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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><b>UNITED STATES</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><b>SECURITIES AND EXCHANGE
COMMISSION</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><b>WASHINGTON, DC 20549</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">For the fiscal year ended
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">&#160;</p><div>

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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">&#160;</p><div>

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SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">Date of event requiring
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">For the transition period
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><i>(Exact name of registrant
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><i>(Name, Telephone, E-mail
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">Securities registered
or to be registered pursuant to Section 12(b) of the Act:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: bottom"> <td style="border-bottom: black 1.5pt solid; white-space: nowrap; width: 32%; text-align: center"><span style="font-size: 10pt"><b>Title of each class to be registered</b></span></td> <td style="white-space: nowrap; width: 2%; text-align: center">&#160;</td> <td style="border-bottom: black 1.5pt solid; white-space: nowrap; width: 32%; text-align: center"><span style="font-size: 10pt"><b>Trading Symbol(s)</b></span></td> <td style="width: 2%; text-align: center">&#160;</td> <td style="border-bottom: black 1.5pt solid; width: 32%; text-align: center"><span style="font-size: 10pt"><b>Name of each exchange on which each<br/>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">Securities registered
or to be registered pursuant to Section 12(g) of the Act: None</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white">Securities for which there
is a reporting obligation pursuant to Section 15(d) of the Act: None</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Number of outstanding shares
of each of the issuer&#8217;s classes of capital or common stock as of December 31, 2022: <ix:nonFraction contextRef="c2" decimals="INF" format="ixt:num-dot-decimal" name="dei:EntityCommonStockSharesOutstanding" scale="0" unitRef="shares">10,932,896</ix:nonFraction> ordinary shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Yes
<span style="font-family: Times New Roman, Times, Serif">&#9744;</span> &#160;<ix:nonNumeric contextRef="c0" name="dei:EntityWellKnownSeasonedIssuer">No</ix:nonNumeric> <span style="font-family: Times New Roman, Times, Serif">&#9746;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">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 Exchange Act of 1934.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Yes
<span style="font-family: Times New Roman, Times, Serif">&#9744;</span> &#160;<ix:nonNumeric contextRef="c0" name="dei:EntityVoluntaryFilers">No</ix:nonNumeric> <span style="font-family: Times New Roman, Times, Serif">&#9746;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><ix:nonNumeric contextRef="c0" name="dei:EntityCurrentReportingStatus">Yes</ix:nonNumeric>
<span style="font-family: Times New Roman, Times, Serif">&#9746;</span> &#160;No <span style="font-family: Times New Roman, Times, Serif">&#9744;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">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 during the preceding 12 months.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><ix:nonNumeric contextRef="c0" name="dei:EntityInteractiveDataCurrent">Yes</ix:nonNumeric>
<span style="font-family: Times New Roman, Times, Serif">&#9746;</span> &#160;No <span style="font-family: Times New Roman, Times, Serif">&#9744;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth
company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse"> <tr style="vertical-align: top"> <td style="width: 25%; text-align: justify"><span style="font-size: 10pt">Large accelerated filer &#9744;</span></td> <td style="width: 25%; text-align: justify"><span style="font-size: 10pt">Accelerated filer &#9744;</span></td> <td style="width: 25%; text-align: justify"><ix:nonNumeric contextRef="c0" format="ixt-sec:entityfilercategoryen" name="dei:EntityFilerCategory"><span style="font-size: 10pt">Non-accelerated filer</span></ix:nonNumeric></td> <td style="width: 25%; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9746;</span></td></tr> <tr style="vertical-align: top"> <td style="text-align: justify">&#160;</td> <td style="text-align: justify">&#160;</td> <td style="text-align: justify"><span style="font-size: 10pt">Emerging Growth Company</span></td> <td style="text-align: justify"><ix:nonNumeric contextRef="c0" format="ixt:fixed-true" name="dei:EntityEmergingGrowthCompany"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9746;</span></ix:nonNumeric></td></tr> </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">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) Exchange Act. <ix:nonNumeric contextRef="c0" format="ixt:fixed-true" name="dei:EntityExTransitionPeriod"><span style="font-family: Times New Roman, Times, Serif">&#9746;</span></ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Indicate
by check mark whether the registrant has filed a report on and attestation to its management&#8217;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. <ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:IcfrAuditorAttestationFlag"><span style="font-family: Times New Roman, Times, Serif">&#9744;</span></ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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. <span style="font-family: Times New Roman, Times, Serif">&#9744;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 16.2pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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&#8217;s executive officers during the relevant recovery period pursuant to &#167;240.10D-1(b). <span style="font-family: Times New Roman, Times, Serif">&#9744;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Indicate
by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="-sec-ix-hidden: hidden-fact-2">U.S.
GAAP</span> <span style="font-family: Times New Roman, Times, Serif">&#9746;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">International
Financial Reporting Standards as issued by the International Accounting Standards Board&#160;<span style="font-family: Times New Roman, Times, Serif">&#9744;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Other
<span style="font-family: Times New Roman, Times, Serif">&#9744;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">If
&#8220;Other&#8221; has been checked in response to the previous question, indicate by check mark which financial statement item the registrant
has elected to follow.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-family: Times New Roman, Times, Serif">&#9744;</span>
Item 17 &#160;<span style="font-family: Times New Roman, Times, Serif">&#9744;</span> Item 18</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">If
this is an annual report, indicate by check mark whether the registrant is a shell company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Yes
<span style="font-family: Times New Roman, Times, Serif">&#9744;</span> &#160;No <ix:nonNumeric contextRef="c0" format="ixt:fixed-false" name="dei:EntityShellCompany"><span style="font-family: Times New Roman, Times, Serif">&#9746;</span></ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Rule-Page --><div style="margin-top: 0pt; margin-bottom: 0pt; width: 100%"><div style="font-size: 1pt; border-top: Black 1pt solid; border-bottom: Black 2pt solid">&#160;</div></div><!-- Field: /Rule-Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"></p><div>

</div><!-- Field: Page; Sequence: 2 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0; margin-bottom: 0">&#160;</p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>TABLE OF CONTENTS</b>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="vertical-align: top; width: 10%; text-align: justify">&#160;</td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; width: 80%; text-align: justify">&#160;</td>
    <td style="border-bottom: black 1.5pt solid; vertical-align: bottom; width: 10%; text-align: center"><span style="font-size: 10pt"><b>Page</b></span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td colspan="2" style="vertical-align: top; text-align: justify"><span style="font-size: 10pt"><a href="#a_001">INTRODUCTION</a></span></td>
    <td style="vertical-align: bottom; text-align: center">iii</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td colspan="2" style="text-align: justify"><a href="#a_002"><span style="font-size: 10pt">CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS</span></a></td>
    <td style="text-align: center">iv</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td colspan="2" style="text-align: justify"><span style="font-size: 10pt">EXPLANATORY NOTE</span></td>
    <td style="text-align: center"></td></tr>
  <tr style="background-color: White">
    <td colspan="2" style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: center">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><a href="#a_003"><span style="font-size: 10pt">PART I</span></a></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify">&#160;</td>
    <td style="text-align: center">1</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: justify">&#160;</td>
    <td style="vertical-align: bottom; text-align: center">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 1.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_004"><span style="font-size: 10pt">IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</span></a></td>
    <td style="text-align: center">1</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 2.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_005"><span style="font-size: 10pt">OFFER STATISTICS AND EXPECTED TIMETABLE</span></a></td>
    <td style="text-align: center">1</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 3.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_006"><span style="font-size: 10pt">KEY INFORMATION</span></a></td>
    <td style="text-align: center">1</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">A.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_007"><span style="font-size: 10pt">Reserved</span></a></td>
    <td style="text-align: center">1</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">B.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_008"><span style="font-size: 10pt">Capitalization and Indebtedness</span></a></td>
    <td style="text-align: center">1</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">C.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_009"><span style="font-size: 10pt">Reasons for the Offer and Use of Proceeds</span></a></td>
    <td style="text-align: center">1</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">D.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_010"><span style="font-size: 10pt">Risk Factors</span></a></td>
    <td style="text-align: center">1</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 4.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_011"><span style="font-size: 10pt">INFORMATION ON THE COMPANY</span></a></td>
    <td style="text-align: center">43</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">A.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_012"><span style="font-size: 10pt">History and Development of the Company</span></a></td>
    <td style="text-align: center">43</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">B.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_013"><span style="font-size: 10pt">Business Overview</span></a></td>
    <td style="text-align: center"><span style="font-size: 10pt">44</span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">C.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_014"><span style="font-size: 10pt">Organizational Structure</span></a></td>
    <td style="text-align: center">61</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">D.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_015"><span style="font-size: 10pt">Property, Plants and Equipment</span></a></td>
    <td style="text-align: center">61</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 4A.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_016"><span style="font-size: 10pt">UNRESOLVED STAFF COMMENTS</span></a></td>
    <td style="text-align: center">61</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 5.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_017"><span style="font-size: 10pt">OPERATING AND FINANCIAL REVIEW AND PROSPECTS</span></a></td>
    <td style="text-align: center">61</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">A.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_018"><span style="font-size: 10pt">Operating Results</span></a></td>
    <td style="text-align: center">66</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">B.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_019"><span style="font-size: 10pt">Liquidity and Capital Resources</span></a></td>
    <td style="text-align: center">69</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">C.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_020"><span style="font-size: 10pt">Research and Development, Patents and Licenses</span></a></td>
    <td style="text-align: center">72</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">D.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_022"><span style="font-size: 10pt">Trend Information</span></a></td>
    <td style="text-align: center">72</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">E.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_023"><span style="font-size: 10pt">Critical Accounting Estimates</span></a></td>
    <td style="text-align: center">73</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 6.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_024"><span style="font-size: 10pt">DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</span></a></td>
    <td style="text-align: center">76</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">A.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_025"><span style="font-size: 10pt">Directors and Senior Management</span></a></td>
    <td style="text-align: center">76</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">B.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_026"><span style="font-size: 10pt">Compensation</span></a></td>
    <td style="text-align: center">79</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">C.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_027"><span style="font-size: 10pt">Board Practices</span></a></td>
    <td style="text-align: center">80</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">D.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_028"><span style="font-size: 10pt">Employees</span></a></td>
    <td style="text-align: center">95</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">E.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_029"><span style="font-size: 10pt">Share Ownership</span></a></td>
    <td style="text-align: center">95</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">F.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_030"><span style="font-size: 10pt">Disclosure of a registrant&#8217;s action to recover erroneously awarded
    compensation</span></a></td>
    <td style="text-align: center">98</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 7.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_031"><span style="font-size: 10pt">MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</span></a></td>
    <td style="text-align: center">98</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">A.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_032"><span style="font-size: 10pt">Major Shareholders</span></a></td>
    <td style="text-align: center">98</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">B.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_033"><span style="font-size: 10pt">Related Party Transactions</span></a></td>
    <td style="text-align: center">101</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">C.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_034"><span style="font-size: 10pt">Interests of Experts and Counsel</span></a></td>
    <td style="text-align: center">102</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 8.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_035"><span style="font-size: 10pt">FINANCIAL INFORMATION</span></a></td>
    <td style="text-align: center">102</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">A.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_036"><span style="font-size: 10pt">Consolidated Statements and Other Financial Information</span></a></td>
    <td style="text-align: center">102</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">B.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: justify"><a href="#a_037"><span style="font-size: 10pt">Significant Changes</span></a></td>
    <td style="text-align: center">103</td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="width: 10%; text-align: justify"><span style="font-size: 10pt">ITEM 9.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; width: 80%; text-align: left"><a href="#a_038"><span style="font-size: 10pt">THE OFFER AND LISTING</span></a></td>
    <td style="width: 10%; text-align: center">103</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">A.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_039"><span style="font-size: 10pt">Offer and Listing Details</span></a></td>
    <td style="text-align: center">103</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">B.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_040"><span style="font-size: 10pt">Plan of Distribution</span></a></td>
    <td style="text-align: center">103</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">C.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_041"><span style="font-size: 10pt">Markets</span></a></td>
    <td style="text-align: center">103</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">D.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_042"><span style="font-size: 10pt">Selling Shareholders</span></a></td>
    <td style="text-align: center">103</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">E.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_043"><span style="font-size: 10pt">Dilution</span></a></td>
    <td style="text-align: center">103</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">F.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_044"><span style="font-size: 10pt">Expenses of the Issue</span></a></td>
    <td style="text-align: center">103</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 10.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_045"><span style="font-size: 10pt">ADDITIONAL INFORMATION</span></a></td>
    <td style="text-align: center">103</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">A.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_046"><span style="font-size: 10pt">Share Capital</span></a></td>
    <td style="text-align: center">103</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">B.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_047"><span style="font-size: 10pt">Articles of Association</span></a></td>
    <td style="text-align: center">103</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">C.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_048"><span style="font-size: 10pt">Material Contracts</span></a></td>
    <td style="text-align: center">103</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">D.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_049"><span style="font-size: 10pt">Exchange Controls</span></a></td>
    <td style="text-align: center">104</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">E.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_050"><span style="font-size: 10pt">Taxation</span></a></td>
    <td style="text-align: center">104</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">F.</span></td>
    <td style="padding-left: 0.125in; text-align: left; text-indent: -0.125in"><a href="#a_051"><span style="font-size: 10pt">Dividends and Paying Agents</span></a></td>
    <td style="text-align: center">110</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">G.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_052"><span style="font-size: 10pt">Statement by Experts</span></a></td>
    <td style="text-align: center">110</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">H.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_053"><span style="font-size: 10pt">Documents on Display</span></a></td>
    <td style="text-align: center">110</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">I.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_054"><span style="font-size: 10pt">Subsidiary Information</span></a></td>
    <td style="text-align: center">110</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">J.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_055"><span style="font-size: 10pt">Annual Report to Security Holders</span></a></td>
    <td style="text-align: center">110</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 11.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_056"><span style="font-size: 10pt">QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</span></a></td>
    <td style="text-align: center">110</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 12.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_057"><span style="font-size: 10pt">DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</span></a></td>
    <td style="text-align: center">111</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">A.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_058"><span style="font-size: 10pt">Debt Securities</span></a></td>
    <td style="text-align: center">111</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">B.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_059"><span style="font-size: 10pt">Warrants and rights</span></a></td>
    <td style="text-align: center">111</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">C.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_060"><span style="font-size: 10pt">Other Securities</span></a></td>
    <td style="text-align: center">111</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">D.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_061"><span style="font-size: 10pt">American Depositary Shares</span></a></td>
    <td style="text-align: center">111</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top">&#160;</td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">&#160;</td>
    <td style="vertical-align: bottom; text-align: center">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><a href="#a_062"><span style="font-size: 10pt">PART II</span></a></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left">&#160;</td>
    <td style="text-align: center">112</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify">&#160;</td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left">&#160;</td>
    <td style="text-align: center">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 13.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_063"><span style="font-size: 10pt">DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</span></a></td>
    <td style="text-align: center">112</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 14.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_064"><span style="font-size: 10pt">MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
    PROCEEDS</span></a></td>
    <td style="text-align: center">112</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 15.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_065"><span style="font-size: 10pt">CONTROLS AND PROCEDURES</span></a></td>
    <td style="text-align: center">112</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 16.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_066"><span style="font-size: 10pt">[RESERVED]</span></a></td>
    <td style="text-align: center">112</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 16A.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_067"><span style="font-size: 10pt">AUDIT COMMITTEE FINANCIAL EXPERT</span></a></td>
    <td style="text-align: center">112</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 16B.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_068"><span style="font-size: 10pt">CODE OF ETHICS</span></a></td>
    <td style="text-align: center">112</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 16C.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_069"><span style="font-size: 10pt">PRINCIPAL ACCOUNTANT FEES AND SERVICES</span></a></td>
    <td style="text-align: center">113</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 16D.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_070"><span style="font-size: 10pt">EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES</span></a></td>
    <td style="text-align: center">113</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 16E.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_071"><span style="font-size: 10pt">PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS</span></a></td>
    <td style="text-align: center">113</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 16F.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_072"><span style="font-size: 10pt">CHANGE IN REGISTRANT&#8217;S CERTIFYING ACCOUNTANT</span></a></td>
    <td style="text-align: center">113</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 16G.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_073"><span style="font-size: 10pt">CORPORATE GOVERNANCE</span></a></td>
    <td style="text-align: center">113</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 16H.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_074"><span style="font-size: 10pt">MINE SAFETY DISCLOSURE</span></a></td>
    <td style="text-align: center">115</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 16I.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_075"><span style="font-size: 10pt">DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS</span></a></td>
    <td style="text-align: center">115</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">&#160;</td>
    <td style="vertical-align: bottom; text-align: center">&#160;</td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top; text-align: justify"><a href="#a_076"><span style="font-size: 10pt">PART III</span></a></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; vertical-align: top; text-align: left">&#160;</td>
    <td style="vertical-align: bottom; text-align: center">116</td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top; text-align: justify">&#160;</td>
    <td colspan="2" style="vertical-align: bottom; text-align: center">&#160;</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 17.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_077"><span style="font-size: 10pt">FINANCIAL STATEMENTS</span></a></td>
    <td style="text-align: center">116</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 18.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_078"><span style="font-size: 10pt">FINANCIAL STATEMENTS</span></a></td>
    <td style="text-align: center">116</td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td style="text-align: justify"><span style="font-size: 10pt">ITEM 19.</span></td>
    <td style="text-indent: -0.125in; padding-left: 0.125in; text-align: left"><a href="#a_079"><span style="font-size: 10pt">EXHIBITS</span></a></td>
    <td style="text-align: center">116</td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td colspan="2" style="text-align: justify"><a href="#a_080"><span style="font-size: 10pt">SIGNATURES</span></a></td>
    <td style="text-align: center">117</td></tr>
  </table><div>
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</div><div><a id="a_001"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center; background-color: white"><b>INTRODUCTION</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are an innovator of video
encoding, transcoding and optimization solutions that enable high quality, performance, and unmatched bitrate efficiency for video and
images. With our Emmy&#174;-winning patented technology and award-winning services, we help our customers realize the potential of video
encoding and media optimization to address business-critical challenges. Our customers include tier one over-the-top, or OTT, content
distributors, video streaming platforms, and Hollywood studios who rely on our suite of products and expertise to reduce the cost and
complexity associated with storing, distributing and monetizing video and images across devices.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">At the heart of our patented
optimization technology is the proprietary Beamr Quality Measure, or BQM, that is highly correlated with the human visual system. BQM
is integrated into our Content Adaptive Bitrate, or CABR, system, which maximizes quality and remove visual redundancies resulting in
a smaller file size. The BQM has excellent correlation with subjective results, confirmed in testing under ITU BT.500, an international
standard for rigorous testing of image quality. The perceptual quality preservation of CABR has been repeatedly verified using large scale
crowd-sourcing based testing sessions, as well as by industry leaders and studio &#8220;golden eyes&#8221;.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We currently license three
core video and image compression products that help our customers use video and images to further their businesses in meaningful ways:
(1) a suite of video compression software encoder solutions including the Beamr 4 encoder, Beamr 4X content adaptive encoder, Beamr 5
encoder and the Beamr 5X content adaptive encoder, (2) Beamr JPEGmini photo optimization software solutions for reducing JPEG file sizes,
and (3) Beamr Silicon IP block, a hardware solution for integration into dedicated video encoding ASICs, GPUs, and application processors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Upon listing of our ordinary
shares in our initial public offering on February 28, 2023, we effected a reverse share spit at a ratio of 1-for-5. All share numbers
in this Annual Report on Form 20-F have been retroactively adjusted and are reflected on a post-reverse share split basis.&#160;</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Unless
the context requires otherwise, the terms &#8220;Beamr,&#8221; &#8220;we,&#8221; &#8220;us,&#8221; &#8220;our,&#8221; &#8220;the Company,&#8221;
and similar designations refer to Beamr Imaging&#160;Ltd. and its wholly-owned subsidiary, Beamr, Inc.. References to &#8220;ordinary
shares&#8221;, &#8220;warrants&#8221; and &#8220;share capital&#8221; refer to our ordinary shares, warrants and share capital, respectively,
of Beamr.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-size: 10pt">References
to &#8220;U.S. dollars&#8221; and &#8220;$&#8221; are to currency of the United States of America, and references to &#8220;NIS&#8221;
are to New Israeli Shekels. References to &#8220;ordinary shares&#8221; are to our ordinary shares, par value NIS 0.05 per share. We report
financial information under generally accepted accounting principles in the United States of America or U.S. GAAP.</span>&#160;</p><div>

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</div><div><a id="a_002"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><b>CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Certain
information included or incorporated by reference in this Annual Report on Form 20-F may be deemed to be &#8220;forward-looking statements&#8221;
within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Forward-looking statements are often
characterized by the use of forward-looking terminology such as &#8220;may,&#8221; &#8220;will,&#8221; &#8220;expect,&#8221; &#8220;anticipate,&#8221;
&#8220;estimate,&#8221; &#8220;continue,&#8221; &#8220;believe,&#8221; &#8220;should,&#8221; &#8220;intend,&#8221; &#8220;project&#8221;
or other similar words, but are not the only way these statements are identified.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">These
forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies, statements
that contain projections of results of operations or of financial condition, expected capital needs and expenses, statements relating
to the research, development, completion and use of our products, and all statements (other than statements of historical facts) that
address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Forward-looking
statements are not guarantees of future performance and are subject to risks and uncertainties. We have based these forward-looking statements
on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current
conditions, expected future developments and other factors they believe to be appropriate.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Important
factors that could cause actual results, developments and business decisions to differ materially from those anticipated in these forward-looking
statements include, among other things:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Readers
are urged to carefully review and consider the various disclosures made throughout this Annual Report on Form 20-F which are designed
to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">You
should not put undue reliance on any forward-looking statements. Any forward-looking statements in this annual report on Form 20-F are
made as of the date hereof and are expressly qualified in their entirety by the cautionary statements included in this Annual Report.
We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by law.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">In
addition, the section of this Annual Report on Form 20-F entitled &#8220;Item 4. Information on the Company&#8221; contains information
obtained from independent industry sources and other sources that we have not independently verified.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"></p><div>

</div><!-- Field: Page; Sequence: 7; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>INDUSTRY AND MARKET DATA</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Market
data and certain industry data and forecasts used throughout this Annual Report on Form 20-F were obtained from internal company surveys,
market research, consultant surveys commissioned by the Company, publicly available information, reports of governmental agencies and
industry publications and surveys. Industry surveys, publications, consultant surveys commissioned by the Company and forecasts generally
state that the information contained therein has been obtained from sources believed to be reliable. However, this information may prove
to be inaccurate because of the method by which some of the data for the estimates is obtained or because this information cannot always
be verified with complete certainty due to the limits on the availability and reliability of raw data, the voluntary nature of the data
gathering process and other limitations and uncertainties. As a result, the market and industry data and forecasts included or incorporated
by reference in this annual report, and estimates and beliefs based on that data, may not be reliable. We have relied on certain data
from third-party sources, including internal surveys, industry forecasts and market research, which we believe to be reliable based on
our management&#8217;s knowledge of the industry. However, we have not ascertained the underlying economic assumptions relied upon therein.
Forecasts are particularly likely to be inaccurate, especially over long periods of time. In addition, we do not necessarily know what
assumptions regarding general economic growth were used in preparing the forecasts we cite. Statements as to our market position are based
to the best of our knowledge on the most currently available data. While we are not aware of any misstatements regarding the industry
data presented in this annual report, our estimates involve risks and uncertainties and are subject to change based on various factors,
including those discussed under the heading &#8220;Risk Factors&#8221; in this Annual Report.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Statements made in this Annual
Report on Form 20-F concerning the contents of any agreement, contract or other document are summaries of such agreements, contracts or
documents and are not a complete description of all of their terms. If we filed any of these agreements, contracts or documents as exhibits
to this Report or to any previous filing with the Securities and Exchange Commission, or SEC, you may read the document itself for a complete
understanding of its terms.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>PRESENTATION OF FINANCIAL INFORMATION</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our financial statements were
prepared in accordance with generally accepted accounting principles in the United States, or U.S.&#160;GAAP. We present our consolidated
financial statements in U.S. dollars.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our fiscal year ends on December
31 of each year. Our most recent fiscal year ended on December 31, 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Certain figures included in
this Annual Report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic
aggregation of the figures that precede them.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center; background-color: white"><b>EMERGING GROWTH COMPANY
STATUS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">We
are an &#8220;emerging growth company,&#8221; as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities
Act, as modified by the&#160;JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not &#8220;emerging growth companies&#8221; including, but not limited to, not
being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations
regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a&#160;non-binding&#160;advisory
vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. If some investors find
our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities
may be more volatile.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">In
addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period
provided in Section 13(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, for complying with new or revised accounting
standards. We have elected to opt out of this extended transition period and, as a result, we are required to comply with new or revised
accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Under federal
securities laws, our decision to opt out of the extended transition period is irrevocable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">We
will remain an emerging growth company until the earliest of: (i) the last day of the first fiscal year in which our annual gross revenues
exceed $&#160;$1.235 billion; (ii) the last day of the fiscal year following the fifth anniversary of the date of our initial public offering
(i.e., December 31, 2028); (iii) the date that we become a &#8220;large accelerated filer&#8221; as defined in Rule&#160;12b-2&#160;under
the&#160;Exchange Act, which would occur if the aggregate worldwide market value of our ordinary shares, including ordinary shares represented
by ADSs, held by non-affiliates is at least $700 million as of the last business day of our most recently completed second fiscal quarter;
or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during any three-year period.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>TRADEMARKS AND TRADE NAMES</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We own or have rights to trademarks,
service marks and trade names that we use in connection with the operation of our business, including our corporate name, logos and website
names. Other trademarks, service marks and trade names appearing in this Annual Report are the property of their respective owners. Solely
for convenience, some of the trademarks, service marks and trade names referred to in this Annual Report are listed without the <sup>&#174;
</sup>and &#8482; symbols, but we will assert, to the fullest extent under applicable law, our rights to our trademarks, service marks
and trade names.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>GLOSSARY OF INDUSTRY TERMS AND CONCEPTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following is a list of
certain industry terms and concepts that are used in this Annual Report:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#8220;<i>API</i>&#8221; means
application programming interface, which is a software intermediary that allows two applications to talk to each other.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#8220;<i>ASIC</i>&#8221;
means an application-specific integrated circuit which is an integrated circuit chip customized for a particular use, rather than intended
for general-purpose use.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#8220;<i>AVC</i>&#8221; means
advanced video coding, also referred to as H.264 or MPEG-4 Part 10, which is a video compression standard based on block-oriented, motion-compensated
integer-discrete cosine transform coding.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#8220;<i>BQM</i>&#8221; means
the proprietary Beamr quality measure which is an artificial intelligence trained computer vision processing architecture.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#8220;<i>CABR</i>&#8221;
means content adaptive bitrate which refers to our technology combined with our BQM that uses a flexible computer vision engine programmed
with a high level algorithm description to achieve maximal compression of the video input while maintaining the input video resolution,
format, and visual quality.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#8220;<i>Codec</i>&#8221;
means a device or computer program which encodes or decodes a data stream, bitstream or signal.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#8220;<i>CPU</i>&#8221; means
central processing unit which is the electronic circuitry in a computer that executes instructions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#8220;<i>FPGA</i>&#8221;
means field-programmable gate array which is a hardware circuit that a user can program to carry out one or more logical operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#8220;<i>GPU</i>&#8221; means
graphics processing unit which is a specialized electronic circuit designed to rapidly manipulate and alter memory using parallel computations
to accelerate the creation of images in a frame buffer intended for output to a display device.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#8220;<i>HDR</i>&#8221; means
high dynamic range imaging which is the set of techniques used to reproduce a greater range of luminosity than that which is possible
with standard photographic or video graphic techniques.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#8220;<i>HEVC</i>&#8221;
means high efficiency video coding, also known as H.265 and MPEG-H Part 2, which is a video compression standard designed as part of the
MPEG-H project as a successor to the widely used AVC standard.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#8220;<i>HLG</i>&#8221; means
hybrid log-gamma, an HDR format that uses the HLG transfer function, BT.2020 color primaries and a bit depth of 10-bits.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#8220;<i>JPEG</i>&#8221;
means joint photographic experts group which is a commonly used format for lossy compression for digital images, particularly for images
produced by digital photography.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#8220;<i>ITU BT. 500</i>&#8221;
is an international standard for testing image quality.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#8220;<i>OTT</i>&#8221; means
over-the-top which is a means of providing television and film content over the internet at the request and to suit the requirements of
the individual consumer. Services like Netflix, ViacomCBS and Wowza are video OTT services.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#8220;<i>PSNR</i>&#8221;
means peak signal to noise ratio which is a quality measure which represents the ratio between the highest power of an original signal
and the power level of the distortion, on logarithmic scale.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#8220;<i>Silicon IP</i>&#8221;
is a reusable unit of logic, cell, or chip layout design and is also the intellectual property of one party. Silicon IP can be used as
building blocks within application-specific integrated circuits (ASIC) chip designs or field programmable gate array (FPGA) logic designs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#8220;<i>SSIM</i>&#8221;
means structural similarity index measure which is a technique to predict the perceived quality of digital images and videos.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#8220;<i>UGC</i>&#8221; means
user generated content which refers to any form of content, such as images, videos, text, and audio, that has been created or posted by
users on online platforms.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#8220;<i>VBR</i>&#8221; means
variable bit rate which relates to the bitrate used in sound or video encoding.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><div><a id="a_003"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><b>PART I</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_004"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>ITEM&#160;1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Not
applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_005"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>ITEM&#160;2. OFFER STATISTICS AND EXPECTED TIMETABLE</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Not
applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_006"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>ITEM&#160;3. KEY INFORMATION</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_007"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>A. Reserved.</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_008"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>B. Capitalization and Indebtedness</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Not
applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><div><a id="a_009"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>C. Reasons for the Offer and Use of Proceeds</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Not
applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_010"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>D. Risk Factors</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">You should carefully consider
the risks described below, together with all of the other information in this Annual Report on Form 20-F. The risks and uncertainties
described below are those significant risk factors, currently known and specific to us, that we believe are relevant to an investment
in our securities. Additional risks and uncertainties not currently known to us or that we now deem immaterial may also harm us. If any
of these risks materialize, our business, results of operations or financial condition could suffer, and the price of our ordinary shares
could decline substantially.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><b>Summary Risk Factors</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Investing
in our ordinary shares involves a high degree of risk, as fully described below. The principal factors and uncertainties that make investing
in our ordinary shares risky, include, among others:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Risks Related to Our Business and Industry</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">We have a history of losses and may not be able to achieve or maintain profitability.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">We will need to raise additional capital to meet our business requirements in the future, and such capital raising may be costly or difficult to obtain and could dilute our shareholders&#8217; ownership interests.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">To support our business growth we are expanding our product offering to include the Beamr HW-Accelerated Content Adaptive Encoding solution, a new SaaS solution, the development and commercialization of which may not be successful. This change in our products and services also makes it difficult to evaluate our current business and future prospects and may increase the risk that we will not be successful.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">We may not be successful in establishing and maintaining strategic partnerships, which could adversely affect our ability to develop and commercialize our SaaS solution and other future products.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

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</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

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</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Risks Related to Ownership of our Ordinary
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="font-size: 10pt"><b>Risks Related to Our Business
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have incurred losses in
each year since our incorporation in 2009, including net losses of $1.2 million and $0.9 million in the years ended December 31, 2022
and 2021. As a result, we had an accumulated deficit of $30.9 million and $29.7 million as of December 31, 2022 and 2021, respectively.
We intend to continue to expend substantial financial and other resources on, among other things:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="text-align: justify"><span style="font-size: 10pt">augmenting our current offerings by increasing the breadth of our technology partnerships and exploring potential transactions that may enhance our capabilities or increase the scope of our technology footprint; and</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">These efforts may prove more
expensive than we currently anticipate, and we may not succeed in increasing our revenue sufficiently, or at all, to offset these higher
expenses. In addition, to the extent we are successful in increasing our customer base, we may also incur increased losses because of
unforeseen costs. If our revenue does not increase to offset our operating expenses, we will not achieve profitability in future periods
and our net losses may increase. Revenue growth may slow or revenue may decline for a number of possible reasons, many of which are beyond
our control, including inability to penetrate new markets, slowing demand for our products and services, increasing competition, or any
of the other factors discussed in this Risk Factors section. Any failure to increase our revenue as we grow our business could prevent
us from achieving profitability at all or on a consistent basis, which would cause our business, financial condition and results of operations
to suffer and the market price of our ordinary shares to decline.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We will need to raise additional capital
to meet our business requirements in the future, and such capital raising may be costly or difficult to obtain and could dilute our shareholders&#8217;
ownership interests.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In order for us to pursue
our business objectives, we will need to raise additional capital, which additional capital may not be available on reasonable terms or
at all. Any additional capital raised through the sale of equity or equity-backed securities may dilute our shareholders&#8217; ownership
percentages and could also result in a decrease in the market value of our equity securities. The terms of any securities issued by us
in future capital transactions may be more favorable to new investors, and may include preferences, superior voting rights and the issuance
of warrants or other derivative securities, which may have a further dilutive effect on the holders of any of our securities then outstanding.
In addition, we may incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting
fees, securities law compliance fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash
expenses in connection with certain securities we issue, such as convertible notes and warrants, which may adversely impact our financial
condition.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our indebtedness could adversely affect
our ability to raise additional capital to fund operations, limit our ability to react to changes in the economy or our industry and prevent
us from meeting our financial obligations.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On July 7, 2022, we entered
into a funding agreement with IBI Spikes, Ltd., or IBI, providing for a loan in the amount of NIS 3.1 million (approximately $900,000)
and the issuance of 65,562 warrants to purchase ordinary shares. See &#8220;Item 5.B&#8212;Operating and Financial Review and Prospects&#8212;Liquidity
and Resources&#8212;IBI Spikes Loan&#8221;.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On February 27, 2023, we announced
the pricing of our initial public offering of 1,950,000 ordinary shares at a public offering price of $4.00 per share, for aggregate gross
proceeds of $7.8 million prior to deducting underwriting discounts and other offering expenses.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we cannot generate sufficient
cash flow from operations to service our debt, we may need to further refinance our debt, dispose of assets or issue equity to obtain
necessary funds. We do not know whether we will be able to do any of this on a timely basis, on terms satisfactory to us, or at all. Our
indebtedness could have important consequences, including:&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="text-align: justify"><span style="font-size: 10pt">our ability to obtain additional debt or equity financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes may be limited;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="text-align: justify"><span style="font-size: 10pt">a portion of our cash flows from operations will be dedicated to the payment of principal and interest on the indebtedness and will not be available for other purposes, including operations, capital expenditures and future business opportunities;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="text-align: justify"><span style="font-size: 10pt">our ability to adjust to changing market conditions may be limited and may place us at a competitive disadvantage compared to less-leveraged competitors; and</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>To support our business growth we are expanding
our product offering to include the Beamr HW-Accelerated Content Adaptive Encoding solution, a new SaaS solution, the development and
commercialization of which may not be successful. This change in our products and services also makes it difficult to evaluate our current
business and future prospects and may increase the risk that we will not be successful.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our current product line is
mainly geared to the high end, high quality media customers and we count among our customers Netflix, ViacomCBS, Snapfish, Wowza and other
leading media companies using video and photo solutions.&#160; This product line involves high cost and complexity of deploying our existing
software solutions and the long sales lead times.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In order to grow our business,
in 2019, we resolved to build a lower cost offering which requires hardware acceleration and started to integrate with hardware encoders.
In the first quarter of 2020, we introduced our first proof of concept results with Intel&#8217;s GPU. Then, we made a strategic decision
to focus our resources on the development and commercialization of our next-generation product, the Beamr HW-Accelerated Content Adaptive
Encoding solution, a SaaS solution that is designed, based on our own internal testing, to provide up to 10x cost-effective video optimization
than existing solutions to an industry agnostic target market. This change in strategy and these efforts may prove more expensive than
we currently anticipate, or may require longer development and deployment times, and we may not succeed in fully developing and implementing
our SaaS solution sufficiently, or at all.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We may not be successful in establishing
and maintaining strategic partnerships, which could adversely affect our ability to develop and commercialize our SaaS solution and other
future products.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To successfully develop and
commercialize our Beamr HW-Accelerated Content Adaptive Encoding solution and other product offerings, we will need substantial financial
resources as well as expertise and physical resources and systems. We may elect to develop some or all of these physical resources and
systems and expertise ourselves, or we may seek to collaborate with another company or companies that can provide some or all of such
physical resources and systems as well as financial resources and expertise. For example, we are collaborating with NVIDIA, a leading
developer of GPUs, in the development of our next generation product, the Beamr HW-Accelerated Content Adaptive Encoding solution, and
we are collaborating with Allegro DVT in the development the world&#8217;s first content-adaptive silicon IP encoder.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We face significant competition
in seeking appropriate partners for our products, and the negotiation process is time-consuming and complex. In order for us to successfully
develop and commercialize our products with a strategic partner, potential partners must view our products as economically valuable in
markets they determine to be attractive in light of the terms that we are seeking and other available products for licensing by other
companies. Even if we are successful in our efforts to establish strategic partnerships, the terms that we agree upon may not be favorable
to us, and we may not be able to maintain such strategic partnerships if, for example, development of a product is delayed or sales of
a product are disappointing. Any delay in entering into strategic partnership agreements related to our products could delay the development
and commercialization of our products and reduce their competitiveness even if they reach the market. If we fail to establish and maintain
strategic partnerships related to our products, we will bear all of the risk and costs related to the development and commercialization
of our products, and we will need to seek additional financing, hire additional employees and otherwise develop expertise which we do
not have and for which we have not budgeted.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">The risks in a strategic partnership include the
following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 20.5pt">&#160;</p><div>

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    <td style="text-align: justify"><span style="font-size: 10pt">the strategic partner may not apply the expected financial resources, efforts, or required expertise in developing the physical resources and systems necessary to successfully develop and commercialize a product;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="text-align: justify"><span style="font-size: 10pt">the strategic partner may not invest in the development of a sales and marketing force and the related infrastructure at levels that ensure that sales of the products reach their full potential;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 38.5pt; text-align: justify; text-indent: -0.25in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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    <td style="text-align: justify"><span style="font-size: 10pt">strategic partners could decide to withdraw a development program or a collaboration, or move forward with a competing product developed either independently or in collaboration with others, including our competitors;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="text-align: justify"><span style="font-size: 10pt">disputes may arise between us and a strategic partner that delay the development or commercialization or adversely affect the sales or profitability of the product; or</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="text-align: justify"><span style="font-size: 10pt">the strategic partner may independently develop, or develop with third parties, products that could compete with our products.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 38.5pt; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 38.5pt; text-align: justify; text-indent: -0.25in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 38.5pt; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, a strategic partner
for one or more of our products may have the right to terminate the collaboration at its discretion. For example, our collaboration with
NVIDIA is based on a mutual development program of our Beamr HW-Accelerated Content Adaptive Encoding solution that is in advanced stages
and that has been approved at senior levels at NVIDIA however our collaboration has not been reduced to a written agreement and we have
not signed any agreement with NVIDIA, which exposes us to the risk of termination of our collaboration at any time for any or no reason.
Any early termination of our collaboration in a manner adverse to us could have a material adverse effect on our liquidity, financial
condition and results of operations. Any termination may require us to seek a new strategic partner or partners, which we may not be able
to do on a timely basis, if at all, or require us to delay or scale back our development and commercialization efforts. The occurrence
of any of these events could adversely affect the development and commercialization of our products or product candidates and materially
harm our business and share price by delaying the development of our products, and the sale of any products, by slowing the growth of
such sales, by reducing the profitability of the product and/or by adversely affecting the reputation of the product.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Further, a strategic partner
may breach an agreement with us, and we may not be able to adequately protect our rights under these agreements. Furthermore, a strategic
partner will likely negotiate for certain rights to control decisions regarding the development and commercialization of our products
and may not conduct those activities in the same manner as we would do so.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our future growth depends in part upon the
successful deployment of the Beamr HW-Accelerated Content Adaptive Encoding solution in the cloud. </i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our current business is based
on software licensing and is not capital intensive, usually paid for by our customers upfront on an annual basis. We are planning to expand
our product offering with the Beamr HW-Accelerated Content Adaptive Encoding solution, a SaaS solution which is to be deployed on cloud
platforms (e.g., AWS, Azure, and GCP) and will be volume-based solutions. Future payments that we will make to cloud platforms and payments
we will receive from customers are hard to predict and will be based on different terms and conditions. We may also be at risk if there
will be gaps between account receivables and account payables. In addition, attracting new customers to our SaaS offering may involve
evaluation processes that prospects may not be willing to cover before experiencing satisfying results with our products and services,
while we will continue to accrue cloud platform service costs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We expect our SaaS operation
will be based on spreads in which we first pay for computing platforms (e.g. GPU instances), and then we sell storage/bandwidth savings
(e.g., AWS S3, CloudFront). Any future margins may be at risk if computing platform costs increase and storage/bandwidth costs decrease.
In addition, our ability to grow and maintain customer base and revenue also depends on achieving significant storage/bitrate savings,
translating into superior total cost of ownership and return on investment for our customers. While we believe that the Beamr HW-Accelerated
Content Adaptive Encoding solution will result in significant savings for our customers, there is a risk that our savings for the customers
might not be significant.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, the Beamr HW-Accelerated
Content Adaptive Encoding solution is based on hardware acceleration of our core technology. While we successfully tested our technology
and our technology and software libraries have matured, the new implementation of the Beamr HW-Accelerated Content Adaptive Encoding has
only been tested in limited proof of concept testing, and there is a technical risk when we transition to ultra-high volume production
and utilizing platforms that were not tested.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There is a risk that we may
not win customers that moved their long-tail assets to cold, or off-line storage services (e.g., Amazon S3 Glacier) for reduced storage
costs. In addition, improvements in general encoding solutions that are based on &#8220;content-adaptive&#8221; or &#8220;content-aware&#8221;
technologies may reduce the savings which our products and services can provide. Moreover, if the public cloud data services that utilize
NVIDIA GPUs (e.g., Amazon, GCP, Azure) do not adopt, or take significant time to adopt, the Nvidia driver and firmware with our new capabilities,
that could adversely affect our market penetration and future revenue growth.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe any future revenue
growth will depend on a number of factors, including, among other things, our ability to:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 17; Value: 6 --><div>
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</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="text-align: justify"><span style="font-size: 10pt">price our offerings effectively and determine appropriate contract terms;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">determine the most appropriate investments for our limited resources;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="text-align: justify"><span style="font-size: 10pt">increase awareness of our brand on a global basis.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we are unable to accomplish
any of these objectives, any revenue growth will be impaired. Many factors may contribute to declines in growth rate, including increased
competition, slowing demand for our offerings, a failure by us to continue capitalizing on growth opportunities, the maturation of our
business, and global economic downturns, among others. If our growth rate declines as a result of this or any of the other factors described
above, investors&#8217; perceptions of our business and the market price of our ordinary shares could be adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our ability to forecast our
future results of operations is subject to a number of uncertainties, including our ability to effectively plan for and model future growth.
We have encountered in the past, and may encounter in the future, risks and uncertainties frequently experienced by growing companies
in rapidly changing industries that may prevent us from achieving the objectives outlined herein. If we fail to achieve the necessary
level of efficiency in our organization as it grows, or if we are not able to accurately forecast future growth, our business would be
adversely affected. Moreover, if the assumptions that we use to plan our business are incorrect or change in reaction to changes in our
market, or if we are unable to maintain consistent revenue or revenue growth, the market price of our ordinary shares could be volatile,
and it may be difficult to achieve and maintain profitability.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The failure to effectively develop and expand
our marketing and sales capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our
offerings.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our ability to increase our
customer base and achieve broader market acceptance of our products and services and in particular the Beamr HW-Accelerated Content Adaptive
Encoding solution will depend to a significant extent on our ability to expand our sales and marketing operations. As part of our growth
strategy, we plan to dedicate significant resources to our marketing programs. All of these efforts will require us to invest significant
financial and other resources. Our business will be harmed if our efforts do not generate a correspondingly significant increase in revenue.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 18; Value: 6 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our business and operations have experienced
growth, and if we do not appropriately manage this growth and any future growth, or if we are unable to improve our systems, processes
and controls, our business, financial condition, results of operations and prospects will be adversely affected.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We plan to make continued
investments in the growth and expansion of our business and customer base including in particular substantial investment of resources
in the development and commercialization of our next-generation product, the Beamr HW-Accelerated Content Adaptive Encoding solution.
The growth and expansion of our business places a continuous and significant strain on our management, operational, financial and other
resources. In addition, as customers adopt our offerings for an increasing number of use cases, we have had to support more complex commercial
relationships. In order to manage our growth effectively, we must continue to improve and expand our information technology and financial
infrastructure, our security and compliance requirements, our operating and administrative systems, our customer service and support capabilities,
our relationships with various partners and other third parties, and our ability to manage headcount and processes in an efficient manner.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We may not be able to sustain
the pace of improvements to our products and services, or the development and introduction of new offerings, successfully, or implement
systems, processes, and controls in an efficient or timely manner or in a manner that does not negatively affect our results of operations.
Our failure to improve our systems, processes, and controls, or their failure to operate in the intended manner, may result in our inability
to manage the growth of our business and to forecast our revenue, expenses, and earnings accurately, or to prevent losses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As we continue to expand our
business and operate as a public company, we may find it difficult to maintain our corporate culture while managing our employee growth.
Any failure to manage our anticipated growth and related organizational changes in a manner that preserves our culture could negatively
impact future growth and achievement of our business objectives. Additionally, our productivity and the quality of our offerings may be
adversely affected if we do not integrate and train our new employees quickly and effectively. Failure to manage our growth to date and
any future growth effectively could result in increased costs, negatively affect customer satisfaction and adversely affect our business,
financial condition, results of operations and growth prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The markets for our offerings are new and
evolving and may develop more slowly or differently than we expect. Our future success depends on the growth and expansion of these markets
and our ability to adapt and respond effectively to evolving market conditions.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The markets in which we operate,
in particular the video storage market, are relatively new and rapidly evolving. Accordingly, it is difficult to predict customer adoption,
renewals and demand, the entry of new competitive products, the success of existing competitive products, and the future growth rate,
expansion, longevity, and size of the markets for our products and services. The expansion of these new and evolving markets depends on
a number of factors, including the cost, performance, and perceived value associated with the technologies that we and others in our industry
develop. If we or other companies in our industry experience security incidents, loss of customer data, or disruptions in delivery or
service, the market for these applications as a whole, including the demand for our offerings, may be negatively affected. If video products
and solutions such as ours do not continue to achieve market acceptance, or there is a reduction in demand caused by decreased customer
acceptance, technological challenges, weakening economic conditions, privacy, data protection and data security concerns, governmental
regulation, competing technologies and products, or decreases in information technology spending or otherwise, the market for our offerings
might not continue to develop or might develop more slowly than we expect, which could adversely affect our business, financial condition,
results of operations and growth prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 19; Value: 6 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our results of operations are likely to
fluctuate from quarter to quarter and year to year, which could adversely affect the trading price of our ordinary shares.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our results of operations,
including our revenue, cost of revenue, gross margin, operating expenses, cash flow, and deferred revenue, have fluctuated from quarter
to quarter and year to year in the past and may continue to vary significantly in the future so that period-to-period comparisons of our
results of operations may not be meaningful. Accordingly, our financial results in any one quarter should not be relied upon as indicative
of future performance. Our quarterly financial results may fluctuate as a result of a variety of factors, many of which are outside of
our control, may be difficult to predict, and may not fully reflect the underlying performance of our business. Factors that may cause
fluctuations in our quarterly financial results include:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="text-align: justify">the impact any resurgence of the COVID-19 pandemic, or any other pandemic,
epidemic, outbreak of infectious disease or other global health crises on our business, the businesses of our customers and partners and
general economic conditions&#894;</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="text-align: justify"><span style="font-size: 10pt">the timing and success of new products and solutions introduced by us or our competitors, or any other change in the competitive dynamics of our industry, including consolidation among competitors, customers or partners.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In particular, our cost of
revenue is generally higher in periods during which we acquire new customers.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The impact of one or more
of the foregoing or other factors may cause our results of operations to vary significantly. Such fluctuations make forecasting more difficult
and could cause us to fail to meet the expectations of investors and securities analysts, which could cause the trading price of our ordinary
shares to fall substantially, resulting in the loss of all or part of your investment, and subject us to costly lawsuits, including securities
class action suits.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The loss of one or more of our significant
customers, or any other reduction in the amount of revenue we derive from any such customer, would adversely affect our business, financial
condition, results of operations and growth prospects.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our future success is dependent
on our ability to establish and maintain successful relationships with a diverse set of customers. We currently derive a significant portion
of our revenue from a limited number of our customers. For the years ended December 31, 2022 and December 31, 2021, our top ten customers
in the aggregate accounted for approximately 61% and 62% of our revenues, respectively.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Until we can derive revenue,
if any, from the Beamr HW-Accelerated Content Adaptive Encoding solution, we expect to continue to derive a significant portion of our
revenue from a limited number of customers in the future and, in some cases, the portion of our revenue attributable to individual customers
may increase. The loss of one or more significant customers or a reduction in the amount of revenue we derive from any such customer could
significantly and adversely affect our business, financial condition and results of operations. Customers may choose not to renew their
contracts or may otherwise reduce the breadth of the offerings which they purchase for any number of reasons. We are also subject to the
risk that any such customer will experience financial difficulties that prevent them from making payments to us on a timely basis or at
all.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If we are not able to keep pace with technological
and competitive developments and develop or otherwise introduce new products and solutions and enhancements to our existing offerings,
our offerings may become less marketable, less competitive or obsolete, and our business, financial condition and results of operations
may be adversely affected.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The markets in which we compete
are characterized by rapid technological change, frequent introductions of new products, services, features and capabilities, and evolving
industry standards and regulatory requirements. Our ability to grow our customer base and increase our revenue will depend in significant
part on our ability to develop or otherwise introduce new products and solutions; develop or otherwise introduce new features, integrations,
capabilities and other enhancements to our existing offerings on a timely basis; and interoperate across an increasing range of devices,
operating systems and third-party applications. The success of any new products or solutions, or enhancements to our existing offerings,
will depend on a number of factors including, but not limited to, the timeliness and effectiveness of our research and product development
activities and go-to-market strategy, our ability to anticipate customer needs and achieve market acceptance, our ability to manage the
risks associated with new product releases, the effective management of development and other spending in connection with the product
development process, and the availability of other newly developed products and technologies by our competitors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, in connection
with our product development efforts, we may introduce significant changes to our existing products or solutions, or develop or otherwise
introduce new and unproven products or solutions, including technologies with which we have little or no prior development or operating
experience. These new products, solutions and updates may not perform as expected, may fail to engage our customer base or other end users
of our products, or may otherwise create a lag in adoption of such new products. New products may initially suffer from performance and
quality issues that may negatively impact our ability to market and sell such products to new and existing customers. We have in the past
experienced bugs, errors, or other defects or deficiencies in new products and product updates and delays in releasing new products, deployment
options, and product enhancements and may have similar experiences in the future. As a result, some of our customers may either defer
purchasing our offerings until the next upgrade is released or switch to a competitor if we are not able to keep up with technological
developments. To keep pace with technological and competitive developments we have in the past invested, and may in the future invest,
in the acquisition of complementary businesses, technologies, services, products, and other assets that expand our offerings. We may make
these investments without being certain that they will result in products or enhancements that will be accepted by existing or prospective
customers or that will achieve market acceptance. The short- and long-term impact of any major change to our offerings, or the introduction
of new products or solutions, is particularly difficult to predict. If new or enhanced offerings fail to engage our customer base or other
end users of our products, or do not perform as expected, we may fail to generate sufficient revenue, operating margin, or other value
to justify our investments in such products, any of which may adversely affect our reputation and negatively affect our business in the
short-term, long-term, or both. If we are unable to successfully enhance our existing offerings to meet evolving customer requirements,
increase adoption and use cases of our offerings, develop or otherwise introduce new products and solutions and quickly resolve security
vulnerabilities or other errors or defects, or if our efforts in any of these areas are more expensive than we expect, our business, financial
condition and results of operations would be adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If we are not able to maintain and expand
our relationships with third-party technology partners to integrate our offerings with their products and solutions, our business, financial
condition and results of operations may be adversely affected.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our success depends in part
on our ability to integrate our products and services with a variety of network, hardware and software platforms, and we need to continuously
modify and enhance our offerings to adapt to changes in hardware, software, networking, browser and database technologies. Third-party
products and services are constantly evolving, and we may not be able to modify our offerings to ensure their compatibility with those
of other third parties following development changes. Any losses or shifts in the market position of the providers of these third-party
products and services could require us to identify and develop integrations with new third-party technologies. Such changes could consume
substantial resources and may not be effective. Any expansion into new geographies may also require us to integrate our offerings with
new third-party technologies, products and services and invest in developing new relationships with these providers. If we are unable
to respond to changes in a cost-effective manner, our offerings may become less marketable, less competitive, or obsolete, and our business,
financial condition and results of operations may be negatively impacted.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, a significant
percentage of our customers may choose to integrate our products and services with certain capabilities of third-party hardware and software
providers using APIs. The functionality and popularity of our products and services may depend, in part, on their ability to integrate
with a wide variety of third-party applications and software. Third-party providers of applications may change the features of their applications
and software, restrict our access to their applications and software or alter the terms governing use of their applications and access
to those applications and software in an adverse manner. Such changes could functionally limit or eliminate our ability to use these third-party
applications and software in conjunction with our offerings, which could negatively impact customer demand, our competitive position and
adversely affect our business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We may not be able to compete successfully
against current and future competitors, some of whom have greater financial, technical, and other resources than we do. If we do not compete
successfully, our business, financial condition and results of operations could be harmed.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">While there are several companies
offering video compression solutions such as MainConcept, Ateme, Ittiam, Visionular and open source (x264/x265), we believe there is currently
no direct competitor with our content-adaptive video compression solutions. There are companies that offer software solutions for video
optimization such as Harmonic and Elemental, and other companies offering storage optimization (but not involving video technologies)
such as EMC and Seagate. In addition, for our quality measure, some of our current competitors include SSIMWave (SSIMPlus), Apple (AVQT),
Google (YouVQ) and open source (VMAF). We operate in a highly specialized area that is evolving very quickly with rapid developments.
In the future, competitors could develop products or solutions that compete with our video compression solutions. For example, the public
cloud platforms such as AWS, Azure, and GCP could in the future develop their own video optimization hardware accelerated solutions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">We believe the following
competitive attributes are necessary for our solutions to successfully compete in the video compression market:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: -0.25in; background-color: white">&#160;</p><div>

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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="width: 0.5in">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that we compare
favorably on the basis of the factors listed above. However, many of our competitors have substantially greater financial, technical,
and marketing resources; relationships with large vendor partners; larger global presence; larger customer bases; longer operating histories;
greater brand recognition; and more established relationships in the industry than we do. Furthermore, new entrants not currently considered
to be competitors may enter the market through <i>acquisitions, partnerships, or strategic relationships</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Additionally, we compete with
home-grown, start-up, and open source technologies across the categories described above. With the introduction of new technologies and
the entrance of new market participants, competition has intensified, and we expect it to continue to intensify in the future. Established
companies are also developing their own video encoding and optimization platforms, products and solutions within their own core product
lines, and may continue to do so in the future. Established companies may also acquire or establish product integration, distribution
or other cooperative relationships with our current competitors. New competitors or alliances among competitors may emerge from time to
time and rapidly acquire significant market share due to various factors such as their greater brand name recognition, larger existing
user or customer base, consumer preferences for their offerings, a larger or more effective sales organization and greater financial,
technical, marketing and other resources and experience. Furthermore, with the recent increase in large merger and acquisition transactions
in the technology industry, particularly transactions involving cloud-based technologies, there is a greater likelihood that we will compete
with other larger technology companies in the future. Companies resulting from these potential consolidations may create more compelling
product offerings and be able to offer more attractive pricing options, making it more difficult for us to compete effectively.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Many of our competitors have,
and some of our potential competitors may have, greater financial, technical, and other resources, longer operating histories, greater
brand recognition, larger sales forces and marketing budgets, broader distribution networks, more diverse product and services offerings,
larger and more mature intellectual property portfolios, more established relationships in the industry and with customers, lower cost
structures and greater customer experience resources. These competitors may be able to respond more quickly and effectively than we can
to new or changing opportunities, technologies, standards and customer requirements. They may be able to leverage these resources to gain
business in a manner that discourages customers from purchasing our offerings, including through selling at zero or negative margins,
product bundling, forced product migrations, auto-installation of applications, or closed technology platforms. Potential customers may
also prefer to purchase from companies with which they have an existing relationship rather than a new supplier, regardless of product
performance or features. Furthermore, we expect that our industry will continue to attract new companies, including smaller emerging companies,
which could introduce new offerings. We may also expand into new markets and encounter additional competitors in such markets. These competitive
pressures in the markets in which we operate, or our failure to compete effectively, may result in price reductions, fewer customers,
reduced revenue, gross profit and gross margins, increased net losses and loss of market share. Any failure to effectively address these
factors could significantly and adversely affect our business, financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If we are unable to increase sales of our
products and services to new customers, expand the offerings to which our existing customers subscribe, or expand the value of our existing
sales, our future revenue and results of operations will be adversely affected.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our success depends on our
ability to sell our products and services to new customers and to expand within our existing customer base by selling products and services
for additional offerings to our existing customers and expanding the value of existing customers&#8217; subscriptions, and to do so in
a cost-effective manner. Our ability to sell new products and services and expand the value of existing sales depends on a number of factors,
including the prices of our offerings and their functionality, the prices of products offered by our competitors, and the budgets of our
customers. We also plan to offer an initial trial period for certain of our offerings. To the extent prospective customers utilize this
trial period without becoming, or lead others not to become, paying customers, our expenses may increase as a result of associated hosting
costs, and our ability to grow our business may be adversely affected. There is no guarantee that such events will translate into new
customers.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, a significant
aspect of our sales and marketing focus is to expand deployments within existing customers. The rate at which our customers purchase additional
offerings and expand the value of their existing offerings depends on a number of factors, including, among other things, customers&#8217;
level of satisfaction with our offerings and customer support, the nature and size of the deployments, the desire to address additional
use cases, and the availability of, and customers&#8217; awareness of and perceived need for, additional features, integrations, capabilities
or other enhancements, as well as general economic conditions. If our customers do not recognize the potential of our offerings, our business
would be materially and adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->14<!-- Field: /Sequence --></span></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If our existing customers do not renew their
order of products or subscription to services, or if they renew on terms that are less economically beneficial to us, it could have an
adverse effect on our business, financial condition and results of operations.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We expect to derive a significant
portion of our revenue from renewals of subscriptions. Customers have no contractual obligation to renew their subscriptions after the
completion of their subscription term. Subscriptions for most of our offerings are offered on either an annual or multi-year basis. Our
subscriptions may also generally include committed usage amounts. As a result, we cannot provide assurance that customers will renew their
subscriptions for a similar contract period or with the same or greater product depth, number of users, functionality or other terms that
are equally or more economically beneficial to us, if they renew at all.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our customers&#8217; renewals
may decline or fluctuate as a result of a number of factors, including their satisfaction with our products and our customer support,
the frequency and severity of product outages, our product uptime or latency, the pricing of our offering in relation to competing offerings,
additional new features, integrations, capabilities or other enhancements that we offer, updates to our products as a result of updates
by technology partners, and customers or users no longer having a need for our offerings . Renewal rates may also be impacted by general
economic conditions or other factors that reduce customers&#8217; spending levels. If our customers do not renew their subscriptions or
renew on terms less economically favorable to us, our revenue may decline or grow less quickly than anticipated, which would adversely
affect our business, financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If we fail to meet contractual commitments
under our customer agreements, we could be subject to contractual penalties, litigation and other liabilities, and could experience an
increase in contract terminations or decrease in contract renewals in future periods, which would lower our revenue, increase our costs
and otherwise adversely affect our business, financial condition and results of operations.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our customer agreements may
contain service-level commitments. If we are unable to meet the stated service-level commitments, including failure to meet the uptime
and response time requirements under our customer agreements, we may be contractually obligated to provide these customers with service
credits, or customers could elect to terminate and receive refunds for prepaid amounts related to unused subscriptions, either of which
could significantly affect our revenue in the periods in which the failure occurs and the credits are applied or refunds paid out. In
addition, customer terminations or any reduction in renewals resulting from service-level failures could significantly affect both our
current and future revenue. We cannot guarantee that we will not experience a material decrease in customer renewals in future periods
as additional customers cycle through their subscription terms.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Furthermore, any service-level
failures or failure to meet committed delivery schedules and milestones could also create negative publicity and damage our reputation,
which may discourage prospective customers from adopting our offerings. In addition, if we modify the terms of our contractual commitments
in future customer agreements in a manner customers perceive to be unfavorable, demand for our offerings could be reduced. The occurrence
of these or any of the events discussed above could have a significant adverse effect on our business, financial condition, results of
operations and cash flow, as well as our ability to grow our business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We rely on third parties, including third
parties outside the United States, for some of our software development, quality assurance, operations, and customer support.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We currently depend on various
third parties for some of our software development efforts, quality assurance, operations, and customer support services. Specifically,
through our subsidiary Beamr Imaging RU we undertake some of our software development and design, quality assurance, and operations activities
using employees and consultants located in Russia. Our dependence on third-parties creates a number of risks, in particular, the risk
that we may not maintain development quality, control, or effective management with respect to these business operations. In addition,
the Russian invasion of Ukraine, poor relations between the United States and Russia, and sanctions by the United States and the European
Union, or the EU, against Russia could have an adverse impact on our third-party software development in Russia. See also &#8220;Risk
Factors&#8212;Risks Related to Our Operations in Russia.&#8221; We anticipate that we will continue to depend on these and other third-party
relationships in order to grow our business for the foreseeable future. If we are unsuccessful in maintaining existing and, if needed,
establishing new relationships with third parties, our ability to efficiently operate existing services or develop new services and provide
adequate customer support could be impaired, and, as a result, our competitive position or our results of operations could suffer.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->15<!-- Field: /Sequence --></span></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We depend on our management team and other
key employees, and the loss of one or more of these employees or an inability to attract and retain highly skilled employees could adversely
affect our business.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our future success depends,
in part, on our ability to continue to attract and retain highly skilled personnel. The loss of the services of any of our key personnel,
the inability to attract or retain qualified personnel, or delays in hiring required personnel, particularly in engineering and sales,
may seriously and adversely affect our business, financial condition and results of operations. Although we have entered into employment
or consulting agreements with our personnel, their employment is generally for no specific duration. We are also substantially dependent
on the continued service of our existing IT personnel because of the complexity of our products.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our future performance also
depends on the continued services and continuing contributions of our senior management team, which includes Sharon Carmel, our founder
and Chief Executive Officer, to execute on our business plan and to identify and pursue new opportunities and product innovations. The
loss of services of our senior management team, particularly our Chief Executive Officer, could significantly delay or prevent the achievement
of our development and strategic objectives, which could adversely affect our business, financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Additionally, the industry
in which we operate is generally characterized by significant competition for skilled personnel, as well as high employee attrition. There
is currently a high demand for experienced software industry personnel, particularly for engineering, research and development, sales
and support positions, and we may not be successful in attracting, integrating and retaining qualified personnel to fulfill our current
and future needs. This intense competition has resulted in increasing wages, especially in Israel, where our headquarters is located and
most of our research and development positions are located, and in California, where our sales offices are located, which may make it
more difficult for us to attract and retain qualified personnel, as many of the companies against which we compete for personnel have
greater financial resources than we do. These competitors may also actively seek to hire our existing personnel away from us, even if
such employee has entered into a non-compete agreement. We may be unable to enforce these agreements under the laws of the jurisdictions
in which our employees work. For example, Israeli labor courts have required employers seeking to enforce non-compete undertakings of
a former employee to demonstrate that the competitive activities of the former employee will harm one of a limited number of material
interests of the employer that have been recognized by the courts, such as the protection of a company&#8217;s confidential information
or other intellectual property, taking into account, among other things, the employee&#8217;s tenure, position, and the degree to which
the non-compete undertaking limits the employee&#8217;s freedom of occupation. We may not be able to make such a demonstration. Also,
to the extent we hire personnel from competitors, we may be subject to allegations that they have been improperly solicited or that they
have divulged their former employers&#8217; proprietary or other confidential information or incorporated such information into our products,
which could include claims that such former employers therefore own or otherwise have rights to their inventions or other work product
developed while employed by us.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, in making employment
decisions, particularly in the internet and high-technology industries, job candidates often consider the value of the equity they are
to receive in connection with their employment. Employees may be more likely to leave us if the shares they own or the shares underlying
their equity incentive awards have significantly appreciated or significantly reduced in value. Many of our employees may receive significant
proceeds from sales of our equity in the public markets, which may reduce their motivation to continue to work for us and could lead to
employee attrition. If we fail to attract new personnel, or fail to retain and motivate our current personnel, our business, financial
condition, results of operations and growth prospects could be adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If we are not able to maintain and enhance
awareness of our brand, especially among companies who store large amounts of video files, our business, financial condition and results
of operations may be adversely affected.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that developing
and maintaining widespread awareness of our brand, especially with companies who store large amounts of video files, is critical to achieving
widespread acceptance of our products and services and attracting new users and customers. Brand promotion activities may not generate
user or customer awareness or increase revenue, and even if they do, any increase in revenue may not offset the expenses we incur in building
our brand. If we fail to successfully promote and maintain our brand, we may fail to attract and retain users and customers necessary
to realize a sufficient return on our brand-building efforts, and may fail to achieve the widespread brand awareness that is critical
for broad customer adoption of our offerings.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our corporate culture has contributed to
our success, and if we cannot maintain this culture as we grow, we could lose the innovation, creativity, and entrepreneurial spirit we
have worked to foster, which could adversely affect our business.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that our corporate
culture, which is based on openness, flexibility, and collaboration, has been and will continue to be a key contributor to our success.
We expect to hire aggressively as we expand. If we do not continue to maintain our corporate culture as we grow, we may be unable to foster
the innovation, creativity, and entrepreneurial spirit we believe we need to support our growth. The growth and expansion of our business
and our transition from a private company to a public company may result in changes to our corporate culture, which could adversely affect
our business, including our ability to recruit and retain qualified personnel.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our failure to offer high quality customer
support would have an adverse effect on our business, reputation and results of operations.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our customers depend on our
customer success managers to resolve issues and realize the full benefits relating to our products and services. If we do not succeed
in helping our customers quickly resolve post-deployment issues or provide effective ongoing support and education, our ability to renew
contracts with, or establish contracts for additional offerings to, existing customers, or expand the value of existing customers&#8217;
contracts, would be adversely affected and our reputation with potential customers could be damaged. In addition, most of our existing
customers are large enterprises with complex information technology environments and, as a result, require significant levels of support.
If we fail to meet the requirements of these customers, it may be more difficult to grow sales or maintain our relationships with them.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Additionally, while growing
our need for customer success managers is a key component of our growth strategy, it can take several months to recruit, hire and train
qualified engineering-level customer support employees, and we may not be able to hire such resources fast enough to keep up with demand
during the relevant time in the future. To the extent that we are unsuccessful in hiring, training and retaining adequate support resources,
our ability to provide adequate and timely support to our customers, and our customers&#8217; satisfaction with our products and services,
will be adversely affected. Any failure by us to provide and maintain high-quality customer support services would have an adverse effect
on our business, reputation and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The sales prices of our offerings may change,
which may reduce our revenue and gross profit and adversely affect our financial results.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The sales prices for our offerings
may be subject to change for a variety of reasons, including competitive pricing pressures, discounts, anticipation of the introduction
of new products, promotional programs, general economic conditions, or our marketing, user acquisition and technology costs and, as a
result, we anticipate that we will need to change our pricing model from time to time. In the past, we have sometimes adjusted our prices
for individual customers in certain situations, and expect to continue to do so in the future. Moreover, demand for our offerings is price-sensitive.
Competition continues to increase in the market segments in which we operate, and we expect competition to further increase in the future,
thereby leading to increased pricing pressures. Larger competitors with more diverse offerings may reduce the price of offerings that
compete with ours or may bundle them with other offerings and provide for free. Similarly, certain competitors may use marketing strategies
that enable them to acquire customers more rapidly or at a lower cost than us, or both, and we may be unable to attract new customers
or grow and retain our customer base based on our historical pricing. Additionally, currency fluctuations in certain countries and regions
may negatively impact actual prices that customers and resellers are willing to pay in those countries and regions. As we develop and
introduce new offerings, as well as features, integrations, capabilities and other enhancements, we may need to, or choose to, revise
our pricing. There can be no assurance that we will not be forced to engage in price-cutting initiatives or to increase our marketing
and other expenses to attract customers in response to competitive or other pressures. Any decrease in the sales prices for our products,
without a corresponding decrease in costs, increase in volume or increase in revenue from our other offerings, would adversely affect
our revenue and gross profit. We cannot assure you that we will be able to maintain our prices and gross profits at levels that will allow
us to achieve and maintain profitability.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our international operations and expansion
expose us to risk.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our products and services
address the needs of customers and end users around the world, and we see continued international expansion as a significant opportunity.
For the years ended December 31, 2022 and 2021, we generated approximately 25% and 21% of our revenue, respectively, from customers outside
the United States. Our customers, end users, employees and partners are located in a number of different jurisdictions worldwide, and
we expect our operations will become increasingly global as our business continues to grow. Our current international operations involve,
and future initiatives will also involve, a variety of risks, including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="text-align: justify">risks resulting from any resurgence of the COVID-19 pandemic, or any
other pandemic, epidemic or outbreak of infectious disease, including uncertainty regarding what measures the U.S. or foreign governments
will take in response&#894;</td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="text-align: justify"><span style="font-size: 10pt">limited or unfavorable&#8212;including greater difficulty in enforcing&#8212;intellectual property protection&#894; and</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-size: 10pt">exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S. Foreign Corrupt Practices Act of 1977, as amended, and similar applicable laws and regulations in other jurisdictions.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we are unable to address
these difficulties and challenges or other problems encountered in connection with our international operations and expansion, we might
incur unanticipated liabilities or we might otherwise suffer harm to our business generally.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Currency exchange rate fluctuations and
inflation affect our results of operations, as reported in our financial statements.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We report our financial results
in U.S. dollars. We collect our revenue primarily in U.S. dollars and NIS. A portion of the cost of revenue, research and development,
selling and marketing and general and administrative expenses of our Israeli and Russian operations are incurred in NIS or in Russian
Ruble, or RUB. As a result, we are exposed to exchange rate risks that may materially and adversely affect our financial results. If the
NIS or RUB appreciates against the U.S. dollar, or if the value of the NIS or RUB decline against the U.S. dollar, at a time when the
rate of inflation in the cost of Israeli and Russian goods and services exceed the rate of decline in the relative value of the NIS and
RUB, then the U.S. dollar-denominated cost of our operations in Israel and Russia would increase and our results of operations could be
materially and adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Inflation in Israel compounds
the adverse impact of a devaluation of the NIS against the U.S. dollar by further increasing the amount of our Israeli expenses. Israeli
inflation may also (in the future) outweigh the positive effect of any appreciation of the U.S. dollar relative to the NIS, if, and to
the extent that, it outpaces such appreciation or precedes such appreciation. The Israeli rate of inflation did not have a material adverse
effect on our financial condition during 2021 or 2022. Given our general lack of currency hedging arrangements to protect us from fluctuations
in the exchange rates of the NIS or the RUB in relation to the U.S. dollar (and/or from inflation of such non-U.S. currencies), we may
be exposed to material adverse effects from such movements. We cannot predict any future trends in the rate of inflation in Israel or
in Russia or the rate of devaluation (if any) of the U.S. dollar against the NIS or the RUB.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In particular, due to the
recent Russian invasion of Ukraine, there has been significant currency rate fluctuations between the U.S. dollar and RUB. We cannot predict
any future exchange-rate fluctuations and future trends in the rate of inflation in Israel and Russia and our ability to hedge our exposure
to currency exchange rate fluctuations may be limited.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, we use products
and services and offer our products and services through cloud services, which may publish different prices in different locations. These
differences in prices and locations may impact our costs and margins, and value we bring to our customers.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><b><i>Our business, operating
results and growth rates may be adversely affected by current or future unfavorable economic and market conditions and adverse developments
with respect to financial institutions and associated liquidity risk.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Our
business depends on the economic health of the global economies. If the conditions in the global economies remain uncertain or continue
to be volatile, or if they deteriorate, including as a result of the impact of military conflict, such as the war between Russia and Ukraine,
terrorism or other geopolitical events, our business, operating results and financial condition may be materially adversely affected.
Economic weakness, inflation and increases in interest rates, limited availability of credit, liquidity shortages and constrained capital
spending have at times in the past resulted, and may in the future result, in challenging and delayed sales cycles, slower adoption of
new technologies and increased price competition, and could negatively affect our ability to forecast future periods, which could result
in an inability to satisfy demand for our products and a loss of market share.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">In
addition, increases in inflation raise our costs for commodities, labor, materials and services and other costs required to grow and operate
our business, and failure to secure these on reasonable terms may adversely impact our financial condition. Additionally, increases in
inflation, along with the uncertainties surrounding COVID-19, geopolitical developments and global supply chain disruptions, have caused,
and may in the future cause, global economic uncertainty and uncertainty about the interest rate environment, which may make it more difficult,
costly or dilutive for us to secure additional financing. A failure to adequately respond to these risks could have a material adverse
impact on our financial condition, results of operations or cash flows.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">More
recently, the closures of SVB and Signature Bank and their placement into receivership with the FDIC created bank-specific and broader
financial institution liquidity risk and concerns. Although the Department of the Treasury, the Federal Reserve and the FDIC jointly
released a statement that depositors at SVB and Signature Bank would have access to their funds, even those in excess of the standard
FDIC insurance limits, under a systemic risk exception, future adverse developments with respect to specific financial institutions or
the broader financial services industry may lead to market-wide liquidity shortages, impair the ability of companies to access near-term
working capital needs, and create additional market and economic uncertainty. There can be no assurance that future credit and financial
market instability and a deterioration in confidence in economic conditions will not occur. Our general business strategy may be adversely
affected by any such economic downturn, liquidity shortages, volatile business environment or continued unpredictable and unstable market
conditions. If the current equity and credit markets deteriorate, or if adverse developments are experienced by financial institutions,
it may cause short-term liquidity risk and also make any necessary debt or equity financing more difficult, more costly, more onerous
with respect to financial and operating covenants and more dilutive. Failure to secure any necessary financing in a timely manner and
on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price and could require
us to alter our operating plans. In addition, there is a risk that one or more of our service providers, financial institutions, manufacturers,
suppliers and other partners may be adversely affected by the foregoing risks, which could directly affect our ability to attain our
operating goals on schedule and on budget.</p><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><b><i>Increasing scrutiny
of, and evolving expectations for, sustainability and environmental, social, and governance, or ESG, initiatives could increase our costs
or otherwise adversely impact our business.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Public
companies are facing increasing scrutiny related to&#160;ESG&#160;practices and disclosures from certain investors, capital providers,
shareholder advocacy groups, other market participants and other stakeholder groups. With this increased focus, public reporting regarding&#160;ESG&#160;practices
is becoming more broadly expected. Such increased scrutiny may result in increased costs, enhanced compliance or disclosure obligations,
or other adverse impacts on our business, financial condition or results of operations. If our&#160;ESG&#160;practices and reporting do
not meet investor or other stakeholder expectations, which continue to evolve, we may be subject to investor or regulator engagement regarding
such matters. In addition, new sustainability rules and regulations have been adopted and may continue to be introduced in various states
and other jurisdictions. For example, the SEC has published proposed rules that would require companies to provide significantly expanded
climate-related disclosures in their periodic reporting, which may require us to incur significant additional costs to comply and impose
increased oversight obligations on our management and board of directors. Our failure to comply with any applicable rules or regulations
could lead to penalties and adversely impact our reputation, access to capital and employee retention. Such&#160;ESG&#160;matters may
also impact our third-party contract manufacturers and other third parties on which we rely, which may augment or cause additional impacts
on our business, financial condition, or results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Any resurgence of the COVID-19 pandemic
could adversely affect our business, financial condition and results of operations.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In December 2019, an
outbreak of a novel coronavirus disease, or COVID-19, was first identified and began to spread across the globe and, in March 2020,
the World Health Organization declared it a pandemic. This contagious disease spread across the globe and impacted economic activity
and financial markets worldwide, including countries in which our end users and customers are located, as well as the United States
and Israel where we have business operations. As a result of the COVID-19 pandemic, government authorities around the world ordered
schools and businesses to close, imposed restrictions on non-essential activities and required people to remain at home while
imposing significant restrictions on traveling and social gatherings.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">While COVID-19 has not had
a material adverse impact on our operations through the date of this Annual Report, our ability to attract, serve, retain or upsell customers
is inherently uncertain and depends on the duration, severity and potential resurgence of the pandemic and its impact on end users, customers
and the macroeconomic environment as a whole. Prior to the COVID-19 pandemic, our employees traveled frequently to establish and maintain
relationships with one another, as well as our customers, partners, and investors. Although we continue to monitor the situation, any
renewed limitations on travel and doing business in person may negatively affect our customer success efforts, sales and marketing efforts,
challenge our ability to enter into customer contracts in a timely manner, slow down our recruiting efforts, or create operational or
other challenges, any of which could adversely affect our business, financial condition and results of operations.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Furthermore, COVID-19 has
disrupted and may continue to disrupt the operations of our customers and technology partners for an indefinite period of time, including
as a result of travel restrictions and/or business shutdowns, all of which could negatively impact our business, financial condition and
results of operations. More generally, the COVID-19 pandemic has adversely affected economies and financial markets globally, leading
to an economic downturn, which could decrease technology spending and adversely affect demand for our offerings and harm our business,
financial condition and results of operations. Existing and potential customers may choose to reduce or delay technology investments in
response to the COVID-19 pandemic, or attempt to renegotiate contracts and obtain concessions, which may materially and negatively impact
our operating results, financial condition and prospects. For example, as a result of COVID-19, we have experienced and expect to continue
to experience an increase in the average length of sales cycles to onboard new customers, delays in new projects, and requests by some
customers for extension of payment obligations, all of which could materially and adversely impact our business, financial condition and
results of operations in future periods. The COVID-19 pandemic has also resulted in, and may continue to result in, significant disruption
of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity. It is
also possible that continued widespread remote work arrangements may have a negative impact on our operations, the execution of our business
plans, the productivity and availability of key personnel and other employees necessary to conduct our business, and on third-party service
providers who perform critical services for us, or otherwise cause operational failures due to changes in our normal business practices
necessitated by the pandemic and related governmental actions. If a natural disaster, power outage, connectivity issue, or other event
occurred that impacted our employees&#8217; ability to work remotely, it may be difficult or, in certain cases, impossible, for us to
continue our business for a substantial period of time. The increase in remote working may also result in privacy, data protection, data
security, and fraud risks, and our understanding of applicable legal and regulatory requirements, as well as the latest guidance from
regulatory authorities in connection with the COVID-19 pandemic, may be subject to legal or regulatory challenge, particularly as regulatory
guidance evolves in response to future developments.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-indent: 0.5in; text-align: justify; margin: 0pt 0">It is not possible at this time to estimate the long-term impact that
COVID-19 could have on our business, financial condition and results of operations as the impact will depend on future developments, which
are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the pandemic, its severity, the
actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume.
Even after the COVID-19 pandemic has subsided, we may experience materially adverse impacts to our business as a result of its global
economic impact, including any recession that has occurred or may occur in the future.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Risks Related to Information Technology, Intellectual
Property and Data Security and Privacy</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>A real or perceived bug, defect, security
vulnerability, error, or other performance failure involving our products and services could cause us to lose revenue, damage our reputation,
and expose us to liability.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our products and services
are inherently complex and, despite extensive testing and quality control, have in the past and may in the future contain bugs, defects,
security vulnerabilities, errors, or other performance failures, especially when first introduced, or otherwise not perform as intended.
Any such bug, defect, security vulnerability, error, or other performance failure could cause damage to our reputation, loss of customers
or revenue, order cancellations, service terminations, and lack of market acceptance of our offerings. As the use of our offerings among
new and existing customers expands, particularly to more sensitive, secure, or mission critical uses, we may be subject to increased scrutiny,
potential reputational risk, or potential liability should our offerings fail to perform as contemplated in such deployments. We have
in the past and may in the future need to issue corrective releases of our software to fix these defects, errors or performance failures,
which could require us to allocate significant research and development and customer support resources to address these problems. Despite
our efforts, such corrections may take longer to develop and release than we or our customers anticipate and expect.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any limitation of liability
provision contained in an agreement with a customer, user, third-party vendor, service provider, or partner may not be enforceable, adequate
or effective as a result of existing or future applicable law or judicial decisions, and may not function to limit our liability arising
from regulatory enforcement or other specific circumstances. The sale and support of our offerings entail the risk of liability claims,
which could be substantial in light of the use of our offerings in enterprise-wide environments. In addition, our insurance against any
such liability may not be adequate to cover a potential claim, and may be subject to exclusions, or subject us to the risk that the insurer
will deny coverage as to any future claim or exclude from our coverage such claims in policy renewals, increase our fees or deductibles
or impose co-insurance requirements. Any such bugs, defects, security vulnerabilities, errors, or other performance failures in our products
and services, including as a result of denial of claims by our insurer or the successful assertion of claims by others against us that
exceed available insurance coverage, or the occurrence of changes in our insurance policies, including increases or the imposition of
large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition,
results of operations and reputation.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If we or our third-party service providers
experience a security breach, data loss or other compromise, including if unauthorized parties obtain access to our customers&#8217; data,
our reputation may be harmed, demand for our products and services may be reduced, and we may incur significant liabilities.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our business products and
services involve the collection, storage, processing, transmission and other use of data, including certain confidential, sensitive, and
personal information. Any security breach, data loss, or other compromise, including those resulting from a cybersecurity attack, phishing
attack, or any unauthorized access, unauthorized usage, virus or similar breach or disruption could result in the loss or destruction
of or unauthorized access to, or use, alteration, disclosure, or acquisition of, data, damage to our reputation, litigation, regulatory
investigations, or other liabilities. These attacks may come from individual hackers, criminal groups, and state-sponsored organizations.
If our security measures are breached as a result of third-party action, employee error or negligence, a defect or bug in our offerings
or those of our third-party service providers, malfeasance or otherwise and, as a result, someone obtains unauthorized access to any data,
including our confidential, sensitive, or personal information or the confidential, sensitive, or personal information of our customers,
or other persons, or any of these types of information is lost, destroyed, or used, altered, disclosed, or acquired without authorization,
our reputation may be damaged, our business may suffer, and we could incur significant liability, including under applicable data privacy
and security laws and regulations. Even the perception of inadequate security may damage our reputation and negatively impact our ability
to win new customers and retain and receive timely payments from existing customers. Further, we could be required to expend significant
capital and other resources to protect against and address any data security incident or breach, which may not be covered or fully covered
by our insurance and which may involve payments for investigations, forensic analyses, regulatory compliance, breach notification, legal
advice, public relations advice, system repair or replacement, or other services. In addition, we do not maintain cybersecurity insurance
and therefore have no insurance coverage in the event of any breach or disruption of our or our customers&#8217; or service providers&#8217;
systems, including any unauthorized access or loss of any personal data that we may collect, store or otherwise process. To the extent
that any disruption or security breach were to result in a loss of, or damage to, our data or systems, or inappropriate disclosure of
confidential or proprietary information, we could incur liability, our competitive position could be harmed and our business, operations,
and financial results could be adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, part of the process
of our solution is replacing our customer&#8217;s native image and video files with optimized, compressed files. This process and replacement
of files can result in data loss. Additionally, we do not directly control content that our customers store or use in our products. If
our customers use our products for the transmission or storage of personal, confidential, sensitive, or other information about individuals
and our security measures are or are believed to have been breached as a result of third-party action, employee error, malfeasance or
otherwise, our reputation could be damaged, our business may suffer, and we could incur significant liability.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We engage third-party vendors
and service providers to store and otherwise process some of our and our customers&#8217; data, including personal, confidential, sensitive,
and other information about individuals. Our vendors and service providers may also be the targets of cyberattacks, malicious software,
phishing schemes, and fraud. Our ability to monitor our vendors and service providers&#8217; data security is limited, and, in any event,
third parties may be able to circumvent those security measures, resulting in the unauthorized access to, misuse, acquisition, disclosure,
loss, alteration, or destruction of our and our customers&#8217; data, including confidential, sensitive, and other information about
individuals.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Techniques used to sabotage
or obtain unauthorized access to systems or networks are constantly evolving and, in some instances, are not identified until after they
have been launched against a target. We and our service providers may be unable to anticipate these techniques, react in a timely manner,
or implement adequate preventative and mitigating measures. If we are unable to efficiently and effectively maintain and upgrade our system
safeguards, we may incur unexpected costs and certain of our systems may become more vulnerable to unauthorized access or disruption.
Any of the foregoing could have a material adverse effect on our business, including our financial condition, results of operations and
reputation.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Insufficient investment in, or interruptions
or performance problems associated with, our technology and infrastructure, including in connection with our Beamr HW-Accelerated Content
Adaptive Encoding solution is to be deployed on a public cloud infrastructure, and our reliance on technologies from third parties, may
adversely affect our business operations and financial results.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Customers of our offerings
will need to be able to access our platform at any time, without interruption or degradation of performance. Our Beamr HW-Accelerated
Content Adaptive Encoding solution is to be deployed on a public cloud infrastructure with the goal of providing improved stability, reliability,
scalability and elasticity for our offerings. We may discover deficiencies in our design, implementation or maintenance of our Beamr HW-Accelerated
Content Adaptive Encoding solution that could adversely affect our business, financial condition and results of operations. Furthermore,
we cannot yet know the ultimate impact of this or any similar future event on our customer relationships.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, third-party cloud
providers run their own platforms that we access, and we are, therefore, vulnerable to their service interruptions and any changes in
their product offerings. Any limitation on the capacity of our third-party hosting services could impede our ability to onboard new customers
or expand the usage of our existing customers, which could adversely affect our business, financial condition and results of operations.
In addition, any incident affecting our third-party hosting services&#8217; infrastructure that may be caused by cyber-attacks, computer
viruses, malware, systems failures or other technical malfunctions, natural disasters, fire, flood, severe storm, earthquake, power loss,
telecommunications failures, terrorist or other attacks, protests or riots, and other similar events beyond our control could negatively
affect our cloud-based offerings. It is also possible that our customers and regulators would seek to hold us accountable for any breach
of security affecting a third-party cloud provider&#8217;s infrastructure and we may incur significant liability in investigating such
an incident and responding to any claims, investigations, or proceedings made or initiated by those customers, regulators, and other third
parties. We may not be able to recover a material portion of such liabilities from any of our third-party cloud providers. It may also
become increasingly difficult to maintain and improve our performance and cost, especially during peak usage times, as our processing
cost might be higher during peak hours. Moreover, our insurance may not be adequate to cover such liability and may be subject to exclusions.
Any of the above circumstances or events may adversely affect our business, financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the event that our service
agreements with our third-party hosting services are terminated, or there is a lapse of service, elimination of services or features that
we utilize, interruption of internet service provider connectivity or damage to our providers&#8217; facilities, we could experience interruptions
in access to our platform as well as significant delays and additional expense in arranging or creating new facilities and services and/or
re-architecting our cloud-based offerings for deployment on a different cloud infrastructure service provider, which could adversely affect
our business, financial condition and results of operations. Upon the termination or expiration of such service agreements, we cannot
guarantee that adequate third-party hosting services will be available to us on commercially acceptable terms or within adequate timelines
from the same or different hosting services providers or at all.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We may also rely on cloud
technologies from third parties in order to operate critical functions of our business, including financial management services, relationship
management services, and lead generation management services. If these services become unavailable due to extended outages or interruptions
or because they are no longer available on commercially reasonable terms or prices, our expenses could increase, our ability to manage
our finances could be interrupted, our processes for managing sales of our products and supporting our customers could be impaired, and
our ability to generate and manage sales leads could be weakened until equivalent services are identified, obtained, and implemented.
Even if such services are available, we may not be able to identify, obtain and implement such services in time to avoid disruption to
our business, and such services may only be available on a more costly basis or otherwise less favorable terms. Any of the foregoing could
have a material adverse effect on our business, including our financial condition, results of operations and reputation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Failure to protect our proprietary technology,
or to obtain, maintain, protect and enforce sufficiently broad intellectual property rights therein, could substantially harm our business,
financial condition and results of operations.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our success depends to a significant
degree on our ability to protect our proprietary technology, methodologies, know-how, and brand. We rely on a combination of trademarks,
copyrights, patents, trade secret laws, contractual restrictions, and other intellectual property laws and confidentiality procedures
to establish and protect our proprietary rights. However, our competitors or other third parties could reverse engineering our code and
use it to create software and service offerings that compete with ours. While software can, in some cases, be protected under copyright
law, in order to bring a copyright infringement lawsuit in the United States, the copyright must first be registered. We have chosen not
to register any copyrights and rely on trade secret protection in addition to unregistered copyrights to protect our proprietary software.
Accordingly, the remedies and damages available to us for unauthorized use of our software may be limited.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Further, the steps we take
to protect our intellectual property and proprietary rights may be inadequate. We may not be able to register our intellectual property
rights in all jurisdictions where we conduct or anticipate conducting business, and may experience conflicts with third parties who contest
our applications to register our intellectual property. Even if registered or issued, we cannot guarantee that our trademarks, patents,
copyrights or other intellectual property or proprietary rights will be of sufficient scope or strength to provide us with any meaningful
protection or commercial advantage. We will not be able to protect our intellectual property and proprietary rights if we are unable to
enforce our rights or if we do not detect infringement, misappropriation, dilution or other unauthorized use or violation thereof. If
we fail to defend and protect our intellectual property rights adequately, our competitors and other third parties may gain access to
our proprietary technology, information and know-how, reverse-engineer our software, and infringe upon or dilute the value of our brand,
and our business may be harmed. In addition, obtaining, maintaining, defending, and enforcing our intellectual property rights might entail
significant expense. Any patents, trademarks, copyrights, or other intellectual property rights that we have or may obtain may be challenged
by others or invalidated through administrative process or litigation. Even if we continue to seek patent protection in the future, we
may be unable to obtain further patent protection for our technology. In addition, any patents issued in the future may not provide us
with competitive advantages, may be designed around by our competitors, or may be successfully challenged by third parties. Furthermore,
legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights are uncertain.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We may be unable to prevent
third parties from acquiring domain names or trademarks that are similar to, infringe upon, dilute or diminish the value of our trademarks
and other proprietary rights. Additionally, our trademarks may be opposed, otherwise challenged or declared invalid, unenforceable or
generic, or determined to be infringing on or dilutive of other marks. We may not be able to protect our rights in these trademarks, which
we need in order to build name recognition with customers. If third parties succeed in registering or developing common law rights in
such trademarks and we are not successful in challenging such third-party rights, or if our trademark rights are successfully challenged,
we may not be able to use our trademarks to commercialize our products in certain relevant jurisdictions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Despite our precautions, it
may be possible for unauthorized third parties to copy our products and use information that we regard as proprietary to create offerings
that compete with ours. Effective patent, trademark, copyright, and trade secret protection may not be available to us in every country
in which our products are available. The laws of some countries may not be as protective of intellectual property rights as those in the
United States, and mechanisms for enforcement of intellectual property rights may be inadequate. As we continue to expand our international
activities, our exposure to unauthorized copying and use of our products and proprietary information will likely increase. Accordingly,
despite our efforts, we may be unable to prevent third parties from infringing upon, diluting, misappropriating or otherwise violating
our intellectual property rights.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have devoted substantial
resources to the development of our technology, business operations and business plans. We attempt to protect our intellectual property
and proprietary information, including trade secrets, by implementing administrative, technical and physical practices, including source
code access controls, to secure our proprietary information. We also seek to enter into confidentiality, non-compete, proprietary, and
inventions assignment agreements with our employees, consultants and contractors, and enter into confidentiality agreements with other
parties, such as licensees and customers. However, such agreements may not be self-executing, and there can be no guarantee that all applicable
parties have executed such agreements. No assurance can be given that these practices or agreements will be effective in controlling access
to and distribution of our proprietary information, or in providing adequate remedies in the event of unauthorized access or distribution,
especially in certain states and countries, including Israel and Russia, that are less willing to enforce such agreements or otherwise
provide protection for trade secrets. Further, these agreements may not prevent our competitors from independently developing technologies
that are substantially equivalent or superior to our products, and in such cases we would not be able to assert trade secret rights against
such parties. We also employ individuals who were previously employed at other companies in our field, and our efforts to ensure that
such individuals do not use the proprietary information or know-how of others in their work for us may not prevent others from claiming
that we or our employees or independent contractors have used or disclosed intellectual property, including trade secrets or other proprietary
information, of a former employer or other third parties. Litigation may be necessary to defend against any such claims. If we are unsuccessful
in defending against any such claims, we may be liable for damages or prevented from using certain intellectual property, which in turn
could materially adversely affect our business, financial condition or results of operations; even if we are successful in defending against
such claims, litigation could result in substantial costs and distract management and other employees.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 34; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->24<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In order to protect our intellectual
property and proprietary rights and to monitor for and take action against any infringement, misappropriation or other violations thereof,
we may be required to spend significant resources. Litigation may be necessary to enforce and protect our trade secrets and other intellectual
property and proprietary rights, which could be costly, time-consuming, and distracting to management, and could result in the impairment
or loss of portions of our intellectual property. Further, our efforts to enforce our intellectual property and proprietary rights may
be met with defenses, counterclaims, and countersuits attacking the ownership, scope, validity and enforceability of such rights. Our
inability to protect our proprietary technology or our brand against unauthorized copying or use, as well as any costly litigation or
diversion of our management&#8217;s attention and resources, could delay further sales or the implementation of our offerings or impair
their functionality, delay introductions of new offerings, result in our substituting inferior or more costly technologies into our offerings,
or injure our reputation. Any of the foregoing could materially and adversely affect our business, financial condition, results of operations
and growth prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We could incur substantial costs and otherwise
suffer harm as a result of any claim of infringement, misappropriation or other violation of another party&#8217;s intellectual property
or proprietary rights.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In recent years, there has
been significant litigation involving patents and other intellectual property and proprietary rights in the software industry. Our competitors
and others may now and in the future have significantly larger and more mature patent portfolios than we have. Even a large patent portfolio
may not serve as a deterrent to litigation by certain third parties, some of whose sole or primary business is to assert patent claims
and some of whom have sent letters to and/or filed suit alleging infringement against us or some of our customers. We could incur substantial
costs in prosecuting or defending any intellectual property litigation. If we sue to enforce our rights or are sued by a third party claiming
that our offerings infringe, misappropriate or violate their rights, the litigation could be expensive and could divert management attention
and resources away from our core business operations. In addition, there could be public announcements of the results of hearings, motions
or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could
have a material adverse effect on the price of our ordinary shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any intellectual property
litigation to which we might become a party, or for which we are required to provide indemnification, may require us to do one or more
of the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="width: 0.5in">&#160;</td>
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    <td style="text-align: justify"><span style="font-size: 10pt">cease selling or using offerings that incorporate or are otherwise covered by the intellectual property rights that we allegedly infringe, misappropriate or otherwise violate&#894;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
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    <td style="text-align: justify"><span style="font-size: 10pt">obtain a license to sell or use the relevant technology, which may not be available on reasonable terms or at all, may be non-exclusive and thereby allow our competitors and other parties access to the same technology, and may require the payment of substantial licensing, royalty or other fees&#894; or</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
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    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">redesign the allegedly infringing offerings to avoid infringement, misappropriation or other violation, which could be costly, time-consuming or impossible.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we are required to make
substantial payments or undertake or suffer any of the other actions and consequences noted above as a result of any intellectual property
infringement, misappropriation or violation claims against us or any obligation to indemnify our customers for such claims, such payments,
actions and consequences could materially and adversely affect our business, financial condition, results of operations and growth prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 35; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->25<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We could incur substantial costs and otherwise
suffer harm as a result of patent royalty claims, in particular patents related to the implementation of image and video standards</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our products and services
decode and encode media files which are compressed using compression methods that are standardized by international standard bodies such
as ISO and ITU. These standard compression methods include, for example, JPEG and HEIC for images, and H.264, HEVC, EVC and VVC for video.
Some of the algorithms included in these image and video compression standards are covered by patents which are licensed by patent pools,
such as MPEG-LA, Access Advance and Velos Media, and by independent patent holders. Depending on the use case and application of these
image and video standards in our products and services, we may be required to pay patent royalties to such patent pools and independent
patent holders, which might affect our margins and our profitability. Historically, almost all of our products and services have not required
such patent royalty payment however as we expand our SaaS offering, we expect to pay such patent royalties in the future. In addition,
in order to avoid paying patent royalties, some of our customers may opt to use open source compression standards such as VP9 or AV1,
which in turn would require us to support such standards in our products and services, causing additional product development costs due
to this fragmentation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Indemnity provisions in various agreements
potentially expose us to substantial liability for intellectual property infringement, misappropriation, violation, and other losses.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our agreements with customers
and other third parties may include indemnification provisions under which we agree to indemnify them for losses suffered or incurred
as a result of claims of intellectual property infringement, misappropriation or violation, damages caused by us to property or persons,
or other liabilities relating to or arising from our software, services or other contractual obligations. Large indemnity payments could
adversely affect our business, financial condition and results of operations. Although we normally seek to contractually limit our liability
with respect to such indemnity obligations, we do not and may not in the future have a cap on our liability in certain agreements, which
could result in substantial liability. Substantial indemnity payments under such agreements could harm our business, financial condition
and results of operations. Any dispute with a customer or other third party with respect to such obligations could have adverse effects
on our relationship with that customer, other existing customers and new customers, and other parties, and could harm our reputation,
business, financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We rely on software and services licensed
from other parties. The loss of software or services from third parties could increase our costs and limit the features available in our
products and services.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Components of our offerings
include various types of software and services licensed from unaffiliated parties. If any of the software or services we license from
others or functional equivalents thereof were either no longer available to us or no longer offered on commercially reasonable terms,
we would be required to either redesign the offerings that include such software or services to function with software or services available
from other parties or develop these components ourselves, which we may not be able to do without incurring increased costs, experiencing
delays in our product launches and the release of new offerings, or at all. Furthermore, we might be forced to temporarily limit the features
available in our current or future products and solutions. If we fail to maintain or renegotiate any of these software or service licenses,
we could face significant delays and diversion of resources in attempting to license and integrate functional equivalents. We and our
customers may also be subject to suits by parties claiming infringement, misappropriation or other violation of third-party intellectual
property or proprietary rights due to the reliance by our solutions on such third-party software and services, such third-party software
and services may contain bugs or other errors that cause our own offerings to malfunction, and our agreements with such third parties
may not contain any, or adequate, warranties, indemnities or other protective provisions on our behalf. Any of the foregoing could materially
and adversely affect our business, financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->26<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Risks Related to Other Legal, Regulatory and
Tax Matters</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Changes in laws and regulations related
to the internet, changes in the internet infrastructure itself, or increases in the cost of internet connectivity and network access may
diminish the demand for our offerings and could harm our business.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The future success of our
business depends upon the continued use of the internet as a primary medium for commerce, communication, and business applications. Federal,
state, or foreign governmental bodies or agencies have in the past adopted, and may in the future adopt, laws or regulations affecting
the use of the internet as a commercial medium. The adoption of any laws or regulations that could reduce the growth, popularity, or use
of the internet, including laws or practices limiting internet neutrality, could decrease the demand for our offerings, increase our cost
of doing business, and adversely affect our results of operations. Changes in these laws or regulations could require us to modify our
offerings, or certain aspects of our offerings, in order to comply with these changes. In addition, government agencies or private organizations
have imposed and may impose additional taxes, fees, or other charges for accessing the internet or commerce conducted via the internet.
These laws or charges could limit the growth of internet-related commerce or communications generally or result in reductions in the demand
for internet-based products such as ours. In addition, the use of the internet as a business tool could be harmed due to delays in the
development or adoption of new standards and protocols to handle increased demands of internet activity, security, reliability, cost,
ease-of-use, accessibility, and quality of service. Further, our platform depends on the quality of our customers&#8217; and end users&#8217;
access to the internet.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On June 11, 2018, the repeal
of the &#8220;net neutrality&#8221; rules of the Federal Communications Commission, or the FCC, took effect and returned to a &#8220;light-touch&#8221;
regulatory framework. The prior rules were designed to ensure that all online content is treated the same by internet service providers
and other companies that provide broadband services. Additionally, on September 30, 2018, California enacted the California Internet Consumer
Protection and Net Neutrality Act of 2018, making California the fourth state to enact a state-level net neutrality law since the FCC
repealed its nationwide regulations, mandating that all broadband services in California must be provided in accordance with state net
neutrality requirements. The U.S. Department of Justice has sued to block the law going into effect, and California has agreed to delay
enforcement until the resolution of the FCC&#8217;s repeal of the federal rules. A number of other states are considering legislation
or executive actions that would regulate the conduct of broadband providers. We cannot predict whether the FCC order or state initiatives
will be modified, overturned, or vacated by legal action of the court, federal legislation or the FCC. With the repeal of net neutrality
rules in effect, we could incur greater operating expenses, which could harm our results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As the internet continues
to experience growth in the number of users, frequency of use, and amount of data transmitted, the internet infrastructure that we and
our customers and end users rely on may be unable to support the demands placed upon it. The failure of the internet infrastructure that
we or our customers and end users rely on, even for a short period of time, could adversely affect our business, financial condition and
results of operations. In addition, the performance of the internet and its acceptance as a business tool has been harmed by &#8220;viruses,&#8221;
&#8220;worms&#8221; and similar malicious programs and the internet has experienced a variety of outages and other delays as a result
of damage to portions of its infrastructure. If the use of the internet is adversely affected by these issues, demand for our offerings
could decline.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Internet access is frequently
provided by companies that have significant market power and the ability to take actions that degrade, disrupt, or increase the cost of
user access to our offerings. As demand for online media increases, there can be no assurance that internet and network service providers
will continue to price their network access services on reasonable terms. The distribution of online media requires delivery of digital
content files and providers of network access and distribution may change their business models and increase their prices significantly,
which could slow the widespread adoption of such services. We could incur greater operating expenses and our customer acquisition and
retention could be negatively impacted if network operators:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">implement usage-based pricing;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">discount pricing for competitive products;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">otherwise materially change their pricing rates or schemes;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">charge us to deliver our traffic at certain levels or at all;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->27<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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    <td style="width: 0.5in">&#160;</td>
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    <td style="text-align: justify"><span style="font-size: 10pt">throttle traffic based on its source or type;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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    <td style="text-align: justify"><span style="font-size: 10pt">implement bandwidth caps or other usage restrictions; or</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">otherwise try to monetize or control access to their networks.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In order for our services
to be successful, there must be a reasonable price model in place to allow for the continuous distribution of digital media files. We
have limited or no control over the extent to which any of these circumstances may occur, and if network access or distribution prices
rise, our business, financial condition and results of operations would likely be adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Failure to comply with anti-bribery, anti-corruption,
anti-money laundering laws, and similar laws, could subject us to penalties and other adverse consequences.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are subject to the U.S.
Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. &#167; 201, the
U.S. Travel Act, the USA PATRIOT Act, Chapter 9 (sub-chapter 5) of the Israeli Criminal Law, 5737-1977, the Israeli Prohibition on Money
Laundering Law, 5760-2000 and other anti-bribery and anti-money laundering laws in countries outside of the United States in which we
conduct our activities, such as Russia. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are
interpreted broadly to generally prohibit companies, their employees, and their third-party intermediaries from authorizing, offering,
or providing, directly or indirectly, improper payments or benefits to recipients in the public or private sector.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We sometimes leverage third
parties to sell our offerings and conduct our business abroad. We and our third-party intermediaries may have direct or indirect interactions
with officials and employees of government agencies or state-owned or affiliated entities and may be held liable for the corrupt or other
illegal activities of these third-party business partners and intermediaries, our employees, representatives, contractors, partners, and
agents, even if we do not explicitly authorize such activities. We cannot assure you that our employees and agents will not take actions
in violation of applicable law, for which we may be ultimately held responsible. As we increase our international sales and business operations,
our risks under these laws are likely to increase.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any actual or alleged violation
of the FCPA or other applicable anti-bribery, anti-corruption or anti-money laundering laws could result in whistleblower complaints,
sanctions, settlements, prosecution, enforcement actions, fines, damages, adverse media coverage, investigations, loss of export privileges,
severe criminal or civil sanctions, or suspension or debarment from U.S. government contracts, any of which would adversely affect our
reputation, as well as our business, financial condition, results of operations and growth prospects. Responding to any investigation
or action would likely result in a materially significant diversion of management&#8217;s attention and resources and significant defense
costs and other professional fees. In addition, the U.S. government may seek to hold us liable for successor liability for FCPA violations
committed by companies in which we invest or that we acquire.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Changes in financial accounting standards
or practices may cause adverse, unexpected financial reporting fluctuations and affect our results of operations.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The accounting rules and regulations
that we must comply with are complex and subject to interpretation by the Financial Accounting Standards Board, or the FASB, the SEC and
various bodies formed to promulgate and interpret appropriate accounting principles. Recent actions and public comments from the FASB
and the SEC have focused on the integrity of financial reporting and internal controls. In addition, many companies&#8217; accounting
policies are being subject to heightened scrutiny by regulators and the public. Further, the accounting rules and regulations are continually
changing in ways that could materially impact our financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We cannot predict the impact
of future changes to accounting principles or our accounting policies on our financial statements going forward, which could have a significant
effect on our reported financial results and could affect the reporting of transactions completed before the announcement of the change.
In addition, if we were to change our critical accounting estimates, including those related to the recognition of subscription revenue
and other revenue sources, our operating results could be significantly affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Changes in U.S. and foreign tax laws could
have a material adverse effect on our business, cash flow, results of operations or financial conditions.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are subject to taxation
in several countries, including the United States and Israel; changes in tax laws or challenges to our tax positions could adversely affect
our business, results of operations, and financial condition. As such, we are subject to tax laws, regulations, and policies of the U.S.
federal, state, and local governments and of comparable taxing authorities in foreign jurisdictions. Changes in tax laws, including the
U.S. federal tax legislation enacted in 2017, commonly referred to as the Tax Cuts and Jobs Act of 2017, as well as other factors, could
cause us to experience fluctuations in our tax obligations and effective tax rates in the future and otherwise adversely affect our tax
positions and/or our tax liabilities. There can be no assurance that our effective tax rates, tax payments, tax credits, or incentives
will not be adversely affected by changes in tax laws in various jurisdictions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Biden administration has
proposed a number of changes to the U.S. tax system. The proposals include changes that would increase U.S. corporate tax rates, impose
a corporate minimum book tax, and double the tax rate on and make other tax changes to &#8220;global intangible low-taxed income&#8221;
earned by foreign subsidiaries. Many aspects of the proposals are unclear or undeveloped. We are unable to predict which, if any, U.S.
tax reform proposals will be enacted into law, and what effects any enacted legislation might have on our liability for U.S. tax.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Unanticipated changes in effective tax rates
or adverse outcomes resulting from examination of our income or other tax returns could expose us to greater than anticipated tax liabilities.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The tax laws applicable to
our business, including the laws of the United States, Israel, Russia, and other jurisdictions, are subject to interpretation, and certain
jurisdictions may aggressively interpret their laws in an effort to raise additional tax revenue. The taxing authorities of the jurisdictions
in which we operate may challenge our methodologies for valuing developed technology or intercompany arrangements or our revenue recognition
policies, which could increase our worldwide effective tax rate and adversely affect our financial position and results of operations.
It is possible that tax authorities may disagree with certain positions we have taken, and any adverse outcome of such a review or audit
could have a negative effect on our business, financial condition and results of operations. Further, the determination of our worldwide
provision for income taxes and other tax liabilities requires significant judgment by management, and there are transactions where the
ultimate tax determination is uncertain. Although we believe that our estimates are reasonable, the ultimate tax outcome may differ from
the amounts recorded in our consolidated financial statements and may materially affect our financial results in the period or periods
for which such determination is made.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our corporate structure and intercompany
arrangements are subject to the tax laws of various jurisdictions, and we could be obligated to pay additional taxes, which would adversely
affect our results of operations.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Based on our current corporate
structure, we are subject to taxation in several jurisdictions around the world with increasingly complex tax laws, the application of
which can be uncertain. The amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable
tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents. The authorities
in these jurisdictions could review our tax returns or require us to file tax returns in jurisdictions in which we are not currently filing,
and could impose additional tax, interest, and penalties. These authorities could also claim that various withholding requirements apply
to us or our subsidiaries, assert that benefits of tax treaties are not available to us or our subsidiaries, or challenge our methodologies
for valuing developed technology or intercompany arrangements, including our transfer pricing. The relevant taxing authorities may determine
that the manner in which we operate our business does not achieve the intended tax consequences. If such a disagreement were to occur,
and our position was not sustained, we could be required to pay additional taxes, interest, and penalties. Such authorities could claim
that various withholding requirements apply to us or our subsidiaries or assert that benefits of tax treaties are not available to us
or our subsidiaries. Any increase in the amount of taxes we pay or that are imposed on us could increase our worldwide effective tax rate
and adversely affect our business, financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We could be required to collect additional
sales, use, value added, digital services or other similar taxes or be subject to other liabilities that may increase the costs our customers
would have to pay for our offerings and adversely affect our results of operations.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We could be required to collect
sales, value added and other similar taxes in a number of jurisdictions. One or more U.S. states or countries may seek to impose incremental
or new sales, use, value added, digital services, or other tax collection obligations on us. Further, an increasing number of U.S. states
have considered or adopted laws that attempt to impose tax collection obligations on out-of-state companies. Additionally, the Supreme
Court of the United States has ruled that online sellers can be required to collect sales and use tax despite not having a physical presence
in the state of the customer. As a result, U.S. states and local governments may adopt, or begin to enforce, laws requiring us to calculate,
collect, and remit taxes on sales in their jurisdictions, even if we have no physical presence in that jurisdiction. A successful assertion
by one or more U.S. states requiring us to collect taxes where we presently do not do so, or to collect more taxes in a jurisdiction in
which we currently do collect some taxes, could result in substantial liabilities, including taxes on past sales, as well as interest
and penalties. Furthermore, certain jurisdictions, such as the United Kingdom and France, have recently introduced a digital services
tax, which is generally a tax on gross revenue generated from users or customers located in those jurisdictions, and other jurisdictions
have enacted or are considering enacting similar laws. A successful assertion that we should have been or should currently be collecting
additional sales, use, value added, digital services or other similar taxes in a particular jurisdiction could, among other things, result
in substantial tax payments, create significant administrative burdens for us, discourage potential customers from subscribing to our
platform due to the incremental cost of any such sales or other related taxes, or otherwise adversely affect our business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Risks Related to Our Operations in Israel</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Political, economic and military conditions
in Israel could materially and adversely affect our business.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have offices in Herzeliya,
near Tel Aviv, Israel where our primary operations, research and development, and certain other finance activities are based. In addition,
a number of our officers and directors, as well as our founder, are residents of Israel. As of April 15, 2023, we had six full-time and
part-time employees in Israel. Accordingly, political, economic and military conditions in Israel and the surrounding region may directly
affect our business and operations. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place
between Israel and its neighboring countries, as well as terrorist acts committed within Israel by hostile elements. In recent years,
Israel has been engaged in sporadic armed conflicts with Hamas, an Islamist terrorist group that controls the Gaza Strip, with Hezbollah,
an Islamist terrorist group that controls large portions of southern Lebanon, and with Iranian-backed military forces in Syria. In addition,
Iran has threatened to attack Israel and may be developing nuclear weapons. Some of these hostilities were accompanied by missiles being
fired against civilian targets in various parts of Israel, including areas in which our employees, and some of our consultants are located,
and negatively affected business conditions in Israel. Any hostilities, armed conflicts, terrorist activities involving Israel or the
interruption or curtailment of trade between Israel and its trading partners, or any political instability in the region could adversely
affect business conditions and our results of operations and could make it more difficult for us to raise capital. Parties with whom we
do business have sometimes declined to travel to Israel during periods of heightened unrest or tension, forcing us to make alternative
arrangements when necessary in order to meet our business partners face to face. In addition, the political and security situation in
Israel may result in parties with whom we have agreements involving performance in Israel claiming that they are not obligated to perform
their commitments under those agreements pursuant to force majeure provisions in such agreements.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Continued hostilities between
Israel and its neighbors and any future armed conflict, terrorist activity or political instability in the region could adversely affect
our operations in Israel and adversely affect the market price of our ordinary shares. An escalation of tensions or violence might result
in a significant downturn in the economic or financial condition of Israel, which could have a material adverse effect on our operations
in Israel and our business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our commercial insurance does
not cover losses that may occur as a result of events associated with war and terrorism. Although the Israeli government currently covers
the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government
coverage will be maintained or that it will sufficiently cover our potential damages. Any losses or damages incurred by us could have
a material adverse effect on our business. Any armed conflicts or political instability in the region would likely negatively affect business
conditions and could adversely affect our results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Further, in the past, the
State of Israel and Israeli companies have been subjected to economic boycotts. Several countries still restrict business with the State
of Israel and with Israeli companies. These restrictive laws and policies may have an adverse impact on our operating results, financial
condition or the expansion of our business. A campaign of boycotts, divestment and sanctions has been undertaken against Israel, which
could also adversely impact our business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Israel&#8217;s most recent
general elections were held on April 9, 2019, September 17, 2019, March 2, 2020, March 23, 2021 and November 1, 2022. In addition, proposed
judicial reform has sparked widespread protests across Israel. Uncertainty surrounding future elections and the outcome of the judicial
reform in Israel may continue and the political situation in Israel may further deteriorate. Actual or perceived political instability
in Israel or any negative changes in the political environment, may individually or in the aggregate adversely affect the Israeli economy
and, in turn, our business, financial condition, results of operations and growth prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our operations could be disrupted as a result
of the obligation of certain of our personnel residing in Israel to perform military service.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Many of our officers and employees
reside in Israel and may be required to perform annual military reserve duty. Currently, all male adult citizens and permanent residents
of Israel under the age of 40 (or older, depending on their position with the Israeli Defense Forces reserves), unless exempt, are obligated
to perform military reserve duty annually and are subject to being called to active duty at any time under emergency circumstances. Our
operations could be disrupted by the absence for a significant period of one or more of our key officers and employees due to military
service. Any such disruption could have a material adverse effect on our business, results of operations and financial condition.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We may not be able to enforce covenants
not-to-compete under current Israeli law.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have non-competition agreements
with most of our employees, many of which are governed by Israeli law. These agreements generally prohibit our employees from competing
with us or working for our competitors for a specified period following termination of their employment. However, Israeli courts are reluctant
to enforce non-compete undertakings of former employees and tend, if at all, to enforce those provisions for relatively brief periods
of time in restricted geographical areas and only when the employee has unique value specific to that employer&#8217;s business and not
just regarding the professional development of the employee. Any such inability to enforce non-compete covenants may cause us to lose
any competitive advantage resulting from advantages provided to us by such confidential information.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;<b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We may become subject to claims for remuneration
or royalties for assigned service invention rights by our employees and consultants, which could result in litigation and would adversely
affect our business.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A significant portion of our
intellectual property has been developed by our employees and consultants in the course of their engagement with us. Under the Israeli
Patent Law, 5727-1967, or the Patent Law, inventions conceived by an employee during the scope of his or her employment relationship with
a company are regarded as &#8220;service inventions,&#8221; which belong to the employer, absent a specific agreement stating otherwise.
The Patent Law also provides that absent an agreement providing otherwise, the Israeli Compensation and Royalties Committee, or the Committee,
a body constituted under the Patent Law, shall determine whether the employee is entitled to remuneration for his or her inventions. Case
law clarifies that the right to receive consideration for &#8220;service inventions&#8221; can be waived by the employee and that such
waiver does not necessarily have to be explicit. The Committee will examine, on a case-by-case basis, the general contractual framework
between the parties, using interpretation rules of the general Israeli contract laws. Further, the Committee has not yet determined one
specific formula for calculating this remuneration, but rather uses the criteria specified in the Patent Law. Although we generally seek
to enter into assignment-of-invention agreements with our employees and consultants pursuant to which such individuals assign to us all
rights to any inventions created in the scope of their employment or engagement with us, we cannot guarantee that all such agreements
are self-executing or have been entered into by all applicable individuals. Even when such agreements include provisions regarding the
assignment and waiver of rights to additional compensation in respect of inventions created within the course of their employment or consulting
relationship with us, including in respect of service inventions, we cannot guarantee that such provisions will be upheld by Israeli courts,
as a result of uncertainty under Israeli law with respect to the efficacy of such provisions. We may face claims demanding remuneration
in consideration for assigned inventions, which could require us to pay additional remuneration or royalties to our current and former
employees and consultants, or be forced to litigate such claims, which could negatively affect our business.<b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>It may be difficult for investors in the
United States to enforce any judgments obtained against us or some of our directors or officers.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The majority of our assets
are located outside the U.S. In addition, our officers are nationals and/or residents of countries other than the U.S., and all or a substantial
portion of such persons&#8217; assets are located outside the U.S. As a result, it may be difficult for investors to enforce within the
United States any judgments obtained against us or any of our non-U.S. officers, including judgments predicated upon the civil liability
provisions of the securities laws of the U.S. or any state thereof. Additionally, it may be difficult to assert U.S. securities law claims
in actions originally instituted outside of the U.S. Israeli courts may refuse to hear a U.S. securities law claim because Israeli courts
may not be the most appropriate forums in which to bring such a claim. Even if an Israeli court agrees to hear a claim, it may determine
that the Israeli law, and not U.S. law, is applicable to the claim. Further, if U.S. law is found to be applicable, certain 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
still be governed by the Israeli law. Consequently, you may be effectively prevented from pursuing remedies under U.S. federal and state
securities laws against us or any of our non-U.S. directors or officers.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our amended and restated articles of association
provide that, unless we consent to an alternative forum, the federal district courts of the United States shall be the exclusive forum
for resolution of any complaint asserting a cause of action arising under the Securities Act, and under the Courts Law 5744-1984 [consolidated
version] (&#8220;Courts Law&#8221;) the competent courts of Tel Aviv, Israel, shall be the exclusive forum for resolution of substantially
all disputes between the Company and its shareholders under the Companies Law and the Israeli Securities Law, which could limit our shareholders&#8217;
ability to choose the judicial forum for disputes with us, our directors, shareholders, or other employees.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 28.35pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Section 22 of the Securities
Act creates concurrent jurisdiction for U.S. federal and state courts over all such Securities Act actions. Accordingly, both U.S. state
and federal courts have jurisdiction to entertain such claims. To prevent having to litigate claims in multiple jurisdictions and the
threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated 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 exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. This exclusive
forum provision will not apply to suits brought to enforce any liability or duty created by the Exchange Act, and our shareholders cannot
and will not be deemed to have waived our compliance with the U.S. federal securities laws and the rules and regulations thereunder as
a result of our exclusive forum provision.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 28.35pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Courts Law, the
competent courts of Tel Aviv, Israel, is the exclusive forum for the resolution of (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&#8217;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. Such exclusive forum provision is intended to
apply to claims arising under Israeli law and does not apply to claims for which the federal courts would have exclusive jurisdiction,
whether by law or pursuant to our amended and restated articles of association, as described above.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 28.35pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Any person or entity purchasing
or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to the foregoing provisions
of our amended and restated articles of association. However, the enforceability of similar forum provisions (including exclusive federal
forum provisions for actions, suits, or proceedings asserting a cause of action arising under the Securities Act) in other companies&#8217;
organizational documents has been challenged in legal proceedings, and there is uncertainty as to whether courts would enforce the exclusive
forum provisions in our amended and restated articles of association. If a court were to find the exclusive forum provisions contained
in our amended and restated articles of association to be inapplicable or unenforceable in an action, we may incur additional costs associated
with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition, and results
of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Although we believe these
exclusive forum provisions benefit us by providing increased consistency in the application of U.S. federal securities laws or the Companies
Law, as applicable, in the types of lawsuits to which they apply, such exclusive forum provisions may limit a shareholder&#8217;s ability
to bring a claim in the judicial forum of their choosing for disputes with us or any of our directors, shareholders, officers, or other
employees, which may discourage lawsuits with respect to such claims against us and our current and former directors, shareholders, officers,
or other employees.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Risks Related to Our Operations in Russia</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Russia&#8217;s invasion of Ukraine and sanctions
brought against Russia could disrupt our software development operations in Russia.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="background-color: white">In
addition to our U.S. and Israel operations, we have operations in Russia through our wholly owned subsidiary, Beamr Imaging RU, and may
expand international operations and development in the future. Specifically, we undertake some of our software development and design,
quality assurance, and support in Russia using personnel located there. While a majority of our developers are located in Russia, our
research and development leadership is located in Israel. </span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="background-color: white">On
February 24, 2022, Russia invaded Ukraine. The outbreak of hostilities between the two countries could result in more widespread conflict
and could have a severe adverse effect on the region.</span> Following Russia&#8217;s actions, various countries, including the U.S.,
Canada, the United Kingdom, Germany and France, as well as the European Union, issued broad-ranging economic sanctions against Russia.
Such sanctions included, among other things, a prohibition on doing business with certain Russian companies, officials and citizens; a
commitment by certain countries and the European Union to remove selected Russian banks from the Society for Worldwide Interbank Financial
Telecommunications (SWIFT) electronic banking network that connects banks globally; and restrictive measures to prevent the Russian Central
Bank from undermining the impact of the sanctions. In response to sanctions, the Russian Central Bank raised its interest rates and banned
sales of local securities by foreigners. Russia may take additional counter measures or retaliatory actions in the future. The continuation
of these hostilities may result in additional economic and other sanctions against Russia. The potential impact of the conflict and any
resulting bans, sanctions and boycotts on companies doing business in Russia is currently uncertain due to the fluid nature of the conflict
as it is unfolding and has the potential to result in broadened military actions. The duration of ongoing hostilities and such sanctions
and related events cannot be predicted. Uncertainty as to future relations between Russia and the U.S. and other countries in the west,
or between Russia and other eastern European countries, may have a negative impact on our operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="background-color: white">We
do not operate in any sectors of the Russian economy that have been targeted by U.S. or EU sanctions and have no reason to believe that
we would be targeted by any sanctions in the future. Nonetheless such sanctions and potential responses to such sanctions, including those
that may limit or restrict transfer funds into Russia, may in the future significantly affect our ability to pay our personnel based in
Russia. In response, </span>we have begun to partially implement a business continuity plan in order to address risks related to the conflict
on our personnel, operations and product development that includes alternative payment solutions for personnel in Russia and relocation
of certain personnel to territories outside Russia and Belarus on short notice. As of April 15, 2023, some of the Russian employees and contractors of our wholly owned subsidiary in St. Petersburg, Russia have relocated
to other countries and we are continuing to monitor the situation with respect to our business continuity plan.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our operations and presence
in Russia is limited. We have no manufacturing operations in Russia and we do not sell any products in Russia and as a consequence we
have not derived any revenues from there. To date, none of our investors expressed concern with respect to our operations in Russia and
none of our customers terminated or downsized their engagement with us as a result of such operations. Our employees in Russia have not
to date experienced any change in their daily ability to perform their tasks. We do not expect Russia or another government to nationalize
our assets or operations in Russia. In particular, our primary asset is software that are stored outside of Russia and our products and
services are all delivered outside of Russia. In addition, we believe that if we needed to, we would be able to recruit personnel outside
Russia without any material interruption to our operations. As a result, we believe that if nationalization were to occur, any impact
on our financial statements would be immaterial. Nevertheless, we cannot predict the progress or outcome of the situation in Ukraine,
as the conflict and governmental reactions are rapidly developing and beyond our control.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Political, military conditions or other
risks in Russia could adversely affect our business.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Russia is a federative state
consisting of 85 constituent entities, or &#8220;subjects.&#8221; The Russian Constitution reserves some governmental powers for the Russian
Government, some for the subjects and some for areas of joint competence. In addition, eight &#8220;federal districts&#8221; (&#8220;federal&#8217;nye
okruga&#8221;), which are overseen by a plenipotentiary representative of the President, supplement the country&#8217;s federal system.
The delineation of authority among and within the subjects is, in many instances, unclear and contested, particularly with respect to
the division of tax revenues and authority over regulatory matters. For these reasons, the Russian political system is vulnerable to tension
and conflict between federal, subject and local authorities. This tension creates uncertainties in the operating environment in Russia,
which may prevent us from carrying out our strategy effectively. The risks associated with these events or potential events could materially
and adversely affect the investment environment and overall consumer and entrepreneurial confidence in Russia, and our business, prospects,
financial condition, hiring ability, and results of operations could be materially and adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Furthermore, high levels of
corruption reportedly exist in Russia, including the bribing of officials for the purpose of initiating investigations by government agencies.
Corruption and other illegal activities could disrupt our ability to conduct our business effectively, and claims that the we are involved
in such corruption or illegal activities could generate negative publicity, of which could harm our development, financial condition,
results of operations or prospects.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Economic and other risks in Russia could adversely affect our
business.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Operating a business in an
emerging market such as Russia can involve a greater degree of risk than operating a business in more developed markets.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Over the last two decades,
the Russian economy has experienced or continues to experience at various times:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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    <td style="text-align: justify"><span style="font-size: 10pt">significant volatility in its GDP;</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the impact of international sanctions;</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">high levels of inflation;</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">increases in, or high, interest rates;</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">price volatility in oil and other natural resources;</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">instability in the local currency market;</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">budget deficits;</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the continued operation of loss-making enterprises due to the lack of effective bankruptcy proceedings;</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
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  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Russian economy has been
subject to abrupt downturns in the past, including as a result of the invasion of Ukraine, global financial crisis, and, as an emerging
market, remains particularly vulnerable to further external shocks and any future fluctuations in the global markets. Any further deterioration
in the general economic conditions in Russia (whether or not as a result of the events mentioned above) could have a material adverse
effect on the Russian economy and may result in hiring and operational difficulties, as well as potential flight of human capital, which
could have a material adverse effect on our business, product development and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Legal risks in Russia could materially adversely
affect our operations and Russian tax legislation is subject to frequent change.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Among the risks of the Russian
legal system are: inconsistencies among laws, presidential decrees, and government and ministerial orders and resolutions; conflicting
local, regional and federal laws and regulations; the untested nature of the independence of the judiciary and its sensitivity to economic
or political influences; substantial gaps in the regulatory structure due to the delay or absence of implementing legislation; a high
degree of discretion on the part of governmental authorities; reported corruption within governmental entities and other governmental
authorities; the relative inexperience of judges and courts in interpreting laws applicable to complex transactions; and the unpredictability
of enforcement of foreign judgments and foreign arbitral awards. Many Russian laws and regulations are construed in a way that provides
for significant administrative discretion in application and enforcement. Unlawful, selective or arbitrary actions of the Russian Government
have reportedly included the denial or withdrawal of licenses, sudden and unexpected tax audits, criminal prosecutions, and civil claims.
Any of the above events may have a material adverse effect on our product development and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Despite certain improvements
in the taxation system made by the Russian Government over the past decade, Russian tax legislation is still subject to frequent change,
varying interpretations, and inconsistent and selective enforcement. There are currently no clear rules for distinguishing between lawful
tax optimization and tax evasion. In addition, Russian tax laws do not contain detailed rules on the taxation in Russia of foreign companies.
As such, taxpayers often have to resort to court proceedings to defend their position against the Russian tax authorities. However, in
the absence of consistent court practice or binding precedents, there is inconsistency amongst court decisions. Further, the possibility
exists that the Russian Federation would impose arbitrary or onerous taxes and penalties in the future, which could have a material adverse
effect on our product development and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;<b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Risks Related to Ownership of our Ordinary
Shares</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The market price for our ordinary shares
may be volatile or may decline regardless of our operating performance.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The market price of our ordinary
shares may be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, many of which are beyond
our control, including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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    <td style="text-align: justify"><span style="font-size: 10pt">announced or completed acquisitions of businesses or technologies, or other strategic transactions by us or our competitors&#894;</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Furthermore, the stock market
has experienced extreme volatility that in some cases has been unrelated or disproportionate to the operating performance of particular
companies. These and other factors may cause the market price and demand for our ordinary shares to fluctuate substantially, which may
limit or prevent investors from readily selling their shares and may otherwise negatively affect the liquidity of our ordinary shares.
In addition, in the past, when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities
class action litigation against the company that issued the stock. If any of our shareholders were to bring a lawsuit against us, we could
incur substantial costs defending the lawsuit. Such a lawsuit could also divert the time and attention of our management from our business.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><b><i>An active trading
market for our ordinary shares may not be sustained.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">An&#160;active&#160;public&#160;trading&#160;market
for our ordinary shares may not be sustained. The lack of an active market may impair your ability to sell your ordinary shares at the
time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair value of
your ordinary shares. An inactive market may also impair our ability to raise capital to continue to fund operations by selling ordinary
shares and may impair our ability to acquire other companies or technologies by using our ordinary shares as consideration.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our principal shareholders have significant
influence over us.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our principal shareholders
each holding more than 5% of our outstanding ordinary shares collectively beneficially own approximately 71% of our outstanding ordinary
shares. See &#8220;Item 7.A. Major Shareholders&#8221;. These shareholders or their affiliates will be able to exert significant influence
over us and, if acting together, will be able to control matters requiring shareholder approval, including the election of directors and
approval of significant corporate transactions, including a merger, consolidation or sale of all or substantially all of our assets and
the issuance or redemption of equity interests in certain circumstances. The interests of these shareholders may not always coincide with,
and in some cases may conflict with, our interests and the interests of our other shareholders. For instance, these shareholders could
attempt to delay or prevent a change in control of our company, even if such change in control would benefit our other shareholders, which
could deprive our shareholders of an opportunity to receive a premium for their ordinary shares. This concentration of ownership may also
affect the prevailing market price of our ordinary shares due to investors&#8217; perceptions that conflicts of interest may exist or
arise. As a result, this concentration of ownership may not be in your best interests.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Future sales of substantial amounts of our
ordinary shares in the public markets, or the perception that such sales might occur, could reduce the price that our ordinary shares
might otherwise attain.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 35.45pt">Future sales of a substantial
number of shares of our ordinary shares in the public market, particularly sales by our directors, executive officers and significant
shareholders, or the perception that these sales could occur, could adversely affect the market price of our ordinary shares and may make
it more difficult for you to sell your ordinary shares at a time and price that you deem appropriate.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, we intend to
register the offer and sale of all ordinary shares that we may issue from time to time under our equity compensation plans. Once we register
these shares, they will be freely tradable in the public market, subject to the volume limitations under Rule 144 of the Securities Act
in the case of our affiliates and the lock-up agreements or market stand-off provisions agreed with the representative of the underwriters
in connection with our initial public offering on February 28, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Your ownership and voting power may be diluted
by the issuance of additional shares of our ordinary shares in connection with financings, acquisitions, investments, our equity incentive
plans or otherwise.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have 222,000,000
ordinary shares authorized. Subject to compliance with applicable rules and regulations, we may issue ordinary shares or securities
convertible into ordinary shares from time to time for the consideration and on the terms and conditions established by our board of
directors in its sole discretion, whether in connection with a financing, acquisition, investment, our equity incentive plans or
otherwise. As of April 15, 2023, 12,882,896 ordinary shares were outstanding and we had 1,604,241 ordinary shares issuable upon the
exercise of outstanding options at a weighted average exercise price of $1.87 per share, of which 1,142,602 were vested as of such
date, warrants to purchase 644,666 ordinary shares and an additional 322,279 ordinary shares reserved for future issuance under our
2015 Plan. See &#8220;Item 6.C&#8212;Director, Senior Management and Employees&#8212;Compensation.&#8221; Any additional ordinary
shares that we issue, including under our 2015 Plan or other equity incentive plans that we may adopt in the future, or in
connection with the exercise of our warrants, would dilute the percentage ownership and voting power held by investors. In the
future, we may also issue additional securities if we need to raise capital, including, but not limited to, in connection with
acquisitions, which could constitute a material portion of our then-outstanding ordinary shares. Any such issuance could
substantially dilute the ownership and voting power of our existing shareholders and cause the market price of our ordinary shares
to decline.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our management team has limited experience
managing a public company, and the requirements of being a public company may strain our resources, divert management&#8217;s attention,
and affect our ability to attract and retain qualified board members.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a public company listed
in the United States, we incur significant additional legal, accounting, and other expenses. In addition, changing laws, regulations,
and standards relating to corporate governance and public disclosure, including regulations implemented by the SEC and The Nasdaq Stock
Market LLC, or Nasdaq, may increase legal and financial compliance costs, and make some activities more time consuming. These laws, regulations
and standards are subject to varying interpretations, and as a result, their application in practice may evolve over time as new guidance
is provided by regulatory and governing bodies.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Most members of our management
team have no prior experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly
complex laws pertaining to public companies. Our management team may not successfully or efficiently manage our transition of becoming
a public company that is subject to significant regulatory oversight and reporting obligations under the federal securities laws and the
continuous scrutiny of securities analysts and investors. Furthermore, we are committed to maintaining high standards of corporate governance
and public disclosure, and our efforts to establish the corporate infrastructure required of a public company and to comply with evolving
laws, regulations and standards are likely to divert management&#8217;s time and attention away from revenue-generating activities to
compliance activities, which may prevent us from implementing our business strategy and growing our business. Moreover, we may not be
successful in implementing these requirements. If we do not effectively and efficiently manage our transition into a public company and
continue to develop and implement the right processes and tools to manage our changing enterprise and maintain our culture, our ability
to compete successfully and achieve our business objectives could be impaired, which could negatively impact our business, financial condition
and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Additionally, as a public
company, we may from time to time be subject to proposals by shareholders urging us to take certain corporate actions. If activist shareholder
activity ensues, we may be required to incur additional costs to retain the services of professional advisors, management time and attention
will be diverted from our core business operations, and perceived uncertainties as to our future direction, strategy or leadership may
cause us to lose potential business opportunities and impair our brand and reputation, any of which could materially and adversely affect
our business, financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition to increasing
our legal and financial compliance costs, the additional rules and regulations described above might also make it more difficult for us
to obtain certain types of insurance, including director and officer liability insurance, and we might be forced to accept reduced policy
limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult
for us to attract and retain qualified persons to serve on our board of directors, on committees of our board of directors or as members
of our senior management team.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We are an &#8220;emerging growth company&#8221;
and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our ordinary shares
less attractive to investors.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are an &#8220;emerging
growth company&#8221; within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions
from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but
not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously
approved. As a result, our shareholders may not have access to certain information they may deem important. We cannot predict whether
investors will find our securities less attractive because we intend to rely on these exemptions. If some investors find our securities
less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise
would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such an election to opt out is irrevocable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We have elected to opt out of this extended transition
period and, as a result, we are required to comply with new or revised accounting standards on the relevant dates on which adoption of
such standards is required for non-emerging growth companies. Under federal securities laws, our decision to opt out of the extended transition
period is irrevocable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We may take advantage of these
provisions until December 31, 2028 or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging
growth company upon the earlier to occur of: (1) the last day of the fiscal year in which we have total annual gross revenue of $1.235
billion or more; (2) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or
(3) the date on which we are deemed to be a large accelerated filer under the rules of the SEC. We may choose to take advantage of some
but not all of these reduced burdens, and therefore the information that we provide holders of our ordinary shares may be different than
the information you might receive from other public companies in which you hold equity.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">When we are no longer deemed
to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above. We cannot predict
if investors will find our ordinary shares less attractive as a result of our reliance on exemptions under the JOBS Act. If some investors
find our ordinary shares less attractive as a result, there may be a less active trading market for our ordinary shares and our share
price may be more volatile. &#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We do not anticipate paying dividends on
our ordinary shares in the foreseeable future. As a result, your ability to achieve a return on your investment will depend on appreciation
in the price of our ordinary shares.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have never declared or
paid any cash dividends on our ordinary shares and do not anticipate paying any cash dividends on our ordinary shares in the foreseeable
future. We anticipate that we will retain all of our available funds and any future earnings for use in the operation and expansion of
our business and the repayment of outstanding debt. Any future determination as to the payment of cash dividends will be at the discretion
of our board of directors and will depend on, among other things, our business prospects, financial condition, results of operations,
current and anticipated cash needs and availability, industry trends and other factors that our board of directors may consider to be
relevant. Our ability to pay cash dividends on our ordinary shares in the future may also be limited by the terms of any preferred securities
we may issue or financial and other covenants in any instruments or agreements governing any additional indebtedness we may incur in the
future. Consequently, investors who purchase ordinary shares may be unable to realize a return on their investment except by selling sell
such shares after price appreciation, which may never occur. Our inability or decision not to pay dividends, particularly when others
in our industry have elected to do so, could also adversely affect the market price of our ordinary shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>There can be no assurance that we will not
be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. Holders
of our ordinary shares.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We would be classified as
a passive foreign investment company, or PFIC, for any taxable year if, after the application of certain look-through rules, either: (i)
75% or more of our gross income for such year is &#8220;passive income&#8221; (as defined in the relevant provisions of the Internal Revenue
Code of 1986, as amended, or the Code), or (ii) 50% or more of the value of our assets (generally determined on the basis of a quarterly
average) during such year is attributable to assets that produce or are held for the production of passive income. For these purposes,
cash and other assets readily convertible into cash or that do or could generate passive income are categorized as passive assets, and
the value of goodwill and other unbooked intangible assets is generally taken into account. Passive income generally includes, among other
things, rents, dividends, interest, royalties, gains from the disposition of passive assets and gains from commodities and securities
transactions. For purposes of this test, we will be treated as owning a proportionate share of the assets and earning a proportionate
share of the income of any other corporation of which we own, directly or indirectly, at least 25% (by value) of the stock. Based on our
market capitalization and the composition of our income, assets and operations, we do not expect to be a PFIC for United States federal
income tax purposes for the current taxable year or in the foreseeable future. However, this is a factual determination that must be made
annually after the close of each taxable year. Moreover, the value of our assets for purposes of the PFIC determination may be determined
by reference to the public price of our ordinary shares, which could fluctuate significantly. In addition, it is possible that the Internal
Revenue Service may take a contrary position with respect to our determination in any particular year, and therefore, there can be no
assurance that we will not be classified as a PFIC in the current taxable year or in the future. Certain adverse U.S. federal income tax
consequences could apply to a U.S. Holder (as defined in &#8220;U.S. Federal Income Tax Considerations&#8221;) if we are treated as a
PFIC for any taxable year during which such U.S. Holder holds our ordinary shares. U.S. Holders should consult their tax advisors about
the potential application of the PFIC rules to their investment in our ordinary shares. For further discussion, see &#8220;Item 10.E&#8212;Additional
Information&#8212;Taxation&#8212;U.S. Federal Income Tax Considerations&#8212;Passive Foreign Investment Companies.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If a United States person is treated as
owning at least 10% of our ordinary shares, such holder may be subject to adverse U.S. federal income tax consequences.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If a United States person
is treated as owning (directly, indirectly, or constructively) at least 10% of the value or voting power of our ordinary shares, such
person may be treated as a &#8220;United States shareholder&#8221; with respect to each controlled foreign corporation, or CFC, in our
group (if any). Because our group includes a U.S. subsidiary, certain of our non-U.S. subsidiaries will be treated as CFCs (regardless
of whether or not we are treated as a CFC). A United States shareholder of a CFC may be required to report annually and include in its
U.S. taxable income its pro rata share of &#8220;Subpart F income,&#8221; &#8220;global intangible low-taxed income,&#8221; and investments
in U.S. property by CFCs, regardless of whether we make any distributions. An individual that is a United States shareholder with respect
to a CFC generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder
that is a U.S. corporation. Failure to comply with these reporting obligations may subject a United States shareholder to significant
monetary penalties and may prevent the statute of limitations with respect to such shareholder&#8217;s U.S. federal income tax return
for the year for which reporting was due from starting. We cannot provide any assurances that we will assist investors in determining
whether we are or any of our non-U.S. subsidiaries is treated as CFC or whether any investor is treated as a United States shareholder
with respect to any such CFC or furnish to any United States shareholders information that may be necessary to comply with the aforementioned
reporting and tax paying obligations. The United States Internal Revenue Service has provided limited guidance on situations in which
investors may rely on publicly available information to comply with their reporting and tax paying obligations with respect to foreign-controlled
CFCs. A United States investor should consult its advisors regarding the potential application of these rules to an investment in our
ordinary shares.&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.75in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>We incur significant increased costs as
a result of operating as a public company, and our management is required to devote substantial time to new compliance initiatives.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As a public company whose
ordinary shares are listed in the United States, we incur significant legal, accounting and other expenses that we did not incur as a
private company. We are subject to the reporting requirements of the Exchange Act, the other rules and regulations of the SEC, and the
rules and regulations of Nasdaq and provisions of the Companies Law that apply to public companies such as us. The expenses that are required
in order to be a public company are material and compliance with the various reporting and other requirements applicable to public companies
require considerable time and attention of management. For example, the Sarbanes-Oxley Act and the rules of the SEC and national securities
exchanges have imposed various requirements on public companies, including requiring establishment and maintenance of effective disclosure
and financial controls. Our management and other personnel devote a substantial amount of time to these compliance initiatives. These
rules and regulations will continue to increase our legal and financial compliance costs and will make some activities more time-consuming
and costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director
and officer liability insurance, and we may be required to accept reduced policy limits on coverage or incur substantial costs to maintain
the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified personnel
to serve on our board of directors, our board committees, or as executive officers.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.75in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Sarbanes-Oxley Act requires,
among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. In particular,
we must perform system and process evaluation and testing of our internal control over financial reporting to allow management to report
on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, beginning
as early as our second annual report on Form 20-F for the fiscal year ended December 31, 2023. In addition, we will be required to have
our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting beginning
with our annual report on Form 20-F following the date on which we are no longer an emerging growth company. Our compliance with Section
404 of the Sarbanes-Oxley Act will require that we incur substantial accounting expense and expend significant management efforts. We
currently do not have an internal audit group, and we will need to hire additional accounting and financial staff with appropriate public
company experience and technical accounting knowledge. If we are not able to comply with the requirements of Section 404 in a timely manner,
or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that
are deemed to be material weaknesses, the market price of our shares could decline and we could be subject to sanctions or investigations
by Nasdaq, the SEC or other regulatory authorities, which would require additional financial and management resources.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our ability to successfully
implement our business plan and comply with Section 404 requires us to be able to prepare timely and accurate financial statements. We
expect that we will need to continue to improve existing, and implement new operational and financial systems, procedures and controls
to manage our business effectively. Any delay in the implementation of, or disruption in the transition to, new or enhanced systems, procedures
or controls, may cause our operations to suffer and we may be unable to conclude that our internal control over financial reporting is
effective and to obtain an unqualified report on internal controls from our auditors as required under Section 404 of the Sarbanes-Oxley
Act. This, in turn, could have an adverse impact on trading prices for our ordinary shares and could adversely affect our ability to access
the capital markets.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><b><i>We have identified a material weakness
in our internal control over financial reporting, and we may not be able to successfully implement remedial measures.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">We
have identified control deficiencies in our financial reporting process that constitute a material weakness related to lack of sufficient
internal accounting personnel, segregation of duties, lack of sufficient internal controls (including IT general controls, entity level
controls and transaction level controls).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">We
expect to take a number of measures to address the material weaknesses that have been identified. See &#8220;Item 5.E&#8212;Operating
and Financial Review and Prospects&#8212;Critical Account Estimates&#8212;Internal Control Over Financial Reporting.&#8221; However, we
cannot assure you that these measures may fully address the material weaknesses in our internal control over financial reporting or that
we may conclude that they have been fully remediated.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">We
expect to complete our remediation plan within the next 12 months. However, we have not tested the effectiveness of our internal control
over financial reporting and cannot assure you that we will be able to successfully remediate this material weakness and, even if we do,
we cannot assure you that we will not suffer from other material weaknesses in the future. Except for additional personnel costs, the
cost of systems and the costs of our third-party service providers, we do not expect to incur any material costs related to our remediation
plan.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Further,
there can be no assurance that we will not suffer from other material weaknesses or significant deficiencies in the future. If we fail
to remediate these material weaknesses or fail to otherwise maintain effective internal controls over financial reporting in the future,
such failure could result in a material misstatement of our annual or quarterly financial statements that would not be prevented or detected
on a timely basis and which could cause investors and other users to lose confidence in our financial statements, limit our ability to
raise capital and have a negative effect on the trading price of our ordinary shares. Additionally, failure to remediate the material
weakness or otherwise maintain effective internal controls over financial reporting may also negatively impact our operating results and
financial condition, impair our ability to timely file our periodic and other reports with the SEC, subject us to additional litigation
and regulatory actions and cause us to incur substantial additional costs in future periods relating to the implementation of remedial
measures.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Our disclosure controls and procedures may
not prevent or detect all errors or acts of fraud.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are subject to the periodic
reporting requirements of the Exchange Act. We designed our disclosure controls and procedures to provide reasonable assurance that information
we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed,
summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and
procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the
control system are met.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">These inherent limitations
include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized
override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud
may occur and not be detected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If our estimates or judgments relating to
our critical accounting policies are based on assumptions that change or prove to be incorrect, our results of operations could fall below
the expectations of securities analysts and investors, resulting in a decline in the trading price of our ordinary shares.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The preparation of financial
statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated
financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe
to be reasonable under the circumstances. See &#8220;Item 5 &#8211;Operating and Financial Review and Prospects&#8221;, the results of
which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue, and expenses that are not
readily apparent from other sources. Our results of operations may be adversely affected if our assumptions change or if actual circumstances
differ from those in our assumptions, which could cause our results of operations to fall below our publicly announced guidance or the
expectations of securities analysts and investors, resulting in a decline in the market price of our ordinary shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Unfavorable conditions in our industry or
the global economy or reductions in information technology spending could limit our ability to grow our business and negatively affect
our results of operations.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our results of operations may vary based on the impact of changes in
our industry and the global economy on us and our customers. Current or future economic uncertainties or downturns could adversely affect
our business, financial condition and results of operations. Negative conditions in the general economy both in the United States and
abroad, including conditions resulting from changes in gross domestic product growth, financial, and credit market fluctuations, political
turmoil, natural catastrophes, any resurgence of the COVID-19 pandemic, any other pandemic, epidemic or outbreak of infectious disease,
warfare, protests and riots, and terrorist attacks on the United States, Europe, the Asia Pacific region, or elsewhere, could cause a
decrease in business investments by our customers and potential customers, including spending on information technology, and negatively
affect the growth of our business. To the extent our offerings are perceived by customers and potential customers as discretionary, our
revenue may be disproportionately affected by delays or reductions in general information technology spending. Also, customers may choose
to develop in-house software as an alternative to using our offerings. Moreover, competitors may respond to market conditions by lowering
prices. We cannot predict the timing, strength or duration of any economic slowdown, instability or recovery, generally or within any
particular industry. If the economic conditions of the general economy or markets in which we operate do not improve, or worsen from present
levels, our business, financial condition and results of operations could be adversely affected.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>The estimates of market opportunity and
forecasts of market growth included in this Annual Report may prove to be inaccurate, and even if the markets in which we compete achieve
the forecasted growth, our business could fail to grow at similar rates, or at all.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The estimates of market opportunity
and forecasts of market growth included in this Annual Report may prove to be inaccurate. Market opportunity estimates and growth forecasts
are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate, including as a result
of any of the risks described in this Annual Report.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, the variables
that go into the calculation of our market opportunity are subject to change over time, and there is no guarantee that any particular
number or percentage of addressable users or companies covered by our market opportunity estimates will purchase our offerings or generate
any particular level of revenue for us. In addition, our ability to expand in any of our target markets depends on a number of factors,
including the cost, performance, and perceived value associated with our platform and those of our competitors. Even if the markets in
which we compete meet the size estimates and growth forecasted in this Annual Report, our business could fail to grow at similar rates,
or at all. Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many
risks and uncertainties. Accordingly, the forecasts of market growth included in this Annual Report should not be taken as indicative
of our future growth.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>If industry or financial analysts do not
publish research or reports about our business, or if they issue inaccurate or unfavorable research regarding our ordinary shares, the
market price and trading volume of our ordinary shares could decline.</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The trading market for our
ordinary shares is influenced by the research and reports that industry or financial analysts publish about us and our business. We do
not control these analysts or the content and opinions included in their reports. As a new public company, we may be slow to attract research
coverage and the analysts who publish information about our ordinary shares will have had relatively little experience with our company,
which could affect their ability to accurately forecast our results and make it more likely that we fail to meet their estimates. In the
event we obtain industry or financial analyst coverage, if any of the analysts who cover us issues an inaccurate or unfavorable opinion
regarding our company, the market price of our ordinary shares would likely decline. In addition, the share prices of many companies in
the technology industry have declined significantly after those companies have failed to meet, or significantly exceed, the financial
guidance they have publicly announced or the expectations of analysts and investors. If our financial results fail to meet, or significantly
exceed, our announced guidance or the expectations of analysts or investors, analysts could downgrade our ordinary shares or publish unfavorable
research about us. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, our visibility
in the financial markets could decrease, which in turn could cause the market price or trading volume of our ordinary shares to decline.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_011"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;4.</b>&#160;<b>INFORMATION ON THE
COMPANY</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><b>&#160;</b></p><div>

</div><div><a id="a_012"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>A. History and Development of the Company</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a leading innovator
of video encoding, transcoding and optimization solutions that enable high quality, performance, and unmatched bitrate efficiency for
video and images. With our Emmy&#174;-winning patented technology and award-winning services, we help our customers realize the potential
of video encoding and media optimization to address business-critical challenges. Our customers include tier one OTT, content distributors,
video streaming platforms, and Hollywood studios who rely on our suite of products and expertise to reduce the cost and complexity associated
with storing, distributing and monetizing video and images across devices.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">At the heart of our patented
optimization technology is the proprietary Beamr quality measure, or BQM, that is highly correlated with the human visual system. BQM
is integrated into our content adaptive bitrate, or CABR, system which together maximizes quality and removes visual redundancies resulting
in a smaller file size. The BQM has excellent correlation with subjective results, confirmed in testing under ITU BT.500, an international
standard for rigorous testing of image quality. The perceptual quality preservation of CABR has been repeatedly verified using large scale
crowd-sourcing based testing sessions, as well as by industry leaders and studio &#8220;golden eyes&#8221;.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We currently license three
core video and image compression products that help our customers use video and images to further their businesses in meaningful ways:
(1) a suite of video compression software encoder solutions including the Beamr 4 H.264 encoder, Beamr 4X H.264 content adaptive encoder,
Beamr 5 HEVC encoder and the Beamr 5X HEVC content adaptive encoder, (2) Beamr JPEGmini photo optimization software solutions for reducing
JPEG file sizes, and (3) Beamr Silicon IP block, a hardware solution for integration into dedicated video encoding ASICs, GPUs, and application
processors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our current product line is
mainly geared to the high end, high quality media customers and we count among our enterprise customers Netflix, Snapfish, ViacomCBS,
Wowza, Microsoft, VMware, Genesys, Deluxe, Vimeo, Encoding.com, Citrix, Walmart, Photobox, Antix, Dalet, and other leading media companies
using video and photo solutions. Due to the high cost and complexity of deploying our existing software solutions and the long sales lead
times, we have a made a strategic decision to focus our resources on the development and commercialization of our next-generation product,
the Beamr HW-Accelerated Content Adaptive Encoding solution, a SaaS solution that is designed, based on our own internal testing, to be
up to 10x more cost efficient than our existing software-based solutions, resulting in reduced media storage, processing and delivery
costs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our legal and commercial name
is Beamr Imaging Ltd. We were incorporated in Israel on October 1, 2009 under the name I.C.V.T Ltd. On January 11, 2015, we changed our
name to Beamr Imaging Ltd.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have two wholly owned subsidiaries:
Beamr, Inc. and&#160;Beamr Imaging RU LLC. Beamr, Inc. is our wholly owned subsidiary incorporated in 2012 in the State of Delaware. Beamr,
Inc. is engaged in reselling our software and products in the U.S. and Canada. Beamr Imaging RU LLC is our wholly owned subsidiary, a
limited Russian partnership formed in 2016. Beamr Imaging RU LLC is engaged in research and development for us.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, we previously
had a wholly owned subsidiary, Beamr UK Ltd, which was incorporated in 2017 in England. Beamr UK Ltd was engaged in reselling our software
and products in the U.K. Beamr UK Ltd was dissolved in May 2020.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On February 27, 2023, our
ordinary shares were approved for trading on the Nasdaq Capital Market under our ticker symbol &#8220;BMR&#8221; and began trading at
the open of market on February 28, 2023. Upon listing of our ordinary shares in our initial public offering on February 28, 2023, we effected
a reverse share spit at a ratio of 1-for-5.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our principal office is located
at 10 HaManofim Street, Herzeliya, 4672561, Israel, and our telephone number is +1-888-520-8735. Our primary internet address is https://beamr.com/.
None of the information on our website is incorporated by reference herein. Our wholly-owned subsidiary, Beamr, Inc., serves as our agent
for service of process in the United States for certain limited matters, and its address is 16185 Los Gatos Blvd, Ste 205, Mailbox 12,
Los Gatos, CA 95032.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We use our website (https://beamr.com/)
as a channel of distribution of Company information. The information we post on our website may be deemed material. Accordingly, investors
should monitor our website, in addition to following our press releases, SEC filings and public conference calls and webcasts. The contents
of our website are not, however, a part of this Annual Report.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are an emerging growth company, as defined in Section 2(a) of the
Securities Act, as implemented under the JOBS Act. As such, we are eligible to, and intend to, take advantage of certain exemptions from
reporting requirements that generally apply to public companies, including the auditor attestation requirements with respect to internal
control over financial reporting under Section 404 of the Sarbanes-Oxley Act, compliance with new standards adopted by the Public Company
Accounting Oversight Board which may require mandatory audit firm rotation or auditor discussion and analysis, exemption from say on pay,
say on frequency, and say on golden parachute voting requirements, and reduced disclosure obligations regarding executive compensation
in our periodic reports and proxy statements. We will be an emerging growth company until the earliest of: (i) the last day of the fiscal
year during which we had total annual gross revenues of $ $1.235 billion or more, (ii) the last day of the fiscal year following the fifth
anniversary of the date of the first sale of the ordinary shares pursuant to an effective registration statement (i.e., December 31, 2028),
(iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt, or (iv) the
date on which we are deemed a &#8220;large accelerated filer&#8221; as defined in Regulation S-K under the Securities Act, which means
the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the prior June 30th.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We report under the Exchange
Act as a non-U.S. company with foreign private issuer status. Even after we no longer qualify as an emerging growth company, as long as
we continue to qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act
that are applicable to U.S. domestic public companies, including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations with respect to a security registered under the Exchange Act;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form&#160;10-Q containing unaudited financial statements and other specified information, and current reports on Form&#160;8-K upon the occurrence of specified significant events.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are required to file an
annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results on a quarterly
basis through press releases, distributed pursuant to the rules and regulations of the Nasdaq. Press releases relating to financial results
and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to
the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result,
you may not be afforded the same protections or information, which would be made available to you, were you investing in a U.S. domestic
issuer.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We may take advantage of these
exemptions until such time as we are no longer a foreign private issuer. We would cease to be a foreign private issuer at such time as
more than 50% of our outstanding voting securities are held by U.S. residents and any of the following three circumstances applies: (i)
the majority of our executive officers or directors are U.S. citizens or residents; (ii) more than 50% of our assets are located in the
United States; or (iii) our business is administered principally in the United States.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Both foreign private issuers
and emerging growth companies are also exempt from certain more stringent executive compensation disclosure rules. Thus, even if we no
longer qualify as an emerging growth company, but remain a foreign private issuer, we will continue to be exempt from the more stringent
compensation disclosures required of companies that are neither an emerging growth company nor a foreign private issuer.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><div><a id="a_013"></a></div><p style="text-align: justify; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>B. Business Overview</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Overview</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a leading innovator
of video encoding, transcoding and optimization solutions that enable high quality, performance, and unmatched bitrate efficiency for
video and images. With our Emmy&#174;-winning patented technology and award-winning services, we help our customers realize the potential
of video encoding and media optimization to address business-critical challenges. Our customers include tier one OTT, content distributors,
video streaming platforms, and Hollywood studios who rely on our suite of products and expertise to reduce the cost and complexity associated
with storing, distributing and monetizing video and images across devices.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->44<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">At the heart of our patented
optimization technology is the proprietary Beamr quality measure, or BQM, that is highly correlated with the human visual system. BQM
is integrated into our content adaptive bitrate, or CABR, system which together maximizes quality and removes visual redundancies resulting
in a smaller file size. The BQM has excellent correlation with subjective results, confirmed in testing under ITU BT.500, an international
standard for rigorous testing of image quality. The perceptual quality preservation of CABR has been repeatedly verified using large scale
crowd-sourcing based testing sessions, as well as by industry leaders and studio &#8220;golden eyes&#8221;.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We currently license three
core video and image compression products that help our customers use video and images to further their businesses in meaningful ways:
(1) a suite of video compression software encoder solutions including the Beamr 4 H.264 encoder, Beamr 4X H.264 content adaptive encoder,
Beamr 5 HEVC encoder and the Beamr 5X HEVC content adaptive encoder, (2) Beamr JPEGmini photo optimization software solutions for reducing
JPEG file sizes, and (3) Beamr Silicon IP block, a hardware solution for integration into dedicated video encoding ASICs, GPUs, and application
processors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our current product line is
mainly geared to the high end, high quality media customers and we count among our enterprise customers Netflix, Snapfish, ViacomCBS,
Wowza, Microsoft, VMware, Genesys, Deluxe, Vimeo, Encoding.com, Citrix, Walmart, Photobox, Antix, Dalet, and other leading media companies
using video and photo solutions. Due to the high cost and complexity of deploying our existing software solutions and the long sales lead
times, we have a made a strategic decision to focus our resources on the development and commercialization of our next-generation product,
the Beamr HW-Accelerated Content Adaptive Encoding solution, a SaaS solution that is designed, based on our own internal testing, to be
up to 10x more cost efficient than our existing software-based solutions, resulting in reduced media storage, processing and delivery
costs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are currently collaborating
with NVIDIA, a multinational technology company and a leading developer of GPUs, with an annual revenue of $26.9 billion for the fiscal
year 2022, to develop the Beamr HW-Accelerated Content Adaptive Encoding solution, the world&#8217;s first GPU accelerated encoding solution
powered with our CABR, which will allow fast and easy end-user deployment combined with superior video compression rates. Upon completion,
our CABR software will execute directly on NVIDIA GPU cores and interact with the NVIDIA video accelerator encoder known as NVENC. NVIDIA
NVENC is a high-quality, high-performance hardware video encoder that is built into most NVIDIA GPUs. NVENC offloads video encoding to
hardware, and provides extreme performance for applications such as live video encoding, cloud gaming and cloud storage. NVIDIA GPUs with
NVENC are available on all major cloud platforms.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As planned, the first version
of the integrated video optimization engine was released at the end of the first quarter of 2023. Following this, we plan to build out
the cloud based SaaS platform and test it with beta customers in the third quarter of 2023. Following that, we plan to commercially launch
the first release of our cloud based Beamr HW-Accelerated Content Adaptive Encoding solution in the first quarter of 2024 and expect that
following release, end-users of the solution will enjoy significant end-user storage and networking cost savings. Using the Beamr HW-Accelerated
Content Adaptive Encoding solution will potentially reduce their return on investment for storage optimization to approximately four months,
compared to approximately two years with our existing software encoder solutions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><img alt="" src="image_001.jpg"/>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Our Business Strengths</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that the following
business strengths differentiate us from our competitors and are key to our success:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
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    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt"><b><i>We are a recognized video compression market leader</i></b>. In January 2021 we were recognized with an Emmy&#174; Award for the &#8220;Development of Open Perceptual Metrics for Video Encoding Optimization&#8221; and in November 2021 we won the Seagate Lyve Innovator of the Year competition. We have over 50 patents, and count among our customers leading content distributors including Netflix, ViacomCBS and Wowza Media Systems.</span></td></tr>
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    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt"><b><i>Strong value proposition</i></b>. We believe our existing video compression encoding solutions are among the fastest software video encoders on the market and provide a lower total cost-of-ownership to our customers by reducing media storage, processing and delivery costs. Upon release of our next generation SaaS solution, the Beamr HW-Accelerated Content Adaptive Encoding, we believe that its performance will be up to 10x more cost efficient than our existing software-based solutions, resulting in even greater reduced, based on our own internal testing, media storage, processing and delivery costs.</span></td></tr>
  </table><div>
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    <td style="text-align: justify"><span style="font-size: 10pt"><b><i>Partnering with leading technology giants to enable the adoption of our video compression solutions</i></b>. We offer industry proven video optimization solutions and are collaborating in product development with industry giants such as NVIDIA and Allegro DVT that provide incremental improvements to existing products without having to reinvent the wheel.</span></td></tr>
  </table><div>
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    <td style="width: 0.5in">&#160;</td>
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    <td style="text-align: justify"><span style="font-size: 10pt"><b><i>Core technology is powered by proprietary content-adaptive quality measure. </i></b>Our CABR technology, built over our proprietary BQM, achieves maximal compression of the video input while maintaining the input video resolution, format, and visual quality. The CABR powers our existing video compression encoders as well as our next generation Beamr HW-Accelerated Content Adaptive Encoding in development. The BQM has excellent correlation with subjective results, confirmed in testing under ITU BT.500, an international standard for rigorous testing of image quality. The perceptual quality preservation of CABR has been repeatedly verified using large scale crowd-sourcing based testing sessions, as well as by industry&#160;leaders and tier one Hollywood studios &#8220;golden eyes&#8221;.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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    <td style="text-align: justify"><span style="font-size: 10pt"><b><i>Our management team has experience building and scaling software companies</i></b>. Our visionary and experienced management team with best-in-class research and development, or R&amp;D, capabilities and in-depth industry backgrounds and experiences has been leading us since our inception. Members of our senior leadership team have held senior product, business and technology roles at companies such as Scitex, Kodak, Comverse, IBM and Intel. Sharon Carmel, our founder and Chief Executive Officer is a serial entrepreneur with a proven track record in the software space having co-founded Emblaze (LON: BLZ) which developed the Internet&#8217;s first vector-based graphics player, preceding Macromedia Flash, and BeInSync, which developed P2P synchronization and online backup technologies, and was acquired in 2008 by Phoenix Technologies (NASDAQ: PTEC).</span></td></tr>
  </table><div>
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    <td style="text-align: justify"><span style="font-size: 10pt"><b><i>Ongoing customer-driven development</i></b>. Through our account managers, support teams, product development teams and regular outreach from senior leadership, we solicit and capture feedback from our customer base for incorporation into ongoing enhancements to our solutions. We regularly provide our customers with enhancements to our products.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->47<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Our Market Opportunity</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">According to Fortune Business
Insights, the global cloud video storage market is projected to grow from $7.3 billion in 2021 to $13.5 billion in 2025 and to $20.9 billion
by 2028, at a compound annual growth rate, or CAGR, of 16% during the forecast period.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The fact that the video data
is often required to be stored and accessed forever cannot be ignored for long periods. This brings about the problem of lifetime costs
associated with the efficient storing and managing of data. While the upfront cost might appear manageable but over a period, the rise
in data volumes might require organizations to result in the need to pay more in the future to keep the data in the cloud. In today&#8217;s
environment, with deployment of media and entertainment, user generated content, enterprise video, agricultural technology, or AgTech,
and industrial solutions, autonomous vehicles, surveillance and smart cities, we believe that the usage of video and its storage on public
cloud platforms is expected to increase exponentially and we believe existing solutions are not suitable for large volume storage optimization.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Our Growth Strategies</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">We intend to pursue the following growth strategies:</p><div>

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    <td style="text-align: justify"><span style="font-size: 10pt"><b><i>Complete development and gain broad market acceptance for our SaaS solution</i></b>. We are collaborating with NVIDIA in the development of our next generation product, the Beamr HW-Accelerated Content Adaptive Encoding. Upon release, we believe it will provide a simple, easily deployable, fast, scalable, low cost and best-in-class video optimization solution resulting in reduced media storage, processing and delivery costs. We plan to make our next generation SaaS solution available through public cloud services such as AWS, Azure and GCP allowing us to potentially access and acquire large numbers of new customers with relatively low sales investment. According to Canalys estimates, these three cloud service providers accounted for 61% of the total cloud spend in the third quarter of 2021.</span></td></tr>
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    <td style="text-align: justify"><span style="font-size: 10pt"><b><i>Expand business growth through collaborations and partnerships
    with industry-leading solution providers in new verticals. </i></b>We are currently collaborating with NVIDIA and plan to expand
    our collaborations to develop further market-leading products. We believe that our hardware-accelerated CABR powered video optimization
    solutions have broad application to a wide array of verticals including UGC, public safety, smart cities, education, enterprise,
    autonomous vehicles, government and media and entertainment.</span></td></tr>
  </table><div>
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    <td style="text-align: justify"><span style="font-size: 10pt"><b><i>Continue to innovate and develop new products and features.</i></b>&#160;We continue to invest in research and development to enhance our product offerings and release new products and features. We maintain close relationships with our customer base who provide us with frequent and real-time feedback, which we leverage to rapidly update and further improve our products.</span></td></tr>
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    <td style="text-align: justify"><span style="font-size: 10pt; background-color: white"><b><i>Selectively Pursue Acquisitions and Strategic Investments.</i></b>&#160;While we have not identified any specific targets, we plan to selectively pursue acquisitions and strategic investments in businesses and technologies that strengthen our products, enhance our capabilities and/or expand our market presence in our core vertical markets.</span> <span style="font-size: 10pt">In 2016, we acquired Vanguard Video, a leading developer of software encoders.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Our CABR System</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">At the heart of our patented
optimization technology is the proprietary BQM, a novel, efficient and reliable quality evaluation algorithm which is highly correlated
with the human vision system. The CABR technology, with the BQM at its core, allows encoders to make smarter, quality driven, encoding
decisions. CABR is a closed-loop content-adaptive rate control mechanism enabling video encoders to lower the bitrate of their encode,
while simultaneously preserving the perceptual quality of the higher bitrate encode. An integrated CABR encoding solution consists of
a video encoder and the CABR rate control engine. The CABR engine comprises the CABR control module responsible for managing the optimization
process and a module which evaluates video quality. The video encoder first encodes a frame using a configuration based on its regular
rate control mechanism, resulting in an initial encode. Then, Beamr&#8217;s CABR rate control instructs the encoder to encode the same
frame again with various values of encoding parameters, creating candidate encodes. Using the BQM, each candidate encode is compared with
the initial encode, and then the best candidate is selected and placed in the output stream. The best candidate is the one that has the
lowest bitrate but still has the same perceptual quality as the initial encode. Due to very efficient control algorithms, only approximately
1.5-2 iterations are required on average to find the best candidate. Combined with the real-time oriented design of BQM, and the possibility
to reuse encoding decisions&#160;from the initial encode, the impact on overall performance is quite manageable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following is a depiction
of the CABR system showing how the BQM interacts with a video encoder.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><img alt="" src="image_004.jpg"/>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In testing, BQM demonstrated
higher correlation with subjective results than other quality measures such as PSNR and SSIM. In user testing, under ITU BT.500, an international
standard for testing image quality, the correlation of our BQM with subjective (human) results was, in our opinion, very high.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Beamr&#8217;s CABR technology
was integrated as a new rate control mechanism into our software H.264 and HEVC encoders. With regular VBR encoding, the user of the encoder
sets a target bitrate, and the resulting bitrate of the encoded video will be that target bitrate. With CABR encoding, the user also sets
a target bitrate, but the resulting bitrate of the encoded video will be lower than that target. The video will be encoded to the lowest
possible bitrate that is still perceptually identical to a VBR encode at that target bitrate. CABR with BQM can also be used to optimize
an input video stream, by removing redundancies and creating an equivalent, lower bitrate, perceptually identical output video stream.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As seen in the two graphs
below, for VBR encoding the actual average bitrate of the encoded clip is very similar to the requested target bitrate. For CABR encoding,
the actual bitrate of the encoded clips is lower than the requested target bitrate. The difference between the requested target bitrate
(dotted line) and the actual encoded CABR bitrate (blue line) is the bitrate savings. As seen in the graphs, the bitrate savings increase
as the target bitrate increases, since for higher target bitrates there is more redundancy present in the encoded stream, redundancy which
CABR removes.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><img alt="" src="image_005.jpg"/>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><img alt="" src="image_006.jpg"/>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Ultimately, Beamr&#8217;s
CABR system enables the bitrate of video files to be reduced by up to 50% over the current state of the art standard compliant block based
encoders, without compromising image quality, bitstream standard compliance or changing the artistic intent. We believe that a source
video and a Beamr-optimized video viewed side-by-side will look exactly the same to the human eye.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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</div><p style="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><img alt="" src="image_007.jpg"/>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Beamr has integrated the CABR
engine into its AVC software encoder, Beamr 4, and into its HEVC software encoder, Beamr 5. Similarly, the CABR engine can be integrated
with any software or hardware video encoder, supporting any block-based video standard such as AVC (the most popular video standard supported
on almost all end user devices), HEVC (the leading 4K video standard available on almost all 4K televisions), and AV1 (the emerging royalty-free
standard led by Google, Apple, Microsoft, Intel and many others which is used on Netflix, Youtube and Vimeo).&#160;In addition, CABR with
BQM can be used to optimize an input video stream, by removing redundancies and creating an equivalent, lower bitrate, perceptually identical
output video stream.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Our Product Offerings</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Our Next-Generation SaaS Product: Beamr HW-Accelerated Content
Adaptive Encoding</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are currently collaborating
with NVIDIA, a leading developer of GPUs, to develop the world&#8217;s first GPU accelerated encoding solution that would allow fast and
easy end-user deployment combined with superior video compression rates powered with our CABR rate control and BQM quality measure.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our BQM quality measure software
will execute directly on NVIDIA GPU cores and interact with the NVIDIA video accelerator encoder known as NVENC. NVIDIA NVENC is a high-quality,
high-performance hardware video encoder that is built into most NVIDIA GPUs. NVENC offloads video encoding to hardware, and provides extreme
performance for applications such as live video encoding, cloud gaming and cloud storage. NVIDIA GPUs with NVENC are available on all
major cloud platforms.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our current product line of
CABR software encoders run on the CPU. In proof of concept tests with both Intel and NVIDIA, we have demonstrated that when our CABR is
offloaded from the CPU to the GPU, the cost/performance ratio is up to 10x better than on the CPU.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To accommodate Beamr&#8217;s
content-adaptive GPU accelerated encoding solution, NVIDIA is currently modifying the API of the NVENC. On March 27, 2023, we announced
that our content adaptive technology officially support NVIDIA GPU acceleration, which was a major milestone for us. We are also in advanced
stages of porting the CABR to run on the GPU, and once completed, we will be able to use the NVENC as the video encoder for CABR, offloading
CABR-based video encoding from the CPU to the GPU enabling low-cost, high resolution, real time CABR encoding.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Upon release, we believe the
Beamr HW-Accelerated Content Adaptive Encoding solution will provide a simple, easily deployable, fast, scalable, low cost and best-in-class
video optimization solution resulting in reduced media storage, processing and delivery costs. We initially plan to offer our Beamr HW-Accelerated
Content Adaptive Encoding solution as a SaaS offering through public cloud data services that utilize NVIDIA GPUs (e.g., AWS, Microsoft
Azure, GCP) allowing us to potentially access and acquire large numbers of new customers with relatively low sales investment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We initiated the collaboration
with NVIDIA on developing the Beamr HW-Accelerated Content Adaptive Encoding solution in January 2021. Our collaboration with NVIDIA is
based on a mutual development program that is in advanced stages and that has been approved at senior levels at NVIDIA. While our collaboration
has not been reduced to a written agreement, we believe that NVIDIA has a commercial incentive to complete the development and deploy
the software update that enables the CABR powered NVENC because of the superior video compression rates of the NVENC when combined with
our CABR solution. Since commencing the collaboration, we have successfully completed the following steps: (i) demonstrated proof of concept;
(ii) jointly defined the required frame-level APIs that enable our CABR system to determine the optimal tradeoff between bitrate and quality;
(iii) NVIDIA has approved the plan of record; (iv) NVIDIA completed delivery of the first version of the APIs; (v) we verified implementation
of the APIs that result in significant reduction of the bitrate of video streams; (vi) in December 2022, we received a pre-final implementation
from NVIDIA showing major progress, an indication that the work is close to completion and (vii) on March 23, 2023, the first General
Availability (GA) of the API was public release by NVIDIA.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As planned, the first version
of the integrated video optimization engine was released at the end of the first quarter of 2023. Following this, we plan to build out
the cloud based SaaS platform and test it with beta customers in the third quarter of 2023. Following that, we plan to commercially launch
the first release of our cloud based Beamr HW-Accelerated Content Adaptive Encoding solution in the first quarter of 2024 and expect that
following release, end-users of the solution will enjoy significant end-user storage and networking cost savings. Using the Beamr HW-Accelerated
Content Adaptive Encoding solution will potentially reduce their return on investment for storage optimization to approximately four months,
compared to approximately two years with our existing software encoder solutions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Below is a depiction of how
we expect the end-user dashboard of the Beamr HW-Accelerated Content Adaptive Encoding to look.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><img alt="" src="image_008.jpg"/>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Following integration into
the NVIDIA GPU, we believe the Beamr HW-Accelerated Content Adaptive Encoding solution will provide the following key benefits including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt"><b><i>Attractive return on investment</i>. </b>The Beamr HW-Accelerated Content Adaptive Encoding solution will be available at an accessible price point in which we estimate it will reduce the return on investment for storage optimization to approximately four months, compared to approximately two years with our existing software solutions.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt"><b><i>Fast set-up</i></b>. The Beamr HW-Accelerated Content Adaptive Encoding solution will be deployable in a self-service (one-click) installation process within minutes without any specialized hardware or need to download third-party software, allowing new users to quickly derive value without any specialized training or heavy implementation or customization.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt"><b><i>Easy to use</i></b><i>. </i>The Beamr HW-Accelerated Content Adaptive Encoding solution will have an intuitive interface that can be easily navigated by even first-time users. Our solution removes the need for video-specific expertise and high-touch user support and troubleshooting.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt"><b><i>Cloud agnostic and scalable</i></b>. Our Beamr HW-Accelerated Content Adaptive Encoding solution is highly scalable and designed to be deployable across all environments employing NVIDIA GPUs, including public cloud, private cloud, on-premise and multi-cloud hybrid environments.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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  <tr style="vertical-align: top">
    <td style="width: 0.5in">&#160;</td>
    <td style="width: 0.25in"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt"><b><i>Security</i></b>. By using public cloud platforms best security practices, we address our customers security concerns.</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt"><b><i>Reducing carbon footprint.</i></b> Smaller video files means less disk space occupied and smaller files transferred over the network from one place to another. This in turn results in lower energy consumption, which we believe is going to be an accelerator for our service adoption.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Using our content adaptive bit rate
solution, we estimate end users will be able to save up to 50% of their video storage costs and an average of 30% in their cost of video
public cloud storage, which, based on 2020 amounts, according to Fortune Business Insights, currently stands at $9 billion.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Video Compression Software Encoder Solutions</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><b><i>Beamr 4 AVC Encoder</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Beamr4 is our fully standard
compliant AVC (H.264) video encoder. This encoding standard is still the primary format used in video applications across the market.
While the decoder and bitstream are fully defined by the standard, video coding standards do not define the encoder, and this is completely&#160;up
to the implementation ingenuity. At Beamr we have spent many years perfecting our encoder, resulting in an efficient, high performance,
high quality AVC encoder, which enables using less computation&#160;to achieve the same compression efficiency&#160;as competing implementations.
(Compression efficiency is defined by how much you can compress the video to obtain a target quality, or vice-versa, what quality&#160;can
be obtained at a specified bitrate, The higher the compression efficiency, the less bits are needed for a certain quality level). Beamr4
has an extensive API enabling deep control of the encoder configuration to maximize the benefit for each and every application or use
case, and our support team is available to help&#160;users find the best setup for their specific needs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><b><i>Beamr 5 HEVC Encoder</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Beamr5 is our fully standard
compliant HEVC (H.265) video encoder. This encoding standard is the primary format used today for high resolution (4K, 8K) and premium
quality encoding of 10 and 12 bit and High-Dynamic-Range content. Once again, only the decoder and bitstream are defined by the standard,
and encoders&#160;can differ quite significantly in how well they&#160;perform the encoding and utilize the advanced tools available in
HEVC to obtain maximum compression efficiency without incurring prohibitive performance costs. An important factor in supporting live
encoding is to be able to reach very good parallelization of the encoding tasks. This is not easy in video encoding which is very serial,
and unevenly distributed by nature. At Beamr we have developed a unique architecture for the encoder, which enables very efficient deep
parallelization making the best concurrent use of all available cores, enabling the world&#8217;s first live 8K HEVC encoder. In addition,
Beamr5 is one of the few HEVC codecs that has wide support for HDR and can be used in conjunction with Dolby Vision, HDR10 and HLG - various
HDR formats used around the globe. Beamr5 also has an extensive API enabling deep control of the encoder configuration to maximize the
benefit for each and every application or use case, and our support team is always available to help&#160;users find the best setup for
their specific needs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><b><i>Beamr 4X AVC Content
Adaptive Encoder</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Beamr4x is achieved&#160;by
adding our Content&#160;Adaptive Bit-Rate rate control, to Beamr4. Video encoders generally operate either in a bit-rate driven mode,
such as VBR (Variable Bit-Rate), or in a quality driven mode. The new mode introduced in Beamr4x, enables encode that is bit-rate driven,
but where any bits that are redundant for the perceptual quality of the video are swiftly removed. This is done by first compressing the
video frame according to the bit-rate considerations. Then, for each frame, more aggressive compression is applied, reducing the frame
size in bits to the maximal extent that is possible&#160;without&#160;compromising perceptual quality of this video&#160;frame. This is
done using our novel, award winning&#160;quality measure, which can reliably report the perceptual&#160;quality of the reduced size frame,
relative to the initial encode, and make sure we get to the best compression point. While this may sound like a difficult problem to solve
for each frame, using our sophisticated search algorithm, we actually guess the correct compression point on the first try more often
than not, and on average require less than two attempts per frame. The resulting bitstream has the same perceptual quality as the VBR
encode to target bitrate would have, while offering significant bitrate savings for many use cases.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><b><i>Beamr 5X HEVC Content Adaptive Encoder</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Similarly, Beamr 5x combines
Beamr 5 with CABR, enabling HEVC encoding with significant bitrate savings.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>JPEGMini Photo Optimization Solutions</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">JPEGmini is a patented photo
recompression technology, which significantly reduces the size of photographs without affecting their perceptual quality. JPEGmini is
fully compliant with the JPEG standard, resulting in files that are fully compatible with any browser, photo software or device that support
the standard JPEG format.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">JPEGmini is capable of reducing
the file size of standard JPEG photos by up to 50%, while the resulting photos are visually identical to the original photos. The JPEGmini
algorithm imitates the perceptual qualities of the human visual system, ensuring that each photo is compressed to the maximum extent possible
by removing redundancies, without creating any visual artifacts in the process. This enables fully automatic, maximal compression of photos
with no human intervention required. JPEGmini has also been successfully tested with artificial intelligence/machine learning image sets
in which a reduction of storage cost of up to 50% was obtained, without compromising classification and detection accuracy.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Silicon IP</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our CABR technology, which
has been integrated with Beamr software codecs to create Beamr4x and Beamr5x, has also been implemented as a silicon IP design, which
can be integrated with any HW video encoder, such as our collaboration with Allegro DVT, a leading provider of video processing silicon
IPs, to create the world&#8217;s first content-adaptive silicon IP encoder. This enhances the encoder by providing the additional, bitrate
saving, encoding mode.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><b>Sales and Marketing</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of April 15, 2023, we have
two-full time and part-time sales and marketing employees and consultants, whose focus is to work together to accelerate the adoption
of our existing products, to drive awareness and increase brand recognition of our products and technologies, to improve new customer
acquisitions and to increase revenue from our existing customers.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="background-color: white">For
our next-generation </span>Beamr HW-Accelerated Content Adaptive Encoding solution<span style="background-color: white">, we plan to launch
our solution on the largest cloud platform, AWS, and after initial deployment on AWS to integrate our solution both with Azure and GCP.
Since NVIDIA GPUs are widely adopted by cloud platforms, we believe that by making the Beamr HW-Accelerated Content Adaptive Encoding
solution on cloud platforms will </span>allow us to potentially access and acquire large numbers of new customers with relatively low
sales investment through a self service, online sales process, with low touch pay as you go subscription service to our SaaS solution.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, since the Beamr
HW-Accelerated Content Adaptive Encoding solution is designed to be deployable across all environments, including public cloud, private
cloud, on-premise and multi-cloud hybrid environments, we intend to focus our direct sales efforts on particular vertical markets that
store large amounts of video including internet of things (IoT), smart cities, surveillance, autonomous cars, AgTech, and medical imaging.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="background-color: white">We
primarily market and license directly our existing products to media customers through outbound sales networking and customer and partner
referrals. Our direct customers include category leaders such as Netflix, </span>Snapfish, <span style="background-color: white">ViacomCBS,
Wowza and Encoding.com. Our sales cycles for our existing products typically require a significant investment of time and a substantial
expenditure of resources before we can realize revenue from the sale of our solutions, if any. Our typical sales cycle consists of a multi-month
sales and development process involving our customers&#8217; system designers and management and our sales personnel and software engineers.
If successful, this process culminates in a customer&#8217;s decision to use our solutions in its system, which we refer to as an account
win. </span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We focus our marketing efforts
on the strength of our product and technology innovation, the value we provide and our domain expertise. We target the video engineering
and information technology (IT) operations community through our marketing activities, using diverse tactics to connect with prospective
customers, such as content marketing, events, social media, and public relations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 27.8pt; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">We
intend to continue to invest in our sales and marketing capabilities to capitalize on our market opportunity.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">We
enter into written contracts with our customers pursuant to which we license the rights to use our software and provide maintenance and
technical support. Our contracts are generally for one to three-year terms, with automatic renewal terms of one year terms. Some of our
contracts are on a perpetual basis. We bill most of our customers annually in advance for the fees associated with the software licenses
and related support. Some of our customers are billed on a quarterly basis.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Research and Development</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our research and development
team is responsible for the design, development, testing and delivery of new technologies, features and integrations of our solutions,
as well as the continued improvement and iteration of our existing products. It is also responsible for operating and scaling our solutions
including the underlying infrastructure. Our research and development investments seek to drive core technology innovation and bring new
products to market.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Members of our research and
development team specialize in many functional areas including algorithms, machine learning, and electrical engineering as well as computer
science. As we shift our focus to a SaaS based cloud service offering, we intend to make significant investments in a cloud-optimized
delivery model while continuing to invest in our software offerings, both for standalone consumption and for deployment in hybrid environments.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our main research and development
facility is located in central Israel, which we believe is a strategic advantage for us, allowing us to leverage a talented pool of engineers
and product experts.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of April 15, 2023, we had
20 full-time and part-time employees dedicated to research and development. We have made substantial investments in product and technology
development since our inception. Research and development expense totaled $2 million and $2 million in the years ended December 31, 2022
and 2021, respectively. We expect our research and development expense to increase significantly for the foreseeable future as we enhance
our existing product, develop new products for our current markets and introduce new products in new markets.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Acquisition</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">In
2016, we acquired Vanguard Video, a provider of HEVC and H.264 codec technologies, which enabled us to integrate our CABR technology with
Vanguard Videos video encoders, which today are available as Beamr 4x and Beamr 5x.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Competition</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">While there are several companies
offering video compression solutions such as MainConcept, Ateme, Ittiam, Visionular and open source (x264/x265), we believe there is currently
no direct competitor with our content-adaptive video compression solutions. There are companies which offer software solutions for video
optimization such as Harmonic and Elemental, and other companies offering storage optimization (but not involving video technologies)
such as EMC and Seagate. In addition, for our quality measure, some of our current competitors include SSIMWave (SSIMPlus), Apple (AVQT),
Google (YouVQ) and open source (VMAF). We operate in a highly specialized area that is evolving very quickly with rapid developments.
In the future, competitors could develop products or solutions that compete with our video compression solutions. For example, the public
cloud platforms such as AWS, Azure and GCP could in the future develop their own video optimization hardware accelerated solutions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">We believe the following
competitive attributes are necessary for our solutions to successfully compete in the video compression market:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">&#160;</p><div>

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  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td><span style="font-size: 10pt">&#9679;</span></td>
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  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
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  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
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  <tr style="vertical-align: top">
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    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
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  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td><span style="font-size: 10pt">&#9679;</span></td>
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  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that we compare
favorably on the basis of the factors listed above. However, many of our competitors have substantially greater financial, technical,
and marketing resources; relationships with large vendor partners; larger global presence; larger customer bases; longer operating histories;
greater brand recognition; and more established relationships in the industry than we do. Furthermore, new entrants not currently considered
to be competitors may enter the market through acquisitions, partnerships, or strategic relationships. See &#8220;Item 3.D Risk Factors&#8212;Risks
Related to Our Business and Industry&#8212;We may not be able to compete successfully against current and future competitors, some of
whom have greater financial, technical, and other resources than we do. If we do not compete successfully, our business, financial condition
and results of operations could be harmed.&#8221;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Intellectual Property</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Intellectual property is an
important aspect of our business and we seek protection for our intellectual property rights as appropriate. To establish and protect
our proprietary rights, we rely on a combination of patent, copyright, trade secret and trademark laws, know-how and continuing innovation,
and contractual restrictions such as confidentiality agreements, licenses, and intellectual property assignment agreements. We strive
to protect the proprietary technologies that we believe are important to our business, including seeking and maintaining patent protection
intended to cover our system.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of April 15, 2023, our
exclusively owned patent portfolio includes 53 issued patents (one of which is jointly owned), of which 33 are U.S. patents and 20 are
foreign patents, and two U.S. patent applications are pending. The claims of these owned patents and patent applications are directed
toward various aspects of our family of products, method of their manufacturing and research programs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We pursue the registration
of our domain names that we consider material to the marketing of our products, including the <i>beamr.com</i> domain name</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We generally seek to enter
into confidentiality agreements and proprietary rights agreements with our employees and consultants and to control access to, and distribution
of, our proprietary information. However, we cannot guarantee that all applicable parties have executed such agreements. Such agreements
can also be breached, and we may not have adequate remedies for such breach.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Intellectual property laws,
procedures, and restrictions provide only limited protection, and any of our intellectual property rights may be challenged, invalidated,
circumvented, infringed, misappropriated or otherwise violated. Furthermore, the laws of certain countries do not protect intellectual
property and proprietary rights to the same extent as the laws of the United States, and we therefore may be unable to protect our proprietary
technology in certain jurisdictions. Moreover, our platform and many of our products and services incorporate software components licensed
to the general public under open-source software licenses. We obtain some components from software developed and released by contributors
to independent open-source components of our platform. Open-source licenses grant licensees broad permissions to use, copy, modify and
redistribute certain components of our platform. As a result, open-source development and licensing practices can limit the value of our
proprietary software assets.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Despite our efforts to protect
our proprietary rights, unauthorized parties may attempt to copy or obtain and use our technology to develop products and services with
the same functionality as our platform. Policing unauthorized use of our technology is difficult. Our competitors could also independently
develop technologies like ours, and our intellectual property rights may not be broad enough for us to prevent competitors from selling
products and services incorporating those technologies. For more information regarding the risks relating to intellectual property, see
&#8220;Item 3.D Risk Factors&#8212;Risks Related to Information Technology, Intellectual Property and Data Security and Privacy.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><img alt="" src="image_009.jpg"/>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->59<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><b>Regulatory Environment</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">We
are subject to a number of U.S. federal and state and foreign laws and regulations that involve matters central to our business. These
laws and regulations involve privacy, data protection, intellectual property, competition, consumer protection and other subjects. Many
of the laws and regulations to which we are subject are still evolving and being tested in courts and could be interpreted in ways that
could harm our business. In addition, the application and interpretation of these laws and regulations are often uncertain, particularly
in the new and rapidly evolving industry in which we operate. Because global laws and regulations have continued to develop and evolve
rapidly, it is possible that we may not be, or may not have been, compliant with each such applicable law or regulation.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Employees </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: justify; margin: 0pt 0; text-indent: 0.5in"><span style="font-size: 10pt">As of April 15, 2023,
we had six employees in Israel, 17 employees who are employed by our wholly owned subsidiary in St. Petersburg, Russia and two employees
who are employed by our wholly owned subsidiary in California, United States. We are not bound by any collective bargaining agreements.
We consider the relationship with our employees to be good. We also use outside consultants and contractors with special expertise and
skills for limited engagements, including manufacturing and quality assurance. During the fourth quarter of 2022, we implemented a cost
reduction plan, including layoffs of certain employees, reducing certain employees from full-time status to part-time status and salary
and bonus reductions of our management and employees.</span>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Environmental, Health, and Safety Matters</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our research, development,
and manufacturing processes involve the controlled use of certain hazardous materials. Therefore, we are subject to extensive environmental,
health, and safety laws and regulations in a number of jurisdictions in Israel, governing, among other things: the use, storage, registration,
handling, emission, and disposal of chemicals, waste materials, and sewage; chemicals, air, water, and ground contamination; air emissions;
and the cleanup of contaminated sites, including any contamination that results from spills due to our failure to properly dispose of
chemicals, waste materials, and sewage. Our operations at our Rehovot manufacturing facility use chemicals and produce waste materials
and sewage. Our activities require permits from various governmental authorities including local municipal authorities, the Ministry of
Environmental Protection, and the Ministry of Health. The Ministry of Environmental Protection, the Ministry of Health, local authorities,
and the municipal water and sewage company conduct periodic inspections in order to review and ensure our compliance with various regulations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">These laws, regulations, and
permits could potentially require the expenditure by us of significant amounts for compliance or remediation. We believe that our environmental,
health, and safety procedures for handling and disposing of these materials comply with the standards prescribed by the controlling laws
and regulations. If we fail to comply with such laws, regulations, or permits, we may be subject to fines and other civil, administrative,
or criminal sanctions, including the revocation of permits and licenses necessary to continue our business activities. In addition, we
may be required to pay damages or civil judgments with respect to third-party claims, including those relating to personal injury (including
exposure to hazardous substances we use, store, handle, transport, manufacture, or dispose of), property damage, or contribution claims.
These risks are managed to minimize or eliminate associated business impacts. Some environmental, health, and safety laws allow for strict
joint and several liability for remediation costs, regardless of comparative fault. We may be identified as a responsible party under
such laws. Such developments could have a material adverse effect on our business, financial condition, and results of operations as these
kinds of liabilities could exceed our resources. We could be subject to a regulatory shutdown of a facility that could prevent the distribution
and sale of products manufactured in such facility for a significant period of time, and we could suffer a casualty loss that could require
a shutdown of the facility in order to repair it, any of which could have a material, adverse effect on our business. Although we continuously
strive to maintain full compliance with respect to all applicable global environmental, health, and safety laws and regulations, we could
incur substantial costs to fully comply with future laws and regulations, and our operations, business, or assets may be negatively affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, compliance with
laws and regulations relating to environmental, health, and safety matters is an ongoing process and is often subject to change. In the
event of any changes or new laws or regulations, we could be subject to new compliance measures or to penalties for activities which were
previously permitted. For instance, Israeli regulations were promulgated in 2012 relating to the discharge of industrial sewage into the
sewer system. These regulations establish new and potentially significant fines for discharging forbidden or irregular sewage into the
sewage system. We have compliance procedures in place for employee health and safety programs, driven by a centrally led organizational
structure that ensures proper implementation, which is essential to our overall business objectives.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->60<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We invest resources in creating
a green production environment and in the treatment and disposal of waste using environmentally friendly processes. We have received all
the necessary permits from the Ministry of Environmental Protection regarding our operations in Yessod Hama&#8217;ala and we have obtained
a business license for our new facilities in Rehovot. We consult with environmental consultants for direction on environmental issues.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Legal Proceedings</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are not currently party
to any pending material legal proceedings. From time to time, we may become a party to litigation incident to the ordinary course of our
business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of
management resources and other factors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_014"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>C. Organizational Structure</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have two wholly owned subsidiaries:
Beamr, Inc. and&#160;Beamr Imaging RU LLC. Beamr, Inc. is our wholly owned subsidiary incorporated in 2012 in the State of Delaware. Beamr,
Inc. is engaged in reselling our software and products in the U.S. and Canada. Beamr Imaging RU LLC is our wholly owned subsidiary, a
limited Russian partnership formed in 2016. Beamr Imaging RU LLC is engaged in research and development for us.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, we previously
had a wholly owned subsidiary, Beamr UK Ltd, which was incorporated in 2017 in England. Beamr UK Ltd was engaged in reselling our software
and products in the U.K. Beamr UK Ltd was dissolved in May 2020.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_015"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>D. Property, Plant and Equipment</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our principle executive offices
are located in Herzliya, Israel and consist of approximately 300 square feet of office space. Our wholly owned Russian subsidiary operates
from a leased office located in St Petersburg, Russia. Our employees in our wholly owned US subsidiary operate primarily from their home
offices.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We lease all of our facilities
and do not own any real property. We intend to procure additional space in the future as we continue to add employees and expand geographically.
We believe our facilities are adequate and suitable for our current needs and that, should it be needed, suitable additional or alternative
space will be available to accommodate our operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_016"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;4A. UNRESOLVED STAFF COMMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_017"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>ITEM&#160;5. OPERATING AND FINANCIAL REVIEW
AND PROSPECTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">You should read the following
discussion and analysis of our financial condition and results of operations together with the section titled &#8220;Item 3.A.&#8212;Selected
Financial Data&#8221; and our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 20-F.
This discussion and other parts of this Annual Report on Form 20-F contain forward-looking statements based upon current expectations
that involve risks and uncertainties. This discussion and other parts of this Annual Report on Form 20-F contain forward-looking statements
that involve risk and uncertainties, such as statements of our plans, objectives, expectations, and intentions. Our actual results could
differ materially from those discussed in these forward looking statements. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in the section titled &#8220;Item 3.D.&#8212;Risk Factors&#8221; and elsewhere in this
Annual Report in Form 20-F.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Overview</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are a leading innovator
of video encoding, transcoding and optimization solutions that enable high quality, performance, and unmatched bitrate efficiency for
video and images. With our Emmy&#174;-winning patented technology and award-winning services, we help our customers realize the potential
of video encoding and media optimization to address business-critical challenges. Our customers include tier one OTT, content distributors,
video streaming platforms, and Hollywood studios who rely on our suite of products and expertise to reduce the cost and complexity associated
with storing, distributing and monetizing video and images across devices.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">At the heart of our patented
optimization technology is the proprietary BQM, that is highly correlated with the human visual system. BQM is integrated into our CABR,
system, which maximizes quality and remove visual redundancies resulting in a smaller file size. The BQM has excellent correlation with
subjective results, confirmed in testing under ITU BT.500, an international standard for rigorous testing of image quality. The perceptual
quality preservation of CABR has been repeatedly verified using large scale crowd-sourcing based testing sessions, as well as by industry
leaders and studio &#8220;golden eyes&#8221;.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We currently license three
core video and image compression products that help our customers use video and images to further their businesses in meaningful ways:
(1) a suite of video compression software encoder solutions including the Beamr 4 encoder, Beamr 4X content adaptive encoder, Beamr 5
encoder and the Beamr 5X content adaptive encoder, (2) Beamr JPEGmini photo optimization software solutions for reducing JPEG file sizes,
and (3) Beamr Silicon IP block, a hardware solution for integration into dedicated video encoding ASICs, GPUs, and application processors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our current product line is
mainly geared to the high end, high quality media customers and we count among our enterprise customers Netflix, ViacomCBS, Snapfish,
Wowza, Microsoft, VMware, Genesys, Deluxe, Vimeo, Encoding.com, Citrix, Walmart, Photobox, Antix, Dalet, and other leading media companies
using video and photo solutions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We currently derive a significant
portion of our revenue from a limited number of our customers. For the years ended December 31, 2022 and December 31, 2021, our top ten
customers in the aggregate accounted for approximately 61% and 62% of our revenues.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Due to the high cost and complexity
of deploying our existing software solutions and the long sales lead times, we have a made a strategic decision to focus our resources
on the development and commercialization of our next-generation product, the Beamr HW-Accelerated Content Adaptive Encoding solution,
a SaaS solution that is designed, based on our own internal testing, to be up to 10x more cost efficient than our existing software-based
solutions, resulting in reduced media storage, processing and delivery costs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are currently collaborating
with NVIDIA, a multinational technology company and a leading developer of GPUs, with an annual revenue of $26.9 billion for the fiscal
year 2022, to develop the world&#8217;s first GPU accelerated encoding solution that would allow fast and easy end-user deployment combined
with superior video compression rates powered with our CABR rate control and BQM quality measure. Our BQM quality measure software will
execute directly on NVIDIA GPU cores and interact with the NVIDIA video accelerator encoder known as NVENC. NVIDIA NVENC is a high-quality,
high-performance hardware video encoder that is built into most NVIDIA GPUs. NVENC offloads video encoding to hardware, and provides extreme
performance for applications such as live video encoding, cloud gaming and cloud storage. NVIDIA GPUs with NVENC are available on all
major cloud platforms. We are in the advanced stages of development and expect to beta release the Beamr HW-Accelerated Content Adaptive
Encoding solution during the third quarter of 2023 and expect that following release, end-users of the solution will enjoy significant
end-user storage and networking cost savings, potentially reducing their return on investment for storage optimization to approximately
four months, compared to approximately two years with our existing software encoder solutions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Impact of COVID-19</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For additional information,
see &#8220;Item 3.D Risk Factors&#8212;Risks Related to Our Business and Industry&#8211;Any resurgence of the COVID-19 pandemic could
adversely affect our business, financial condition and results of operations.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Impact of Invasion of Ukraine</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="background-color: white">In
addition to our U.S. and Israel operations, we have operations in Russia through our wholly owned subsidiary, Beamr Imaging RU. Specifically,
we undertake some of our software development and design, quality assurance, and support in Russia using personnel located there. While
a majority of our developers are located in Russia, our research and development leadership is all located in Israel. </span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="background-color: white">On
February 24, 2022, Russia invaded Ukraine. The outbreak of hostilities between the two countries could result in more widespread conflict
and could have a severe adverse effect on the region.</span> Following Russia&#8217;s actions, various countries, including the U.S.,
Canada, the United Kingdom, Germany and France, as well as the European Union, issued broad-ranging economic sanctions against Russia.
Such sanctions included, among other things, a prohibition on doing business with certain Russian companies, officials and citizens; a
commitment by certain countries and the European Union to remove selected Russian banks from the Society for Worldwide Interbank Financial
Telecommunications (SWIFT) electronic banking network that connects banks globally; and restrictive measures to prevent the Russian Central
Bank from undermining the impact of the sanctions. In response to sanctions, the Russian Central Bank raised its interest rates and banned
sales of local securities by foreigners. Russia may take additional counter measures or retaliatory actions in the future. The continuation
of these hostilities may result in additional economic and other sanctions against Russia. The potential impact of the conflict and any
resulting bans, sanctions and boycotts on companies doing business in Russia is currently uncertain due to the fluid nature of the conflict
as it is unfolding and has the potential to result in broadened military actions. The duration of ongoing hostilities and such sanctions
and related events cannot be predicted. Uncertainty as to future relations between Russia and the U.S. and other countries in the west,
or between Russia and other eastern European countries, may have a negative impact on our operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="background-color: white">We
do not operate in any sectors of the Russian economy that have been targeted by U.S. or EU sanctions and have no reason to believe that
we would be targeted by any sanctions in the future. Nonetheless, such sanctions and potential responses to such sanctions, including
those that may limit or restrict transfer funds into Russia, may in the future significantly affect our ability to pay our personnel based
in Russia.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our operations and presence
in Russia is limited. We have no manufacturing operations in Russia and we do not sell any products in Russia and as a consequence we
have not derived any revenues from there. To date, none of our investors expressed concern with respect to our operations in Russia and
none of our customers terminated or downsized their engagement with us as a result of such operations. Our employees in Russia have not
to date experienced any change in their daily ability to perform their tasks. We do not expect Russia or another government to nationalize
our assets or operations in Russia. In particular, our primary assets are software that are stored outside of Russia and our products
and services are all delivered outside of Russia. In addition, we believe that if we needed to, we would be able to recruit personnel
outside Russia without any material interruption to our operations. As a result, we believe that if nationalization were to occur, any
impact on our financial statements would be immaterial.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="background-color: white">Since
the start of the conflict, we have been constantly evaluating our activities in Russia. Our board is responsible for overseeing risks
related to Russia&#8217;s invasion of Ukraine, including risks related to cybersecurity, sanctions, employees based in Russia and risks
associated with ongoing or halted operations or investments in affected regions and is actively monitoring key risks. In response to Russia&#8217;s
invasion of Ukraine, in March 2022, our management presented to our board a business continuity plan. We have begun to partially implement
the business continuity plan in order to address risks related to the conflict on our personnel, operations and product development that
includes alternative payment solutions for personnel in Russia and relocation of certain personnel to territories outside Russia and Belarus
on short notice</span>. As of April 15, 2023, some of the Russian employees and contractors of our wholly owned subsidiary in St. Petersburg,
Russia have relocated to other countries and we are continuing to monitor the situation with respect to our business continuity plan.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For additional information,
see &#8220;Item 3.D&#8212;Risk Factors&#8212;Risks Related to Our Operations in Russia&#8212;Russia&#8217;s invasion of Ukraine and sanctions
brought against Russia could disrupt our software development operations in Russia.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Components of Our Results of Operations</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><b><i>Revenue</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><i>Software Licensing</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our revenues are mainly comprised
of revenue from licensing the rights to use our software for a limited term (mainly for a period of one to three years) or on a perpetual
basis for enterprises that incorporate our perpetual license in their own products delivered to end users and for our products&#160;sold
to thousands of private consumers, as applicable to each contract, and from and provision of related maintenance and technical support
services (i.e. Post-Contract Customer Support, or PCS).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Revenue from the sale of software
license (either timely-based or perpetual) is recognized at a point in time in which the license is delivered to the customer. The software
license is considered a distinct performance obligation, as the customer can benefit from the software on its own. Revenue from PCS services
are also derived from annual maintenance providing for unspecified upgrades on a when-and-if-available basis. The right for an unspecified
upgrade for the version acquired by the customer and enhancements on a when-and-if-available basis that do not specify the features, functionality
and release date of future product enhancements for the customer to know what will be made available and the general timeframe in which
it will be delivered. We consider the PCS performance obligation as a distinct performance obligation that is satisfied over time and
recognized on a straight-line basis over the contractual period (mainly over a period of one year either for timely-based license or for
perpetual license).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As we bundle software licenses
(either timely-based or perpetual) together with PCS, the transaction price is allocated to the separate performance obligations on a
relative standalone selling price basis.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Since we do not sell PCS on
a stand-alone basis and due to the fact that these services are usually involved with limited customer support, mainly based on several
hours of technical support per contract (as management believes the technology and products covered under the software license component
are mature and fully functional), the standalone selling prices of the PCS are determined based on the expected cost plus a margin based
on estimation of direct fulfillment cost (an hourly service) and a reasonable margin. Such estimate is also corroborated with the price
that the customer would have to pay to a third-party service provider for a similar support service.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The stand-alone selling price
of the software licenses (either timely-based or perpetual) is estimated by management based on adjusted market assessment approach which
represents management estimation of the price that a customer in the market will be willing to pay for such license on a stand-alone basis
(i.e. without any PCS).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Due to the fact that these
services are usually involved with limited customer support, mainly based on several hours of technical support per contract, the transaction
price allocated to the PCS is considered insignificant. Consequently, most of the transaction price is allocated to the software licenses
as management believes the technology and products covered under the software license component are mature and fully functional.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><i>Advertising</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Commencing 2022, revenue in
small volume is also derived from the traffic operations in the Google AdSense program, a web advertising platform, that we make available
on our websites.&#160;Google pays us on a cost-per-click basis. We recognize as revenue the fees paid to it by Google based on the volume
of clicks through to Google AdSense advertisements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><b><i>Cost of Revenue</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Cost of software licensing
and related maintenance and technical support services revenues primarily consist of costs related to salaries, of our support team and
additional overhead allocation costs such as rent, utilities and supplies to all departments based on relative headcount.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><b><i>Gross Margins</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Gross margins have been, and
will continue to be, affected by a variety of factors, including the average sales price of our products and services, volume growth,
the mix of revenues, software licenses, maintenance and technical support and professional services, onboarding of new media and telecom
customers, and changes in cloud infrastructure and personnel costs.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><b><i>Operating Expenses</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><i>Research and Development</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our research and development
expenses consist primarily of costs incurred for personnel-related expenses for our technical staff, including salaries and other direct
personnel-related costs. Additional expenses include consulting, amortization of acquired technology intangible asset and professional
fees for third-party development resources. We expect our research and development expenses to increase in absolute dollars for the foreseeable
future as we continue to dedicate substantial resources to develop, improve and expand the functionality of our solutions. Subsequent
costs incurred for the development of future upgrades and enhancements, which are expected to result in additional functionality, may
qualify for capitalization under internal-use software and therefore may cause research and development expenses to fluctuate.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><i>Selling and Marketing Expenses</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our selling and marketing
expenses consist primarily of personnel related costs for our sales and marketing functions, including salaries and other direct personnel-related
costs. Additional expenses include marketing program costs, amortization of acquired customer relationships and trade names, intangible
assets, and payment processer commissions. We expect our selling and marketing expenses will increase on an absolute dollar basis for
the foreseeable future as we continue to increase investments to support our growth. We also anticipate that selling and marketing expenses
will increase as a percentage of revenue in the near and medium-term.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><i>General and Administrative
Expenses</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our general and administrative
expenses consist primarily of personnel-related costs for our executive, finance, human resources, professional fees, information technology
and legal functions, including salaries and other direct personnel-related costs. We expect general and administrative expense to increase
on an absolute dollar basis for the foreseeable future as we continue to increase investments to support our growth and as a result of
our becoming a public company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We allocate overhead expenses
related to the services agreement and the office agreement expenses under which we receive recurring consulting and related services from
our founder Sharon Carmel as Chief Executive Officer and an entity controlled by him, Sharon Carmel Management, Ltd. The allocation was
done based on the management estimation to reflect the contribution to the related activity.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->65<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><i>Other Income</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In 2021, other income consisted
primarily of loans forgiveness as it were utilized for qualifying expenses under the Coronavirus Aid, Relief, and Economic Security Act.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><i>Financing Income (Expenses),
Net</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Financing income (expenses),
net consists of amortization of discounts and interest expense on our indebtedness, modification of terms relating to our loan with Silicon
Valley Bank, or SVB, and changes in the fair value of warrants and convertible advanced investments. Financial expenses, net also includes
foreign exchange gains and losses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><i>Taxes on Income</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are subject to taxes in
jurisdictions or countries in which we conduct business. Our effective tax rate is affected by tax rates in jurisdictions and the relative
amounts of income we earn in those jurisdictions, changes in the valuation of our deferred tax assets and liabilities, applicability of
any valuation allowances, and changes in tax laws in jurisdictions in which we operate. Due to cumulative losses, we maintain a valuation
allowance against our deferred tax assets. We consider all available evidence, both positive and negative, in assessing the extent to
which a valuation allowance should be applied against our deferred tax assets. Realization of our deferred tax assets depends upon future
earnings, the timing and amount of which are uncertain. Our effective tax rate is affected by tax rates in foreign jurisdictions and the
relative amounts of income we earn in those jurisdictions, as well as non-deductible expenses, such as share-based compensation, and changes
in our valuation allowance.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_018"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>A. Operating Results</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The table below provides our
results of operations for the years ended December 31, 2022, 2021, and 2020.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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</td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-style: italic">(U.S. dollars in thousands)</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%">Revenues</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,863</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">3,300</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">3,176</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(98</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(90</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(94</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Gross profit</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">2,765</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">3,210</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">3,082</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Operating expenses:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Research and development</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(2,063</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(2,032</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(2,727</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Sales and marketing</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(905</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(959</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(1,371</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">General and administrative</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(828</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(773</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(671</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt">Other income</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">129</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">20</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Operating loss</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(1,031</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(425</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(1,667</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Financing expenses, net</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(165</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(475</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(697</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt">Tax on income</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(52</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(52</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(95</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 4pt">Net loss</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(1,248</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(952</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(2,459</td><td style="padding-bottom: 4pt; text-align: left">)</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><i>Revenues, Cost of Revenues and Gross Profit</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table presents
our revenue, cost of revenues and gross profit for the periods indicated:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="10" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">Year Ended&#160;December 31,</td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">2,863</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">3,300</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">3,176</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 1.5pt">Cost of revenues</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(98</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(90</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(94</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 4pt">Gross profit</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">2,765</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">3,210</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Revenues decreased by $0.4
million, or 13%, to $2.9 million for the year ended December 31, 2022, from $3.3 million for the year ended December 31, 2021. The decrease
was primarily due to a shifting of a license renewal that occurred in December 2021 for a 15-month extension until March 2023, which resulted
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</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Revenues increased by $0.1
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was primarily due to higher volume of transactions in which license renewal transactions have occurred in 2021 which resulted in recognizing
the related revenues in higher amount in such reported year compared to 2020.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><b><i>Operating Expenses</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><i>Research and Development
Expenses</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
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    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: left">$</td><td style="text-align: right">(99</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(161</td><td style="text-align: left">)</td></tr>
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    <td style="text-align: left">$</td><td style="text-align: right">(4</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(107</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(415</td><td style="text-align: left">)</td></tr>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(188</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(2,032</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(2,727</td><td style="padding-bottom: 4pt; text-align: left">)</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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did not change materially for the year ended December 31, 2022, compared to 2021. There was a slight increase in salaries, professional
fees and overhead expenses offset by a decrease in depreciation and amortization expenses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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decreased by $0.7 million, or 25% to $2 million for the year ended December 31, 2021, from $2.7 million in 2020. The decrease was primarily
due to (i) a reduction in salary and expenses related to a change in priority of deployment of our resources, (ii) a decrease in depreciation
and amortization of intangible assets, and (iii) our focus of our R&amp;D on our new SaaS solution, the Beamr HW-Accelerated Content Adaptive
Encoding solution.</p><div>

</div><p style="text-indent: 0pt; font: 10pt Times New Roman, Times, Serif; margin: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><i>Selling and Marketing Expenses</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom">
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    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(560</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(777</td><td style="width: 1%; text-align: left">)</td></tr>
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    <td style="text-align: left">$</td><td style="text-align: right">(81</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(255</td><td style="text-align: left">)</td></tr>
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    <td style="text-align: left">$</td><td style="text-align: right">(17</td><td style="text-align: left">)</td></tr>
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(905</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(959</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Selling and marketing expenses
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Selling and marketing expenses
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due to (i) a reduction in salary and expenses related to a change in priority of deployment of our resources, (ii) a decrease in depreciation
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Encoding solution.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><i>General and Administrative</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

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    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(346</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(297</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(352</td><td style="width: 1%; text-align: left">)</td></tr>
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    <td style="text-align: left">$</td><td style="text-align: right">(504</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(509</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(360</td><td style="text-align: left">)</td></tr>
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    <td style="text-align: left">$</td><td style="text-align: right">140</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">220</td><td style="text-align: left">&#160;</td></tr>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(107</td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(179</td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(828</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(773</td><td style="padding-bottom: 4pt; text-align: left">)</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">(671</td><td style="padding-bottom: 4pt; text-align: left">)</td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><i>Other Income</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><i>Financing Expenses, Net</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

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  <tr style="vertical-align: bottom; background-color: White">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Financing expenses decreased
by $0.3 million, or 65%, to $0.17 million for the year ended December 31, 2022, from $0.47 million in 2021. The decrease was primarily
due to a decrease in the change of fair value of convertible advanced investment, a decrease in exchange rate differences and a decrease
in modification of terms relating to straight loan offset by an increase in amortization of discount and accrued interest and discount
expense relating to liability to related party.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Financing expenses decreased
by $0.2 million, or 32%, to $0.5 million for the year ended December 31, 2021, from $0.7 million in 2020. The decrease was primarily due
to a decrease in the change of fair value of convertible advanced investment, a decrease in exchange rate differences, a decrease in amortization
of discount and accrued interest on our loan from SVB and offset by one-time expenses incurred as result of modification of terms relating
to straight loan.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><i>Taxes on Income</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Taxes on income expenses did
not change for the year ended December 31, 2022, compared to 2021.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Taxes on income decreased
by $0.04 million, or 45%, to $0.05 million for the year ended December 31, 2021, from $0.1 million in 2020. The decrease was primarily
due to tax provision adjustments related to amortization of intangible assets.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Recent Accounting Pronouncements</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Certain recently issued accounting
pronouncements are discussed in Note 2, Significant Accounting Policies, to the consolidated financial statements included in &#8220;Item
18. Financial Statements&#8221; of this Annual Report.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>JOBS Act</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the JOBS Act, an &#8220;emerging
growth company&#8221; can take advantage of an extended transition period for complying with new or revised accounting standards. This
provision allows an &#8220;emerging growth company&#8221; to delay the adoption of new or revised accounting standards that have different
transition dates for public and private companies until those standards would otherwise apply to private companies. Although we meet the
definition of an &#8220;emerging growth company&#8221; and we have elected not to use this extended transition period for complying with
new or revised accounting standards.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_019"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>B.</b>&#160;<b>Liquidity and Capital Resources</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have financed our operations
through cash generated from operations, the proceeds from private offerings, proceeds from receiving convertible advanced investments
from our current shareholders and others and proceeds from our initial public offering on the Nasdaq. During the fourth quarter of 2022,
we implemented a cost reduction plan, including layoffs of certain employees, reducing certain employees from full-time status to part-time
status and salary and bonus reductions of our management and employees. This plan is expected to reduce our annual costs in 2023 by approximately
$0.6 million, and, with the recruitment of our new Chief Product Officer, will also allow us to focus on building our future SaaS, and
building a short term roadmap to maximize revenues from our existing products.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that our existing
capital resources and cash flows from operations together with funds received from the initial public offering will be adequate to satisfy
our expected liquidity requirements through the next twelve months. Without derogating from the foregoing estimate regarding our existing
capital resources and cash flows from operations, we may decide to raise additional funds in 2023. We believe that, if required, we will
be able to raise additional capital or reduce discretionary spending to provide the required liquidity beyond the next twelve months.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our future capital requirements
will depend on many factors, including our revenue growth, the timing and extent of investments to support such growth, the expansion
of sales and marketing activities, increases in general and administrative costs and many other factors as described under &#8220;Risk
Factors.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To the extent additional funds
are necessary to meet our long-term liquidity needs as we continue to execute our business strategy, we anticipate that they will be obtained
through the incurrence of additional indebtedness, additional equity financings or a combination of these potential sources of funds;
however, such financing may not be available on favorable terms, or at all. In particular, the widespread COVID-19 pandemic has resulted
in, and may result in, significant disruption of global financial markets, reducing our ability to access capital. If we are unable to
raise additional funds when desired, our business, financial condition and results of operations could be adversely affected.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><b><i>SVB Loans</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On February 19, 2017, we and
Beamr, Inc., our wholly owned subsidiary, entered into a Loan Agreement, or the 2017 Loan Agreement, with SVB under which we had a right
to borrow from SVB up to $3 million bearing interest at a floating per annum rate equal to the Wall Street Journal Prime Rate plus 3.5%
(upon occurrence of an &#8216;default event&#8217; as defined in the Loan Agreement, the principal amount shall bear interest at a rate
per annum which is 5% above the rate that is otherwise applicable thereto) which shall be payable monthly. In June 2018, we subsequently
drew down a cash amount in the aggregate principal amount of $3 million, or the 2017 Loan, payable in 36 equal installments on a monthly
basis commencing the following month after draw down. On July 26, 2022, we terminated the 2017 Loan Agreement. The Loan is sometimes referred
to herein as a &#8220;straight loan&#8221;<b><i>.&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In connection with the execution
of the 2017 Loan Agreement, we issued to SVB a 15-year warrant to purchase (i) 41,040 Series C Convertible Preferred Shares at an exercise
price of $5.12 per share or (ii) 41,040 shares to be issued in the &#8216;next round&#8217; at an exercise price equal to the lowest price
per share at which we will sell and issue shares of the next round shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On April 15, 2020, we signed
a deferral agreement in connection with the 2017 Loan Agreement with SVB according to which it was agreed that the original monthly repayment
date for the principal due from May 2020 to October 2020 shall be extended by a period of six months commencing November 2020.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, on April 29,
2021, or the Deferral Effective Date, we signed a second deferral agreement in connection with the 2017 Loan Agreement with SVB according
to which it was agreed that the original monthly repayment date for the principal due from May 2021 to October 2021 shall be extended
by a period of six months commencing November 2021. In consideration, we agreed to (i) pay to SVB a total deferral facility fee equal
to $50, which fee shall be fully earned at the Deferral Effective Date, and payable in 10 monthly equal installments over the period commencing
April 29, 2021 through January 29, 2022; (ii) reimburse SVB for all reasonable legal fees and expenses incurred in connection with the
deferral agreement and (iii) issue to SVB a 15-year warrant to purchase 9,764 shares exercisable at an exercise price of $5.12 per share
(subject to standard adjustments) into either Series C Preferred Shares or a class of securities sold and issued by us in the next equity
financing round. Furthermore, if SVB exercises the warrant and the warrant value (as determined in the warrant) is lower than $50,000,
then immediately following such exercise, we are required to pay the holder an amount equal to the difference between the $50,000 and
the warrant value.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On February 17, 2022, we entered
into a second Loan and Securities Agreement, or the 2022 Loan Agreement providing a credit line against our accounts receivables. According
to the 2022 Loan Agreement, commencing as of August 1, 2022 through December 31, 2022, SVB may, in its sole discretion in each instance,
pursuant to our request, finance specific eligible account receivables of ours, as determined in the 2022 Loan Agreement, in a total amount
equal to the face amount of the eligible account receivable multiplied by a rate of 80%, subject to reduction by SVB in its discretion,
or the Advance, provided that the aggregate amount of all outstanding Advances shall not exceed the lesser of (i) an aggregate principal
amount equal to $350,000, or the Revolving Line, or (ii) 80% of all eligible account receivables minus the sum of all outstanding principal
amounts of any Advances, subject to reduction by SVB in its discretion. The outstanding principal amount of any Advance shall accrue interest
at a floating rate per annum equal to the greater of (i) 8.25% and (ii) a floating per annum rate equal to the Wall Street Journal Prime
Rate plus 5% (upon occurrence of a &#8216;default event&#8217; as defined in the 2022 Loan Agreement, the aggregate loan principal amount
shall bear interest at a rate per annum which is 5% above the rate that is otherwise applicable thereto). Interest on the principal amount
of each Advance will be payable in monthly arrears (i) on each the last day of each month and (ii) on December 31, 2022, or the Revolving
Line Maturity Date. The security interest granted in the 2022 Loan Agreement shall at all times continue to be a first priority perfected
security. On July 26, 2022, we terminated the 2022 Loan Agreement and the security interest on all our assets was removed.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->70<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Upon making of the initial
Advance, we agreed to issue to SVB a warrant to purchase (i) 4,784 Series C Convertible Preferred Shares, or (ii) ordinary shares in the
event that we have listed its securities for trading on Nasdaq, or (iii) upon SVB&#8217;s written irrevocable election in its sole discretion,
the same class and series, or other designation, of convertible preferred share or other senior equity security sold and issued by us
in the next equity financing over a 15-years period commencing the issuance date of such warrant, at an exercise price of $5.12 per share,
provided that if the class is the next equity financing securities, then the exercise price shall be the lowest price per share for which
next equity financing securities are sold or issued by us. Upon termination of the 2022 Loan Agreement, we have no commitment to issue
to SVB the aforesaid warrant.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 28.35pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of March 13, 2023, we held
approximately $10,000 at SVB and do not have any additional deposits or securities in accounts at SVB.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><b><i>Convertible Advance
Investment</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On August 25, 2021 and August 6, 2019, we entered into separate advance
investment agreements with several current shareholders under which we raised an amount of $560,000 and $3,097,000, respectively, which
was not interest bearing but was eligible for conversion into our ordinary shares based on a variable conversion price depending on the
occurrence of certain liquidation events. Upon completion of our initial public offering, the advance investment amounts were converted
into an aggregate of 1,142,856 ordinary shares based on a conversion price of $3.20 per ordinary share.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><b><i>IBI Spikes Loan</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 28.35pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On July 7, 2022, we entered
into a funding agreement with IBI providing for a loan, or the IBI Loan, in the amount of NIS 3.1 million (approximately $900,000), or
the IBI Loan Agreement. The loan is repayable on a monthly basis based on a formula set forth in the IBI Loan Agreement until the earlier
repayment of NIS 4,172,760 (approximately $1.2 million), or the Repayment Amount, or January 5, 2026. We may repay the IBI Loan early
based on formula set forth in the IBI Loan Agreement. The IBI Loan Agreement provides for certain customary covenants and accelerates
in the event of default.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 28.35pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In consideration for the grant of the IBI Loan, we are required to
pay to IBI a non-refundable one-time fee of 1.5% of the IBI Loan amount and we issued a warrant to purchase 65,562 ordinary shares at
an exercise price of $3.20 per share. The warrant has a term of the earlier of 10 years or certain liquidation events and a variable exercise
price depending on the occurrence of certain liquidation events. The warrant can be exercised on cashless exercise based on the discretion
of IBI.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><b><i>Completion of our Initial
Public Offering </i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On February 27, 2023, we announced
the pricing of our initial public offering of 1,950,000 ordinary shares at a public offering price of $4.00 per ordinary share, for aggregate
gross proceeds of $7,800,000 prior to deducting underwriting discounts and other offering expenses.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our ordinary shares began
trading on the Nasdaq Capital Market under the ticker symbol &#8220;BMR&#8221; on February 28, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><b><i>Cash Flows</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table summarizes
our cash flows for the periods presented:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="10" style="border-bottom: Black 1.5pt solid; text-align: center"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Year
Ended&#160;December&#160;31,</b></p></td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-style: italic">(U.S. dollars in thousands)</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center; font-weight: bold">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2020</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left">Net cash provided by (used in) operating activities</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(645</td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">569</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(1,020</td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Net cash provided by (used in) investing activities</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(2</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(4</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">1</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Net cash used in financing activities</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">312</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(141</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(418</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Change in cash, cash equivalents</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(335</td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">424</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">(1,437</td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Cash, cash equivalents at beginning of period</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">1,028</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">604</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">2,041</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Cash, cash equivalents at end of period</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">692</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">1,028</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">604</td><td style="text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><i>Net cash used in operating
activities</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the year ended December
31, 2022, net cash used by operating activities was mainly due to&#160;a net loss of $1.2 million, offset by $0.2 million of share-based
compensation and change in other working capital items as shown in the consolidated statements of cash flows of the annual financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the year ended December
31, 2021, net cash provided by operating activities was mainly due to&#160;a net loss of $1 million and $0.1 million of forgiveness of
loan under a paycheck protection program note, which was offset by $0.2 million of depreciation and amortization, $0.2 million of share-based
compensation, $0.01 million of amortization of discount relating to our loan from SVB, $0.3 million of change in the fair value of convertible
advanced investments, $0.1 million of modification of terms of our loan from SVB, $0.7 million change in trade receivables and $0.2 million
change in other working capital items as shown in the condensed consolidated statements of cash flows of the interim financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the year ended December
31, 2020, net cash used in operating activities was mainly due to&#160;a net loss of $2.4 million, which was offset by $0.6 million of
depreciation and amortization, $0.1 million of share-based compensation, $0.02 million of amortization of discount relating to our loan
from SVB, $0.4 million of change in the fair value of convertible advanced investments and $0.1 million of change in other working capital
items as shown in the consolidated statement of cash flows of the annual financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><i>Investing Activities</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For the years ended December
31, 2022, 2021 and 2020, the change in net cash used in investing activities was immaterial.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><i>Financing Activities</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net cash provided by financing activities of $0.3 million for the year
ended December 31, 2022 was related to $0.9 million of proceeds received from a loan granted from a commercial bank (IBI) and $0.1 million
of proceeds from loan received from related party, offset by deferred offering costs of $0.1 million and repayment of principal relating
to a straight loan received from a commercial bank (SVB) of $0.6 million.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net cash used in financing
activities of $0.1 million for the year ended December 31, 2021 was related to repayment of a straight loan and facility fees of $0.5
million and deferred offering costs of $0.2 million and offset by proceeds received from a paycheck protection program note of $0.05 million
and proceeds received from issuance of convertible advanced investments of $0.6 million.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Net cash used in financing
activities of $0.4 million for the year ended December 31, 2020 was related to repayment of our loan from SVB of $0.5 million and offset
by proceeds received from a paycheck protection program note of $0.07 million and proceeds received from exercise of share options into
shares of $0.01 million.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><div><a id="a_020"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>C.&#160;Research and Development, Patents and
Licenses</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify; text-indent: -0.25in">See above, under
Item 5 &#8211; &#8220;Research and Development Expenses.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><div><a id="a_022"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>D.</b>&#160;<b>Trend Information</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Other than as disclosed in
&#8220;<i>Item 5. Operating and Financial Review and Prospectus&#8212;Components of Our Results of Operations</i>&#8221; and elsewhere
in this Annual Report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2022
to December 31, 2022 that are reasonably likely to have a material effect on our total revenues, income, profitability, liquidity or capital
resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial
condition.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->72<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><div><a id="a_023"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>E.</b>&#160;<b>Critical Accounting Estimates</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><b><i>Use of Estimates</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The preparation of financial
statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported
in the consolidated financial statements and accompanying notes. Our management believes that the estimates, judgment and assumptions
used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial
statements, and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that the accounting
policies described below require management&#8217;s most difficult, subjective or complex judgments. Judgments or uncertainties affecting
the application of these policies may result in materially different amounts being reported under different conditions or using different
assumptions. Accordingly, we believe these are the most critical to aid in fully understanding and evaluating our financial condition
and results of operations. See Note 2 to the audited consolidated financial statements for additional information regarding these and
our other significant accounting policies.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><b><i>Share-based compensation</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><i>Service-based awards</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We account for share-based
compensation in accordance with ASC 718, &#8220;Compensation - Stock Compensation&#8221;, or ASC 718, which requires companies to estimate
the fair value of equity-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award
is recognized as an expense over the requisite service periods by applying the straight-line method in our consolidated statements of
comprehensive loss.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We selected the Black-Scholes
option-pricing model as the most appropriate fair value method for our option awards. The Black-Scholes option-pricing model requires
the input of highly subjective assumptions, including the fair value of the underlying ordinary shares, the expected volatility of the
price of our ordinary shares, the expected term of the option, risk-free interest rates and the expected dividend yield of our ordinary
shares. These estimates involve inherent uncertainties and the application of management&#8217;s judgment. These assumptions are estimated
as follows:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><i>Key Assumptions</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">Fair Value of our ordinary shares.&#160;&#160; The fair value of the underlying ordinary shares is determined based on the price of our ordinary shares on the Nasdaq.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
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    <td style="text-align: justify"><span style="font-size: 10pt">Expected Volatility.&#160;&#160;The expected price volatility for our ordinary shares was estimated by taking the average historical price volatility for our ordinary shares on the Nasdaq.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
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    <td style="text-align: justify"><span style="font-size: 10pt">Expected Term. The expected term represents the period that our share-based awards are expected to be outstanding and is determined based on the simplified method until sufficient historical exercise data will support using expected life assumptions.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">Risk-Free Rate.&#160;&#160;The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of the options for each option group.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">Dividend Yield.&#160;&#160;We have never declared or paid any cash dividends and do not presently plan to pay cash dividends in the foreseeable future. Consequently, we used an expected dividend yield of zero.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in"></p><div>

</div><!-- Field: Page; Sequence: 83; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->73<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><b><i>Ordinary shares valuation</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The fair value of ordinary
shares was determined by our board of directors, with input from management, and taking into account the most recent valuation from an
independent third-party valuation specialist. These valuations were determined in accordance with the guidelines outlined in the American
Institute of Certified Public Accountants Accounting and Valuation Guide: Valuation of Privately-Held-Company Equity Securities Issued
as Compensation. The assumptions we used in the valuation models were based on future expectations combined with management judgment.
Numerous objective and subjective factors were considered in the determination of the fair value of our ordinary shares as of the date
of each option grant, including the following factors:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">contemporaneous valuations performed at periodic intervals by an independent third-party specialist;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the likelihood and timing of achieving a liquidity event, such as an initial public offering or sale;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the liquidation preferences, rights, and privileges of our preferred shares relative to our ordinary shares;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the nature and history of our business;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the general economic conditions and our industry outlook;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">our overall financial condition;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">our earning capacity;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">our dividend history;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the existence of goodwill or other intangible value within our business;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the prior sales of interests in the business and the size of the interest being valued;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the market price of equity interest in companies engaged in the same or a similar line of business; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">adjustments necessary to recognize a lack of marketability of the ordinary shares.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In valuing our ordinary shares,
absent an arm&#8217;s-length current/recent round of financing, the fair value of our business, or equity value, was determined using
both the income approach and market approach.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The income approach estimates
value based on the expectation of future cash flows that we will generate. These future cash flows are discounted to their present values
using a discount rate based on the capital rates of return for comparable publicly traded companies and are adjusted to reflect the risks
inherent in our cash flows relative to those inherent in the companies utilized in the discount rate calculation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The market approach estimates
value based on a comparison of us to comparable public companies in a similar line of business. From the comparable companies, representative
market value multiples are determined and then applied to our financial results to estimate our value.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The resulting equity value
was then allocated to each share class using an OPM. Under the OPM, preferred and ordinary shares are treated as a series of call options,
with the preferred shares having an exercise price based on the liquidation preference of the respective preferred share. The OPM operates
through a series of Black-Scholes-Merton option pricing models, with the exercise prices of the options representing the upper and lower
bounds of the proceed ranges that a security holder would receive upon a liquidity event. The strike prices occur at break points where
the allocation of firm value changes among the various security holders. The ordinary shares are presumed to have value only if funds
available for distribution to shareholders exceed the value of the respective liquidation preferences at the time of a liquidity event.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->74<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For each valuation date, after
the ordinary shares value was determined, a discount for lack of marketability, or DLOM, was applied to arrive at the fair value of the
ordinary shares on a non-marketable basis. A DLOM is applied in order to reflect the lack of a recognized market for a closely held interest
and the fact that a non-controlling equity interest may not be readily transferable. A market participant purchasing this share would
recognize this illiquidity associated with the shares, which would reduce the overall fair value. The discount for lack of marketability
was determined using a put option as a proxy for measuring discounts for lack of marketability of securities.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We also considered any secondary
transactions involving our capital shares. In our evaluation of those transactions, we considered the facts and circumstances of each
transaction to determine the extent to which they represented a fair value exchange. Factors considered include:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">transaction volume;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">proximity in time to other transactions as well as the valuation date;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">frequency of similar transactions;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">whether the transactions occurred between willing and unrelated parties; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">whether the transactions involved parties with sufficient access to our financial; information from which to make an informed decision on price.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.25in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Application of these approaches
involves the use of estimates, judgments, and assumptions that are highly complex and subjective, such as those regarding our expected
future revenue, expenses, future cash flows, discount rates, market multiples, the selection of comparable companies, and the probability
of possible future events. Changes in any or all of these estimates and assumptions or the relationships between those assumptions impact
our valuations as of each valuation date and may have a material impact on the valuation of our ordinary shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><b>Internal Control Over
Financial Reporting</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Prior to our initial public offering, we were a private company with
limited accounting and financial reporting personnel and other resources to address our internal controls and procedures. In connection
with the audit of our consolidated financial statements as of December&#160;31, 2022, we identified control deficiencies in our financial
reporting process that constitute a material weakness for the three years then ended. The material weakness related to lack of sufficient
internal accounting personnel, segregation of duties, and lack of sufficient internal controls (including IT general controls, entity
level controls and transaction level controls).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">As
defined in the standards established by the Public Company Accounting Oversight Board of the United States, a &#8220;material weakness&#8221;
is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility
that a material misstatement of the company&#8217;s annual or interim financial statements will not be prevented or detected on a timely
basis.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">We
expect to take a number of measures to address the internal control deficiencies that have been identified including expanding our existing
accounting and financial reporting personnel, establishing effective monitoring and oversight controls and engaging an external consulting
firm to assist us with assessment of Sarbanes-Oxley compliance requirements and improvement of overall internal controls. However, we
cannot assure you that these measures may fully address the material weaknesses in our internal control over financial reporting or that
we may conclude that they have been fully remediated.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">We
expect to complete our remediation plan within the next 12 months. However, we have not tested the effectiveness of our internal control
over financial reporting and cannot assure you that we will be able to successfully remediate this material weakness and, even if we do,
we cannot assure you that we will not suffer from other material weaknesses in the future. Except for additional personnel costs, the
cost of systems and the costs of our third-party service providers, we do not expect to incur any material costs related to our remediation
plan.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">The
process of designing and implementing an effective financial reporting system is a continuous effort that requires us to anticipate and
react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a financial
reporting system that is adequate to satisfy our reporting obligation. See &#8220;Item 3.D&#8212;Risk Factors&#8212;Risks Related to Ownership
of our Ordinary Shares&#8212; We have identified a material weakness in our internal control over financial reporting, and we may not
be able to successfully implement remedial measures.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">As
a company with less than US $1.235&#160;billion in revenue for our last fiscal year, we are an &#8220;emerging growth company&#8221; pursuant
to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise
applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section&#160;404
of the Sarbanes-Oxley Act of 2002, in the assessment of the emerging growth company&#8217;s internal control over financial reporting.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_024"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>ITEM&#160;6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_025"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>A.</b>&#160;<b>Directors and Senior Management</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets forth
certain information relating to our directors and senior management as of April 15, 2023. Unless otherwise stated, the address for our
directors and senior management is at the Company&#8217;s registered address c/o 10 HaManofim Street, Herzeliya, 4672561, Israel.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: bottom">
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  <tr style="background-color: White">
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    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 10pt">37 </span></td>
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  <tr style="background-color: rgb(204,238,255)">
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    <td style="vertical-align: top; text-align: center"><span style="font-size: 10pt">48 </span></td>
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  <tr style="background-color: White">
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    <td style="vertical-align: top; text-align: center"><span style="font-size: 10pt">46 </span></td>
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    <td style="vertical-align: bottom"><span style="font-size: 10pt">V.P. of Research and Development </span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
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    <td style="vertical-align: top; text-align: center"><span style="font-size: 10pt">47 </span></td>
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  <tr style="background-color: White">
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    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 10pt">61 </span></td>
    <td style="vertical-align: top">&#160;</td>
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  <tr style="background-color: rgb(204,238,255)">
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    <td style="vertical-align: top; text-align: center"><span style="font-size: 10pt">59 </span></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: bottom"><span style="font-size: 10pt">Director </span></td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top"><span style="font-size: 10pt">Lluis Pedragosa (1) </span></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 10pt">44 </span></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: bottom"><span style="font-size: 10pt">Director </span></td></tr>
  <tr style="background-color: rgb(204,238,255)">
    <td style="vertical-align: top"><span style="font-size: 10pt">Yair Shoham (1)(2) </span></td>
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    <td style="vertical-align: top; text-align: center"><span style="font-size: 10pt">69 </span></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: bottom"><span style="font-size: 10pt">Director </span></td></tr>
  <tr style="background-color: White">
    <td style="vertical-align: top"><span style="font-size: 10pt">Osnat Michaeli (1)(2) </span></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: top; text-align: center"><span style="font-size: 10pt">54 </span></td>
    <td style="vertical-align: top">&#160;</td>
    <td style="vertical-align: bottom"><span style="font-size: 10pt">Director </span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.25in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; background-color: white; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-size: 10pt">(1)</span></td>
    <td><span style="font-size: 10pt">Independent director (as defined under Nasdaq Stock Market Listing Rules).</span></td></tr>
  <tr style="vertical-align: top">
    <td>&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: top">
    <td><span style="font-size: 10pt">(2)</span></td>
    <td><span style="font-size: 10pt">External director (as defined under the Companies Law)</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white"><b>Sharon Carmel, Chief Executive Officer,
Director</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Sharon Carmel, </i>52,
serves as our Chief Executive Officer and as the Chairman of the board of directors since he founded our company in October 2009. Prior
to founding Beamr, Mr. Carmel is a serial entrepreneur with a proven track record in the software space. Prior to founding Beamr, in August
2002, Mr. Carmel co-founded, BeInSync, which developed P2P synchronization and online backup technologies. Prior to that, in January 1994,
Mr. Carmel co-founded Emblaze (LON: BLZ), a software company, which developed the Internet&#8217;s first vector-based graphics player.
Mr. Carmel received his training in computer science and software development during his mandatory military service in the IDF.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Danny Sandler, Chief Financial Officer</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Danny Sandler</i>, 37,
serves as our Chief Financial Officer since December 2021. Mr. Sandler joined us in May 2020, and prior to his current role, served as
our Director of Finance. Prior to joining us, between December 2014 and May 2020, Mr. Sandler served in various roles and, most recently
as Assurance Manager, in the Hi-Tech and Life Science Practice at EY, a global accounting and consulting firm. Prior to that, between
November 2011 and November 2014, Mr. Sandler was a finance associate at Seeking Alpha, a crowd-sourced content service for financial markets.
Mr. Sandler holds a Bachelor&#8217;s degree in Economics and Accounting from Bar-Ilan University.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>&#160;</b></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Tamar Shoham, Chief Technology Officer</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Tamar Shoham</i>, 48, serves
as our Chief Technology Officer since November 2021. Mrs. Shoham is a leading imaging and video scientist, with over 20 years&#8217; experience
in algorithm development and industry-oriented research, primarily in the field of video quality and compression. Mrs. Shoham joined us
in August 2009, and prior to her current role, served as our Vice President of Technology where she led our algorithm and intellectual
property development. Prior to joining us, between 2006 and 2009, Mrs. Shoham was a research fellow at the NEGEV consortium, Signal and
Image Processing Lab at the Technion Institute of Technology. Prior to that, between 1997 and 2005, Mrs. Shoham served as a digital signal
processing algorithm developer at Comverse Ltd. Mrs. Shoham holds a Master&#8217;s degree in Electrical Engineering from the Technion
Institute of Technology and a Bachelor&#8217;s degree in Electrical Engineering from Tel Aviv University.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Dan Julius, V.P. of Research and Development</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Dan Julius</i>, 45, serves
as our Vice President of Research and Development. Mr. Julius brings more than two decades of experience in management and software development.
Mr. Julius joined us in March 2011, and prior to his current role served as a team lead for our system overseeing design, development,
and quality control. Prior to joining us, between February 2008 and May 2011, Mr. Julius was the co-founder and served as Chief Technology
Officer at Joliper Ltd. Prior to that, between February 2007 and February 2008, Mr. Julius served as a software developer and a team leader
at BeInSync Ltd., a software platform enabling users to backup, synchronize, share and access their files, documents and other data online.
Prior to that, between November 2001 and August 2004, Mr. Julius served as a CAD engineer at Intel. Between February 1999 and August 2001,
Mr. Julius served as a software developer and a team leader at TeleVend Inc. Mr. Julius holds a Master&#8217;s degree in Computer Science
from the University of British Columbia and a Bachelor&#8217;s degree in Computer Science from Tel Aviv University.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;<b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Dani Megrelishvili, Chief Product Officer</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Dani Megrelishvili</i>,
47, serves as our Chief Product Officer since December 2022. Mr. Megrelishvili&#8217;s previous roles with us were between November 2014
and November 2017, serving as Head of Product (JPEGmini business unit), and between February 2012 and November 2014, serving as Head of
User experience. Prior to rejoining us, between January 2022 and November 2022, Mr. Megrelishvili served as product manager at Lexense
Technologies Ltd., a legal-tech startup offering tools for handling and managing legal disputes. Prior to that, between June 2020 and
December 2021, Mr. Megrelishvili served as product manager at Wix.Com Ltd (NASDQ: WIX), a cloud-based web development services company.
Prior to that, between August 2018 and June 2020, Mr. Megrelishvili served as a consultant to several technology companies, including
ZOOZ Mobile Ltd., a payment processing platform (acquired by PayU in 2018) and Augmented Intelligence Inc., a startup that builds an AI
Assistant for a variety of use-cases.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Eliezer Lubitch, President, Beamr, Inc.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Eliezer Lubitch</i>, 61,
serves as the President of our subsidiary, Beamr, Inc. since 2011. Mr. Lubitch heads our U.S. operations, including sales, business development,
new markets, and strategic partnerships. Prior to joining us, between 2008 and 2011, Mr. Lubitch served as Vice President of Business
Development and Brand Licensing at Eastman Kodak Company. Prior to that, between 2004 and 2007, Mr. Lubitch served as Vice President of
Business Development at Kodak Versamark Inc., a wholly owned subsidiary of Kodak. Between 1990 and 2003, Mr. Lubitch served in various
roles at Scitex Corporation, Ltd. (NASDAQ: SCIX), including Vice President of Business Development, Director of Business Development,
Product Line R&amp;D Manager, and software engineer. Mr. Lubitch was a seed investor in Tivella, Inc., a pioneering company of IPTV (acquired
by Cisco in 2007). Mr. Lubitch holds a Master&#8217;s degree in Business Administration from the Technion Institute of Technology, a Master&#8217;s
degree in Computer Science from Tel Aviv University, and a Bachelor&#8217;s degree in Mathematics and Computer Science from Hebrew University.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Tal Barnoach, Director</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Tal Barnoach</i>, 58, serves
as a board member in our company since January 2014. Mr. Barnoach is a general partner at Disruptive VC, a venture capital fund since
July 2014 Disruptive Opportunity Fund since 2018 and Disruptive AI since 2020. Besides his role as a general partner in Disruptive and
serving as a board member of Beamr, Mr. Barnoach serves as a board member in several other technological companies like Idomoo, Anodot,
Tailor Brands, Bit, Lumen, Deep, Replix, Qwilt, Minta and more. Over the last 20 years, Mr. Barnoach has founded and led companies such
as S.E.A. Multimedia (which went public in 1996), Orca Interactive (acquired by France Telecom in 2008), BeInsync (acquired by Phoenix
Technologies in 2008) and Dotomi (acquired by ValueClick in 2011). Mr. Barnoach holds a B.A. degree in economics from Tel Aviv University.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Lluis Pedragosa, Director</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Liuis Pedragosa, </i>43<i>,
</i>serves as a board member in our company since August 2016, and was appointed by our shareholder, Marker LLC. Since May 2018, Mr. Pedragosa
is a managing partner and the Chief Financial Officer of Team8, a cybersecurity and fintech company creation platform and a venture capital
fund. Prior to that, between December 2012 and April 2018, Mr. Pedragosa was a partner and founding team member at Marker LLC, a venture
capital firm with over $400 million under management. Besides his role in Team8 and serving as a board member of Beamr, Mr. Pedragosa
serves as a board member in Screenz, and as a board observer in Overwolf Ltd. Mr. Pedragosa holds a Master&#8217;s degree in Business
Administration from The Wharton School of the University of Pennsylvania, a Master&#8217;s degree in International Studies from the University
of Pennsylvania, and a Bachelor&#8217;s of science in Business Administration from ESADE Business School.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Yair Shoham, Director</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Yair Shoham</i>, 68, serves
as a board member in our company since March 2023. Mr. Shoham brings more than two decades of global experience in venture capital and
is a serial entrepreneur with a track record in the software and hardware spaces. Prior to joining us, between 2018 and December 2021,
Mr. Shoham served as Managing Director and Israel Country Manager at Intel Capital, the venture arm of Intel Corporation. Prior to this
role, between July 2012 and 2018, he served as Investment Director at Intel Capital. Prior to that, between 1999 and 2012, Mr. Shoham
served as General Partner at Genesis Partners, a leading early stage Israel-based venture capital firm. During his career, Mr. Shoham
has founded and led several companies such as VDOnet Corp. (acquired by Citrix Systems, Inc.), Butterfly VLSI Ltd. (acquired by Texas
Instruments Incorporated), and RFWaves Ltd. (acquired by Vishay Intertechnology Inc.). Between 1995 and 2006, Mr. Shoham served as an
independent board member at M-Systems Ltd., until the company was acquired by SanDisk Corporation. Mr. Shoham holds a Juris Doctor degree
from Loyola University School of Law and a Bachelor&#8217;s degree in psychology from the University of Haifa.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Osnat Michaeli, Director</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Osnat Michaeli</i>, 53,
serves as a board member in our company since March 2023. Ms. Michaeli brings more than two decades of global experience in finance and
operations. Prior to joining us, between May 2019 and August 2021, Ms. Michaeli served as Chief Financial Officer at Twine Solutions Ltd,
a leading digital thread-dyeing technology company. Between March 2017 and May 2019, Ms. Michaeli served as Chief Financial Officer at
Cardo Systems Ltd., a leading company for Bluetooth&#174; and Dynamic Mesh Communication, and entertainment systems for motorcycle riders.
Prior to that, between March 2011 and August 2015, Ms. Michaeli served as Chief Financial Officer at Kornit Digital Ltd., an international
manufacturing company, which produces high-speed industrial inkjet printers, pigmented ink, and chemical products, where she held a key
role in leading the company to its Initial Public Offering in, 2015 (NASDAQ: KRNT). Ms. Michaeli holds a Bachelor&#8217;s degree in economics
and a Master&#8217;s degree in Business Administration, both from Tel Aviv University.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_026"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>B. Compensation</b>&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The aggregate compensation we paid to our executive officers and directors
for the year ended December 31, 2022, was approximately $1,025,749. This amount includes approximately $79,701 paid, set aside or accrued
to provide pension, severance, retirement or similar benefits or expenses and $96,897 share based compensation expenses, but does not
include 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 December 31, 2022, options to purchase 826,234 ordinary shares granted to our officers
and directors were outstanding under our share option plan at a weighted average exercise price of $1.65 per share.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In accordance with the Companies
Law, the table below reflects the compensation granted to our five most highly compensated officers during or with respect to the year
ended December 31, 2022. For purposes of the table and the summary below, &#8220;compensation&#8221; 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">189</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-size: 10pt">(1)</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">Salary includes the officer&#8217;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&#8217; 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.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-size: 10pt">(2)</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">Represents annual bonuses granted to the officer based on formulas set forth in the respective resolutions of our Compensation Committee and Board of Directors with respect to 2022.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-size: 10pt">(3)</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">Represents the equity-based compensation expenses recorded in our financial statements for the year ended December&#160;31, 2022, based on the securities&#8217; 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&#160;12 to our financial statements included in this Annual Report.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">For
so long as we are a foreign private issuer, we will not be required to comply with the proxy rules applicable to U.S. domestic companies
regarding disclosure of the compensation of certain executive officers on an individual basis. Pursuant to the Companies Law, we are required
to disclose the annual compensation of our five most highly compensated officers on an individual basis. This disclosure will not be as
extensive as that required of a U.S. domestic issuer. We intend to commence providing such disclosure, at the latest, in the annual proxy
statement for our first annual meeting of shareholders, which will be filed under cover of a report on Form 6-K.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><b><i>Employment Agreements
with Executive Officers</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have entered into written
employment or consulting agreements with each of our executive officers. All of these agreements 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. In addition, we intend to enter into indemnification agreements, subject to the listing of our securities
on the Nasdaq Capital Market, with each executive officer, director, and director nominee pursuant to which we will indemnify each of
them up to a certain amount and to the extent that these liabilities are not covered by directors and officers insurance.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">For
a description of the terms of our options and option plans, see &#8220;Item 6.E Directors, Senior Management and Employees&#8212;Share
Ownership&#8212;Share Option Plans<span style="font-variant: small-caps">&#8221;&#160;</span>below.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><b><i>Directors&#8217;
Service Contracts</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Other than with respect to
our directors that are also executive officers, we do not have written agreements with any director providing for benefits upon the termination
of his employment with our company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Non-Executive Board Engagement Terms</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">During
the term of office as a director, each non-executive director shall be entitled to receive an annual remuneration payment of $20,000 per
full year (payable in four (4) equal payments, one for each calendar quarter ending on March 31, June 30, September 30 and December 31
of each year), or a pro rata thereof. In addition, each non-executive director shall also be entitled to receive a payment of $750.00
for each face-to-face or zoom meeting of the board of directors or a committee thereof, and a payment of $500.00 for each written resolution
of the board of birectors or a committee thereof.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="margin: 0"></p><div>

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</div><p style="margin: 0">&#160;</p><div>

</div><div><a id="a_027"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>C. Board Practices</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Introduction</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our board of directors consists
of five&#160;members. We believe that Tal Barnoach, Lluis Pedragosa, Yair Shoham and Osnat Michaeli are &#8220;independent&#8221; for
purposes of the Nasdaq Stock Market rules. Our amended and restated articles of association provide that the number of board of directors&#8217;
members shall be set by the general meeting of the shareholders provided that it will consist of not less than five and not more than
ten. Pursuant to the Companies Law, the management of our business is vested in our board of directors. Our board of directors may exercise
all powers and may take all actions that are not specifically granted to our shareholders or to management. Our executive officers are
responsible for our day-to-day management and have individual responsibilities established by our board of directors. Our Chief Executive
Officer is appointed by, and serves at the discretion of, our board of directors, subject to the service agreement that we have entered
into with him. All other executive officers are appointed by our Chief Executive Officer. Their terms of employment are subject to the
approval of the board of directors, and are subject to the terms of any applicable employment agreements that we may enter into with them.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Each director, except external
directors that may be required to be appointed under the Companies Law under certain circumstances, will hold office pursuant to the Companies
Law, until the next annual general meeting of our shareholders following his or her appointment, or until he or she resigns or unless
he or she is removed by a majority vote of our shareholders at a general meeting of our shareholders or upon the occurrence of certain
events, in accordance with the Companies Law and our amended and restated articles of association.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, if a director&#8217;s
office becomes vacant, the remaining serving directors may continue to act in any manner, provided that their number is of the minimal
number specified in our amended and restated articles of association. If the number of serving directors is lower than such minimum number,
then our board of directors may only act in an emergency or to fill the office of director which has become vacant up to a number equal
to the minimum number provided for pursuant to our amended and restated articles of association, or in order to call a general meeting
of our shareholders for the purpose of electing directors to fill any of our vacancies . External directors may be elected for up to two
additional three-year terms after their initial three-year term under the circumstances described below, with certain exceptions as described
in &#8220;External Directors&#8221; below. External directors may be removed from office only under the limited circumstances set forth
in the Companies Law.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Companies Law, any
shareholder holding at least one percent of our outstanding voting power may nominate a director. However, any such shareholder may make
such a nomination only if a written notice of such shareholder&#8217;s intent to make such nomination has been given to our board of directors.
Any such notice must include certain information, including the consent of the proposed director nominee to serve as our director if elected,
and a declaration that the nominee signed declaring that he or she possesses the requisite skills and has the availability to carry out
his or her duties. Additionally, the nominee must provide details of such skills, and demonstrate an absence of any limitation under the
Companies Law that may prevent his or her election, and affirm that all of the required election-information is provided to us, pursuant
to the Companies Law.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Companies Law, our
board of directors must determine the minimum number of directors who are required to have accounting and financial expertise. In determining
the number of directors required to have such expertise, our board of directors must consider, among other things, the type and size of
the company and the scope and complexity of its operations. Our board of directors has determined that the minimum number of directors
of our company who are required to have accounting and financial expertise is two.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The board of directors must
elect one director to serve as the chairman of the board of directors to preside at the meetings of the board of directors, and may also
remove that director as chairman. Pursuant to the Companies Law, neither the chief executive officer nor any of his or her relatives is
permitted to serve as the chairman of the board of directors, and a company may not vest the chairman or any of his or her relatives with
the chief executive officer&#8217;s authorities. In addition, a person who reports, directly or indirectly, to the chief executive officer
may not serve as the chairman of the board of directors; the chairman may not be vested with authorities of a person who reports, directly
or indirectly, to the chief executive officer; and the chairman may not serve in any other position in the company or a controlled company,
but he or she may serve as a director or chairman of a controlled company. However, the Companies Law permits a company&#8217;s shareholders
to determine, for a period not exceeding three years from each such determination, that the chairman or his or her relative may serve
as chief executive officer or be vested with the chief executive officer&#8217;s authorities, and that the chief executive officer or
his or her relative may serve as chairman or be vested with the chairman&#8217;s authorities. Such determination of a company&#8217;s
shareholders requires either: (1) the approval of at least a majority of the shares of those shareholders present and voting on the matter
(other than controlling shareholders and those having a personal interest in the determination) (shares held by abstaining shareholders
shall not be considered); or (2) that the total number of shares opposing such determination does not exceed 2% of the total voting power
in the company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The board of directors may,
subject to the provisions of the Companies Law, delegate any or all of its powers to committees of the board, and it may, from time to
time, revoke such delegation or alter the composition of any such committees, subject to certain limitations. Unless otherwise expressly
provided by the board of directors, the committees shall not be empowered to further delegate such powers. The composition and duties
of our audit committee, financial statement examination committee and compensation committee that will be established upon the listing
of our ordinary shares on the Nasdaq Capital Market, are described below.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The board of directors oversees
how management monitors compliance with our risk management policies and procedures, and reviews the adequacy of the risk management framework
in relation to the risks faced by us. The board of directors is assisted in its oversight role by an internal auditor. The internal auditor
undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which will be reported to our audit
committee.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><b>DIVERSITY OF THE BOARD
OF DIRECTORS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><b>Board Diversity Matrix
(As of April 15, 2023)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td>Country of Principal Executive Offices</td><td>&#160;</td>
    <td style="text-align: center">Israel</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>Foreign Private Issuer</td><td>&#160;</td>
    <td style="text-align: center">Yes</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="width: 88%; text-align: left">Total Number of Directors</td><td style="width: 1%">&#160;</td>
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  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 52%">Directors</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: left">Part II: Demographic Background</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Underrepresented Individual in Home Country Jurisdiction</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td>LGBTQ+</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">0</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">2</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  </table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; background-color: white">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>External Directors</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Under
the Companies Law, companies incorporated under the laws of the State of Israel that are publicly traded, including Israeli companies
with shares listed on the Nasdaq, are required to appoint at least two external directors who meet the qualification requirements set
forth in the Companies Law. The definitions of an external director under the Companies Law and independent director under Nasdaq Stock
Market rules are similar such that it would generally be expected that our two external directors will also comply with the independence
requirement under Nasdaq Stock Market rules.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">A
person may not be appointed as an external director if the person is a relative of a controlling shareholder or if on the date of the
person&#8217;s appointment or within the preceding two years the person or his or her relatives, partners, employers or anyone to whom
that person is subordinate, whether directly or indirectly, or entities under the person&#8217;s control have or had any affiliation with
any of the following, or an affiliated entity: (1)&#160;us; (2)&#160;any person or entity controlling us on the date of such appointment;
(3)&#160;any relative of a controlling shareholder; or (4)&#160;any entity controlled, on the date of such appointment or within the preceding
two years, by us or by a controlling shareholder. If there is no controlling shareholder or any shareholder holding 25% or more of voting
rights in the company, a person may not be appointed as an external director if the person has any affiliation to the chairman of the
board of directors, the chief executive officer (referred to in the Companies Law as a general manager), any shareholder holding 5% or
more of the company&#8217;s shares or voting rights or the senior financial officer as of the date of the person&#8217;s appointment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><b><i>&#160;</i></b>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"></p><div>

</div><!-- Field: Page; Sequence: 91; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->81<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">The
term &#8220;controlling shareholder&#8221; means a shareholder with the ability to direct the activities of the company, other than by
virtue of being an office holder. A shareholder is presumed to have &#8220;control&#8221; of the company and thus to be a controlling
shareholder of the company if the shareholder holds 50% or more of the &#8220;means of control&#8221; of the company. &#8220;Means of
control&#8221; is defined as (1)&#160;the right to vote at a general meeting of a company or a corresponding body of another corporation;
or (2)&#160;the right to appoint directors of the corporation or its general manager. For the purpose of approving related-party transactions,
the term also includes any shareholder that holds 25% or more of the voting rights of the company if the company has no shareholder that
owns more than 50% of its voting rights. For the purpose of determining the holding percentage stated above, two or more shareholders
who have a personal interest in a transaction that is brought for the company&#8217;s approval are deemed as joint holders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">The
term affiliation includes:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">an employment relationship;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">a business or professional relationship maintained on a regular basis;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">control; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">service as an office holder, excluding service as a director in a private company prior to the first offering of its shares to the public if such director was appointed as a director of the private company in order to serve as an external director following the initial public offering.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">The
term &#8220;relative&#8221; is defined as a spouse, sibling, parent, grandparent, descendant, spouse&#8217;s descendant, sibling and parent
and the spouse of each of the foregoing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">The
term &#8220;office holder&#8221; is defined as a general manager, chief business manager, deputy general manager, vice general manager,
director or manager directly subordinate to the general manager or any other person assuming the responsibilities of any of the foregoing
positions, without regard to such person&#8217;s title.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">A
person may not serve as an external director if that person or that person&#8217;s relative, partner, employer, a person to whom such
person is subordinate (directly or indirectly) or any entity under the person&#8217;s control has a business or professional relationship
with any entity that has an affiliation with any affiliated entity, even if such relationship is intermittent (excluding insignificant
relationships). Additionally, any person who has received compensation intermittently (excluding insignificant relationships) other than
compensation permitted under the Companies Law may not continue to serve as an external director.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">No
person can serve as an external director if the person&#8217;s position or other affairs create, or may create, a conflict of interest
with the person&#8217;s responsibilities as a director or may otherwise interfere with the person&#8217;s ability to serve as a director
or if such a person is an employee of the Israeli Securities Authority or of an Israeli stock exchange. If at the time an external director
is appointed all current members of the board of directors, who are not controlling shareholders or relatives of controlling shareholders,
are of the same gender, then the external director to be appointed must be of the other gender. In addition, a person who is a director
of a company may not be elected as an external director of another company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">According
to regulations promulgated under the Companies law, at least one of the external directors is required to have &#8220;financial and accounting
expertise,&#8221; unless another member of the audit committee, who is an independent director under the Nasdaq Stock Market rules, has
&#8220;financial and accounting expertise,&#8221; and the other external director or directors are required to have &#8220;professional
expertise.&#8221; An external director may not be appointed to an additional term unless: (1)&#160;such director has &#8220;accounting
and financial expertise;&#8221; or (2)&#160;he or she has &#8220;professional expertise,&#8221; and on the date of appointment for another
term there is another external director who has &#8220;accounting and financial expertise&#8221; and the number of &#8220;accounting and
financial experts&#8221; on the board of directors is at least equal to the minimum number determined appropriate by the board of directors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"></p><div>

</div><!-- Field: Page; Sequence: 92; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->82<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">The
regulations promulgated under the Companies Law define an external director with requisite professional qualifications as a director who
satisfies one of the following requirements: (1)&#160;the director holds an academic degree in either economics, business administration,
accounting, law or public administration, (2)&#160;the director either holds an academic degree in any other field or has completed another
form of higher education in the company&#8217;s primary field of business or in an area which is relevant to his or her office as an external
director in the company, or (3)&#160;the director has at least five years of experience serving in any one of the following, or at least
five years of cumulative experience serving in two or more of the following capacities: (a)&#160;a senior business management position
in a company with a substantial scope of business, (b)&#160;a senior position in the company&#8217;s primary field of business or (c)&#160;a
senior position in public administration.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Until
the lapse of a two-year period from the date that an external director of a company ceases to act in such capacity, the company in which
such external director served, and its controlling shareholder or any entity under control of such controlling shareholder may not, directly
or indirectly, grant such former external director, or his or her spouse or child, any benefit, including by way of (i)&#160;the appointment
of such former director or his or her spouse or his child as an officer in the company or in an entity controlled by the company&#8217;s
controlling shareholder, (ii)&#160;the employment of such former director, and (iii)&#160;the engagement, directly or indirectly, of such
former director as a provider of professional services for compensation, directly or indirectly, including via an entity under his or
her control. With respect to a relative who is not a spouse or a child, such limitations only apply for one year from the date such external
director ceased to be engaged in such capacity.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">The
provisions of the Companies Law set forth special approval requirements for the election of external directors. External directors must
be elected by a majority vote of the shares present and voting at a shareholders meeting, provided that either:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">such majority includes at least a majority of the shares held by shareholders who are non-controlling shareholders and do not have a personal interest in the election of the external director (other than a personal interest not deriving from a relationship with a controlling shareholder) that are voted at the meeting, excluding abstentions, to which we refer as a disinterested majority; or</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the total number of shares voted by non-controlling shareholders and by shareholders who do not have a personal interest in the election of the external director, against the election of the external director, does not exceed 2% of the aggregate voting rights in the company.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">The
initial term of an external director is three years. Thereafter, an external director may be reelected by shareholders to serve in that
capacity for up to two additional three-year terms, provided that:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 48pt; text-align: justify; text-indent: -24pt">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">his or her service for each such additional term is recommended by one or more shareholders holding at least 1% of the company&#8217;s voting rights and is approved at a shareholders meeting by a disinterested majority, where the total number of shares held by non-controlling, disinterested shareholders voting for such reelection exceeds 2% of the aggregate voting rights in the company. In such event, the external director so reappointed may not be a Related or Competing Shareholder, as defined below, or a relative of such shareholder, at the time of the appointment, and is not and has not had any affiliation with a Related or Competing Shareholder, at such time or during the two years preceding such person&#8217;s reappointment to serve an additional term as external director. The term &#8220;Related or Competing Shareholder&#8221; means a shareholder proposing the reappointment or a shareholder holding 5% or more of the outstanding shares or voting rights of the company, provided, that at the time of the reappointment, such shareholder, the controlling shareholder of such shareholder, or a company controlled by such shareholder, have a business relationship with the company or are competitors of the company;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the external director proposed his or her own nomination, and such nomination was approved in accordance with the requirements described above;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">his or her service for each such additional term is recommended by the board of directors and is approved at a shareholders meeting by the same majority required for the initial election of an external director (as described above).</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">The
term of office for external directors for Israeli companies traded on certain foreign stock exchanges, including the Nasdaq Marketplace
Rules, may be extended indefinitely in increments of additional three-year terms, in each case provided that the audit committee and the
board of directors of the company confirm that, in light of the external director&#8217;s expertise and special contribution to the work
of the board of directors and its committees, the reelection for such additional period(s) is beneficial to the company, and provided
that the external director is reelected subject to the same shareholder vote requirements as if elected for the first time (as described
above).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">External
directors may be removed from office by a special general meeting of shareholders called by the board of directors, which approves such
dismissal by the same shareholder vote percentage required for their election, after receiving the board of directors arguments for such
removal, or by a court, in each case, only under limited circumstances, including ceasing to meet the statutory qualifications for appointment,
or violating their duty of loyalty to the company. If an external directorship becomes vacant and there are fewer than two external directors
on the board of directors at the time, then the board of directors is required under the Companies Law to call a shareholders meeting
as soon as practicable to appoint a replacement external director.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Each
committee of the board of directors that is authorized to exercise the powers of the board of directors must include at least one external
director, except that the audit committee and the compensation committee must include all external directors then serving on the board
of directors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">External
directors may be compensated only in accordance with regulations adopted under the Companies Law.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 24pt">&#160;<b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Alternate Directors</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Our
amended and restated articles of association provide, as allowed by the Companies Law, that any director may, subject to the conditions
set thereto, appoint a person as an alternate to act in his place, to remove the alternate and appoint another in his place and to appoint
an alternate in place of an alternate whose office is vacated for any reason whatsoever. Under the Companies Law, a person who is not
qualified to be appointed as a director, a person who is already serving as a director or a person who is already serving as an alternate
director for another director, may not be appointed as an alternate director. Nevertheless, a director who is already serving as a director
may be appointed as an alternate director for a member of a committee of the board of directors so long as he or she is not already serving
as a member of such committee, and if the alternate director is to replace an external director, he or she is required to be an external
director and to have either &#8220;financial and accounting expertise&#8221; or &#8220;professional expertise,&#8221; depending on the
qualifications of the external director he or she is replacing. A person who does not have the requisite &#8220;financial and accounting
experience&#8221; or the &#8220;professional expertise,&#8221; depending on the qualifications of the external director he or she is replacing,
may not be appointed as an alternate director for an external director. A person who is not qualified to be appointed as an independent
director, pursuant to the Companies Law, may not be appointed as an alternate director of an independent director qualified as such under
the Companies Law. Unless the appointing director limits the time or scope of the appointment, the appointment is effective for all purposes
until the appointing director ceases to be a director or terminates the appointment.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Committees of the Board of Directors</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our board of directors has
established two standing committees, the audit committee and the compensation committee.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>Audit Committee</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Companies Law, we
are required to appoint an audit committee subject to the listing of our ordinary shares on the Nasdaq Capital Market. The audit committee
must be comprised of at least three directors, including all of the external directors, if applicable, (one of whom must serve as chair
of the committee). The audit committee may not include the chairman of the board; a controlling shareholder of the company or a relative
of a controlling shareholder; a director employed by or providing services on a regular basis to the company, to a controlling shareholder
or to an entity controlled by a controlling shareholder; or a director who derives most of his or her income from a controlling shareholder.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our audit committee is comprised
of Lluis Pedragosa, Yair Shoham and Osnat Michaeli.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Companies Law, our
audit committee is responsible for:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-size: 10pt">determining whether there are deficiencies in the business management practices of our company, and making recommendations to the board of directors to improve such practices;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">(ii)</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">determining whether to approve certain related party transactions (including transactions in which an office holder has a personal interest and whether such transaction is extraordinary or material under Companies Law) and establishing the approval process for certain transactions with a controlling shareholder or in which a controlling shareholder has a personal interest (see &#8220;Item 6.C Directors, Senior Management and Employees&#8212;Board Practices&#8212;Approval of Related Party Transactions under Israeli Law&#8221;);</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">(iii)</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">determining the approval process for transactions that are &#8220;non-negligible&#8221; (i.e., transactions with a controlling shareholder that are classified by the audit committee as non-negligible, even though they are not deemed extraordinary transactions), as well as determining which types of transactions would require the approval of the audit committee, optionally based on criteria which may be determined annually in advance by the audit committee;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">(iv)</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">examining our internal controls and internal auditor&#8217;s performance, including whether the internal auditor has sufficient resources and tools to dispose of its responsibilities;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">(v)</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">examining the scope of our auditor&#8217;s work and compensation and submitting a recommendation with respect thereto to our board of directors or shareholders, depending on which of them is considering the appointment of our auditor;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">(vi)</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">establishing procedures for the handling of employees&#8217; complaints as to deficiencies in the management of our business and the protection to be provided to such employees; and</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">(vii)</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">where the board of directors approves the working plan of the internal auditor, examining such working plan before its submission to the board of directors and proposing amendments thereto.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Pursuant to the Companies
Law, our audit committee may not conduct any discussions or approve any actions requiring its approval (see &#8220;Item 6.C Directors,
Senior Management and Employees&#8212;Board Practices&#8212;Approval of Related Party Transactions under Israeli Law&#8221;), unless at
the time of the approval a majority of the committee&#8217;s members are present.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our board of directors intends
to adopt an audit committee charter to be effective upon the listing of our ordinary shares on the Nasdaq Capital Market setting forth,
among others, the responsibilities of the audit committee consistent with the rules of the SEC and Nasdaq Listing Rules (in addition to
the requirements for such committee under the Companies Law), including, among others, the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">oversight of our independent registered public accounting firm and recommending the engagement, compensation or termination of engagement of our independent registered public accounting firm to the board of directors in accordance with Israeli law;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">recommending the engagement or termination of the person filling the office of our internal auditor, reviewing the services provided by our internal auditor and reviewing effectiveness of our system of internal control over financial reporting;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">recommending the terms of audit and non-audit services provided by the independent registered public accounting firm for pre-approval by our board of directors; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px">&#160;</td>
    <td style="width: 24px"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">reviewing and monitoring, if applicable, legal matters with significant impact, finding of regulatory authorities&#8217; findings, receive reports regarding irregularities and legal compliance, acting according to &#8220;whistleblower policy&#8221; and recommend to our board of directors if so required.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Nasdaq Stock Market Requirements for Audit
Committee</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Nasdaq Stock Market
rules, we are required to maintain an audit committee consisting of at least three members, all of whom are independent and are financially
literate and one of whom has accounting or related financial management expertise.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As noted above, the members
of our audit committee include&#160;Lluis Pedragosa, Yair Shoham and Osnat Michaeli. Osnat Michaeli&#160; serves as the chairman of our
audit committee. All members of our audit committee will meet the requirements for financial literacy under the Nasdaq Stock Market rules.
Our board of directors has determined that each member of our audit committee will be an audit committee financial expert as defined by
the SEC rules and has the requisite financial experience as defined by the Nasdaq Stock Market rules.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Companies Law, our
audit committee will also carry out the duties of a financial statement examination committee. As such, the audit committee will be responsible
for: (i) estimations and assessments made in connection with the preparation of financial statements; (ii) internal controls related to
the financial statements; (iii) completeness and propriety of the disclosure in the financial statements; (iv) the accounting policies
adopted and the accounting treatments implemented in material matters of the company; and (v) value evaluations, including the assumptions
and assessments on which evaluations are based and the supporting data in the financial statements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Compensation Committee</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Companies Law, the
board of directors of any public company must establish a compensation committee. The compensation committee must be comprised of at least
three directors, including all of the external directors (if any). The compensation committee is subject to the same Companies Law restrictions
as the audit committee as to: (a) who may not be a member of the committee; and (b)&#160;who may not be present during committee deliberations
as described above.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our compensation committee,
acting pursuant to a written charter, is comprised of Tal Barnoach, Yair Shoham and Osnat Michaeli. Our compensation committee complies
with the provisions of the Companies Law, the regulations promulgated thereunder on all aspects referring to its independence, authorities
and practice. Our compensation committee follows home country practice as opposed to complying with the compensation committee membership
and charter requirements prescribed under the Nasdaq Stock Market rules.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our compensation committee
will review and recommend to our board of directors: with respect to our executive officers&#8217; and directors&#8217;: (1) annual base
compensation (2) annual incentive bonus, including the specific goals and amounts; (3) equity compensation; (4) employment agreements,
severance arrangements, and change in control agreements and provisions; (5) retirement grants and/or retirement bonuses; and (6) any
other benefits, compensation, compensation policies or arrangements.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The duties of the compensation
committee include the recommendation to the company&#8217;s board of directors of a policy regarding the terms of engagement of office
holders, to which we refer as a compensation policy. Such policy must be adopted by the company&#8217;s board of directors, after considering
the recommendations of the compensation committee. The compensation policy is then brought for approval by our shareholders, which requires
a special majority (see &#8220;Item 6.C Directors, Senior Management and Employees&#8212;Board Practices&#8212;Approval of Related Party
Transactions under Israeli Law&#8221;). Under the Companies Law, the board of directors may adopt the compensation policy if it is not
approved by the shareholders, provided that after the shareholders oppose the approval of such policy, the compensation committee and
the board of directors revisit the matter and determine that adopting the compensation policy would be in the best interests of the company.
Under the Companies Law, we are required to adopt an office holder compensation policy by November 27, 2023, which is 9 months from the
date of our initial public offering.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->86<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The compensation policy must
serve as the basis for decisions concerning the financial terms of employment or engagement of executive officers and directors, including
exculpation, insurance, indemnification or any monetary payment or obligation of payment in respect of employment or engagement. The compensation
policy must relate to certain factors, including advancement of the company&#8217;s objectives, the company&#8217;s business and its long-term
strategy, and creation of appropriate incentives for executives. It must also consider, among other things, the company&#8217;s risk management,
size and the nature of its operations. The compensation policy must furthermore consider the following additional factors:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the education, skills, expertise and accomplishments of the relevant director or executive;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The compensation policy must
also include the following principles:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
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    <td style="width: 48px; text-align: justify">&#160;</td>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The compensation policy must
also consider appropriate incentives from a long-term perspective.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The compensation committee
will be responsible for: (1) recommending the compensation policy to a company&#8217;s board of directors for its approval (and subsequent
approval by the shareholders); and (2) duties related to the compensation policy and to the compensation of a company&#8217;s office holders,
including:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">recommending to the board of directors periodic updates to the compensation policy;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">assessing implementation of the compensation policy;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our compensation policy will
be designed to promote our long-term goals, work plan and policy, retain, motivate and incentivize our directors and executive officers,
while considering the risks that our activities involve, our size, the nature and scope of our activities and the contribution of an officer
to the achievement of our goals and maximization of profits, and align the interests of our directors and executive officers with our
long-term performance. To that end, a portion of an executive officer compensation package is targeted to reflect our short and long-term
goals, as well as the executive officer&#8217;s individual performance. On the other hand, our compensation policy will include measures
designed to reduce the executive officer&#8217;s incentives to take excessive risks that may harm us in the long-term, such as limits
on the value of cash bonuses and equity-based compensation, limitations on the ratio between the variable and the total compensation of
an executive officer and minimum vesting periods for equity-based compensation.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our compensation policy will
also address our executive officer&#8217;s individual characteristics (such as his or her respective position, education, scope of responsibilities
and contribution to the attainment of our goals) as the basis for compensation variation among our executive officers, and considers the
internal ratios between compensation of our executive officers and directors and other employees. For example, the compensation that may
be granted to an executive officer may include: base salary, annual bonuses, equity-based compensation, benefits and retirement and termination
of service arrangements. All cash bonuses are limited to a maximum amount linked to the executive officer&#8217;s base salary. In addition,
our compensation policy will provide for maximum permitted ratios between the total variable (cash bonuses and equity-based compensation)
and non-variable (base salary) compensation components, in accordance with an officer&#8217;s respective position with the company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">An annual cash bonus may be
awarded to executive officers upon the attainment of pre-set periodic objectives and individual targets. The annual cash bonus that may
be granted to executive officers other than our chairman or Chief Executive Officer may be based entirely on a discretionary evaluation.
Our Chief Executive Officer will be entitled to recommend performance objectives to such executive officers, and such performance objectives
will be approved by our compensation committee (and, if required by law, by our board of directors).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The performance measurable
objectives of our chairman and Chief Executive Officer will be determined annually by our compensation committee and board of directors.
A less significant portion of the chairman&#8217;s and/or the Chief Executive Officer&#8217;s annual cash bonus may be based on a discretionary
evaluation of the chairman&#8217;s or the Chief Executive Officer&#8217;s respective overall performance by the compensation committee
and the board of directors based on quantitative and qualitative criteria.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The equity-based compensation
under our compensation policy for our executive officers (including members of our board of directors) will be designed in a manner consistent
with the underlying objectives in determining the base salary and the annual cash bonus, with its main objectives being to enhance the
alignment between the executive officers&#8217; interests with our long-term interests and those of our shareholders and to strengthen
the retention and the motivation of executive officers in the long term. Our compensation policy will provide for executive officer compensation
in the form of share options or other equity-based awards, such as restricted shares and phantom, options, in accordance with our equity
incentive plan then in place. Share options granted to executive officers shall be subject to vesting periods in order to promote long-term
retention of the awarded executive officers. The equity-based compensation shall be granted from time to time and be individually determined
and awarded according to the performance, educational background, prior business experience, qualifications, role and the personal responsibilities
of the executive officer.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, our compensation
policy will contain compensation recovery provisions which allows us under certain conditions to recover bonuses paid in excess, will
enable our Chief Executive Officer to approve an immaterial change in the terms of employment of an executive officer (provided that the
changes of the terms of employment are in accordance our compensation policy) and will allow us to exculpate, indemnify and insure our
executive officers and directors subject to certain limitations set forth thereto.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our compensation policy will
also provide for compensation to the members of our board of directors either: (i) in accordance with the amounts provided in the Companies
Regulations (Rules Regarding the Compensation and Expenses of an External Director) of 2000, as amended by the Companies Regulations (Relief
for Public Companies Traded in Stock Exchange Outside of Israel) of 2000, as such regulations may be amended from time to time; or (ii)
in accordance with the amounts determined in our compensation policy.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 98; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->88<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Internal Auditor</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Companies Law, the
board of directors of an Israeli public company must appoint an internal auditor nominated by the audit committee. We intend to appoint
our internal auditor by May 28, 2023, which is 90 days following our initial public offering. The role of the internal auditor is to examine,
among other things, whether a company&#8217;s actions comply with the law and proper business procedure. The chairman of the Board, or
whoever the Board of the Company determines from time to time is required to oversee the activities, and to assess the performance of
the internal auditor as well as to review the internal auditor&#8217;s work plan. An internal auditor may not be an interested party or
office holder, or a relative of any interested party or office holder, and may not be a member of the company&#8217;s independent accounting
firm or its representative. The Companies Law defines an interested party as a holder of 5% or more of the outstanding shares or voting
rights of a company, any person or entity that has the right to appoint at least one director or the general manager of the company or
any person who serves as a director or as the general manager of a company. Our internal auditor is not our employee, but partner of a
firm which specializes in internal auditing.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Remuneration of Directors</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Companies Law, remuneration
of directors is subject to the approval of the compensation committee, thereafter by the board of directors and thereafter, unless exempted
under the regulations promulgated under the Companies Law, by the general meeting of the shareholders. In case the remuneration of the
directors is in accordance with regulations applicable to remuneration of the external directors then such remuneration shall be exempt
from the approval of the general meeting. Where the director is also a controlling shareholder, the requirements for approval of transactions
with controlling shareholders apply.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Fiduciary Duties of Office Holders</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Companies Law imposes
a duty of care and a duty of loyalty on all office holders of a company.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The duty of care requires
an office holder to act with the level of care with which a reasonable office holder in the same position would have acted under the same
circumstances. The duty of care of an office holder includes a duty to use reasonable means to obtain:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">information on the advisability of a given action brought for his approval or performed by him by virtue of his position; and</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">all other important information pertaining to these actions.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The duty of loyalty of an
office holder requires an office holder to act in good faith and for the benefit of the company, and includes a duty to:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Insurance</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Companies Law, a
company may obtain insurance for any of its office holders against the following liabilities incurred due to acts he or she performed
as an office holder, if and to the extent provided for in the company&#8217;s articles of association:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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    <td style="text-align: justify"><span style="font-size: 10pt">a breach of his or her duty of loyalty to the company, provided that the office holder acted in good faith and had reasonable cause to assume that his or her act would not prejudice the company&#8217;s interests; and</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
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  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We purchase increased insurance
coverage for a company of our size.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Indemnification</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Companies Law and the
Israeli Securities Law, 5728-1968, or the Securities Law, provide that a company may indemnify an office holder against the following
liabilities and expenses incurred for acts performed by him or her as an office holder, either pursuant to an undertaking made in advance
of an event or following an event, provided its articles of association include a provision authorizing such indemnification:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">reasonable litigation expenses, including attorneys&#8217; fees, expended by the office holder (a) as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (1) no indictment (as defined in the Companies Law) was filed against such office holder as a result of such investigation or proceeding; and (2) no financial liability as a substitute for the criminal proceeding (as defined in the Companies Law) was imposed upon him or her as a result of such investigation or proceeding, or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent; or (b) in connection with a monetary sanction;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">reasonable litigation expenses, including attorneys&#8217; fees, expended by the office holder or imposed on him or her by a court: (1) in proceedings that the company institutes, or that another person institutes on the company&#8217;s behalf, against him or her; (2) in a criminal proceeding of which he or she was acquitted; or (3) as a result of a conviction for a crime that does not require proof of criminal intent; and</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">expenses incurred by an office holder in connection with an Administrative Procedure under the Securities Law, including reasonable litigation expenses and reasonable attorneys&#8217; fees. An &#8220;Administrative Procedure&#8221; is defined as a procedure pursuant to chapters H3 (Monetary Sanction by the Israeli Securities Authority), H4 (Administrative Enforcement Procedures of the Administrative Enforcement Committee) or I1 (Arrangement to prevent Procedures or Interruption of procedures subject to conditions) to the Securities Law.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 100; Value: 1 --><div>
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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Companies Law also permits
a company to undertake in advance to indemnify an office holder, provided that if such indemnification relates to financial liability
imposed on him or her, as described above, then the undertaking should be limited and shall detail the following foreseen events and amount
or criterion:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">to events that in the opinion of the board of directors can be foreseen based on the company&#8217;s activities at the time that the undertaking to indemnify is made; and</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">in amount or criterion determined by the board of directors, at the time of the giving of such undertaking to indemnify, to be reasonable under the circumstances.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We intend to enter, into indemnification
agreements with all of our directors and with all members of our senior management subject to the listing of our securities on the Nasdaq
Capital Market. Each such indemnification agreement will provide the office holder with indemnification permitted under applicable law
and up to a certain amount, and to the extent that these liabilities are not covered by directors and officers insurance.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Exculpation</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Companies Law, an
Israeli company may not exculpate an office holder from liability for a breach of his or her duty of loyalty, but may exculpate in advance
an office holder from his or her liability to the company, in whole or in part, for damages caused to the company as a result of a breach
of his or her duty of care (other than in relation to distributions), but only if a provision authorizing such exculpation is included
in its articles of association. Our amended and restated articles of association provide that we may exculpate, in whole or in part, any
office holder from liability to us for damages caused to the company as a result of a breach of his or her duty of care, other than a
breach of the duty of care in a distribution. Subject to the aforesaid limitations, under the indemnification agreements we intend to
enter, we will exculpate and release our office holders from any and all liability to us related to any breach by them of their duty of
care to us to the fullest extent permitted by law.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;<i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Limitations</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Companies Law provides
that we may not exculpate or indemnify an office holder nor enter into an insurance contract that would provide coverage for any liability
incurred as a result of any of the following: (1) a breach by the office holder of his or her duty of loyalty unless (in the case of indemnity
or insurance only, but not exculpation) the office holder acted in good faith and had a reasonable basis to believe that the act would
not prejudice us; (2) a breach by the office holder of his or her duty of care if the breach was carried out intentionally or recklessly
(as opposed to merely negligently); (3) any act or omission committed with the intent to derive an illegal personal benefit; or (4) any
fine, monetary sanction, penalty or forfeit levied against the office holder.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Companies Law, exculpation,
indemnification and insurance of office holders in a public company must be approved by the compensation committee and the board of directors
and, with respect to certain office holders or under certain circumstances, also by the shareholders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our amended and restated articles
of association permit us to exculpate (subject to the aforesaid limitation), indemnify and insure our office holders to the fullest extent
permitted or to be permitted by the Companies Law.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The foregoing descriptions
summarize the material aspects and practices of our board of directors. For additional details, we also refer you to the full text of
the Companies Law, as well as of our amended and restated articles of association, which are exhibits to this Annual Report.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There are no service contracts
between us or our Subsidiary, on the one hand, and our directors in their capacity as directors, on the other hand, providing for benefits
upon termination of service.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 101; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->91<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Approval of Related Party Transactions under
Israeli Law</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>General</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Under
the Companies Law, we may approve an action by an office holder from which the office holder would otherwise have to refrain, as described
above, if:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the office holder acts in good faith and the act or its approval does not cause harm to the company; and</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the office holder disclosed the nature of his or her interest in the transaction (including any significant fact or document) to the company at a reasonable time before the company&#8217;s approval of such matter.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Disclosure of Personal Interests of an Office
Holder</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">The
Companies Law requires that an office holder disclose to the company, promptly, and, in any event, not later than the board meeting at
which the transaction is first discussed, any direct or indirect personal interest that he or she may have and all related material information
known to him or her relating to any existing or proposed transaction by the company. If the transaction is an extraordinary transaction,
the office holder must also disclose any personal interest held by:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the office holder&#8217;s relatives; or</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">any corporation 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.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">An
office holder is not, however, obliged to disclose a personal interest if it derives solely from the personal interest of his or her relative
in a transaction that is not considered an extraordinary transaction. Under the Companies Law, an extraordinary transaction is a transaction:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">not in the ordinary course of business;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">not on market terms; or</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">that is likely to have a material effect on the company&#8217;s profitability, assets or liabilities.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">The
Companies Law does not specify to whom within us nor the manner in which required disclosures are to be made. We require our office holders
to make such disclosures to our board of directors.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Under
the Companies Law, once an office holder complies with the above disclosure requirement, the board of directors may approve a transaction
between the company and an office holder, or a third party in which an office holder has a personal interest, unless the articles of association
provide otherwise and provided that the transaction is in the company&#8217;s interest. If the transaction is an extraordinary transaction
in which an office holder has a personal interest, first the audit committee and then the board of directors, in that order, must approve
the transaction. Under specific circumstances, shareholder approval may also be required. Generally, a person who has a personal interest
in a matter which is considered at a meeting of the board of directors or the audit committee may not be present at such a meeting unless
the chairman of the audit committee or board of directors (as applicable) determines that he or she should be present in order to present
the transaction that is subject to approval. A director who has a personal interest in a transaction, which is considered at a meeting
of the board of directors or the audit committee, may not be present at this meeting or vote on this matter, unless a majority of members
of the board of directors or the audit committee, as the case may be, has a personal interest. If a majority of the board of directors
has a personal interest, then shareholder approval is generally also required.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Disclosure of Personal Interests of a Controlling
Shareholder</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Under
the Companies Law, the disclosure requirements that apply to an office holder also apply to a controlling shareholder of a public company.
Extraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest, including a private
placement in which a controlling shareholder has a personal interest, as well as transactions for the provision of services whether directly
or indirectly by a controlling shareholder or his or her relative, or a company such controlling shareholder controls, and transactions
concerning the terms of engagement and compensation of a controlling shareholder or a controlling shareholder&#8217;s relative, whether
as an office holder or an employee, require the approval of the audit committee or the compensation committee, as the case may be, the
board of directors and a majority of the shares voted by the shareholders of the company participating and voting on the matter in a shareholders&#8217;
meeting. In addition, the shareholder approval must fulfill one of the following requirements:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">at least 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</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">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.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">In
addition, any extraordinary transaction with a controlling shareholder or in which a controlling shareholder has a personal interest with
a term of more than three years requires the abovementioned approval every three years; however, such transactions not involving the receipt
of services or compensation can be approved for a longer term, provided that the audit committee determines that such longer term is reasonable
under the circumstances.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">The
Companies Law requires that every shareholder that participates, in person, by proxy or by voting instrument, in a vote regarding a transaction
with a controlling shareholder, must indicate in advance or in the ballot whether or not that shareholder has a personal interest in the
vote in question. Failure to so indicate will result in the invalidation of that shareholder&#8217;s vote.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">The
term &#8220;controlling shareholder&#8221; is defined in the Companies Law as a shareholder with the ability to direct the activities
of the company, other than by virtue of being an office holder. A shareholder is presumed to be a controlling shareholder if the shareholder
holds 50% or more of the voting rights in a company or has the right to appoint 50% or more of the directors of the company or its general
manager. In the context of a transaction involving a shareholder of the company, a controlling shareholder also includes a shareholder
who holds 25% or more of the voting rights in the company if no other shareholder holds more than 50% of the voting rights in the company.
For this purpose, the holdings of all shareholders who have a personal interest in the same transaction will be aggregated.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><i>Approval of the Compensation of Directors and
Executive Officers</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The compensation of, or an
undertaking to indemnify, insure or exculpate, an office holder who is not a director requires the approval of the company&#8217;s compensation
committee, followed by the approval of the company&#8217;s board of directors, and, if such compensation arrangement or an undertaking
to indemnify, insure or exculpate is inconsistent with the company&#8217;s stated compensation policy, or if the said office holder is
the chief executive officer of the company (subject to a number of specific exceptions), then such arrangement is subject to the approval
of our shareholders, subject to a special majority requirement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Directors</i>. Under the
Companies Law, the compensation of our directors requires the approval of our compensation committee, the subsequent approval of the board
of directors and, unless exempted under the regulations promulgated under the Companies Law, the approval of the general meeting of our
shareholders. If the compensation of our directors is inconsistent with our stated compensation policy, then, provided that those provisions
that must be included in the compensation policy according to the Companies Law have been considered by the compensation committee and
board of directors, shareholder approval by a special majority will be required.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Executive officers other
than the chief executive officer.</i>&#160;The Companies Law requires the approval of the compensation of a public company&#8217;s executive
officers (other than the chief executive officer) in the following order: (i) the compensation committee, (ii) the company&#8217;s board
of directors, and (iii) only if such compensation arrangement is inconsistent with the company&#8217;s stated compensation policy, the
company&#8217;s shareholders by a special majority. However, if the shareholders of the company do not approve a compensation arrangement
with an executive officer that is inconsistent with the company&#8217;s stated compensation policy, the compensation committee and board
of directors may override the shareholders&#8217; decision if each of the compensation committee and the board of directors provide detailed
reasons for their decision.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

</div><!-- Field: Page; Sequence: 103; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->93<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Chief executive officer.</i>&#160;Under
the Companies Law, the compensation of a public company&#8217;s chief executive officer is required to be approved by: (i) the company&#8217;s
compensation committee; (ii) the company&#8217;s board of directors, and (iii) the company&#8217;s shareholders by a special majority.
However, if the shareholders of the company do not approve the compensation arrangement with the chief executive officer, the compensation
committee and board of directors may override the shareholders&#8217; decision if each of the compensation committee and the board of
directors provides detailed reasons for their decision. In addition, the compensation committee may exempt the engagement terms of a candidate
to serve as the chief executive officer from shareholders&#8217; approval, if the compensation committee determines that the compensation
arrangement is consistent with the company&#8217;s stated compensation policy, that the chief executive officer did not have a prior business
relationship with the company or a controlling shareholder of the company, and that subjecting the approval to a shareholder vote would
impede the company&#8217;s ability to attain the candidate to serve as the company&#8217;s chief executive officer (and provide detailed
reasons for the latter).</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The approval of each of the
compensation committee and the board of directors, with regard to the office holders and directors above, must be in accordance with the
company&#8217;s stated compensation policy; however, under special circumstances, the compensation committee and the board of directors
may approve compensation terms of a chief executive officer that are inconsistent with the company&#8217;s compensation policy provided
that they have considered those provisions that must be included in the compensation policy according to the Companies Law and that shareholder
approval was obtained by a special majority requirement.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Duties of Shareholders</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Under
the Companies Law, a shareholder has a duty to refrain from abusing his power in the company and to act in good faith and in an acceptable
manner in exercising his rights and performing his obligations toward the company and other shareholders, including, among other things,
in voting at general meetings of shareholders (and at shareholder class meetings) on the following matters:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">amendment of the articles of association;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">increase in the company&#8217;s authorized share capital;</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">merger; and</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the approval of related party transactions and acts of office holders that require shareholder approval.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">A
shareholder also has a general duty to refrain from oppressing other shareholders. The remedies generally available upon a breach of contract
will also apply to a breach of the above mentioned duties, and in the event of oppression of other shareholders, additional remedies are
available to the injured shareholder.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">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&#8217;s articles of association, has the power to appoint or prevent the appointment of an office holder,
or has another power with respect to a company, is under a duty to act with fairness towards the company. The Companies Law does not describe
the substance of this duty except to state that the remedies generally available upon a breach of contract will also apply in the event
of a breach of the duty to act with fairness, taking the shareholder&#8217;s position in the company into account.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Employment and Consulting Agreements with Executive
Officers</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have entered into written
employment or consulting agreements with each of our executive officers. 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 salary and benefits. These agreements also contain customary provisions regarding non-competition, non-solicitation, confidentiality
of information and assignment of inventions. However, the enforceability of the non-competition provisions may be limited under applicable
law.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_028"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>D.</b>&#160;<b>Employees.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">See &#8220;Item 4.B. Business
Overview&#8212;Employees.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_029"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>E.</b>&#160;<b>Share Ownership.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">See
&#8220;Item 7.A. Major Shareholders&#8221; below.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Share Option Plans</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>2010 Option Plan</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In December 22, 2010, our
board of directors adopted our 2010 Option Plan, or the 2010 Plan. We are no longer granting options under the 2010 Plan and currently
grant options under the 2015 Plan (as defined below). There are currently 142,760 ordinary shares resulting from the exercise of certain
options granted under the 2010 Plan which are held in trust in favor of the employees who exercised such options. We maintain the 2010
Plan in order to allow our employees to enjoy certain tax benefits under Israeli tax law. Of the 543,120 outstanding options as of April
15, 2023 under the 2010 Plan, all options were fully vested.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Administration</i>. Our
board of directors, a duly authorized committee of our board of directors, or the administrator, administer the 2010 Plan. Under the 2010
Plan, the administrator has the authority, subject to applicable law, to interpret the terms of the 2010 Plan and any option agreements
or options granted thereunder, designate recipients of options, determine and amend the terms of options, including, but not limited to,
the number and class of ordinary shares underlying each option, the time of grant of an option, the exercise price of an option (with
the consent of the grantee in the event of an increase of the exercise price), the time and vesting schedule applicable to an option,
accelerate or amend the vesting schedule applicable to an option (with the consent of the grantee in the event of an extension to the
vesting schedule) and take all other actions and make all other determinations necessary or advisable for the administration of the 2010
Plan.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The administrator also has
the authority to approve the conversion, substitution, cancellation or suspension under and in accordance with the 2010 Plan of any or
all options or ordinary shares. The administrator also has the authority to amend and rescind rules and regulations relating to the 2010
Plan or terminate the 2010 Plan at any time before the date of expiration of its ten-year term.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Grant</i>. All options
granted pursuant to the 2010 Plan are evidenced by an option agreement. The option agreement sets forth the terms and conditions of the
options, including the number of shares subject to such options, vesting schedule, the exercise price, if applicable, the tax route and
other terms and conditions not inconsistent with the 2010 Plan as the administrator may determine</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Exercise</i>. An option
under the 2010 Plan may be exercised by providing us with a written notice of exercise, specifying the number of shares with respect to
which the option is being exercised and full payment of the exercise price for such shares, if applicable, in such form and method as
may be determined by the administrator and permitted by applicable law. An option may not be exercised for a fraction of a share.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Termination of Employment</i>.
Options under the 2010 Plan shall expire in accordance with the period determined in the applicable option agreement or following the
termination of the grantee&#8217;s employment or engagement with us, as set forth below. In the event of the death of a grantee while
employed by or performing service for us or a subsidiary, or in the event of termination of a grantee&#8217;s employment or services for
reasons of disability, the grantee, or in the case of death, such grantee&#8217;s legal successor, may exercise options that have vested
prior to termination within the earlier of the twelve-month period following the date of death or termination, or the options&#8217; expiration
date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the case of termination
of the grantee&#8217;s employee, other than for cause, any option that is vested prior to the date of termination may be exercised within
such period of time ending on the earlier of 90 days following the termination date, or the option&#8217;s expiration date.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->95<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Transferability</i>. Unless
otherwise determined by the board of directors, options under the 2010 Plan may not, other than by will or laws of descent, be transferred
by the grantee nor may of the rights arising under the options be subject to a mortgage, attachment or other willful encumbrance.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Transactions</i>. In the
event of a merger, consolidation or sale of all, or substantially all, of our assets or shares, any and all outstanding, unexercised options
granted under the 2010 Plan, whether vested or unvested shall be cancelled for no consideration, unless determined otherwise by our board
of directors in its sole and absolute discretion to cause or effect any actions such as (i) the assumption or exchange of the options
for options or shares of a successor company; (ii) the exchange of options for monetary compensation; or (iii) the determination that
all unvested options and unexercised vested options shall expire on the date of such transactions.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b><i>2015 Share Incentive Plan</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The 2015 Share Incentive Plan,
or the 2015 Plan, was adopted by our board of directors on January 1, 2015. The 2015 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 our business.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Authorized Shares</i>.
As of April 15, 2023, there are 322,279 ordinary shares reserved and available for issuance under the 2015 Plan.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Shares underlying an award
granted under the 2015 Plan or an award granted under the 2010 Plan that has expired, or was cancelled, terminated, forfeited, or repurchased
or settled in cash in lieu of issuance of shares, for any reason, without having been exercised, and if permitted by us, shares tendered
to pay the exercise price or withholding tax obligations, are available for issuance under the 2015 Plan in accordance with applicable
law.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Administration</i>. Our
board of directors, a duly authorized committee of our board of directors or the administrator administer the 2015 Plan. Under the 2015
Plan, the administrator has the authority, subject to applicable law, to interpret the terms of the 2015 Plan and any award agreements
or awards granted thereunder, designate recipients of awards, determine and amend the terms of awards, including, but not limited to,
the number and class of ordinary shares underlying each option award, the time of grant of an option award, the exercise price of an option
award (with the consent of the grantee in the event of an increase of the exercise price), 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 2015 Plan and take all other actions and make all other determinations
necessary for the administration of the 2015 Plan.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The administrator also has
the authority to approve the conversion, substitution, cancellation or suspension under and in accordance with the 2015 Plan of any or
all option awards or ordinary shares. The administrator also has 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 2015 Plan but without amending the 2015 Plan. The administrator also has the authority to amend and
rescind rules and regulations relating to the 2015 Plan or terminate the 2015 Plan at any time before the date of expiration of its ten-year
term.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Eligibility</i>. The 2015
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), 5721-1961, or the Ordinance, and Section 3(i) of the Ordinance and for awards granted to our U.S.
employees or service providers, including those who are deemed to be U.S. residents for tax purposes, in compliance with Section 422 of
the Code, and Section 409A of the Code, or Incentive Stock Options.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Section 102 of the Ordinance
allows employees, directors and officers who are not controlling shareholders and are considered Israeli residents to receive favorable
tax treatment for compensation in the form of shares, options or certain other types of equity awards. Our non-employee service providers
and controlling shareholders may only be granted options under section 3(i) of the Ordinance, which does not provide for similar tax benefits.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->96<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Grant</i>. All awards granted
pursuant to the 2015 Plan are evidenced by an award agreement, in a form approved, from time to time, by the administrator in its sole
discretion. The award agreement sets 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, and other
terms and conditions not inconsistent with the 2015 Plan as the administrator may determine. Certain awards under the 2015 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.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Unless otherwise determined
by the administrator and stated in the award agreement, and subject to the conditions of the 2015 Plan, awards for new employees 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 us throughout such vesting dates.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Each award granted under the
2015 Plan will expire ten years from the date of the grant thereof, unless such shorter term of expiration is otherwise designated by
the administrator. In the case of an Incentive Stock Option granted to a 10% shareholder, within the meaning of Section 422(b)(6) of the
Code, the exercise period shall not exceed five years from the effective date of grant of such Incentive Stock Option.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Awards. </i>The 2015 Plan
provides for the grant of share options (including Incentive Stock Options and Nonqualified Stock Options), restricted shares, RSUs and
other share-based awards. Options granted under the 2015 Plan to our employees who are U.S. residents may qualify as Incentive Stock Options
within the meaning of Section 422 of the Code, or may be non-qualified stock options. The exercise price of a stock option may not be
less than 100% of the fair market value of the underlying share on the date of grant unless the administrator specifically indicates that
the share option will have a lower exercise price and it complies with Section 409A of the Code, and in the case of Incentive Stock Options
granted to 10% shareholders, not less than 110%.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Exercise</i>. An award
under the 2015 Plan may be exercised by providing us with a written notice of exercise, specifying the number of shares with respect to
which the award is being exercised and full payment of the exercise price for such shares, 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 2015 Plan, the administrator
may, in its discretion, (1) accept cash, (2) provide for net withholding of shares in a cashless exercise mechanism or (3) direct a securities
broker to sell shares and deliver all or a part of the proceeds to the company or the trustee, or to pledge shares to a securities broker
or lender, as security for a loan, and to deliver all or part of the loan proceeds to the company or the trustee.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Transferability</i>. Other
than by will, the laws of descent and distribution or as otherwise provided under the 2015 Plan or determined by the administrator, neither
the options nor any right in connection with such options are assignable or transferable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Termination of Employment</i>.
Unless otherwise determined by the administrator and subject to the conditions of the 2015 Plan, an award may only be exercised for as
long as the grantee is an employee or provides services to us. In the event of termination of a grantee&#8217;s employment or service
with us or any of our affiliates, other than for cause, 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 and subject to the
conditions of the 2015 Plan and in no event later than the expiration of the term of such awards. After such three-month period or expiration
of the term of such awards, all such unexercised awards will terminate and the shares covered by such awards shall again be available
for issuance under the 2015 Plan.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->97<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the event of termination
of a grantee&#8217;s employment or service with us or any of our affiliates due to such grantee&#8217;s death or permanent disability
all vested and exercisable awards held by such grantee as of the date of termination may be exercised by the grantee or the grantee&#8217;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 and in the event of termination due to such grantee&#8217;s
retirement, within three months of such termination. 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 2015 Plan.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Notwithstanding any of the
foregoing, if a grantee&#8217;s employment or services with us or any of our affiliates is terminated for &#8220;cause&#8221; (as defined
in the 2015 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 2015 Plan.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>Transactions</i>. In the
event of a share split, reverse share split, share dividend, recapitalization, combination or reclassification of our shares, merger,
consolidation, amalgamation, a reorganization or other similar occurrences, the administrator in its sole discretion shall make an appropriate
adjustment in the number of shares related to each outstanding award and to the number of shares reserved for issuance under the 2015
Plan, to the class and kind of shares subject to the 2015 Plan, as well as the exercise price per share of each outstanding award, as
applicable, the terms and conditions concerning vesting and exercisability and the term and duration of outstanding awards, or any other
terms that the administrator adjusts in its discretion; provided that any fractional shares resulting from such adjustment shall be rounded
to the nearest whole share unless otherwise determined by the administrator. Notwithstanding any of the foregoing, unless determined by
the administrator, no adjustment shall be made by reason of the distribution of subscription rights or rights offering to outstanding
shares or other issuance of shares by us.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In the event of a merger or
consolidation of the company, or a sale of all, or substantially all, of the our shares or assets or other transaction having a similar
effect on us, 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, the administrator may but is not required to (i) cause any outstanding
award to be assumed or substituted by such successor corporation, (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, or (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, (iii)
determine that any payments made in respect of awards shall be made or delayed to the same extent that payment of consideration to the
holders of the shares in connection with the merger/sale is made or delayed, or (iv) suspend the grantee&#8217;s rights to exercise any
vested portion of an award for a period of time prior to the signing or consummation of a merger/sale transaction.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Notwithstanding the foregoing,
the administrator may upon such event amend, modify or terminate the terms of any award as it shall deem, in good faith, appropriate.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><div><a id="a_030"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>F.</b>&#160;<b>Disclosure of a registrant&#8217;s
action to recover erroneously awarded compensation.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><div><a id="a_031"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>ITEM&#160;7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_032"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>A.</b>&#160;<b>Major Shareholders</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table sets forth
information with respect to the beneficial ownership of our ordinary shares as of April 15, 2023 by:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">each of our directors and senior management;</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">all of our directors and senior management as a group; and</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1in; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">each person (or group of affiliated persons) known by us to be the beneficial owner of 5% or more of the outstanding ordinary shares.</span></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The beneficial ownership of
our ordinary shares is determined in accordance with the rules of the SEC and generally includes any shares over which a person exercises
sole or shared voting or investment power, or the right to receive the economic benefit of ownership. For purposes of the table below,
we deem ordinary shares issuable pursuant to options that are currently exercisable or exercisable within 60&#160;days from April 15,
2023 to be outstanding and to be beneficially owned by the person holding the options 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. Percentage
of shares beneficially owned is based on ordinary shares issued and outstanding as of April 15, 2023.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">As of April 15, 2023 and based
on their reported registered office, thirteen of our shareholders were U.S. persons, holding in aggregate approximately 39% of our outstanding
ordinary shares. We have also set forth below information known to us regarding any significant change in the percentage ownership of
our ordinary shares by any major shareholders during the past three years. Except where otherwise indicated, we believe, based on information
furnished to us by such owners, that the beneficial owners of the ordinary shares listed below have sole investment and voting power with
respect to such shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">All of our shareholders, including
the shareholders listed below, have the same voting rights attached to their ordinary shares, and neither our principal shareholders nor
our directors and executive officers have different or special voting rights with respect to their ordinary shares. A description of any
material relationship that our principal shareholders have had with us or any of our predecessors or affiliates within the past three
years is included under &#8220;Item 7.A Major Shareholders and Related Party Transactions&#8212;Certain Relationships and Related Party
Transactions.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Unless otherwise noted below,
the address of each shareholder, director and executive officer is c/o&#160;Beamr Imaging&#160;Ltd., 10 HaManofim Street Herzeliya, 43305,
Israel.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td style="text-align: center">&#160;</td><td style="font-weight: bold">&#160;</td>
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    <td colspan="2" style="text-align: center">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="border-bottom: Black 1.5pt solid; font-weight: bold">Name of beneficial owner</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="font-weight: bold">5% or Greater Shareholder</td><td>&#160;</td>
    <td colspan="2">&#160;</td><td>&#160;</td><td>&#160;</td>
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    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">2,272,150</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
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shares. Richard Scanlon is the sole director of the managers and the general partner of the Marker II LP. Ohad Finkelstein and Yuval
Shachar are independent members of the investment committee of the Marker II LP. Voting and investment power over the shares held by
the Marker II LP resides with the general partner and the members of any such investment committee. The address of the foregoing entity
and individuals is c/o Marker LLC, 10 East 53rd Street, New York, NY 10022.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%">
  <tr style="vertical-align: top">
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  <tr style="vertical-align: top">
    <td>&#160;</td>
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  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">To our knowledge, other than
as disclosed in the table above, our other filings with the SEC and this Annual Report, there has been no significant change in the percentage
ownership held by any major shareholder since January 1, 2020.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->100<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_033"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>B.</b>&#160;<b>Related Party Transactions</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following is a description
of the material terms of those transactions with related parties to which we, or our subsidiaries, are party since January 1, 2022.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Advance Investment Agreements</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On August 6, 2019, we entered
into Advanced Investment Agreements, or the 2019 AIA, with several of our current shareholders, providing for bridge loan financing in
the aggregate amount of $3,097,000. The 2019 AIAs provide for the conversion of the investment amount into our ordinary shares under certain
circumstances including in particular in the case of an initial public offering such that immediately prior to the closing our initial
public the investment amount automatically converted into such number of our ordinary shares equal to the initial public offering price
multiplied by 0.8.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On August 26, 2021, we entered
into Advanced Investment Agreements, or the 2021 AIA, with several of our current shareholders, providing for bridge loan financing in
the aggregate amount of $560,000. The 2021 AIAs provide for the conversion of the investment amount into our ordinary shares under certain
circumstances including in particular in the case of an initial public offering such that immediately prior to the closing of our initial
public offering the investment amount automatically convert into such number of our ordinary shares equal to the initial public offering
price multiplied by 0.8.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Related party participants
in the 2019 AIAs and 2021 AIAs, collectively, the AIAs, that were converted into ordinary shares in our initial public offering included
the following:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify">Verizon Ventures LLC</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">947,619</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">296,131</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify">Innovation Endeavors II LP</td><td>&#160;</td>
    <td style="text-align: left">$</td><td style="text-align: right">250,000</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">78,125</td><td style="text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left">*</td><td style="text-align: justify">Number of ordinary shares issued upon the automatic conversion
of advance investment agreements on February 27, 2023 in our initial public offering based on a conversion price equal to 80% of the
initial public offering price of $&#8204;4.00.</td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Sharon Carmel Management</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On November 1, 2009, we entered
into a services agreement with Sharon Carmel Management Ltd., or SCM, a company owned by our Chief Executive Officer and Chairman, Sharon
Carmel, according to which we receive consulting services for a current monthly gross amount of NIS 45,000 from Mr. Carmel as our full
time Chief Executive Officer. Since January 1, 2020, we have not been paying SCM for the consulting services and as further discussed
below, we have accrued expenses of an aggregate of $460,000 as of December 31, 2022.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, on February 16,
2022, we entered into an addendum to the services agreement with SCM under which it was agreed that (i) the term of the services agreement
with SCM was extended until December 31, 2025 and (ii) the current liability towards SCM as was accrued for services rendered under the
services agreement over a period commencing January 1, 2020 through February 16, 2022 in total amount of $359,000, or the Current Liability,
will be paid in 18 equal installments (without an interest) starting on March 1, 2022, or the Commencement Date. However, in the event
that we shall not have available sufficient funds in any such payment date from and after the Commencement Date to repay the installments
of the Current Liability and/or the on-going fee owed to SCM or in the event that we determine that according to the following 12-months
period budget that we shall not have available sufficient funds to pay such installments and/or the on-going fee, then SCM hereby agrees
to postpone such payments owed to it until we will have such sufficient funds. Any unpaid on-going fee payments will be added to the Current
Liability.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->101<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Agreements and Arrangements With, and Compensation
of Executive Officers</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Certain of our executive officers
have employment agreements that contain customary provisions and representations, including confidentiality, non-competition, non-solicitation
and inventions assignment undertakings by the executive officers. Under current applicable Israeli employment laws, we may not be able
to enforce (either in whole or in part) 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 &#8220;Item 6.B Directors, Senior Management and Employees&#8212;Compensation.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Options</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Since
our inception we have granted options to purchase our ordinary shares to our officers and to our directors. Such option agreements may
contain acceleration provisions upon certain merger, acquisition, or change of control transactions. We describe our option plans under
&#8220;Management&#8212;Share Option Plans.&#8221; If the relationship between us and an executive officer or a director is terminated,
except for cause (as defined in the various Option Plan agreements), options that are vested will generally remain exercisable for three
(3) months following the date of such termination if we initiate such termination or two weeks following the date of such termination,
if an executive officer or a director initiates such termination.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 10pt; text-align: justify; text-indent: -10pt"><b>Indemnification
Agreements</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 10pt; text-align: justify; text-indent: -10pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our amended and restated articles
of association permits us to exculpate, indemnify and insure each of our directors and office holders to the fullest extent permitted
by the Israeli Companies Law. Upon the closing of our initial public offering, we entered into indemnification agreements with each of
our directors, director nominees and executive officers, undertaking to indemnify them to the fullest extent permitted by Israeli law,
including with respect to liabilities resulting from a public offering of our shares, to the extent that these liabilities are not covered
by insurance. We have also obtained directors and officers insurance for each of our executive officers and directors. For further information,
see &#8220;Item 6.C Directors, Senior Management and Employees&#8212;Board Practices&#8212;Exculpation,&#8221; Item 6.C Directors, Senior
Management and Employees&#8212;Board Practices&#8212;Insurance,&#8221; and &#8220;Item 6.C Directors, Senior Management and Employees&#8212;Board
Practices&#8212;Indemnification.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_034"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>C.</b>&#160;<b>Interests of Experts and Counsel</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_035"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>ITEM&#160;8. FINANCIAL INFORMATION.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_036"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>A.</b>&#160;<b>Consolidated Statements and Other
Financial Information.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">See &#8220;Item 18. Financial
Statements.&#8221;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><b>Legal Proceedings</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><span style="font-size: 10pt">See
&#8220;Item 4.B. Business Overview&#8212;Legal Proceedings.&#8221;</span>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><b>Dividends</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 15pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have never declared or
paid any cash dividends to our shareholders of our ordinary shares, and we do not anticipate or intend to pay cash dividends in the foreseeable
future. Payment of cash dividends, if any, in the future will be at the discretion of our board of directors in compliance with applicable
legal requirements and will depend on a number of factors, including future earnings, our financial condition, operating results, contractual
restrictions, capital requirements, business prospects, our strategic goals and plans to expand our business, applicable law and other
factors that our board of directors may deem relevant.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The Companies Law imposes
further restrictions on our ability to declare and pay dividends</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Payment of dividends may be
subject to Israeli withholding taxes. See &#8220;Item 10.E&#8212;Additional Information&#8212;Taxation&#8221; for additional information.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><div><a id="a_037"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>B.</b>&#160;<b>Significant Changes</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Other than as otherwise described
in this Annual Report on Form 20-F and as set forth below, no significant change has occurred in our operations since the date of our
consolidated financial statements included in this Annual Report on Form 20-F.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><div><a id="a_038"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>ITEM&#160;9. THE OFFER AND LISTING</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_039"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>A.</b>&#160;<b>Offer and Listing Details</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">On February 27, 2023, our
ordinary shares were approved for trading on the Nasdaq Capital Market under our ticker symbol &#8220;BMR&#8221; and began trading at
the open of market on February 28, 2023. Upon listing of our ordinary shares in our initial public offering on February 28, 2023, we effected
a reverse share spit at a ratio of 1-for-5.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_040"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>B.</b>&#160;<b>Plan of Distribution</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_041"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>C.</b>&#160;<b>Markets</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our ordinary shares are listed
on the Nasdaq Capital Market.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_042"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>D.</b>&#160;<b>Selling Shareholders</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_043"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>E.</b>&#160;<b>Dilution</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_044"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>F.</b>&#160;<b>Expenses of the Issue</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;<b>&#160;</b></p><div>

</div><div><a id="a_045"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>ITEM&#160;10. ADDITIONAL INFORMATION</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_046"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>A.</b>&#160;<b>Share Capital</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_047"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>B.</b>&#160;<b>Memorandum and Articles of Association</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A copy of our Amended and
Restated Articles of Association is attached as Exhibit 1.1 to this Annual Report. Other than as disclosed below, the information called
for by this Item is set forth in Exhibit 2.1 to this Annual Report and is incorporated by reference into this Annual Report.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><div><a id="a_048"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>C.</b>&#160;<b>Material Contracts</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Except
as set forth below, we have not entered into any material contract within the two years prior to the date of this Annual Report on Form
20-F, other than contracts entered into in the ordinary course of business, or as otherwise described herein in &#8220;Item&#160;4.A.
History and Development of the Company&#8221;, &#8220;Item&#160;4.B. Business Overview&#8221;, &#8220;Item&#160;7A. Major Shareholders&#8221;
or &#8220;Item 7B. Related Party Transactions&#8221; above.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"></p><div>

</div><!-- Field: Page; Sequence: 113; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->103<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_049"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>D.</b>&#160;<b>Exchange Controls</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There are currently no Israeli
currency control restrictions on remittances of dividends on our ordinary shares, proceeds from the sale of the shares or interest or
other payments to non-residents of Israel, except for shareholders who are subjects of countries that are, or have been, in a state of
war with Israel.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_050"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.3pt"><b>E.</b>&#160;<b>Taxation.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>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. 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.</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Israeli Tax Considerations and Government Programs</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="background-color: white">The
following is a description of the material Israeli income tax consequences of the ownership of our ordinary shares. The following also
contains a description of material relevant provisions of the current Israeli income tax structure applicable to companies in Israel,
with reference to its effect on us. To the extent that the discussion is based on new tax legislation which has not been subject to judicial
or administrative interpretation, there can be no assurance that the tax authorities will accept the views expressed in the discussion
in question. The discussion is not intended, and should not be taken, as legal or professional tax advice and is not exhaustive of all
possible tax considerations.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="background-color: white">The
following description is not intended to constitute a complete analysis of all tax consequences relating to the ownership or disposition
of our ordinary shares. Shareholders should consult their own tax advisors concerning the tax consequences of their particular situation,
as well as any tax consequences that may arise under the laws of any state, local, foreign or other taxing jurisdiction.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>General Corporate Tax Structure in Israel</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="background-color: white">Israeli
companies are generally subject to corporate tax. As of January 1, 2018, the corporate tax rate is 23%. However, the effective tax rate
payable by a company that derives income from a Preferred Enterprise (as discussed below) may be considerably less. Capital gains derived
by an Israeli resident company are generally subject to the prevailing corporate tax rate.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="background-color: white">Under
Israeli tax legislation, a corporation will be considered as an &#8220;Israeli resident company&#8221; if it meets one of the following:
(i) it was incorporated in Israel; or (ii) the control and management of its business are exercised in Israel.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Tax Benefits for Research and Development</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><i>&#160;</i></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="background-color: white">Israeli
tax ordinance allows, under certain conditions, a tax deduction for expenditures, including capital expenditures, for the year in which
they are incurred. Expenditures are deemed related to scientific research and development projects, and the tax deduction shall usually
take place as long as one of the following applies:</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">The expenditures are <span style="background-color: white">in the fields of industry, agriculture, transportation or energy</span>, and <span style="background-color: white">the research is carried out by a factory owner who is in the field of the said industries or at his order for the development or promotion of his factory;</span></span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">the expenses are of the <span style="background-color: white">expenditures </span>operator who does not have a <span style="background-color: white">factory </span>in the said <span style="background-color: white">industries</span>, or the expenses constitute as a participation in research funding carried out by another person in exchange for a right to the profits of the results of the <span style="background-color: white">expenditures </span>(that are reasonable in relation to his participation in research expenses.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="background-color: white">The
amount of such deductible expenses is reduced by the sum of any funds received through government grants for the finance of such scientific
research and development projects. No deduction under these research and development deduction rules is allowed if such deduction is related
to an expense invested in an asset depreciable under the general depreciation rules of the income Tax Ordinance, 1961. Expenditures not
so approved are deductible in equal amounts over three years.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="background-color: white">From
time to time we may apply the Office of the Chief Scientist for approval to allow a tax deduction for all research and development expenses
during the year incurred. There can be no assurance that such application will be accepted.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Law for the Encouragement of Capital Investments,
5719-1959</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="background-color: white">The
Law for the Encouragement of Capital Investments, 5719-1959, generally referred to as the Investment Law, provides certain incentives
for capital investments in production facilities (or other eligible assets).</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Tax Benefits</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="background-color: white">The
Investment Law grants tax benefits for income generated by a &#8220;Preferred Company&#8221; through its &#8220;Preferred Enterprise&#8221;
(as such terms are defined in the Investment Law) The definition of a Preferred Company includes a company incorporated in Israel that
is not fully owned by a governmental entity, and that has, among other things, Preferred Enterprise status and is controlled and managed
from Israel. A Preferred Company is entitled to a reduced corporate tax rate of 16% with respect to its income derived by its Preferred
Enterprise, unless the Preferred Enterprise is located in a specified development zone, in which case the rate will be 9%.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="background-color: white">Dividends
paid out of income attributed to a Preferred Enterprise are generally subject to withholding tax at source at the rate of 20%.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Taxation of our Shareholders</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="background-color: white">Capital
Gains Taxes Applicable to Non-Israeli Resident Shareholders. However, non-Israeli corporations will not be entitled to the foregoing exemption
if Israeli residents: (i) have a controlling interest of 25% or more in such non-Israeli corporation or (ii) are the beneficiaries of,
or are entitled to, 25% or more of the revenues or profits of such non-Israeli corporation, whether directly or indirectly.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="background-color: white">Additionally,
a sale of securities by a non-Israeli resident may be exempt from Israeli capital gains tax under the provisions of an applicable tax
treaty. For example, under Convention Between the Government of the United States of America and the Government of the State of Israel
with respect to Taxes on Income, as amended, or the United States-Israel Tax Treaty, the sale, exchange or other disposition of shares
by a shareholder who is a United States resident (for purposes of the treaty) holding the shares as a capital asset and is entitled to
claim the benefits afforded to such a resident by the U.S.-Israel Tax Treaty, or a Treaty U.S. Resident, is generally exempt from Israeli
capital gains tax unless: (i) the capital gain arising from such sale, exchange or disposition is attributed to real estate located in
Israel; (ii) the capital gain arising from such sale, exchange or disposition is attributed to royalties; (iii) the capital gain arising
from the such sale, exchange or disposition is attributed to a permanent establishment in Israel, under certain terms; (iv) such Treaty
U.S. Resident holds, directly or indirectly, shares representing 10% or more of the voting capital during any part of the 12-month period
preceding the disposition, subject to certain conditions; or (v) such Treaty U.S. Resident is an individual and was present in Israel
for 183 days or more during the relevant taxable year.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="background-color: white">In
some instances where our shareholders may be liable for Israeli tax on the sale of their ordinary shares, the payment of the consideration
may be subject to the withholding of Israeli tax at source. Shareholders may be required to demonstrate that they are exempt from tax
on their capital gains in order to avoid withholding at source at the time of sale.</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="background-color: white">Taxation
of Non-Israeli Shareholders on Receipt of Dividends. Non-Israeli residents are generally subject to Israeli income tax on the receipt
of dividends paid on our ordinary shares at the rate of 25%, With respect to a person who is a &#8220;substantial shareholder&#8221; at
the time of receiving the dividend or on any time during the preceding twelve months, the applicable tax rate is 30%. A &#8220;substantial
shareholder&#8221; is generally a person who alone or together with another person, holds, directly or indirectly, at least 10% of any
of the &#8220;means of control&#8221; of the corporation. &#8220;Means of control&#8221; generally include the right to vote, receive
profits, nominate a director or an executive officer, receive assets upon liquidation, or order someone who holds any of the aforesaid
rights how to act, regardless of the source of such right. However, a distribution of dividends to non-Israeli residents is subject to
withholding tax at source at a rate of 20% if the dividend is distributed from income attributed to a Preferred Enterprise, unless a reduced
tax rate is provided under an applicable tax treaty. For example, under the United States-Israel Tax Treaty, the maximum rate of tax withheld
at source in Israel on dividends paid to a holder of our ordinary shares who is a Treaty U.S. Resident is 25%. However, generally, the
maximum rate of withholding tax on dividends, not generated by a Preferred Enterprise, that are paid to a United States corporation holding
10% or more of the outstanding voting capital throughout the tax year in which the dividend is distributed as well as during the previous
tax year, is 12.5%, provided that not more than 25% of the gross income for such preceding year consists of certain types of dividends
and interest. Notwithstanding the foregoing, dividends distributed from income attributed to an Preferred Enterprise are not entitled
to such reduction under the tax treaty but are subject to a withholding tax rate of 15% for a shareholder that is a U.S. corporation,
provided that the condition related to our gross income for the previous year (as set forth in the previous sentence) is met. If the dividend
is attributable partly to income derived from a Preferred Enterprise, and partly to other sources of income, the withholding rate will
be a blended rate reflecting the relative portions of the two types of income. We cannot assure you that we will designate the profits
that we may distribute in a way that will reduce shareholders&#8217; tax liability.<b>&#160;</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><span style="background-color: white"><b>U.S. Federal Income Tax Considerations</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">THE FOLLOWING SUMMARY IS INCLUDED
HEREIN FOR GENERAL INFORMATION AND IS NOT INTENDED TO BE, AND SHOULD NOT BE CONSIDERED TO BE, LEGAL OR TAX ADVICE. EACH U.S. HOLDER SHOULD
CONSULT WITH HIS OR HER OWN TAX ADVISOR AS TO THE PARTICULAR U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND SALE
OF ORDINARY SHARES, INCLUDING THE EFFECTS OF APPLICABLE STATE, LOCAL, FOREIGN OR OTHER TAX LAWS AND POSSIBLE CHANGES IN THE TAX LAWS.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Subject to the limitations
described in the next two paragraphs, the following discussion summarizes the material U.S. federal income tax consequences to a &#8220;U.S.
Holder&#8221; arising from the purchase, ownership and sale of the ordinary shares. For this purpose, a &#8220;U.S. Holder&#8221; is a
holder of ordinary shares that is: (1) an individual citizen or resident of the United States, including an alien individual who is a
lawful permanent resident of the United States or meets the substantial presence residency test under U.S. federal income tax laws; (2)
a corporation (or entity treated as a corporation for U.S. federal income tax purposes) or a partnership (other than a partnership that
is not treated as a U.S. person under any applicable U.S. Treasury regulations) created or organized under the laws of the United States
or the District of Columbia or any political subdivision thereof; (3) an estate, the income of which is includable in gross income for
U.S. federal income tax purposes regardless of its source; (4) a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more U.S. persons have authority to control all substantial decisions of the
trust; or (5) a trust that has a valid election in effect to be treated as a U.S. person to the extent provided in U.S. Treasury regulations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This summary is for general
information purposes only and does not purport to be a comprehensive description of all of the U.S. federal income tax considerations
that may be relevant to a decision to purchase our ordinary shares. This summary generally considers only U.S. Holders that will own our
ordinary shares as capital assets. Except to the limited extent discussed below, this summary does not consider the U.S. federal tax consequences
to a person that is not a U.S. Holder, nor does it describe the rules applicable to determine a taxpayer&#8217;s status as a U.S. Holder.
This summary is based on the provisions of the Code and final, temporary and proposed U.S. Treasury regulations promulgated thereunder,
administrative and judicial interpretations thereof, and the United States-Israel Income Tax Treaty, all as in effect as of the date hereof
and all of which are subject to change, possibly on a retroactive basis, and all of which are open to differing interpretations. We will
not seek a ruling from the Internal Revenue Service, or the IRS, with regard to the U.S. federal income tax treatment of an investment
in our ordinary shares by U.S. Holders and, therefore, can provide no assurances that the IRS will agree with the conclusions set forth
below.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This discussion does not address
all of the aspects of U.S. federal income taxation that may be relevant to a particular U.S. holder based on such holder&#8217;s particular
circumstances and in particular does not discuss any estate, gift, generation-skipping transfer, state, local, excise or foreign tax considerations.
In addition, this discussion does not address the U.S. federal income tax treatment of a U.S. Holder who is: (1) a bank, life insurance
company, regulated investment company, or other financial institution or &#8220;financial services entity;&#8221; (2) a broker or dealer
in securities or foreign currency; (3) a person who acquired our ordinary shares in connection with employment or other performance of
services; (4) a U.S. Holder that is subject to the U.S. alternative minimum tax; (5) a U.S. Holder that holds our ordinary shares as a
hedge or as part of a hedging, straddle, conversion or constructive sale transaction or other risk-reduction transaction for U.S. federal
income tax purposes; (6) a tax-exempt entity; (7) real estate investment trusts or grantor trusts; (8) a U.S. Holder that expatriates
out of the United States or a former long-term resident of the United States; or (9) a person having a functional currency other than
the U.S. dollar. This discussion does not address the U.S. federal income tax treatment of a U.S. Holder that owns, directly or constructively,
at any time, ordinary shares representing 10% or more of the shares of our company. Additionally, the U.S. federal income tax treatment
of partnerships (or other pass-through entities) or persons who hold ordinary shares through a partnership or other pass-through entity
are not addressed.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Each prospective investor
is advised to consult his or her own tax adviser for the specific tax consequences to that investor of purchasing, holding or disposing
of our ordinary shares, including the effects of applicable state, local, foreign or other tax laws and possible changes in the tax laws.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="background-color: white"><b><i>Taxation
of Dividends Paid on Ordinary Shares</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We do not intend to pay dividends
in the foreseeable future. In the event that we do pay dividends, and subject to the discussion under the heading &#8220;Passive Foreign
Investment Companies&#8221; below and the discussion of &#8220;qualified dividend income&#8221; below, a U.S. Holder, other than certain
U.S. Holders that are U.S. corporations, will be required to include in gross income as ordinary income the amount of any distribution
paid on the ordinary shares (including the amount of any Israeli tax withheld on the date of the distribution), to the extent that such
distribution does not exceed our current and accumulated earnings and profits, as determined for U.S. federal income tax purposes. The
amount of a distribution that exceeds our earnings and profits will be treated first as a non-taxable return of capital, reducing the
U.S. Holder&#8217;s tax basis for the ordinary shares to the extent thereof, and then capital gain. We do not expect to maintain calculations
of our earnings and profits under U.S. federal income tax principles and, therefore, U.S. Holders should expect that the entire amount
of any distribution generally will be reported as dividend income.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In general, preferential tax
rates for &#8220;qualified dividend income&#8221; and long-term capital gains are applicable for U.S. Holders that are individuals, estates
or trusts. For this purpose, &#8220;qualified dividend income&#8221; means, inter alia, dividends received from a &#8220;qualified foreign
corporation.&#8221; A &#8220;qualified foreign corporation&#8221; is a corporation that is entitled to the benefits of a comprehensive
tax treaty with the United States that includes an exchange of information program. The IRS has stated that the United States-Israel Tax
Treaty satisfies this requirement and we believe we are eligible for the benefits of that treaty.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, our dividends
will be qualified dividend income if our ordinary shares are readily tradable on the Nasdaq Capital Market or another established securities
market in the United States. Dividends will not qualify for the preferential rate if we are treated, in the year the dividend is paid
or in the prior year, as a passive foreign investment company, or PFIC, as described below under &#8220;Passive Foreign Investment Companies.&#8221;
A U.S. Holder will not be entitled to the preferential rate: (1) if the U.S. Holder has not held our ordinary shares for at least 61 days
of the 121 day period beginning on the date which is 60 days before the ex-dividend date, or (2) to the extent the U.S. Holder is under
an obligation to make related payments with respect to positions in substantially similar or related property. Any days during which the
U.S. Holder has diminished its risk of loss on our ordinary shares are not counted towards meeting the 61-day holding period. Finally,
U.S. Holders who elect to treat the dividend income as &#8220;investment income&#8221; pursuant to Section 163(d)(4) of the Code will
not be eligible for the preferential rate of taxation.</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The amount of a distribution
with respect to our ordinary shares will be measured by the amount of the fair market value of any property distributed, and for U.S.
federal income tax purposes, the amount of any Israeli taxes withheld therefrom. Cash distributions paid by us in NIS will be included
in the income of U.S. Holders at a U.S. dollar amount based upon the spot rate of exchange in effect on the date the dividend is includible
in the income of the U.S. Holder, and U.S. Holders will have a tax basis in such NIS for U.S. federal income tax purposes equal to such
U.S. dollar value. If the U.S. Holder subsequently converts the NIS into U.S. dollars or otherwise disposes of them, any subsequent gain
or loss in respect of such NIS arising from exchange rate fluctuations will be U.S. source ordinary exchange gain or loss.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Dividends paid with respect
to our ordinary shares will be treated as foreign source income, which may be relevant in calculating the holder&#8217;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 &#8220;passive category income,&#8221; or, in the case of certain
U.S. Holders, &#8220;general category income.&#8221; 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 U.S. Holders should consult their tax advisor to determine whether and to what extent such holder will be entitled to
this credit.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="background-color: white"><b><i>Taxation
of the Sale, Exchange or other Disposition of </i></b></span><b><i>Ordinary Shares</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Except as provided under the
PFIC rules described below under &#8220;Passive Foreign Investment Companies,&#8221; upon the sale, exchange or other disposition of our
ordinary shares, a U.S. Holder will recognize capital gain or loss in an amount equal to the difference between such U.S. Holder&#8217;s
tax basis for the ordinary shares, determined in U.S. dollars, and the U.S. dollar value of the amount realized on the disposition (or
its U.S. dollar equivalent determined by reference to the spot rate of exchange on the date of disposition, if the amount realized is
denominated in a foreign currency). The gain or loss realized on the sale, exchange or other disposition of ordinary shares will be long-term
capital gain or loss if the U.S. Holder has a holding period of more than one year at the time of the disposition. Individuals who recognize
long-term capital gains may be taxed on such gains at reduced rates of tax. The deduction of capital losses is subject to various limitations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="background-color: white"><b><i>Passive
Foreign Investment Companies</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Special U.S. federal income
tax laws apply to U.S. taxpayers who own shares of a corporation that is a PFIC. We will be treated as a PFIC for U.S. federal income
tax purposes for any taxable year that either:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">75% or more of our gross income (including our pro rata share of gross income for any company, in which we are considered to own 25% or more of the shares by value), in a taxable year is passive; or</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">At least 50% of our assets generally determined on the basis of a quarterly average and based upon fair market value (including our pro rata share of the assets of any company in which we are considered to own 25% or more of the shares by value) are held for the production of, or produce, passive income.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">For this purpose, passive
income generally consists of rents, dividends, interest, royalties, gains from the disposition of passive assets and gains from commodities
and securities transactions. Cash is treated as generating passive income.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We believe that we will not
be a PFIC for the current taxable year, although we have not determined whether we will be a PFIC in the foreseeable future. The tests
for determining PFIC status are applied annually, and it is difficult to make accurate projections of future income and assets which are
relevant to this determination. In addition, our PFIC status may depend in part on the market value of our ordinary shares. Accordingly,
there can be no assurance that we currently are not or will not become a PFIC.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">If we currently are or become
a PFIC, each U.S. Holder who has not elected to mark the shares to market (as discussed below), would, upon receipt of certain &#8220;excess
distributions&#8221; by us and upon disposition of our ordinary shares at a gain:&#160;(1) have such excess distribution or gain allocated
ratably over the U.S. Holder&#8217;s holding period for the ordinary shares, as the case may be; (2) the amount allocated to the current
taxable year and any period prior to the first day of the first taxable year in which we were a PFIC would be taxed as ordinary income;
and (3) the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable
class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting
tax attributable to each such other taxable year. Distributions received by a U.S. Holder in a taxable year that are greater than 125%
of the average annual distributions received during the shorter of the three preceding taxable years or the U.S. Holder&#8217;s holding
period for the ordinary shares will be treated as excess distributions. In addition, when shares of a PFIC are acquired by reason of death
from a decedent that was a U.S. Holder, the tax basis of such shares would not receive a step-up to fair market value as of the date of
the decedent&#8217;s death, but instead would be equal to the decedent&#8217;s basis if lower, unless all gain were recognized by the
decedent. Indirect investments in a PFIC may also be subject to these special U.S. federal income tax rules.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="background-color: white">&#160;&#160;&#160;</span></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="background-color: white">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The PFIC rules described above
would not apply to a U.S. Holder who makes a qualified electing fund, or QEF, election for all taxable years that such U.S. Holder has
held the ordinary shares while we are a PFIC, provided that we comply with specified reporting requirements. Instead, each U.S. Holder
who has made such a QEF election is required for each taxable year that we are a PFIC to include in income such U.S. Holder&#8217;s pro
rata share of our ordinary earnings as ordinary income and such U.S. Holder&#8217;s pro rata share of our net capital gains as long-term
capital gain, regardless of whether we make any distributions of such earnings or gain. In general, a QEF election is effective only if
we make available certain required information. The QEF election is made on a shareholder-by-shareholder basis and generally may be revoked
only with the consent of the IRS. We do not intend to notify U.S. Holders if we believe we will be treated as a PFIC for any tax year.
In addition, we do not intend to furnish U.S. Holders annually with information needed in order to complete IRS Form 8621 and to make
and maintain a valid QEF election for any year in which we or any of our subsidiaries are a PFIC. Therefore, the QEF election will not
be available with respect to our ordinary shares.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In addition, the PFIC rules
described above would not apply if we were a PFIC and a U.S. Holder made a mark-to-market election. A U.S. Holder of our ordinary shares
which are regularly traded on a qualifying exchange, including the Nasdaq Capital Market, can elect to mark the ordinary shares to market
annually, recognizing as ordinary income or loss each year an amount equal to the difference as of the close of the taxable year between
the fair market value of the ordinary shares and the U.S. Holder&#8217;s adjusted tax basis in the ordinary shares. Losses are allowed
only to the extent of net mark-to-market gain previously included income by the U.S. Holder under the election for prior taxable years.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">U.S. Holders who hold our
ordinary shares during a period when we are a PFIC will be subject to the foregoing rules, even if we cease to be a PFIC. U.S. Holders
are strongly urged to consult their tax advisors about the PFIC rules.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="background-color: white"><b>Tax
on Net Investment Income</b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">U.S. Holders who are individuals,
estates or trusts will generally be required to pay a 3.8% Medicare tax on their net investment income (including dividends on and gains
from the sale or other disposition of our ordinary shares), or in the case of estates and trusts on their net investment income that is
not distributed to beneficiaries of the estate or trust. In each case, the 3.8% Medicare tax applies only to the extent the U.S. Holder&#8217;s
total adjusted income exceeds applicable thresholds.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white"><span style="background-color: white"><b><i>Information
Reporting and Withholding</i></b></span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">A U.S. Holder may be subject
to backup withholding at a rate of 24% with respect to cash dividends and proceeds from a disposition of ordinary shares. In general,
backup withholding will apply only if a U.S. Holder fails to comply with specified identification procedures. Backup withholding will
not apply with respect to payments made to designated exempt recipients, such as corporations and tax-exempt organizations. Backup withholding
is not an additional tax and may be claimed as a credit against the U.S. federal income tax liability of a U.S. Holder, provided that
the required information is timely furnished to the IRS.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Certain U.S. Holders with
interests in &#8220;specified foreign financial assets&#8221; (including, among other assets, our ordinary shares, unless such ordinary
shares are held on such U.S. Holder&#8217;s behalf through a financial institution) may be required to file an information report with
the IRS if the aggregate value of all such assets exceeds $50,000 on the last day of the taxable year or $75,000 at any time during the
taxable year (or such higher dollar amount as may be prescribed by applicable IRS guidance); and may be required to file a Report of Foreign
Bank and Financial Accounts, or FBAR, if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the
calendar year. You should consult your own tax advisor as to the possible obligation to file such information report.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->109<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>THE DISCUSSION ABOVE IS
A GENERAL SUMMARY AND IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX CONSEQUENCES RELATING TO THE PURCHASE, OWNERSHIP AND
DISPOSITION OF OUR ORDINARY SHARES. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCE TO A PROSPECTIVE INVESTOR. EACH PROSPECTIVE
INVESTOR IS URGED TO CONSULT ITS OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES TO IT RELATING TO THE PURCHASE, OWNERSHIP, AND DISPOSITION
OF ORDINARY SHARES IN LIGHT OF THE INVESTOR&#8217;S OWN CIRCUMSTANCES.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_051"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>F. Dividends and Paying Agents</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_052"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>G. Statement by Experts</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_053"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>H. Documents on Display</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are subject to certain
information reporting requirements of the Exchange Act, applicable to foreign private issuers and under those requirements will file reports
with the SEC.&#160;The SEC maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements and
other information regarding issuers that file electronically with the SEC. Our filings with the SEC will also be available to the public
through the SEC&#8217;s website at www.sec.gov.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">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 will be 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 annual, quarterly and current reports and financial statements
with the SEC as frequently or as promptly as U.S. domestic companies whose securities are registered under the Exchange Act. However,
we will file with the SEC, within 120 days after the end of each fiscal year, or such applicable time as required by the SEC, an annual
report on Form 20-F containing financial statements audited by an independent registered public accounting firm, and may submit to the
SEC, on a Form 6-K, unaudited quarterly financial information.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;&#160;</p><div>

</div><div><a id="a_054"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>I. Subsidiary Information.</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_055"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>J. Annual Report to Security Holders.</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_056"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>ITEM&#160;11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We are exposed to market risk
from changes in exchange rates, interest rates and inflation. All of these market risks arise in the ordinary course of business, as we
do not engage in speculative trading activities. The following analysis provides additional information regarding these risks.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><b><i>Foreign Currency and
Exchange Risk</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our functional currency and
all of our subsidiaries all of which are primarily a direct and integral component of our operation is the U.S. dollars, as the U.S. dollars
is the primary currency of the economic environment in which us and our subsidiaries have operated (which is the currency of the environment
in which an entity primarily generates cash) and expects to continue to operate in the foreseeable future. Our sales are mainly denominated
in U.S. dollars. A significant portion of our operating costs are in Israel and in Russia, consisting principally of salaries and related
personnel expenses, and facility expenses, which are denominated in NIS and RUB. This foreign currency exposure gives rise to market risk
associated with exchange rate movements of the U.S. dollar against the NIS and RUB. Furthermore, we anticipate that a significant portion
of our expenses will continue to be denominated in NIS and RUB. We do not hedge against currency risk. A hypothetical 10% change in foreign
currency exchange rates applicable to our business would have had an impact on our results for the year ended December 31, 2022 of $0.1
million due to NIS, and $0.1 million due to RUB.&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt; text-indent: 0pt"><b><i>Impact of Inflation</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b><i>&#160;</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">While it is difficult to accurately
measure the impact of inflation due to the imprecise nature of the estimates required, we do not believe inflation has had a material
effect on our historical results of operations and financial condition. However, if our costs were to become subject to significant inflationary
pressures, we may not be able to fully offset higher costs through price increases or other corrective measures, and our inability or
failure to do so could adversely affect our business, financial condition and results of operations.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><div><a id="a_057"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>ITEM&#160;12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_058"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>A. Debt Securities.</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_059"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>B. Warrants and rights.</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_060"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>C. Other Securities.</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_061"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>D. American Depositary Shares</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 121; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->111<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><div><a id="a_062"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><b>PART&#160;II</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_063"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>ITEM&#160;13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">None.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_064"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>ITEM&#160;14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">There are no material modifications
to the rights of security holders.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_065"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>ITEM&#160;15. CONTROLS AND PROCEDURES</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>(a) Disclosure Controls and Procedures</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our management, with the participation
of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures
(as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2022, or the Evaluation Date. Based
on such evaluation, those officers have concluded that, as of the Evaluation Date, our disclosure controls and procedures were not effective
due to a material weakness in our internal control over financial reporting related to lack of sufficient internal accounting personnel,
segregation of duties, lack of sufficient internal controls (including IT general controls, entity level controls and transaction level
controls). See &#8220;Item 5.E&#8212;Operating and Financial Review and Prospects&#8212;Critical Account Estimates&#8212;Internal Control
Over Financial Reporting&#8221; for additional information.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>(b) Management&#8217;s Annual Report on Internal Control over Financial Reporting</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This Annual Report does not
include a report of management&#8217;s assessment regarding internal control over financial reporting due to a transition period established
by rules of the SEC for newly public companies. See &#8220;Item 5.E&#8212;Operating and Financial Review and Prospects&#8212;Critical
Account Estimates&#8212;Internal Control Over Financial Reporting&#8221; for additional information.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>(c) Attestation Report of the Registered Public Accounting Firm</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">This Annual Report does not
include a report of management&#8217;s assessment regarding internal control over financial reporting due to a transition period established
by rules of the SEC for newly public companies.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>(d) Changes in Internal Control over Financial Reporting</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">During the year ended December
31, 2022, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely
to materially affect, our internal control over financial reporting.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_066"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>ITEM 16. [RESERVED]</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_067"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>ITEM&#160;16A.
AUDIT COMMITTEE FINANCIAL EXPERT</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our board of directors has
determined that three members of our audit committee, include Lluis Pedragosa, Yair Shoham and Osnat Michaeli. Osnat Michaeli, are an
audit committee financial expert, as defined under the rules under the Exchange Act, and is independent in accordance with applicable
Exchange Act rules and the Nasdaq Listing Rules.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_068"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>ITEM&#160;16B. CODE OF ETHICS</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 22.5pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our board of directors has
adopted a Code of Ethics applicable to all of our directors and employees, including our Chief Executive Officer, Chief Financial Officer,
controller or principal accounting officer, or other persons performing similar functions, which is a &#8220;code of ethics&#8221; as
defined in Item 16B of Form 20-F promulgated by the SEC. The full text of the Code of Ethics is posted on our website at&#160;<i>https://beamr.com/</i>.
Information contained on, or that can be accessed through, our website does not constitute a part of this a part of this Annual Report
on Form 20-F and is not incorporated by reference herein. If we make any amendment to the Code of Ethics or grant any waivers, including
any implicit waiver, from a provision of the Code of Ethics, we will disclose the nature of such amendment or waiver on our website to
the extent required by the rules and regulations of the SEC. We have not granted any waivers under our Code of Business Conduct and Ethics.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 122; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->112<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="a_069"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>ITEM&#160;16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The following table provides
information regarding fees paid by us to Fahn Kanne &amp; Co. Grant Thornton Israel, an independent registered public accounting firm,
for all services, including audit services, for the years ended December 31, 2022 and 2021:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
    <td>&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td>(USD)</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td><td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td><td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left; text-indent: -0.15in; padding-left: 0.15in"><span style="font-size: 10pt">Audit fees&#160;<sup>(1)</sup></span></td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">60,134</td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td><td style="width: 9%; text-align: right">35,096</td><td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 1.5pt; text-indent: -0.15in; padding-left: 0.15in"><span style="font-size: 10pt">Tax fees<sup>(2)</sup></span></td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">643</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">-</td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 4pt; text-indent: -0.15in; padding-left: 0.15in">All other fees</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right">0</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td><td style="border-bottom: Black 4pt double; text-align: right">0</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -0.15in; padding-left: 0.15in">Total</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">60,777</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">35,096</td><td style="text-align: left">&#160;</td></tr>
  </table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-size: 10pt">(1)</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">The audit fees for the years ended December 31, 2022 and 2021 includes professional services rendered in connection with the audit of our annual consolidated financial statements and the review of our consolidated interim financial statements, our statutory tax audits and assistance with review of documents filed with the SEC.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
    <td style="width: 24px"><span style="font-size: 10pt">(2)</span></td>
    <td style="text-align: justify"><span style="font-size: 10pt">Tax fees include professional services rendered in substance related to receive a certificate from the Israeli tax authority for an exemption or a reduction of withholding tax at the source regarding transfer of funds.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b><i>Pre-Approval of Auditors&#8217; Compensation</i></b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Our audit committee has a
pre-approval policy for the engagement of our independent registered public accounting firm to perform certain audit and non-audit services.
Pursuant to this policy, which is designed to assure that such engagements do not impair the independence of our auditors, the audit committee
pre-approves annually a catalog of specific audit and non-audit services in the categories of audit services, audit-related services and
tax services that may be performed by our independent registered public accounting firm. If a type of service, that is to be provided
by our auditors, has not received such general pre-approval, it will require specific pre-approval by our audit committee. The policy
prohibits retention of the independent registered public accounting firm to perform the prohibited non-audit functions defined in applicable
SEC rules.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_070"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>ITEM&#160;16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_071"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>ITEM&#160;16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_072"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>ITEM&#160;16F. CHANGE IN REGISTRANT&#8217;S CERTIFYING ACCOUNTANT</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><div><a id="a_073"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>ITEM&#160;16G.
CORPORATE GOVERNANCE</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Under the Companies Law, companies
incorporated under the laws of the State of Israel, whose shares are publicly traded, including companies whose shares are listed on the
Nasdaq Capital Market are considered public companies under Israeli law and are required to comply with various corporate governance requirements
under Israeli law relating to such matters as external directors, the audit committee, compensation committee, compensation policy, company&#8217;s
auditors, and an internal auditor. These requirements are in addition to the corporate governance requirements imposed by the Nasdaq Listing
Rules, and other applicable provisions of U.S. securities laws to which we are subject as a foreign private issuer due to the listing
of our ordinary shares on the Nasdaq Capital Market. However, pursuant to regulations promulgated under the Companies Law, companies with
shares traded on certain U.S. stock exchanges, including the Nasdaq Capital Market, may, subject to certain conditions, &#8220;opt out&#8221;
from the requirement of the Companies Law to appoint external directors and related Companies Law rules concerning the composition of
the audit committee and compensation committee of the board of directors (other than the gender diversification rule under the Companies
Law which requires the appointment of a director from the other gender if, at the time a director is appointed, all members of the board
of directors are of the same gender). In accordance with these regulations, we have elected to &#8220;opt out&#8221; from such requirements
of the Companies Law. Under these regulations, the exemptions from such Companies Law&#8217;s requirements will continue to be available
to us so long as we comply with the following: (i) we do not have a &#8220;controlling shareholder&#8221; (as such term is defined under
the Companies Law), (ii) our shares are traded on certain U.S. stock exchanges, including the Nasdaq Capital Market, and (iii) we comply
with the director independence requirements and the requirements regarding the composition of the audit committee and the compensation
committee under U.S. laws (including applicable Nasdaq rules) applicable to U.S. domestic issuers.</p><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">In accordance with Israeli
law and practice and subject to the exemption set forth in Rule&#160;5615 of the Nasdaq Stock Market rules, we have elected to follow
the provisions of the Companies Law, rather than the Nasdaq Stock Market rules, with respect to the following requirements:</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify; font-size: 10pt">&#160;</td>
    <td style="width: 24px; text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify; font-size: 10pt"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Quorum</i>. While the Nasdaq Stock Market rules require that the quorum for purposes of any meeting of the holders of a listed company&#8217;s ordinary voting stock, as specified in the company&#8217;s bylaws, be no less than 33 1/3% of the company&#8217;s outstanding ordinary voting stock, under Israeli law, a company is entitled to determine in its articles of association the number of shareholders and percentage of holdings required for a quorum at a shareholders meeting. Our amended and restated articles of association provide that a quorum of two or more shareholders holding at least 25% of the voting rights in person or by proxy is required for commencement of business at a general meeting. However, the quorum set forth in our amended and restated articles of association with respect to an adjourned meeting consists of any number of shareholders present in person or by proxy.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">&#160;&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Compensation of officers.</i>&#160;Israeli law and our amended and restated articles of association do not require that the independent members of our board of directors (or a compensation committee composed solely of independent members of our board of directors) determine an executive officer&#8217;s compensation, as is generally required under the Nasdaq Stock Market rules with respect to the chief executive officer and all other executive officers. Instead, compensation of executive officers is determined and approved by our board of directors, and in certain circumstances by our shareholders, either in consistency with our office holder compensation policy or, in special circumstances in deviation therefrom, taking into account certain considerations stated in the Companies Law. See &#8220;Item 6.C Directors, Senior Management and Employees&#8212;&#8212;Board Practices&#8212;Approval of Related Party Transactions under Israeli Law&#8221; for additional information.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Shareholder approval.</i>&#160;We will seek shareholder approval for all corporate actions requiring such approval under the requirements of the Companies Law, rather than seeking approval for corporation actions in accordance with Nasdaq Listing Rule&#160;5635. In particular, under this Nasdaq Stock Market rule, shareholder approval is generally required for: (i)&#160;an acquisition of shares/assets of another company that involves the issuance of 20% or more of the acquirer&#8217;s shares or voting rights or if a director, officer or 5% shareholder has greater than a 5% interest in the target company or the consideration to be received; (ii)&#160;the issuance of shares leading to a change of control; (iii)&#160;adoption/amendment of equity compensation arrangements (although under the provisions of the Companies Law there is no requirement for shareholder approval for the adoption/amendment of the equity compensation plan); and (iv)&#160;issuances of 20% or more of the shares or voting rights (including securities convertible into, or exercisable for, equity) of a listed company via a private placement (and/or via sales by directors/officers/5% shareholders) if such equity is issued (or sold) at below the greater of the book or market value of shares. By contrast, under the Companies Law, shareholder approval is required for, among other things: (i)&#160;transactions with directors concerning the terms of their service or indemnification, exemption and insurance for their service (or for any other position that they may hold at a company), for which approvals of the compensation committee, board of directors and shareholders are all required, (ii)&#160;extraordinary transactions with controlling shareholders of publicly held companies, which require the special approval, and (iii)&#160;terms of employment or other engagement of the controlling shareholder of us or such controlling shareholder&#8217;s relative, which require special approval. In addition, under the Companies Law, a merger requires approval of the shareholders of each of the merging companies.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

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    </div><!-- Field: /Page --><div>

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</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679; </span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Nomination of Directors. </i>We will not have to comply with the requirements that we have a nominating committee composed entirely of independent directors with a written charter addressing the committee&#8217;s purpose and responsibilities. </span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679; </span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Director Independence. </i>Israeli law does not require that a majority of the directors serving on our board of directors be &#8220;independent,&#8221; as defined under Nasdaq Stock Market Rule 5605(a)(2), and rather requires we have at least two external directors who meet the requirements of the Companies Law, as described below under &#8220;Management&#8212;Board Practices&#8212;External Directors.&#8221; The definition of independent director under Nasdaq Stock Market rules and external director under the Companies Law overlap to a significant degree such that we would generally expect the directors serving as external directors to satisfy the requirements to be independent under Nasdaq Stock Market rules. However, it is possible for a director to qualify as an &#8220;external director&#8217;&#8217; under the Companies Law without qualifying as an &#8220;independent director&#8217;&#8217; under the Nasdaq Stock Market rules, or vice-versa. Notwithstanding Israeli law, we believe that a majority of our directors will be &#8220;independent&#8221; under the Nasdaq Stock Market rules. We are required, however, to ensure that all members of our Audit Committee are &#8220;independent&#8221; under the applicable Nasdaq and SEC criteria for independence (as we cannot exempt ourselves from compliance with that SEC independence requirement, despite our status as a foreign private issuer), and we must also ensure that a majority of the members of our Audit Committee are &#8220;independent directors&#8221; as defined in the Companies Law. Furthermore, Israeli law does not require, nor do our independent directors conduct, regularly scheduled meetings at which only they are present, which the Nasdaq Stock Market rules otherwise require </span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Approval of Related Party Transactions</i>. All related party transactions are approved in accordance with the requirements and procedures for approval of interested party acts and transaction as set forth in the Companies Law, which requires the approval of the audit committee, or the compensation committee, as the case may be, the board of directors and shareholders, as may be applicable, for specified transactions, rather than approval by the audit committee or other independent body of our board of directors as required under the Nasdaq Stock Market rules. See &#8220;Item 6.C Directors, Senior Management and Employees&#8212;Board Practices&#8212;Approval of Related Party Transactions under Israeli Law&#8221; for additional information.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;&#160;&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 48px; text-align: justify">&#160;</td>
    <td style="width: 24px; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Annual Shareholders Meeting.&#160;</i>&#160;As opposed to the Nasdaq Stock Market Rule 5620(a), which mandates that a listed company hold its annual shareholders meeting within one year of the company&#8217;s fiscal year-end, we are required, under the Companies Law, to hold an annual shareholders meeting each calendar year and within 15 months of the last annual shareholders meeting.</span></td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#9679;</span></td>
    <td style="text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt"><i>Distribution of periodic reports to shareholders; proxy solicitation.</i>&#160;As opposed to the Nasdaq Stock Market rules, which require listed issuers to make such reports available to shareholders in one of a number of specific manners, Israeli law does not require us to distribute periodic reports directly to shareholders, and the generally accepted business practice in Israel is not to distribute such reports to shareholders but to make such reports available through a public website. In addition to making such reports available on a public website, we currently make our audited consolidated financial statements available to our shareholders at our offices and will only mail such reports to shareholders upon request. As a foreign private issuer, we are generally exempt from the SEC&#8217;s proxy solicitation rules.</span></td></tr>
  </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">Except
as stated above, we intend to comply with the rules generally applicable to U.S. domestic companies listed on the Nasdaq Capital Market,
subject to certain exemptions the JOBS Act provides to emerging growth companies. We may in the future decide to use other foreign private
issuer exemptions with respect to some or all of the other Nasdaq Listing Rules. Following our home country governance practices, as opposed
to the requirements that would otherwise apply to a company listed on the Nasdaq Capital Market, may provide less protection than is accorded
to investors under the Nasdaq Listing Rules applicable to domestic issuers.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_074"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>ITEM&#160;16H.
MINE SAFETY DISCLOSURE</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">Not applicable.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><div><a id="a_075"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>ITEM&#160;16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in">Not applicable.<span style="clear: both; display: block;"><br/></span>
&#160;</p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.5in"><span style="font-size: 6pt">&#160;</span></p><div>

</div><div><a id="a_076"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><b>PART&#160;III</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-size: 6pt">&#160;</span></p><div>

</div><div><a id="a_077"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>ITEM&#160;17.
FINANCIAL STATEMENTS</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-size: 6pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">We have elected to provide
financial statements and related information pursuant to Item&#160;18.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-size: 6pt">&#160;</span></p><div>

</div><div><a id="a_078"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>ITEM&#160;18.
FINANCIAL STATEMENTS</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-size: 6pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in">The consolidated financial
statements and the related notes required by this Item are included in this Annual Report on Form 20-F beginning on page&#160;F-1.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-size: 6pt">&#160;</span></p><div>

</div><div><a id="a_079"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><span style="font-size: 10pt"><b>ITEM&#160;19. EXHIBITS.</b></span></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-size: 6pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr>
    <td style="vertical-align: top; width: 10%; border-bottom: black 1.5pt solid"><span style="font-size: 10pt"><b>Exhibit&#160;No.</b></span></td>
    <td style="width: 1%">&#160;</td>
    <td style="vertical-align: bottom; width: 89%; border-bottom: black 1.5pt solid"><span style="font-size: 10pt"><b>Description</b></span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-size: 10pt">1.1</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1899005/000121390023018552/ea174872ex99-1_beamrimag.htm">Amended and Restated Articles of Association of the Registrant (filed as Exhibit 99.1 to our Report on Form 6-K as filed with the Securities and Exchange Commission on March 8, 2023, and incorporated herein by reference)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td><span style="font-size: 10pt">2.1*</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><a href="f20f2022ex2-1_beamrimaging.htm"><span style="font-size: 10pt">Description of Securities Registered under Section 12</span></a></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-size: 10pt">4.1</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1899005/000121390022048262/ea163870ex4-1_beamrimag.htm">Specimen share certificate of the Registrant (filed as Exhibit 4.1 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on August 15, 2022, and incorporated herein by reference)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td><span style="font-size: 10pt">10.1</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1899005/000121390022008695/ea155804ex10-1_beamrimag.htm">Form of Indemnification Agreement (filed as Exhibit 10.1 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on February 22, 2022, and incorporated herein by reference)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-size: 10pt">10.2+</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1899005/000121390022008695/ea155804ex10-2_beamrimag.htm">2010 Option Plan (filed as Exhibit 10.2 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on February 22, 2022, and incorporated herein by reference)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td><span style="font-size: 10pt">10.3+</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1899005/000121390022008695/ea155804ex10-3_beamrimag.htm">2015 Share Incentive Plan (filed as Exhibit 10.3 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on February 22, 2022, and incorporated herein by reference)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-size: 10pt">10.4</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1899005/000121390022038918/ea162604ex10-4_beamrimag.htm">Form of Compensation Policy for Directors and Officers (filed as Exhibit 10.4 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on July 12,2022, and incorporated herein by reference)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: White">
    <td><span style="font-size: 10pt">10.5</span></td>
    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1899005/000121390022008695/ea155804ex10-5_beamrimag.htm">Loan and Security Agreement dated as of February 19, 2017 between Silicon Valley Bank, Beamr Imaging Ltd. and Beamr, Inc. (filed as Exhibit 10.5 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on February 22, 2022, and incorporated herein by reference)</a></span></td></tr>
  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
    <td><span style="font-size: 10pt">10.6</span></td>
    <td>&#160;</td>
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  <tr style="vertical-align: top; background-color: White">
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  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: top; background-color: White">
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  <tr style="vertical-align: top; background-color: rgb(204,238,255)">
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    <td style="text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1899005/000121390022038918/ea162604ex10-13_beamrimag.htm">Funding Agreement dated as of July 5, 2022 between IBI Spikes Ltd. and Beamr Imaging Ltd. &#160;(filed as Exhibit 10.13 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on July 12, 2022, and incorporated herein by reference)</a></span></td></tr>
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Statement on Form F-1 as filed with the Securities and Exchange Commission on August 15, 2022, and incorporated herein by reference)</a></td></tr>
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Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on August 15, 2022, and incorporated herein by
reference)</a></td></tr>
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    <td style="text-align: justify"><a href="f20f2022ex12-1_beamrimaging.htm">Certification of the Chief Executive Officer pursuant to rule 13a-14(a)
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    <td>12.2*</td>
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    <td style="text-align: justify"><a href="f20f2022ex12-2_beamrimaging.htm">Certification of the Chief Financial Officer pursuant to rule 13a-14(a)
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    <td>13.1*</td>
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    <td style="text-align: justify"><a href="f20f2022ex13-1_beamrimaging.htm">Certification of the Chief Executive Officer pursuant to 18 U.S.C.
1350</a></td></tr>
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    <td style="text-align: justify"><a href="f20f2022ex13-2_beamrimaging.htm">Certification of the Chief Executive Officer pursuant to 18 U.S.C.
1350</a></td></tr>
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    <td style="text-align: justify"><span style="font-size: 10pt"><a href="http://www.sec.gov/Archives/edgar/data/1899005/000121390022008695/ea155804ex21-1_beamrimag.htm">List of Subsidiaries of the Registrant (filed as Exhibit 21.1 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on February 22, 2022, and incorporated herein by reference).</a></span></td></tr>
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    <td style="text-align: justify"><span style="font-size: 10pt">Inline XBRL Taxonomy Extension Definition Linkbase Document</span></td></tr>
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    <td style="text-align: justify"><span style="font-size: 10pt">Inline XBRL Taxonomy Extension Label Linkbase Document</span></td></tr>
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    <td>&#160;</td>
    <td style="text-align: justify"><span style="font-size: 10pt">Inline XBRL Taxonomy Extension Presentation Linkbase Document</span></td></tr>

  <tr style="vertical-align: top; background-color: White">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white"><span style="font-size: 6pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%">
  <tr style="vertical-align: top">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.5in"><span style="font-size: 6pt">&#160;</span></p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left"><span style="font-size: 10pt">+</span></td><td style="text-align: justify"><span style="font-size: 10pt">Indicates a management contract
or any compensatory plan, contract or arrangement.</span></td>
</tr></table><div>
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</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.25in; text-align: left"><span style="font-size: 10pt">&#x5e;</span></td><td style="text-align: justify"><span style="font-size: 10pt">Certain schedules and exhibits
have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule
or exhibit to the SEC upon request.</span></td>
</tr></table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.5in"></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.5in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: -0.5in">&#160;</p><div>

</div><div><a id="a_080"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>SIGNATURES</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center; background-color: white"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">The
registrant hereby certifies that it meets all of the requirements for filing on Form&#160;20-F and that it has duly caused and authorized
the undersigned to sign this Annual Report on Form 20-F filed on its behalf.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0.5in; background-color: white">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
    <td colspan="2"><span style="font-size: 10pt"><b>BEAMR IMAGING LTD.</b></span></td></tr>
  <tr style="vertical-align: top">
    <td style="width: 60%; text-align: justify">&#160;</td>
    <td style="width: 4%; text-align: justify">&#160;</td>
    <td style="width: 36%; text-align: justify">&#160;</td></tr>
  <tr style="vertical-align: top">
    <td style="text-align: justify"><span style="font-size: 10pt">Date: April 24</span>, 2023</td>
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  <tr style="vertical-align: top">
    <td style="text-align: justify">&#160;</td>
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    <td style="text-align: justify">&#160;</td>
    <td style="text-align: justify">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></p><div>

</div><!-- Field: Page; Sequence: 127; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0; margin-bottom: 0"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->117<!-- Field: /Sequence --></p></div><div>
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</div><p style="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="text-align: center; margin-top: 0pt; margin-bottom: 0pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">BEAMR IMAGING LTD.</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">CONSOLIDATED FINANCIAL STATEMENTS</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>AS OF DECEMBER 31, 2022</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>


</div><!-- Field: Page; Sequence: 128; Options: NewSection; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">BEAMR IMAGING LTD.</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>AS OF DECEMBER 31, 2022</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; border-collapse: collapse"> <tr style="background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: -0.125in; vertical-align: top; width: 85%; text-align: left"><a href="#fin_001">Report of Independent Registered Public Accounting Firm (PCAOB ID: <ix:nonNumeric contextRef="c0" name="dei:AuditorFirmId">1375</ix:nonNumeric>)</a></td> <td style="vertical-align: bottom; width: 15%; text-align: center">F-3</td></tr> <tr style="background-color: White"> <td style="padding-left: 0.125in; text-indent: -0.125in; vertical-align: top; text-align: left"><a href="#fin_002">Consolidated Balance Sheets as of December 31, 2022 and 2021</a></td> <td style="vertical-align: bottom; text-align: center">F-4</td></tr> <tr style="background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: -0.125in; vertical-align: top; text-align: left"><a href="#fin_003">Consolidated Statements of Operations and Comprehensive Loss for the three years ended December 31, 2022</a></td> <td style="vertical-align: bottom; text-align: center">F-5</td></tr> <tr style="background-color: White"> <td style="padding-left: 0.125in; text-indent: -0.125in; vertical-align: top; text-align: left"><a href="#fin_004">Consolidated Statements of Changes in Shareholders&#8217; Equity (Deficit) for the three years ended December 31, 2022</a></td> <td style="vertical-align: bottom; text-align: center">F-6</td></tr> <tr style="background-color: rgb(204,238,255)"> <td style="padding-left: 0.125in; text-indent: -0.125in; vertical-align: top; text-align: left"><a href="#fin_005">Consolidated Statements of Cash Flows for the three years ended December 31, 2022</a></td> <td style="vertical-align: bottom; text-align: center">F-7</td></tr> <tr style="background-color: White"> <td style="padding-left: 0.125in; text-indent: -0.125in; vertical-align: top; text-align: left"><a href="#fin_006">Notes to Consolidated Financial Statements</a></td> <td style="vertical-align: bottom; text-align: center">F-8 - F-34</td></tr> </table><div>
</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><img alt="" src="image_010.jpg"/>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: left; margin-top: 0pt; margin-bottom: 0pt"><img alt="" src="image_011.jpg"/>&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><div><a id="fin_001"></a></div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <tr style="vertical-align: top">
    <td style="width: 76%">
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    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Board
    of Directors and Shareholders</p>
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    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><b>Fahn Kanne &amp; Co.</b></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Head Office</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">32 Hamasger Street</p>
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    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><i>PO Box 36172, 6136101</i></p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&#160;</p>
    <p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">T +972 3 7106666</p>
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 www.gtfk.co.il</p></td></tr>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Opinion on the financial statements </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have audited the accompanying consolidated
balance sheets of Beamr Imaging Ltd. and its subsidiaries (the &#8220;Company&#8221;) as of December 31, 2022 and 2021, the related consolidated
statements of operations and comprehensive loss, changes in shareholders&#8217; equity (deficit), and cash flows for each of the three
years in the period ended December 31, 2022, and the related notes (collectively referred to as the &#8220;financial statements&#8221;).
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December
31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022,
in conformity with accounting principles generally accepted in the United States of America.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>Basis for opinion </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">These financial statements are the responsibility
of the Company&#8217;s management. Our responsibility is to express an opinion on the Company&#8217;s financial statements based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (&#8220;PCAOB&#8221;)
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 U.S. Securities and Exchange Commission and the PCAOB.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">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 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&#8217;s
internal control over financial reporting. Accordingly, we express no such opinion.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Our audits included performing procedures to assess
the risks of material misstatement of the 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 supporting the amounts and disclosures in the 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 financial statements. We believe that our audits provide a reasonable basis for our opinion.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">/s/ <ix:nonNumeric contextRef="c0" name="dei:AuditorName">Fahn Kanne &amp; Co. Grant Thornton Israel</ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><b>FAHN KANNE &amp; CO. GRANT THORNTON ISRAEL</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">We have served as the Company&#8217;s auditor
since 2021.</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"><ix:nonNumeric contextRef="c0" name="dei:AuditorLocation">Tel Aviv, Israel</ix:nonNumeric></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">April 24, 2023</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0">Certified Public Accountants</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: left; margin-top: 0pt; margin-right: 0; margin-bottom: 0pt"><b>Fahn Kanne
&amp; Co. is the Israeli member firm of Grant Thornton International Ltd</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><div><a id="fin_002"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>BEAMR IMAGING LTD.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>CONSOLIDATED BALANCE SHEETS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in thousands except share and per
share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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of<br/>
December 31,</b></p> </div></td><td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td><td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:AccountsPayableCurrent" scale="3" unitRef="usd">33</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify; text-indent: -5.65pt; padding-left: 5.65pt">Deferred revenues</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DeferredRevenueCurrent" scale="3" unitRef="usd">31</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c3" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DeferredRevenueCurrent" scale="3" unitRef="usd">33</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 1.5pt; text-align: justify; text-indent: -5.65pt; padding-left: 17pt">Total current liabilities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: center; padding-left: 2.85pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify; text-indent: -5.65pt; padding-left: 5.65pt">&#160;</td><td>&#160;</td>
    <td style="text-align: center; padding-left: 2.85pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: center; padding-left: 2.85pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify; text-indent: -5.65pt; padding-left: 5.65pt">Loans, net of current maturities</td><td>&#160;</td>
    <td style="text-align: center; padding-left: 2.85pt">6</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: center; padding-left: 2.85pt">14</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DueToRelatedPartiesNoncurrent" scale="3" unitRef="usd">262</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-4">-</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: justify; text-indent: -5.65pt; padding-left: 5.65pt">Derivative warrants liability</td><td>&#160;</td>
    <td style="text-align: center; padding-left: 2.85pt">8</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DerivativeLiabilitiesNoncurrent" scale="3" unitRef="usd">138</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c3" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DerivativeLiabilitiesNoncurrent" scale="3" unitRef="usd">50</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify; padding-bottom: 1.5pt; text-indent: -5.65pt; padding-left: 5.65pt">Convertible advanced investments</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="text-align: center; padding-bottom: 1.5pt; padding-left: 2.85pt">9</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="bmr:ConvertibleAdvancedInvestments" scale="3" unitRef="usd">4,840</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c3" decimals="-3" format="ixt:num-dot-decimal" name="bmr:ConvertibleAdvancedInvestments" scale="3" unitRef="usd">4,770</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-bottom: 1.5pt; text-align: justify; text-indent: -5.65pt; padding-left: 17pt">Total non-current liabilities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: center; padding-left: 2.85pt">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:LiabilitiesNoncurrent" scale="3" unitRef="usd">5,627</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c3" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:LiabilitiesNoncurrent" scale="3" unitRef="usd">4,820</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify; text-indent: -5.65pt; padding-left: 5.65pt">&#160;</td><td>&#160;</td>
    <td style="text-align: center; padding-left: 2.85pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: justify; text-indent: -5.65pt; padding-left: 5.65pt">Commitments and contingent liabilities</td><td>&#160;</td>
    <td style="text-align: center; padding-left: 2.85pt">10</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-5">&#160;</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-6">&#160;</div></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="font-weight: bold; text-align: justify; text-indent: -5.65pt; padding-left: 5.65pt">&#160;</td><td>&#160;</td>
    <td style="text-align: center; padding-left: 2.85pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="font-weight: bold; text-align: justify; text-indent: -5.65pt; padding-left: 5.65pt">Shareholders&#8217; equity (deficit):</td><td>&#160;</td>
    <td style="text-align: center; padding-left: 2.85pt">11</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; text-indent: -14.2pt; padding-left: 14.2pt">Ordinary Shares of NIS 0.05 par value each:</td><td>&#160;</td>
    <td style="text-align: center; padding-left: 2.85pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.25in; text-indent: -0.125in; text-align: left"><div style="-sec-ix-hidden: hidden-fact-8; -sec-ix-hidden: hidden-fact-7">Authorized: <ix:nonFraction contextRef="c4" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesAuthorized" scale="0" unitRef="shares">14,307,116</ix:nonFraction> and <ix:nonFraction contextRef="c5" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesAuthorized" scale="0" unitRef="shares">14,316,880</ix:nonFraction> shares at December 31, 2022 and 2021, respectively; Issued and outstanding: <ix:nonFraction contextRef="c4" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesIssued" scale="0" unitRef="shares"><ix:nonFraction contextRef="c5" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesIssued" scale="0" unitRef="shares"><ix:nonFraction contextRef="c4" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesOutstanding" scale="0" unitRef="shares"><ix:nonFraction contextRef="c5" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesOutstanding" scale="0" unitRef="shares">2,578,760</ix:nonFraction></ix:nonFraction></ix:nonFraction></ix:nonFraction> shares at December 31, 2022 and 2021</div></td><td>&#160;</td>
    <td style="text-align: center; padding-left: 2.85pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:CommonStockValue" scale="3" unitRef="usd">51</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c3" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:CommonStockValue" scale="3" unitRef="usd">51</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; text-indent: -14.2pt; padding-left: 14.2pt">Convertible Ordinary 1 and 2 Shares of NIS 0.05 par value each:</td><td>&#160;</td>
    <td style="text-align: center; padding-left: 2.85pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.25in; text-indent: -0.125in; text-align: left"><div style="-sec-ix-hidden: hidden-fact-10; -sec-ix-hidden: hidden-fact-9">Authorized: <ix:nonFraction contextRef="c6" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesAuthorized" scale="0" unitRef="shares"><ix:nonFraction contextRef="c6" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesIssued" scale="0" unitRef="shares"><ix:nonFraction contextRef="c6" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesOutstanding" scale="0" unitRef="shares">1,496,880</ix:nonFraction></ix:nonFraction></ix:nonFraction> shares at December 31, 2022 and 2021; Issued and outstanding: <ix:nonFraction contextRef="c7" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesAuthorized" scale="0" unitRef="shares"><ix:nonFraction contextRef="c7" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesIssued" scale="0" unitRef="shares"><ix:nonFraction contextRef="c7" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:CommonStockSharesOutstanding" scale="0" unitRef="shares">1,496,880</ix:nonFraction></ix:nonFraction></ix:nonFraction> shares at December 31, 2022 and 2021</div></td><td>&#160;</td>
    <td style="text-align: center; padding-left: 2.85pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="bmr:CommonStockValue1" scale="3" unitRef="usd">5</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c3" decimals="-3" format="ixt:num-dot-decimal" name="bmr:CommonStockValue1" scale="3" unitRef="usd">5</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify; text-indent: -5.65pt; padding-left: 5.65pt">Convertible Preferred Shares of NIS 0.05 par value each:</td><td>&#160;</td>
    <td style="text-align: center; padding-left: 2.85pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.25in; text-indent: -0.125in; text-align: left"><div style="-sec-ix-hidden: hidden-fact-12; -sec-ix-hidden: hidden-fact-11">Authorized: <ix:nonFraction contextRef="c2" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:PreferredStockSharesAuthorized" scale="0" unitRef="shares">6,196,004</ix:nonFraction> and <ix:nonFraction contextRef="c3" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:PreferredStockSharesAuthorized" scale="0" unitRef="shares">6,186,240</ix:nonFraction> shares at December 31, 2022 and 2021, respectively; Issued and outstanding: <ix:nonFraction contextRef="c2" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:PreferredStockSharesIssued" scale="0" unitRef="shares"><ix:nonFraction contextRef="c3" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:PreferredStockSharesIssued" scale="0" unitRef="shares"><ix:nonFraction contextRef="c2" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:PreferredStockSharesOutstanding" scale="0" unitRef="shares"><ix:nonFraction contextRef="c3" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:PreferredStockSharesOutstanding" scale="0" unitRef="shares">5,714,400</ix:nonFraction></ix:nonFraction></ix:nonFraction></ix:nonFraction> shares at December 31, 2022 and 2021</div></td><td>&#160;</td>
    <td style="text-align: center; padding-left: 2.85pt">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:PreferredStockValue" scale="3" unitRef="usd">78</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c3" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:PreferredStockValue" scale="3" unitRef="usd">78</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: justify; text-indent: -5.65pt; padding-left: 5.65pt">Additional paid-in capital</td><td>&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>The accompanying notes are an integral part of these consolidated financial statements.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><b>&#160;</b></p><div>

</div><div><a id="fin_003"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>BEAMR IMAGING LTD.&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in thousands except share and per
share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

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    <td style="padding-bottom: 1.5pt; text-align: center">&#160;</td><td style="padding-bottom: 1.5pt; text-align: center">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="text-align: center; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><b>The accompanying notes are an integral part of these consolidated financial statements.</b></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><div><a id="fin_004"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>BEAMR IMAGING LTD.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS&#8217;
EQUITY (DEFICIT)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in thousands except share and per
share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  </table><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left">*)</td><td style="text-align: justify"><ix:footnote id="ix_0_footnote" xml:lang="en-US">Representing an amount less than $1.</ix:footnote></td>
</tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: left; text-indent: -21.3pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>The accompanying notes
are an integral part of these consolidated financial statements.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>


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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><div><a id="fin_005"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>BEAMR IMAGING LTD.</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>CONSOLIDATED STATEMENTS OF CASH FLOWS</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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  <tr style="vertical-align: bottom">
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    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(<ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:NetIncomeLoss" scale="3" sign="-" unitRef="usd">952</ix:nonFraction></td><td style="width: 1%; text-align: left">)</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right">(<ix:nonFraction contextRef="c9" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:NetIncomeLoss" scale="3" sign="-" unitRef="usd">2,459</ix:nonFraction></td><td style="width: 1%; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -0.125in; text-align: left; padding-left: 0.25in">Adjustments required to reconcile net loss to net cash used in operating activities:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; text-align: left; padding-left: 0.375in">Depreciation and amortization</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c9" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DepreciationDepletionAndAmortization" scale="3" unitRef="usd">679</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -0.125in; text-align: left; padding-left: 0.375in">Share-based compensation (Note 12)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensation" scale="3" unitRef="usd">222</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c9" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensation" scale="3" unitRef="usd">120</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; text-align: left; padding-left: 0.375in">Amortization of discount relating to straight loan received from commercial bank (Note 6)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:AmortizationOfDebtDiscountPremium" scale="3" unitRef="usd">14</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:AmortizationOfDebtDiscountPremium" scale="3" unitRef="usd">14</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c9" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:AmortizationOfDebtDiscountPremium" scale="3" unitRef="usd">29</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -0.125in; text-align: left; padding-left: 0.375in">Exchange rate differences on straight loan received from commercial bank (Note 6)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:GainsLossesOnExtinguishmentOfDebt" scale="3" unitRef="usd">12</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; text-align: left; padding-left: 0.375in">Amortization of discount relating to liability to related party (see Note 14)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:AmortizationOfFinancingCosts" scale="3" unitRef="usd">40</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -0.125in; text-align: left; padding-left: 0.375in">Change in the fair value of convertible advanced investments (Note 9)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:FairValueOptionChangesInFairValueGainLoss1" scale="3" sign="-" unitRef="usd">70</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:FairValueOptionChangesInFairValueGainLoss1" scale="3" sign="-" unitRef="usd">288</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c9" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:FairValueOptionChangesInFairValueGainLoss1" scale="3" sign="-" unitRef="usd">436</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; text-align: left; padding-left: 0.375in">Capital gain from selling of property and equipment</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-52">-</div></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c9" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:GainLossOnSaleOfPropertyPlantEquipment" scale="3" unitRef="usd">5</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -0.125in; text-align: left; padding-left: 0.375in">Capital loss from disposal of property and equipment</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:GainLossOnDispositionOfAssets" scale="3" sign="-" unitRef="usd">6</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; text-align: left; padding-left: 0.375in">Modification of terms of straight loan (Note 6A)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="bmr:ModificationOfTermsOfStraightLoan" scale="3" sign="-" unitRef="usd">90</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -0.125in; text-align: left; padding-left: 0.375in">Forgiveness of loan under paycheck protection program notes (Note 6B)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:GainsLossesOnRestructuringOfDebt" scale="3" unitRef="usd">129</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; text-align: left; padding-left: 0.375in">Decrease (increase) in trade receivables</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInOtherReceivables" scale="3" sign="-" unitRef="usd">310</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInOtherReceivables" scale="3" sign="-" unitRef="usd">704</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c9" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInOtherReceivables" scale="3" unitRef="usd">113</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -0.125in; text-align: left; padding-left: 0.375in">Decrease (increase) in other current assets</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInOtherCurrentAssets" scale="3" sign="-" unitRef="usd">2</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInOtherCurrentAssets" scale="3" unitRef="usd">26</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c9" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInOtherCurrentAssets" scale="3" sign="-" unitRef="usd">366</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; text-align: left; padding-left: 0.375in">Increase (decrease) in account payables</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInAccountsPayable" scale="3" unitRef="usd">6</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInAccountsPayable" scale="3" unitRef="usd">16</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c9" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInAccountsPayable" scale="3" sign="-" unitRef="usd">14</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -0.125in; text-align: left; padding-left: 0.375in">Increase (decrease) in deferred revenues</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInDeferredRevenue" scale="3" sign="-" unitRef="usd">2</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInDeferredRevenue" scale="3" sign="-" unitRef="usd">32</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c9" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInDeferredRevenue" scale="3" unitRef="usd">31</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; text-align: left; padding-left: 0.375in">Increase in liability from related party</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInDueFromRelatedParties" scale="3" sign="-" unitRef="usd">177</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c9" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInDueFromRelatedParties" scale="3" sign="-" unitRef="usd">168</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt; padding-left: 0.375in">Increase (decrease) in other current liabilities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInOtherCurrentLiabilities" scale="3" sign="-" unitRef="usd">75</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInOtherCurrentLiabilities" scale="3" unitRef="usd">63</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c9" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:IncreaseDecreaseInOtherCurrentLiabilities" scale="3" sign="-" unitRef="usd">258</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt; padding-left: 0.25in">Net cash provided by (used in) operating activities</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInOperatingActivities" scale="3" sign="-" unitRef="usd">645</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInOperatingActivities" scale="3" unitRef="usd">569</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c9" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:NetCashProvidedByUsedInOperatingActivities" scale="3" sign="-" unitRef="usd">1,020</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: left">Cash flows from investing activities:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -0.125in; text-align: left; padding-left: 0.25in">Purchase of property and equipment</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquirePropertyPlantAndEquipment" scale="3" unitRef="usd">2</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquirePropertyPlantAndEquipment" scale="3" unitRef="usd">4</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c9" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:PaymentsToAcquirePropertyPlantAndEquipment" scale="3" unitRef="usd">7</ix:nonFraction></td><td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt; padding-left: 0.25in">Selling of property and equipment</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; text-align: left; padding-left: 0.25in">Deferred offering costs (Note 2F)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -0.125in; text-align: left; padding-left: 0.25in">Proceeds received from issuance of convertible advanced investments (Note 9)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; text-align: left; padding-left: 0.25in">Proceeds received from paycheck protection program note (Note 6B)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -0.125in; text-align: left; padding-left: 0.25in">Repayment of principal relating to straight loan received from commercial bank (Note 6)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; text-align: left; padding-left: 0.25in">Repayment of Facility Fee relating to straight loan received from commercial bank (Note 6)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; text-align: left; padding-left: 0.25in">Proceeds from loan received from related party</td><td>&#160;</td>
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    <td style="text-align: left">&#160;</td><td style="text-align: right">-</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt; padding-left: 0.25in">Proceeds received from exercise of share options into Ordinary Shares (Note 12)</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-indent: -0.125in; text-align: left; padding-bottom: 1.5pt; padding-left: 0.25in">Net cash provided by (used in) financing activities</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: left">Change in cash, cash equivalents</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsPeriodIncreaseDecreaseIncludingExchangeRateEffect" scale="3" sign="-" unitRef="usd">335</ix:nonFraction></td><td style="text-align: left">)</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalentsPeriodIncreaseDecreaseIncludingExchangeRateEffect" scale="3" unitRef="usd">424</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: left; padding-bottom: 1.5pt">Cash, cash equivalents at beginning of year</td><td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c26" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" scale="3" unitRef="usd">604</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c15" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" scale="3" unitRef="usd">2,041</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: left; padding-bottom: 4pt">Cash, cash equivalents at end of year</td><td style="padding-bottom: 4pt">&#160;</td>
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c3" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" scale="3" unitRef="usd">1,028</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c26" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:CashCashEquivalentsRestrictedCashAndRestrictedCashEquivalents" scale="3" unitRef="usd">604</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; font-weight: bold; text-align: left">Non-cash financing activities:</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left; padding-bottom: 4pt">Contribution to equity due to free interest loan from controlling shareholder (Note 14)</td><td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:StockIssued1" scale="3" unitRef="usd">112</ix:nonFraction></td><td style="padding-bottom: 4pt; text-align: left">&#160;</td><td style="padding-bottom: 4pt">&#160;</td>
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    <td style="border-bottom: Black 4pt double; text-align: left">$</td><td style="border-bottom: Black 4pt double; text-align: right">-</td><td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left"><b>Supplemental disclosure of
cash flow information:</b></td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right">&#160;</td><td style="text-align: left">&#160;</td></tr>

<tr style="vertical-align: bottom; background-color: White">
    <td style="width: 64%; text-align: left; padding-bottom: 4pt">Interest paid</td><td style="width: 1%; padding-bottom: 4pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><b>The accompanying notes are an integral part of these consolidated financial statements.</b></p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->7<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><div><a id="fin_006"></a></div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>BEAMR IMAGING LTD.&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS </b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 2cm; text-align: justify; text-indent: -2cm"><span style="font-weight: normal">&#160;</span></p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock"><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 2cm; text-align: justify; text-indent: -2cm">NOTE 1 - GENERAL</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left; text-indent: -1cm"><b>&#160;</b></p></ix:nonNumeric><div>

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_2" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>A.</b></td><td style="text-align: left"><b>Operations</b></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_3" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Beamr Imaging Ltd. (the &#8220;Company&#8221;
or &#8220;Beamr&#8221;) was incorporated on October 1, 2009 under the laws of the State of Israel and it engages in the development of
optimization technologies for video and photo compression.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left; text-indent: -1cm"><b>&#160;</b></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_4" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_3"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>B.</b></td><td style="text-align: left"><b>Foreign operations</b></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 49.5pt; text-align: justify; text-indent: -22.5pt"><b>&#160;</b></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_5" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_4"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"></td><td style="width: 0.25in"><b>1.</b></td><td style="text-align: justify"><b>Beamr Inc.</b></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 49.5pt; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_6" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify">In 2012, the Company incorporated a
wholly-owned U.S. subsidiary, Beamr Inc. (&#8220;Beamr Inc.&#8221;), for the purpose of reselling the Company&#8217;s software and products
in the U.S. and Canadian markets.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 49.5pt; text-align: justify; text-indent: -22.5pt"><b>&#160;</b></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_7" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_6"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"></td><td style="width: 0.25in"><b>2.</b></td><td style="text-align: justify"><b>Beamr Imaging RU LLC </b></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 49.5pt; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_8" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_7"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.75in; text-align: justify">In 2016, the Company incorporated a
wholly-owned Russian limited partnership, Beamr Imaging RU LLC, (&#8220;Beamr Imaging RU&#8221;) for the purpose of conducting research
and development services to the Company.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_9" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_8"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company and its subsidiaries, Beamr
Inc. and Beamr Imaging RU, are collectively referred to as the &#8220;Group&#8221;.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left; text-indent: -1cm"><b>&#160;</b></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_10" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_9"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>C.</b></td><td style="text-align: left"><b>Liquidity and capital resources </b></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_11" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_10"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company has devoted substantially
all of its efforts to research and development, the commercialization of its software and products and raising capital for such purposes.
The development and commercialization of the Company&#8217;s software and products are expected to require substantial further expenditures.
To date, the Company has not yet generated sufficient revenues from operations to support its activities, and therefore it is dependent
upon external sources for financing its operations. In 2022, the Company had net losses of $<ix:nonFraction contextRef="c43" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:NetIncomeLoss" scale="3" unitRef="usd">1,248</ix:nonFraction>. As of December 31, 2022, the Company
had an accumulated deficit of $<ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:RetainedEarningsAccumulatedDeficit" scale="3" sign="-" unitRef="usd">30,969</ix:nonFraction>. The Company plans to finance its operations through the sales of equity (including the Company&#8217;s
Initial Public Offering (IPO) of its ordinary shares, par value NIS <ix:nonFraction contextRef="c4" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:VariableInterestDifferenceBetweenCarryingAmountAndMaximumExposure" scale="0" unitRef="ils">0.05</ix:nonFraction> per share, of the Company (the &#8220;Ordinary Shares&#8221;)
that closed in March 2023) and to the extent available, refinancing of liabilities on a long-term basis and through revenues from sales
of its software, products and related services. In addition, the Company has recently commenced collaborating with a strategic partner
in development of the Company&#8217;s next generation product, the Beamr HW-Accelerated Content Adaptive Encoding, which is expected to allow
the Company to potentially access new customers and new markets with relatively low sales investment.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_12" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_11"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">During the year ended December 31, 2020,
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respectively (see also Note 6B and Note 12, respectively). During the year ended December 31, 2021, the Company raised net amounts of
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Note 9, respectively). During the year ended December 31, 2022, the Company raised net amounts of $<ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:CapitalUnitsNetAmount" scale="3" unitRef="usd">887</ix:nonFraction> through a Funding Agreement with
IBI Spikes Ltd (see also Note 6C).</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

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of such conditions in relation to the Company&#8217;s ability to meet its current obligations and to achieve its business targets and determined
that these conditions are not raising substantial doubt about the Company&#8217;s ability to continue as a going concern taking into consideration,
among others (i) an agreement from February 2022 with the Company&#8217;s founder and significant shareholder (the &#8220;Founder&#8221;) under
which the Company&#8217;s outstanding current liability towards an entity controlled by the Founder (the &#8220;Service Provider&#8221;), as
noted in Note 14, will be paid in 18 equal installments pending availability of sufficient liquidity funds and (ii) the execution of a
definitive agreement (the &#8220;Definitive Agreement&#8221;) with another commercial bank for receiving straight loan and issuance of
warrants, as noted in Note 6C. As of December 31, 2022, it was agreed to extend the term of liability to the Service Provider (including
with respect to amount relating to services provided to the Company by the Service Provider throughout fiscal year ended December 31,
2022).</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

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</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_15" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_14"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
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</div><div>

</div><ix:continuation continuedAt="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_16" id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_15"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">During the year ended December 31, 2022,
there were no material adverse impacts on the consolidated financial statements. The duration, scope and effects of the ongoing COVID-19
pandemic, government and other third-party responses to it, the related macroeconomic effects, and the extent of its impact on the Company&#8217;s
operational and financial performance will depend on future developments. As events continue to evolve and additional information becomes
available, the Company&#8217;s estimates and assumptions may change in future periods.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 135; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->8<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>BEAMR IMAGING LTD.&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 2cm; text-align: justify; text-indent: -2cm"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 2cm; text-align: justify; text-indent: -2cm">NOTE 1 - GENERAL
(Cont.)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left; text-indent: -1cm"><b>&#160;</b></p><div>

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<td style="width: 0%"></td><td style="width: 0.5in"><b>E.</b></td><td style="text-align: left"><b>The impact of the Russian Invasion of Ukraine</b></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation id="_OrganizationConsolidationAndPresentationOfFinancialStatementsDisclosureTextBlock-c0_cont_17"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">On February 24, 2022, Russia invaded Ukraine.
The Company has an operation in Russia through its wholly-owned subsidiary, Beamr Imaging RU. The Company undertakes some of its software
development and design, quality assurance and support in Russia using personnel located there. While most of the Company&#8217;s developers
are located in Russia, its research and development leadership are all located in Israel. The Company has no manufacturing operations
in Russia, and the Company does not sell any products in Russia. The Company constantly evaluates its activities in Russia and currently
believes there was no significant impact on its activities.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_1" escape="true" name="us-gaap:SignificantAccountingPoliciesTextBlock"><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 2cm; text-align: justify; text-indent: -2cm">NOTE 2 - SIGNIFICANT
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_2" id="_SignificantAccountingPoliciesTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of America (&#8220;US GAAP&#8221;).</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left; text-indent: -1cm"><b>&#160;</b></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_3" id="_SignificantAccountingPoliciesTextBlock-c0_cont_2"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>A.</b></td><td style="text-align: left"><ix:nonNumeric contextRef="c0" continuedAt="_UseOfEstimates-c0_cont_1" escape="true" name="us-gaap:UseOfEstimates"><b>Use of estimates in the preparation of financial statements </b></ix:nonNumeric></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_4" id="_SignificantAccountingPoliciesTextBlock-c0_cont_3"><ix:continuation id="_UseOfEstimates-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The preparation of the financial statements
in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue
and expenses during the reported periods. Actual results could differ from those estimates. As applicable to these financial statements,
the most significant estimates and assumptions include (i) revenues recognition; (ii) identification of and measurement of financial instruments
in funding transactions; (iii) recoverability of the Company&#8217;s goodwill upon subsequent periods (iv) measurement of fair value of
equity awards and (v) evaluation of going concern.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left; text-indent: -1cm"><b>&#160;</b></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_5" id="_SignificantAccountingPoliciesTextBlock-c0_cont_4"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
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</div><div>

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and all of its subsidiaries all of which are primarily a direct and integral component of the Company&#8217;s operation is the US dollar (&#8220;$&#8221;
or &#8220;dollar&#8221;), as the dollar is the primary currency of the economic environment in which the Company and its subsidiaries
have operated (which is the currency of the environment in which an entity primarily generates cash) and expects to continue to operate
in the foreseeable future.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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at the applicable balance sheet date. For foreign currency transactions included in the consolidated Statement of Operations and Comprehensive
Loss, the exchange rates applicable on the relevant transaction dates are used. Gains or losses arising from changes in the exchange rates
used in the translation of such transactions are presented within financing income or expenses.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left; text-indent: -1cm"><b>&#160;</b></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_8" id="_SignificantAccountingPoliciesTextBlock-c0_cont_7"><ix:nonNumeric contextRef="c0" continuedAt="_ConsolidationPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:ConsolidationPolicyTextBlock"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>C.</b></td><td style="text-align: left"><b>Principles of Consolidation</b></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:nonNumeric></ix:continuation><div>

</div><div>

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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_10" id="_SignificantAccountingPoliciesTextBlock-c0_cont_9"><ix:nonNumeric contextRef="c0" continuedAt="_CashAndCashEquivalentsPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:CashAndCashEquivalentsPolicyTextBlock"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
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</div><div>

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or use and that are readily convertible to cash with maturities of three months or less as of the date acquired.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left; text-indent: -1cm"><b>&#160;</b></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_12" id="_SignificantAccountingPoliciesTextBlock-c0_cont_11"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_13" id="_SignificantAccountingPoliciesTextBlock-c0_cont_12"><ix:continuation continuedAt="_ResearchAndDevelopmentExpensePolicy-c0_cont_2" id="_ResearchAndDevelopmentExpensePolicy-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Research and development expenses are
charged to operations, as incurred.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_14" id="_SignificantAccountingPoliciesTextBlock-c0_cont_13"><ix:continuation id="_ResearchAndDevelopmentExpensePolicy-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">ASC 985-20, &#8220;Software - Costs of
Computer Software to be Sold, Leased or Otherwise Marketed&#8221;, requires capitalization of certain software development costs subsequent
to the establishment of technological feasibility. In accordance with ASC 985-20, capitalization ceases when the related product is available
for general release to customers. Costs of maintenance and customer support are charged to expenses, as incurred. Based on the Company&#8217;s
product development process, technological feasibility is established upon completion of a working model. Costs incurred by the Company
between completion of the working models and the point at which the products are ready for general release have been insignificant. Therefore,
all research and development costs have been expensed.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>


</div><!-- Field: Page; Sequence: 136; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->9<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>BEAMR IMAGING LTD.&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 2cm; text-align: justify; text-indent: -2cm"><span style="font-weight: normal">&#160;</span></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 2cm; text-align: justify; text-indent: -2cm">NOTE 2 - SIGNIFICANT
ACCOUNTING POLICIES (Cont.)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left; text-indent: -1cm"><b>&#160;</b></p><div>

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</div><div>

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date of an offering of equity securities, specific incremental costs directly (i.e. accounting, consulting, legal and printing fees) attributable
to a proposed or actual offering of securities are deferred and charged against the gross proceeds of the offering, unless the offering
of equity securities has been delayed but is currently in process, under which such specific incremental and direct costs are charged
immediately to operations. As of December 31, 2022, the Company deferred specific incremental costs directly attributable to offering
of securities through its IPO that closed in March 2023 in total amount of $<ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromIssuanceInitialPublicOffering" scale="3" unitRef="usd">313</ix:nonFraction>, which was classified as non-current asset in the Company&#8217;s
Consolidated Balance Sheet.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left; text-indent: -1cm"><b>&#160;</b></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_17" id="_SignificantAccountingPoliciesTextBlock-c0_cont_16"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_18" id="_SignificantAccountingPoliciesTextBlock-c0_cont_17"><ix:continuation continuedAt="_GoodwillAndIntangibleAssetsPolicyTextBlock-c0_cont_2" id="_GoodwillAndIntangibleAssetsPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Goodwill is the amount
by which the purchase price of acquired net assets in a business combination exceeded the fair values of the net identifiable assets on
the date of acquisition.&#160;Goodwill is not amortized but evaluated for impairment annually or more frequently if events or changes
in circumstances indicate that the asset might be impaired. The provisions of ASC 350 &#8220;Intangibles-Goodwill and Other&#8221; (&#8220;ASC
350&#8221;) require that the impairment test be performed on goodwill at the level of the reporting unit. As required by ASC 350, the
Company chooses either to perform a qualitative assessment whether a goodwill impairment test is necessary or proceeds directly to the
goodwill impairment test. Such determination is made for each reporting unit on a stand-alone basis. The qualitative assessment includes
various factors such as macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, earnings
multiples, gross margin and cash flows from operating activities and other relevant factors. When the Company chooses to perform a qualitative
assessment and determines that it is more likely than not (more than 50 percent likelihood) that the fair value of the reporting unit
is less than its carrying value, then the Company proceeds to the goodwill impairment test. If the Company determines otherwise, no further
evaluation is necessary.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_19" id="_SignificantAccountingPoliciesTextBlock-c0_cont_18"><ix:continuation continuedAt="_GoodwillAndIntangibleAssetsPolicyTextBlock-c0_cont_3" id="_GoodwillAndIntangibleAssetsPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">When the Company decides
or is required to perform the quantitative goodwill impairment test, the Company compares the fair value of the reporting unit to its
carrying value and an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit&#8217;s fair
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</div><div>

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approach, which utilizes a discounted cash flow model, as it believes that this approach best approximates the reporting unit&#8217;s
fair value. Judgments and assumptions related to revenue, operating income, future short-term and long-term growth rates, weighted average
cost of capital, interest, capital expenditures, cash flows, and market conditions are inherent in developing the discounted cash flow
model. The Company considers historical rates and current market conditions when determining the discount and growth rates to use in its
analyses. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges
for its goodwill. As of December 31, 2022 and 2021, the Company has performed the annual impairment test and has determined that impairment
loss is not required to be recognized.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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assets acquired in business combinations, which include technology, customer relationships and trade names, are initially recorded at
fair value.&#160;They are amortized on a straight-line basis over their estimated useful lives.&#160;The intangible asset lives have been
determined based upon the anticipated period over which the Company will derive future cash flows from the intangible assets.&#160;The
Company has considered the effects of legal, regulatory, contractual, competitive, and other economic factors in determining these useful
lives.&#160;Recoverability of these assets is assessed when triggering events have occurred that may give rise to an impairment loss and
is determined by a comparison of the carrying amount of the asset to the future undiscounted net cash flows expected to be generated by
the asset.&#160;When it is determined that the carrying value of the asset is not recoverable, the asset is written down to its estimated
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_22" id="_SignificantAccountingPoliciesTextBlock-c0_cont_21"><ix:continuation continuedAt="_GoodwillAndIntangibleAssetsPolicyTextBlock-c0_cont_6" id="_GoodwillAndIntangibleAssetsPolicyTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">As a result of continued
losses, the management performed an impairment test with respect to its intangible assets by maintaining an external valuation which utilized
discounted cash flow model. Accordingly,&#160;certain assumptions and judgments were made to determine the discount rate as well as future
cash flows of the Company.&#160;During the years ended December 31, 2022, 2021 and 2020, no impairment losses were identified through
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_23" id="_SignificantAccountingPoliciesTextBlock-c0_cont_22"><ix:continuation continuedAt="_GoodwillAndIntangibleAssetsPolicyTextBlock-c0_cont_7" id="_GoodwillAndIntangibleAssetsPolicyTextBlock-c0_cont_6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The lives used in computing straight-line amortization
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_24" id="_SignificantAccountingPoliciesTextBlock-c0_cont_23"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfFiniteLivedIntangibleAssetsTableTextBlock"><ix:continuation id="_GoodwillAndIntangibleAssetsPolicyTextBlock-c0_cont_7"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; text-align: left">Technology</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Customer relationships</td><td>&#160;</td>
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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 137; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->10<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>BEAMR IMAGING LTD.&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; background-color: white"><b>&#160;</b></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 2cm; text-align: justify; text-indent: -2cm">NOTE 2 - SIGNIFICANT
ACCOUNTING POLICIES (Cont.)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left; text-indent: -1cm"><b>&#160;</b></p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_25" id="_SignificantAccountingPoliciesTextBlock-c0_cont_24"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_26" id="_SignificantAccountingPoliciesTextBlock-c0_cont_25"><ix:continuation continuedAt="_PropertyPlantAndEquipmentPolicyTextBlock-c0_cont_2" id="_PropertyPlantAndEquipmentPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Property and equipment
are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful
lives of the assets. When an asset is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from
the respective accounts and the net difference less any amount realized from disposition is reflected in the consolidated Statements of
Operations and Comprehensive Loss.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_27" id="_SignificantAccountingPoliciesTextBlock-c0_cont_26"><ix:continuation continuedAt="_PropertyPlantAndEquipmentPolicyTextBlock-c0_cont_3" id="_PropertyPlantAndEquipmentPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company&#8217;s long-lived
assets are reviewed for impairment in accordance with ASC 360, &#8220;Property, Plant and Equipment&#8221;, whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset.
If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of
the asset exceeds its fair value. To date, the Company has not incurred any impairment losses.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 27.35pt">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_28" id="_SignificantAccountingPoliciesTextBlock-c0_cont_27"><ix:continuation continuedAt="_PropertyPlantAndEquipmentPolicyTextBlock-c0_cont_4" id="_PropertyPlantAndEquipmentPolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The lives used in computing straight-line depreciation
for financial reporting purposes are as follows:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_29" id="_SignificantAccountingPoliciesTextBlock-c0_cont_28"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:PropertyPlantAndEquipmentAndIntangibleAssetsTextBlock"><ix:continuation id="_PropertyPlantAndEquipmentPolicyTextBlock-c0_cont_4"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_30" id="_SignificantAccountingPoliciesTextBlock-c0_cont_29"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>I.</b></td><td style="text-align: left"><ix:nonNumeric contextRef="c0" continuedAt="_LesseeLeasesPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:LesseeLeasesPolicyTextBlock"><b>Leases</b></ix:nonNumeric></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_31" id="_SignificantAccountingPoliciesTextBlock-c0_cont_30"><ix:continuation continuedAt="_LesseeLeasesPolicyTextBlock-c0_cont_2" id="_LesseeLeasesPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company entered
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_32" id="_SignificantAccountingPoliciesTextBlock-c0_cont_31"><ix:continuation continuedAt="_LesseeLeasesPolicyTextBlock-c0_cont_3" id="_LesseeLeasesPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company applies
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_33" id="_SignificantAccountingPoliciesTextBlock-c0_cont_32"><ix:continuation continuedAt="_LesseeLeasesPolicyTextBlock-c0_cont_4" id="_LesseeLeasesPolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Accordingly, the Company
determines if an arrangement is a lease at inception. The Company&#8217;s assessment is based on: (i) whether the contract involves the
use of an identified asset, (ii) whether the Company obtains the right to substantially all of the economic benefits from the use of the
asset throughout the period of use, and (iii) whether the Company has the right to direct the use of the asset.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_34" id="_SignificantAccountingPoliciesTextBlock-c0_cont_33"><ix:continuation continuedAt="_LesseeLeasesPolicyTextBlock-c0_cont_5" id="_LesseeLeasesPolicyTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Leases are classified
as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria are met: (i)
the lease transfers ownership of the asset by the end of the lease term, (ii) the lease contains an option to purchase the asset that
is reasonably certain to be exercised, (iii) the lease term is for a major part of the remaining useful life of the asset, (iv) the present
value of the lease payments equals or exceeds substantially all of the fair value of the asset, or (v) the underlying asset is of such
a specialized nature that it is expected to have no alternative use to the lessor at the end of lease term. A lease is classified as an
operating lease if it does not meet any one of these criteria. Since all the Company&#8217;s lease contracts for premises do not meet
any of the criteria above, the Company concluded that all its lease contracts should be classified as operating leases.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_35" id="_SignificantAccountingPoliciesTextBlock-c0_cont_34"><ix:continuation continuedAt="_LesseeLeasesPolicyTextBlock-c0_cont_6" id="_LesseeLeasesPolicyTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Right of Use (&#8220;ROU&#8221;)
assets and liabilities are recognized on the commencement date based on the present value of remaining lease payments over the lease term.
For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of the Company&#8217;s
leases do not provide an implicit rate, the Company uses its incremental borrowing rate (&#8220;IBR&#8221;) based on the information available
on the commencement date in determining the present value of lease payments. The Company&#8217;s IBR is estimated to approximate the interest
rate for collateralized borrowing with similar terms and payments and in economic environments where the leased asset is located. The
ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Moreover,
the ROU asset may also include initial direct costs, which are incremental costs of a lease that would not have been incurred if the lease
had not been obtained. The Company uses the long-lived assets impairment guidance in ASC 360-10, &#8220;Property, Plant, and Equipment
- Overall&#8221;, to determine whether a ROU asset is impaired, and if so, the amount of the impairment loss to recognize. Certain leases
include options to extend or terminate the lease. An option to extend the lease is considered in connection with determining the ROU asset
and lease liability when it is reasonably certain that the Company will exercise that option. An option to terminate is considered unless
it is reasonably certain that the Company will not exercise the option.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_36" id="_SignificantAccountingPoliciesTextBlock-c0_cont_35"><ix:continuation id="_LesseeLeasesPolicyTextBlock-c0_cont_6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company also elected
the short-term lease recognition exemption for all leases that qualify (leases with a term shorter than 12 months). For those leases,
ROU assets or lease liabilities are not recognized and rent&#160;expense is recognized on a straight-line basis over the lease term. See
also Note 10A for further discussion.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: center; background-color: white">&#160;</p></ix:continuation></ix:continuation><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: center; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center; background-color: white"><b>BEAMR IMAGING LTD.&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center; background-color: white">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center; background-color: white"><b>NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; background-color: white"><b>&#160;</b></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 2cm; text-align: justify; text-indent: -2cm">NOTE 2 - SIGNIFICANT
ACCOUNTING POLICIES (Cont.)</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 2cm; text-align: justify; text-indent: -2cm">&#160;</p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_37" id="_SignificantAccountingPoliciesTextBlock-c0_cont_36"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>J.</b></td><td style="text-align: left"><ix:nonNumeric contextRef="c0" continuedAt="_IncomeTaxPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:IncomeTaxPolicyTextBlock"><b>Deferred income taxes</b></ix:nonNumeric></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_38" id="_SignificantAccountingPoliciesTextBlock-c0_cont_37"><ix:continuation continuedAt="_IncomeTaxPolicyTextBlock-c0_cont_2" id="_IncomeTaxPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company accounts
for income taxes in accordance with ASC Topic 740, &#8220;Income Taxes&#8221;. Accordingly, deferred income taxes are determined utilizing
the asset and liability method based on the estimated future tax effects of differences between the financial accounting and the tax bases
of assets and liabilities under the applicable tax law. Deferred tax balances are computed using the enacted tax rates expected to be
in effect when these differences reverse. Valuation allowance in respect of deferred tax assets is provided for, if necessary, to reduce
deferred tax assets is amounts more likely than not to be realized.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; background-color: white">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_39" id="_SignificantAccountingPoliciesTextBlock-c0_cont_38"><ix:continuation id="_IncomeTaxPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company accounts
for uncertain tax positions in accordance with ASC Topic 740-10, which prescribes detailed guidance for the financial statement recognition,
measurement and disclosure of uncertain tax positions recognized in an enterprise&#8217;s financial statements. According to ASC Topic
740-10, tax positions must meet a more-likely-than-not recognition threshold. The Company&#8217;s accounting policy is to classify interest
and penalties relating to uncertain tax positions under income taxes, however the Company did not recognize such items in its consolidated
financial statements during the years ended December 31, 2022, 2021 and 2020 and did not recognize any liability with respect to an unrecognized
tax position in its balance sheets.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; background-color: white">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_40" id="_SignificantAccountingPoliciesTextBlock-c0_cont_39"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>K.</b></td><td style="text-align: left"><ix:nonNumeric contextRef="c0" continuedAt="_PostemploymentBenefitPlansPolicy-c0_cont_1" escape="true" name="us-gaap:PostemploymentBenefitPlansPolicy"><b>Employees benefit plans </b></ix:nonNumeric></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_41" id="_SignificantAccountingPoliciesTextBlock-c0_cont_40"><ix:continuation id="_PostemploymentBenefitPlansPolicy-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company&#8217;s
liability for severance pay to its Israeli employees is pursuant to Section 14 of the Israeli Severance Compensation Act, 1963 (&#8220;Section
14&#8221;), pursuant to which all the Company&#8217;s employees are included under Section 14, and are entitled only to monthly deposits,
at a rate of <ix:nonFraction contextRef="c0" decimals="4" format="ixt:num-dot-decimal" name="bmr:EmployeeCompensationPercentage" scale="-2" unitRef="pure">8.33</ix:nonFraction>% of their monthly salary, made in the employee&#8217;s name with insurance companies. Under Israeli employment law,
payments in accordance with Section 14 release the Company from any future severance payments in respect of those employees. The fund
is made available to the employee at the time the employer-employee relationship is terminated, regardless of cause of termination. The
severance pay liabilities and deposits under Section 14 are not reflected in the balance sheets as the severance pay risks have been irrevocably
transferred to the severance funds. All deposits required through December 31, 2022 have been made.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left; text-indent: -1cm"><b>&#160;</b></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_42" id="_SignificantAccountingPoliciesTextBlock-c0_cont_41"><ix:nonNumeric contextRef="c0" continuedAt="_CommitmentsAndContingenciesPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:CommitmentsAndContingenciesPolicyTextBlock"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>L.</b></td><td style="text-align: left"><b>Contingencies</b></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_43" id="_SignificantAccountingPoliciesTextBlock-c0_cont_42"><ix:continuation id="_CommitmentsAndContingenciesPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company and its
subsidiaries may be involved in certain legal proceedings and certain business relationships that arise from time to time in the ordinary
course of their business and in connection with certain agreements with third parties. Except for income tax contingencies, the Company
applies the provisions of ASC Topic 450, Contingencies. Thus, the Company records accruals for contingencies to the extent that the management
concludes that the occurrence is probable and that the related liabilities are estimable. Legal expenses associated with contingencies
are expensed as incurred.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left; text-indent: -1cm"><b>&#160;</b></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_44" id="_SignificantAccountingPoliciesTextBlock-c0_cont_43"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>M.</b></td><td style="text-align: left"><ix:nonNumeric contextRef="c0" continuedAt="bmr_ConcentrationOfCreditRiskPolicyTextBlock-c0_cont_1" escape="true" name="bmr:ConcentrationOfCreditRiskPolicyTextBlock"><b>Concentrations of credit risk and allowance for doubtful accounts</b></ix:nonNumeric></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_45" id="_SignificantAccountingPoliciesTextBlock-c0_cont_44"><ix:continuation continuedAt="bmr_ConcentrationOfCreditRiskPolicyTextBlock-c0_cont_2" id="bmr_ConcentrationOfCreditRiskPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Financial instruments
that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and trade receivables
as well as certain other current assets that do not amount to a significant amount. Cash and cash equivalents, which are primarily held
in US Dollars and New Israeli Shekels (NIS), are deposited with major banks in Israel, U.S. and Russian Federation. Management believes
that such financial institutions are financially sound and, accordingly, minimal credit risk exists with respect to these financial instruments.
The Company does not have any significant off-balance-sheet concentration of credit risk, such as foreign exchange contracts, option contracts
or other foreign hedging arrangements. Most of the Company&#8217;s sales are mainly derived from sales to a diverse set of customers located
primarily in the United States. Management periodically evaluates the collectability of the trade receivables to determine the amounts
that are doubtful of collection and determine a proper allowance for doubtful accounts, as described below. Accordingly, management believes
that the Company&#8217;s trade receivables do not represent a substantial concentration of credit risk.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_46" id="_SignificantAccountingPoliciesTextBlock-c0_cont_45"><ix:continuation id="bmr_ConcentrationOfCreditRiskPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company extends credit to customers
in the normal course of business and does not require collateral or any other security to support amounts due. Management performs ongoing
credit evaluations of its customers. The allowance for doubtful accounts is determined with respect to amounts the Group has determined
to be doubtful of collection. In determining the allowance for doubtful accounts, the Company considers, among other things, its past
experience with customers, the length of time that the balance is past due, the customer&#8217;s current ability to pay and available information
about the credit risk on such customers.&#160;Provisions for the allowance for doubtful accounts are recorded under general and administrative
expenses in the consolidated Statements of Operations and Comprehensive Loss. During the years ended December 31, 2022, 2021 and 2020,
the Company has not recorded allowance in respect of accounts receivable.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: center; background-color: white"><b>&#160;</b></p></ix:continuation></ix:continuation><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: center; background-color: white"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center; background-color: white"><b>BEAMR IMAGING LTD.&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center; background-color: white"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center; background-color: white"><b>NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; background-color: white"><b>&#160;</b></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 2cm; text-align: justify; text-indent: -2cm">NOTE 2 - SIGNIFICANT
ACCOUNTING POLICIES (Cont.)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left; text-indent: -1cm"><b>&#160;</b></p><div>

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</div><div>

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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_49" id="_SignificantAccountingPoliciesTextBlock-c0_cont_48"><ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_3" id="_RevenueRecognitionPolicyTextBlock-c0_cont_2"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_50" id="_SignificantAccountingPoliciesTextBlock-c0_cont_49"><ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_4" id="_RevenueRecognitionPolicyTextBlock-c0_cont_3"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
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</div><div>

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</div><div>

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</div><div>

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</div><div>

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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_55" id="_SignificantAccountingPoliciesTextBlock-c0_cont_54"><ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_9" id="_RevenueRecognitionPolicyTextBlock-c0_cont_8"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company derives its revenues from
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that incorporate the Company&#8217;s perpetual license in their own products delivered to end users and for the Company&#8217;s products&#160;sold
to thousands private consumers, as applicable to each contract, and from, provision of related maintenance and technical support. The
Company sells its products through direct sales force and indirectly through distributors and consumer platforms.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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the promised goods or services are transferred to the customers, in an amount that reflects the consideration that the company expects
to receive in exchange for those goods or services. However, when the consideration for the license is based on sales of the related customer,
the company applies the provisions of ASC 606 with respect to sales-based or usage-based royalties promised in exchange for a license
of intellectual property and recognizes revenues only when the underlying sales occur, as long as this approach does not result in the
acceleration of revenue ahead of the company&#8217;s performance.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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services to the customer, either at a point in time or over time. The Company recognizes its revenues from software sales at a point in
time upon delivery of its software license. The software license is considered a distinct performance obligation, as the customer can
benefit from the software on its own. The Company&#8217;s revenues from PCS are derived from annual maintenance providing for unspecified
upgrades on a when-and-if-available basis. The right for an unspecified upgrade for the version acquired by the customer and enhancements
on a when-and-if-available basis that do not specify the features, functionality and release date of future product enhancements for the
customer to know what will be made available and the general timeframe in which it will be delivered. The Company considers the PCS performance
obligation as a distinct performance obligation that is satisfied over time and recognized on a straight-line basis over the contractual
period (mainly over a period of one year either for timely-based license or for perpetual license).</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_58" id="_SignificantAccountingPoliciesTextBlock-c0_cont_57"><ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_12" id="_RevenueRecognitionPolicyTextBlock-c0_cont_11"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">As the Company bundles software licenses
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standalone selling price basis.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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a stand-alone basis and due to the fact that these services are usually involved with limited customer support, mainly based on several
hours of technical support per contract (as management believes the technology and products covered under the software license component
are mature and fully functional), the standalone selling prices of the PCS are determined based on the expected cost plus a margin (&#8220;cost-plus
approach&#8221;) based on estimation of direct fulfillment cost (an hourly service) and a reasonable margin. Such estimate is also corroborated
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_60" id="_SignificantAccountingPoliciesTextBlock-c0_cont_59"><ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_14" id="_RevenueRecognitionPolicyTextBlock-c0_cont_13"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The stand-alone selling price of the software
licenses (either timely-based or perpetual) is estimated by management based on adjusted market assessment approach which represents management
estimation of the price that a customer in the market will be willing to pay for such license on a stand-alone basis (i.e. without any
PCS).</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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are usually involved with limited customer support, mainly based on several hours of technical support per contract, the transaction price
allocated to the PCS is considered insignificant. Consequently, most of the transaction price is allocated to the software licenses as
management believes the technology and products covered under the software license component are mature and fully functional.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 140; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->13<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>BEAMR IMAGING LTD.&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 2cm; text-align: justify; text-indent: -2cm">NOTE 2 - SIGNIFICANT
ACCOUNTING POLICIES (Cont.)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left; text-indent: -1cm"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>N.</b></td><td style="text-align: left"><b>Revenue recognition (Cont.)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_62" id="_SignificantAccountingPoliciesTextBlock-c0_cont_61"><ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_16" id="_RevenueRecognitionPolicyTextBlock-c0_cont_15"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">During the reported periods, costs to
obtain contracts were in an insignificant amount.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_63" id="_SignificantAccountingPoliciesTextBlock-c0_cont_62"><ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_17" id="_RevenueRecognitionPolicyTextBlock-c0_cont_16"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company does not grant a right of
return to its customers. When product delivered to the customer is subject to evaluation, the Company defers revenue until evaluation
is completed subject to formal selling agreement with the customer, at which time revenue is recognized provided that all other revenue
recognition criteria are met.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_64" id="_SignificantAccountingPoliciesTextBlock-c0_cont_63"><ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_18" id="_RevenueRecognitionPolicyTextBlock-c0_cont_17"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Commencing 2022, revenue is also derived
from the traffic operations in the Google AdSense program, a web advertising platform, that the Company makes available on its websites.&#160;Google
pays the Company on a cost-per-click basis. The Company recognizes as revenue the fees paid to it by Google based on the volume of clicks
through to Google AdSense advertisements.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_65" id="_SignificantAccountingPoliciesTextBlock-c0_cont_64"><ix:continuation continuedAt="_RevenueRecognitionPolicyTextBlock-c0_cont_19" id="_RevenueRecognitionPolicyTextBlock-c0_cont_18"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Company receives payments from customers
based upon contractual payment schedules. Trade receivables are recorded when right to consideration becomes unconditional, and an invoice
is issued to the customer. Unbilled receivables include amounts related to the Company&#8217;s contractual right to consideration for
completed performance obligations not yet invoiced. As of December 31, 2022 and 2021, unbilled receivables balance amounted to $<ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:OtherReceivables" scale="3" unitRef="usd">35</ix:nonFraction>&#160;and
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</div><div>

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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_67" id="_SignificantAccountingPoliciesTextBlock-c0_cont_66"><ix:continuation id="_RevenueRecognitionPolicyTextBlock-c0_cont_20"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">See also Note 16 for further discussion
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_68" id="_SignificantAccountingPoliciesTextBlock-c0_cont_67"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
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</div><div>

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establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value
measurements. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that
should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering
such assumptions there exists a three-tier fair-value hierarchy, which prioritizes the inputs used in measuring fair value as follows:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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measurement date.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_71" id="_SignificantAccountingPoliciesTextBlock-c0_cont_70"><ix:continuation continuedAt="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_4" id="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Level 2 - pricing inputs
are other than quoted prices in active markets that are directly observable for the asset or liability or indirectly observable through
corroboration with observable market data.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_72" id="_SignificantAccountingPoliciesTextBlock-c0_cont_71"><ix:continuation continuedAt="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_5" id="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Level 3 - pricing inputs
are unobservable for the non-financial asset or liability and only used when there is little, if any, market activity for the non-financial
asset or liability at the measurement date. The inputs into the determination of fair value require significant management judgment or
estimation. Level 3 inputs are considered as the lowest priority within the fair value hierarchy. The valuation of certain financial instruments
classified under fair value through profit or loss category and the fair value of reporting units for purposes of goodwill impairment
analysis, fall under this category.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_73" id="_SignificantAccountingPoliciesTextBlock-c0_cont_72"><ix:continuation continuedAt="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_6" id="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">This hierarchy requires
the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_74" id="_SignificantAccountingPoliciesTextBlock-c0_cont_73"><ix:continuation id="_FairValueMeasurementPolicyPolicyTextBlock-c0_cont_6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The fair value of cash
and cash equivalents is based on its demand value, which is equal to its carrying value. Additionally, the carrying value of all other
short-term monetary assets and liabilities are estimated to be equal to their fair value due to the short-term nature of these instruments.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left; text-indent: -1cm"><b>&#160;</b></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_75" id="_SignificantAccountingPoliciesTextBlock-c0_cont_74"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>P.</b></td><td style="text-align: left"><ix:nonNumeric contextRef="c0" continuedAt="bmr_ConvertibleOrdinary1And2SharesAndPreferredSharesPolicyTextBlock-c0_cont_1" escape="true" name="bmr:ConvertibleOrdinary1And2SharesAndPreferredSharesPolicyTextBlock"><b>Convertible Ordinary 1 and 2 Shares and Preferred Shares</b></ix:nonNumeric></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_76" id="_SignificantAccountingPoliciesTextBlock-c0_cont_75"><ix:continuation id="bmr_ConvertibleOrdinary1And2SharesAndPreferredSharesPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The Convertible Ordinary 1 and 2 Shares
and Convertible Preferred Shares are not subject to redemption feature upon any events that are considered not solely within the control
of the Company. In addition, upon occurrence of liquidation event, as defined in the Company&#8217;s Articles of Association, all holders of
the Ordinary Shares, Convertible Ordinary 1 and 2 Shares and Convertible Preferred Shares will be entitled to receive the same form of
consideration. Thus, the Company classifies its Convertible Ordinary 1 and 2 Shares and Convertible Preferred Shares as part of permanent
equity.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>


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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->14<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>BEAMR IMAGING LTD.&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; background-color: white"><b>&#160;</b></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 2cm; text-align: justify; text-indent: -2cm">NOTE 2 - SIGNIFICANT
ACCOUNTING POLICIES (Cont.)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left; text-indent: -1cm"><b>&#160;</b></p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_77" id="_SignificantAccountingPoliciesTextBlock-c0_cont_76"><ix:nonNumeric contextRef="c0" continuedAt="bmr_AllocationOfProceedsAndRelatedIssuanceCostsPolicyTextBlock-c0_cont_1" escape="true" name="bmr:AllocationOfProceedsAndRelatedIssuanceCostsPolicyTextBlock"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>Q.</b></td><td style="text-align: left"><b>Allocation of proceeds and related issuance costs</b></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_78" id="_SignificantAccountingPoliciesTextBlock-c0_cont_77"><ix:continuation continuedAt="bmr_AllocationOfProceedsAndRelatedIssuanceCostsPolicyTextBlock-c0_cont_2" id="bmr_AllocationOfProceedsAndRelatedIssuanceCostsPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">When multiple instruments are issued in
a single transaction (package issuance), the total net proceeds from the transaction are allocated among the individual freestanding instruments
identified. The allocation occurs after identifying all the freestanding instruments and the subsequent measurement basis for those instruments.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_79" id="_SignificantAccountingPoliciesTextBlock-c0_cont_78"><ix:continuation continuedAt="bmr_AllocationOfProceedsAndRelatedIssuanceCostsPolicyTextBlock-c0_cont_3" id="bmr_AllocationOfProceedsAndRelatedIssuanceCostsPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Financial instruments that are required
to be subsequently measured at fair value (such as derivative warrants liability) are measured at fair value and the remaining consideration
is allocated to other financial instruments that are not required to be subsequently measured at fair value (i.e. straight loan), based
on the relative fair value basis for such instruments.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_80" id="_SignificantAccountingPoliciesTextBlock-c0_cont_79"><ix:continuation continuedAt="bmr_AllocationOfProceedsAndRelatedIssuanceCostsPolicyTextBlock-c0_cont_4" id="bmr_AllocationOfProceedsAndRelatedIssuanceCostsPolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The allocation of issuance costs to freestanding
instruments was based on an approach that is consistent with the allocation of the proceeds, as described above.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_81" id="_SignificantAccountingPoliciesTextBlock-c0_cont_80"><ix:continuation continuedAt="bmr_AllocationOfProceedsAndRelatedIssuanceCostsPolicyTextBlock-c0_cont_5" id="bmr_AllocationOfProceedsAndRelatedIssuanceCostsPolicyTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Issuance costs allocated to the derivative
warrant liability were immediately expensed.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_82" id="_SignificantAccountingPoliciesTextBlock-c0_cont_81"><ix:continuation id="bmr_AllocationOfProceedsAndRelatedIssuanceCostsPolicyTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Issuance costs allocated to straight loan
are recorded as a discount of the straight loan and accreted over the contractual term of straight loan up to face value of such loans
using the effective interest method.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left; text-indent: -1cm"><b>&#160;</b></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_83" id="_SignificantAccountingPoliciesTextBlock-c0_cont_82"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>R.</b></td><td style="text-align: left"><ix:nonNumeric contextRef="c0" continuedAt="bmr_WarrantsPolicyTextBlock-c0_cont_1" escape="true" name="bmr:WarrantsPolicyTextBlock"><b>Warrants</b></ix:nonNumeric></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_84" id="_SignificantAccountingPoliciesTextBlock-c0_cont_83"><ix:continuation continuedAt="bmr_WarrantsPolicyTextBlock-c0_cont_2" id="bmr_WarrantsPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Certain warrants that
were issued to a commercial bank as part of entering into a straight loan and to seller through transaction in which certain identified
intangible assets have been purchased are classified as a component of permanent equity since they are freestanding financial instruments
that are legally detachable and separately exercisable, do not embody an obligation for the Company to repurchase its own shares, and
permit the holders to receive a fixed number of Ordinary Shares upon exercise for a fixed exercise price and thus, are considered as indexed
to the Company&#8217;s own shares. In addition, the warrants must require physical settlement and may not provide any guarantee of value or
return. As such warrants were issued together with financial instruments that are not subsequently measured at fair value the warrants
were measured based on allocation of the proceeds received by the Company in accordance with the relative fair value basis. When applicable,
direct issuance expenses that were allocated to such warrants were deducted from additional paid-in capital.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_85" id="_SignificantAccountingPoliciesTextBlock-c0_cont_84"><ix:continuation id="bmr_WarrantsPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Commencing January 1,
2018 and following the early adoption of ASU 2017-11, &#8220;Earnings Per Share&#8221; (ASU 2017-11), the Company disregards the down
round feature when assessing whether an instrument is indexed to its own shares, for purposes of determining liability or equity classification.
Based on its evaluation, management has determined that certain warrants with down-round protection are eligible for equity classification.
In accordance with the provisions of ASU 2017-11, upon the occurrence of an event that triggers down round protection (i.e., when the
exercise price of the warrants is adjusted downward because of the down round feature), the effect is accounted for as a deemed dividend
and as a reduction of income available to common shareholders for purposes of basic earnings per share (EPS) calculation. However, during
the reported periods there were no events that trigger a down round protection.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left; text-indent: -1cm"><b>&#160;</b></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_86" id="_SignificantAccountingPoliciesTextBlock-c0_cont_85"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>S.</b></td><td style="text-align: left"><ix:nonNumeric contextRef="c0" continuedAt="_DerivativesPolicyTextBlock-c0_cont_1" escape="true" name="us-gaap:DerivativesPolicyTextBlock"><b>Derivative Warrants Liability</b></ix:nonNumeric></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_87" id="_SignificantAccountingPoliciesTextBlock-c0_cont_86"><ix:continuation continuedAt="_DerivativesPolicyTextBlock-c0_cont_2" id="_DerivativesPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Certain warrants that
were granted by the Company for commercial bank through funding transaction entitle the bank to exercise the warrants for a variable number
of shares and/or for a variable exercise price and thus the fixed-for-fixed criteria is not met. Accordingly, the warrants were classified
as a non-current liability according to the provisions of ASC 815-40, &#8220;Derivatives and Hedging - Contracts in Entity&#8217;s Own
Equity&#8221; (&#8220;ASC 815-40&#8221;). The Company accounted for these warrants as a financial derivative liability measured upon initial
recognition and on subsequent periods at fair value by using the Hybrid Method by combining the OPM and an IPO scenario.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_88" id="_SignificantAccountingPoliciesTextBlock-c0_cont_87"><ix:continuation id="_DerivativesPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The fair value of the
aforesaid warrants derivative liability is estimated using the Black-Scholes Model which requires inputs such as the expected term of
the warrants, share price volatility and risk-free interest rate. These assumptions are reviewed on a regular basis and changes in the
estimated fair value of the outstanding warrants are recognized each reporting period as part of the &#8220;Financing (income) expenses,
net&#8221; line in the consolidated statements of operations and comprehensive loss, until such warrants are exercised or expired. When
applicable, direct issuance expenses that were allocated to the above warrants were expensed as incurred.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p></ix:continuation></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 142; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->15<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>BEAMR IMAGING LTD.&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; background-color: white"><b>&#160;</b></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 2cm; text-align: justify; text-indent: -2cm">NOTE 2
- SIGNIFICANT ACCOUNTING POLICIES (Cont.)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left; text-indent: -1cm"><b>&#160;</b></p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_89" id="_SignificantAccountingPoliciesTextBlock-c0_cont_88"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>T.</b></td><td style="text-align: left"><ix:nonNumeric contextRef="c0" continuedAt="bmr_ModificationsOrExchangeOfLoansPolicyTextBlock-c0_cont_1" escape="true" name="bmr:ModificationsOrExchangeOfLoansPolicyTextBlock"><b>Modifications or exchanges of loans</b></ix:nonNumeric></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_90" id="_SignificantAccountingPoliciesTextBlock-c0_cont_89"><ix:continuation continuedAt="bmr_ModificationsOrExchangeOfLoansPolicyTextBlock-c0_cont_2" id="bmr_ModificationsOrExchangeOfLoansPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Modifications to, or
exchanges of, financial instruments such as loans or convertible loans, are accounted for as a modification or an extinguishment, following
to provisions of ASC 470-50, &#8220;Debt &#8211; Modification and Extinguishments&#8221; (ASC 470-50<span style="font-family: Times New Roman, Times, Serif">)</span>.
Such an assessment done by management either qualitatively or quantitatively based on the facts and circumstances of each transaction<span style="font-family: Times New Roman, Times, Serif">.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_91" id="_SignificantAccountingPoliciesTextBlock-c0_cont_90"><ix:continuation continuedAt="bmr_ModificationsOrExchangeOfLoansPolicyTextBlock-c0_cont_3" id="bmr_ModificationsOrExchangeOfLoansPolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Under ASC 470-50, modifications
or exchanges are generally considered extinguishments with gains or losses recognized in current earnings if the terms of the new debt
and original instrument are substantially different. The instruments are considered &#8220;substantially different&#8221; when the present
value of the cash flows under the terms of the new debt instrument is at least <ix:nonFraction contextRef="c2" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentInterestRateStatedPercentage" scale="-2" unitRef="pure">10</ix:nonFraction>% different from the present value of the remaining cash
flows under the terms of the original instrument<span style="font-family: Times New Roman, Times, Serif">.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_92" id="_SignificantAccountingPoliciesTextBlock-c0_cont_91"><ix:continuation continuedAt="bmr_ModificationsOrExchangeOfLoansPolicyTextBlock-c0_cont_4" id="bmr_ModificationsOrExchangeOfLoansPolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">If the terms of a debt
instrument are changed or modified and the present value of the cash flows under the terms of the new debt instrument is less than <ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentRedemptionPricePercentage" scale="-2" unitRef="pure">10</ix:nonFraction>%,
the debt instruments are not considered to be substantially different, except in the following two circumstances: (i)<span style="font-family: Times New Roman, Times, Serif">&#160;&#160;</span>the
transaction significantly affects the terms of an embedded conversion option, such that the change in the fair value of the embedded conversion
option (calculated as the difference between the fair value of the embedded conversion option immediately before and after the modification
or exchange) is at least <ix:nonFraction contextRef="c2" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentInterestRateEffectivePercentage" scale="-2" unitRef="pure">10</ix:nonFraction>% of the carrying amount of the original debt instrument immediately before the modification or exchange or
(ii)<span style="font-family: Times New Roman, Times, Serif">&#160;&#160;</span>the transaction adds a substantive conversion option or
eliminates a conversion option that was substantive at the date of the modification or exchange<span style="font-family: Times New Roman, Times, Serif">.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_93" id="_SignificantAccountingPoliciesTextBlock-c0_cont_92"><ix:continuation continuedAt="bmr_ModificationsOrExchangeOfLoansPolicyTextBlock-c0_cont_5" id="bmr_ModificationsOrExchangeOfLoansPolicyTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">If the original and
new debt instruments are considered as &#8220;substantially different&#8221;, the original debt is derecognized and the new debt is initially
recorded at fair value, with the difference recognized as an extinguishment gain or loss under financial expense or income as applicable<span style="font-family: Times New Roman, Times, Serif">.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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instrument with a beneficial conversion option that was separately accounted for in equity, is extinguished prior to its conversion or
stated maturity date, a portion of the reacquisition price is allocated to the repurchase of the beneficial conversion option. The amount
of the reacquisition price allocated to the beneficial conversion option is measured using the intrinsic value of that conversion option
at the extinguishment date. The residual amount, if any, is allocated to the convertible debt instrument<span style="font-family: Times New Roman, Times, Serif">.</span></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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the extinguishment of the convertible debt instrument is determined based on the difference between the carrying amount and the fair value
of the allocated reacquisition price.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left; text-indent: -1cm"><b>&#160;</b></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_96" id="_SignificantAccountingPoliciesTextBlock-c0_cont_95"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
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</div><div>

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income or loss per share for each class of shares (ordinary and all other shares with preferences over Ordinary Shares) to be calculated
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were declared or paid during the reported periods. According to the provisions of ASC&#160;260-10, the Company&#8217;s Convertible Preferred
Shares and Convertible Ordinary 1 and 2 Shares do not have contractual obligation to share losses of the Company and therefore are not
included in the computation in period of net loss per share.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_98" id="_SignificantAccountingPoliciesTextBlock-c0_cont_97"><ix:continuation continuedAt="_EarningsPerSharePolicyTextBlock-c0_cont_3" id="_EarningsPerSharePolicyTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Basic net loss per Ordinary
Share is computed by dividing the net loss for the period applicable to ordinary shareholders, by the weighted average number of Ordinary
Shares outstanding during the period. Diluted loss per share gives effect to all potentially dilutive common shares outstanding during
the year using the treasury stock method with respect to shares with preferences over Ordinary Shares (Convertible Ordinary 1 and 2 shares
and Convertible Preferred Shares), share options and certain warrants and using the if-converted method with respect to convertible advance
investments and certain warrants accounted for as derivative liability. In computing diluted loss per share, the average share price for
the period is used in determining the number of shares assumed to be purchased from the exercise of share options or warrants.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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December 31, 2022, 2021 and 2020, the total weighted average number of Ordinary Shares related to outstanding shares with preferences
over Ordinary Shares (Convertible Ordinary 1 and 2 shares and Convertible Preferred Shares), share options, warrants and convertible advance
investments excluded from the calculation of the diluted loss per share was <ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesOutstanding" scale="0" unitRef="shares">9,067,438</ix:nonFraction>, <ix:nonFraction contextRef="c3" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesOutstanding" scale="0" unitRef="shares">8,957,327</ix:nonFraction> and <ix:nonFraction contextRef="c26" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesOutstanding" scale="0" unitRef="shares">8,842,202</ix:nonFraction>, respectively.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify; text-indent: 0cm">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>


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    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->16<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>BEAMR IMAGING LTD.&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; background-color: white"><b>&#160;</b></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 2cm; text-align: justify; text-indent: -2cm">NOTE 2 - SIGNIFICANT
ACCOUNTING POLICIES (Cont.)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left; text-indent: -1cm"><b>&#160;</b></p><div>

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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_101" id="_SignificantAccountingPoliciesTextBlock-c0_cont_100"><ix:continuation continuedAt="bmr_ConvertibleAdvanceInvestmentsPolicyTextBlock-c0_cont_2" id="bmr_ConvertibleAdvanceInvestmentsPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Upon initial recognition, the Company
has considered the provisions of ASC 480-10 &#8220;Distinguishing Liabilities from Equity&#8221; with respect to certain obligations to
issue a variable number of shares and has determined that the convertible advance investments represent a financial liability since most
of its settlement alternatives embody either a conditional or an unconditional obligation to issue a variable number of the Company&#8217;s
shares with monetary value based predominantly on a fixed monetary amount known at inception (the original issue price of the convertible
advance investments together with a fixed &#160;return to the investors).</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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has considered the provisions of ASC 815-15,&#160;&#8220;Derivatives and Hedging - Embedded Derivatives&#8221;, and determined that the
embedded conversion feature of the convertible advance investments cannot be considered as clearly and closely related to the host debt
instrument. However, it was determined that the embedded conversion feature should not be separated from the host instrument because the
embedded conversion option, if freestanding, did not meet a derivative definition based on the provisions of ASC 815-10, &#8220;Derivatives
and Hedging&#8221;&#160;since its terms did not require or permit net settlement. Thus, it was determined that the conversion feature
does not meet the characteristic of being readily convertible to cash. However, the Company has determined that the redemption feature
upon certain events is not solely within the Company&#8217;s control under which the Company will be required to repay an amount equal to <ix:nonFraction contextRef="c47" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:EquityMethodInvestmentOwnershipPercentage" scale="-2" unitRef="pure">200</ix:nonFraction>%
of the original investment was determined to represent a contingent interest feature that requires bifurcation from a host debt contract
because the contingent interest feature meets a derivative definition and the economic characteristics of the embedded feature are not
clearly and closely related to those of host debt instrument as such feature is not directly credit risk related.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_103" id="_SignificantAccountingPoliciesTextBlock-c0_cont_102"><ix:continuation continuedAt="bmr_ConvertibleAdvanceInvestmentsPolicyTextBlock-c0_cont_4" id="bmr_ConvertibleAdvanceInvestmentsPolicyTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">Furthermore, the Company applied ASC 470-20,
&#8220;Debt - Debt with Conversion and Other Options&#8221; (&#8220;ASC 470-20&#8221;) which clarifies the accounting for instruments with
Beneficial Conversion Features (BCF) or contingently adjustable conversion ratios and has applied the BCFs guidance to determine whether
the conversion feature is beneficial to investors. However, as the convertible advance investments were not convertible upon inception
(such instrument would have become convertible if the Company would have completed qualified financing by August 5, 2020), it was determined
that no BCF was required to be recognized upon initial recognition of the instrument.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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advance investments, the Company elected to measure this liability in its entirety, at its fair value in accordance with ASC 825-10, &#8220;Financial
Instruments&#8221; due to the existence of certain redemption option and the potential requirement to recognize contingent BCF. Accordingly,
upon initial recognition and in subsequent periods, the Company measures the liability related to the convertible advance investments
based on its fair value taking into consideration, among others all relevant settlement possibilities and their respective likelihood.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: left; text-indent: -1cm"><b>&#160;</b></p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_105" id="_SignificantAccountingPoliciesTextBlock-c0_cont_104"><ix:nonNumeric contextRef="c0" continuedAt="bmr_CapitalContributionFromAControllingShareholderPolicyTextBlock-c0_cont_1" escape="true" name="bmr:CapitalContributionFromAControllingShareholderPolicyTextBlock"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>W.</b></td><td style="text-align: left"><b>Capital contribution from a controlling shareholder</b></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:nonNumeric></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_106" id="_SignificantAccountingPoliciesTextBlock-c0_cont_105"><ix:continuation id="bmr_CapitalContributionFromAControllingShareholderPolicyTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">The fair value of the benefit received
in respect of loan received from the controlling shareholder is calculated on the basis of the difference between the interest rate that
the Company would have required to pay for similar loan from commercial bank and the interest rate that the Company is actually charged
under the agreement with the controlling shareholders. Such benefit is accounted for as capital contribution received from the controlling
shareholder as additional paid-in capital and it is recorded as discount on the loan received against at the initial measurement date.
Subsequently, such discount is expensed over the economic life of the loan based on the effective interest rate method.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 1cm; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>


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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="margin: 0">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">BEAMR IMAGING LTD.</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; background-color: white"><b>&#160;</b></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">NOTE 2 -
SIGNIFICANT ACCOUNTING POLICIES (Cont.)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.35pt; text-align: left; text-indent: -28.35pt"><b>&#160;</b></p><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_107" id="_SignificantAccountingPoliciesTextBlock-c0_cont_106"><ix:nonNumeric contextRef="c0" continuedAt="_ShareBasedCompensationOptionAndIncentivePlansPolicy-c0_cont_1" escape="true" name="us-gaap:ShareBasedCompensationOptionAndIncentivePlansPolicy"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
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</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_108" id="_SignificantAccountingPoliciesTextBlock-c0_cont_107"><ix:continuation continuedAt="_ShareBasedCompensationOptionAndIncentivePlansPolicy-c0_cont_2" id="_ShareBasedCompensationOptionAndIncentivePlansPolicy-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify; text-indent: 0in">The Company measures
and recognizes compensation expense for all equity-based payments to employees based on their estimated fair values in accordance with
ASC 718, &#8220;Compensation-Stock Compensation&#8221;. Share-based payments are recognized in the Statement of Operations and Comprehensive
Loss as an operating expense based on fair value of the award at the grant date by using Black-Scholes option-pricing model. The inputs
for the valuation analysis of the share options include several assumptions of which the most significant are the fair market value of
the underlying Ordinary Share, the expected share price volatility and the expected option term. Expected volatility was calculated based
upon historical volatility of peer companies in the same industry on daily basis since the Company&#8217;s marketability is considered low.
The expected option term represents the period that the Company&#8217;s share options are expected to be outstanding and is determined
based on the simplified method until sufficient historical exercise data will support using expected life assumptions. The risk-free interest
rate is based on the yield from U.S. treasury bonds with an equivalent term. The expected dividend yield assumption is based on the Company&#8217;s
historical experience and expectation of no future dividend payouts. The Company has historically not paid cash dividends and has no foreseeable
plans to pay cash dividends in the future. The Company expensed compensation costs net of estimated forfeitures over the requisite service
period by applying the straight-line method.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.35pt; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

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Ordinary Shares underlying the share options was determined by the Company&#8217;s management with the assistance of an independent valuation
firm. Because there has been no public market for the Ordinary Shares, the Company&#8217;s management has determined fair value of the Ordinary
Shares at the time of grant by considering several objective and subjective factors including data from other comparable companies, sales
of Convertible Preferred Shares to unrelated third parties, operating and financial performance, the lack of liquidity of share capital
and general and industry specific economic outlook, amongst other factors. The fair value of the underlying Ordinary Shares shall be determined
by management until such time as the ordinary shares are listed on an established stock exchange, national market system or other quotation
system. For all reported periods through December&#160;31, 2020, the valuations were performed using the Option Pricing Method (&#8220;OPM&#8221;).
Commencing June&#160;30, 2021, the valuations were performed using Hybrid Method by combining the OPM and an IPO scenario.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.35pt; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SignificantAccountingPoliciesTextBlock-c0_cont_110" id="_SignificantAccountingPoliciesTextBlock-c0_cont_109"><ix:continuation continuedAt="_ShareBasedCompensationOptionAndIncentivePlansPolicy-c0_cont_4" id="_ShareBasedCompensationOptionAndIncentivePlansPolicy-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify; text-indent: 0in">Commencing January
1, 2019, following the adoption of ASU 2018-07 which aligns the measurement and classification guidance for share-based payments to nonemployees
with the guidance for share-based payments to employees (with certain exceptions), share-based payments to non-employees are accounted
in accordance with ASC 718.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.35pt; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation id="_SignificantAccountingPoliciesTextBlock-c0_cont_110"><ix:continuation id="_ShareBasedCompensationOptionAndIncentivePlansPolicy-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify; text-indent: 0in">When applicable,
a modification to the terms and/or conditions of an award (i.e. a change of award&#8217;s fair value, vesting conditions or classification
as an equity or a liability instrument) is accounted for as an exchange of the original award for a new award resulting in total compensation
cost equal to the grant-date fair value of the original award, plus the incremental value of the modification to the award. The calculation
of the incremental value is based on the excess of the fair value of the modified award following the modification over the fair value
of the original award measured immediately before its terms were modified.</p></ix:continuation></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left"><b>&#160;</b></p><ix:nonNumeric contextRef="c0" continuedAt="_OtherCurrentAssetsTextBlock-c0_cont_1" escape="true" name="us-gaap:OtherCurrentAssetsTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 63.8pt; text-align: left; text-indent: -63.8pt"><b>NOTE 3 - OTHER
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</div><div>

</div><ix:continuation id="_OtherCurrentAssetsTextBlock-c0_cont_1"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfOtherCurrentAssetsTableTextBlock"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; border-collapse: collapse; width: 100%">
  <tr style="vertical-align: bottom">
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 December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:OtherPrepaidExpenseCurrent" scale="3" unitRef="usd">17</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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  </table></ix:nonNumeric></ix:continuation><div>



</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&#160;</p><div>

</div><!-- Field: Page; Sequence: 145; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->18<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">BEAMR IMAGING LTD.</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_PropertyPlantAndEquipmentDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:PropertyPlantAndEquipmentDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><b>NOTE 4 - PROPERTY AND EQUIPMENT,
NET</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><b>&#160;</b></p></ix:nonNumeric><div>

</div><div>

</div><ix:continuation continuedAt="_PropertyPlantAndEquipmentDisclosureTextBlock-c0_cont_2" id="_PropertyPlantAndEquipmentDisclosureTextBlock-c0_cont_1"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:PropertyPlantAndEquipmentTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt; text-align: justify">&#160;</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td colspan="6" style="border-bottom: Black 1.5pt solid; text-align: center; font-weight: bold">As of<br/>
 December 31,</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt; text-align: justify">&#160;</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center; font-weight: bold">2022</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center; font-weight: bold">2021</td><td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left">Computers and peripheral equipment</td><td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td><td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c54" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentGross" scale="3" unitRef="usd">95</ix:nonFraction></td><td style="width: 1%; text-align: left">&#160;</td><td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-bottom: 1.5pt; text-align: left">Office furniture and equipment</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c56" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentGross" scale="3" unitRef="usd">42</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c57" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentGross" scale="3" unitRef="usd">42</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentGross" scale="3" unitRef="usd">137</ix:nonFraction></td><td style="text-align: left">&#160;</td><td>&#160;</td>
    <td style="text-align: left">&#160;</td><td style="text-align: right"><ix:nonFraction contextRef="c3" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentGross" scale="3" unitRef="usd">135</ix:nonFraction></td><td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">$</td><td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:PropertyPlantAndEquipmentNet" scale="3" unitRef="usd">15</ix:nonFraction></td><td style="padding-bottom: 1.5pt; text-align: left">&#160;</td><td style="padding-bottom: 1.5pt">&#160;</td>
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</div><div>

</div><ix:continuation id="_PropertyPlantAndEquipmentDisclosureTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">During the years ended December
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&#160;</p><div>

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NET AND GOODWILL</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><b>&#160;</b></p></ix:nonNumeric><div>

</div><div>

</div><ix:continuation continuedAt="_GoodwillAndIntangibleAssetsDisclosureTextBlock-c0_cont_2" id="_GoodwillAndIntangibleAssetsDisclosureTextBlock-c0_cont_1"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfImpairedIntangibleAssetsTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="text-align: center; border-bottom: Black 1.5pt solid"><b>As of<br/>
 December 31,</b></td>
    <td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td>
    <td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2022</td>
    <td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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  <tr style="vertical-align: bottom">
    <td style="text-align: left">Carrying amount:</td>
    <td>&#160;</td>
    <td colspan="2" style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td>&#160;</td>
    <td colspan="2" style="text-align: left">&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; width: 76%; text-align: left">Technology</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td>
    <td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c58" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:AssetsUnderManagementCarryingAmount" scale="3" unitRef="usd">2,007</ix:nonFraction></td>
    <td style="width: 1%; text-align: left">&#160;</td>
    <td style="width: 1%">&#160;</td>
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    <td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-align: left">Customer relationships</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><ix:nonFraction contextRef="c60" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:AssetsUnderManagementCarryingAmount" scale="3" unitRef="usd">1,127</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Trade names</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c63" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:AssetsUnderManagementCarryingAmount" scale="3" unitRef="usd">201</ix:nonFraction></td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 4pt">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
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    <td style="padding-bottom: 4pt">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Accumulated amortization:</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-align: left">Technology</td>
    <td>&#160;</td>
    <td style="text-align: left">$</td>
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    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">$</td>
    <td style="text-align: right"><ix:nonFraction contextRef="c59" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:AccumulatedAmortizationDeferredFinanceCosts" scale="3" unitRef="usd">2,007</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-align: left">Customer relationships</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><ix:nonFraction contextRef="c61" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:AccumulatedAmortizationDeferredFinanceCosts" scale="3" unitRef="usd">1,127</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-align: left; padding-bottom: 1.5pt">Trade names</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c62" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:AccumulatedAmortizationDeferredFinanceCosts" scale="3" unitRef="usd">134</ix:nonFraction></td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
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</div><div>

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an impairment analysis was performed also with respect to the remaining balance of intangible assets. The analysis was based on valuation
performed by management using the assistance of third-party appraiser by using the income approach. The significant assumptions used for
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: center"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">BEAMR IMAGING LTD.</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&#160;</p><div>

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NET</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.65pt; text-align: left; text-indent: -5.65pt"><b>&#160;</b></p></ix:nonNumeric><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_2" id="_DebtDisclosureTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"><b>A.</b></td><td style="text-align: justify"><b>Loan and Security Agreements with Silicon Valley Bank</b></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 39.3pt; text-align: justify; text-indent: -0.25in">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_3" id="_DebtDisclosureTextBlock-c0_cont_2"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"></td><td style="width: 0.25in">1.</td><td style="text-align: justify">On February 19, 2017, the Company and Beamr Inc. entered into a Loan and Security Agreement (the &#8220;2017
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$<ix:nonFraction contextRef="c64" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentFaceAmount" scale="3" unitRef="usd">3,000</ix:nonFraction> bearing interest at a floating per annum rate equal to the Wall Street Journal Prime Rate plus <ix:nonFraction contextRef="c64" decimals="3" format="ixt:num-dot-decimal" name="us-gaap:ShortTermDebtPercentageBearingVariableInterestRate" scale="-2" unitRef="pure">3.5</ix:nonFraction>% (upon occurrence of &#8217;default
event&#8217; as defined in the 2017 Loan Agreement, the Aggregate Loan Principal Amount shall bear interest at a rate per annum which is <ix:nonFraction contextRef="c64" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:LoansReceivableBasisSpreadOnVariableRate" scale="-2" unitRef="pure">5</ix:nonFraction>%
above the rate that is otherwise applicable thereto) which shall be payable monthly.</td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.75in; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_4" id="_DebtDisclosureTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.75in; text-align: justify; text-indent: 0in">In June 2018, the
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</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_5" id="_DebtDisclosureTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.75in; text-align: justify; text-indent: 0in">In connection with
the execution of the 2017 Loan Agreement, the Company issued to SVB a warrant to purchase over a period of 15-years from the issuance
date of the warrant (i) <ix:nonFraction contextRef="c66" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ClassOfWarrantOrRightOutstanding" scale="0" unitRef="shares">41,040</ix:nonFraction> Series C Convertible Preferred Shares at an exercise price of $<ix:nonFraction contextRef="c66" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1" scale="0" unitRef="usdPershares">5.12</ix:nonFraction> per share or (ii) <ix:nonFraction contextRef="c67" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:SaleOfStockNumberOfSharesIssuedInTransaction" scale="0" unitRef="shares">41,040</ix:nonFraction> shares to
be issued in the &#8216;next round&#8217; (as defined in the Agreement) at an exercise price equal to the lowest price per share at which the Company
will sell and issue shares of the Next Round Shares (the &#8220;2017 Warrant&#8221;).</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.75in; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

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the management by assistance of third-party appraiser allocated the net cash proceeds received based on the relative fair value of the
Loan and the detachable 2017 Warrant in total amount of $<ix:nonFraction contextRef="c68" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:WarrantsAndRightsOutstanding" scale="3" unitRef="usd">2,875</ix:nonFraction> and $<ix:nonFraction contextRef="c69" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:WarrantsAndRightsOutstanding" scale="3" unitRef="usd">125</ix:nonFraction>, respectively. The amount allocated to the 2017 Warrant was classified
as a component of permanent equity (as their terms permit the holder to receive a fixed number of Ordinary Shares upon exercise for a
fixed exercise price) and the same amount was presented as a discount of the loan component.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.75in; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

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the Loan is accounted for using the effective interest method over the Loan term, until its stated maturity. Consequently, the Company
recorded expenses amounting to $<ix:nonFraction contextRef="c70" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:AmortizationOfDebtDiscountPremium" scale="3" unitRef="usd">12</ix:nonFraction> and $<ix:nonFraction contextRef="c71" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:AmortizationOfDebtDiscountPremium" scale="3" unitRef="usd">59</ix:nonFraction> related to amortization of discount and interest expenses of the Loan under finance expenses
line in the consolidated Statement of Operations and Comprehensive Loss for the years ended December 31, 2022 and 2021, respectively.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.75in; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

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under the 2017 Loan Agreement, the Company provided a fixed and floating collateral on all its assets (including its intellectual property).</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.75in; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

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the Company entered into deferral agreement with SVB in connection with the 2017 Loan Agreement under which the original monthly repayment
date for the remaining principal due from May 2020 to October 2020 was extended by a period of six months commencing November 2020. However,
management has determined that such modification of terms does not represent extinguishment of the original Loan, as the Loan before and
after the modification was not considered as &#8220;substantially different&#8221; in accordance with the provisions of ASC 470-50.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.75in; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

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(the &#8220;Deferral Effective Date&#8221;), the Company entered into a second deferral agreement in connection with the straight loan
made under the 2017 Loan Agreement with SVB, under which it was agreed that the original monthly repayment dates for the remaining balance
of the principal due from May 2021 to October 2021 (amounting to $<ix:nonFraction contextRef="c72" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:InvestmentOwnedBalancePrincipalAmount" scale="3" unitRef="usd">667</ix:nonFraction> as of that date) shall be extended by a period of six months commencing
November 2021. In consideration, the Company was required to (i) pay SVB a deferral facility fee equal to $<ix:nonFraction contextRef="c73" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:LineOfCreditFacilityCommitmentFeeAmount" scale="3" unitRef="usd">50</ix:nonFraction> which shall be fully earned
at the Deferral Effective Date, and payable in 10 monthly equal installments over the period commencing April 29, 2021 through January
29, 2022 (the &#8220;Facility Fee&#8221;); (ii) reimburse SVB for all reasonable legal fees and expenses incurred in connection with the
Deferral Agreement and (iii) issue SVB warrants to purchase <ix:nonFraction contextRef="c74" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:DebtConversionConvertedInstrumentWarrantsOrOptionsIssued1" scale="0" unitRef="shares">9,764</ix:nonFraction> shares (the &#8220;2021 Warrant&#8221;) at an exercise price of $<ix:nonFraction contextRef="c75" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ClassOfWarrantOrRightExercisePriceOfWarrantsOrRights1" scale="0" unitRef="usdPershares">5.12</ix:nonFraction>
per share (subject to standard adjustments) over a period of 15-years at SVB&#8217;s discretion into either to Series C Convertible Preferred
Shares or class of securities sold and issued by the Company in the next equity financing round (as determined in accordance with the
warrant agreement for the 2021 Warrant (the &#8220;Warrant Agreement&#8221;)) . If SVB exercises the 2021 Warrant and the Warrant Value
(as defined in and determined in the Warrant Agreement) will be lower than an amount of $<ix:nonFraction contextRef="c76" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:FairValueAdjustmentOfWarrants" scale="3" unitRef="usd">50</ix:nonFraction> (the &#8220;Minimum Value&#8221;), then immediately
following such exercise, the Company shall pay SVB an amount in cash equal to the difference between the Minimum Value and Warrant Value.
The 2021 Warrant was issued on April 29, 2021.</p><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

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</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">BEAMR IMAGING LTD.</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.65pt; text-align: left; text-indent: -5.65pt"><b>NOTE 6 - LOANS,
NET (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.65pt; text-align: left; text-indent: -5.65pt"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>A.</b></td><td style="text-align: justify"><b>Loan and Security Agreements with Silicon Valley Bank (Cont.)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 21.3pt">&#160;</p><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_11" id="_DebtDisclosureTextBlock-c0_cont_10"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0.5in"></td><td style="width: 0.25in; text-align: left">1.</td><td style="text-align: justify">(Cont.)</td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 39.3pt; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_12" id="_DebtDisclosureTextBlock-c0_cont_11"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.75in; text-align: justify; text-indent: 0in">Upon the modification
of the terms under the 2017 Loan Agreement, the Company has considered the provisions of ASC 470-50 &#8220;Debt - Modification or Extinguishment&#8221;
(&#8220;ASC 470-50&#8221;), and based on such assessment, management has determined by using the assistance of a third-party appraiser
that the fair value of the modified loan (including the Facility Fee) plus the fair value of the 2021 Warrant granted are considered as
substantially different than the fair value of the original straight loan prior to the modification date. As per the provisions of ASC
470-50, it was determined that the modification represents an extinguishment of the original straight loan. Accordingly, the Company derecognized
the remaining balance of the original straight loan in the total amount of $<ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:LineOfCreditFacilityFairValueOfAmountOutstanding" scale="3" unitRef="usd">672</ix:nonFraction> and recorded an amount of $<ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:LineOfCreditFacilityCollateralFeesAmount" scale="3" unitRef="usd">712</ix:nonFraction> which represented the fair
value of the modified loan (including the Facility Fee) and the fair value of the issued 2021 Warrant in a total amount of $<ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:FairValueAdjustmentOfWarrants" scale="3" unitRef="usd">50</ix:nonFraction> as non-current
financial liability as their terms permit the holders to receive a variable number of Ordinary Shares upon exercise and as such, the 2021
Warrant is subject to a minimum fair value mechanism. Changes in the estimated fair value of the 2021 Warrant are recognized each reporting
period under Financing Expenses, net in the consolidated Statement of Operations and Comprehensive Loss, until the 2021 Warrant is exercised
or expired, as earlier. See also Note 8.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 39.3pt; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_13" id="_DebtDisclosureTextBlock-c0_cont_12"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.75in; text-align: justify; text-indent: 0in">In June 2022, the
Loan was fully repaid.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 39.3pt; text-align: justify; text-indent: -0.25in">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_14" id="_DebtDisclosureTextBlock-c0_cont_13"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"></td><td style="width: 0.25in">2.</td><td style="text-align: justify">On February 17, 2022, the Company entered into a Loan and Securities Agreement (the &#8220;2022 Loan Agreement&#8221;)
with SVB, according to which commencing as of August 1, 2022 through December 31, 2022, SVB may, in its sole discretion in each instance,
pursuant to the Company&#8217;s request, finance specific eligible accounts receivables of the Company, as determined in the 2022 Loan
Agreement, in a total amount equal to the face amount of the eligible account multiplied by a rate of <ix:nonFraction contextRef="c77" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:InvestmentInterestRate" scale="-2" unitRef="pure">80</ix:nonFraction>%, subject to reduction by SVB
in its discretion (the &#8220;Advance&#8221;), provided that the aggregate amount of all outstanding Advances shall not exceed the lesser
of (i) an aggregate principal amount equal to $<ix:nonFraction contextRef="c78" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentFaceAmount" scale="3" unitRef="usd">350</ix:nonFraction>, the (&#8220;Revolving Line&#8221;), or (ii) <ix:nonFraction contextRef="c78" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DerivativeFixedInterestRate" scale="-2" unitRef="pure">80</ix:nonFraction>% of all eligible accounts minus the
sum of all outstanding principal amounts of any Advances, subject to reduction by SVB in its discretion. The outstanding principal amount
of any Advance shall accrue interest at a floating rate per annum equal to the greater of (i) <ix:nonFraction contextRef="c79" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:DerivativeFixedInterestRate" scale="-2" unitRef="pure">8.25</ix:nonFraction>% and (ii) a floating per annum rate
equal to the Wall Street Journal Prime Rate plus <ix:nonFraction contextRef="c80" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DerivativeFixedInterestRate" scale="-2" unitRef="pure">5</ix:nonFraction>% (upon occurrence of a &#8216;default event&#8217; as defined in the 2022 Loan Agreement, the aggregate
loan principal amount shall bear interest at a rate per annum which is <ix:nonFraction contextRef="c78" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:InvestmentInterestRate" scale="-2" unitRef="pure">5</ix:nonFraction>% above the rate that is otherwise applicable thereto). Interest
on the principal amount of each Advance will be payable in monthly arrears (i) on each the last day of each month and (ii) on December
31, 2022 (the &#8220;Revolving Line Maturity Date&#8221;). The security interest granted in the 2022 Loan Agreement shall at all times
continue to be a first priority preferred security interest in the collateral and a first priority fixed and floating charges.</td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 39.3pt; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_15" id="_DebtDisclosureTextBlock-c0_cont_14"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.75in; text-align: justify; text-indent: 0in">Upon making of the
initial Advance, the Company agreed to issue to SVB a warrant to purchase (i) <ix:nonFraction contextRef="c81" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:PreferredStockSharesIssued" scale="0" unitRef="shares">4,785</ix:nonFraction> Series C Convertible Preferred Shares, or (ii) Ordinary
Shares in the event that the Company has listed its securities for trading on Nasdaq, or (iii) upon SVB&#8217;s written irrevocable election
in its sole discretion, the same class and series, or other designation, of convertible preferred share or other senior equity security
sold and issued by the Company in the next equity financing over a 15-years period commencing the issuance date of such warrant, at an
exercise price of $<ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:WarrantExercisePriceIncrease" scale="0" unitRef="usdPershares">5.12</ix:nonFraction> per share, provided that if the class is the next equity financing securities, then the exercise price shall be
the lowest price per share for which next equity financing securities are sold or issued by the Company.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 39.3pt; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_16" id="_DebtDisclosureTextBlock-c0_cont_15"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.75in; text-align: justify; text-indent: 0in">On July 26, 2022,
the 2022 Loan Agreement was terminated, and all related collateral was released.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: -21.3pt"><b>&#160;</b></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_17" id="_DebtDisclosureTextBlock-c0_cont_16"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>B.</b></td><td style="text-align: justify"><b>Paycheck Protection Program Notes</b></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_18" id="_DebtDisclosureTextBlock-c0_cont_17"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify; text-indent: 0in">On May 7, 2020 and
March 25, 2021, Beamr Inc. entered into separate Paycheck Protection Program Notes (the &#8220;PPP Notes&#8221;) with SVB under which
Beamr Inc. borrowed amounts of $<ix:nonFraction contextRef="c82" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:EquityMethodInvestmentAggregateCost" scale="3" unitRef="usd">75</ix:nonFraction> and $<ix:nonFraction contextRef="c83" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:EquityMethodInvestmentAggregateCost" scale="3" unitRef="usd">54</ix:nonFraction>, respectively, (in aggregate the &#8220;PPP Amount&#8221;). The PPP Amount bears interest of
<ix:nonFraction contextRef="c3" decimals="3" format="ixt:num-dot-decimal" name="us-gaap:AccountsPayableInterestBearingInterestRate" scale="-2" unitRef="pure">1.0</ix:nonFraction>% per annum. Beamr Inc. was required make a monthly payment of principal and interest on the applicable PPP Amount, each monthly payment
to be in equal amounts such that the applicable PPP Amount was fully amortized by the maturity date which was determined as 24 months
from the date of the first PPP Note or 60 months from the date of the second PPP Note. At any time, Beamr Inc. was entitled to fully prepay
the PPP Amount without payment of penalty or premium.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_19" id="_DebtDisclosureTextBlock-c0_cont_18"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify; text-indent: 0in">The Company used
the PPP Amount for qualifying expenses which may be forgiven if it is utilized for qualifying expenses as described in the CARES Act.
In 2021, the PPP Amount was fully forgiven due to qualification for used expenses under the CARES Act and consequently the Company recorded
an amount of $<ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:OtherIncome" scale="3" unitRef="usd">129</ix:nonFraction> under other income in the consolidated Statement of Operations and Comprehensive Loss for the year ended December 31,
2021.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.75in; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.75in; text-align: justify; text-indent: 0in"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">BEAMR IMAGING LTD.</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 56.7pt; text-align: justify; text-indent: -56.7pt">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.65pt; text-align: left; text-indent: -5.65pt"><b>NOTE 6 - LOANS,
NET (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.65pt; text-align: left; text-indent: -5.65pt"><b>&#160;</b></p><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_20" id="_DebtDisclosureTextBlock-c0_cont_19"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>C.</b></td><td style="text-align: justify"><b>Funding Agreement with IBI Spikes Ltd.</b></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_21" id="_DebtDisclosureTextBlock-c0_cont_20"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify; text-indent: 0in">On July 7, 2022 (the
&#8220;Effective Date&#8221;), the Company entered into the Definitive Agreement with IBI Spikes Ltd. (the &#8220;IBI&#8221;), according
to which the Company received an amount of NIS <ix:nonFraction contextRef="c84" decimals="-5" format="ixt:num-dot-decimal" name="bmr:AgreementAmountReceived" scale="6" unitRef="ils">3.1</ix:nonFraction> million (approximately $<ix:nonFraction contextRef="c84" decimals="-3" format="ixt:num-dot-decimal" name="bmr:AgreementAmountReceived" scale="3" unitRef="usd">900</ix:nonFraction>) (the &#8220;IBI Loan&#8221;). The Company granted IBI
a right to receive consecutive monthly repayments equal to Net Cash Receipts multiplied by the Royalty Rate, as both defined in the Definitive
Agreement, until such time as IBI receives an amount equal to NIS <ix:nonFraction contextRef="c84" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromRoyaltiesReceived" scale="3" unitRef="ils">4,172,760</ix:nonFraction> (approximately $<ix:nonFraction contextRef="c84" decimals="-5" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromRoyaltiesReceived" scale="6" unitRef="usd">1.2</ix:nonFraction> million) (the &#8220;Repayment Amount&#8221;)
with any amount on account of the Repayment Amount which remains outstanding on the 42nd month anniversary of the later of (i) the Closing
Date, and (ii) the last payment provided by IBI (the &#8220;Final Repayment Date&#8221;) to be paid to IBI at such time. Notwithstanding
the above, Company&#8217;s minimum annual payment during any Annual Calculation Period will not be less than the lower of (i) $<ix:nonFraction contextRef="c85" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentAnnualPrincipalPayment" scale="3" unitRef="usd">330</ix:nonFraction> and
(ii) the outstanding Repayment Amount in recent year.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_22" id="_DebtDisclosureTextBlock-c0_cont_21"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify; text-indent: 0in">The Company may repay
the Repayment Amount at any time prior to the Final Repayment Date. If early repayment (such amount, the &#8220;Payment Amount&#8221;)
occurs prior to 12-month anniversary date of the Effective Date, then, a <ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="bmr:PercentageOfOutstandingRepaymentAndPaymentAmount" scale="-2" unitRef="pure">50</ix:nonFraction>% discount will be applied on the outstanding difference between
the Repayment Amount and the Payment Amount (the &#8220;Rev-Share Amount&#8221;) component of the outstanding Repayment Amount; or if
early repayment occurs after 12-month anniversary date of the Closing Date but before 18-month anniversary date of the Closing Date, then,
a <ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="bmr:PercentageOfDiscountOutstanding" scale="-2" unitRef="pure">35</ix:nonFraction>% discount will be applied on the outstanding Rev-Share Amount of the outstanding Repayment Amount (the &#8220;Early Repayment Amount&#8221;).</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_23" id="_DebtDisclosureTextBlock-c0_cont_22"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify; text-indent: 0in">In case the Company
and/or its subsidiaries consummates a change of control, merger transaction, IPO (excluding an IPO on the Nasdaq Capital Market (the &#8220;Nasdaq&#8221;))
or sale of all or substantially all of assets (the &#8220;Exit Event&#8221;), the Company shall fully pay IBI the Repayment Amount or
the Early Repayment Amount, as the case may be.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_24" id="_DebtDisclosureTextBlock-c0_cont_23"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify; text-indent: 0in">The Company incurred
non-refundable one-time fee of $<ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:InterestAndFeeIncomeOtherLoans" scale="3" unitRef="usd">13</ix:nonFraction>, reflecting <ix:nonFraction contextRef="c86" decimals="3" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentRedemptionPricePercentageOfPrincipalAmountRedeemed" scale="-2" unitRef="pure">1.5</ix:nonFraction>% of the Payment Amount plus VAT.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_25" id="_DebtDisclosureTextBlock-c0_cont_24"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify; text-indent: 0in">Upon making of the
Payment Amount, the Company issued warrant to IBI to purchase <ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ClassOfWarrantOrRightOutstanding" scale="0" unitRef="shares">65,563</ix:nonFraction> of (i) the most senior class of shares outstanding or (ii) Ordinary
Shares in case of an exercise following to completion of an IPO transaction (the &#8220;Warrant Share&#8221;). The exercise price for
each of the Warrant Share, shall be as follows:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_26" id="_DebtDisclosureTextBlock-c0_cont_25"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"></td><td style="width: 0.25in">1.</td><td style="text-align: justify">If financing round in consideration for an aggregate investment of at least $<ix:nonFraction contextRef="c2" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:EquityMethodInvestmentAggregateCost" scale="0" unitRef="usd">10,000</ix:nonFraction> (including the Investment
Amount and any additional amount provided to the Company under any additional AIA) (the &#8220;Qualified Financing&#8221;) occurs within
12 months following the Effective Date consummates, the exercise price for each Warrant Share, will be the price per share in such Qualified
Financing, less a <ix:nonFraction contextRef="c87" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:LesseeFinanceLeaseDiscountRate" scale="-2" unitRef="pure">20</ix:nonFraction>% discount and the shares type upon conversion of the Warrant Share shall have the same rights and preferences as
attached to the shares issued to the investors in such Qualified Financing. If transactions consummated in such closings are not on the
same terms and conditions and/or involve the issuance of more than one type of Company&#8217;s securities, then, the shares type upon conversion
of the Warrant Share shall have the most favorable terms of such closing.</td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify; text-indent: -21.25pt">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_27" id="_DebtDisclosureTextBlock-c0_cont_26"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"></td><td style="width: 0.25in">2.</td><td style="text-align: justify">If a Non-Qualified Financing occurs, IBI shall have the right but not the obligation to elect, by delivery
of written notice to the Company no later than 30 days from the receipt of a written notice from the Company setting forth the terms and
conditions of such Non-Qualified Financing, to determine that the exercise price for each Warrant Share, will be the price per share in
such Non-Qualified Financing, less a <ix:nonFraction contextRef="c2" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:LesseeFinanceLeaseDiscountRate" scale="-2" unitRef="pure">20</ix:nonFraction>% discount and the shares type upon conversion of the Warrant Share shall have the same rights
and preferences as attached to the shares issued to the investors in such Non-Qualified Financing. If transactions consummated in such
closings are not on the same terms and conditions and/or involve the issuance of more than one type of Company&#8217;s securities, then, the
shares type upon conversion of the Warrant Share shall have the most favorable terms of such closing.</td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify; text-indent: -21.25pt">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_28" id="_DebtDisclosureTextBlock-c0_cont_27"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"></td><td style="width: 0.25in">3.</td><td style="text-align: justify">In the event the Company has not consummated (a Qualified Financing or an Realization Event (as defined
in the Definitive Agreement) within period of 12 months of the Effective Date of the Definitive Agreement, IBI shall have the right but
not the obligation to elect, by delivery of written notice to the Company no later than 30-days from the receipt of a written notice from
the Company, to determine that the exercise price for each Warrant Share will be based on Company value of $<ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:StockIssuedDuringPeriodValueStockDividend" scale="3" unitRef="usd">62,500</ix:nonFraction> divided by the then
fully diluted number of Company shares and the shares type upon conversion of the Warrant Share shall have the same rights of the Company&#8217;s
most senior class of shares then outstanding.</td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify; text-indent: -21.25pt">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_29" id="_DebtDisclosureTextBlock-c0_cont_28"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"></td><td style="width: 0.25in">4.</td><td style="text-align: justify">In the event of Realization Event, the exercise price for each Warrant Share will be the price per share
in such Financing, less a <ix:nonFraction contextRef="c88" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:LesseeFinanceLeaseDiscountRate" scale="-2" unitRef="pure">20</ix:nonFraction>% discount, and the shares type upon conversion of the Warrant Share shall have the Company&#8217;s Most Senior
Shares, or Ordinary Shares in case the Realization Event is an IPO.</td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_30" id="_DebtDisclosureTextBlock-c0_cont_29"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify; text-indent: 0in">Each Warrant Share
is exercisable until the earlier of (a) M&amp;A, (b) IPO, or (c) a <ix:nonNumeric contextRef="c2" format="ixt-sec:duryear" name="us-gaap:LoansHeldForSaleTerm">10</ix:nonNumeric>-years period from the issuance date and shall be in customary form
approved by IBI and shall contain standard and customary provisions.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_31" id="_DebtDisclosureTextBlock-c0_cont_30"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify; text-indent: 0in">As the exercise price
of the Warrant Share will be determined based on the occurrence of one of the aforesaid trigger events, the Warrant Share was accounted
for as a derivative financial liability. (See note 8).</p><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p></ix:continuation><div>

</div><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 149; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->22<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">BEAMR IMAGING LTD.</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 46.35pt; text-align: justify; text-indent: 0in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.65pt; text-align: left; text-indent: -5.65pt"><b>NOTE 6 - LOANS,
NET (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.65pt; text-align: left; text-indent: -5.65pt"><b>&#160;</b></p><div>

</div><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>C.</b></td><td style="text-align: justify"><b>Funding Agreement with IBI Spikes Ltd. (Cont.)</b></td></tr></table><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: 0in">&#160;</p><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_32" id="_DebtDisclosureTextBlock-c0_cont_31"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify; text-indent: 0in">Pursuant to the above,
at the Effective Date, management by assistance of third-party appraiser allocated the IBI Loan to identified components as follows:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_33" id="_DebtDisclosureTextBlock-c0_cont_32"><ix:nonNumeric contextRef="c0" escape="true" name="bmr:ScheduleOfTheMemberEffectiveDateManagementByAssistanceOfThirdpartyTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; text-align: center"><b>As of Closing Date</b></td>
    <td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;&#160;</td>
    <td>&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 88%; text-align: left">Derivative warrant liability (see Note 8)</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td>
    <td style="width: 9%; text-align: right">&#160;&#160;&#160;&#160;&#160;<ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="bmr:DerivativeWarrantLiabilityseeNote8" scale="3" unitRef="usd">78</ix:nonFraction></td>
    <td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Straight loan</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:StraightLineRent" scale="3" unitRef="usd">822</ix:nonFraction></td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Total gross consideration</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td>
    <td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="bmr:TotalGrossConsideration" scale="3" unitRef="usd">900</ix:nonFraction></td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: 0in">&#160;</p></ix:nonNumeric></ix:continuation><div>


</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_34" id="_DebtDisclosureTextBlock-c0_cont_33"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify; text-indent: 0in">Total incremental and direct debt costs of $<ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardPlanModificationIncrementalCompensationCost" scale="3" unitRef="usd">1</ix:nonFraction> and $<ix:nonFraction contextRef="c0" decimals="-6" format="ixt:num-dot-decimal" name="us-gaap:PaymentsOfLoanCosts" scale="6" unitRef="usd">12</ix:nonFraction> were allocated to Warrant Share and straight loan, respectively, based on their
relative value at the Effective Date. The portion of issuance costs allocated to Warrant Share was recognized immediately as finance expenses
in the consolidated statements of operations and comprehensive loss and the portion of issuance costs allocated to straight loan was deducted
from the principal amount.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: -21.3pt"><b>&#160;</b></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_35" id="_DebtDisclosureTextBlock-c0_cont_34"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>D.</b></td><td style="text-align: justify">The following tabular presentation reflects the reconciliation of the carrying amount of the Company&#8217;s
loans during the years ended December 31, 2022, 2021:</td></tr></table><p style="margin-top: 0; margin-bottom: 0">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_36" id="_DebtDisclosureTextBlock-c0_cont_35"><ix:nonNumeric contextRef="c0" escape="true" name="bmr:ScheduleOfPresentationReflectsTheReconciliationOfTheCarryingAmountTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="10" style="text-align: center; border-bottom: Black 1.5pt solid"><b>Year ended  December 31,</b></td>
    <td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td>
    <td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2022</td>
    <td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2021</td>
    <td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</td>
    <td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left; text-indent: -14.15pt; padding-left: 14.15pt">Opening balance</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td>
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    <td style="width: 1%; text-align: left">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td>
    <td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="bmr:ReconciliationOfTheCarryingAmount" scale="3" unitRef="usd">1,069</ix:nonFraction></td>
    <td style="width: 1%; text-align: left">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td>
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    <td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; text-indent: -14.15pt; padding-left: 14.15pt">Consideration received from PPP Note</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-55">-</div></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="bmr:ConsiderationReceivedFromPPPNote" scale="3" unitRef="usd">54</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><ix:nonFraction contextRef="c9" decimals="-3" format="ixt:num-dot-decimal" name="bmr:ConsiderationReceivedFromPPPNote" scale="3" unitRef="usd">75</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -14.15pt; padding-left: 14.15pt">Net consideration received from IBI Loan</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="bmr:NetConsiderationReceivedFromIBILoan" scale="3" unitRef="usd">887</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-56">-</div></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-57">-</div></td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; text-indent: -14.15pt; padding-left: 14.15pt">Recognition of fair value of derivative warrant liability</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">(<ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DerivativeLiabilityFairValueOfCollateral" scale="3" unitRef="usd">88</ix:nonFraction></td>
    <td style="text-align: left">)</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-58">-</div></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-59">-</div></td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -14.15pt; padding-left: 14.15pt">PPP Note forgiveness (see also Note 6B)</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-60">-</div></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">(<ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentDecreaseForgiveness" scale="3" unitRef="usd">129</ix:nonFraction></td>
    <td style="text-align: left">)</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-61">-</div></td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; text-indent: -14.15pt; padding-left: 14.15pt">Amortization of discounts relating to straight loan (see also Note 13)</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:AccretionAmortizationOfDiscountsAndPremiumsInvestments" scale="3" unitRef="usd">14</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:AccretionAmortizationOfDiscountsAndPremiumsInvestments" scale="3" unitRef="usd">14</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><ix:nonFraction contextRef="c9" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:AccretionAmortizationOfDiscountsAndPremiumsInvestments" scale="3" unitRef="usd">29</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -14.15pt; padding-left: 14.15pt">Accrued interest expenses relating to straight loan (see also Note 13)</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:AccountsPayableAndAccruedLiabilitiesFairValueDisclosure" scale="3" unitRef="usd">77</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><ix:nonFraction contextRef="c3" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:AccountsPayableAndAccruedLiabilitiesFairValueDisclosure" scale="3" unitRef="usd">45</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><ix:nonFraction contextRef="c26" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:AccountsPayableAndAccruedLiabilitiesFairValueDisclosure" scale="3" unitRef="usd">91</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; text-indent: -14.15pt; padding-left: 14.15pt">Repayment of accrued interest relating to straight loan</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:RepaymentsOfDebt" scale="3" unitRef="usd">77</ix:nonFraction></td>
    <td style="text-align: left">)</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">(<ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:RepaymentsOfDebt" scale="3" unitRef="usd">45</ix:nonFraction></td>
    <td style="text-align: left">)</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">(<ix:nonFraction contextRef="c9" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:RepaymentsOfDebt" scale="3" unitRef="usd">91</ix:nonFraction></td>
    <td style="text-align: left">)</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -14.15pt; padding-left: 14.15pt">Repayment of Facility Fee relating to straight loan</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">(<ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:LoanProcessingFee" scale="3" unitRef="usd">10</ix:nonFraction></td>
    <td style="text-align: left">)</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">(<ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:LoanProcessingFee" scale="3" unitRef="usd">40</ix:nonFraction></td>
    <td style="text-align: left">)</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-62">-</div></td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; text-indent: -14.15pt; padding-left: 14.15pt">Repayment of principal relating to straight loans</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
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    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="padding-bottom: 4pt">&#160;</td>
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</div><div>

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<td style="width: 0%"></td><td style="width: 0.5in"><b>E.</b></td><td style="text-align: justify">Maturity dates of outstanding loans:</td></tr></table><p style="margin-top: 0; margin-bottom: 0">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DebtDisclosureTextBlock-c0_cont_38" id="_DebtDisclosureTextBlock-c0_cont_37"><ix:nonNumeric contextRef="c0" continuedAt="bmr_ScheduleOfMaturityDatesOfOutstandingLoanTableTextBlock-c0_cont_1" escape="true" name="bmr:ScheduleOfMaturityDatesOfOutstandingLoanTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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    <td style="text-align: justify">&#160;</td>
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December 31,</b></td>
    <td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td>
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    <td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2021</td>
    <td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
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    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td>
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    <td style="width: 1%; text-align: left">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td>
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    <td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-69">-</div></td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -14.15pt; padding-left: 14.15pt">Third year</td>
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    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-70">-</div></td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 4pt; text-indent: -14.15pt; padding-left: 14.15pt">Closing balance</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td>
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    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td>
    <td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c3" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:LongTermDebt" scale="3" unitRef="usd">508</ix:nonFraction></td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&#160;</p></ix:nonNumeric></ix:continuation><div>


</div><div>

</div><ix:continuation id="_DebtDisclosureTextBlock-c0_cont_38"><ix:continuation id="bmr_ScheduleOfMaturityDatesOfOutstandingLoanTableTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left">(*)</td><td style="text-align: justify"><ix:footnote id="ix_1_footnote" xml:lang="en-US">As described in Note 6C above, the Company is required to repay
each year a minimum amount of $<ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:RepaymentsOfSecuredDebt" scale="3" unitRef="usd">330</ix:nonFraction> with respect to Repayment Amount (principal and interest).</ix:footnote></td>
</tr></table></ix:continuation></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.65pt; text-align: left; text-indent: -5.65pt"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.65pt; text-align: left; text-indent: -5.65pt"></p><div>

</div><!-- Field: Page; Sequence: 150; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->23<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.65pt; text-align: left; text-indent: -5.65pt"><b>&#160;</b></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">BEAMR IMAGING LTD.</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-weight: normal">&#160;</span></p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_AccountsPayableAccruedLiabilitiesAndOtherLiabilitiesDisclosureCurrentTextBlock-c0_cont_1" escape="true" name="us-gaap:AccountsPayableAccruedLiabilitiesAndOtherLiabilitiesDisclosureCurrentTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 63.8pt; text-align: left; text-indent: -63.8pt"><b>NOTE 7 - OTHER
CURRENT LIABILITIES</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 63.8pt; text-align: left; text-indent: -63.8pt"><b>&#160;</b></p></ix:nonNumeric><div>

</div><div>

</div><ix:continuation continuedAt="_AccountsPayableAccruedLiabilitiesAndOtherLiabilitiesDisclosureCurrentTextBlock-c0_cont_2" id="_AccountsPayableAccruedLiabilitiesAndOtherLiabilitiesDisclosureCurrentTextBlock-c0_cont_1"><ix:nonNumeric contextRef="c0" continuedAt="_OtherCurrentLiabilitiesTableTextBlock-c0_cont_1" escape="true" name="us-gaap:OtherCurrentLiabilitiesTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="padding-bottom: 1.5pt; text-align: justify">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td colspan="6" style="border-bottom: Black 1.5pt solid; text-align: center"><b>As of <br/>
December 31,</b></td>
    <td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td>
    <td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2022</td>
    <td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2021</td>
    <td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 76%; text-align: left; text-indent: -14.15pt; padding-left: 14.15pt">Employees and payroll accruals</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td>
    <td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:EmployeeRelatedLiabilitiesCurrent" scale="3" unitRef="usd">298</ix:nonFraction></td>
    <td style="width: 1%; text-align: left">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td>
    <td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c3" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:EmployeeRelatedLiabilitiesCurrent" scale="3" unitRef="usd">341</ix:nonFraction></td>
    <td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; text-indent: -14.15pt; padding-left: 14.15pt">Accrued expenses (*)</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" id="ix_2_fact" name="us-gaap:AccountsPayableAndAccruedLiabilitiesCurrent" scale="3" unitRef="usd">85</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><ix:nonFraction contextRef="c3" decimals="-3" format="ixt:num-dot-decimal" id="ix_3_fact" name="us-gaap:AccountsPayableAndAccruedLiabilitiesCurrent" scale="3" unitRef="usd">126</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -14.15pt; padding-left: 14.15pt">Government authorities</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="bmr:GovernmentAuthorities" scale="3" unitRef="usd">42</ix:nonFraction></td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c3" decimals="-3" format="ixt:num-dot-decimal" name="bmr:GovernmentAuthorities" scale="3" unitRef="usd">33</ix:nonFraction></td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 4pt; text-indent: -14.15pt; padding-left: 14.15pt">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td>
    <td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:OtherLiabilitiesCurrent" scale="3" unitRef="usd">425</ix:nonFraction></td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td>
    <td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c3" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:OtherLiabilitiesCurrent" scale="3" unitRef="usd">500</ix:nonFraction></td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&#160;</p></ix:nonNumeric></ix:continuation><div>


</div><div>

</div><ix:continuation id="_AccountsPayableAccruedLiabilitiesAndOtherLiabilitiesDisclosureCurrentTextBlock-c0_cont_2"><ix:continuation id="_OtherCurrentLiabilitiesTableTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left">(*)</td><td style="text-align: justify"><ix:footnote id="ix_2_footnote" xml:lang="en-US">Including accrued interest relating to straight loan amounted
to $<ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DepositLiabilitiesAccruedInterest" scale="3" unitRef="usd">11</ix:nonFraction> as of December 31, 2022. See also Note 13.</ix:footnote></td>
</tr></table></ix:continuation></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: -21.3pt">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.65pt; text-align: left; text-indent: -5.65pt"><b>NOTE 8 - DERIVATIVE
WARRANTS LIABILITIES</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.65pt; text-align: left; text-indent: -5.65pt"><b>&#160;</b></p></ix:nonNumeric><div>

</div><div>

</div><ix:continuation continuedAt="_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock-c0_cont_2" id="_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">The following tabular presentation
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</div><div>

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    <td style="width: 1%">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td>
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</div><div>

</div><ix:continuation continuedAt="_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock-c0_cont_4" id="_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">The fair values of the 2021
Warrant and the Warrant Share were determined by the Company&#8217;s management with the assistance of an independent valuation firm by using
the Hybrid Method by combining the OPM and an IPO scenario. Because there has been no public market for the Ordinary Shares, the Company&#8217;s
management has determined fair value of the Ordinary Shares at the time of grant by considering several objective and subjective factors
including data from other comparable companies, the lack of liquidity of share capital and general and industry specific economic outlook,
amongst other factors. The fair value of the underlying Ordinary Shares shall be determined by management until such time as the Ordinary
Shares are listed on an established stock exchange, national market system or other quotation system.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation id="_DerivativeInstrumentsAndHedgingActivitiesDisclosureTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">Through December 31, 2022, the
estimated fair values of derivative liability for the 2021 Warrant and Warrant Share have not changed significantly and the 2021 Warrant
and Warrant Share have not been exercised.</p></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"></p><div>

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    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">BEAMR IMAGING LTD.</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.65pt; text-align: left; text-indent: -5.65pt"><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_InvestmentHoldingsTextBlock-c0_cont_1" escape="true" name="us-gaap:InvestmentHoldingsTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.65pt; text-align: left; text-indent: -5.65pt"><b>NOTE 9 - CONVERTIBLE
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</div><div>

</div><ix:continuation continuedAt="_InvestmentHoldingsTextBlock-c0_cont_2" id="_InvestmentHoldingsTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">On August 25, 2021 and August
6, 2019, the Company entered into separate Advance Investment Agreements (the &#8220;AIA&#8221;) with several current shareholders (the
&#8220;2021 AIA Investors&#8221;, &#8220;2019 AIA Investors&#8221; and together the &#8220;AIA Investors&#8221;) under which the Company
raised an amount of $<ix:nonFraction contextRef="c89" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentFaceAmount" scale="3" unitRef="usd">560</ix:nonFraction> and $<ix:nonFraction contextRef="c90" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentFaceAmount" scale="3" unitRef="usd">3,097</ix:nonFraction>, respectively, (together the &#8220;AIA Investment Amounts&#8221;) which is not interest bearing but
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</div><div>

</div><ix:continuation continuedAt="_InvestmentHoldingsTextBlock-c0_cont_3" id="_InvestmentHoldingsTextBlock-c0_cont_2"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.25in">1.</td><td style="text-align: justify">In the event of a consummation by the Company of a transaction or series of related transactions in which
the Company issues preferred shares for an aggregate investment of at least $<ix:nonFraction contextRef="c91" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:EquityMethodInvestmentAggregateCost" scale="3" unitRef="usd">10,000</ix:nonFraction> (including the AIA Investment Amounts and any additional
amount provided to the Company under any additional AIA Agreement(s)) (the &#8220;AIA Qualifying Financing&#8221;), the AIA Investment
Amounts shall automatically be converted immediately prior to the consummation of such Qualified Financing into such number of preferred
shares (or a sub-class thereof) issued in such Qualified Financing (the &#8220;Next Round Shares&#8221;), as is obtained by dividing the
AIA Investment Amounts by a price per share which shall reflect a <ix:nonFraction contextRef="c92" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentRedemptionPricePercentage" scale="-2" unitRef="pure">20</ix:nonFraction>% discount off the lowest price per share paid in the AIA Qualified
Financing.</td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: -21.3pt">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_InvestmentHoldingsTextBlock-c0_cont_4" id="_InvestmentHoldingsTextBlock-c0_cont_3"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.25in">2.</td><td style="text-align: justify">In the event of a consummation by the Company of a transaction or series of related transactions in which
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and any additional amount provided to the Company under any additional AIA Agreement(s)), or which for any other reason would not be deemed
as a AIA Qualified Financing (the &#8220;AIA Non-Qualified Financing&#8221;), then each time when the Company consummates such Non-Qualified
Financing, the AIA Investors shall have the right (but not the obligation) to elect to be converted immediately prior to the consummation
of such Non-Qualified Financing the AIA Investment Amounts into the shares and/or securities issued and sold at the closing of such Non-Qualified
Financing in accordance with <ix:nonFraction contextRef="c94" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentRedemptionPricePercentage" scale="-2" unitRef="pure">20</ix:nonFraction>% discount off the price per share paid in the Non-Qualified Financing.</td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: -21.3pt">&#160;</p></ix:continuation><div>

</div><div>

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<td style="width: 0%"></td><td style="width: 0.25in">3.</td><td style="text-align: justify">In the event that the Company has not consummated a AIA Qualified Financing or an Exit Event (as defined
below) and the AIA Investment Amounts or any portion thereof has not been converted in accordance with the terms of the AIA Agreements
by August 26, 2022, then, the 2021 AIA Investors shall have the right (but not the obligation) to elect, by delivery of written notice
to the Company no later than 30 days from the receipt of a written notice from the Company, to convert their AIA Investment Amount into
such number of shares of the Company of the most senior class then outstanding (the &#8220;Most Senior Shares&#8221;), equal to the quotient
received by dividing their AIA Investment Amount by a price per share reflecting a pre-money valuation of the Company (determined on a
fully diluted basis as of the date of the conversion) of $<ix:nonFraction contextRef="c94" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DebtConversionConvertedInstrumentAmount1" scale="3" unitRef="usd">62,500</ix:nonFraction> (&#8220;AIA Target Valuation&#8221;).</td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: -21.3pt">&#160;</p></ix:continuation><div>

</div><div>

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<td style="width: 0%"></td><td style="width: 0.25in">4.</td><td style="text-align: justify">In the event of the consummation of an Acquisition or an Asset Transfer (as defined in the Company&#8217;s Articles
of Association), each, an &#8220;Exit Event&#8221;, then immediately prior to the closing of such Acquisition or Asset Transfer, the AIA
Investors shall either elect, at its discretion, to (i) convert the AIA Investment Amounts into such number of Most Senior Shares, as
is obtained by dividing the AIA Investment Amounts by the quotient obtained by dividing (A) the AIA Target Valuation by (B) the issued
and outstanding share capital of the Company, on a fully diluted basis, as of immediately prior to the closing of the Acquisition or Asset
Transfer, as applicable, excluding any shares to be issued under the AIA Agreement); or (ii) receive, prior and in preference to payment
in respect of other Company securities, a redemption payment equal to <ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:DebtInstrumentRedemptionPricePercentageOfPrincipalAmountRedeemed" scale="-2" unitRef="pure">200</ix:nonFraction>% of the AIA Investment Amounts.</td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: -21.3pt">&#160;</p></ix:continuation><div>

</div><div>

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</div><div>

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for the repayment of the investment through shares, subject to the scenarios set out above, the AIA Agreements provide that upon the occurrence
of certain bankruptcy related events, the Company will be required to pay the AIA Investors in cash the amount of their original investment.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

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AIA, the Company entered into a subordination agreement under which the AIA Investors agreed that all of the Company&#8217;s indebtedness
and obligations to the AIA Investors pursuant to the AIA is subordinated to all of the Company&#8217;s indebtedness and obligations to
SVB under the Loan Agreement. See also Note 6A.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

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on the characteristics of the convertible advance investments (and its embedded derivatives), the Company elected to measure this liability
in its entirety, at its fair value (the &#8220;Fair Value Option&#8221;) in accordance with ASC 825-10, &#8220;Financial Instruments&#8221;
due to the existence of a certain redemption option and the potential requirement to recognize contingent BCF. Measurement of the fair
value of the convertible advance investments was classified as level 3 of the fair value hierarchy, using the scenario method.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>




</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"></p><div>

</div><!-- Field: Page; Sequence: 152; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->25<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">BEAMR IMAGING LTD.</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.65pt; text-align: left; text-indent: -5.65pt"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.65pt; text-align: left; text-indent: -5.65pt"><b>NOTE 9 - CONVERTIBLE
ADVANCE INVESTMENT (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 5.65pt; text-align: left; text-indent: -5.65pt">&#160;</p><div>

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reflects the reconciliation of the carrying amount of the convertible advance investment during the years ended December 31, 2022, 2021
and 2020:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation id="_InvestmentHoldingsTextBlock-c0_cont_11"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:InvestmentHoldingsScheduleOfInvestmentsTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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    <td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td>
    <td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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    <td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 14.2pt; text-align: justify; text-indent: -14.2pt">&#160;</p><div>

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</div><div>

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</div><div>

</div><ix:continuation continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_3" id="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_2"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"></td><td style="width: 0.25in">1.</td><td style="text-align: justify">On July 29, 2020, the Company entered into a lease agreement for premises with an unrelated party over
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</div><div>

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</div><div>

</div><ix:continuation continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_6" id="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_5"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
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</div><div>

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</div><div>

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</div><ix:continuation continuedAt="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_10" id="_CommitmentsAndContingenciesDisclosureTextBlock-c0_cont_9"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify; text-indent: 0in">The payments above are associated with short-term operating leases of premises with a lease term of twelve months or less. As the Company
elected the short-term recognition exemption (see also Note 2I), such leases are out of scope of ASC 842 &#8220;Leases&#8221;. Consequently,
these payments are recognized on a straight-line basis as an operating expense in the Consolidated Statements of Operations and Comprehensive
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</div><div>

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</div><div>

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<td style="width: 0%"></td><td style="width: 0.5in">B.</td><td style="text-align: justify">Grant of share options upon completion of an IPO transaction</td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: 0in">&#160;</p></ix:continuation><div>

</div><div>

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the same number of Ordinary Shares at an exercise price that will be equal to the listing price per share over a vesting schedule on a
monthly basis over 36-months period commencing the listing date. However, as the grant is contingent upon a performance condition (successful
IPO) which is out of the Company&#8217;s control, the related expenses will be recognized when the IPO will occur. Accordingly, compensation
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: center">&#160;</p><div>




</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 153; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->26<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">BEAMR IMAGING LTD.</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><b>&#160;</b></p><div>

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(DEFICIT)</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in">&#160;</p></ix:nonNumeric><div>

</div><div>

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</div><div>

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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Series Convertible Ordinary 2 Shares (B)</td><td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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  <tr style="vertical-align: bottom; background-color: White">
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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</div><div>

</div><ix:continuation continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_4" id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_3"><ix:continuation continuedAt="_ScheduleOfStockholdersEquityTableTextBlock-c0_cont_2" id="_ScheduleOfStockholdersEquityTableTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left">A.</td><td style="text-align: justify"><ix:footnote id="ix_3_footnote" xml:lang="en-US">The Ordinary Shares confer upon the holders thereof all rights
accruing to a shareholder of the Company, as provided in the Company&#8217;s Articles of Association (the &#8220;Articles&#8221;), including,
without limitation, the right to receive notices of, and to attend, all general meetings, the right to vote thereat with each Ordinary
Share held entitling the holder thereof to one vote at all general meetings (and written actions in lieu of meetings), the right to participate
and share on a per share basis, in any distribution and in distribution of surplus assets and funds of the Company in the event of a
liquidation event, and certain other rights as may be expressly provided for herein or under the Companies Law. All Ordinary Shares rank
pari passu amongst themselves for all intents and purposes, including, without limitation, in relation to the amounts of capital paid
or credited as paid on their nominal value. The voting, dividend and liquidation rights of the holders of Ordinary Shares are subject
to and qualified by the rights, powers and preferences of the holders of the Convertible Preferred Shares and the Convertible Ordinary
1 and 2 Shares as set below.</ix:footnote></td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: -21.3pt">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_5" id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_4"><ix:continuation continuedAt="_ScheduleOfStockholdersEquityTableTextBlock-c0_cont_3" id="_ScheduleOfStockholdersEquityTableTextBlock-c0_cont_2"><table cellpadding="0" cellspacing="0" style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; width: 100%"><tr style="vertical-align: top; text-align: justify">
<td style="width: 0in"></td><td style="width: 0.25in; text-align: left">B.</td><td style="text-align: justify">The Convertible Ordinary 1 Shares, Convertible Ordinary 2 Shares,
Convertible B Preferred Shares, Convertible B1 Preferred Shares and the Convertible C Preferred Shares (referring together herein as
&#8220;Convertible Preferred Shares&#8221;) shall confer upon the holders thereof all rights conferred upon the holders of Ordinary Shares
in the Company. In addition, the holders of Convertible Preferred Shares shall have rights, preferences and privileges, as follows:</td>
</tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_6" id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_5"><ix:continuation continuedAt="_ScheduleOfStockholdersEquityTableTextBlock-c0_cont_4" id="_ScheduleOfStockholdersEquityTableTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">Liquidation preference&#160;- Based
on preference of distribution, in the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary,
change in control or distribution, the Company&#8217;s assets or surplus funds legally available for distribution shall be distributed to the
holders of Convertible Preferred Shares pursuant to which each Convertible Preferred Share will be entitled to receive <ix:nonFraction contextRef="c2" decimals="1" format="ixt:num-dot-decimal" name="us-gaap:PreferredStockConvertibleConversionPrice" scale="0" unitRef="usdPershares">1.2</ix:nonFraction> of the applicable
original issue price paid by each Convertible Preferred shareholder plus all accrued but unpaid dividends and less the aggregate of all
amounts previously paid in preference. The aggregate liquidation preference of all shares with preferences over Ordinary Shares as of
December&#160;31, 2022 and 2021 amounted to $<ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:PreferredStockAmountOfPreferredDividendsInArrears" scale="3" unitRef="usd"><ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:PreferredStockAmountOfPreferredDividendsInArrears" scale="3" unitRef="usd">33,785</ix:nonFraction></ix:nonFraction>. None of the foregoing dollar amounts include dividends, as the Board of Directors
has not declared any dividends since inception.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_7" id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_6"><ix:continuation continuedAt="_ScheduleOfStockholdersEquityTableTextBlock-c0_cont_5" id="_ScheduleOfStockholdersEquityTableTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">The Convertible Preferred Shares have
been classified as part of the permanent equity of the Company since upon occurrence of liquidation event all holder of the Ordinary Shares
and the Convertible Preferred Shares will be entitled to receive the same form of consideration.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_8" id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_7"><ix:continuation continuedAt="_ScheduleOfStockholdersEquityTableTextBlock-c0_cont_6" id="_ScheduleOfStockholdersEquityTableTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">Voting&#160;- Each shareholder shall
have one vote for each Ordinary Share held by such shareholder of record or such Ordinary Shares as would be held by each holder of Convertible
Preferred Share if all Convertible Preferred Shares were converted to Ordinary Shares at the then effective conversion rate, on every
resolution.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_9" id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_8"><ix:continuation continuedAt="_ScheduleOfStockholdersEquityTableTextBlock-c0_cont_7" id="_ScheduleOfStockholdersEquityTableTextBlock-c0_cont_6"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">Conversion&#160;- Each holder of a
Convertible Preferred Share shall be entitled to convert, at any time and from time to time, and without payment of additional consideration,
into such number of fully paid and non-assessable shares of Ordinary Share in ratio as determined in the Articles, which initially shall
be one to one. The conversion price initially shall be the applicable Original Issue Price subject to adjustments as describe in the Articles.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_10" id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_9"><ix:continuation continuedAt="_ScheduleOfStockholdersEquityTableTextBlock-c0_cont_8" id="_ScheduleOfStockholdersEquityTableTextBlock-c0_cont_7"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.25in; text-align: justify">All outstanding Convertible Preferred
Shares shall automatically be converted into Ordinary Shares at the then-effective conversion rate applicable upon the earlier of (i)
closing of sale of Ordinary Shares in an initial firm-commitment underwritten public offering, with net proceeds to the Company of $<ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:ProceedsFromDebtNetOfIssuanceCosts" scale="3" unitRef="usd">50,000</ix:nonFraction>
and at an offering price per share equal to at least 5 times the Preferred C Original Issue Price (Qualified IPO) or (ii) affirmative
vote or written consent of majority shareholders of the then outstanding Convertible Preferred Shares, with respect to each series.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"><b>&#160;</b></p></ix:continuation></ix:continuation><div>

</div><div>




</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 154; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->27<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
    </div><!-- Field: /Page --><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">BEAMR IMAGING LTD.</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><b>&#160;</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><b>NOTE 11 - SHAREHOLDERS&#8217; EQUITY
(DEFICIT) (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><b>&#160;</b></p><div>

</div><ix:continuation continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_11" id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_10"><ix:continuation continuedAt="_ScheduleOfStockholdersEquityTableTextBlock-c0_cont_9" id="_ScheduleOfStockholdersEquityTableTextBlock-c0_cont_8"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in">C.</td><td style="text-align: justify">On March 14, 2022, the Company&#8217;s shareholders approved, among other matters, the following matters as
were originally approved by the Company&#8217;s Board of Directors on March&#160;1, 2022&#160;-</td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 21.3pt; text-align: justify; text-indent: -21.3pt">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_12" id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_11"><ix:continuation continuedAt="_ScheduleOfStockholdersEquityTableTextBlock-c0_cont_10" id="_ScheduleOfStockholdersEquityTableTextBlock-c0_cont_9"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"></td><td style="width: 0.25in">1.</td><td style="text-align: justify">In connection with listing of the Company&#8217;s Ordinary Shares on
Nasdaq, increase the Company&#8217;s authorized shares from <ix:nonFraction contextRef="c69" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesAuthorized" scale="0" unitRef="shares">22,000,000</ix:nonFraction> to <ix:nonFraction contextRef="c68" decimals="0" format="ixt:num-dot-decimal" name="us-gaap:ExcessStockSharesAuthorized" scale="0" unitRef="shares">222,000,000</ix:nonFraction>.</td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify; text-indent: -21.25pt">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_13" id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_12"><ix:continuation continuedAt="_ScheduleOfStockholdersEquityTableTextBlock-c0_cont_11" id="_ScheduleOfStockholdersEquityTableTextBlock-c0_cont_10"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0.5in"></td><td style="width: 0.25in">2.</td><td style="text-align: justify">Approve and ratify (i) <ix:nonNumeric contextRef="c0" name="bmr:VoluntaryConversionDescription">subject to the listing of the Company&#8217;s Ordinary Shares on Nasdaq, the voluntary
conversion of all the Ordinary 1, Ordinary 2, Preferred B, Preferred B-1 and Preferred B shares of the Company into Ordinary Shares (collectively,
the &#8220;Voluntary Conversion&#8221;), (ii) subject to the listing of the Company&#8217;s Ordinary Shares on Nasdaq, a reverse share
split of all outstanding Ordinary Shares of the Company at a ratio of 5:1 so that each 5 ordinary shares nominal value NIS 0.01 each shall
be consolidated into 1 Ordinary Share each, and (the &#8220;Reverse Share Split&#8221;) (iii) subject to the listing of the Company&#8217;s
Ordinary Shares on Nasdaq, the recapitalization and redistribution of the entire share capital of the Company (the &#8220;Recapitalization&#8221;),
so that following such Voluntary Conversion and Recapitalization, the share capital of the Company shall consist of NIS 11,100,000 divided
into 222,000,000 Ordinary Shares each of which 9,790,040 are issued and outstanding (post the aforesaid Reverse Share Split).</ix:nonNumeric></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify; text-indent: -21.25pt">&#160;</p></ix:continuation></ix:continuation><div>

</div><div>

</div><ix:continuation id="_StockholdersEquityNoteDisclosureTextBlock-c0_cont_13"><ix:continuation id="_ScheduleOfStockholdersEquityTableTextBlock-c0_cont_11"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.75in; text-align: justify">For accounting purposes, following
the completion of the IPO transaction as noted in Note 17 below, all shares, options and warrants to purchase Ordinary Shares and loss
per share amounts have been adjusted to give retroactive effect to the Reverse Share Split for all periods presented in these consolidated
financial statements. Any fractional shares resulting from the Reverse Share Split were rounded up to the nearest whole share.</p></ix:continuation></ix:continuation><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 42.55pt; text-align: justify">&#160;</p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_1" escape="true" name="us-gaap:DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><b>NOTE 12 - SHARE OPTIONS</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><b>&#160;</b></p></ix:nonNumeric><div>

</div><div>

</div><ix:continuation continuedAt="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_2" id="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Share option plan:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_3" id="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On January 11, 2015, the Company&#8217;s Board
of Directors approved and adopted the 2015 Share Incentive Plan (the &#8220;Plan&#8221;), pursuant to which the Company&#8217;s Board
of Directors may award share options to purchase the Company&#8217;s Ordinary Shares as well as restricted shares, RSUs and other share-based
awards to designated participants. Subject to the terms and conditions of the Plan, the Company&#8217;s Board of Directors has full authority
in its discretion, from time to time and at any time, to determine (i) the designate participants; (ii) the terms and provisions of the
respective award agreements, including, but not limited to, the number of share options to be granted to each optionee, the number of
shares to be covered by each share option, provisions concerning the time and the extent to which the share options may be exercised and
the nature and duration of restrictions as to the transferability or restrictions constituting substantial risk of forfeiture and to cancel
or suspend awards, as necessary; (iii) determine the fair market value of the shares covered by each award; (iv) make an election as to
the type of approved 102 Option under Israeli tax law; (v) designate the type of share options; (vi) take any measures, and to take actions,
as deemed necessary or advisable for the administration and implementation of the Plan; (vii) interpret the provisions of the Plan and
to amend from time to time the terms of the Plan.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

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share Ordinary Shares subject to adjustments set in the Plan. As of December 31, 2022, considering the effect of previously exercised
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</div><div>

</div><ix:continuation continuedAt="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_5" id="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following table presents the Company&#8217;s
share option activity for employees and members of the Board of Directors of the Company under the Plan for the years ended December 31,
2022, 2021 and 2020:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_6" id="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_5"><ix:nonNumeric contextRef="c0" continuedAt="_ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock-c0_cont_1" escape="true" name="us-gaap:ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
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    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><b>Number of<br/>
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    <td style="padding-bottom: 1.5pt; font-weight: bold"><b>&#160;</b></td>
    <td style="padding-bottom: 1.5pt"><b>&#160;</b></td>
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$</b></td>
    <td style="padding-bottom: 1.5pt"><b>&#160;</b></td>
    <td style="font-weight: bold; padding-bottom: 1.5pt"><b>&#160;</b></td>
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    <td style="padding-bottom: 1.5pt; font-weight: bold"><b>&#160;</b></td>
    <td style="font-weight: bold; padding-bottom: 1.5pt"><b>&#160;</b></td>
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    <td style="padding-bottom: 1.5pt; font-weight: bold"><b>&#160;</b></td></tr>
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    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td>
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    <td style="width: 1%; text-align: left">&#160;</td>
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    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: center">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Granted</td>
    <td>&#160;</td>
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    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
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    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Exercised</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">)</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
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    <td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-76">-</div></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
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  <tr style="vertical-align: bottom; background-color: White">
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    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
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    <td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td>
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    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
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    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: center">&#160;</td>
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    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td>
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    <td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="padding-bottom: 4pt">&#160;</td>
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    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
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    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: center">&#160;</td>
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    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td>
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    <td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:nonNumeric></ix:continuation><div>


</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 155; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->28<!-- Field: /Sequence --></p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">BEAMR IMAGING LTD.</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><b>NOTE 12 - SHARE OPTIONS (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><b>&#160;</b></p><div>

</div><ix:continuation continuedAt="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_7" id="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_6"><ix:continuation continuedAt="_ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock-c0_cont_2" id="_ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: left"><b>&#160;</b></td>
    <td style="font-weight: bold; padding-bottom: 1.5pt"><b>&#160;</b></td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><b>Number of<br/>
    Share<br/>
    Options</b></td>
    <td style="padding-bottom: 1.5pt; font-weight: bold"><b>&#160;</b></td>
    <td style="padding-bottom: 1.5pt"><b>&#160;</b></td>
    <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><b>Weighted<br/>
    Average<br/>
    Exercise<br/>
    Price<br/>
    $</b></td>
    <td style="padding-bottom: 1.5pt"><b>&#160;</b></td>
    <td style="font-weight: bold; padding-bottom: 1.5pt"><b>&#160;</b></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><b>Weighted<br/> average<br/>
    remaining<br/> contractual<br/> life (years)</b></td>
    <td style="padding-bottom: 1.5pt; font-weight: bold"><b>&#160;</b></td>
    <td style="font-weight: bold; padding-bottom: 1.5pt"><b>&#160;</b></td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><b>Intrinsic<br/> value<br/>
 $</b></td>
    <td style="padding-bottom: 1.5pt; font-weight: bold"><b>&#160;</b></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 52%; text-align: left">Outstanding as of December 31, 2020</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td>
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    <td style="width: 1%; text-align: left">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td>
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    <td style="width: 1%; text-align: left">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: center">&#160;</td>
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    <td style="width: 1%; text-align: left">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td>
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    <td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Granted</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td style="text-align: right"><ix:nonNumeric contextRef="c8" format="ixt-sec:duryear" name="bmr:WeightedAverageRemainingContractualLifeGranted">9.64</ix:nonNumeric></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Forfeited or expired</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c8" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsForfeituresAndExpirationsInPeriod" scale="0" unitRef="shares">101,520</ix:nonFraction></td>
    <td style="padding-bottom: 1.5pt; text-align: left">)</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c8" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsForfeituresAndExpirationsInPeriodWeightedAverageExercisePrice" scale="0" unitRef="usdPershares">1.80</ix:nonFraction></td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: center">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-78">-</div></td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Outstanding as of December 31, 2021</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td>
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    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td>
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    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: center">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: right"><ix:nonNumeric contextRef="c8" format="ixt-sec:duryear" name="bmr:WeightedAverageRemainingContractualLifeOutstanding">5.72</ix:nonNumeric></td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td>
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    <td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Exercisable as of December&#160;31, 2021</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c3" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableNumber" scale="0" unitRef="shares">927,988</ix:nonFraction></td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td>
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    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: center">&#160;</td>
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    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td>
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    <td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><b>&#160;</b></p></ix:continuation></ix:continuation><div>


</div><div>

</div><ix:continuation continuedAt="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_8" id="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_7"><ix:continuation id="_ScheduleOfShareBasedCompensationStockOptionsActivityTableTextBlock-c0_cont_2"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
  <tr style="vertical-align: bottom">
    <td style="text-align: left"><b>&#160;</b></td>
    <td style="font-weight: bold; padding-bottom: 1.5pt"><b>&#160;</b></td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><b>Number of<br/>
    Share<br/>
    Options</b></td>
    <td style="padding-bottom: 1.5pt; font-weight: bold"><b>&#160;</b></td>
    <td style="padding-bottom: 1.5pt"><b>&#160;</b></td>
    <td colspan="2" style="text-align: center; border-bottom: Black 1.5pt solid"><b>Weighted<br/>
    Average<br/>
    Exercise<br/>
    Price<br/>
    $</b></td>
    <td style="padding-bottom: 1.5pt"><b>&#160;</b></td>
    <td style="font-weight: bold; padding-bottom: 1.5pt"><b>&#160;</b></td>
    <td colspan="2" style="border-bottom: Black 1.5pt solid; font-weight: bold; text-align: center"><b>Weighted<br/> average<br/>
    remaining<br/> contractual<br/> life (years)</b></td>
    <td style="padding-bottom: 1.5pt; font-weight: bold"><b>&#160;</b></td>
    <td style="font-weight: bold; padding-bottom: 1.5pt"><b>&#160;</b></td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid"><b>Intrinsic<br/> value<br/>
    $</b></td>
    <td style="padding-bottom: 1.5pt; font-weight: bold"><b>&#160;</b></td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 52%; text-align: left">Outstanding as of December 31, 2021</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td>
    <td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c3" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingNumber" scale="0" unitRef="shares">1,367,168</ix:nonFraction></td>
    <td style="width: 1%; text-align: left">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td>
    <td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c3" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice" scale="0" unitRef="usdPershares">1.75</ix:nonFraction></td>
    <td style="width: 1%; text-align: left">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: center">&#160;</td>
    <td style="width: 9%; text-align: right"><ix:nonNumeric contextRef="c0" format="ixt-sec:duryear" name="us-gaap:SharebasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeOutstandingOptionsWeightedAverageRemainingContractualTerm2">5.72</ix:nonNumeric></td>
    <td style="width: 1%; text-align: left">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">&#160;</td>
    <td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c3" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingIntrinsicValue" scale="3" unitRef="usd">4,860</ix:nonFraction></td>
    <td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Granted</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsGrantsInPeriodGross" scale="0" unitRef="shares">286,875</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementsByShareBasedPaymentAwardOptionsGrantsInPeriodWeightedAverageExercisePrice" scale="0" unitRef="usdPershares">1.83</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: center">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Forfeited or expired</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c0" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsForfeituresAndExpirationsInPeriod" scale="0" unitRef="shares">83,052</ix:nonFraction></td>
    <td style="padding-bottom: 1.5pt; text-align: left">)</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c0" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsForfeituresAndExpirationsInPeriodWeightedAverageExercisePrice" scale="0" unitRef="usdPershares">1.45</ix:nonFraction></td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: center">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">-</td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">&#160;</td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left">Outstanding as of December 31, 2022</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td>
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    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c2" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsOutstandingWeightedAverageExercisePrice" scale="0" unitRef="usdPershares">1.78</ix:nonFraction></td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: center">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: right"><ix:nonNumeric contextRef="c0" format="ixt-sec:duryear" name="bmr:WeightedAverageRemainingContractualLifeOutstanding">4.97</ix:nonNumeric></td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td>
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    <td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">Exercisable as of December&#160;31, 2022</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c2" decimals="INF" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsExercisableNumber" scale="0" unitRef="shares">1,048,297</ix:nonFraction></td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c2" decimals="2" format="ixt:num-dot-decimal" name="us-gaap:ShareBasedCompensationArrangementByShareBasedPaymentAwardOptionsVestedAndExpectedToVestExercisableWeightedAverageExercisePrice" scale="0" unitRef="usdPershares">1.70</ix:nonFraction></td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: center">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: right"><ix:nonNumeric contextRef="c0" format="ixt-sec:duryear" name="us-gaap:SharebasedCompensationSharesAuthorizedUnderStockOptionPlansExercisePriceRangeExercisableOptionsWeightedAverageRemainingContractualTerm2">3.2</ix:nonNumeric></td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:SharebasedCompensationArrangementBySharebasedPaymentAwardOptionsExercisableIntrinsicValue1" scale="3" unitRef="usd">1,677</ix:nonFraction></td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation></ix:continuation><div>


</div><div>

</div><ix:continuation continuedAt="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_9" id="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_8"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the deemed fair value of
the Company&#8217;s Ordinary Shares on the last day of each of the applicable reported period and the exercise price, multiplied by the number
of in-the-money share options) that would have been received by the share option holders had all share options holders exercised their
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</div><div>

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</div><div>

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</div><div>

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</div><div>

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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify"></p><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">BEAMR IMAGING LTD.</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><b>NOTE 12 &#8211; SHARE OPTIONS
(Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in">&#160;</p><div>

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</div><div>

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</div><ix:continuation continuedAt="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_17" id="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_16"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The total compensation cost related to all of
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</div><div>

</div><ix:continuation id="_DisclosureOfCompensationRelatedCostsShareBasedPaymentsTextBlock-c0_cont_17"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfCompensationCostForShareBasedPaymentArrangementsAllocationOfShareBasedCompensationCostsByPlanTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p><div>

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</div><div>

</div><ix:continuation id="bmr_FinancingExpenses-c0_cont_1"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ConvertibleDebtTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">&#160;</td>
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    <td>&#160;</td>
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    <td>&#160;</td>
    <td>&#160;</td>
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    <td>&#160;</td>
    <td>&#160;</td>
    <td colspan="2" style="text-align: right">&#160;</td>
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    <td>&#160;</td>
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    <td>&#160;</td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-81">-</div></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
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    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-82">-</div></td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:AmortizationOfFinancingCostsAndDiscounts" scale="3" unitRef="usd">40</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-83">-</div></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-84">-</div></td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">Exchange rate differences and others</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="bmr:ExchangeRateDifferencesAndOthers" scale="3" sign="-" unitRef="usd">47</ix:nonFraction></td>
    <td style="padding-bottom: 1.5pt; text-align: left">)</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="bmr:ExchangeRateDifferencesAndOthers" scale="3" unitRef="usd">38</ix:nonFraction></td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c9" decimals="-3" format="ixt:num-dot-decimal" name="bmr:ExchangeRateDifferencesAndOthers" scale="3" unitRef="usd">141</ix:nonFraction></td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="padding-left: 0.125in; text-indent: -0.125in; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td>
    <td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:OtherNonoperatingExpense" scale="3" unitRef="usd">165</ix:nonFraction></td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td>
    <td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c8" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:OtherNonoperatingExpense" scale="3" unitRef="usd">475</ix:nonFraction></td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td>
    <td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c9" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:OtherNonoperatingExpense" scale="3" unitRef="usd">697</ix:nonFraction></td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  </table></ix:nonNumeric></ix:continuation><div>





</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 157; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->30<!-- Field: /Sequence --></p></div><div>
    </div><div style="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><p style="margin: 0pt">&#160;</p></div><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">BEAMR IMAGING LTD.</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 99.8pt; text-align: left; text-indent: 8.2pt"><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:RelatedPartyTransactionsDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 63.8pt; text-align: left; text-indent: -63.8pt"><b>NOTE 14 - RELATED
PARTIES TRANSACTIONS</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 63.8pt; text-align: left; text-indent: -63.8pt"><b>&#160;</b></p></ix:nonNumeric><div>

</div><div>

</div><ix:continuation continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_2" id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_1"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The liability to related party derives from a
service agreement with the Company&#8217;s Founder under which the Company receives consulting services on recurring basis from the Founder
as Chief Executive Officer indirectly through an entity controlled by the Founder (the &#8220;Service Provider&#8221;) for total current
monthly gross amount of NIS <ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:RelatedPartyTransactionDueFromToRelatedPartyCurrent" scale="3" unitRef="ils">45</ix:nonFraction> thousand. On March 14, 2022, the Company&#8217;s shareholders approved, among other matters, to renew the service
agreement with the Founder for a period ending December 31, 2025.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_3" id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">On February 16, 2022, the Company entered into
an addendum to the aforesaid service agreement with the Service Provider under which it was agreed that (i) the term of the service agreement
with the Service Provider was extended to December 31, 2025 and (ii) the then current liability towards the Service Provider as was accrued
for services rendered under the service agreement over a period commencing January 1, 2020 through the date hereof in total nominal amount
of $<ix:nonFraction contextRef="c162" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DueToOtherRelatedPartiesClassifiedCurrent" scale="3" unitRef="usd">357</ix:nonFraction> (the &#8220;Current Liability&#8221;) will be paid in 18 equal installments (without an interest) starting on March 1, 2022 (the
&#8220;Commencement Date&#8221;). However, in the event that the Company shall not have available sufficient funds in any such payment
date from and after the Commencement Date to repay the installments of the Current Liability and/or the on-going fee owed to the Service
Provider or in the event that the Company determines that according to the following 12-months period budget that it shall not have available
sufficient funds to pay such installments and/or the on-going fee, then the Service Provider hereby agrees to postpone such payments owed
to it until the Company will have such sufficient funds. Any unpaid on-going fee payments will be added to the Current Liability.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_4" id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_3"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">Since the liability towards the Founder was considered
as free interest loan which did not represent the applicable rate of risk for the Company, the aforesaid addendum was accounted for as
a capital contribution from a controlling shareholder. Thus, the liability towards the Founder was measured at fair value based on future
cash payments discounted using an interest rate of <ix:nonFraction contextRef="c2" decimals="4" format="ixt:num-dot-decimal" name="us-gaap:InvestmentInterestRate" scale="-2" unitRef="pure">15.45</ix:nonFraction>% which represented the applicable rate of risk for the Company, as determined
by management using the assistance of third-party appraiser. As a result, the Company recorded a discount on the balance of liability
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through fiscal year for 2022). The Company will record a discount expense over the economic life of the loan based on the effective interest
rate method. As of December 31, 2022, management has updated the repayments schedule of the obligation based on its current projection
of the availability of funds. Accordingly, the obligation is expected to be repaid over the following 24-months period.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_5" id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_4"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The following tabular presentation reflects the
reconciliation of the carrying amount of the Company&#8217;s Liability to related party, net during the years ended December 31, 2022,
2021 and 2020:</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_6" id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_5"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfRegulatoryLiabilitiesTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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    <td style="text-align: justify">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="padding-bottom: 1.5pt">&#160;</td></tr>
  <tr style="vertical-align: bottom">
    <td style="text-align: justify">&#160;</td>
    <td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2022</td>
    <td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2021</td>
    <td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td>
    <td style="font-weight: bold; padding-bottom: 1.5pt">&#160;</td>
    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2020</td>
    <td style="padding-bottom: 1.5pt; font-weight: bold">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="width: 64%; text-align: left; text-indent: -14.15pt; padding-left: 14.15pt">Opening balance</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td>
    <td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c3" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:InvestmentRelatedLiabilities" scale="3" unitRef="usd">345</ix:nonFraction></td>
    <td style="width: 1%; text-align: left">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td>
    <td style="width: 9%; text-align: right"><ix:nonFraction contextRef="c26" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:InvestmentRelatedLiabilities" scale="3" unitRef="usd">168</ix:nonFraction></td>
    <td style="width: 1%; text-align: left">&#160;</td>
    <td style="width: 1%">&#160;</td>
    <td style="width: 1%; text-align: left">$</td>
    <td style="width: 9%; text-align: right"><div style="-sec-ix-hidden: hidden-fact-85">-</div></td>
    <td style="width: 1%; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; text-indent: -14.15pt; padding-left: 14.15pt">Accrued liability in respect to additional services rendered</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:OtherAccruedLiabilitiesCurrentAndNoncurrent" scale="3" unitRef="usd">115</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><ix:nonFraction contextRef="c3" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:OtherAccruedLiabilitiesCurrentAndNoncurrent" scale="3" unitRef="usd">177</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><ix:nonFraction contextRef="c26" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:OtherAccruedLiabilitiesCurrentAndNoncurrent" scale="3" unitRef="usd">168</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left; text-indent: -14.15pt; padding-left: 14.15pt">Recognition of capital contribution from a controlling shareholder</td>
    <td>&#160;</td>
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    <td style="text-align: left">)</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-86">-</div></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right"><div style="-sec-ix-hidden: hidden-fact-87">-</div></td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
    <td style="text-align: left; padding-bottom: 1.5pt; text-indent: -14.15pt; padding-left: 14.15pt">Amortization of discount relating to liability to related party</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c0" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:InvestmentIncomeAmortizationOfDiscount" scale="3" unitRef="usd">40</ix:nonFraction></td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right"><div style="-sec-ix-hidden: hidden-fact-88">-</div></td>
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</div><div>

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</div><div>

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</div><div>

</div><ix:continuation id="_RelatedPartyTransactionsDisclosureTextBlock-c0_cont_10"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">The allocation was done based on the management estimation to reflect the contribution to the related activity.</p></ix:continuation><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 158; Value: 1 --><div>
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</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">BEAMR IMAGING LTD.</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><b>&#160;</b></p><div>

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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_2" id="_IncomeTaxDisclosureTextBlock-c0_cont_1"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>A.</b></td><td style="text-align: justify">Israeli taxation:</td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.35pt; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_3" id="_IncomeTaxDisclosureTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify">Taxable income of the Company is subject
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</div><div>

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which can be offset against future taxable income for an indefinite period of time.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.35pt; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

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</div><div>

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</div><div>

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<td style="width: 0.5in"></td><td style="width: 0.25in">1.</td><td style="text-align: justify">Beamr Inc. is taxed under United States federal and state tax rules. Income tax is calculated based on
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</div><div>

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</div><div>

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<td style="width: 0.5in"></td><td style="width: 0.25in">2.</td><td style="text-align: justify">Beamr Imaging RU is taxed under the Russian tax code at the rate of 0% (Clause 1.15 of Article 284 of
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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_10" id="_IncomeTaxDisclosureTextBlock-c0_cont_9"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.75in; text-align: justify">Beamr Imaging RU have not received
final tax assessments for the tax years ended December 31, 2020 through 2022.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 46.35pt; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_11" id="_IncomeTaxDisclosureTextBlock-c0_cont_10"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>C.</b></td><td style="text-align: justify">Taxes on income are comprised from taxes incurred as result of (i) withholding tax deducted at source
in accordance with U.S. - Israel tax treaty related to selling of software and (ii) implementation of the intercompany agreement between
the Company and&#160;Beamr Inc. for conducting reseller services and implementation of the intercompany agreement between the Company
and Beamr Imaging RU for conducting research and development services on behalf of the Company (see also Note 1B).</td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.35pt; text-align: justify; text-indent: -28.35pt"><b>&#160;</b></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_12" id="_IncomeTaxDisclosureTextBlock-c0_cont_11"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>D.</b></td><td style="text-align: justify">Loss (income) before taxes on income consists of the following:</td></tr></table><p style="margin-top: 0; margin-bottom: 0">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_13" id="_IncomeTaxDisclosureTextBlock-c0_cont_12"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfComponentsOfIncomeTaxExpenseBenefitTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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  <tr style="vertical-align: bottom">
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    <td colspan="2" style="font-weight: bold; text-align: center; border-bottom: Black 1.5pt solid">2022</td>
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    <td style="padding-bottom: 4pt">&#160;</td>
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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_14" id="_IncomeTaxDisclosureTextBlock-c0_cont_13"><table cellpadding="0" cellspacing="0" style="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><tr style="vertical-align: top">
<td style="width: 0%"></td><td style="width: 0.5in"><b>E.</b></td><td style="text-align: justify">Deferred income taxes reflect the net tax effects of net operating loss and temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant
components of the Company&#8217;s deferred tax assets are as follows:</td></tr></table><p style="margin-top: 0; margin-bottom: 0">&#160;</p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_15" id="_IncomeTaxDisclosureTextBlock-c0_cont_14"><ix:nonNumeric contextRef="c0" escape="true" name="us-gaap:ScheduleOfDeferredTaxAssetsAndLiabilitiesTableTextBlock"><table cellpadding="0" cellspacing="0" style="border-collapse: collapse; width: 100%; font: 10pt Times New Roman, Times, Serif">
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    <td style="width: 1%">&#160;</td>
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    <td style="text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DeferredTaxAssetsInProcessResearchAndDevelopment" scale="3" unitRef="usd">438</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
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    <td style="text-align: right"><ix:nonFraction contextRef="c3" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DeferredTaxAssetsInProcessResearchAndDevelopment" scale="3" unitRef="usd">588</ix:nonFraction></td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="padding-bottom: 1.5pt">&#160;</td>
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    <td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DeferredTaxAssetsTaxDeferredExpenseReservesAndAccrualsAccruedLiabilities" scale="3" unitRef="usd">48</ix:nonFraction></td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right"><ix:nonFraction contextRef="c3" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DeferredTaxAssetsTaxDeferredExpenseReservesAndAccrualsAccruedLiabilities" scale="3" unitRef="usd">62</ix:nonFraction></td>
    <td style="padding-bottom: 1.5pt; text-align: left">&#160;</td></tr>
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    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DeferredTaxAssetsGross" scale="3" unitRef="usd">6,829</ix:nonFraction></td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: right"><ix:nonFraction contextRef="c3" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DeferredTaxAssetsGross" scale="3" unitRef="usd">6,904</ix:nonFraction></td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td>&#160;</td>
    <td style="text-align: left">&#160;</td>
    <td style="text-align: right">&#160;</td>
    <td style="text-align: left">&#160;</td></tr>
  <tr style="vertical-align: bottom; background-color: White">
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    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c2" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DeferredTaxAssetsValuationAllowance" scale="3" unitRef="usd">6,829</ix:nonFraction></td>
    <td style="padding-bottom: 1.5pt; text-align: left">)</td>
    <td style="padding-bottom: 1.5pt">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: left">&#160;</td>
    <td style="border-bottom: Black 1.5pt solid; text-align: right">(<ix:nonFraction contextRef="c3" decimals="-3" format="ixt:num-dot-decimal" name="us-gaap:DeferredTaxAssetsValuationAllowance" scale="3" unitRef="usd">6,904</ix:nonFraction></td>
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  <tr style="vertical-align: bottom; background-color: rgb(204,238,255)">
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    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td>
    <td style="border-bottom: Black 4pt double; text-align: right"><div style="-sec-ix-hidden: hidden-fact-91">-</div></td>
    <td style="padding-bottom: 4pt; text-align: left">&#160;</td>
    <td style="padding-bottom: 4pt">&#160;</td>
    <td style="border-bottom: Black 4pt double; text-align: left">$</td>
    <td style="border-bottom: Black 4pt double; text-align: right"><div style="-sec-ix-hidden: hidden-fact-92">-</div></td>
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</div><div>

</div><ix:continuation continuedAt="_IncomeTaxDisclosureTextBlock-c0_cont_16" id="_IncomeTaxDisclosureTextBlock-c0_cont_15"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.35pt; text-align: justify">In assessing the realization of deferred
tax assets, management considers whether it is more likely than not that all or some portion of the deferred tax assets will not be realized.
The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which
temporary differences are deductible and net operating losses are utilized. Based on consideration of these factors, the Company recorded
a full valuation allowance as of December 31, 2022 and 2021.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.35pt; text-align: justify; text-indent: -28.35pt"><b>&#160;</b></p></ix:continuation><div>

</div><div>

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<td style="width: 0"></td><td style="width: 28.35pt"><b>F.</b></td><td style="text-align: justify">During the years ended December 31, 2022, 2021 and 2020, the main reconciling item between the statutory
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of valuation allowance in respect of deferred taxes relating to accumulated net operating losses carried forward and other permanent and
temporary differences due to the uncertainty of the realization of such deferred taxes and withholding taxes that were deducted by the
Company&#8217;s customers.</td></tr></table></ix:continuation><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center"></p><div>

</div><!-- Field: Page; Sequence: 159; Value: 1 --><div>
    </div><div style="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1.5pt solid"><p style="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt">F-<!-- Field: Sequence; Type: Arabic; Name: PageNo -->32<!-- Field: /Sequence --></p></div><div>
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    </div><!-- Field: /Page --><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">BEAMR IMAGING LTD.</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">&#160;</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 63.8pt; text-align: left; text-indent: -63.8pt"><b>&#160;</b></p><div>

</div><ix:nonNumeric contextRef="c0" continuedAt="_SegmentReportingDisclosureTextBlock-c0_cont_1" escape="true" name="us-gaap:SegmentReportingDisclosureTextBlock"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in"><b>NOTE 16 - SEGMENT GEOGRAPHICAL
INFORMATION AND MAJOR CUSTOMERS</b></p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left; text-indent: 0in">&#160;</p></ix:nonNumeric><div>

</div><div>

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<td style="width: 0%"></td><td style="width: 0.5in"><b>A.</b></td><td style="text-align: justify"><b>General information</b></td></tr></table><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.35pt; text-align: justify; text-indent: -28.35pt"><b>&#160;</b></p></ix:continuation><div>

</div><div>

</div><ix:continuation continuedAt="_SegmentReportingDisclosureTextBlock-c0_cont_3" id="_SegmentReportingDisclosureTextBlock-c0_cont_2"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify">Since inception date, the operation
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a single reporting unit. This activity also represents the reportable segment of the Group.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.35pt; text-align: justify">&#160;</p></ix:continuation><div>

</div><div>

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<td style="width: 0%"></td><td style="width: 0.5in"><b>B.</b></td><td style="text-align: justify"><b>Revenues by geographic region are as follows:</b></td></tr></table><p style="margin-top: 0; margin-bottom: 0">&#160;</p></ix:continuation><div>

</div><div>

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</div><div>

</div><ix:continuation continuedAt="_SegmentReportingDisclosureTextBlock-c0_cont_6" id="_SegmentReportingDisclosureTextBlock-c0_cont_5"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify">Revenues were attributed to countries
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</div><div>

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</div><div>

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</div><div>

</div><ix:continuation continuedAt="_SegmentReportingDisclosureTextBlock-c0_cont_9" id="_SegmentReportingDisclosureTextBlock-c0_cont_8"><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0pt 0pt 0.5in; text-align: justify">Such balance is comprised of property
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</div><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.35pt; text-align: justify"></p><div>

</div><!-- Field: Page; Sequence: 160; Value: 1 --><div>
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</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>&#160;</b></p><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">BEAMR IMAGING LTD.</p><div>

</div><p style="font: bold 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><span style="font-family: Times New Roman, Times, Serif; font-size: 10pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center"><b>NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt; text-align: center">(U.S. dollars in
thousands except share and per share amounts)</p><div>


</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.35pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 6pt">&#160;</span></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-right: 0; margin-bottom: 0pt; text-align: left"><b>NOTE 16 - SEGMENT GEOGRAPHICAL
INFORMATION AND MAJOR CUSTOMERS (Cont.)</b></p><div>

</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 28.35pt; text-align: justify"><span style="font-family: Times New Roman, Times, Serif; font-size: 6pt">&#160;</span></p><div>

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</div><div>

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to be issued (April 17, 2023). Based upon this review, the Company did not identify any other subsequent events that would have required
adjustment or disclosure in the financial statements except as disclosed below.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif; font-size: 6pt">&#160;</span></p></ix:continuation><div>

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a period of 5-years commencing August 26, 2023 and (ii) a 45-day option to purchase up to an additional 292,500 ordinary shares at the
public offering price less discounts, to cover over-allotments.</ix:nonNumeric> The over-allotment option was not exercised and has expired as of the
date of filing of these consolidated financial statements.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif; font-size: 6pt">&#160;</span></p></ix:continuation><div>

</div><div>

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on the Nasdaq Capital Market under the ticker symbol &#8220;BMR&#8221; on February 28, 2023. The Company&#8217;s IPO closed on March 2,
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the completion of the above IPO transaction, all shares, options and warrants to purchase Ordinary Shares and loss per share amounts have
been adjusted to give retroactive effect to the Reverse Share Split for all periods presented in these consolidated financial statements.
Any fractional shares resulting from the Reverse Share Split were rounded up to the nearest whole share.</p><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif; font-size: 6pt">&#160;</span></p></ix:continuation><div>

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</div><div>

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</div><p style="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify; text-indent: 0in"><span style="font-family: Times New Roman, Times, Serif; font-size: 6pt">&#160;</span></p><div>

</div><p style="text-align: center; margin-top: 0; margin-bottom: 0">F-34</p><div>

</div><p style="margin: 0"></p><div>

</div><!-- Field: Rule-Page --><div style="margin-top: 0pt; margin-bottom: 0pt; width: 100%"><div style="font-size: 1pt; border-top: Black 1.5pt solid">&#160;</div></div><!-- Field: /Rule-Page --><div>

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<ix:footnote id="ix_4_footnote" xml:lang="en-US">The Convertible Ordinary 1 Shares, Convertible Ordinary 2 Shares, Convertible B Preferred Shares, Convertible B1 Preferred Shares and the Convertible C Preferred Shares (referring together herein as &#8220;Convertible Preferred Shares&#8221;) shall confer upon the holders thereof all rights conferred upon the holders of Ordinary Shares in the Company. In addition, the holders of Convertible Preferred Shares shall have rights, preferences and privileges, as follows:

Liquidation preference - Based on preference of distribution, in the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary, change in control or distribution, the Company&#8217;s assets or surplus funds legally available for distribution shall be distributed to the holders of Convertible Preferred Shares pursuant to which each Convertible Preferred Share will be entitled to receive 1.2 of the applicable original issue price paid by each Convertible Preferred shareholder plus all accrued but unpaid dividends and less the aggregate of all amounts previously paid in preference. The aggregate liquidation preference of all shares with preferences over Ordinary Shares as of December 31, 2022 and 2021 amounted to $33,785. None of the foregoing dollar amounts include dividends, as the Board of Directors has not declared any dividends since inception.

The Convertible Preferred Shares have been classified as part of the permanent equity of the Company since upon occurrence of liquidation event all holder of the Ordinary Shares and the Convertible Preferred Shares will be entitled to receive the same form of consideration.

Voting - Each shareholder shall have one vote for each Ordinary Share held by such shareholder of record or such Ordinary Shares as would be held by each holder of Convertible Preferred Share if all Convertible Preferred Shares were converted to Ordinary Shares at the then effective conversion rate, on every resolution.

Conversion - Each holder of a Convertible Preferred Share shall be entitled to convert, at any time and from time to time, and without payment of additional consideration, into such number of fully paid and non-assessable shares of Ordinary Share in ratio as determined in the Articles, which initially shall be one to one. The conversion price initially shall be the applicable Original Issue Price subject to adjustments as describe in the Articles.

All outstanding Convertible Preferred Shares shall automatically be converted into Ordinary Shares at the then-effective conversion rate applicable upon the earlier of (i) closing of sale of Ordinary Shares in an initial firm-commitment underwritten public offering, with net proceeds to the Company of $50,000 and at an offering price per share equal to at least 5 times the Preferred C Original Issue Price (Qualified IPO) or (ii) affirmative vote or written consent of majority shareholders of the then outstanding Convertible Preferred Shares, with respect to each series.</ix:footnote><!--Text not found in footnote sections assigned to Schedule of composition of shareholders' equity-->
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UNITED STATES
SECURITIES AND EXCHANGE
COMMISSION
WASHINGTON, DC 20549
FORM
20-F
☐
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
,
2022
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 No.:
001-41523
Beamr Imaging Ltd.
(Exact name of registrant
as specified in its charter)
Translation of registrant's
name into English:
Not applicable
State of
Israel
10 HaManofim Street
Herzeliya
,
4672561
,
Israel
Tel: +
1-888-520-8735
(Jurisdiction of incorporation or organization)
(Address of principal executive offices)
Sharon Carmel
Chief Executive Officer
sharon@beamr.com
10 HaManofim Street
Herzeliya
,
4672561
,
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 to be registered
Trading Symbol(s)
Name of each exchange on which each
class is to be registered
Ordinary shares, par value NIS 0.05 per share
BMR
Nasdaq
Capital Market
Securities registered
or to be registered pursuant to Section 12(g) of the Act: None
Securities for which there
is a reporting obligation pursuant to Section 15(d) of the Act: None
Number of outstanding shares
of each of the issuer's classes of capital or common stock as of December 31, 2022:
10,932,896
ordinary shares.
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 Exchange Act of 1934.
Yes
☐
No
☒
Indicate
by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 during the preceding 12 months.
Yes
☒
No
☐
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth
company.
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) Exchange Act.
☒
Indicate
by check mark whether the registrant has filed a report on and 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.
Yes
☐
No
☒
TABLE OF CONTENTS
Page
INTRODUCTION
iii
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
iv
EXPLANATORY NOTE
PART I
1
ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
1
ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE
1
ITEM 3.
KEY INFORMATION
1
A.
Reserved
1
B.
Capitalization and Indebtedness
1
C.
Reasons for the Offer and Use of Proceeds
1
D.
Risk Factors
1
ITEM 4.
INFORMATION ON THE COMPANY
43
A.
History and Development of the Company
43
B.
Business Overview
44
C.
Organizational Structure
61
D.
Property, Plants and Equipment
61
ITEM 4A.
UNRESOLVED STAFF COMMENTS
61
ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
61
A.
Operating Results
66
B.
Liquidity and Capital Resources
69
C.
Research and Development, Patents and Licenses
72
D.
Trend Information
72
E.
Critical Accounting Estimates
73
ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
76
A.
Directors and Senior Management
76
B.
Compensation
79
C.
Board Practices
80
D.
Employees
95
E.
Share Ownership
95
F.
Disclosure of a registrant's action to recover erroneously awarded
    compensation
98
ITEM 7.
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
98
A.
Major Shareholders
98
B.
Related Party Transactions
101
C.
Interests of Experts and Counsel
102
ITEM 8.
FINANCIAL INFORMATION
102
A.
Consolidated Statements and Other Financial Information
102
B.
Significant Changes
103
i
ITEM 9.
THE OFFER AND LISTING
103
A.
Offer and Listing Details
103
B.
Plan of Distribution
103
C.
Markets
103
D.
Selling Shareholders
103
E.
Dilution
103
F.
Expenses of the Issue
103
ITEM 10.
ADDITIONAL INFORMATION
103
A.
Share Capital
103
B.
Articles of Association
103
C.
Material Contracts
103
D.
Exchange Controls
104
E.
Taxation
104
F.
Dividends and Paying Agents
110
G.
Statement by Experts
110
H.
Documents on Display
110
I.
Subsidiary Information
110
J.
Annual Report to Security Holders
110
ITEM 11.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
110
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
111
A.
Debt Securities
111
B.
Warrants and rights
111
C.
Other Securities
111
D.
American Depositary Shares
111
PART II
112
ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
112
ITEM 14.
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF
    PROCEEDS
112
ITEM 15.
CONTROLS AND PROCEDURES
112
ITEM 16.
[RESERVED]
112
ITEM 16A.
AUDIT COMMITTEE FINANCIAL EXPERT
112
ITEM 16B.
CODE OF ETHICS
112
ITEM 16C.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
113
ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
113
ITEM 16E.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
113
ITEM 16F.
CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT
113
ITEM 16G.
CORPORATE GOVERNANCE
113
ITEM 16H.
MINE SAFETY DISCLOSURE
115
ITEM 16I.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
115
PART III
116
ITEM 17.
FINANCIAL STATEMENTS
116
ITEM 18.
FINANCIAL STATEMENTS
116
ITEM 19.
EXHIBITS
116
SIGNATURES
117
ii
INTRODUCTION
We are an innovator of video
encoding, transcoding and optimization solutions that enable high quality, performance, and unmatched bitrate efficiency for video and
images. With our Emmy®-winning patented technology and award-winning services, we help our customers realize the potential of video
encoding and media optimization to address business-critical challenges. Our customers include tier one over-the-top, or OTT, content
distributors, video streaming platforms, and Hollywood studios who rely on our suite of products and expertise to reduce the cost and
complexity associated with storing, distributing and monetizing video and images across devices.
At the heart of our patented
optimization technology is the proprietary Beamr Quality Measure, or BQM, that is highly correlated with the human visual system. BQM
is integrated into our Content Adaptive Bitrate, or CABR, system, which maximizes quality and remove visual redundancies resulting in
a smaller file size. The BQM has excellent correlation with subjective results, confirmed in testing under ITU BT.500, an international
standard for rigorous testing of image quality. The perceptual quality preservation of CABR has been repeatedly verified using large scale
crowd-sourcing based testing sessions, as well as by industry leaders and studio "golden eyes".
We currently license three
core video and image compression products that help our customers use video and images to further their businesses in meaningful ways:
(1) a suite of video compression software encoder solutions including the Beamr 4 encoder, Beamr 4X content adaptive encoder, Beamr 5
encoder and the Beamr 5X content adaptive encoder, (2) Beamr JPEGmini photo optimization software solutions for reducing JPEG file sizes,
and (3) Beamr Silicon IP block, a hardware solution for integration into dedicated video encoding ASICs, GPUs, and application processors.
Upon listing of our ordinary
shares in our initial public offering on February 28, 2023, we effected a reverse share spit at a ratio of 1-for-5. All share numbers
in this Annual Report on Form 20-F have been retroactively adjusted and are reflected on a post-reverse share split basis.
Unless
the context requires otherwise, the terms "Beamr," "we," "us," "our," "the Company,"
and similar designations refer to Beamr Imaging Ltd. and its wholly-owned subsidiary, Beamr, Inc.. References to "ordinary
shares", "warrants" and "share capital" refer to our ordinary shares, warrants and share capital, respectively,
of Beamr.
References
to "U.S. dollars" and "$" are to currency of the United States of America, and references to "NIS"
are to New Israeli Shekels. References to "ordinary shares" are to our ordinary shares, par value NIS 0.05 per share. We report
financial information under generally accepted accounting principles in the United States of America or U.S. GAAP.
iii
CAUTIONARY NOTE REGARDING
FORWARD-LOOKING STATEMENTS
Certain
information included or incorporated by reference in this Annual Report on Form 20-F may be deemed to be "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Forward-looking statements are often
characterized by the use of forward-looking terminology such as "may," "will," "expect," "anticipate,"
"estimate," "continue," "believe," "should," "intend," "project"
or other similar words, but are not the only way these statements are identified.
These
forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies, statements
that contain projections of results of operations or of financial condition, expected capital needs and expenses, statements relating
to the research, development, completion and use of our products, and all statements (other than statements of historical facts) that
address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future.
Forward-looking
statements are not guarantees of future performance and are subject to risks and uncertainties. We have based these forward-looking statements
on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current
conditions, expected future developments and other factors they believe to be appropriate.
Important
factors that could cause actual results, developments and business decisions to differ materially from those anticipated in these forward-looking
statements include, among other things:
●
our business, development and operating goals and strategies and plans for the development of existing and new businesses, ability to implement such strategies and plans and expected time;
●
our future business development, financial condition and results of operations;
●
expected changes in our revenues, costs or expenditures;
●
our expectations regarding demand for and market acceptance of our products and services;
●
our expectations regarding our relationships with customers, business partners and strategic partners;
●
our dependence on and the success of our strategic relationships with third parties and service providers;
●
the trends in, expected growth in and market size of the global image and video storage, video streaming, and public cloud video storage industries;
●
our estimates of, and future expectations regarding, our market opportunity;
●
our ability to maintain and enhance our market position;
●
our ability to attract customers, grow our retention rates, expand usage and sell subscription plans;
●
our ability to continue to develop new technologies and/or upgrade our existing technologies;
●
our ability to ensure that our SaaS solution interoperates with a variety of software and hardware applications that are developed by third parties;
●
competitive environment and landscape and potential competitor behavior in our industry and the overall outlook in our industry;
●
our ability to maintain the security and availability of our products and solutions and to maintain privacy, data protection and cybersecurity;
iv
●
our plans and ability to obtain or protect intellectual property rights, or to obtain, maintain, protect and enforce sufficiently broad intellectual property rights therein, including extensions of patent terms where available and our ability to avoid infringing the intellectual property rights of others;
●
the need to hire additional personnel and our ability to attract, train and retain such personnel;
●
our estimates regarding expenses, future revenue, capital requirements and needs for additional financing;
●
the period over which we estimate our existing cash and cash equivalents will be sufficient to fund our future development and operating expenses and capital expenditure requirements;
●
risks related to our international operations and our ability to expand our international business operations;
●
risks related to business, political, social, economic and security conditions in Israel and Russia (including the ongoing conflict between Russia and Ukraine);
●
changes in applicable tax law, the stability of effective tax rates and adverse outcomes resulting from examination of our income or other tax returns;
●
the effects of currency exchange rate fluctuations on our results of operations;
●
risks related to unfavorable economic and market conditions and adverse developments with respect to financial institutions and associated liquidity risk;
●
any resurgence of the COVID-19 pandemic and its impact on our business and industry;
●
our ability to generate revenue and profit margin under our collaboration with third parties and anticipated contracts which is subject to certain risks; and
●
those factors referred to in "Item 3.D. Risk Factors," "Item 4. Information on the Company," and "Item 5. Operating and Financial Review and Prospects", as well as in this annual report on Form 20-F generally.
Readers
are urged to carefully review and consider the various disclosures made throughout this Annual Report on Form 20-F which are designed
to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.
You
should not put undue reliance on any forward-looking statements. Any forward-looking statements in this annual report on Form 20-F are
made as of the date hereof and are expressly qualified in their entirety by the cautionary statements included in this Annual Report.
We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by law.
In
addition, the section of this Annual Report on Form 20-F entitled "Item 4. Information on the Company" contains information
obtained from independent industry sources and other sources that we have not independently verified.
v
INDUSTRY AND MARKET DATA
Market
data and certain industry data and forecasts used throughout this Annual Report on Form 20-F were obtained from internal company surveys,
market research, consultant surveys commissioned by the Company, publicly available information, reports of governmental agencies and
industry publications and surveys. Industry surveys, publications, consultant surveys commissioned by the Company and forecasts generally
state that the information contained therein has been obtained from sources believed to be reliable. However, this information may prove
to be inaccurate because of the method by which some of the data for the estimates is obtained or because this information cannot always
be verified with complete certainty due to the limits on the availability and reliability of raw data, the voluntary nature of the data
gathering process and other limitations and uncertainties. As a result, the market and industry data and forecasts included or incorporated
by reference in this annual report, and estimates and beliefs based on that data, may not be reliable. We have relied on certain data
from third-party sources, including internal surveys, industry forecasts and market research, which we believe to be reliable based on
our management's knowledge of the industry. However, we have not ascertained the underlying economic assumptions relied upon therein.
Forecasts are particularly likely to be inaccurate, especially over long periods of time. In addition, we do not necessarily know what
assumptions regarding general economic growth were used in preparing the forecasts we cite. Statements as to our market position are based
to the best of our knowledge on the most currently available data. While we are not aware of any misstatements regarding the industry
data presented in this annual report, our estimates involve risks and uncertainties and are subject to change based on various factors,
including those discussed under the heading "Risk Factors" in this Annual Report.
Statements made in this Annual
Report on Form 20-F concerning the contents of any agreement, contract or other document are summaries of such agreements, contracts or
documents and are not a complete description of all of their terms. If we filed any of these agreements, contracts or documents as exhibits
to this Report or to any previous filing with the Securities and Exchange Commission, or SEC, you may read the document itself for a complete
understanding of its terms.
PRESENTATION OF FINANCIAL INFORMATION
Our financial statements were
prepared in accordance with generally accepted accounting principles in the United States, or U.S. GAAP. We present our consolidated
financial statements in U.S. dollars.
Our fiscal year ends on December
31 of each year. Our most recent fiscal year ended on December 31, 2022.
Certain figures included in
this Annual Report have been subject to rounding adjustments. Accordingly, figures shown as totals in certain tables may not be an arithmetic
aggregation of the figures that precede them.
EMERGING GROWTH COMPANY
STATUS
We
are an "emerging growth company," as defined in Section 2(a) of the Securities Act of 1933, as amended, or the Securities
Act, as modified by the JOBS Act. As such, we are eligible to take advantage of certain exemptions from various reporting requirements
that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not
being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations
regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a non-binding advisory
vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. If some investors find
our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities
may be more volatile.
vi
In
addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition period
provided in Section 13(a) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, for complying with new or revised accounting
standards. We have elected to opt out of this extended transition period and, as a result, we are required to comply with new or revised
accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Under federal
securities laws, our decision to opt out of the extended transition period is irrevocable.
We
will remain an emerging growth company until the earliest of: (i) the last day of the first fiscal year in which our annual gross revenues
exceed $ $1.235 billion; (ii) the last day of the fiscal year following the fifth anniversary of the date of our initial public offering
(i.e., December 31, 2028); (iii) the date that we become a "large accelerated filer" as defined in Rule 12b-2 under
the Exchange Act, which would occur if the aggregate worldwide market value of our ordinary shares, including ordinary shares represented
by ADSs, held by non-affiliates is at least $700 million as of the last business day of our most recently completed second fiscal quarter;
or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during any three-year period.
TRADEMARKS AND TRADE NAMES
We own or have rights to trademarks,
service marks and trade names that we use in connection with the operation of our business, including our corporate name, logos and website
names. Other trademarks, service marks and trade names appearing in this Annual Report are the property of their respective owners. Solely
for convenience, some of the trademarks, service marks and trade names referred to in this Annual Report are listed without the
®
and ™ symbols, but we will assert, to the fullest extent under applicable law, our rights to our trademarks, service marks
and trade names.
GLOSSARY OF INDUSTRY TERMS AND CONCEPTS
The following is a list of
certain industry terms and concepts that are used in this Annual Report:
"
API
" means
application programming interface, which is a software intermediary that allows two applications to talk to each other.
"
ASIC
"
means an application-specific integrated circuit which is an integrated circuit chip customized for a particular use, rather than intended
for general-purpose use.
"
AVC
" means
advanced video coding, also referred to as H.264 or MPEG-4 Part 10, which is a video compression standard based on block-oriented, motion-compensated
integer-discrete cosine transform coding.
"
BQM
" means
the proprietary Beamr quality measure which is an artificial intelligence trained computer vision processing architecture.
"
CABR
"
means content adaptive bitrate which refers to our technology combined with our BQM that uses a flexible computer vision engine programmed
with a high level algorithm description to achieve maximal compression of the video input while maintaining the input video resolution,
format, and visual quality.
"
Codec
"
means a device or computer program which encodes or decodes a data stream, bitstream or signal.
"
CPU
" means
central processing unit which is the electronic circuitry in a computer that executes instructions.
vii
"
FPGA
"
means field-programmable gate array which is a hardware circuit that a user can program to carry out one or more logical operations.
"
GPU
" means
graphics processing unit which is a specialized electronic circuit designed to rapidly manipulate and alter memory using parallel computations
to accelerate the creation of images in a frame buffer intended for output to a display device.
"
HDR
" means
high dynamic range imaging which is the set of techniques used to reproduce a greater range of luminosity than that which is possible
with standard photographic or video graphic techniques.
"
HEVC
"
means high efficiency video coding, also known as H.265 and MPEG-H Part 2, which is a video compression standard designed as part of the
MPEG-H project as a successor to the widely used AVC standard.
"
HLG
" means
hybrid log-gamma, an HDR format that uses the HLG transfer function, BT.2020 color primaries and a bit depth of 10-bits.
"
JPEG
"
means joint photographic experts group which is a commonly used format for lossy compression for digital images, particularly for images
produced by digital photography.
"
ITU BT. 500
"
is an international standard for testing image quality.
"
OTT
" means
over-the-top which is a means of providing television and film content over the internet at the request and to suit the requirements of
the individual consumer. Services like Netflix, ViacomCBS and Wowza are video OTT services.
"
PSNR
"
means peak signal to noise ratio which is a quality measure which represents the ratio between the highest power of an original signal
and the power level of the distortion, on logarithmic scale.
"
Silicon IP
"
is a reusable unit of logic, cell, or chip layout design and is also the intellectual property of one party. Silicon IP can be used as
building blocks within application-specific integrated circuits (ASIC) chip designs or field programmable gate array (FPGA) logic designs.
"
SSIM
"
means structural similarity index measure which is a technique to predict the perceived quality of digital images and videos.
"
UGC
" means
user generated content which refers to any form of content, such as images, videos, text, and audio, that has been created or posted by
users on online platforms.
"
VBR
" means
variable bit rate which relates to the bitrate used in sound or video encoding.
viii
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. Reserved.
B. Capitalization and Indebtedness
Not
applicable.
C. Reasons for the Offer and Use of Proceeds
Not
applicable.
D. Risk Factors
You should carefully consider
the risks described below, together with all of the other information in this Annual Report on Form 20-F. The risks and uncertainties
described below are those significant risk factors, currently known and specific to us, that we believe are relevant to an investment
in our securities. Additional risks and uncertainties not currently known to us or that we now deem immaterial may also harm us. If any
of these risks materialize, our business, results of operations or financial condition could suffer, and the price of our ordinary shares
could decline substantially.
Summary Risk Factors
Investing
in our ordinary shares involves a high degree of risk, as fully described below. The principal factors and uncertainties that make investing
in our ordinary shares risky, include, among others:
Risks Related to Our Business and Industry
●
We have a history of losses and may not be able to achieve or maintain profitability.
●
We will need to raise additional capital to meet our business requirements in the future, and such capital raising may be costly or difficult to obtain and could dilute our shareholders' ownership interests.
●
To support our business growth we are expanding our product offering to include the Beamr HW-Accelerated Content Adaptive Encoding solution, a new SaaS solution, the development and commercialization of which may not be successful. This change in our products and services also makes it difficult to evaluate our current business and future prospects and may increase the risk that we will not be successful.
1
●
We may not be successful in establishing and maintaining strategic partnerships, which could adversely affect our ability to develop and commercialize our SaaS solution and other future products.
●
Our future growth depends in part upon the successful deployment of the Beamr HW-Accelerated Content Adaptive Encoding solution in the cloud.
●
The failure to effectively develop and expand our marketing and sales capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our offerings.
●
Our business and operations have experienced growth, and if we do not appropriately manage this growth and any future growth, or if we are unable to improve our systems, processes and controls, our business, financial condition, results of operations and prospects will be adversely affected.
●
The markets for our offerings are new and evolving and may develop more slowly or differently than we expect. Our future success depends on the growth and expansion of these markets and our ability to adapt and respond effectively to evolving market conditions.
●
Our results of operations are likely to fluctuate from quarter to quarter and year to year, which could adversely affect the trading price of our ordinary shares.
●
The loss of one or more of our significant customers, or any other reduction in the amount of revenue we derive from any such customer, would adversely affect our business, financial condition, results of operations and growth prospects.
●
If we are not able to keep pace with technological and competitive developments and develop or otherwise introduce new products and solutions and enhancements to our existing offerings, our offerings may become less marketable, less competitive or obsolete, and our business, financial condition and results of operations may be adversely affected.
●
If we are not able to maintain and expand our relationships with third-party technology partners to integrate our offerings with their products and solutions, our business, financial condition and results of operations may be adversely affected.
●
We may not be able to compete successfully against current and future competitors, some of whom have greater financial, technical, and other resources than we do. If we do not compete successfully, our business, financial condition and results of operations could be harmed.
●
We depend on our management team and other key employees, and the loss of one or more of these employees or an inability to attract and retain highly skilled employees could adversely affect our business.
●
Our international operations and expansion expose us to risk.
●
Currency exchange rate fluctuations affect our results of operations, as reported in our financial statements.
●
Our business, operating results and growth rates may be adversely affected by current or future unfavorable economic and market conditions and adverse developments with respect to financial institutions and associated liquidity risk.
●
A resurgence of the COVID-19 pandemic could adversely affect our business, financial condition and results of operations.
2
Risks Related to Information Technology,
Intellectual Property and Data Security and Privacy
●
A real or perceived bug, defect, security vulnerability, error, or other performance failure involving our products and services could cause us to lose revenue, damage our reputation, and expose us to liability.
●
If we or our third-party service providers experience a security breach, data loss or other compromise, including if unauthorized parties obtain access to our customers' data, our reputation may be harmed, demand for our products and services may be reduced, and we may incur significant liabilities.
●
Insufficient investment in, or interruptions or performance problems associated with, our technology and infrastructure, including in connection with our Beamr HW-Accelerated Content Adaptive Encoding solution which is to be deployed on a public cloud infrastructure, and our reliance on technologies from third parties, may adversely affect our business operations and financial results.
●
Failure to protect our proprietary technology, or to obtain, maintain, protect and enforce sufficiently broad intellectual property rights therein, could substantially harm our business, financial condition and results of operations.
●
We could incur substantial costs and otherwise suffer harm as a result of any claim of infringement, misappropriation or other violation of another party's intellectual property or proprietary rights.
●
We could incur substantial costs and otherwise suffer harm as a result of patent royalty claims, in particular patents related to the implementation of image and video standards.
●
We rely on software and services licensed from other parties. The loss of software or services from third parties could increase our costs and limit the features available in our products and services.
Risks Related to Other Legal, Regulatory
and Tax Matters
●
Changes in laws and regulations related to the internet or video standards, changes in the internet infrastructure itself, or increases in the cost of internet connectivity and network access may diminish the demand for our offerings and could harm our business.
●
Changes in U.S. and foreign tax laws could have a material adverse effect on our business, cash flow, results of operations or financial conditions.
●
Our corporate structure and intercompany arrangements are subject to the tax laws of various jurisdictions, and we could be obligated to pay additional taxes, which would adversely affect our results of operations.
Risks Related to Our Operations in Israel
and Russia
●
Political, economic and military conditions in Israel could materially and adversely affect our business.
●
Russia's invasion of Ukraine and sanctions brought against Russia could disrupt our software development operations in Russia.
●
Political, military conditions or other risks in Russia could adversely affect our business.
Risks Related to Ownership of our Ordinary
Shares
●
The market price for our ordinary shares may be volatile or may decline regardless of our operating performance.
●
Our principal shareholders will continue to have significant influence over us.
3
●
Your ownership and voting power may be diluted by the issuance of additional shares of our ordinary shares in connection with financings, acquisitions, investments, our equity incentive plans or otherwise.
●
Our management team has limited experience managing a public company, and the requirements of being a public company may strain our resources, divert management's attention, and affect our ability to attract and retain qualified board members.
●
We incur significant increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives.
●
We have identified a material weakness in our internal control over financial reporting, and we may not be able to successfully implement remedial measures.
Risks Related to Our Business
and Industry
We have a history of losses and may not
be able to achieve or maintain profitability.
We have incurred losses in
each year since our incorporation in 2009, including net losses of $1.2 million and $0.9 million in the years ended December 31, 2022
and 2021. As a result, we had an accumulated deficit of $30.9 million and $29.7 million as of December 31, 2022 and 2021, respectively.
We intend to continue to expend substantial financial and other resources on, among other things:
●
extending our product leadership by investing in our video storage optimization products and services, and other recently introduced offerings, as well as by developing new products, expanding our platform into additional industries and enhancing our offerings with additional core capabilities and technologies;
●
sales and marketing expenses by hiring customer success personnel and investment in online marketing to attract new customers;
●
augmenting our current offerings by increasing the breadth of our technology partnerships and exploring potential transactions that may enhance our capabilities or increase the scope of our technology footprint; and
●
general administration, including legal, accounting, and other expenses related to our transition to being a new public company.
These efforts may prove more
expensive than we currently anticipate, and we may not succeed in increasing our revenue sufficiently, or at all, to offset these higher
expenses. In addition, to the extent we are successful in increasing our customer base, we may also incur increased losses because of
unforeseen costs. If our revenue does not increase to offset our operating expenses, we will not achieve profitability in future periods
and our net losses may increase. Revenue growth may slow or revenue may decline for a number of possible reasons, many of which are beyond
our control, including inability to penetrate new markets, slowing demand for our products and services, increasing competition, or any
of the other factors discussed in this Risk Factors section. Any failure to increase our revenue as we grow our business could prevent
us from achieving profitability at all or on a consistent basis, which would cause our business, financial condition and results of operations
to suffer and the market price of our ordinary shares to decline.
4
We will need to raise additional capital
to meet our business requirements in the future, and such capital raising may be costly or difficult to obtain and could dilute our shareholders'
ownership interests.
In order for us to pursue
our business objectives, we will need to raise additional capital, which additional capital may not be available on reasonable terms or
at all. Any additional capital raised through the sale of equity or equity-backed securities may dilute our shareholders' ownership
percentages and could also result in a decrease in the market value of our equity securities. The terms of any securities issued by us
in future capital transactions may be more favorable to new investors, and may include preferences, superior voting rights and the issuance
of warrants or other derivative securities, which may have a further dilutive effect on the holders of any of our securities then outstanding.
In addition, we may incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting
fees, securities law compliance fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash
expenses in connection with certain securities we issue, such as convertible notes and warrants, which may adversely impact our financial
condition.
Our indebtedness could adversely affect
our ability to raise additional capital to fund operations, limit our ability to react to changes in the economy or our industry and prevent
us from meeting our financial obligations.
On July 7, 2022, we entered
into a funding agreement with IBI Spikes, Ltd., or IBI, providing for a loan in the amount of NIS 3.1 million (approximately $900,000)
and the issuance of 65,562 warrants to purchase ordinary shares. See "Item 5.B—Operating and Financial Review and Prospects—Liquidity
and Resources—IBI Spikes Loan".
On February 27, 2023, we announced
the pricing of our initial public offering of 1,950,000 ordinary shares at a public offering price of $4.00 per share, for aggregate gross
proceeds of $7.8 million prior to deducting underwriting discounts and other offering expenses.
If we cannot generate sufficient
cash flow from operations to service our debt, we may need to further refinance our debt, dispose of assets or issue equity to obtain
necessary funds. We do not know whether we will be able to do any of this on a timely basis, on terms satisfactory to us, or at all. Our
indebtedness could have important consequences, including:
●
our ability to obtain additional debt or equity financing for working capital, capital expenditures, debt service requirements, acquisitions and general corporate or other purposes may be limited;
●
a portion of our cash flows from operations will be dedicated to the payment of principal and interest on the indebtedness and will not be available for other purposes, including operations, capital expenditures and future business opportunities;
●
our ability to adjust to changing market conditions may be limited and may place us at a competitive disadvantage compared to less-leveraged competitors; and
●
we may be vulnerable during a downturn in general economic conditions or in our business, or may be unable to carry on capital spending that is important to our growth.
To support our business growth we are expanding
our product offering to include the Beamr HW-Accelerated Content Adaptive Encoding solution, a new SaaS solution, the development and
commercialization of which may not be successful. This change in our products and services also makes it difficult to evaluate our current
business and future prospects and may increase the risk that we will not be successful.
Our current product line is
mainly geared to the high end, high quality media customers and we count among our customers Netflix, ViacomCBS, Snapfish, Wowza and other
leading media companies using video and photo solutions.  This product line involves high cost and complexity of deploying our existing
software solutions and the long sales lead times.
In order to grow our business,
in 2019, we resolved to build a lower cost offering which requires hardware acceleration and started to integrate with hardware encoders.
In the first quarter of 2020, we introduced our first proof of concept results with Intel's GPU. Then, we made a strategic decision
to focus our resources on the development and commercialization of our next-generation product, the Beamr HW-Accelerated Content Adaptive
Encoding solution, a SaaS solution that is designed, based on our own internal testing, to provide up to 10x cost-effective video optimization
than existing solutions to an industry agnostic target market. This change in strategy and these efforts may prove more expensive than
we currently anticipate, or may require longer development and deployment times, and we may not succeed in fully developing and implementing
our SaaS solution sufficiently, or at all.
5
We may not be successful in establishing
and maintaining strategic partnerships, which could adversely affect our ability to develop and commercialize our SaaS solution and other
future products.
To successfully develop and
commercialize our Beamr HW-Accelerated Content Adaptive Encoding solution and other product offerings, we will need substantial financial
resources as well as expertise and physical resources and systems. We may elect to develop some or all of these physical resources and
systems and expertise ourselves, or we may seek to collaborate with another company or companies that can provide some or all of such
physical resources and systems as well as financial resources and expertise. For example, we are collaborating with NVIDIA, a leading
developer of GPUs, in the development of our next generation product, the Beamr HW-Accelerated Content Adaptive Encoding solution, and
we are collaborating with Allegro DVT in the development the world's first content-adaptive silicon IP encoder.
We face significant competition
in seeking appropriate partners for our products, and the negotiation process is time-consuming and complex. In order for us to successfully
develop and commercialize our products with a strategic partner, potential partners must view our products as economically valuable in
markets they determine to be attractive in light of the terms that we are seeking and other available products for licensing by other
companies. Even if we are successful in our efforts to establish strategic partnerships, the terms that we agree upon may not be favorable
to us, and we may not be able to maintain such strategic partnerships if, for example, development of a product is delayed or sales of
a product are disappointing. Any delay in entering into strategic partnership agreements related to our products could delay the development
and commercialization of our products and reduce their competitiveness even if they reach the market. If we fail to establish and maintain
strategic partnerships related to our products, we will bear all of the risk and costs related to the development and commercialization
of our products, and we will need to seek additional financing, hire additional employees and otherwise develop expertise which we do
not have and for which we have not budgeted.
The risks in a strategic partnership include the
following:
●
the strategic partner may not apply the expected financial resources, efforts, or required expertise in developing the physical resources and systems necessary to successfully develop and commercialize a product;
●
the strategic partner may not invest in the development of a sales and marketing force and the related infrastructure at levels that ensure that sales of the products reach their full potential;
●
we may be required to undertake the expenditure of substantial operational, financial, and management resources;
●
we may be required to issue equity securities that would dilute our existing shareholders' percentage ownership;
●
we may be required to assume substantial actual or contingent liabilities;
●
strategic partners could decide to withdraw a development program or a collaboration, or move forward with a competing product developed either independently or in collaboration with others, including our competitors;
●
disputes may arise between us and a strategic partner that delay the development or commercialization or adversely affect the sales or profitability of the product; or
●
the strategic partner may independently develop, or develop with third parties, products that could compete with our products.
6
In addition, a strategic partner
for one or more of our products may have the right to terminate the collaboration at its discretion. For example, our collaboration with
NVIDIA is based on a mutual development program of our Beamr HW-Accelerated Content Adaptive Encoding solution that is in advanced stages
and that has been approved at senior levels at NVIDIA however our collaboration has not been reduced to a written agreement and we have
not signed any agreement with NVIDIA, which exposes us to the risk of termination of our collaboration at any time for any or no reason.
Any early termination of our collaboration in a manner adverse to us could have a material adverse effect on our liquidity, financial
condition and results of operations. Any termination may require us to seek a new strategic partner or partners, which we may not be able
to do on a timely basis, if at all, or require us to delay or scale back our development and commercialization efforts. The occurrence
of any of these events could adversely affect the development and commercialization of our products or product candidates and materially
harm our business and share price by delaying the development of our products, and the sale of any products, by slowing the growth of
such sales, by reducing the profitability of the product and/or by adversely affecting the reputation of the product.
Further, a strategic partner
may breach an agreement with us, and we may not be able to adequately protect our rights under these agreements. Furthermore, a strategic
partner will likely negotiate for certain rights to control decisions regarding the development and commercialization of our products
and may not conduct those activities in the same manner as we would do so.
Our future growth depends in part upon the
successful deployment of the Beamr HW-Accelerated Content Adaptive Encoding solution in the cloud.
Our current business is based
on software licensing and is not capital intensive, usually paid for by our customers upfront on an annual basis. We are planning to expand
our product offering with the Beamr HW-Accelerated Content Adaptive Encoding solution, a SaaS solution which is to be deployed on cloud
platforms (e.g., AWS, Azure, and GCP) and will be volume-based solutions. Future payments that we will make to cloud platforms and payments
we will receive from customers are hard to predict and will be based on different terms and conditions. We may also be at risk if there
will be gaps between account receivables and account payables. In addition, attracting new customers to our SaaS offering may involve
evaluation processes that prospects may not be willing to cover before experiencing satisfying results with our products and services,
while we will continue to accrue cloud platform service costs.
We expect our SaaS operation
will be based on spreads in which we first pay for computing platforms (e.g. GPU instances), and then we sell storage/bandwidth savings
(e.g., AWS S3, CloudFront). Any future margins may be at risk if computing platform costs increase and storage/bandwidth costs decrease.
In addition, our ability to grow and maintain customer base and revenue also depends on achieving significant storage/bitrate savings,
translating into superior total cost of ownership and return on investment for our customers. While we believe that the Beamr HW-Accelerated
Content Adaptive Encoding solution will result in significant savings for our customers, there is a risk that our savings for the customers
might not be significant.
In addition, the Beamr HW-Accelerated
Content Adaptive Encoding solution is based on hardware acceleration of our core technology. While we successfully tested our technology
and our technology and software libraries have matured, the new implementation of the Beamr HW-Accelerated Content Adaptive Encoding has
only been tested in limited proof of concept testing, and there is a technical risk when we transition to ultra-high volume production
and utilizing platforms that were not tested.
There is a risk that we may
not win customers that moved their long-tail assets to cold, or off-line storage services (e.g., Amazon S3 Glacier) for reduced storage
costs. In addition, improvements in general encoding solutions that are based on "content-adaptive" or "content-aware"
technologies may reduce the savings which our products and services can provide. Moreover, if the public cloud data services that utilize
NVIDIA GPUs (e.g., Amazon, GCP, Azure) do not adopt, or take significant time to adopt, the Nvidia driver and firmware with our new capabilities,
that could adversely affect our market penetration and future revenue growth.
We believe any future revenue
growth will depend on a number of factors, including, among other things, our ability to:
●
continually enhance and improve our products and services, including the features, integrations and capabilities we offer, and develop or otherwise introduce new products and solutions;
●
attract new customers and maintain our relationships with, and increase revenue from, our existing customers;
7
●
provide excellent customer and end user experiences;
●
maintain the security and reliability of our products and services;
●
introduce and grow adoption of our offerings in new markets outside the United States;
●
hire, integrate, train and retain skilled personnel;
●
adequately expand our sales and marketing force and distribution channels;
●
obtain, maintain, protect and enforce intellectual property protection for our platform and technologies;
●
expand into new technologies, industries and use cases;
●
expand and maintain our partner ecosystem;
●
comply with existing and new applicable laws and regulations, including those related to data privacy and security;
●
price our offerings effectively and determine appropriate contract terms;
●
determine the most appropriate investments for our limited resources;
●
successfully compete against established companies and new market entrants; and
●
increase awareness of our brand on a global basis.
If we are unable to accomplish
any of these objectives, any revenue growth will be impaired. Many factors may contribute to declines in growth rate, including increased
competition, slowing demand for our offerings, a failure by us to continue capitalizing on growth opportunities, the maturation of our
business, and global economic downturns, among others. If our growth rate declines as a result of this or any of the other factors described
above, investors' perceptions of our business and the market price of our ordinary shares could be adversely affected.
Our ability to forecast our
future results of operations is subject to a number of uncertainties, including our ability to effectively plan for and model future growth.
We have encountered in the past, and may encounter in the future, risks and uncertainties frequently experienced by growing companies
in rapidly changing industries that may prevent us from achieving the objectives outlined herein. If we fail to achieve the necessary
level of efficiency in our organization as it grows, or if we are not able to accurately forecast future growth, our business would be
adversely affected. Moreover, if the assumptions that we use to plan our business are incorrect or change in reaction to changes in our
market, or if we are unable to maintain consistent revenue or revenue growth, the market price of our ordinary shares could be volatile,
and it may be difficult to achieve and maintain profitability.
The failure to effectively develop and expand
our marketing and sales capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our
offerings.
Our ability to increase our
customer base and achieve broader market acceptance of our products and services and in particular the Beamr HW-Accelerated Content Adaptive
Encoding solution will depend to a significant extent on our ability to expand our sales and marketing operations. As part of our growth
strategy, we plan to dedicate significant resources to our marketing programs. All of these efforts will require us to invest significant
financial and other resources. Our business will be harmed if our efforts do not generate a correspondingly significant increase in revenue.
8
Our business and operations have experienced
growth, and if we do not appropriately manage this growth and any future growth, or if we are unable to improve our systems, processes
and controls, our business, financial condition, results of operations and prospects will be adversely affected.
We plan to make continued
investments in the growth and expansion of our business and customer base including in particular substantial investment of resources
in the development and commercialization of our next-generation product, the Beamr HW-Accelerated Content Adaptive Encoding solution.
The growth and expansion of our business places a continuous and significant strain on our management, operational, financial and other
resources. In addition, as customers adopt our offerings for an increasing number of use cases, we have had to support more complex commercial
relationships. In order to manage our growth effectively, we must continue to improve and expand our information technology and financial
infrastructure, our security and compliance requirements, our operating and administrative systems, our customer service and support capabilities,
our relationships with various partners and other third parties, and our ability to manage headcount and processes in an efficient manner.
We may not be able to sustain
the pace of improvements to our products and services, or the development and introduction of new offerings, successfully, or implement
systems, processes, and controls in an efficient or timely manner or in a manner that does not negatively affect our results of operations.
Our failure to improve our systems, processes, and controls, or their failure to operate in the intended manner, may result in our inability
to manage the growth of our business and to forecast our revenue, expenses, and earnings accurately, or to prevent losses.
As we continue to expand our
business and operate as a public company, we may find it difficult to maintain our corporate culture while managing our employee growth.
Any failure to manage our anticipated growth and related organizational changes in a manner that preserves our culture could negatively
impact future growth and achievement of our business objectives. Additionally, our productivity and the quality of our offerings may be
adversely affected if we do not integrate and train our new employees quickly and effectively. Failure to manage our growth to date and
any future growth effectively could result in increased costs, negatively affect customer satisfaction and adversely affect our business,
financial condition, results of operations and growth prospects.
The markets for our offerings are new and
evolving and may develop more slowly or differently than we expect. Our future success depends on the growth and expansion of these markets
and our ability to adapt and respond effectively to evolving market conditions.
The markets in which we operate,
in particular the video storage market, are relatively new and rapidly evolving. Accordingly, it is difficult to predict customer adoption,
renewals and demand, the entry of new competitive products, the success of existing competitive products, and the future growth rate,
expansion, longevity, and size of the markets for our products and services. The expansion of these new and evolving markets depends on
a number of factors, including the cost, performance, and perceived value associated with the technologies that we and others in our industry
develop. If we or other companies in our industry experience security incidents, loss of customer data, or disruptions in delivery or
service, the market for these applications as a whole, including the demand for our offerings, may be negatively affected. If video products
and solutions such as ours do not continue to achieve market acceptance, or there is a reduction in demand caused by decreased customer
acceptance, technological challenges, weakening economic conditions, privacy, data protection and data security concerns, governmental
regulation, competing technologies and products, or decreases in information technology spending or otherwise, the market for our offerings
might not continue to develop or might develop more slowly than we expect, which could adversely affect our business, financial condition,
results of operations and growth prospects.
9
Our results of operations are likely to
fluctuate from quarter to quarter and year to year, which could adversely affect the trading price of our ordinary shares.
Our results of operations,
including our revenue, cost of revenue, gross margin, operating expenses, cash flow, and deferred revenue, have fluctuated from quarter
to quarter and year to year in the past and may continue to vary significantly in the future so that period-to-period comparisons of our
results of operations may not be meaningful. Accordingly, our financial results in any one quarter should not be relied upon as indicative
of future performance. Our quarterly financial results may fluctuate as a result of a variety of factors, many of which are outside of
our control, may be difficult to predict, and may not fully reflect the underlying performance of our business. Factors that may cause
fluctuations in our quarterly financial results include:
●
our ability to attract new customers and increase revenue from our existing customers;
●
the loss of existing customers;
●
customer satisfaction with our products, solutions, platform capabilities and customer support;
●
mergers and acquisitions or other factors resulting in the consolidation of our customer base;
●
mix of our revenue;
●
our ability to gain new partners and retain existing partners;
●
fluctuations in share-based compensation expense;
●
decisions by potential customers to purchase competing offerings or develop in-house technologies and solutions as alternatives to our offerings;
●
changes in the spending patterns of our customers;
●
the amount and timing of operating expenses related to the maintenance and expansion of our business and operations, including investments in research and development, sales and marketing, and general and administrative resources;
●
network outages;
●
developments or disputes concerning our intellectual property or proprietary rights, our products and services, or third-party intellectual property or proprietary rights;
●
negative publicity about our company, our offerings or our partners, including as a result of actual or perceived breaches of, or failures relating to, privacy, data protection or data security;
●
the timing of expenses related to the development or acquisition of technologies or businesses and potential future charges for impairment of goodwill from acquired companies;
●
general economic, industry, and market conditions;
●
the impact any resurgence of the COVID-19 pandemic, or any other pandemic,
epidemic, outbreak of infectious disease or other global health crises on our business, the businesses of our customers and partners and
general economic conditions;
10
●
the impact of political uncertainty or unrest;
●
changes in our pricing policies or those of our competitors;
●
fluctuations in the growth rate of the markets that our offerings address;
●
seasonality in the underlying businesses of our customers, including budgeting cycles, purchasing practices and usage patterns;
●
the business strengths or weakness of our customers;
●
our ability to collect timely on invoices or receivables;
●
the cost and potential outcomes of future litigation or other disputes;
●
future accounting pronouncements or changes in our accounting policies;
●
our overall effective tax rate, including impacts caused by any reorganization in our corporate tax structure and any new legislation or regulatory developments;
●
our ability to successfully expand our business in the United States and internationally;
●
fluctuations in foreign currency exchange rates; and
●
the timing and success of new products and solutions introduced by us or our competitors, or any other change in the competitive dynamics of our industry, including consolidation among competitors, customers or partners.
In particular, our cost of
revenue is generally higher in periods during which we acquire new customers.
The impact of one or more
of the foregoing or other factors may cause our results of operations to vary significantly. Such fluctuations make forecasting more difficult
and could cause us to fail to meet the expectations of investors and securities analysts, which could cause the trading price of our ordinary
shares to fall substantially, resulting in the loss of all or part of your investment, and subject us to costly lawsuits, including securities
class action suits.
The loss of one or more of our significant
customers, or any other reduction in the amount of revenue we derive from any such customer, would adversely affect our business, financial
condition, results of operations and growth prospects.
Our future success is dependent
on our ability to establish and maintain successful relationships with a diverse set of customers. We currently derive a significant portion
of our revenue from a limited number of our customers. For the years ended December 31, 2022 and December 31, 2021, our top ten customers
in the aggregate accounted for approximately 61% and 62% of our revenues, respectively.
Until we can derive revenue,
if any, from the Beamr HW-Accelerated Content Adaptive Encoding solution, we expect to continue to derive a significant portion of our
revenue from a limited number of customers in the future and, in some cases, the portion of our revenue attributable to individual customers
may increase. The loss of one or more significant customers or a reduction in the amount of revenue we derive from any such customer could
significantly and adversely affect our business, financial condition and results of operations. Customers may choose not to renew their
contracts or may otherwise reduce the breadth of the offerings which they purchase for any number of reasons. We are also subject to the
risk that any such customer will experience financial difficulties that prevent them from making payments to us on a timely basis or at
all.
11
If we are not able to keep pace with technological
and competitive developments and develop or otherwise introduce new products and solutions and enhancements to our existing offerings,
our offerings may become less marketable, less competitive or obsolete, and our business, financial condition and results of operations
may be adversely affected.
The markets in which we compete
are characterized by rapid technological change, frequent introductions of new products, services, features and capabilities, and evolving
industry standards and regulatory requirements. Our ability to grow our customer base and increase our revenue will depend in significant
part on our ability to develop or otherwise introduce new products and solutions; develop or otherwise introduce new features, integrations,
capabilities and other enhancements to our existing offerings on a timely basis; and interoperate across an increasing range of devices,
operating systems and third-party applications. The success of any new products or solutions, or enhancements to our existing offerings,
will depend on a number of factors including, but not limited to, the timeliness and effectiveness of our research and product development
activities and go-to-market strategy, our ability to anticipate customer needs and achieve market acceptance, our ability to manage the
risks associated with new product releases, the effective management of development and other spending in connection with the product
development process, and the availability of other newly developed products and technologies by our competitors.
In addition, in connection
with our product development efforts, we may introduce significant changes to our existing products or solutions, or develop or otherwise
introduce new and unproven products or solutions, including technologies with which we have little or no prior development or operating
experience. These new products, solutions and updates may not perform as expected, may fail to engage our customer base or other end users
of our products, or may otherwise create a lag in adoption of such new products. New products may initially suffer from performance and
quality issues that may negatively impact our ability to market and sell such products to new and existing customers. We have in the past
experienced bugs, errors, or other defects or deficiencies in new products and product updates and delays in releasing new products, deployment
options, and product enhancements and may have similar experiences in the future. As a result, some of our customers may either defer
purchasing our offerings until the next upgrade is released or switch to a competitor if we are not able to keep up with technological
developments. To keep pace with technological and competitive developments we have in the past invested, and may in the future invest,
in the acquisition of complementary businesses, technologies, services, products, and other assets that expand our offerings. We may make
these investments without being certain that they will result in products or enhancements that will be accepted by existing or prospective
customers or that will achieve market acceptance. The short- and long-term impact of any major change to our offerings, or the introduction
of new products or solutions, is particularly difficult to predict. If new or enhanced offerings fail to engage our customer base or other
end users of our products, or do not perform as expected, we may fail to generate sufficient revenue, operating margin, or other value
to justify our investments in such products, any of which may adversely affect our reputation and negatively affect our business in the
short-term, long-term, or both. If we are unable to successfully enhance our existing offerings to meet evolving customer requirements,
increase adoption and use cases of our offerings, develop or otherwise introduce new products and solutions and quickly resolve security
vulnerabilities or other errors or defects, or if our efforts in any of these areas are more expensive than we expect, our business, financial
condition and results of operations would be adversely affected.
If we are not able to maintain and expand
our relationships with third-party technology partners to integrate our offerings with their products and solutions, our business, financial
condition and results of operations may be adversely affected.
Our success depends in part
on our ability to integrate our products and services with a variety of network, hardware and software platforms, and we need to continuously
modify and enhance our offerings to adapt to changes in hardware, software, networking, browser and database technologies. Third-party
products and services are constantly evolving, and we may not be able to modify our offerings to ensure their compatibility with those
of other third parties following development changes. Any losses or shifts in the market position of the providers of these third-party
products and services could require us to identify and develop integrations with new third-party technologies. Such changes could consume
substantial resources and may not be effective. Any expansion into new geographies may also require us to integrate our offerings with
new third-party technologies, products and services and invest in developing new relationships with these providers. If we are unable
to respond to changes in a cost-effective manner, our offerings may become less marketable, less competitive, or obsolete, and our business,
financial condition and results of operations may be negatively impacted.
12
In addition, a significant
percentage of our customers may choose to integrate our products and services with certain capabilities of third-party hardware and software
providers using APIs. The functionality and popularity of our products and services may depend, in part, on their ability to integrate
with a wide variety of third-party applications and software. Third-party providers of applications may change the features of their applications
and software, restrict our access to their applications and software or alter the terms governing use of their applications and access
to those applications and software in an adverse manner. Such changes could functionally limit or eliminate our ability to use these third-party
applications and software in conjunction with our offerings, which could negatively impact customer demand, our competitive position and
adversely affect our business.
We may not be able to compete successfully
against current and future competitors, some of whom have greater financial, technical, and other resources than we do. If we do not compete
successfully, our business, financial condition and results of operations could be harmed.
While there are several companies
offering video compression solutions such as MainConcept, Ateme, Ittiam, Visionular and open source (x264/x265), we believe there is currently
no direct competitor with our content-adaptive video compression solutions. There are companies that offer software solutions for video
optimization such as Harmonic and Elemental, and other companies offering storage optimization (but not involving video technologies)
such as EMC and Seagate. In addition, for our quality measure, some of our current competitors include SSIMWave (SSIMPlus), Apple (AVQT),
Google (YouVQ) and open source (VMAF). We operate in a highly specialized area that is evolving very quickly with rapid developments.
In the future, competitors could develop products or solutions that compete with our video compression solutions. For example, the public
cloud platforms such as AWS, Azure, and GCP could in the future develop their own video optimization hardware accelerated solutions.
We believe the following
competitive attributes are necessary for our solutions to successfully compete in the video compression market:
●
the performance and reliability of our solutions;
●
cost of deployment and return on investment in terms of cost savings;
●
sophistication, novel and innovative intellectual property and technology, and functionality of our offerings;
●
cross-platform operability;
●
security;
●
ease of implementation and use of service;
●
high quality customer support; and
●
price.
We believe that we compare
favorably on the basis of the factors listed above. However, many of our competitors have substantially greater financial, technical,
and marketing resources; relationships with large vendor partners; larger global presence; larger customer bases; longer operating histories;
greater brand recognition; and more established relationships in the industry than we do. Furthermore, new entrants not currently considered
to be competitors may enter the market through
acquisitions, partnerships, or strategic relationships
13
Additionally, we compete with
home-grown, start-up, and open source technologies across the categories described above. With the introduction of new technologies and
the entrance of new market participants, competition has intensified, and we expect it to continue to intensify in the future. Established
companies are also developing their own video encoding and optimization platforms, products and solutions within their own core product
lines, and may continue to do so in the future. Established companies may also acquire or establish product integration, distribution
or other cooperative relationships with our current competitors. New competitors or alliances among competitors may emerge from time to
time and rapidly acquire significant market share due to various factors such as their greater brand name recognition, larger existing
user or customer base, consumer preferences for their offerings, a larger or more effective sales organization and greater financial,
technical, marketing and other resources and experience. Furthermore, with the recent increase in large merger and acquisition transactions
in the technology industry, particularly transactions involving cloud-based technologies, there is a greater likelihood that we will compete
with other larger technology companies in the future. Companies resulting from these potential consolidations may create more compelling
product offerings and be able to offer more attractive pricing options, making it more difficult for us to compete effectively.
Many of our competitors have,
and some of our potential competitors may have, greater financial, technical, and other resources, longer operating histories, greater
brand recognition, larger sales forces and marketing budgets, broader distribution networks, more diverse product and services offerings,
larger and more mature intellectual property portfolios, more established relationships in the industry and with customers, lower cost
structures and greater customer experience resources. These competitors may be able to respond more quickly and effectively than we can
to new or changing opportunities, technologies, standards and customer requirements. They may be able to leverage these resources to gain
business in a manner that discourages customers from purchasing our offerings, including through selling at zero or negative margins,
product bundling, forced product migrations, auto-installation of applications, or closed technology platforms. Potential customers may
also prefer to purchase from companies with which they have an existing relationship rather than a new supplier, regardless of product
performance or features. Furthermore, we expect that our industry will continue to attract new companies, including smaller emerging companies,
which could introduce new offerings. We may also expand into new markets and encounter additional competitors in such markets. These competitive
pressures in the markets in which we operate, or our failure to compete effectively, may result in price reductions, fewer customers,
reduced revenue, gross profit and gross margins, increased net losses and loss of market share. Any failure to effectively address these
factors could significantly and adversely affect our business, financial condition and results of operations.
If we are unable to increase sales of our
products and services to new customers, expand the offerings to which our existing customers subscribe, or expand the value of our existing
sales, our future revenue and results of operations will be adversely affected.
Our success depends on our
ability to sell our products and services to new customers and to expand within our existing customer base by selling products and services
for additional offerings to our existing customers and expanding the value of existing customers' subscriptions, and to do so in
a cost-effective manner. Our ability to sell new products and services and expand the value of existing sales depends on a number of factors,
including the prices of our offerings and their functionality, the prices of products offered by our competitors, and the budgets of our
customers. We also plan to offer an initial trial period for certain of our offerings. To the extent prospective customers utilize this
trial period without becoming, or lead others not to become, paying customers, our expenses may increase as a result of associated hosting
costs, and our ability to grow our business may be adversely affected. There is no guarantee that such events will translate into new
customers.
In addition, a significant
aspect of our sales and marketing focus is to expand deployments within existing customers. The rate at which our customers purchase additional
offerings and expand the value of their existing offerings depends on a number of factors, including, among other things, customers'
level of satisfaction with our offerings and customer support, the nature and size of the deployments, the desire to address additional
use cases, and the availability of, and customers' awareness of and perceived need for, additional features, integrations, capabilities
or other enhancements, as well as general economic conditions. If our customers do not recognize the potential of our offerings, our business
would be materially and adversely affected.
14
If our existing customers do not renew their
order of products or subscription to services, or if they renew on terms that are less economically beneficial to us, it could have an
adverse effect on our business, financial condition and results of operations.
We expect to derive a significant
portion of our revenue from renewals of subscriptions. Customers have no contractual obligation to renew their subscriptions after the
completion of their subscription term. Subscriptions for most of our offerings are offered on either an annual or multi-year basis. Our
subscriptions may also generally include committed usage amounts. As a result, we cannot provide assurance that customers will renew their
subscriptions for a similar contract period or with the same or greater product depth, number of users, functionality or other terms that
are equally or more economically beneficial to us, if they renew at all.
Our customers' renewals
may decline or fluctuate as a result of a number of factors, including their satisfaction with our products and our customer support,
the frequency and severity of product outages, our product uptime or latency, the pricing of our offering in relation to competing offerings,
additional new features, integrations, capabilities or other enhancements that we offer, updates to our products as a result of updates
by technology partners, and customers or users no longer having a need for our offerings . Renewal rates may also be impacted by general
economic conditions or other factors that reduce customers' spending levels. If our customers do not renew their subscriptions or
renew on terms less economically favorable to us, our revenue may decline or grow less quickly than anticipated, which would adversely
affect our business, financial condition and results of operations.
If we fail to meet contractual commitments
under our customer agreements, we could be subject to contractual penalties, litigation and other liabilities, and could experience an
increase in contract terminations or decrease in contract renewals in future periods, which would lower our revenue, increase our costs
and otherwise adversely affect our business, financial condition and results of operations.
Our customer agreements may
contain service-level commitments. If we are unable to meet the stated service-level commitments, including failure to meet the uptime
and response time requirements under our customer agreements, we may be contractually obligated to provide these customers with service
credits, or customers could elect to terminate and receive refunds for prepaid amounts related to unused subscriptions, either of which
could significantly affect our revenue in the periods in which the failure occurs and the credits are applied or refunds paid out. In
addition, customer terminations or any reduction in renewals resulting from service-level failures could significantly affect both our
current and future revenue. We cannot guarantee that we will not experience a material decrease in customer renewals in future periods
as additional customers cycle through their subscription terms.
Furthermore, any service-level
failures or failure to meet committed delivery schedules and milestones could also create negative publicity and damage our reputation,
which may discourage prospective customers from adopting our offerings. In addition, if we modify the terms of our contractual commitments
in future customer agreements in a manner customers perceive to be unfavorable, demand for our offerings could be reduced. The occurrence
of these or any of the events discussed above could have a significant adverse effect on our business, financial condition, results of
operations and cash flow, as well as our ability to grow our business.
We rely on third parties, including third
parties outside the United States, for some of our software development, quality assurance, operations, and customer support.
We currently depend on various
third parties for some of our software development efforts, quality assurance, operations, and customer support services. Specifically,
through our subsidiary Beamr Imaging RU we undertake some of our software development and design, quality assurance, and operations activities
using employees and consultants located in Russia. Our dependence on third-parties creates a number of risks, in particular, the risk
that we may not maintain development quality, control, or effective management with respect to these business operations. In addition,
the Russian invasion of Ukraine, poor relations between the United States and Russia, and sanctions by the United States and the European
Union, or the EU, against Russia could have an adverse impact on our third-party software development in Russia. See also "Risk
Factors—Risks Related to Our Operations in Russia." We anticipate that we will continue to depend on these and other third-party
relationships in order to grow our business for the foreseeable future. If we are unsuccessful in maintaining existing and, if needed,
establishing new relationships with third parties, our ability to efficiently operate existing services or develop new services and provide
adequate customer support could be impaired, and, as a result, our competitive position or our results of operations could suffer.
15
We depend on our management team and other
key employees, and the loss of one or more of these employees or an inability to attract and retain highly skilled employees could adversely
affect our business.
Our future success depends,
in part, on our ability to continue to attract and retain highly skilled personnel. The loss of the services of any of our key personnel,
the inability to attract or retain qualified personnel, or delays in hiring required personnel, particularly in engineering and sales,
may seriously and adversely affect our business, financial condition and results of operations. Although we have entered into employment
or consulting agreements with our personnel, their employment is generally for no specific duration. We are also substantially dependent
on the continued service of our existing IT personnel because of the complexity of our products.
Our future performance also
depends on the continued services and continuing contributions of our senior management team, which includes Sharon Carmel, our founder
and Chief Executive Officer, to execute on our business plan and to identify and pursue new opportunities and product innovations. The
loss of services of our senior management team, particularly our Chief Executive Officer, could significantly delay or prevent the achievement
of our development and strategic objectives, which could adversely affect our business, financial condition and results of operations.
Additionally, the industry
in which we operate is generally characterized by significant competition for skilled personnel, as well as high employee attrition. There
is currently a high demand for experienced software industry personnel, particularly for engineering, research and development, sales
and support positions, and we may not be successful in attracting, integrating and retaining qualified personnel to fulfill our current
and future needs. This intense competition has resulted in increasing wages, especially in Israel, where our headquarters is located and
most of our research and development positions are located, and in California, where our sales offices are located, which may make it
more difficult for us to attract and retain qualified personnel, as many of the companies against which we compete for personnel have
greater financial resources than we do. These competitors may also actively seek to hire our existing personnel away from us, even if
such employee has entered into a non-compete agreement. We may be unable to enforce these agreements under the laws of the jurisdictions
in which our employees work. For example, Israeli labor courts have required employers seeking to enforce non-compete undertakings of
a former employee to demonstrate that the competitive activities of the former employee will harm one of a limited number of material
interests of the employer that have been recognized by the courts, such as the protection of a company's confidential information
or other intellectual property, taking into account, among other things, the employee's tenure, position, and the degree to which
the non-compete undertaking limits the employee's freedom of occupation. We may not be able to make such a demonstration. Also,
to the extent we hire personnel from competitors, we may be subject to allegations that they have been improperly solicited or that they
have divulged their former employers' proprietary or other confidential information or incorporated such information into our products,
which could include claims that such former employers therefore own or otherwise have rights to their inventions or other work product
developed while employed by us.
In addition, in making employment
decisions, particularly in the internet and high-technology industries, job candidates often consider the value of the equity they are
to receive in connection with their employment. Employees may be more likely to leave us if the shares they own or the shares underlying
their equity incentive awards have significantly appreciated or significantly reduced in value. Many of our employees may receive significant
proceeds from sales of our equity in the public markets, which may reduce their motivation to continue to work for us and could lead to
employee attrition. If we fail to attract new personnel, or fail to retain and motivate our current personnel, our business, financial
condition, results of operations and growth prospects could be adversely affected.
If we are not able to maintain and enhance
awareness of our brand, especially among companies who store large amounts of video files, our business, financial condition and results
of operations may be adversely affected.
We believe that developing
and maintaining widespread awareness of our brand, especially with companies who store large amounts of video files, is critical to achieving
widespread acceptance of our products and services and attracting new users and customers. Brand promotion activities may not generate
user or customer awareness or increase revenue, and even if they do, any increase in revenue may not offset the expenses we incur in building
our brand. If we fail to successfully promote and maintain our brand, we may fail to attract and retain users and customers necessary
to realize a sufficient return on our brand-building efforts, and may fail to achieve the widespread brand awareness that is critical
for broad customer adoption of our offerings.
16
Our corporate culture has contributed to
our success, and if we cannot maintain this culture as we grow, we could lose the innovation, creativity, and entrepreneurial spirit we
have worked to foster, which could adversely affect our business.
We believe that our corporate
culture, which is based on openness, flexibility, and collaboration, has been and will continue to be a key contributor to our success.
We expect to hire aggressively as we expand. If we do not continue to maintain our corporate culture as we grow, we may be unable to foster
the innovation, creativity, and entrepreneurial spirit we believe we need to support our growth. The growth and expansion of our business
and our transition from a private company to a public company may result in changes to our corporate culture, which could adversely affect
our business, including our ability to recruit and retain qualified personnel.
Our failure to offer high quality customer
support would have an adverse effect on our business, reputation and results of operations.
Our customers depend on our
customer success managers to resolve issues and realize the full benefits relating to our products and services. If we do not succeed
in helping our customers quickly resolve post-deployment issues or provide effective ongoing support and education, our ability to renew
contracts with, or establish contracts for additional offerings to, existing customers, or expand the value of existing customers'
contracts, would be adversely affected and our reputation with potential customers could be damaged. In addition, most of our existing
customers are large enterprises with complex information technology environments and, as a result, require significant levels of support.
If we fail to meet the requirements of these customers, it may be more difficult to grow sales or maintain our relationships with them.
Additionally, while growing
our need for customer success managers is a key component of our growth strategy, it can take several months to recruit, hire and train
qualified engineering-level customer support employees, and we may not be able to hire such resources fast enough to keep up with demand
during the relevant time in the future. To the extent that we are unsuccessful in hiring, training and retaining adequate support resources,
our ability to provide adequate and timely support to our customers, and our customers' satisfaction with our products and services,
will be adversely affected. Any failure by us to provide and maintain high-quality customer support services would have an adverse effect
on our business, reputation and results of operations.
The sales prices of our offerings may change,
which may reduce our revenue and gross profit and adversely affect our financial results.
The sales prices for our offerings
may be subject to change for a variety of reasons, including competitive pricing pressures, discounts, anticipation of the introduction
of new products, promotional programs, general economic conditions, or our marketing, user acquisition and technology costs and, as a
result, we anticipate that we will need to change our pricing model from time to time. In the past, we have sometimes adjusted our prices
for individual customers in certain situations, and expect to continue to do so in the future. Moreover, demand for our offerings is price-sensitive.
Competition continues to increase in the market segments in which we operate, and we expect competition to further increase in the future,
thereby leading to increased pricing pressures. Larger competitors with more diverse offerings may reduce the price of offerings that
compete with ours or may bundle them with other offerings and provide for free. Similarly, certain competitors may use marketing strategies
that enable them to acquire customers more rapidly or at a lower cost than us, or both, and we may be unable to attract new customers
or grow and retain our customer base based on our historical pricing. Additionally, currency fluctuations in certain countries and regions
may negatively impact actual prices that customers and resellers are willing to pay in those countries and regions. As we develop and
introduce new offerings, as well as features, integrations, capabilities and other enhancements, we may need to, or choose to, revise
our pricing. There can be no assurance that we will not be forced to engage in price-cutting initiatives or to increase our marketing
and other expenses to attract customers in response to competitive or other pressures. Any decrease in the sales prices for our products,
without a corresponding decrease in costs, increase in volume or increase in revenue from our other offerings, would adversely affect
our revenue and gross profit. We cannot assure you that we will be able to maintain our prices and gross profits at levels that will allow
us to achieve and maintain profitability.
17
Our international operations and expansion
expose us to risk.
Our products and services
address the needs of customers and end users around the world, and we see continued international expansion as a significant opportunity.
For the years ended December 31, 2022 and 2021, we generated approximately 25% and 21% of our revenue, respectively, from customers outside
the United States. Our customers, end users, employees and partners are located in a number of different jurisdictions worldwide, and
we expect our operations will become increasingly global as our business continues to grow. Our current international operations involve,
and future initiatives will also involve, a variety of risks, including:
●
unexpected changes in practices, tariffs, export quotas, custom duties, trade disputes, tax laws and treaties, particularly due to economic tensions and trade negotiations or other trade restrictions;
●
different labor regulations, especially in the EU, where labor laws are generally more advantageous to employees as compared to the United States, including deemed hourly wage and overtime regulations in these locations;
●
exposure to many evolving stringent and potentially inconsistent laws and regulations relating to privacy, data protection, and information security, particularly in the EU;
●
changes in a specific country's or region's political or economic conditions;
●
risks resulting from any resurgence of the COVID-19 pandemic, or any
other pandemic, epidemic or outbreak of infectious disease, including uncertainty regarding what measures the U.S. or foreign governments
will take in response;
●
risks resulting from changes in currency exchange rates;
●
challenges inherent to efficiently managing an increased number of employees over large geographic distances, including the need to implement appropriate systems, policies, benefits and compliance programs;
●
difficulties in maintaining our corporate culture with a dispersed workforce;
●
risks relating to the implementation of exchange controls, including restrictions promulgated by the United States Department of the Treasury's Office of Foreign Assets Control, or OFAC, and other similar trade protection regulations and measures in the United States or in other jurisdictions;
●
reduced ability to timely collect amounts owed to us by our customers in countries where our recourse may be more limited;
●
slower than anticipated availability and adoption of cloud infrastructures by international businesses, which would increase our on-premise deployments;
●
limitations on our ability to reinvest earnings from operations derived from one country to fund the capital needs of our operations in other countries;
●
limited or unfavorable—including greater difficulty in enforcing—intellectual property protection; and
●
exposure to liabilities under anti-corruption and anti-money laundering laws, including the U.S. Foreign Corrupt Practices Act of 1977, as amended, and similar applicable laws and regulations in other jurisdictions.
If we are unable to address
these difficulties and challenges or other problems encountered in connection with our international operations and expansion, we might
incur unanticipated liabilities or we might otherwise suffer harm to our business generally.
18
Currency exchange rate fluctuations and
inflation affect our results of operations, as reported in our financial statements.
We report our financial results
in U.S. dollars. We collect our revenue primarily in U.S. dollars and NIS. A portion of the cost of revenue, research and development,
selling and marketing and general and administrative expenses of our Israeli and Russian operations are incurred in NIS or in Russian
Ruble, or RUB. As a result, we are exposed to exchange rate risks that may materially and adversely affect our financial results. If the
NIS or RUB appreciates against the U.S. dollar, or if the value of the NIS or RUB decline against the U.S. dollar, at a time when the
rate of inflation in the cost of Israeli and Russian goods and services exceed the rate of decline in the relative value of the NIS and
RUB, then the U.S. dollar-denominated cost of our operations in Israel and Russia would increase and our results of operations could be
materially and adversely affected.
Inflation in Israel compounds
the adverse impact of a devaluation of the NIS against the U.S. dollar by further increasing the amount of our Israeli expenses. Israeli
inflation may also (in the future) outweigh the positive effect of any appreciation of the U.S. dollar relative to the NIS, if, and to
the extent that, it outpaces such appreciation or precedes such appreciation. The Israeli rate of inflation did not have a material adverse
effect on our financial condition during 2021 or 2022. Given our general lack of currency hedging arrangements to protect us from fluctuations
in the exchange rates of the NIS or the RUB in relation to the U.S. dollar (and/or from inflation of such non-U.S. currencies), we may
be exposed to material adverse effects from such movements. We cannot predict any future trends in the rate of inflation in Israel or
in Russia or the rate of devaluation (if any) of the U.S. dollar against the NIS or the RUB.
In particular, due to the
recent Russian invasion of Ukraine, there has been significant currency rate fluctuations between the U.S. dollar and RUB. We cannot predict
any future exchange-rate fluctuations and future trends in the rate of inflation in Israel and Russia and our ability to hedge our exposure
to currency exchange rate fluctuations may be limited.
In addition, we use products
and services and offer our products and services through cloud services, which may publish different prices in different locations. These
differences in prices and locations may impact our costs and margins, and value we bring to our customers.
Our business, operating
results and growth rates may be adversely affected by current or future unfavorable economic and market conditions and adverse developments
with respect to financial institutions and associated liquidity risk.
Our
business depends on the economic health of the global economies. If the conditions in the global economies remain uncertain or continue
to be volatile, or if they deteriorate, including as a result of the impact of military conflict, such as the war between Russia and Ukraine,
terrorism or other geopolitical events, our business, operating results and financial condition may be materially adversely affected.
Economic weakness, inflation and increases in interest rates, limited availability of credit, liquidity shortages and constrained capital
spending have at times in the past resulted, and may in the future result, in challenging and delayed sales cycles, slower adoption of
new technologies and increased price competition, and could negatively affect our ability to forecast future periods, which could result
in an inability to satisfy demand for our products and a loss of market share.
In
addition, increases in inflation raise our costs for commodities, labor, materials and services and other costs required to grow and operate
our business, and failure to secure these on reasonable terms may adversely impact our financial condition. Additionally, increases in
inflation, along with the uncertainties surrounding COVID-19, geopolitical developments and global supply chain disruptions, have caused,
and may in the future cause, global economic uncertainty and uncertainty about the interest rate environment, which may make it more difficult,
costly or dilutive for us to secure additional financing. A failure to adequately respond to these risks could have a material adverse
impact on our financial condition, results of operations or cash flows.
19
More
recently, the closures of SVB and Signature Bank and their placement into receivership with the FDIC created bank-specific and broader
financial institution liquidity risk and concerns. Although the Department of the Treasury, the Federal Reserve and the FDIC jointly
released a statement that depositors at SVB and Signature Bank would have access to their funds, even those in excess of the standard
FDIC insurance limits, under a systemic risk exception, future adverse developments with respect to specific financial institutions or
the broader financial services industry may lead to market-wide liquidity shortages, impair the ability of companies to access near-term
working capital needs, and create additional market and economic uncertainty. There can be no assurance that future credit and financial
market instability and a deterioration in confidence in economic conditions will not occur. Our general business strategy may be adversely
affected by any such economic downturn, liquidity shortages, volatile business environment or continued unpredictable and unstable market
conditions. If the current equity and credit markets deteriorate, or if adverse developments are experienced by financial institutions,
it may cause short-term liquidity risk and also make any necessary debt or equity financing more difficult, more costly, more onerous
with respect to financial and operating covenants and more dilutive. Failure to secure any necessary financing in a timely manner and
on favorable terms could have a material adverse effect on our growth strategy, financial performance and stock price and could require
us to alter our operating plans. In addition, there is a risk that one or more of our service providers, financial institutions, manufacturers,
suppliers and other partners may be adversely affected by the foregoing risks, which could directly affect our ability to attain our
operating goals on schedule and on budget.
Increasing scrutiny
of, and evolving expectations for, sustainability and environmental, social, and governance, or ESG, initiatives could increase our costs
or otherwise adversely impact our business.
Public
companies are facing increasing scrutiny related to ESG practices and disclosures from certain investors, capital providers,
shareholder advocacy groups, other market participants and other stakeholder groups. With this increased focus, public reporting regarding ESG practices
is becoming more broadly expected. Such increased scrutiny may result in increased costs, enhanced compliance or disclosure obligations,
or other adverse impacts on our business, financial condition or results of operations. If our ESG practices and reporting do
not meet investor or other stakeholder expectations, which continue to evolve, we may be subject to investor or regulator engagement regarding
such matters. In addition, new sustainability rules and regulations have been adopted and may continue to be introduced in various states
and other jurisdictions. For example, the SEC has published proposed rules that would require companies to provide significantly expanded
climate-related disclosures in their periodic reporting, which may require us to incur significant additional costs to comply and impose
increased oversight obligations on our management and board of directors. Our failure to comply with any applicable rules or regulations
could lead to penalties and adversely impact our reputation, access to capital and employee retention. Such ESG matters may
also impact our third-party contract manufacturers and other third parties on which we rely, which may augment or cause additional impacts
on our business, financial condition, or results of operations.
Any resurgence of the COVID-19 pandemic
could adversely affect our business, financial condition and results of operations.
In December 2019, an
outbreak of a novel coronavirus disease, or COVID-19, was first identified and began to spread across the globe and, in March 2020,
the World Health Organization declared it a pandemic. This contagious disease spread across the globe and impacted economic activity
and financial markets worldwide, including countries in which our end users and customers are located, as well as the United States
and Israel where we have business operations. As a result of the COVID-19 pandemic, government authorities around the world ordered
schools and businesses to close, imposed restrictions on non-essential activities and required people to remain at home while
imposing significant restrictions on traveling and social gatherings.
While COVID-19 has not had
a material adverse impact on our operations through the date of this Annual Report, our ability to attract, serve, retain or upsell customers
is inherently uncertain and depends on the duration, severity and potential resurgence of the pandemic and its impact on end users, customers
and the macroeconomic environment as a whole. Prior to the COVID-19 pandemic, our employees traveled frequently to establish and maintain
relationships with one another, as well as our customers, partners, and investors. Although we continue to monitor the situation, any
renewed limitations on travel and doing business in person may negatively affect our customer success efforts, sales and marketing efforts,
challenge our ability to enter into customer contracts in a timely manner, slow down our recruiting efforts, or create operational or
other challenges, any of which could adversely affect our business, financial condition and results of operations.
20
Furthermore, COVID-19 has
disrupted and may continue to disrupt the operations of our customers and technology partners for an indefinite period of time, including
as a result of travel restrictions and/or business shutdowns, all of which could negatively impact our business, financial condition and
results of operations. More generally, the COVID-19 pandemic has adversely affected economies and financial markets globally, leading
to an economic downturn, which could decrease technology spending and adversely affect demand for our offerings and harm our business,
financial condition and results of operations. Existing and potential customers may choose to reduce or delay technology investments in
response to the COVID-19 pandemic, or attempt to renegotiate contracts and obtain concessions, which may materially and negatively impact
our operating results, financial condition and prospects. For example, as a result of COVID-19, we have experienced and expect to continue
to experience an increase in the average length of sales cycles to onboard new customers, delays in new projects, and requests by some
customers for extension of payment obligations, all of which could materially and adversely impact our business, financial condition and
results of operations in future periods. The COVID-19 pandemic has also resulted in, and may continue to result in, significant disruption
of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity. It is
also possible that continued widespread remote work arrangements may have a negative impact on our operations, the execution of our business
plans, the productivity and availability of key personnel and other employees necessary to conduct our business, and on third-party service
providers who perform critical services for us, or otherwise cause operational failures due to changes in our normal business practices
necessitated by the pandemic and related governmental actions. If a natural disaster, power outage, connectivity issue, or other event
occurred that impacted our employees' ability to work remotely, it may be difficult or, in certain cases, impossible, for us to
continue our business for a substantial period of time. The increase in remote working may also result in privacy, data protection, data
security, and fraud risks, and our understanding of applicable legal and regulatory requirements, as well as the latest guidance from
regulatory authorities in connection with the COVID-19 pandemic, may be subject to legal or regulatory challenge, particularly as regulatory
guidance evolves in response to future developments.
It is not possible at this time to estimate the long-term impact that
COVID-19 could have on our business, financial condition and results of operations as the impact will depend on future developments, which
are highly uncertain and cannot be predicted, including, but not limited to, the duration and spread of the pandemic, its severity, the
actions to contain the virus or treat its impact, and how quickly and to what extent normal economic and operating conditions can resume.
Even after the COVID-19 pandemic has subsided, we may experience materially adverse impacts to our business as a result of its global
economic impact, including any recession that has occurred or may occur in the future.
Risks Related to Information Technology, Intellectual
Property and Data Security and Privacy
A real or perceived bug, defect, security
vulnerability, error, or other performance failure involving our products and services could cause us to lose revenue, damage our reputation,
and expose us to liability.
Our products and services
are inherently complex and, despite extensive testing and quality control, have in the past and may in the future contain bugs, defects,
security vulnerabilities, errors, or other performance failures, especially when first introduced, or otherwise not perform as intended.
Any such bug, defect, security vulnerability, error, or other performance failure could cause damage to our reputation, loss of customers
or revenue, order cancellations, service terminations, and lack of market acceptance of our offerings. As the use of our offerings among
new and existing customers expands, particularly to more sensitive, secure, or mission critical uses, we may be subject to increased scrutiny,
potential reputational risk, or potential liability should our offerings fail to perform as contemplated in such deployments. We have
in the past and may in the future need to issue corrective releases of our software to fix these defects, errors or performance failures,
which could require us to allocate significant research and development and customer support resources to address these problems. Despite
our efforts, such corrections may take longer to develop and release than we or our customers anticipate and expect.
Any limitation of liability
provision contained in an agreement with a customer, user, third-party vendor, service provider, or partner may not be enforceable, adequate
or effective as a result of existing or future applicable law or judicial decisions, and may not function to limit our liability arising
from regulatory enforcement or other specific circumstances. The sale and support of our offerings entail the risk of liability claims,
which could be substantial in light of the use of our offerings in enterprise-wide environments. In addition, our insurance against any
such liability may not be adequate to cover a potential claim, and may be subject to exclusions, or subject us to the risk that the insurer
will deny coverage as to any future claim or exclude from our coverage such claims in policy renewals, increase our fees or deductibles
or impose co-insurance requirements. Any such bugs, defects, security vulnerabilities, errors, or other performance failures in our products
and services, including as a result of denial of claims by our insurer or the successful assertion of claims by others against us that
exceed available insurance coverage, or the occurrence of changes in our insurance policies, including increases or the imposition of
large deductible or co-insurance requirements, could have a material adverse effect on our business, including our financial condition,
results of operations and reputation.
21
If we or our third-party service providers
experience a security breach, data loss or other compromise, including if unauthorized parties obtain access to our customers' data,
our reputation may be harmed, demand for our products and services may be reduced, and we may incur significant liabilities.
Our business products and
services involve the collection, storage, processing, transmission and other use of data, including certain confidential, sensitive, and
personal information. Any security breach, data loss, or other compromise, including those resulting from a cybersecurity attack, phishing
attack, or any unauthorized access, unauthorized usage, virus or similar breach or disruption could result in the loss or destruction
of or unauthorized access to, or use, alteration, disclosure, or acquisition of, data, damage to our reputation, litigation, regulatory
investigations, or other liabilities. These attacks may come from individual hackers, criminal groups, and state-sponsored organizations.
If our security measures are breached as a result of third-party action, employee error or negligence, a defect or bug in our offerings
or those of our third-party service providers, malfeasance or otherwise and, as a result, someone obtains unauthorized access to any data,
including our confidential, sensitive, or personal information or the confidential, sensitive, or personal information of our customers,
or other persons, or any of these types of information is lost, destroyed, or used, altered, disclosed, or acquired without authorization,
our reputation may be damaged, our business may suffer, and we could incur significant liability, including under applicable data privacy
and security laws and regulations. Even the perception of inadequate security may damage our reputation and negatively impact our ability
to win new customers and retain and receive timely payments from existing customers. Further, we could be required to expend significant
capital and other resources to protect against and address any data security incident or breach, which may not be covered or fully covered
by our insurance and which may involve payments for investigations, forensic analyses, regulatory compliance, breach notification, legal
advice, public relations advice, system repair or replacement, or other services. In addition, we do not maintain cybersecurity insurance
and therefore have no insurance coverage in the event of any breach or disruption of our or our customers' or service providers'
systems, including any unauthorized access or loss of any personal data that we may collect, store or otherwise process. To the extent
that any disruption or security breach were to result in a loss of, or damage to, our data or systems, or inappropriate disclosure of
confidential or proprietary information, we could incur liability, our competitive position could be harmed and our business, operations,
and financial results could be adversely affected.
In addition, part of the process
of our solution is replacing our customer's native image and video files with optimized, compressed files. This process and replacement
of files can result in data loss. Additionally, we do not directly control content that our customers store or use in our products. If
our customers use our products for the transmission or storage of personal, confidential, sensitive, or other information about individuals
and our security measures are or are believed to have been breached as a result of third-party action, employee error, malfeasance or
otherwise, our reputation could be damaged, our business may suffer, and we could incur significant liability.
We engage third-party vendors
and service providers to store and otherwise process some of our and our customers' data, including personal, confidential, sensitive,
and other information about individuals. Our vendors and service providers may also be the targets of cyberattacks, malicious software,
phishing schemes, and fraud. Our ability to monitor our vendors and service providers' data security is limited, and, in any event,
third parties may be able to circumvent those security measures, resulting in the unauthorized access to, misuse, acquisition, disclosure,
loss, alteration, or destruction of our and our customers' data, including confidential, sensitive, and other information about
individuals.
Techniques used to sabotage
or obtain unauthorized access to systems or networks are constantly evolving and, in some instances, are not identified until after they
have been launched against a target. We and our service providers may be unable to anticipate these techniques, react in a timely manner,
or implement adequate preventative and mitigating measures. If we are unable to efficiently and effectively maintain and upgrade our system
safeguards, we may incur unexpected costs and certain of our systems may become more vulnerable to unauthorized access or disruption.
Any of the foregoing could have a material adverse effect on our business, including our financial condition, results of operations and
reputation.
22
Insufficient investment in, or interruptions
or performance problems associated with, our technology and infrastructure, including in connection with our Beamr HW-Accelerated Content
Adaptive Encoding solution is to be deployed on a public cloud infrastructure, and our reliance on technologies from third parties, may
adversely affect our business operations and financial results.
Customers of our offerings
will need to be able to access our platform at any time, without interruption or degradation of performance. Our Beamr HW-Accelerated
Content Adaptive Encoding solution is to be deployed on a public cloud infrastructure with the goal of providing improved stability, reliability,
scalability and elasticity for our offerings. We may discover deficiencies in our design, implementation or maintenance of our Beamr HW-Accelerated
Content Adaptive Encoding solution that could adversely affect our business, financial condition and results of operations. Furthermore,
we cannot yet know the ultimate impact of this or any similar future event on our customer relationships.
In addition, third-party cloud
providers run their own platforms that we access, and we are, therefore, vulnerable to their service interruptions and any changes in
their product offerings. Any limitation on the capacity of our third-party hosting services could impede our ability to onboard new customers
or expand the usage of our existing customers, which could adversely affect our business, financial condition and results of operations.
In addition, any incident affecting our third-party hosting services' infrastructure that may be caused by cyber-attacks, computer
viruses, malware, systems failures or other technical malfunctions, natural disasters, fire, flood, severe storm, earthquake, power loss,
telecommunications failures, terrorist or other attacks, protests or riots, and other similar events beyond our control could negatively
affect our cloud-based offerings. It is also possible that our customers and regulators would seek to hold us accountable for any breach
of security affecting a third-party cloud provider's infrastructure and we may incur significant liability in investigating such
an incident and responding to any claims, investigations, or proceedings made or initiated by those customers, regulators, and other third
parties. We may not be able to recover a material portion of such liabilities from any of our third-party cloud providers. It may also
become increasingly difficult to maintain and improve our performance and cost, especially during peak usage times, as our processing
cost might be higher during peak hours. Moreover, our insurance may not be adequate to cover such liability and may be subject to exclusions.
Any of the above circumstances or events may adversely affect our business, financial condition and results of operations.
In the event that our service
agreements with our third-party hosting services are terminated, or there is a lapse of service, elimination of services or features that
we utilize, interruption of internet service provider connectivity or damage to our providers' facilities, we could experience interruptions
in access to our platform as well as significant delays and additional expense in arranging or creating new facilities and services and/or
re-architecting our cloud-based offerings for deployment on a different cloud infrastructure service provider, which could adversely affect
our business, financial condition and results of operations. Upon the termination or expiration of such service agreements, we cannot
guarantee that adequate third-party hosting services will be available to us on commercially acceptable terms or within adequate timelines
from the same or different hosting services providers or at all.
We may also rely on cloud
technologies from third parties in order to operate critical functions of our business, including financial management services, relationship
management services, and lead generation management services. If these services become unavailable due to extended outages or interruptions
or because they are no longer available on commercially reasonable terms or prices, our expenses could increase, our ability to manage
our finances could be interrupted, our processes for managing sales of our products and supporting our customers could be impaired, and
our ability to generate and manage sales leads could be weakened until equivalent services are identified, obtained, and implemented.
Even if such services are available, we may not be able to identify, obtain and implement such services in time to avoid disruption to
our business, and such services may only be available on a more costly basis or otherwise less favorable terms. Any of the foregoing could
have a material adverse effect on our business, including our financial condition, results of operations and reputation.
Failure to protect our proprietary technology,
or to obtain, maintain, protect and enforce sufficiently broad intellectual property rights therein, could substantially harm our business,
financial condition and results of operations.
Our success depends to a significant
degree on our ability to protect our proprietary technology, methodologies, know-how, and brand. We rely on a combination of trademarks,
copyrights, patents, trade secret laws, contractual restrictions, and other intellectual property laws and confidentiality procedures
to establish and protect our proprietary rights. However, our competitors or other third parties could reverse engineering our code and
use it to create software and service offerings that compete with ours. While software can, in some cases, be protected under copyright
law, in order to bring a copyright infringement lawsuit in the United States, the copyright must first be registered. We have chosen not
to register any copyrights and rely on trade secret protection in addition to unregistered copyrights to protect our proprietary software.
Accordingly, the remedies and damages available to us for unauthorized use of our software may be limited.
23
Further, the steps we take
to protect our intellectual property and proprietary rights may be inadequate. We may not be able to register our intellectual property
rights in all jurisdictions where we conduct or anticipate conducting business, and may experience conflicts with third parties who contest
our applications to register our intellectual property. Even if registered or issued, we cannot guarantee that our trademarks, patents,
copyrights or other intellectual property or proprietary rights will be of sufficient scope or strength to provide us with any meaningful
protection or commercial advantage. We will not be able to protect our intellectual property and proprietary rights if we are unable to
enforce our rights or if we do not detect infringement, misappropriation, dilution or other unauthorized use or violation thereof. If
we fail to defend and protect our intellectual property rights adequately, our competitors and other third parties may gain access to
our proprietary technology, information and know-how, reverse-engineer our software, and infringe upon or dilute the value of our brand,
and our business may be harmed. In addition, obtaining, maintaining, defending, and enforcing our intellectual property rights might entail
significant expense. Any patents, trademarks, copyrights, or other intellectual property rights that we have or may obtain may be challenged
by others or invalidated through administrative process or litigation. Even if we continue to seek patent protection in the future, we
may be unable to obtain further patent protection for our technology. In addition, any patents issued in the future may not provide us
with competitive advantages, may be designed around by our competitors, or may be successfully challenged by third parties. Furthermore,
legal standards relating to the validity, enforceability, and scope of protection of intellectual property rights are uncertain.
We may be unable to prevent
third parties from acquiring domain names or trademarks that are similar to, infringe upon, dilute or diminish the value of our trademarks
and other proprietary rights. Additionally, our trademarks may be opposed, otherwise challenged or declared invalid, unenforceable or
generic, or determined to be infringing on or dilutive of other marks. We may not be able to protect our rights in these trademarks, which
we need in order to build name recognition with customers. If third parties succeed in registering or developing common law rights in
such trademarks and we are not successful in challenging such third-party rights, or if our trademark rights are successfully challenged,
we may not be able to use our trademarks to commercialize our products in certain relevant jurisdictions.
Despite our precautions, it
may be possible for unauthorized third parties to copy our products and use information that we regard as proprietary to create offerings
that compete with ours. Effective patent, trademark, copyright, and trade secret protection may not be available to us in every country
in which our products are available. The laws of some countries may not be as protective of intellectual property rights as those in the
United States, and mechanisms for enforcement of intellectual property rights may be inadequate. As we continue to expand our international
activities, our exposure to unauthorized copying and use of our products and proprietary information will likely increase. Accordingly,
despite our efforts, we may be unable to prevent third parties from infringing upon, diluting, misappropriating or otherwise violating
our intellectual property rights.
We have devoted substantial
resources to the development of our technology, business operations and business plans. We attempt to protect our intellectual property
and proprietary information, including trade secrets, by implementing administrative, technical and physical practices, including source
code access controls, to secure our proprietary information. We also seek to enter into confidentiality, non-compete, proprietary, and
inventions assignment agreements with our employees, consultants and contractors, and enter into confidentiality agreements with other
parties, such as licensees and customers. However, such agreements may not be self-executing, and there can be no guarantee that all applicable
parties have executed such agreements. No assurance can be given that these practices or agreements will be effective in controlling access
to and distribution of our proprietary information, or in providing adequate remedies in the event of unauthorized access or distribution,
especially in certain states and countries, including Israel and Russia, that are less willing to enforce such agreements or otherwise
provide protection for trade secrets. Further, these agreements may not prevent our competitors from independently developing technologies
that are substantially equivalent or superior to our products, and in such cases we would not be able to assert trade secret rights against
such parties. We also employ individuals who were previously employed at other companies in our field, and our efforts to ensure that
such individuals do not use the proprietary information or know-how of others in their work for us may not prevent others from claiming
that we or our employees or independent contractors have used or disclosed intellectual property, including trade secrets or other proprietary
information, of a former employer or other third parties. Litigation may be necessary to defend against any such claims. If we are unsuccessful
in defending against any such claims, we may be liable for damages or prevented from using certain intellectual property, which in turn
could materially adversely affect our business, financial condition or results of operations; even if we are successful in defending against
such claims, litigation could result in substantial costs and distract management and other employees.
24
In order to protect our intellectual
property and proprietary rights and to monitor for and take action against any infringement, misappropriation or other violations thereof,
we may be required to spend significant resources. Litigation may be necessary to enforce and protect our trade secrets and other intellectual
property and proprietary rights, which could be costly, time-consuming, and distracting to management, and could result in the impairment
or loss of portions of our intellectual property. Further, our efforts to enforce our intellectual property and proprietary rights may
be met with defenses, counterclaims, and countersuits attacking the ownership, scope, validity and enforceability of such rights. Our
inability to protect our proprietary technology or our brand against unauthorized copying or use, as well as any costly litigation or
diversion of our management's attention and resources, could delay further sales or the implementation of our offerings or impair
their functionality, delay introductions of new offerings, result in our substituting inferior or more costly technologies into our offerings,
or injure our reputation. Any of the foregoing could materially and adversely affect our business, financial condition, results of operations
and growth prospects.
We could incur substantial costs and otherwise
suffer harm as a result of any claim of infringement, misappropriation or other violation of another party's intellectual property
or proprietary rights.
In recent years, there has
been significant litigation involving patents and other intellectual property and proprietary rights in the software industry. Our competitors
and others may now and in the future have significantly larger and more mature patent portfolios than we have. Even a large patent portfolio
may not serve as a deterrent to litigation by certain third parties, some of whose sole or primary business is to assert patent claims
and some of whom have sent letters to and/or filed suit alleging infringement against us or some of our customers. We could incur substantial
costs in prosecuting or defending any intellectual property litigation. If we sue to enforce our rights or are sued by a third party claiming
that our offerings infringe, misappropriate or violate their rights, the litigation could be expensive and could divert management attention
and resources away from our core business operations. In addition, there could be public announcements of the results of hearings, motions
or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could
have a material adverse effect on the price of our ordinary shares.
Any intellectual property
litigation to which we might become a party, or for which we are required to provide indemnification, may require us to do one or more
of the following:
●
cease selling or using offerings that incorporate or are otherwise covered by the intellectual property rights that we allegedly infringe, misappropriate or otherwise violate;
●
make substantial payments for legal fees, settlement payments or other costs or damages, including potentially treble damages if we are found liable for willful infringement;
●
obtain a license to sell or use the relevant technology, which may not be available on reasonable terms or at all, may be non-exclusive and thereby allow our competitors and other parties access to the same technology, and may require the payment of substantial licensing, royalty or other fees; or
●
redesign the allegedly infringing offerings to avoid infringement, misappropriation or other violation, which could be costly, time-consuming or impossible.
If we are required to make
substantial payments or undertake or suffer any of the other actions and consequences noted above as a result of any intellectual property
infringement, misappropriation or violation claims against us or any obligation to indemnify our customers for such claims, such payments,
actions and consequences could materially and adversely affect our business, financial condition, results of operations and growth prospects.
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We could incur substantial costs and otherwise
suffer harm as a result of patent royalty claims, in particular patents related to the implementation of image and video standards
Our products and services
decode and encode media files which are compressed using compression methods that are standardized by international standard bodies such
as ISO and ITU. These standard compression methods include, for example, JPEG and HEIC for images, and H.264, HEVC, EVC and VVC for video.
Some of the algorithms included in these image and video compression standards are covered by patents which are licensed by patent pools,
such as MPEG-LA, Access Advance and Velos Media, and by independent patent holders. Depending on the use case and application of these
image and video standards in our products and services, we may be required to pay patent royalties to such patent pools and independent
patent holders, which might affect our margins and our profitability. Historically, almost all of our products and services have not required
such patent royalty payment however as we expand our SaaS offering, we expect to pay such patent royalties in the future. In addition,
in order to avoid paying patent royalties, some of our customers may opt to use open source compression standards such as VP9 or AV1,
which in turn would require us to support such standards in our products and services, causing additional product development costs due
to this fragmentation.
Indemnity provisions in various agreements
potentially expose us to substantial liability for intellectual property infringement, misappropriation, violation, and other losses.
Our agreements with customers
and other third parties may include indemnification provisions under which we agree to indemnify them for losses suffered or incurred
as a result of claims of intellectual property infringement, misappropriation or violation, damages caused by us to property or persons,
or other liabilities relating to or arising from our software, services or other contractual obligations. Large indemnity payments could
adversely affect our business, financial condition and results of operations. Although we normally seek to contractually limit our liability
with respect to such indemnity obligations, we do not and may not in the future have a cap on our liability in certain agreements, which
could result in substantial liability. Substantial indemnity payments under such agreements could harm our business, financial condition
and results of operations. Any dispute with a customer or other third party with respect to such obligations could have adverse effects
on our relationship with that customer, other existing customers and new customers, and other parties, and could harm our reputation,
business, financial condition and results of operations.
We rely on software and services licensed
from other parties. The loss of software or services from third parties could increase our costs and limit the features available in our
products and services.
Components of our offerings
include various types of software and services licensed from unaffiliated parties. If any of the software or services we license from
others or functional equivalents thereof were either no longer available to us or no longer offered on commercially reasonable terms,
we would be required to either redesign the offerings that include such software or services to function with software or services available
from other parties or develop these components ourselves, which we may not be able to do without incurring increased costs, experiencing
delays in our product launches and the release of new offerings, or at all. Furthermore, we might be forced to temporarily limit the features
available in our current or future products and solutions. If we fail to maintain or renegotiate any of these software or service licenses,
we could face significant delays and diversion of resources in attempting to license and integrate functional equivalents. We and our
customers may also be subject to suits by parties claiming infringement, misappropriation or other violation of third-party intellectual
property or proprietary rights due to the reliance by our solutions on such third-party software and services, such third-party software
and services may contain bugs or other errors that cause our own offerings to malfunction, and our agreements with such third parties
may not contain any, or adequate, warranties, indemnities or other protective provisions on our behalf. Any of the foregoing could materially
and adversely affect our business, financial condition and results of operations.
26
Risks Related to Other Legal, Regulatory and
Tax Matters
Changes in laws and regulations related
to the internet, changes in the internet infrastructure itself, or increases in the cost of internet connectivity and network access may
diminish the demand for our offerings and could harm our business.
The future success of our
business depends upon the continued use of the internet as a primary medium for commerce, communication, and business applications. Federal,
state, or foreign governmental bodies or agencies have in the past adopted, and may in the future adopt, laws or regulations affecting
the use of the internet as a commercial medium. The adoption of any laws or regulations that could reduce the growth, popularity, or use
of the internet, including laws or practices limiting internet neutrality, could decrease the demand for our offerings, increase our cost
of doing business, and adversely affect our results of operations. Changes in these laws or regulations could require us to modify our
offerings, or certain aspects of our offerings, in order to comply with these changes. In addition, government agencies or private organizations
have imposed and may impose additional taxes, fees, or other charges for accessing the internet or commerce conducted via the internet.
These laws or charges could limit the growth of internet-related commerce or communications generally or result in reductions in the demand
for internet-based products such as ours. In addition, the use of the internet as a business tool could be harmed due to delays in the
development or adoption of new standards and protocols to handle increased demands of internet activity, security, reliability, cost,
ease-of-use, accessibility, and quality of service. Further, our platform depends on the quality of our customers' and end users'
access to the internet.
On June 11, 2018, the repeal
of the "net neutrality" rules of the Federal Communications Commission, or the FCC, took effect and returned to a "light-touch"
regulatory framework. The prior rules were designed to ensure that all online content is treated the same by internet service providers
and other companies that provide broadband services. Additionally, on September 30, 2018, California enacted the California Internet Consumer
Protection and Net Neutrality Act of 2018, making California the fourth state to enact a state-level net neutrality law since the FCC
repealed its nationwide regulations, mandating that all broadband services in California must be provided in accordance with state net
neutrality requirements. The U.S. Department of Justice has sued to block the law going into effect, and California has agreed to delay
enforcement until the resolution of the FCC's repeal of the federal rules. A number of other states are considering legislation
or executive actions that would regulate the conduct of broadband providers. We cannot predict whether the FCC order or state initiatives
will be modified, overturned, or vacated by legal action of the court, federal legislation or the FCC. With the repeal of net neutrality
rules in effect, we could incur greater operating expenses, which could harm our results of operations.
As the internet continues
to experience growth in the number of users, frequency of use, and amount of data transmitted, the internet infrastructure that we and
our customers and end users rely on may be unable to support the demands placed upon it. The failure of the internet infrastructure that
we or our customers and end users rely on, even for a short period of time, could adversely affect our business, financial condition and
results of operations. In addition, the performance of the internet and its acceptance as a business tool has been harmed by "viruses,"
"worms" and similar malicious programs and the internet has experienced a variety of outages and other delays as a result
of damage to portions of its infrastructure. If the use of the internet is adversely affected by these issues, demand for our offerings
could decline.
Internet access is frequently
provided by companies that have significant market power and the ability to take actions that degrade, disrupt, or increase the cost of
user access to our offerings. As demand for online media increases, there can be no assurance that internet and network service providers
will continue to price their network access services on reasonable terms. The distribution of online media requires delivery of digital
content files and providers of network access and distribution may change their business models and increase their prices significantly,
which could slow the widespread adoption of such services. We could incur greater operating expenses and our customer acquisition and
retention could be negatively impacted if network operators:
●
implement usage-based pricing;
●
discount pricing for competitive products;
●
otherwise materially change their pricing rates or schemes;
●
charge us to deliver our traffic at certain levels or at all;
27
●
throttle traffic based on its source or type;
●
implement bandwidth caps or other usage restrictions; or
●
otherwise try to monetize or control access to their networks.
In order for our services
to be successful, there must be a reasonable price model in place to allow for the continuous distribution of digital media files. We
have limited or no control over the extent to which any of these circumstances may occur, and if network access or distribution prices
rise, our business, financial condition and results of operations would likely be adversely affected.
Failure to comply with anti-bribery, anti-corruption,
anti-money laundering laws, and similar laws, could subject us to penalties and other adverse consequences.
We are subject to the U.S.
Foreign Corrupt Practices Act of 1977, as amended, or the FCPA, the U.S. domestic bribery statute contained in 18 U.S.C. § 201, the
U.S. Travel Act, the USA PATRIOT Act, Chapter 9 (sub-chapter 5) of the Israeli Criminal Law, 5737-1977, the Israeli Prohibition on Money
Laundering Law, 5760-2000 and other anti-bribery and anti-money laundering laws in countries outside of the United States in which we
conduct our activities, such as Russia. Anti-corruption and anti-bribery laws have been enforced aggressively in recent years and are
interpreted broadly to generally prohibit companies, their employees, and their third-party intermediaries from authorizing, offering,
or providing, directly or indirectly, improper payments or benefits to recipients in the public or private sector.
We sometimes leverage third
parties to sell our offerings and conduct our business abroad. We and our third-party intermediaries may have direct or indirect interactions
with officials and employees of government agencies or state-owned or affiliated entities and may be held liable for the corrupt or other
illegal activities of these third-party business partners and intermediaries, our employees, representatives, contractors, partners, and
agents, even if we do not explicitly authorize such activities. We cannot assure you that our employees and agents will not take actions
in violation of applicable law, for which we may be ultimately held responsible. As we increase our international sales and business operations,
our risks under these laws are likely to increase.
Any actual or alleged violation
of the FCPA or other applicable anti-bribery, anti-corruption or anti-money laundering laws could result in whistleblower complaints,
sanctions, settlements, prosecution, enforcement actions, fines, damages, adverse media coverage, investigations, loss of export privileges,
severe criminal or civil sanctions, or suspension or debarment from U.S. government contracts, any of which would adversely affect our
reputation, as well as our business, financial condition, results of operations and growth prospects. Responding to any investigation
or action would likely result in a materially significant diversion of management's attention and resources and significant defense
costs and other professional fees. In addition, the U.S. government may seek to hold us liable for successor liability for FCPA violations
committed by companies in which we invest or that we acquire.
Changes in financial accounting standards
or practices may cause adverse, unexpected financial reporting fluctuations and affect our results of operations.
The accounting rules and regulations
that we must comply with are complex and subject to interpretation by the Financial Accounting Standards Board, or the FASB, the SEC and
various bodies formed to promulgate and interpret appropriate accounting principles. Recent actions and public comments from the FASB
and the SEC have focused on the integrity of financial reporting and internal controls. In addition, many companies' accounting
policies are being subject to heightened scrutiny by regulators and the public. Further, the accounting rules and regulations are continually
changing in ways that could materially impact our financial statements.
We cannot predict the impact
of future changes to accounting principles or our accounting policies on our financial statements going forward, which could have a significant
effect on our reported financial results and could affect the reporting of transactions completed before the announcement of the change.
In addition, if we were to change our critical accounting estimates, including those related to the recognition of subscription revenue
and other revenue sources, our operating results could be significantly affected.
28
Changes in U.S. and foreign tax laws could
have a material adverse effect on our business, cash flow, results of operations or financial conditions.
We are subject to taxation
in several countries, including the United States and Israel; changes in tax laws or challenges to our tax positions could adversely affect
our business, results of operations, and financial condition. As such, we are subject to tax laws, regulations, and policies of the U.S.
federal, state, and local governments and of comparable taxing authorities in foreign jurisdictions. Changes in tax laws, including the
U.S. federal tax legislation enacted in 2017, commonly referred to as the Tax Cuts and Jobs Act of 2017, as well as other factors, could
cause us to experience fluctuations in our tax obligations and effective tax rates in the future and otherwise adversely affect our tax
positions and/or our tax liabilities. There can be no assurance that our effective tax rates, tax payments, tax credits, or incentives
will not be adversely affected by changes in tax laws in various jurisdictions.
The Biden administration has
proposed a number of changes to the U.S. tax system. The proposals include changes that would increase U.S. corporate tax rates, impose
a corporate minimum book tax, and double the tax rate on and make other tax changes to "global intangible low-taxed income"
earned by foreign subsidiaries. Many aspects of the proposals are unclear or undeveloped. We are unable to predict which, if any, U.S.
tax reform proposals will be enacted into law, and what effects any enacted legislation might have on our liability for U.S. tax.
Unanticipated changes in effective tax rates
or adverse outcomes resulting from examination of our income or other tax returns could expose us to greater than anticipated tax liabilities.
The tax laws applicable to
our business, including the laws of the United States, Israel, Russia, and other jurisdictions, are subject to interpretation, and certain
jurisdictions may aggressively interpret their laws in an effort to raise additional tax revenue. The taxing authorities of the jurisdictions
in which we operate may challenge our methodologies for valuing developed technology or intercompany arrangements or our revenue recognition
policies, which could increase our worldwide effective tax rate and adversely affect our financial position and results of operations.
It is possible that tax authorities may disagree with certain positions we have taken, and any adverse outcome of such a review or audit
could have a negative effect on our business, financial condition and results of operations. Further, the determination of our worldwide
provision for income taxes and other tax liabilities requires significant judgment by management, and there are transactions where the
ultimate tax determination is uncertain. Although we believe that our estimates are reasonable, the ultimate tax outcome may differ from
the amounts recorded in our consolidated financial statements and may materially affect our financial results in the period or periods
for which such determination is made.
Our corporate structure and intercompany
arrangements are subject to the tax laws of various jurisdictions, and we could be obligated to pay additional taxes, which would adversely
affect our results of operations.
Based on our current corporate
structure, we are subject to taxation in several jurisdictions around the world with increasingly complex tax laws, the application of
which can be uncertain. The amount of taxes we pay in these jurisdictions could increase substantially as a result of changes in the applicable
tax principles, including increased tax rates, new tax laws or revised interpretations of existing tax laws and precedents. The authorities
in these jurisdictions could review our tax returns or require us to file tax returns in jurisdictions in which we are not currently filing,
and could impose additional tax, interest, and penalties. These authorities could also claim that various withholding requirements apply
to us or our subsidiaries, assert that benefits of tax treaties are not available to us or our subsidiaries, or challenge our methodologies
for valuing developed technology or intercompany arrangements, including our transfer pricing. The relevant taxing authorities may determine
that the manner in which we operate our business does not achieve the intended tax consequences. If such a disagreement were to occur,
and our position was not sustained, we could be required to pay additional taxes, interest, and penalties. Such authorities could claim
that various withholding requirements apply to us or our subsidiaries or assert that benefits of tax treaties are not available to us
or our subsidiaries. Any increase in the amount of taxes we pay or that are imposed on us could increase our worldwide effective tax rate
and adversely affect our business, financial condition and results of operations.
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We could be required to collect additional
sales, use, value added, digital services or other similar taxes or be subject to other liabilities that may increase the costs our customers
would have to pay for our offerings and adversely affect our results of operations.
We could be required to collect
sales, value added and other similar taxes in a number of jurisdictions. One or more U.S. states or countries may seek to impose incremental
or new sales, use, value added, digital services, or other tax collection obligations on us. Further, an increasing number of U.S. states
have considered or adopted laws that attempt to impose tax collection obligations on out-of-state companies. Additionally, the Supreme
Court of the United States has ruled that online sellers can be required to collect sales and use tax despite not having a physical presence
in the state of the customer. As a result, U.S. states and local governments may adopt, or begin to enforce, laws requiring us to calculate,
collect, and remit taxes on sales in their jurisdictions, even if we have no physical presence in that jurisdiction. A successful assertion
by one or more U.S. states requiring us to collect taxes where we presently do not do so, or to collect more taxes in a jurisdiction in
which we currently do collect some taxes, could result in substantial liabilities, including taxes on past sales, as well as interest
and penalties. Furthermore, certain jurisdictions, such as the United Kingdom and France, have recently introduced a digital services
tax, which is generally a tax on gross revenue generated from users or customers located in those jurisdictions, and other jurisdictions
have enacted or are considering enacting similar laws. A successful assertion that we should have been or should currently be collecting
additional sales, use, value added, digital services or other similar taxes in a particular jurisdiction could, among other things, result
in substantial tax payments, create significant administrative burdens for us, discourage potential customers from subscribing to our
platform due to the incremental cost of any such sales or other related taxes, or otherwise adversely affect our business.
Risks Related to Our Operations in Israel
Political, economic and military conditions
in Israel could materially and adversely affect our business.
We have offices in Herzeliya,
near Tel Aviv, Israel where our primary operations, research and development, and certain other finance activities are based. In addition,
a number of our officers and directors, as well as our founder, are residents of Israel. As of April 15, 2023, we had six full-time and
part-time employees in Israel. Accordingly, political, economic and military conditions in Israel and the surrounding region may directly
affect our business and operations. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place
between Israel and its neighboring countries, as well as terrorist acts committed within Israel by hostile elements. In recent years,
Israel has been engaged in sporadic armed conflicts with Hamas, an Islamist terrorist group that controls the Gaza Strip, with Hezbollah,
an Islamist terrorist group that controls large portions of southern Lebanon, and with Iranian-backed military forces in Syria. In addition,
Iran has threatened to attack Israel and may be developing nuclear weapons. Some of these hostilities were accompanied by missiles being
fired against civilian targets in various parts of Israel, including areas in which our employees, and some of our consultants are located,
and negatively affected business conditions in Israel. Any hostilities, armed conflicts, terrorist activities involving Israel or the
interruption or curtailment of trade between Israel and its trading partners, or any political instability in the region could adversely
affect business conditions and our results of operations and could make it more difficult for us to raise capital. Parties with whom we
do business have sometimes declined to travel to Israel during periods of heightened unrest or tension, forcing us to make alternative
arrangements when necessary in order to meet our business partners face to face. In addition, the political and security situation in
Israel may result in parties with whom we have agreements involving performance in Israel claiming that they are not obligated to perform
their commitments under those agreements pursuant to force majeure provisions in such agreements.
Continued hostilities between
Israel and its neighbors and any future armed conflict, terrorist activity or political instability in the region could adversely affect
our operations in Israel and adversely affect the market price of our ordinary shares. An escalation of tensions or violence might result
in a significant downturn in the economic or financial condition of Israel, which could have a material adverse effect on our operations
in Israel and our business.
Our commercial insurance does
not cover losses that may occur as a result of events associated with war and terrorism. Although the Israeli government currently covers
the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government
coverage will be maintained or that it will sufficiently cover our potential damages. Any losses or damages incurred by us could have
a material adverse effect on our business. Any armed conflicts or political instability in the region would likely negatively affect business
conditions and could adversely affect our results of operations.
Further, in the past, the
State of Israel and Israeli companies have been subjected to economic boycotts. Several countries still restrict business with the State
of Israel and with Israeli companies. These restrictive laws and policies may have an adverse impact on our operating results, financial
condition or the expansion of our business. A campaign of boycotts, divestment and sanctions has been undertaken against Israel, which
could also adversely impact our business.
30
Israel's most recent
general elections were held on April 9, 2019, September 17, 2019, March 2, 2020, March 23, 2021 and November 1, 2022. In addition, proposed
judicial reform has sparked widespread protests across Israel. Uncertainty surrounding future elections and the outcome of the judicial
reform in Israel may continue and the political situation in Israel may further deteriorate. Actual or perceived political instability
in Israel or any negative changes in the political environment, may individually or in the aggregate adversely affect the Israeli economy
and, in turn, our business, financial condition, results of operations and growth prospects.
Our operations could be disrupted as a result
of the obligation of certain of our personnel residing in Israel to perform military service.
Many of our officers and employees
reside in Israel and may be required to perform annual military reserve duty. Currently, all male adult citizens and permanent residents
of Israel under the age of 40 (or older, depending on their position with the Israeli Defense Forces reserves), unless exempt, are obligated
to perform military reserve duty annually and are subject to being called to active duty at any time under emergency circumstances. Our
operations could be disrupted by the absence for a significant period of one or more of our key officers and employees due to military
service. Any such disruption could have a material adverse effect on our business, results of operations and financial condition.
We may not be able to enforce covenants
not-to-compete under current Israeli law.
We have non-competition agreements
with most of our employees, many of which are governed by Israeli law. These agreements generally prohibit our employees from competing
with us or working for our competitors for a specified period following termination of their employment. However, Israeli courts are reluctant
to enforce non-compete undertakings of former employees and tend, if at all, to enforce those provisions for relatively brief periods
of time in restricted geographical areas and only when the employee has unique value specific to that employer's business and not
just regarding the professional development of the employee. Any such inability to enforce non-compete covenants may cause us to lose
any competitive advantage resulting from advantages provided to us by such confidential information.
We may become subject to claims for remuneration
or royalties for assigned service invention rights by our employees and consultants, which could result in litigation and would adversely
affect our business.
A significant portion of our
intellectual property has been developed by our employees and consultants in the course of their engagement with us. Under the Israeli
Patent Law, 5727-1967, or the Patent Law, inventions conceived by an employee during the scope of his or her employment relationship with
a company are regarded as "service inventions," which belong to the employer, absent a specific agreement stating otherwise.
The Patent Law also provides that absent an agreement providing otherwise, the Israeli Compensation and Royalties Committee, or the Committee,
a body constituted under the Patent Law, shall determine whether the employee is entitled to remuneration for his or her inventions. Case
law clarifies that the right to receive consideration for "service inventions" can be waived by the employee and that such
waiver does not necessarily have to be explicit. The Committee will examine, on a case-by-case basis, the general contractual framework
between the parties, using interpretation rules of the general Israeli contract laws. Further, the Committee has not yet determined one
specific formula for calculating this remuneration, but rather uses the criteria specified in the Patent Law. Although we generally seek
to enter into assignment-of-invention agreements with our employees and consultants pursuant to which such individuals assign to us all
rights to any inventions created in the scope of their employment or engagement with us, we cannot guarantee that all such agreements
are self-executing or have been entered into by all applicable individuals. Even when such agreements include provisions regarding the
assignment and waiver of rights to additional compensation in respect of inventions created within the course of their employment or consulting
relationship with us, including in respect of service inventions, we cannot guarantee that such provisions will be upheld by Israeli courts,
as a result of uncertainty under Israeli law with respect to the efficacy of such provisions. We may face claims demanding remuneration
in consideration for assigned inventions, which could require us to pay additional remuneration or royalties to our current and former
employees and consultants, or be forced to litigate such claims, which could negatively affect our business.
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It may be difficult for investors in the
United States to enforce any judgments obtained against us or some of our directors or officers.
The majority of our assets
are located outside the U.S. In addition, our officers are nationals and/or residents of countries other than the U.S., and all or a substantial
portion of such persons' assets are located outside the U.S. As a result, it may be difficult for investors to enforce within the
United States any judgments obtained against us or any of our non-U.S. officers, including judgments predicated upon the civil liability
provisions of the securities laws of the U.S. or any state thereof. Additionally, it may be difficult to assert U.S. securities law claims
in actions originally instituted outside of the U.S. Israeli courts may refuse to hear a U.S. securities law claim because Israeli courts
may not be the most appropriate forums in which to bring such a claim. Even if an Israeli court agrees to hear a claim, it may determine
that the Israeli law, and not U.S. law, is applicable to the claim. Further, if U.S. law is found to be applicable, certain 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
still be governed by the Israeli law. Consequently, you may be effectively prevented from pursuing remedies under U.S. federal and state
securities laws against us or any of our non-U.S. directors or officers.
Our amended and restated articles of association
provide that, unless we consent to an alternative forum, the federal district courts of the United States shall be the exclusive forum
for resolution of any complaint asserting a cause of action arising under the Securities Act, and under the Courts Law 5744-1984 [consolidated
version] ("Courts Law") the competent courts of Tel Aviv, Israel, shall be the exclusive forum for resolution of substantially
all disputes between the Company and its shareholders under the Companies Law and the Israeli Securities Law, which could limit our shareholders'
ability to choose the judicial forum for disputes with us, our directors, shareholders, or other employees.
Section 22 of the Securities
Act creates concurrent jurisdiction for U.S. federal and state courts over all such Securities Act actions. Accordingly, both U.S. state
and federal courts have jurisdiction to entertain such claims. To prevent having to litigate claims in multiple jurisdictions and the
threat of inconsistent or contrary rulings by different courts, among other considerations, our amended and restated 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 exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. This exclusive
forum provision will not apply to suits brought to enforce any liability or duty created by the Exchange Act, and our shareholders cannot
and will not be deemed to have waived our compliance with the U.S. federal securities laws and the rules and regulations thereunder as
a result of our exclusive forum provision.
Under the Courts Law, the
competent courts of Tel Aviv, Israel, is the exclusive forum for the resolution of (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. Such exclusive forum provision is intended to
apply to claims arising under Israeli law and does not apply to claims for which the federal courts would have exclusive jurisdiction,
whether by law or pursuant to our amended and restated articles of association, as described above.
Any person or entity purchasing
or otherwise acquiring any interest in any of our securities shall be deemed to have notice of and consented to the foregoing provisions
of our amended and restated articles of association. However, the enforceability of similar forum provisions (including exclusive federal
forum provisions for actions, suits, or proceedings asserting a cause of action arising under the Securities Act) in other companies'
organizational documents has been challenged in legal proceedings, and there is uncertainty as to whether courts would enforce the exclusive
forum provisions in our amended and restated articles of association. If a court were to find the exclusive forum provisions contained
in our amended and restated articles of association to be inapplicable or unenforceable in an action, we may incur additional costs associated
with resolving such action in other jurisdictions, which could materially adversely affect our business, financial condition, and results
of operations.
Although we believe these
exclusive forum provisions benefit us by providing increased consistency in the application of U.S. federal securities laws or the Companies
Law, as applicable, in the types of lawsuits to which they apply, such exclusive forum provisions may limit a shareholder's ability
to bring a claim in the judicial forum of their choosing for disputes with us or any of our directors, shareholders, officers, or other
employees, which may discourage lawsuits with respect to such claims against us and our current and former directors, shareholders, officers,
or other employees.
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Risks Related to Our Operations in Russia
Russia's invasion of Ukraine and sanctions
brought against Russia could disrupt our software development operations in Russia.
In
addition to our U.S. and Israel operations, we have operations in Russia through our wholly owned subsidiary, Beamr Imaging RU, and may
expand international operations and development in the future. Specifically, we undertake some of our software development and design,
quality assurance, and support in Russia using personnel located there. While a majority of our developers are located in Russia, our
research and development leadership is located in Israel.
On
February 24, 2022, Russia invaded Ukraine. The outbreak of hostilities between the two countries could result in more widespread conflict
and could have a severe adverse effect on the region.
Following Russia's actions, various countries, including the U.S.,
Canada, the United Kingdom, Germany and France, as well as the European Union, issued broad-ranging economic sanctions against Russia.
Such sanctions included, among other things, a prohibition on doing business with certain Russian companies, officials and citizens; a
commitment by certain countries and the European Union to remove selected Russian banks from the Society for Worldwide Interbank Financial
Telecommunications (SWIFT) electronic banking network that connects banks globally; and restrictive measures to prevent the Russian Central
Bank from undermining the impact of the sanctions. In response to sanctions, the Russian Central Bank raised its interest rates and banned
sales of local securities by foreigners. Russia may take additional counter measures or retaliatory actions in the future. The continuation
of these hostilities may result in additional economic and other sanctions against Russia. The potential impact of the conflict and any
resulting bans, sanctions and boycotts on companies doing business in Russia is currently uncertain due to the fluid nature of the conflict
as it is unfolding and has the potential to result in broadened military actions. The duration of ongoing hostilities and such sanctions
and related events cannot be predicted. Uncertainty as to future relations between Russia and the U.S. and other countries in the west,
or between Russia and other eastern European countries, may have a negative impact on our operations.
We
do not operate in any sectors of the Russian economy that have been targeted by U.S. or EU sanctions and have no reason to believe that
we would be targeted by any sanctions in the future. Nonetheless such sanctions and potential responses to such sanctions, including those
that may limit or restrict transfer funds into Russia, may in the future significantly affect our ability to pay our personnel based in
Russia. In response,
we have begun to partially implement a business continuity plan in order to address risks related to the conflict
on our personnel, operations and product development that includes alternative payment solutions for personnel in Russia and relocation
of certain personnel to territories outside Russia and Belarus on short notice. As of April 15, 2023, some of the Russian employees and contractors of our wholly owned subsidiary in St. Petersburg, Russia have relocated
to other countries and we are continuing to monitor the situation with respect to our business continuity plan.
Our operations and presence
in Russia is limited. We have no manufacturing operations in Russia and we do not sell any products in Russia and as a consequence we
have not derived any revenues from there. To date, none of our investors expressed concern with respect to our operations in Russia and
none of our customers terminated or downsized their engagement with us as a result of such operations. Our employees in Russia have not
to date experienced any change in their daily ability to perform their tasks. We do not expect Russia or another government to nationalize
our assets or operations in Russia. In particular, our primary asset is software that are stored outside of Russia and our products and
services are all delivered outside of Russia. In addition, we believe that if we needed to, we would be able to recruit personnel outside
Russia without any material interruption to our operations. As a result, we believe that if nationalization were to occur, any impact
on our financial statements would be immaterial. Nevertheless, we cannot predict the progress or outcome of the situation in Ukraine,
as the conflict and governmental reactions are rapidly developing and beyond our control.
Political, military conditions or other
risks in Russia could adversely affect our business.
Russia is a federative state
consisting of 85 constituent entities, or "subjects." The Russian Constitution reserves some governmental powers for the Russian
Government, some for the subjects and some for areas of joint competence. In addition, eight "federal districts" ("federal'nye
okruga"), which are overseen by a plenipotentiary representative of the President, supplement the country's federal system.
The delineation of authority among and within the subjects is, in many instances, unclear and contested, particularly with respect to
the division of tax revenues and authority over regulatory matters. For these reasons, the Russian political system is vulnerable to tension
and conflict between federal, subject and local authorities. This tension creates uncertainties in the operating environment in Russia,
which may prevent us from carrying out our strategy effectively. The risks associated with these events or potential events could materially
and adversely affect the investment environment and overall consumer and entrepreneurial confidence in Russia, and our business, prospects,
financial condition, hiring ability, and results of operations could be materially and adversely affected.
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Furthermore, high levels of
corruption reportedly exist in Russia, including the bribing of officials for the purpose of initiating investigations by government agencies.
Corruption and other illegal activities could disrupt our ability to conduct our business effectively, and claims that the we are involved
in such corruption or illegal activities could generate negative publicity, of which could harm our development, financial condition,
results of operations or prospects.
Economic and other risks in Russia could adversely affect our
business.
Operating a business in an
emerging market such as Russia can involve a greater degree of risk than operating a business in more developed markets.
Over the last two decades,
the Russian economy has experienced or continues to experience at various times:
●
significant volatility in its GDP;
●
the impact of international sanctions;
●
high levels of inflation;
●
increases in, or high, interest rates;
●
price volatility in oil and other natural resources;
●
instability in the local currency market;
●
budget deficits;
●
the continued operation of loss-making enterprises due to the lack of effective bankruptcy proceedings;
●
capital flight; and
●
significant increases in poverty rates, unemployment and underemployment.
The Russian economy has been
subject to abrupt downturns in the past, including as a result of the invasion of Ukraine, global financial crisis, and, as an emerging
market, remains particularly vulnerable to further external shocks and any future fluctuations in the global markets. Any further deterioration
in the general economic conditions in Russia (whether or not as a result of the events mentioned above) could have a material adverse
effect on the Russian economy and may result in hiring and operational difficulties, as well as potential flight of human capital, which
could have a material adverse effect on our business, product development and results of operations.
Legal risks in Russia could materially adversely
affect our operations and Russian tax legislation is subject to frequent change.
Among the risks of the Russian
legal system are: inconsistencies among laws, presidential decrees, and government and ministerial orders and resolutions; conflicting
local, regional and federal laws and regulations; the untested nature of the independence of the judiciary and its sensitivity to economic
or political influences; substantial gaps in the regulatory structure due to the delay or absence of implementing legislation; a high
degree of discretion on the part of governmental authorities; reported corruption within governmental entities and other governmental
authorities; the relative inexperience of judges and courts in interpreting laws applicable to complex transactions; and the unpredictability
of enforcement of foreign judgments and foreign arbitral awards. Many Russian laws and regulations are construed in a way that provides
for significant administrative discretion in application and enforcement. Unlawful, selective or arbitrary actions of the Russian Government
have reportedly included the denial or withdrawal of licenses, sudden and unexpected tax audits, criminal prosecutions, and civil claims.
Any of the above events may have a material adverse effect on our product development and results of operations.
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Despite certain improvements
in the taxation system made by the Russian Government over the past decade, Russian tax legislation is still subject to frequent change,
varying interpretations, and inconsistent and selective enforcement. There are currently no clear rules for distinguishing between lawful
tax optimization and tax evasion. In addition, Russian tax laws do not contain detailed rules on the taxation in Russia of foreign companies.
As such, taxpayers often have to resort to court proceedings to defend their position against the Russian tax authorities. However, in
the absence of consistent court practice or binding precedents, there is inconsistency amongst court decisions. Further, the possibility
exists that the Russian Federation would impose arbitrary or onerous taxes and penalties in the future, which could have a material adverse
effect on our product development and results of operations.
Risks Related to Ownership of our Ordinary
Shares
The market price for our ordinary shares
may be volatile or may decline regardless of our operating performance.
The market price of our ordinary
shares may be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, many of which are beyond
our control, including:
●
actual or anticipated changes or fluctuations in our results of operations;
●
the guidance we may provide to analysts and investors from time to time, and any changes in, or our failure to perform in line with, such guidance;
●
announcements by us or our competitors of new offerings or new or terminated contracts, commercial relationships or capital commitments;
●
industry or financial analyst or investor reaction to our press releases, other public announcements, and filings with the SEC;
●
rumors and market speculation involving us or other companies in our industry;
●
future sales or expected future sales of our ordinary shares;
●
investor perceptions of us and the industries in which we operate;
●
price and volume fluctuations in the overall stock market from time to time;
●
changes in operating performance and stock market valuations of other technology companies generally, or those in our industry in particular;
●
failure of industry or financial analysts to maintain coverage of us, the issuance of new or updated reports or recommendations by any analysts who follow our company, or our failure to meet the expectations of investors;
●
actual or anticipated developments in our business or our competitors' businesses or the competitive landscape generally;
●
litigation involving us, other companies in our industry or both, or investigations by regulators into our operations or those of our competitors;
●
developments or disputes concerning our intellectual property or proprietary rights or our solutions, or third-party intellectual or proprietary rights;
35
●
announced or completed acquisitions of businesses or technologies, or other strategic transactions by us or our competitors;
●
actual or perceived breaches of, or failures relating to, privacy, data protection or data security;
●
new laws or regulations or new interpretations of existing laws or regulations applicable to our business;
●
actual or anticipated changes in our management or our board of directors;
●
general economic conditions and slow or negative growth of our target markets; and
●
other events or factors, including those resulting from war, incidents of terrorism or responses to these events.
Furthermore, the stock market
has experienced extreme volatility that in some cases has been unrelated or disproportionate to the operating performance of particular
companies. These and other factors may cause the market price and demand for our ordinary shares to fluctuate substantially, which may
limit or prevent investors from readily selling their shares and may otherwise negatively affect the liquidity of our ordinary shares.
In addition, in the past, when the market price of a stock has been volatile, holders of that stock have sometimes instituted securities
class action litigation against the company that issued the stock. If any of our shareholders were to bring a lawsuit against us, we could
incur substantial costs defending the lawsuit. Such a lawsuit could also divert the time and attention of our management from our business.
An active trading
market for our ordinary shares may not be sustained.
An active public trading market
for our ordinary shares may not be sustained. The lack of an active market may impair your ability to sell your ordinary shares at the
time you wish to sell them or at a price that you consider reasonable. The lack of an active market may also reduce the fair value of
your ordinary shares. An inactive market may also impair our ability to raise capital to continue to fund operations by selling ordinary
shares and may impair our ability to acquire other companies or technologies by using our ordinary shares as consideration.
Our principal shareholders have significant
influence over us.
Our principal shareholders
each holding more than 5% of our outstanding ordinary shares collectively beneficially own approximately 71% of our outstanding ordinary
shares. See "Item 7.A. Major Shareholders". These shareholders or their affiliates will be able to exert significant influence
over us and, if acting together, will be able to control matters requiring shareholder approval, including the election of directors and
approval of significant corporate transactions, including a merger, consolidation or sale of all or substantially all of our assets and
the issuance or redemption of equity interests in certain circumstances. The interests of these shareholders may not always coincide with,
and in some cases may conflict with, our interests and the interests of our other shareholders. For instance, these shareholders could
attempt to delay or prevent a change in control of our company, even if such change in control would benefit our other shareholders, which
could deprive our shareholders of an opportunity to receive a premium for their ordinary shares. This concentration of ownership may also
affect the prevailing market price of our ordinary shares due to investors' perceptions that conflicts of interest may exist or
arise. As a result, this concentration of ownership may not be in your best interests.
Future sales of substantial amounts of our
ordinary shares in the public markets, or the perception that such sales might occur, could reduce the price that our ordinary shares
might otherwise attain.
Future sales of a substantial
number of shares of our ordinary shares in the public market, particularly sales by our directors, executive officers and significant
shareholders, or the perception that these sales could occur, could adversely affect the market price of our ordinary shares and may make
it more difficult for you to sell your ordinary shares at a time and price that you deem appropriate.
36
In addition, we intend to
register the offer and sale of all ordinary shares that we may issue from time to time under our equity compensation plans. Once we register
these shares, they will be freely tradable in the public market, subject to the volume limitations under Rule 144 of the Securities Act
in the case of our affiliates and the lock-up agreements or market stand-off provisions agreed with the representative of the underwriters
in connection with our initial public offering on February 28, 2023.
Your ownership and voting power may be diluted
by the issuance of additional shares of our ordinary shares in connection with financings, acquisitions, investments, our equity incentive
plans or otherwise.
We have 222,000,000
ordinary shares authorized. Subject to compliance with applicable rules and regulations, we may issue ordinary shares or securities
convertible into ordinary shares from time to time for the consideration and on the terms and conditions established by our board of
directors in its sole discretion, whether in connection with a financing, acquisition, investment, our equity incentive plans or
otherwise. As of April 15, 2023, 12,882,896 ordinary shares were outstanding and we had 1,604,241 ordinary shares issuable upon the
exercise of outstanding options at a weighted average exercise price of $1.87 per share, of which 1,142,602 were vested as of such
date, warrants to purchase 644,666 ordinary shares and an additional 322,279 ordinary shares reserved for future issuance under our
2015 Plan. See "Item 6.C—Director, Senior Management and Employees—Compensation." Any additional ordinary
shares that we issue, including under our 2015 Plan or other equity incentive plans that we may adopt in the future, or in
connection with the exercise of our warrants, would dilute the percentage ownership and voting power held by investors. In the
future, we may also issue additional securities if we need to raise capital, including, but not limited to, in connection with
acquisitions, which could constitute a material portion of our then-outstanding ordinary shares. Any such issuance could
substantially dilute the ownership and voting power of our existing shareholders and cause the market price of our ordinary shares
to decline.
Our management team has limited experience
managing a public company, and the requirements of being a public company may strain our resources, divert management's attention,
and affect our ability to attract and retain qualified board members.
As a public company listed
in the United States, we incur significant additional legal, accounting, and other expenses. In addition, changing laws, regulations,
and standards relating to corporate governance and public disclosure, including regulations implemented by the SEC and The Nasdaq Stock
Market LLC, or Nasdaq, may increase legal and financial compliance costs, and make some activities more time consuming. These laws, regulations
and standards are subject to varying interpretations, and as a result, their application in practice may evolve over time as new guidance
is provided by regulatory and governing bodies.
Most members of our management
team have no prior experience managing a publicly traded company, interacting with public company investors, and complying with the increasingly
complex laws pertaining to public companies. Our management team may not successfully or efficiently manage our transition of becoming
a public company that is subject to significant regulatory oversight and reporting obligations under the federal securities laws and the
continuous scrutiny of securities analysts and investors. Furthermore, we are committed to maintaining high standards of corporate governance
and public disclosure, and our efforts to establish the corporate infrastructure required of a public company and to comply with evolving
laws, regulations and standards are likely to divert management's time and attention away from revenue-generating activities to
compliance activities, which may prevent us from implementing our business strategy and growing our business. Moreover, we may not be
successful in implementing these requirements. If we do not effectively and efficiently manage our transition into a public company and
continue to develop and implement the right processes and tools to manage our changing enterprise and maintain our culture, our ability
to compete successfully and achieve our business objectives could be impaired, which could negatively impact our business, financial condition
and results of operations.
Additionally, as a public
company, we may from time to time be subject to proposals by shareholders urging us to take certain corporate actions. If activist shareholder
activity ensues, we may be required to incur additional costs to retain the services of professional advisors, management time and attention
will be diverted from our core business operations, and perceived uncertainties as to our future direction, strategy or leadership may
cause us to lose potential business opportunities and impair our brand and reputation, any of which could materially and adversely affect
our business, financial condition and results of operations.
37
In addition to increasing
our legal and financial compliance costs, the additional rules and regulations described above might also make it more difficult for us
to obtain certain types of insurance, including director and officer liability insurance, and we might be forced to accept reduced policy
limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult
for us to attract and retain qualified persons to serve on our board of directors, on committees of our board of directors or as members
of our senior management team.
We are an "emerging growth company"
and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our ordinary shares
less attractive to investors.
We are an "emerging
growth company" within the meaning of the Securities Act, as modified by the JOBS Act, and we may take advantage of certain exemptions
from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but
not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced
disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements
of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously
approved. As a result, our shareholders may not have access to certain information they may deem important. We cannot predict whether
investors will find our securities less attractive because we intend to rely on these exemptions. If some investors find our securities
less attractive as a result of our reliance on these exemptions, the trading prices of our securities may be lower than they otherwise
would be, there may be a less active trading market for our securities and the trading prices of our securities may be more volatile.
Further, Section 102(b)(1) of the JOBS Act exempts
emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that
is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered
under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company
can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but
any such an election to opt out is irrevocable.
We have elected to opt out of this extended transition
period and, as a result, we are required to comply with new or revised accounting standards on the relevant dates on which adoption of
such standards is required for non-emerging growth companies. Under federal securities laws, our decision to opt out of the extended transition
period is irrevocable.
We may take advantage of these
provisions until December 31, 2028 or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging
growth company upon the earlier to occur of: (1) the last day of the fiscal year in which we have total annual gross revenue of $1.235
billion or more; (2) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years; or
(3) the date on which we are deemed to be a large accelerated filer under the rules of the SEC. We may choose to take advantage of some
but not all of these reduced burdens, and therefore the information that we provide holders of our ordinary shares may be different than
the information you might receive from other public companies in which you hold equity.
When we are no longer deemed
to be an emerging growth company, we will not be entitled to the exemptions provided in the JOBS Act discussed above. We cannot predict
if investors will find our ordinary shares less attractive as a result of our reliance on exemptions under the JOBS Act. If some investors
find our ordinary shares less attractive as a result, there may be a less active trading market for our ordinary shares and our share
price may be more volatile.
38
We do not anticipate paying dividends on
our ordinary shares in the foreseeable future. As a result, your ability to achieve a return on your investment will depend on appreciation
in the price of our ordinary shares.
We have never declared or
paid any cash dividends on our ordinary shares and do not anticipate paying any cash dividends on our ordinary shares in the foreseeable
future. We anticipate that we will retain all of our available funds and any future earnings for use in the operation and expansion of
our business and the repayment of outstanding debt. Any future determination as to the payment of cash dividends will be at the discretion
of our board of directors and will depend on, among other things, our business prospects, financial condition, results of operations,
current and anticipated cash needs and availability, industry trends and other factors that our board of directors may consider to be
relevant. Our ability to pay cash dividends on our ordinary shares in the future may also be limited by the terms of any preferred securities
we may issue or financial and other covenants in any instruments or agreements governing any additional indebtedness we may incur in the
future. Consequently, investors who purchase ordinary shares may be unable to realize a return on their investment except by selling sell
such shares after price appreciation, which may never occur. Our inability or decision not to pay dividends, particularly when others
in our industry have elected to do so, could also adversely affect the market price of our ordinary shares.
There can be no assurance that we will not
be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. Holders
of our ordinary shares.
We would be classified as
a passive foreign investment company, or PFIC, for any taxable year if, after the application of certain look-through rules, either: (i)
75% or more of our gross income for such year is "passive income" (as defined in the relevant provisions of the Internal Revenue
Code of 1986, as amended, or the Code), or (ii) 50% or more of the value of our assets (generally determined on the basis of a quarterly
average) during such year is attributable to assets that produce or are held for the production of passive income. For these purposes,
cash and other assets readily convertible into cash or that do or could generate passive income are categorized as passive assets, and
the value of goodwill and other unbooked intangible assets is generally taken into account. Passive income generally includes, among other
things, rents, dividends, interest, royalties, gains from the disposition of passive assets and gains from commodities and securities
transactions. For purposes of this test, we will be treated as owning a proportionate share of the assets and earning a proportionate
share of the income of any other corporation of which we own, directly or indirectly, at least 25% (by value) of the stock. Based on our
market capitalization and the composition of our income, assets and operations, we do not expect to be a PFIC for United States federal
income tax purposes for the current taxable year or in the foreseeable future. However, this is a factual determination that must be made
annually after the close of each taxable year. Moreover, the value of our assets for purposes of the PFIC determination may be determined
by reference to the public price of our ordinary shares, which could fluctuate significantly. In addition, it is possible that the Internal
Revenue Service may take a contrary position with respect to our determination in any particular year, and therefore, there can be no
assurance that we will not be classified as a PFIC in the current taxable year or in the future. Certain adverse U.S. federal income tax
consequences could apply to a U.S. Holder (as defined in "U.S. Federal Income Tax Considerations") if we are treated as a
PFIC for any taxable year during which such U.S. Holder holds our ordinary shares. U.S. Holders should consult their tax advisors about
the potential application of the PFIC rules to their investment in our ordinary shares. For further discussion, see "Item 10.E—Additional
Information—Taxation—U.S. Federal Income Tax Considerations—Passive Foreign Investment Companies."
If a United States person is treated as
owning at least 10% of our ordinary shares, such holder may be subject to adverse U.S. federal income tax consequences.
If a United States person
is treated as owning (directly, indirectly, or constructively) at least 10% of the value or voting power of our ordinary shares, such
person may be treated as a "United States shareholder" with respect to each controlled foreign corporation, or CFC, in our
group (if any). Because our group includes a U.S. subsidiary, certain of our non-U.S. subsidiaries will be treated as CFCs (regardless
of whether or not we are treated as a CFC). A United States shareholder of a CFC may be required to report annually and include in its
U.S. taxable income its pro rata share of "Subpart F income," "global intangible low-taxed income," and investments
in U.S. property by CFCs, regardless of whether we make any distributions. An individual that is a United States shareholder with respect
to a CFC generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder
that is a U.S. corporation. Failure to comply with these reporting obligations may subject a United States shareholder to significant
monetary penalties and may prevent the statute of limitations with respect to such shareholder's U.S. federal income tax return
for the year for which reporting was due from starting. We cannot provide any assurances that we will assist investors in determining
whether we are or any of our non-U.S. subsidiaries is treated as CFC or whether any investor is treated as a United States shareholder
with respect to any such CFC or furnish to any United States shareholders information that may be necessary to comply with the aforementioned
reporting and tax paying obligations. The United States Internal Revenue Service has provided limited guidance on situations in which
investors may rely on publicly available information to comply with their reporting and tax paying obligations with respect to foreign-controlled
CFCs. A United States investor should consult its advisors regarding the potential application of these rules to an investment in our
ordinary shares.
39
We incur significant increased costs as
a result of operating as a public company, and our management is required to devote substantial time to new compliance initiatives.
As a public company whose
ordinary shares are listed in the United States, we incur significant legal, accounting and other expenses that we did not incur as a
private company. We are subject to the reporting requirements of the Exchange Act, the other rules and regulations of the SEC, and the
rules and regulations of Nasdaq and provisions of the Companies Law that apply to public companies such as us. The expenses that are required
in order to be a public company are material and compliance with the various reporting and other requirements applicable to public companies
require considerable time and attention of management. For example, the Sarbanes-Oxley Act and the rules of the SEC and national securities
exchanges have imposed various requirements on public companies, including requiring establishment and maintenance of effective disclosure
and financial controls. Our management and other personnel devote a substantial amount of time to these compliance initiatives. These
rules and regulations will continue to increase our legal and financial compliance costs and will make some activities more time-consuming
and costly. For example, we expect these rules and regulations to make it more difficult and more expensive for us to obtain director
and officer liability insurance, and we may be required to accept reduced policy limits on coverage or incur substantial costs to maintain
the same or similar coverage. The impact of these events could also make it more difficult for us to attract and retain qualified personnel
to serve on our board of directors, our board committees, or as executive officers.
The Sarbanes-Oxley Act requires,
among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. In particular,
we must perform system and process evaluation and testing of our internal control over financial reporting to allow management to report
on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act, beginning
as early as our second annual report on Form 20-F for the fiscal year ended December 31, 2023. In addition, we will be required to have
our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting beginning
with our annual report on Form 20-F following the date on which we are no longer an emerging growth company. Our compliance with Section
404 of the Sarbanes-Oxley Act will require that we incur substantial accounting expense and expend significant management efforts. We
currently do not have an internal audit group, and we will need to hire additional accounting and financial staff with appropriate public
company experience and technical accounting knowledge. If we are not able to comply with the requirements of Section 404 in a timely manner,
or if we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that
are deemed to be material weaknesses, the market price of our shares could decline and we could be subject to sanctions or investigations
by Nasdaq, the SEC or other regulatory authorities, which would require additional financial and management resources.
Our ability to successfully
implement our business plan and comply with Section 404 requires us to be able to prepare timely and accurate financial statements. We
expect that we will need to continue to improve existing, and implement new operational and financial systems, procedures and controls
to manage our business effectively. Any delay in the implementation of, or disruption in the transition to, new or enhanced systems, procedures
or controls, may cause our operations to suffer and we may be unable to conclude that our internal control over financial reporting is
effective and to obtain an unqualified report on internal controls from our auditors as required under Section 404 of the Sarbanes-Oxley
Act. This, in turn, could have an adverse impact on trading prices for our ordinary shares and could adversely affect our ability to access
the capital markets.
We have identified a material weakness
in our internal control over financial reporting, and we may not be able to successfully implement remedial measures.
We
have identified control deficiencies in our financial reporting process that constitute a material weakness related to lack of sufficient
internal accounting personnel, segregation of duties, lack of sufficient internal controls (including IT general controls, entity level
controls and transaction level controls).
40
We
expect to take a number of measures to address the material weaknesses that have been identified. See "Item 5.E—Operating
and Financial Review and Prospects—Critical Account Estimates—Internal Control Over Financial Reporting." However, we
cannot assure you that these measures may fully address the material weaknesses in our internal control over financial reporting or that
we may conclude that they have been fully remediated.
We
expect to complete our remediation plan within the next 12 months. However, we have not tested the effectiveness of our internal control
over financial reporting and cannot assure you that we will be able to successfully remediate this material weakness and, even if we do,
we cannot assure you that we will not suffer from other material weaknesses in the future. Except for additional personnel costs, the
cost of systems and the costs of our third-party service providers, we do not expect to incur any material costs related to our remediation
plan.
Further,
there can be no assurance that we will not suffer from other material weaknesses or significant deficiencies in the future. If we fail
to remediate these material weaknesses or fail to otherwise maintain effective internal controls over financial reporting in the future,
such failure could result in a material misstatement of our annual or quarterly financial statements that would not be prevented or detected
on a timely basis and which could cause investors and other users to lose confidence in our financial statements, limit our ability to
raise capital and have a negative effect on the trading price of our ordinary shares. Additionally, failure to remediate the material
weakness or otherwise maintain effective internal controls over financial reporting may also negatively impact our operating results and
financial condition, impair our ability to timely file our periodic and other reports with the SEC, subject us to additional litigation
and regulatory actions and cause us to incur substantial additional costs in future periods relating to the implementation of remedial
measures.
Our disclosure controls and procedures may
not prevent or detect all errors or acts of fraud.
We are subject to the periodic
reporting requirements of the Exchange Act. We designed our disclosure controls and procedures to provide reasonable assurance that information
we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed,
summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and
procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the
control system are met.
These inherent limitations
include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized
override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud
may occur and not be detected.
If our estimates or judgments relating to
our critical accounting policies are based on assumptions that change or prove to be incorrect, our results of operations could fall below
the expectations of securities analysts and investors, resulting in a decline in the trading price of our ordinary shares.
The preparation of financial
statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in our consolidated
financial statements and accompanying notes. We base our estimates on historical experience and on various other assumptions that we believe
to be reasonable under the circumstances. See "Item 5 –Operating and Financial Review and Prospects", the results of
which form the basis for making judgments about the carrying values of assets, liabilities, equity, revenue, and expenses that are not
readily apparent from other sources. Our results of operations may be adversely affected if our assumptions change or if actual circumstances
differ from those in our assumptions, which could cause our results of operations to fall below our publicly announced guidance or the
expectations of securities analysts and investors, resulting in a decline in the market price of our ordinary shares.
41
Unfavorable conditions in our industry or
the global economy or reductions in information technology spending could limit our ability to grow our business and negatively affect
our results of operations.
Our results of operations may vary based on the impact of changes in
our industry and the global economy on us and our customers. Current or future economic uncertainties or downturns could adversely affect
our business, financial condition and results of operations. Negative conditions in the general economy both in the United States and
abroad, including conditions resulting from changes in gross domestic product growth, financial, and credit market fluctuations, political
turmoil, natural catastrophes, any resurgence of the COVID-19 pandemic, any other pandemic, epidemic or outbreak of infectious disease,
warfare, protests and riots, and terrorist attacks on the United States, Europe, the Asia Pacific region, or elsewhere, could cause a
decrease in business investments by our customers and potential customers, including spending on information technology, and negatively
affect the growth of our business. To the extent our offerings are perceived by customers and potential customers as discretionary, our
revenue may be disproportionately affected by delays or reductions in general information technology spending. Also, customers may choose
to develop in-house software as an alternative to using our offerings. Moreover, competitors may respond to market conditions by lowering
prices. We cannot predict the timing, strength or duration of any economic slowdown, instability or recovery, generally or within any
particular industry. If the economic conditions of the general economy or markets in which we operate do not improve, or worsen from present
levels, our business, financial condition and results of operations could be adversely affected.
The estimates of market opportunity and
forecasts of market growth included in this Annual Report may prove to be inaccurate, and even if the markets in which we compete achieve
the forecasted growth, our business could fail to grow at similar rates, or at all.
The estimates of market opportunity
and forecasts of market growth included in this Annual Report may prove to be inaccurate. Market opportunity estimates and growth forecasts
are subject to significant uncertainty and are based on assumptions and estimates that may not prove to be accurate, including as a result
of any of the risks described in this Annual Report.
In addition, the variables
that go into the calculation of our market opportunity are subject to change over time, and there is no guarantee that any particular
number or percentage of addressable users or companies covered by our market opportunity estimates will purchase our offerings or generate
any particular level of revenue for us. In addition, our ability to expand in any of our target markets depends on a number of factors,
including the cost, performance, and perceived value associated with our platform and those of our competitors. Even if the markets in
which we compete meet the size estimates and growth forecasted in this Annual Report, our business could fail to grow at similar rates,
or at all. Our growth is subject to many factors, including our success in implementing our business strategy, which is subject to many
risks and uncertainties. Accordingly, the forecasts of market growth included in this Annual Report should not be taken as indicative
of our future growth.
If industry or financial analysts do not
publish research or reports about our business, or if they issue inaccurate or unfavorable research regarding our ordinary shares, the
market price and trading volume of our ordinary shares could decline.
The trading market for our
ordinary shares is influenced by the research and reports that industry or financial analysts publish about us and our business. We do
not control these analysts or the content and opinions included in their reports. As a new public company, we may be slow to attract research
coverage and the analysts who publish information about our ordinary shares will have had relatively little experience with our company,
which could affect their ability to accurately forecast our results and make it more likely that we fail to meet their estimates. In the
event we obtain industry or financial analyst coverage, if any of the analysts who cover us issues an inaccurate or unfavorable opinion
regarding our company, the market price of our ordinary shares would likely decline. In addition, the share prices of many companies in
the technology industry have declined significantly after those companies have failed to meet, or significantly exceed, the financial
guidance they have publicly announced or the expectations of analysts and investors. If our financial results fail to meet, or significantly
exceed, our announced guidance or the expectations of analysts or investors, analysts could downgrade our ordinary shares or publish unfavorable
research about us. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, our visibility
in the financial markets could decrease, which in turn could cause the market price or trading volume of our ordinary shares to decline.
42
ITEM 4.
INFORMATION ON THE
COMPANY
A. History and Development of the Company
We are a leading innovator
of video encoding, transcoding and optimization solutions that enable high quality, performance, and unmatched bitrate efficiency for
video and images. With our Emmy®-winning patented technology and award-winning services, we help our customers realize the potential
of video encoding and media optimization to address business-critical challenges. Our customers include tier one OTT, content distributors,
video streaming platforms, and Hollywood studios who rely on our suite of products and expertise to reduce the cost and complexity associated
with storing, distributing and monetizing video and images across devices.
At the heart of our patented
optimization technology is the proprietary Beamr quality measure, or BQM, that is highly correlated with the human visual system. BQM
is integrated into our content adaptive bitrate, or CABR, system which together maximizes quality and removes visual redundancies resulting
in a smaller file size. The BQM has excellent correlation with subjective results, confirmed in testing under ITU BT.500, an international
standard for rigorous testing of image quality. The perceptual quality preservation of CABR has been repeatedly verified using large scale
crowd-sourcing based testing sessions, as well as by industry leaders and studio "golden eyes".
We currently license three
core video and image compression products that help our customers use video and images to further their businesses in meaningful ways:
(1) a suite of video compression software encoder solutions including the Beamr 4 H.264 encoder, Beamr 4X H.264 content adaptive encoder,
Beamr 5 HEVC encoder and the Beamr 5X HEVC content adaptive encoder, (2) Beamr JPEGmini photo optimization software solutions for reducing
JPEG file sizes, and (3) Beamr Silicon IP block, a hardware solution for integration into dedicated video encoding ASICs, GPUs, and application
processors.
Our current product line is
mainly geared to the high end, high quality media customers and we count among our enterprise customers Netflix, Snapfish, ViacomCBS,
Wowza, Microsoft, VMware, Genesys, Deluxe, Vimeo, Encoding.com, Citrix, Walmart, Photobox, Antix, Dalet, and other leading media companies
using video and photo solutions. Due to the high cost and complexity of deploying our existing software solutions and the long sales lead
times, we have a made a strategic decision to focus our resources on the development and commercialization of our next-generation product,
the Beamr HW-Accelerated Content Adaptive Encoding solution, a SaaS solution that is designed, based on our own internal testing, to be
up to 10x more cost efficient than our existing software-based solutions, resulting in reduced media storage, processing and delivery
costs.
Our legal and commercial name
is Beamr Imaging Ltd. We were incorporated in Israel on October 1, 2009 under the name I.C.V.T Ltd. On January 11, 2015, we changed our
name to Beamr Imaging Ltd.
We have two wholly owned subsidiaries:
Beamr, Inc. and Beamr Imaging RU LLC. Beamr, Inc. is our wholly owned subsidiary incorporated in 2012 in the State of Delaware. Beamr,
Inc. is engaged in reselling our software and products in the U.S. and Canada. Beamr Imaging RU LLC is our wholly owned subsidiary, a
limited Russian partnership formed in 2016. Beamr Imaging RU LLC is engaged in research and development for us.
In addition, we previously
had a wholly owned subsidiary, Beamr UK Ltd, which was incorporated in 2017 in England. Beamr UK Ltd was engaged in reselling our software
and products in the U.K. Beamr UK Ltd was dissolved in May 2020.
On February 27, 2023, our
ordinary shares were approved for trading on the Nasdaq Capital Market under our ticker symbol "BMR" and began trading at
the open of market on February 28, 2023. Upon listing of our ordinary shares in our initial public offering on February 28, 2023, we effected
a reverse share spit at a ratio of 1-for-5.
Our principal office is located
at 10 HaManofim Street, Herzeliya, 4672561, Israel, and our telephone number is +1-888-520-8735. Our primary internet address is https://beamr.com/.
None of the information on our website is incorporated by reference herein. Our wholly-owned subsidiary, Beamr, Inc., serves as our agent
for service of process in the United States for certain limited matters, and its address is 16185 Los Gatos Blvd, Ste 205, Mailbox 12,
Los Gatos, CA 95032.
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We use our website (https://beamr.com/)
as a channel of distribution of Company information. The information we post on our website may be deemed material. Accordingly, investors
should monitor our website, in addition to following our press releases, SEC filings and public conference calls and webcasts. The contents
of our website are not, however, a part of this Annual Report.
We are an emerging growth company, as defined in Section 2(a) of the
Securities Act, as implemented under the JOBS Act. As such, we are eligible to, and intend to, take advantage of certain exemptions from
reporting requirements that generally apply to public companies, including the auditor attestation requirements with respect to internal
control over financial reporting under Section 404 of the Sarbanes-Oxley Act, compliance with new standards adopted by the Public Company
Accounting Oversight Board which may require mandatory audit firm rotation or auditor discussion and analysis, exemption from say on pay,
say on frequency, and say on golden parachute voting requirements, and reduced disclosure obligations regarding executive compensation
in our periodic reports and proxy statements. We will be an emerging growth company until the earliest of: (i) the last day of the fiscal
year during which we had total annual gross revenues of $ $1.235 billion or more, (ii) the last day of the fiscal year following the fifth
anniversary of the date of the first sale of the ordinary shares pursuant to an effective registration statement (i.e., December 31, 2028),
(iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt, or (iv) the
date on which we are deemed a "large accelerated filer" as defined in Regulation S-K under the Securities Act, which means
the market value of our ordinary shares that is held by non-affiliates exceeds $700 million as of the prior June 30th.
We report under the Exchange
Act as a non-U.S. company with foreign private issuer status. Even after we no longer qualify as an emerging growth company, as long as
we continue to qualify as a foreign private issuer under the Exchange Act, we will be exempt from certain provisions of the Exchange Act
that are applicable to U.S. domestic public companies, including:
●
the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations with respect to a security registered under the Exchange Act;
●
the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and
●
the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q containing unaudited financial statements and other specified information, and current reports on Form 8-K upon the occurrence of specified significant events.
We are required to file an
annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend to publish our results on a quarterly
basis through press releases, distributed pursuant to the rules and regulations of the Nasdaq. Press releases relating to financial results
and material events will also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to
the SEC will be less extensive and less timely compared to that required to be filed with the SEC by U.S. domestic issuers. As a result,
you may not be afforded the same protections or information, which would be made available to you, were you investing in a U.S. domestic
issuer.
We may take advantage of these
exemptions until such time as we are no longer a foreign private issuer. We would cease to be a foreign private issuer at such time as
more than 50% of our outstanding voting securities are held by U.S. residents and any of the following three circumstances applies: (i)
the majority of our executive officers or directors are U.S. citizens or residents; (ii) more than 50% of our assets are located in the
United States; or (iii) our business is administered principally in the United States.
Both foreign private issuers
and emerging growth companies are also exempt from certain more stringent executive compensation disclosure rules. Thus, even if we no
longer qualify as an emerging growth company, but remain a foreign private issuer, we will continue to be exempt from the more stringent
compensation disclosures required of companies that are neither an emerging growth company nor a foreign private issuer.
B. Business Overview
Overview
We are a leading innovator
of video encoding, transcoding and optimization solutions that enable high quality, performance, and unmatched bitrate efficiency for
video and images. With our Emmy®-winning patented technology and award-winning services, we help our customers realize the potential
of video encoding and media optimization to address business-critical challenges. Our customers include tier one OTT, content distributors,
video streaming platforms, and Hollywood studios who rely on our suite of products and expertise to reduce the cost and complexity associated
with storing, distributing and monetizing video and images across devices.
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At the heart of our patented
optimization technology is the proprietary Beamr quality measure, or BQM, that is highly correlated with the human visual system. BQM
is integrated into our content adaptive bitrate, or CABR, system which together maximizes quality and removes visual redundancies resulting
in a smaller file size. The BQM has excellent correlation with subjective results, confirmed in testing under ITU BT.500, an international
standard for rigorous testing of image quality. The perceptual quality preservation of CABR has been repeatedly verified using large scale
crowd-sourcing based testing sessions, as well as by industry leaders and studio "golden eyes".
We currently license three
core video and image compression products that help our customers use video and images to further their businesses in meaningful ways:
(1) a suite of video compression software encoder solutions including the Beamr 4 H.264 encoder, Beamr 4X H.264 content adaptive encoder,
Beamr 5 HEVC encoder and the Beamr 5X HEVC content adaptive encoder, (2) Beamr JPEGmini photo optimization software solutions for reducing
JPEG file sizes, and (3) Beamr Silicon IP block, a hardware solution for integration into dedicated video encoding ASICs, GPUs, and application
processors.
Our current product line is
mainly geared to the high end, high quality media customers and we count among our enterprise customers Netflix, Snapfish, ViacomCBS,
Wowza, Microsoft, VMware, Genesys, Deluxe, Vimeo, Encoding.com, Citrix, Walmart, Photobox, Antix, Dalet, and other leading media companies
using video and photo solutions. Due to the high cost and complexity of deploying our existing software solutions and the long sales lead
times, we have a made a strategic decision to focus our resources on the development and commercialization of our next-generation product,
the Beamr HW-Accelerated Content Adaptive Encoding solution, a SaaS solution that is designed, based on our own internal testing, to be
up to 10x more cost efficient than our existing software-based solutions, resulting in reduced media storage, processing and delivery
costs.
We are currently collaborating
with NVIDIA, a multinational technology company and a leading developer of GPUs, with an annual revenue of $26.9 billion for the fiscal
year 2022, to develop the Beamr HW-Accelerated Content Adaptive Encoding solution, the world's first GPU accelerated encoding solution
powered with our CABR, which will allow fast and easy end-user deployment combined with superior video compression rates. Upon completion,
our CABR software will execute directly on NVIDIA GPU cores and interact with the NVIDIA video accelerator encoder known as NVENC. NVIDIA
NVENC is a high-quality, high-performance hardware video encoder that is built into most NVIDIA GPUs. NVENC offloads video encoding to
hardware, and provides extreme performance for applications such as live video encoding, cloud gaming and cloud storage. NVIDIA GPUs with
NVENC are available on all major cloud platforms.
As planned, the first version
of the integrated video optimization engine was released at the end of the first quarter of 2023. Following this, we plan to build out
the cloud based SaaS platform and test it with beta customers in the third quarter of 2023. Following that, we plan to commercially launch
the first release of our cloud based Beamr HW-Accelerated Content Adaptive Encoding solution in the first quarter of 2024 and expect that
following release, end-users of the solution will enjoy significant end-user storage and networking cost savings. Using the Beamr HW-Accelerated
Content Adaptive Encoding solution will potentially reduce their return on investment for storage optimization to approximately four months,
compared to approximately two years with our existing software encoder solutions.
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Our Business Strengths
We believe that the following
business strengths differentiate us from our competitors and are key to our success:
●
We are a recognized video compression market leader
. In January 2021 we were recognized with an Emmy® Award for the "Development of Open Perceptual Metrics for Video Encoding Optimization" and in November 2021 we won the Seagate Lyve Innovator of the Year competition. We have over 50 patents, and count among our customers leading content distributors including Netflix, ViacomCBS and Wowza Media Systems.
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●
Strong value proposition
. We believe our existing video compression encoding solutions are among the fastest software video encoders on the market and provide a lower total cost-of-ownership to our customers by reducing media storage, processing and delivery costs. Upon release of our next generation SaaS solution, the Beamr HW-Accelerated Content Adaptive Encoding, we believe that its performance will be up to 10x more cost efficient than our existing software-based solutions, resulting in even greater reduced, based on our own internal testing, media storage, processing and delivery costs.
●
Partnering with leading technology giants to enable the adoption of our video compression solutions
. We offer industry proven video optimization solutions and are collaborating in product development with industry giants such as NVIDIA and Allegro DVT that provide incremental improvements to existing products without having to reinvent the wheel.
●
Core technology is powered by proprietary content-adaptive quality measure.
Our CABR technology, built over our proprietary BQM, achieves maximal compression of the video input while maintaining the input video resolution, format, and visual quality. The CABR powers our existing video compression encoders as well as our next generation Beamr HW-Accelerated Content Adaptive Encoding in development. The BQM has excellent correlation with subjective results, confirmed in testing under ITU BT.500, an international standard for rigorous testing of image quality. The perceptual quality preservation of CABR has been repeatedly verified using large scale crowd-sourcing based testing sessions, as well as by industry leaders and tier one Hollywood studios "golden eyes".
●
Our management team has experience building and scaling software companies
. Our visionary and experienced management team with best-in-class research and development, or R&D, capabilities and in-depth industry backgrounds and experiences has been leading us since our inception. Members of our senior leadership team have held senior product, business and technology roles at companies such as Scitex, Kodak, Comverse, IBM and Intel. Sharon Carmel, our founder and Chief Executive Officer is a serial entrepreneur with a proven track record in the software space having co-founded Emblaze (LON: BLZ) which developed the Internet's first vector-based graphics player, preceding Macromedia Flash, and BeInSync, which developed P2P synchronization and online backup technologies, and was acquired in 2008 by Phoenix Technologies (NASDAQ: PTEC).
●
Ongoing customer-driven development
. Through our account managers, support teams, product development teams and regular outreach from senior leadership, we solicit and capture feedback from our customer base for incorporation into ongoing enhancements to our solutions. We regularly provide our customers with enhancements to our products.
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Our Market Opportunity
According to Fortune Business
Insights, the global cloud video storage market is projected to grow from $7.3 billion in 2021 to $13.5 billion in 2025 and to $20.9 billion
by 2028, at a compound annual growth rate, or CAGR, of 16% during the forecast period.
The fact that the video data
is often required to be stored and accessed forever cannot be ignored for long periods. This brings about the problem of lifetime costs
associated with the efficient storing and managing of data. While the upfront cost might appear manageable but over a period, the rise
in data volumes might require organizations to result in the need to pay more in the future to keep the data in the cloud. In today's
environment, with deployment of media and entertainment, user generated content, enterprise video, agricultural technology, or AgTech,
and industrial solutions, autonomous vehicles, surveillance and smart cities, we believe that the usage of video and its storage on public
cloud platforms is expected to increase exponentially and we believe existing solutions are not suitable for large volume storage optimization.
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Our Growth Strategies
We intend to pursue the following growth strategies:
●
Complete development and gain broad market acceptance for our SaaS solution
. We are collaborating with NVIDIA in the development of our next generation product, the Beamr HW-Accelerated Content Adaptive Encoding. Upon release, we believe it will provide a simple, easily deployable, fast, scalable, low cost and best-in-class video optimization solution resulting in reduced media storage, processing and delivery costs. We plan to make our next generation SaaS solution available through public cloud services such as AWS, Azure and GCP allowing us to potentially access and acquire large numbers of new customers with relatively low sales investment. According to Canalys estimates, these three cloud service providers accounted for 61% of the total cloud spend in the third quarter of 2021.
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●
Expand business growth through collaborations and partnerships
    with industry-leading solution providers in new verticals.
We are currently collaborating with NVIDIA and plan to expand
    our collaborations to develop further market-leading products. We believe that our hardware-accelerated CABR powered video optimization
    solutions have broad application to a wide array of verticals including UGC, public safety, smart cities, education, enterprise,
    autonomous vehicles, government and media and entertainment.
●
Continue to innovate and develop new products and features.
We continue to invest in research and development to enhance our product offerings and release new products and features. We maintain close relationships with our customer base who provide us with frequent and real-time feedback, which we leverage to rapidly update and further improve our products.
●
Selectively Pursue Acquisitions and Strategic Investments.
While we have not identified any specific targets, we plan to selectively pursue acquisitions and strategic investments in businesses and technologies that strengthen our products, enhance our capabilities and/or expand our market presence in our core vertical markets.
In 2016, we acquired Vanguard Video, a leading developer of software encoders.
Our CABR System
At the heart of our patented
optimization technology is the proprietary BQM, a novel, efficient and reliable quality evaluation algorithm which is highly correlated
with the human vision system. The CABR technology, with the BQM at its core, allows encoders to make smarter, quality driven, encoding
decisions. CABR is a closed-loop content-adaptive rate control mechanism enabling video encoders to lower the bitrate of their encode,
while simultaneously preserving the perceptual quality of the higher bitrate encode. An integrated CABR encoding solution consists of
a video encoder and the CABR rate control engine. The CABR engine comprises the CABR control module responsible for managing the optimization
process and a module which evaluates video quality. The video encoder first encodes a frame using a configuration based on its regular
rate control mechanism, resulting in an initial encode. Then, Beamr's CABR rate control instructs the encoder to encode the same
frame again with various values of encoding parameters, creating candidate encodes. Using the BQM, each candidate encode is compared with
the initial encode, and then the best candidate is selected and placed in the output stream. The best candidate is the one that has the
lowest bitrate but still has the same perceptual quality as the initial encode. Due to very efficient control algorithms, only approximately
1.5-2 iterations are required on average to find the best candidate. Combined with the real-time oriented design of BQM, and the possibility
to reuse encoding decisions from the initial encode, the impact on overall performance is quite manageable.
The following is a depiction
of the CABR system showing how the BQM interacts with a video encoder.
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In testing, BQM demonstrated
higher correlation with subjective results than other quality measures such as PSNR and SSIM. In user testing, under ITU BT.500, an international
standard for testing image quality, the correlation of our BQM with subjective (human) results was, in our opinion, very high.
Beamr's CABR technology
was integrated as a new rate control mechanism into our software H.264 and HEVC encoders. With regular VBR encoding, the user of the encoder
sets a target bitrate, and the resulting bitrate of the encoded video will be that target bitrate. With CABR encoding, the user also sets
a target bitrate, but the resulting bitrate of the encoded video will be lower than that target. The video will be encoded to the lowest
possible bitrate that is still perceptually identical to a VBR encode at that target bitrate. CABR with BQM can also be used to optimize
an input video stream, by removing redundancies and creating an equivalent, lower bitrate, perceptually identical output video stream.
As seen in the two graphs
below, for VBR encoding the actual average bitrate of the encoded clip is very similar to the requested target bitrate. For CABR encoding,
the actual bitrate of the encoded clips is lower than the requested target bitrate. The difference between the requested target bitrate
(dotted line) and the actual encoded CABR bitrate (blue line) is the bitrate savings. As seen in the graphs, the bitrate savings increase
as the target bitrate increases, since for higher target bitrates there is more redundancy present in the encoded stream, redundancy which
CABR removes.
Ultimately, Beamr's
CABR system enables the bitrate of video files to be reduced by up to 50% over the current state of the art standard compliant block based
encoders, without compromising image quality, bitstream standard compliance or changing the artistic intent. We believe that a source
video and a Beamr-optimized video viewed side-by-side will look exactly the same to the human eye.
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Beamr has integrated the CABR
engine into its AVC software encoder, Beamr 4, and into its HEVC software encoder, Beamr 5. Similarly, the CABR engine can be integrated
with any software or hardware video encoder, supporting any block-based video standard such as AVC (the most popular video standard supported
on almost all end user devices), HEVC (the leading 4K video standard available on almost all 4K televisions), and AV1 (the emerging royalty-free
standard led by Google, Apple, Microsoft, Intel and many others which is used on Netflix, Youtube and Vimeo). In addition, CABR with
BQM can be used to optimize an input video stream, by removing redundancies and creating an equivalent, lower bitrate, perceptually identical
output video stream.
Our Product Offerings
Our Next-Generation SaaS Product: Beamr HW-Accelerated Content
Adaptive Encoding
We are currently collaborating
with NVIDIA, a leading developer of GPUs, to develop the world's first GPU accelerated encoding solution that would allow fast and
easy end-user deployment combined with superior video compression rates powered with our CABR rate control and BQM quality measure.
Our BQM quality measure software
will execute directly on NVIDIA GPU cores and interact with the NVIDIA video accelerator encoder known as NVENC. NVIDIA NVENC is a high-quality,
high-performance hardware video encoder that is built into most NVIDIA GPUs. NVENC offloads video encoding to hardware, and provides extreme
performance for applications such as live video encoding, cloud gaming and cloud storage. NVIDIA GPUs with NVENC are available on all
major cloud platforms.
Our current product line of
CABR software encoders run on the CPU. In proof of concept tests with both Intel and NVIDIA, we have demonstrated that when our CABR is
offloaded from the CPU to the GPU, the cost/performance ratio is up to 10x better than on the CPU.
To accommodate Beamr's
content-adaptive GPU accelerated encoding solution, NVIDIA is currently modifying the API of the NVENC. On March 27, 2023, we announced
that our content adaptive technology officially support NVIDIA GPU acceleration, which was a major milestone for us. We are also in advanced
stages of porting the CABR to run on the GPU, and once completed, we will be able to use the NVENC as the video encoder for CABR, offloading
CABR-based video encoding from the CPU to the GPU enabling low-cost, high resolution, real time CABR encoding.
Upon release, we believe the
Beamr HW-Accelerated Content Adaptive Encoding solution will provide a simple, easily deployable, fast, scalable, low cost and best-in-class
video optimization solution resulting in reduced media storage, processing and delivery costs. We initially plan to offer our Beamr HW-Accelerated
Content Adaptive Encoding solution as a SaaS offering through public cloud data services that utilize NVIDIA GPUs (e.g., AWS, Microsoft
Azure, GCP) allowing us to potentially access and acquire large numbers of new customers with relatively low sales investment.
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We initiated the collaboration
with NVIDIA on developing the Beamr HW-Accelerated Content Adaptive Encoding solution in January 2021. Our collaboration with NVIDIA is
based on a mutual development program that is in advanced stages and that has been approved at senior levels at NVIDIA. While our collaboration
has not been reduced to a written agreement, we believe that NVIDIA has a commercial incentive to complete the development and deploy
the software update that enables the CABR powered NVENC because of the superior video compression rates of the NVENC when combined with
our CABR solution. Since commencing the collaboration, we have successfully completed the following steps: (i) demonstrated proof of concept;
(ii) jointly defined the required frame-level APIs that enable our CABR system to determine the optimal tradeoff between bitrate and quality;
(iii) NVIDIA has approved the plan of record; (iv) NVIDIA completed delivery of the first version of the APIs; (v) we verified implementation
of the APIs that result in significant reduction of the bitrate of video streams; (vi) in December 2022, we received a pre-final implementation
from NVIDIA showing major progress, an indication that the work is close to completion and (vii) on March 23, 2023, the first General
Availability (GA) of the API was public release by NVIDIA.
As planned, the first version
of the integrated video optimization engine was released at the end of the first quarter of 2023. Following this, we plan to build out
the cloud based SaaS platform and test it with beta customers in the third quarter of 2023. Following that, we plan to commercially launch
the first release of our cloud based Beamr HW-Accelerated Content Adaptive Encoding solution in the first quarter of 2024 and expect that
following release, end-users of the solution will enjoy significant end-user storage and networking cost savings. Using the Beamr HW-Accelerated
Content Adaptive Encoding solution will potentially reduce their return on investment for storage optimization to approximately four months,
compared to approximately two years with our existing software encoder solutions.
Below is a depiction of how
we expect the end-user dashboard of the Beamr HW-Accelerated Content Adaptive Encoding to look.
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Following integration into
the NVIDIA GPU, we believe the Beamr HW-Accelerated Content Adaptive Encoding solution will provide the following key benefits including:
●
Attractive return on investment
.
The Beamr HW-Accelerated Content Adaptive Encoding solution will be available at an accessible price point in which we estimate it will reduce the return on investment for storage optimization to approximately four months, compared to approximately two years with our existing software solutions.
●
Fast set-up
. The Beamr HW-Accelerated Content Adaptive Encoding solution will be deployable in a self-service (one-click) installation process within minutes without any specialized hardware or need to download third-party software, allowing new users to quickly derive value without any specialized training or heavy implementation or customization.
●
Easy to use
.
The Beamr HW-Accelerated Content Adaptive Encoding solution will have an intuitive interface that can be easily navigated by even first-time users. Our solution removes the need for video-specific expertise and high-touch user support and troubleshooting.
●
Cloud agnostic and scalable
. Our Beamr HW-Accelerated Content Adaptive Encoding solution is highly scalable and designed to be deployable across all environments employing NVIDIA GPUs, including public cloud, private cloud, on-premise and multi-cloud hybrid environments.
●
Security
. By using public cloud platforms best security practices, we address our customers security concerns.
●
Reducing carbon footprint.
Smaller video files means less disk space occupied and smaller files transferred over the network from one place to another. This in turn results in lower energy consumption, which we believe is going to be an accelerator for our service adoption.
Using our content adaptive bit rate
solution, we estimate end users will be able to save up to 50% of their video storage costs and an average of 30% in their cost of video
public cloud storage, which, based on 2020 amounts, according to Fortune Business Insights, currently stands at $9 billion.
Video Compression Software Encoder Solutions
Beamr 4 AVC Encoder
Beamr4 is our fully standard
compliant AVC (H.264) video encoder. This encoding standard is still the primary format used in video applications across the market.
While the decoder and bitstream are fully defined by the standard, video coding standards do not define the encoder, and this is completely up
to the implementation ingenuity. At Beamr we have spent many years perfecting our encoder, resulting in an efficient, high performance,
high quality AVC encoder, which enables using less computation to achieve the same compression efficiency as competing implementations.
(Compression efficiency is defined by how much you can compress the video to obtain a target quality, or vice-versa, what quality can
be obtained at a specified bitrate, The higher the compression efficiency, the less bits are needed for a certain quality level). Beamr4
has an extensive API enabling deep control of the encoder configuration to maximize the benefit for each and every application or use
case, and our support team is available to help users find the best setup for their specific needs.
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Beamr 5 HEVC Encoder
Beamr5 is our fully standard
compliant HEVC (H.265) video encoder. This encoding standard is the primary format used today for high resolution (4K, 8K) and premium
quality encoding of 10 and 12 bit and High-Dynamic-Range content. Once again, only the decoder and bitstream are defined by the standard,
and encoders can differ quite significantly in how well they perform the encoding and utilize the advanced tools available in
HEVC to obtain maximum compression efficiency without incurring prohibitive performance costs. An important factor in supporting live
encoding is to be able to reach very good parallelization of the encoding tasks. This is not easy in video encoding which is very serial,
and unevenly distributed by nature. At Beamr we have developed a unique architecture for the encoder, which enables very efficient deep
parallelization making the best concurrent use of all available cores, enabling the world's first live 8K HEVC encoder. In addition,
Beamr5 is one of the few HEVC codecs that has wide support for HDR and can be used in conjunction with Dolby Vision, HDR10 and HLG - various
HDR formats used around the globe. Beamr5 also has an extensive API enabling deep control of the encoder configuration to maximize the
benefit for each and every application or use case, and our support team is always available to help users find the best setup for
their specific needs.
Beamr 4X AVC Content
Adaptive Encoder
Beamr4x is achieved by
adding our Content Adaptive Bit-Rate rate control, to Beamr4. Video encoders generally operate either in a bit-rate driven mode,
such as VBR (Variable Bit-Rate), or in a quality driven mode. The new mode introduced in Beamr4x, enables encode that is bit-rate driven,
but where any bits that are redundant for the perceptual quality of the video are swiftly removed. This is done by first compressing the
video frame according to the bit-rate considerations. Then, for each frame, more aggressive compression is applied, reducing the frame
size in bits to the maximal extent that is possible without compromising perceptual quality of this video frame. This is
done using our novel, award winning quality measure, which can reliably report the perceptual quality of the reduced size frame,
relative to the initial encode, and make sure we get to the best compression point. While this may sound like a difficult problem to solve
for each frame, using our sophisticated search algorithm, we actually guess the correct compression point on the first try more often
than not, and on average require less than two attempts per frame. The resulting bitstream has the same perceptual quality as the VBR
encode to target bitrate would have, while offering significant bitrate savings for many use cases.
Beamr 5X HEVC Content Adaptive Encoder
Similarly, Beamr 5x combines
Beamr 5 with CABR, enabling HEVC encoding with significant bitrate savings.
JPEGMini Photo Optimization Solutions
JPEGmini is a patented photo
recompression technology, which significantly reduces the size of photographs without affecting their perceptual quality. JPEGmini is
fully compliant with the JPEG standard, resulting in files that are fully compatible with any browser, photo software or device that support
the standard JPEG format.
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JPEGmini is capable of reducing
the file size of standard JPEG photos by up to 50%, while the resulting photos are visually identical to the original photos. The JPEGmini
algorithm imitates the perceptual qualities of the human visual system, ensuring that each photo is compressed to the maximum extent possible
by removing redundancies, without creating any visual artifacts in the process. This enables fully automatic, maximal compression of photos
with no human intervention required. JPEGmini has also been successfully tested with artificial intelligence/machine learning image sets
in which a reduction of storage cost of up to 50% was obtained, without compromising classification and detection accuracy.
Silicon IP
Our CABR technology, which
has been integrated with Beamr software codecs to create Beamr4x and Beamr5x, has also been implemented as a silicon IP design, which
can be integrated with any HW video encoder, such as our collaboration with Allegro DVT, a leading provider of video processing silicon
IPs, to create the world's first content-adaptive silicon IP encoder. This enhances the encoder by providing the additional, bitrate
saving, encoding mode.
Sales and Marketing
As of April 15, 2023, we have
two-full time and part-time sales and marketing employees and consultants, whose focus is to work together to accelerate the adoption
of our existing products, to drive awareness and increase brand recognition of our products and technologies, to improve new customer
acquisitions and to increase revenue from our existing customers.
For
our next-generation
Beamr HW-Accelerated Content Adaptive Encoding solution
, we plan to launch
our solution on the largest cloud platform, AWS, and after initial deployment on AWS to integrate our solution both with Azure and GCP.
Since NVIDIA GPUs are widely adopted by cloud platforms, we believe that by making the Beamr HW-Accelerated Content Adaptive Encoding
solution on cloud platforms will
allow us to potentially access and acquire large numbers of new customers with relatively low
sales investment through a self service, online sales process, with low touch pay as you go subscription service to our SaaS solution.
In addition, since the Beamr
HW-Accelerated Content Adaptive Encoding solution is designed to be deployable across all environments, including public cloud, private
cloud, on-premise and multi-cloud hybrid environments, we intend to focus our direct sales efforts on particular vertical markets that
store large amounts of video including internet of things (IoT), smart cities, surveillance, autonomous cars, AgTech, and medical imaging.
We
primarily market and license directly our existing products to media customers through outbound sales networking and customer and partner
referrals. Our direct customers include category leaders such as Netflix,
Snapfish,
ViacomCBS,
Wowza and Encoding.com. Our sales cycles for our existing products typically require a significant investment of time and a substantial
expenditure of resources before we can realize revenue from the sale of our solutions, if any. Our typical sales cycle consists of a multi-month
sales and development process involving our customers' system designers and management and our sales personnel and software engineers.
If successful, this process culminates in a customer's decision to use our solutions in its system, which we refer to as an account
win.
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We focus our marketing efforts
on the strength of our product and technology innovation, the value we provide and our domain expertise. We target the video engineering
and information technology (IT) operations community through our marketing activities, using diverse tactics to connect with prospective
customers, such as content marketing, events, social media, and public relations.
We
intend to continue to invest in our sales and marketing capabilities to capitalize on our market opportunity.
We
enter into written contracts with our customers pursuant to which we license the rights to use our software and provide maintenance and
technical support. Our contracts are generally for one to three-year terms, with automatic renewal terms of one year terms. Some of our
contracts are on a perpetual basis. We bill most of our customers annually in advance for the fees associated with the software licenses
and related support. Some of our customers are billed on a quarterly basis.
Research and Development
Our research and development
team is responsible for the design, development, testing and delivery of new technologies, features and integrations of our solutions,
as well as the continued improvement and iteration of our existing products. It is also responsible for operating and scaling our solutions
including the underlying infrastructure. Our research and development investments seek to drive core technology innovation and bring new
products to market.
Members of our research and
development team specialize in many functional areas including algorithms, machine learning, and electrical engineering as well as computer
science. As we shift our focus to a SaaS based cloud service offering, we intend to make significant investments in a cloud-optimized
delivery model while continuing to invest in our software offerings, both for standalone consumption and for deployment in hybrid environments.
Our main research and development
facility is located in central Israel, which we believe is a strategic advantage for us, allowing us to leverage a talented pool of engineers
and product experts.
As of April 15, 2023, we had
20 full-time and part-time employees dedicated to research and development. We have made substantial investments in product and technology
development since our inception. Research and development expense totaled $2 million and $2 million in the years ended December 31, 2022
and 2021, respectively. We expect our research and development expense to increase significantly for the foreseeable future as we enhance
our existing product, develop new products for our current markets and introduce new products in new markets.
Acquisition
In
2016, we acquired Vanguard Video, a provider of HEVC and H.264 codec technologies, which enabled us to integrate our CABR technology with
Vanguard Videos video encoders, which today are available as Beamr 4x and Beamr 5x.
Competition
While there are several companies
offering video compression solutions such as MainConcept, Ateme, Ittiam, Visionular and open source (x264/x265), we believe there is currently
no direct competitor with our content-adaptive video compression solutions. There are companies which offer software solutions for video
optimization such as Harmonic and Elemental, and other companies offering storage optimization (but not involving video technologies)
such as EMC and Seagate. In addition, for our quality measure, some of our current competitors include SSIMWave (SSIMPlus), Apple (AVQT),
Google (YouVQ) and open source (VMAF). We operate in a highly specialized area that is evolving very quickly with rapid developments.
In the future, competitors could develop products or solutions that compete with our video compression solutions. For example, the public
cloud platforms such as AWS, Azure and GCP could in the future develop their own video optimization hardware accelerated solutions.
57
We believe the following
competitive attributes are necessary for our solutions to successfully compete in the video compression market:
●
the performance and reliability of our solutions;
●
cost of deployment and return on investment in terms of cost savings;
●
sophistication, novel and innovative intellectual property and technology, and functionality of our offerings;
●
cross-platform operability;
●
security;
●
ease of implementation and use of service;
●
high quality customer support; and
●
price.
We believe that we compare
favorably on the basis of the factors listed above. However, many of our competitors have substantially greater financial, technical,
and marketing resources; relationships with large vendor partners; larger global presence; larger customer bases; longer operating histories;
greater brand recognition; and more established relationships in the industry than we do. Furthermore, new entrants not currently considered
to be competitors may enter the market through acquisitions, partnerships, or strategic relationships. See "Item 3.D Risk Factors—Risks
Related to Our Business and Industry—We may not be able to compete successfully against current and future competitors, some of
whom have greater financial, technical, and other resources than we do. If we do not compete successfully, our business, financial condition
and results of operations could be harmed."
Intellectual Property
Intellectual property is an
important aspect of our business and we seek protection for our intellectual property rights as appropriate. To establish and protect
our proprietary rights, we rely on a combination of patent, copyright, trade secret and trademark laws, know-how and continuing innovation,
and contractual restrictions such as confidentiality agreements, licenses, and intellectual property assignment agreements. We strive
to protect the proprietary technologies that we believe are important to our business, including seeking and maintaining patent protection
intended to cover our system.
As of April 15, 2023, our
exclusively owned patent portfolio includes 53 issued patents (one of which is jointly owned), of which 33 are U.S. patents and 20 are
foreign patents, and two U.S. patent applications are pending. The claims of these owned patents and patent applications are directed
toward various aspects of our family of products, method of their manufacturing and research programs.
We pursue the registration
of our domain names that we consider material to the marketing of our products, including the
beamr.com
domain name
We generally seek to enter
into confidentiality agreements and proprietary rights agreements with our employees and consultants and to control access to, and distribution
of, our proprietary information. However, we cannot guarantee that all applicable parties have executed such agreements. Such agreements
can also be breached, and we may not have adequate remedies for such breach.
Intellectual property laws,
procedures, and restrictions provide only limited protection, and any of our intellectual property rights may be challenged, invalidated,
circumvented, infringed, misappropriated or otherwise violated. Furthermore, the laws of certain countries do not protect intellectual
property and proprietary rights to the same extent as the laws of the United States, and we therefore may be unable to protect our proprietary
technology in certain jurisdictions. Moreover, our platform and many of our products and services incorporate software components licensed
to the general public under open-source software licenses. We obtain some components from software developed and released by contributors
to independent open-source components of our platform. Open-source licenses grant licensees broad permissions to use, copy, modify and
redistribute certain components of our platform. As a result, open-source development and licensing practices can limit the value of our
proprietary software assets.
58
Despite our efforts to protect
our proprietary rights, unauthorized parties may attempt to copy or obtain and use our technology to develop products and services with
the same functionality as our platform. Policing unauthorized use of our technology is difficult. Our competitors could also independently
develop technologies like ours, and our intellectual property rights may not be broad enough for us to prevent competitors from selling
products and services incorporating those technologies. For more information regarding the risks relating to intellectual property, see
"Item 3.D Risk Factors—Risks Related to Information Technology, Intellectual Property and Data Security and Privacy."
59
Regulatory Environment
We
are subject to a number of U.S. federal and state and foreign laws and regulations that involve matters central to our business. These
laws and regulations involve privacy, data protection, intellectual property, competition, consumer protection and other subjects. Many
of the laws and regulations to which we are subject are still evolving and being tested in courts and could be interpreted in ways that
could harm our business. In addition, the application and interpretation of these laws and regulations are often uncertain, particularly
in the new and rapidly evolving industry in which we operate. Because global laws and regulations have continued to develop and evolve
rapidly, it is possible that we may not be, or may not have been, compliant with each such applicable law or regulation.
Employees
As of April 15, 2023,
we had six employees in Israel, 17 employees who are employed by our wholly owned subsidiary in St. Petersburg, Russia and two employees
who are employed by our wholly owned subsidiary in California, United States. We are not bound by any collective bargaining agreements.
We consider the relationship with our employees to be good. We also use outside consultants and contractors with special expertise and
skills for limited engagements, including manufacturing and quality assurance. During the fourth quarter of 2022, we implemented a cost
reduction plan, including layoffs of certain employees, reducing certain employees from full-time status to part-time status and salary
and bonus reductions of our management and employees.
Environmental, Health, and Safety Matters
Our research, development,
and manufacturing processes involve the controlled use of certain hazardous materials. Therefore, we are subject to extensive environmental,
health, and safety laws and regulations in a number of jurisdictions in Israel, governing, among other things: the use, storage, registration,
handling, emission, and disposal of chemicals, waste materials, and sewage; chemicals, air, water, and ground contamination; air emissions;
and the cleanup of contaminated sites, including any contamination that results from spills due to our failure to properly dispose of
chemicals, waste materials, and sewage. Our operations at our Rehovot manufacturing facility use chemicals and produce waste materials
and sewage. Our activities require permits from various governmental authorities including local municipal authorities, the Ministry of
Environmental Protection, and the Ministry of Health. The Ministry of Environmental Protection, the Ministry of Health, local authorities,
and the municipal water and sewage company conduct periodic inspections in order to review and ensure our compliance with various regulations.
These laws, regulations, and
permits could potentially require the expenditure by us of significant amounts for compliance or remediation. We believe that our environmental,
health, and safety procedures for handling and disposing of these materials comply with the standards prescribed by the controlling laws
and regulations. If we fail to comply with such laws, regulations, or permits, we may be subject to fines and other civil, administrative,
or criminal sanctions, including the revocation of permits and licenses necessary to continue our business activities. In addition, we
may be required to pay damages or civil judgments with respect to third-party claims, including those relating to personal injury (including
exposure to hazardous substances we use, store, handle, transport, manufacture, or dispose of), property damage, or contribution claims.
These risks are managed to minimize or eliminate associated business impacts. Some environmental, health, and safety laws allow for strict
joint and several liability for remediation costs, regardless of comparative fault. We may be identified as a responsible party under
such laws. Such developments could have a material adverse effect on our business, financial condition, and results of operations as these
kinds of liabilities could exceed our resources. We could be subject to a regulatory shutdown of a facility that could prevent the distribution
and sale of products manufactured in such facility for a significant period of time, and we could suffer a casualty loss that could require
a shutdown of the facility in order to repair it, any of which could have a material, adverse effect on our business. Although we continuously
strive to maintain full compliance with respect to all applicable global environmental, health, and safety laws and regulations, we could
incur substantial costs to fully comply with future laws and regulations, and our operations, business, or assets may be negatively affected.
In addition, compliance with
laws and regulations relating to environmental, health, and safety matters is an ongoing process and is often subject to change. In the
event of any changes or new laws or regulations, we could be subject to new compliance measures or to penalties for activities which were
previously permitted. For instance, Israeli regulations were promulgated in 2012 relating to the discharge of industrial sewage into the
sewer system. These regulations establish new and potentially significant fines for discharging forbidden or irregular sewage into the
sewage system. We have compliance procedures in place for employee health and safety programs, driven by a centrally led organizational
structure that ensures proper implementation, which is essential to our overall business objectives.
60
We invest resources in creating
a green production environment and in the treatment and disposal of waste using environmentally friendly processes. We have received all
the necessary permits from the Ministry of Environmental Protection regarding our operations in Yessod Hama'ala and we have obtained
a business license for our new facilities in Rehovot. We consult with environmental consultants for direction on environmental issues.
Legal Proceedings
We are not currently party
to any pending material legal proceedings. From time to time, we may become a party to litigation incident to the ordinary course of our
business. Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of
management resources and other factors.
C. Organizational Structure
We have two wholly owned subsidiaries:
Beamr, Inc. and Beamr Imaging RU LLC. Beamr, Inc. is our wholly owned subsidiary incorporated in 2012 in the State of Delaware. Beamr,
Inc. is engaged in reselling our software and products in the U.S. and Canada. Beamr Imaging RU LLC is our wholly owned subsidiary, a
limited Russian partnership formed in 2016. Beamr Imaging RU LLC is engaged in research and development for us.
In addition, we previously
had a wholly owned subsidiary, Beamr UK Ltd, which was incorporated in 2017 in England. Beamr UK Ltd was engaged in reselling our software
and products in the U.K. Beamr UK Ltd was dissolved in May 2020.
D. Property, Plant and Equipment
Our principle executive offices
are located in Herzliya, Israel and consist of approximately 300 square feet of office space. Our wholly owned Russian subsidiary operates
from a leased office located in St Petersburg, Russia. Our employees in our wholly owned US subsidiary operate primarily from their home
offices.
We lease all of our facilities
and do not own any real property. We intend to procure additional space in the future as we continue to add employees and expand geographically.
We believe our facilities are adequate and suitable for our current needs and that, should it be needed, suitable additional or alternative
space will be available to accommodate our operations.
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 5. OPERATING AND FINANCIAL REVIEW
AND PROSPECTS
You should read the following
discussion and analysis of our financial condition and results of operations together with the section titled "Item 3.A.—Selected
Financial Data" and our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 20-F.
This discussion and other parts of this Annual Report on Form 20-F contain forward-looking statements based upon current expectations
that involve risks and uncertainties. This discussion and other parts of this Annual Report on Form 20-F contain forward-looking statements
that involve risk and uncertainties, such as statements of our plans, objectives, expectations, and intentions. Our actual results could
differ materially from those discussed in these forward looking statements. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in the section titled "Item 3.D.—Risk Factors" and elsewhere in this
Annual Report in Form 20-F.
61
Overview
We are a leading innovator
of video encoding, transcoding and optimization solutions that enable high quality, performance, and unmatched bitrate efficiency for
video and images. With our Emmy®-winning patented technology and award-winning services, we help our customers realize the potential
of video encoding and media optimization to address business-critical challenges. Our customers include tier one OTT, content distributors,
video streaming platforms, and Hollywood studios who rely on our suite of products and expertise to reduce the cost and complexity associated
with storing, distributing and monetizing video and images across devices.
At the heart of our patented
optimization technology is the proprietary BQM, that is highly correlated with the human visual system. BQM is integrated into our CABR,
system, which maximizes quality and remove visual redundancies resulting in a smaller file size. The BQM has excellent correlation with
subjective results, confirmed in testing under ITU BT.500, an international standard for rigorous testing of image quality. The perceptual
quality preservation of CABR has been repeatedly verified using large scale crowd-sourcing based testing sessions, as well as by industry
leaders and studio "golden eyes".
We currently license three
core video and image compression products that help our customers use video and images to further their businesses in meaningful ways:
(1) a suite of video compression software encoder solutions including the Beamr 4 encoder, Beamr 4X content adaptive encoder, Beamr 5
encoder and the Beamr 5X content adaptive encoder, (2) Beamr JPEGmini photo optimization software solutions for reducing JPEG file sizes,
and (3) Beamr Silicon IP block, a hardware solution for integration into dedicated video encoding ASICs, GPUs, and application processors.
Our current product line is
mainly geared to the high end, high quality media customers and we count among our enterprise customers Netflix, ViacomCBS, Snapfish,
Wowza, Microsoft, VMware, Genesys, Deluxe, Vimeo, Encoding.com, Citrix, Walmart, Photobox, Antix, Dalet, and other leading media companies
using video and photo solutions.
We currently derive a significant
portion of our revenue from a limited number of our customers. For the years ended December 31, 2022 and December 31, 2021, our top ten
customers in the aggregate accounted for approximately 61% and 62% of our revenues.
Due to the high cost and complexity
of deploying our existing software solutions and the long sales lead times, we have a made a strategic decision to focus our resources
on the development and commercialization of our next-generation product, the Beamr HW-Accelerated Content Adaptive Encoding solution,
a SaaS solution that is designed, based on our own internal testing, to be up to 10x more cost efficient than our existing software-based
solutions, resulting in reduced media storage, processing and delivery costs.
We are currently collaborating
with NVIDIA, a multinational technology company and a leading developer of GPUs, with an annual revenue of $26.9 billion for the fiscal
year 2022, to develop the world's first GPU accelerated encoding solution that would allow fast and easy end-user deployment combined
with superior video compression rates powered with our CABR rate control and BQM quality measure. Our BQM quality measure software will
execute directly on NVIDIA GPU cores and interact with the NVIDIA video accelerator encoder known as NVENC. NVIDIA NVENC is a high-quality,
high-performance hardware video encoder that is built into most NVIDIA GPUs. NVENC offloads video encoding to hardware, and provides extreme
performance for applications such as live video encoding, cloud gaming and cloud storage. NVIDIA GPUs with NVENC are available on all
major cloud platforms. We are in the advanced stages of development and expect to beta release the Beamr HW-Accelerated Content Adaptive
Encoding solution during the third quarter of 2023 and expect that following release, end-users of the solution will enjoy significant
end-user storage and networking cost savings, potentially reducing their return on investment for storage optimization to approximately
four months, compared to approximately two years with our existing software encoder solutions.
62
Impact of COVID-19
For additional information,
see "Item 3.D Risk Factors—Risks Related to Our Business and Industry–Any resurgence of the COVID-19 pandemic could
adversely affect our business, financial condition and results of operations."
Impact of Invasion of Ukraine
In
addition to our U.S. and Israel operations, we have operations in Russia through our wholly owned subsidiary, Beamr Imaging RU. Specifically,
we undertake some of our software development and design, quality assurance, and support in Russia using personnel located there. While
a majority of our developers are located in Russia, our research and development leadership is all located in Israel.
On
February 24, 2022, Russia invaded Ukraine. The outbreak of hostilities between the two countries could result in more widespread conflict
and could have a severe adverse effect on the region.
Following Russia's actions, various countries, including the U.S.,
Canada, the United Kingdom, Germany and France, as well as the European Union, issued broad-ranging economic sanctions against Russia.
Such sanctions included, among other things, a prohibition on doing business with certain Russian companies, officials and citizens; a
commitment by certain countries and the European Union to remove selected Russian banks from the Society for Worldwide Interbank Financial
Telecommunications (SWIFT) electronic banking network that connects banks globally; and restrictive measures to prevent the Russian Central
Bank from undermining the impact of the sanctions. In response to sanctions, the Russian Central Bank raised its interest rates and banned
sales of local securities by foreigners. Russia may take additional counter measures or retaliatory actions in the future. The continuation
of these hostilities may result in additional economic and other sanctions against Russia. The potential impact of the conflict and any
resulting bans, sanctions and boycotts on companies doing business in Russia is currently uncertain due to the fluid nature of the conflict
as it is unfolding and has the potential to result in broadened military actions. The duration of ongoing hostilities and such sanctions
and related events cannot be predicted. Uncertainty as to future relations between Russia and the U.S. and other countries in the west,
or between Russia and other eastern European countries, may have a negative impact on our operations.
We
do not operate in any sectors of the Russian economy that have been targeted by U.S. or EU sanctions and have no reason to believe that
we would be targeted by any sanctions in the future. Nonetheless, such sanctions and potential responses to such sanctions, including
those that may limit or restrict transfer funds into Russia, may in the future significantly affect our ability to pay our personnel based
in Russia.
Our operations and presence
in Russia is limited. We have no manufacturing operations in Russia and we do not sell any products in Russia and as a consequence we
have not derived any revenues from there. To date, none of our investors expressed concern with respect to our operations in Russia and
none of our customers terminated or downsized their engagement with us as a result of such operations. Our employees in Russia have not
to date experienced any change in their daily ability to perform their tasks. We do not expect Russia or another government to nationalize
our assets or operations in Russia. In particular, our primary assets are software that are stored outside of Russia and our products
and services are all delivered outside of Russia. In addition, we believe that if we needed to, we would be able to recruit personnel
outside Russia without any material interruption to our operations. As a result, we believe that if nationalization were to occur, any
impact on our financial statements would be immaterial.
63
Since
the start of the conflict, we have been constantly evaluating our activities in Russia. Our board is responsible for overseeing risks
related to Russia's invasion of Ukraine, including risks related to cybersecurity, sanctions, employees based in Russia and risks
associated with ongoing or halted operations or investments in affected regions and is actively monitoring key risks. In response to Russia's
invasion of Ukraine, in March 2022, our management presented to our board a business continuity plan. We have begun to partially implement
the business continuity plan in order to address risks related to the conflict on our personnel, operations and product development that
includes alternative payment solutions for personnel in Russia and relocation of certain personnel to territories outside Russia and Belarus
on short notice
. As of April 15, 2023, some of the Russian employees and contractors of our wholly owned subsidiary in St. Petersburg,
Russia have relocated to other countries and we are continuing to monitor the situation with respect to our business continuity plan.
For additional information,
see "Item 3.D—Risk Factors—Risks Related to Our Operations in Russia—Russia's invasion of Ukraine and sanctions
brought against Russia could disrupt our software development operations in Russia."
Components of Our Results of Operations
Revenue
Software Licensing
Our revenues are mainly comprised
of revenue from licensing the rights to use our software for a limited term (mainly for a period of one to three years) or on a perpetual
basis for enterprises that incorporate our perpetual license in their own products delivered to end users and for our products sold
to thousands of private consumers, as applicable to each contract, and from and provision of related maintenance and technical support
services (i.e. Post-Contract Customer Support, or PCS).
Revenue from the sale of software
license (either timely-based or perpetual) is recognized at a point in time in which the license is delivered to the customer. The software
license is considered a distinct performance obligation, as the customer can benefit from the software on its own. Revenue from PCS services
are also derived from annual maintenance providing for unspecified upgrades on a when-and-if-available basis. The right for an unspecified
upgrade for the version acquired by the customer and enhancements on a when-and-if-available basis that do not specify the features, functionality
and release date of future product enhancements for the customer to know what will be made available and the general timeframe in which
it will be delivered. We consider the PCS performance obligation as a distinct performance obligation that is satisfied over time and
recognized on a straight-line basis over the contractual period (mainly over a period of one year either for timely-based license or for
perpetual license).
As we bundle software licenses
(either timely-based or perpetual) together with PCS, the transaction price is allocated to the separate performance obligations on a
relative standalone selling price basis.
Since we do not sell PCS on
a stand-alone basis and due to the fact that these services are usually involved with limited customer support, mainly based on several
hours of technical support per contract (as management believes the technology and products covered under the software license component
are mature and fully functional), the standalone selling prices of the PCS are determined based on the expected cost plus a margin based
on estimation of direct fulfillment cost (an hourly service) and a reasonable margin. Such estimate is also corroborated with the price
that the customer would have to pay to a third-party service provider for a similar support service.
The stand-alone selling price
of the software licenses (either timely-based or perpetual) is estimated by management based on adjusted market assessment approach which
represents management estimation of the price that a customer in the market will be willing to pay for such license on a stand-alone basis
(i.e. without any PCS).
Due to the fact that these
services are usually involved with limited customer support, mainly based on several hours of technical support per contract, the transaction
price allocated to the PCS is considered insignificant. Consequently, most of the transaction price is allocated to the software licenses
as management believes the technology and products covered under the software license component are mature and fully functional.
64
Advertising
Commencing 2022, revenue in
small volume is also derived from the traffic operations in the Google AdSense program, a web advertising platform, that we make available
on our websites. Google pays us on a cost-per-click basis. We recognize as revenue the fees paid to it by Google based on the volume
of clicks through to Google AdSense advertisements.
Cost of Revenue
Cost of software licensing
and related maintenance and technical support services revenues primarily consist of costs related to salaries, of our support team and
additional overhead allocation costs such as rent, utilities and supplies to all departments based on relative headcount.
Gross Margins
Gross margins have been, and
will continue to be, affected by a variety of factors, including the average sales price of our products and services, volume growth,
the mix of revenues, software licenses, maintenance and technical support and professional services, onboarding of new media and telecom
customers, and changes in cloud infrastructure and personnel costs.
Operating Expenses
Research and Development
Our research and development
expenses consist primarily of costs incurred for personnel-related expenses for our technical staff, including salaries and other direct
personnel-related costs. Additional expenses include consulting, amortization of acquired technology intangible asset and professional
fees for third-party development resources. We expect our research and development expenses to increase in absolute dollars for the foreseeable
future as we continue to dedicate substantial resources to develop, improve and expand the functionality of our solutions. Subsequent
costs incurred for the development of future upgrades and enhancements, which are expected to result in additional functionality, may
qualify for capitalization under internal-use software and therefore may cause research and development expenses to fluctuate.
Selling and Marketing Expenses
Our selling and marketing
expenses consist primarily of personnel related costs for our sales and marketing functions, including salaries and other direct personnel-related
costs. Additional expenses include marketing program costs, amortization of acquired customer relationships and trade names, intangible
assets, and payment processer commissions. We expect our selling and marketing expenses will increase on an absolute dollar basis for
the foreseeable future as we continue to increase investments to support our growth. We also anticipate that selling and marketing expenses
will increase as a percentage of revenue in the near and medium-term.
General and Administrative
Expenses
Our general and administrative
expenses consist primarily of personnel-related costs for our executive, finance, human resources, professional fees, information technology
and legal functions, including salaries and other direct personnel-related costs. We expect general and administrative expense to increase
on an absolute dollar basis for the foreseeable future as we continue to increase investments to support our growth and as a result of
our becoming a public company.
We allocate overhead expenses
related to the services agreement and the office agreement expenses under which we receive recurring consulting and related services from
our founder Sharon Carmel as Chief Executive Officer and an entity controlled by him, Sharon Carmel Management, Ltd. The allocation was
done based on the management estimation to reflect the contribution to the related activity.
65
Other Income
In 2021, other income consisted
primarily of loans forgiveness as it were utilized for qualifying expenses under the Coronavirus Aid, Relief, and Economic Security Act.
Financing Income (Expenses),
Net
Financing income (expenses),
net consists of amortization of discounts and interest expense on our indebtedness, modification of terms relating to our loan with Silicon
Valley Bank, or SVB, and changes in the fair value of warrants and convertible advanced investments. Financial expenses, net also includes
foreign exchange gains and losses.
Taxes on Income
We are subject to taxes in
jurisdictions or countries in which we conduct business. Our effective tax rate is affected by tax rates in jurisdictions and the relative
amounts of income we earn in those jurisdictions, changes in the valuation of our deferred tax assets and liabilities, applicability of
any valuation allowances, and changes in tax laws in jurisdictions in which we operate. Due to cumulative losses, we maintain a valuation
allowance against our deferred tax assets. We consider all available evidence, both positive and negative, in assessing the extent to
which a valuation allowance should be applied against our deferred tax assets. Realization of our deferred tax assets depends upon future
earnings, the timing and amount of which are uncertain. Our effective tax rate is affected by tax rates in foreign jurisdictions and the
relative amounts of income we earn in those jurisdictions, as well as non-deductible expenses, such as share-based compensation, and changes
in our valuation allowance.
A. Operating Results
The table below provides our
results of operations for the years ended December 31, 2022, 2021, and 2020.
Year
Ended December 31,
(U.S. dollars in thousands)
2022
2021
2020
Revenues
$
2,863
$
3,300
$
3,176
Cost of revenues
$
(98
)
$
(90
)
$
(94
)
Gross profit
$
2,765
$
3,210
$
3,082
Operating expenses:
Research and development
$
(2,063
)
$
(2,032
)
$
(2,727
)
Sales and marketing
$
(905
)
$
(959
)
$
(1,371
)
General and administrative
$
(828
)
$
(773
)
$
(671
)
Other income
$
-
$
129
$
20
Operating loss
$
(1,031
)
$
(425
)
$
(1,667
)
Financing expenses, net
$
(165
)
$
(475
)
$
(697
)
Tax on income
$
(52
)
$
(52
)
$
(95
)
Net loss
$
(1,248
)
$
(952
)
$
(2,459
)
Revenues, Cost of Revenues and Gross Profit
The following table presents
our revenue, cost of revenues and gross profit for the periods indicated:
Year Ended December 31,
(U.S. dollars in thousands)
2022
2021
2020
Revenues
$
2,863
$
3,300
$
3,176
Cost of revenues
$
(98
)
$
(90
)
$
(94
)
Gross profit
$
2,765
$
3,210
$
3,082
66
Revenues decreased by $0.4
million, or 13%, to $2.9 million for the year ended December 31, 2022, from $3.3 million for the year ended December 31, 2021. The decrease
was primarily due to a shifting of a license renewal that occurred in December 2021 for a 15-month extension until March 2023, which resulted
in recognizing the related revenues in a higher amount in 2021 and a shifting of the next scheduled license renewal to March 2023 when
there is expected to be additional revenue recognition.
Revenues increased by $0.1
million, or 4%, to $3.3 million for the year ended December 31, 2021, from $3.2 million for the year ended December 31, 2020. The increase
was primarily due to higher volume of transactions in which license renewal transactions have occurred in 2021 which resulted in recognizing
the related revenues in higher amount in such reported year compared to 2020.
Operating Expenses
Research and Development
Expenses
Year
Ended December 31,
(U.S. dollars in thousands)
2022
2021
2020
Salary and related expenses
$
(1,722
)
$
(1,645
)
$
(1,963
)
Professional fees
$
(123
)
$
(99
)
$
(161
)
Depreciation and amortization
$
(4
)
$
(107
)
$
(415
)
Travel and overhead expenses
$
(214
)
$
(181
)
$
(188
)
Total research and development expenses
$
(2,063
)
$
(2,032
)
$
(2,727
)
Research and development expenses
did not change materially for the year ended December 31, 2022, compared to 2021. There was a slight increase in salaries, professional
fees and overhead expenses offset by a decrease in depreciation and amortization expenses.
Research and development expenses
decreased by $0.7 million, or 25% to $2 million for the year ended December 31, 2021, from $2.7 million in 2020. The decrease was primarily
due to (i) a reduction in salary and expenses related to a change in priority of deployment of our resources, (ii) a decrease in depreciation
and amortization of intangible assets, and (iii) our focus of our R&D on our new SaaS solution, the Beamr HW-Accelerated Content Adaptive
Encoding solution.
Selling and Marketing Expenses
Year
Ended December 31,
(U.S. dollars in thousands)
2022
2021
2020
Salary and related expenses
$
(564
)
$
(560
)
$
(777
)
Professional fees and platform commissions
$
(236
)
$
(241
)
$
(207
)
Depreciation and amortization
$
(22
)
$
(81
)
$
(255
)
Marketing conferences and trade shows
$
(3
)
$
(1
)
$
(17
)
Travel and overhead expenses
$
(80
)
$
(76
)
$
(115
)
Total selling and marketing expenses
$
(905
)
$
(959
)
$
(1,371
)
Selling and marketing expenses
decreased by $0.05 million, or 6%, to $0.9 million for the year ended December 31, 2022, from $0.95 million in 2021. The decrease was
primarily due to a decrease in depreciation and amortization of intangible assets.
Selling and marketing expenses
decreased by $0.4 million, or 30%, to $1 million for the year ended December 31, 2021, from $1.4 million in 2020. The decrease was primarily
due to (i) a reduction in salary and expenses related to a change in priority of deployment of our resources, (ii) a decrease in depreciation
and amortization of intangible assets, and (iii) our focus of our R&D on our new SaaS solution, the Beamr HW-Accelerated Content Adaptive
Encoding solution.
67
General and Administrative
Year
Ended December 31,
(U.S. dollars in thousands)
2022
2021
2020
Salary and related expenses
$
(346
)
$
(297
)
$
(352
)
Professional fees and consulting
$
(504
)
$
(509
)
$
(360
)
Overhead allocated
$
153
$
140
$
220
Travel, office and other expenses
$
(131
)
$
(107
)
$
(179
)
Total general and administrative expenses
$
(828
)
$
(773
)
$
(671
)
General and administrative
expenses increased by $0.05 million, or 7%, to $0.83 million for the year ended December 31, 2022, from $0.78 million in 2021. The increase
was primarily due to salaries and related expenses.
General and administrative
expenses increased by $0.1 million, or 15%, to $0.8 million for the year ended December 31, 2021, from $0.7 million in 2020. The increase
was primarily due to IPO related service providers.
Other Income
Year Ended
December 31,
(U.S. dollars in thousands)
2022
2021
Other income
$
-
$
129
Other income of $0.01 million
for the year ended December 31, 2021, was a onetime occurrence of other income due to forgiveness of loans under paycheck protection program.
Financing Expenses, Net
Year
Ended December 31,
(U.S. dollars in thousands)
2022
2021
2020
Change in fair value of convertible advanced investment
$
(71
)
$
(288
)
$
(436
)
Amortization of discount and accrued interest on straight loan
$
(103
)
$
(59
)
$
(120
)
Modification of terms relating to straight loan
$
-
$
(90
)
$
-
Discount relating to liability to related party
(40
)
-
-
Exchange rate differences and other finance expenses
$
(49
)
$
(38
)
$
(141
)
Total financing expenses, net
$
(165
)
$
(475
)
$
(697
)
Financing expenses decreased
by $0.3 million, or 65%, to $0.17 million for the year ended December 31, 2022, from $0.47 million in 2021. The decrease was primarily
due to a decrease in the change of fair value of convertible advanced investment, a decrease in exchange rate differences and a decrease
in modification of terms relating to straight loan offset by an increase in amortization of discount and accrued interest and discount
expense relating to liability to related party.
Financing expenses decreased
by $0.2 million, or 32%, to $0.5 million for the year ended December 31, 2021, from $0.7 million in 2020. The decrease was primarily due
to a decrease in the change of fair value of convertible advanced investment, a decrease in exchange rate differences, a decrease in amortization
of discount and accrued interest on our loan from SVB and offset by one-time expenses incurred as result of modification of terms relating
to straight loan.
68
Taxes on Income
Year
Ended December 31,
(U.S. dollars in thousands)
2022
2021
2020
Taxes on income
$
(52
)
(52
)
$
(95
)
Taxes on income expenses did
not change for the year ended December 31, 2022, compared to 2021.
Taxes on income decreased
by $0.04 million, or 45%, to $0.05 million for the year ended December 31, 2021, from $0.1 million in 2020. The decrease was primarily
due to tax provision adjustments related to amortization of intangible assets.
Recent Accounting Pronouncements
Certain recently issued accounting
pronouncements are discussed in Note 2, Significant Accounting Policies, to the consolidated financial statements included in "Item
18. Financial Statements" of this Annual Report.
JOBS Act
Under the JOBS Act, an "emerging
growth company" can take advantage of an extended transition period for complying with new or revised accounting standards. This
provision allows an "emerging growth company" to delay the adoption of new or revised accounting standards that have different
transition dates for public and private companies until those standards would otherwise apply to private companies. Although we meet the
definition of an "emerging growth company" and we have elected not to use this extended transition period for complying with
new or revised accounting standards.
B.
Liquidity and Capital Resources
We have financed our operations
through cash generated from operations, the proceeds from private offerings, proceeds from receiving convertible advanced investments
from our current shareholders and others and proceeds from our initial public offering on the Nasdaq. During the fourth quarter of 2022,
we implemented a cost reduction plan, including layoffs of certain employees, reducing certain employees from full-time status to part-time
status and salary and bonus reductions of our management and employees. This plan is expected to reduce our annual costs in 2023 by approximately
$0.6 million, and, with the recruitment of our new Chief Product Officer, will also allow us to focus on building our future SaaS, and
building a short term roadmap to maximize revenues from our existing products.
We believe that our existing
capital resources and cash flows from operations together with funds received from the initial public offering will be adequate to satisfy
our expected liquidity requirements through the next twelve months. Without derogating from the foregoing estimate regarding our existing
capital resources and cash flows from operations, we may decide to raise additional funds in 2023. We believe that, if required, we will
be able to raise additional capital or reduce discretionary spending to provide the required liquidity beyond the next twelve months.
Our future capital requirements
will depend on many factors, including our revenue growth, the timing and extent of investments to support such growth, the expansion
of sales and marketing activities, increases in general and administrative costs and many other factors as described under "Risk
Factors."
To the extent additional funds
are necessary to meet our long-term liquidity needs as we continue to execute our business strategy, we anticipate that they will be obtained
through the incurrence of additional indebtedness, additional equity financings or a combination of these potential sources of funds;
however, such financing may not be available on favorable terms, or at all. In particular, the widespread COVID-19 pandemic has resulted
in, and may result in, significant disruption of global financial markets, reducing our ability to access capital. If we are unable to
raise additional funds when desired, our business, financial condition and results of operations could be adversely affected.
69
SVB Loans
On February 19, 2017, we and
Beamr, Inc., our wholly owned subsidiary, entered into a Loan Agreement, or the 2017 Loan Agreement, with SVB under which we had a right
to borrow from SVB up to $3 million bearing interest at a floating per annum rate equal to the Wall Street Journal Prime Rate plus 3.5%
(upon occurrence of an 'default event' as defined in the Loan Agreement, the principal amount shall bear interest at a rate
per annum which is 5% above the rate that is otherwise applicable thereto) which shall be payable monthly. In June 2018, we subsequently
drew down a cash amount in the aggregate principal amount of $3 million, or the 2017 Loan, payable in 36 equal installments on a monthly
basis commencing the following month after draw down. On July 26, 2022, we terminated the 2017 Loan Agreement. The Loan is sometimes referred
to herein as a "straight loan"
.
In connection with the execution
of the 2017 Loan Agreement, we issued to SVB a 15-year warrant to purchase (i) 41,040 Series C Convertible Preferred Shares at an exercise
price of $5.12 per share or (ii) 41,040 shares to be issued in the 'next round' at an exercise price equal to the lowest price
per share at which we will sell and issue shares of the next round shares.
On April 15, 2020, we signed
a deferral agreement in connection with the 2017 Loan Agreement with SVB according to which it was agreed that the original monthly repayment
date for the principal due from May 2020 to October 2020 shall be extended by a period of six months commencing November 2020.
In addition, on April 29,
2021, or the Deferral Effective Date, we signed a second deferral agreement in connection with the 2017 Loan Agreement with SVB according
to which it was agreed that the original monthly repayment date for the principal due from May 2021 to October 2021 shall be extended
by a period of six months commencing November 2021. In consideration, we agreed to (i) pay to SVB a total deferral facility fee equal
to $50, which fee shall be fully earned at the Deferral Effective Date, and payable in 10 monthly equal installments over the period commencing
April 29, 2021 through January 29, 2022; (ii) reimburse SVB for all reasonable legal fees and expenses incurred in connection with the
deferral agreement and (iii) issue to SVB a 15-year warrant to purchase 9,764 shares exercisable at an exercise price of $5.12 per share
(subject to standard adjustments) into either Series C Preferred Shares or a class of securities sold and issued by us in the next equity
financing round. Furthermore, if SVB exercises the warrant and the warrant value (as determined in the warrant) is lower than $50,000,
then immediately following such exercise, we are required to pay the holder an amount equal to the difference between the $50,000 and
the warrant value.
On February 17, 2022, we entered
into a second Loan and Securities Agreement, or the 2022 Loan Agreement providing a credit line against our accounts receivables. According
to the 2022 Loan Agreement, commencing as of August 1, 2022 through December 31, 2022, SVB may, in its sole discretion in each instance,
pursuant to our request, finance specific eligible account receivables of ours, as determined in the 2022 Loan Agreement, in a total amount
equal to the face amount of the eligible account receivable multiplied by a rate of 80%, subject to reduction by SVB in its discretion,
or the Advance, provided that the aggregate amount of all outstanding Advances shall not exceed the lesser of (i) an aggregate principal
amount equal to $350,000, or the Revolving Line, or (ii) 80% of all eligible account receivables minus the sum of all outstanding principal
amounts of any Advances, subject to reduction by SVB in its discretion. The outstanding principal amount of any Advance shall accrue interest
at a floating rate per annum equal to the greater of (i) 8.25% and (ii) a floating per annum rate equal to the Wall Street Journal Prime
Rate plus 5% (upon occurrence of a 'default event' as defined in the 2022 Loan Agreement, the aggregate loan principal amount
shall bear interest at a rate per annum which is 5% above the rate that is otherwise applicable thereto). Interest on the principal amount
of each Advance will be payable in monthly arrears (i) on each the last day of each month and (ii) on December 31, 2022, or the Revolving
Line Maturity Date. The security interest granted in the 2022 Loan Agreement shall at all times continue to be a first priority perfected
security. On July 26, 2022, we terminated the 2022 Loan Agreement and the security interest on all our assets was removed.
70
Upon making of the initial
Advance, we agreed to issue to SVB a warrant to purchase (i) 4,784 Series C Convertible Preferred Shares, or (ii) ordinary shares in the
event that we have listed its securities for trading on Nasdaq, or (iii) upon SVB's written irrevocable election in its sole discretion,
the same class and series, or other designation, of convertible preferred share or other senior equity security sold and issued by us
in the next equity financing over a 15-years period commencing the issuance date of such warrant, at an exercise price of $5.12 per share,
provided that if the class is the next equity financing securities, then the exercise price shall be the lowest price per share for which
next equity financing securities are sold or issued by us. Upon termination of the 2022 Loan Agreement, we have no commitment to issue
to SVB the aforesaid warrant.
As of March 13, 2023, we held
approximately $10,000 at SVB and do not have any additional deposits or securities in accounts at SVB.
Convertible Advance
Investment
On August 25, 2021 and August 6, 2019, we entered into separate advance
investment agreements with several current shareholders under which we raised an amount of $560,000 and $3,097,000, respectively, which
was not interest bearing but was eligible for conversion into our ordinary shares based on a variable conversion price depending on the
occurrence of certain liquidation events. Upon completion of our initial public offering, the advance investment amounts were converted
into an aggregate of 1,142,856 ordinary shares based on a conversion price of $3.20 per ordinary share.
IBI Spikes Loan
On July 7, 2022, we entered
into a funding agreement with IBI providing for a loan, or the IBI Loan, in the amount of NIS 3.1 million (approximately $900,000), or
the IBI Loan Agreement. The loan is repayable on a monthly basis based on a formula set forth in the IBI Loan Agreement until the earlier
repayment of NIS 4,172,760 (approximately $1.2 million), or the Repayment Amount, or January 5, 2026. We may repay the IBI Loan early
based on formula set forth in the IBI Loan Agreement. The IBI Loan Agreement provides for certain customary covenants and accelerates
in the event of default.
In consideration for the grant of the IBI Loan, we are required to
pay to IBI a non-refundable one-time fee of 1.5% of the IBI Loan amount and we issued a warrant to purchase 65,562 ordinary shares at
an exercise price of $3.20 per share. The warrant has a term of the earlier of 10 years or certain liquidation events and a variable exercise
price depending on the occurrence of certain liquidation events. The warrant can be exercised on cashless exercise based on the discretion
of IBI.
Completion of our Initial
Public Offering
On February 27, 2023, we announced
the pricing of our initial public offering of 1,950,000 ordinary shares at a public offering price of $4.00 per ordinary share, for aggregate
gross proceeds of $7,800,000 prior to deducting underwriting discounts and other offering expenses.
Our ordinary shares began
trading on the Nasdaq Capital Market under the ticker symbol "BMR" on February 28, 2023.
Cash Flows
The following table summarizes
our cash flows for the periods presented:
Year
Ended December 31,
(U.S. dollars in thousands)
2022
2021
2020
Net cash provided by (used in) operating activities
$
(645
)
$
569
$
(1,020
)
Net cash provided by (used in) investing activities
$
(2
)
$
(4
)
$
1
Net cash used in financing activities
$
312
$
(141
)
$
(418
)
Change in cash, cash equivalents
$
(335
)
$
424
$
(1,437
)
Cash, cash equivalents at beginning of period
$
1,028
$
604
$
2,041
Cash, cash equivalents at end of period
$
692
$
1,028
$
604
71
Net cash used in operating
activities
For the year ended December
31, 2022, net cash used by operating activities was mainly due to a net loss of $1.2 million, offset by $0.2 million of share-based
compensation and change in other working capital items as shown in the consolidated statements of cash flows of the annual financial statements.
For the year ended December
31, 2021, net cash provided by operating activities was mainly due to a net loss of $1 million and $0.1 million of forgiveness of
loan under a paycheck protection program note, which was offset by $0.2 million of depreciation and amortization, $0.2 million of share-based
compensation, $0.01 million of amortization of discount relating to our loan from SVB, $0.3 million of change in the fair value of convertible
advanced investments, $0.1 million of modification of terms of our loan from SVB, $0.7 million change in trade receivables and $0.2 million
change in other working capital items as shown in the condensed consolidated statements of cash flows of the interim financial statements.
For the year ended December
31, 2020, net cash used in operating activities was mainly due to a net loss of $2.4 million, which was offset by $0.6 million of
depreciation and amortization, $0.1 million of share-based compensation, $0.02 million of amortization of discount relating to our loan
from SVB, $0.4 million of change in the fair value of convertible advanced investments and $0.1 million of change in other working capital
items as shown in the consolidated statement of cash flows of the annual financial statements.
Investing Activities
For the years ended December
31, 2022, 2021 and 2020, the change in net cash used in investing activities was immaterial.
Financing Activities
Net cash provided by financing activities of $0.3 million for the year
ended December 31, 2022 was related to $0.9 million of proceeds received from a loan granted from a commercial bank (IBI) and $0.1 million
of proceeds from loan received from related party, offset by deferred offering costs of $0.1 million and repayment of principal relating
to a straight loan received from a commercial bank (SVB) of $0.6 million.
Net cash used in financing
activities of $0.1 million for the year ended December 31, 2021 was related to repayment of a straight loan and facility fees of $0.5
million and deferred offering costs of $0.2 million and offset by proceeds received from a paycheck protection program note of $0.05 million
and proceeds received from issuance of convertible advanced investments of $0.6 million.
Net cash used in financing
activities of $0.4 million for the year ended December 31, 2020 was related to repayment of our loan from SVB of $0.5 million and offset
by proceeds received from a paycheck protection program note of $0.07 million and proceeds received from exercise of share options into
shares of $0.01 million.
C. Research and Development, Patents and
Licenses
See above, under
Item 5 – "Research and Development Expenses."
D.
Trend Information
Other than as disclosed in
"
Item 5. Operating and Financial Review and Prospectus—Components of Our Results of Operations
" and elsewhere
in this Annual Report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2022
to December 31, 2022 that are reasonably likely to have a material effect on our total revenues, income, profitability, liquidity or capital
resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial
condition.
72
E.
Critical Accounting Estimates
Use of Estimates
The preparation of financial
statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported
in the consolidated financial statements and accompanying notes. Our management believes that the estimates, judgment and assumptions
used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial
statements, and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.
We believe that the accounting
policies described below require management's most difficult, subjective or complex judgments. Judgments or uncertainties affecting
the application of these policies may result in materially different amounts being reported under different conditions or using different
assumptions. Accordingly, we believe these are the most critical to aid in fully understanding and evaluating our financial condition
and results of operations. See Note 2 to the audited consolidated financial statements for additional information regarding these and
our other significant accounting policies.
Share-based compensation
Service-based awards
We account for share-based
compensation in accordance with ASC 718, "Compensation - Stock Compensation", or ASC 718, which requires companies to estimate
the fair value of equity-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award
is recognized as an expense over the requisite service periods by applying the straight-line method in our consolidated statements of
comprehensive loss.
We selected the Black-Scholes
option-pricing model as the most appropriate fair value method for our option awards. The Black-Scholes option-pricing model requires
the input of highly subjective assumptions, including the fair value of the underlying ordinary shares, the expected volatility of the
price of our ordinary shares, the expected term of the option, risk-free interest rates and the expected dividend yield of our ordinary
shares. These estimates involve inherent uncertainties and the application of management's judgment. These assumptions are estimated
as follows:
Key Assumptions
●
Fair Value of our ordinary shares.   The fair value of the underlying ordinary shares is determined based on the price of our ordinary shares on the Nasdaq.
●
Expected Volatility.  The expected price volatility for our ordinary shares was estimated by taking the average historical price volatility for our ordinary shares on the Nasdaq.
●
Expected Term. The expected term represents the period that our share-based awards are expected to be outstanding and is determined based on the simplified method until sufficient historical exercise data will support using expected life assumptions.
●
Risk-Free Rate.  The risk-free interest rate is based on the yields of U.S. Treasury securities with maturities similar to the expected term of the options for each option group.
●
Dividend Yield.  We have never declared or paid any cash dividends and do not presently plan to pay cash dividends in the foreseeable future. Consequently, we used an expected dividend yield of zero.
73
Ordinary shares valuation
The fair value of ordinary
shares was determined by our board of directors, with input from management, and taking into account the most recent valuation from an
independent third-party valuation specialist. These valuations were determined in accordance with the guidelines outlined in the American
Institute of Certified Public Accountants Accounting and Valuation Guide: Valuation of Privately-Held-Company Equity Securities Issued
as Compensation. The assumptions we used in the valuation models were based on future expectations combined with management judgment.
Numerous objective and subjective factors were considered in the determination of the fair value of our ordinary shares as of the date
of each option grant, including the following factors:
●
contemporaneous valuations performed at periodic intervals by an independent third-party specialist;
●
the likelihood and timing of achieving a liquidity event, such as an initial public offering or sale;
●
the liquidation preferences, rights, and privileges of our preferred shares relative to our ordinary shares;
●
the nature and history of our business;
●
the general economic conditions and our industry outlook;
●
our overall financial condition;
●
our earning capacity;
●
our dividend history;
●
the existence of goodwill or other intangible value within our business;
●
the prior sales of interests in the business and the size of the interest being valued;
●
the market price of equity interest in companies engaged in the same or a similar line of business; and
●
adjustments necessary to recognize a lack of marketability of the ordinary shares.
In valuing our ordinary shares,
absent an arm's-length current/recent round of financing, the fair value of our business, or equity value, was determined using
both the income approach and market approach.
The income approach estimates
value based on the expectation of future cash flows that we will generate. These future cash flows are discounted to their present values
using a discount rate based on the capital rates of return for comparable publicly traded companies and are adjusted to reflect the risks
inherent in our cash flows relative to those inherent in the companies utilized in the discount rate calculation.
The market approach estimates
value based on a comparison of us to comparable public companies in a similar line of business. From the comparable companies, representative
market value multiples are determined and then applied to our financial results to estimate our value.
The resulting equity value
was then allocated to each share class using an OPM. Under the OPM, preferred and ordinary shares are treated as a series of call options,
with the preferred shares having an exercise price based on the liquidation preference of the respective preferred share. The OPM operates
through a series of Black-Scholes-Merton option pricing models, with the exercise prices of the options representing the upper and lower
bounds of the proceed ranges that a security holder would receive upon a liquidity event. The strike prices occur at break points where
the allocation of firm value changes among the various security holders. The ordinary shares are presumed to have value only if funds
available for distribution to shareholders exceed the value of the respective liquidation preferences at the time of a liquidity event.
74
For each valuation date, after
the ordinary shares value was determined, a discount for lack of marketability, or DLOM, was applied to arrive at the fair value of the
ordinary shares on a non-marketable basis. A DLOM is applied in order to reflect the lack of a recognized market for a closely held interest
and the fact that a non-controlling equity interest may not be readily transferable. A market participant purchasing this share would
recognize this illiquidity associated with the shares, which would reduce the overall fair value. The discount for lack of marketability
was determined using a put option as a proxy for measuring discounts for lack of marketability of securities.
We also considered any secondary
transactions involving our capital shares. In our evaluation of those transactions, we considered the facts and circumstances of each
transaction to determine the extent to which they represented a fair value exchange. Factors considered include:
●
transaction volume;
●
proximity in time to other transactions as well as the valuation date;
●
frequency of similar transactions;
●
whether the transactions occurred between willing and unrelated parties; and
●
whether the transactions involved parties with sufficient access to our financial; information from which to make an informed decision on price.
Application of these approaches
involves the use of estimates, judgments, and assumptions that are highly complex and subjective, such as those regarding our expected
future revenue, expenses, future cash flows, discount rates, market multiples, the selection of comparable companies, and the probability
of possible future events. Changes in any or all of these estimates and assumptions or the relationships between those assumptions impact
our valuations as of each valuation date and may have a material impact on the valuation of our ordinary shares.
Internal Control Over
Financial Reporting
Prior to our initial public offering, we were a private company with
limited accounting and financial reporting personnel and other resources to address our internal controls and procedures. In connection
with the audit of our consolidated financial statements as of December 31, 2022, we identified control deficiencies in our financial
reporting process that constitute a material weakness for the three years then ended. The material weakness related to lack of sufficient
internal accounting personnel, segregation of duties, and lack of sufficient internal controls (including IT general controls, entity
level controls and transaction level controls).
As
defined in the standards established by the Public Company Accounting Oversight Board of the United States, a "material weakness"
is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility
that a material misstatement of the company's annual or interim financial statements will not be prevented or detected on a timely
basis.
We
expect to take a number of measures to address the internal control deficiencies that have been identified including expanding our existing
accounting and financial reporting personnel, establishing effective monitoring and oversight controls and engaging an external consulting
firm to assist us with assessment of Sarbanes-Oxley compliance requirements and improvement of overall internal controls. However, we
cannot assure you that these measures may fully address the material weaknesses in our internal control over financial reporting or that
we may conclude that they have been fully remediated.
We
expect to complete our remediation plan within the next 12 months. However, we have not tested the effectiveness of our internal control
over financial reporting and cannot assure you that we will be able to successfully remediate this material weakness and, even if we do,
we cannot assure you that we will not suffer from other material weaknesses in the future. Except for additional personnel costs, the
cost of systems and the costs of our third-party service providers, we do not expect to incur any material costs related to our remediation
plan.
75
The
process of designing and implementing an effective financial reporting system is a continuous effort that requires us to anticipate and
react to changes in our business and the economic and regulatory environments and to expend significant resources to maintain a financial
reporting system that is adequate to satisfy our reporting obligation. See "Item 3.D—Risk Factors—Risks Related to Ownership
of our Ordinary Shares— We have identified a material weakness in our internal control over financial reporting, and we may not
be able to successfully implement remedial measures."
As
a company with less than US $1.235 billion in revenue for our last fiscal year, we are an "emerging growth company" pursuant
to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise
applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404
of the Sarbanes-Oxley Act of 2002, in the assessment of the emerging growth company's internal control over financial reporting.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A.
Directors and Senior Management
The following table sets forth
certain information relating to our directors and senior management as of April 15, 2023. Unless otherwise stated, the address for our
directors and senior management is at the Company's registered address c/o 10 HaManofim Street, Herzeliya, 4672561, Israel.
Name
Age
Position
Sharon Carmel
52
Chief Executive Officer and Chairman
Danny Sandler
37
Chief Financial Officer
Tamar Shoham
48
Chief Technology Officer
Dan Julius
46
V.P. of Research and Development
Dani Megrelishvili
47
Chief Product Officer
Eliezer Lubitch
61
President, Beamr, Inc.
Tal Barnoach (1)
59
Director
Lluis Pedragosa (1)
44
Director
Yair Shoham (1)(2)
69
Director
Osnat Michaeli (1)(2)
54
Director
(1)
Independent director (as defined under Nasdaq Stock Market Listing Rules).
(2)
External director (as defined under the Companies Law)
Sharon Carmel, Chief Executive Officer,
Director
Sharon Carmel,
52,
serves as our Chief Executive Officer and as the Chairman of the board of directors since he founded our company in October 2009. Prior
to founding Beamr, Mr. Carmel is a serial entrepreneur with a proven track record in the software space. Prior to founding Beamr, in August
2002, Mr. Carmel co-founded, BeInSync, which developed P2P synchronization and online backup technologies. Prior to that, in January 1994,
Mr. Carmel co-founded Emblaze (LON: BLZ), a software company, which developed the Internet's first vector-based graphics player.
Mr. Carmel received his training in computer science and software development during his mandatory military service in the IDF.
Danny Sandler, Chief Financial Officer
Danny Sandler
, 37,
serves as our Chief Financial Officer since December 2021. Mr. Sandler joined us in May 2020, and prior to his current role, served as
our Director of Finance. Prior to joining us, between December 2014 and May 2020, Mr. Sandler served in various roles and, most recently
as Assurance Manager, in the Hi-Tech and Life Science Practice at EY, a global accounting and consulting firm. Prior to that, between
November 2011 and November 2014, Mr. Sandler was a finance associate at Seeking Alpha, a crowd-sourced content service for financial markets.
Mr. Sandler holds a Bachelor's degree in Economics and Accounting from Bar-Ilan University.
76
Tamar Shoham, Chief Technology Officer
Tamar Shoham
, 48, serves
as our Chief Technology Officer since November 2021. Mrs. Shoham is a leading imaging and video scientist, with over 20 years' experience
in algorithm development and industry-oriented research, primarily in the field of video quality and compression. Mrs. Shoham joined us
in August 2009, and prior to her current role, served as our Vice President of Technology where she led our algorithm and intellectual
property development. Prior to joining us, between 2006 and 2009, Mrs. Shoham was a research fellow at the NEGEV consortium, Signal and
Image Processing Lab at the Technion Institute of Technology. Prior to that, between 1997 and 2005, Mrs. Shoham served as a digital signal
processing algorithm developer at Comverse Ltd. Mrs. Shoham holds a Master's degree in Electrical Engineering from the Technion
Institute of Technology and a Bachelor's degree in Electrical Engineering from Tel Aviv University.
Dan Julius, V.P. of Research and Development
Dan Julius
, 45, serves
as our Vice President of Research and Development. Mr. Julius brings more than two decades of experience in management and software development.
Mr. Julius joined us in March 2011, and prior to his current role served as a team lead for our system overseeing design, development,
and quality control. Prior to joining us, between February 2008 and May 2011, Mr. Julius was the co-founder and served as Chief Technology
Officer at Joliper Ltd. Prior to that, between February 2007 and February 2008, Mr. Julius served as a software developer and a team leader
at BeInSync Ltd., a software platform enabling users to backup, synchronize, share and access their files, documents and other data online.
Prior to that, between November 2001 and August 2004, Mr. Julius served as a CAD engineer at Intel. Between February 1999 and August 2001,
Mr. Julius served as a software developer and a team leader at TeleVend Inc. Mr. Julius holds a Master's degree in Computer Science
from the University of British Columbia and a Bachelor's degree in Computer Science from Tel Aviv University.
Dani Megrelishvili, Chief Product Officer
Dani Megrelishvili
,
47, serves as our Chief Product Officer since December 2022. Mr. Megrelishvili's previous roles with us were between November 2014
and November 2017, serving as Head of Product (JPEGmini business unit), and between February 2012 and November 2014, serving as Head of
User experience. Prior to rejoining us, between January 2022 and November 2022, Mr. Megrelishvili served as product manager at Lexense
Technologies Ltd., a legal-tech startup offering tools for handling and managing legal disputes. Prior to that, between June 2020 and
December 2021, Mr. Megrelishvili served as product manager at Wix.Com Ltd (NASDQ: WIX), a cloud-based web development services company.
Prior to that, between August 2018 and June 2020, Mr. Megrelishvili served as a consultant to several technology companies, including
ZOOZ Mobile Ltd., a payment processing platform (acquired by PayU in 2018) and Augmented Intelligence Inc., a startup that builds an AI
Assistant for a variety of use-cases.
Eliezer Lubitch, President, Beamr, Inc.
Eliezer Lubitch
, 61,
serves as the President of our subsidiary, Beamr, Inc. since 2011. Mr. Lubitch heads our U.S. operations, including sales, business development,
new markets, and strategic partnerships. Prior to joining us, between 2008 and 2011, Mr. Lubitch served as Vice President of Business
Development and Brand Licensing at Eastman Kodak Company. Prior to that, between 2004 and 2007, Mr. Lubitch served as Vice President of
Business Development at Kodak Versamark Inc., a wholly owned subsidiary of Kodak. Between 1990 and 2003, Mr. Lubitch served in various
roles at Scitex Corporation, Ltd. (NASDAQ: SCIX), including Vice President of Business Development, Director of Business Development,
Product Line R&D Manager, and software engineer. Mr. Lubitch was a seed investor in Tivella, Inc., a pioneering company of IPTV (acquired
by Cisco in 2007). Mr. Lubitch holds a Master's degree in Business Administration from the Technion Institute of Technology, a Master's
degree in Computer Science from Tel Aviv University, and a Bachelor's degree in Mathematics and Computer Science from Hebrew University.
77
Tal Barnoach, Director
Tal Barnoach
, 58, serves
as a board member in our company since January 2014. Mr. Barnoach is a general partner at Disruptive VC, a venture capital fund since
July 2014 Disruptive Opportunity Fund since 2018 and Disruptive AI since 2020. Besides his role as a general partner in Disruptive and
serving as a board member of Beamr, Mr. Barnoach serves as a board member in several other technological companies like Idomoo, Anodot,
Tailor Brands, Bit, Lumen, Deep, Replix, Qwilt, Minta and more. Over the last 20 years, Mr. Barnoach has founded and led companies such
as S.E.A. Multimedia (which went public in 1996), Orca Interactive (acquired by France Telecom in 2008), BeInsync (acquired by Phoenix
Technologies in 2008) and Dotomi (acquired by ValueClick in 2011). Mr. Barnoach holds a B.A. degree in economics from Tel Aviv University.
Lluis Pedragosa, Director
Liuis Pedragosa,
43
,
serves as a board member in our company since August 2016, and was appointed by our shareholder, Marker LLC. Since May 2018, Mr. Pedragosa
is a managing partner and the Chief Financial Officer of Team8, a cybersecurity and fintech company creation platform and a venture capital
fund. Prior to that, between December 2012 and April 2018, Mr. Pedragosa was a partner and founding team member at Marker LLC, a venture
capital firm with over $400 million under management. Besides his role in Team8 and serving as a board member of Beamr, Mr. Pedragosa
serves as a board member in Screenz, and as a board observer in Overwolf Ltd. Mr. Pedragosa holds a Master's degree in Business
Administration from The Wharton School of the University of Pennsylvania, a Master's degree in International Studies from the University
of Pennsylvania, and a Bachelor's of science in Business Administration from ESADE Business School.
Yair Shoham, Director
Yair Shoham
, 68, serves
as a board member in our company since March 2023. Mr. Shoham brings more than two decades of global experience in venture capital and
is a serial entrepreneur with a track record in the software and hardware spaces. Prior to joining us, between 2018 and December 2021,
Mr. Shoham served as Managing Director and Israel Country Manager at Intel Capital, the venture arm of Intel Corporation. Prior to this
role, between July 2012 and 2018, he served as Investment Director at Intel Capital. Prior to that, between 1999 and 2012, Mr. Shoham
served as General Partner at Genesis Partners, a leading early stage Israel-based venture capital firm. During his career, Mr. Shoham
has founded and led several companies such as VDOnet Corp. (acquired by Citrix Systems, Inc.), Butterfly VLSI Ltd. (acquired by Texas
Instruments Incorporated), and RFWaves Ltd. (acquired by Vishay Intertechnology Inc.). Between 1995 and 2006, Mr. Shoham served as an
independent board member at M-Systems Ltd., until the company was acquired by SanDisk Corporation. Mr. Shoham holds a Juris Doctor degree
from Loyola University School of Law and a Bachelor's degree in psychology from the University of Haifa.
Osnat Michaeli, Director
Osnat Michaeli
, 53,
serves as a board member in our company since March 2023. Ms. Michaeli brings more than two decades of global experience in finance and
operations. Prior to joining us, between May 2019 and August 2021, Ms. Michaeli served as Chief Financial Officer at Twine Solutions Ltd,
a leading digital thread-dyeing technology company. Between March 2017 and May 2019, Ms. Michaeli served as Chief Financial Officer at
Cardo Systems Ltd., a leading company for Bluetooth® and Dynamic Mesh Communication, and entertainment systems for motorcycle riders.
Prior to that, between March 2011 and August 2015, Ms. Michaeli served as Chief Financial Officer at Kornit Digital Ltd., an international
manufacturing company, which produces high-speed industrial inkjet printers, pigmented ink, and chemical products, where she held a key
role in leading the company to its Initial Public Offering in, 2015 (NASDAQ: KRNT). Ms. Michaeli holds a Bachelor's degree in economics
and a Master's degree in Business Administration, both from Tel Aviv University.
78
B. Compensation
The aggregate compensation we paid to our executive officers and directors
for the year ended December 31, 2022, was approximately $1,025,749. This amount includes approximately $79,701 paid, set aside or accrued
to provide pension, severance, retirement or similar benefits or expenses and $96,897 share based compensation expenses, but does not
include 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 December 31, 2022, options to purchase 826,234 ordinary shares granted to our officers
and directors were outstanding under our share option plan at a weighted average exercise price of $1.65 per share.
In accordance with the Companies
Law, the table below reflects the compensation granted to our five most highly compensated officers during or with respect to the year
ended December 31, 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
Total
(USD in thousands)
Sharon Carmel, CEO
161
-
-
--
161
Danny Sandler, CFO
159
-
18
--
177
Eliezer Lubitch, US President
241
-
26
--
267
Tamar Shoham, CTO
164
-
19
--
183
Dan Julius, VP R&D
189
-
21
--
210
(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 granted to the officer based on formulas set forth in the respective resolutions of our Compensation Committee and Board of Directors with respect to 2022.
(3)
Represents the equity-based compensation expenses recorded in our financial statements for the year ended December 31, 2022, based on the securities' 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 12 to our financial statements included in this Annual Report.
For
so long as we are a foreign private issuer, we will not be required to comply with the proxy rules applicable to U.S. domestic companies
regarding disclosure of the compensation of certain executive officers on an individual basis. Pursuant to the Companies Law, we are required
to disclose the annual compensation of our five most highly compensated officers on an individual basis. This disclosure will not be as
extensive as that required of a U.S. domestic issuer. We intend to commence providing such disclosure, at the latest, in the annual proxy
statement for our first annual meeting of shareholders, which will be filed under cover of a report on Form 6-K.
Employment Agreements
with Executive Officers
We have entered into written
employment or consulting agreements with each of our executive officers. All of these agreements 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. In addition, we intend to enter into indemnification agreements, subject to the listing of our securities
on the Nasdaq Capital Market, with each executive officer, director, and director nominee pursuant to which we will indemnify each of
them up to a certain amount and to the extent that these liabilities are not covered by directors and officers insurance.
For
a description of the terms of our options and option plans, see "Item 6.E Directors, Senior Management and Employees—Share
Ownership—Share Option Plans
"
below.
Directors'
Service Contracts
Other than with respect to
our directors that are also executive officers, we do not have written agreements with any director providing for benefits upon the termination
of his employment with our company.
Non-Executive Board Engagement Terms
During
the term of office as a director, each non-executive director shall be entitled to receive an annual remuneration payment of $20,000 per
full year (payable in four (4) equal payments, one for each calendar quarter ending on March 31, June 30, September 30 and December 31
of each year), or a pro rata thereof. In addition, each non-executive director shall also be entitled to receive a payment of $750.00
for each face-to-face or zoom meeting of the board of directors or a committee thereof, and a payment of $500.00 for each written resolution
of the board of birectors or a committee thereof.
79
C. Board Practices
Introduction
Our board of directors consists
of five members. We believe that Tal Barnoach, Lluis Pedragosa, Yair Shoham and Osnat Michaeli are "independent" for
purposes of the Nasdaq Stock Market rules. Our amended and restated articles of association provide that the number of board of directors'
members shall be set by the general meeting of the shareholders provided that it will consist of not less than five and not more than
ten. Pursuant to the Companies Law, the management of our business is vested in our board of directors. Our board of directors may exercise
all powers and may take all actions that are not specifically granted to our shareholders or to management. Our executive officers are
responsible for our day-to-day management and have individual responsibilities established by our board of directors. Our Chief Executive
Officer is appointed by, and serves at the discretion of, our board of directors, subject to the service agreement that we have entered
into with him. All other executive officers are appointed by our Chief Executive Officer. Their terms of employment are subject to the
approval of the board of directors, and are subject to the terms of any applicable employment agreements that we may enter into with them.
Each director, except external
directors that may be required to be appointed under the Companies Law under certain circumstances, will hold office pursuant to the Companies
Law, until the next annual general meeting of our shareholders following his or her appointment, or until he or she resigns or unless
he or she is removed by a majority vote of our shareholders at a general meeting of our shareholders or upon the occurrence of certain
events, in accordance with the Companies Law and our amended and restated articles of association.
In addition, if a director's
office becomes vacant, the remaining serving directors may continue to act in any manner, provided that their number is of the minimal
number specified in our amended and restated articles of association. If the number of serving directors is lower than such minimum number,
then our board of directors may only act in an emergency or to fill the office of director which has become vacant up to a number equal
to the minimum number provided for pursuant to our amended and restated articles of association, or in order to call a general meeting
of our shareholders for the purpose of electing directors to fill any of our vacancies . External directors may be elected for up to two
additional three-year terms after their initial three-year term under the circumstances described below, with certain exceptions as described
in "External Directors" below. External directors may be removed from office only under the limited circumstances set forth
in the Companies Law.
Under the Companies Law, any
shareholder holding at least one percent of our outstanding voting power may nominate a director. However, any such shareholder may make
such a nomination only if a written notice of such shareholder's intent to make such nomination has been given to our board of directors.
Any such notice must include certain information, including the consent of the proposed director nominee to serve as our director if elected,
and a declaration that the nominee signed declaring that he or she possesses the requisite skills and has the availability to carry out
his or her duties. Additionally, the nominee must provide details of such skills, and demonstrate an absence of any limitation under the
Companies Law that may prevent his or her election, and affirm that all of the required election-information is provided to us, pursuant
to the Companies Law.
Under the Companies Law, our
board of directors must determine the minimum number of directors who are required to have accounting and financial expertise. In determining
the number of directors required to have such expertise, our board of directors must consider, among other things, the type and size of
the company and the scope and complexity of its operations. Our board of directors has determined that the minimum number of directors
of our company who are required to have accounting and financial expertise is two.
The board of directors must
elect one director to serve as the chairman of the board of directors to preside at the meetings of the board of directors, and may also
remove that director as chairman. Pursuant to the Companies Law, neither the chief executive officer nor any of his or her relatives is
permitted to serve as the chairman of the board of directors, and a company may not vest the chairman or any of his or her relatives with
the chief executive officer's authorities. In addition, a person who reports, directly or indirectly, to the chief executive officer
may not serve as the chairman of the board of directors; the chairman may not be vested with authorities of a person who reports, directly
or indirectly, to the chief executive officer; and the chairman may not serve in any other position in the company or a controlled company,
but he or she may serve as a director or chairman of a controlled company. However, the Companies Law permits a company's shareholders
to determine, for a period not exceeding three years from each such determination, that the chairman or his or her relative may serve
as chief executive officer or be vested with the chief executive officer's authorities, and that the chief executive officer or
his or her relative may serve as chairman or be vested with the chairman's authorities. Such determination of a company's
shareholders requires either: (1) the approval of at least a majority of the shares of those shareholders present and voting on the matter
(other than controlling shareholders and those having a personal interest in the determination) (shares held by abstaining shareholders
shall not be considered); or (2) that the total number of shares opposing such determination does not exceed 2% of the total voting power
in the company.
80
The board of directors may,
subject to the provisions of the Companies Law, delegate any or all of its powers to committees of the board, and it may, from time to
time, revoke such delegation or alter the composition of any such committees, subject to certain limitations. Unless otherwise expressly
provided by the board of directors, the committees shall not be empowered to further delegate such powers. The composition and duties
of our audit committee, financial statement examination committee and compensation committee that will be established upon the listing
of our ordinary shares on the Nasdaq Capital Market, are described below.
The board of directors oversees
how management monitors compliance with our risk management policies and procedures, and reviews the adequacy of the risk management framework
in relation to the risks faced by us. The board of directors is assisted in its oversight role by an internal auditor. The internal auditor
undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which will be reported to our audit
committee.
DIVERSITY OF THE BOARD
OF DIRECTORS
Board Diversity Matrix
(As of April 15, 2023)
Country of Principal Executive Offices
Israel
Foreign Private Issuer
Yes
Disclosure Prohibited under Home Country Law
No
Total Number of Directors
5
Part I: Gender Identity
Female
Male
Non-
Binary
Did Not
Disclose
Gender
Directors
0
3
0
2
Part II: Demographic Background
Underrepresented Individual in Home Country Jurisdiction
0
LGBTQ+
0
Did Not Disclose Demographic Background
2
External Directors
Under
the Companies Law, companies incorporated under the laws of the State of Israel that are publicly traded, including Israeli companies
with shares listed on the Nasdaq, are required to appoint at least two external directors who meet the qualification requirements set
forth in the Companies Law. The definitions of an external director under the Companies Law and independent director under Nasdaq Stock
Market rules are similar such that it would generally be expected that our two external directors will also comply with the independence
requirement under Nasdaq Stock Market rules.
A
person may not be appointed as an external director if the person is a relative of a controlling shareholder or if on the date of the
person's appointment or within the preceding two years the person or his or her relatives, partners, employers or anyone to whom
that person is subordinate, whether directly or indirectly, or entities under the person's control have or had any affiliation with
any of the following, or an affiliated entity: (1) us; (2) any person or entity controlling us on the date of such appointment;
(3) any relative of a controlling shareholder; or (4) any entity controlled, on the date of such appointment or within the preceding
two years, by us or by a controlling shareholder. If there is no controlling shareholder or any shareholder holding 25% or more of voting
rights in the company, a person may not be appointed as an external director if the person has any affiliation to the chairman of the
board of directors, the chief executive officer (referred to in the Companies Law as a general manager), any shareholder holding 5% or
more of the company's shares or voting rights or the senior financial officer as of the date of the person's appointment.
81
The
term "controlling shareholder" means a shareholder with the ability to direct the activities of the company, other than by
virtue of being an office holder. A shareholder is presumed to have "control" of the company and thus to be a controlling
shareholder of the company if the shareholder holds 50% or more of the "means of control" of the company. "Means of
control" is defined as (1) the right to vote at a general meeting of a company or a corresponding body of another corporation;
or (2) the right to appoint directors of the corporation or its general manager. For the purpose of approving related-party transactions,
the term also includes any shareholder that holds 25% or more of the voting rights of the company if the company has no shareholder that
owns more than 50% of its voting rights. For the purpose of determining the holding percentage stated above, two or more shareholders
who have a personal interest in a transaction that is brought for the company's approval are deemed as joint holders.
The
term affiliation includes:
●
an employment relationship;
●
a business or professional relationship maintained on a regular basis;
●
control; and
●
service as an office holder, excluding service as a director in a private company prior to the first offering of its shares to the public if such director was appointed as a director of the private company in order to serve as an external director following the initial public offering.
The
term "relative" is defined as a spouse, sibling, parent, grandparent, descendant, spouse's descendant, sibling and parent
and the spouse of each of the foregoing.
The
term "office holder" is defined as a general manager, chief business manager, deputy general manager, vice general manager,
director or manager directly subordinate to the general manager or any other person assuming the responsibilities of any of the foregoing
positions, without regard to such person's title.
A
person may not serve as an external director if that person or that person's relative, partner, employer, a person to whom such
person is subordinate (directly or indirectly) or any entity under the person's control has a business or professional relationship
with any entity that has an affiliation with any affiliated entity, even if such relationship is intermittent (excluding insignificant
relationships). Additionally, any person who has received compensation intermittently (excluding insignificant relationships) other than
compensation permitted under the Companies Law may not continue to serve as an external director.
No
person can serve as an external director if the person's position or other affairs create, or may create, a conflict of interest
with the person's responsibilities as a director or may otherwise interfere with the person's ability to serve as a director
or if such a person is an employee of the Israeli Securities Authority or of an Israeli stock exchange. If at the time an external director
is appointed all current members of the board of directors, who are not controlling shareholders or relatives of controlling shareholders,
are of the same gender, then the external director to be appointed must be of the other gender. In addition, a person who is a director
of a company may not be elected as an external director of another company.
According
to regulations promulgated under the Companies law, at least one of the external directors is required to have "financial and accounting
expertise," unless another member of the audit committee, who is an independent director under the Nasdaq Stock Market rules, has
"financial and accounting expertise," and the other external director or directors are required to have "professional
expertise." An external director may not be appointed to an additional term unless: (1) such director has "accounting
and financial expertise;" or (2) he or she has "professional expertise," and on the date of appointment for another
term there is another external director who has "accounting and financial expertise" and the number of "accounting and
financial experts" on the board of directors is at least equal to the minimum number determined appropriate by the board of directors.
82
The
regulations promulgated under the Companies Law define an external director with requisite professional qualifications as a director who
satisfies one of the following requirements: (1) the director holds an academic degree in either economics, business administration,
accounting, law or public administration, (2) the director either holds an academic degree in any other field or has completed another
form of higher education in the company's primary field of business or in an area which is relevant to his or her office as an external
director in the company, or (3) the director has at least five years of experience serving in any one of the following, or at least
five years of cumulative experience serving in two or more of the following capacities: (a) a senior business management position
in a company with a substantial scope of business, (b) a senior position in the company's primary field of business or (c) a
senior position in public administration.
Until
the lapse of a two-year period from the date that an external director of a company ceases to act in such capacity, the company in which
such external director served, and its controlling shareholder or any entity under control of such controlling shareholder may not, directly
or indirectly, grant such former external director, or his or her spouse or child, any benefit, including by way of (i) the appointment
of such former director or his or her spouse or his child as an officer in the company or in an entity controlled by the company's
controlling shareholder, (ii) the employment of such former director, and (iii) the engagement, directly or indirectly, of such
former director as a provider of professional services for compensation, directly or indirectly, including via an entity under his or
her control. With respect to a relative who is not a spouse or a child, such limitations only apply for one year from the date such external
director ceased to be engaged in such capacity.
The
provisions of the Companies Law set forth special approval requirements for the election of external directors. External directors must
be elected by a majority vote of the shares present and voting at a shareholders meeting, provided that either:
●
such majority includes at least a majority of the shares held by shareholders who are non-controlling shareholders and do not have a personal interest in the election of the external director (other than a personal interest not deriving from a relationship with a controlling shareholder) that are voted at the meeting, excluding abstentions, to which we refer as a disinterested majority; or
●
the total number of shares voted by non-controlling shareholders and by shareholders who do not have a personal interest in the election of the external director, against the election of the external director, does not exceed 2% of the aggregate voting rights in the company.
The
initial term of an external director is three years. Thereafter, an external director may be reelected by shareholders to serve in that
capacity for up to two additional three-year terms, provided that:
●
his or her service for each such additional term is recommended by one or more shareholders holding at least 1% of the company's voting rights and is approved at a shareholders meeting by a disinterested majority, where the total number of shares held by non-controlling, disinterested shareholders voting for such reelection exceeds 2% of the aggregate voting rights in the company. In such event, the external director so reappointed may not be a Related or Competing Shareholder, as defined below, or a relative of such shareholder, at the time of the appointment, and is not and has not had any affiliation with a Related or Competing Shareholder, at such time or during the two years preceding such person's reappointment to serve an additional term as external director. The term "Related or Competing Shareholder" means a shareholder proposing the reappointment or a shareholder holding 5% or more of the outstanding shares or voting rights of the company, provided, that at the time of the reappointment, such shareholder, the controlling shareholder of such shareholder, or a company controlled by such shareholder, have a business relationship with the company or are competitors of the company;
●
the external director proposed his or her own nomination, and such nomination was approved in accordance with the requirements described above;
●
his or her service for each such additional term is recommended by the board of directors and is approved at a shareholders meeting by the same majority required for the initial election of an external director (as described above).
83
The
term of office for external directors for Israeli companies traded on certain foreign stock exchanges, including the Nasdaq Marketplace
Rules, may be extended indefinitely in increments of additional three-year terms, in each case provided that the audit committee and the
board of directors of the company confirm that, in light of the external director's expertise and special contribution to the work
of the board of directors and its committees, the reelection for such additional period(s) is beneficial to the company, and provided
that the external director is reelected subject to the same shareholder vote requirements as if elected for the first time (as described
above).
External
directors may be removed from office by a special general meeting of shareholders called by the board of directors, which approves such
dismissal by the same shareholder vote percentage required for their election, after receiving the board of directors arguments for such
removal, or by a court, in each case, only under limited circumstances, including ceasing to meet the statutory qualifications for appointment,
or violating their duty of loyalty to the company. If an external directorship becomes vacant and there are fewer than two external directors
on the board of directors at the time, then the board of directors is required under the Companies Law to call a shareholders meeting
as soon as practicable to appoint a replacement external director.
Each
committee of the board of directors that is authorized to exercise the powers of the board of directors must include at least one external
director, except that the audit committee and the compensation committee must include all external directors then serving on the board
of directors.
External
directors may be compensated only in accordance with regulations adopted under the Companies Law.
Alternate Directors
Our
amended and restated articles of association provide, as allowed by the Companies Law, that any director may, subject to the conditions
set thereto, appoint a person as an alternate to act in his place, to remove the alternate and appoint another in his place and to appoint
an alternate in place of an alternate whose office is vacated for any reason whatsoever. Under the Companies Law, a person who is not
qualified to be appointed as a director, a person who is already serving as a director or a person who is already serving as an alternate
director for another director, may not be appointed as an alternate director. Nevertheless, a director who is already serving as a director
may be appointed as an alternate director for a member of a committee of the board of directors so long as he or she is not already serving
as a member of such committee, and if the alternate director is to replace an external director, he or she is required to be an external
director and to have either "financial and accounting expertise" or "professional expertise," depending on the
qualifications of the external director he or she is replacing. A person who does not have the requisite "financial and accounting
experience" or the "professional expertise," depending on the qualifications of the external director he or she is replacing,
may not be appointed as an alternate director for an external director. A person who is not qualified to be appointed as an independent
director, pursuant to the Companies Law, may not be appointed as an alternate director of an independent director qualified as such under
the Companies Law. Unless the appointing director limits the time or scope of the appointment, the appointment is effective for all purposes
until the appointing director ceases to be a director or terminates the appointment.
Committees of the Board of Directors
Our board of directors has
established two standing committees, the audit committee and the compensation committee.
Audit Committee
Under the Companies Law, we
are required to appoint an audit committee subject to the listing of our ordinary shares on the Nasdaq Capital Market. The audit committee
must be comprised of at least three directors, including all of the external directors, if applicable, (one of whom must serve as chair
of the committee). The audit committee may not include the chairman of the board; a controlling shareholder of the company or a relative
of a controlling shareholder; a director employed by or providing services on a regular basis to the company, to a controlling shareholder
or to an entity controlled by a controlling shareholder; or a director who derives most of his or her income from a controlling shareholder.
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Our audit committee is comprised
of Lluis Pedragosa, Yair Shoham and Osnat Michaeli.
Under the Companies Law, our
audit committee is responsible for:
(i)
determining whether there are deficiencies in the business management practices of our company, and making recommendations to the board of directors to improve such practices;
(ii)
determining whether to approve certain related party transactions (including transactions in which an office holder has a personal interest and whether such transaction is extraordinary or material under Companies Law) and establishing the approval process for certain transactions with a controlling shareholder or in which a controlling shareholder has a personal interest (see "Item 6.C Directors, Senior Management and Employees—Board Practices—Approval of Related Party Transactions under Israeli Law");
(iii)
determining the approval process for transactions that are "non-negligible" (i.e., transactions with a controlling shareholder that are classified by the audit committee as non-negligible, even though they are not deemed extraordinary transactions), as well as determining which types of transactions would require the approval of the audit committee, optionally based on criteria which may be determined annually in advance by the audit committee;
(iv)
examining our internal controls and internal auditor's performance, including whether the internal auditor has sufficient resources and tools to dispose of its responsibilities;
(v)
examining the scope of our auditor's work and compensation and submitting a recommendation with respect thereto to our board of directors or shareholders, depending on which of them is considering the appointment of our auditor;
(vi)
establishing procedures for the handling of employees' complaints as to deficiencies in the management of our business and the protection to be provided to such employees; and
(vii)
where the board of directors approves the working plan of the internal auditor, examining such working plan before its submission to the board of directors and proposing amendments thereto.
Pursuant to the Companies
Law, our audit committee may not conduct any discussions or approve any actions requiring its approval (see "Item 6.C Directors,
Senior Management and Employees—Board Practices—Approval of Related Party Transactions under Israeli Law"), unless at
the time of the approval a majority of the committee's members are present.
Our board of directors intends
to adopt an audit committee charter to be effective upon the listing of our ordinary shares on the Nasdaq Capital Market setting forth,
among others, the responsibilities of the audit committee consistent with the rules of the SEC and Nasdaq Listing Rules (in addition to
the requirements for such committee under the Companies Law), including, among others, the following:
●
oversight of our independent registered public accounting firm and recommending the engagement, compensation or termination of engagement of our independent registered public accounting firm to the board of directors in accordance with Israeli law;
●
recommending the engagement or termination of the person filling the office of our internal auditor, reviewing the services provided by our internal auditor and reviewing effectiveness of our system of internal control over financial reporting;
●
recommending the terms of audit and non-audit services provided by the independent registered public accounting firm for pre-approval by our board of directors; and
●
reviewing and monitoring, if applicable, legal matters with significant impact, finding of regulatory authorities' findings, receive reports regarding irregularities and legal compliance, acting according to "whistleblower policy" and recommend to our board of directors if so required.
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Nasdaq Stock Market Requirements for Audit
Committee
Under the Nasdaq Stock Market
rules, we are required to maintain an audit committee consisting of at least three members, all of whom are independent and are financially
literate and one of whom has accounting or related financial management expertise.
As noted above, the members
of our audit committee include Lluis Pedragosa, Yair Shoham and Osnat Michaeli. Osnat Michaeli  serves as the chairman of our
audit committee. All members of our audit committee will meet the requirements for financial literacy under the Nasdaq Stock Market rules.
Our board of directors has determined that each member of our audit committee will be an audit committee financial expert as defined by
the SEC rules and has the requisite financial experience as defined by the Nasdaq Stock Market rules.
Under the Companies Law, our
audit committee will also carry out the duties of a financial statement examination committee. As such, the audit committee will be responsible
for: (i) estimations and assessments made in connection with the preparation of financial statements; (ii) internal controls related to
the financial statements; (iii) completeness and propriety of the disclosure in the financial statements; (iv) the accounting policies
adopted and the accounting treatments implemented in material matters of the company; and (v) value evaluations, including the assumptions
and assessments on which evaluations are based and the supporting data in the financial statements.
Compensation Committee
Under the Companies Law, the
board of directors of any public company must establish a compensation committee. The compensation committee must be comprised of at least
three directors, including all of the external directors (if any). The compensation committee is subject to the same Companies Law restrictions
as the audit committee as to: (a) who may not be a member of the committee; and (b) who may not be present during committee deliberations
as described above.
Our compensation committee,
acting pursuant to a written charter, is comprised of Tal Barnoach, Yair Shoham and Osnat Michaeli. Our compensation committee complies
with the provisions of the Companies Law, the regulations promulgated thereunder on all aspects referring to its independence, authorities
and practice. Our compensation committee follows home country practice as opposed to complying with the compensation committee membership
and charter requirements prescribed under the Nasdaq Stock Market rules.
Our compensation committee
will review and recommend to our board of directors: with respect to our executive officers' and directors': (1) annual base
compensation (2) annual incentive bonus, including the specific goals and amounts; (3) equity compensation; (4) employment agreements,
severance arrangements, and change in control agreements and provisions; (5) retirement grants and/or retirement bonuses; and (6) any
other benefits, compensation, compensation policies or arrangements.
The duties of the compensation
committee include the recommendation to the company's board of directors of a policy regarding the terms of engagement of office
holders, to which we refer as a compensation policy. Such policy must be adopted by the company's board of directors, after considering
the recommendations of the compensation committee. The compensation policy is then brought for approval by our shareholders, which requires
a special majority (see "Item 6.C Directors, Senior Management and Employees—Board Practices—Approval of Related Party
Transactions under Israeli Law"). Under the Companies Law, the board of directors may adopt the compensation policy if it is not
approved by the shareholders, provided that after the shareholders oppose the approval of such policy, the compensation committee and
the board of directors revisit the matter and determine that adopting the compensation policy would be in the best interests of the company.
Under the Companies Law, we are required to adopt an office holder compensation policy by November 27, 2023, which is 9 months from the
date of our initial public offering.
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The compensation policy must
serve as the basis for decisions concerning the financial terms of employment or engagement of executive officers and directors, including
exculpation, insurance, indemnification or any monetary payment or obligation of payment in respect of employment or engagement. The compensation
policy must relate to certain factors, including advancement of the company's objectives, the company's business and its long-term
strategy, and creation of appropriate incentives for executives. It must also consider, among other things, the company's risk management,
size and the nature of its operations. The compensation policy must furthermore consider the following additional factors:
●
the education, skills, expertise and accomplishments of the relevant director or executive;
●
the director's or executive's roles and responsibilities and prior compensation agreements with him or her;
●
the relationship between the cost of the terms of service of an office holder and the average median compensation of the other employees of the company (including those employed through manpower companies), including the impact of disparities in salary upon work relationships in the company;
●
the possibility of reducing variable compensation at the discretion of the board of directors; and the possibility of setting a limit on the exercise value of non-cash variable compensation; and
●
as to severance compensation, the period of service of the director or executive, the terms of his or her compensation during such service period, the company's performance during that period of service, the person's contribution towards the company's achievement of its goals and the maximization of its profits, and the circumstances under which the person is leaving the company.
The compensation policy must
also include the following principles:
●
with the exception of office holders who report directly to the chief executive officer, the link between variable compensation and long-term performance and measurable criteria;
●
the relationship between variable and fixed compensation, and the ceiling for the value of variable compensation at the time of its grant;
●
the conditions under which a director or executive would be required to repay compensation paid to him or her if it was later shown that the data upon which such compensation was based was inaccurate and was required to be restated in the company's financial statements;
●
the minimum holding or vesting period for variable, equity-based compensation; and
●
maximum limits for severance compensation.
The compensation policy must
also consider appropriate incentives from a long-term perspective.
The compensation committee
will be responsible for: (1) recommending the compensation policy to a company's board of directors for its approval (and subsequent
approval by the shareholders); and (2) duties related to the compensation policy and to the compensation of a company's office holders,
including:
●
recommending whether a compensation policy should continue in effect, if the then-current policy has a term of greater than three years (approval of either a new compensation policy or the continuation of an existing compensation policy must in any case occur every three years);
●
recommending to the board of directors periodic updates to the compensation policy;
●
assessing implementation of the compensation policy;
●
determining whether the terms of compensation of certain office holders of the company need not be brought to approval of the shareholders; and
●
determining whether to approve the terms of compensation of office holders that require the committee's approval.
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Our compensation policy will
be designed to promote our long-term goals, work plan and policy, retain, motivate and incentivize our directors and executive officers,
while considering the risks that our activities involve, our size, the nature and scope of our activities and the contribution of an officer
to the achievement of our goals and maximization of profits, and align the interests of our directors and executive officers with our
long-term performance. To that end, a portion of an executive officer compensation package is targeted to reflect our short and long-term
goals, as well as the executive officer's individual performance. On the other hand, our compensation policy will include measures
designed to reduce the executive officer's incentives to take excessive risks that may harm us in the long-term, such as limits
on the value of cash bonuses and equity-based compensation, limitations on the ratio between the variable and the total compensation of
an executive officer and minimum vesting periods for equity-based compensation.
Our compensation policy will
also address our executive officer's individual characteristics (such as his or her respective position, education, scope of responsibilities
and contribution to the attainment of our goals) as the basis for compensation variation among our executive officers, and considers the
internal ratios between compensation of our executive officers and directors and other employees. For example, the compensation that may
be granted to an executive officer may include: base salary, annual bonuses, equity-based compensation, benefits and retirement and termination
of service arrangements. All cash bonuses are limited to a maximum amount linked to the executive officer's base salary. In addition,
our compensation policy will provide for maximum permitted ratios between the total variable (cash bonuses and equity-based compensation)
and non-variable (base salary) compensation components, in accordance with an officer's respective position with the company.
An annual cash bonus may be
awarded to executive officers upon the attainment of pre-set periodic objectives and individual targets. The annual cash bonus that may
be granted to executive officers other than our chairman or Chief Executive Officer may be based entirely on a discretionary evaluation.
Our Chief Executive Officer will be entitled to recommend performance objectives to such executive officers, and such performance objectives
will be approved by our compensation committee (and, if required by law, by our board of directors).
The performance measurable
objectives of our chairman and Chief Executive Officer will be determined annually by our compensation committee and board of directors.
A less significant portion of the chairman's and/or the Chief Executive Officer's annual cash bonus may be based on a discretionary
evaluation of the chairman's or the Chief Executive Officer's respective overall performance by the compensation committee
and the board of directors based on quantitative and qualitative criteria.
The equity-based compensation
under our compensation policy for our executive officers (including members of our board of directors) will be designed in a manner consistent
with the underlying objectives in determining the base salary and the annual cash bonus, with its main objectives being to enhance the
alignment between the executive officers' interests with our long-term interests and those of our shareholders and to strengthen
the retention and the motivation of executive officers in the long term. Our compensation policy will provide for executive officer compensation
in the form of share options or other equity-based awards, such as restricted shares and phantom, options, in accordance with our equity
incentive plan then in place. Share options granted to executive officers shall be subject to vesting periods in order to promote long-term
retention of the awarded executive officers. The equity-based compensation shall be granted from time to time and be individually determined
and awarded according to the performance, educational background, prior business experience, qualifications, role and the personal responsibilities
of the executive officer.
In addition, our compensation
policy will contain compensation recovery provisions which allows us under certain conditions to recover bonuses paid in excess, will
enable our Chief Executive Officer to approve an immaterial change in the terms of employment of an executive officer (provided that the
changes of the terms of employment are in accordance our compensation policy) and will allow us to exculpate, indemnify and insure our
executive officers and directors subject to certain limitations set forth thereto.
Our compensation policy will
also provide for compensation to the members of our board of directors either: (i) in accordance with the amounts provided in the Companies
Regulations (Rules Regarding the Compensation and Expenses of an External Director) of 2000, as amended by the Companies Regulations (Relief
for Public Companies Traded in Stock Exchange Outside of Israel) of 2000, as such regulations may be amended from time to time; or (ii)
in accordance with the amounts determined in our compensation policy.
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Internal Auditor
Under the Companies Law, the
board of directors of an Israeli public company must appoint an internal auditor nominated by the audit committee. We intend to appoint
our internal auditor by May 28, 2023, which is 90 days following our initial public offering. The role of the internal auditor is to examine,
among other things, whether a company's actions comply with the law and proper business procedure. The chairman of the Board, or
whoever the Board of the Company determines from time to time is required to oversee the activities, and to assess the performance of
the internal auditor as well as to review the internal auditor's work plan. An internal auditor may not be an interested party or
office holder, or a relative of any interested party or office holder, and may not be a member of the company's independent accounting
firm or its representative. The Companies Law defines an interested party as a holder of 5% or more of the outstanding shares or voting
rights of a company, any person or entity that has the right to appoint at least one director or the general manager of the company or
any person who serves as a director or as the general manager of a company. Our internal auditor is not our employee, but partner of a
firm which specializes in internal auditing.
Remuneration of Directors
Under the Companies Law, remuneration
of directors is subject to the approval of the compensation committee, thereafter by the board of directors and thereafter, unless exempted
under the regulations promulgated under the Companies Law, by the general meeting of the shareholders. In case the remuneration of the
directors is in accordance with regulations applicable to remuneration of the external directors then such remuneration shall be exempt
from the approval of the general meeting. Where the director is also a controlling shareholder, the requirements for approval of transactions
with controlling shareholders apply.
Fiduciary Duties of Office Holders
The Companies Law imposes
a duty of care and a duty of loyalty on all office holders of a company.
The duty of care requires
an office holder to act with the level of care with which a reasonable office holder in the same position would have acted under the same
circumstances. The duty of care of an office holder includes a duty to use reasonable means to obtain:
●
information on the advisability of a given action brought for his approval or performed by him by virtue of his position; and
●
all other important information pertaining to these actions.
The duty of loyalty of an
office holder requires an office holder to act in good faith and for the benefit of the company, and includes a duty to:
●
refrain from any conflict of interest between the performance of his duties in the company and his performance of his other duties or personal affairs;
●
refrain from any action that is competitive with the company's business;
●
refrain from exploiting any business opportunity of the company to receive a personal gain for himself or others; and
●
disclose to the company any information or documents relating to the company's affairs which the office holder has received due to his position as an office holder.
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Insurance
Under the Companies Law, a
company may obtain insurance for any of its office holders against the following liabilities incurred due to acts he or she performed
as an office holder, if and to the extent provided for in the company's articles of association:
●
breach of his or her duty of care to the company or to another person;
●
a breach of his or her duty of loyalty to the company, provided that the office holder acted in good faith and had reasonable cause to assume that his or her act would not prejudice the company's interests; and
●
a financial liability imposed upon him or her in favor of another person.
We purchase increased insurance
coverage for a company of our size.
Indemnification
The Companies Law and the
Israeli Securities Law, 5728-1968, or the Securities Law, provide that a company may indemnify an office holder against the following
liabilities and expenses incurred for acts performed by him or her as an office holder, either pursuant to an undertaking made in advance
of an event or following an event, provided its articles of association include a provision authorizing such indemnification:
●
a financial liability imposed on him or her in favor of another person by any judgment concerning an act performed in his or her capacity as an office holder, including a settlement or arbitrator's award approved by a court;
●
reasonable litigation expenses, including attorneys' fees, expended by the office holder (a) as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (1) no indictment (as defined in the Companies Law) was filed against such office holder as a result of such investigation or proceeding; and (2) no financial liability as a substitute for the criminal proceeding (as defined in the Companies Law) was imposed upon him or her as a result of such investigation or proceeding, or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent; or (b) in connection with a monetary sanction;
●
reasonable litigation expenses, including attorneys' fees, expended by the office holder or imposed on him or her by a court: (1) in proceedings that the company institutes, or that another person institutes on the company's behalf, against him or her; (2) in a criminal proceeding of which he or she was acquitted; or (3) as a result of a conviction for a crime that does not require proof of criminal intent; and
●
expenses incurred by an office holder in connection with an Administrative Procedure under the Securities Law, including reasonable litigation expenses and reasonable attorneys' fees. An "Administrative Procedure" is defined as a procedure pursuant to chapters H3 (Monetary Sanction by the Israeli Securities Authority), H4 (Administrative Enforcement Procedures of the Administrative Enforcement Committee) or I1 (Arrangement to prevent Procedures or Interruption of procedures subject to conditions) to the Securities Law.
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The Companies Law also permits
a company to undertake in advance to indemnify an office holder, provided that if such indemnification relates to financial liability
imposed on him or her, as described above, then the undertaking should be limited and shall detail the following foreseen events and amount
or criterion:
●
to events that in the opinion of the board of directors can be foreseen based on the company's activities at the time that the undertaking to indemnify is made; and
●
in amount or criterion determined by the board of directors, at the time of the giving of such undertaking to indemnify, to be reasonable under the circumstances.
We intend to enter, into indemnification
agreements with all of our directors and with all members of our senior management subject to the listing of our securities on the Nasdaq
Capital Market. Each such indemnification agreement will provide the office holder with indemnification permitted under applicable law
and up to a certain amount, and to the extent that these liabilities are not covered by directors and officers insurance.
Exculpation
Under the Companies Law, an
Israeli company may not exculpate an office holder from liability for a breach of his or her duty of loyalty, but may exculpate in advance
an office holder from his or her liability to the company, in whole or in part, for damages caused to the company as a result of a breach
of his or her duty of care (other than in relation to distributions), but only if a provision authorizing such exculpation is included
in its articles of association. Our amended and restated articles of association provide that we may exculpate, in whole or in part, any
office holder from liability to us for damages caused to the company as a result of a breach of his or her duty of care, other than a
breach of the duty of care in a distribution. Subject to the aforesaid limitations, under the indemnification agreements we intend to
enter, we will exculpate and release our office holders from any and all liability to us related to any breach by them of their duty of
care to us to the fullest extent permitted by law.
Limitations
The Companies Law provides
that we may not exculpate or indemnify an office holder nor enter into an insurance contract that would provide coverage for any liability
incurred as a result of any of the following: (1) a breach by the office holder of his or her duty of loyalty unless (in the case of indemnity
or insurance only, but not exculpation) the office holder acted in good faith and had a reasonable basis to believe that the act would
not prejudice us; (2) a breach by the office holder of his or her duty of care if the breach was carried out intentionally or recklessly
(as opposed to merely negligently); (3) any act or omission committed with the intent to derive an illegal personal benefit; or (4) any
fine, monetary sanction, penalty or forfeit levied against the office holder.
Under the Companies Law, exculpation,
indemnification and insurance of office holders in a public company must be approved by the compensation committee and the board of directors
and, with respect to certain office holders or under certain circumstances, also by the shareholders.
Our amended and restated articles
of association permit us to exculpate (subject to the aforesaid limitation), indemnify and insure our office holders to the fullest extent
permitted or to be permitted by the Companies Law.
The foregoing descriptions
summarize the material aspects and practices of our board of directors. For additional details, we also refer you to the full text of
the Companies Law, as well as of our amended and restated articles of association, which are exhibits to this Annual Report.
There are no service contracts
between us or our Subsidiary, on the one hand, and our directors in their capacity as directors, on the other hand, providing for benefits
upon termination of service.
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Approval of Related Party Transactions under
Israeli Law
General
Under
the Companies Law, we may approve an action by an office holder from which the office holder would otherwise have to refrain, as described
above, if:
●
the office holder acts in good faith and the act or its approval does not cause harm to the company; and
●
the office holder disclosed the nature of his or her interest in the transaction (including any significant fact or document) to the company at a reasonable time before the company's approval of such matter.
Disclosure of Personal Interests of an Office
Holder
The
Companies Law requires that an office holder disclose to the company, promptly, and, in any event, not later than the board meeting at
which the transaction is first discussed, any direct or indirect personal interest that he or she may have and all related material information
known to him or her relating to any existing or proposed transaction by the company. If the transaction is an extraordinary transaction,
the office holder must also disclose any personal interest held by:
●
the office holder's relatives; or
●
any corporation 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.
An
office holder is not, however, obliged to disclose a personal interest if it derives solely from the personal interest of his or her relative
in a transaction that is not considered an extraordinary transaction. Under the Companies Law, an extraordinary transaction is a transaction:
●
not in the ordinary course of business;
●
not on market terms; or
●
that is likely to have a material effect on the company's profitability, assets or liabilities.
The
Companies Law does not specify to whom within us nor the manner in which required disclosures are to be made. We require our office holders
to make such disclosures to our board of directors.
Under
the Companies Law, once an office holder complies with the above disclosure requirement, the board of directors may approve a transaction
between the company and an office holder, or a third party in which an office holder has a personal interest, unless the articles of association
provide otherwise and provided that the transaction is in the company's interest. If the transaction is an extraordinary transaction
in which an office holder has a personal interest, first the audit committee and then the board of directors, in that order, must approve
the transaction. Under specific circumstances, shareholder approval may also be required. Generally, a person who has a personal interest
in a matter which is considered at a meeting of the board of directors or the audit committee may not be present at such a meeting unless
the chairman of the audit committee or board of directors (as applicable) determines that he or she should be present in order to present
the transaction that is subject to approval. A director who has a personal interest in a transaction, which is considered at a meeting
of the board of directors or the audit committee, may not be present at this meeting or vote on this matter, unless a majority of members
of the board of directors or the audit committee, as the case may be, has a personal interest. If a majority of the board of directors
has a personal interest, then shareholder approval is generally also required.
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Disclosure of Personal Interests of a Controlling
Shareholder
Under
the Companies Law, the disclosure requirements that apply to an office holder also apply to a controlling shareholder of a public company.
Extraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest, including a private
placement in which a controlling shareholder has a personal interest, as well as transactions for the provision of services whether directly
or indirectly by a controlling shareholder or his or her relative, or a company such controlling shareholder controls, and transactions
concerning the terms of engagement and compensation of a controlling shareholder or a controlling shareholder's relative, whether
as an office holder or an employee, require the approval of the audit committee or the compensation committee, as the case may be, the
board of directors and a majority of the shares voted by the shareholders of the company participating and voting on the matter in a shareholders'
meeting. In addition, the shareholder approval must fulfill one of the following requirements:
●
at least 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.
In
addition, any extraordinary transaction with a controlling shareholder or in which a controlling shareholder has a personal interest with
a term of more than three years requires the abovementioned approval every three years; however, such transactions not involving the receipt
of services or compensation can be approved for a longer term, provided that the audit committee determines that such longer term is reasonable
under the circumstances.
The
Companies Law requires that every shareholder that participates, in person, by proxy or by voting instrument, in a vote regarding a transaction
with a controlling shareholder, must indicate in advance or in the ballot whether or not that shareholder has a personal interest in the
vote in question. Failure to so indicate will result in the invalidation of that shareholder's vote.
The
term "controlling shareholder" is defined in the Companies Law as a shareholder with the ability to direct the activities
of the company, other than by virtue of being an office holder. A shareholder is presumed to be a controlling shareholder if the shareholder
holds 50% or more of the voting rights in a company or has the right to appoint 50% or more of the directors of the company or its general
manager. In the context of a transaction involving a shareholder of the company, a controlling shareholder also includes a shareholder
who holds 25% or more of the voting rights in the company if no other shareholder holds more than 50% of the voting rights in the company.
For this purpose, the holdings of all shareholders who have a personal interest in the same transaction will be aggregated.
Approval of the Compensation of Directors and
Executive Officers
The compensation of, or an
undertaking to indemnify, insure or exculpate, an office holder who is not a director requires the approval of the company's compensation
committee, followed by the approval of the company's board of directors, and, if such compensation arrangement or an undertaking
to indemnify, insure or exculpate is inconsistent with the company's stated compensation policy, or if the said office holder is
the chief executive officer of the company (subject to a number of specific exceptions), then such arrangement is subject to the approval
of our shareholders, subject to a special majority requirement.
Directors
. Under the
Companies Law, the compensation of our directors requires the approval of our compensation committee, the subsequent approval of the board
of directors and, unless exempted under the regulations promulgated under the Companies Law, the approval of the general meeting of our
shareholders. If the compensation of our directors is inconsistent with our stated compensation policy, then, provided that those provisions
that must be included in the compensation policy according to the Companies Law have been considered by the compensation committee and
board of directors, shareholder approval by a special majority will be required.
Executive officers other
than the chief executive officer.
The Companies Law requires the approval of the compensation of a public company's executive
officers (other than the chief executive officer) in the following order: (i) the compensation committee, (ii) the company's board
of directors, and (iii) only if such compensation arrangement is inconsistent with the company's stated compensation policy, the
company's shareholders by a special majority. However, if the shareholders of the company do not approve a compensation arrangement
with an executive officer that is inconsistent with the company's stated compensation policy, the compensation committee and board
of directors may override the shareholders' decision if each of the compensation committee and the board of directors provide detailed
reasons for their decision.
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Chief executive officer.
Under
the Companies Law, the compensation of a public company's chief executive officer is required to be approved by: (i) the company's
compensation committee; (ii) the company's board of directors, and (iii) the company's shareholders by a special majority.
However, if the shareholders of the company do not approve the compensation arrangement with the chief executive officer, the compensation
committee and board of directors may override the shareholders' decision if each of the compensation committee and the board of
directors provides detailed reasons for their decision. In addition, the compensation committee may exempt the engagement terms of a candidate
to serve as the chief executive officer from shareholders' approval, if the compensation committee determines that the compensation
arrangement is consistent with the company's stated compensation policy, that the chief executive officer did not have a prior business
relationship with the company or a controlling shareholder of the company, and that subjecting the approval to a shareholder vote would
impede the company's ability to attain the candidate to serve as the company's chief executive officer (and provide detailed
reasons for the latter).
The approval of each of the
compensation committee and the board of directors, with regard to the office holders and directors above, must be in accordance with the
company's stated compensation policy; however, under special circumstances, the compensation committee and the board of directors
may approve compensation terms of a chief executive officer that are inconsistent with the company's compensation policy provided
that they have considered those provisions that must be included in the compensation policy according to the Companies Law and that shareholder
approval was obtained by a special majority requirement.
Duties of Shareholders
Under
the Companies Law, a shareholder has a duty to refrain from abusing his power in the company and to act in good faith and in an acceptable
manner in exercising his rights and performing his obligations toward the company and other shareholders, including, among other things,
in voting at general meetings of shareholders (and at shareholder class meetings) on the following matters:
●
amendment of the articles of association;
●
increase in the company's authorized share capital;
●
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 oppressing other shareholders. The remedies generally available upon a breach of contract
will also apply to a breach of the above mentioned duties, and in the event of oppression of other shareholders, additional remedies are
available to the injured shareholder.
In
addition, any controlling shareholder, any shareholder that knows that its vote can determine the outcome of a shareholder vote and any
shareholder that, under a company's articles of association, has the power to appoint or prevent the appointment of an office holder,
or has another power with respect to a company, is under a duty to act with fairness towards the company. The Companies Law does not describe
the substance of this duty except to state that the remedies generally available upon a breach of contract will also apply in the event
of a breach of the duty to act with fairness, taking the shareholder's position in the company into account.
Employment and Consulting Agreements with Executive
Officers
We have entered into written
employment or consulting agreements with each of our executive officers. 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 salary and benefits. These agreements also contain customary provisions regarding non-competition, non-solicitation, confidentiality
of information and assignment of inventions. However, the enforceability of the non-competition provisions may be limited under applicable
law.
94
D.
Employees.
See "Item 4.B. Business
Overview—Employees."
E.
Share Ownership.
See
"Item 7.A. Major Shareholders" below.
Share Option Plans
2010 Option Plan
In December 22, 2010, our
board of directors adopted our 2010 Option Plan, or the 2010 Plan. We are no longer granting options under the 2010 Plan and currently
grant options under the 2015 Plan (as defined below). There are currently 142,760 ordinary shares resulting from the exercise of certain
options granted under the 2010 Plan which are held in trust in favor of the employees who exercised such options. We maintain the 2010
Plan in order to allow our employees to enjoy certain tax benefits under Israeli tax law. Of the 543,120 outstanding options as of April
15, 2023 under the 2010 Plan, all options were fully vested.
Administration
. Our
board of directors, a duly authorized committee of our board of directors, or the administrator, administer the 2010 Plan. Under the 2010
Plan, the administrator has the authority, subject to applicable law, to interpret the terms of the 2010 Plan and any option agreements
or options granted thereunder, designate recipients of options, determine and amend the terms of options, including, but not limited to,
the number and class of ordinary shares underlying each option, the time of grant of an option, the exercise price of an option (with
the consent of the grantee in the event of an increase of the exercise price), the time and vesting schedule applicable to an option,
accelerate or amend the vesting schedule applicable to an option (with the consent of the grantee in the event of an extension to the
vesting schedule) and take all other actions and make all other determinations necessary or advisable for the administration of the 2010
Plan.
The administrator also has
the authority to approve the conversion, substitution, cancellation or suspension under and in accordance with the 2010 Plan of any or
all options or ordinary shares. The administrator also has the authority to amend and rescind rules and regulations relating to the 2010
Plan or terminate the 2010 Plan at any time before the date of expiration of its ten-year term.
Grant
. All options
granted pursuant to the 2010 Plan are evidenced by an option agreement. The option agreement sets forth the terms and conditions of the
options, including the number of shares subject to such options, vesting schedule, the exercise price, if applicable, the tax route and
other terms and conditions not inconsistent with the 2010 Plan as the administrator may determine
Exercise
. An option
under the 2010 Plan may be exercised by providing us with a written notice of exercise, specifying the number of shares with respect to
which the option is being exercised and full payment of the exercise price for such shares, if applicable, in such form and method as
may be determined by the administrator and permitted by applicable law. An option may not be exercised for a fraction of a share.
Termination of Employment
.
Options under the 2010 Plan shall expire in accordance with the period determined in the applicable option agreement or following the
termination of the grantee's employment or engagement with us, as set forth below. In the event of the death of a grantee while
employed by or performing service for us or a subsidiary, or in the event of termination of a grantee's employment or services for
reasons of disability, the grantee, or in the case of death, such grantee's legal successor, may exercise options that have vested
prior to termination within the earlier of the twelve-month period following the date of death or termination, or the options' expiration
date.
In the case of termination
of the grantee's employee, other than for cause, any option that is vested prior to the date of termination may be exercised within
such period of time ending on the earlier of 90 days following the termination date, or the option's expiration date.
95
Transferability
. Unless
otherwise determined by the board of directors, options under the 2010 Plan may not, other than by will or laws of descent, be transferred
by the grantee nor may of the rights arising under the options be subject to a mortgage, attachment or other willful encumbrance.
Transactions
. In the
event of a merger, consolidation or sale of all, or substantially all, of our assets or shares, any and all outstanding, unexercised options
granted under the 2010 Plan, whether vested or unvested shall be cancelled for no consideration, unless determined otherwise by our board
of directors in its sole and absolute discretion to cause or effect any actions such as (i) the assumption or exchange of the options
for options or shares of a successor company; (ii) the exchange of options for monetary compensation; or (iii) the determination that
all unvested options and unexercised vested options shall expire on the date of such transactions.
2015 Share Incentive Plan
The 2015 Share Incentive Plan,
or the 2015 Plan, was adopted by our board of directors on January 1, 2015. The 2015 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 our business.
Authorized Shares
.
As of April 15, 2023, there are 322,279 ordinary shares reserved and available for issuance under the 2015 Plan.
Shares underlying an award
granted under the 2015 Plan or an award granted under the 2010 Plan that has expired, or was cancelled, terminated, forfeited, or repurchased
or settled in cash in lieu of issuance of shares, for any reason, without having been exercised, and if permitted by us, shares tendered
to pay the exercise price or withholding tax obligations, are available for issuance under the 2015 Plan in accordance with applicable
law.
Administration
. Our
board of directors, a duly authorized committee of our board of directors or the administrator administer the 2015 Plan. Under the 2015
Plan, the administrator has the authority, subject to applicable law, to interpret the terms of the 2015 Plan and any award agreements
or awards granted thereunder, designate recipients of awards, determine and amend the terms of awards, including, but not limited to,
the number and class of ordinary shares underlying each option award, the time of grant of an option award, the exercise price of an option
award (with the consent of the grantee in the event of an increase of the exercise price), 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 2015 Plan and take all other actions and make all other determinations
necessary for the administration of the 2015 Plan.
The administrator also has
the authority to approve the conversion, substitution, cancellation or suspension under and in accordance with the 2015 Plan of any or
all option awards or ordinary shares. The administrator also has 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 2015 Plan but without amending the 2015 Plan. The administrator also has the authority to amend and
rescind rules and regulations relating to the 2015 Plan or terminate the 2015 Plan at any time before the date of expiration of its ten-year
term.
Eligibility
. The 2015
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), 5721-1961, or the Ordinance, and Section 3(i) of the Ordinance and for awards granted to our U.S.
employees or service providers, including those who are deemed to be U.S. residents for tax purposes, in compliance with Section 422 of
the Code, and Section 409A of the Code, or Incentive Stock Options.
Section 102 of the Ordinance
allows employees, directors and officers who are not controlling shareholders and are considered Israeli residents to receive favorable
tax treatment for compensation in the form of shares, options or certain other types of equity awards. Our non-employee service providers
and controlling shareholders may only be granted options under section 3(i) of the Ordinance, which does not provide for similar tax benefits.
96
Grant
. All awards granted
pursuant to the 2015 Plan are evidenced by an award agreement, in a form approved, from time to time, by the administrator in its sole
discretion. The award agreement sets 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, and other
terms and conditions not inconsistent with the 2015 Plan as the administrator may determine. Certain awards under the 2015 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 2015 Plan, awards for new employees 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 us throughout such vesting dates.
Each award granted under the
2015 Plan will expire ten years from the date of the grant thereof, unless such shorter term of expiration is otherwise designated by
the administrator. In the case of an Incentive Stock Option granted to a 10% shareholder, within the meaning of Section 422(b)(6) of the
Code, the exercise period shall not exceed five years from the effective date of grant of such Incentive Stock Option.
Awards.
The 2015 Plan
provides for the grant of share options (including Incentive Stock Options and Nonqualified Stock Options), restricted shares, RSUs and
other share-based awards. Options granted under the 2015 Plan to our employees who are U.S. residents may qualify as Incentive Stock Options
within the meaning of Section 422 of the Code, or may be non-qualified stock options. The exercise price of a stock option may not be
less than 100% of the fair market value of the underlying share on the date of grant unless the administrator specifically indicates that
the share option will have a lower exercise price and it complies with Section 409A of the Code, and in the case of Incentive Stock Options
granted to 10% shareholders, not less than 110%.
Exercise
. An award
under the 2015 Plan may be exercised by providing us with a written notice of exercise, specifying the number of shares with respect to
which the award is being exercised and full payment of the exercise price for such shares, 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 2015 Plan, the administrator
may, in its discretion, (1) accept cash, (2) provide for net withholding of shares in a cashless exercise mechanism or (3) direct a securities
broker to sell shares and deliver all or a part of the proceeds to the company or the trustee, or to pledge shares to a securities broker
or lender, as security for a loan, and to deliver all or part of the loan proceeds to the company or the trustee.
Transferability
. Other
than by will, the laws of descent and distribution or as otherwise provided under the 2015 Plan or determined by the administrator, neither
the options nor any right in connection with such options are assignable or transferable.
Termination of Employment
.
Unless otherwise determined by the administrator and subject to the conditions of the 2015 Plan, an award may only be exercised for as
long as the grantee is an employee or provides services to us. In the event of termination of a grantee's employment or service
with us or any of our affiliates, other than for cause, 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 and subject to the
conditions of the 2015 Plan and in no event later than the expiration of the term of such awards. After such three-month period or expiration
of the term of such awards, all such unexercised awards will terminate and the shares covered by such awards shall again be available
for issuance under the 2015 Plan.
97
In the event of termination
of a grantee's employment or service with us or any of our affiliates due to such grantee's death or permanent disability
all vested and exercisable awards held by such grantee as of the date of termination may be exercised by the grantee or the grantee's
legal guardian, estate, or by a person who acquired the right to exercise the award by bequest or inheritance, as applicable, within one
year after such date of termination, unless otherwise provided by the administrator and in the event of termination due to such grantee's
retirement, within three months of such termination. 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 2015 Plan.
Notwithstanding any of the
foregoing, if a grantee's employment or services with us or any of our affiliates is terminated for "cause" (as defined
in the 2015 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 2015 Plan.
Transactions
. In the
event of a share split, reverse share split, share dividend, recapitalization, combination or reclassification of our shares, merger,
consolidation, amalgamation, a reorganization or other similar occurrences, the administrator in its sole discretion shall make an appropriate
adjustment in the number of shares related to each outstanding award and to the number of shares reserved for issuance under the 2015
Plan, to the class and kind of shares subject to the 2015 Plan, as well as the exercise price per share of each outstanding award, as
applicable, the terms and conditions concerning vesting and exercisability and the term and duration of outstanding awards, or any other
terms that the administrator adjusts in its discretion; provided that any fractional shares resulting from such adjustment shall be rounded
to the nearest whole share unless otherwise determined by the administrator. Notwithstanding any of the foregoing, unless determined by
the administrator, no adjustment shall be made by reason of the distribution of subscription rights or rights offering to outstanding
shares or other issuance of shares by us.
In the event of a merger or
consolidation of the company, or a sale of all, or substantially all, of the our shares or assets or other transaction having a similar
effect on us, 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, the administrator may but is not required to (i) cause any outstanding
award to be assumed or substituted by such successor corporation, (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, or (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, (iii)
determine that any payments made in respect of awards shall be made or delayed to the same extent that payment of consideration to the
holders of the shares in connection with the merger/sale is made or delayed, or (iv) suspend the grantee's rights to exercise any
vested portion of an award for a period of time prior to the signing or consummation of a merger/sale transaction.
Notwithstanding the foregoing,
the administrator may upon such event amend, modify or terminate the terms of any award as it shall deem, in good faith, appropriate.
F.
Disclosure of a registrant's
action to recover erroneously awarded compensation.
Not applicable.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A.
Major Shareholders
The following table sets forth
information with respect to the beneficial ownership of our ordinary shares as of April 15, 2023 by:
●
each of our directors and senior management;
●
all of our directors and senior management as a group; and
●
each person (or group of affiliated persons) known by us to be the beneficial owner of 5% or more of the outstanding ordinary shares.
98
The beneficial ownership of
our ordinary shares is determined in accordance with the rules of the SEC and generally includes any shares over which a person exercises
sole or shared voting or investment power, or the right to receive the economic benefit of ownership. For purposes of the table below,
we deem ordinary shares issuable pursuant to options that are currently exercisable or exercisable within 60 days from April 15,
2023 to be outstanding and to be beneficially owned by the person holding the options 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. Percentage
of shares beneficially owned is based on ordinary shares issued and outstanding as of April 15, 2023.
As of April 15, 2023 and based
on their reported registered office, thirteen of our shareholders were U.S. persons, holding in aggregate approximately 39% of our outstanding
ordinary shares. We have also set forth below information known to us regarding any significant change in the percentage ownership of
our ordinary shares by any major shareholders during the past three years. Except where otherwise indicated, we believe, based on information
furnished to us by such owners, that the beneficial owners of the ordinary shares listed below have sole investment and voting power with
respect to such shares.
All of our shareholders, including
the shareholders listed below, have the same voting rights attached to their ordinary shares, and neither our principal shareholders nor
our directors and executive officers have different or special voting rights with respect to their ordinary shares. A description of any
material relationship that our principal shareholders have had with us or any of our predecessors or affiliates within the past three
years is included under "Item 7.A Major Shareholders and Related Party Transactions—Certain Relationships and Related Party
Transactions."
Unless otherwise noted below,
the address of each shareholder, director and executive officer is c/o Beamr Imaging Ltd., 10 HaManofim Street Herzeliya, 43305,
Israel.
Number of
Shares
Name of beneficial owner
beneficially
owned
Percentage
5% or Greater Shareholder
Marker II LP (1)
2,272,150
17.6
%
Innovation Endeavors II, L.P. (2)
1,042,445
8.1
%
Disruptive Technologies III L.P. (3)
1,056,290
8.2
%
Verizon Ventures LLC (4)
1,073,731
8.3
%
Directors and Executive Officers
Sharon Carmel (5)
3,693,190
28.67
%
Danny Sandler (6)
27,750
*
Tamar Shoham (7)
92,050
*
Dan Julius (8)
114,335
*
Dani Megrelishvili (9)
42,658
*
Eliezer Lubitch (10)
286,390
2.22
%
Tal Barnoach (11)
241,105
1.87
%
Lluis Pedragosa (12)
1,584
*
Yair Shoham (12)
1,584
*
Osnat Michaeli (12)
1,584
*
All directors, director nominees and executive officers as a group (10 persons)
4,502,230
32.76
%
*
Indicates beneficial ownership of less than 1% of the total ordinary shares outstanding.
(1)
Consists of (i) 2,272,150 ordinary
shares. Richard Scanlon is the sole director of the managers and the general partner of the Marker II LP. Ohad Finkelstein and Yuval
Shachar are independent members of the investment committee of the Marker II LP. Voting and investment power over the shares held by
the Marker II LP resides with the general partner and the members of any such investment committee. The address of the foregoing entity
and individuals is c/o Marker LLC, 10 East 53rd Street, New York, NY 10022.
99
(2)
Consists of 1,042,445 ordinary shares. Dror Berman is a managing partner at Innovation Endeavors, and as such may be deemed to have voting and investment control over the shares held by Innovation Endeavors II, L.P. The address of the principal office of Innovation Endeavors II, L.P. is 1845 El Camino Real, Palo Alto, CA 94306.
(3)
Consists of (i) 1,007,570 ordinary shares held by Disruptive Technologies III L.P., and (ii) 48,720 ordinary shares held by Disruptive Technologies L.P. Disruptive Technology Ltd is the general partner of Disruptive Technologies L.P & Disruptive Technologies III L.P, Tal Barnoach and Adam Rothstein holds the GP and therefore they are deemed to have voting and dispositive power concerning the shares. The address of the principal office of Technologies L.P & Disruptive Technologies III L.P is PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.
(4)
Consists of 1,073,731 ordinary shares. Verizon Ventures LLC is an indirect, wholly-owned subsidiary of Verizon Communications, Inc. The address of the principal office of Verizon Ventures LLC is 1095 Avenues of the Americas, New York, NY 10036.
(5)
Consists of 3,693,190 ordinary shares.
(6)
Consists of 27,750 options to purchase ordinary shares that are currently exercisable or will be exercisable within 60 days from April 15, 2023. Does not include 44,250 options to purchase ordinary shares that are not exercisable within 60 days of April 15, 2023.
(7)
Consists of 92,050 options to purchase ordinary shares that are currently exercisable or will be exercisable within 60 days from April 15, 2023. Does not include 18,750 options to purchase ordinary shares that are not exercisable within 60 days of April 15, 2023.
(8)
Consists of 114,335 options to purchase ordinary shares that are currently exercisable or will be exercisable within 60 days from April 15, 2023. Does not include 20,625 options to purchase ordinary shares that are not exercisable within 60 days of April 15, 2023.
(9)
Consists of 12,000 ordinary shares, and (ii) 30,658 options to purchase ordinary shares that are currently exercisable or will be exercisable within 60 days from April 15, 2023. Does not include 216,616 options to purchase ordinary shares that are not exercisable within 60 days of April 15, 2023.
(10)
Consists of (i) 97,440 ordinary shares, and (ii) 188,950 options to purchase ordinary shares that are currently exercisable or will be exercisable within 60 days from April 15, 2023. Does not include 26,250 options to purchase ordinary shares that are not exercisable within 60 days of April 15, 2023.
(11)
Consists of (i) 63,121 ordinary shares, (iii) 128,400 ordinary shares held in favor of certain beneficiaries, and (iv) options to purchase 49,584 ordinary shares that are currently exercisable or will be exercisable within 60 days from April 15, 2023. The ordinary shares do not include shares held by Disruptive Technologies III L.P. or Disruptive Technologies L.P. Does not include 17,416 options to purchase ordinary shares that are not exercisable within 60 days of April 15, 2023.
(12)
Consists of 1,584 options to purchase ordinary shares that are currently exercisable or will be exercisable within 60 days from April 15, 2023. Does not include 17,416 options to purchase ordinary shares that are not exercisable within 60 days of April 15, 2023
To our knowledge, other than
as disclosed in the table above, our other filings with the SEC and this Annual Report, there has been no significant change in the percentage
ownership held by any major shareholder since January 1, 2020.
100
B.
Related Party Transactions
The following is a description
of the material terms of those transactions with related parties to which we, or our subsidiaries, are party since January 1, 2022.
Advance Investment Agreements
On August 6, 2019, we entered
into Advanced Investment Agreements, or the 2019 AIA, with several of our current shareholders, providing for bridge loan financing in
the aggregate amount of $3,097,000. The 2019 AIAs provide for the conversion of the investment amount into our ordinary shares under certain
circumstances including in particular in the case of an initial public offering such that immediately prior to the closing our initial
public the investment amount automatically converted into such number of our ordinary shares equal to the initial public offering price
multiplied by 0.8.
On August 26, 2021, we entered
into Advanced Investment Agreements, or the 2021 AIA, with several of our current shareholders, providing for bridge loan financing in
the aggregate amount of $560,000. The 2021 AIAs provide for the conversion of the investment amount into our ordinary shares under certain
circumstances including in particular in the case of an initial public offering such that immediately prior to the closing of our initial
public offering the investment amount automatically convert into such number of our ordinary shares equal to the initial public offering
price multiplied by 0.8.
Related party participants
in the 2019 AIAs and 2021 AIAs, collectively, the AIAs, that were converted into ordinary shares in our initial public offering included
the following:
Participant
Aggregate
Investment
Amount
Number of Ordinary Shares from Conversion of AIA in our Initial Public Offering*
Sharon Carmel
$
1,100,000
343,750
Disruptive Technologies LP
$
100,000
31,250
Marker II LP
$
1,100,000
343,750
Verizon Ventures LLC
$
947,619
296,131
Innovation Endeavors II LP
$
250,000
78,125
*
Number of ordinary shares issued upon the automatic conversion
of advance investment agreements on February 27, 2023 in our initial public offering based on a conversion price equal to 80% of the
initial public offering price of $‌4.00.
Sharon Carmel Management
On November 1, 2009, we entered
into a services agreement with Sharon Carmel Management Ltd., or SCM, a company owned by our Chief Executive Officer and Chairman, Sharon
Carmel, according to which we receive consulting services for a current monthly gross amount of NIS 45,000 from Mr. Carmel as our full
time Chief Executive Officer. Since January 1, 2020, we have not been paying SCM for the consulting services and as further discussed
below, we have accrued expenses of an aggregate of $460,000 as of December 31, 2022.
In addition, on February 16,
2022, we entered into an addendum to the services agreement with SCM under which it was agreed that (i) the term of the services agreement
with SCM was extended until December 31, 2025 and (ii) the current liability towards SCM as was accrued for services rendered under the
services agreement over a period commencing January 1, 2020 through February 16, 2022 in total amount of $359,000, or the Current Liability,
will be paid in 18 equal installments (without an interest) starting on March 1, 2022, or the Commencement Date. However, in the event
that we shall not have available sufficient funds in any such payment date from and after the Commencement Date to repay the installments
of the Current Liability and/or the on-going fee owed to SCM or in the event that we determine that according to the following 12-months
period budget that we shall not have available sufficient funds to pay such installments and/or the on-going fee, then SCM hereby agrees
to postpone such payments owed to it until we will have such sufficient funds. Any unpaid on-going fee payments will be added to the Current
Liability.
101
Agreements and Arrangements With, and Compensation
of Executive Officers
Certain of our executive officers
have employment agreements that contain customary provisions and representations, including confidentiality, non-competition, non-solicitation
and inventions assignment undertakings by the executive officers. Under current applicable Israeli employment laws, we may not be able
to enforce (either in whole or in part) 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 6.B Directors, Senior Management and Employees—Compensation."
Options
Since
our inception we have granted options to purchase our ordinary shares to our officers and to our directors. Such option agreements may
contain acceleration provisions upon certain merger, acquisition, or change of control transactions. We describe our option plans under
"Management—Share Option Plans." If the relationship between us and an executive officer or a director is terminated,
except for cause (as defined in the various Option Plan agreements), options that are vested will generally remain exercisable for three
(3) months following the date of such termination if we initiate such termination or two weeks following the date of such termination,
if an executive officer or a director initiates such termination.
Indemnification
Agreements
Our amended and restated articles
of association permits us to exculpate, indemnify and insure each of our directors and office holders to the fullest extent permitted
by the Israeli Companies Law. Upon the closing of our initial public offering, we entered into indemnification agreements with each of
our directors, director nominees and executive officers, undertaking to indemnify them to the fullest extent permitted by Israeli law,
including with respect to liabilities resulting from a public offering of our shares, to the extent that these liabilities are not covered
by insurance. We have also obtained directors and officers insurance for each of our executive officers and directors. For further information,
see "Item 6.C Directors, Senior Management and Employees—Board Practices—Exculpation," Item 6.C Directors, Senior
Management and Employees—Board Practices—Insurance," and "Item 6.C Directors, Senior Management and Employees—Board
Practices—Indemnification."
C.
Interests of Experts and Counsel
Not applicable.
ITEM 8. FINANCIAL INFORMATION.
A.
Consolidated Statements and Other
Financial Information.
See "Item 18. Financial
Statements."
Legal Proceedings
See
"Item 4.B. Business Overview—Legal Proceedings."
Dividends
We have never declared or
paid any cash dividends to our shareholders of our ordinary shares, and we do not anticipate or intend to pay cash dividends in the foreseeable
future. Payment of cash dividends, if any, in the future will be at the discretion of our board of directors in compliance with applicable
legal requirements and will depend on a number of factors, including future earnings, our financial condition, operating results, contractual
restrictions, capital requirements, business prospects, our strategic goals and plans to expand our business, applicable law and other
factors that our board of directors may deem relevant.
The Companies Law imposes
further restrictions on our ability to declare and pay dividends
Payment of dividends may be
subject to Israeli withholding taxes. See "Item 10.E—Additional Information—Taxation" for additional information.
102
B.
Significant Changes
Other than as otherwise described
in this Annual Report on Form 20-F and as set forth below, no significant change has occurred in our operations since the date of our
consolidated financial statements included in this Annual Report on Form 20-F.
ITEM 9. THE OFFER AND LISTING
A.
Offer and Listing Details
On February 27, 2023, our
ordinary shares were approved for trading on the Nasdaq Capital Market under our ticker symbol "BMR" and began trading at
the open of market on February 28, 2023. Upon listing of our ordinary shares in our initial public offering on February 28, 2023, we effected
a reverse share spit at a ratio of 1-for-5.
B.
Plan of Distribution
Not applicable.
C.
Markets
Our ordinary shares are listed
on the Nasdaq Capital Market.
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.
Memorandum and Articles of Association
A copy of our Amended and
Restated Articles of Association is attached as Exhibit 1.1 to this Annual Report. Other than as disclosed below, the information called
for by this Item is set forth in Exhibit 2.1 to this Annual Report and is incorporated by reference into this Annual Report.
C.
Material Contracts
Except
as set forth below, we have not entered into any material contract within the two years prior to the date of this Annual Report on Form
20-F, other than contracts entered into in the ordinary course of business, or as otherwise described herein in "Item 4.A.
History and Development of the Company", "Item 4.B. Business Overview", "Item 7A. Major Shareholders"
or "Item 7B. Related Party Transactions" above.
103
D.
Exchange Controls
There are currently no Israeli
currency control restrictions on remittances of dividends on our ordinary shares, proceeds from the sale of the shares or interest or
other payments to non-residents of Israel, except for shareholders who are subjects of countries that are, or have been, in a state of
war with Israel.
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. You should consult your own tax advisor concerning the tax consequences of your particular situation, as well as any
tax consequences that may arise under the laws of any state, local, foreign, or other taxing jurisdiction.
Israeli Tax Considerations and Government Programs
The
following is a description of the material Israeli income tax consequences of the ownership of our ordinary shares. The following also
contains a description of material relevant provisions of the current Israeli income tax structure applicable to companies in Israel,
with reference to its effect on us. To the extent that the discussion is based on new tax legislation which has not been subject to judicial
or administrative interpretation, there can be no assurance that the tax authorities will accept the views expressed in the discussion
in question. The discussion is not intended, and should not be taken, as legal or professional tax advice and is not exhaustive of all
possible tax considerations.
The
following description is not intended to constitute a complete analysis of all tax consequences relating to the ownership or disposition
of our ordinary shares. Shareholders should consult their own tax advisors concerning the tax consequences of their particular situation,
as well as any tax consequences that may arise under the laws of any state, local, foreign or other taxing jurisdiction.
General Corporate Tax Structure in Israel
Israeli
companies are generally subject to corporate tax. As of January 1, 2018, the corporate tax rate is 23%. However, the effective tax rate
payable by a company that derives income from a Preferred Enterprise (as discussed below) may be considerably less. Capital gains derived
by an Israeli resident company are generally subject to the prevailing corporate tax rate.
Under
Israeli tax legislation, a corporation will be considered as an "Israeli resident company" if it meets one of the following:
(i) it was incorporated in Israel; or (ii) the control and management of its business are exercised in Israel.
Tax Benefits for Research and Development
Israeli
tax ordinance allows, under certain conditions, a tax deduction for expenditures, including capital expenditures, for the year in which
they are incurred. Expenditures are deemed related to scientific research and development projects, and the tax deduction shall usually
take place as long as one of the following applies:
●
The expenditures are
in the fields of industry, agriculture, transportation or energy
, and
the research is carried out by a factory owner who is in the field of the said industries or at his order for the development or promotion of his factory;
●
the expenses are of the
expenditures
operator who does not have a
factory
in the said
industries
, or the expenses constitute as a participation in research funding carried out by another person in exchange for a right to the profits of the results of the
expenditures
(that are reasonable in relation to his participation in research expenses.
104
The
amount of such deductible expenses is reduced by the sum of any funds received through government grants for the finance of such scientific
research and development projects. No deduction under these research and development deduction rules is allowed if such deduction is related
to an expense invested in an asset depreciable under the general depreciation rules of the income Tax Ordinance, 1961. Expenditures not
so approved are deductible in equal amounts over three years.
From
time to time we may apply the Office of the Chief Scientist for approval to allow a tax deduction for all research and development expenses
during the year incurred. There can be no assurance that such application will be accepted.
Law for the Encouragement of Capital Investments,
5719-1959
The
Law for the Encouragement of Capital Investments, 5719-1959, generally referred to as the Investment Law, provides certain incentives
for capital investments in production facilities (or other eligible assets).
Tax Benefits
The
Investment Law grants tax benefits for income generated by a "Preferred Company" through its "Preferred Enterprise"
(as such terms are defined in the Investment Law) The definition of a Preferred Company includes a company incorporated in Israel that
is not fully owned by a governmental entity, and that has, among other things, Preferred Enterprise status and is controlled and managed
from Israel. A Preferred Company is entitled to a reduced corporate tax rate of 16% with respect to its income derived by its Preferred
Enterprise, unless the Preferred Enterprise is located in a specified development zone, in which case the rate will be 9%.
Dividends
paid out of income attributed to a Preferred Enterprise are generally subject to withholding tax at source at the rate of 20%.
Taxation of our Shareholders
Capital
Gains Taxes Applicable to Non-Israeli Resident Shareholders. However, non-Israeli corporations will not be entitled to the foregoing exemption
if Israeli residents: (i) have a controlling interest of 25% or more in such non-Israeli corporation or (ii) are the beneficiaries of,
or are entitled to, 25% or more of the revenues or profits of such non-Israeli corporation, whether directly or indirectly.
Additionally,
a sale of securities by a non-Israeli resident may be exempt from Israeli capital gains tax under the provisions of an applicable tax
treaty. For example, under Convention Between the Government of the United States of America and the Government of the State of Israel
with respect to Taxes on Income, as amended, or the United States-Israel Tax Treaty, the sale, exchange or other disposition of shares
by a shareholder who is a United States resident (for purposes of the treaty) holding the shares as a capital asset and is entitled to
claim the benefits afforded to such a resident by the U.S.-Israel Tax Treaty, or a Treaty U.S. Resident, is generally exempt from Israeli
capital gains tax unless: (i) the capital gain arising from such sale, exchange or disposition is attributed to real estate located in
Israel; (ii) the capital gain arising from such sale, exchange or disposition is attributed to royalties; (iii) the capital gain arising
from the such sale, exchange or disposition is attributed to a permanent establishment in Israel, under certain terms; (iv) such Treaty
U.S. Resident holds, directly or indirectly, shares representing 10% or more of the voting capital during any part of the 12-month period
preceding the disposition, subject to certain conditions; or (v) such Treaty U.S. Resident is an individual and was present in Israel
for 183 days or more during the relevant taxable year.
In
some instances where our shareholders may be liable for Israeli tax on the sale of their ordinary shares, the payment of the consideration
may be subject to the withholding of Israeli tax at source. Shareholders may be required to demonstrate that they are exempt from tax
on their capital gains in order to avoid withholding at source at the time of sale.
105
Taxation
of Non-Israeli Shareholders on Receipt of Dividends. Non-Israeli residents are generally subject to Israeli income tax on the receipt
of dividends paid on our ordinary shares at the rate of 25%, With respect to a person who is a "substantial shareholder" at
the time of receiving the dividend or on any time during the preceding twelve months, the applicable tax rate is 30%. A "substantial
shareholder" is generally a person who alone or together with another person, holds, directly or indirectly, at least 10% of any
of the "means of control" of the corporation. "Means of control" generally include the right to vote, receive
profits, nominate a director or an executive officer, receive assets upon liquidation, or order someone who holds any of the aforesaid
rights how to act, regardless of the source of such right. However, a distribution of dividends to non-Israeli residents is subject to
withholding tax at source at a rate of 20% if the dividend is distributed from income attributed to a Preferred Enterprise, unless a reduced
tax rate is provided under an applicable tax treaty. For example, under the United States-Israel Tax Treaty, the maximum rate of tax withheld
at source in Israel on dividends paid to a holder of our ordinary shares who is a Treaty U.S. Resident is 25%. However, generally, the
maximum rate of withholding tax on dividends, not generated by a Preferred Enterprise, that are paid to a United States corporation holding
10% or more of the outstanding voting capital throughout the tax year in which the dividend is distributed as well as during the previous
tax year, is 12.5%, provided that not more than 25% of the gross income for such preceding year consists of certain types of dividends
and interest. Notwithstanding the foregoing, dividends distributed from income attributed to an Preferred Enterprise are not entitled
to such reduction under the tax treaty but are subject to a withholding tax rate of 15% for a shareholder that is a U.S. corporation,
provided that the condition related to our gross income for the previous year (as set forth in the previous sentence) is met. If the dividend
is attributable partly to income derived from a Preferred Enterprise, and partly to other sources of income, the withholding rate will
be a blended rate reflecting the relative portions of the two types of income. We cannot assure you that we will designate the profits
that we may distribute in a way that will reduce shareholders' tax liability.
U.S. Federal Income Tax Considerations
THE FOLLOWING SUMMARY IS INCLUDED
HEREIN FOR GENERAL INFORMATION AND IS NOT INTENDED TO BE, AND SHOULD NOT BE CONSIDERED TO BE, LEGAL OR TAX ADVICE. EACH U.S. HOLDER SHOULD
CONSULT WITH HIS OR HER OWN TAX ADVISOR AS TO THE PARTICULAR U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND SALE
OF ORDINARY SHARES, INCLUDING THE EFFECTS OF APPLICABLE STATE, LOCAL, FOREIGN OR OTHER TAX LAWS AND POSSIBLE CHANGES IN THE TAX LAWS.
Subject to the limitations
described in the next two paragraphs, the following discussion summarizes the material U.S. federal income tax consequences to a "U.S.
Holder" arising from the purchase, ownership and sale of the ordinary shares. For this purpose, a "U.S. Holder" is a
holder of ordinary shares that is: (1) an individual citizen or resident of the United States, including an alien individual who is a
lawful permanent resident of the United States or meets the substantial presence residency test under U.S. federal income tax laws; (2)
a corporation (or entity treated as a corporation for U.S. federal income tax purposes) or a partnership (other than a partnership that
is not treated as a U.S. person under any applicable U.S. Treasury regulations) created or organized under the laws of the United States
or the District of Columbia or any political subdivision thereof; (3) an estate, the income of which is includable in gross income for
U.S. federal income tax purposes regardless of its source; (4) a trust if a court within the United States is able to exercise primary
supervision over the administration of the trust and one or more U.S. persons have authority to control all substantial decisions of the
trust; or (5) a trust that has a valid election in effect to be treated as a U.S. person to the extent provided in U.S. Treasury regulations.
This summary is for general
information purposes only and does not purport to be a comprehensive description of all of the U.S. federal income tax considerations
that may be relevant to a decision to purchase our ordinary shares. This summary generally considers only U.S. Holders that will own our
ordinary shares as capital assets. Except to the limited extent discussed below, this summary does not consider the U.S. federal tax consequences
to a person that is not a U.S. Holder, nor does it describe the rules applicable to determine a taxpayer's status as a U.S. Holder.
This summary is based on the provisions of the Code and final, temporary and proposed U.S. Treasury regulations promulgated thereunder,
administrative and judicial interpretations thereof, and the United States-Israel Income Tax Treaty, all as in effect as of the date hereof
and all of which are subject to change, possibly on a retroactive basis, and all of which are open to differing interpretations. We will
not seek a ruling from the Internal Revenue Service, or the IRS, with regard to the U.S. federal income tax treatment of an investment
in our ordinary shares by U.S. Holders and, therefore, can provide no assurances that the IRS will agree with the conclusions set forth
below.
106
This discussion does not address
all of the aspects of U.S. federal income taxation that may be relevant to a particular U.S. holder based on such holder's particular
circumstances and in particular does not discuss any estate, gift, generation-skipping transfer, state, local, excise or foreign tax considerations.
In addition, this discussion does not address the U.S. federal income tax treatment of a U.S. Holder who is: (1) a bank, life insurance
company, regulated investment company, or other financial institution or "financial services entity;" (2) a broker or dealer
in securities or foreign currency; (3) a person who acquired our ordinary shares in connection with employment or other performance of
services; (4) a U.S. Holder that is subject to the U.S. alternative minimum tax; (5) a U.S. Holder that holds our ordinary shares as a
hedge or as part of a hedging, straddle, conversion or constructive sale transaction or other risk-reduction transaction for U.S. federal
income tax purposes; (6) a tax-exempt entity; (7) real estate investment trusts or grantor trusts; (8) a U.S. Holder that expatriates
out of the United States or a former long-term resident of the United States; or (9) a person having a functional currency other than
the U.S. dollar. This discussion does not address the U.S. federal income tax treatment of a U.S. Holder that owns, directly or constructively,
at any time, ordinary shares representing 10% or more of the shares of our company. Additionally, the U.S. federal income tax treatment
of partnerships (or other pass-through entities) or persons who hold ordinary shares through a partnership or other pass-through entity
are not addressed.
Each prospective investor
is advised to consult his or her own tax adviser for the specific tax consequences to that investor of purchasing, holding or disposing
of our ordinary shares, including the effects of applicable state, local, foreign or other tax laws and possible changes in the tax laws.
Taxation
of Dividends Paid on Ordinary Shares
We do not intend to pay dividends
in the foreseeable future. In the event that we do pay dividends, and subject to the discussion under the heading "Passive Foreign
Investment Companies" below and the discussion of "qualified dividend income" below, a U.S. Holder, other than certain
U.S. Holders that are U.S. corporations, will be required to include in gross income as ordinary income the amount of any distribution
paid on the ordinary shares (including the amount of any Israeli tax withheld on the date of the distribution), to the extent that such
distribution does not exceed our current and accumulated earnings and profits, as determined for U.S. federal income tax purposes. The
amount of a distribution that exceeds our earnings and profits will be treated first as a non-taxable return of capital, reducing the
U.S. Holder's tax basis for the ordinary shares to the extent thereof, and then capital gain. We do not expect to maintain calculations
of our earnings and profits under U.S. federal income tax principles and, therefore, U.S. Holders should expect that the entire amount
of any distribution generally will be reported as dividend income.
In general, preferential tax
rates for "qualified dividend income" and long-term capital gains are applicable for U.S. Holders that are individuals, estates
or trusts. For this purpose, "qualified dividend income" means, inter alia, dividends received from a "qualified foreign
corporation." A "qualified foreign corporation" is a corporation that is entitled to the benefits of a comprehensive
tax treaty with the United States that includes an exchange of information program. The IRS has stated that the United States-Israel Tax
Treaty satisfies this requirement and we believe we are eligible for the benefits of that treaty.
In addition, our dividends
will be qualified dividend income if our ordinary shares are readily tradable on the Nasdaq Capital Market or another established securities
market in the United States. Dividends will not qualify for the preferential rate if we are treated, in the year the dividend is paid
or in the prior year, as a passive foreign investment company, or PFIC, as described below under "Passive Foreign Investment Companies."
A U.S. Holder will not be entitled to the preferential rate: (1) if the U.S. Holder has not held our ordinary shares for at least 61 days
of the 121 day period beginning on the date which is 60 days before the ex-dividend date, or (2) to the extent the U.S. Holder is under
an obligation to make related payments with respect to positions in substantially similar or related property. Any days during which the
U.S. Holder has diminished its risk of loss on our ordinary shares are not counted towards meeting the 61-day holding period. Finally,
U.S. Holders who elect to treat the dividend income as "investment income" pursuant to Section 163(d)(4) of the Code will
not be eligible for the preferential rate of taxation.
107
The amount of a distribution
with respect to our ordinary shares will be measured by the amount of the fair market value of any property distributed, and for U.S.
federal income tax purposes, the amount of any Israeli taxes withheld therefrom. Cash distributions paid by us in NIS will be included
in the income of U.S. Holders at a U.S. dollar amount based upon the spot rate of exchange in effect on the date the dividend is includible
in the income of the U.S. Holder, and U.S. Holders will have a tax basis in such NIS for U.S. federal income tax purposes equal to such
U.S. dollar value. If the U.S. Holder subsequently converts the NIS into U.S. dollars or otherwise disposes of them, any subsequent gain
or loss in respect of such NIS arising from exchange rate fluctuations will be U.S. source ordinary exchange gain or loss.
Dividends paid with respect
to our ordinary shares 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 U.S. Holders should consult their tax advisor to determine whether and to what extent such holder will be entitled to
this credit.
Taxation
of the Sale, Exchange or other Disposition of
Ordinary Shares
Except as provided under the
PFIC rules described below under "Passive Foreign Investment Companies," upon the sale, exchange or other disposition of our
ordinary shares, a U.S. Holder will recognize capital gain or loss in an amount equal to the difference between such U.S. Holder's
tax basis for the ordinary shares, determined in U.S. dollars, and the U.S. dollar value of the amount realized on the disposition (or
its U.S. dollar equivalent determined by reference to the spot rate of exchange on the date of disposition, if the amount realized is
denominated in a foreign currency). The gain or loss realized on the sale, exchange or other disposition of ordinary shares will be long-term
capital gain or loss if the U.S. Holder has a holding period of more than one year at the time of the disposition. Individuals who recognize
long-term capital gains may be taxed on such gains at reduced rates of tax. The deduction of capital losses is subject to various limitations.
Passive
Foreign Investment Companies
Special U.S. federal income
tax laws apply to U.S. taxpayers who own shares of a corporation that is a PFIC. We will be treated as a PFIC for U.S. federal income
tax purposes for any taxable year that either:
●
75% or more of our gross income (including our pro rata share of gross income for any company, in which we are considered to own 25% or more of the shares by value), in a taxable year is passive; or
●
At least 50% of our assets generally determined on the basis of a quarterly average and based upon fair market value (including our pro rata share of the assets of any company in which we are considered to own 25% or more of the shares by value) are held for the production of, or produce, passive income.
For this purpose, passive
income generally consists of rents, dividends, interest, royalties, gains from the disposition of passive assets and gains from commodities
and securities transactions. Cash is treated as generating passive income.
We believe that we will not
be a PFIC for the current taxable year, although we have not determined whether we will be a PFIC in the foreseeable future. The tests
for determining PFIC status are applied annually, and it is difficult to make accurate projections of future income and assets which are
relevant to this determination. In addition, our PFIC status may depend in part on the market value of our ordinary shares. Accordingly,
there can be no assurance that we currently are not or will not become a PFIC.
If we currently are or become
a PFIC, each U.S. Holder who has not elected to mark the shares to market (as discussed below), would, upon receipt of certain "excess
distributions" by us and upon disposition of our ordinary shares at a gain: (1) have such excess distribution or gain allocated
ratably over the U.S. Holder's holding period for the ordinary shares, as the case may be; (2) the amount allocated to the current
taxable year and any period prior to the first day of the first taxable year in which we were a PFIC would be taxed as ordinary income;
and (3) the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable
class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting
tax attributable to each such other taxable year. Distributions received by a U.S. Holder in a taxable year that are greater than 125%
of the average annual distributions received during the shorter of the three preceding taxable years or the U.S. Holder's holding
period for the ordinary shares will be treated as excess distributions. In addition, when shares of a PFIC are acquired by reason of death
from a decedent that was a U.S. Holder, the tax basis of such shares would not receive a step-up to fair market value as of the date of
the decedent's death, but instead would be equal to the decedent's basis if lower, unless all gain were recognized by the
decedent. Indirect investments in a PFIC may also be subject to these special U.S. federal income tax rules.
108
The PFIC rules described above
would not apply to a U.S. Holder who makes a qualified electing fund, or QEF, election for all taxable years that such U.S. Holder has
held the ordinary shares while we are a PFIC, provided that we comply with specified reporting requirements. Instead, each U.S. Holder
who has made such a QEF election is required for each taxable year that we are a PFIC to include in income such U.S. Holder's pro
rata share of our ordinary earnings as ordinary income and such U.S. Holder's pro rata share of our net capital gains as long-term
capital gain, regardless of whether we make any distributions of such earnings or gain. In general, a QEF election is effective only if
we make available certain required information. The QEF election is made on a shareholder-by-shareholder basis and generally may be revoked
only with the consent of the IRS. We do not intend to notify U.S. Holders if we believe we will be treated as a PFIC for any tax year.
In addition, we do not intend to furnish U.S. Holders annually with information needed in order to complete IRS Form 8621 and to make
and maintain a valid QEF election for any year in which we or any of our subsidiaries are a PFIC. Therefore, the QEF election will not
be available with respect to our ordinary shares.
In addition, the PFIC rules
described above would not apply if we were a PFIC and a U.S. Holder made a mark-to-market election. A U.S. Holder of our ordinary shares
which are regularly traded on a qualifying exchange, including the Nasdaq Capital Market, can elect to mark the ordinary shares to market
annually, recognizing as ordinary income or loss each year an amount equal to the difference as of the close of the taxable year between
the fair market value of the ordinary shares and the U.S. Holder's adjusted tax basis in the ordinary shares. Losses are allowed
only to the extent of net mark-to-market gain previously included income by the U.S. Holder under the election for prior taxable years.
U.S. Holders who hold our
ordinary shares during a period when we are a PFIC will be subject to the foregoing rules, even if we cease to be a PFIC. U.S. Holders
are strongly urged to consult their tax advisors about the PFIC rules.
Tax
on Net Investment Income
U.S. Holders who are individuals,
estates or trusts will generally be required to pay a 3.8% Medicare tax on their net investment income (including dividends on and gains
from the sale or other disposition of our ordinary shares), or in the case of estates and trusts on their net investment income that is
not distributed to beneficiaries of the estate or trust. In each case, the 3.8% Medicare tax applies only to the extent the U.S. Holder's
total adjusted income exceeds applicable thresholds.
Information
Reporting and Withholding
A U.S. Holder may be subject
to backup withholding at a rate of 24% with respect to cash dividends and proceeds from a disposition of ordinary shares. In general,
backup withholding will apply only if a U.S. Holder fails to comply with specified identification procedures. Backup withholding will
not apply with respect to payments made to designated exempt recipients, such as corporations and tax-exempt organizations. Backup withholding
is not an additional tax and may be claimed as a credit against the U.S. federal income tax liability of a U.S. Holder, provided that
the required information is timely furnished to the IRS.
Certain U.S. Holders with
interests in "specified foreign financial assets" (including, among other assets, our ordinary shares, unless such ordinary
shares are held on such U.S. Holder's behalf through a financial institution) may be required to file an information report with
the IRS if the aggregate value of all such assets exceeds $50,000 on the last day of the taxable year or $75,000 at any time during the
taxable year (or such higher dollar amount as may be prescribed by applicable IRS guidance); and may be required to file a Report of Foreign
Bank and Financial Accounts, or FBAR, if the aggregate value of the foreign financial accounts exceeds $10,000 at any time during the
calendar year. You should consult your own tax advisor as to the possible obligation to file such information report.
109
THE DISCUSSION ABOVE IS
A GENERAL SUMMARY AND IS NOT INTENDED TO CONSTITUTE A COMPLETE ANALYSIS OF ALL TAX CONSEQUENCES RELATING TO THE PURCHASE, OWNERSHIP AND
DISPOSITION OF OUR ORDINARY SHARES. IT DOES NOT COVER ALL TAX MATTERS THAT MAY BE OF IMPORTANCE TO A PROSPECTIVE INVESTOR. EACH PROSPECTIVE
INVESTOR IS URGED TO CONSULT ITS OWN TAX ADVISOR ABOUT THE TAX CONSEQUENCES TO IT RELATING TO THE PURCHASE, OWNERSHIP, AND DISPOSITION
OF ORDINARY SHARES IN LIGHT OF THE INVESTOR'S OWN CIRCUMSTANCES.
F. Dividends and Paying Agents
Not applicable.
G. Statement by Experts
Not applicable.
H. Documents on Display
We are subject to certain
information reporting requirements of the Exchange Act, applicable to foreign private issuers and under those requirements will file reports
with the SEC. The SEC maintains an internet site at http://www.sec.gov that contains reports, proxy and information statements and
other information regarding issuers that file electronically with the SEC. Our filings with the SEC will also be available to the public
through the SEC's website at www.sec.gov.
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 will be 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 annual, quarterly and current reports and financial statements
with the SEC as frequently or as promptly as U.S. domestic companies whose securities are registered under the Exchange Act. However,
we will file with the SEC, within 120 days after the end of each fiscal year, or such applicable time as required by the SEC, an annual
report on Form 20-F containing financial statements audited by an independent registered public accounting firm, and may submit to the
SEC, on a Form 6-K, unaudited quarterly financial information.
I. Subsidiary Information.
Not applicable.
J. Annual Report to Security Holders.
Not applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk
from changes in exchange rates, interest rates and inflation. All of these market risks arise in the ordinary course of business, as we
do not engage in speculative trading activities. The following analysis provides additional information regarding these risks.
110
Foreign Currency and
Exchange Risk
Our functional currency and
all of our subsidiaries all of which are primarily a direct and integral component of our operation is the U.S. dollars, as the U.S. dollars
is the primary currency of the economic environment in which us and our subsidiaries have operated (which is the currency of the environment
in which an entity primarily generates cash) and expects to continue to operate in the foreseeable future. Our sales are mainly denominated
in U.S. dollars. A significant portion of our operating costs are in Israel and in Russia, consisting principally of salaries and related
personnel expenses, and facility expenses, which are denominated in NIS and RUB. This foreign currency exposure gives rise to market risk
associated with exchange rate movements of the U.S. dollar against the NIS and RUB. Furthermore, we anticipate that a significant portion
of our expenses will continue to be denominated in NIS and RUB. We do not hedge against currency risk. A hypothetical 10% change in foreign
currency exchange rates applicable to our business would have had an impact on our results for the year ended December 31, 2022 of $0.1
million due to NIS, and $0.1 million due to RUB.
Impact of Inflation
While it is difficult to accurately
measure the impact of inflation due to the imprecise nature of the estimates required, we do not believe inflation has had a material
effect on our historical results of operations and financial condition. However, if our costs were to become subject to significant inflationary
pressures, we may not be able to fully offset higher costs through price increases or other corrective measures, and our inability or
failure to do so could adversely affect our business, financial condition and results of operations.
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
Not applicable.
111
PART II
ITEM 13.
DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
There are no material modifications
to the rights of security holders.
ITEM 15. CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures
Our management, with the participation
of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures
(as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2022, or the Evaluation Date. Based
on such evaluation, those officers have concluded that, as of the Evaluation Date, our disclosure controls and procedures were not effective
due to a material weakness in our internal control over financial reporting related to lack of sufficient internal accounting personnel,
segregation of duties, lack of sufficient internal controls (including IT general controls, entity level controls and transaction level
controls). See "Item 5.E—Operating and Financial Review and Prospects—Critical Account Estimates—Internal Control
Over Financial Reporting" for additional information.
(b) Management's Annual Report on Internal Control over Financial Reporting
This Annual Report does not
include a report of management's assessment regarding internal control over financial reporting due to a transition period established
by rules of the SEC for newly public companies. See "Item 5.E—Operating and Financial Review and Prospects—Critical
Account Estimates—Internal Control Over Financial Reporting" for additional information.
(c) Attestation Report of the Registered Public Accounting Firm
This Annual Report does not
include a report of management's assessment regarding internal control over financial reporting due to a transition period established
by rules of the SEC for newly public companies.
(d) Changes in Internal Control over Financial Reporting
During the year ended December
31, 2022, there were no changes in our internal control over financial reporting that have materially affected, or 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 three members of our audit committee, include Lluis Pedragosa, Yair Shoham and Osnat Michaeli. Osnat Michaeli, are an
audit committee financial expert, as defined under the rules under the Exchange Act, and is independent in accordance with applicable
Exchange Act rules and the Nasdaq Listing Rules.
ITEM 16B. CODE OF ETHICS
Our board of directors has
adopted a Code of Ethics applicable to all of our directors and employees, including our Chief Executive Officer, Chief Financial Officer,
controller or principal accounting officer, or other persons performing similar functions, which is a "code of ethics" as
defined in Item 16B of Form 20-F promulgated by the SEC. The full text of the Code of Ethics is posted on our website at
https://beamr.com/
.
Information contained on, or that can be accessed through, our website does not constitute a part of this a part of this Annual Report
on Form 20-F and is not incorporated by reference herein. If we make any amendment to the Code of Ethics or grant any waivers, including
any implicit waiver, from a provision of the Code of Ethics, we will disclose the nature of such amendment or waiver on our website to
the extent required by the rules and regulations of the SEC. We have not granted any waivers under our Code of Business Conduct and Ethics.
112
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The following table provides
information regarding fees paid by us to Fahn Kanne & Co. Grant Thornton Israel, an independent registered public accounting firm,
for all services, including audit services, for the years ended December 31, 2022 and 2021:
2022
2021
(USD)
Audit fees
(1)
60,134
35,096
Tax fees
(2)
643
-
All other fees
0
0
Total
60,777
35,096
(1)
The audit fees for the years ended December 31, 2022 and 2021 includes professional services rendered in connection with the audit of our annual consolidated financial statements and the review of our consolidated interim financial statements, our statutory tax audits and assistance with review of documents filed with the SEC.
(2)
Tax fees include professional services rendered in substance related to receive a certificate from the Israeli tax authority for an exemption or a reduction of withholding tax at the source regarding transfer of funds.
Pre-Approval of Auditors' Compensation
Our audit committee has a
pre-approval policy for the engagement of our independent registered public accounting firm to perform certain audit and non-audit services.
Pursuant to this policy, which is designed to assure that such engagements do not impair the independence of our auditors, the audit committee
pre-approves annually a catalog of specific audit and non-audit services in the categories of audit services, audit-related services and
tax services that may be performed by our independent registered public accounting firm. If a type of service, that is to be provided
by our auditors, has not received such general pre-approval, it will require specific pre-approval by our audit committee. The policy
prohibits retention of the independent registered public accounting firm to perform the prohibited non-audit functions defined in applicable
SEC rules.
ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Not applicable.
ITEM 16F. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 16G.
CORPORATE GOVERNANCE
Under the Companies Law, companies
incorporated under the laws of the State of Israel, whose shares are publicly traded, including companies whose shares are listed on the
Nasdaq Capital Market are considered public companies under Israeli law and are required to comply with various corporate governance requirements
under Israeli law relating to such matters as external directors, the audit committee, compensation committee, compensation policy, company's
auditors, and an internal auditor. These requirements are in addition to the corporate governance requirements imposed by the Nasdaq Listing
Rules, and other applicable provisions of U.S. securities laws to which we are subject as a foreign private issuer due to the listing
of our ordinary shares on the Nasdaq Capital Market. However, pursuant to regulations promulgated under the Companies Law, companies with
shares traded on certain U.S. stock exchanges, including the Nasdaq Capital Market, may, subject to certain conditions, "opt out"
from the requirement of the Companies Law to appoint external directors and related Companies Law rules concerning the composition of
the audit committee and compensation committee of the board of directors (other than the gender diversification rule under the Companies
Law which requires the appointment of a director from the other gender if, at the time a director is appointed, all members of the board
of directors are of the same gender). In accordance with these regulations, we have elected to "opt out" from such requirements
of the Companies Law. Under these regulations, the exemptions from such Companies Law's requirements will continue to be available
to us so long as we comply with the following: (i) we do not have a "controlling shareholder" (as such term is defined under
the Companies Law), (ii) our shares are traded on certain U.S. stock exchanges, including the Nasdaq Capital Market, and (iii) we comply
with the director independence requirements and the requirements regarding the composition of the audit committee and the compensation
committee under U.S. laws (including applicable Nasdaq rules) applicable to U.S. domestic issuers.
113
In accordance with Israeli
law and practice and subject to the exemption set forth in Rule 5615 of the Nasdaq Stock Market rules, we have elected to follow
the provisions of the Companies Law, rather than the Nasdaq Stock Market rules, with respect to the following requirements:
●
Quorum
. While the Nasdaq Stock Market rules require that the quorum for purposes of any meeting of the holders of a listed company's ordinary voting stock, as specified in the company's bylaws, be no less than 33 1/3% of the company's outstanding ordinary voting stock, under Israeli law, a company is entitled to determine in its articles of association the number of shareholders and percentage of holdings required for a quorum at a shareholders meeting. Our amended and restated articles of association provide that a quorum of two or more shareholders holding at least 25% of the voting rights in person or by proxy is required for commencement of business at a general meeting. However, the quorum set forth in our amended and restated articles of association with respect to an adjourned meeting consists of any number of shareholders present in person or by proxy.
●
Compensation of officers.
Israeli law and our amended and restated articles of association do not require that the independent members of our board of directors (or a compensation committee composed solely of independent members of our board of directors) determine an executive officer's compensation, as is generally required under the Nasdaq Stock Market rules with respect to the chief executive officer and all other executive officers. Instead, compensation of executive officers is determined and approved by our board of directors, and in certain circumstances by our shareholders, either in consistency with our office holder compensation policy or, in special circumstances in deviation therefrom, taking into account certain considerations stated in the Companies Law. See "Item 6.C Directors, Senior Management and Employees——Board Practices—Approval of Related Party Transactions under Israeli Law" for additional information.
●
Shareholder approval.
We will seek shareholder approval for all corporate actions requiring such approval under the requirements of the Companies Law, rather than seeking approval for corporation actions in accordance with Nasdaq Listing Rule 5635. In particular, under this Nasdaq Stock Market rule, shareholder approval is generally required for: (i) an acquisition of shares/assets of another company that involves the issuance of 20% or more of the acquirer's shares or voting rights or if a director, officer or 5% shareholder has greater than a 5% interest in the target company or the consideration to be received; (ii) the issuance of shares leading to a change of control; (iii) adoption/amendment of equity compensation arrangements (although under the provisions of the Companies Law there is no requirement for shareholder approval for the adoption/amendment of the equity compensation plan); and (iv) issuances of 20% or more of the shares or voting rights (including securities convertible into, or exercisable for, equity) of a listed company via a private placement (and/or via sales by directors/officers/5% shareholders) if such equity is issued (or sold) at below the greater of the book or market value of shares. By contrast, under the Companies Law, shareholder approval is required for, among other things: (i) transactions with directors concerning the terms of their service or indemnification, exemption and insurance for their service (or for any other position that they may hold at a company), for which approvals of the compensation committee, board of directors and shareholders are all required, (ii) extraordinary transactions with controlling shareholders of publicly held companies, which require the special approval, and (iii) terms of employment or other engagement of the controlling shareholder of us or such controlling shareholder's relative, which require special approval. In addition, under the Companies Law, a merger requires approval of the shareholders of each of the merging companies.
114
●
Nomination of Directors.
We will not have to comply with the requirements that we have a nominating committee composed entirely of independent directors with a written charter addressing the committee's purpose and responsibilities.
●
Director Independence.
Israeli law does not require that a majority of the directors serving on our board of directors be "independent," as defined under Nasdaq Stock Market Rule 5605(a)(2), and rather requires we have at least two external directors who meet the requirements of the Companies Law, as described below under "Management—Board Practices—External Directors." The definition of independent director under Nasdaq Stock Market rules and external director under the Companies Law overlap to a significant degree such that we would generally expect the directors serving as external directors to satisfy the requirements to be independent under Nasdaq Stock Market rules. However, it is possible for a director to qualify as an "external director'' under the Companies Law without qualifying as an "independent director'' under the Nasdaq Stock Market rules, or vice-versa. Notwithstanding Israeli law, we believe that a majority of our directors will be "independent" under the Nasdaq Stock Market rules. We are required, however, to ensure that all members of our Audit Committee are "independent" under the applicable Nasdaq and SEC criteria for independence (as we cannot exempt ourselves from compliance with that SEC independence requirement, despite our status as a foreign private issuer), and we must also ensure that a majority of the members of our Audit Committee are "independent directors" as defined in the Companies Law. Furthermore, Israeli law does not require, nor do our independent directors conduct, regularly scheduled meetings at which only they are present, which the Nasdaq Stock Market rules otherwise require
●
Approval of Related Party Transactions
. All related party transactions are approved in accordance with the requirements and procedures for approval of interested party acts and transaction as set forth in the Companies Law, which requires the approval of the audit committee, or the compensation committee, as the case may be, the board of directors and shareholders, as may be applicable, for specified transactions, rather than approval by the audit committee or other independent body of our board of directors as required under the Nasdaq Stock Market rules. See "Item 6.C Directors, Senior Management and Employees—Board Practices—Approval of Related Party Transactions under Israeli Law" for additional information.
●
Annual Shareholders Meeting.
As opposed to the Nasdaq Stock Market Rule 5620(a), which mandates that a listed company hold its annual shareholders meeting within one year of the company's fiscal year-end, we are required, under the Companies Law, to hold an annual shareholders meeting each calendar year and within 15 months of the last annual shareholders meeting.
●
Distribution of periodic reports to shareholders; proxy solicitation.
As opposed to the Nasdaq Stock Market rules, which require listed issuers to make such reports available to shareholders in one of a number of specific manners, Israeli law does not require us to distribute periodic reports directly to shareholders, and the generally accepted business practice in Israel is not to distribute such reports to shareholders but to make such reports available through a public website. In addition to making such reports available on a public website, we currently make our audited consolidated financial statements available to our shareholders at our offices and will only mail such reports to shareholders upon request. As a foreign private issuer, we are generally exempt from the SEC's proxy solicitation rules.
Except
as stated above, we intend to comply with the rules generally applicable to U.S. domestic companies listed on the Nasdaq Capital Market,
subject to certain exemptions the JOBS Act provides to emerging growth companies. We may in the future decide to use other foreign private
issuer exemptions with respect to some or all of the other Nasdaq Listing Rules. Following our home country governance practices, as opposed
to the requirements that would otherwise apply to a company listed on the Nasdaq Capital Market, may provide less protection than is accorded
to investors under the Nasdaq Listing Rules applicable to domestic issuers.
ITEM 16H.
MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT
INSPECTIONS
Not applicable.
115
PART III
ITEM 17.
FINANCIAL STATEMENTS
We have elected to provide
financial statements and related information pursuant to Item 18.
ITEM 18.
FINANCIAL STATEMENTS
The consolidated financial
statements and the related notes required by this Item are included in this Annual Report on Form 20-F beginning on page F-1.
ITEM 19. EXHIBITS.
Exhibit No.
Description
1.1
Amended and Restated Articles of Association of the Registrant (filed as Exhibit 99.1 to our Report on Form 6-K as filed with the Securities and Exchange Commission on March 8, 2023, and incorporated herein by reference)
2.1*
Description of Securities Registered under Section 12
4.1
Specimen share certificate of the Registrant (filed as Exhibit 4.1 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on August 15, 2022, and incorporated herein by reference)
10.1
Form of Indemnification Agreement (filed as Exhibit 10.1 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on February 22, 2022, and incorporated herein by reference)
10.2+
2010 Option Plan (filed as Exhibit 10.2 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on February 22, 2022, and incorporated herein by reference)
10.3+
2015 Share Incentive Plan (filed as Exhibit 10.3 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on February 22, 2022, and incorporated herein by reference)
10.4
Form of Compensation Policy for Directors and Officers (filed as Exhibit 10.4 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on July 12,2022, and incorporated herein by reference)
10.5
Loan and Security Agreement dated as of February 19, 2017 between Silicon Valley Bank, Beamr Imaging Ltd. and Beamr, Inc. (filed as Exhibit 10.5 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on February 22, 2022, and incorporated herein by reference)
10.6
Warrant to Purchase Shares issued February 19, 2017 to Silicon Valley Bank (filed as Exhibit 10.6 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on February 22, 2022, and incorporated herein by reference).
10.7
Form of Advance Investment Agreement dated August 6, 2019 (filed as Exhibit 10.7 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on February 22, 2022, and incorporated herein by reference).
10.8
Deferral Agreement dated April 15, 2020 between Silicon Valley Bank and Beamr Imaging Ltd and Beamr, Inc. (filed as Exhibit 10.8 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on February 22, 2022, and incorporated herein by reference).
10.9
Deferral Agreement dated April 29, 2021 between Silicon Valley Bank, Beamr Imaging Ltd. and Beamr, Inc. (filed as Exhibit 10.9 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on February 22, 2022, and incorporated herein by reference).
10.10
Warrant to Purchase Stock issued April 29, 2021 to Silicon Valley Bank (filed as Exhibit 10.10 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on February 22, 2022, and incorporated herein by reference).
10.11
Form of Advance Investment Agreement dated August 26, 2021 (filed as Exhibit 10.11 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on February 22, 2022, and incorporated herein by reference).
10.12^
Funding Agreement dated as of July 5, 2022 between IBI Spikes Ltd. and Beamr Imaging Ltd.  (filed as Exhibit 10.13 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on July 12, 2022, and incorporated herein by reference)
10.13
Warrant to Purchase Shares of Beamr Imaging Ltd. dated as of July 5, 2022 issued to IBI Spikes Ltd. (filed as Exhibit 10.14 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on July 12, 2022, and incorporated herein by reference)
10.14
Form of Underwriting Agreement (filed as Exhibit 1.1 to our Registration
Statement on Form F-1 as filed with the Securities and Exchange Commission on August 15, 2022, and incorporated herein by reference)
10.15
Form of Representative's Warrant (filed as Exhibit 4.2 to our
Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on August 15, 2022, and incorporated herein by
reference)
12.1*
Certification of the Chief Executive Officer pursuant to rule 13a-14(a)
of the Securities Exchange Act of 1934
12.2*
Certification of the Chief Financial Officer pursuant to rule 13a-14(a)
of the Securities Exchange Act of 1934
13.1*
Certification of the Chief Executive Officer pursuant to 18 U.S.C.
1350
13.2*
Certification of the Chief Executive Officer pursuant to 18 U.S.C.
1350
21.1
List of Subsidiaries of the Registrant (filed as Exhibit 21.1 to our Registration Statement on Form F-1 as filed with the Securities and Exchange Commission on February 22, 2022, and incorporated herein by reference).
101.INS
Inline XBRL Instance Document
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (embedded within the Inline XBRL document)
*
Filed herewith.
+
Indicates a management contract
or any compensatory plan, contract or arrangement.
^
Certain schedules and exhibits
have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company agrees to furnish supplementally a copy of any omitted schedule
or exhibit to the SEC upon request.
116
SIGNATURES
The
registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this Annual Report on Form 20-F filed on its behalf.
BEAMR IMAGING LTD.
Date: April 24
, 2023
By:
/s/ Sharon Carmel
Sharon Carmel
Chief Executive Officer
117
BEAMR IMAGING LTD.
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2022
F-
1
BEAMR IMAGING LTD.
CONSOLIDATED FINANCIAL STATEMENTS
AS OF DECEMBER 31, 2022
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm (PCAOB ID:
1375
)
F-3
Consolidated Balance Sheets as of December 31, 2022 and 2021
F-4
Consolidated Statements of Operations and Comprehensive Loss for the three years ended December 31, 2022
F-5
Consolidated Statements of Changes in Shareholders' Equity (Deficit) for the three years ended December 31, 2022
F-6
Consolidated Statements of Cash Flows for the three years ended December 31, 2022
F-7
Notes to Consolidated Financial Statements
F-8 - F-34
F-
2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board
    of Directors and Shareholders
Beamr Imaging Ltd.
Fahn Kanne & Co.
Head Office
32 Hamasger Street
Tel-Aviv 6721118, ISRAEL
PO Box 36172, 6136101
T +972 3 7106666
F +972 3 7106660
www.gtfk.co.il
Opinion on the financial statements
We have audited the accompanying consolidated
balance sheets of Beamr Imaging Ltd. and its subsidiaries (the "Company") as of December 31, 2022 and 2021, the related consolidated
statements of operations and comprehensive loss, changes in shareholders' equity (deficit), and cash flows for each of the three
years in the period ended December 31, 2022, and the related notes (collectively referred to as the "financial statements").
In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December
31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022,
in conformity with accounting principles generally accepted in the United States of America.
Basis for opinion
These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's 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 U.S. 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 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 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 supporting the amounts and disclosures in the 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 financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/
Fahn Kanne & Co. Grant Thornton Israel
FAHN KANNE & CO. GRANT THORNTON ISRAEL
We have served as the Company's auditor
since 2021.
Tel Aviv, Israel
April 24, 2023
Certified Public Accountants
Fahn Kanne
& Co. is the Israeli member firm of Grant Thornton International Ltd
F-
3
BEAMR IMAGING LTD.
CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands except share and per
share amounts)
As
of
December 31,
Note
2022
2021
ASSETS
Current assets:
Cash and cash equivalents
$
693
$
1,028
Trade receivables
581
891
Other current assets
3
64
66
Total current assets
1,338
1,985
Non-current assets:
Deferred offering costs
2F
313
215
Property and equipment, net
4
15
21
Intangible assets, net
5
67
87
Goodwill
2G, 5
4,379
4,379
Total non-current assets
4,774
4,702
Total assets
$
6,112
$
6,687
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Current maturities of loans, net
6
$
330
$
508
Account payables
33
27
Deferred revenues
2N
31
33
Liability from related party, net
14
126
345
Other current liabilities
7
425
500
Total current liabilities
945
1,413
Non-current liabilities:
Loans, net of current maturities
6
$
387
$
-
Liability from related party, net
14
262
-
Derivative warrants liability
8
138
50
Convertible advanced investments
9
4,840
4,770
Total non-current liabilities
5,627
4,820
Commitments and contingent liabilities
10
Shareholders' equity (deficit):
11
Ordinary Shares of NIS 0.05 par value each:
Authorized:
14,307,116
and
14,316,880
shares at December 31, 2022 and 2021, respectively; Issued and outstanding:
2,578,760
shares at December 31, 2022 and 2021
51
51
Convertible Ordinary 1 and 2 Shares of NIS 0.05 par value each:
Authorized:
1,496,880
shares at December 31, 2022 and 2021; Issued and outstanding:
1,496,880
shares at December 31, 2022 and 2021
5
5
Convertible Preferred Shares of NIS 0.05 par value each:
Authorized:
6,196,004
and
6,186,240
shares at December 31, 2022 and 2021, respectively; Issued and outstanding:
5,714,400
shares at December 31, 2022 and 2021
78
78
Additional paid-in capital
30,375
30,041
Accumulated deficit
(
30,969
)
(
29,721
)
Total shareholders' equity (deficit)
(
460
)
454
Total liabilities and shareholders' equity (deficit)
$
6,112
$
6,687
The accompanying notes are an integral part of these consolidated financial statements.
F-
4
BEAMR IMAGING LTD.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE
LOSS
(U.S. dollars in thousands except share and per
share amounts)
Year ended December 31,
Note
2022
2021
2020
Revenues
16
$
2,863
$
3,300
$
3,176
Cost of revenues
(
98
)
(
90
)
(
94
)
Gross profit
2,765
3,210
3,082
Research and development expenses
(
2,063
)
(
2,032
)
(
2,727
)
Sales and marketing expenses
(
905
)
(
959
)
(
1,371
)
General and administrative expenses
(
828
)
(
773
)
(
671
)
Other income
6B
-
129
20
Operating loss
(
1,031
)
(
425
)
(
1,667
)
Financing expenses, net
13
(
165
)
(
475
)
(
697
)
Loss before taxes on income
(
1,196
)
(
900
)
(
2,364
)
Taxes on income
15
(
52
)
(
52
)
(
95
)
Net loss and comprehensive loss for the year
$
(
1,248
)
$
(
952
)
$
(
2,459
)
Basic and diluted net loss per share
$
(
0.48
)
$
(
0.37
)
$
(
0.96
)
Weighted average number of Ordinary Shares used in computing basic and diluted net loss per share
2,578,760
2,578,760
2,574,814
The accompanying notes are an integral part of these consolidated financial statements.
F-
5
BEAMR IMAGING LTD.
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS'
EQUITY (DEFICIT)
(U.S. dollars in thousands except share and per
share amounts)
Ordinary shares
Convertible
Ordinary 1 and 2 shares
Convertible
Preferred shares
Additional
paid-in
Accumulated
Total
shareholders'
Equity
Number
Amount
Number
Amount
Number
Amount
capital
deficit
(deficit)
Balance as of January 1, 2020
2,568,960
51
1,496,880
5
5,714,400
78
29,753
(
26,310
)
3,577
Exercise of share options into Ordinary Shares (Note
    12)
9,800
*
)
-
-
-
-
11
-
11
Share-based compensation (Note 12)
-
-
-
-
-
-
120
-
120
Net loss for the year
-
-
-
-
-
-
-
(
2,459
)
(
2,459
)
Balance as of December 31, 2020
2,578,760
$
51
1,496,880
$
5
5,714,400
$
78
$
29,884
$
(
28,769
)
$
1,249
Share-based compensation (Note 12)
-
-
-
-
-
-
157
-
157
Net loss for the year
-
-
-
-
-
-
-
(
952
)
(
952
)
Balance as of December 31, 2021
2,578,760
$
51
1,496,880
$
5
5,714,400
$
78
$
30,041
$
(
29,721
)
$
454
Contribution to equity due to free interest loan from
    controlling shareholder (Note 14)
-
-
-
-
-
-
112
-
112
Share-based compensation (Note 12)
-
-
-
-
-
-
222
-
222
Net loss for the year
-
-
-
-
-
-
-
(
1,248
)
(
1,248
)
Balance as of December 31, 2022
2,578,760
$
51
1,496,880
$
5
5,714,400
$
78
$
30,375
$
(
30,969
)
$
(
460
)
*)
Representing an amount less than $1.
The accompanying notes
are an integral part of these consolidated financial statements.
F-
6
BEAMR IMAGING LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in
thousands except share and per share amounts)
Year ended December 31
2022
2021
2020
Cash flows from operating activities:
Net loss
$
(
1,248
)
$
(
952
)
$
(
2,459
)
Adjustments required to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
28
193
679
Share-based compensation (Note 12)
222
157
120
Amortization of discount relating to straight loan received from commercial bank (Note 6)
14
14
29
Exchange rate differences on straight loan received from commercial bank (Note 6)
(
12
)
-
-
Amortization of discount relating to liability to related party (see Note 14)
40
-
-
Change in the fair value of convertible advanced investments (Note 9)
70
288
436
Capital gain from selling of property and equipment
-
-
(
5
)
Capital loss from disposal of property and equipment
-
6
-
Modification of terms of straight loan (Note 6A)
-
90
-
Forgiveness of loan under paycheck protection program notes (Note 6B)
-
(
129
)
-
Decrease (increase) in trade receivables
310
704
(
113
)
Decrease (increase) in other current assets
2
(
26
)
366
Increase (decrease) in account payables
6
16
(
14
)
Increase (decrease) in deferred revenues
(
2
)
(
32
)
31
Increase in liability from related party
-
177
168
Increase (decrease) in other current liabilities
(
75
)
63
(
258
)
Net cash provided by (used in) operating activities
(
645
)
569
(
1,020
)
Cash flows from investing activities:
Purchase of property and equipment
(
2
)
(
4
)
(
7
)
Selling of property and equipment
-
-
8
Net cash provided by (used in) investing activities
(
2
)
(
4
)
1
Cash flows from financing activities:
Deferred offering costs (Note 2F)
(
98
)
(
215
)
-
Proceeds received from issuance of convertible advanced investments (Note 9)
-
560
-
Proceeds received from paycheck protection program note (Note 6B)
-
54
75
Repayment of principal relating to straight loan received from commercial bank (Note 6)
(
582
)
(
500
)
(
504
)
Repayment of Facility Fee relating to straight loan received from commercial bank (Note 6)
(
10
)
(
40
)
-
Proceeds from issuance of unit consist of straight loan and warrant granted to commercial bank, net (Note 6C)
887
-
-
Proceeds from loan received from related party
115
-
-
Proceeds received from exercise of share options into Ordinary Shares (Note 12)
-
-
11
Net cash provided by (used in) financing activities
312
(
141
)
(
418
)
Change in cash, cash equivalents
(
335
)
424
(
1,437
)
Cash, cash equivalents at beginning of year
1,028
604
2,041
Cash, cash equivalents at end of year
$
693
$
1,028
$
604
Non-cash financing activities:
Contribution to equity due to free interest loan from controlling shareholder (Note 14)
$
112
$
-
$
-
Supplemental disclosure of
cash flow information:
Interest paid
$
(
77
)
$
(
90
)
$
(
91
)
Taxes paid
$
(
54
)
$
(
49
)
$
(
99
)
The accompanying notes are an integral part of these consolidated financial statements.
F-
7
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(U.S. dollars in
thousands except share and per share amounts)
NOTE 1 - GENERAL
A.
Operations
Beamr Imaging Ltd. (the "Company"
or "Beamr") was incorporated on October 1, 2009 under the laws of the State of Israel and it engages in the development of
optimization technologies for video and photo compression.
B.
Foreign operations
1.
Beamr Inc.
In 2012, the Company incorporated a
wholly-owned U.S. subsidiary, Beamr Inc. ("Beamr Inc."), for the purpose of reselling the Company's software and products
in the U.S. and Canadian markets.
2.
Beamr Imaging RU LLC
In 2016, the Company incorporated a
wholly-owned Russian limited partnership, Beamr Imaging RU LLC, ("Beamr Imaging RU") for the purpose of conducting research
and development services to the Company.
The Company and its subsidiaries, Beamr
Inc. and Beamr Imaging RU, are collectively referred to as the "Group".
C.
Liquidity and capital resources
The Company has devoted substantially
all of its efforts to research and development, the commercialization of its software and products and raising capital for such purposes.
The development and commercialization of the Company's software and products are expected to require substantial further expenditures.
To date, the Company has not yet generated sufficient revenues from operations to support its activities, and therefore it is dependent
upon external sources for financing its operations. In 2022, the Company had net losses of $
1,248
. As of December 31, 2022, the Company
had an accumulated deficit of $
30,969
. The Company plans to finance its operations through the sales of equity (including the Company's
Initial Public Offering (IPO) of its ordinary shares, par value NIS
0.05
per share, of the Company (the "Ordinary Shares")
that closed in March 2023) and to the extent available, refinancing of liabilities on a long-term basis and through revenues from sales
of its software, products and related services. In addition, the Company has recently commenced collaborating with a strategic partner
in development of the Company's next generation product, the Beamr HW-Accelerated Content Adaptive Encoding, which is expected to allow
the Company to potentially access new customers and new markets with relatively low sales investment.
During the year ended December 31, 2020,
the Company raised net amounts of $
75
and $
11
through the paycheck protection program and exercise of share options into Ordinary Shares,
respectively (see also Note 6B and Note 12, respectively). During the year ended December 31, 2021, the Company raised net amounts of
$
54
and $
560
through the paycheck protection program and issuance of convertible advanced investment, respectively (see also Note 6B and
Note 9, respectively). During the year ended December 31, 2022, the Company raised net amounts of $
887
through a Funding Agreement with
IBI Spikes Ltd (see also Note 6C).
Management has considered the significance
of such conditions in relation to the Company's ability to meet its current obligations and to achieve its business targets and determined
that these conditions are not raising substantial doubt about the Company's ability to continue as a going concern taking into consideration,
among others (i) an agreement from February 2022 with the Company's founder and significant shareholder (the "Founder") under
which the Company's outstanding current liability towards an entity controlled by the Founder (the "Service Provider"), as
noted in Note 14, will be paid in 18 equal installments pending availability of sufficient liquidity funds and (ii) the execution of a
definitive agreement (the "Definitive Agreement") with another commercial bank for receiving straight loan and issuance of
warrants, as noted in Note 6C. As of December 31, 2022, it was agreed to extend the term of liability to the Service Provider (including
with respect to amount relating to services provided to the Company by the Service Provider throughout fiscal year ended December 31,
2022).
On February 27, 2023, the Company announced
the pricing of its initial public offering of
1,950,000
Ordinary Shares at a public offering price of $
4.00
per share, for aggregate gross
proceeds of $
7,800
prior to deducting underwriting discounts and other offering expenses. For additional information, see also Note 17.
D.
The impact of COVID-19
During the year ended December 31, 2022,
there were no material adverse impacts on the consolidated financial statements. The duration, scope and effects of the ongoing COVID-19
pandemic, government and other third-party responses to it, the related macroeconomic effects, and the extent of its impact on the Company's
operational and financial performance will depend on future developments. As events continue to evolve and additional information becomes
available, the Company's estimates and assumptions may change in future periods.
F-
8
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 1 - GENERAL
(Cont.)
E.
The impact of the Russian Invasion of Ukraine
On February 24, 2022, Russia invaded Ukraine.
The Company has an operation in Russia through its wholly-owned subsidiary, Beamr Imaging RU. The Company undertakes some of its software
development and design, quality assurance and support in Russia using personnel located there. While most of the Company's developers
are located in Russia, its research and development leadership are all located in Israel. The Company has no manufacturing operations
in Russia, and the Company does not sell any products in Russia. The Company constantly evaluates its activities in Russia and currently
believes there was no significant impact on its activities.
NOTE 2 - SIGNIFICANT
ACCOUNTING POLICIES
The financial statements have been prepared in
accordance with accounting principles generally accepted in the United States of America ("US GAAP").
A.
Use of estimates in the preparation of financial statements
The preparation of the financial statements
in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue
and expenses during the reported periods. Actual results could differ from those estimates. As applicable to these financial statements,
the most significant estimates and assumptions include (i) revenues recognition; (ii) identification of and measurement of financial instruments
in funding transactions; (iii) recoverability of the Company's goodwill upon subsequent periods (iv) measurement of fair value of
equity awards and (v) evaluation of going concern.
B.
Functional currency
The functional currency of the Company
and all of its subsidiaries all of which are primarily a direct and integral component of the Company's operation is the US dollar ("$"
or "dollar"), as the dollar is the primary currency of the economic environment in which the Company and its subsidiaries
have operated (which is the currency of the environment in which an entity primarily generates cash) and expects to continue to operate
in the foreseeable future.
In accordance with ASC 830, "Foreign
Currency Matters", balances denominated in or linked to foreign currency are stated on the basis of the exchange rates prevailing
at the applicable balance sheet date. For foreign currency transactions included in the consolidated Statement of Operations and Comprehensive
Loss, the exchange rates applicable on the relevant transaction dates are used. Gains or losses arising from changes in the exchange rates
used in the translation of such transactions are presented within financing income or expenses.
C.
Principles of Consolidation
The consolidated financial statements
include the accounts of the Group. Intercompany transactions and balances have been eliminated upon consolidation.
D.
Cash and cash equivalents
Cash equivalents are short-term highly
liquid investments which include short term bank deposits (up to three months from date of deposit), that are not restricted as to withdrawals
or use and that are readily convertible to cash with maturities of three months or less as of the date acquired.
E.
Research and development expenses
Research and development expenses are
charged to operations, as incurred.
ASC 985-20, "Software - Costs of
Computer Software to be Sold, Leased or Otherwise Marketed", requires capitalization of certain software development costs subsequent
to the establishment of technological feasibility. In accordance with ASC 985-20, capitalization ceases when the related product is available
for general release to customers. Costs of maintenance and customer support are charged to expenses, as incurred. Based on the Company's
product development process, technological feasibility is established upon completion of a working model. Costs incurred by the Company
between completion of the working models and the point at which the products are ready for general release have been insignificant. Therefore,
all research and development costs have been expensed.
F-
9
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 2 - SIGNIFICANT
ACCOUNTING POLICIES (Cont.)
F.
Deferred offering costs
Prior to the effective
date of an offering of equity securities, specific incremental costs directly (i.e. accounting, consulting, legal and printing fees) attributable
to a proposed or actual offering of securities are deferred and charged against the gross proceeds of the offering, unless the offering
of equity securities has been delayed but is currently in process, under which such specific incremental and direct costs are charged
immediately to operations. As of December 31, 2022, the Company deferred specific incremental costs directly attributable to offering
of securities through its IPO that closed in March 2023 in total amount of $
313
, which was classified as non-current asset in the Company's
Consolidated Balance Sheet.
G.
Goodwill and Intangible Assets
Goodwill is the amount
by which the purchase price of acquired net assets in a business combination exceeded the fair values of the net identifiable assets on
the date of acquisition. Goodwill is not amortized but evaluated for impairment annually or more frequently if events or changes
in circumstances indicate that the asset might be impaired. The provisions of ASC 350 "Intangibles-Goodwill and Other" ("ASC
350") require that the impairment test be performed on goodwill at the level of the reporting unit. As required by ASC 350, the
Company chooses either to perform a qualitative assessment whether a goodwill impairment test is necessary or proceeds directly to the
goodwill impairment test. Such determination is made for each reporting unit on a stand-alone basis. The qualitative assessment includes
various factors such as macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, earnings
multiples, gross margin and cash flows from operating activities and other relevant factors. When the Company chooses to perform a qualitative
assessment and determines that it is more likely than not (more than 50 percent likelihood) that the fair value of the reporting unit
is less than its carrying value, then the Company proceeds to the goodwill impairment test. If the Company determines otherwise, no further
evaluation is necessary.
When the Company decides
or is required to perform the quantitative goodwill impairment test, the Company compares the fair value of the reporting unit to its
carrying value and an impairment charge is recognized for the amount by which the carrying amount exceeds the reporting unit's fair
value, if any.
The Company determined
that its operations represent a single reporting unit. The Company determines the fair value of its reporting unit by using the income
approach, which utilizes a discounted cash flow model, as it believes that this approach best approximates the reporting unit's
fair value. Judgments and assumptions related to revenue, operating income, future short-term and long-term growth rates, weighted average
cost of capital, interest, capital expenditures, cash flows, and market conditions are inherent in developing the discounted cash flow
model. The Company considers historical rates and current market conditions when determining the discount and growth rates to use in its
analyses. If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges
for its goodwill. As of December 31, 2022 and 2021, the Company has performed the annual impairment test and has determined that impairment
loss is not required to be recognized.
Finite lived intangible
assets acquired in business combinations, which include technology, customer relationships and trade names, are initially recorded at
fair value. They are amortized on a straight-line basis over their estimated useful lives. The intangible asset lives have been
determined based upon the anticipated period over which the Company will derive future cash flows from the intangible assets. The
Company has considered the effects of legal, regulatory, contractual, competitive, and other economic factors in determining these useful
lives. Recoverability of these assets is assessed when triggering events have occurred that may give rise to an impairment loss and
is determined by a comparison of the carrying amount of the asset to the future undiscounted net cash flows expected to be generated by
the asset. When it is determined that the carrying value of the asset is not recoverable, the asset is written down to its estimated
fair value.
As a result of continued
losses, the management performed an impairment test with respect to its intangible assets by maintaining an external valuation which utilized
discounted cash flow model. Accordingly, certain assumptions and judgments were made to determine the discount rate as well as future
cash flows of the Company. During the years ended December 31, 2022, 2021 and 2020, no impairment losses were identified through
the impairment test.
The lives used in computing straight-line amortization
for financial reporting purposes are as follows:
Rate of depreciation
%
Technology
20
Customer relationships
20
Trade names
10
F-
10
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 2 - SIGNIFICANT
ACCOUNTING POLICIES (Cont.)
H.
Property and equipment
Property and equipment
are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful
lives of the assets. When an asset is retired or otherwise disposed of, the related cost and accumulated depreciation are removed from
the respective accounts and the net difference less any amount realized from disposition is reflected in the consolidated Statements of
Operations and Comprehensive Loss.
The Company's long-lived
assets are reviewed for impairment in accordance with ASC 360, "Property, Plant and Equipment", whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is
measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the asset.
If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of
the asset exceeds its fair value. To date, the Company has not incurred any impairment losses.
The lives used in computing straight-line depreciation
for financial reporting purposes are as follows:
Rate of depreciation
%
Computers and peripheral equipment
33
Office furniture and equipment
7
-
15
I.
Leases
The Company entered
into several non-cancelable lease agreements for offices for use in its operations, which are classified as operating leases (see below).
The Company applies
ASC Topic 842, Leases ("ASC 842").
Accordingly, the Company
determines if an arrangement is a lease at inception. The Company's assessment is based on: (i) whether the contract involves the
use of an identified asset, (ii) whether the Company obtains the right to substantially all of the economic benefits from the use of the
asset throughout the period of use, and (iii) whether the Company has the right to direct the use of the asset.
Leases are classified
as either finance leases or operating leases. A lease is classified as a finance lease if any one of the following criteria are met: (i)
the lease transfers ownership of the asset by the end of the lease term, (ii) the lease contains an option to purchase the asset that
is reasonably certain to be exercised, (iii) the lease term is for a major part of the remaining useful life of the asset, (iv) the present
value of the lease payments equals or exceeds substantially all of the fair value of the asset, or (v) the underlying asset is of such
a specialized nature that it is expected to have no alternative use to the lessor at the end of lease term. A lease is classified as an
operating lease if it does not meet any one of these criteria. Since all the Company's lease contracts for premises do not meet
any of the criteria above, the Company concluded that all its lease contracts should be classified as operating leases.
Right of Use ("ROU")
assets and liabilities are recognized on the commencement date based on the present value of remaining lease payments over the lease term.
For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of the Company's
leases do not provide an implicit rate, the Company uses its incremental borrowing rate ("IBR") based on the information available
on the commencement date in determining the present value of lease payments. The Company's IBR is estimated to approximate the interest
rate for collateralized borrowing with similar terms and payments and in economic environments where the leased asset is located. The
ROU asset also includes any lease payments made prior to commencement and is recorded net of any lease incentives received. Moreover,
the ROU asset may also include initial direct costs, which are incremental costs of a lease that would not have been incurred if the lease
had not been obtained. The Company uses the long-lived assets impairment guidance in ASC 360-10, "Property, Plant, and Equipment
- Overall", to determine whether a ROU asset is impaired, and if so, the amount of the impairment loss to recognize. Certain leases
include options to extend or terminate the lease. An option to extend the lease is considered in connection with determining the ROU asset
and lease liability when it is reasonably certain that the Company will exercise that option. An option to terminate is considered unless
it is reasonably certain that the Company will not exercise the option.
The Company also elected
the short-term lease recognition exemption for all leases that qualify (leases with a term shorter than 12 months). For those leases,
ROU assets or lease liabilities are not recognized and rent expense is recognized on a straight-line basis over the lease term. See
also Note 10A for further discussion.
F-
11
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 2 - SIGNIFICANT
ACCOUNTING POLICIES (Cont.)
J.
Deferred income taxes
The Company accounts
for income taxes in accordance with ASC Topic 740, "Income Taxes". Accordingly, deferred income taxes are determined utilizing
the asset and liability method based on the estimated future tax effects of differences between the financial accounting and the tax bases
of assets and liabilities under the applicable tax law. Deferred tax balances are computed using the enacted tax rates expected to be
in effect when these differences reverse. Valuation allowance in respect of deferred tax assets is provided for, if necessary, to reduce
deferred tax assets is amounts more likely than not to be realized.
The Company accounts
for uncertain tax positions in accordance with ASC Topic 740-10, which prescribes detailed guidance for the financial statement recognition,
measurement and disclosure of uncertain tax positions recognized in an enterprise's financial statements. According to ASC Topic
740-10, tax positions must meet a more-likely-than-not recognition threshold. The Company's accounting policy is to classify interest
and penalties relating to uncertain tax positions under income taxes, however the Company did not recognize such items in its consolidated
financial statements during the years ended December 31, 2022, 2021 and 2020 and did not recognize any liability with respect to an unrecognized
tax position in its balance sheets.
K.
Employees benefit plans
The Company's
liability for severance pay to its Israeli employees is pursuant to Section 14 of the Israeli Severance Compensation Act, 1963 ("Section
14"), pursuant to which all the Company's employees are included under Section 14, and are entitled only to monthly deposits,
at a rate of
8.33
% of their monthly salary, made in the employee's name with insurance companies. Under Israeli employment law,
payments in accordance with Section 14 release the Company from any future severance payments in respect of those employees. The fund
is made available to the employee at the time the employer-employee relationship is terminated, regardless of cause of termination. The
severance pay liabilities and deposits under Section 14 are not reflected in the balance sheets as the severance pay risks have been irrevocably
transferred to the severance funds. All deposits required through December 31, 2022 have been made.
L.
Contingencies
The Company and its
subsidiaries may be involved in certain legal proceedings and certain business relationships that arise from time to time in the ordinary
course of their business and in connection with certain agreements with third parties. Except for income tax contingencies, the Company
applies the provisions of ASC Topic 450, Contingencies. Thus, the Company records accruals for contingencies to the extent that the management
concludes that the occurrence is probable and that the related liabilities are estimable. Legal expenses associated with contingencies
are expensed as incurred.
M.
Concentrations of credit risk and allowance for doubtful accounts
Financial instruments
that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and trade receivables
as well as certain other current assets that do not amount to a significant amount. Cash and cash equivalents, which are primarily held
in US Dollars and New Israeli Shekels (NIS), are deposited with major banks in Israel, U.S. and Russian Federation. Management believes
that such financial institutions are financially sound and, accordingly, minimal credit risk exists with respect to these financial instruments.
The Company does not have any significant off-balance-sheet concentration of credit risk, such as foreign exchange contracts, option contracts
or other foreign hedging arrangements. Most of the Company's sales are mainly derived from sales to a diverse set of customers located
primarily in the United States. Management periodically evaluates the collectability of the trade receivables to determine the amounts
that are doubtful of collection and determine a proper allowance for doubtful accounts, as described below. Accordingly, management believes
that the Company's trade receivables do not represent a substantial concentration of credit risk.
The Company extends credit to customers
in the normal course of business and does not require collateral or any other security to support amounts due. Management performs ongoing
credit evaluations of its customers. The allowance for doubtful accounts is determined with respect to amounts the Group has determined
to be doubtful of collection. In determining the allowance for doubtful accounts, the Company considers, among other things, its past
experience with customers, the length of time that the balance is past due, the customer's current ability to pay and available information
about the credit risk on such customers. Provisions for the allowance for doubtful accounts are recorded under general and administrative
expenses in the consolidated Statements of Operations and Comprehensive Loss. During the years ended December 31, 2022, 2021 and 2020,
the Company has not recorded allowance in respect of accounts receivable.
F-
12
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 2 - SIGNIFICANT
ACCOUNTING POLICIES (Cont.)
N.
Revenue recognition
The Company recognizes revenues in accordance
with ASC 606, "Revenue from Contracts with Customers" ("ASC 606") under which the Company determines revenue recognition
through the following five steps:
◾
Identification of the contract, or contracts, with a customer;
◾
Identification of the performance obligations in the contract;
◾
Determination of the transaction price;
◾
Allocation of the transaction price to the performance obligations in the contract; and
◾
Recognition of revenue when, or as, the Company satisfies a performance obligation.
The Company enters into contracts that
mostly include software and software related services (i.e. Post-Contract Customer Support ("PCS")), which are generally capable
as being distinct from each other and accounted for as separate performance obligations.
The Company derives its revenues from
licensing the rights to use its software for a limited term (mainly for a period of one to three years) or on a perpetual basis for enterprises
that incorporate the Company's perpetual license in their own products delivered to end users and for the Company's products sold
to thousands private consumers, as applicable to each contract, and from, provision of related maintenance and technical support. The
Company sells its products through direct sales force and indirectly through distributors and consumer platforms.
Revenues are recognized when control of
the promised goods or services are transferred to the customers, in an amount that reflects the consideration that the company expects
to receive in exchange for those goods or services. However, when the consideration for the license is based on sales of the related customer,
the company applies the provisions of ASC 606 with respect to sales-based or usage-based royalties promised in exchange for a license
of intellectual property and recognizes revenues only when the underlying sales occur, as long as this approach does not result in the
acceleration of revenue ahead of the company's performance.
Under ASC 606, an entity recognizes revenue
when or as it satisfies a performance obligation by transferring software license (either timely-based or perpetual) or software related
services to the customer, either at a point in time or over time. The Company recognizes its revenues from software sales at a point in
time upon delivery of its software license. The software license is considered a distinct performance obligation, as the customer can
benefit from the software on its own. The Company's revenues from PCS are derived from annual maintenance providing for unspecified
upgrades on a when-and-if-available basis. The right for an unspecified upgrade for the version acquired by the customer and enhancements
on a when-and-if-available basis that do not specify the features, functionality and release date of future product enhancements for the
customer to know what will be made available and the general timeframe in which it will be delivered. The Company considers the PCS performance
obligation as a distinct performance obligation that is satisfied over time and recognized on a straight-line basis over the contractual
period (mainly over a period of one year either for timely-based license or for perpetual license).
As the Company bundles software licenses
(either time-based or perpetual) together with PCS, the transaction price is allocated to the separate performance obligations on a relative
standalone selling price basis.
Since the Company does not sell PCS on
a stand-alone basis and due to the fact that these services are usually involved with limited customer support, mainly based on several
hours of technical support per contract (as management believes the technology and products covered under the software license component
are mature and fully functional), the standalone selling prices of the PCS are determined based on the expected cost plus a margin ("cost-plus
approach") based on estimation of direct fulfillment cost (an hourly service) and a reasonable margin. Such estimate is also corroborated
with the price that the company would have to pay to a third-party service provider for a similar support service.
The stand-alone selling price of the software
licenses (either timely-based or perpetual) is estimated by management based on adjusted market assessment approach which represents management
estimation of the price that a customer in the market will be willing to pay for such license on a stand-alone basis (i.e. without any
PCS).
Due to the fact that the PCS services
are usually involved with limited customer support, mainly based on several hours of technical support per contract, the transaction price
allocated to the PCS is considered insignificant. Consequently, most of the transaction price is allocated to the software licenses as
management believes the technology and products covered under the software license component are mature and fully functional.
F-
13
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 2 - SIGNIFICANT
ACCOUNTING POLICIES (Cont.)
N.
Revenue recognition (Cont.)
During the reported periods, costs to
obtain contracts were in an insignificant amount.
The Company does not grant a right of
return to its customers. When product delivered to the customer is subject to evaluation, the Company defers revenue until evaluation
is completed subject to formal selling agreement with the customer, at which time revenue is recognized provided that all other revenue
recognition criteria are met.
Commencing 2022, revenue is also derived
from the traffic operations in the Google AdSense program, a web advertising platform, that the Company makes available on its websites. Google
pays the Company on a cost-per-click basis. The Company recognizes as revenue the fees paid to it by Google based on the volume of clicks
through to Google AdSense advertisements.
The Company receives payments from customers
based upon contractual payment schedules. Trade receivables are recorded when right to consideration becomes unconditional, and an invoice
is issued to the customer. Unbilled receivables include amounts related to the Company's contractual right to consideration for
completed performance obligations not yet invoiced. As of December 31, 2022 and 2021, unbilled receivables balance amounted to $
35
and
$
29
, respectively, and are included within trade receivables balance in the Company's Consolidated Balance Sheets.
As of December 31, 2022 and 2021, the
Company had $
31
and $
33
, respectively, of remaining performance obligations not yet satisfied or partly satisfied related to revenues
(mostly PCS). Such amounts are presented as deferred revenues which are expected to be recognized as revenues during the next twelve months.
See also Note 16 for further discussion
related to disaggregation of revenues.
O.
Fair Value Measurements
The Company measures
and discloses fair value in accordance with the ASC 820, "Fair Value Measurements and Disclosures" which defines fair value,
establishes a framework and gives guidance regarding the methods used for measuring fair value, and expands disclosures about fair value
measurements. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability
in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that
should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering
such assumptions there exists a three-tier fair-value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1 - unadjusted
quoted prices are available in active markets for identical assets or liabilities that the Company has the ability to access as of the
measurement date.
Level 2 - pricing inputs
are other than quoted prices in active markets that are directly observable for the asset or liability or indirectly observable through
corroboration with observable market data.
Level 3 - pricing inputs
are unobservable for the non-financial asset or liability and only used when there is little, if any, market activity for the non-financial
asset or liability at the measurement date. The inputs into the determination of fair value require significant management judgment or
estimation. Level 3 inputs are considered as the lowest priority within the fair value hierarchy. The valuation of certain financial instruments
classified under fair value through profit or loss category and the fair value of reporting units for purposes of goodwill impairment
analysis, fall under this category.
This hierarchy requires
the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.
The fair value of cash
and cash equivalents is based on its demand value, which is equal to its carrying value. Additionally, the carrying value of all other
short-term monetary assets and liabilities are estimated to be equal to their fair value due to the short-term nature of these instruments.
P.
Convertible Ordinary 1 and 2 Shares and Preferred Shares
The Convertible Ordinary 1 and 2 Shares
and Convertible Preferred Shares are not subject to redemption feature upon any events that are considered not solely within the control
of the Company. In addition, upon occurrence of liquidation event, as defined in the Company's Articles of Association, all holders of
the Ordinary Shares, Convertible Ordinary 1 and 2 Shares and Convertible Preferred Shares will be entitled to receive the same form of
consideration. Thus, the Company classifies its Convertible Ordinary 1 and 2 Shares and Convertible Preferred Shares as part of permanent
equity.
F-
14
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 2 - SIGNIFICANT
ACCOUNTING POLICIES (Cont.)
Q.
Allocation of proceeds and related issuance costs
When multiple instruments are issued in
a single transaction (package issuance), the total net proceeds from the transaction are allocated among the individual freestanding instruments
identified. The allocation occurs after identifying all the freestanding instruments and the subsequent measurement basis for those instruments.
Financial instruments that are required
to be subsequently measured at fair value (such as derivative warrants liability) are measured at fair value and the remaining consideration
is allocated to other financial instruments that are not required to be subsequently measured at fair value (i.e. straight loan), based
on the relative fair value basis for such instruments.
The allocation of issuance costs to freestanding
instruments was based on an approach that is consistent with the allocation of the proceeds, as described above.
Issuance costs allocated to the derivative
warrant liability were immediately expensed.
Issuance costs allocated to straight loan
are recorded as a discount of the straight loan and accreted over the contractual term of straight loan up to face value of such loans
using the effective interest method.
R.
Warrants
Certain warrants that
were issued to a commercial bank as part of entering into a straight loan and to seller through transaction in which certain identified
intangible assets have been purchased are classified as a component of permanent equity since they are freestanding financial instruments
that are legally detachable and separately exercisable, do not embody an obligation for the Company to repurchase its own shares, and
permit the holders to receive a fixed number of Ordinary Shares upon exercise for a fixed exercise price and thus, are considered as indexed
to the Company's own shares. In addition, the warrants must require physical settlement and may not provide any guarantee of value or
return. As such warrants were issued together with financial instruments that are not subsequently measured at fair value the warrants
were measured based on allocation of the proceeds received by the Company in accordance with the relative fair value basis. When applicable,
direct issuance expenses that were allocated to such warrants were deducted from additional paid-in capital.
Commencing January 1,
2018 and following the early adoption of ASU 2017-11, "Earnings Per Share" (ASU 2017-11), the Company disregards the down
round feature when assessing whether an instrument is indexed to its own shares, for purposes of determining liability or equity classification.
Based on its evaluation, management has determined that certain warrants with down-round protection are eligible for equity classification.
In accordance with the provisions of ASU 2017-11, upon the occurrence of an event that triggers down round protection (i.e., when the
exercise price of the warrants is adjusted downward because of the down round feature), the effect is accounted for as a deemed dividend
and as a reduction of income available to common shareholders for purposes of basic earnings per share (EPS) calculation. However, during
the reported periods there were no events that trigger a down round protection.
S.
Derivative Warrants Liability
Certain warrants that
were granted by the Company for commercial bank through funding transaction entitle the bank to exercise the warrants for a variable number
of shares and/or for a variable exercise price and thus the fixed-for-fixed criteria is not met. Accordingly, the warrants were classified
as a non-current liability according to the provisions of ASC 815-40, "Derivatives and Hedging - Contracts in Entity's Own
Equity" ("ASC 815-40"). The Company accounted for these warrants as a financial derivative liability measured upon initial
recognition and on subsequent periods at fair value by using the Hybrid Method by combining the OPM and an IPO scenario.
The fair value of the
aforesaid warrants derivative liability is estimated using the Black-Scholes Model which requires inputs such as the expected term of
the warrants, share price volatility and risk-free interest rate. These assumptions are reviewed on a regular basis and changes in the
estimated fair value of the outstanding warrants are recognized each reporting period as part of the "Financing (income) expenses,
net" line in the consolidated statements of operations and comprehensive loss, until such warrants are exercised or expired. When
applicable, direct issuance expenses that were allocated to the above warrants were expensed as incurred.
F-
15
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 2
- SIGNIFICANT ACCOUNTING POLICIES (Cont.)
T.
Modifications or exchanges of loans
Modifications to, or
exchanges of, financial instruments such as loans or convertible loans, are accounted for as a modification or an extinguishment, following
to provisions of ASC 470-50, "Debt – Modification and Extinguishments" (ASC 470-50
)
.
Such an assessment done by management either qualitatively or quantitatively based on the facts and circumstances of each transaction
.
Under ASC 470-50, modifications
or exchanges are generally considered extinguishments with gains or losses recognized in current earnings if the terms of the new debt
and original instrument are substantially different. The instruments are considered "substantially different" when the present
value of the cash flows under the terms of the new debt instrument is at least
10
% different from the present value of the remaining cash
flows under the terms of the original instrument
.
If the terms of a debt
instrument are changed or modified and the present value of the cash flows under the terms of the new debt instrument is less than
10
%,
the debt instruments are not considered to be substantially different, except in the following two circumstances: (i)
the
transaction significantly affects the terms of an embedded conversion option, such that the change in the fair value of the embedded conversion
option (calculated as the difference between the fair value of the embedded conversion option immediately before and after the modification
or exchange) is at least
10
% of the carrying amount of the original debt instrument immediately before the modification or exchange or
(ii)
the transaction adds a substantive conversion option or
eliminates a conversion option that was substantive at the date of the modification or exchange
.
If the original and
new debt instruments are considered as "substantially different", the original debt is derecognized and the new debt is initially
recorded at fair value, with the difference recognized as an extinguishment gain or loss under financial expense or income as applicable
.
If a convertible debt
instrument with a beneficial conversion option that was separately accounted for in equity, is extinguished prior to its conversion or
stated maturity date, a portion of the reacquisition price is allocated to the repurchase of the beneficial conversion option. The amount
of the reacquisition price allocated to the beneficial conversion option is measured using the intrinsic value of that conversion option
at the extinguishment date. The residual amount, if any, is allocated to the convertible debt instrument
.
The gain or loss on
the extinguishment of the convertible debt instrument is determined based on the difference between the carrying amount and the fair value
of the allocated reacquisition price.
U.
Basic and diluted net loss per Ordinary Share
The Company applies
the two-class method as required by ASC 260-10, "Earnings Per Share" ("ASC 260-10") which requires the
income or loss per share for each class of shares (ordinary and all other shares with preferences over Ordinary Shares) to be calculated
assuming
100
% of the Company's earnings are distributed as dividends to each class of shares based on their contractual rights. No dividends
were declared or paid during the reported periods. According to the provisions of ASC 260-10, the Company's Convertible Preferred
Shares and Convertible Ordinary 1 and 2 Shares do not have contractual obligation to share losses of the Company and therefore are not
included in the computation in period of net loss per share.
Basic net loss per Ordinary
Share is computed by dividing the net loss for the period applicable to ordinary shareholders, by the weighted average number of Ordinary
Shares outstanding during the period. Diluted loss per share gives effect to all potentially dilutive common shares outstanding during
the year using the treasury stock method with respect to shares with preferences over Ordinary Shares (Convertible Ordinary 1 and 2 shares
and Convertible Preferred Shares), share options and certain warrants and using the if-converted method with respect to convertible advance
investments and certain warrants accounted for as derivative liability. In computing diluted loss per share, the average share price for
the period is used in determining the number of shares assumed to be purchased from the exercise of share options or warrants.
During the years ended
December 31, 2022, 2021 and 2020, the total weighted average number of Ordinary Shares related to outstanding shares with preferences
over Ordinary Shares (Convertible Ordinary 1 and 2 shares and Convertible Preferred Shares), share options, warrants and convertible advance
investments excluded from the calculation of the diluted loss per share was
9,067,438
,
8,957,327
and
8,842,202
, respectively.
F-
16
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 2 - SIGNIFICANT
ACCOUNTING POLICIES (Cont.)
V.
Convertible Advance Investments
Upon initial recognition, the Company
has considered the provisions of ASC 480-10 "Distinguishing Liabilities from Equity" with respect to certain obligations to
issue a variable number of shares and has determined that the convertible advance investments represent a financial liability since most
of its settlement alternatives embody either a conditional or an unconditional obligation to issue a variable number of the Company's
shares with monetary value based predominantly on a fixed monetary amount known at inception (the original issue price of the convertible
advance investments together with a fixed  return to the investors).
Upon initial recognition, the Company
has considered the provisions of ASC 815-15, "Derivatives and Hedging - Embedded Derivatives", and determined that the
embedded conversion feature of the convertible advance investments cannot be considered as clearly and closely related to the host debt
instrument. However, it was determined that the embedded conversion feature should not be separated from the host instrument because the
embedded conversion option, if freestanding, did not meet a derivative definition based on the provisions of ASC 815-10, "Derivatives
and Hedging" since its terms did not require or permit net settlement. Thus, it was determined that the conversion feature
does not meet the characteristic of being readily convertible to cash. However, the Company has determined that the redemption feature
upon certain events is not solely within the Company's control under which the Company will be required to repay an amount equal to
200
%
of the original investment was determined to represent a contingent interest feature that requires bifurcation from a host debt contract
because the contingent interest feature meets a derivative definition and the economic characteristics of the embedded feature are not
clearly and closely related to those of host debt instrument as such feature is not directly credit risk related.
Furthermore, the Company applied ASC 470-20,
"Debt - Debt with Conversion and Other Options" ("ASC 470-20") which clarifies the accounting for instruments with
Beneficial Conversion Features (BCF) or contingently adjustable conversion ratios and has applied the BCFs guidance to determine whether
the conversion feature is beneficial to investors. However, as the convertible advance investments were not convertible upon inception
(such instrument would have become convertible if the Company would have completed qualified financing by August 5, 2020), it was determined
that no BCF was required to be recognized upon initial recognition of the instrument.
Based on the characteristics of the convertible
advance investments, the Company elected to measure this liability in its entirety, at its fair value in accordance with ASC 825-10, "Financial
Instruments" due to the existence of certain redemption option and the potential requirement to recognize contingent BCF. Accordingly,
upon initial recognition and in subsequent periods, the Company measures the liability related to the convertible advance investments
based on its fair value taking into consideration, among others all relevant settlement possibilities and their respective likelihood.
W.
Capital contribution from a controlling shareholder
The fair value of the benefit received
in respect of loan received from the controlling shareholder is calculated on the basis of the difference between the interest rate that
the Company would have required to pay for similar loan from commercial bank and the interest rate that the Company is actually charged
under the agreement with the controlling shareholders. Such benefit is accounted for as capital contribution received from the controlling
shareholder as additional paid-in capital and it is recorded as discount on the loan received against at the initial measurement date.
Subsequently, such discount is expensed over the economic life of the loan based on the effective interest rate method.
F-
17
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 2 -
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
X.
Share-based compensation
The Company measures
and recognizes compensation expense for all equity-based payments to employees based on their estimated fair values in accordance with
ASC 718, "Compensation-Stock Compensation". Share-based payments are recognized in the Statement of Operations and Comprehensive
Loss as an operating expense based on fair value of the award at the grant date by using Black-Scholes option-pricing model. The inputs
for the valuation analysis of the share options include several assumptions of which the most significant are the fair market value of
the underlying Ordinary Share, the expected share price volatility and the expected option term. Expected volatility was calculated based
upon historical volatility of peer companies in the same industry on daily basis since the Company's marketability is considered low.
The expected option term represents the period that the Company's share options are expected to be outstanding and is determined
based on the simplified method until sufficient historical exercise data will support using expected life assumptions. The risk-free interest
rate is based on the yield from U.S. treasury bonds with an equivalent term. The expected dividend yield assumption is based on the Company's
historical experience and expectation of no future dividend payouts. The Company has historically not paid cash dividends and has no foreseeable
plans to pay cash dividends in the future. The Company expensed compensation costs net of estimated forfeitures over the requisite service
period by applying the straight-line method.
The fair value of
Ordinary Shares underlying the share options was determined by the Company's management with the assistance of an independent valuation
firm. Because there has been no public market for the Ordinary Shares, the Company's management has determined fair value of the Ordinary
Shares at the time of grant by considering several objective and subjective factors including data from other comparable companies, sales
of Convertible Preferred Shares to unrelated third parties, operating and financial performance, the lack of liquidity of share capital
and general and industry specific economic outlook, amongst other factors. The fair value of the underlying Ordinary Shares shall be determined
by management until such time as the ordinary shares are listed on an established stock exchange, national market system or other quotation
system. For all reported periods through December 31, 2020, the valuations were performed using the Option Pricing Method ("OPM").
Commencing June 30, 2021, the valuations were performed using Hybrid Method by combining the OPM and an IPO scenario.
Commencing January
1, 2019, following the adoption of ASU 2018-07 which aligns the measurement and classification guidance for share-based payments to nonemployees
with the guidance for share-based payments to employees (with certain exceptions), share-based payments to non-employees are accounted
in accordance with ASC 718.
When applicable,
a modification to the terms and/or conditions of an award (i.e. a change of award's fair value, vesting conditions or classification
as an equity or a liability instrument) is accounted for as an exchange of the original award for a new award resulting in total compensation
cost equal to the grant-date fair value of the original award, plus the incremental value of the modification to the award. The calculation
of the incremental value is based on the excess of the fair value of the modified award following the modification over the fair value
of the original award measured immediately before its terms were modified.
NOTE 3 - OTHER
CURRENT ASSETS
As of
December 31,
2022
2021
Prepaid expenses
$
32
$
33
Government authorities
15
22
Others
17
11
$
64
$
66
F-
18
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 4 - PROPERTY AND EQUIPMENT,
NET
As of
December 31,
2022
2021
Computers and peripheral equipment
$
95
$
93
Office furniture and equipment
42
42
137
135
Less - accumulated depreciation
(
122
)
(
114
)
Total property and equipment, net
$
15
$
21
During the years ended December
31, 2022, 2021 and 2020, total depreciation expenses were $
8
, $
16
and $
32
, respectively.
NOTE 5 - INTANGIBLE ASSETS,
NET AND GOODWILL
As of
December 31,
2022
2021
Carrying amount:
Technology
$
2,007
$
2,007
Customer relationships
1,127
1,127
Trade names
201
201
$
3,335
$
3,335
Accumulated amortization:
Technology
$
2,007
$
2,007
Customer relationships
1,127
1,127
Trade names
134
114
3,268
3,248
Intangible assets, net
$
67
$
87
During the years ended December
31, 2022, 2021 and 2020, total amortization expenses were $
20
, $
177
and $
647
, respectively.
As of December 31, 2022, the
estimated future amortization expense of intangible assets is as follows:
2023
$
20
2024-2026
47
$
67
As of December 31, 2022 and 2021, the Company performed an annual impairment analysis with respect to goodwill and due to continued losses,
an impairment analysis was performed also with respect to the remaining balance of intangible assets. The analysis was based on valuation
performed by management using the assistance of third-party appraiser by using the income approach. The significant assumptions used for
the assessment were a discount rate of
25.3
% and
25.5
% as of December 31, 2022 and 2021, respectively, and long-term growth rate of
3
%
as of December 31, 2022 and 2021. The measurement was classified at level 3 in the fair value hierarchy whereby it was determined
that impairment is not required to be recognized with respect to goodwill or intangible assets as of December 31, 2022 and 2021.
F-
19
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 6 - LOANS,
NET
A.
Loan and Security Agreements with Silicon Valley Bank
1.
On February 19, 2017, the Company and Beamr Inc. entered into a Loan and Security Agreement (the "2017
Loan Agreement") with Silicon Valley Bank (the "SVB"), under which the Company had a right to borrow from SVB up to
$
3,000
bearing interest at a floating per annum rate equal to the Wall Street Journal Prime Rate plus
3.5
% (upon occurrence of 'default
event' as defined in the 2017 Loan Agreement, the Aggregate Loan Principal Amount shall bear interest at a rate per annum which is
5
%
above the rate that is otherwise applicable thereto) which shall be payable monthly.
In June 2018, the
Company drew down a cash amount in the aggregate principal amount of $
3,000
(the "Loan") payable in 36 equal installments
on a monthly basis commencing the following month after drawing down. The Loan is sometimes referred to herein as a "straight loan".
In connection with
the execution of the 2017 Loan Agreement, the Company issued to SVB a warrant to purchase over a period of 15-years from the issuance
date of the warrant (i)
41,040
Series C Convertible Preferred Shares at an exercise price of $
5.12
per share or (ii)
41,040
shares to
be issued in the 'next round' (as defined in the Agreement) at an exercise price equal to the lowest price per share at which the Company
will sell and issue shares of the Next Round Shares (the "2017 Warrant").
Upon initial recognition,
the management by assistance of third-party appraiser allocated the net cash proceeds received based on the relative fair value of the
Loan and the detachable 2017 Warrant in total amount of $
2,875
and $
125
, respectively. The amount allocated to the 2017 Warrant was classified
as a component of permanent equity (as their terms permit the holder to receive a fixed number of Ordinary Shares upon exercise for a
fixed exercise price) and the same amount was presented as a discount of the loan component.
In subsequent periods,
the Loan is accounted for using the effective interest method over the Loan term, until its stated maturity. Consequently, the Company
recorded expenses amounting to $
12
and $
59
related to amortization of discount and interest expenses of the Loan under finance expenses
line in the consolidated Statement of Operations and Comprehensive Loss for the years ended December 31, 2022 and 2021, respectively.
To secure its obligations
under the 2017 Loan Agreement, the Company provided a fixed and floating collateral on all its assets (including its intellectual property).
On April 15, 2020,
the Company entered into deferral agreement with SVB in connection with the 2017 Loan Agreement under which the original monthly repayment
date for the remaining principal due from May 2020 to October 2020 was extended by a period of six months commencing November 2020. However,
management has determined that such modification of terms does not represent extinguishment of the original Loan, as the Loan before and
after the modification was not considered as "substantially different" in accordance with the provisions of ASC 470-50.
On April 29, 2021
(the "Deferral Effective Date"), the Company entered into a second deferral agreement in connection with the straight loan
made under the 2017 Loan Agreement with SVB, under which it was agreed that the original monthly repayment dates for the remaining balance
of the principal due from May 2021 to October 2021 (amounting to $
667
as of that date) shall be extended by a period of six months commencing
November 2021. In consideration, the Company was required to (i) pay SVB a deferral facility fee equal to $
50
which shall be fully earned
at the Deferral Effective Date, and payable in 10 monthly equal installments over the period commencing April 29, 2021 through January
29, 2022 (the "Facility Fee"); (ii) reimburse SVB for all reasonable legal fees and expenses incurred in connection with the
Deferral Agreement and (iii) issue SVB warrants to purchase
9,764
shares (the "2021 Warrant") at an exercise price of $
5.12
per share (subject to standard adjustments) over a period of 15-years at SVB's discretion into either to Series C Convertible Preferred
Shares or class of securities sold and issued by the Company in the next equity financing round (as determined in accordance with the
warrant agreement for the 2021 Warrant (the "Warrant Agreement")) . If SVB exercises the 2021 Warrant and the Warrant Value
(as defined in and determined in the Warrant Agreement) will be lower than an amount of $
50
(the "Minimum Value"), then immediately
following such exercise, the Company shall pay SVB an amount in cash equal to the difference between the Minimum Value and Warrant Value.
The 2021 Warrant was issued on April 29, 2021.
F-
20
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 6 - LOANS,
NET (Cont.)
A.
Loan and Security Agreements with Silicon Valley Bank (Cont.)
1.
(Cont.)
Upon the modification
of the terms under the 2017 Loan Agreement, the Company has considered the provisions of ASC 470-50 "Debt - Modification or Extinguishment"
("ASC 470-50"), and based on such assessment, management has determined by using the assistance of a third-party appraiser
that the fair value of the modified loan (including the Facility Fee) plus the fair value of the 2021 Warrant granted are considered as
substantially different than the fair value of the original straight loan prior to the modification date. As per the provisions of ASC
470-50, it was determined that the modification represents an extinguishment of the original straight loan. Accordingly, the Company derecognized
the remaining balance of the original straight loan in the total amount of $
672
and recorded an amount of $
712
which represented the fair
value of the modified loan (including the Facility Fee) and the fair value of the issued 2021 Warrant in a total amount of $
50
as non-current
financial liability as their terms permit the holders to receive a variable number of Ordinary Shares upon exercise and as such, the 2021
Warrant is subject to a minimum fair value mechanism. Changes in the estimated fair value of the 2021 Warrant are recognized each reporting
period under Financing Expenses, net in the consolidated Statement of Operations and Comprehensive Loss, until the 2021 Warrant is exercised
or expired, as earlier. See also Note 8.
In June 2022, the
Loan was fully repaid.
2.
On February 17, 2022, the Company entered into a Loan and Securities Agreement (the "2022 Loan Agreement")
with SVB, according to which commencing as of August 1, 2022 through December 31, 2022, SVB may, in its sole discretion in each instance,
pursuant to the Company's request, finance specific eligible accounts receivables of the Company, as determined in the 2022 Loan
Agreement, in a total amount equal to the face amount of the eligible account multiplied by a rate of
80
%, subject to reduction by SVB
in its discretion (the "Advance"), provided that the aggregate amount of all outstanding Advances shall not exceed the lesser
of (i) an aggregate principal amount equal to $
350
, the ("Revolving Line"), or (ii)
80
% of all eligible accounts minus the
sum of all outstanding principal amounts of any Advances, subject to reduction by SVB in its discretion. The outstanding principal amount
of any Advance shall accrue interest at a floating rate per annum equal to the greater of (i)
8.25
% and (ii) a floating per annum rate
equal to the Wall Street Journal Prime Rate plus
5
% (upon occurrence of a 'default event' as defined in the 2022 Loan Agreement, the aggregate
loan principal amount shall bear interest at a rate per annum which is
5
% above the rate that is otherwise applicable thereto). Interest
on the principal amount of each Advance will be payable in monthly arrears (i) on each the last day of each month and (ii) on December
31, 2022 (the "Revolving Line Maturity Date"). The security interest granted in the 2022 Loan Agreement shall at all times
continue to be a first priority preferred security interest in the collateral and a first priority fixed and floating charges.
Upon making of the
initial Advance, the Company agreed to issue to SVB a warrant to purchase (i)
4,785
Series C Convertible Preferred Shares, or (ii) Ordinary
Shares in the event that the Company has listed its securities for trading on Nasdaq, or (iii) upon SVB's written irrevocable election
in its sole discretion, the same class and series, or other designation, of convertible preferred share or other senior equity security
sold and issued by the Company in the next equity financing over a 15-years period commencing the issuance date of such warrant, at an
exercise price of $
5.12
per share, provided that if the class is the next equity financing securities, then the exercise price shall be
the lowest price per share for which next equity financing securities are sold or issued by the Company.
On July 26, 2022,
the 2022 Loan Agreement was terminated, and all related collateral was released.
B.
Paycheck Protection Program Notes
On May 7, 2020 and
March 25, 2021, Beamr Inc. entered into separate Paycheck Protection Program Notes (the "PPP Notes") with SVB under which
Beamr Inc. borrowed amounts of $
75
and $
54
, respectively, (in aggregate the "PPP Amount"). The PPP Amount bears interest of
1.0
% per annum. Beamr Inc. was required make a monthly payment of principal and interest on the applicable PPP Amount, each monthly payment
to be in equal amounts such that the applicable PPP Amount was fully amortized by the maturity date which was determined as 24 months
from the date of the first PPP Note or 60 months from the date of the second PPP Note. At any time, Beamr Inc. was entitled to fully prepay
the PPP Amount without payment of penalty or premium.
The Company used
the PPP Amount for qualifying expenses which may be forgiven if it is utilized for qualifying expenses as described in the CARES Act.
In 2021, the PPP Amount was fully forgiven due to qualification for used expenses under the CARES Act and consequently the Company recorded
an amount of $
129
under other income in the consolidated Statement of Operations and Comprehensive Loss for the year ended December 31,
2021.
F-
21
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 6 - LOANS,
NET (Cont.)
C.
Funding Agreement with IBI Spikes Ltd.
On July 7, 2022 (the
"Effective Date"), the Company entered into the Definitive Agreement with IBI Spikes Ltd. (the "IBI"), according
to which the Company received an amount of NIS
3.1
million (approximately $
900
) (the "IBI Loan"). The Company granted IBI
a right to receive consecutive monthly repayments equal to Net Cash Receipts multiplied by the Royalty Rate, as both defined in the Definitive
Agreement, until such time as IBI receives an amount equal to NIS
4,172,760
(approximately $
1.2
million) (the "Repayment Amount")
with any amount on account of the Repayment Amount which remains outstanding on the 42nd month anniversary of the later of (i) the Closing
Date, and (ii) the last payment provided by IBI (the "Final Repayment Date") to be paid to IBI at such time. Notwithstanding
the above, Company's minimum annual payment during any Annual Calculation Period will not be less than the lower of (i) $
330
and
(ii) the outstanding Repayment Amount in recent year.
The Company may repay
the Repayment Amount at any time prior to the Final Repayment Date. If early repayment (such amount, the "Payment Amount")
occurs prior to 12-month anniversary date of the Effective Date, then, a
50
% discount will be applied on the outstanding difference between
the Repayment Amount and the Payment Amount (the "Rev-Share Amount") component of the outstanding Repayment Amount; or if
early repayment occurs after 12-month anniversary date of the Closing Date but before 18-month anniversary date of the Closing Date, then,
a
35
% discount will be applied on the outstanding Rev-Share Amount of the outstanding Repayment Amount (the "Early Repayment Amount").
In case the Company
and/or its subsidiaries consummates a change of control, merger transaction, IPO (excluding an IPO on the Nasdaq Capital Market (the "Nasdaq"))
or sale of all or substantially all of assets (the "Exit Event"), the Company shall fully pay IBI the Repayment Amount or
the Early Repayment Amount, as the case may be.
The Company incurred
non-refundable one-time fee of $
13
, reflecting
1.5
% of the Payment Amount plus VAT.
Upon making of the
Payment Amount, the Company issued warrant to IBI to purchase
65,563
of (i) the most senior class of shares outstanding or (ii) Ordinary
Shares in case of an exercise following to completion of an IPO transaction (the "Warrant Share"). The exercise price for
each of the Warrant Share, shall be as follows:
1.
If financing round in consideration for an aggregate investment of at least $
10,000
(including the Investment
Amount and any additional amount provided to the Company under any additional AIA) (the "Qualified Financing") occurs within
12 months following the Effective Date consummates, the exercise price for each Warrant Share, will be the price per share in such Qualified
Financing, less a
20
% discount and the shares type upon conversion of the Warrant Share shall have the same rights and preferences as
attached to the shares issued to the investors in such Qualified Financing. If transactions consummated in such closings are not on the
same terms and conditions and/or involve the issuance of more than one type of Company's securities, then, the shares type upon conversion
of the Warrant Share shall have the most favorable terms of such closing.
2.
If a Non-Qualified Financing occurs, IBI shall have the right but not the obligation to elect, by delivery
of written notice to the Company no later than 30 days from the receipt of a written notice from the Company setting forth the terms and
conditions of such Non-Qualified Financing, to determine that the exercise price for each Warrant Share, will be the price per share in
such Non-Qualified Financing, less a
20
% discount and the shares type upon conversion of the Warrant Share shall have the same rights
and preferences as attached to the shares issued to the investors in such Non-Qualified Financing. If transactions consummated in such
closings are not on the same terms and conditions and/or involve the issuance of more than one type of Company's securities, then, the
shares type upon conversion of the Warrant Share shall have the most favorable terms of such closing.
3.
In the event the Company has not consummated (a Qualified Financing or an Realization Event (as defined
in the Definitive Agreement) within period of 12 months of the Effective Date of the Definitive Agreement, IBI shall have the right but
not the obligation to elect, by delivery of written notice to the Company no later than 30-days from the receipt of a written notice from
the Company, to determine that the exercise price for each Warrant Share will be based on Company value of $
62,500
divided by the then
fully diluted number of Company shares and the shares type upon conversion of the Warrant Share shall have the same rights of the Company's
most senior class of shares then outstanding.
4.
In the event of Realization Event, the exercise price for each Warrant Share will be the price per share
in such Financing, less a
20
% discount, and the shares type upon conversion of the Warrant Share shall have the Company's Most Senior
Shares, or Ordinary Shares in case the Realization Event is an IPO.
Each Warrant Share
is exercisable until the earlier of (a) M&A, (b) IPO, or (c) a
10
-years period from the issuance date and shall be in customary form
approved by IBI and shall contain standard and customary provisions.
As the exercise price
of the Warrant Share will be determined based on the occurrence of one of the aforesaid trigger events, the Warrant Share was accounted
for as a derivative financial liability. (See note 8).
F-
22
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS (Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 6 - LOANS,
NET (Cont.)
C.
Funding Agreement with IBI Spikes Ltd. (Cont.)
Pursuant to the above,
at the Effective Date, management by assistance of third-party appraiser allocated the IBI Loan to identified components as follows:
As of Closing Date
Derivative warrant liability (see Note 8)
$
78
Straight loan
822
Total gross consideration
$
900
Total incremental and direct debt costs of $
1
and $
12
were allocated to Warrant Share and straight loan, respectively, based on their
relative value at the Effective Date. The portion of issuance costs allocated to Warrant Share was recognized immediately as finance expenses
in the consolidated statements of operations and comprehensive loss and the portion of issuance costs allocated to straight loan was deducted
from the principal amount.
D.
The following tabular presentation reflects the reconciliation of the carrying amount of the Company's
loans during the years ended December 31, 2022, 2021:
Year ended  December 31,
2022
2021
2020
Opening balance
$
508
$
1,069
$
1,469
Consideration received from PPP Note
-
54
75
Net consideration received from IBI Loan
887
-
-
Recognition of fair value of derivative warrant liability
(
88
)
-
-
PPP Note forgiveness (see also Note 6B)
-
(
129
)
-
Amortization of discounts relating to straight loan (see also Note 13)
14
14
29
Accrued interest expenses relating to straight loan (see also Note 13)
77
45
91
Repayment of accrued interest relating to straight loan
(
77
)
(
45
)
(
91
)
Repayment of Facility Fee relating to straight loan
(
10
)
(
40
)
-
Repayment of principal relating to straight loans
(
582
)
(
500
)
(
504
)
Derecognition due to extinguishment of original straight loan
-
(
672
)
-
Recognition subsequent to substantial modification of terms
-
712
-
Exchange rate differences
(
12
)
-
-
Closing balance
$
717
$
508
$
1,069
E.
Maturity dates of outstanding loans:
As of
December 31,
2022
2021
First year (current maturities) (*)
$
164
$
508
Second year
288
-
Third year
265
-
Closing balance
$
717
$
508
(*)
As described in Note 6C above, the Company is required to repay
each year a minimum amount of $
330
with respect to Repayment Amount (principal and interest).
F-
23
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 7 - OTHER
CURRENT LIABILITIES
As of
December 31,
2022
2021
Employees and payroll accruals
$
298
$
341
Accrued expenses (*)
85
126
Government authorities
42
33
$
425
$
500
(*)
Including accrued interest relating to straight loan amounted
to $
11
as of December 31, 2022. See also Note 13.
NOTE 8 - DERIVATIVE
WARRANTS LIABILITIES
The following tabular presentation
reflects the reconciliation of the fair value of derivative warrants liabilities during the years ended December 31, 2022, 2021 and 2020:
Year ended  December 31,
2022
2021
Opening balance
$
50
$
-
Recognition of fair value of 2021 Warrant issued upon substantial modification of terms (see Note 6A1)
-
50
Recognition of fair value of Warrant Share issued at Effective Date (see Note 6C)
88
-
Closing balance
$
138
$
50
The fair values of the 2021
Warrant and the Warrant Share were determined by the Company's management with the assistance of an independent valuation firm by using
the Hybrid Method by combining the OPM and an IPO scenario. Because there has been no public market for the Ordinary Shares, the Company's
management has determined fair value of the Ordinary Shares at the time of grant by considering several objective and subjective factors
including data from other comparable companies, the lack of liquidity of share capital and general and industry specific economic outlook,
amongst other factors. The fair value of the underlying Ordinary Shares shall be determined by management until such time as the Ordinary
Shares are listed on an established stock exchange, national market system or other quotation system.
Through December 31, 2022, the
estimated fair values of derivative liability for the 2021 Warrant and Warrant Share have not changed significantly and the 2021 Warrant
and Warrant Share have not been exercised.
F-
24
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 9 - CONVERTIBLE
ADVANCE INVESTMENT
On August 25, 2021 and August
6, 2019, the Company entered into separate Advance Investment Agreements (the "AIA") with several current shareholders (the
"2021 AIA Investors", "2019 AIA Investors" and together the "AIA Investors") under which the Company
raised an amount of $
560
and $
3,097
, respectively, (together the "AIA Investment Amounts") which is not interest bearing but
is eligible for conversion into shares of the Company, based on the following terms:
1.
In the event of a consummation by the Company of a transaction or series of related transactions in which
the Company issues preferred shares for an aggregate investment of at least $
10,000
(including the AIA Investment Amounts and any additional
amount provided to the Company under any additional AIA Agreement(s)) (the "AIA Qualifying Financing"), the AIA Investment
Amounts shall automatically be converted immediately prior to the consummation of such Qualified Financing into such number of preferred
shares (or a sub-class thereof) issued in such Qualified Financing (the "Next Round Shares"), as is obtained by dividing the
AIA Investment Amounts by a price per share which shall reflect a
20
% discount off the lowest price per share paid in the AIA Qualified
Financing.
2.
In the event of a consummation by the Company of a transaction or series of related transactions in which
the Company issues preferred shares in consideration for an aggregate investment of less than $
10,000
(including the AIA Investment Amounts
and any additional amount provided to the Company under any additional AIA Agreement(s)), or which for any other reason would not be deemed
as a AIA Qualified Financing (the "AIA Non-Qualified Financing"), then each time when the Company consummates such Non-Qualified
Financing, the AIA Investors shall have the right (but not the obligation) to elect to be converted immediately prior to the consummation
of such Non-Qualified Financing the AIA Investment Amounts into the shares and/or securities issued and sold at the closing of such Non-Qualified
Financing in accordance with
20
% discount off the price per share paid in the Non-Qualified Financing.
3.
In the event that the Company has not consummated a AIA Qualified Financing or an Exit Event (as defined
below) and the AIA Investment Amounts or any portion thereof has not been converted in accordance with the terms of the AIA Agreements
by August 26, 2022, then, the 2021 AIA Investors shall have the right (but not the obligation) to elect, by delivery of written notice
to the Company no later than 30 days from the receipt of a written notice from the Company, to convert their AIA Investment Amount into
such number of shares of the Company of the most senior class then outstanding (the "Most Senior Shares"), equal to the quotient
received by dividing their AIA Investment Amount by a price per share reflecting a pre-money valuation of the Company (determined on a
fully diluted basis as of the date of the conversion) of $
62,500
("AIA Target Valuation").
4.
In the event of the consummation of an Acquisition or an Asset Transfer (as defined in the Company's Articles
of Association), each, an "Exit Event", then immediately prior to the closing of such Acquisition or Asset Transfer, the AIA
Investors shall either elect, at its discretion, to (i) convert the AIA Investment Amounts into such number of Most Senior Shares, as
is obtained by dividing the AIA Investment Amounts by the quotient obtained by dividing (A) the AIA Target Valuation by (B) the issued
and outstanding share capital of the Company, on a fully diluted basis, as of immediately prior to the closing of the Acquisition or Asset
Transfer, as applicable, excluding any shares to be issued under the AIA Agreement); or (ii) receive, prior and in preference to payment
in respect of other Company securities, a redemption payment equal to
200
% of the AIA Investment Amounts.
5.
In connection with the effectiveness of the Company's initial public offering of its Ordinary Shares
on the Nasdaq (see Note 17), the AIA Investment Amounts automatically converted into Ordinary Shares at a conversion price equal to
80
%
of the initial public offering price of $
4.00
.
In addition to the mechanism
for the repayment of the investment through shares, subject to the scenarios set out above, the AIA Agreements provide that upon the occurrence
of certain bankruptcy related events, the Company will be required to pay the AIA Investors in cash the amount of their original investment.
Moreover, upon entry into the
AIA, the Company entered into a subordination agreement under which the AIA Investors agreed that all of the Company's indebtedness
and obligations to the AIA Investors pursuant to the AIA is subordinated to all of the Company's indebtedness and obligations to
SVB under the Loan Agreement. See also Note 6A.
As described in Note 2V, based
on the characteristics of the convertible advance investments (and its embedded derivatives), the Company elected to measure this liability
in its entirety, at its fair value (the "Fair Value Option") in accordance with ASC 825-10, "Financial Instruments"
due to the existence of a certain redemption option and the potential requirement to recognize contingent BCF. Measurement of the fair
value of the convertible advance investments was classified as level 3 of the fair value hierarchy, using the scenario method.
F-
25
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 9 - CONVERTIBLE
ADVANCE INVESTMENT (Cont.)
The following tabular presentation
reflects the reconciliation of the carrying amount of the convertible advance investment during the years ended December 31, 2022, 2021
and 2020:
Year ended December 31,
2022
2021
2020
Opening balance
$
4,770
$
3,922
$
3,486
Net consideration received
-
560
-
Change in the fair value of convertible advance investments (see also Note 13)
70
288
436
Closing balance
$
4,840
$
4,770
$
3,922
NOTE 10 - COMMITMENTS
AND CONTINGENT LIABILITIES
A.
Lease commitments
1.
On July 29, 2020, the Company entered into a lease agreement for premises with an unrelated party over
a period commencing August 24, 2020 through February 28, 2021, for a monthly rental fee amounted of NIS
18
(approximately $
5.6
).
In January 2021,
the Company renewed its lease agreement with an unrelated party for the period commencing March 1, 2021 through August 31, 2021 for a
monthly fee of NIS
17
thousand (approximately $
5.3
). In August 2021, the Company renewed its lease agreement with an unrelated party for
a further period commencing September 1, 2021 through February 28, 2022 for a monthly fee of NIS
21
thousand (approximately $
6.5
).
In February 2022,
the Company renewed its lease agreement with an unrelated party for a period commencing March 1, 2022 through August 31, 2022 for a monthly
fee of NIS
23
thousand (approximately $
7.4
). In August 2022, the Company renewed its lease agreement with an unrelated party for the period
commencing September 1, 2022 through August 31, 2023 for a monthly fee of NIS
25
thousand (approximately $
7.1
).
2.
On November 1, 2020, Beamr Imaging RU entered into a lease agreement for premises with an unrelated party
over a period until September 30, 2021, for a monthly a rental fee of Russian Ruble 200 (approximately $3).
On October 1, 2021,
Beamr Imaging RU entered into a lease agreement for premises with an unrelated party over a period until August 30, 2022, for a monthly
a rental fee of Russian Ruble 213 (approximately $
3
). In September 2022, Beamr Imaging RU renewed its lease agreement for the period commencing
September 1, 2022 through July 31, 2023 for a monthly fee of Russian Ruble 213 (approximately $
3
).
As of December 31,
2022, the future minimum commitment under binding short-term operating lease agreements is as follows:
Lease of
premises
2023
$
77
$
77
The payments above are associated with short-term operating leases of premises with a lease term of twelve months or less. As the Company
elected the short-term recognition exemption (see also Note 2I), such leases are out of scope of ASC 842 "Leases". Consequently,
these payments are recognized on a straight-line basis as an operating expense in the Consolidated Statements of Operations and Comprehensive
Loss.
During the years
ended December 31, 2022, 2021 and 2020, the total lease expenses were $
119
, $
115
and $
167
, respectively.
B.
Grant of share options upon completion of an IPO transaction
On March 14, 2022,
the Company's shareholders approved, among other matters, that upon completion of the IPO transaction, each of the member of the Company's
Board of Directors (except the Founder which serves inter alia as the Board chairman) will be entitled to
19,000
share options to purchase
the same number of Ordinary Shares at an exercise price that will be equal to the listing price per share over a vesting schedule on a
monthly basis over 36-months period commencing the listing date. However, as the grant is contingent upon a performance condition (successful
IPO) which is out of the Company's control, the related expenses will be recognized when the IPO will occur. Accordingly, compensation
cost relating to such obligation has not been recorded in 2022.
F-
26
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 11 - SHAREHOLDERS' EQUITY
(DEFICIT)
Composition of shareholders' equity (deficit):
As of
December 31, 2022
As of
December 31, 2021
Authorized
Issued and
outstanding
Authorized
Issued and
outstanding
Number of shares
Shares of NIS 0.05 par value:
Series Ordinary Shares (A)
14,307,116
2,578,760
14,316,880
2,578,760
Series Convertible Ordinary 1 Shares (B)
607,680
607,680
607,680
607,680
Series Convertible Ordinary 2 Shares (B)
889,200
889,200
889,200
889,200
Series Convertible B Preferred Shares (B)
2,047,200
2,047,200
2,047,200
2,047,200
Series Convertible B1 Preferred Shares B)
738,240
738,240
738,240
738,240
Series Convertible C Preferred Shares (B)
3,410,564
2,928,960
3,400,800
2,928,960
Total
22,000,000
9,790,040
22,000,000
9,790,040
A.
The Ordinary Shares confer upon the holders thereof all rights
accruing to a shareholder of the Company, as provided in the Company's Articles of Association (the "Articles"), including,
without limitation, the right to receive notices of, and to attend, all general meetings, the right to vote thereat with each Ordinary
Share held entitling the holder thereof to one vote at all general meetings (and written actions in lieu of meetings), the right to participate
and share on a per share basis, in any distribution and in distribution of surplus assets and funds of the Company in the event of a
liquidation event, and certain other rights as may be expressly provided for herein or under the Companies Law. All Ordinary Shares rank
pari passu amongst themselves for all intents and purposes, including, without limitation, in relation to the amounts of capital paid
or credited as paid on their nominal value. The voting, dividend and liquidation rights of the holders of Ordinary Shares are subject
to and qualified by the rights, powers and preferences of the holders of the Convertible Preferred Shares and the Convertible Ordinary
1 and 2 Shares as set below.
B.
The Convertible Ordinary 1 Shares, Convertible Ordinary 2 Shares,
Convertible B Preferred Shares, Convertible B1 Preferred Shares and the Convertible C Preferred Shares (referring together herein as
"Convertible Preferred Shares") shall confer upon the holders thereof all rights conferred upon the holders of Ordinary Shares
in the Company. In addition, the holders of Convertible Preferred Shares shall have rights, preferences and privileges, as follows:
Liquidation preference - Based
on preference of distribution, in the event of any liquidation, dissolution or winding up of the Company, whether voluntary or involuntary,
change in control or distribution, the Company's assets or surplus funds legally available for distribution shall be distributed to the
holders of Convertible Preferred Shares pursuant to which each Convertible Preferred Share will be entitled to receive
1.2
of the applicable
original issue price paid by each Convertible Preferred shareholder plus all accrued but unpaid dividends and less the aggregate of all
amounts previously paid in preference. The aggregate liquidation preference of all shares with preferences over Ordinary Shares as of
December 31, 2022 and 2021 amounted to $
33,785
. None of the foregoing dollar amounts include dividends, as the Board of Directors
has not declared any dividends since inception.
The Convertible Preferred Shares have
been classified as part of the permanent equity of the Company since upon occurrence of liquidation event all holder of the Ordinary Shares
and the Convertible Preferred Shares will be entitled to receive the same form of consideration.
Voting - Each shareholder shall
have one vote for each Ordinary Share held by such shareholder of record or such Ordinary Shares as would be held by each holder of Convertible
Preferred Share if all Convertible Preferred Shares were converted to Ordinary Shares at the then effective conversion rate, on every
resolution.
Conversion - Each holder of a
Convertible Preferred Share shall be entitled to convert, at any time and from time to time, and without payment of additional consideration,
into such number of fully paid and non-assessable shares of Ordinary Share in ratio as determined in the Articles, which initially shall
be one to one. The conversion price initially shall be the applicable Original Issue Price subject to adjustments as describe in the Articles.
All outstanding Convertible Preferred
Shares shall automatically be converted into Ordinary Shares at the then-effective conversion rate applicable upon the earlier of (i)
closing of sale of Ordinary Shares in an initial firm-commitment underwritten public offering, with net proceeds to the Company of $
50,000
and at an offering price per share equal to at least 5 times the Preferred C Original Issue Price (Qualified IPO) or (ii) affirmative
vote or written consent of majority shareholders of the then outstanding Convertible Preferred Shares, with respect to each series.
F-
27
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 11 - SHAREHOLDERS' EQUITY
(DEFICIT) (Cont.)
C.
On March 14, 2022, the Company's shareholders approved, among other matters, the following matters as
were originally approved by the Company's Board of Directors on March 1, 2022 -
1.
In connection with listing of the Company's Ordinary Shares on
Nasdaq, increase the Company's authorized shares from
22,000,000
to
222,000,000
.
2.
Approve and ratify (i)
subject to the listing of the Company's Ordinary Shares on Nasdaq, the voluntary
conversion of all the Ordinary 1, Ordinary 2, Preferred B, Preferred B-1 and Preferred B shares of the Company into Ordinary Shares (collectively,
the "Voluntary Conversion"), (ii) subject to the listing of the Company's Ordinary Shares on Nasdaq, a reverse share
split of all outstanding Ordinary Shares of the Company at a ratio of 5:1 so that each 5 ordinary shares nominal value NIS 0.01 each shall
be consolidated into 1 Ordinary Share each, and (the "Reverse Share Split") (iii) subject to the listing of the Company's
Ordinary Shares on Nasdaq, the recapitalization and redistribution of the entire share capital of the Company (the "Recapitalization"),
so that following such Voluntary Conversion and Recapitalization, the share capital of the Company shall consist of NIS 11,100,000 divided
into 222,000,000 Ordinary Shares each of which 9,790,040 are issued and outstanding (post the aforesaid Reverse Share Split).
For accounting purposes, following
the completion of the IPO transaction as noted in Note 17 below, all shares, options and warrants to purchase Ordinary Shares and loss
per share amounts have been adjusted to give retroactive effect to the Reverse Share Split for all periods presented in these consolidated
financial statements. Any fractional shares resulting from the Reverse Share Split were rounded up to the nearest whole share.
NOTE 12 - SHARE OPTIONS
Share option plan:
On January 11, 2015, the Company's Board
of Directors approved and adopted the 2015 Share Incentive Plan (the "Plan"), pursuant to which the Company's Board
of Directors may award share options to purchase the Company's Ordinary Shares as well as restricted shares, RSUs and other share-based
awards to designated participants. Subject to the terms and conditions of the Plan, the Company's Board of Directors has full authority
in its discretion, from time to time and at any time, to determine (i) the designate participants; (ii) the terms and provisions of the
respective award agreements, including, but not limited to, the number of share options to be granted to each optionee, the number of
shares to be covered by each share option, provisions concerning the time and the extent to which the share options may be exercised and
the nature and duration of restrictions as to the transferability or restrictions constituting substantial risk of forfeiture and to cancel
or suspend awards, as necessary; (iii) determine the fair market value of the shares covered by each award; (iv) make an election as to
the type of approved 102 Option under Israeli tax law; (v) designate the type of share options; (vi) take any measures, and to take actions,
as deemed necessary or advisable for the administration and implementation of the Plan; (vii) interpret the provisions of the Plan and
to amend from time to time the terms of the Plan.
The Plan permits the grant of up to
2,069,280
share Ordinary Shares subject to adjustments set in the Plan. As of December 31, 2022, considering the effect of previously exercised
share options, there were
355,530
Ordinary Shares available for future issuance under the Plan.
The following table presents the Company's
share option activity for employees and members of the Board of Directors of the Company under the Plan for the years ended December 31,
2022, 2021 and 2020:
Number of
Share
Options
Weighted
Average
Exercise
Price
$
Weighted
average
remaining
contractual
life (years)
Intrinsic
value
$
Outstanding as of December 31, 2019
1,291,810
1.65
5.94
194
Granted
353,960
1.80
9.35
Exercised
(
9,800
)
1.15
-
Forfeited or expired
(
381,970
)
1.75
-
Outstanding as of December 31, 2020
1,254,000
1.70
6.12
125
Exercisable as of December 31, 2020
839,665
1.50
4.73
252
F-
28
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 12 - SHARE OPTIONS (Cont.)
Number of
Share
Options
Weighted
Average
Exercise
Price
$
Weighted
average
remaining
contractual
life (years)
Intrinsic
value
$
Outstanding as of December 31, 2020
1,254,000
1.70
6.12
125
Granted
214,688
2.05
9.64
Forfeited or expired
(
101,520
)
1.80
-
Outstanding as of December 31, 2021
1,367,168
1.75
5.72
4,860
Exercisable as of December 31, 2021
927,988
1.60
4.25
3,429
Number of
Share
Options
Weighted
Average
Exercise
Price
$
Weighted
average
remaining
contractual
life (years)
Intrinsic
value
$
Outstanding as of December 31, 2021
1,367,168
1.75
5.72
4,860
Granted
286,875
1.83
Forfeited or expired
(
83,052
)
1.45
-
Outstanding as of December 31, 2022
1,570,991
1.78
4.97
2,435
Exercisable as of December 31, 2022
1,048,297
1.70
3.2
1,677
The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the deemed fair value of
the Company's Ordinary Shares on the last day of each of the applicable reported period and the exercise price, multiplied by the number
of in-the-money share options) that would have been received by the share option holders had all share options holders exercised their
share options on December 31 of each of the reported period. This amount is impacted by the changes in the fair market value of the
Company's Ordinary Share.
The outstanding and exercisable share options
as of December 31, 2022 have been separated into ranges of exercise prices, as follows:
Exercise price
Share options
outstanding
as of
December 31,
2022
Weighted
average
remaining
contractual
term (years)
Share options
exercisable
as of
December 31,
2022
Weighted
average
remaining
contractual
term (years)
$
$
$
0.00
152,640
2.42
152,640
1.03
1.14
228,480
1.39
228,480
1.39
1.67
43,200
2.21
43,200
2.21
1.83
982,870
6.75
489,239
4.70
3.2
35,001
6.45
10,938
6.45
3.79
60,000
1.59
60,000
1.59
4.17
28,800
3.03
28,800
3.03
5.12
40,000
6.54
35,000
6.54
1,570,991
1,048,297
The weighted average grant date fair value of share options granted during the years ended December 31, 2022, 2021 and 2020 was $
0.51
,
$
0.44
and $
0.20
per share option, respectively.
During the years ended December 31, 2022 and 2021,
share options have not been exercised into Ordinary Shares. During the year ended December 31, 2020, certain employees exercised
9,800
share options into the same number of Ordinary Shares for total consideration of $
11
.
F-
29
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 12 – SHARE OPTIONS
(Cont.)
The following table presents the assumptions used
to estimate the fair values of the share options granted in the reported periods presented:
Year ended December 31
2022
2021
2020
Volatility (%)
61.49
%
64.75
%
61.89
%-
61.91
%
Risk-free interest rate (%)
3.64
%-
3.85
%
0.09
%
0.03
%-
0.04
%
Dividend yield (%)
-
-
-
Expected life (years)
6.25
6.25
6.25
Exercise price ($)
1.83
1.80
-
3.20
1.80
Share price ($)
3.30
3.20
1.80
As of December 31, 2022, there was $
1,029
of unrecognized
compensation expense related to unvested share options. The Company recognizes compensation expense on a straight-line basis over the
requisite service periods, which results in a weighted average period of approximately
1.72
years over which the unrecognized compensation
expense is expected to be recognized.
The total compensation cost related to all of
the Company's equity-based awards recognized during the years ended December 31, 2022, 2021 and 2020 was comprised as follows:
Year ended December 31
2022
2021
2020
Research and development
$
144
$
94
$
60
Sales and marketing
49
45
48
General and administrative
29
18
12
$
222
$
157
$
120
NOTE 13 - FINANCING
EXPENSES, NET
Year ended  December 31
2022
2021
2020
Change in fair value of convertible advance investment (see Note 9)
$
70
$
288
$
436
Amortization of discount and accrued interest relating to straight loan received from commercial Bank (see Note 6 and Note 7)
102
59
120
Modification of terms relating to straight loan (see Note 6A1)
-
90
-
Amortization of discount relating to liability to related party (see Note 14)
40
-
-
Exchange rate differences and others
(
47
)
38
141
$
165
$
475
$
697
F-
30
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 14 - RELATED
PARTIES TRANSACTIONS
The liability to related party derives from a
service agreement with the Company's Founder under which the Company receives consulting services on recurring basis from the Founder
as Chief Executive Officer indirectly through an entity controlled by the Founder (the "Service Provider") for total current
monthly gross amount of NIS
45
thousand. On March 14, 2022, the Company's shareholders approved, among other matters, to renew the service
agreement with the Founder for a period ending December 31, 2025.
On February 16, 2022, the Company entered into
an addendum to the aforesaid service agreement with the Service Provider under which it was agreed that (i) the term of the service agreement
with the Service Provider was extended to December 31, 2025 and (ii) the then current liability towards the Service Provider as was accrued
for services rendered under the service agreement over a period commencing January 1, 2020 through the date hereof in total nominal amount
of $
357
(the "Current Liability") will be paid in 18 equal installments (without an interest) starting on March 1, 2022 (the
"Commencement Date"). However, in the event that the Company shall not have available sufficient funds in any such payment
date from and after the Commencement Date to repay the installments of the Current Liability and/or the on-going fee owed to the Service
Provider or in the event that the Company determines that according to the following 12-months period budget that it shall not have available
sufficient funds to pay such installments and/or the on-going fee, then the Service Provider hereby agrees to postpone such payments owed
to it until the Company will have such sufficient funds. Any unpaid on-going fee payments will be added to the Current Liability.
Since the liability towards the Founder was considered
as free interest loan which did not represent the applicable rate of risk for the Company, the aforesaid addendum was accounted for as
a capital contribution from a controlling shareholder. Thus, the liability towards the Founder was measured at fair value based on future
cash payments discounted using an interest rate of
15.45
% which represented the applicable rate of risk for the Company, as determined
by management using the assistance of third-party appraiser. As a result, the Company recorded a discount on the balance of liability
towards the Founder in total amount of $
112
against additional paid-in capital (including in respect to amounts due for services period
through fiscal year for 2022). The Company will record a discount expense over the economic life of the loan based on the effective interest
rate method. As of December 31, 2022, management has updated the repayments schedule of the obligation based on its current projection
of the availability of funds. Accordingly, the obligation is expected to be repaid over the following 24-months period.
The following tabular presentation reflects the
reconciliation of the carrying amount of the Company's Liability to related party, net during the years ended December 31, 2022,
2021 and 2020:
Year ended  December 31,
2022
2021
2020
Opening balance
$
345
$
168
$
-
Accrued liability in respect to additional services rendered
115
177
168
Recognition of capital contribution from a controlling shareholder
(
112
)
-
-
Amortization of discount relating to liability to related party
40
-
-
Closing balance
$
388
$
345
$
168
Maturity dates:
As of
December 31,
2022
2021
First year (current maturities)
$
126
$
345
Second year
262
-
Closing balance
$
388
$
345
The Company allocated the expenses related to
the above service agreement and addendum as follows:
Year ended  December 31
2022
2021
2020
Research and development
$
42
$
44
$
82
Sales and marketing
42
44
58
General and administrative
83
89
108
$
167
$
177
$
248
The allocation was done based on the management estimation to reflect the contribution to the related activity.
F-
31
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 15 - TAXES ON INCOME
A.
Israeli taxation:
Taxable income of the Company is subject
to the Israeli corporate tax at the rate of
23
%.
As of December 31, 2022, the Company
has net operating losses and capital losses carryforward for Israeli income tax purposes of approximately $
27,169
and $
409
respectively,
which can be offset against future taxable income for an indefinite period of time.
The Company has final (considered
final) tax assessments through the 2017 tax year.
B.
Foreign entities:
1.
Beamr Inc. is taxed under United States federal and state tax rules. Income tax is calculated based on
a U.S. federal tax rate of
21
%.
Beamr Inc. have not received final
tax assessments for the tax years ended December 31, 2019 through 2022.
2.
Beamr Imaging RU is taxed under the Russian tax code at the rate of 0% (Clause 1.15 of Article 284 of
the Tax Code of the Russian Federation, with changes provided by Federal Law No. 321-FZ of 14.07.2022).
Beamr Imaging RU have not received
final tax assessments for the tax years ended December 31, 2020 through 2022.
C.
Taxes on income are comprised from taxes incurred as result of (i) withholding tax deducted at source
in accordance with U.S. - Israel tax treaty related to selling of software and (ii) implementation of the intercompany agreement between
the Company and Beamr Inc. for conducting reseller services and implementation of the intercompany agreement between the Company
and Beamr Imaging RU for conducting research and development services on behalf of the Company (see also Note 1B).
D.
Loss (income) before taxes on income consists of the following:
Year ended  December 31
2022
2021
2020
Domestic
$
1,293
$
1,104
$
2,529
Foreign operations (Beamr Inc and Imaging RU)
(
97
)
(
204
)
(
165
)
$
1,196
$
900
$
2,364
E.
Deferred income taxes reflect the net tax effects of net operating loss and temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant
components of the Company's deferred tax assets are as follows:
As of
December 31
Composition of deferred tax assets:
2022
2021
Net operating loss and capital losses carry-forward
$
6,343
$
6,254
Research and development credits
438
588
Vacation accrual
48
62
Net deferred tax asset before deferred tax liabilities and valuation allowance
6,829
6,904
Valuation allowance
(
6,829
)
(
6,904
)
Net deferred tax assets
$
-
$
-
In assessing the realization of deferred
tax assets, management considers whether it is more likely than not that all or some portion of the deferred tax assets will not be realized.
The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which
temporary differences are deductible and net operating losses are utilized. Based on consideration of these factors, the Company recorded
a full valuation allowance as of December 31, 2022 and 2021.
F.
During the years ended December 31, 2022, 2021 and 2020, the main reconciling item between the statutory
tax rate of the Company (as noted in Note 15A) and the effective tax rate at the rate of
4.4
%,
5.8
% and
4.0
%, respectively, is the recognition
of valuation allowance in respect of deferred taxes relating to accumulated net operating losses carried forward and other permanent and
temporary differences due to the uncertainty of the realization of such deferred taxes and withholding taxes that were deducted by the
Company's customers.
F-
32
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 16 - SEGMENT GEOGRAPHICAL
INFORMATION AND MAJOR CUSTOMERS
A.
General information
Since inception date, the operation
of the Company is conducted through
one
operating segment, the optimization technology for video and photo compression, which represents
a single reporting unit. This activity also represents the reportable segment of the Group.
B.
Revenues by geographic region are as follows:
Year ended December 31
2022
2021
2020
United States
$
2,134
$
2,597
$
2,558
Israel
22
101
61
Rest of the world
707
602
557
$
2,863
$
3,300
$
3,176
Revenues were attributed to countries
based on customer location.
C.
Long-lived assets, net, by geographic areas:
As of
December 31,
2022
2021
Israel
$
12
$
13
United States
1
4
Russia
2
4
$
15
$
21
Such balance is comprised of property
and equipment that are attributed to the geographic area in which they are located or originated, as applicable.
F-
33
BEAMR IMAGING LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
(U.S. dollars in
thousands except share and per share amounts)
NOTE 16 - SEGMENT GEOGRAPHICAL
INFORMATION AND MAJOR CUSTOMERS (Cont.)
D.
Major customers
During the years ended December 31,
2022, 2021 and 2020, the Company had one customer which accounted for
26
%,
23
% and
23
% of the Company's total revenues, respectively.
In addition, as of December 31, 2022 and 2021, the Company had one customer which accounted for
28
% and
44
% of the Company's total trade
receivables, respectively.
E.
Major product lines and services and timing of revenue recognition
In the following table, revenue is
disaggregated by primary major product lines and services, and timing of revenue recognition for the years ended December 31, 2022, 2021
and 2020:
Year ended  December 31,
2022
2021
2020
Software license:
Perpetual based software license - transferred at a point of time
$
1,068
$
1,156
$
1,043
Term-based software license - transferred at a point of time
1,630
2,032
1,976
Total software license (*)
$
2,740
$
3,188
$
3,019
PCS services transferred over a period of time
123
112
157
Advertising at a point of time upon clicks
42
-
-
$
2,863
$
3,300
$
3,176
(*)
Revenue recognized from sales-based software license was $
48
,
$
45
and $
99
during the years ended December 31, 2022, 2021 and 2020, respectively (see also Note 2N).
NOTE 17 - SUBSEQUENT EVENTS
The Company evaluated subsequent
events and transactions that occurred after the balance sheet date up to the date that the consolidated financial statements were available
to be issued (April 17, 2023). Based upon this review, the Company did not identify any other subsequent events that would have required
adjustment or disclosure in the financial statements except as disclosed below.
Completion of an Initial
Public Offering Transaction
On February 27, 2023, the Company
announced the pricing of its initial public offering of
1,950,000
Ordinary Shares at a public offering price of $
4.00
per share, for aggregate
gross proceeds of $
7,800
prior to deducting underwriting discounts and other offering expenses.
In addition, the Company granted the underwriters
(i) 97,500 warrants which shall be exercisable into Ordinary Shares of the Company at an exercise price of $5.00 per Ordinary Share over
a period of 5-years commencing August 26, 2023 and (ii) a 45-day option to purchase up to an additional 292,500 ordinary shares at the
public offering price less discounts, to cover over-allotments.
The over-allotment option was not exercised and has expired as of the
date of filing of these consolidated financial statements.
The Ordinary Shares began trading
on the Nasdaq Capital Market under the ticker symbol "BMR" on February 28, 2023. The Company's IPO closed on March 2,
2023.
For accounting purposes, following
the completion of the above IPO transaction, all shares, options and warrants to purchase Ordinary Shares and loss per share amounts have
been adjusted to give retroactive effect to the Reverse Share Split for all periods presented in these consolidated financial statements.
Any fractional shares resulting from the Reverse Share Split were rounded up to the nearest whole share.
In addition, the holders of all
other shares with preferences over Ordinary Shares (i.e. Convertible Preferred Shares and Convertible Ordinary
1
and
2
Shares) effected
a conversion of all such shares to
7,211,280
Ordinary Shares, effective as of the pricing of the IPO on February 27, 2023.
Further, in connection with the above IPO, on March 14, 2022, the Company's
shareholders approved to increase the Company's authorized shares from
22,000,000
to
222,000,000
. These consolidated financial statements
exclude the aforesaid increase of authorized shares, as if such change to the Company's capital structure had not yet occurred.
F-34