10-K/A: IR-Med Inc. Files Amended 10-K After Operational Limits and Financial Difficulties

IR-Med Inc. files an amendment to its annual report to correct disclosures regarding directors, executive officers, and corporate governance, following a period of operational limitations due to financial challenges.

Summary

• IR-Med Inc. has filed an amendment to its annual report on Form 10-K for the fiscal year ended December 31, 2023, primarily to correct disclosures in Item 9B and Item 10.
• The company's operations have been limited to critical actions to save funds due to financial difficulties, and development plans for its three product candidates are currently on hold.
• IR-Med is developing an infrared spectroscopy and AI analysis platform for point-of-care decision support devices, with PressureSafe as its first product, designed for early detection of pressure injuries.
• The company is also developing DiaSafe for early detection of diabetic foot ulcers and Nobiotics, an otoscope to differentiate between bacterial and viral ear infections.
• A usability study of PressureSafe in Israel showed 96% accuracy in detecting pressure injuries and 91% accuracy in determining the absence of wounds.
• A clinical trial agreement has been signed with Methodist Healthcare System of San Antonio to study PressureSafe's efficacy across various skin tones.
• The Israeli Innovation Authority approved a program to develop a diabetic foot ulcer device with a budget of approximately US$ 1,030,000, including a 50% grant.
• The company's business model is based on a disposable unit/pay-per-use system, with potential for software as a service (SAAS) offerings.
• The company has an exclusive distribution agreement with PI Prevention Care LLC for the PressureSafe device in the United States.
• The company incurred net losses of approximately $4,909,000 and $4,734,000 for the years ended December 31, 2023, and 2022, respectively, with an accumulated deficit of $14,839,000 as of December 31, 2023.
• The company had 69,931,056 shares of common stock outstanding as of April 1, 2024.

Sentiment

Score: 3

Explanation: The document highlights significant financial challenges and operational limitations, overshadowing the potential of the company's technology. The going concern warning and the need for substantial additional funding create a negative outlook.

Positives

• PressureSafe demonstrated high efficacy in detecting pressure injuries in usability studies.
• The company has secured a grant from the Israeli Innovation Authority for the development of a diabetic foot ulcer device.
• The company has an exclusive distribution agreement for PressureSafe in the United States.
• The company has a patent protected core technology.

Negatives

• The company's operations are currently limited due to financial difficulties.
• Development plans for all three product candidates are currently on hold.
• The company has incurred significant operating losses and has a substantial accumulated deficit.
• The company's independent auditor has raised concerns about its ability to continue as a going concern.
• The company has limited operating history and may not be able to successfully meet its objectives.

Risks

• The company is a development stage medical device company with a history of significant operating losses and may never achieve profitability.
• The company needs substantial additional funding to continue operations, which could result in significant dilution or restrictions on business activities.
• The company may not be able to raise capital when needed, which would force it to delay, reduce or eliminate product development programs.
• The company's independent auditor has included an explanatory paragraph relating to its ability to continue as a going concern.
• Medical device development is a lengthy and expensive process with an uncertain outcome.
• The company currently has no products approved for commercial sale.
• The size and future growth in the market for the company's planned devices has not been established with precision and may be smaller than estimated.
• The company may be subject to numerous and varying privacy and security laws, and failure to comply could result in penalties and reputational damage.
• The company's technology development is headquartered in Israel and may be adversely affected by economic restrictions and political instability.
• The company may be sued by third parties for alleged infringement of their proprietary rights.

Future Outlook

The company plans to launch PressureSafe in 2024, pending FDA registration and listing, and to initiate a clinical trial for the diabetic foot ulcer device in Israel, with a potential US trial in 2025. The company also plans to seek reimbursement for its products in the future.

Management Comments

• The company's operations will be limited to critical actions in order to save funds.
• The company is working on completing the development of the commercial version of the PressureSafe device, planned to be launched during 2024.
• The company plans to commence a clinical trial in the center of Israels leading diabetes clinic.
• The company plans to seek out collaborative arrangements with major healthcare providers to facilitate market adoption of our product candidates.

Industry Context

The company operates in the competitive medical device market, facing competition from established companies and new technologies. The company's focus on early detection and AI-driven diagnostics aligns with the industry's trend towards more efficient and personalized healthcare solutions. The company's products target large and growing patient populations with significant unmet medical needs, such as pressure injuries and ear infections.

Comparison to Industry Standards

• The PressureSafe device is expected to compete with Bruins Biometrics Provizio SEM Scanner, which is based on electro-resistance measurement of the skin's moisture, while PressureSafe uses real-time optical monitoring combined with AI.
• The company's technology is based on the fact that tissues of the human body absorb and reflect light in different wave lengths, which is different from other methods such as skin conductivity.
• The company's technology is being developed to enable the assessment of different subdermal layers by scanning through these skin layers, thus improving the identification of the damage, assessing the subdermal damaged tissue volume and assisting with additional information to allow better treatment efficacy.
• The company's technology is being developed to detect changes at a depth of 1-5 mm in the skin, regardless of skin tone, by measuring differences of subdermal fluid content and bio-signals.

Management Changes

Legal Proceedings

• A lawsuit was filed against the Company, the Subsidiary and Mr. Aharon Klein, alleging breach of contract based on non-payment of amounts purportedly owed to the Plaintiff in respect of the services rendered, including the market value of the Companys common stock that the Plaintiff alleges should have been issued to him in respect of his services.

Related Party Transactions

• The company has various related party transactions including loans from shareholders, payments for research and development services, consulting services, rent and office services, and compensation to directors and officers.

Stakeholder Impact

• Shareholders face the risk of significant dilution and potential loss of investment due to the company's financial difficulties and need for additional funding.
• Employees have been affected by the termination of employment due to financial difficulties.
• Customers may experience delays in the availability of the company's products due to the limited operations and development delays.
• Suppliers may face uncertainty regarding future orders and payments due to the company's financial situation.
• Creditors may face increased risk of non-payment due to the company's financial difficulties.

Next Steps

• Complete development of the commercial version of the PressureSafe device.
• Seek FDA registration and listing for PressureSafe.
• Commence a clinical trial for the diabetic foot ulcer device in Israel.
• Potentially conduct a US-based trial for the diabetic foot ulcer device in 2025.
• Seek additional funding to support operations and development.

Key Dates

Keywords

medical devices, infrared spectroscopy, artificial intelligence, pressure injuries, diabetic foot ulcers, otitis media, diagnostics, healthcare, FDA, clinical trials