Exhibit 99.1

ENLIVEX THERAPEUTICS LTD.

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

AS OF MARCH 31, 2021 AND DECEMBER 31, 2020

AND FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2021 AND 2020

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

ENLIVEX THERAPEUTICS LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2021 (UNAUDITED)

NOTE 1 - GENERAL

The Company is a clinical stage immunotherapy company, developing Allocetra^TM, a universal, off-the-shelf cell therapy designed to reprogram macrophages into their homeostatic state. Resetting non-homeostatic macrophages into their homeostatic state is critical for immune system rebalancing and resolution of life-threatening conditions. Non-homeostatic macrophages contribute significantly to the severity of the certain diseases, which include solid tumors, sepsis, COVID-19, and others.

The Allocetra^TM concept is based on the discoveries of Professor Dror Mevorach, an expert on immune activity, macrophage activation and clearance of dying (apoptotic) cells, in his laboratory in the Hadassah University Hospital located in the State of Israel.

Enlivex Therapeutics R&D Ltd. (“Enlivex R&D”, formerly known as Enlivex Therapeutics Ltd.) was incorporated in September 2005 under the laws of the State of Israel. On March 26, 2019, upon consummation of a merger transaction between the Parent and Enlivex R&D, pursuant to which a wholly owned subsidiary of the Parent merged with and into Enlivex R&D, the Parent changed its name to Enlivex Therapeutics Ltd.

In January 2015, Bioblast Pharma Inc. was established in the State of Delaware as a wholly owned subsidiary of the Parent. On July 1, 2020 Bioblast Pharma Inc changed its name to Enlivex Therapeutics Inc.

The Company’s ordinary shares, NIS 0.40 per share (“Ordinary Shares” or “ordinary shares”), are traded under the symbol “ENLV” on both the Nasdaq Capital Market and the Tel Aviv Stock Exchange.

The Company devotes substantially all of its efforts toward research and development activities and raising capital to support such activities. The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding before the Company achieves sustainable revenues and profit from operations.

Research and development activities have required significant capital investment since the Company’s inception. The Company expects its operations to continue to require cash investment to pursue the Company’s research and development activities, including preclinical studies, formulation development, clinical trials and related drug manufacturing. The Company has not generated any revenues or product sales and has not achieved profitable operations or positive cash flow from operations. The Company has experienced net losses since its inception, and, as of March 31, 2021, had an accumulated deficit of $40,697.

During the first quarter of 2021 the Company raised a net aggregated amount of $53.2 million in cash in connection with the issuance and sale of 2,848,629 of its ordinary shares and an additional amount of $7.7 million from the exercise of 855,813 warrants and 13,435 options. However, the Company expects to continue to incur losses for at least the next several years and over that period the Company will need to raise additional debt or equity financing or enter into partnerships to fund its development. If the Company is not able to achieve its funding requirements, it may be required to reduce discretionary spending, may not be able to continue the development of its product candidates or may be required to delay part of its development programs, which could have a material adverse effect on the Company’s ability to achieve its intended business objectives. There can be no assurances that additional financing will be secured or, if secured, will be on favorable terms. The ability of the Company to transition to profitability in the longer term is dependent on developing products and product revenues to support its expenses.

ENLIVEX THERAPEUTICS LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2021 (UNAUDITED)

The Company’s management and board of directors are of the opinion that its current financial resources will be sufficient to continue the development of the Company’s product candidates for at least twelve months from the filing of these financial statements on Form 6-K. The Company may determine, however, to raise additional capital during such period as its board of directors deems prudent. The Company’s management plans to finance its operations with issuances of the Company’s equity securities and, in the longer term, revenues. There are no assurances, however, that the Company will be successful in obtaining an adequate level of financing needed for its long-term development. The Company’s ability to continue to operate in the long term is dependent upon additional financial support.

In addition to the foregoing, based on the Company’s current assessment, the Company does not expect any material impact on its development timeline or its liquidity due to the worldwide spread of the COVID-19 virus. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition, will depend on future developments that are highly uncertain as of the date of issuance of these unaudited condensed consolidated financial statements. Actual results could differ from the Company’s estimates.

NOTE 2 –SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These unaudited consolidated financial statements include the accounts of the Company and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been made.

These unaudited consolidated financial statements should be read in conjunction with the Company’s audited annual financial statements and notes thereto included in the Company’s 2020 Annual Report on Form 20-F, as filed with the SEC on April 30, 2021. The results of operations for these interim periods are not necessarily indicative of the operating results for any future period. The December 31, 2020 financial information has been derived from the Company’s audited financial statements.

Use of Estimates

The preparation of interim financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts in the consolidated balance sheets and statements of operations, it also requires that management exercise its judgment in applying the Company’s accounting policies. On an ongoing basis, management evaluates its estimates, including estimates related to its stock-based compensation expense, and implicit interest rate on new lease liabilities. Significant estimates in these interim financial statements include estimates made for accrued research and development expenses, stock-based compensation expenses.

Functional Currency and Translation to The Reporting Currency

The functional currency of the Company is the New Israeli Shekel (“NIS”), which is the local currency in which it operates. The financial statements of the Company were translated into U.S. dollars in accordance with ASC 830, “Foreign Currency Matters”.  Accordingly, assets and liabilities were translated from NIS to U.S. dollars using period -end exchange rates, equity items were translated at the exchange rates of the date of the equity transaction, and income and expense items were translated at average exchange rates during the period.

Gains or losses resulting from translation adjustments (which result from translating an entity’s financial statements into U.S. dollars if its functional currency is other than the U.S. dollar) are reported in other comprehensive income (loss) and are reflected in equity, under “accumulated other comprehensive income (loss)”.

ENLIVEX THERAPEUTICS LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2021 (UNAUDITED)

Balances denominated in, or linked to foreign currencies are stated on the basis of the exchange rates prevailing at the balance sheet date.  For foreign currency transactions included in the statement of income, the exchange rates applicable on the relevant transaction dates are used.  Transaction gains or losses arising from changes in the exchange rates used in the translation of such balances are carried to financing income or expenses as applicable.

1 U.S. $ = 3.334 NIS and 3.215 NIS as of March 31, 2021 and December 31, 2020, respectively.

The U.S. $ increased against the NIS 3.7% and 3.15% in the three months ended March 31, 2021 and 2020, respectively.

Reclassification of Prior Year Presentation

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

Recent Accounting Pronouncements

Effective January 1, 2021, the Company adopted ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which removes specific exceptions to the general principles in Topic 740 and simplifies the accounting for income taxes. The adoption of this standard did not have a significant impact on the Company’s consolidated financial statements.

Effective January 1, 2021, the Company adopted ASU No. 2020-10, Codification Improvements, which amends a variety of topics in the Accounting Standards Codification to improve consistency and clarify guidance. The adoption of this standard did not have a significant impact on the Company’s consolidated financial statements.

There have been no other material changes to the significant accounting policies previously disclosed in the Company’s Annual Report on Form 20-F for the year ended December 31, 2020.

Marketable Securities.

The Company has an investment policy that includes guidelines on acceptable investment securities, minimum credit quality, maturity parameters, and concentration and diversification. The Company invests its excess cash primarily in mutual funds that are classified based on the nature of the securities and their availability for use in current operations. The Company’s marketable equity securities are measured at fair value with gains and losses recognized in other income/(expense), net.

Net gain recognized on equity securities for the three months ended March 31, 2021 was $388 thousand of which $392 thousand were not realized.

ENLIVEX THERAPEUTICS LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2021 (UNAUDITED)

Depreciation expenses for the three months ended March 31, 2021 and 2020 were $117 thousands and $54 thousands, respectively.

ENLIVEX THERAPEUTICS LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2021 (UNAUDITED)

NOTE 6 – LEASES

The Company is a party to operating leases for its corporate offices, laboratory space and vehicles. The Company's operating leases have remaining lease terms of up to 4.5 years, some of which include options to extend the leases for up to five years.

ENLIVEX THERAPEUTICS LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2021 (UNAUDITED)

NOTE 7 – COMMITMENTS AND CONTINGENT LIABILITIES

The Company is required to pay royalties to the State of Israel (represented by the Israeli Innovation Authority (the “IIA”)), computed on the basis of proceeds from the sale or license of products for which development was supported by IIA grants. In accordance with the terms of the financial participation, the IIA is entitled to royalties on the sale or license of any product for which development was supported with IIA participation. These royalties are generally 3% - 5% of sales until repayment of 100% of the grants (linked to the dollar) received by the Company plus annual interest at the LIBOR rate.

The gross amount of grants received by the Company from the IIA, including accrued ,interest as of March 31, 2021 was approximately $6.7 million. As of March 31, 2021, the Company had not paid any royalties to the IIA.

In January 2021, the Company submitted a new grant application to the IIA which was approved in May 2021 see Note 11

NOTE 8 – EQUITY

On February 9, 2021, the Company terminated the prospectus supplement related to the offer and sale of ordinary shares under the Sales Agreement, but the Sales Agreement remains in full force and effect. To that date, the Company had sold an aggregate of 476,983 ordinary shares under the Sales Agreement, having a gross aggregate offering price of $8,557,437 at a gross average price per share of $17.94. Until such time as the Company files with the SEC a new registration statement on Form F-3 and such registration statement becomes effective, the Company may not offer and sell any additional ordinary shares under the Sales Agreement.

The Offering closed on February 12, 2021, on which date the Company completed the issuance of 2,296,107 ordinary shares to Wainwright at a price, including the underwriting discount but before other associated fees, of $18.60 per ordinary share, as set forth in the Underwriting Agreement.

On February 17, 2021, Wainwright exercised in part its option to purchase additional ordinary shares and purchased 268,205 ordinary shares at a price, including the underwriting discount but before other associated fees, of $18.60 per share, as set forth in the Underwriting Agreement.

In accordance with the Underwriting Agreement, the Company paid Wainwright underwriting discounts and commissions equal to 7% of the gross proceeds received by the Company from the sale of the ordinary shares in the Offering, as well as a management fee equal to 1% of the gross proceeds received by the Company from the sale of the ordinary shares in the Offering. In addition, the Company issued to Wainwright 179,501 warrants to purchase ordinary shares of the Company (the “Underwriter Warrants”). The Underwriter Warrants are exercisable for five years from commencement of the Offering and have an exercise price of $25 per ordinary share, subject to customary adjustments as provided in the Underwriter Warrants. The Company has also paid Wainwright approximately $126,000 for various expenses.

The placement agent warrants were valued at $2,095 thousand using a Black-Scholes model with the following assumptions: estimated weighted average volatility 78.4%; weighted average risk-free interest rate of 0.5%; no dividend; and a weighted average contractual life of 5 years.

The net proceeds from the Offering were $47,023 thousand after deducting Wainwright’s fees and other expenses relating to the Offering.

ENLIVEX THERAPEUTICS LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2021 (UNAUDITED)

All Company warrants are classified as a component of shareholders’ equity because such warrants are free standing financial instruments that are legally detachable, 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, requires physical settlement and do not provide any guarantee of value or return.

NOTE 9 – SHARE-BASED COMPENSATION

During the three months ended March 31, 2021 and 2020, the Company recognized $175 thousand and $132 thousand, respectively, of share-based compensation expenses related to stock options. As of March 31, 2021, the total unrecognized estimated compensation cost related to outstanding non-vested stock options was $1,389 thousand which is expected to be recognized over a weighted average period of 1.75 years.

ENLIVEX THERAPEUTICS LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2021 (UNAUDITED)

The Company estimates the fair value of restricted stock units based on the closing sales price of the Company’s ordinary shares on the date of grant (or the closing bid price, if no sales were reported). During the three months ended March 31, 2021 and 2020, the Company recognized $15 thousand and $0, respectively, of share-based compensation expense related to restricted stock units. Total share-based compensation expense related to restricted stock units not yet recognized as of March 31, 2021 was $688 thousand, which is expected to be recognized over a weighted average period of 3.9 years.

ENLIVEX THERAPEUTICS LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS MARCH 31, 2021 (UNAUDITED)

NOTE 11 – EVENT SUBSEQUENT TO THE BALANCE SHEET DATE

The Company evaluated all events and transactions that occurred subsequent to the balance sheet date and prior to the date on which these financial statements were issued, and determined that the following subsequent event necessitates disclosure:

In January 2021, the Company submitted a new non-dilutive grant application to the IIA for reimbursement by the IIA of certain expenses associated with its clinical development program of prevention of cytokine storms and organ dysfunction associated with Sepsis for a period commencing January 1, 2021 and ending December 31, 2021 (the “2021 Sepsis Grant Application”). In May 2021 the IIA approved the 2021 Sepsis Grant Application in the total amount of NIS 3.8 million ($1.13 million).

F-13

Exhibit 99.2

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

This Operating and Financial Review and Prospects contains forward-looking statements, which may be identified by words such as “expects,” “plans,” “projects,” “will,” “may,” “anticipates,” “believes,” “should,” “would”, “could”, “intends,” “estimates,” “suggests,” “has the potential to” and other words and phrases of similar meaning, including, without limitation, statements regarding expected cash balances, market opportunities for the results of current clinical studies and preclinical experiments, and the effectiveness of, and market opportunities for, ALLOCETRA^TM programs, all of which statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Investors are cautioned that forward-looking statements involve risks and uncertainties that may affect Enlivex’s business and prospects, including the risks that Enlivex may not succeed in generating any revenues or developing any commercial products; that the products in development may fail, may not achieve the expected results or effectiveness and/or may not generate data that would support the approval or marketing of these products for the indications being studied or for other indications; that ongoing studies may not continue to show substantial or any activity; and other risks and uncertainties that may cause results to differ materially from those set forth in the forward-looking statements. The results of clinical trials in humans may produce results that differ significantly from the results of clinical and other trials in animals. The results of early-stage trials may differ significantly from the results of more developed, later-stage trials. The development of any products using the ALLOCETRA^TM product line could also be affected by a number of other factors, including unexpected safety, efficacy or manufacturing issues, additional time requirements for data analyses and decision making, the impact of pharmaceutical industry regulation, the impact of competitive products and pricing and the impact of patents and other proprietary rights held by competitors and other third parties.  In addition to the risk factors described above, investors should consider the economic, competitive, governmental, technological and other factors discussed in Enlivex’s filings with the Securities and Exchange Commission, including in its Annual Report on Form 20-F for the year ended December 31, 2020.  The forward-looking statements contained in this Operating and Financial Review and Prospects speak only as of the date the statements were made, and we do not undertake any obligation to update forward-looking statements, except as required under applicable law.

Overview

Enlivex Therapeutics, Ltd., a company organized under the laws of the State of Israel (including its consolidated subsidiaries, “we”, “us”, “our” or the “Company”), is a clinical stage immunotherapy company, developing Allocetra^TM, a universal, off-the-shelf cell therapy designed to reprogram macrophages into their homeostatic state. Resetting non-homeostatic macrophages into their homeostatic state is critical for immune system rebalancing and resolution of life-threatening conditions. Non-homeostatic macrophages contribute significantly to the severity of the respective diseases, which include solid tumors, sepsis, novel strain of coronavirus (“COVID-19”) patients in severe or critical condition, and others.

The Company’s primary innovative immunotherapy, Allocetra^TM, represents a paradigm shift in macrophage reprogramming, moving from a binary classification of M1 (pro-inflammatory macrophages) or M2 (anti-inflammatory macrophages) status, to a fundamental view of macrophage homeostasis. Restoring macrophage homeostasis may induce the immune system to rebalance itself to normal levels of operation, thereby promoting disease resolution.

The Company is focused on three main clinical verticals, including sepsis, COVID-19, and solid malignant tumors (the “Indications”). The Company believes that negatively-reprogrammed macrophages may be key contributors to disease severity across all these three indications, and thus effective reprogramming of these previously negative-reprogrammed macrophages into their respective homeostatic state may provide diseases resolution to these Indications, some of which are considered “unmet medical needs”, such as preventing or treating complications associated with sepsis.

Financing During First Quarter 2021

During February 2021, we received gross proceeds of approximately $6,339,000 from the sale of 284,317 ordinary shares under an at the market offering agreement (the “Sales Agreement”), dated as of October 22, 2020, by and between the Company and H.C. Wainwright & Co., LLC (“Wainwright”), pursuant to which we could elect to sell, through the sales agent party to the Sales Agreement, up to an aggregate of $25 million of our ordinary shares. On February 9, 2021, we terminated the prospectus supplement related to the offering of sales under the Sales Agreement, but the Sales Agreement remains in effect.

On February 9, 2021, we entered into an underwriting agreement with Wainwright with respect to our offer, issuance and sale (the “February 2021 offering”) of an aggregate of 2,296,107 ordinary shares, together with an option granted to Wainwright to purchase up to 344,416 additional ordinary shares. The ordinary shares were offered to the public at a price of $20 per share. The February 2021 offering closed on February 12, 2021, on which date the Company completed the issuance of 2,296,107 ordinary shares to Wainwright at a price of $18.60 per share, including underwriting discounts. We paid Wainwright underwriting discounts and commissions equal to 7% of the gross proceeds from the sale of ordinary shares to the public in the February 2021 offering, as well as a management fee equal to 1% of the gross proceeds from the sale of the ordinary shares in the February 2021 offering. In addition, the Company issued to Wainwright 179,501 five-year warrants to purchase ordinary shares at an exercise price of $25 per ordinary share, subject to customary adjustments. The Company also reimbursed Wainwright approximately $126,000 for various expenses.

The net proceeds from the February 2021 offering were approximately $42 million after deducting Wainwright’s fees and other estimated expenses relating to the February 2021 offering. On February 17, 2021, Wainwright exercised in part its option to purchase additional ordinary shares, and purchased 268,205 ordinary shares at a price of $18.60 per share, after underwriting discounts. The net proceeds from the purchase of additional ordinary shares by Wainwright were approximately $5.0 million after deducting Wainwright’s fees.

During February 2021, 855,813 warrants issued in the two registered direct offerings that occurred in February 2020 and March 2020 (collectively the “2020 registered direct offerings”) were exercised for an aggregate of 855,813 ordinary shares, providing the Company with aggregate gross proceeds of $7.7 million.

Impact of COVID-19

Based on the Company’s current assessment, the Company does not expect any material impact on its liquidity due to the worldwide spread of the SARS-CoV-2 coronavirus. However, the timelines for the Company’s clinical development programs may be extended due to direct and indirect impacts of the COVID-19 pandemic. For example, there has been a delay in recruiting patients for the Company’s randomized, controlled Phase IIb clinical trial of Allocetra^TM in patients with severe sepsis due to a lower number of pneumonic septic patients, as a result of the COVID-19 pandemic environment. As previously reported in the Company’s Annual Report on Form 20-F, the Company still expects to obtain interim results from this Phase IIb during 2021 or early 2022 followed by top-line results later in 2022. The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition will depend on future developments that are highly uncertain as of the date of issuance of this Operating and Financial Review and Prospects. Actual results could differ materially from the Company’s estimates.

Financial Overview

Since inception, we have incurred significant losses in connection with our research and development and have not generated any revenue. We have funded our operations primarily through grants from the Israel Innovation Authority and pursuant to the sale of equity and equity-linked securities in both private and registered equity offerings to our affiliates, shareholders and third-party investors. As of March 31, 2021, we had $91.6 million in cash and cash equivalents, short-term bank deposits and marketable securities. As of March 31, 2021, we had an accumulated deficit of approximately $41 million. Although we provide no assurance, we believe that our existing funds will be sufficient to continue our business and operations as currently conducted through the fourth quarter of 2023. We expect that we will continue to incur operating losses, which may be substantial, over at least the next several years, and we will likely need to obtain additional funds to further develop our research and development programs. Our ability to generate revenue and become profitable depends upon the clinical success of our product candidates, regulatory approvals and our ability to successfully commercialize products.

Costs and Operating Expenses

Our current costs and operating expenses consist of two components: (i) research and development expenses; and (ii) general and administrative expenses.

Research and Development Expenses

Our research and development expenses consist primarily of research and development activities at our laboratory in Israel, including drug and laboratory supplies and costs for facilities and equipment, outsourced development expenses, including the costs of regulatory consultants and certain other service providers, salaries and related personnel expenses (including stock based compensation) and fees paid to external service providers and the costs of preclinical studies and clinical trials. We charge all research and development expenses to operations as they are incurred. We expect our research and development expenses to remain our primary expenses in the near future as we continue to develop our product candidates. Increases or decreases in research and development expenditures are attributable to the number and duration of our preclinical and clinical studies.

We expect that a large percentage of our research and development expenses in the future will be incurred in support of our current and future preclinical and clinical development projects. Due to the inherently unpredictable nature of preclinical and clinical development processes, we are unable to estimate with any certainty the costs we will incur in the continued development of our product candidates in our pipeline for potential commercialization. Furthermore, although we expect to obtain additional grants from the Israel Innovation Authority, we cannot be certain that we will do so. Clinical development timelines, the probability of success and development costs can differ materially from expectations. We expect to continue to test our product candidates in preclinical studies for toxicology, safety and efficacy and to conduct additional clinical trials for our product candidates.

While we are currently focused on advancing our product development, our future research and development expenses will depend on the clinical success of our product candidates, as well as ongoing assessments of each candidate’s commercial potential. As we obtain results from clinical trials, we may elect to discontinue or delay clinical trials for our product candidates in certain indications in order to focus our resources on more promising indications for any such product candidate. Completion of clinical trials may take several years or more, but the length of time generally varies according to the type, complexity, novelty and intended use of a product candidate.

We expect our research and development expenses to increase in the future as we continue the advancement of our clinical product development for our current indications and as we potentially pursue additional indications. The lengthy process of completing clinical trials and seeking regulatory approval for our product candidates requires the expenditure of substantial resources. Any failure or delay in completing clinical trials, or in obtaining regulatory approvals, could cause a delay in generating product revenue and cause our research and development expenses to increase and, in turn, have a material adverse effect on our operations.

General and Administrative Expenses

General and administrative expenses consist primarily of compensation (including stock-based compensation) for employees in executive and operational roles, including accounting, finance, investor relations, information technology and human resources. Our other significant general and administrative expenses include facilities costs, professional fees for outside accounting and legal services including legal work in connection with patent applications, travel costs and insurance premiums. We expect that our general and administrative expenses will increase over time, as we currently expect increases in the number of our executive, accounting and administrative personnel due to our anticipated growth.

Other income, net

Other income consist of bank fees, exchange rate differences and gains and losses resulting from our investments in marketable equity securities.

Other Comprehensive income (Loss)

Our functional currency is the New Israeli Shekel (“NIS”), while our presentation currency is the U.S. dollar. Gains or losses resulting from the translation from our functional currency to our presentation currency are recognized in other comprehensive income (loss).

Critical Accounting Policies and Estimate

The preparation of financial statements in accordance with United States generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in our financial statements and accompanying notes. Management bases its estimates on historical experience, market and other conditions, and various other assumptions it believes to be reasonable. Although these estimates are based on management’s best knowledge of current events and actions that may impact us in the future, the estimation process is, by its nature, uncertain given that estimates depend on events over which we may not have control. If market and other conditions change from those that we anticipate, our financial statements may be materially affected. In addition, if our assumptions change, we may need to revise our estimates, or take other corrective actions, either of which may also have a material effect in our financial statements. We review our estimates, judgments, and assumptions used in our accounting practices periodically and reflect the effects of revisions in the period in which they are deemed to be necessary. We believe that these estimates are reasonable; however, our actual results may differ from these estimates.

We believe the following accounting policies to be the most critical to the judgments and estimates used in the preparation of our financial statements. For additional detail regarding our significant accounting policies, please see the notes to our audited consolidated financial statements contained in our Annual Report on Form 20-F for the period ended December 31, 2020 as filed with the SEC on April 30, 2021.

Share-Based Compensation and Fair Value of Ordinary Shares

ASC 718 - “Compensation-stock Compensation”- (“ASC 718”) 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 that is ultimately expected to vest is recognized as an expense over the requisite service periods.

We estimate the fair value of our share-based awards using Black-Scholes, which requires the input of assumptions, some of which are highly subjective, including:

Prior the consummation of our merger transaction that closed on March 26, 2019 (the “Merger”), there was no active external or internal market for our ordinary shares. Thus, it was not possible to estimate the expected volatility of our share price in estimating fair value of options granted with respect to periods preceding the Merger. Accordingly, as a substitute for such volatility, we used the historical volatility of comparable companies in our industry. The expected term of options granted represents the period of time that options granted are expected to be outstanding, we use management’s estimates for the expected term of options due to insufficient readily available historical exercise data.

Research and Development Expenses

For the three months ended March 31, 2021 and 2020, we incurred research and development expenses in the aggregate of $2,497,000 and $1,263,000, respectively. The increase of $1,234,000, or 98%, in research and development expenses for 2021 as compared to 2020 was primarily due to a $475,000 increase in salaries and a $485,000 increase in clinical studies and consumption of materials, offset by a decrease of $198,000 in grants from the Israel Innovation Authority at 30% participation of an approved clinical development program of prevention of cytokine storm and organ dysfunction associated with sepsis and COVID-19.

General and Administrative Expenses

For the three months ended March 31, 2021 and 2020, we incurred general and administrative expenses in the aggregate of $1,305,000 and $633,000, respectively. The increase of $672,000, or 106%, in general and administrative expenses for 2021 as compared to 2020 was primarily due to a $435,000 increase in compensation to directors, a $66,000 increase in stock based compensation, a $91,000 increase in professional fees and a $61,000 increase in insurance expenses.

Operating Loss

Due to an increase in research and development and general and administrative expenses for the three months ended March 31, 2021, our operating loss was $3,802,000, representing an increase of $1,906,000, or 101%, as compared to our operating loss of $1,896,000 for the three months ended March 31, 2020. This increase primarily resulted from research and development salaries, the costs of clinical studies and material consumption and an increase in accounting and legal expenses, and compensation to directors.

Other Income (Expenses), Net

Other income (expenses), net consist of the following:

For the three months ended March 31, 2021 and 2020, we recorded net financial income of $602,000 and $1,102,000 respectively. The decrease in financial income for the three months ended March 31, 2021 as compared to the three months ended March 31, 2020 was primarily due to a decrease in income from currency fluctuations on cash and cash equivalents and deposits denominated in currencies other than the NIS, changes in the fair value of marketable equity securities and from interest earned on our cash and cash equivalents.

Net Loss

For the three months ended March 31, 2021, our net loss was $3,200,000, representing an increase of $2,406,000 as compared to our net loss of $794,000 for the comparable prior year period. This increase primarily resulted from an increase in research and development expenses, including salaries, the costs of clinical studies and material consumption and an increase in accounting and legal expenses, compensation to directors and by a decrease in financial income.

Other Comprehensive Income (Loss)

As a result of an increase of 3.70% in the U.S. dollar against the NIS in three months ended March 31, 2021, as compared to an increase of 3.15% in the comparable prior year period, we recorded losses of $2,788,000 from exchange rate differences arising from translating our unaudited condensed consolidated financial statements from functional to presentation currency, as compared to losses of $1,016,000 for the comparable prior year period.

Cash Flows

Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020

For the three months ended March 31, 2021 and 2020, net cash (used in) provided by operations was $(2,340,000) and $779,000 respectively. The increase in net cash used in operations for 2021 was primarily due to an increase in research and development expenses and general and administrative expenses as a result of increases in salaries, clinical studies and consumption of materials, directors compensation fees, professional services fees and insurance expenses.

For the three months ended March 31, 2021 and 2020, net cash used in investing activities was $(59,589,000) and $(2,039,000), respectively. The increase in net cash used in investing activities for 2021 as compared to 2020 resulted primarily from our investments in marketable equity securities.

For the three months ended March 31, 2021 and 2020, net cash provided by financing activities was $60,916,000 and $22,456,000, respectively. This increase in cash provided by financing activities for 2021 as compared to 2020 resulted primarily from net proceeds of $53,174,000 from our issuance of ordinary shares and warrants in the February 2021 offering and proceeds of $7,702,000 from the exercise of warrants.

Liquidity and Capital Resources

We have incurred substantial losses since our inception. As of March 31, 2021, we had an accumulated deficit of approximately $41 million and working capital (current assets minus current liabilities) of approximately $88.8 million. We expect to incur losses from operations for the foreseeable future, and we expect to incur increasing research and development expenses, including expenses related to the hiring of personnel, conducting preclinical studies and clinical trials and outsourcing of certain development activities. We expect that general and administrative expenses will also increase as we expand our finance and administrative staff and add infrastructure.

Developing product candidates, conducting clinical trials and commercializing products are expensive, and we will need to raise substantial additional funds to achieve our strategic objectives. We believe that our existing cash resources, due to our 2021 financing activity, as described above, will be sufficient to fund our projected cash requirements approximately through the fourth quarter of 2023. Nevertheless, we will require significant additional financing in the future to fund our operations, including if and when we progress into additional clinical trials, obtain regulatory approval for any of our product candidates and commercialize the same. We believe that we will need to raise significant additional funds before we have any cash flow from operations, if at all. Our future capital requirements will depend on many factors, including:

We currently do not have any commitments for future external funding. In the future, we will need to raise additional funds, and we may decide to raise additional funds even before we need such funds if the conditions for raising capital are favorable. Until we can generate significant recurring revenues, we expect to satisfy our future cash needs through debt or equity financings, credit facilities or by out-licensing applications of our product candidates. The sale of equity or convertible debt securities may result in dilution to our existing shareholders. The incurrence of indebtedness would result in increased fixed obligations and could also subject us to covenants that restrict our operations. We cannot be certain that additional funding, whether through grants from the Israel Innovation Authority, financings, credit facilities or out-licensing arrangements, will be available to us on acceptable terms, if at all. If sufficient funds are not available, we may be required to delay, reduce the scope of or eliminate research or development plans for, or commercialization efforts with respect to, one or more applications of our product candidates, or obtain funds through arrangements with collaborators or others that may require us to relinquish rights to certain potential products that we might otherwise seek to develop or commercialize independently.

 Foreign Currency Exchange Risk

Our foreign currency exposures give rise to market risk associated with exchange rate movements of the NIS mainly against the U.S. dollar, and vice versa, because most of our expenses are denominated in NIS and the U.S. dollar. Our NIS and U.S. dollar expenses consist principally of payments made to employees, sub-contractors and consultants for preclinical studies, clinical trials and other research and development activities. We anticipate that a sizable portion of our expenses will continue to be denominated in the NIS and U.S. dollar. Our financial position, results of operations and cash flow are, therefore, subject to fluctuations due to changes in foreign currency exchange rates and may be adversely affected in the future due to changes in foreign exchange rates.

8