OTC: DROR

Existing aligner solutions
generally share the same treatment principles, which are different from our solution. In most cases, patients seeking to improve their
smile need to undergo a 12-to-15 month process of wearing plastic aligners, which need to be worn the entire day and should only be removed
while eating or drinking. Patients are prescribed a series of 20 to 30 aligners that are intended to forcefully move teeth progressively
closer to their intended final position. This process causes pain every time a new aligner is used and restricts blood circulation, which
counterproductively slows down tooth movement. All-day aligner solutions are also intrusive, as patients need to conduct their lives at
work or school wearing the plastic aligners. In addition, most existing aligner therapies require multiple visits to an orthodontist to
monitor the progress of treatment plans through intraoral scanning, physical examination and patient testimony.

We believe that recent rapid
advancements in technology have made traditional aligner solutions no longer the most effective treatment option for smile correction.
Our Company has developed a proprietary AI-based platform to correct people’s smiles in a discreet and less painful manner. On July
14, 2024, the Company announced that its next generation solution will be rebranded from Aerodentis to “ZSmile” (the “Platform”)
since the Platform is intended for nighttime use and while sleeping. The name “ZSmile” is intended to communicate that people
can correct their smile while they sleep or colloquially “getting some zzz’s”. ZSmile uses only one smart aligner to
gently move teeth into their optimum position with pulsating air while the patient is sleeping or at home. The Company has several patents
for the technology used in the Platform. The Platform is a Class II medical device which received 510(k) clearance from the FDA for commercialization
in the U.S. pursuant to the 510(k) notification process in February 2026, being substantially equivalent to the Aerodentis System. The
Platform, represents an improvement upon the Aerodentis System, which is also a Class II medical device which received 510(k) clearance
from the FDA in April 2020.

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The Company currently does not generate revenues
to fund operations and anticipates that it will continue to incur significant losses as it continues to develop the Platform. Please refer
to “Risk Factors - We are in the development stage, are not generating revenues and have no operating history in the manufacturing
and distribution of orthodontic medical devices or platforms for consumer use.” for additional information. The Company intends
to spend approximately $1 million over the next 12 months on software and hardware development as well as the accompanying regulatory
approvals and IP protection associated with such software and hardware projects. Our Product

The First Generation Aerodentis System

Our Company was founded in
2005 with the goal of offering millions of people a chance to correct their smile in a more discreet and less painful manner. The first
generation of our product underwent ten years of development by a team of twelve orthodontists, engineers, industrial designers and dental
technicians. This team developed a new clinically-proven method for correcting Class 1 and Class 2 malocclusion using pulsating air. The
team discovered that using pulsating air improved blood circulation in the gums, which is essential to tooth movement. This first-generation
product (the “Aerodentis System”) was composed of a base control unit that contained a pump and motor that would deliver pulses
of air to a micro balloon that was part of a mouthpiece to be used by the patient to deliver the treatment. The use of pulsating air is
the base patented technology that distinguishes our Aerodentis System from clear aligner therapies, which are designed to move teeth using
continuous resistant force delivered by the aligner, which impairs blood flow.

Pictured: Base control unit, containing micro-pump and controls, attached to the smart aligner. The smart aligner is composed of an outer mouthpiece structure, which is shaped based on the final position of the teeth for a perfect smile. Behind the outer mouthpiece structure is a micro balloon that is attached to the base control unit with a fine and flexible microtube. The balloon delivers pulsating air by inflating and deflating. Behind the balloon is the “push structure,” which provides the balloon with a surface to push against as it gently moves the teeth.

In January 2013, the Aerodentis
System composed of the base control unit and custom mouthpiece received the European CE Mark. In 2020, it received FDA clearance via the
510(k) process as a Class II medical device, with broad indication for use “in movement and alignment of teeth during orthodontic
treatment of malocclusion.” Clinical trials demonstrated that Aerodentis System was suitable for adults and pediatric patients with
Class 1 and Class 2 malocclusion, including crowding, proclination and retroclination. Further, clinical trials have demonstrated
that the effectiveness of Aerodentis System was consistent with the results achieved by the Invisalign clear aligners solution provided
by Align Technology, Inc.

Pictured: Close up of smart aligner with (1) outer structure formed based on the final tooth position desired for a perfect smile and (2) micro balloon inserted between the outer structure and the inner structure to support the balloon’s expansion.

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The Platform

Building on the Aerodentis System, we developed
a more advanced product called “ZSmile.” This is our next generation, comprehensive enhanced solution to Class 1 and Class
2 malocclusion for which we received 510(k) clearance to market and sell in the U.S. as of February 2026. The new ZSmile Platform was
developed over the course of two years and is intended to advance the proven clinical features of the Aerodentis System while incorporating
recent developments in artificial intelligence utilized in our ZSmile AI Cloud (as defined below) component of the Platform, secure wireless
and Internet communications with Internet of Things (“IoT”) devices used in our Smart Aligner System component of the Platform
and advanced imaging and 3D printing technologies. IoT devices refers to pieces of hardware, such as sensors, actuators, gadgets, appliances,
or machines, that are programmed for certain applications and can transmit data over the internet or other networks.

Our Platform is comprised of three primary components:

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the ZSmile smartphone application;

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our AI-based cloud service (“ZSmile AI Cloud”), which is used to perform analytics and manage patient treatment plans; and

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the smart aligner system used by the patient, which consists of: (i) a base control unit containing the pump and the IoT components and (ii) a smart aligner containing the micro-balloon that gently pushes teeth into their intended final position using pulsating air (the “Smart Aligner System”).

The following provides a more detailed description of each of the components
of our Platform:

ZSmile Smartphone Application

Our freely downloadable ZSmile
smartphone application will allow potential patients to make a video of their smile and teeth and upload the video to the ZSmile AI Cloud.
This 2D video will be converted into a 3D model using our proprietary patent-pending AI based image analysis technology. The underlying
algorithms will then perform an initial analysis to determine if the patient can potentially benefit from our solution. This complex analysis
will be performed in minutes and will deliver a “Go/No Go” response. Once a patient begins treatment, they will use the smartphone
application to provide their dental professional with ongoing remote monitoring of their treatment progress. The smartphone application
can be used to upload additional teeth videos showing progress and to transmit data from the Smart Aligner System (described below), including
the amount of time the patient used the Smart Aligner System and the pressure and pulse levels administered.

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ZSmile AI Cloud

The ZSmile AI Cloud will be
used to analyze data uploaded by patients and to facilitate communication between patients and dental professionals. If the analysis performed
on the initial video upload from the ZSmile smartphone application delivers a “Go” result, the patient will be invited to
have an intraoral scan performed by a dental professional from our network of participating providers. The results of this intraoral scan
will be uploaded to the ZSmile AI Cloud by the dental professional, and the ZSmile AI Cloud will use a machine learning algorithm to compare
the scan with the initial model generated from the patient’s initial video upload. The machine learning algorithm is designed to
learn with every scan how to improve the accuracy of the 3D images it generates from smartphone videos. We believe that the Platform’s
image analysis of smartphone videos will eventually approach the level of accuracy observed in intraoral scans. If we achieve this, we
will be in a position to be able provide highly accurate image analysis of teeth that can be used throughout the dental industry since
it would allow for smartphones to essentially replace the need for intraoral scans for certain cases. This would dramatically increase
the efficiency and treatment delivery cycle in the dental industry and result in a potentially material economic benefit to our Company
in the future.

The ZSmile AI Cloud will also
be used for ongoing analysis of patient data and management of a patient’s treatment plan throughout the treatment. A dental professional
will use our Platform to develop a customized treatment plan, including any interproximal reduction necessary before treatment begins,
based on the Smart Aligner System. As a patient uploads progress videos from their smartphone, the Platform will compare tooth positions
in previous videos to current positions. A dental professional will be able to use this data to remotely monitor the treatment progress
and modify the treatment plan remotely as needed.

Smart Aligner System

The Platform’s Smart
Aligner System features a newer, more advanced version of our first generation ZSmile System, featuring completely redesigned micropump
and motor mechanisms. The redesign has significantly increased the pump’s pressure capacity, efficiency, and durability. In addition,
the base control unit of Smart Aligner System is now IoT-enabled to allow external secure communication with the device using Wi-Fi and
Bluetooth. The device is thus designed to communicate with the patient’s smartphone as well as the ZSmile AI Cloud and the designated
dental professional.

The clear aligner of a patient’s
Smart Aligner System will be created using 3D printing based on various 3D images of the patient’s teeth that are collected and
analyzed in the ZSmile AI Cloud. This will represent a significant development in our industry since, today, aligners are not printed
but produced using a thermoforming process. Other companies have implemented 3D printing to produce the aligner models but not the actual
aligners. Although using 3D printing is a superior method for production due to its level of precision and customizability, it has not
been implemented in the production of aligners in the traditional aligner market because it would be financially prohibitive to do so,
since traditional aligner solutions would need to print multiple aligners for each patient. Since our solution requires only one smart
aligner to be produced for each patient, we will be able to take advantage of this cost-effective production method that will also have
economies of scale.

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Pictured: The Company’s
second generation device ZSmile

Pictured: ZSmile depicted being used while sleeping

Market Opportunity

Malocclusion is one of the
most prevalent clinical dental conditions in the world, affecting approximately 56% of the global population.1 This translates
into approximately 4.6 billion people globally with malocclusions who could benefit from straightening their teeth.2 However,
most people afflicted by malocclusion do not seek orthodontic treatment due to a number of reasons, including negative perceptions of
metal braces, affordability of treatment, and accessibility to doctors in certain markets and geographies. Annually, only approximately
21 million or 0.46% of the affected individuals elect treatment by orthodontists.3 Today, most orthodontic patients continue
to have their malocclusions treated with the use of traditional corrective methods such as metal arch wires and brackets, referred to
as braces, augmented with elastics, metal expanders, headgear or functional appliances, and other ancillary devices as needed. Upon completion
of a patient’s treatment, their dental professional may recommend the patient use a retainer appliance to preserve the benefits
of their treatments.

1 Hanyi
Chen, Healthcare (MDPI) 2024 “Prevalence of Malocclusion Traits in Primary Dentition, A Systematic Review” https://www.mdpi.com/2227-9032/12/13/1321

2 https://www.fortunebusinessinsights.com/industry-reports/clear-aligners-market-101377.Calculation
based on global population of 8.3 billion: https://www.worldometers.info/demographics/world-demographics/

3 Medi-Tech
Insights. Global Orthodontic Supplies Market Report 2024 – Improving Oral Health Care, available at https://meditechinsights.com/global-orthodontic-supplies-market/.

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According to a 2025 study
conducted by Grand View Research (the “Grand View Research 2025 Study”), the global clear aligners market size was estimated
at $8.3 billion in 2025 and is projected to reach $56.8 billion by 2033, growing at a CAGR of 26.95% from 2026 to 2033.4

Source: Grand View Research Study, 2025

Our Platform seeks to address
this large and underserved global market by offering a discreet, less intrusive and less painful treatment alternative to available clear
aligners and traditional orthodontic treatments. Our Platform is optimized to correct malocclusions that relate to the “social six,”
which are the front upper six and lower six teeth. We believe that at least 30% of those who currently seek treatment could benefit from
using ZSmile to correct their smiles. Based on the Grand View Research 2025 Study, 30% of a $56.8 billion market represents a potential
addressable market of $17 billion.

4 https://www.grandviewresearch.com/industry-analysis/clear-aligners-market

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Source: Based on Grand View Research Study,
2025 and the potential of ZSmile to be able to treat 30% of cases

ZSmile targets the General Dentists Market as well as Orthodontists

Our total addressable market also stands to benefit from the recent trend toward dentists, rather than orthodontists, delivering orthodontic care through clear aligners. In order for a smile correction solution to work properly, a treatment plan and monitoring needs to be executed by a dental professional, such as dentists and orthodontists. Since the ZSmile Platform provides the necessary information to develop and administer a treatment plan using our solution, it may be used by dentists as well as orthodontists, which significantly expands our target distribution channel to cover both orthodontists and dentists. For example, in 2024 there were 10,830 licensed orthodontists in the U.S. while there were 159,562 general practice dentists, based on American Dental Association (ADA) via Statista. 5

5 https://www.statista.com/statistics/1114666/number-of-active-dentists-by-practice-area-us/

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15 X larger addressable market:

General practice dentists outnumber orthodontists
approximately 15 to 1. By enabling GP dentists to deliver orthodontic treatment through ZSmile, the Company’s total addressable practitioner
market expands significantly.

Source: American Dental Association (ADA)
via Statista, reporting 2024

Business Model

Our business model is focused
on engaging the customer throughout their smile correction journey and beyond. Our solution provides an innovative, proprietary end-to-end
platform that spans all stages of customer engagement, from initial acquisition to treatment and ongoing maintenance — all with
minimal need for office visits and lifestyle inconvenience.

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Customer Initiated Dentist-Controlled Treatment

Unlike other solutions in
the market, such as traditional clear aligners, we believe our Platform will provide greater access and interaction with the customers
and allow customers to feel more involved in their own treatment process. We hope to engage the power of social media and other digital
outlets to initiate initial demand for our Platform by the customers.

Customer Engagement – Value Creation

Our Platform is designed to
have a high level of engagement with customers, if cleared for marketing in the U.S., as users will be able to scan their teeth with any
smartphone and see how our solution can improve their smile. We intend to engage the customer from their first interest in correcting
their smile and guide them throughout our convenient process.

Network of Dental Professionals

The Platform is designed to
function via the following process: if the customer can benefit from our Platform, based on the severity of their tooth alignment and
malocclusions, they will be referred to a dental professional in our network for an intraoral scan. Once the results of the scan are uploaded
to our ZSmile AI Cloud, a remote dental professional will develop a treatment plan for that patient using our Platform. If the patient
requires any tooth preparation before initiating treatment with the smart aligner, the patient will again be referred to a dental professional
in our network. The Company currently does not have any written agreements or arrangements with any dental professionals governing provision
of orthodontic services using our Platform.

Monetization – Value Capture

We intend to generate revenues
by:

●
reselling our solution through a professional dental network;

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providing ongoing monitoring and treatment plans for those who have completed their smile correction and may require smile maintenance throughout their life; and

●
eventually selling directly to the consumer in qualified cases with remote dental professional involvement

Sales and Marketing

We intend to market our Platform
in Israel, the European Union (“E.U.”), United Kingdom, United States, and Canada, subject to each country’s requisite
regulatory authorization. We intend to utilize social media to promote our Platform to our targeted audience. The Platform has a potentially
viral social media message that we hope will drive demand by placing user-generated content on all major social medial platforms. Our
marketing strategy themes and promotional messages will emphasize the ease and convenience offered by our Platform as compared to other
available treatments.

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Research and Development

We have a research and development
team with software development, medical device development, dental/orthodontic, data science and other innovation focused backgrounds.
Our current research and development efforts are primarily focused on enhancing the Platform and developing software and processes to
enable the manufacture of our smart aligner systems in volume. Part of our development efforts will be focused on the 3D printing of our
smart aligner, which we believe to be feasible within a year and which we expect will greatly increase manufacturing efficiency.

As of December 2025, our outsourced
software development team is composed of eight professionals with years of experience in artificial intelligence development, data science,
application and software engineering. Members of the team come from the elite intelligence units of the Israeli Defense Force and have
a breadth of experience in computer vision, imaging and targeting systems development. Our software development team is headed by Yossi
Avni, who has 25 years of experience in developing advanced artificial intelligence applications, behavioral biometrics, behavioral profiling
and advanced security systems and holds over 100 patents in these areas.

Our hardware and systems development
team is composed of six professionals with years of experience in FDA-compliant medical device development. They are a part of Aran Research
Development Prototypes Ltd. (“Aran”), a leading Israeli product design and development firm and our third-party hardware development
partner. Aran is ISO 13485 certified and maintains an ISO 7 cleanroom for testing and assembly. Aran also has manufacturing facilities
and a full suite of 3D printing capabilities, which are compliant with FDA guidelines. Our hardware and systems development team is headed
by Avi Kayton, a skilled development manager and systems engineer with 16 years of experience, including extensive experience in medical
device companies.

Intellectual Property

We have three issued U.S.
patents, four pending U.S. patents and numerous global patent applications. These patents and applications cover critical aspects of our
Platform, including the movement of teeth using pulsating air, our diagnostic process, Platform technology, and 3D printing. Our issued
U.S. patents 7819661, 10806376, and 10820965 expire in 2030, 2040, and 2040 respectively. We currently do not own any trademarks.

We intend to continue to pursue
further intellectual property protection through U.S. and non-U.S. patent applications, trademark applications, and non-disclosure and
non-compete agreements. We also intend to seek to protect our software, documentation and other written materials under trade secret and
copyright laws. There can be no assurance that patents will be issued as a result of any patent application or that patents that have
been issued to us or may issue in the future will be found to be valid and enforceable and sufficient to protect our technology or products.

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Seasonality

Our business is generally
not seasonal. However, we may experience moderate sales fluctuations, at certain periods of the year, such as January, due to renewed
consumer focus on health improvement and aesthetics.

Competition

The dental industry is in
a period of immense and rapid digital transformation involving products, technologies, distribution channels and business models. We face
competition in the market for our Platform from the clear aligners market and we expect competition from existing competitors and new
companies that may enter the market or introduce new technologies in the future. We compete with several well-established companies both
in the traditional orthodontic industry and the direct-to-consumer clear aligner industry, including Align Technologies, Dentsply Sirona
(Byte), 3M Clarity Aligners, and Straumann Group. Although these companies offer clear aligner solutions, and thus do not use technologies
similar to the Platform, we expect that potential patients will view clear aligner products as alternatives to the Platform. For this
reason, we view any company in the clear aligners market as a potential competitor.

We believe that the principal
competitive factors in the market for orthodontic appliances include:

●
price and financing options;

●
access and convenience;

●
aesthetic appeal of the treatment method;

●
comfort associated with the treatment method;

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duration and effectiveness of treatment;

●
ease of use; and

●
orthodontist chair time.

We believe that our Platform
will compare favorably with respect to each of these factors.

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Government Regulation

Our products (both the first
generation Aerodentis system and the ZSmile Platform) are considered medical devices, and, accordingly, are subject to rigorous regulation
by government agencies in the United States and other countries in which we intend to sell our products. These regulations vary from country
to country but cover, among other things, the following activities with respect to medical devices:

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design, development and manufacturing;

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testing, labeling, content and language of instructions for use and storage;

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product storage and safety;

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marketing, sales and distribution;

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pre-market clearance and approval;

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record keeping procedures;

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advertising and promotion;

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recalls and field safety corrective actions;

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post-market surveillance;

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post-market approval studies; and

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product import and export

FDA Regulation

In the U.S., numerous laws
and regulations govern the processes by which medical devices are developed, manufactured, brought to market and marketed. These include
the Federal Food, Drug, and Cosmetic Act (“FD&C Act”) and its implementing regulations issued by FDA, among others. Unless
an exemption applies, each medical device commercially distributed in the United States requires FDA clearance of a 510(k) premarket notification
(“510(k) clearance”), granting of a de novo request, or approval of an application for premarket approval (“PMA”).
In general, under the FD&C Act, medical devices are classified in one of three classes on the basis of the controls necessary to reasonably
assure their safety and effectiveness. A medical device’s classification determines the level of FDA review and approval to which
the device is subject before it can be marketed to consumers:

●
Class I devices, the lowest-risk FDA device classification, include devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to FDA’s medical device general controls, including labeling, establishment registration, device product listing, adverse event reporting, and, for some products, adherence to good manufacturing practices through FDA’s Quality System Regulations.

●
Class II devices, moderate-risk devices, also require compliance with general controls and in some cases, special controls as deemed necessary by FDA to ensure the safety and effectiveness of the device. These special controls may include performance standards, particular labeling requirements, or post-market surveillance obligations. While most Class I devices are exempt from the 510(k) premarket notification requirement, typically a Class II device also requires pre-market review and 510(k) clearance as well as adherence to the Quality System Regulations/good manufacturing practices for devices.

●
Class III devices, high-risk devices that are often implantable or life-sustaining, also require compliance with the medical device general controls and Quality System Regulations, and generally must be approved by FDA before entering the market through a PMA application. Approved PMAs can include post-approval conditions and post-market surveillance requirements, analogous to some of the special controls that may be imposed on Class II devices.

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Our manufacturing quality
system is required to be in compliance with the Quality System Regulations enforced by FDA and similar regulations enforced by other worldwide
regulatory authorities. FDA’s Quality System Regulations require manufacturers to follow stringent design, testing, process control,
documentation, and other quality assurance procedures.

Our first generation Aerodentis
System is a Class II medical device, which was cleared by FDA for commercialization in the U.S. pursuant to the 510(k) notification process
for movement and alignment of teeth during orthodontic treatment of malocclusion in April 2020. Our updated Platform, which contains new
and/or different components than the original device, received 510(k) clearance in February 2026, qualifying it to be marketed in the
U.S. The manufacture, marketing and distribution of the Aerodentis System, as well as our next-generation Platform, is subject to continuing
regulation and enforcement by FDA and other government authorities, which includes routine FDA inspections of our facilities to determine
compliance with facility registration requirements, product listing requirements, medical device reporting regulations, and Quality System
Regulations, among others. If FDA finds that we have failed to comply with Quality System Regulations or other legal or regulatory requirements,
it or other government agencies may institute a wide variety of enforcement actions against us, ranging from Warning Letters to more severe
sanctions, including but not limited to financial penalties, withdrawal of 510(k) clearances already granted, and criminal prosecution.
We have passed our International Organization for Standardization (“ISO”) and Medical Device Single Audit Program (“MDSAP”)
certification process and have added the U.S. to our ISO/MDSAP certification in 2019.

The 510(k) Process

Under the 510(k) process,
the manufacturer must submit to FDA a premarket notification demonstrating that the device is “substantially equivalent” to
either a device that was legally marketed prior to May 28, 1976, the date upon which the Medical Device Amendments of 1976 were enacted,
and for which a PMA is not required, a device that has been reclassified from Class III to Class II or Class I, or another commercially
available device that was cleared through the 510(k) process. To be “substantially equivalent,” the proposed device must have
the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have
different technological characteristics and not raise different questions of safety or effectiveness than the predicate device. Clinical
data is sometimes required to support substantial equivalence.

After a 510(k) premarket notification
is submitted, FDA determines whether to accept it for substantive review. If it lacks necessary information for substantive review, FDA
will refuse to accept the 510(k) notification. If it is accepted for filing, FDA begins a substantive review. By statute, FDA is required
to complete its review of a 510(k) notification within 90 days of receiving the 510(k) notification. As a practical matter, clearance
often takes longer, and clearance is never assured. FDA may require further information, including clinical data, to make a determination
regarding substantial equivalence, which may significantly prolong the review process. If FDA agrees that the device is substantially
equivalent to a predicate device currently on the market, it will grant 510(k) clearance to commercially market the device.

Post-Market Regulation

After a device is cleared
or approved for marketing, numerous and extensive regulatory requirements may continue to apply. These include but are not limited to:

●
annual and updated establishment registration and device listing with FDA;

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Quality System Regulation requirements, which require manufacturers to follow stringent quality assurance procedures during all aspects of the design and manufacturing process;

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restrictions on sale, distribution, or use of a device;

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labeling, advertising, promotion, and marketing regulations, which require that promotion is truthful, not misleading, and provide adequate directions for use and that all claims are substantiated, and also prohibit the promotion of products for unapproved or “off-label” uses (i.e., indications that are inconsistent with or beyond the scope of the applicable FDA approval or clearance) and impose other restrictions on labeling;

●
clearance or approval of product modifications to legally marketed devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use;

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medical device reporting regulations, which require that a manufacturer report to FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury if the malfunction were to recur;

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correction, removal, and recall reporting regulations, and FDA’s recall authority;

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complying with the federal law and regulations requiring Unique Device Identifiers on devices; and

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post-market surveillance activities and regulations, which apply when deemed by FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.

FDA has broad regulatory compliance
and enforcement powers. If FDA determines that we failed to comply with applicable regulatory requirements, it can take a variety of compliance
or enforcement actions, which may result in any of the following sanctions:

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warning letters, untitled letters, fines, injunctions, consent decrees, and civil penalties;

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recalls, withdrawals, or administrative detention, or seizure of our products;

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operating restrictions or partial suspension or total shutdown of production;

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refusing or delaying requests for 510(k) marketing clearance or PMA approvals of new products or modified products;

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withdrawing 510(k) clearances or PMA approvals that have already been granted;

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refusal to grant export or import approvals for our products; or

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criminal prosecution.

International Regulation

Many countries throughout
the world have established regulatory frameworks for marketing and commercialization of medical devices. As a designer, manufacturer,
and marketer of medical devices, we are obligated to comply with the respective frameworks of these countries to obtain and maintain access
to these global markets. The frameworks often define requirements for marketing authorizations which vary by country. Failure to obtain
appropriate marketing authorization and to meet all local requirements, including specific quality and safety standards in any country
in which we currently market our products, could cause commercial disruption and/or subject us to sanctions and fines. Delays in receipt
of, or a failure to receive, such marketing authorizations, or the loss of any previously received authorizations, could have a material
adverse effect on our business, financial condition and results of operations.

There is currently no premarket
government review of medical devices in the European Economic Area (“EEA”). However, all medical devices placed on the market
in the EEA must meet the relevant essential requirements laid down in Annex I of Directive 93/42/EEC concerning medical devices, or the
Medical Devices Directive. The most fundamental essential requirement is that a medical device must be designed and manufactured in such
a way that it will not compromise the clinical condition or safety of patients, or the safety and health of users and others. In addition,
the device must achieve the performances intended by the manufacturer and be designed, manufactured, and packaged in a suitable manner.
The European Commission has adopted various standards applicable to medical devices. These include standards governing common requirements,
such as sterilization and safety of medical electrical equipment, and product standards for certain types of medical devices. There are
also harmonized standards relating to design and manufacture. While not mandatory, compliance with these standards is viewed as the easiest
way to satisfy the essential requirements as a practical matter. Compliance with a standard developed to implement an essential requirement
also creates a rebuttable presumption that the device satisfies that essential requirement.

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On April 5, 2017, the European
Parliament passed the Medical Devices Regulation (Regulation 2017/745), which repeals and replaces the E.U. Medical Device Directive and
became effective on May 26, 2021. The Medical Devices Regulation, among other things, is intended to establish a uniform, transparent,
predictable, and sustainable regulatory framework across the EEA for medical devices and ensure a high level of safety and health while
supporting innovation. The new regulations, among other things:

●
strengthen the rules on placing devices on the market and reinforce surveillance once they are available;

●
establish explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance, and safety of devices placed on the market;

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improve the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number;

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set up a central database to provide patients, healthcare professionals, and the public with comprehensive information on products available in the E.U.; and

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strengthen rules for the assessment of certain high-risk devices, such as implants, which may have to undergo an additional check by experts before they are placed on the market.

We received our European CE
mark and ISO/MDSAP certification in 2019. In light of our ISO/MDSAP certification, we believe that we are in substantial compliance with
applicable E.U. regulations and do not anticipate having to make any material expenditures as a result of E.U. or other currently applicable
regulatory requirements. Under Medical Devices Regulation, manufacturing facilities are subject to periodic inspections by regulatory
authorities and must comply with device safety and effectiveness requirements as set forth therein. To that end, we have implemented controls
and procedures intended to ensure that our Access Dental Lab Quality System meets FDA’s and ISO requirements. We passed our audit
to renew our ISO/MDSAP certification in April 2023.

Quality System Regulations

Our manufacturing quality
system is required to be in compliance with the Quality System Regulations enforced by FDA and similar regulations enforced by other worldwide
regulatory authorities. FDA’s Quality System Regulations require manufacturers to follow stringent design, testing, process control,
documentation, and other quality assurance procedures. If FDA finds that we have failed to comply with Quality System Regulations or other
legal or regulatory requirements, it or other government agencies may institute a wide variety of enforcement actions against us, ranging
from Warning Letters to more severe sanctions, including but not limited to financial penalties, withdrawal of 510(k) clearances already
granted, and criminal prosecution. In addition, under Canadian regulation, manufacturing facilities are subject to periodic inspections
by regulatory authorities and must comply with device safety and effectiveness requirements as required by the Medical Devices Regulation.

State Professional Regulation

Our ability to conduct business
in each state is dependent in part upon that particular state’s treatment of remote healthcare delivery under such state’s
laws, rules and policies governing the practice of dentistry, which are subject to changing political, regulatory and other influences.
Orthodontists and dentists who provide professional services to a patient via teledentistry must, in most instances, hold a valid license
to practice or to provide treatment in the state in which the patient is located. In addition, certain states require an orthodontist
or dentist providing telehealth services to be physically located in the same state as the patient. Failure to comply with these laws
and regulations can give rise to civil or criminal penalties.

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Other U.S. Federal and State Laws

We are also subject to various
laws inside and outside the U.S. concerning our relationships with healthcare professionals and government officials, price reporting
and regulation, the promotion, sales and marketing of our products and services, the importation and exportation of our products, reimbursement
for our products and services, the operation of our facilities, and the distribution of our products. Initiatives sponsored by government
agencies, legislative bodies, and the private sector regarding these matters, including efforts to limit the growth of healthcare expenses
generally, are ongoing in markets where we do business. It is not possible to predict at this time the long-term impact of such cost containment
and other measures on our future business.

We intend to enter into contracts
with orthodontists, dentists, or professional corporations to deliver our products and services to their patients. Such contractual relationships
will be subject to various state laws that prohibit the practice of dentistry by lay entities or persons and are intended to prevent unlicensed
persons from interfering with or influencing the orthodontist’s or dentist’s professional judgment. In addition, laws in various
states also generally prohibit the sharing of professional services income with nonprofessional or business interests. Activities other
than those directly related to the delivery of healthcare may be considered an element of the practice of dentistry in many states. Under
the corporate practice of dentistry restrictions of certain states, non-clinical decisions and activities may implicate the restrictions
on the corporate practice of dentistry. We will continually monitor state requirements as to what constitutes the practice of dentistry
and take steps to ensure that the orthodontists and dentists who utilize our services and teledentistry platform handle all clinical aspects
of their patients’ care to ensure we do not violate those laws and regulations.

As a participant in the health
care industry we are subject to extensive and frequently changing regulation under many other laws administered by governmental entities
at the federal, state, and local levels, some of which are, and others of which may be, applicable to our business. Laws regulating medical
device manufacturers and health care providers cover a broad array of subjects.

Several states have fraud
and abuse and consumer protection laws that apply to healthcare items or services reimbursed by any third-party payor, including commercial
insurers, not just those reimbursed by a federally funded healthcare program, or apply regardless of payor. The scope of these laws and
the interpretations of them vary from state to state and are enforced by state courts and regulatory authorities, each with broad discretion.
A determination of liability under such laws could result in fines and penalties and restrictions on our ability to operate in these jurisdictions.

Health Information Privacy and Security
Laws

There are numerous U.S. federal
and state laws and regulations related to the privacy and security of PII, including health information. Among others, the federal Health
Insurance Portability and Accountability Act of 1996, as amended by HITECH, and their implementing regulations, which we collectively
refer to as HIPAA, establish privacy and security standards that limit the use and disclosure of PHI and require covered entities and
business associates to implement administrative, physical, and technical safeguards to ensure the confidentiality, integrity, and availability
of individually identifiable health information in electronic form, among other requirements.

Violations of HIPAA may result
in civil and criminal penalties. We must also comply with HIPAA’s breach notification rule which requires notification to affected
individuals and HHS, and in certain cases to media outlets, in the case of a breach of unsecured PHI. The regulations also require business
associates of covered entities to notify the covered entity of breaches by the business associate.

State attorneys general also
have the right to prosecute HIPAA violations committed against residents of their states, and HIPAA standards have been used as the basis
for the duty of care in state civil suits, such as those for negligence or recklessness in misusing personal information. In addition,
HIPAA mandates that HHS conduct periodic compliance audits of HIPAA covered entities and their business associates for compliance.

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Many states also have laws
that protect the privacy and security of sensitive and personal information, including health information. These laws may be similar to
or even more protective than HIPAA and other federal privacy laws. For example, the laws of the State of California, are more restrictive
than HIPAA. Where state laws are more protective than HIPAA, we must comply with the state laws we are subject to, in addition to HIPAA.
California passed the California Consumer Privacy Act or CCPA on June 28, 2018, which went into effect January 1, 2020. On November 3,
2020, the California Privacy Rights Act of 2020 (“CPRA”), which amends the CCPA and adds new privacy protections that became
effective on January 1, 2023, was enacted through a ballot initiative. While information we maintain that is covered by HIPAA may be exempt
from the CCPA, other records and information we maintain on our patients may be subject to the CCPA. In certain cases, it may be necessary
to modify our planned operations and procedures to comply with these more stringent state laws. Not only may some of these state laws
impose fines and penalties upon violators, but also some, unlike HIPAA, may afford private rights of action to individuals who believe
their personal information has been misused. In addition, state and federal privacy laws subject to frequent change.

In addition to HIPAA and state
health information privacy laws, we may be subject to other state and federal privacy laws, including laws that prohibit unfair privacy
and security practices and deceptive statements about privacy and security, laws that place specific requirements on certain types of
activities, such as data security and texting, and laws requiring holders of personal information to maintain safeguards and to take certain
actions in response to a data breach.

Foreign data protection, privacy,
and other laws and regulations are often more restrictive than those in the U.S. The E.U., for example, traditionally has imposed stricter
obligations under its laws and regulations relating to privacy, data protection and consumer protection than the U.S. In May 2018, the
General Data Protection Regulation (the “GDPR”), which governs data practices and privacy in the E.U., became effective and
replaced the data protection laws of the individual member states. GDPR requires companies to meet stringent requirements regarding the
handling of personal data of individuals in the E.U. These more stringent requirements include expanded disclosures to inform members
about how we may use their personal data, increased controls on profiling members, and increased rights for members to access, control
and delete their personal data. In addition, there are mandatory data breach notification requirements. The law also includes significant
penalties for non-compliance, which may result in monetary penalties of up to 20 million Euros or 4% of a company’s worldwide turnover,
whichever is higher. GDPR and other similar regulations require companies to give specific types of notice and informed consent is required
for the placement of a cookie or similar technologies on a user’s device for online tracking for behavioral advertising and other
purposes and for direct electronic marketing, and the GDPR also imposes additional conditions in order to satisfy such consent, such as
a prohibition on pre-checked consents. It remains unclear how the U.K. data protection laws or regulations will develop in the medium
to longer term and how data transfer to the U.K. from the E.U. will be regulated. Outside of the E.U., there are many other countries
with data protection laws, and new countries are adopting data protection legislation with increasing frequency. Many of these laws may
require consent from individuals for the use of data for various purposes, including marketing, which may reduce our ability to market
our products.

There is no harmonized approach
to these laws and regulations globally. Consequently, we increase our risk of non-compliance with applicable foreign data protection laws
and regulations when we expand internationally. We may need to change and limit the way we use personal information in operating our business
and may have difficulty maintaining a single operating model that is compliant. Compliance with such laws and regulations will result
in additional costs and may necessitate changes to our business practices and divergent operating models, limit the effectiveness of our
marketing activities, adversely affect our business, results of operations, and financial condition, and subject us to additional liabilities.

Environmental Matters

We have no material expenditures
for compliance with Federal, State or local provisions regulating the discharge of materials into the environment, or otherwise relating
to the protection of the environment.

Employees

As of December 31, 2025, we
had 3 full-time employees and 1 part-time employee.

Company Information

Our principal executive offices
are located at Shatner Street 3, Jerusalem, Israel, and our telephone number is +972 (0)74-700-6700. Our web page address is www.zsmile.com.
References to our website address do not constitute incorporation by reference of the information contained on the website, and the information
contained on the website is not part of this document or any other document that we file with or furnish to the SEC.

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