SecProbe.io

CORRESP
1
filename1.htm

Dror
Ortho-Design, Inc.

Shatner Street 3

Jerusalem, Israel

May
10, 2024

VIA
EDGAR

Division
of Corporation Finance

Office of Industrial Applications and Services

U.S. Securities and Exchange Commission

Washington, D.C. 20549

Attention: Robert Augustin and Lauren Nguyen

    Re:
    Dror Ortho-Design, Inc.

    Amendment No. 1 to the Registration Statement on Form
    S-1/A

    Originally filed on February 9, 2024, as amended on
    April 17, 2024

    File No. 333-276981 (as amended, the “Registration
    Statement”)

Dear
Mr. Augustin and Ms. Nguyen:

On
behalf of Dror Ortho-Design, Inc. (the “Company”), we hereby transmit the Company’s response to the comment
letter received from the staff (the “Staff”) of the U.S. Securities and Exchange Commission (the “Commission”),
dated May 3, 2024, regarding the Registration Statement. For the Staff’s convenience, we have repeated below the Staff’s
comment in bold, and have followed the comment with the Company’s response.

Amendment
No. 1 to Registration Statement on Form S-1

Plan
of Distribution, page 108

 1. We
                                            note your response to prior comment 1 and reissue it in part. You state here that the selling
                                            shareholder sales may be at fixed or negotiated prices. You also state that "the Selling
                                            Securityholders and any broker-dealers or agents that are involved in selling the securities
                                            may be deemed to be “underwriters” within the meaning of the Securities Act in
                                            connection with such sales." Given the nature of the offering and its significant size
                                            relative to the number of shares outstanding held by non-affiliates, it appears that this
                                            transaction may be an indirect primary offering by or on behalf of the company. Accordingly,
                                            please either revise your prospectus cover page and here to disclose that the selling shareholders
                                            will offer the shares at a fixed price for the duration of the offering and identify the
                                            selling shareholders as underwriters or provide us with a detailed analysis as to why the
                                            proposed offering is not an indirect primary offering on your behalf and thus should appropriately
                                            be characterized as a transaction eligible to be made pursuant to Rule 415(a)(1)(i) under
                                            the Securities Act. Please refer to Question 612.09 of our Compliance & Disclosure Interpretations
                                            for Securities Act Rules, which can be found on our website.

The
Company respectfully submits that the offering contemplated in the Registration Statement is not an indirect primary offering, but is
a valid secondary offering by or on behalf of the selling stockholders that may be registered for resale on a continuous basis pursuant
to Rule 415(a)(1)(i) of Regulation C of the Securities Act of 1933, as amended (the “Securities Act”).

Rule
415(a)(1)(i) provides that securities may be registered for an offering to be made on a continuous or delayed basis in the future, provided
that the registration statement pertains only to securities “which are to be offered or sold solely by or on behalf of a person
or persons other than the registrant, a subsidiary of the registrant or a person of which the registrant is a subsidiary.” Thus,
Rule 415(a)(1)(i) permits an issuer to register securities to be sold on a delayed or continuous basis by the selling stockholders in
a secondary offering.

U.S. Securities & Exchange Commission

May 10, 2024

Page 2

In
Interpretation 612.09 of the Staff’s Securities Act Rules Compliance and Disclosure Interpretations (“C&DI”),
the Staff sets forth a detailed analysis of the relevant factors that should be examined when determining whether the offering is by
or on behalf of a person other than the registrant. Interpretation 612.09 provides that:

“It
is important to identify whether a purported secondary offering is really a primary offering, i.e., the selling shareholders are actually
underwriters selling on behalf of an issuer. Underwriter status may involve additional disclosure, including an acknowledgment of the
seller’s prospectus delivery requirements. In an offering involving Rule 415 or Form S-3, if the offering is deemed to be on behalf
of the issuer, the Rule and Form in some cases will be unavailable (e.g., because of the Form S-3 “public float” test for
a primary offering, or because Rule 415(a)(1)(i) is available for secondary offerings, but primary offerings must meet the requirements
of one of the other subsections of Rule 415). The question of whether an offering styled as a secondary one is really on behalf of the
issuer is a difficult factual one, not merely a question of who receives the proceeds. Consideration should be given to how long the
selling shareholders have held the shares, the circumstances under which they received them, their relationship to the issuer, the amount
of shares involved, whether the sellers are in the business of underwriting securities, and finally, whether under all the circumstances
it appears that the seller is acting as a conduit for the issuer.”

Each
of the relevant factors listed in Interpretation 612.09 is discussed below. Based on an analysis of the specific factors listed in Interpretation
612.09 and all the circumstances for the Company, the Company respectfully submits that the transaction described herein is appropriately
characterized as a transaction that is eligible to be made under Rule 415(a)(1)(i).

(A)
How long the selling stockholders have held the shares

Given
the length of time the Investors (as defined herein) have held the Securities (as defined herein), this factor weighs favorably in finding
that the offering by the Investors under the Registration Statement constitutes a secondary offering and not an indirect primary offering.

Share
Exchange

On
July 5, 2023, the Company entered into a Share Exchange Agreement (as amended by that certain Amendment to Share Exchange Agreement,
dated August 14, 2023, the “Exchange Agreement”) by and among the Company, Dror Ortho-Design Ltd., a company
incorporated under the laws of the State of Israel (“Private Dror”) and all shareholders (the “Shareholders”)
of Private Dror (the “Share Exchange”). Pursuant to the Exchange Agreement, on August 14, 2023, the Shareholders
transferred all of their ordinary shares in Private Dror to the Company in exchange for newly issued shares of Series A Convertible Preferred
Stock (the “Share Exchange Preferred Shares”), par value $0.0001 per share (the “Series A Preferred
Shares”), of the Company and shares of common stock (“Share Exchange Shares”), par value $0.0001
per share (the “Common Stock”), of the Company. Additionally, pursuant to the terms and conditions of the Exchange
Agreement, all outstanding Series A-4 Warrants to purchase Private Dror’s ordinary shares were assumed by the Company and converted
into Private Placement Warrants (as defined herein) (the “Share Exchange Warrants”). The securities issued
pursuant to the Share Exchange were exempt from the registration requirements of the Securities Act pursuant to Regulation S promulgated
thereunder as an offering outside the U.S. and/or Rule 506 of Regulation D of the Securities Act, as applicable.

U.S. Securities & Exchange Commission

May 10, 2024

Page 3

Private
Placement

In
connection with the Share Exchange, the Company entered into a securities purchase agreement, by and among the Company and each of the
purchasers thereto, dated August 14, 2023 (the “Securities Purchase Agreement”), pursuant to which the Company
sold (1) shares of Common Stock (the “Private Placement Shares,” and together with the Share Exchange Shares,
the “Common Shares”) and shares of the Company’s Series A Preferred Shares (the “Private
Placement Preferred Shares,” and together with the Share Exchange Preferred Shares, the “Preferred Shares”),
or a combination thereof, at an effective purchase price of $0.011 per share of Common Stock sold or underlying such shares of Private
Placement Preferred Shares and (2) five-year warrants to acquire shares of Common Stock at an exercise price of $0.033 per share (“Private
Placement Warrants,” and together with the Share Exchange Warrants, the “Warrants”; and Private
Placement Warrants, together with Private Placement Shares and Private Placement Preferred Shares, the “Private Placement
Securities”) in a private placement (the “Private Placement”) to certain investors (collectively,
the “Private Placement Investors,” and together with the Shareholders, the “Investors”).
On September 13, 2023, pursuant to Section 2.1 of the Securities Purchase Agreement, the Company sold additional Private Placement Preferred
Shares and Private Placement Warrants to certain investors. The Private Placement Securities were sold pursuant to exemption from the
registration requirements of the Securities Act under Section 4(a)(2) of the Securities Act and Rule 506 of Regulation D thereunder.
The shares of Common Stock issuable upon the conversion of the Preferred Shares are herein referred to as “Conversion Shares,”
the shares of Common Stock issuable upon the exercise of the Warrants are herein referred to as “Warrant Shares,”
and the Common Shares, the Warrants and the Preferred Shares are collectively herein referred to as the “Securities.”

Holding
Period

Generally,
the longer shares are held, the less likely it is that the selling stockholders are acting as a mere conduit for the Company. Because
the purchase price has already been paid and the Securities have already been delivered to the Investors, the Investors bear the investment
risk of holding all of these securities issued under the Securities Purchase Agreement and Share Exchange Agreement, as applicable. The
Investors participated in the Private Placement and/or the Share Exchange with the knowledge that they might not be able to exit their
positions at a profit, and they provided evidence that they purchased the Securities with the intent to invest, rather than to effect
a distribution, as an underwriter would have.

The
Investors have already been subject to the full investment risk associated with ownership of the Securities for a period eight months,
and even if the Registration Statement were immediately declared effective it would be several months, at a minimum, before the Investors
could resell all of the Securities and/or Common Stock underlying the Securities, which the Company is seeking to register. Accordingly,
the Investors cannot be compared to underwriters as underwriters (by definition) do not take long term risk on an issuer’s equity
securities.

Furthermore,
the Company notes that there is no mandatory holding period for a private investment in public equities (“PIPE”)
transaction, such as the Private Placement, to be characterized as a private placement. We believe a similar analysis applies to the
Share Exchange Shares, the Share Exchange Preferred Shares and the Share Exchange Warrants issued in the Share Exchange Agreement, which
were exempt from the registration requirements of the Securities Act.

As
noted by the Staff in Securities Act C&DI Question 139.11, a valid secondary offering could in theory occur immediately following
the closing of a private placement. C&DI Question 139.11 provides as follows:

“In
a PIPE transaction, a company will be permitted to register the resale of securities prior to their issuance if the company has completed
a Section 4(2)-exempt sale of the securities […] to the investor, and the investor is at market risk at the time of filing of
the resale registration statement. The investor must be irrevocably bound to purchase a set number of securities for a set purchase price
that is not based on market price or a fluctuating ratio, either at the time of effectiveness of the resale registration statement or
at any subsequent date. […] There can be no conditions to closing that are within an investor’s control or that an investor
can cause not to be satisfied. For example, closing conditions in capital formation transactions relating to the market price of the
company’s securities or the investor’s satisfactory completion of its due diligence on the company are unacceptable conditions.
The closing of the private placement of the unissued securities must occur within a short time after the effectiveness of the resale
registration statement.”

U.S.
Securities & Exchange Commission

May 10, 2024

Page 4

As
the interpretation states a company may even register a secondary offering before shares are issued in a PIPE transaction. The Company
is not aware of any Staff guidance on Rule 415 addressing the appropriate length of time shares must be held in order to determine whether
a purported secondary offering is really a primary offering. In addition, the Company is not aware that the Staff has taken the position
that the period of time elapsing between a closing and effectiveness of a registration statement has raised concerns about whether the
offering is a valid secondary offering, and the Company believes such a position would be inconsistent with C&DI Question 139.11
mentioned above, which allows inclusion of the securities sold after a registration statement is filed if the registration statement
is not yet effective.

(B)
The circumstances under which the selling stockholders received their shares

The
securities being registered for resale were issued and sold to the Investors pursuant to the Securities Purchase Agreement and the Exchange
Agreement in an arm’s-length transaction that was vigorously negotiated, including between legal counsels for the Company and the
lead Investor (as defined in the Securities Purchase Agreement), as applicable, and which complied in all respects with Section 4(a)(2)
of the Securities Act, Rule 506 of Regulation D or Regulation S, as applicable.

As
set forth in the Registration Statement, other than receipt of the exercise price of the Warrants, the Company will not receive any proceeds
from the resale of the Common Shares, Conversion Shares and the Warrant Shares by the Investors. Although the question of who receives
proceeds is not the only factor on which the analysis of the character of an offering should be based, the fact that the Company will
not receive any financial benefits from the sales of the securities being registered further supports the conclusion that the proposed
offering is not a primary offering on behalf of the Company.

Furthermore,
each of the Private Placement Investors specifically represented to the Company, as set forth in Section 3.2(b) of the Securities Purchase
Agreement, that it was acquiring the securities for its own account and not with a view towards, or for resale in connection with, the
public sale or distribution thereof, and it had no intention of distributing any of the securities in violation of the Securities Act
or any applicable state securities law and had no direct or indirect arrangement or understandings with any other persons to distribute
or regarding the distribution of such securities in violation of the Securities Act or any applicable state securities law. Similarly,
each Shareholder represented to the Company, as set forth in Section 2.10 of the Share Exchange Agreement, either (A) that it was an
accredited investor within the meaning of Rule 501(a) of Regulation D, or (B) (i) that such Shareholder is not a U.S. person (as that
term is defined in Regulation S), (ii) that there were no directed sell