Fooling greedy foreigners is so easy

Nanox Chairman (and soon to be former CEO) lies to the Korean press again, inflating chip production estimates by 30x in the temporary "plant" and by 9x in the future "fab:"

The Cheongju plant has a partial production capacity of 300 wafers per month, and can produce 50-150 chips per wafer depending on the product line. Chairman Poliakine added, “The clean room size for semiconductor production will also be expanded to more than three times that of the Cheongju plant.” [google translated]

His statement contradicts the slides from the investment presentation at Jefferies on June 4.

Specifically, the temporary "clean room," which is not clean at all and located in an equipment parts manufacturing plant, was supposed to have a maximum capacity of 1,000 chips per month, not the 15,000-45,000 (300 x 50-150) he told the Korean press.  Similarly, he lied about the new fab, when he said production will be more than 3x, implying over 45,000-135,000 chips a month, while the investor presentation said 10,000 chips a month at full capacity.

Weren't Koreans supposed to be good at math?

By the way, those chips are neither semiconductor (they are supposed to use small molybdenum pins, not semiconductors) nor MEMS (there is nothing mechanical about them), and they are not functional.  Here is a snapshot again from the August Business Update proving that the temporary "clean room" is not clean at all, showing the chips all covered with dust specs everywhere.

The article also repeats the lies perpetuated by Nanox investor, Yozma group:

Nanox is a company that manufactures X-rays that can reduce radiation exposure time by one-half by shooting images with clearer quality than existing X-rays at 30 times faster. Its size and weight are one-fifth of that of existing devices, so it can be used in small hospitals and medical blind spots. 

All of the statements in the paragraph above are intentionally misleading.  As the 510(k) summary revealed, Nanox' tube is nothing more than an used and abused (and severely underperforming) dental x-ray tube that is underpowered and slow.  Nanox proposed devices are obviously larger than the portable x-ray devices that it underperforms.

A handheld x-ray device by Vatech Korea

Update:  A slightly different version of the same article also quotes the upcoming CEO, who was kicked out of his Chairman position at Hadassah Medical Center last year (he was also on the Board of Nanox when Nanox signed a suspect agreement with Hadassah):

New CEO Erez Meltzer said, “Once the acquisition of Zebra Medical is completed, we can create next-generation medical devices with imaging AI solutions. Zebra's AI and cloud can form a new AI-assisted diagnostic space," he said. "New cooperation opportunities are always welcome."

The new CEO will not be much different from the old CEO, based on the statement above.  Zebra's AI simply does not work with the proposed Nanox.Arc - the reason is simple - Zebra's AI has been trained on regular x-ray images, while there is nothing regular about the proposed Nanox.Arc.  For example, the chest images that Zebra has utilized must be standard standing/sitting erect PA at a sufficient distance from the x-ray source, while all the proposed Nanox.Arc can produce is an underexposed, close-range supine AP (and it is a good bet Zebra has no chest tomosynthesis training images whatsoever).  Maybe Zebra's team can deliver a miracle, eventually, but only after thousands of the proposed Arcs have been deployed and fully utilized and many, many years.

Korean math, again

Another non-sensical fluff piece sponsored by Nanox:

Nanox said that its Yongin plant will be annually producing 220,000 MEMS chips, enough to make 50,000 Nanox.ARC devices. The temporary facility in Cheongju currently has a monthly production capacity of 1,000 MEMS chips.

That is interesting.  220,000 divided by 50,000 is 4.4.  In other words, each Arc device will have 4 tubes and another very special partial ( 4/10, exactly) tube, just short of the 5 tubes in the investor presentations.   Also, Nanox has not disclosed any plans to make 50,000 Arc devices (only 15,000 by 2024).

The capacity is also wrong  - it was supposed to be 120,000 (based on the 10,000 a month from inventor presentations).

Here is the Korean text, in case of doubt.

The equipment shown in the article's photo appears to be Precision 5000 by Applied Materials, an almost 40-year-old CVD machine - baking the very innovative fake Nanox.Source!  Let me know, if I am mistaken.  

A lie about 1,000 tubes

One of the Nanox promoters now wants the CEO removed to an Executive Chairman role, for various reasons.

One of the reasons - the 1,000 magic x-ray tubes that vanished (the 10 fake Nanox.Arc "produced" in November 2020, and the 25 fake Nanox.Arc "produced" in March 2021 were already addressed on this blog).

So, yeah, on the March 2, 2021 results call, the CEO insisted:

So again, just to clarify, for 2021 shipment, which is 1000 units, we are all set. We have secured actually everything we need in terms of chips and tubes and actually metal parts for the system. So for the 1,000 systems that we intend to make and ship this year or latest first quarter of next year, we are set.

He said today that the tube "supplier" is having some problems finishing and testing those tubes.  Poof, 1,000 tubes vanished.  Actually, they were never real - as discussed on this blog, Nanox has no ability to obtain the chips that are supposed to go into these proposed tubes, because the Japanese university labs it claims to be renting prohibit commercial use.   Moreover, the tube assembly Korean "facility" that Nanox showed in a video during RSNA 2020 was labeled "R&D," with no apparent vacuum sealing capabilities - so no assembly there either.

Update May 12, 2021:  Of course, it was not a thousand tubes.  Each of the first 1,000 Nanox.Arc devices is now supposed to have 5 tubes, bringing the number of disappearing tubes to 5,000 (plus spares).

Lost in translation

According to a recent Google-translated Korean article about the planned fab, or factory, Nanox plans to make only 2,000 x-ray tubes a month.  

The investment is about 40 million dollars... Nanox plans to produce about 2,000 semiconductor chips and tubes per month for digital X-rays at [the planned Korean] factory. (google translated)

Something must be wrong with the translation by Google.  Making only 2,000 tubes a month means that the cost can never get to $100 a piece, a cost that would be competitive with regular Chinese tubes of equivalent power/performance.

from Slide 15, January 2020 investor presentation  

Here is the simple math:  Recouping just the capital investment at a $100 cost would require making 400,000 non-defective tubes, which would take over 16 years (given the supposed plan for 24,000 tubes a year ).  So, a $100 Nanox tube would not be possible with this fab, if the translated article is correct.

In an interview in September 2020, the CEO told a different story about that same planned fab:

We are shooting for quite a large capacity because we think that Nanox eventually will be in many, many devices, so we are planning for about 1,000 wafers per month (about 5:30 into the video).

Depending on the wafer size and layout, a real company making real MEMS chips of similar size, should get from less than 100 to nearly 200 chips per wafer, or about 40-100 non-defective chips per wafer (assuming yield of 40% and over).

Nanox wafers, annual report, page 66 

But what is Nanox going to do with over one million non-defective chips a year (or over three million by end of 2024)?  All the planned 15,000 Nanox.Arc devices by end of 2024 need only 75,000 to 165,000 tubes in total (depending on whether 5 or 11 tubes per proposed device).  There are only about "500,000 plus" x-ray imaging systems in the world (page 11, Varex filing)

Another weird press release

 According to the today's press release,  

Nanox is Scaling up Semiconductor Fabrication Plant in South Korea in light of Increased Demand

and

Nano-X Korean Inc, ... boosts construction to support key source manufacturing in light of growth in global demand

So, Nanox already has a fabrication plant, but is now scaling it up, and actually boosting the construction of a new plant, to meet increased demand for its products?

Turns out, none of the above.

The press release explains down below that the plant or FAB is only in the planning stage, and no construction has began.  It is just a piece of barren land and a nice design.  The CEO further hedges that there is no demand, but just a "growing interest in demand," whatever that means.  Clearly, demand is zero, as the product has no regulatory clearance (it is, in fact, fake, after all).  He also seems to admit that the company is "undergoing a smooth transition from development to manufacturing."  Meaning, there is no manufacturing.

Investors also learn that Dr. Ilung (IU) Kim is now a Chairman of Nano-X Korean Inc.  He had previously been introduced by Nanox as a President of SK Telecom (Hong Kong Office) just before his RSNA 2020 testimony disappeared.  He was not considered an executive officer or part of the management team as late last last month, based on the prospectus and latest (January) slide deck.  In a press release by another company, he was introduced in February as the president of SK Telecom, ICT committee.  Eli Reifman, the convicted felon, claims to be a marketing manager at that company.

So, Dr. Kim states:

Scaling up the production line to meet market demand is one of our main priorities, as we would like to see the Nanox.ARC systems tested and operating globally as soon as possible

But, again, how can a production line be scaled, if it does not exist yet.  Why do you need a production line, if all you need a is a few units to be tested?  Didn't Nanox assemble 10 such systems in November, per investor call, and all of them have now vanished, per latest investor call?

Nanox claims in its prospectus to be manufacturing the chips of the cold cathodes in the clean rooms at University of Tokyo in Japan using its own equipment, but that is a lie because the University prohibits commercial use and all the equipment belongs to the University.  So, the novel cold-cathode x-ray source is just a figment of Nanox imagination, as of today, yet Nanox claims that the device it has submitted for clearance uses that source.  I wonder what the FDA thinks of that.

Update March 11, 2021:  The Kim/Reifman connection was first pointed out to me by Steve @ Yahoo.  

Update March 22, 2021:  TerraPharma1 @ Twitter found the FAB project on the website of the reputable Korean architectural and construction management firm Samoo C.M.  Turns out the actual design/plan is different from what Nanox and its promoters have been posting.

The parcel covers about 10,000 square meters, while the building is about 4,000 square meters, per Samoo.  Nanox claims to have paid $6.2 million for the land, per Prospectus, page F-34 (which seems on the high side - who sold the land to Nanox?). The project is supposed to be completed in October this year.  The parcel is located at about 37.1527, 127.2995 , closely in line with the coordinates first published by BH @ Yahoo.com in February.

Numerous discrepancies are visible - The Nanox and Samoo designs are essentially two different designs:

• a long ramp A in Samoo vs very short one in Nanox.
• a cut in section B in Samoo vs no cut in Nanox, and section B is shorter than then middle section in Samoo vs taller than the middle section in Nanox
• section C is same height as middle section in Samoo, but shorter in Nanox.  Shape is different.
• section D is equal height to the middle section in Samoo, but taller in Nanox

If Nanox were serious about getting 150,000 nano-Spindt cold-cathode chips (for the supposed 15,000 ARC units), it won't be building a new fab anyway.

Update April 19, 2021;  Someone posted on twitter the info about the permit for the building granted on April 15.

After OCR and google translate:

경기도 용인시 처인구 원삼면 학일리 원삼 일반산업단지 산업-2

허가구분               신축허가          허가/신고일              20210415

건축면적(m2)            2208.43          대지면적(m2)             11124

연면적(m2)              4810.1

주용도                 공장              기타용도

착공구분         미착공       착공예정

실착공일

사용승인구분                 사용승인일

Industry-2, Wonsam General Industrial Complex, Hakil-ri, Wonsam-myeon, Cheoin-gu, Yongin-si, Gyeonggi-do

Permit Category New Construction Permit Permit/Report Date 20210415

Building area (sq meters) 2,208.43  Site area (sq meters) 11,124

Total Area(sq meters) 4810.1

Main use Factory other use

Start of construction Classification Not to be started Construction scheduled to start

Actual date of arrival

Use approval category Use approval date

Update October 15, 2021:  The Nanox design appears closer to what is on the ground so far.  Images below are snapshots from recent TV footage.

How SK Telecom promotes its investment

If the lie is big enough, and if you repeat it, maybe people will start believing it.

Someone posted a link to the June 2020 press release by SK Telecom as a proof that Nanox is not a fraud.

The press release states:

Nanox developed the innovative Nanox System, which is composed of the Nanox.Arc, a novel digital X-ray device.

Oops.  Novel!  Apparently, nobody told SK Telecom that a novel X-ray device cannot be cleared by the FDA, because clearance requires a substantial equivalence to an already legally marketed device.  So being  novel, the device is clearly (pun intended!) not equivalent to anything on the market already, and so cannot obtain a 510(k) clearance. 

So, if SK Telecom did not lie about the novel thing, then Nanox regulatory strategy goes poof.  Because Nanox has been telling investors that it plans to 

submit an additional 510(k) application with respect to the multi-source Nanox.ARC, which, if cleared, will be our commercial imaging system

 

But how exactly is Nanox device novel?  Well, it is fake and non-functional.  That's its novelty.  The press release helpfully supplies its picture.

Only for angels (humans too heavy for this "body scanner") 

The table clearly can't support a human being.  The Arc is immobile and cannot move along the table (even though it is labeled BODY SCANNER on the side).  The whole thing is powered by a 12V battery (to light up a few LEDs for the photographer and the greedy investors and advisors).  There are no functioning x-ray sources or detectors in the device.  Nanox says on its tech webpage that this is version 1.0 of the device, and claims:

Cold cathode tubes allow the use of a single high voltage power supply and a ‎single high voltage supply line (connecting all the anodes in the system). Digitally ‎controlling each tube enables the system to be significantly reduced and saves ‎power supply cables, installation space, and so on.‎ ‍

Which could be true, indeed, if 12V is high voltage, if and those cold cathode tubes do not generate x-rays but simply multi-spectral light.

The press release also shows an animation gif of the levitating scan, that must generate antigravitons.  Nanox has not provided information as to which version of Nanox.Arc that is.

Roentgen discovered X-rays in 1895, Nanox discovered levitation in 2019.

Update:  Apparently at least one radiologist agrees about Nanox.Arc.

The testimony at RSNA 2020 that disappeared

This testimony was removed after briefly appearing in a longer video on Nanox' RSNA 2020 virtual booth on November 29, 2020 (days ahead of the live presentation). Per Nanox prospectus:

In addition, we signed an agreement with a President of SK Telecom, Dr. Ilung Kim, dated December 16, 2019, for the provision of consulting services to us. Under the agreement, we granted Dr. Kim options to purchase 1,206,290 of our ordinary shares at an exercise price of $2.21 per ordinary share. 301,572 of the options vested as of the grant date and the remaining 904,718 options will vest in equal monthly installments over a period of three years from the vesting commencement date. In case of an initial public offering or certain other events, all unvested options will fully accelerate immediately prior to the closing of the initial public offering. The vested options are exercisable until the earlier of (a) the second anniversary of termination of the engagement between us and Dr. Kim or (b) the tenth anniversary from the date of grant.

So why did it disappear?  High-cost of tubes, not ready for mass production, anything else?

Update March 30,2021:  

Well, turns out Dr. Kim was a marketing SVP and GM of Samsung Memory from 1999 to 2008, according to a recent press release announcing his joining MCE's advisory board.  Turns out, a Dr. Kim, vice president of marketing for the memory division at Samsung, agreed to plead guilty to a single count of price fixing in 2007. Dr. Kim was later sentenced to pay a fine of $250,000 and to "a period of incarceration of fourteen months."  And who claims to be working as a Marketing Managers for MCE?  Eli Reifman, the convicted felon.  Both Lydia Edwards, who is President, USA at Nanox, and Bruce Edwards, who is Nanox’s VP of Business Development used to work with Mr. Reifman.  

And one more thing:  He was on the list of Nanox representatives at the November 2020 Berenberg "CEO" conference.  

Thanks to Steve @ Yahoo and MuddyWaters' report for the hints.

Update March 31, 2021:  The draft registration statement filed on January 14, 2021 had the date of Dr. Kim agreement as October 28, 2019.  Apparently, Nanox had forgotten that the agreement with Dr. Kim had been modified on December 16, 2019 to allow for full vesting of the options prior to the IPO...

Update August 1, 2021:  Dr. Kim, a convicted felon who swindled SK Telecom into investing in Nanox and therefore received the most generous consulting fee from Nanox, has "left" SK Telecom two months ago, and joined Nano-X Korea Ltd. full-time in July ("Responsible for Korean Fab Operation, X ray Tube R & D and AP area sales and marketing", per his linkedin profile).  I first learned it from a June 30 MCE "article", which refers to him as a "former President SK Telecom."  The promotional piece appears authored by Eli Reifman, a convicted felon who claims to be Marketing Manager at MCE.  Reifman may still have an email address at Nanox (according to an email verification service), and may be affiliated with A-Labs (A-Labs supposedly denies it), which provided "consulting services" in connection "with various transactions, such as a private placement [and] ... initial public offering."  For example, A-Labs touted nine months ago the Monolith, the "world's first full-screen smartphone designed by Eli Reifman, founder of Emblaze Ltd. in 2001 with R&D initiated in 2004 which is 3 years before Apple's steve jobs introduced the first iPhone in 2007." 

Here is an August 2020 Israeli article explaining (google translate):

The Emblaze consulting firm cuts millions of dollars in coupons in Nanox and INX offerings

Eli Reifman is not officially affiliated with A-Labs, one of the biggest beneficiaries in the Nanox IPO • The company is owned by Doron Cohen, former vice president of technology company Emblaze, along with Roni Lieberman, who briefly served as VP of product at Emblaze

Gali Weinreb 23.08.2020

Eli Reifman.  Affair that began with his conviction in 2011 / Photo: Tamar Mitzpi, Globes  

A-Labs, which served as a consultant for the Nanox IPO , is one of the biggest beneficiaries of the move. As recently revealed in "Globes", this is a company founded by the graduates of the technology company Emblaze by Eli Reifman , and according to market estimates, Reifman is significantly involved in it. A-Labs itself admittedly denied that Reifman was officially associated with her, but the company's CEO and founder, Doron Cohen, noted that Reifman is a friend and sometimes advises him in a friendly manner.

Under the consulting agreement between the companies, A-Labs received a 2.5% success fee from the issue amount - approximately $ 4 million, an additional payment of $ 1 million due to the issue itself, and another 160,457 options at an exercise price of $ 16 (compared to $ 18 per issue), equivalent to At the time of the IPO, another $ 300,000. A-Labs advises in a similar format to other Israeli companies, and it was recently announced that it is expected to pocket millions of additional dollars from the issuance of the crypto company INX in the USA ( see separate article ).

Reifman is not officially affiliated with A-Labs. The company is owned by Doron Cohen, formerly vice president of the technology company Emblaze, together with Roni Lieberman, who briefly served as VP of product at Emblaze. Its vice president of operations, Raviv Pablo, also previously worked at Emblaze. 

Clues to the fact that Reifman is involved in the company can be found, for example, in the fact that Scratch Alter, who was defined in the court document as "Reifman's relative" in the matter of providing a guarantee for him, is the head of the life sciences department in the company. In addition, the company's offices are located in Kadima, where Reifman also lives.

Recent issues involving A-Labs have included issues of Israeli companies in Canada: Zoomd, which provides website search engine technology, and Else, which has developed a vegan baby food compound.

Eli Reifman is the founder of the technology company Emblaze, which has developed technology in the field of digital video. In the past, Reifman was considered a "child prodigy" in Israeli high-tech, however, he became involved in crime and accumulated debts in the gray market.

In 2011, Reifman was convicted of forgery and fraud and sentenced to four years in prison and compensation to the complainants against him. Following an appeal he filed, the Supreme Court dismissed his appeal and he went to jail, from which he was finally released a year and a half before the end of his full sentence.

Reifman founded Emblaze in 1994. The company was issued in London in 1996, and its value rose from $ 160 million at the time of the IPO to about $ 8 billion at its peak. Reifman sold tens of millions of dollars worth of shares in the company, and became one of the most prominent high-tech rich in the economy before the dot.com bubble burst.

No comment

From the Korean press in September 2020:

Nanox CEO presenting (source: Pulse, Sept 9, 2020, by By Kim Ki-cheol, et al.)

Existing X-ray and CT machines cost over billions of dollars to set up, with one-time imaging over $100. Nanox device costs about $10,000 with one-time imaging about $1.

Here is a comment anyway:  Anything is possible in Korea.