UNITED
STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2018
or
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________________ to ________________
Commission file number: 000-55680
TECHCARE
CORP.
(Exact Name Of Registrant As Specified In Its Charter)
Delaware | 68-0080601 | |
(State of Incorporation) | (I.R.S. Employer Identification No.) | |
1140 Avenue of the Americas, New York, NY | 10036 | |
(Address of Principal Executive Offices) | (ZIP Code) |
Registrant’s Telephone Number, Including Area Code: + (972) 3 750-3060 or (646) 380-6645
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). [X] Yes [ ] No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the defnitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer [ ] | Accelerated filer [ ] | ||
Non-Accelerated filer [X] | Smaller reporting company [X] | ||
Emerging Growth Company [ ] |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
On November 12, 2018, the Registrant had 29,949,096 shares of common stock outstanding.
TABLE OF CONTENTS
Item | Description | Page | ||
PART I - FINANCIAL INFORMATION | ||||
ITEM 1. | FINANCIAL STATEMENTS (UNAUDITED). | |||
Condensed Consolidated Balance Sheets | 3 | |||
Condensed Consolidated Statements of Operations and Comprehensive loss | 4 | |||
Condensed Consolidated Statements of Cash Flows | 5 | |||
Notes to Unaudited Financial Statements | 6 | |||
ITEM 2. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS. | 18 | ||
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. | 24 | ||
ITEM 4. | CONTROLS AND PROCEDURES. | 25 | ||
PART II - OTHER INFORMATION | ||||
ITEM 1. | LEGAL PROCEEDINGS. | 26 | ||
ITEM 1A. | RISK FACTORS. | 26 | ||
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS. | 26 | ||
ITEM 3. | DEFAULT UPON SENIOR SECURITIES. | 26 | ||
ITEM 4. | MINE SAFETY DISCLOSURE. | 27 | ||
ITEM 5. | OTHER INFORMATION. | 27 | ||
ITEM 6. | EXHIBITS. | 27 | ||
SIGNITURES. | 28 |
2 |
PART I - FINANCIAL INFORMATION
TechCare Corp.
Condensed Consolidated Balance Sheets
As of September 30, 2018 and December 31, 2017
(Unaudited)
September 30, 2018 | December 31, 2017 | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 384,495 | $ | 589,818 | ||||
Accounts receivables | 173,626 | 3,318 | ||||||
Inventory | 156,240 | 41,445 | ||||||
Other receivables | 244,212 | 105,818 | ||||||
Total current assets | 958,573 | 740,399 | ||||||
Non-current assets: | ||||||||
Severance pay fund | 21,564 | 13,764 | ||||||
Long-term deposits | 11,745 | 12,287 | ||||||
Property and equipment, net | 133,365 | 95,984 | ||||||
Total non-current assets | 166,674 | 122,035 | ||||||
Total assets | $ | 1,125,247 | $ | 862,434 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable and accrued expenses | $ | 252,376 | $ | 106,362 | ||||
Refund liability | 107,460 | - | ||||||
Note payable | 84,719 | 88,751 | ||||||
Option liability | - | 132,470 | ||||||
Total current liabilities | 444,555 | 327,583 | ||||||
Non-current liability: | ||||||||
Liability for severance pay | 27,642 | 23,422 | ||||||
Total liabilities | 472,197 | 351,005 | ||||||
Commitments | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized: none issued and outstanding at September 30, 2018 and December 31, 2017 | - | - | ||||||
Common stock, par value $0.0001 per share, 500,000,000 shares authorized: 29,949,096 and 25,835,401 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively | 2,995 | 2,584 | ||||||
Accumulated other comprehensive income | 111,780 | 104,777 | ||||||
Additional paid-in capital | 8,564,286 | 6,945,151 | ||||||
Stock to be issued | 60,000 | 30,000 | ||||||
Accumulated deficit | (8,086,011 | ) | (6,571,083 | ) | ||||
Total stockholders’ equity | 653,050 | 511,429 | ||||||
Total liabilities and stockholders’ equity | $ | 1,125,247 | $ | 862,434 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
3 |
TechCare Corp.
Condensed Consolidated Statements of Operations
and Comprehensive loss
For the Nine and Three-Months Periods Ended September 30, 2018 and 2017
(Unaudited)
For the nine | For the nine | For the three | For the three | |||||||||||||
months ended | months ended | months ended | months ended | |||||||||||||
September 30, 2018 |
September 30, 2017 |
September 30, 2018 |
September 30, 2017 |
|||||||||||||
Restated | Restated | |||||||||||||||
Revenues | 188,809 | - | 90,367 | - | ||||||||||||
Cost of revenues | 128,842 | - | 71,224 | - | ||||||||||||
Gross profit | 59,967 | - | 19,143 | - | ||||||||||||
Research and development expenses | 191,316 | 263,268 | 143,400 | 83,030 | ||||||||||||
Change in fair value of option liability | (132,470 | ) | 182,720 | - | (93,430 | ) | ||||||||||
Marketing, General and administrative expenses | 1,489,784 | 2,082,658 | 522,864 | 398,880 | ||||||||||||
Operating loss | 1,488,663 | 2,528,646 | 647,121 | 388,480 | ||||||||||||
Financial expenses (income), net | 26,265 | (24,495 | ) | 9,110 | (5,304 | ) | ||||||||||
Net loss | $ | 1,514,928 | 2,504,151 | 656,231 | $ | 383,176 | ||||||||||
Net loss per common stock: | ||||||||||||||||
Basic | $ | (0.05 | ) | $ | (0.12 | ) | (0.02 | ) | $ | (0.02 | ) | |||||
Diluted | $ | (0.05 | ) | $ | (0.12 | ) | (0.02 | ) | $ | (0.02 | ) | |||||
Weighted average number of common stock outstanding: | ||||||||||||||||
Basic | 31,709,944 | 21,722,199 | 32,529,717 | 21,752,409 | ||||||||||||
Diluted | 31,807,036 | 21,722,199 | 32,529,717 | 22,018,967 | ||||||||||||
Comprehensive loss: | ||||||||||||||||
Net loss | 1,514,928 | 2,504,151 | 656,231 | 383,176 | ||||||||||||
Other comprehensive expense (income) attributable to foreign currency translation | (7,003 | ) | (10,058 | ) | 8,702 | 2,344 | ||||||||||
Comprehensive loss | 1,507,925 | 2,494,093 | 664,933 | 385,520 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
4 |
TechCare Corp.
Condensed Consolidated Statements of Cash Flows
For the Nine-Months Periods Ended September 30, 2018 and 2017
(Unaudited)
For the nine | For the nine | |||||||
months ended | months ended | |||||||
September 30, 2018 | September 30, 2017 | |||||||
Restated | ||||||||
Cash flows from operating activities: | ||||||||
Net loss | $ | (1,514,928 | ) | $ | (2,504,151 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Depreciation | (9,329 | ) | 10,193 | |||||
Stock issued in relation to consulting services | - | 70,964 | ||||||
Change in fair value of option liability | (132,470 | ) | 182,720 | |||||
Stock-based compensation | 27,544 | 1,222,920 | ||||||
Changes in cash attributed to changes in operating assets and liabilities: | ||||||||
Other receivables and prepaid expenses | (310,877 | ) | 7,055 | |||||
Accounts payable and accrued expenses | 151,413 | (60,512 | ) | |||||
Liability for severance pay | (6,614 | ) | 5,229 | |||||
Refund liability | 107,088 | - | ||||||
Inventory | (120,978 | ) | - | |||||
Net cash used in operating activities | (1,809,151 | ) | (1,065,582 | ) | ||||
Cash flow from investing activities: | ||||||||
Severance pay fund | 3,485 | (1,592 | ) | |||||
Purchase of fixed assets | (31,999 | ) | (4,170 | ) | ||||
Investment in long-term deposit | - | (6,059 | ) | |||||
Net cash used in investing activities | (28,514 | ) | (11,821 | ) | ||||
Cash flow from financing activities: | ||||||||
Proceeds from issuance of common stock | 1,592,000 | 878,250 | ||||||
Proceeds from stock to be issued | 30,000 | - | ||||||
Net cash provided by financing activities | 1,622,000 | 878,250 | ||||||
Effect of exchange rates on cash and cash equivalents | 10,342 | 8,394 | ||||||
Decrease in cash and cash equivalents | (205,323 | ) | (190,759 | ) | ||||
Cash and cash equivalents - beginning of period | 589,818 | 275,041 | ||||||
Cash and cash equivalents - end of period | $ | 384,495 | $ | 84,282 | ||||
Non-cash financing activity during the period: | ||||||||
Issuance of common stock and warrants | $ | 194,995 |
The accompanying notes are an integral part of these condensed consolidated financial statements.
5 |
TechCare Corp.
Notes to Unaudited Financial Statements
September 30, 2018 (Unaudited)
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Nature of operations
TechCare Corp. (“Techcare” or the “Company”), formally known as BreedIT Corp. (“BreedIt”) was incorporated under the laws of the State of Delaware on May 26, 2010. The Company’s common stock is traded in the United States on the OTCQB Market under the ticker symbol “TECR”.
On February 8, 2016, the Company signed a Merger Agreement with Novomic Ltd. (“Novomic”), a private company incorporated under the laws of the State of Israel. The closing of the Merger took place on August 9, 2016 pursuant to which Novomic became a wholly-owned subsidiary of the Company. The Merger was structured as a reverse Merger.
Novomic was incorporated as a private company in Israel in 2009. Since inception, Novomic has been a technology company engaged in the design, development and commercialization of a unique delivery platform utilizing vaporization of various natural compounds for multiple health, beauty and wellness applications. Novomic’s delivery platform is proprietary and patented.
Novomic’s first product is Novokid® - an innovative home use device which vaporizes a natural, plant-based, pesticides and silicone-free compound that effectively treats head lice and eggs. The Novokid® kit includes a vaporizer, treatment capsules and treatment cap alongside ancillary components. Novokid® is currently being sold in Israel and the Netherlands.
Novomic is currently working on the research and development of future product offerings for its delivery platform, including Shine, a revolutionary cosmetic device for the treatment and rejuvenation of the hair and scalp.
Going Concern
During the nine months period ended September 30, 2018, the Company had a comprehensive loss of approximately $1.5 million. As of September 30, 2018, the Company had accumulated losses of approximately $8 million.
Based on the projected cash flows and Company’s cash balances as of September 30, 2018, Company’s management is of the opinion that without further fund raising it will not have sufficient resources to enable it to continue advancing its activities including the development, manufacturing and marketing of its products for a period of at least 12 months from the date of issuance of these financial statements. As a result, there is substantial doubt about the Company’s ability to continue as a going concern.
Management’s plans include the continued commercialization of the products, continue taking cost reduction steps and securing sufficient financing through the sale of additional equity securities, debt or capital inflows from strategic partnerships. There are no assurances however, that the Company will be successful in obtaining the level of financing needed for its operations. If the Company is unsuccessful in commercializing its products and securing sufficient financing, it may need to reduce activities, curtail or cease operations. These financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
6 |
B. Summary of significant accounting policies
The accounting policies adopted are consistent with those of the previous financial year.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements and condensed footnotes have been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”), for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for fair statement of results for the interim periods presented have been included. The results of operations for the nine and the three months ended September 30, 2018 are not necessarily indicative of the results to be expected for the year or for other interim periods or for future years. The consolidated balance sheet as of December 31, 2017 is derived from audited financial statements as of that date; however, it does not include all of the information and footnotes required by GAAP for complete financial statements. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, which was filed with the SEC on April 2, 2018.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of TechCare, and its subsidiary, Novomic. All intercompany balances and transactions have been eliminated in consolidation.
Revenue Recognition
Effective January 1, 2018, the Company adopted the new accounting standard related to the recognition of revenue in contracts with customers. Since the Company had no revenues prior to January 1, 2018, the new standard had no impact on revenues and results of operations for prior periods.
The Company derives revenues from sales of its product Novokid directly or indirectly through its distributors in the Netherlands and in Israel.
The Company determines revenue recognition through the following steps:
● | Identification of the contract, or contracts, with a customer. | |
● | Identification of the performance obligations in the contract. | |
● | Determination of the transaction price. | |
● | Allocation of the transaction price to the performance obligations in the contract. | |
● | Recognition of revenue when, or as, the Company satisfies a performance obligation. |
Revenue is measured as the amount of consideration expected to receive in exchange for transferring goods to the end customer or to the distributor.The Company also considers products that might be returned mostly based on the terms stipulated in the agreements with its distributors.The Company recognize the amount received or receivable that is expected to be returned as a refund liability,representing its obligation to return the clients’ consideration.
The Company reports revenue net of any revenue based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue-producing transactions.
Revenue from products are recognized when the customer or the distributor has obtained control of the goods (for the Company’s current arrangements, this is at the point in time) based on the shipping terms. The Company recognizes revenue on sales to distributors upon shipment of the goods, when the distributor has economic substance apart from the Company and the distributor is considered the principal for the transaction with the end-user client.
7 |
NOTE 2: NEW ACCOUNTING PRONOUNCEMENTS
Accounting Pronouncements Adopted in Current Period
In May 2014, and in following related amendments, the Financial Accounting Standards Board (the “FASB”) issued a new comprehensive revenue recognition guidance on revenue from contracts with customers ( the “Standard”) that will supersede the current revenue recognition guidance. The Standard provides a unified model to determine when and how revenue is recognized. The core principle of the Standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company adopted this guidance on January 1, 2018, which resulted in no impact on its consolidated financial statements since the Company had no revenues prior to 2018.
In January 2016, the FASB issued an Accounting Standards Update (an “ASU”) which changes to the current measurement model primarily affects all equity investments in unconsolidated entities (other than those accounted for using the equity method of accounting), financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. Under the new ASU equity investments in unconsolidated entities (other than those accounted for using the equity method of accounting) with readily determinable fair values will be measured at fair value through earnings. Equity investments that do not have readily determinable fair values may be measured at fair value or at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The Company adopted this guidance on January 1, 2018, which resulted in no impact on its consolidated financial statements.
In November 2016, the FASB issued an ASU which requires entities to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted this guidance on January 1, 2018, which resulted in no impact on its consolidated financial statements.
In June 2018, the FASB issued an ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). These amendments expand the scope of Topic 718, Compensation—Stock Compensation (which previously included share-based payments to employees only) to include share based payments issued to nonemployees for goods or services, with certain exceptions. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. ASU 2018-07 supersedes Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees, and is effective for all public entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. The Company early adopted ASU 2018-07 commencing July 1, 2018, with no impact on its consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In February 2016, the FASB issued a new ASU which revises lease accounting guidance. Under the new guidance, lessees will be required to recognize a right-of-use asset and a lease liability for all leases, other than leases that meet the definition of a short-term lease. The liability and the right-of-use asset arising from the lease will be measured as the present value of the lease payments. In addition, this guidance requires disclosure of key information about leasing arrangements to increase transparency and comparability among organizations. The new standard is effective for fiscal year beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition approach, with certain practical expedients. The Company is currently evaluating the impact of the adoption of the new lease accounting guidance on its consolidated financial statements.
8 |
NOTE 3: RESTATEMENT OF 2017 CONDENSED CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS
As discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, during the preparation of the 2017 annual financial statements, the Company became aware of misstatements in its condensed consolidated financial statements for the quarter ended March 31, 2017, the six months ended June 30, 2017, and the nine months ended September 30, 2017, that were included in each of the Company’s 2017 Form 10-Qs. The misstatement stemmed from an erroneous recording of additional stock compensation expense of $943,901 during the three months ended March 31, 2017 related to certain fully vested awards that were granted in December 31, 2016, and were properly fully expensed in 2016. As a result, the Company’s previously reported net loss for each of the three aforementioned periods in 2017 was overstated by this amount. The Board of Directors and the Company concluded that due to this error the condensed consolidated financial statements for each of these periods was materially misstated and should be restated (the Restatement).
The Restatement also corrects certain other misstatements during the 2017 interim periods, including (i) an error related to the accounting for advances to suppliers that were previously expensed that impacted the quarters ended June 30, 2017, and September 30, 2017, and (ii) errors in the classification of certain expenses within the consolidated statements of operations and comprehensive loss which impacts classification only and does not impact the total net loss or comprehensive loss reported for any of the periods.
The Restatement does not result in a change to the Company’s previously reported total amounts of net cash flows from operating activities, investing activities, or financing activities. There was no impact to net change in cash and cash equivalents for any previously reported periods. Certain corrections of classifications within the operating cash flow section were impacted by the Restatement.
9 |
Condensed consolidated balance sheet as of September 30, 2017 (Unaudited):
As previously reported | Adjustments | As Restated | ||||||||||
Assets | ||||||||||||
Current assets: | ||||||||||||
Cash and cash equivalents | $ | 84,282 | 84,282 | |||||||||
Other receivables | 160,620 | 29,755 | 190,375 | |||||||||
Total current assets | 244,902 | 29,755 | 274,657 | |||||||||
Non-current assets: | ||||||||||||
Severance pay fund | 10,403 | 10,403 | ||||||||||
Long-term deposit | 12,071 | 12,071 | ||||||||||
Property and equipment, net | 99,744 | 99,744 | ||||||||||
Total non-current assets | 122,218 | 122,218 | ||||||||||
Total assets | $ | 367,120 | 29,755 | 396,875 | ||||||||
Liabilities and Stockholders’ Equity | ||||||||||||
Current liabilities: | ||||||||||||
Accounts payable and accrued expenses | $ | 137,780 | 137,780 | |||||||||
Option liability | 182,720 | 182,720 | ||||||||||
Note payable | 87,192 | 87,192 | ||||||||||
Total current liabilities | 407,692 | 407,692 | ||||||||||
Non-current liability: | ||||||||||||
Liability for severance pay | 21,184 | 21,184 | ||||||||||
Total liabilities | 428,876 | 428,876 | ||||||||||
Commitments | ||||||||||||
Stockholders’ equity: | ||||||||||||
Preferred stock, par value $0.0001 per share, 10,000,000 shares authorized: none issued and outstanding at September 30, 2017 | - | - | ||||||||||
Common stock, par value $0.0001 per share, 500,000,000 shares authorized: 21,776,762 shares issued and outstanding at September 30, 2017 | 2,177 | 2,177 | ||||||||||
Accumulated other comprehensive income | 107,061 | 107,061 | ||||||||||
Additional paid-in capital | 6,970,542 | (943,901 | ) | 6,026,641 | ||||||||
Stock to be issued | 48,964 | 48,964 | ||||||||||
Accumulated deficit | (7,190,500 | ) | 973,656 | (6,216,844 | ) | |||||||
Total capital deficiency | (61,756 | ) | 29,755 | (32,001 | ) | |||||||
Total liabilities and capital deficiency | $ | 367,120 | 29,755 | 396,875 |
10 |
Condensed consolidated statement of operations and comprehensive loss for the nine month period ended September 30, 2017 (Unaudited):
As previously reported | Adjustments | As Restated | ||||||||||
Research and development expenses | 872,874 | (609,606 | ) | 263,268 | ||||||||
Change in fair value of option liability | 182,720 | 182,720 | ||||||||||
Marketing, general and administrative expenses | 2,441,860 | (359,202 | ) | 2,082,658 | ||||||||
Operating loss | 3,497,454 | (968,808 | ) | 2,528,646 | ||||||||
Financial income, net | 24,495 | 24,495 | ||||||||||
Loss before income taxes | 3,472,959 | (968,808 | ) | 2,504,151 | ||||||||
Tax expenses | 4,848 | (4,848 | ) | - | ||||||||
Net loss | $ | 3,477,807 | (973,656 | ) | 2,504,151 | |||||||
Net loss per common stock: | ||||||||||||
Basic | $ | (0.16 | ) | 0.04 | (0.12 | ) | ||||||
Diluted | $ | (0.16 | ) | 0.04 | (0.12 | ) | ||||||
Weighted average number of common stock outstanding: | ||||||||||||
Basic | 21,722,199 | 21,722,199 | ||||||||||
Diluted | 21,722,199 | 21,722,199 | ||||||||||
Comprehensive loss: | ||||||||||||
Net loss | 3,477,807 | (973,656 | ) | 2,504,151 | ||||||||
Other comprehensive income attributable to foreign currency translation | 10,058 | 10,058 | ||||||||||
Comprehensive loss | 3,467,749 | (973,656 | ) | 2,494,093 |
11 |
Condensed consolidated statement of operations and comprehensive loss for the three month period ended September 30, 2017 (Unaudited):
As previously reported | Adjustments | As Restated | ||||||||||
Research and development expenses | 131,765 | (48,735 | ) | 83,030 | ||||||||
Change in fair value of option liability | (93,430 | ) | (93,430 | ) | ||||||||
Marketing, general and administrative expenses | 361,342 | 37,538 | 398,880 | |||||||||
Operating loss | 399,677 | (11,197 | ) | 388,480 | ||||||||
Financial income, net | 5,304 | 5,304 | ||||||||||
Loss before income taxes | 394,373 | (11,197 | ) | 383,176 | ||||||||
Tax expenses | - | - | ||||||||||
Net loss | $ | 394,373 | (11,197 | ) | 383,176 | |||||||
Net loss per common stock: | ||||||||||||
Basic | $ | (0.018 | ) | - | (0.018 | ) | ||||||
Diluted | $ | (0.022 | ) | - | (0.022 | ) | ||||||
Weighted average number of common stock outstanding: | ||||||||||||
Basic | 21,752,409 | 21,752,409 | ||||||||||
Diluted | 22,018,967 | 22,018,967 | ||||||||||
Comprehensive loss: | ||||||||||||
Net loss | 394,373 | (11,197 | ) | 383,176 | ||||||||
Other comprehensive expense attributable to foreign currency translation | 2,344 | 2,344 | ||||||||||
Comprehensive loss | 396,717 | (11,197 | ) | 385,520 |
NOTE 4: STOCKHOLDERS’ EQUITY
Share capital
During the nine months ended September 30, 2018, the Company entered into several agreements, under which the Company raised an aggregate amount of $ 1,622,000, as follows:
a) | 1,291,990 shares of its common stock at a purchase price of $0.387 for a total consideration of $500,000 and warrants to purchase up to 645,995 stock with an exercise price of $0.387, exercisable until June 30, 2018. The warrants expired on June 30, 2018. | |
b) | 1,033,592 shares of common stock of the Company at a purchase price of $0.387 for a total consideration of $400,000, and warrants to purchase up to 516,796 stock with an exercise price of $0.387, exercisable until September 30, 2018. The warrants expired on September 30, 2018. | |
c) | 108,527 shares of common stock of the Company at a purchase price of $0.387 for a total consideration of $42,000, and warrants to purchase up to 70,000 stock with an exercise price of $0.60, exercisable until June 17, 2019. |
12 |
Investment agreements signed during the three months ended September 30, 2018:
d) | 645,995 shares of common stock of the Company at a purchase price of $0.387 for a total consideration of $250,000, and warrants to purchase up to 416,667 stock with an exercise price of $0.6, exercisable until June 27, 2019. | |
e) | 645,995 shares of common stock of the Company at a purchase price of $0.387 for a total consideration of $250,000, and warrants to purchase up to 416,667 stock with an exercise price of $0.6, exercisable until August 7, 2019. | |
f) | 129,199 shares of common stock of the Company at a purchase price of $0.387 for a total consideration of $50,000, and warrants to purchase up to 83,333 stock with an exercise price of $0.6, exercisable until August 7, 2019. | |
g) | 258,398 shares of common stock of the Company at a purchase price of $0.387 for a total consideration of $100,000, and warrants to purchase up to 166,667 stock with an exercise price of $0.6, exercisable until August 7, 2019. | |
h) | 77,519 shares of common stock of the Company at a purchase price of $0.387 for a total consideration of $30,000, and warrants to purchase up to 50,000 shares of common stock with an exercise price of $0.6, exercisable until August 21, 2019. As of September 30, 2018, the Company had not yet issued the shares of common stock and, therefore, recorded stock to be issued in the amount of $30,000 in the consolidated financial statements. | |
i) | 77,519 shares of common stock of the Company at a purchase price of $0.387 for a total consideration of $30,000, and warrants to purchase up to 50,000 stock with an exercise price of $0.6, exercisable until August 21, 2019. As of September 30, 2018, the Company had not yet received the investment proceeds and therefore had not issued the shares of common stock for such investment. |
Stock-Based Compensation to employees and directors
Stock based awards are accounted for using the fair value method in accordance with ASC 718, Shared Based Payment. The Company’s primary type of stock-based compensation consists of stock options to directors, employees and officers. The Company uses Black-Scholes option pricing model in valuing options.
During the nine months ended September 30, 2018 the Company had not granted any options to employees and directors.
During March 2017, the Company granted to certain employees options to purchase 869,596 of the Company’s common stock for an exercise price of $0.0001. The options granted were fully vested on the date of the grant and exercisable into the Company’s common stock at a 1:1 ratio for 2.5 years from the date of the grant.
The following assumptions were applied in determining the options’ fair value on their grant date:
Risk-free interest rate | 1.54 | % | ||
Expected shares price volatility | 70 | % | ||
Expected option term (years) | 2.5-5 | |||
Dividend yield | - |
The Company based the risk-free interest rate on the U.S. Treasury yield curve. The expected term in years represents the period of time that the awards granted are expected to be outstanding. The assumption for dividend yield is zero because the Company has not historically paid dividends nor does it expect to do so in the foreseeable future. The volatility was based on the historical stock volatility of several peer companies, as the Company has limited trading history to use the volatility of its own common stock.
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A summary of the stock option activity for employees and directors for the nine months ended September 30, 2018:
Number of Options | Weighted Average Exercise Price | |||||||
U.S Dollar | ||||||||
Options outstanding at December 31, 2017 | 2,640,334 | 0.0001 | ||||||
Granted | - | - | ||||||
Options outstanding at September 30, 2018 | 2,640,334 | 0.0001 | ||||||
Options exercisable at September 30, 2018 | 2,640,334 | 0.0001 |
Stock-based compensation expenses related to employee awards, included in the Company’s statements of operations and comprehensive loss, were allocated as follows:
Nine months ended September 30, 2018 | Nine months ended September 30, 2017 | |||||||
Restated (see note 3) | ||||||||
Research and development expenses | $ | - | 103,795 | |||||
Marketing ,general and administrative | - | 1,119,125 | ||||||
$ | - | 1,222,920 |
Stock-Based Compensation to non-employees – Options and Warrants
The Company early adopted ASU 2018-07 commencing July 1, 2018, with no impact on its consolidated financial statements. Prior to the adoption of ASU 2018-07 stock options issued to consultants and other non-employees, as compensation for services provided to the Company, were accounted for based upon the fair value of the options. The fair value of the options granted were measured on a final basis at the end of the related service period and were recognized over the related service period using the straight line method. After the adoption of ASU 2018-07, the measurement date for non-employee awards is the date of the grant. The compensation expense for non-employees is recognized, without changes in the fair value of the award, over the requisite service period, which is the vesting period of the respective award.
In the second quarter of 2018, as part of consulting agreements, the Company granted options to non-employees, as follows:
1) | 83,393 options exercisable to purchase 83,393 shares of common stock of the Company, at an exercise price of $0.0001 per option. The options will be vested in accordance with the following vesting periods: 25% of the options will be exercisable on December 1, 2018, and the remaining 75% will be considered exercisable at the end of each subsequent three-month period thereafter, over the course of 12 quarters. | |
2) | 83,393 options to a related party exercisable to purchase 83,393 shares of common stock of the Company, at an exercise price of $0.0001 per option. The options will be vested in accordance with the following vesting periods: 25% of the options will be exercisable on January 1, 2019, and the remaining 75% will be considered exercisable at the end of each subsequent three-month period thereafter, over the course of 12 quarters. | |
3) | 436,349 options to a related party exercisable to purchase 436,349 shares of common stock of the Company, at an exercise price of $0.387 per option. The options will be vested in accordance with the following vesting periods: 33.33% of the options will be exercisable on January 1, 2019, and the remaining 66.67% will be considered exercisable at the end of each subsequent three-month period thereafter, over the course of 8 quarters. |
The following assumptions were applied in determining the options’ fair value on their grant date:
Risk-free interest rate | 2.65%-2.85 | % | ||
Expected shares price volatility | 70 | % | ||
Expected option term (years) | 5 | |||
Dividend yield | - |
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The Company based the risk-free interest rate on the U.S. Treasury yield curve. The expected term in years represents the period of time that the awards granted are expected to be outstanding. The assumption for dividend yield is zero because the Company has not historically paid dividends nor does it expect to do so in the foreseeable future. The volatility was based on the historical stock volatility of several peer companies, as the Company has limited trading history to use the volatility of its own common stock.
During January 2017, as part of a consulting agreement, the Company granted to a non-employee warrants exercisable to purchase 100,000 of the Company’s common stock at an exercise price of $1.50 per warrant exercisable for a period of 24 months commencing on the date of the agreement, fully vested on the date of the grant.
During March 2017, the Company granted to a non-employee options to purchase 521,065 of the Company’s common stock for an exercise price of $0.0001. The options granted were fully vested on the date of the grant and exercisable into the Company’s common stock at a 1:1 ratio for 5 years from the date of the grant.
The following assumptions were applied in determining the options’ fair value on their grant date:
Risk-free interest rate | 1.54 | % | ||
Expected shares price volatility | 70 | % | ||
Expected option term (years) | 2-5 | |||
Dividend yield | - |
A summary of the stock option activity related to non-employees, for the nine months ended September 30, 2018:
Number of Options | Weighted Average Exercise Price | |||||||
U.S Dollar | ||||||||
Options outstanding at December 31, 2017 | 621,065 | 0.2416 | ||||||
Granted | 603,135 | 0.2800 | ||||||
Options outstanding at September 30, 2018 | 1,224,200 | 0.2605 | ||||||
Options exercisable at September 30, 2018 | 621,065 | 0.2416 |
Stock-based compensation expenses in the amount of $27,544 included in the Company’s statements of operations and comprehensive loss for the nine months period ended September 30, 2018 recorded in marketing, general and administrative.
NOTE 5: OEM DISTRIBUTION AGREEMENT
On June 23, 2017, the Company entered into an OEM agreement (the “OEM Agreement”) with a medical device and wellness applications company based in the United States (the “OEM Distributor”), according to which the OEM Distributor will manufacture, distribute and sell the Company’s Novokid head lice treatment products in the United States, Canada, Brazil, Argentina, Costa Rica and Colombia, all on an exclusive basis, pursuant to and in accordance with the terms and conditions set forth in the OEM Agreement, including minimum royalties commitments. The OEM Distributor will be solely responsible for obtaining and maintaining the approval from the US Food and Drug Administration (the “FDA”) and shall bear all costs related to such approval. The Company, through its OEM Distributor, has been communicating with the FDA regarding Novokid’s designation as a medical device. An Application to the FDA Office of Combination (OCP division) is under preparation.
As of the date of these financial statements, an FDA approval was not obtained, hence, the Company did not generate any revenues from the OEM agreement.
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As part of the OEM Agreement, the OEM Distributor paid a royalty advance of $10,000 and also an amount of $140,000 which is held in an escrow account, until the Company completes certain milestones, as described in the OEM Agreement. As of September 30, 2018, the milestones have not been achieved.
Also, as part of the OEM Agreement, the Company granted the OEM Distributor an option to purchase up to 9.09% of the Company’s common stock for a total consideration of up to $900,000,exercisable until January 15, 2018.
The fair value of the option as of June 23, 2017 (initial recognition) amounted to $432,518.The key assumptions used in the options’ valuation was as follows:
Risk-free interest rate | 1.14 | % | ||
Expected shares price volatility | 70 | % | ||
Expected option term (years) | 0.56 | |||
Dividend yield | - |
The fair value of the option as of December 31, 2017 amounted to $132,470.The key assumptions used in the options’ valuation was as follows:
Risk-free interest rate | 1.28 | % | ||
Expected shares price volatility | 70 | % | ||
Expected option term (years) | 0.04 | |||
Dividend yield | - |
The option expired on January 15, 2018.
NOTE 6: INCOME TAXES
a. Basis of taxation
The Company and its subsidiary are taxed under the domestic tax laws of the jurisdiction of incorporation of each entity (United States and Israel).
b. Carryforward Tax Losses
Carryforward Tax Losses of the US Company as of September 30, 2018 amounted to approximately $0.4 million. Carryforward Tax Losses of the Israeli subsidiary amounted to approximately $5.1 million. A full valuation allowance was created against these carry forward tax losses since the realization of any future benefit from these net operating losses cannot be sufficiently assured at September 30, 2018.
c. Corporate tax rates
The regular corporate tax rate in Israel in 2017 is 24% and 23% in 2018.
On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act (the “TCJA”), which among other reduces the federal corporate tax rate from 35% to 21%, effective January 1, 2018.
The Company has no impact of the TCJA on these condensed consolidated financial statements.
NOTE 7: LOSS PER SHARE
Loss per share is based on the loss that is attributed to the stockholders holding common stock, divided by the weighted average number of common stock in issue during the period.
For purposes of the calculation of the diluted loss per share, the Company adjusts the weighted average number of common stock using the treasury stock method assuming conversion of all of the dilutive potential stock. The potential stock are taken into account only if their effect is dilutive (increases loss per share).
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NOTE 8: FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of the Company’s financial instruments, including cash equivalents, current assets, accounts payable and accrued liabilities and notes payables approximate their fair value, due to their short term in nature and their carrying amounts approximates the amounts expected to be received or paid.
A hierarchy has been established for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The Company accounts for option liability as Level 3 since its inputs are unobservable inputs for the liability.
The following table is a reconciliation of the change for the financial liability where fair value measurement is estimated utilizing Level 3 inputs:
2018 | 2017 | |||||||
US dollar | US dollar | |||||||
Fair value as of January 1 | $ | 132,470 | - | |||||
Change in fair value recognized in statement of operations and comprehensive loss | (132,470 | ) | 276,150 | |||||
Fair value as of September 30 | $ | - | 276,150 |
NOTE 9: RELATED PARTIES
(a) | On June 28, 2018 the Company entered into a subscription agreement with an investor, pursuant to which the Company will issue 645,995 shares of its common stock at a purchase price of $0.387 for a total consideration of $250,000 and warrants to purchase up to 416,667 stock with an exercise price of $0.60, exercisable until June 28, 2019. In August 2018, the funds were received and the shares of common stock were issued. | |
(b) | On August 8, 2018 the Company entered into subscription agreements with several investors who are related parties, pursuant to which the Company issued 904,393 shares of its common stock at a purchase price of $0.387 for a total consideration of $350,000 and warrants to purchase up to 583,334 stock with an exercise price of $0.60, exercisable until August 7, 2019. | |
(c) | On July 16, 2018, the Board of Directors of the Company has appointed Mr. Doron Biran as the new Chief Executive Officer of the Company and its wholly-owned subsidiary Novomic. Pursuant to the service agreement (the “Agreement”) signed with Mr, Biran, Mr. Biran will receive a monthly compensation of NIS 52 thousand (approximately $14.3 thousand) plus VAT. In the event of a capital raise exceeding $1,000 thousand Mr. Biran will be entitled to compensation increase to a total of NIS 65 thousand (approximately $17.9 thousand). Furthermore, upon the earlier of either 24 months from the effective date of the Agreement, or a capital raise exceeding $5,000 thousand and listing of the Company on the Nasdaq Stock Market, Mr. Biran shall become an employee of the Company and shall receive a base salary of NIS 60 thousand as well as NIS 5 thousands for automobile expenses (approximately $16.5 thousand) and other customary social benefits. | |
Pursuant to the Agreement, Mr. Biran is entitled to options to purchase 870,958 common stock of the Company (the “Options”). The Options shall vest over a period of four years in quarterly increments, commencing on June 11, 2018, subject to continued provision of services by Mr. Biran in accordance with the Agreement. The Options shall accelerate and become fully vested in the event of a merger or acquisition of the Company at an evaluation exceeding $50 million or in the event that the Company’s traded value exceeds $50 million (each, “Acceleration Event” and together “Acceleration Events”), provided that Mr. Biran provided his services to the Company for a period of at least 12 months prior to the Acceleration Event. The exercise price of each Option shall be $0.279, equal to the volume weighted average price of the Company’s common stock during a 30 days’ period prior to the signing of Mr. Biran’s services Agreement. As of the date of the report Options were not granted yet. |
NOTE 10: SUBSEQUENT EVENT
On October 28, 2018, the Company entered into an amendment to the subscription agreement mentioned in note 4e (the “Amendment”). Pursuant to the Amendment, the investor has increased its initial investment by an additional sum of $250,000 to a total investment of $500,000 and is to be issued a total of 1,915,708 shares of common stock at a price per share of $0.261, out of which 645,995 shares of common stock were issued in August 2018. In addition, the investor was issued additional warrants to purchase up to 416,667 shares of common stock with an exercise price of $0.6, exercisable until October 27, 2019. The funds were received in November 2018.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
FORWARD-LOOKING STATEMENTS
The following discussion provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Certain statements that the Company may make from time to time, including all statements contained in this Form 10-Q that are not statements of historical fact, constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 and the safe harbor provisions set forth in Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements may be identified by words such as “plans,” “expects,” “believes,” “anticipates,” “estimates,” “projects,” “will,” “should,” and other words of similar meaning used in conjunction with, among other things, discussions of future operations, financial performance, product development and new product launches, market position and expenditures. The Company assumes no obligation to update any forward-looking statements. Additional information concerning factors which could cause differences between forward-looking statements and future actual results is discussed under the heading “Risk Factors” in the Company’s Annual report on Form 10-K as filed with the SEC on April 2, 2018. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to help you understand our historical results of operations during the periods presented and our financial condition for the periods ended September 30, 2018 and 2017. This MD&A should be read in conjunction with our consolidated financial statements and the accompanying notes to consolidated financial statements for the years ended December 31, 2017 and 2016.
Overview and Recent Developments
We are a technology company engaged in the design, development and commercialization of a unique delivery platform utilizing vaporization of various natural compounds for multiple health, beauty and wellness applications. Novomic’s delivery platform is proprietary and patented.
Our current product offering includes Novokid® - an innovative home use device which vaporizes a natural, plant-based, pesticides and silicone-free compound that effectively treats head lice and eggs. Following our soft launch of Novokid® in the Netherlands, we expanded our distribution network and launched Novokid in Israel during late May 2018 through Super Pharm, Israel’s largest and leading drugstore chain. The launch was accompanied by a radio and digital brand awareness and marketing campaign and supported by Meditrend, our Israeli distributor, specializing in health and wellness products while representing leading brands.
During the following months, we will work to expand our sales points to additional drugstore chains, pharmacies, department stores, HMOs, various online outlets, and the like.
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As we remain focused on increasing our global footprint and expanding our distribution network, we showcased Novokid® and met potential distributors and partners at CPhI Worldwide, a renowned and leading pharma tradeshow held in Madrid during October 2018.
We are also working on erecting an automated production line which is expected to ramp up our manufacturing capacity while reducing its costs.
In July 2018, our board of directors has appointed Mr. Doron Biran as the new chief executive officer of the Company and its wholly-owned subsidiary Novomic. Mr. Biran replaced Mr. Zvi Yemini, our chairman of the board of directors, who served as our chief executive officer of the Company and its wholly-owned subsidiary Novomic since June 2018. In September 2018, we appointed Mr. Nir Shemesh as the new chief financial officer of the Company and its wholly owned subsidiary Novomic. Mr. Shemesh replaced Tzahi Geld who had served as chief financial officer of the Company since July 2017.
As of the date hereof, we have limited operations and revenues from our business operations. There is substantial doubt that we can continue as a going concern and an on-going business for the next twelve months without the success of our business operations which foresees the generation of revenues throughout 2018. Before we enter the U.S. market, we will need to secure approval from the FDA which will take approximately 12-24 months.
We project that we will need to raise up to $2,000,000 during the next 12 months in order to successfully implement our business plan, of which there can be no assurance. Failure to obtain this necessary capital at acceptable terms, if at all, when needed, may force us to delay, limit, or terminate our products development efforts and secure regulatory approvals and would adversely impact our planned research and development efforts in connection with the Company’s future products, which may make it more difficult for us to attain profitability.
Our Treatment Solutions
Novokid – Natural, Plant-based and Effective Lice Treatment
Parents and children exposed to head lice are now forced to use standard over-the-counter, or OTC, treatments that are toxic, often ineffective, time consuming and expensive. According to the Journal of Medical Entomology, 98% of lice have developed resistance to existing treatments in the US and they have now referred to as “super-lice”. Most current treatments contain pesticides, alcohol or silicone, which are all associated with a wide variety of hazardous side effects.
Novokid is a non-pesticide, natural, plant-based and eco-friendly solution that eliminates lice and super lice by a 10 minute dry treatment. This compares with current treatments that required 20-40 minutes of shampooing and daily combing. Our treatment is fast, dry, clean, and easily administered at home or on the go. Novokid can also be used as a maintenance and preventative treatment if used regularly.
Shine – Natural Haircare rejuvenation
Shine uses cold vaporization and a proprietary formulation to clean, treat and improve the appearance of the hair and scalp. In addition to removing the residue of products, the treatments will balance the hair’s pH levels, add body and shine, define curls, and strengthen and protect hair from further damage. Like our solution for lice, users simply put a Shine capsule in the compressor, place the attached cap on their head and sit for a 10-minute treatment. There is no need to rinse or shampoo following the treatment.
The global hair care market is estimated to be in excess of $80 billion per annum and we are looking to establish a presence in the home treatment niche. To that end, we are in the process of expanding the Shine treatment product line to include formulations for the needs of specific hair types, such as dry, curly, colored, and over-processed hair.
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Recent Developments and Plans
Our current and future products are all based on the Platform which was developed over a period of seven years. During the past 18 months, we have achieved the following:
● | Performed extensive market research for the lice treatment/prevention market; | |
● | Completed product development of Novokid, which included finalization of commercial design of vaporizer, capsules and head cap, optimizing the product efficiency, negotiating and finalizing the product supply chain across various suppliers; | |
● | Received the Israeli Ministry of health approval, or AMAR, to market our Novokid head lice treatment products in Israel; | |
● | Attained ISO 9001 certification; | |
● | Obtained CE approval for Novokid, classified as a Class I medical device; | |
● | Obtained recommendations from leading senior pediatrics; | |
● | Opened Company headquarters offices in Israel’s Rosh Ha’ayin Industrial Park; | |
● | Entered into an Original Equipment Manufacturer, or OEM, Agreement, which we refer to as the OEM Agreement, according to which the OEM distributor will manufacture, distribute and sell the Company’s Novokid head lice treatment products, in the United States, Canada, Brazil, Argentina, Costa Rica and Colombia, all on an exclusive basis; | |
● | Entered into a distribution agreement with an exclusive distributor of our Novokid product line in the Netherlands; | |
● | Entered into a distribution agreement with an exclusive distributor of our Novokid product line in Israel; | |
● | Contracted and set up production facilities in China and Israel; and | |
● | Showcased Novokid® in CPhI Madrid, the world’s leading pharma tradeshow, held in Madrid, Spain, during October 2018. |
During the next 12-18 months, we plan to focus our efforts on the following:
● | Showcasing Novokid® and Shine and meet potential distributors and partners in multiple tradeshows around the world; | |
● | Finalizing additional distribution, OEM and JV agreements with well-known distributes and manufacturers, in Israel and throughout the world; | |
● | Erecting automated production and assembly lines; | |
● | Reduction of manufacturing costs; | |
● | Finalizing the development and commercialization of Shine, the Company’s hair treatment devices exploiting our proprietary vapor based delivery platform; | |
● | Obtain the approval of the FDA for Novokid, by and through our OEM distributor; | |
● | Obtain CE and FDA approvals for Shine; | |
● | Complete preparations for mass production by launching an automated capsule production line; | |
● | Presenting the platform and its application in leading conferences around the globe; and | |
● | Developing our dermatology and pests control applications, based on our Platform. |
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We may be required to obtain additional regulatory approvals for our head lice treatment platform and any future products. If unable to receive regulatory approval or commercialize our product candidates, our business will be adversely affected. CE approval is required for the marketing, distributing and sale of our products in the EU, whereas FDA approval is required for such marketing, distributing and sale in the United States. In the event that our products are to be sold in certain territories requiring additional regulatory approvals, such approvals will need to be obtained by us or by our distributors.
Sales and Marketing
While the vaporizer for both Novokid and Shine is designated to be a one-time purchase, the head cap and the capsules, will be sold separately based on the razor/razor-blade business model. Based on our estimates, which we believe are both reasonable and conservative, our target customers are expected to purchase between 12-16 capsule units per year. Therefore, we estimate that the majority of our revenues will be generated in the future based on capsules sales for both Novokid and Shine products.
The Company plans to focus its initial sales and marketing efforts on the European Union where CE approval was obtained in Q3 2017, and once FDA approval for the Novokid product is received, also the United States.
In order to achieve our intended global footprint and market presence, we plan to base our primary distribution method on the distribution model, in which the distributer will sell our products under our name and branding. In specific instances, we will consider implementing the OEM model, in which the distributer will sell our products under a co-branding arrangement. We believe that these models will reduce our marketing costs to a minimum while starting to generate revenues to support our research and development efforts for utilizing our technological platform to expand our product line.
The Company also plans to market and advertise its products through implementing an omni-channel strategy, both through online and retail sales outlets, which we believe will present a huge opportunity for generating sales and market acceptance.
Production
We manufacture our products through third party manufacturers in Israel and China. The Novokid vaporizer is manufactured in China by a local manufacturer which also handles assembly, integration and quality assurance for the vaporizer and manufactures the cap and the ancillary components of the Novokid Kit. The Novokid treatment capsules are manufactured and filled in Israel by third party contractors. We are working with industry experts to erect an automated production and assembly line, which we expect to increase our manufacturing capacity as well as reduce its costs.
Research and Development
We incurred approximately $696 thousand on research and development during the past two years. During this period, the Company completed the development of both the Novokid and Shine products, which included finalization of commercial design of the compressor, capsules and head cap and optimizing the products efficiency.
We plan to build upon the research and development achievements we had with the completion of the Novokid product for head lice treatment as the basis to expand our variety of treatments and solutions, which will also be based on the developed Platform and the knowledge we gained during the past two years.
We are working on a new and proprietary capsule (patent-pending) which will enable a wider variety of future applications for our delivery platform.
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Intellectual Property
Due to the importance of patents, we have devoted significant efforts and resources and will continue to invest resources in strengthening our patent portfolio. Below is the list of patents registered by the Company to date:
Patents | Each patent’s relevance to the program | Date and status of registration | ||
EP 2 438 830 B1 | Treating lice with gaseous compounds in airtight space. | Approved on July 16, 2014 | ||
US 9/307820 B2 | Treating lice with gaseous compounds in airtight space. | Approved on April 12, 2016 | ||
US 15/438842 | Treating an object with gaseous compounds in an airtight space. | February 22, 2017 * | ||
US 62661868 | A capsule for the vaporization of liquid | April 24, 2018 * |
* Under approval process
We plan to expand our existing patents portfolio to encompass additional applications.
Results of Operations during the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017
During the Nine months ended September 30, 2018, we generated approximately $189 thousand in revenues, compared to no revenues in the Nine months ended September 30, 2017. Our revenues are derived from the launch of Novokid® in the Netherlands and in Israel.
Our research and development expenses during the nine months ended September 30, 2018 were approximately $191 thousand. Our research and development expenses during the nine months ended September 30, 2017, were approximately $263 thousand, comprised of approximately $47 thousand of ongoing research and development expenses, and additional sum of approximately $216 thousand in stock based compensation to the Company’s research and development employees.
Our marketing, general and administrative expenses during the nine months ended September 30, 2018, were approximately $1.5 million, comprised of approximately $1.5 million in payroll and service providers’ consultancy, and additional sum of $28 thousand in stock based compensation to our management, consultants and service providers. Our marketing, general and administrative expenses during the nine months ended September 30, 2017 were approximately $2.1 million, comprised of approximately $1 million in payroll and service providers’ consultancy, and an additional sum of approximately $1.1 million in stock based compensation to our management, consultants and service providers.
During the nine months ended September 30, 2018, we incurred a net loss of approximately $1.5 million. Excluding a sum of $28 thousand in stock based compensation, we incurred a net loss of approximately $656 thousand during the three month period ended September 30, 2018. During the nine months ended September 30, 2017, we incurred a net loss of approximately $2.5 million. Excluding a sum of approximately $1.2 million in stock based compensation, we incurred a net loss of $383 thousand during the three month period ended September 30, 2017.
Results of Operations during the three months ended September 30, 2018 as compared to the three months ended September 30, 2017
During the three months ended September 30, 2018, we generated approximately $90 thousand in revenues, compared to no revenues in the three months ended September 30, 2017.Our revenues are derived from the launch of Novokid® in the Netherlands and in Israel.
Our research and development expenses during the three months ended September 30, 2018 were approximately $143 thousand. Our research and development expenses during the three months ended September 30, 2017, were approximately $83 thousand, all expenses resulted from ongoing research and development expenses.
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Our marketing, general and administrative expenses during the three months ended September 30, 2018, were approximately $523 thousand, comprised of approximately $514 thousand in payroll and service providers’ consultancy, and additional sum of approximately $9 thousand in stock based compensation to our management, consultants and service providers. Our marketing, general and administrative expenses during the three months ended September 30, 2017 were approximately $399 thousand, all expenses resulted from payroll and service providers’ consultancy.
During the three months ended September 30, 2018, we incurred a net loss of approximately $656 thousand. Excluding a sum of approximately $9 thousand in stock based compensation, we incurred a net loss of approximately $647 thousand during the three month period ended September 30, 2018. During the three months ended September 30, 2017, we incurred a net loss of $383 thousand.
Liquidity and Capital Resources
Our balance sheet as of September 30, 2018, reflects total assets of approximately $1.1 million, consisting mainly of cash and cash equivalents in the amount of approximately $384 thousand, accounts receivables of approximately $174 thousand, inventory of approximately $156 thousand and other receivables of approximately $244 thousand. As of December 31, 2017, our balance sheet reflects total assets of approximately $862 thousand, consisting mainly of cash and cash equivalents in the amount of approximately $590 thousand, other receivables of approximately $106 thousand, inventory of approximately $41 thousand and property and equipment, net of approximately $96 thousand.
As of September 30, 2018, we had total current liabilities of approximately $444 thousand, consisting mainly of accounts payable and accrued expenses of approximately $252 thousand, refund liability of approximately $107 thousand and note payable of approximately $85 thousand. As of December 31, 2017, we had total current liabilities of approximately $328 thousand, consisting mainly of accounts payable and accrued expenses of approximately $106 thousand, note payable of approximately $89 thousand and option liability of approximately $132 thousand.
As of September 30, 2018, we had positive working capital of approximately $514 thousand, compared to positive working capital of approximately $412 thousand at December 31, 2017. The working capital has been sufficient to sustain our operations to date, although there is substantial doubt about our ability to continue as going concern. Our total liabilities as of September 30, 2018 were approximately $473 thousand, compared to approximately $351 thousand at December 31, 2017.
During the nine months ended September 30, 2018, we used approximately $1.8 million of cash in our operating activities. This resulted mainly from an overall net loss of approximately $1.5 million, an increase in other receivables of approximately $310 thousand, an increase in inventory of approximately $121 thousand and fair value option income of approximately $132 thousand, offset by an increase in accounts payable and accrued expenses of approximately $151 thousand.
During the nine months ended September 30, 2018, our financing activities provided us with approximately $1.6 million, as compared to approximately $878 thousand in the same period in the prior year, through the issuance of common stock and proceeds from stock to be issued.
While management believes the Company will be successful in its current and planned operating activities, there can be no assurance that the Company will be successful in the achievement of sales of its products that will generate sufficient revenues to earn a profit and sustain the operations of the Company. Our ability to create sufficient working capital to sustain us over the next twelve-month period and beyond, is dependent on our ability to raise additional funds through the issuance of equity or debt instrument. There can be no assurance that sufficient capital will be available to us. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.
23 |
Going Concern Consideration
As result of the above, there is substantial doubt about our ability to continue as a going concern. Our financial statements contain additional note disclosures with respect to this matter, but no accounting adjustments that relate to this matter.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Critical Accounting Policies
There was no change to our critical accounting policies since the year ended December 31, 2017, except for the adoption of the new revenue accounting standard and the improvements to Non-Employee Share-Based Payment Accounting.
a. | Effective January 1, 2018, the Company adopted the new accounting standard related to the recognition of revenue in contracts with customers. Since the Company had no revenues prior to January 1, 2018 the new standard had no impact to revenues and results of operations for prior periods. |
The Company derives revenues from sales of its products directly or indirectly through its distributors.
The Company determines revenue recognition through the following steps:
● | Identification of the contract, or contracts, with a customer. | |
● | Identification of the performance obligations in the contract. | |
● | Determination of the transaction price. | |
● | Allocation of the transaction price to the performance obligations in the contract. | |
● | Recognition of revenue when, or as, the Company satisfies a performance obligation. |
Revenue is measured as the amount of consideration expected to receive in exchange for transferring goods to the end customer or to the distributor.
The Company reports revenue net of any revenue based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue-producing transactions.
Revenue from products are recognized when the customer or the distributor has obtained control of the goods (for the Company’s current arrangements, this is at the point in time) based on the shipping terms. The Company recognizes revenue on sales to distributors upon shipment of the goods, when the distributor has economic substance apart from the Company and the distributor is considered the principal for the transaction with the end-user client.
b. | Effective July 2018, the Company early adopted the new improvement to Nonemployee Share-Based Payment Accounting with no impact on its consolidated financial statements. |
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
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ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures.
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s Chief Executive Officer (CEO) (who is the Company’s principal executive officer) and the Company’s Chief Financial Officer (CFO) (who is the Company’s principal financial officer) to allow for timely decisions regarding required disclosure. In designing and evaluating the Company’s disclosure controls and procedures, the Company’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and the Company’s management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on our evaluation of the effectiveness of our disclosure controls and procedures as of September 30, 2018, our Company’s CEO and CFO concluded that the Company’s disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding required disclosure.
Management’s Remediation Plan
Since the time our material weaknesses were identified in early 2017 related to (i) inadequate segregation of duties consistent with control objectives; and (ii) ineffective controls over period-end financial reporting and disclosure processes we initiated the following procedures during the year ended December 31, 2017:
(i) | Due to inadequate finance resources as of the end of Q1 2017, we hired during the second quarter of 2017 a new outsourced finance team and replaced our Chief Financial Officer. | |
(ii) | Began implementing processes and controls to properly perform an effective period-end financial reporting process. |
We have started to implement the following additional steps: (i) Appoint additional qualified personnel (such as a new Chief Executive Officer as of July 2018 and a new internal Chief Financial Officer as of September 2018) to address inadequate segregation of duties and ineffective controls over period-end financial reporting as well as continue implementing modifications to our operating procedures and financial controls to address such inadequacies; and (ii) Adopt sufficient policies and procedures for period-end financial reporting.
The remediation efforts, which are not completed as of September 30, 2018, set out is largely dependent upon our Company securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.
Changes in Internal Control over Financial Reporting
During the three months ended September 30, 2018, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.
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We know of no material, active or pending legal proceedings against our Company, nor of any proceedings that a governmental authority is contemplating against us. We know of no material proceedings to which any of our directors, officers, affiliates, owner of record or beneficially of more than 5 percent of our voting securities or security holders is an adverse party or has a material interest adverse to our interest.
Not applicable.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEED
On June 18, 2018, the Company entered into a subscription agreement with an investor, pursuant to which the Company issued 108,527 shares of common stock at a purchase price of $0.387 and warrants to purchase up to 70,000 shares of common stock with an exercise price of $0.60, exercisable until June 17, 2019, for a total consideration of $42,000.
On June 28, 2018, the Company entered into a subscription agreement with an investor, pursuant to which the Company issued 645,995 shares of its common stock at a purchase price of $0.387 and warrants to purchase up to 416,667 stock with an exercise price of $0.6, exercisable until June 27, 2019, for a total consideration of $250,000.
On August 8, 2018, the Company entered into subscription agreements with several investors, pursuant to which the Company issued 1,033,592 shares of its common stock at a purchase price of $0.387 and warrants to purchase up to 666,667 stock with an exercise price of $0.60, exercisable until August 7, 2019 for a total consideration of $400,000.
On August 22, 2018 the Company entered into subscription agreements with several investors, pursuant to which the Company will issue 155,038 shares of its common stock at a purchase price of $0.387 and warrants to purchase up to 100,000 stock with an exercise price of $0.60, exercisable until August 21, 2019 for a total consideration of $60,000.
On October 28, 2018, the Company entered into an amendment to a subscription agreement entered between the Company and an investor on August 8, 2018 (the “Amendment”). Pursuant to the Amendment, the investor has increased its initial investment by an additional sum of $250,000 to a total investment of $500,000 and was issued a total of 1,915,708 shares of common stock at a price per share of $0.261, out of which 645,995 shares of common stock were issued in August 2018. In addition, the investor was issued additional warrants to purchase up to 416,667 shares of common stock with an exercise price of $0.6, exercisable until October 27, 2019.
The shares issued pursuant to the aforementioned subscription agreements have been offered pursuant to Regulation D or Regulation S under the United States Securities Act of 1933, as amended, or the Securities Act, and therefore will be restricted securities and may be offered and resold only in transactions that are exempt from registration under the Securities Act and other applicable securities laws.
With respect to grants of share options, we claimed exemption from registration under the Securities Act for these issuances under Section 4(a)(2), Regulation S promulgated under the Securities Act or Rule 701 of the Securities Act as transactions pursuant to written compensatory plans or pursuant to a written contract relating to compensation.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
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ITEM 4. MINE SAFETY DISCLOSURE.
Not applicable.
Not applicable.
(a) The following documents are filed as exhibits to this report on Form 10-Q or incorporated by reference herein. Any document incorporated by reference is identified by a parenthetical reference to the SEC filing that included such document.
* English Transition of Hebrew original document.
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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned.
TechCare Corp. | ||
By: | /s/ Doron Biran | |
Doron Biran | ||
Chief Executive Officer | ||
(Principal Executive Officer) | ||
Date: | November 13, 2018 | |
By: | /s/ Nir Shemesh | |
Nir Shemesh | ||
Chief Financial Officer | ||
(Principal Financial and Principal Accounting Officer) | ||
Date: | November 13, 2018 |
28 |
EMPLOYMENT AGREEMENT
Executed on September 9, 2018
This Employment Agreement (the “Agreement”) is entered into by and between Novomic Ltd., with offices at 23 Hamelacha St., Rosh Hain, Israel (the “Company”) and Nir Shemesh, I.D. No. 021612759, of ________________________, email: nir.shemesh@gmail.com (the “Employee”).
EMPLOYMENT AND COMPENSATION
1. | The Company has agreed to employ Employee for an indefinite period and Employee has agreed to become so employed, on the terms and conditions set forth herein. The commencement date of the employment, Employee’s position, the reporting duties and other work-related terms, including salary, entitlements and fringe benefits, are specified in Appendix A attached hereto. |
2. | Employee undertakes to devote Employee’s full time, attention, skill, and effort exclusively to the performance of Employee’s duties and undertakes not to engage, whether as an employee or otherwise, in any business, commercial or professional activities, whether or not for compensation, during Employee’s employment, without the prior written consent of the Company. Nothing contained herein shall derogate from Employee’s undertakings in Appendix B attached hereto. |
3. | This Agreement may be terminated by either party at any time by giving the other party hereto a prior notice of such termination, as specified in Appendix A (the “Notice Period”). |
4. | Notwithstanding anything to the contrary in Section 3 above, the Company may terminate the employee’s employment for Cause. In any event of termination for Cause, the Employment under this Agreement shall forthwith terminate and thereafter the Company shall not have any further liability or obligation towards Employee, including with respect to Notice Period. The term “Cause” means: (i) breach of Employee’s fiduciary duties, misappropriation of the Company’s property or any breach of Employee’s undertakings under Appendix B; or (ii) a material breach by the Employee of this Agreement, provided however, that Employee has not cured such breach (if remediable) within 7 days following a notice sent to Employee by the Company; or (iii) Employee’s indictment for a criminal offense (other than an offense for which a fine or non-custodial penalty is imposed) or involvement in sexual harassment of another employee or third party in connection with Employee’s employment; or (iv) any other circumstances under which prior notice may be denied from Employee upon termination of employment under any applicable law. |
5. | Employee shall have no lien on any of the Company’s assets, equipment or any other material in Employee’s possession. Employee shall return to the Company all Company’s equipment no later than the day of termination of employer-employee relationship, prior to any unpaid leave or within 7 days following Company’s demand. |
6. | Nothing herein shall derogate from any right Employee may have, in accordance with any law, expansion order, collective bargaining agreement, employment agreement or any other agreement with respect to the terms of Employee’s employment, which cannot be stipulated against. |
NON DISCLOSURE, COMPETITIVE ACTIVITY AND OWNERSHIP OF INVENTIONS
7. | Simultaneously with the signing of this Agreement, Employee shall sign the Non-Disclosure, Unfair Competition and Ownership of Inventions Undertaking in favor of the Company, attached hereto as Appendix B. |
EMPLOYEE’S REPRESENTATIONS AND UNDERTAKINGS
Employee represents, warrants, and undertakes all of the following:
8. | Employee has the ability, knowledge and qualifications needed to perform Employee’s obligations under this Agreement. Employee does not suffer from any physical or mental health issues which may have an unreasonable influence on the performance of Employee’s undertakings under this Agreement. |
Company: /s/ Doron Biran | Employee: /s/ Nir Shemesh |
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9. | There are no other undertakings or agreements preventing, restricting or limiting the fulfillment of Employee’s obligations under this Agreement. Employee shall not, by entering into this Agreement and performing Employee’s obligations hereunder, be deemed to be: (i) violating any right of Employee’s former employer(s), or (ii) in breach of or in conflict with, any of Employee’s obligations towards Employee’s former employer(s) or under any agreement or obligation to which Employee is bound. |
10. | Employee shall inform the Company of any matter in which Employee or Employee’s immediate family has a personal interest and which might give rise to a conflict of interest with Employee’s duties under the terms of Employee’s employment, immediately upon becoming aware of such matter. |
11. | Employee shall not receive any benefit from any third party, directly or indirectly in connection with Employee’s employment. In the event Employee breaches this undertaking, without derogating from any of the Company’s rights, such benefit or its value shall become the sole property of the Company and the Company may deduct the value of such benefit from any payment Employee may be entitled to. This section does not apply to gifts or benefits with insignificant value. |
12. | In carrying out Employee’s duties, Employee shall not act in a way which contradicts the signature rights of the Company. |
13. | Employee acknowledges and agrees that from time to time Employee may be required by the Company to travel and stay abroad as part of Employee’s obligations under this Agreement. Employee hereby acknowledges and agrees that while Employee is abroad as part of Employee’s obligations under this Agreement, Employee shall serve as a senior representative of the Company, a position which requires a special degree of personal trust, as defined in the Working Hours and Rest Law, 1951 (the “Working Hours and Rest Law”). Therefore, in these special circumstances, the provisions of the Working Hours and Rest Law shall not apply to the Employee’s employment under this Agreement. Employee acknowledges that while Employee is abroad as part of Employee’s obligations under this Agreement, Employee shall be required to work “overtime” hours, including during late hours and during “weekly hours of rest”, and that Employee shall not be granted any additional compensation with regard to such “overtime” hours. Employee acknowledges that the monetary implications of this provision have been taken into account by the parties to this Agreement in their decision on the compensation specified in Appendix A and by the Employee in the Employee’s decision to engage in this Agreement. |
14. | Employee acknowledges that in extraordinary circumstances the Company may require the Employee to participate in a polygraph test. Employee agrees that: (a) the Company may rely on the results of such polygraph test; and (b) the results of such test may be presented in any legal proceedings and may be considered as valid evidence. |
15. | Unless otherwise provided under this Agreement or Company’s procedures, Employee will use the Company’s equipment for the purpose of Employee’s employment only. Thus, Employee shall not use the Company’s computers/laptops and email system (including by smartphone) for personal purposes (the “Company’s Computers”), shall not store any private material on Company’s Computers and shall not store company documents on Employee’s cloud storage accounts. For personal purposes, Employee shall be entitled to use external email services (such as Gmail, Yahoo Mail, etc.). |
16. | Employee acknowledges and agrees as follows: (i) the Company shall have the right to allow other employees and other third parties to use the Company’s Computers; (ii) the Company shall have the right to conduct inspections on any and all of the Company’s Computers, including inspections of email transmissions, internet usage and inspections of their content and shall have the right to use the findings of such inspections for the Company’s purposes; (iii) in light of Employee’s undertaking that the sole use of the Company’s Computers shall be for business purposes, Employee has no right to privacy in any of the Company’s Computers. |
17. | Employee acknowledges and agrees that information related to the Employee and the Employee’s terms of employment at the Company, as shall be received and held by the Company (the “Information”), may be transferred to third parties, including those located abroad, subject to: (a) that such transfer shall be made only in order for the Company to comply with any relevant legal requirements or due to business purposes of the Company (including transactions related with the Company); (b) that the transferred Information shall be limited to the reasonable and necessary scope; and (c) that the receiver of the Information shall undertake, to the extent possible, to preserve the privacy of the Information, at least at the level of privacy kept by the Company itself regarding the Information. |
Company: /s/ Doron Biran | Employee: /s/ Nir Shemesh |
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18. | In the event this Agreement is terminated for any reason whatsoever, Employee shall cooperate with the Company and exercise Employee’s best efforts to assist in the integration of the person or persons who will assume Employee’s responsibilities into the Company. |
GENERAL PROVISIONS
19. | This Agreement and all Appendices attached hereto constitute the entire agreement between the parties and supersede all prior agreements, proposals, understandings and arrangements, if any, whether oral or written, between the parties hereto with respect to the subject matter hereof. This Agreement may be amended, supplemented or modified only by a written instrument duly signed by or on behalf of each party hereto. |
20. | This Agreement shall be governed by and construed in accordance with the laws of the State of Israel, without giving effect to its laws pertaining to conflict of laws. Any and all disputes in connection with this Agreement shall be submitted to the exclusive jurisdiction of the competent courts or tribunals, as relevant, located in the city of Tel-Aviv-Jaffa, Israel. |
21. | Any notice or other communication in connection with this Agreement must be in writing to the address set forth in the preamble to this Agreement (or to such other address as shall be specified by like notice), sent via registered mail, messenger or email. Such notice shall be deemed given after four (4) business days, if sent via registered mail; after one (1) day if sent by messenger, provided a proof of delivery has been received; after one (1) day if sent by email, provided however, that a computerized automatic “received” approval (delivery receipt) was sent by the email server. |
Employee acknowledges that:
(1) | she has read and fully understood all the provisions of this Agreement and its appendices; |
(2) | she was given the opportunity to consult with third parties, including her attorneys; and |
(3) | This Agreement was signed at Employee’s own free will. |
Novomic Ltd. | Employee - Nir Shemesh | ||
By: | /s/ Doron Biran | /s/ Nir Shemesh | |
Name: | Doron Biran | ||
Title: | CEO |
Company: /s/ Doron Biran | Employee: /s/ Nir Shemesh |
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APPENDIX A
TERMS OF EMPLOYMENT AND COMPENSATION
1. | Commencement Date, Position and Reporting - Employee’s employment shall commence on September 9, 2018, in the position of Chief Financial Officer. Employee shall report directly to Company’s Chief Executive Officer. |
2. | Working Hours - Employee shall be employed on a 5-day workweek basis. Employee’s working hours shall be in accordance with the Company’s policy, as in effect from time to time. On the date of signature of this Agreement the normal working hours of the Company are 9:00 to 18:00. The Company may instruct the Employee to work overtime. Employee’s entitlement to breaks will be in accordance with any applicable law. Employee’s rest day shall be Saturday. |
3. | Notice Period - During the first 6 months of Employee’s employment, the Notice Period shall be in accordance with the Prior Notice for Dismissal and Resignation Law, 2001; Thereafter - the Notice Period shall be 1 month. Notwithstanding the above, the Company shall be entitled to consider the Employee’s clear and unequivocal oral notice of resignation as binding, in the absence of written notice. |
4. | Salary – A gross monthly salary of NIS 17,500 (the “Base Salary”). An additional global payment of NIS 4,700 per month for up to 40 overtime hours at an hourly rate of 125% and NIS 2,800 per month for up to 20 overtime hours at an hourly rate of 150% (the “Global Overtime Payment”) – up to 60 overtime hours in total (the “Quota”). Employee will be entitled to full Global Overtime Payment even if the entire Quota was not met. |
The parties estimate that the Quota reflects the actual overtime hours that Employee may work and therefore, the Global Overtime Payment is sufficient to cover all overtime work. The Company undertakes that the Global Overtime Payment shall be raised together with any Base Salary increase.
Upon the first anniversary of the Employee’s employment by the Company, his Salary shall be increased by 5%.
5. | The parties agree that the Global Overtime Payment be treated, for all intents and purposes, as salary payment and therefore the Base Salary and the Global Overtime Payment shall be collectively referred to as the “Salary”. Any payment or benefit under this Appendix A, other than the Salary, shall not be considered as a salary for any purpose whatsoever, and the Employee shall not maintain or claim otherwise. The Salary shall be payable on such dates as required by law. |
6. | Pension Arrangements - The Company shall insure the Employee under an accepted ‘Managers’ Insurance’ plan (the “Managers’ Insurance Policy”), a Pension Fund (the “Pension Fund”) or a combination of both, at Employee’s choice, according to the following rates and conditions: |
6.1. | Managers’ Insurance Policy: | ||
6.1.1. | Disability Insurance - The Company, at its own discretion and expense, shall purchase a disability insurance, under normal and acceptable conditions, which would insure 75% of the Salary (the “Disability Insurance”). The Company’s contribution for Disability Insurance shall, in no circumstances, exceed the amount of 2½% of the Salary. | ||
6.1.2. | Severance - an amount equal to 8⅓% of the Salary; | ||
6.1.3. | Company’s contribution towards pension - the difference between 6.5% of the Salary and the actual percentage of the Salary contributed towards Disability Insurance, provided that the Company’s contribution towards pension shall not be lesser than 5% of the Salary. | ||
6.1.4. | Employee’s contribution towards pension – 6% of the Salary. |
Company: /s/ Doron Biran | Employee: /s/ Nir Shemesh |
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6.2. | Pension Fund: Severance - an amount equal to 8⅓% of the Salary; Pension - an amount equal to 6.5% of the Salary. In addition, the Company will deduct from Employee’s monthly paycheck a sum equal to 6% of the Salary as Employee’s contribution. |
7. | Study Fund. The Company and the Employee shall contribute to a study fund pursuant to applicable law. |
8. | Pension Funds Release - The Company and Employee agree to adopt the provisions of the “General Approval of the Minister of Labor and Social Welfare Regarding Payments by Employers to a Pension Fund and Insurance Fund in lieu of Severance Pay”, which was issued in accordance with the Severance Pay Law, 1963 (the “General Acknowledgement”), as amended from time to time. The General Acknowledgment is attached to this Agreement as Appendix C. The Company waives any right that it may have for the repayment of any monies paid by it to the Managers’ Insurance Policy and/or the Pension Fund, unless the right of Employee to severance has been revoked by a judicial decision, under Section 16 or 17 of the Severance Pay Law, 1963 (to the extent of such revocation) or in case Employee withdrew monies from the Pension Fund or the Insurance Fund for any reason other than death, disability or retirement at the age of sixty or thereafter. |
Employee hereby acknowledges and confirms that the Company’s contributions towards the Employee’s Insurance Policy and/or the Pension Fund are and shall be in lieu of severance pay, if Employee shall be entitled to such, according to Section 14 of the Severance Pay Law, 1963 and in accordance with the General Acknowledgement.
9. | Vacation - Employee shall be entitled to 20 vacation days (the “Vacation Days”) with respect to each full year of continuous employment with the Company. Employee shall be entitled to carry forward the unused Vacation Days in accordance with the terms set out in the Leave Law. Any contractual vacation days (annual leave days granted in excess of the amount required by law or by any applicable expansion order) remaining unused at the end of any 12-month period of employment, shall be forfeited with no compensation payable. |
10. | Sick Leave - Employee shall be entitled to sick leave in accordance with the provisions of the Sick Pay Law, 1976. In the event Employee is absent from work due to illness, Employee shall notify the Company of the illness on the first day of absence, unless Employee is unable to provide such notice due to Employee’s medical condition, in which case the notice will be delivered as soon as possible. Such notice shall include, inter alia, the estimated period in which Employee will be absent from work. Employee shall be reimbursed for his sick leave commencing on his first day of leave. |
11. | Recuperation Pay - Employee shall be entitled to Recuperation Pay (“Dmey Havra’a”) in accordance with the applicable expansion order. |
12. | Car |
The Company shall lease a Hyundai i25 (the “Car”) for the Employee and shall bear the costs of the Car, including rental fees, registration and gasoline. The Car shall be used by the Employee pursuant to and in accordance with the Company’s policy and guidelines from time to time.
13. | Business Expenses - The Company shall reimburse Employee for necessary and customary business expenses incurred by Employee, in accordance with the Company’s policy, as amended from time to time. |
14. | Stock Options – The Employee shall be entitled to receive such stock options, representing 1% of the issued share capital of the Company’s parent company, TechCare Corp. to vest in annual increments over 4 years of continuous employment by the Company (the “Options”). The exercise price of the Options shall be equivalent to the average VWAP of the stock during a 30 days’ period prior to the signing of this Agreement. The grant of the Options shall be subject to the approval of the Company’s Board of Directors and pursuant a stock award agreement. |
15. | Annual Bonus. In the event shall generate an annual operational profit of $1,000,000, the Employee shall be entitled to a bonus equivalent to 2 monthly Base Salaries. |
16. | Taxes - The Company shall withhold, deduct, transfer and/or charge Employee with all taxes and other compulsory payments as required under law in respect of, or resulting from, the compensation paid to or received by Employee and in respect of all the benefits that Employee is or may be entitled to. |
Novomic Ltd. | Employee – Nir Shemesh | ||
By: | /s/ Doron Biran | /s/ Nir Shemesh | |
Name: | Doron Biran | ||
Title: | CEO |
Company: /s/ Doron Biran | Employee: /s/ Nir Shemesh |
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APPENDIX B
THIS UNDERTAKING (“Undertaking”) is entered into as of September 9, 2018, by Nir Shemesh, I.D. No. 021612759, of __________________________, email: Nir.Shemesh@gmail.com (the “Employee”).
WHEREAS, Employee wishes to be employed by Novomic Ltd. (the “Company”); and
WHEREAS, it is critical for the Company to preserve and protect its Confidential Information (as defined below) and its rights in Inventions (as defined below) and in all related intellectual property, and Employee is entering into this Undertaking as a condition to Employee’s employment with the Company.
NOW, THEREFORE, the Employee undertakes and warrants towards the Company as follows:
References herein to the term “Company” shall include any of the Company’s direct or indirect parent, subsidiary and affiliated companies, and their respective successors and assigns.
1. | Confidentiality. |
1.1. | Employee acknowledges that Employee may have access to information that relates to the Company, its business, assets, financial condition, affairs, activities, plans and projections, customers, suppliers, partners, and other third parties with whom the Company agreed or agrees, from time to time, to hold information of such party in confidence (the “Confidential Information”). Confidential Information shall include, without limitation, information, whether or not marked or designated as confidential, concerning technology, products, research and development, patents, copyrights, inventions, trade secrets, test results, formulae, processes, data, know-how, marketing, promotion, business and financial plans, policies, practices, strategies, surveys, analyses and forecasts, financial information, customer lists, agreements, transactions, undertakings and data concerning employees, consultants, officers, directors, and shareholders. Confidential Information includes information in any form or media, whether documentary, written, oral, magnetic, electronically transmitted, through presentation or demonstration or computer generated. Confidential Information shall not include information that: (i) has become part of the public domain not as a result of a breach of any obligation owed by Employee to the Company; or (ii) is required to be disclosed by law or the binding rules of any governmental organization, provided, however, that Employee gives the Company prompt notice thereof so that the Company may seek a protective order or other appropriate remedy, and further provided, that in the event that such protective order or other remedy is not obtained, Employee shall furnish only that portion of the Confidential Information which is legally required, and shall exercise all reasonable efforts required to obtain confidential treatment for such information. |
1.2. | Employee acknowledges and understands that the employment by the Company and the access to Confidential Information creates a relationship of confidence and trust with respect to such Confidential Information. |
1.3. | During the term of Employee’s employment and at any time after termination or expiration thereof, for any reason, Employee shall keep in strict confidence and trust, shall safeguard, and shall not disclose to any person or entity, nor use for the benefit of any party other than the Company, any Confidential Information, other than with the prior express consent of the Company. |
1.4. | All right, title and interest in and to Confidential Information are and shall remain the sole and exclusive property of the Company or of the third party providing such Confidential Information to the Company, as the case may be. Without limitation of the foregoing, Employee agrees and acknowledges that all memoranda, books, notes, records, email transmissions, charts, formulae, specifications, lists and other documents (contained on any media whatsoever) made, reproduced, compiled, received, held or used by Employee in connection with the employment by the Company or that otherwise relates to any Confidential Information (the “Confidential Material”), shall be the Company’s sole and exclusive property and shall be deemed to be Confidential Information. All originals, copies, reproductions and summaries of the Confidential Materials shall be delivered by Employee to the Company upon termination or expiration of Employee’s employment for any reason, or at any earlier time at the request of the Company, without Employee retaining any copies thereof. |
Company: /s/ Doron Biran | Employee: /s/ Nir Shemesh |
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1.5. | During the term of Employee’s employment with the Company, Employee shall not remove from the Company’s offices or premises any Confidential Material unless and to the extent necessary in connection with the duties and responsibilities of Employee and permitted pursuant to the then applicable policies and regulations of the Company. In the event that such Confidential Material is duly removed from the Company’s offices or premises, Employee shall take all actions necessary in order to secure the safekeeping and confidentiality of such Confidential Material and return the Confidential Material to their proper files or location as promptly as possible after such use. |
1.6. | During the term of Employee’s employment with the Company, Employee will not improperly use or disclose any proprietary or confidential information or trade secrets, and will not bring onto the premises of the Company any unpublished documents or any property, belonging to any former employer or any other person to whom Employee has an obligation of confidentiality and/or non-use (including, without limitation, any academic institution or any entity related thereto), unless generally available to the public or consented to in writing by that person. |
2. | Unfair Competition and Solicitation. |
2.1. | Employee undertakes that during the term of employment with the Company Employee shall not engage, establish, open or in any manner whatsoever become involved, directly or indirectly, either as an employee, owner, partner, agent, shareholder, director, consultant or otherwise, in any business, occupation, work or any other activity which competes with the business of the Company. |
2.2. | Employee undertakes that for a period of twelve (12) months following termination of Employee’s employment for whatever reason Employee shall not engage, establish, open or in any manner whatsoever become involved, directly or indirectly, either as an employee, owner, partner, agent, shareholder, director, consultant or otherwise, in any business, occupation, work or any other activity which is reasonably likely to involve or require the use of any of the Company’s Major Assets, as defined below. Employee confirms that engagement, establishment, opening or involvement, directly or indirectly, either as an employee, owner, partner, agent, shareholder, director, consultant or otherwise, in any business, occupation, work or any other activity which competes with the business of the Company as conducted during the term of employment or contemplated, during such term, to be conducted, is likely to require the use of all or a portion of the Company’s Major Assets. |
2.3. | Employee hereby declares that he/she is aware that a portion of the Salary contains additional consideration in exchange for the Employee fully undertaking the non-compete provisions in Sections 2.1 and 2.2 above. Notwithstanding anything in this provision, the Employee declares that he/she is financially capable of undertaking these non-compete provisions. |
2.4. | Employee undertakes that during the term of employment with the Company and for a period of twelve (12) months thereafter: (i) Employee shall not, directly or indirectly, solicit, hire or retain as an employee, consultant or otherwise, any employee of the Company or induce or attempt to induce any such employee to terminate or reduce the scope of such employee’s employment with the Company; and (ii) Employee shall not, directly or indirectly, solicit or induce, or attempt to solicit or induce, any consultant, service provider, agent, distributor, customer or supplier of the Company to terminate, reduce or modify the scope of such person’s engagement with the Company. |
2.5. | Employee acknowledges that in light of Employee’s position with the Company and in view of Employee’s exposure to, and involvement in, the Company’s sensitive and valuable proprietary information, property (including, intellectual property) and technologies, as well as its goodwill and business plans (the “Company’s Major Assets”), the provisions of this Section 2 above are reasonable and necessary to legitimately protect the Company’s Major Assets, and are’s Major Assets, and are being undertaken by Employee as a condition to the employment of Employee by the Company. Employee confirms that Employee has carefully reviewed the provisions of this Section 2, fully understands the consequences thereof and has assessed the respective advantages and disadvantages to Employee of entering into this Undertaking and, specifically, Section 2 hereof. |
Company: /s/ Doron Biran | Employee: /s/ Nir Shemesh |
-8- |
3. | Ownership of Inventions. |
3.1. | Employee will notify and disclose in writing to the Company, or any persons designated by the Company from time to time, all information, improvements, inventions, trademarks, works, designs, trade secrets, formulae, processes, techniques, know-how and data, whether or not patentable or registerable under copyright or any similar laws, made or conceived or reduced to practice or learned by Employee, either alone or jointly with others, during Employee’s employment with the Company (including after hours, on weekends or during vacation time) (all such information, improvements, inventions, trademarks, works, designs, trade secrets, formulae, processes, techniques, know-how, and data are hereinafter referred to as the “Invention(s)”) immediately upon discovery, receipt or invention as applicable. |
3.2. | Employee agrees that all the Inventions are, upon creation, Inventions of the Company, shall be the sole property of the Company and its assignees, and the Company and its assignees shall be the sole owner of all title, rights and interest in and to any patents, copyrights, trade secrets and all other rights of any kind or nature, including moral rights, in connection with such Inventions. Employee hereby irrevocably and unconditionally assigns to the Company all the following with respect to any and all Inventions: (i) all title, rights and interest in and to any patents, patent applications, and patent rights, including any and all continuations or extensions thereof; (ii) rights associated with works of authorship, including copyrights and copyright applications, Moral Rights (as defined below) and mask work rights; (iii) rights relating to the protection of trade secrets and confidential information; (iv) design rights and industrial property rights; (v) any other proprietary rights relating to intangible property including trademarks, service marks and applications thereof, trade names and packaging and all goodwill associated with the same; (vi) any and all title, rights and interest in and to any Invention; and (vii) all rights to sue for any infringement of any of the foregoing rights and the right to all income, royalties, damages and payments with respect to any of the foregoing rights. Employee also hereby forever waives and agrees never to assert any and all Moral Rights Employee may have in or with respect to any Inventions, even after termination of employment on behalf of the Company. “Moral Rights” means any right to claim authorship of a work, any right to object to any distortion or other modification of a work, and any similar right, existing under the law of any country in the world, or under any treaty. |
3.3. | Employee has attached hereto, as Exhibit B-1, a list describing all information, improvements, inventions, formulae, processes, techniques, know-how and data, whether or not patentable or registerable under copyright or any similar laws, and whether or not reduced to practice, original works of authorship and trade secrets made or conceived by or belonging to the Employee (whether made solely by the Employee or jointly with others) that: (i) were developed by the Employee prior to the Employee’s engagement with the Company (collectively, the “Prior Inventions”), (ii) relate to the Company’s actual or proposed business, products or research and development, and (iii) are not assigned to the Company hereunder; or, if Exhibit B-1 is incomplete or if no such list is attached, the Employee represents that there are no such Prior Inventions. |
3.4. | Employee further agrees to perform, during and after employment, all acts deemed reasonably necessary or desirable by the Company to permit and assist it, at the Company’s expense, in obtaining, maintaining, defending and enforcing the Inventions in any and all countries. Such acts may include, but are not limited to, execution of documents and assistance or cooperation in legal proceedings. Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents, as Employee’s agents and attorneys-in-fact to act for and on Employee’s behalf and instead of Employee, to execute and file any documents and to do all other lawfully permitted acts to further the above purposes with the same legal force and effect as if executed by Employee. |
3.5. | Employee shall not be entitled to any monetary consideration or any other consideration except as explicitly set forth in the employment agreement between Employee and the Company. Without limitation of the foregoing, Employee irrevocably confirms that the consideration explicitly set forth in the employment agreement is in lieu of any rights for compensation that may arise in connection with the Inventions under applicable law and waives any right to claim royalties or other consideration with respect to any Invention, including under Section 134 of the Israeli Patent Law - 1967. Any oral understanding, communication or agreement with respect to the matters set forth herein, not memorialized in writing and duly signed by the Company, shall be void. |
Company: /s/ Doron Biran | Employee: /s/ Nir Shemesh |
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4. | General. |
4.1. | Employee represents that the performance of all the terms of this Undertaking and Employee’s duties as an employee of the Company does not and will not breach any invention assignment, proprietary information, non-compete, confidentiality or similar agreements with, or rules, regulations or policies of, any former employer or other party (including, without limitation, any academic institution or any entity related thereto). Employee acknowledges that the Company is relying upon the truthfulness and accuracy of such representations in employing Employee. |
4.2. | Employee acknowledges that the provisions of this Undertaking serve as an integral part of the terms of Employee’s employment and reflect the reasonable requirements of the Company in order to protect its legitimate interests with respect to the subject matter hereof. |
4.3. | Employee recognizes and acknowledges that in the event of a breach or threatened breach of this Undertaking by Employee, the Company may suffer irreparable harm or damage and will, therefore, be entitled to injunctive relief to enforce this Undertaking (without limitation to any other remedy at law or in equity). |
4.4. | This Undertaking is governed by and construed in accordance with the laws of the State of Israel, without giving effect to its laws pertaining to conflict of laws. Any and all disputes in connection with this Undertaking shall be submitted to the exclusive jurisdiction of the competent courts or tribunals, as relevant, located in the city of Tel-Aviv-Jaffa, Israel. |
4.5. | If any provision of this Undertaking is determined by any court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such provision will be enforced to the maximum extent possible given the intent of the parties hereto. If such clause or provision cannot be so enforced, such provision shall be stricken from this Undertaking only with respect to such jurisdiction in which such clause or provision cannot be enforced, and the remainder of this Undertaking shall be enforced as if such invalid, illegal or unenforceable clause or provision had (to the extent not enforceable) never been contained in this Undertaking. In addition, if any particular provision contained in this Undertaking shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, it shall be construed by limiting and reducing the scope of such provision so that the provision is enforceable to the fullest extent compatible with applicable law. |
4.6. | The provisions of this Undertaking shall continue and remain in full force and effect following the termination or expiration of the employment relationship between the Company and Employee, for whatever reason. This Undertaking shall not serve in any manner so as to derogate from any of Employee’s obligations and liabilities under any applicable law. |
4.7. | Employee hereby consents that, following the termination or expiration of the employment relationship hereunder, the Company may notify the Employee’s new employer about the Employee’s rights and obligations under this Undertaking. |
4.8. | This Undertaking constitutes the entire agreement between Employee and the Company with respect to the subject matter hereof and supersedes all prior agreements, proposals, understandings and arrangements, if any, whether oral or written, with respect to the subject matter hereof. No amendment, waiver or modification of any obligation under this Undertaking will be enforceable unless set forth in a writing signed by the Company. No delay or failure to require performance of any provision of this Undertaking shall constitute a waiver of that provision as to that or any other instance. No waiver granted under this Undertaking as to any one provision herein shall constitute a subsequent waiver of such provision or of any other provision herein, nor shall it constitute the waiver of any performance other than the actual performance specifically waived. |
4.9. | This Undertaking, the rights of the Company hereunder, and the obligations of Employee hereunder, will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives. The Company may assign any of its rights under this Undertaking. Employee may not assign, whether voluntarily or by operation of law, any of its obligations under this Undertaking, except with the prior written consent of the Company. |
IN WITNESS WHEREOF, the undersigned has executed this Undertaking as of the date first mentioned above.
/S/ Nir Shemesh |
Company: /s/ Doron Biran | Employee: /s/ Nir Shemesh |
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APPENDIX C
General Approval Regarding Payments by Employers to a Pension Fund and Insurance Fund in lieu of Severance Pay
In accordance with the Severance Pay Law 5723-1963
By virtue of my authority under Section 14 of the Severance Pay Law 5723-1963 (hereinafter, the “Law”), I hereby confirm that payments made by an employer beginning on the date this authorization is publicized, for its employee, towards a comprehensive pension in a provident fund for benefit payments, which is not an insurance fund as implied in the Income Tax Regulations (Rules for Approving and Managing Provident Funds) 5724-1964 (hereinafter, a “Pension Fund”), or towards Managers’ Insurance that includes an option for benefit payments (hereinafter, an “Insurance Fund”) or a combination of payments towards a Pension Fund and an Insurance Fund (hereinafter, “Employer Payments”), shall be in lieu of the severance pay to which the said employee is entitled for the wages of which the said payments were paid and the period for which they were paid (hereinafter, the “Exempted Salary”), provided the following conditions shall be met:
1. | Employer Payments - | |
(a) | To a Pension Fund are not less than 14.33% of the Exempted Salary or 12% of the Exempted Salary if the employer pays for its employee, in addition to this, supplementary severance payments towards a Severance Pay Fund or an Insurance Fund in the name of the employee, at a rate of 2.33% of the Exempted Salary. If the employer does not pay the said 2.33% in addition to the 12%, its payments shall be only in lieu of 72% of the employee’s severance pay. | |
(b) | To an Insurance Fund are not less than one of the following: |
(1) | 13 1/3% of the Exempted Salary, if the employer pays for its employee payments for additional monthly income support in case of employee’s inability to work, through a plan approved by the Supervisor for Capital Markets, Insurance and Savings in the Ministry of Finance, at a rate necessary to guarantee at least 75% of the Exempted Salary, or at a rate of 2 1/2% of the Exempted Salary, whichever is lower (hereinafter, “Loss of Work Capacity Insurance”). | ||
(2) | 11% of the Exempted Salary, if the employer paid an additional Payment for the Loss of Work Capacity Insurance, and in such case the employer’s payments shall be only in lieu of 72% of the employee’s severance pay. If, in addition to such payments, the employer has also paid payments for the supplement of severance pay to a Severance Pay Fund or an Insurance Fund under the name of the employee at a rate of 2 1/3% of the Exempted Salary, the employer’s payments shall be in lieu of 100% of the employee’s severance pay. |
2. | Not later than three months from the commencement of the employer’s payments a written agreement shall be prepared between the employer and the employee, which shall include: |
(a) | The employee’s agreement to an arrangement in accordance with this authorization, in wording that specifies the employer’s payments and the Pension Fund and the Insurance Fund, as relevant. The said agreement shall also include the wording of this authorization. | |
(b) | The employer’s prior waiver of any right it may have to a financial reimbursement for all or part of its payments, unless the employee’s right to severance pay is rescinded by a judicial decree by virtue of Sections 16 or 17 of the Law, or that the employee withdrew funds from the Pension Fund or from the Insurance Fund not for a qualifying incident. In this regard a “qualifying incident”- death, disability or retirement at the age of 60 or older. | |
(c) | This authorization shall not derogate from the employee’s right to severance pay under the Law, collective agreement, expansion order or employment contract, for wages exceeding The Exempted Salary. |
(-) | |
Eliyahu Yishai | |
Minister of Labor and Social Welfare |
Company: /s/ Doron Biran | Employee: /s/ Nir Shemesh |
THIS SUBSCRIPTION AGREEMENT RELATES TO AN OFFERING OF SHARES OF COMMON STOCK (THE “OFFERING”), IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S PROMULGATED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).
THE SHARES THAT ARE SUBJECT TO THIS SUBSCRIPTION AGREEMENT IN RELIANCE ON REGULATION S (THE “SUBSCRIPTION AGREEMENT”) HAVE NOT BEEN REGISTERED UNDER THE ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE ACT.
TECHCARE CORP.
(A Delaware corporation)
SUBSCRIPTION AGREEMENT
DATED: August 8, 2018 (the “Effective Date”)
1. The Offering
1.1 On the basis of the representations and warranties and subject to the terms and conditions set forth in this Subscription Agreement, Traistman Radziejewski Fundacja Ltd. (Israeli Co. No. 514498856), of 15A Yahalom St., Shoham, Israel (C/O Oren Traistman) (the “Investor”) hereby agrees to subscribe for and purchase 258,398 shares of common stock, par value $0.0001 (the “Initial Shares”) offered by TechCare Corp., a Delaware corporation with offices located at 1140 Avenue of the Americas, New York, NY 10036 (the “Company”), at a purchase price per share of US$ 0.387 (the “Share Purchase Price”), for an aggregate consideration of US$100,000 (the “Subscription Proceeds”), all pursuant to the terms and conditions set forth in this Subscription Agreement.
1.2 In addition, on the basis of the representations and warranties and subject to the terms and conditions set forth in this Subscription Agreement, the Investor shall be entitled, until the 12 month anniversary of the date hereof, to subscribe for, and purchase, 166,667 additional Shares of TechCare Corp. (the “Additional Shares” and together with the Initial Shares, the “Shares”) at a purchase price per share of US$0.60, for an aggregate consideration of US$100,000 (the “Additional Subscription Proceeds”), all pursuant to the terms and conditions set forth in this Subscription Agreement
1.3 The undersigned Investor understands that this Offering by the Company is being made only to persons/institutions who are not U.S. Persons, as defined in Rule 902 of Regulation S promulgated by the United States Securities and Exchange Commission (“SEC”) under the Securities Act of 1933, as amended (the “Act”) and that the Company will not offer Shares nor accept subscriptions from any person and/or entity that is not a U.S. Person as defined in Rule 902 of Regulation S.
1.4 On the basis of the representations and warranties of the Investor and subject to the terms and conditions set forth herein, the Company, by its execution and delivery of the counter-signed copy of this Subscription Agreement, hereby irrevocably agrees to accept the subscription and sell to the undersigned the Shares subscribed for herein.
1.5 Subject to the terms hereof, this Subscription Agreement will be effective upon receipt by the Company of the Subscription Proceeds.
1.6 Within seven (7) days of from the receipt of the Subscription Proceeds or the Additional Subscription Proceeds by the Company, as applicable, the Company shall deliver to the Investor book entry confirmation representing the number of Shares purchased by the Investor. The Shares shall be registered on the books of the Company as follows: Traistman Radziejewski Fundacja Ltd. (Israeli Co. No. 514498856), of 15A Yahalom St., Shoham, Israel (C/O Oren Traistman).
2. Payment of Subscription Proceeds and Additional Subscription Proceeds
The Investor understands that the Subscription Proceeds and Additional Subscription Proceeds, as applicable, are payable to the Company by electronic wire transfer pursuant to the Company’s wiring instructions to be provided thereto.
3. Documents/Deliveries Required from the Investor
3.1 The Investor understands and agrees that as a condition to the Company’s acceptance of this subscription, the undersigned will complete, sign and return to the Company an executed copy of this Subscription Agreement together with any and all attachments hereto.
3.2 The Investor will complete, sign and return to the Company as soon as possible, on request by the Company, any other documents, questionnaires, notices and undertakings as may be reasonably required by regulatory authorities and applicable law.
3.3 The Investor will pay/deliver the Subscription Proceeds and the Additional Subscription Proceeds, as applicable, to the Company as provided in Section 2 above subject to the Company’s execution and acceptance of this Subscription Agreement.
4. Acknowledgements of Investor
4.1 The Investor acknowledges and agrees that:
(i) the Shares being offered have not been registered under the Act, or under any state securities or “blue sky” laws of any state of the United States, and, unless so registered, the Shares may neither be offered nor sold in the United States or, directly or indirectly, to U.S. Persons, as that term is defined in Rule 902 of Regulation S under the Act, except in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Act;
(ii) the Investor acknowledges that the Company has not undertaken, and will have no obligation, to register the under the Act;
(iii) the decision to execute this Subscription Agreement has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of the Company, and such decision is based entirely upon a review of information (the receipt of which is hereby acknowledged) which has been filed by the Company with the SEC under the Securities Exchange Act of 1934 (collectively, the “Exchange act Reports”);
(iv) no securities commission or similar regulatory authority has reviewed or passed on the merits of an investment in the Shares;
(v) there is no government or other insurance covering any investment in the Shares;
(vi) there are risks associated with an investment in the Shares, as more fully described in certain information forming part of the Exchange Act Reports;
(vii) the Investor has had a reasonable opportunity to ask questions of and receive answers from the Company in connection with the Offering and to obtain additional information, to the extent possessed or obtainable without unreasonable effort or expense, necessary to verify the accuracy of the information about the Company;
(viii) the books and records of the Company were available upon reasonable notice for inspection, subject to certain confidentiality restrictions, by the Investor during reasonable business hours at its principal place of business, and all documents, records and books in connection with the distribution of the Shares hereunder have been made available for inspection by the Investor, the Investor’s attorney and/or advisor(s), if any;
(ix) there is no guarantee that the Shares will be listed on any stock exchange or automated dealer quotation system and no representation has been made to the Investor that the Shares will be listed on any stock exchange or automated dealer quotation system;
(x) the Shares are assignable only with the prior written consent of the Company, which consent will not be unreasonably denied, provided that any such transfer is made in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the Act or pursuant to an available exemption from the registration requirements of the Act; and
(xi) this Subscription Agreement is not enforceable by the Investor unless it has been accepted by the Company.
5. Representations, Warranties and Covenants of the Investor
5.1 The Investor hereby represents and warrants to and covenants with the Company (which representations, warranties and covenants shall be true and correct as of the date hereof and as of the subscription date of the Additional Shares, and will survive the execution and delivery of this Subscription Agreement) that:
(i) the Investor has the legal capacity and competence to enter into and execute this Subscription Agreement and to take all actions required pursuant hereto and, if the Investor is a corporation, it is duly incorporated and validly subsisting under the laws of its jurisdiction of incorporation and all necessary approvals by its directors, shareholders and others have been obtained to authorize execution and performance of this Subscription Agreement on behalf of the Investor;
(ii) entering into of this Subscription Agreement and the transactions contemplated hereby do not result in the violation of any of the terms and provisions of any law applicable to, or the corporate documents of, the Investor or of any agreement, written or oral, to which the Investor may be a party or by which the Investor is or may be bound;
(iii) the Investor has duly executed and delivered this Subscription Agreement and it constitutes a valid and binding agreement of the Investor enforceable against the Investor;
(iv) the Investor is not a U.S. Person;
(v) the Investor is not acquiring the Shares for the account or benefit of, directly or indirectly, any U.S. Person;
(vi) the Investor is resident of the jurisdiction set out under the heading “Name and Address of Investor” on the signature page of this Subscription Agreement;
(vii) the Investor is and will be outside the United States when receiving and executing this Subscription Agreement and is acquiring the Shares as principal for the Investor’s own account (except for the circumstances outlined in paragraph 5.1), for investment purposes only, and not with a view to, or for, resale, distribution or fractionalization thereof, in whole or in part, and no other person has a direct or indirect beneficial interest in the Shares;
(ix) the Investor is acquiring the Shares for investment only and not with a view to resale or distribution and, in particular, it has no intention to distribute either directly or indirectly any of the Shares in the United States or to U.S. Persons;
(x) the Investor is not an underwriter of, or dealer in, the Shares of the Company, nor is the Investor participating, pursuant to a contractual agreement or otherwise, in the distribution of the Shares;
(xi) the Investor:
(a) is able to fend for itself in connection with the Offering; and
(b) has such knowledge and experience in business matters as to be capable of evaluating the merits and risks of its prospective investment in the Company’s Shares offered hereby; and
(c) has the ability to bear the economic risks of its prospective investment and can afford the complete loss of such investment;
(xii) if the Investor is acquiring the Shares as a fiduciary or agent for one or more investor accounts, the Investor has sole investment discretion with respect to each such account and it has full power to make the foregoing acknowledgements, representations and agreements on behalf of such account, and the investor accounts, if any, for which the Investor acts as a fiduciary or agent satisfy the definition of an “Accredited Investor”, as the term is defined in Rule 501 of Regulation D under the Act;
(xiii) the Investor acknowledges that the Investor has not acquired the Shares as a result of, and will not itself engage in, any “directed selling efforts” (as defined in Regulation S under the Act) in the United States in respect of any of the Shares which would include any activities undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the resale of any of the Shares, provided, however, that the Investor may sell or otherwise dispose of any of the Shares pursuant to an effective registration statement under the Act and any applicable state securities laws or under an exemption from such registration requirements and as otherwise provided herein;
(xiv) the Investor acknowledges that:
(a) he has not received nor is he aware of any advertisement of any of the Shares;
(b) no person has made to the Investor any written or oral representations that any person will resell or repurchase any of the Shares; and
(c) no person will refund the purchase price of any of the Shares.
6. Conditions Precedent.
The undertaking of the Investors shall be subject to and contingent upon the following:
6.1 Prior to the Effective Date, the Company shall have secured all permits, consents and authorizations that shall be necessary or required lawfully to consummate this Subscription Agreement and to issue Shares in accordance with the terms of this Subscription Agreement. The Company has all requisite corporate power to own and operate its property and assets, to perform all its obligations under all agreements and instruments to which it is a party or by which it is bound, and to carry on the business of the Company as presently conducted and as proposed to be conducted. The Company is in compliance with all applicable laws, including all laws pertaining to it as a public company. All issued and outstanding shares of the Company have been duly authorized, and are validly issued and outstanding and fully paid and non-assessable. The Shares, when issued in accordance with this Subscription Agreement, will be duly authorized, validly issued, fully paid, non-assessable, and free of any preemptive rights, and will have the rights, preferences, privileges, and restrictions set forth in the Certificate of Incorporation of the Company, and will be issued free and clear of any liens, claims, encumbrances or third party rights of any kind and duly registered in the name of the Investor in the Company’s register of members.
6.2 The Company has duly executed and delivered this Subscription Agreement and it constitutes a valid and binding agreement of the Investor enforceable against the Investor.
6.3 The acquisition of and subscription for the Shares by the Investor as contemplated in this Subscription Agreement complies with or is exempt from the applicable securities legislation of the jurisdiction of residence of the Investor.
7. Acknowledgement and Waiver
The Investor has acknowledged that the decision to subscribe for and purchase the Shares was solely made on the basis of publicly available information contained in the Exchange Act Reports. The Investor hereby waives, to the fullest extent permitted by law, any rights of withdrawal, rescission or compensation for damages to which the Investor might be entitled in connection with the distribution of any of the Shares.
8. Restrictive Legend on Subject Securities
8.1 The Investor hereby acknowledges that upon the issuance thereof, and until such time as the same is no longer required under the applicable securities laws and regulations, certificates or book entry forms evidencing the Shares will bear a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THE SHARES HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).
NONE OF THE SHARES HAVE BEEN REGISTERED UNDER THE ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE ACT, PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SHARES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE ACT.
8.2 The Investor hereby acknowledges and agrees to the Company making a notation on its records in order to implement the restrictions on transfer set forth and described in this Subscription Agreement.
9. Costs
The Investor acknowledges and agrees that all costs and expenses incurred by the Investor (including any fees and disbursements of any counsel or other professional retained by the Investor) relating to the purchase of the Shares will be borne by the Investor.
10. Governing Law
This Subscription Agreement is governed by the laws of the State of New York. The Investor, in his personal or corporate capacity and, if applicable, on behalf of each beneficial purchaser for whom it is acting, irrevocably agrees to the jurisdiction of the courts of the State of New York.
11. Survival
This Subscription Agreement, including without limitation the representations, warranties and covenants contained herein, will survive and continue in full force and effect and be binding upon the parties hereto notwithstanding the completion of the purchase of the Shares by the Investor pursuant hereto.
12. Assignment
This Subscription Agreement is transferable or assignable only with the prior written consent of the Company, which consent will not be unreasonably denied.
13. Severability
The invalidity or unenforceability of any particular provision of this Subscription Agreement will not affect or limit the validity or enforceability of the remaining provisions of this Subscription Agreement.
14. Entire Agreement
Except as expressly provided in this Subscription Agreement and in the agreements, instruments and other documents contemplated or provided for herein, this Subscription Agreement contains the entire agreement between the parties with respect to the sale of the Shares and there are no other terms, conditions, representations or warranties, whether expressed, implied, oral or written, by statute or common law, by the Company or by anyone else.
15. Notices
All notices here under will be in writing and will be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Investor will be directed to the address on the Investor’s signature page and notices to the Company will be directed to it at the address first set forth above unless another address will be provided to the Investor by the Company in writing.
16. Counterparts and Electronic Means
This Subscription Agreement may be executed in any number of counterparts, each of which, when so executed and delivered, will constitute an original and all of which together will constitute one instrument. Delivery of an executed copy of this Subscription Agreement by electronic facsimile transmission or other means of electronic communication capable of producing a printed copy will be deemed to be execution and delivery of this Subscription Agreement as of the date hereinafter set forth.
IN WITNESS WHEREOF the Investor has duly executed this Subscription Agreement as of the date of acceptance by the Company.
Traistman Radziejewski Fundacja Ltd. | ||
(Name of Investor) | ||
/s/: Traistman Radziejewski Fundacja Ltd. | ||
(Signature of Investor) | ||
15A Yahalom St., Shoham, Israel (C/O Oren Traistman) | ||
(Address of Investor) |
A C C E P T A N C E
The above-mentioned Subscription Agreement in respect of the Shares is hereby accepted by TechCare Corp.
DATED this 8th day of August, 2018
TechCare Corp.
/s/: Tzvi Yemini | ||
Name: | Zvi Yemini | |
Title: | Chairman |
THIS SUBSCRIPTION AGREEMENT RELATES TO AN OFFERING OF SHARES OF COMMON STOCK (THE “OFFERING”), IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S PROMULGATED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).
THE SHARES THAT ARE SUBJECT TO THIS SUBSCRIPTION AGREEMENT IN RELIANCE ON REGULATION S (THE “SUBSCRIPTION AGREEMENT”) HAVE NOT BEEN REGISTERED UNDER THE ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE ACT.
TECHCARE CORP.
(A Delaware corporation)
SUBSCRIPTION AGREEMENT
DATED: Aug 8, 2018 (the “Effective Date”)
1. The Offering
1.1 On the basis of the representations and warranties and subject to the terms and conditions set forth in this Subscription Agreement, Y.M.Y Industry Ltd. (Israeli Company No. 512680539), of 38 Yefet St., Tel Aviv-Yafo, Israel (the “Investor”) hereby agrees to subscribe for and purchase 645,995 shares of common stock, par value $0.0001 (the “Initial Shares”) offered by TechCare Corp., a Delaware corporation with offices located at 1140 Avenue of the Americas, New York, NY 10036 (the “Company”), at a purchase price per share of US$ 0.387 (the “Share Purchase Price”), for an aggregate consideration of US$250,000 (the “Subscription Proceeds”), as of the date hereof, all pursuant to the terms and conditions set forth in this Subscription Agreement.
1.2 In addition, on the basis of the representations and warranties and subject to the terms and conditions set forth in this Subscription Agreement, the Investor shall be entitled, but not obligated, until the twelve month anniversary of the date hereof, to subscribe for, and purchase, 416,667 additional Shares of TechCare Corp. (the “Additional Shares” and together with the Initial Shares, the “Shares”) at a purchase price of $0.60, for an aggregate consideration of US$250,000 (the “Additional Subscription Proceeds”), all pursuant to the terms and conditions set forth in this Subscription Agreement.
1.3 The undersigned Investor understands that this Offering by the Company is being made only to persons/institutions who are not U.S. Persons, as defined in Rule 902 of Regulation S promulgated by the United States Securities and Exchange Commission (“SEC”) under the Securities Act of 1933, as amended (the “Act”) and that the Company will not offer Shares nor accept subscriptions from any person and/or entity that is not a U.S. Person as defined in Rule 902 of Regulation S.
1.4 On the basis of the representations and warranties of the Investor and subject to the terms and conditions set forth herein, the Company, by its execution and delivery of the counter-signed copy of this Subscription Agreement, hereby irrevocably agrees to accept the subscription and sell to the undersigned the Shares subscribed for herein.
1.5 Subject to the terms hereof, this Subscription Agreement will be effective upon receipt by the Company of the Subscription Proceeds.
1.6 Within seven (7) days of from the receipt of the Subscription Proceeds or the Additional Subscription Proceeds by the Company, as applicable, the Company shall deliver to the Investor book entry confirmation representing the number of Shares purchased by the Investor. The Shares shall be registered on the books of the Company as follows: Y.M.Y Industry Ltd. (Israeli Company No. 512680539), of 38 Yefet St., Tel Aviv-Yafo, Israel.
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2. Payment of Subscription Proceeds and Additional Subscription Proceeds
The Investor understands that the Subscription Proceeds and Additional Subscription Proceeds, as applicable, are payable to the Company by electronic wire transfer pursuant to the Company’s wiring instructions to be provided thereto.
3. Documents/Deliveries Required from the Investor
3.1 The Investor understands and agrees that as a condition to the Company’s acceptance of this subscription, the undersigned will complete, sign and return to the Company an executed copy of this Subscription Agreement together with any and all attachments hereto.
3.2 The Investor will complete, sign and return to the Company as soon as possible, on request by the Company, any other documents, questionnaires, notices and undertakings as may be reasonably required by regulatory authorities and applicable law.
3.3 The Investor will pay/deliver the Subscription Proceeds and the Additional Subscription Proceeds, as applicable, to the Company, as provided in Section 2 above subject to the Company’s execution and acceptance of this Subscription Agreement.
4. Acknowledgements of Investor
4.1 The Investor acknowledges and agrees that:
(i) | the Shares being offered have not been registered under the Act, or under any state securities or “blue sky” laws of any state of the United States, and, unless so registered, the Shares may neither be offered nor sold in the United States or, directly or indirectly, to U.S. Persons, as that term is defined in Rule 902 of Regulation S under the Act, except in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Act; |
(ii) | the Investor acknowledges that the Company has not undertaken, and will have no obligation, to register the under the Act; |
(iii) | the decision to execute this Subscription Agreement has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of the Company, and such decision is based entirely upon a review of information (the receipt of which is hereby acknowledged) which has been filed by the Company with the SEC under the Securities Exchange Act of 1934 (collectively, the “Exchange act Reports”); |
(iv) | no securities commission or similar regulatory authority has reviewed or passed on the merits of an investment in the Shares; |
(v) | there is no government or other insurance covering any investment in the Shares; |
(vi) | there are risks associated with an investment in the Shares, as more fully described in certain information forming part of the Exchange Act Reports; |
(vii) | the Investor has had a reasonable opportunity to ask questions of and receive answers from the Company in connection with the Offering and to obtain additional information, to the extent possessed or obtainable without unreasonable effort or expense, necessary to verify the accuracy of the information about the Company; |
(viii) | the books and records of the Company were available upon reasonable notice for inspection, subject to certain confidentiality restrictions, by the Investor during reasonable business hours at its principal place of business, and all documents, records and books in connection with the distribution of the Shares hereunder have been made available for inspection by the Investor, the Investor’s attorney and/or advisor(s), if any; |
(ix) | there is no guarantee that the Shares will be listed on any stock exchange or automated dealer quotation system and no representation has been made to the Investor that the Shares will be listed on any stock exchange or automated dealer quotation system; |
(x) | the Shares are assignable only with the prior written consent of the Company, which consent will not be unreasonably denied, provided that any such transfer is made in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the Act or pursuant to an available exemption from the registration requirements of the Act; and |
(xi) | this Subscription Agreement is not enforceable by the Investor unless it has been accepted by the Company. |
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5. Representations, Warranties and Covenants of the Investor
5.1 The Investor hereby represents and warrants to and covenants with the Company (which representations, warranties and covenants shall be true and correct as of the date hereof and as of the subscription date of the Additional Shares, and will survive the execution and delivery of this Subscription Agreement) that:
(i) the Investor has the legal capacity and competence to enter into and execute this Subscription Agreement and to take all actions required pursuant hereto and, if the Investor is a corporation, it is duly incorporated and validly subsisting under the laws of its jurisdiction of incorporation and all necessary approvals by its directors, shareholders and others have been obtained to authorize execution and performance of this Subscription Agreement on behalf of the Investor;
(ii) entering into of this Subscription Agreement and the transactions contemplated hereby do not result in the violation of any of the terms and provisions of any law applicable to, or the corporate documents of, the Investor or of any agreement, written or oral, to which the Investor may be a party or by which the Investor is or may be bound;
(iii) the Investor has duly executed and delivered this Subscription Agreement and it constitutes a valid and
binding agreement of the Investor enforceable against the Investor;
(iv) the Investor is not a U.S. Person;
(v) the Investor is not acquiring the Shares for the account or benefit of, directly or indirectly, any U.S. Person;
(vi) the Investor is resident of the jurisdiction set out under the heading “Name and Address of Investor” on the signature page of this Subscription Agreement;
(vii) the Investor is and will be outside the United States when receiving and executing this Subscription Agreement and is acquiring the Shares as principal for the Investor’s own account (except for the circumstances outlined in paragraph 5.1), for investment purposes only, and not with a view to, or for, resale, distribution or fractionalization thereof, in whole or in part, and no other person has a direct or indirect beneficial interest in the Shares;
(ix) the Investor is acquiring the Shares for investment only and not with a view to resale or distribution and, in particular, it has no intention to distribute either directly or indirectly any of the Shares in the United States or to U.S. Persons;
(x) the Investor is not an underwriter of, or dealer in, the Shares of the Company, nor is the Investor participating, pursuant to a contractual agreement or otherwise, in the distribution of the Shares;
(xi) the Investor:
(a) is able to fend for itself in connection with the Offering; and
(b) has such knowledge and experience in business matters as to be capable of evaluating the merits and risks of its prospective investment in the Company’s Shares offered hereby; and
(c) has the ability to bear the economic risks of its prospective investment and can afford the complete loss of such investment;
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(xii) if the Investor is acquiring the Shares as a fiduciary or agent for one or more investor accounts, the Investor has sole investment discretion with respect to each such account and it has full power to make the foregoing acknowledgements, representations and agreements on behalf of such account, and the investor accounts, if any, for which the Investor acts as a fiduciary or agent satisfy the definition of an “Accredited Investor”, as the term is defined in Rule 501 of Regulation D under the Act;
(xiii) the Investor acknowledges that the Investor has not acquired the Shares as a result of, and will not itself engage in, any “directed selling efforts” (as defined in Regulation S under the Act) in the United States in respect of any of the Shares which would include any activities undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the resale of any of the Shares, provided, however, that the Investor may sell or otherwise dispose of any of the Shares pursuant to an effective registration statement under the Act and any applicable state securities laws or under an exemption from such registration requirements and as otherwise provided herein;
(xiv) the Investor acknowledges that:
(a) he has not received nor is he aware of any advertisement of any of the Shares;
(b) no person has made to the Investor any written or oral representations that any person will resell or repurchase any of the Shares; and
(c) no person will refund the purchase price of any of the Shares.
6. Conditions Precedent.
The undertaking of the Investor shall be subject to and contingent upon the following:
6.1 Prior to the Effective Date, the Company shall have secured all permits, consents and authorizations that shall be necessary or required lawfully to consummate this Subscription Agreement and to issue Shares in accordance with the terms of this Subscription Agreement. The Company has all requisite corporate power to own and operate its property and assets, to perform all its obligations under all agreements and instruments to which it is a party or by which it is bound, and to carry on the business of the Company as presently conducted and as proposed to be conducted. The Company is in compliance with all applicable laws, including all laws pertaining to it as a public company. All issued and outstanding shares of the Company have been duly authorized, and are validly issued and outstanding and fully paid and non-assessable. The Shares, when issued in accordance with this Subscription Agreement, will be duly authorized, validly issued, fully paid, non-assessable, and free of any preemptive rights, and will have the rights, preferences, privileges, and restrictions set forth in the Certificate of Incorporation of the Company, and will be issued free and clear of any liens, claims, encumbrances or third party rights of any kind and duly registered in the name of the Investor in the Company’s register of members.
6.2 The Company has duly executed and delivered this Subscription Agreement and it constitutes a valid and binding agreement of the Investor enforceable against the Investor.
6.3 The acquisition of and subscription for the Shares by the Investor as contemplated in this Subscription Agreement complies with or is exempt from the applicable securities legislation of the jurisdiction of residence of the Investor.
7. Acknowledgement and Waiver
The Investor has acknowledged that the decision to subscribe for and purchase the Shares was solely made on the basis of publicly available information contained in the Exchange Act Reports. The Investor hereby waives, to the fullest extent permitted by law, any rights of withdrawal, rescission or compensation for damages to which the Investor might be entitled in connection with the distribution of any of the Shares.
8. Restrictive Legend on Subject Securities
8.1 The Investor hereby acknowledges that upon the issuance thereof, and until such time as the same is no longer required under the applicable securities laws and regulations, certificates or book entry forms evidencing the Shares will bear a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THE SHARES HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).
NONE OF THE SHARES HAVE BEEN REGISTERED UNDER THE ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SHARES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE ACT.
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8.2 The Investor hereby acknowledges and agrees to the Company making a notation on its records in order to implement the restrictions on transfer set forth and described in this Subscription Agreement.
9. Costs
The Investor acknowledges and agrees that all costs and expenses incurred by the Investor (including any fees and disbursements of any counsel or other professional retained by the Investor) relating to the purchase of the Shares will be borne by the Investor.
10. Governing Law
This Subscription Agreement is governed by the laws of the State of New York. The Investor, in his personal or corporate capacity and, if applicable, on behalf of each beneficial purchaser for whom it is acting, irrevocably agrees to the jurisdiction of the courts of the State of New York.
11. Survival
This Subscription Agreement, including without limitation the representations, warranties and covenants contained herein, will survive and continue in full force and effect and be binding upon the parties hereto notwithstanding the completion of the purchase of the Shares by the Investor pursuant hereto.
12. Assignment
This Subscription Agreement is transferable or assignable only with the prior written consent of the Company, which consent will not be unreasonably denied.
13. Severability
The invalidity or unenforceability of any particular provision of this Subscription Agreement will not affect or limit the validity or enforceability of the remaining provisions of this Subscription Agreement.
14. Entire Agreement
Except as expressly provided in this Subscription Agreement and in the agreements, instruments and other documents contemplated or provided for herein, this Subscription Agreement contains the entire agreement between the parties with respect to the sale of the Shares and there are no other terms, conditions, representations or warranties, whether expressed, implied, oral or written, by statute or common law, by the Company or by anyone else.
15. Notices
All notices here under will be in writing and will be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Investor will be directed to the address on the Investor’s signature page and notices to the Company will be directed to it at the address first set forth above unless another address will be provided to the Investor by the Company in writing.
16. Counterparts and Electronic Means
This Subscription Agreement may be executed in any number of counterparts, each of which, when so executed and delivered, will constitute an original and all of which together will constitute one instrument. Delivery of an executed copy of this Subscription Agreement by electronic facsimile transmission or other means of electronic communication capable of producing a printed copy will be deemed to be execution and delivery of this Subscription Agreement as of the date hereinafter set forth.
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IN WITNESS WHEREOF the Investor has duly executed this Subscription Agreement as of the date of
acceptance by the Company.
Y.M.Y Industry Ltd. | |
(Name of Investor) | |
/s/: Y.M.Y Industry Ltd. | |
(Signature of Investor) | |
38 Yefet St., Tel Aviv-Yafo, Israel | |
(Address of Investor) |
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A C C E P T A N C E
The above-mentioned Subscription Agreement in respect of the Shares is hereby accepted by TechCare Corp. DATED this 7th day of August, 2018. TechCare Corp.
/s/: Doron Biran | |
Name: Doron Biran Title: | |
CEO |
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THIS SUBSCRIPTION AGREEMENT RELATES TO AN OFFERING OF SHARES OF COMMON STOCK (THE “OFFERING”), IN AN OFFSHORE TRANSACTION TO PERSONS WHO ARE NOT U.S. PERSONS (AS DEFINED HEREIN) PURSUANT TO REGULATION S PROMULGATED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).
THE SHARES THAT ARE SUBJECT TO THIS SUBSCRIPTION AGREEMENT IN RELIANCE ON REGULATION S (THE “SUBSCRIPTION AGREEMENT”) HAVE NOT BEEN REGISTERED UNDER THE ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, NONE MAY BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS (AS DEFINED HEREIN) EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN ACCORDANCE WITH THE ACT.
TECHCARE CORP.
(A Delaware corporation)
FIRST AMENDMENT TO SUBSCRIPTION AGREEMENT DATED AUGUST 8, 2018
DATED: October 28th, 2018 (the “Effective Date”)
WHEREAS | Y.M.Y Industry Ltd. (Israeli Company No. 512680539), of 38 Yefet St., Tel Aviv-Yafo, Israel (the “Investor”) has subscribed for and purchased 645,995 shares of common stock, par value $0.0001 (the “Shares”) offered by TechCare Corp., a Delaware corporation with offices located at 1140 Avenue of the Americas, New York, NY 10036 (the “Company”), at a purchase price per share of US$ $0.387 (the “Original Share Purchase Price”), for an aggregate consideration of US$250,000 (the “Original Investment Amount”), all pursuant to the terms and conditions set forth in a certain subscription agreement dated August 8, 2018 (the “Subscription Agreement”); and |
WHEREAS | Under the subscription Agreement, the Investor was further entitled, but not obligated, until the twelve month anniversary thereof, to subscribe for, and purchase, 416,667 additional Shares of the Company, at a purchase price of $0.60, for an aggregate consideration of US$250,000, valid thru August 7, 2018, all pursuant to the terms and conditions set forth in this Subscription Agreement; and |
WHEREAS | On September 25, 2018, the Company’s board of directors has adopted a resolution, pursuant to which any investor participating in this current financing round, shall be entitled, but not obligated, to increase its investment in the Company to US$500,000 or beyond, and thereby, be entitled to a discounted price per share of $0.261 (respectively: the “New Share Purchase Price” and the Discount”), which will apply both to its Original Investment Amount and to the additional amount so invested; and |
WHEREAS | The Investor wishes to increase its Original Investment Amount, in consideration for the Discount; |
Now Therefore, in consideration of the mutual promises set forth in this Agreement, the Parties hereby agree, represent and undertake as follows:
1. The Offering
1.1 On the basis of the representations and warranties and subject to the terms and conditions set forth in this Subscription Agreement, The Investor hereby agrees to subscribe for and purchase an aggregate total of 1,915,708 shares of common stock, par value $0.0001 (the “Initial Shares”) offered by the Company, at a purchase price per share of US$ 0.261 (the “Share Purchase Price”), for an aggregate consideration of US$500,000 (the “Subscription Proceeds”), as of the date hereof, all pursuant to the terms and conditions set forth in this Subscription Agreement.
1.2 In addition, on the basis of the representations and warranties and subject to the terms and conditions set forth in this Subscription Agreement, the Investor shall be entitled, but not obligated, until the twelve month anniversary of the date hereof, to subscribe for, and purchase, 833,333 additional Shares of TechCare Corp. (the “Additional Shares”) at a purchase price of $0.60, for an aggregate consideration of US$250,000 (the “Additional Subscription Proceeds”), all pursuant to the terms and conditions set forth in the Subscription Agreement and this Amendment.
As the Investor has already subscribed for and purchased 645,995 Shares at a purchase price per share of US$ 0.387 (the “Share Purchase Price”), for an aggregate consideration of US$250,000 and received the option to subscribe for and purchase 416,667 additional Shares of the Company, at a purchase price of $0.60, the following provisions shall apply:
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(a) the Investor shall transfer the outstanding balance of US$250,000 to the Company; (b) the Company shall issue 957,854 Shares to the Investor, representing the New Share Purchase Price; (c) the Company shall issue the Investor 311,859 additional Shares for the aggregate par value, representing the effectuation of the Discount with respect to the Original Investment Amount pursuant to the Subscription Agreement (i.e. a total of 957,854 shares to be issued at the New Share Purchase Price minus 645,995 already issued pursuant to the Subscription Agreement, at the Original Share Purchase Price); and (d) the Company shall grant the Investor with the option subscribe for, and purchase, 416,667 additional Shares of the Company, at a purchase price of $0.60, for an aggregate consideration of US$250,000, valid thru October 27, 2019.
1.3 The undersigned Investor understands that this Offering by the Company is being made only to persons/institutions who are not U.S. Persons, as defined in Rule 902 of Regulation S promulgated by the United States Securities and Exchange Commission (“SEC”) under the Securities Act of 1933, as amended (the “Act”) and that the Company will not offer Shares nor accept subscriptions from any person and/or entity that is not a U.S. Person as defined in Rule 902 of Regulation S.
1.4 On the basis of the representations and warranties of the Investor and subject to the terms and conditions set forth herein, the Company, by its execution and delivery of the counter-signed copy of this Subscription Agreement, hereby irrevocably agrees to accept the subscription and sell to the undersigned the Shares subscribed for herein.
1.5 Subject to the terms hereof, this Subscription Agreement will be effective upon receipt by the Company of the Subscription Proceeds.
1.6 Within seven (7) days of from the receipt of the Subscription Proceeds or the Additional Subscription Proceeds by the Company, as applicable, the Company shall deliver to the Investor book entry confirmation representing the number of Shares purchased by the Investor. The Shares shall be registered on the books of the Company as follows: Y.M.Y Industry Ltd. (Israeli Company No. 512680539), of 38 Yefet St., Tel Aviv-Yafo, Israel.
2. Payment of Subscription Proceeds and Additional Subscription Proceeds
The Investor understands that the Subscription Proceeds and Additional Subscription Proceeds, as applicable, are payable to the Company by electronic wire transfer pursuant to the Company’s wiring instructions to be provided thereto.
3. Documents/Deliveries Required from the Investor
3.1 The Investor understands and agrees that as a condition to the Company’s acceptance of this subscription, the undersigned will complete, sign and return to the Company an executed copy of this Subscription Agreement together with any and all attachments hereto.
3.2 The Investor will complete, sign and return to the Company as soon as possible, on request by the Company, any other documents, questionnaires, notices and undertakings as may be reasonably required by regulatory authorities and applicable law.
3.3 The Investor will pay/deliver the Subscription Proceeds and the Additional Subscription Proceeds, as applicable, to the Company, as provided in Section 2 above subject to the Company’s execution and acceptance of this Subscription Agreement.
4. Acknowledgements of Investor
4.1 The Investor acknowledges and agrees that:
(i) the Shares being offered have not been registered under the Act, or under any state securities or “blue sky” laws of any state of the United States, and, unless so registered, the Shares may neither be offered nor sold in the United States or, directly or indirectly, to U.S. Persons, as that term is defined in Rule 902 of Regulation S under the Act, except in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Act;
(ii) the Investor acknowledges that the Company has not undertaken, and will have no obligation, to register the under the Act;
(iii) the decision to execute this Subscription Agreement has not been based upon any oral or written representation as to fact or otherwise made by or on behalf of the Company, and such decision is based entirely upon a review of information (the receipt of which is hereby acknowledged) which has been filed by the Company with the SEC under the Securities Exchange Act of 1934 (collectively, the “Exchange act Reports”);
(iv) no securities commission or similar regulatory authority has reviewed or passed on the merits of an investment in the Shares;
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(v) there is no government or other insurance covering any investment in the Shares;
(vi) there are risks associated with an investment in the Shares, as more fully described in certain information forming part of the Exchange Act Reports;
(vii) the Investor has had a reasonable opportunity to ask questions of and receive answers from the Company in connection with the Offering and to obtain additional information, to the extent possessed or obtainable without unreasonable effort or expense, necessary to verify the accuracy of the information about the Company;
(viii) the books and records of the Company were available upon reasonable notice for inspection, subject to certain confidentiality restrictions, by the Investor during reasonable business hours at its principal place of business, and all documents, records and books in connection with the distribution of the Shares hereunder have been made available for inspection by the Investor, the Investor’s attorney and/or advisor(s), if any;
(ix) there is no guarantee that the Shares will be listed on any stock exchange or automated dealer quotation system and no representation has been made to the Investor that the Shares will be listed on any stock exchange or automated dealer quotation system;
(x) the Shares are assignable only with the prior written consent of the Company, which consent will not be unreasonably denied, provided that any such transfer is made in accordance with the provisions of Regulation S, pursuant to an effective registration statement under the Act or pursuant to an available exemption from the registration requirements of the Act; and
(xi) this Subscription Agreement is not enforceable by the Investor unless it has been accepted by the Company.
5. Representations, Warranties and Covenants of the Investor
5.1 The Investor hereby represents and warrants to and covenants with the Company (which representations, warranties and covenants shall be true and correct as of the date hereof and as of the subscription date of the Additional Shares, and will survive the execution and delivery of this Subscription Agreement) that:
(i) the Investor has the legal capacity and competence to enter into and execute this Subscription Agreement and to take all actions required pursuant hereto and, if the Investor is a corporation, it is duly incorporated and validly subsisting under the laws of its jurisdiction of incorporation and all necessary approvals by its directors, shareholders and others have been obtained to authorize execution and performance of this Subscription Agreement on behalf of the Investor;
(ii) entering into of this Subscription Agreement and the transactions contemplated hereby do not result in the violation of any of the terms and provisions of any law applicable to, or the corporate documents of, the Investor or of any agreement, written or oral, to which the Investor may be a party or by which the Investor is or may be bound;
(iii) the Investor has duly executed and delivered this Subscription Agreement and it constitutes a valid and binding agreement of the Investor enforceable against the Investor;
(iv) the Investor is not a U.S. Person;
(v) the Investor is not acquiring the Shares for the account or benefit of, directly or indirectly, any U.S. Person;
(vi) the Investor is resident of the jurisdiction set out under the heading “Name and Address of Investor” on the signature page of this Subscription Agreement;
(vii) the Investor is and will be outside the United States when receiving and executing this Subscription Agreement and is acquiring the Shares as principal for the Investor’s own account (except for the circumstances outlined in paragraph 5.1), for investment purposes only, and not with a view to, or for, resale, distribution or fractionalization thereof, in whole or in part, and no other person has a direct or indirect beneficial interest in the Shares;
(ix) the Investor is acquiring the Shares for investment only and not with a view to resale or distribution and, in particular, it has no intention to distribute either directly or indirectly any of the Shares in the United States or to U.S. Persons;
(x) the Investor is not an underwriter of, or dealer in, the Shares of the Company, nor is the Investor participating, pursuant to a contractual agreement or otherwise, in the distribution of the Shares;
(xi) the Investor:
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(a) is able to fend for itself in connection with the Offering; and
(b) has such knowledge and experience in business matters as to be capable of evaluating the merits and risks of its prospective investment in the Company’s Shares offered hereby; and
(c) has the ability to bear the economic risks of its prospective investment and can afford the complete loss of such investment;
(xii) if the Investor is acquiring the Shares as a fiduciary or agent for one or more investor accounts, the Investor has sole investment discretion with respect to each such account and it has full power to make the foregoing acknowledgements, representations and agreements on behalf of such account, and the investor accounts, if any, for which the Investor acts as a fiduciary or agent satisfy the definition of an “Accredited Investor”, as the term is defined in Rule 501 of Regulation D under the Act;
(xiii) the Investor acknowledges that the Investor has not acquired the Shares as a result of, and will not itself engage in, any “directed selling efforts” (as defined in Regulation S under the Act) in the United States in respect of any of the Shares which would include any activities undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for the resale of any of the Shares, provided, however, that the Investor may sell or otherwise dispose of any of the Shares pursuant to an effective registration statement under the Act and any applicable state securities laws or under an exemption from such registration requirements and as otherwise provided herein;
(xiv) the Investor acknowledges that:
(a) he has not received nor is he aware of any advertisement of any of the Shares;
(b) no person has made to the Investor any written or oral representations that any person will resell or repurchase any of the Shares; and
(c) no person will refund the purchase price of any of the Shares.
6. Conditions Precedent.
The undertaking of the Investor shall be subject to and contingent upon the following:
6.1 Prior to the Effective Date, the Company shall have secured all permits, consents and authorizations that shall be necessary or required lawfully to consummate this Subscription Agreement and to issue Shares in accordance with the terms of this Subscription Agreement. The Company has all requisite corporate power to own and operate its property and assets, to perform all its obligations under all agreements and instruments to which it is a party or by which it is bound, and to carry on the business of the Company as presently conducted and as proposed to be conducted. The Company is in compliance with all applicable laws, including all laws pertaining to it as a public company. All issued and outstanding shares of the Company have been duly authorized, and are validly issued and outstanding and fully paid and non-assessable. The Shares, when issued in accordance with this Subscription Agreement, will be duly authorized, validly issued, fully paid, non-assessable, and free of any preemptive rights, and will have the rights, preferences, privileges, and restrictions set forth in the Certificate of Incorporation of the Company, and will be issued free and clear of any liens, claims, encumbrances or third party rights of any kind and duly registered in the name of the Investor in the Company’s register of members.
6.2 The Company has duly executed and delivered this Subscription Agreement and it constitutes a valid and binding agreement of the Investor enforceable against the Investor.
6.3 The acquisition of and subscription for the Shares by the Investor as contemplated in this Subscription Agreement complies with or is exempt from the applicable securities legislation of the jurisdiction of residence of the Investor.
7. Acknowledgement and Waiver
The Investor has acknowledged that the decision to subscribe for and purchase the Shares was solely made on the basis of publicly available information contained in the Exchange Act Reports. The Investor hereby waives, to the fullest extent permitted by law, any rights of withdrawal, rescission or compensation for damages to which the Investor might be entitled in connection with the distribution of any of the Shares.
4 |
8. Restrictive Legend on Subject Securities
8.1 The Investor hereby acknowledges that upon the issuance thereof, and until such time as the same is no longer required under the applicable securities laws and regulations, certificates or book entry forms evidencing the Shares will bear a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THE SHARES HAVE BEEN OFFERED IN AN OFFSHORE TRANSACTION TO A PERSON WHO IS NOT A U.S. PERSON (AS DEFINED HEREIN) PURSUANT TO REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”).
NONE OF THE SHARES HAVE BEEN REGISTERED UNDER THE ACT, OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SHARES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE ACT. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE ACT.
8.2 The Investor hereby acknowledges and agrees to the Company making a notation on its records in order to implement the restrictions on transfer set forth and described in this Subscription Agreement.
9. Costs
The Investor acknowledges and agrees that all costs and expenses incurred by the Investor (including any fees and disbursements of any counsel or other professional retained by the Investor) relating to the purchase of the Shares will be borne by the Investor.
10. Governing Law
This Subscription Agreement is governed by the laws of the State of New York. The Investor, in his personal or corporate capacity and, if applicable, on behalf of each beneficial purchaser for whom it is acting, irrevocably agrees to the jurisdiction of the courts of the State of New York.
11. Survival
This Subscription Agreement, including without limitation the representations, warranties and covenants contained herein, will survive and continue in full force and effect and be binding upon the parties hereto notwithstanding the completion of the purchase of the Shares by the Investor pursuant hereto.
12. Assignment
This Subscription Agreement is transferable or assignable only with the prior written consent of the Company, which consent will not be unreasonably denied.
13. Severability
The invalidity or unenforceability of any particular provision of this Subscription Agreement will not affect or limit the validity or enforceability of the remaining provisions of this Subscription Agreement.
14. Entire Agreement
Except as expressly provided in this Subscription Agreement and in the agreements, instruments and other documents contemplated or provided for herein, this Subscription Agreement contains the entire agreement between the parties with respect to the sale of the Shares and there are no other terms, conditions, representations or warranties, whether expressed, implied, oral or written, by statute or common law, by the Company or by anyone else.
15. Notices
All notices here under will be in writing and will be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Investor will be directed to the address on the Investor’s signature page and notices to the Company will be directed to it at the address first set forth above unless another address will be provided to the Investor by the Company in writing.
16. Counterparts and Electronic Means
This Subscription Agreement may be executed in any number of counterparts, each of which, when so executed and delivered, will constitute an original and all of which together will constitute one instrument. Delivery of an executed copy of this Subscription Agreement by electronic facsimile transmission or other means of electronic communication capable of producing a printed copy will be deemed to be execution and delivery of this Subscription Agreement as of the date hereinafter set forth.
5 |
IN WITNESS WHEREOF the Investor has duly executed this Subscription Agreement as of the date of acceptance by the Company.
Y.M.Y Industry Ltd. | |
(Name of Investor) | |
/s/: Y.M.Y Industry Ltd | |
(Signature of Investor) | |
38 Yefet St., Tel Aviv-Yafo, Israel | |
(Address of Investor) |
6 |
A C C E P T A N C E
The above-mentioned Subscription Agreement in respect of the Shares is hereby accepted by TechCare Corp. DATED this 28th day of October, 2018.
TechCare Corp.
/s/: Doron Biran___ | ||
Name: | Doron Biran | |
Title: | CEO |
7 |
Exhibit 31.1
TechCare Corp.
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Doron Biran, certify that:
1. I have reviewed this quarterly report on Form 10-Q of TechCare Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
By: | /s/ Doron Biran | |
Doron Biran, Chief Executive Officer | ||
Date: | November 13, 2018 |
Exhibit 31.2
TechCare Corp.
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Nir Shemesh, certify that:
1. I have reviewed this quarterly report on Form 10-Q of TechCare Corp.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
By: | /s/ Nir Shemesh | |
Nir Shemesh, Chief Financial Officer | ||
Date: | November 13, 2018 |
Exhibit 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER UNDER SECTION 906 OF
THE SARBANES-OXLEY ACT
Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of TechCare Corp. (the “Company”) hereby certifies to such officer’s knowledge that:
(i) the accompanying Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Doron Biran | |
Doron Biran, Chief Executive Officer | |
Dated: November 13, 2018 |
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, and is not being filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference to any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Exhibit 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER UNDER SECTION 906 OF
THE SARBANES-OXLEY ACT
Pursuant to 18 U.S.C. Section 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of TechCare Corp. (the “Company”) hereby certifies to such officer’s knowledge that:
(i) the accompanying Quarterly Report on Form 10-Q of the Company for the quarterly period ended September 30, 2018 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and
(ii) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
/s/ Nir Shemesh | |
Nir Shemesh, Chief Financial Officer | |
Dated: November 13, 2018 |
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. Section 1350, and is not being filed for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference to any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Nov. 12, 2018 |
|
Document And Entity Information | ||
Entity Registrant Name | TechCare Corp. | |
Entity Central Index Key | 0001498067 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Ex Transition Period | false | |
Entity Common Stock, Shares Outstanding | 29,949,096 | |
Trading Symbol | TECR | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2018 |
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - $ / shares |
Sep. 30, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
---|---|---|---|
Statement of Financial Position [Abstract] | |||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | |||
Preferred stock, shares outstanding | |||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 | 500,000,000 |
Common stock, shares issued | 29,949,096 | 25,835,401 | 21,776,762 |
Common stock, shares outstanding | 29,949,096 | 25,835,401 | 21,776,762 |
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Income Statement [Abstract] | ||||
Revenues | $ 90,367 | $ 188,809 | ||
Cost of revenues | 71,224 | 128,842 | ||
Gross profit | 19,143 | 59,967 | ||
Research and development expenses | 143,400 | 83,030 | 191,316 | 263,268 |
Change in fair value of option liability | (93,430) | (132,470) | 182,720 | |
Marketing, General and administrative expenses | 522,864 | 398,880 | 1,489,784 | 2,082,658 |
Operating loss | 647,121 | 388,480 | 1,488,663 | 2,528,646 |
Financial expenses (income), net | 9,110 | (5,304) | 26,265 | (24,495) |
Net loss | $ 656,231 | $ 383,176 | $ 1,514,928 | $ 2,504,151 |
Net loss per common stock: | ||||
Basic | $ (0.02) | $ (0.02) | $ (0.05) | $ (0.12) |
Diluted | $ (0.02) | $ (0.02) | $ (0.05) | $ (0.12) |
Weighted average number of common stock outstanding: | ||||
Basic | 32,529,717 | 21,752,409 | 31,709,944 | 21,722,199 |
Diluted | 32,529,717 | 22,018,967 | 31,807,036 | 21,722,199 |
Comprehensive loss: | ||||
Net loss | $ 656,231 | $ 383,176 | $ 1,514,928 | $ 2,504,151 |
Other comprehensive expense (income) attributable to foreign currency translation | 8,702 | 2,344 | (7,003) | (10,058) |
Comprehensive loss | $ 664,933 | $ 385,520 | $ 1,507,925 | $ 2,494,093 |
Nature of Operations and Summary of Significant Accounting Policies |
9 Months Ended | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||
Accounting Policies [Abstract] | ||||||||||||||||
Nature of Operations and Summary of Significant Accounting Policies |
NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Nature of operations
TechCare Corp. (“Techcare” or the “Company”), formally known as BreedIT Corp. (“BreedIt”) was incorporated under the laws of the State of Delaware on May 26, 2010. The Company’s common stock is traded in the United States on the OTCQB Market under the ticker symbol “TECR”.
On February 8, 2016, the Company signed a Merger Agreement with Novomic Ltd. (“Novomic”), a private company incorporated under the laws of the State of Israel. The closing of the Merger took place on August 9, 2016 pursuant to which Novomic became a wholly-owned subsidiary of the Company. The Merger was structured as a reverse Merger.
Novomic was incorporated as a private company in Israel in 2009. Since inception, Novomic has been a technology company engaged in the design, development and commercialization of a unique delivery platform utilizing vaporization of various natural compounds for multiple health, beauty and wellness applications. Novomic’s delivery platform is proprietary and patented.
Novomic’s first product is Novokid® - an innovative home use device which vaporizes a natural, plant-based, pesticides and silicone-free compound that effectively treats head lice and eggs. The Novokid® kit includes a vaporizer, treatment capsules and treatment cap alongside ancillary components. Novokid® is currently being sold in Israel and the Netherlands.
Novomic is currently working on the research and development of future product offerings for its delivery platform, including Shine, a revolutionary cosmetic device for the treatment and rejuvenation of the hair and scalp.
Going Concern
During the nine months period ended September 30, 2018, the Company had a comprehensive loss of approximately $1.5 million. As of September 30, 2018, the Company had accumulated losses of approximately $8 million.
Based on the projected cash flows and Company’s cash balances as of September 30, 2018, Company’s management is of the opinion that without further fund raising it will not have sufficient resources to enable it to continue advancing its activities including the development, manufacturing and marketing of its products for a period of at least 12 months from the date of issuance of these financial statements. As a result, there is substantial doubt about the Company’s ability to continue as a going concern.
Management’s plans include the continued commercialization of the products, continue taking cost reduction steps and securing sufficient financing through the sale of additional equity securities, debt or capital inflows from strategic partnerships. There are no assurances however, that the Company will be successful in obtaining the level of financing needed for its operations. If the Company is unsuccessful in commercializing its products and securing sufficient financing, it may need to reduce activities, curtail or cease operations. These financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
B. Summary of significant accounting policies
The accounting policies adopted are consistent with those of the previous financial year.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements and condensed footnotes have been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”), for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for fair statement of results for the interim periods presented have been included. The results of operations for the nine and the three months ended September 30, 2018 are not necessarily indicative of the results to be expected for the year or for other interim periods or for future years. The consolidated balance sheet as of December 31, 2017 is derived from audited financial statements as of that date; however, it does not include all of the information and footnotes required by GAAP for complete financial statements. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, which was filed with the SEC on April 2, 2018.
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of TechCare, and its subsidiary, Novomic. All intercompany balances and transactions have been eliminated in consolidation.
Revenue Recognition
Effective January 1, 2018, the Company adopted the new accounting standard related to the recognition of revenue in contracts with customers. Since the Company had no revenues prior to January 1, 2018, the new standard had no impact on revenues and results of operations for prior periods.
The Company derives revenues from sales of its product Novokid directly or indirectly through its distributors in the Netherlands and in Israel.
The Company determines revenue recognition through the following steps:
Revenue is measured as the amount of consideration expected to receive in exchange for transferring goods to the end customer or to the distributor.The Company also considers products that might be returned mostly based on the terms stipulated in the agreements with its distributors.The Company recognize the amount received or receivable that is expected to be returned as a refund liability,representing its obligation to return the clients’ consideration.
The Company reports revenue net of any revenue based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue-producing transactions.
Revenue from products are recognized when the customer or the distributor has obtained control of the goods (for the Company’s current arrangements, this is at the point in time) based on the shipping terms. The Company recognizes revenue on sales to distributors upon shipment of the goods, when the distributor has economic substance apart from the Company and the distributor is considered the principal for the transaction with the end-user client. |
New Accounting Pronouncements |
9 Months Ended |
---|---|
Sep. 30, 2018 | |
Accounting Changes and Error Corrections [Abstract] | |
New Accounting Pronouncements |
NOTE 2: NEW ACCOUNTING PRONOUNCEMENTS
Accounting Pronouncements Adopted in Current Period
In May 2014, and in following related amendments, the Financial Accounting Standards Board (the “FASB”) issued a new comprehensive revenue recognition guidance on revenue from contracts with customers ( the “Standard”) that will supersede the current revenue recognition guidance. The Standard provides a unified model to determine when and how revenue is recognized. The core principle of the Standard is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The Company adopted this guidance on January 1, 2018, which resulted in no impact on its consolidated financial statements since the Company had no revenues prior to 2018.
In January 2016, the FASB issued an Accounting Standards Update (an “ASU”) which changes to the current measurement model primarily affects all equity investments in unconsolidated entities (other than those accounted for using the equity method of accounting), financial liabilities under the fair value option, and the presentation and disclosure requirements for financial instruments. Under the new ASU equity investments in unconsolidated entities (other than those accounted for using the equity method of accounting) with readily determinable fair values will be measured at fair value through earnings. Equity investments that do not have readily determinable fair values may be measured at fair value or at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or a similar investment of the same issuer. The Company adopted this guidance on January 1, 2018, which resulted in no impact on its consolidated financial statements.
In November 2016, the FASB issued an ASU which requires entities to include amounts generally described as restricted cash and restricted cash equivalents in cash and cash equivalents when reconciling beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company adopted this guidance on January 1, 2018, which resulted in no impact on its consolidated financial statements.
In June 2018, the FASB issued an ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (“ASU 2018-07”). These amendments expand the scope of Topic 718, Compensation—Stock Compensation (which previously included share-based payments to employees only) to include share based payments issued to nonemployees for goods or services, with certain exceptions. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. ASU 2018-07 supersedes Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees, and is effective for all public entities for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted, but no earlier than a company’s adoption date of Topic 606, Revenue from Contracts with Customers. The Company early adopted ASU 2018-07 commencing July 1, 2018, with no impact on its consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted
In February 2016, the FASB issued a new ASU which revises lease accounting guidance. Under the new guidance, lessees will be required to recognize a right-of-use asset and a lease liability for all leases, other than leases that meet the definition of a short-term lease. The liability and the right-of-use asset arising from the lease will be measured as the present value of the lease payments. In addition, this guidance requires disclosure of key information about leasing arrangements to increase transparency and comparability among organizations. The new standard is effective for fiscal year beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. The new standard must be adopted using a modified retrospective transition approach, with certain practical expedients. The Company is currently evaluating the impact of the adoption of the new lease accounting guidance on its consolidated financial statements. |
Restatement of 2017 Condensed Consolidated Quarterly Financial Statements |
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Accounting Changes and Error Corrections [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restatement of 2017 Condensed Consolidated Quarterly Financial Statements |
NOTE 3: RESTATEMENT OF 2017 CONDENSED CONSOLIDATED QUARTERLY FINANCIAL STATEMENTS
As discussed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, during the preparation of the 2017 annual financial statements, the Company became aware of misstatements in its condensed consolidated financial statements for the quarter ended March 31, 2017, the six months ended June 30, 2017, and the nine months ended September 30, 2017, that were included in each of the Company’s 2017 Form 10-Qs. The misstatement stemmed from an erroneous recording of additional stock compensation expense of $943,901 during the three months ended March 31, 2017 related to certain fully vested awards that were granted in December 31, 2016, and were properly fully expensed in 2016. As a result, the Company’s previously reported net loss for each of the three aforementioned periods in 2017 was overstated by this amount. The Board of Directors and the Company concluded that due to this error the condensed consolidated financial statements for each of these periods was materially misstated and should be restated (the Restatement).
The Restatement also corrects certain other misstatements during the 2017 interim periods, including (i) an error related to the accounting for advances to suppliers that were previously expensed that impacted the quarters ended June 30, 2017, and September 30, 2017, and (ii) errors in the classification of certain expenses within the consolidated statements of operations and comprehensive loss which impacts classification only and does not impact the total net loss or comprehensive loss reported for any of the periods.
The Restatement does not result in a change to the Company’s previously reported total amounts of net cash flows from operating activities, investing activities, or financing activities. There was no impact to net change in cash and cash equivalents for any previously reported periods. Certain corrections of classifications within the operating cash flow section were impacted by the Restatement.
Condensed consolidated balance sheet as of September 30, 2017 (Unaudited):
Condensed consolidated statement of operations and comprehensive loss for the nine month period ended September 30, 2017 (Unaudited):
Condensed consolidated statement of operations and comprehensive loss for the three month period ended September 30, 2017 (Unaudited):
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Stockholders' Equity |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity |
NOTE 4: STOCKHOLDERS’ EQUITY
Share capital
During the nine months ended September 30, 2018, the Company entered into several agreements, under which the Company raised an aggregate amount of $ 1,622,000, as follows:
Investment agreements signed during the three months ended September 30, 2018:
Stock-Based Compensation to employees and directors
Stock based awards are accounted for using the fair value method in accordance with ASC 718, Shared Based Payment. The Company’s primary type of stock-based compensation consists of stock options to directors, employees and officers. The Company uses Black-Scholes option pricing model in valuing options.
During the nine months ended September 30, 2018 the Company had not granted any options to employees and directors.
During March 2017, the Company granted to certain employees options to purchase 869,596 of the Company’s common stock for an exercise price of $0.0001. The options granted were fully vested on the date of the grant and exercisable into the Company’s common stock at a 1:1 ratio for 2.5 years from the date of the grant.
The following assumptions were applied in determining the options’ fair value on their grant date:
The Company based the risk-free interest rate on the U.S. Treasury yield curve. The expected term in years represents the period of time that the awards granted are expected to be outstanding. The assumption for dividend yield is zero because the Company has not historically paid dividends nor does it expect to do so in the foreseeable future. The volatility was based on the historical stock volatility of several peer companies, as the Company has limited trading history to use the volatility of its own common stock.
A summary of the stock option activity for employees and directors for the nine months ended September 30, 2018:
Stock-based compensation expenses related to employee awards, included in the Company’s statements of operations and comprehensive loss, were allocated as follows:
Stock-Based Compensation to non-employees – Options and Warrants
The Company early adopted ASU 2018-07 commencing July 1, 2018, with no impact on its consolidated financial statements. Prior to the adoption of ASU 2018-07 stock options issued to consultants and other non-employees, as compensation for services provided to the Company, were accounted for based upon the fair value of the options. The fair value of the options granted were measured on a final basis at the end of the related service period and were recognized over the related service period using the straight line method. After the adoption of ASU 2018-07, the measurement date for non-employee awards is the date of the grant. The compensation expense for non-employees is recognized, without changes in the fair value of the award, over the requisite service period, which is the vesting period of the respective award.
In the second quarter of 2018, as part of consulting agreements, the Company granted options to non-employees, as follows:
The following assumptions were applied in determining the options’ fair value on their grant date:
The Company based the risk-free interest rate on the U.S. Treasury yield curve. The expected term in years represents the period of time that the awards granted are expected to be outstanding. The assumption for dividend yield is zero because the Company has not historically paid dividends nor does it expect to do so in the foreseeable future. The volatility was based on the historical stock volatility of several peer companies, as the Company has limited trading history to use the volatility of its own common stock.
During January 2017, as part of a consulting agreement, the Company granted to a non-employee warrants exercisable to purchase 100,000 of the Company’s common stock at an exercise price of $1.50 per warrant exercisable for a period of 24 months commencing on the date of the agreement, fully vested on the date of the grant.
During March 2017, the Company granted to a non-employee options to purchase 521,065 of the Company’s common stock for an exercise price of $0.0001. The options granted were fully vested on the date of the grant and exercisable into the Company’s common stock at a 1:1 ratio for 5 years from the date of the grant.
The following assumptions were applied in determining the options’ fair value on their grant date:
A summary of the stock option activity related to non-employees, for the nine months ended September 30, 2018:
Stock-based compensation expenses in the amount of $27,544 included in the Company’s statements of operations and comprehensive loss for the nine months period ended September 30, 2018 recorded in marketing, general and administrative. |
OEM Distribution Agreement |
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Contractors [Abstract] | |||||||||||||||||||||||||||||||||||||||||
OEM Distribution Agreement |
NOTE 5: OEM DISTRIBUTION AGREEMENT
On June 23, 2017, the Company entered into an OEM agreement (the “OEM Agreement”) with a medical device and wellness applications company based in the United States (the “OEM Distributor”), according to which the OEM Distributor will manufacture, distribute and sell the Company’s Novokid head lice treatment products in the United States, Canada, Brazil, Argentina, Costa Rica and Colombia, all on an exclusive basis, pursuant to and in accordance with the terms and conditions set forth in the OEM Agreement, including minimum royalties commitments. The OEM Distributor will be solely responsible for obtaining and maintaining the approval from the US Food and Drug Administration (the “FDA”) and shall bear all costs related to such approval. The Company, through its OEM Distributor, has been communicating with the FDA regarding Novokid’s designation as a medical device. An Application to the FDA Office of Combination (OCP division) is under preparation.
As of the date of these financial statements, an FDA approval was not obtained, hence, the Company did not generate any revenues from the OEM agreement.
As part of the OEM Agreement, the OEM Distributor paid a royalty advance of $10,000 and also an amount of $140,000 which is held in an escrow account, until the Company completes certain milestones, as described in the OEM Agreement. As of September 30, 2018, the milestones have not been achieved.
Also, as part of the OEM Agreement, the Company granted the OEM Distributor an option to purchase up to 9.09% of the Company’s common stock for a total consideration of up to $900,000,exercisable until January 15, 2018.
The fair value of the option as of June 23, 2017 (initial recognition) amounted to $432,518.The key assumptions used in the options’ valuation was as follows:
The fair value of the option as of December 31, 2017 amounted to $132,470.The key assumptions used in the options’ valuation was as follows:
The option expired on January 15, 2018. |
Income Taxes |
9 Months Ended |
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Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes |
NOTE 6: INCOME TAXES
a. Basis of taxation
The Company and its subsidiary are taxed under the domestic tax laws of the jurisdiction of incorporation of each entity (United States and Israel).
b. Carryforward Tax Losses
Carryforward Tax Losses of the US Company as of September 30, 2018 amounted to approximately $0.4 million. Carryforward Tax Losses of the Israeli subsidiary amounted to approximately $5.1 million. A full valuation allowance was created against these carry forward tax losses since the realization of any future benefit from these net operating losses cannot be sufficiently assured at September 30, 2018.
c. Corporate tax rates
The regular corporate tax rate in Israel in 2017 is 24% and 23% in 2018.
On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act (the “TCJA”), which among other reduces the federal corporate tax rate from 35% to 21%, effective January 1, 2018.
The Company has no impact of the TCJA on these condensed consolidated financial statements. |
Loss Per Share |
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Sep. 30, 2018 | |
Earnings Per Share [Abstract] | |
Loss Per Share |
NOTE 7: LOSS PER SHARE
Loss per share is based on the loss that is attributed to the stockholders holding common stock, divided by the weighted average number of common stock in issue during the period.
For purposes of the calculation of the diluted loss per share, the Company adjusts the weighted average number of common stock using the treasury stock method assuming conversion of all of the dilutive potential stock. The potential stock are taken into account only if their effect is dilutive (increases loss per share). |
Fair Value of Financial Instruments |
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Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Fair Value of Financial Instruments |
NOTE 8: FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of the Company’s financial instruments, including cash equivalents, current assets, accounts payable and accrued liabilities and notes payables approximate their fair value, due to their short term in nature and their carrying amounts approximates the amounts expected to be received or paid.
A hierarchy has been established for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The Company accounts for option liability as Level 3 since its inputs are unobservable inputs for the liability.
The following table is a reconciliation of the change for the financial liability where fair value measurement is estimated utilizing Level 3 inputs:
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Related Parties |
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Related Party Transactions [Abstract] | ||||||||||||||||||||||
Related Parties |
NOTE 9: RELATED PARTIES
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Subsequent Event |
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Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Event |
NOTE 10: SUBSEQUENT EVENT
On October 28, 2018, the Company entered into an amendment to the subscription agreement mentioned in note 4e (the “Amendment”). Pursuant to the Amendment, the investor has increased its initial investment by an additional sum of $250,000 to a total investment of $500,000 and is to be issued a total of 1,915,708 shares of common stock at a price per share of $0.261, out of which 645,995 shares of common stock were issued in August 2018. In addition, the investor was issued additional warrants to purchase up to 416,667 shares of common stock with an exercise price of $0.6, exercisable until October 27, 2019. The funds were received in November 2018. |
Nature of Operations and Summary of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | ||||||||||||||||
Basis of Presentation |
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements and condensed footnotes have been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles (“GAAP”), for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for fair statement of results for the interim periods presented have been included. The results of operations for the nine and the three months ended September 30, 2018 are not necessarily indicative of the results to be expected for the year or for other interim periods or for future years. The consolidated balance sheet as of December 31, 2017 is derived from audited financial statements as of that date; however, it does not include all of the information and footnotes required by GAAP for complete financial statements. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, which was filed with the SEC on April 2, 2018. |
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Principles of Consolidation |
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of TechCare, and its subsidiary, Novomic. All intercompany balances and transactions have been eliminated in consolidation. |
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Revenue Recognition |
Revenue Recognition
Effective January 1, 2018, the Company adopted the new accounting standard related to the recognition of revenue in contracts with customers. Since the Company had no revenues prior to January 1, 2018, the new standard had no impact on revenues and results of operations for prior periods.
The Company derives revenues from sales of its product Novokid directly or indirectly through its distributors in the Netherlands and in Israel.
The Company determines revenue recognition through the following steps:
Revenue is measured as the amount of consideration expected to receive in exchange for transferring goods to the end customer or to the distributor.The Company also considers products that might be returned mostly based on the terms stipulated in the agreements with its distributors.The Company recognize the amount received or receivable that is expected to be returned as a refund liability,representing its obligation to return the clients’ consideration.
The Company reports revenue net of any revenue based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue-producing transactions.
Revenue from products are recognized when the customer or the distributor has obtained control of the goods (for the Company’s current arrangements, this is at the point in time) based on the shipping terms. The Company recognizes revenue on sales to distributors upon shipment of the goods, when the distributor has economic substance apart from the Company and the distributor is considered the principal for the transaction with the end-user client. |
Restatement of 2017 Condensed Consolidated Quarterly Financial Statements (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Accounting Changes and Error Corrections [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Restatement to Prior Year Income |
Condensed consolidated balance sheet as of September 30, 2017 (Unaudited):
Condensed consolidated statement of operations and comprehensive loss for the nine month period ended September 30, 2017 (Unaudited):
Condensed consolidated statement of operations and comprehensive loss for the three month period ended September 30, 2017 (Unaudited):
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Stockholders' Equity (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Employees and Directors [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Values of Stock Options |
The following assumptions were applied in determining the options’ fair value on their grant date:
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Schedule of Stock Option Activity |
A summary of the stock option activity for employees and directors for the nine months ended September 30, 2018:
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Schedule of Stock-based Compensation Expenses Related to Employee Awards |
Stock-based compensation expenses related to employee awards, included in the Company’s statements of operations and comprehensive loss, were allocated as follows:
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Non Employees [Member] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Fair Values of Stock Options |
The following assumptions were applied in determining the options’ fair value on their grant date:
The following assumptions were applied in determining the options’ fair value on their grant date:
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Schedule of Stock Option Activity |
A summary of the stock option activity related to non-employees, for the nine months ended September 30, 2018:
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OEM Distribution Agreement (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||
Contractors [Abstract] | |||||||||||||||||||||||||||||||||||||||||
Schedule of Assumptions Used to Fair Values of Options Valuation |
|
Fair Value of Financial Instruments (Tables) |
9 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Sep. 30, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Reconciliation of Change Fair Value Measurement Estimated Utilizing Level 3 Inputs |
The following table is a reconciliation of the change for the financial liability where fair value measurement is estimated utilizing Level 3 inputs:
|
Nature of Operations and Summary of Significant Accounting Policies (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Accounting Policies [Abstract] | |||||
Comprehensive loss | $ 664,933 | $ 385,520 | $ 1,507,925 | $ 2,494,093 | |
Accumulated losses | $ 8,086,011 | $ 6,216,844 | $ 8,086,011 | $ 6,216,844 | $ 6,571,083 |
Restatement of 2017 Condensed Consolidated Quarterly Financial Statements (Details Narrative) - USD ($) |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Mar. 31, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Accounting Changes and Error Corrections [Abstract] | |||
Stock compensation expense | $ 943,901 | $ 27,544 | $ 1,222,920 |
Restatement of 2017 Condensed Consolidated Quarterly Financial Statements - Schedule of Restatement to Prior Year Income (Details) (Parenthetical) - $ / shares |
Sep. 30, 2018 |
Dec. 31, 2017 |
Sep. 30, 2017 |
---|---|---|---|
Accounting Changes and Error Corrections [Abstract] | |||
Preferred stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | |||
Preferred stock, shares outstanding | |||
Common stock, par value | $ 0.0001 | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 | 500,000,000 |
Common stock, shares issued | 29,949,096 | 25,835,401 | 21,776,762 |
Common stock, shares outstanding | 29,949,096 | 25,835,401 | 21,776,762 |
Stockholders' Equity - Schedule of Stock-based Compensation Expenses Related to Employee Awards (Details) - USD ($) |
3 Months Ended | 9 Months Ended | |
---|---|---|---|
Mar. 31, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Stock-based compensation | $ 943,901 | $ 27,544 | $ 1,222,920 |
Research and Development Expense [Member] | |||
Stock-based compensation | 103,795 | ||
Marketing, General and Administrative Expenses [Member] | |||
Stock-based compensation | $ 1,119,125 |
OEM Distribution Agreement (Details Narrative) - USD ($) |
9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|
Jun. 23, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Common stock purchase consideration | $ 1,592,000 | $ 878,250 | ||
Fair value of option | $ 194,995 | |||
OEM Agreement [Member] | OEM Distributor [Member] | ||||
Royalty advance paid | 10,000 | |||
Escrow deposit | $ 140,000 | |||
Options granted to purchase shares of common stock, percentage | 9.09% | |||
Common stock purchase consideration | $ 900,000 | |||
Options expiration term | Jan. 15, 2018 | |||
Fair value of option | $ 432,518 | $ 132,470 |
OEM Distribution Agreement - Schedule of Assumptions Used to Fair Values of Options Valuation (Details) |
12 Months Ended | |
---|---|---|
Jun. 23, 2017 |
Dec. 31, 2017 |
|
Contractors [Abstract] | ||
Risk-free interest rate | 1.14% | 1.28% |
Expected shares price volatility | 70.00% | 70.00% |
Expected option term (years) | 6 months 21 days | 15 days |
Dividend yield | 0.00% | 0.00% |
Income Taxes (Details Narrative) - USD ($) |
9 Months Ended | 12 Months Ended | |
---|---|---|---|
Dec. 22, 2017 |
Sep. 30, 2018 |
Dec. 31, 2017 |
|
Net operating carry forward | $ 400,000 | ||
Income tax reconciliation description | Federal corporate tax rate from 35% to 21%, effective January 1, 2018. | ||
January 1, 2018 [Member] | |||
Corporate tax rate | 21.00% | ||
Israel Tax [Member] | |||
Net operating carry forward | $ 5,100,000 | ||
Corporate tax rate | 23.00% | 24.00% |
Fair Value of Financial Instruments - Schedule of Reconciliation of Change Fair Value Measurement Estimated Utilizing Level 3 Inputs (Details) - USD ($) |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Fair Value Disclosures [Abstract] | ||
Fair value, beginning balance | $ 132,470 | |
Change in fair value recognized in statement of operations and comprehensive loss | (132,470) | 276,150 |
Fair value ending balance | $ 276,150 |
Subsequent Event (Details Narrative) - USD ($) |
1 Months Ended | |
---|---|---|
Oct. 28, 2018 |
Aug. 31, 2018 |
|
Subscription Agreement [Member] | ||
Number of common stock shares issues | 645,995 | |
Subsequent Event [Member] | ||
Initial investment | $ 500,000 | |
Subsequent Event [Member] | Subscription Agreement [Member] | ||
Initial investment | $ 250,000 | |
Number of common stock shares issues | 1,915,708 | |
Shares purchase price per share | $ 0.261 | |
Warrant exercise price per share | $ 0.6 | |
Warrant exercisable date | Oct. 27, 2019 | |
Subsequent Event [Member] | Subscription Agreement [Member] | Maximum [Member] | ||
Warrant to purchase shares of common stock | 416,667 |
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