COMMITMENTS AND CONTINGENT LIABILITIES

3 Months Ended

Mar. 31, 2015

Commitments and Contingencies

Commitments and Contingent Liabilities

NOTE 6:- COMMITMENTS AND CONTINGENT LIABILITIES

a.The Company and Inc.’s facilities are leased under operating lease agreements.

The Company signed a lease agreement in Israel for its offices for a period of 36 months beginning July 1, 2012 until June 30, 2015 and an amendment to the agreement extending the term by 6 month, until December 31, 2015. In addition, Inc. signed a lease agreement in US for its offices for a period of 17 months beginning September 30, 2013 until February 28, 2015. That lease is now a month-to-month tenancy by its terms. Inc. is negotiating a lease on new office space with its current landlord.

b.Under the royalty-bearing programs administered by the Office of the Chief Scientist (the “OCS”), the Company is not obligated to repay any amounts received from the OCS if it does not generate any income from the results of the funded research program. If income is generated from a funded research program, the Company is committed to pay royalties at a rate between 3% and 5% of all future revenues arising from such research programs, and up to a maximum of 100% of the amount received, linked to the LIBOR.

The Company may be required to pay an increased total amount of royalties, which may be up to 300% of the grant amount (depending on the manufacturing percentage that is performed outside of Israel) plus interest, in case of manufacturing the developed products outside of Israel and up to 600% in case of transferring intellectual property rights in technologies developed using these grants. Both transferring manufacturing and transferring intellectual property outside of Israel require special approvals from the OCS.

For the years ended December 31, 2013 and 2014, the Company incurred no additional obligation to the OCS. As of December 31, 2014, the Company’s aggregate contingent obligation for payments to OCS, based on royalty-bearing participation received or accrued, totaled approximately $ 367.

In addition, the Company received grants from the Incubator, RAD BioMed Ltd., of $280 under the incubator program during 2005-2006 (the “Incubator Period”) for a disposable system for dosage and application of drugs with a multi-use control unit. The Company’s grants received in the Incubator Period are not subject to royalty payments but may increase to up to 300% or 600% of the grants amounts as mentioned above in case of transferring intellectual property or the manufacturing of the developed products outside of Israel.

In the event that intellectual property rights are deemed to be transferred out of Israel, the grants amount from the OCS and the Incubator may become a loan to be repaid immediately at up to 600% of the grants amounts as described above. Currently, the Company’s management believes no intellectual property has been transferred out of Israel and disclosure of the Company’s know how is made solely in connection with the transfer of manufacturing rights of the Company’s products to subcontractors. In May 2015, the OCS approved the Company’s request to transfer the manufacturing rights outside of Israel, noting that the Company would be requested to pay an increased royalty without providing any specifics. Accordingly, no provision has been recorded.