ITEM
1. FINANCIAL STATEMENTS
E-QURE
CORP.
Balance
Sheets
|
|
September
30, 2018
|
|
|
December
31, 2017
|
|
|
|
(Unaudited)
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
538,258
|
|
|
$
|
10,962
|
|
Prepaid
expenses
|
|
|
-
|
|
|
|
21,000
|
|
Total
current assets
|
|
|
538,258
|
|
|
|
31,962
|
|
Other
assets
|
|
|
18,632
|
|
|
|
63,382
|
|
Total
Assets
|
|
$
|
556,890
|
|
|
$
|
95,344
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’
Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
- trade
|
|
$
|
1,564
|
|
|
$
|
1,564
|
|
Accrued expenses
|
|
|
174,425
|
|
|
|
228,150
|
|
Short-term
notes payable - related party
|
|
|
95,196
|
|
|
|
138,051
|
|
Total
current liabilities
|
|
|
271,185
|
|
|
|
367,765
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity (deficit):
|
|
|
|
|
|
|
|
|
Preferred stock,
$0.00001 par value; 20,000,000 shares authorized; no shares issued and outstanding
|
|
|
|
|
|
|
|
|
Common stock, $0.00001 par value;
500,000,000 shares authorized; and 34,546,243 and 22,237,562 outstanding at September 30, 2018 and December 31, 2017.
|
|
|
345
|
|
|
|
222
|
|
Additional paid
in capital
|
|
|
33,604,992
|
|
|
|
31,325,044
|
|
Stock payable
|
|
|
21,000
|
|
|
|
21,000
|
|
Accumulated
deficit
|
|
|
(33,340,632
|
)
|
|
|
(31,618,687
|
)
|
Total
stockholders’ deficit
|
|
|
285,705
|
|
|
|
(272,421
|
)
|
Total
Liabilities and Stockholders’ Equity (Deficit)
|
|
$
|
556,890
|
|
|
$
|
95,344
|
|
See
Notes to Unaudited Interim Financial Statements.
E-QURE
CORP.
Statements
of Operations
For
the Three and Nine Month Periods Ended September 30, 2018 and 2017
(Unaudited)
|
|
For the
three
|
|
|
For the
three
|
|
|
For the
nine
|
|
|
For the
nine
|
|
|
|
months
ended
|
|
|
months
ended
|
|
|
months
ended
|
|
|
months
ended
|
|
|
|
September
30, 2018
|
|
|
September
30, 2017
|
|
|
September
30, 2018
|
|
|
September
30, 2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
1,514,327
|
|
|
|
141,155
|
|
|
|
1,688,995
|
|
|
|
539,984
|
|
Research
and development
|
|
|
7,418
|
|
|
|
26,207
|
|
|
|
22,200
|
|
|
|
198,339
|
|
Total
|
|
|
1,521,745
|
|
|
|
167,362
|
|
|
|
1,711,195
|
|
|
|
738,323
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) from operations
|
|
|
(1,521,745
|
)
|
|
|
(167,362
|
)
|
|
|
(1,711,195
|
)
|
|
|
(738,323
|
)
|
Income
tax
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
(1,294
|
)
|
|
|
(2,987
|
)
|
|
|
(10,750
|
)
|
|
|
(2,987
|
)
|
Total other expenses
|
|
|
(1,294
|
)
|
|
|
(2,987
|
)
|
|
|
(10,750
|
)
|
|
|
(2,987
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
loss
|
|
$
|
(1,523,039
|
)
|
|
$
|
(170,349
|
)
|
|
$
|
(1,725,945
|
)
|
|
$
|
(741,310
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted per
share amount:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
and diluted net loss
|
|
$
|
(0.06
|
)
|
|
$
|
(0.01
|
)
|
|
$
|
(0.07
|
)
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding (basic and diluted)
|
|
|
24,911,947
|
|
|
|
22,411,263
|
|
|
|
24,030,282
|
|
|
|
22,146,903
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See Notes
to Unaudited Interim Financial Statements.
E-QURE
CORP.
Statements
of Cash Flows
For
the Nine Months Ended September 30, 2018 and 2017
(Unaudited)
|
|
For the nine
|
|
|
For the nine
|
|
|
|
months ended
|
|
|
months ended
|
|
|
|
September
30, 2018
|
|
|
September
30, 2017
|
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(1,721,945
|
)
|
|
$
|
(741,310
|
)
|
Adjustments to reconcile net loss to
cash used in operating activities:
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
129,219
|
|
|
|
107,176
|
|
Shares for services
|
|
|
-
|
|
|
|
60,127
|
|
Donated capital
from related party
|
|
|
69,652
|
|
|
|
-
|
|
Imputed interest
|
|
|
10,750
|
|
|
|
2,987
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
(Increase) decrease
in prepaid expenses
|
|
|
21,000
|
|
|
|
20,750
|
|
(Increase) decrease
in other assets
|
|
|
44,750
|
|
|
|
-
|
|
(Increase) decrease
in accounts receivable
|
|
|
-
|
|
|
|
5,000
|
|
Increase
(decrease) in accounts payable and accrued expenses
|
|
|
114,075
|
|
|
|
159,705
|
|
Cash used in
operating activities
|
|
|
(1,332,499
|
)
|
|
|
(385,565
|
)
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities:
|
|
|
|
|
|
|
|
|
Related party borrowings
|
|
|
64,648
|
|
|
|
108,242
|
|
Proceeds
from issuance of common stock
|
|
|
1,795,147
|
|
|
|
-
|
|
Cash provided
by financing activities
|
|
|
1,859,795
|
|
|
|
108,242
|
|
|
|
|
|
|
|
|
|
|
Change in cash
|
|
|
527,296
|
|
|
|
(277,323
|
)
|
Cash - beginning of period
|
|
|
10,962
|
|
|
|
292,976
|
|
Cash - end of period
|
|
$
|
538,258
|
|
|
$
|
15,653
|
|
|
|
|
|
|
|
|
|
|
Non-cash transaction:
|
|
|
|
|
|
|
|
|
Debt and accrued
wages converted into common stock
|
|
$
|
275,303
|
|
|
$
|
-
|
|
See Notes
to Unaudited Interim Financial Statements.
E-QURE
CORP.
Notes to Unaudited Financial Statements
September 30 , 2018
1.
The Company and Significant Accounting Policies
Organizational
Background
E-Qure
Corp. (“EQURE” or the “Company”) is a Delaware corporation with offices in Israel. The Company owns IP
of innovate technology of wound healing device (BST).
Basis
of Presentation:
The
accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United
States of America, which contemplate continuation of the Company as a going concern. The Company has not established any source
of revenue to cover its operating costs, and as such, has incurred an operating loss since inception.
Significant
Accounting Policies
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from the estimates.
Cash
and Cash Equivalent
s
For
financial statement presentation purposes, the Company considers those short-term, highly liquid investments with original maturities
of three months or less to be cash or cash equivalents. There were no cash equivalents as of September 30, 2018 and December 31,
2017.
Property
and Equipment
New
property and equipment are recorded at cost. Property and equipment included in the bankruptcy proceedings and transferred to
the Trustee had been valued at liquidation value. Depreciation is computed using the straight-line method over the estimated useful
lives of the assets, generally 5 years. Expenditures for renewals and betterments are capitalized. Expenditures for minor items,
repairs and maintenance are charged to operations as incurred. Gain or loss upon sale or retirement due to obsolescence is reflected
in the operating results in the period the event takes place.
Valuation
of Long-Lived Assets
We
review the recoverability of our long-lived assets including equipment, goodwill and other intangible assets, when events or changes
in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment
is based on our ability to recover the carrying value of the asset from the expected future pre-tax cash flows (undiscounted and
without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment
loss is recognized for the difference between estimated fair value and carrying value. Our primary measure of fair value is based
on discounted cash flows. The measurement of impairment requires management to make estimates of these cash flows related to long-lived
assets, as well as other fair value determinations.
Stock
Based Compensation
Stock-based
awards are accounted for using the fair value method in accordance with ASC 718,
Share-Based Payments
. Our primary type
of share-based compensation consists of stock options. We use the Black-Scholes option pricing model in valuing options. The inputs
for the valuation analysis of the options include the market value of the Company’s common stock, the estimated volatility
of the Company’s common stock, the exercise price of the warrants and the risk free interest rate.
Accounting
For Obligations And Instruments Potentially To Be Settled In The Company’s Own Stock
We
account for obligations and instruments potentially to be settled in the Company’s stock in accordance with FASB ASC 815,
Accounting for Derivative Financial Instruments.
This issue addresses the initial balance sheet classification and measurement
of contracts that are indexed to, and potentially settled in, the Company’s own stock.
Fair
Value of Financial Instruments
FASB
ASC 825, “Financial Instruments,” requires entities to disclose the fair value of financial instruments, both assets
and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value. FASB ASC
825 defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction
between willing parties. At September 30, 2018 and December 31, 2017, the carrying value of certain financial instruments (cash
and cash equivalents, accounts payable and accrued expenses.) approximates fair value due to the short-term nature of the instruments
or interest rates, which are comparable with current rates.
Fair
Value Measurements
The
Company measures fair value under a framework that utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques
used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three
levels of inputs which prioritize the inputs used in measuring fair value are:
Level
1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair
value hierarchy gives the highest priority to Level 1 inputs.
Level
2: Other inputs that are observable, directly or indirectly, such as quoted prices for similar assets and liabilities or market
corroborated inputs.
Level
3: Unobservable inputs are used when little or no market data is available, which requires the Company to develop its own assumptions
about how market participants would value the assets or liabilities. The fair value hierarchy gives the lowest priority to Level
3 inputs.
In
determining fair value, the Company utilizes valuation techniques in its assessment that maximize the use of observable inputs
and minimize the use of unobservable inputs. The following table presents the Company’s financial assets and liabilities
that are carried at fair value, classified according to the three categories described above:
Fair Value Measurements at September 30, 2018
|
|
|
|
|
|
|
Quoted Prices
in Active
|
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
|
|
|
Markets for
Identical
Assets
|
|
|
|
Other
Observable
Inputs
|
|
|
|
Significant Unobservable Inputs
|
|
|
|
|
Total
|
|
|
|
(Level 1)
|
|
|
|
(Level 2)
|
|
|
|
(Level 3)
|
|
None
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Total assets and liabilities at fair value
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Fair Value Measurements at December 31, 2017
|
|
|
|
|
|
|
Quoted Prices
in Active
|
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
|
|
|
Markets for
Identical
Assets
|
|
|
|
Other
Observable
Inputs
|
|
|
|
Significant Unobservable Inputs
|
|
|
|
|
Total
|
|
|
|
(Level 1)
|
|
|
|
(Level 2)
|
|
|
|
(Level 3)
|
|
None
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Total assets and liabilities at fair value
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
When
the Company changes its valuation inputs for measuring financial assets and liabilities at fair value, either due to changes in
current market conditions or other factors, it may need to transfer those assets or liabilities to another level in the hierarchy
based on the new inputs used. The Company recognizes these transfers at the end of the reporting period that the transfers occur.
For the fiscal periods ended September 30, 2018 and December 31, 2017, there were no significant transfers of financial assets
or financial liabilities between the hierarchy levels.
Earnings
per Common Share
We
compute net income (loss) per share in accordance with ASC 260,
Earning per Share
. ASC 260 requires presentation of both
basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss)
available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period.
Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method
and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period
is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS
excludes all dilutive potential shares if their effect is anti-dilutive.
Income
Taxes
We
have adopted ASC 740,
Accounting for Income Taxes.
Pursuant to ASC 740, we are required to compute tax asset benefits for
net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial
statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward
in future years.
We
must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates
and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition
of revenue and expense for tax and financial statement purposes.
Deferred
tax assets and liabilities are determined based on the differences between financial reporting and the tax basis of assets and
liabilities using the tax rates and laws in effect when the differences are expected to reverse. ASC 740 provides for the recognition
of deferred tax assets if realization of such assets is more likely than not to occur. Realization of our net deferred tax assets
is dependent upon our generating sufficient taxable income in future years in appropriate tax jurisdictions to realize benefit
from the reversal of temporary differences and from net operating loss, or NOL, carryforwards. We have determined it more likely
than not that these timing differences will not materialize and have provided a valuation allowance against substantially all
of our net deferred tax asset. Management will continue to evaluate the realizability of the deferred tax asset and its related
valuation allowance. If our assessment of the deferred tax assets or the corresponding valuation allowance were to change, we
would record the related adjustment to income during the period in which we make the determination. Our tax rate may also vary
based on our results and the mix of income or loss in domestic and foreign tax jurisdictions in which we operate.
In
addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations.
We recognize liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether,
and to the extent to which, additional taxes will be due. If we ultimately determine that payment of these amounts is unnecessary,
we will reverse the liability and recognize a tax benefit during the period in which we determine that the liability is no longer
necessary. We will record an additional charge in our provision for taxes in the period in which we determine that the recorded
tax liability is less than we expect the ultimate assessment to be.
ASC
740 which requires recognition of estimated income taxes payable or refundable on income tax returns for the current year and
for the estimated future tax effect attributable to temporary differences and carry-forwards. Measurement of deferred income tax
is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available
tax benefits not expected to be realized.
Uncertain
Tax Positions
The
Financial Accounting Standards Board issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an
interpretation of FASB Statement No. 109, Accounting for Income Taxes” (“FIN No. 48”) which was effective for
the Company on January 1, 2007. FIN No. 48 addresses the determination of whether tax benefits claimed or expected to be claimed
on a tax return should be recorded in the financial statements. Under FIN No. 48, the Company may recognize the tax benefit from
an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing
authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such position
should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate
settlement. FIN No. 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim
periods and disclosure requirements.
Our
federal and state income tax returns are open for fiscal years ending on or after December 31, 2008. We are not under examination
by any jurisdiction for any tax year. At September 30, 2018, we had no material unrecognized tax benefits and no adjustments to
liabilities or operations were required under FIN 48.
Recent
Accounting Pronouncements
In
May 2017, the FASB issued Update 2017-09 - Compensation - Stock Compensation (Topic 718): Effective for all entities for annual
periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including
adoption in any interim period, for (1) public business entities for reporting periods for which financial statements have not
yet been issued and (2) all other entities for reporting periods for which financial statements have not yet been made available
for issuance. Early adoption is permitted. This adoption is not expected to have a material impact on our financial position or
results of operations.
In
February 2017, FASB issued Update 2017-06 - Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension
Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting (a consensus of
the Emerging Issues Task Force). Under Topic 960, investments in master trusts are presented in a single line item in the statement
of net assets available for benefits. Similar guidance is not provided in Topic 962 or 965, which has resulted in diversity in
practice. For each master trust in which a plan holds an interest, the amendments in this Update require a plan’s interest
in that master trust and any change in that interest to be presented in separate line items in the statement of net assets available
for benefits and in the statement of changes in net assets available for benefits, respectively. Topics 960 and 962 require plans
to disclose their percentage interest in the master trust and a list of the investments held by the master trust, presented by
general type, within the plan’s financial statements. Stakeholders said that the disclosure can be misleading when the plan
has a divided interest in the individual investments of the master trust (that is, when the plan has a specific, rather than a
proportionate, interest in the master trust). The amendments in this Update remove the requirement to disclose the percentage
interest in the master trust for plans with divided interests and require that all plans disclose the dollar amount of their interest
in each of those general types of investments, which supplements the existing requirement to disclose the master trust’s
balances in each general type of investments. Early adoption is permitted. This adoption is not expected to have a material impact
on our financial position or results of operations.
In
the opinion of management, the information furnished in these interim financial statements reflects all adjustments necessary
for a fair statement of the financial position and results of operations and cash flows as of and for the three month-periods
ended June 30, 2018 and 2017 and for the twelve-month period ended December 31, 2017. All such adjustments are of a normal recurring
nature.
Management
does not anticipate that the adoption of these standards will have a material impact on the financial statements.
2.
Stockholders’ Equity
Common
Stock
We
are currently authorized to issue up to 500,000,000 shares of $0.00001 par value common stock. All issued shares of common stock
are entitled to vote on a 1 share/1 vote basis.
Issuances
of Common Stock During the Period ended September 30, 2018:
During
the three months ended September 30, 2018, the Company raised $1,795,147 from a rights offering of a total of 9,555,468 Units
at $0.10 per Unit, each consisting of: (i) one share of Common Stock; (ii) one Class A Warrant exercisable for a period of 24
months to purchase ½ share of Common Stock at the equivalent of $0.50 per share; and (iii) one Callable Class B Warrant
exercisable for a period of 36 months to purchase ½ share of Common Stock at the equivalent of $1.25 per share. The Company
intends to use the proceeds of the rights offering for general corporate purposes, including working capital, capital expenditures,
as well as acquisitions and other strategic purposes. The warrants fair value is $156,722, and were valued using a Black- Scholes
valuation model.
During
the three-months ended September30, 2018, the Company converted $167,800 in accrued wages and $107,503 in related party debt owed
to management into 2,753,030 shares of Common Stock. In connection with this conversion, the Company issued 1,376,515 Class A
Warrants; 1,376,515 Class B Warrants and 2,750,000 Class C Warrants. The warrants were valued at $129,219 and were included as
stock-based compensation and recorded under additional paid in capital.
Issuances
of Common Stock During the Period ended September 30, 2017:
On
April 20, 2017, we issued 225,000 shares valued at $39,128 to two consultants for services provided. During the three months ended
June 30, 2017, we authorized the issuance of 75,000 additional shares to the same two consultants valued at $0.14 or $21,000,
which was recorded as stock payable.
Preferred
Stock
We
are currently authorized to issue up to 20,000,000 shares of $0.00001 par value preferred stock. There are no preferred shares
outstanding as of September 30, 2018 and December 31, 2017.
Stock
Options
On
January 1, 2015, the Company authorized the adoption of the 2015 Employee Incentive Plan.
Stock
Option Grants
On
January 1, 2015, the board of director approved the 2015 Employee Incentive Plan. The total number of shares of Common Stock reserved
for issuance by the Company either directly as Stock Awards or underlying Options granted under this Plan is 5,000,000 shares
of Common Stock. On January 1, 2015, the Company granted options as follows under its 2015 Employee Incentive Plan: (i) Professor
Ohry was granted options to purchase 250,000 shares of the Registrant’s common stock (“Option Shares”) at an
exercise price equal to one dollar ($1.00) per Option Share. The Option Shares shall vest pursuant to the terms of a Scientific
Advisory Board Agreement dated January 1, 2015 (the “Ohry SAB Agreement”). Provided the Ohry SAB Agreement remains
in effect, 75,000 shares shall vest July 1, 2015, and the remaining 175,000 Option Shares shall vest at the rate of 25,000 Option
Shares per quarter on the first day of each consecutive quarter; (ii) Dr. Ben Zion Weiner was granted options to purchase 350,000
Option Shares at an exercise price equal to one dollar ($1.00) per Option Share. The Option Shares shall vest pursuant to the
terms of a Scientific Advisory Board Agreement dated January 1, 2015 (the “Weiner SAB Agreement”). Provided the Weiner
SAB Agreement remains in effect, 105,000 Option Shares shall vest July 1, 2015 and the remaining 245,000 Option Shares shall vest
at the rate of 35,000 Option Shares per quarter on the first day of each consecutive quarter; and (iii) Michel Sessler was granted
options to purchase 150,000 Option Shares at an exercise price equal to one dollar ($1.00) per Option Share. The Option Shares
shall vest pursuant to the terms of a Scientific Advisory Board Agreement dated January 1, 2015 (the “Sessler SAB Agreement”).
Provided the Sessler SAB Agreement remains in effect, 45,000 Option Shares shall vest July 1, 2015 and the remaining 105,000 Option
Shares shall vest at the rate of 15,000 Option Shares per quarter on the first day of each consecutive quarter.
Following
is a table summarizing options still outstanding and exercisable along with exercise price and range of remaining term.
Type
|
|
Quantity
|
|
|
Exercise Price
|
|
|
Term
|
|
AviOhry
|
|
|
250,000
|
|
|
$
|
1.00
|
|
|
|
24 Months
|
|
Dr. Ben Zion Weiner
|
|
|
350,000
|
|
|
$
|
1.00
|
|
|
|
24 Months
|
|
Michael Sessler
|
|
|
150,000
|
|
|
$
|
1.00
|
|
|
|
24 Months
|
|
Total
|
|
|
750,000
|
|
|
|
|
|
|
|
|
|
During
the nine months ended September 30, 2018 and the year ended December 31, 2017, we expensed $0 and $107,176, respectively, in relation
the options granted above.
3.
Notes Payable
As
of September 30, 2018, the Company had no short-term notes outstanding.
During
the year ended December 31, 2017, the Company issued three notes for a total of $138,051, two of which were issued to related
parties. The notes are due on demand and bear no interest rate. As such, the imputed interest is calculated and included under
additional paid-in capital. As of September 30, 2018 and December 31, 2017, the Company has recorded $10,750 and $6,900, respectively,
in imputed interest.
|
|
September 30, 2018
|
|
|
December 31, 2017
|
|
Roni Weisberg, Chairman
|
|
$
|
-
|
|
|
$
|
57,172
|
|
Itsik Ben Yesha, CTO
|
|
$
|
57,460
|
|
|
$
|
49,745
|
|
Michael Cohen
|
|
|
37,736
|
|
|
|
31,134
|
|
The
reduction in notes due to related party as of September 30, 2018 was due to a partial conversion of debt into equity. See also
Note 2. Stockholders’ Equity.
4.
Other Assets
As
of September 30, 2018 and December 31, 2017, the Company recorded $18,632 and $63,382, respectively, as other assets representing
securities compliance services to be repaid in cash or securities compliance services pursuant to an arrangement with the Company’s
securities compliance consultant.
5.
Related Party Transactions not Disclosed Elsewhere
During
the three months ended September 30, 2018, the In Company’s chief executive officers and chairman converted debt and accrued
wages in the aggregate amount of $275,303 into Units consisting of a total of: (i) 2,753,030 restricted shares, 1,376,515 Class
A Warrants and Class B Warrants, having the same terms as the Class A and Class B Warrants set forth in the Reg S Unit Offering,
and 2,750,000 Class C Warrants exercisable to purchase one share of Common Stock at a price of $1.00 per Share.The warrants were
valued $129,219and were valued using a Black- Scholes valuation model.
As
of September 30, 2018 and December 31, 2017, we had accrued salaries of $174,425 and $228,150, respectively, due to three of our
officers.
On
January 1, 2015, the board of director approved the 2015 Employee Incentive Plan. The total number of shares of Common Stock reserved
for issuance by the Company either directly as Stock Awards or underlying Options granted under this Plan is 5,000,000 shares
of Common Stock. On January 1, 2015, the Company granted options as follows under its 2015 Employee Incentive Plan: (i) Professor
Ohry was granted options to purchase 250,000 shares of the Registrant’s common stock (“Option Shares”) at an
exercise price equal to one dollar ($1.00) per Option Share. The Option Shares shall vest pursuant to the terms of a Scientific
Advisory Board Agreement dated January 1, 2015 (the “Ohry SAB Agreement”). Provided the Ohry SAB Agreement remains
in effect, 75,000 shares shall vest July 1, 2015, and the remaining 175,000 Option Shares shall vest at the rate of 25,000 Option
Shares per quarter on the first day of each consecutive quarter; (ii) Dr. Ben Zion Weiner was granted options to purchase 350,000
Option Shares at an exercise price equal to one dollar ($1.00) per Option Share. The Option Shares shall vest pursuant to the
terms of a Scientific Advisory Board Agreement dated January 1, 2015 (the “Weiner SAB Agreement”). Provided the Weiner
SAB Agreement remains in effect, 105,000 Option Shares shall vest July 1, 2015 and the remaining 245,000 Option Shares shall vest
at the rate of 35,000 Option Shares per quarter on the first day of each consecutive quarter; and (iii) Michel Sessler was granted
options to purchase 150,000 Option Shares at an exercise price equal to one dollar ($1.00) per Option Share. The Option Shares
shall vest pursuant to the terms of a Scientific Advisory Board Agreement dated January 1, 2015 (the “Sessler SAB Agreement”).
Provided the Sessler SAB Agreement remains in effect, 45,000 Option Shares shall vest July 1, 2015 and the remaining 105,000 Option
Shares shall vest at the rate of 15,000 Option Shares per quarter on the first day of each consecutive quarter. We expensed $0
and $107,176, respectively, in relation to the option granted.
6.
Going Concern
The
accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United
States of America, which contemplate continuation of the Company as a going concern. The Company has not established any source
of revenue to cover its operating costs, and as such, has incurred an operating loss since inception. These and other factors
raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements
do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the
amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
7.
Subsequent Events
There
were no other subsequent events following the period ended September 30, 2018 through the date the financial statements were issued
that would materially affect the financial statements.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATION
The
following plan of operation 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. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend,
project and similar expressions, or words which, by their nature, refer to future events. 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.
Plan
of Operations
In
January 2014, Mr. Weissberg negotiated with Lifewave Ltd., a public company organized under the laws of the State of Israel, for
the purpose of acquiring certain of Lifewave’s IP assets pertaining to a wound healing device. The Registrant signed a patent
purchase agreement with Lifewave on January 6, 2014 (the “Agreement”), the closing of which was subject to several
material conditions, including our ability of raising equity capital sufficient to develop and commercially exploit the technology.
On
June 4, 2014, we completed the purchase of all right, title and interest to certain IP assets, including rights to a wound treatment
device. The IP assets, including the wound healing device, acquired by the Registrant are designed for wound treatment incorporating
Bioelectrical Signal Therapy (“BST Device”). The BST Device implements patented and proprietary electrical stimulation
technologies to treat hard-to-cure wounds and ulcers up to complete closure and/or cure.
Pursuant
to the Agreement, the Registrant has agreed to pay Lifewave a royalty of from 10% to 20% of the profits (as defined in the Agreement)
generated from the BST Device.
In
June 2014, the Registrant entered into an agreement with the Austen BioInnovation Institute in Akron (“ABIA” or the
“Institute”), for the purpose of bringing our BST Device to the U.S. market.
The
Company’s management selected ABIA’s Product Innovation and Commercialization Division, which has significant expertise
in wound healing, clinical trial development, and regulatory operations, to spearhead its pre-market clinical trial program, which
is necessary to apply for regulatory approval from the United States Food and Drug Administration (“FDA”) to distribute
the BST Device in the United States. As part of the Institute’s fully integrated regulatory and device development service
Offerings, ABIA will prepare on behalf of the Company an application to obtain FDA approval. The initial trial will include 70
patients in a double-arm, randomized, multi-center study to assess the safety and efficacy of the BST Device in patients with
Stage II and III pressure and venous stasis ulcers; and submit data to the FDA to obtain approval.
On
December 18, 2015, the Registrant confirmed certain information that it had received from ABIA that, while ABIA still anticipated
that it would be able to provide the Registrant with a final draft of the IDE application, ABIA had sustained financial difficulties
and key personnel losses that would likely adversely effect its ability to perform under the Agreement on a timely basis, if at
all. As a result, the Registrant requested that ABIA fully refund the monies paid to ABIA under the Agreement. In addition, the
Registrant agreed to engage a professional regulatory consultant, who was a former member of ABIA’s regulatory staff, to
serve as the Registrant’s FDA regulatory consultant on an interim basis, subject to the execution of a separate services
agreement. The Registrant is also evaluating the advisability of engaging another firm to replace ABIA, which process may be expected
to delay the IDE approval process for the BST Device.
The
Company’s success is dependent upon the successful FDA clinical trial of its BST Device. The Device may need additional
development and may never achieve safety or efficacy. The Company believes that its design and procedure show promise, but the
path to commercial success, even if development milestones are met, may take more time and might be more costly.
There
are a number of potential obstacles the Company might face, including the following:
●
We
may not be able to raise additional funds we may need to complete the clinical trials.
●
Competitors may develop alternatives that render BST Device redundant or unnecessary.
●
We may not have a sufficient and sustainable intellectual property position.
●
Our device may be shown to have harmful side effects or other characteristics that indicate it is unlikely to be safe and
effective.
● Our device may not
receive regulatory approval.
●
Even if our device receives regulatory approval, it may not be accepted by patients, the medical community or third-party
payers.
During
the three months ended September 30, 2017, we received a loan of $51,070 from the chairman of the board to help finance the Company.
The imputed interest on the loan is 10% and principal and accrued interest is due on demand.
Recent
Developments
On
July 18, 2016, the Company received the CE Certificate of Conformity and the ISO 13485 Certification. The CE Certification for
our BST Wound Healing Device is a declaration that it complies with the requirements of the EU related to health, safety and environmental
protections and acknowledges that the BST Device may be legally marketed in the EU. As a result, we are prepared to commence manufacturing
and marketing for our BST Device in Europe as well as other non-European countries that accept the CE Certification. The ISO is
the International Organization for Standardization, and represents that the company’s quality systems and procedures satisfies
the requirements for a comprehensive quality management for the design and manufacture of medical devices.
On
October 14, 2016, the Registrant received notification from FDA that it has granted conditional approval to the IDE application,
authorizing us to commence a clinical investigation of our BST Device for wound healing. The main condition set forth is that
the trial shall begin initially with 10 patients, after which we will file a safety report with the FDA before proceeding with
the trial, which contemplates testing the BST Device with 90 patients altogether.
On
January 8, 2017, the Registrant entered into a five-year distribution agreement (the “Distribution Agreement”) with
TekMedica SAS, organized under the laws of Colombia (“TekMedica” or the “Distributor”). Pursuant to the
Distribution Agreement, the Registrant granted TekMedica the exclusive rights to distribute the Registrant’s medical device
for the treatment of chronic wounds (the “BST Device™”) and the accompanying disposable electrodes (sometimes
collectively, the “Products”) in Colombia (the “Territory”).
The
Distribution Agreement provides that Registrant will provide Distributor with supplies of the BST Devicee and disposable electrode
for treatment of patients in hospitals, long-term care facilities, medical centers and out-patient clinics. The Distributor will
make an initial advance payment to be applied against the first year’s quota together with an initial order supported by
a Letter of Credit with subsequent orders as part of the quota, as set forth in the Distribution Agreement, with minimum annual
quota’s during the five-year term. The Distributor will be responsible for securing any product certification, permit, license
or approval that may be required in the Territory for the marketing, sale, sublicensing and delivery and use of the BST Devise
and Products in the Territory.
On
February 20, 2017, the Registrant received the official certification from the Israeli Ministry of Health authorizing the use
of the Registrant’s BST Device in Israel. The BST Device implements patented and proprietary electrical stimulation technologies
to treat hard-to-cure wounds and ulcers up to complete closure and/or cure.
Results
of Operations during the three months ended September 30, 2018 as compared to the three months ended September 30, 2017
We
have not generated any revenues during the three month ended September 30, 2018 and 2017. We had operating expenses mainly related
to general and administrative expenses and research and development expenses. During the three months ended September 30, 2018,
we incurred a net loss from operations of $1,521,745 due to general and administrative expenses of $1,514,327 and research and
development expenses of $7,418 as compared to a net loss from operation of $167,362 due to general and administrative expenses
of $141,155 and research and development expenses of $26,207 in the same period in the prior year.
Our
general and administrative expenses increased by $1,373,172 during the three months ended September 30, 2018 as compared to the
prior year mainly due to increased expenses related to FDA approval for our BST device.
Our
R&D expenses decreased by $18,789 during the three months ended September 30, 2018 as compared to the prior year mainly due
to decreases expenses related to FDA approval for our BST device.
During
the three months ended September 30, 2018 and 2017, we incurred interest expense of $1,294 and $2,987, respectively.
Results
of Operations during the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017
We
have not generated any revenues during the nine month ended September 30, 2018 and 2017. We had operating expenses mainly related
to general and administrative expenses and research and development expenses. During the nine months ended September 30, 2019,
we incurred a net loss from operations of $1,711,195 due to general and administrative expenses of $1,688,995 and research and
development expenses of $22,200 as compared to a net loss from operations of $738,323 due to general and administrative expenses
of $539,984 and research and development expenses of $198,339 in the same period in the prior year.
Our
general and administrative expenses increased by $1,149,011 during the nine months ended September 30, 2018 as compared to the
prior year mainly due to increased expenses related to FDA approval for our BST device.
Our
R&D expenses decreased by $176,139 during the nine months ended September 30, 2018 as compared to the prior year mainly due
to decreased expenses related to FDA approval for our BST device.
During
the nine months ended September 30, 2018 and 2017, we incurred interest expense of $10,750 and $2,987, respectively.
Liquidity,
Capital Resources and Strategy
On
September 30, 2018, we had current assets of $538,258 consisting of cash, as compared to current assets of $31,962 at December
31, 2017, consisting of $10,962 in cash and $21,000 in receivables and prepaid expenses. We had other assets of $18,632 as of
September 30, 2018 and $63,382 as of December 31, 2017. We had total assets of $556,890 as of September 30, 2018 and $95,344 as
of December 31, 2017.
We
had current liabilities of $271,185 as of September 30, 2018 consisting of $1,564 in accounts payable, accrued expenses of $174,425
and $95,196 in short-term notes payable to related parties. We had current liabilities of $367,765 as of December 31, 2017 consisting
of $1,564 in accounts payable, $228,150 in accrued expenses and $138,051 in short-term notes payable to related parties. We had
no long-term liabilities as of September 30, 2018 and December 31, 2017.
We
used $1,332,499 in our operating activities during the nine months ended September 30, 2018, which was due to a net loss of $1,721,945
offset by stock-based compensation of $129,219, a gain of $69,652 on debt settlements, imputed interest charges of $10,750, a
decrease of $44,750 in other assets, a decrease in prepaid expenses of $21,000, an increase in accounts payable and accrued expenses
of $114,075. We used $385,565 in our operating activities during the nine months ended September 30, 2017, which was due to a
net loss of $741,176 offset by stock-based compensation of $107,176, shares issued for services valued at $60,127, imputed interest
of $2,987, a decrease in prepaid expenses of $20,750, a decrease in accounts receivable of $5,000 and an increase in accounts
payable and accrued expenses of $159,705.
We
financed our negative cash flow from operations during the nine months ended September 30, 2018 through proceeds of $1,795,147
from a rights offering and $64,048 from related party borrowings. We financed our negative cash flow from operations during the
nine months ended September 30, 2017 through a related party loans of $108,242 from our Chairman and two directors and cash on
hand
We
had no investing activities during the nine months ended September 30, 2018 and 2017.
The
accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United
States of America with an auditor’s going concern opinion for the years 2017 and 2016. This means that there is substantial
doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills
and meet our other financial obligations. This is because we have not generated any revenues and no revenues are anticipated.
The
Company has reported a net loss of $1,721,945 during the nine months ended September 30, 2018 and $853,168 for the year ended
December 31, 2017 and had a total accumulated deficits of $33,340,632 and $31,618,687 as of September 30, 2018 and December 31,
2017, respectively.
The
Company had no revenues from operations during the three and nine months ended September 30, 2018 and 2017. As of September 30,
2018, the Company had $538,258 cash on hand and had positive working capital of $267,073.
We
believe that our current cash on hand of $538,258, as of September 30, 2018, will be sufficient to meet our operating requirements
throughout the ensuing twelve month period. We require additional financing at satisfactory terms and conditions, of which there
can be no assurance, in order to satisfy our ongoing capital requirements for the next twelve months in order to execute our plan
of operation as presently constituted.
We
do not expect to generate cash flow from operations unless we receive FDA approval for our BST Device.
Our
management believes that our operations will generate revenues in the US in the second half of 2019. We expect that FDA approval
for our BST Device will improve our ability to generate revenues from sales in other geographic areas. Our future ability to generate
cash flows from operations will depend on the demand for our BST Device, as well as general economic, financial, competitive and
other factors, many of which are beyond our control.
If
and when we receive FDA approval of our BST Device, of which there can be no assurance, our business might not generate sufficient
future cash flow in an amount sufficient to enable us to fund our liquidity needs, including working capital, capital expenditures,
investments and other general corporate requirements.
Availability
of Additional Capital
We
have no commitments or arrangements, formal or otherwise, from any person or entity to provide us with any additional capital.
The Company may be unable to implement its present plan of operation and this could have a material adverse effect on our business,
prospects, financial condition and results of operations.
Our
future financing transactions may include the issuance of equity and/or debt securities. In the event that we seek to raise funds
through additional private placements of equity or convertible debt, the trading price of our common stock could be adversely
effected. Further, if we issue additional equity or debt securities, stockholders may experience dilution or the new equity securities
may have rights, preferences or privileges senior to those of existing holders of our common stock. We are not aware of any material
trend, event or capital commitment, which would or could potentially adversely affect our liquidity. We do not have any arrangements
with potential investors or lenders to provide us with any additional financing and there can be no assurance that any such additional
financing will be available when required in order to proceed with the business plan.