UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1/A #2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
E-QURE CORP.
(Exact Name of Registrant in its Charter)
Delaware |
5090 |
47-1691054 |
(State or other Jurisdiction of Incorporation) |
(Primary Standard Industrial Classification Code) |
(IRS Employer Identification No.) |
20 West 64th Street, Suite 39G, New York, NY 10023, Phone: +(972) 54 427777
(Address and Telephone Number of Registrants Principal
Executive Offices and Principal Place of Business)
Approximate date of commencement of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box.
xIf this Form is filed to register additional securities for an Offering pursuant to Rule 462(b) under the Securities Act of 1933, please check the following box and list the Securities Act registration Statement number of the earlier effective registration statement for the same Offering.
¨If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act of 1933, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same Offering.
¨If delivery of the Prospectus is expected to be made pursuant to Rule 434, please check the following box.
¨Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.
Large accelerated filer | ¨ | Accelerated filer | ¨ |
Non-accelerated filer | ¨ | Smaller reporting company | x |
The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933, as amended, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this Prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the
Securities and Exchange Commission becomes effective. This Prospectus is not an offer to
sell these securities and we are not soliciting offers to buy these securities in any
state where the offer or sale is not permitted.
PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION ON DECEMBER 5, 2014
E-QURE CORP.
2,433,341 SHARES OF COMMON STOCK
The selling shareholders (the "Selling Shareholders") named in this prospectus (the "Prospectus") are offering all of the shares of common stock (the "Common Stock") of E-Qure Corp., a Delaware corporation f/k/a ADB International Group, Inc. offered through this Prospectus. We are filing the registration statement (the "Registration Statement") of which this Prospectus forms a part in order to permit the Selling Shareholders to sell their restricted shares of Common Stock that they acquired in a series of transactions exempt from registration under the Securities act of 1933, as amended (the "Act") pursuant to the provisions of Regulation D and Regulation S promulgated by the United States Securities and Exchange Commission (the "SEC") under the Act. The Common Stock to be sold by the Selling Shareholders as provided in the Selling Shareholders" section of this Prospectus is Common Stock that has already been issued and is currently outstanding. The outstanding shares described above were previously issued in private placement transactions under Regulation D and Regulation S completed prior to the filing of the Registration Statement of which this Prospectus forms a part. We will not receive any proceeds from the sale of the Common Stock covered by this Prospectus in connection with the offering (the "Offering").
Our Common Stock is subject to quotation on OTCQB Market under the symbol EQUR. On December 5, 2014, the last reported sale price for our Common Stock was $1.60 per share. We urge prospective purchasers of our Common Stock to obtain current information about the market prices of our Common Stock. The prices at which the Selling Shareholders may sell the shares of Common Stock in this Offering will be determined by the prevailing market price for the shares of Common Stock or in negotiated transactions.
We are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 (the JOBS Act) and are subject to reduced public company reporting requirements.
Our independent registered public accounting firm has expressed substantial doubt as to our ability to continue as a going concern.
The Company is a SHELL Company as defined in Securities Act Rule 405 of Regulation C.
Investing in our Common Stock involves a high degree of risk. See Risk Factors beginning on page 9 to read about factors you should consider before buying shares of our Common Stock.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The Date of This Prospectus is: December __, 2014
Please read this Prospectus carefully and in its entirety. This Prospectus contains disclosure regarding our business, our financial condition and results of operations and risk factors related to our business and our Common Stock, among other material disclosure. We have prepared this Prospectus so that you will have the information necessary to make an informed investment decision.
You should rely only on information contained in this Prospectus. We have not authorized any other person to provide you with different information. This Prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state where the offer or sale is not permitted. The information in this Prospectus is complete and accurate as of the date on the front cover, but the information may have changed since that date.
The Registration Statement containing this Prospectus, including the exhibits to the Registration Statement, provides additional information about us and the Common Stock offered under this Prospectus. The Registration Statement, including the exhibits and the documents incorporated herein by reference, can be read on the Securities and Exchange Commission website or at the Securities and Exchange Commission offices mentioned under the heading "Where You Can Find More Information."
This summary highlights selected information contained elsewhere in
this Prospectus. This summary does not contain all the information that you should
consider before investing in the Common Stock. You should carefully read the entire
Prospectus, including Risk Factors, Managements Discussion and
Analysis of Financial Condition and Results of Operations and the Financial
Statements, before making an investment decision. In this Prospectus, the terms
E-Qure, Company, "Registrant, "we,
us and our refer to E-Qure Corp., a Delaware corporation f/k/a ADB
International Group, Inc.
Plan
We are a medical device Company planning to commercialize our
Bioelectrical Signal
Therapy
device ("BST Device," or "Device"). Our BST
Device treats wounds via electrical stimulation, which is believed to result in
accelerated wound healing by imitating the natural electrical current that occurs in
injured skin on the human body. Our BST Device stimulates renewed blood flow and
oxygen in order to induce local cell regeneration and therefore promote wound healing. Our
mission is to improve non-invasive wound care treatments and to become a leading provider
of non-invasive wound and ulcer healing treatment. Our device is designed to specifically
address many of the limitations associated with other invasive and non-invasive wound care devices.
We believe our BST Device is a simple and effective wound heal method that can be
used in and incorporated as an adjunctive therapy in wound healing. Treatment is safe,
effective, and well-tolerated.
Our BST Device had the Communaute Europeenne ("CE") mark which is now
being renewed, and was approved to be sold in the EU market. We are in the initial
clinical trial process for the purpose of obtaining approval from the United States Food
and Drug Administration (the "FDA").
The Companys success is dependent upon the successful FDA
clinical trial of its BST Device. The Device may need additional development and may
never achieve the requisite safety and efficacy, prerequisites for FDA approval. The
Company believes that the BST Device's design and procedure is safe and effective,
but the path to commercial success in the US, even if FDA approval is granted, may take
more time and may be more costly that we expect or for which we have sufficient resources.
Our BST Device is designed to treat chronic wounds
primarily Stage III and Stage IV ulcers, which we believe comprises about 11% and 7% of all chronic wounds,
respectively, and severe Stage II wounds.
We plan to sell the BST Device commercially in the United States in the second
half of 2017. We have not generated any revenues from our BST Device to date.
Our independent registered public accounting firm has expressed
substantial doubt as to our ability to continue as a going concern.
Summary of Risk Factors
This offering involves substantial risk.
Our ability to execute our strategy is also subject to certain risks. The
risks described under the heading "Risk Factors" included elsewhere in this
prospectus may cause us not to realize the full benefits of our business
plan and strategy or may cause us to be unable to successfully execute all
or part of our strategy. Some of the most significant challenges and risks
include the following:
We Have Limited Operating History And Face Many Of The
Risks And Difficulties Frequently Encountered By Development Stage
Companies.
Page 5
Shell Company Status
Before you invest in our common stock,
you should carefully consider all the information in this prospectus,
including matters set forth under the heading "Risk Factors."
Where You Can Find Us
We presently maintain our principal offices at 20 West 64th Street, Suite 39G, New
York, NY 10023. Our telephone number is (972) 54 427777.
Implications of Being an Emerging Growth Company
We qualify as an emerging growth company as that term is used in the
JOBS Act. An emerging growth company may take advantage of specified reduced reporting and
other burdens that are otherwise applicable generally to public companies. These
provisions include:
A requirement to have only two years of audited financial statements
and only two years of related MD&A;
We have already taken advantage of these reduced reporting burdens in
this Prospectus, which are also available to us as a smaller reporting company as defined
under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the Exchange
Act).
In addition, Section 107 of the JOBS Act also provides that an emerging
growth company can take advantage of the extended transition period provided in Section
7(a)(2)(B) of the Securities Act of 1933, as amended (the Act) for complying
with new or revised accounting standards. We have elected to take advantage of the
extended transition period for complying with new or revised accounting standards, which
allows us to delay the adoption of new or revised accounting standards that have different
effective dates for public and private companies until those standards apply to private
companies. As a result of this election, our financial statements contained in this Form
S-1 may not be comparable to companies that comply with public company effective dates.
The existing scaled executive compensation disclosure requirements for smaller reporting
companies will continue to apply to our filings for so long as our Company is an emerging
growth company, regardless of whether the Company remains a smaller reporting company.
We could remain an emerging growth company for up to five years, or
until the earliest of (i) the last day of the first fiscal year in which our annual gross
revenues exceed $1 billion, (ii) the date that we become a large accelerated
filer as defined in Rule 12b-2 under the Exchange Act, which would occur if the
market value of our Common Stock that is held by non-affiliates exceeds $700 million as of
the last business day of our most recently completed second fiscal quarter, or (iii) the
date on which we have issued more than $1 billion in non-convertible debt during the
preceding three year period.
For more details regarding this exemption, see Managements
Discussion and Analysis of Financial Condition and Results of Operations Critical
Accounting Policies.
Page 6
If The Clinical Trial Studies Of Our Current Patented Device
Does Not Produce Results Necessary To Support Regulatory Clearance Or
Approval In The United States, We Will Be Unable To Commercialize Our
Device.
We May Face Product Liability Claims That Could Result In Costly
Litigation And Significant Liabilities.
Shell Company Status
You Will
Experience Dilution Of Your Ownership Interest Because Of The Future
Issuance Of Additional Shares Of Our Common Stock Or Our Preferred Stock.
Our Independent Registered Public Accounting Firm Has Expressed Substantial
Doubt As To Our Ability To Continue As A Going Concern.
The Company must be deemed a "Shell" company as that term is defined in Rule
144(i) because we have had only nominal operations to date. See Risk Factor
"Shell Company Status".
Reliance upon Rule 144 for Resales
Rule 144 is not available for the resale of securities initially issued by
Shell companies unless the issuer meets specified conditions.
Form 8-K Requirements
Form 8-K requires disclosure of transactions involving a reporting Shell
company that ceases to be a Shell company, typically involving a reverse
merger or acquisition. of the Exchange Act.
Form S-8
Form S-8 under the Securities Act prohibits companies who are Shell
Companies from using Form S-8.
Reduced Liquidity or Illiquidity of our Common Stock Securities
Shareholders who invested in our shares of common stock while we are deemed
to be a Shell company invested in securities that are considered to be
illiquid and can't be sold pursuant to Rule 144.
Exemption from the auditor attestation requirement in the assessment
of the emerging growth companys internal control over financial reporting under
Section 404 of the Sarbanes-Oxley Act of 2002 ("SOX");
Reduced disclosure about the emerging growth companys executive
compensation arrangements; and
No non-binding advisory votes on executive compensation or golden
parachute arrangements.
Common Stock offered by Selling Shareholders |
2,433,341 shares of Common Stock representing 11% of our current outstanding Common Stock. (1) |
Common stock outstanding before and after the Offering |
21,552,724 |
Terms of the Offering |
The Selling Shareholders will determine when and how they will sell the Common Stock offered in this Prospectus. The prices at which the Selling Shareholders may sell the shares of Common Stock in this Offering will be determined by the prevailing market price for the shares of Common Stock or in negotiated transactions. |
Termination of the Offering |
The Offering will conclude upon such time as all of the Common Stock has been sold pursuant to the Registration Statement. |
Trading Market |
Our Common Stock is subject to quotation on the OTCQB Market under the symbol "EQUR". |
Use of proceeds |
The Company is not selling any shares of the Common Stock covered by this Prospectus. As such, we will not receive any of the Offering proceeds from the registration of the shares of Common Stock covered by this Prospectus. |
Risk Factors |
The Common Stock offered hereby involves a high degree of risk and should not be purchased by investors who cannot afford the loss of his/her/its entire investment. See Risk Factors beginning on page 7. |
(1) Based on 21,552,724 shares of Common Stock outstanding as of November 10, 2014.
Page 7
SUMMARY OF
FINANCIAL INFORMATION
The following summary financial data should be read in conjunction with
Managements Discussion and Analysis, Plan of Operation and
the Financial Statements and Notes thereto, included elsewhere in this Prospectus. The
balance sheet and the statement of operations data are derived from our unaudited
financial statements for the period ended September 30, 2014.
Statement of Operations Data:
For the Period
January 1, 2011
For the Three
Month
(Re-entering
Development Stage)
Period ended September 30, 2014
to September 30, 2014
$
-
$
-
180,303
1,417,823
0
23,929,614
(616,103)
25,783,237
$
(616,103)
$
25,797,176
$
0.60
$
9,840,831
Balance Sheet Data:
September 30, 2014 (Unaudited)
$
1,493,381
1,493,381
19,003
19,003
$
1,474,378
$
1,493,381
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The information contained in this Prospectus, including in the
documents incorporated by reference into this Prospectus, includes some statements that
are not purely historical and that are forward-looking statements. Such
forward-looking statements include, but are not limited to, statements regarding our
managements expectations, hopes, beliefs, intentions and/or strategies regarding the
future, including our financial condition and results of operations. In addition, any
statements that refer to projections, forecasts or other characterizations of future
events or circumstances, including any underlying assumptions, are forward-looking
statements. The words anticipates, believes, continue,
could, estimates, expects, intends,
may, might, plans, possible,
potential, predicts, projects, seeks,
should, would and similar expressions, or the negatives of such
terms, may identify forward-looking statements, but the absence of these words does not
mean that a statement is not forward-looking.
The forward-looking statements contained in this Prospectus are based
on current expectations and beliefs concerning future developments and the potential
effects on the parties and the transaction. There can be no assurance that future
developments actually affecting us will be those anticipated. These that may cause actual
results or performance to be materially different from those expressed or implied by
these forward-looking statements, including the following forward-looking statements
involve a number of risks, uncertainties (some of which are beyond the parties
control) or other assumptions.
Page 8
The shares of our Common Stock being offered for resale by the Selling
Shareholders are highly speculative in nature, involve a high degree of risk and should be
purchased only by persons who can afford to lose their entire amount invested in the
Common Stock. Accordingly, prospective investors should carefully consider, along with
other matters referred to herein, the following risk factors in evaluating our business
before purchasing any shares of Common Stocks. If any of the following risks actually
occurs, our business, financial condition or operating results could be materially
adversely affected. In such case, you may lose all or part of your investment. You should
carefully consider the risks described below and the other information in this Prospectus
before investing in our Common Stock.
Risks Related to Our Business
Our Independent Registered Public Accounting Firm Has Expressed
Substantial Doubt As To Our Ability To Continue As A Going Concern.
The audited financial statements included in the Registration Statement
have been prepared assuming that we will continue as a going concern and do not include
any adjustments that might result if we cease to continue as a going concern. We believe
that in order to continue as a going concern, including the costs of being a public
company, we will need approximately $25,000 per year simply to cover the administrative, legal and
accounting fees. We have incurred significant losses since our inception and/or
re-entering development stage. We have funded these losses primarily through the sale of
restricted shares of our Common Stock and the issuance of convertible notes, which have
subsequently been converted into restricted shares of Common Stock.
Based on our financial history since inception and/or re-entering
development stage, in their report on the financial statements for the period from January
1, 2011 (re-entering development stage) to December 31, 2013, our independent registered
public accounting firm has expressed substantial doubt as to our ability to continue as a
going concern. We are a development stage company that has generated no revenue.
Notwithstanding our success in raising over $2.1 million from the sale
of our securities principally during the second quarter of 2014, there can be no assurance
that we will have adequate capital resources or be able to continue to raise equity and/or
debt capital to fund planned operations or that any additional funds will be available to
us when needed or at all, or, if available, will be available on favorable terms or in
amounts required by us. If we are unable to obtain adequate capital resources to fund
operations, we may be required to delay, scale back or eliminate some or all of our plan
of operations, which may have a material adverse effect on our business, results of
operations and ability to operate as a going concern.
We Have Limited Operating History And Face Many Of The Risks And
Difficulties Frequently Encountered By Development Stage Companies.
In January 2014, the Company acquiring certain patents pertaining to a
wound healing device. The Company's new plan of operation has not yet generated any
revenues. We have no operation history as a medical device company upon which an evaluation
of the Company and its prospects could be based. There can be no assurance that management
of the Company will be successful in commercially exploiting our wound healing device and
implementing the corporate infrastructure to support its new operations so that the
Company will generate sufficient revenues to meet its expenses or to achieve or maintain
profitability.
If we are unable to raise sufficient capital as needed, we may be
required to reduce the scope of our business development activities, which could harm our
business plans, financial condition and operating results, or cease our operations
entirely, in which case, you will lose all your investment.
If The Clinical Trial Studies Of Our Current Patented Device Does Not Produce Results
Necessary To Support Regulatory Clearance Or Approval In The United States, We Will Be
Unable To Commercialize Our Device.
We have engaged Austen BioInnovation Institute in Akron to conduct clinical trials and
we reasonably expect trial results in 2015. Clinical testing may be expected to take a
significant amount of time, is expensive and carries uncertain outcomes. The initiation
and completion of the trial study may be prevented, delayed, or halted for numerous
reasons, including, but not limited to, the following:
Page 9
- the FDA, institutional review boards or other regulatory authorities do not approve a
clinical study protocol, force us to modify a previously approved protocol, or place a
clinical study on hold;
Clinical trial failure can occur at any stage of the testing. Our clinical study may
produce negative or inconclusive results, and we may decide, or regulators may require us,
to conduct additional clinical and/or non-clinical testing in addition to those we have
planned. Our failure to adequately demonstrate the safety and efficacy of our device would
prevent receipt of regulatory clearance or approval and, ultimately, the commercialization
of that device or indication for use. Any of these occurrences may harm our business,
financial condition and prospects significantly.
Our Expected Revenue Will Be Generated From Our Sole Product, And Any Decline In The
Future Sales Of This Product Or Failure To Gain Market Acceptance Of This Product Will
Negatively Impact Our Business.
We expect our revenue to be derived entirely from sales of our wound healing Device for
the foreseeable future. If we are unable to achieve and maintain market acceptance of our
product and do not achieve sustained positive cash flow, we will be severely constrained
in our ability to fund our operations, fulfill our business plan and be able to possibly
develop and commercialize other potential products. In addition, if we are unable to
market our product as a result of a quality problem, failure to maintain or obtain
regulatory approvals, unexpected or serious complications or other unforeseen negative
effects related to our product or the other factors discussed in these risk factors, we
would lose our only potential source of revenue, and our business will be materially
adversely affected.
If We Fail To Develop And Retain Our Sales Force, Our Business Could Suffer.
We plan to develop a direct sales force in the United States. As we launch our product,
assuming that we are successful in securing FDA approval, any efforts to increase our
marketing efforts and expand into new geographies will be dependent on our ability to hire
and retain, as well as grow and develop our sales personnel. We intend to make a
significant investment in recruiting and training sales representatives. There is
significant competition for sales personnel experienced in relevant medical device sales.
Once hired, the training process may be expected to be lengthy because it requires
significant education for new sales representatives to achieve the level of competency
with our product and meet the expectations of potential clients. Upon completion of the
training, and any previous experience in marketing medical devices, generally, our sales
representatives typically require lead time in the field to grow their network of accounts
and achieve the productivity levels we expect them to reach in any individual territory.
If we are unable to attract, motivate, develop and retain a sufficient number of qualified
sales personnel, and if our sales representatives do not achieve the productivity levels
we expect them to reach, our revenue will not grow at the rate we expect and our financial
performance will suffer. Also, to the extent we hire personnel from our competitors, we
may have to wait until applicable non-competition provisions have expired before deploying
such personnel in restricted territories or incur costs to relocate personnel outside of
such territories, and we may be subject to allegations that these new hires have been
improperly solicited, or that they have divulged to us proprietary or other confidential
information of their former employers.
Page 10
If We Are Unable To Educate Physicians On The Safe And Effective Use Of Our Product, We
May Be Unable To Achieve Our Expected Growth.
An important part of our sales process will include the education of physicians on the
safe and effective use of our wound healing device. There is a learning process for
physicians to become proficient in the use of our product and, based upon the use of our
Device in Europe, it typically takes several procedures for a physician to become
comfortable using the device. If a physician experiences difficulties during an initial
procedure or otherwise, that physician may be less likely to continue to use our product,
or to recommend it to other physicians. It is critical to the success of our
commercialization efforts to educate physicians on the proper use of the device, and to
provide them with adequate product support during training. It is important for our expected growth
that these physicians advocate for the benefits of our product in the broader marketplace.
If physicians are not properly trained, they may misuse or ineffectively use our product.
This may also result in unsatisfactory patient outcomes, negative publicity or lawsuits
against us, any of which could have a material adverse effect on our business.
There May Not Be A Wide Enough Client Base To Sustain Our Business.
The Companys principal business is to engage in marketing and
selling its wound healing treatments with our device. The Company hopes to sell its wound
healing device treatments in numbers large enough to make its business model work for
profitability, of which there can b no assurance.
If We Are Unable To Protect Our Intellectual Property, Our Business Will Be Negatively
Affected.
The market for medical devices is subject to frequent litigation regarding patent and
other intellectual property rights. It is possible that our device may not withstand
challenges made by others or that our patents protect our rights adequately.
Our success depends in large part on our ability to secure and maintain effective
patent protection for our product in the United States and internationally. We have
acquired patents that have been granted as well as patents pending and expect to continue
to file patent applications for various aspects of our device technology. However, we face
the risks that:
- we may fail to secure necessary patents on our patents pending prior to or after
obtaining regulatory clearances, thereby permitting competitors to market competing
products; and
If we are unable to protect our intellectual property adequately, our business and
commercial prospects will suffer.
We May Be Accused Of Infringing Intellectual Property Rights Of Third
Parties.
Other parties may claim that our Device infringes on their proprietary
rights. We may be subject to claims and legal proceedings regarding alleged infringement
by us of the intellectual property rights of third parties. Such claims, whether or not
meritorious, may result in the expenditure of significant financial and managerial
resources, legal fees, injunctions or the payment of damages. In the event that our
patents do not fully protect us, we may need to obtain licenses from third parties who
allege that we have infringed their rights, but such licenses may not be available on
terms acceptable to us or at all. In addition, we may not be able to obtain or utilize on
terms that are favorable to us, or at all, licenses or other rights with respect to
intellectual property we do not own.
We May Face Product Liability Claims That Could Result In Costly Litigation And
Significant Liabilities.
Marketing of our device and clinical testing of our product may expose us to product
liability and other tort claims. Although we intend to purchase and maintain product
liability insurance, the coverage limits of our policies may not be adequate and one or
more successful claims brought against us may have a material adverse effect on our
business and results of operations. Additionally, product liability claims could
negatively affect our business reputation, adversely impacting continued product sales as
well as our ability to obtain and maintain regulatory approval for our products.
Page 11
Current Or Future Government Regulations May Add To Our Operating Costs.
We may face unanticipated increases in operating costs because of any changes in
governmental regulations related to our wound healing Device, specifically, and/or medical
devices, generally. We have no assurance that the independent clinical trials conducted by
Austen BioInnovation Institute in Akron will result in favorable data that will be
accepted by the FDA. Laws and regulations may be introduced and court decisions may be
rendered that materially affect the demand for our product. Complying with new regulations
and/or court decisions could increase our operating costs. Furthermore, we may be subject
to the laws of various jurisdictions where we actually conduct business. Our failure to
qualify to do business in a jurisdiction that requires us to do so could subject us to
fines or penalties and could have a material adverse impact on our business and
operations.
We Are Required To Comply With Medical Device Reporting, Or MDR, Requirements And Must
Report Certain Malfunctions, Deaths And Serious Injuries Associated With Our Device Which
Can Result In Voluntary Corrective Actions, Mandatory Recall Or Agency Enforcement
Actions.
Under applicable FDA MDR regulations, medical device manufacturers are required to
submit information to the FDA when they receive a report or become aware that a device has
or may have caused or contributed to a death or serious injury or has or may have a
malfunction that would likely cause or contribute to death or serious injury if the
malfunction were to recur. All manufacturers placing medical devices on the market in the
European Economic Area and the United States are legally bound to report any serious or
potentially serious incidents involving devices they produce or sell to the regulatory
agency, or Competent Authority, in whose jurisdiction the incident occurred.
Malfunction of our wound healing Device could result in future voluntary corrective
actions, such as recalls, including corrections, or customer notifications, or agency
action, such as inspection or enforcement actions. If malfunctions do occur, we may be
unable to correct the malfunctions adequately or prevent further malfunctions, in which
case we may need to cease manufacture and distribution of the affected products, initiate
voluntary recalls, and redesign the products. Regulatory authorities may also take actions
against us, such as ordering recalls, imposing fines, or seizing the affected products.
Any corrective action, whether voluntary or involuntary, will require the dedication of
our time and capital, distract management from operating our business, and may harm our
reputation and financial results.
We May Be Subject To Federal, State And Foreign Healthcare Laws And Regulations, And A
Finding Of Failure To Comply With Such Laws And Regulations Could Have A Material Adverse
Effect On Our Business.
Our operations are, and will continue to be, directly and indirectly affected by
various federal, state or foreign healthcare laws, including, but not limited to, those
described below. In particular, we are subject to the federal Anti-Kickback Statute, which
prohibit, among other things, any person or entity from knowingly and willfully offering,
paying, soliciting or receiving any remuneration, directly or indirectly, in cash or in
kind, in return for or to induce the referring, ordering, leasing, purchasing or arranging
for or recommending the referring, ordering, purchasing or leasing of any good, facility,
item or service, for which payment may be made, in whole or in part, under federal
healthcare programs, such as the Medicare and Medicaid programs.
We are also subject to the federal HIPAA statute, which, among other things, created
federal criminal laws that prohibit knowingly and willfully executing, or attempting to
execute, a scheme or artifice to defraud any health care benefit program or making any
materially false, fictitious or fraudulent statements relating to health care matters.
We are also subject to the federal sunshine law, which requires us to track
and report annually to the Centers for Medicare & Medicaid Services, or CMS,
information related to payments or other transfers of value made to physicians
(defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and
teaching hospitals and to report annually to CMS ownership and investment interests held
by physicians, as defined above, and their immediate family members in our company so long
as it is privately held.
Page 12
In addition, we are subject to the federal civil and criminal false claims laws and
civil monetary penalty laws, which prohibit, among other things, persons or entities from
knowingly presenting, or causing to be presented, a false or fraudulent claim to, or the
knowing use of false records or statements to obtain payment from, or approval by, the
federal government. Suits filed under the False Claims Act, known as qui tam
actions, can be brought by any individual on behalf of the government and such
individuals, commonly known as whistleblowers, may share in any amounts paid
by the entity to the government in fines or settlement. When an entity is determined to
have violated the False Claims Act, it may be required to pay up to three times the actual
damages sustained by the government, plus civil penalties for each separate false claim.
Many states have also adopted laws similar to each of the above federal laws, such as
anti-kickback and false claims laws which may be broader in scope and apply to items or
services reimbursed by any third-party payor, including commercial insurers, as well as
laws that restrict our marketing activities with physicians, and require us to report
consulting and other payments to physicians. Some states mandate implementation of
compliance programs to ensure compliance with these laws. We also are subject to foreign
fraud and abuse laws, which vary by country.
If our operations are found to be in violation of any of the laws described above or
any other governmental regulations that apply to us now or in the future, we may be
subject to penalties, including civil and criminal penalties, damages, fines,
disgorgement, exclusion from governmental health care programs, and the curtailment or
restructuring of our operations, any of which could adversely affect our ability to
operate our business and our financial results.
Our Future Success Is Dependent, In Part, On The Performance And
Continued Service Of Ohad Goren and Itsik Ben Yesha, Our Chief Executive Officer and Chief
Technology Officer.
The Company will be dependent on its key executives, Ohad Goren and
Itsik Ben Yesha, our CEO and CTO, respectively, for the foreseeable future. The loss of
the services from either one could have a material adverse effect on the operations and
prospects of the Company. They are expected to handle all aspects of our medical device
business and manage our operations. Their responsibilities include developing business
arrangements, directing the development of the Company's technology and IP, overseeing technical
aspects of our business, regulations and formulating strategies and materials to be used during our
presentations and meetings. At this time, the Company does not have an employment
agreement with either Mr. Goren or Ben Yesha, though the Company may enter into such an
agreement with Mr. Goren, its CEO and Mr. Ben Yesha, its CTO, on terms and conditions
usual and customary in our industry. The Company does not currently have key
man life insurance on neither Mr. Goren, Mr. Ben Yesha nor on Mr. Ron Weissberg, our
Chairman and control shareholder
We Operate In A Highly Competitive Industry And Compete Against Several
Large Companies Which Could Adversely Affect Our Ability to Succeed.
There are numerous established companies that offer wound healing
products including products from Kinetic Concepts, Inc. and Smith & Nephew, which have
far greater financial and other resources and far longer operating histories than we do.
We are a new entry into this competitive market and may struggle to differentiate
ourselves as a viable competitor whose wound healing Device provides more value and
efficacy than the competition.
We Are An Emerging Growth Company Under The Recently
Enacted Jobs Act And We Cannot Be Certain If The Reduced Disclosure Requirements
Applicable To Emerging Growth Companies Will Make Our Common Stock Less Attractive To
Investors.
We qualify as an emerging growth company under the recently
enacted JOBS Act. As a result, we are permitted to, and intend to, rely on exemptions from
certain disclosure requirements. For so long as we are an emerging growth company, among
other things, we will not be required to:
- have an auditor report on our internal controls over financial
reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;
Page 13
In addition, Section 107 of the JOBS Act also provides that an
emerging growth company can take advantage of the extended transition period
provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised
accounting standards. In other words, an Emerging Growth Company can delay the
adoption of certain accounting standards until those standards would otherwise apply to
private companies. We have elected to take advantage of the benefits of this extended
transition period. Our financial statements may therefore not be comparable to those of
companies that comply with such new or revised accounting standards.
We will remain an Emerging Growth Company for up to five
years, or until the earliest of (i) the last day of the first fiscal year in which our
total annual gross revenues exceed $1 billion; (ii) the date that we become a large
accelerated filer as defined in Rule 12b-2 under the Securities Exchange Act of
1934, which would occur if the market value of our ordinary shares that is held by
non-affiliates exceeds $700 million as of the last business day of our most recently
completed second fiscal quarter or (iii) the date on which we have issued more than $1
billion in non-convertible debt during the preceding three-year period.
Until such time, however, because the JOBS Act has only recently been
enacted, we cannot predict whether investors will find our stock less attractive because
of the more limited disclosure requirements that we may be entitled to follow and other
exemptions on which we are relying while we are an emerging growth company. If
some investors find our Common Stock less attractive as a result, there may be a less
active trading market for our Common Stock and our stock price may be more volatile.
Our By-Laws Provide For Indemnification Of Our Directors And the
Purchase Of D&O Insurance At Our Expense And Limit Their Liability Which May Result In
A Major Cost To Us And Hurt The Interest Of Our Shareholders Because Corporate Resources
May Be Expended For The Benefit Of Our Directors.
The Companys By-Laws include provisions that eliminate the
personal liability of the directors of the Company for monetary damages to the fullest
extent possible under the laws of the State of Delaware or other applicable law. These
provisions eliminate the liability of directors to the Company and its stockholders for
monetary damages arising out of any violation of a director of his fiduciary duty of due
care. Under Delaware law, however, such provisions do not eliminate the personal liability
of a director for (i) breach of the directors duty of loyalty, (ii) acts or
omissions not in good faith or involving intentional misconduct or knowing violation of
law, (iii) payment of dividends or repurchases of stock other than from lawfully available
funds, or (iv) any transaction from which the director derived an improper benefit. These
provisions do not affect a directors liabilities under the federal securities laws
or the recovery of damages by third parties.
Reporting Requirements Under The Exchange Act And Compliance With The
Sarbanes-Oxley Act Of 2002, Including Establishing And Maintaining Acceptable Internal
Controls Over Financial Reporting, Are Costly And May Increase Substantially.
The rules and regulations of the SEC require a public company to
prepare and file periodic reports under the Exchange Act, which will require that the
Company engage legal, accounting, auditing and other professional services. The engagement
of such services is costly. Additionally, the Sarbanes-Oxley Act of 2002 (the
Sarbanes-Oxley Act) requires, among other things, that we design, implement
and maintain adequate internal controls and procedures over financial reporting. The costs
of complying with the Sarbanes-Oxley Act and the limited technically qualified personnel
we have may make it difficult for us to design, implement and maintain adequate internal
controls over financial reporting. We expect these costs to be approximately $25,000 per
year. In the event that we fail to maintain an effective system of internal controls or
discover material weaknesses in our internal controls, we may not be able to produce
reliable financial reports or report fraud, which may harm our overall financial condition
and result in loss of investor confidence and a decline in our share price.
As a public company, we may be subject to the reporting requirements of
the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act of 2010 and other applicable
securities rules and regulations. Despite recent reforms made possible by the JOBS Act,
compliance with these rules and regulations will nonetheless increase our legal and
financial compliance costs, make some activities more difficult, time-consuming or costly
and increase demand on our systems and resources, particularly after we are no longer an
Emerging Growth Company. The Exchange Act requires, among other things, that
we file annual, quarterly, and current reports with respect to our business and operating
results.
Page 14
We are working with our legal, independent accounting and financial
advisors to identify those areas in which changes should be made to our financial and
management control systems to manage our growth and our obligations as a public company.
These areas include corporate governance, corporate control, disclosure controls and
procedures and financial reporting and accounting systems. We have made, and will continue
to make, changes in these and other areas. However, we anticipate that the expenses that
will be required for being a public company could be material. We estimate that the
aggregate cost of increased legal services; accounting and audit functions; personnel,
such as a chief financial officer familiar with the obligations of public company
reporting; consultants to design and implement internal controls could be material. In
addition, if and when we retain independent directors and/or additional members of senior
management, we may incur additional expenses related to director compensation and/or
premiums for directors and officers liability insurance, the costs of which we
cannot estimate at this time. We may also incur additional expenses associated with
investor relations and similar functions, the cost of which we also cannot estimate at
this time. However, these additional expenses individually, or in the aggregate, may also
be material.
In addition, being a public company could make it more difficult or
more costly for us to obtain certain types of insurance, including directors and
officers liability insurance, and we may be forced to accept reduced policy limits
and coverage or incur substantially higher costs to obtain the same or similar coverage.
The impact of these events could also make it more difficult for us to attract and retain
qualified persons to serve on our board of directors, our board committees or as executive
officers.
The increased costs associated with operating as a public company may
decrease our net income or increase our net loss, and may cause us to reduce costs in
other areas of our business or increase the prices of our product to offset the effect of
such increased costs. Additionally, if these requirements divert our managements
attention from other business concerns, they could have a material adverse effect on our
business, financial condition and results of operations.
Future Manufacturing Of Our Product May Be Interrupted Due To International
Political Situations, Natural Disasters Or Other Causes.
Once FDA approval is granted, we plan to manufacture our BST Device principally in Israel. Domestic
situations in Israel and surrounding countries could possibly result in production and
delivery problems. We are subject to the risk that future manufacturing and delivery of our
BST Device may be
interrupted as a result of natural disasters or capacity constraints with our
vendors or suppliers hardware. Any such interruptions may lead to a loss of
customers or distributors and, accordingly, may adversely affect our business and results
of operations.
Risks Related to Our Common Stock
Shell Company Status
The Company must be deemed a
"Shell" company as that term is defined in Rule 144(i) promulgated by the SEC
under the Securities Act of 1933, as amended (the "Act") because we have had
only nominal operations to date.
Reliance upon Rule 144 for Resales
Shareholders who hold shares which are not subject to a registration statement
under the Act often rely upon Rule 144 for their resale. Rule 144 is not
available for the resale of securities initially issued by Shell companies
(other than a business combination related Shell company) or a Registrant that
has been, at any time previously, a reporting or non-reporting Shell company,
unless the issuer meets specified conditions. A security holder may resell
securities pursuant to Rule 144's safe harbor if the following conditions are
met:
Page 15
Form
8-K Requirements
Form 8-K requires disclosure of transactions involving a
reporting Shell company that ceases to be a Shell company, typically involving a
reverse merger or acquisition. The issuer is required to file a report on Form
8-K to report the following: a material definitive agreement under Item 1.01 of
Form 8-K; completion of acquisition or disposition of assets under Item 2.01 of
Form 8-K; changes in control under Item 5.01 of Form 8-K; and information that
would be required in a registration statement on Form 10 to register a class of
securities under Section 12 of the Exchange Act.
Form S-8
Form S-8 under the
Securities Act prohibits companies who are Shell Companies from using Form S-8.
Reduced Liquidity or Illiquidity of our Common Stock
Securities
Our common stock is currently subject to quotation on the OTCBQ
market. There is currently no active trading market in our common stock on the
OTCBQ market. Shareholders who invested in our shares of common stock while we
are deemed to be a Shell company invested in securities that are considered to
be illiquid and can't be sold pursuant to the exemption provided under Rule 144
as long as the Company is a Shell company.
There Is No Assurance Of A Liquid Public Market Of Our Common Stock Or
That You May Be Able To Liquidate Your Investment In Our Common Stock.
At present, our Common Stock is subject to quotation of the
OTC-QB market. There is only a limited, liquid public trading marketing for
our Common Stock and there can be no assurance that one will ever develop. Market
liquidity will depend on the perception of our business and any steps that our management
might take to bring us to the awareness of investors. There can be given no assurance that
there will be any awareness generated. Consequently, investors may not be able to
liquidate their investment or liquidate it at a price that reflects the value of the
business or the value of their initial investment in our Common Stock. As a result,
holders of our securities may not find purchasers for our securities should they to decide
to sell securities held by them. Consequently, our securities should be purchased only by
investors who have no need for liquidity in their investment and who can hold our
securities for a prolonged period of time.
In The Event An Active Trading Market Develops For Our Common Stock,
The Market Price Of Our Common Stock May Be Volatile.
In the event an active trading market develops for our Common Stock,
the market price of our Common Stock may be highly volatile, as is the stock market in
general, and the market for securities subject to quotation on OTC Markets in particular.
Some of the factors that may materially affect the market price of our Common Stock are
beyond our control, such as changes in conditions or trends in the industry in which we
operate or sales of our Common Stock. These factors may materially adversely affect the
market price of our Common Stock, regardless of our business performance. In addition, the
public stock markets have experienced extreme price and trading volume volatility. This
volatility has significantly affected the market prices of securities of many companies
for reasons frequently unrelated to the operating performance of the specific companies.
These broad market fluctuations may adversely affect the market price of our Common Stock.
Page 16
A Large Number Of Additional Shares Will Be Available For Resale Into The Public Market
Pursuant To This Offering As Well As In The Near Future, Which May Cause The Market Price
Of Our Common Stock To Decline Significantly, Even If Our Business Performs As Expected.
Sales of a substantial number of shares of our Common Stock in the public market
pursuant to this Offering, or the perception that additional shares of Common Stock become
available pursuant to Rule 144 promulgated by the SEC under the Act, could adversely
affect the market price of our Common Stock. As of November 10, 2014, we have
21,552,724
shares of Common Stock outstanding. This includes 2,433,341 shares we are registering for
Selling Shareholders in this Registration Statement, which may be resold in the public
market immediately after the effective date of this Registration Statement, except for any
shares held or purchased in this Offering by our affiliates, as defined in Rule 144 under
the Act. Based on 21,552,724 issued and outstanding shares as of November 10,
2014,
21,444,193 shares of Common Stock are restricted as a result of applicable securities
laws. As restrictions on resale expire, the market price could drop significantly if the
holders of these restricted shares sell them or are perceived by the market as intending
to sell them. For a more detailed description, see Shares Eligible for Future
Sale.
If holders of restricted securities sell a large number of shares pursuant to Rule 144
under the Act, they could adversely affect the market price for our Common Stock.
You Will Experience Dilution Of Your Ownership Interest Because Of The
Future Issuance Of Additional Shares Of Our Common Stock Or Our Preferred Stock.
In the future, we may issue our authorized but previously unissued
equity securities, resulting in the dilution of the ownership interests of our present
stockholders. We are authorized to issue an aggregate of 500,000,000 shares of Common
Stock, par value $0.00001 per share, of which 21,552,724 are currently outstanding.
We may also issue additional shares of our Common Stock or other
securities that are convertible into or exercisable for Common Stock in connection with
hiring or retaining employees or consultants, future acquisitions, future sales of our
securities for capital raising purposes, or for other business purposes. The future
issuance of any such additional shares of our Common Stock or other securities may have a
negative impact on the market price of our Common Stock. There can be no assurance that we
will not be required to issue additional shares, warrants or other convertible securities
in the future in conjunction with hiring or retaining employees or consultants, future
acquisitions, future sales of our securities for capital raising purposes or for other
business purposes, including at a price (or exercise prices) below the price at which
shares of our Common Stock will be quoted on the OTC Markets.
We May Never Pay Any Dividends To Our Shareholders.
We currently intend to retain any future earnings for use in the operation and
expansion of our business. Accordingly, we do not expect to pay any dividends in the
foreseeable future, but will review this policy as circumstances dictate. The declaration
and payment of all future dividends, if any, will be at the sole discretion of our board
of directors, which retains the right to change our dividend policy at any time.
Consequently, stockholders must rely on sales of their Common Stock after price
appreciation, which may never occur, as the only way to realize any future gains on their
investment.
Insider Will Continue To Have Substantial Control Over Us After This Offering and Will
Be Able To Influence Corporate Matters.
Upon completion of this Offering, our directors and executive officers and stockholders
holding more than 5% of our Common Stock and their affiliates will beneficially own, in
the aggregate, approximately 30% of our outstanding Common Stock. As a result, if these
stockholders were to choose to act together, they would be able to exercise significant
influence over all matters requiring stockholder approval, including the election of
directors and approval of significant corporate transactions, such as a merger or other
sale of our company or its assets. This concentration of ownership could limit your
ability to influence corporate matters and may have the effect of delaying or preventing a
third party from acquiring control over us. For information regarding the ownership of our
outstanding stock by our executive officers and directors and their affiliates, see
Security Ownership of Certain Beneficial Owners and Management.
Page 17
We cannot assure you that the interests of our management team will
coincide with the interests of the investors. So long as our management team collectively
controls a significant portion of our Common Stock, these individuals, or entities
controlled by them, will continue to collectively be able to strongly influence or
effectively control our decisions.
Anti-Takeover Provisions Of The Delaware General Corporation Law May Discourage Or
Prevent A Change Of Control, Even If An Acquisition Would Be Beneficial To Our
Shareholders, Which Could Reduce Our Stock Price.
We are subject to the provisions of Section 203 of the Delaware General Corporation
Law, which may prohibit certain business combinations with stockholders owning 15% or more
of our outstanding voting stock. These and other provisions in our amended and restated
certificate of incorporation, amended and restated bylaws and Delaware law could make it
more difficult for stockholders or potential acquirers to obtain control of our board of
directors or initiate actions that are opposed by our then-current board of directors,
including a merger, tender offer or proxy contest involving our company. Any delay or
prevention of a change of control transaction or changes in our board of directors could
cause the market price of our Common Stock to decline.
State Blue Sky Registration, Potential Limitations On Resale Of Our Common Stock.
The holders of our shares of Common Stock and those persons, who desire to purchase our
Common Stock in any trading market that might develop, should be aware that there may be
state blue-sky law restrictions upon the ability of investors to resell our securities.
Accordingly, investors should consider the secondary market our securities to be a limited
one.
It is the present intention of management after the active commencement of operations
in to seek coverage and publication of information regarding the Company in an accepted
publication manual, which permits a manual exemption. The manual exemption permits a
security to be distributed in a particular state without being registered if the
Registrant issuing the security has a listing for that security in a securities manual
recognized by the state. However, it is not enough for the security to be listed in a
recognized manual. The listing entry must contain (1) the names of issuer's officers, and
directors, (2) an issuer's balance sheet, and (3) a profit and loss statement for either
the fiscal year preceding the balance sheet or for the most recent fiscal year of
operations. Furthermore, the manual exemption is a non-issuer exemption restricted to
secondary trading transactions, making it unavailable for issuers selling newly issued
securities.
Most of the accepted manuals are those published in Standard and Poor's, Moody's
Investor Service, Fitch's Investment Service, and Best's Insurance Reports, and many
states expressly recognize these manuals. A smaller number of states declare that they
"recognize securities manuals" but do not specify the recognized manuals. The
following states do not have any provisions and therefore do not expressly recognize the
manual exemption: Alabama, Georgia, Illinois, Kentucky, Louisiana, Montana, South Dakota,
Tennessee, Vermont and Wisconsin.
Our Common Stock Is Considered A Penny Stock, Which May Be Subject To
Restrictions On Marketability, So You May Not Be Able To Sell Your Shares.
We may be subject now and in the future to the Penny
Stock rules if our shares of Common Stock sell below $5.00 per share. Penny stocks
generally are equity securities with a price of less than $5.00. The penny stock rules
require broker-dealers to deliver a standardized risk disclosure document prepared by the
SEC which provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer must also provide the customer with current bid and
offer quotations for the penny stock, the compensation of the broker-dealer and its
salesperson, and monthly account statements showing the market value of each penny stock
held in the customers account. The bid and offer quotations, and the broker-dealer
and salesperson compensation information must be given to the customer orally or in
writing prior to completing the transaction and must be given to the customer in writing
before or with the customers confirmation.
In addition, the penny stock rules require that prior to a transaction,
the broker dealer must make a special written determination that the penny stock is a
suitable investment for the purchaser and receive the purchasers written agreement
to the transaction. The penny stock rules are burdensome and may reduce purchases of any
Offerings and reduce the trading activity for shares of our Common Stock. As long as our
shares of Common Stock are subject to the penny stock rules, the holders of such shares of
Common Stock may find it more difficult to sell their securities.
Page 18
The Control Deficiencies In Our Internal Control Over Financial Reporting May Until
Remedied Cause Errors in Our Financial Statements Or Cause Our Filings With The SEC To Not
Be Timely.
We have identified control deficiencies in our internal control over financial
reporting as of the evaluation done by management as of December 31, 2013, including those
related to (i) absent or inadequate segregation of duties within a significant account or
process, (ii) inadequate documentation of the components of internal control, and (iii)
inadequate design of information technology general and application controls that prevent
the information system from providing complete and accurate information consistent with
financial reporting objectives and current needs. If our internal control over financial
reporting or disclosure controls and procedures are not effective, there may be errors in
our financial statements that could require a restatement or our filings may not be timely
made with the SEC. Based on the work undertaken and performed by us, however, we believe
the financial statements contained in our reports filed with the SEC are fairly stated in
all material respects in accordance with GAAP for each of the periods presented. We intend
to implement additional corporate governance and control measures to strengthen our
control environment as we are able, but we may not achieve our desired objectives. We may
identify material weaknesses and control deficiencies in our internal control over
financial reporting in the future that may require remediation and could lead investors
losing confidence in our reported financial information, which could lead to a decline in
our stock price.
Page 19
We will not receive any proceeds from the sale of Common Stock by the
Selling Shareholders. All of the net proceeds from the sale of our Common Stock will go to
the Selling Shareholders as described below in the sections entitled Selling
Security Holders and Plan of Distribution. We have agreed to bear the
expenses relating to the registration of the Common Stock for the Selling Shareholders.
DETERMINATION OF OFFERING PRICE
The Selling Shareholders may sell their shares in the over-the-counter
market or otherwise, at market prices prevailing at the time of sale, at prices related to
the prevailing market price, or at negotiated prices. We will not receive any proceeds
from the sale of Common Stock by the Selling Shareholders.
The Common Stock to be sold by the Selling Shareholders as provided in
the Selling Security Holders section is Common Stock that is currently
issued. Accordingly, there will be no dilution to our existing shareholders.
Revenues
Total General and administrative
Total other (expense)
Total cost and expense
Net loss
Net Loss Per Share Basic
and Diluted
Weighted Average Number of
Common Shares Outstanding - Basic and Diluted
Cash and cash equivalents
Total assets
Total current liabilities
Total liabilities
Total stockholders' equity
Total Liabilities and
Shareholders' Equity
- patients do not enroll in, or enroll at a lower rate than we expect, or do not complete
a clinical study;
- patients or investigators do not comply with study protocols;
-
patients do not return for post-treatment follow-up
at the expected rate;
- patients experience serious or unexpected adverse side effects for a variety of reasons
that may or may not be related to our product causing a clinical trial study to be put on
hold;
- sites participating in an ongoing clinical study withdraw, requiring us to engage new
sites;
- difficulties or delays associated with establishing additional clinical sites;
- third-party clinical investigators decline to participate in our clinical studies, do
not perform the clinical studies on the anticipated schedule, or act in ways inconsistent
with the investigator agreement, clinical study protocol, good clinical practices, and
other FDA and Institutional Review Board requirements;
- third-party entities do not perform data collection and analysis in a timely or accurate
manner;
- regulatory inspections of our clinical studies require us to undertake corrective action
or suspend or terminate our clinical studies;
- changes in federal, state, or foreign governmental statutes, regulations or policies;
- interim results are inconclusive or unfavorable as to immediate and long-term safety or
efficacy; or
- the study design is inadequate to demonstrate safety and efficacy.
- our already-granted patents may be re-examined, invalidated or not extended.
- submit certain executive compensation matters to shareholder advisory votes, such as
say-on-pay and say-on-frequency;
- obtain shareholder approval of any golden parachute payments not previously approved;
and
- disclose certain executive compensation related items such as the correlation between
executive compensation and performance and comparisons of the Chief Executives
compensation to median employee compensation.
a) The issuer of securities that was formerly a reporting or
non-reporting Shell company has ceased to be a Shell;
b) The issuer of the
securities is subject to the reporting requirements of Section 13 or 15(d) of
the Securities Exchange Act of 1934 (the "Exchange Act");
c) The issuer of
the securities has filed all reports and material required to be filed under
Section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12
months (or for such shorter period that the issuer was required to filed such
reports and materials), other than Form 8K reports; and
d) At least one year
has elapsed from the time the issuer filed current Form 10 type information with
the SEC reflecting its status as an entity that is not a Shell company.
If a company ceases to be a Shell company, it may use Form S-8 sixty calendar
days after the company files "Form 10 information," which is information that a
company would be required to file in a registration statement on Form 10 if it
were registering a class of securities under Section 12 of the Exchange Act.
This information would normally be reported on a current report on Form 8K
reporting the completion of a transaction that caused the company to cease being
a Shell company.
As a result of our classification
as a shell company, our investors are not allowed to rely on the "safe harbor"
provisions of Rule 144, promulgated pursuant to the Securities Act of 1933, so
as not to be considered underwriters in connection with the sale of our
securities until one year from the date that we cease to be a shell company.
This will likely make it more difficult for us to attract additional capital
through subsequent unregistered offerings because purchasers of securities in
such unregistered offerings will not be able to resell their securities in
reliance on Rule 144, a safe harbor on which holders of restricted securities
usually rely to resell securities. Additionally, as we may not register our
securities on Form S-8 this may result in our inability to compensate employees
and consultants as cost-effectively as companies that are not Shells, which
may then have an adverse affect on the ongoing operations of the Company.
The shares of Common Stock being offered for resale by the Selling Shareholders consist of 2,433,341 shares of our Common Stock held by 57 shareholders. Such shareholders include the holders of shares that we sold in our private offering pursuant to Regulation S and, to a lesser extent pursuant to Regulation D promulgated by the SEC under the Act sold through June 30, 2014 at an Offering price of $0.40 per share. In addition, several Selling Shareholders will be selling shares of Common Stock acquired upon the conversion of notes at varying prices, which notes were issued primarily during the period from February 2014 through May 2014.
The following table sets forth the names of the Selling Shareholders, the number of shares of Common Stock beneficially owned by each of the Selling Shareholders as of the date of our Registration Statement, of which this Prospectus is a part, and the number of shares of Common Stock being offered by the Selling Shareholders. The shares being offered hereby are being registered to permit public secondary trading, and the Selling Shareholders may offer all or part of the shares for resale from time to time. However, the Selling Shareholders are under no obligation to sell all or any portion of such shares nor are the Selling Shareholders obligated to sell any shares immediately upon effectiveness of this Prospectus. All information with respect to share ownership has been furnished by the Selling Shareholders.
Page 20
Shares Beneficially |
Shares Beneficially |
Percent |
|||
Owned |
Shares to |
Owned After |
Beneficially |
||
Name |
|
Prior to Offering |
Be Offered |
After Offering (a) |
Owned |
Itzchak | Shrem |
247,000 |
74,100 |
172,900 |
0.80% |
Lavi | Krasney |
543,000 |
162,900 |
380,100 |
1.76% |
Amir | Uziel |
542,000 |
162,600 |
379,400 |
1.76% |
Kfir | Silberman |
820,000 |
246,000 |
574,000 |
2.66% |
Eli | Yoresh |
271,000 |
81,300 |
189,700 |
0.88% |
Ohad | Goren |
1,150,000 |
11,500 |
1,138,500 |
5.27% |
Itsik | Ben Yesha |
1,600,000 |
76,000 |
1,524,000 |
7.06% |
Leetal | Weissberg |
93,062 |
20,000 |
73,062 |
0.34% |
Yoav | Korman |
1,000,000 |
10,000 |
990,000 |
4.59% |
Gerald | Yaffe |
1,020,000 |
10,200 |
1,009,800 |
4.68% |
Zeev | Beer |
250,000 |
2,500 |
247,500 |
1.15% |
Yehiel | Waitzman |
25,000 |
250 |
24,750 |
0.11% |
Ishai | Birenboim |
300,000 |
21,000 |
279,000 |
1.29% |
Jacob | Dery |
187,500 |
1,875 |
185,625 |
0.86% |
Benny | Menashe |
150,000 |
19,500 |
130,500 |
0.60% |
Bracha | Yaffe |
996,250 |
9,963 |
986,288 |
4.57% |
Ori Martin | Rafaelowitz |
996,250 |
9,963 |
986,288 |
4.57% |
Michael | Cohen |
875,000 |
218,750 |
656,250 |
3.04% |
Aryeh | Deri |
750,000 |
187,500 |
562,500 |
2.61% |
Ron | Weissberg |
3,581,438 |
35,814 |
3,545,624 |
16.42% |
Dini | Lavi |
250,000 |
62,500 |
187,500 |
0.87% |
Pansk Assets A.Y. Ltd (1) |
250,000 |
62,500 |
187,500 |
0.87% |
|
Short Trade Ltd. (2) |
250,000 |
62,500 |
187,500 |
0.87% |
|
Eli | Shlush |
206,250 |
51,563 |
154,688 |
0.72% |
Sigal | Tidhar |
206,250 |
51,563 |
154,688 |
0.72% |
Daniel | Younisian |
150,000 |
37,500 |
112,500 |
0.52% |
Yael | Berant |
150,000 |
37,500 |
112,500 |
0.52% |
Yehoshua | Abramovitz |
150,000 |
37,500 |
112,500 |
0.52% |
Yochanan | Korman |
1,575,041 |
51,500 |
1,523,541 |
7.06% |
Yoel | Yogev |
150,000 |
37,500 |
112,500 |
0.52% |
Attribute Ltd |
125,000 |
31,250 |
93,750 |
0.43% |
|
Avdinco Ltd |
125,000 |
31,250 |
93,750 |
0.43% |
|
Ben-Zion | Weiner |
150,500 |
37,625 |
112,875 |
0.52% |
Emanuel | Kronitz |
125,000 |
31,250 |
93,750 |
0.43% |
Moshe | Manor |
125,000 |
31,250 |
93,750 |
0.43% |
Boruj | Tenembounm |
125,000 |
31,250 |
93,750 |
0.43% |
R. P. Holdings (1992) Ltd. (3) |
125,000 |
31,250 |
93,750 |
0.43% |
|
Menashe | Arnon |
100,000 |
25,000 |
75,000 |
0.35% |
Ofer | Maimon |
100,000 |
25,000 |
75,000 |
0.35% |
Yaelle | Schnitzer |
100,000 |
25,000 |
75,000 |
0.35% |
Dor | Noy |
90,000 |
22,500 |
67,500 |
0.31% |
Adi | Mantsura |
75,000 |
18,750 |
56,250 |
0.26% |
Assaf | Hadar |
75,000 |
18,750 |
56,250 |
0.26% |
Avital Roy Group Ltd. (4) |
75,000 |
18,750 |
56,250 |
0.26% |
|
Boaz | Raam |
75,000 |
18,750 |
56,250 |
0.26% |
HeliCon Knan (1989) Ltd. (5) |
75,000 |
18,750 |
56,250 |
0.26% |
|
Jacob | Blau |
75,000 |
18,750 |
56,250 |
0.26% |
Kai Otherthinking Ltd. (6) |
75,000 |
18,750 |
56,250 |
0.26% |
|
Moshe | Datz |
75,000 |
18,750 |
56,250 |
0.26% |
Ron | Bentsur |
75,000 |
18,750 |
56,250 |
0.26% |
Sharon | Brimer |
75,000 |
18,750 |
56,250 |
0.26% |
Shlomi Shabat Hafakot Ltd. (7) |
75,000 |
18,750 |
56,250 |
0.26% |
|
Shmuel | Pasternack |
55,000 |
13,750 |
41,250 |
0.19% |
Zvi | Weil |
37,500 |
9,375 |
28,125 |
0.13% |
Amir | Fischler |
30,000 |
7,500 |
22,500 |
0.10% |
Securities Compliance Corp. (8) |
32,500 |
10,000 |
22,500 |
0.10% |
|
Baltic Capital Corp. (9) |
32,500 |
10,000 |
22,500 |
0.10% |
|
Total |
21,038,041 |
2,433,341 |
18,604,700 |
86.32% |
(1) Pansk Assets A.Y. Ltd. Mr. Yehuda Zadik exercises the sole
voting and dispositive powers with respect to the shares offered.
Page 21
(7) Shlomi Shabat Hafakot Ltd. Mr. Shlomi Shabat exercises the sole voting and dispositive
powers with respect to the shares offered.
(2) Short
Trade Ltd. Mr. Shlomo Noyman exercises the sole voting
and dispositive powers with respect to the shares offered.
(3) R.
P. Holdings (1992) Ltd. Mr. Rubin Zimerman exercises the sole voting and dispositive
powers with respect to the shares offered.
(4) Avital
Roy Group Ltd. Mr. Shlomi Avital exercises the sole voting and dispositive powers
with respect to the shares offered.
(5) HeliCon
Knan (1989) Ltd. Mr. Ron Brown and Mr. Itshak Alshech exercise the sole voting and dispositive powers
with respect to the shares offered.
(6) Kai
Otherthinking Ltd. Mr. Eitan Tevyahu exercises the sole voting and dispositive
powers with respect to the shares offered.
(8) Securities Compliance Corp. Mr. Richard Rubin exercises the sole
voting and dispositive powers with respect to the shares offered.
(9) Baltic
Capital Corp. Mr. Ivo Heidn exercises the sole voting and dispositive
powers with respect to the shares offered.
(a) Based on 21,552,724 shares outstanding as of November 10, 2014.
None of the selling shareholders has any material relationship with any of the Company's affiliates such as officers, directors and significant shareholders, other than Leetal Weissberg who is the daughter of Ron Weissberg, the Company's chairman.
Our CEO, Ohad Goren; our Chairman, Ron Weissberg and our CTO, Itsik Ben Yesha are also selling shareholder. None of the other Selling Shareholders or their beneficial owners:
- has had a material relationship with us other than as a shareholder at any time
within the past three years; or
- has ever been one of our officers or directors or an officer or director of our
predecessors or affiliates;
- are broker-dealers or affiliated with broker-dealers.
This Prospectus relates to the resale of up to 2,433,341 shares of our Common Stock by the Selling Shareholders.
The Selling Shareholders and any of its pledgees, donees, assignees and other successors-in-interest may, from time to time sell any or all of their shares of Common Stock on any market or trading facility on which the shares are traded or in private transactions. These sales may be at fixed or negotiated prices. The Selling Shareholders may use any one or more of the following methods when selling shares:
|
ordinary brokerage transactions and transactions in which the broker-dealer solicits the purchaser; |
|
block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal; |
|
facilitate the transaction; |
|
purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
|
an exchange distribution in accordance with the rules of the applicable exchange; |
|
privately negotiated transactions; |
|
broker-dealers may agree with the Selling Shareholders to sell a specified number of such shares at a stipulated price per share; |
|
through the writing of options on the shares |
|
a combination of any such methods of sale; and |
|
any other method permitted pursuant to applicable law. |
The Selling Shareholders shall have the sole and absolute discretion not to accept any purchase offer or make any sale of shares if it deems the purchase price to be unsatisfactory at any particular time.
The Selling Shareholders may also sell the shares directly to market makers acting as principals and/or broker-dealers acting as agents for themselves or their customers. Such broker-dealers may receive compensation in the form of discounts, concessions or commissions from the Selling Shareholders and/or the purchasers of shares for whom such broker-dealers may act as agents or to whom they sell as principal or both, which compensation as to a particular broker-dealer might be in excess of customary commissions. Market makers and block purchasers purchasing the shares will do so for their own account and at their own risk. It is possible that the Selling Shareholders will attempt to sell shares of Common Stock in block transactions to market makers or other purchasers at a price per share which may be below the then existing market price. We cannot assure that all or any of the shares offered in this Prospectus will be issued to, or sold by, the Selling Shareholders. The Selling Shareholders and any broker-dealers or agents, upon completing the sale of any of the shares offered in this Prospectus, may be deemed to be "underwriters" as that term is defined under the Act, the Exchange Act and the rules and regulations of such acts. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Act.
Page 22
The Selling Shareholders, alternatively, may sell all or any part of the shares offered in this Prospectus through an underwriter. The Selling Shareholders have not entered into any agreement with a prospective underwriter and there is no assurance that any such agreement will be entered into.
We know of no existing arrangements between the Selling Shareholders and any other stockholder, broker, dealer or agent relating to the sale or distribution of the shares. We will not receive any proceeds from the sale of the shares of the Selling Shareholders pursuant to this Prospectus. We have agreed to bear the expenses of the registration of the shares, including legal and accounting fees, and such expenses are estimated to be approximately $30,000.
A Selling Shareholder may pledge his/her/its shares to their respective brokers under the margin provisions of customer agreements. If a Selling Shareholder defaults on a margin loan, the broker may, from time to time, offer and sell the pledged shares of Common Stock. The Selling Shareholders and any other persons participating in the sale or distribution of the shares will be subject to applicable provisions of the Exchange Act, and the rules and regulations under such act, including, without limitation, Regulation M. These provisions may restrict certain activities of, and limit the timing of purchases and sales of any of the shares by, the Selling Shareholders or any other such person. The Selling Shareholders is not permitted to engage in short sales of Common Stock. Furthermore, under Regulation M, persons engaged in a distribution of securities are prohibited from simultaneously engaging in market making and certain other activities with respect to such securities for a specified period of time prior to the commencement of such distributions, subject to specified exceptions or exemptions. All of these limitations may affect the marketability of the shares.
DESCRIPTION OF SECURITIES TO BE REGISTERED
General
We are authorized to issue an aggregate number of 520,000,000 shares of capital stock, $0.00001 par value per share, consisting of 20,000,000 shares of Preferred Stock and 500,000,000 shares of Common Stock.
Preferred Stock
We are authorized to issue 20,000,000 shares of Common Stock, $0.00001 par value per share. As of November 10, 2014, no preferred shares issued and outstanding. The Board of Directors has the authority to establish one or more series of Preferred Stock and fix relative rights and preferences of any series of Preferred Stock.
Common Stock
We are authorized to issue 500,000,000 shares of Common Stock, $0.00001 par value per share. As of November 10, 2014, we had 21,552,724 shares of Common Stock issued and outstanding.
Each share of Common Stock shall have one (1) vote per share for all purpose. Our Common Stock does not provide a preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights. Our Common Stock holders are not entitled to cumulative voting for election of Board of Directors.
Dividends
We have not paid any cash dividends to our shareholders. The declaration of any future cash dividends is at the discretion of our board of directors and depends upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.
Warrants
There are no outstanding warrants to purchase our securities.
Options
There are no outstanding options to purchase our securities.
Page 23
The transfer agent of our Common Stock is Transfer Online, 512 SE Salmon Street, Portland, OR 97214-3444, Phone: (503) 227-2950.
No expert or counsel named in this Prospectus as having prepared or certified any part of this Prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or Offering of the Common Stock was employed on a contingency basis, or had, or is to receive, in connection with the Offering, a substantial interest, direct or indirect, in the registrant. Nor was any such person connected with the registrant as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.
Thomas J. Craft, Jr., Esq., 5420 North Ocean Drive, Suite 2102, Singer Island, FL 33404, will pass on the validity of the Common Stock being offered pursuant to this Registration Statement.
The unaudited interim financial statements as of September 30, 2014 and for the period from January 1, 2011 (Re-entering Development Stage) to September 30, 2014 and the audited financial statements for the years ended December 31, 2013 and 2012 included in this Prospectus and the Registration Statement have been audited by M&K CPAS, PLLC, an independent registered public accounting firm, to the extent and for the periods set forth in their report appearing elsewhere herein and in the Registration Statement, and are included in reliance upon such report given upon the authority of said firm as experts in auditing and accounting.
We filed this Registration Statement on Form S-1 with the SEC under the Act with respect to the Common Stock offered by Selling Shareholders in this Prospectus. This Prospectus, which constitutes a part of the Registration Statement, does not contain all of the information set forth in the Registration Statement or the exhibits and schedules filed therewith. For further information with respect to us and our Common Stock, please see the Registration Statement and the exhibits and schedules filed with the Registration Statement. Statements contained in this Prospectus regarding the contents of any contract or any other document that is filed as an exhibit to the Registration Statement are not necessarily complete, and each such statement is qualified in all respects by reference to the full text of such contract or other document filed as an exhibit to the Registration Statement. The Registration Statement, including its exhibits and schedules, may be inspected without charge at the public reference room maintained by the SEC, located at 100 F Street, N.E., Room 1580, Washington, D.C. 20549, and copies of all or any part of the Registration Statement may be obtained from such offices upon the payment of the fees prescribed by the SEC. Please call the SEC at 1-800-SEC-0330 for further information about the public reference room. The SEC also maintains an Internet website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the site is www.sec.gov .
We also maintain a website at http://www.e-qure.com. Upon completion of this Offering, you may access these materials on our website free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. Information contained on our website is not a part of this Prospectus and the inclusion of our website address in this Prospectus is an inactive textual reference only.
Page 24
The Company was incorporated under the name Creative Learning Products, Inc. in the State of New Jersey on August 31, 1988 and changed its name to Creative Gaming, Inc. in May 1997. The Company changed its name to Management Services, Inc. in October 2006. In August 2008, the Company changed its name to Centriforce Technology Corp. In May 2010, the Company changed its name to ADB International Group, Inc. The Company changed its name to its current name, E-Qure Corp., on August 27, 2014.
As of the date of this registration statement, we are a SHELL Company as defined in Securities Act Rule 405 of Regulation C.
On May 12, 2014, the board of directors approved a plan to redomicile from the State of New Jersey to the State of Delaware. In conjunction with the change in domicile the board of directors also approve a 1:100 reverse split of our Common Stock. The redomicile and reverse split were approved by FINRA and became effective on August 4, 2014.
From December 2010 to early 2012, we were engaged in efforts to enter the water treatment industry and began working to develop a new line of water desalination products. We did not generate any revenues from our water desalination development efforts and, as a result, we determined that it would be in the best interests of the Company and our shareholders to devote our limited financial and personnel resources to pursue joint ventures to become a distributor of existing water treatment technology products manufactured by others. We made this determination based upon the business relationships that we had developed while we were engaged in pursuing the development of water desalination products, which caused us to believe that we could become a distributor working together with established Israeli-based companies engaged in the water treatment industry.
In early 2012, we changed our business focus from our efforts to enter the water desalinization technology business, and began to pursue our plan to serve as a distributor of water treatment products manufactured by established companies in the water treatment industry.
During 2012, the Company's business activities involved evaluating the water treatment business and product research, seeking marketing and distribution agreements, evaluating the regulatory requirements and engaging in related activities to become a distributor of water treatment products in certain markets. To that end, we consulted with third parties, including certain of our shareholders as well as technical specialists who were either known by or introduced to us regarding entering the water treatment industry. Our management evaluated competing water treatment technologies and potential partners for whom we could potentially serve as distributor. These efforts resulted in our entering into a memorandum of understanding ("MOU") with Treatec21 Industries Ltd, a major Israeli-based private company engaged in the water treatment industry ("Treatec") and a wholly-owned subsidiary of Yaad Industry Agencies Ltd, a public company listed on the Tel Aviv Stock Exchange ("TASE"). The MOU contemplated the grant by Treatec of certain distribution rights to Treatec's water treatment products in New Zealand, Australia, Canada and the US. Shortly thereafter, on February 28, 2012, we entered into MOU with Green Eng Ltd, an Israeli company ("GreenEng") also engaged in the water treatment industry. The GreenEng MOU also contemplated the grant to the Company of non-exclusive distribution rights to GreenEng's products in the US and Canada
. Following execution of both MOUs, we were able to enter into formal distribution agreements with Treatec21 and GreenEng, two companies that we believed had competitive and innovative water treatment technologies and products that we could successfully market.Notwithstanding our success in entering into distribution agreements with both Treatec21 and GreenEng, we were not able to generate any revenues from our distribution efforts in our territories.
During the last quarter of 2013, we had discussion with a principal shareholder, Mr. Ron Weissberg, about considering other business opportunities for the Company. On December 23, 2013, Mr. Weissberg invested a total $91,545 represented by $20,000 for his purchase of 2,000,000 shares of Common Stock and $71,545 in a convertible note. On December 27, 2013, Mr. Weissberg was appointed as our Chairman, CEO and CFO.
Page 25
Our Business
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 6, 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 for a period of 10 years.
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 services, 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 trial data to the FDA for approval.
The Companys success, of which there can be no assurance, is dependent upon the success of the initial clinical trial with ABIA and further trials, which are also subject to FDA approval. The BST Device may need additional development, depending upon the results of ABIA's initial trial and may never establish, to the satisfaction of the FDA, our Devices safety or efficacy. The Company believes that the BST Device's design and procedure show significant promise, based upon its use and results in Israel and Europe, but the path to commercial success, even if development milestones are met, may take more time and might be more costly than the Company anticipates.
There are a number of potential obstacles the Company might face, including the following:
We may not be able to raise sufficient
additional funds that we may need to complete the all requisite clinical trials.
Competitors may develop alternatives that
render BST Device redundant or unnecessary.
We may not have a sufficient and/or
sustainable intellectual property position.
Our device may be shown to have harmful side
effects/characteristics that indicate it is unlikely to be safe and effective.
Our device may not receive FDA 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 quarter ended June 30, 2014, the Registrant raised $2,095,000 in equity capital to fund its plans to obtain FDA approval, developing marketing and sales capacities and actively engage in the medical device industry, generally, and in wound treatment, specifically.
Once FDA approval is granted, we plan to manufacture our BST Device principally in Israel. Domestic situations in Israel and surrounding countries could possibly result in production and delivery problems. We are subject to the risk that future manufacturing and delivery of our BST Device may be interrupted as a result of natural disasters or capacity constraints with our vendors or suppliers hardware. Any such interruptions may lead to a loss of customers or distributors and, accordingly, may adversely affect our business and results of operations.
Effective October 15, 2014, through our wholly-owned Israeli subsidiary, Esqure Advanced Medical Devices Ltd. ("Esqure"), we entered into an Asset Purchase Agreement with Michael Cohen, a resident of the State of Israel (the "Seller"). Pursuant to the terms of the Asset Purchase Agreement and in consideration of USD$350,000, we purchased all of Seller's assets (the "Seller's Assets") related to our BST Device:
Page 26
(i) medical research data held by Seller's research
partners, distributors and marketing advisors in Israel and elsewhere;
(ii) manufacturing and design files related to the BST
device, including mechanical and electronics schemes drawings, printed
circuit boards graphics, BST electrodes including rechargeable electrodes;
and related files, as well as files related to all BST electrodes;
(iii) testing equipment and devices for BST manufacturing;
(iv) PowerLab devices
including equipment of Lifewave Ltd (the entity from whom Registrant
acquired the BST Device and technology);
(v) BST devices and electrodes under the control of BST
distributors, physicians, hospitals, clinics worldwide;
(vi) the Main Server of Lifewave which holds all
manufacturing, marketing and other material related to the Registrant's BST Device; and
(vii) Injection molds for the manufacture of the Registrant's
BST Device plastic parts.
We are currently a development stage company and we may require additional capital to implement our business and fund our operations. See Managements Discussion and Analysis on page 64.
The Companys principal executive office and mailing address is 20 West 64th Street, Suite 39G, New York, NY 10023. Our telephone number is (972) 54 427777.
Electrical Stimulation To Accelerate Wound Healing
The human cell is, in essence, an electrical unit. Human cells are enveloped by a plasma membrane that operates on the electrochemical physiology principle (the principal of the electrical properties of biological cells and tissues) of direct current exchange of ions. Injury to the outermost layer or epithelial layer of the human skin disrupts the body's naturally occurring electrical current therefore creating an electrical field. This electrical field guides the epithelial cell migration during wound healing. Electrical stimulation has shown enhanced movement of epithelial cells through the application of electrical fields. Movement of epithelial cells does not occur in a linear fashion; rather, the cells migrate approximately along the electrical field. Epithelial cells have the ability to change direction in response to electrical fields. If the polarity of the electrical field is changed, a reversal of movement of the epithelial cell can be observed. Epithelial cells cultured in the presence of an electrical field demonstrate an increase in the extent of cell movement. Under the impact of direct electrical current, endothelial cell orientation may be observed as early as 4 hours after the onset of an electrical field. Electrical stimulation is believed to restart or accelerate chronic wound healing by imitating the natural electrical current that occurs in injured skin and which is absent around chronic wounds.
Our BST Device
The BST Device, using electrodes affixed around the opposing sides of the wound, emits an electrical field around the wound and therefore mimics the electrochemical physiology principle and induces local cell regeneration. Wound treatment with the BST Device is non-invasive, painless and efficient. The procedure calls for electric stimulation to be performed 3 times a day for a duration of 30 minutes. The patient is connected to the BST Device only for the duration of the treatment. Our BST Device is positioned to treat severe stage II, as well as stage III and IV wounds including pressure ulcers, diabetic ulcers and venous ulcers.
Page 27
The BST Device is a standalone and easy-to-operate Device for adjunctive therapy in wound healing. The Device is able to automatically adjust the electric pulse amplitude based on a patient's impedance reading. It has a built-in, pre-programmed timer to stop treatment after a 30 minute session. We believe that our BST Device represents a cost-effective wound healing method that can reduce hospitalization time and therefore reduce treatment costs.
The Global Wound Care Market
Based upon the knowledge and professional experience of members of our management in the wound care industry, we believe that the global market for wound care, which includes an array of surgical, chronic and acute wound care products reached around $24 billion in 2013 and we expect it to grow by approximately 7% annually.
The advanced wound care market, which includes drug treatment, negative pressure devices, enzymatic debridement, electrical treatment and tissue engineered skin substitutes, represents the segment of the overall wound care market, which we believe has the greatest growth potential.
Chronic Wounds - Our Target Market
Our BST Device is designed for chronic wound treatments in hospitals, nursing homes and home care.
Chronic wound care represents a critical issue for healthcare providers. Unlike an acute wound, a chronic wound is one that shows no signs of significant healing within a period of three months. We believe that chronic wounds constitute an expensive and debilitating healthcare problem, with significant clinical and social implications. Without effective treatment, a chronic wound can lead to a more severe medical condition, such as infection, gangrene or amputation, which further impedes the patients quality of life and even death.
Patients can suffer from chronic wounds for months, or even years, before healing is achieved, if at all. The treatment of a patient suffering from a chronic wound including nursing time, wound care products, pressure-relieving devices, special beds, surgical procedures, and hospitalization in the event of more severe complications can possibly surpass $100,000 - with no guarantee of healing. Treatment usually requires a joint effort conducted by an interdisciplinary team of nurses, doctors and surgeons.
There are four types of chronic wounds (also known as trophic or skin ulcers): (i) Pressure ulcers; (ii) Venous insufficiency ulcers (also known as venous stasis ulcers); (iii) Diabetic or Neuropathic ulcers; and (iv) Arterial insufficiency ulcers.
Chronic wounds are classified by four stages according to their degree of severity, with Stages III and IV being the two most severe, requiring, in most cases, hospitalization and special treatment.
Chronic wounds primarily occur in patients over the age of 60 and those with restricted mobility such as being confined to a wheelchair or bed. The wounds are often large and/or deep, prone to infection, and debilitating due to the extent of tissue damage incurred, resulting a compromised state of the patients health. Sepsis can result in extremely severe cases, which in turn, may lead to amputation and even death.
A range of traditional passive therapy and advanced wound therapy products are used to prevent further wound deterioration. Passive therapy products include synthetic dressings and gels that offer early-stage treatment, by enabling the wound to remain clean and moist so as to prevent infection. Advanced wound therapy includes specialty beds, mattress overlays, compression devices, negative pressure therapy and mattress replacements used to accelerate blood flow to the wound. All advanced wound therapy treatments are expensive and require professional assistance.
In recent years, an array of modern, interactive wound management products has been developed to provide a controlled local environment to stimulate the healing process. These sophisticated products, based on growth factors, tissue bioengineering, and hyperbaric oxygen technology, not only are very expensive, but also require a high level of patient compliance.
There is a large number of patients suffering from chronic wounds. We believe, based upon the knowledge and experience of our management in the wound care industry that current treatments available may not be sufficient to manage the various chronic wound conditions. As a result, we believe that our BST device offers an additional, cost-effective and curative treatment method.
Page 28
Our Wound Healing Strategy
The objective of our BST Device is to reduce treatment time and therefore costs while delivering optimal therapeutic results, which eventually will lead to lower wound treatment costs.
The cost of an unhealed wound goes far beyond the costs of the physician, hospital and medical equipment, particularly when there are subsequent complications that require additional medical treatment.
The healing time of chronic wounds usually ranges from a few weeks to a few months depending on the size and type of the wound. Wound treatment typically can involve many direct and indirect costs. Wound dressings comprise only 10-15% of the total direct treatment cost according to the International Committee on Wound Management. In contrast, a significant percentage of the total cost is attributable to care providers salaries and staff expenses. As a result, treatment methods that reduce healing time to closure of the wound inevitably lead to lower cost of care.
The majority of severe chronic wounds are treated in hospitals. Treatment options often have limited efficacy and typically are very expensive. In addition, they are mostly only partially reimbursed by most insurance, primarily due to their poor clinical viability. As a result, hospitals lose revenues due to long and possibly unsuccessful treatment cycles.
We believe that our BST Device is a very effective and cost-saving method for the chronic wound treatment market. Our belief is based on the knowledge and experience of our management in the wound care industry that our BST Device is designed to be able to significantly lower treatment cost compared to other wound therapies due to the fact that our wound heal method requires shorter healing times and therefore lower per day treatment costs.
Marketing and Sales
The Company intends to launch marketing efforts in the US upon FDA approval has been granted, of which there can be no assurance. Until such time, most of our efforts will be related to internally preparing for the launch of our BST Device in the US and launching a few European territories.
Assuming FDA approval, which we believe will be achieved, in part because of approval that has been received in Europe, the Company plans to indirectly sell its wound treatment solution by entering into distribution agreements with distributors specializing in medical devices complementary to BST Device or by creating its own sales and marketing force. The distributors or the company will then sell the treatment to hospitals, nursing homes, geriatric institutions, and private clinics.
In addition to indirect sales through distribution agreements, the Company considers the outright sale of its treatment to each institution such as hospitals, nursing homes, geriatric institutions, and private clinics, which would rent the Device to their patients on a monthly basis. Upon completion of the wound healing treatment, the patient would return the Device, which would then re-enter the medical device rental market.
Competition
Our principal competition in the chronic wound care market are expected to be the wound care products manufactured by Kinetic Concepts, Inc. ("KCI") and Smith & Nephew. KCI is considered market leader and, we believe, commands a market share of approximately 21% in the United States. Smith & Nephew's U.S. market share is believed to be approximately 19% based on revenues. Other significant competitors are ConvaTec, Johnson & Johnson and 3M, al manufacturers of wound healing devices.
In addition to the above-mentioned device manufacturers, we expect to face competition from specialty clinics that have been established by hospitals or physicians. Additionally, there are a number of private companies that provide wound care services. We may also face competition from general health care facilities and service providers, biopharmaceutical companies and pharmaceutical companies.
We also face indirect competition from numerous companies that offer a variety of wound healing methods including traditional wound care dressings, advanced wound care dressings, such as hydrogels, hydrocolloids, and alginates, skin substitutes, and products containing growth factors. While many of these methods compete with our BST Device, such methods can also be utilized as complementary therapies to our BST Device and vis versa.
Page 29
We believe that the following treatments or therapies represent alternatives or complementary treatments and/or therapies to our BST device:
Hyperbaric oxygen therapy ("HBOT"): Hyperbaric oxygen therapy is a medical treatment that utilizes pressurized oxygen to heal wounds. The treatment is administered by placing a patient in a comfortable pressure chamber that circulates oxygen at two to three times the atmospheric pressure rate. The HBOT method is not specifically designed for chronic wounds and the treatment process is both very long and very expensive. HBOT treatments typically last 90-120 minutes and are administered 1-2 times a daily for a period of 5 to 6 days a week. The length of treatment depends on the wounds severity, with some patients requiring 20-40 treatments. There are many companies that offer HBOT treatment in clinics as a direct service to patients.
Vacuum-assisted closure ("V.A.C.") method: The V.A.C. method is designed for the treatment of acute care setting, serious trauma wounds, failed surgical closures, amputations, and serious pressure ulcers. The leading V.A.C. product was launched in 1995 by KCI, a major global medical technology company. We believe that the V.A.C. method is very expensive, painful and inconvenient, since the patient needs to be connected to the device 22 hours a day.
EZCARE (Smith & Nephew) - Following the acquisition of BlueSky Medical in May 2007, Smith & Nephew provide negative pressure wound therapy (NPWT). NPWT is a technology used to treat chronic wounds such as diabetic ulcers, pressure ulcers, as well as post-operative and hard-to-heal wounds. It aids in the healing of open wounds by the application of sub-atmospheric pressure (Similar technology to KCI).
In addition, recently developed technologies, or technologies that may be developed in the future, are or may be the basis for products which compete with our BST Device. There can be given no assurance that we will be able to successfully enter into the chronic wound heal market with our BST Device or that we will be able to compete effectively against such companies in the future.
Many of these companies have substantially greater capital and marketing resources, and greater experience in commercializing products and services than we have.
Patents, Trademarks, and Copyrights
We have attached as exhibit 10.9 a list of all pending and granted patents to date. To the extent that we determine that additional intellectual property ("IP") protection may be necessary, we plan to secure such protection by applying for additional patents, trademarks or copyrights related to our business and IP, as we deem necessary.
Page 30
Government Regulation
Our operations and the marketing of our BST Device is subject to extensive regulation by numerous federal and state governmental authorities in the United States, foremost of which is the FDA. There can be no assurance that the FDA, other governmental agencies or a third party will not contend that certain aspects of our business and our BST Device is either subject to or is not in compliance with applicable laws, regulations or rules or that the state or federal regulatory agencies or courts would interpret such laws, regulations and rules in our favor. The sanctions for failure to comply with such laws, regulations or rules could include denial of the right to conduct business, significant fines and criminal and civil penalties. Additionally, any increase in the complexity or substantive requirements of such laws, regulations or rules could have a material adverse effect on our business.
Any change in current regulatory requirements or related interpretations by or positions of, state officials where we operate could adversely affect our operations within those states. State regulatory requirements could adversely affect our ability to establish operations in such other states.
Timeline and Estimated Costs for Regulatory FDA Approval of Our BST Device
Based on our agreement with ABIA dated June 6, 2014, we expect FDA approval of our BST Device by the end of September 2015 at a total cost of $716,770. In connection with term of the ABIA agreement, we deposited $143,354 within 15 days of the signing of the ABIA agreement. Since July 2014, we have paid a monthly fee of $55,000 to ABIA. Beginning in January 2015, we will pay ABIA a monthly fee of $23,713, with a finalpayment of $30,000 due upon submission of the clinical study report to the FDA. We expect costs related to general administration and final FDA submission to be approximately $120,000.
Various state and federal laws apply to the operations of medical device providers including, but are not limited to, the following:
Licensure: Certain medical device providers are required to be licensed by various state regulatory bodies. However, if we are found to not be in compliance, we could be subject to fines and penalties or ordered to cease operations which could have an adverse effect on our business.
False Claims Act: The Federal False Claims Act and some state laws impose requirements in connection with the submission of claims for payment for health care services and products, including prohibiting the knowing submission of false or fraudulent claims and submission of false records or statements for reimbursement and payment to the United States government or state government. Such requirements would apply to the hospitals to which we provide our Device related to wound care treatment services. Not only are government agencies active in investigating and enforcing actions with respect to applicable health laws, but also health care providers are often subject to actions brought by individuals on behalf of the government. As such, "whistleblower" lawsuits, also known as qui tam actions, are generally filed under seal with a court to allow the government adequate time to investigate and determine whether it will intervene in the action. As a result, health care providers subject to qui tam actions are often unaware of the lawsuit until the government has made its determination whether to intervene, or not, at which time the seal is lifted. The Federal False Claims Act provides for penalties equal to three (3) times the actual amount of any overpayments plus $11,000 per claim. Under legislation passed in 2009, those who bill third parties are now obligated to discover and disclose any overpayments received or be subject to False Claims Act penalties as well
Fraud and Abuse Laws: Since a significant portion of reimbursement for healthcare products and services are currently paid through reimbursements under Medicare, Medicaid or similar programs, the federal government and many states have adopted statutes and regulations that address fraudulent and/or abusive behavior in connection with such programs.
As part of this regulatory scheme, the federal government believes that an inducement to refer a Medicare or Medicaid patient is likely to result in fraud or abuse on the Medicare or Medicaid programs. Therefore, the federal government adopted a number of laws and regulations to recoup funds and assess penalties which it believes were paid inappropriately. In cases of criminal fraud, the individuals responsible for the fraudulent activity can be subject to imprisonment.
Page 31
One of the principal federal statutes regulating fraud and abuse is the Anti-Kickback Statute. The Anti-Kickback statute prohibits the solicitation, payment, receipt or offering of any direct or indirect remuneration in exchange for the referral of Medicare and Medicaid patients or for the purchasing, arranging for or recommending the purchasing, leasing or ordering of Medicare or Medicaid covered services, items or equipment. To be convicted of a violation of the Anti-Kickback Statute, the party must have had specific intent to induce the referral of Medicare or Medicaid patients or the purchase, lease or ordering of a good, item or service reimbursable by Medicare or Medicaid. Some of the federal courts have broadly construed the Anti-Kickback Statute and held that the intent required to support a criminal conviction will exist if only one purpose of the referral is to induce a prohibited referral.
To clarify some of the issues created by the Anti-Kickback Statute, the Center for Medicare and Medicaid Services issued safe harbor regulations identifying actions which will not be deemed to violate the Anti-Kickback Statute. Some of these safe harbors are in the area of joint ventures, personal services, and other arrangements. Conducting an activity that falls within a safe harbor regulation provides comfort that such activity will not be prosecuted. Compliance with each element of a particular safe harbor is required in order to assured of the protection provided by such safe harbor.Even though a transaction that does not fall within a safe harbor may be perfectly appropriate, the arrangement will be evaluated based on its facts and circumstances to determine if the parties intended to induce the referral of Medicare or Medicaid patients or the purchase, lease or ordering of a good, item or service reimbursable under Medicare or Medicaid.
An allegation of violation and/or a conviction for violation of the Anti-Kickback Statute and parallel state laws could have a significant impact on our ability to conduct our business. As noted earlier, significant fines, penalties, exclusion from Medicare and Medicaid programs and imprisonment of individuals can result. Because the burden to prove specific intent under the Anti-Kickback Statute can sometimes be difficult, the government has been pursuing enforcement under statutes that do not require specific intent such as the False Claims Act. In fact, in recent legislation the Congress has required that those submitting claims for third party reimbursement are required to discover and repay any overpayments, or they are subject to additional penalties.
The Stark Law: Federal and some state laws prohibit physician referrals to an entity in which the physician or his or her immediate family members have a financial interest for provision of certain designated health services that are reimbursed by Medicare or Medicaid. We cannot assure you that the federal government, or other states in which we operate, will not enact similar or more restrictive legislation or restrictions or interpret existing laws and regulations in a manner that could harm our business.
Health Care Reform: There are currently a number of legislative proposals that have been proposed as health care reform in the United States Congress. At this time, it is not clear which, if any, of these proposals will be enacted. Therefore, although one or more of these proposals, if enacted, could have an impact on our business, we cannot predict at this time what that impact will be until there is legislation that becomes law.
Ongoing Investigations: Federal and state investigations and enforcement actions continue to focus on the health care industry, scrutinizing a wide range of items such as joint venture arrangements and referral and billing practices. We believe planned activities will be substantially in compliance with applicable legal requirements. We cannot assure you, however, that a governmental agency or a third party will not contend that certain aspects of our business are subject to, or are not in compliance with, such laws, regulations or rules, or that state or federal regulatory agencies or courts would interpret such laws, regulations and rules in our favor, or that future interpretations of such laws will not require structural or organizational modifications of our business or have a negative impact on our business. Applicable laws and regulations are very broad and complex, and, in many cases, the courts interpret them differently, making compliance difficult. Although we try to comply with such laws, regulations and rules, a violation could result in denial of the right to conduct business, significant fines and criminal penalties. Additionally, an increase in the complexity or substantive requirements of such laws, regulations or rules, or reform of the structure of health care delivery systems and payment methods, could have a material adverse effect on our business.
Page 32
We presently have no full-time employees. Our CEO, CTO and CFO are employed under a service agreement with the company. Our officers and directors are expected to dedicate approximately 10% of their professional time to our business development until such time that we receive FDA approval, are manufacturing our BST Device and begin marketing.
Our principal executive office is located at 20 West 64th Street, Suite 39G, New York, NY 10023. Our telephone number is (972) 54-427777, which is the telephone of the offices of our Chairman, Ron Weissberg, located in Israel. There is no lease on the premises the Company is occupying and the Company is not responsible for paying rent. We are not generating sufficient revenue at this time to justify a separate corporate office. Once our business grows and generates revenue, we will look for more office space in a separate corporate office.
From time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not aware of any legal proceedings or claims that we believe will have a material adverse effect on our business, financial condition or operating results.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market Information
The Companys Common Stock is subject to quotation on the OTCQB Market under the symbol EQUR. There is currently no active trading market in the Common Stock on the OTC market. There can be no assurance that there will be an active trading market for the Common Stock once the Company becomes a reporting company under the Exchange Act. In the event that an active trading market commences, there can be no assurance as to the market price of the shares of Common Stock, whether any trading market will provide liquidity to investors, or whether any trading market will be sustained.
For the periods indicated, the following table sets forth the high and low bid prices per share of Common Stock. The below prices represent inter-dealer quotations without retail markup, markdown, or commission and may not necessarily represent actual transactions but does reflect the price of our Common Stock adjusted for the reverse split.
Fiscal 2013 |
Fiscal 2012 |
Fiscal 2011 |
||||||||||||||||
High |
Low |
High |
Low |
High |
Low |
|||||||||||||
First Quarter ended March 31 |
$ |
5.00 |
$ |
1.00 |
$ |
0.78 |
$ |
0.32 |
$ |
12.0 |
$ |
1.00 |
||||||
Second Quarter ended June 30 |
$ |
6.00 |
$ |
1.00 |
$ |
1.00 |
$ |
0.42 |
$ |
3.00 |
$ |
1.00 |
||||||
Third Quarter ended September 30 |
$ |
10.00 |
$ |
1.00 |
$ |
8.80 |
$ |
0.55 |
$ |
2.00 |
$ |
1.00 |
||||||
Fourth Quarter ended December 31 |
$ |
2.00 |
$ |
1.00 |
$ |
5.00 |
$ |
0.12 |
$ |
1.00 |
$ |
1.00 |
Holders of Capital Stock
As of the date of this Registration Statement, we had 217 holders of our Common Stock. This does not include an indeterminate number of persons who hold our Common Stock in brokerage accounts and otherwise in street name.
Rule 144 Shares
As of the date of this Registration Statement, we do not have any significant number of shares of our Common Stock that are currently available for sale to the public in accordance with the volume and trading limitations of Rule 144. This is the result of the fact that shares of our Common Stock that were issued prior to June 4, 2014, the effective date of our acquisition of certain patents and patents pending, we were deemed to be a "shell" company as that term is defined under Rule 144(i) promulgated by the SEC under the Act.
Page 33
Stock Option Grants
We do not have a stock option plan (ESOP) in place and have not granted any stock options at this time. We contemplate adopting an ESOP during the last quarter of 2014 or during the first 2 quarters of 2015.
Securities Authorized for Issuance Under Equity Compensation Plans
No equity compensation plan or agreements under which our Common Stock is authorized for issuance has been adopted during the fiscal year ended December 31, 2013.
Sale of Unregistered Securities
During the Registrant's fiscal years ended December 31, 2013, 2012 and 2011, the three most recent fiscal years, the Registrant issued and/or sold the following restricted securities.
Date |
Title |
Shares Issued |
Persons |
Consideration |
02/09/2012 |
Common Stock |
70,205 |
Haim Silber |
Conversion of $70,500 in debt into equity |
12/23/2013 |
Common Stock |
2,000,000 |
Ron Weissberg |
$0.01 per share pursuant to Section 4(2) |
10/14/2013 |
Common Stock |
75,532 |
Haim Silber |
Conversion of $75,532 in debt into equity |
The Company believes that the issuances and sale of the restricted shares were exempt from registration pursuant to Section 4(2) of the Act as privately negotiated, isolated, non-recurring transactions not involving any public solicitation. Mr. Weissberg represented his intention to acquire the securities for investment only and not with a view to the distribution thereof. Appropriate restrictive legend has been affixed to the stock certificate issued in such transaction. Mr. Weissberg received adequate information about the Company or had access, through employment, relation and/or business relationships with the Company to such information.
Penny Stock Considerations
Our Common Stock will be deemed to be "penny stock" as that term is generally defined in the Securities Exchange Act of 1934 to mean equity securities with a price of less than $5.00. Our shares thus will be subject to rules that impose sales practice and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock.
Under the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer or accredited investor must make a special suitability determination regarding the purchaser and must receive the purchaser's written consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt. Generally, an individual with a net worth in excess of $1,000,000 or annual income exceeding $100,000 individually or $300,000 together with his or her spouse is considered an accredited investor. In addition, under the penny stock regulations the broker-dealer is required to:
-
Deliver, prior to any transaction involving a penny
stock, a disclosure schedule prepared by the SEC relating to the penny stock market,
unless the broker-dealer or the transaction is otherwise exempt;
- Disclose commissions payable to the broker-dealer and our registered representatives and
current bid and offer quotations for the securities;
- Send monthly statements disclosing recent price information pertaining to the penny
stock held in a customer's account, the account's value and information regarding the
limited market in penny stocks; and
- Make a special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction, prior to
conducting any penny stock transaction in the customer's account.
Because of these regulations, broker-dealers may encounter difficulties in their attempt to buy or sell shares of our Common Stock, which may affect the ability of Selling Shareholders or other holders to sell their shares in the secondary market and have the effect of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements could impede the sale of our Common Stock even if our Common Stock becomes publicly traded. In addition, the liquidity for our Common Stock may be decreased, with a corresponding decrease in the price of our Common Stock. Our shares are likely to be subject to such penny stock rules for the foreseeable future.
Page 34
Page 35
E-QURE CORP. | ||||
(A Development Stage Company) | ||||
f/k/a ADB International Group, Inc. | ||||
Balance Sheets | ||||
At September 30, 2014 and December 31, 2013 | ||||
Back to Table of Contents | ||||
September 30, 2014 | ||||
(Unaudited) |
December 31, 2013 |
|||
ASSETS |
||||
Current assets: | ||||
Cash | $ | 1,493,381 | $ | 76,535 |
Total current assets | 1,493,381 | 76,535 | ||
Total Assets | $ | 1,493,381 | $ | 76,535 |
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) |
||||
Current liabilities: | ||||
Accrued expenses | $ | 19,003 | $ | 21,368 |
Convertible notes payable to related parties, net of discount | - | 4,874 | ||
Convertible notes payable, net of discount | - | 89,106 | ||
Total current liabilities | 19,003 | 115,348 | ||
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 | ||||
21,552,562 and 2,845,480 issued and outstanding at Sept. 30, 2014 and Dec. 31, 2013, respectively | 21,553 | 2,845 | ||
Additional paid in capital | 30,060,749 | 3,541,052 | ||
Common stock subscription receivable | (520,000) | - | ||
Accumulated deficit before re-entry to the development stage | (2,290,748) | (2,290,748) | ||
Accumulated deficit after re-entry to development stage | (25,797,176) | (1,291,962) | ||
Total stockholders' equity (deficit) | 1,474,378 | (38,813) | ||
Total Liabilities and Stockholders' Equity (Deficit) | $ | 1,493,381 |
$ |
76,535 |
See Notes to Unaudited Interim Financial Statements. |
Page 36
E-QURE CORP. | ||||||||||
(A Development Stage Company) | ||||||||||
f/k/a ADB International Group, Inc. | ||||||||||
Statements of Operations | ||||||||||
For the Three and Nine Month Periods Ended September 30, 2014 and 2013 | ||||||||||
And the Period From Re-Entering Development Stage (January 1, 2011) to September 30, 2014 | ||||||||||
(Unaudited) | ||||||||||
Back to Table of Contents | ||||||||||
For the period |
||||||||||
from re-entering |
||||||||||
For the three |
For the three |
For the nine |
For the nine |
development stage |
||||||
months ended |
months ended |
months ended |
months ended |
(January 1, 2011) to |
||||||
September 30, 2014 |
September 30, 2013 |
September 30, 2014 |
September 30, 2013 |
September 30, 2014 |
||||||
Revenues |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
$ |
- |
Expenses | ||||||||||
General and administrative | 180,303 | 12,610 | 243,556 | 55,173 | 1,417,823 | |||||
Research and development |
435,800 |
- |
435,800 |
- |
435,800 |
|||||
Total |
616,103 |
12,610 |
679,356 |
55,173 |
1,853,623 |
|||||
(Loss) from operations | (616,103) | ( 12,610 ) | (679,356) | (55,173) | (1,853,623) | |||||
Other income (expense) | ||||||||||
Interest expense | - | (21,067) | (11,510) | (54,709) | (58,694) | |||||
Amortization of debt discount | - | - | (91,066) | - | (161,577) | |||||
Loss on settlement of debt |
- |
- |
(23,709,343) |
- |
(23,709,343) |
|||||
Total other (expense) | - | (21,067) | (23,811,919) | (54,709) | (23,929,614) | |||||
Total cost and expenses | (616,103) |
(33,677) |
(24,491,275) |
(109,882) |
(25,783,237) |
|||||
Loss from continuing operations before income tax | ( 616,103 ) | (33,677) | (24,491,275) | (109,882) | (25,783,237) | |||||
Income tax |
- |
- |
(13,939) |
- |
(13,939) |
|||||
Net loss | $ |
( 616,103 ) |
$ |
(33,677) |
$ |
(24,505,214) |
$ |
(109,882) |
$ |
(25,797,176) |
Basic and diluted per share amount: | ||||||||||
Basic and diluted net loss |
$ |
(0.06) |
$ |
(0.04) |
$ |
(3.69) |
$ |
(0.14) |
||
Weighted average shares outstanding | ||||||||||
(basic and diluted) |
9,840,831 |
769,948 |
6,637,417 |
769,948 |
||||||
See Notes to Unaudited Interim Financial Statements. |
Page 37
Page 38
E-QURE CORP.
(A Development Stage Company)
f/k/a
ADB International Group, Inc.
Notes to Unaudited Financial Statements
September 30
, 2014
Back to
Table of Contents
1. The Company and Significant Accounting Policies
Organizational Background: E-Qure Corp., ("EQUR" or the "Company") is a Delaware corporation with a mailing address in New York, NY and offices in Israel.
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. Further, as of September 30, 2014, the cash resources of the Company were insufficient to meet its current business plan, and the Company had negative working capital. 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.
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 Equivalents: 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, 2014 and December 31, 2013.
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.
Development Stage Enterprise: As of January 1, 2011, the Company re-entered the development stage. The financial statements have been updated to reflect this change as of this date.
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.
Page 39
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, 2014 and December 31, 2013, 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.
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:
- 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.
Page 40
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, 2014 and December 31, 2013, 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. All per share disclosures
retroactively reflect shares outstanding or issuable as though the 1:100
reverse split had occurred January 1, 2011.
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.
Page 41
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 December 31, 2013, we had no material
unrecognized tax benefits and no adjustments to liabilities or operations
were required under FIN 48.
Recently Issued Accounting Pronouncements
In June 2014, the Financial Accounting Standards Board (FASB) issued
Accounting Standards Update (ASU) No. 2014-12, Compensation - Stock
Compensation (Topic 718): Accounting for Share-Based Payments When the Terms
of an Award Provide That a Performance Target Could Be Achieved after the
Requisite Service Period. The new guidance requires that share-based
compensation that require a specific performance target to be achieved in
order for employees to become eligible to vest in the awards and that could
be achieved after an employee completes the requisite service period be
treated as a performance condition. As such, the performance target should
not be reflected in estimating the grant-date fair value of the award.
Compensation costs should be recognized in the period in which it becomes
probable that the performance target will be achieved and should represent
the compensation cost attributable to the period(s) for which the requisite
service has already been rendered. If the performance target becomes
probable of being achieved before the end of the requisite service period,
the remaining unrecognized compensation cost should be recognized
prospectively over the remaining requisite service period. The total amount
of compensation cost recognized during and after the requisite service
period should reflect the number of awards that are expected to vest and
should be adjusted to reflect those awards that ultimately vest. The
requisite service period ends when the employee can cease rendering service
and still be eligible to vest in the award if the performance target is
achieved. This new guidance is effective for fiscal years and interim
periods within those years beginning after December 15, 2015. Early adoption
is permitted. Entities may apply the amendments in this Update either (a)
prospectively to all awards granted or modified after the effective date or
(b) retrospectively to all awards with performance targets that are
outstanding as of the beginning of the earliest annual period presented in
the financial statements and to all new or modified awards thereafter. The
adoption of ASU 2014-12 is not expected to have a material impact on our
financial position or results of operations.
In June 2014, the FASB
issued ASU No. 2014-10: Development Stage Entities (Topic 915): Elimination
of Certain Financial Reporting Requirements, Including an Amendment to
Variable Interest Entities Guidance in Topic 810, Consolidation , to improve
financial reporting by reducing the cost and complexity associated with the
incremental reporting requirements of development stage entities. The
amendments in this update remove all incremental financial reporting
requirements from U.S. GAAP for development stage entities, thereby
improving financial reporting by eliminating the cost and complexity
associated with providing that information. The amendments in this Update
also eliminate an exception provided to development stage entities in Topic
810, Consolidation, for determining whether an entity is a variable interest
entity on the basis of the amount of investment equity that is at risk. The
amendments to eliminate that exception simplify U.S. GAAP by reducing
avoidable complexity in existing accounting literature and improve the
relevance of information provided to financial statement users by requiring
the application of the same consolidation guidance by all reporting
entities. The elimination of the exception may change the consolidation
analysis, consolidation decision, and disclosure requirements for a
reporting entity that has an interest in an entity in the development stage.
The amendments related to the elimination of inception-to-date information
and the other remaining disclosure requirements of Topic 915 should be
applied retrospectively except for the clarification to Topic 275, which
shall be applied prospectively. For public companies, those amendments are
effective for annual reporting periods beginning after December 15, 2014,
and interim periods therein. Early adoption is permitted. The adoption of
ASU 2014-10 is not expected to have a material impact on our financial
position or results of operations.
Page 42
In July 2013, FASB issued ASU No.
2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating
Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists."
The provisions of ASU No. 2013-11 require an entity to present an
unrecognized tax benefit, or portion thereof, in the statement of financial
position as a reduction to a deferred tax asset for a net operating loss
carryforward or a tax credit carryforward, with certain exceptions related
to availability. ASU No. 2013-11 is effective for interim and annual
reporting periods beginning after December 15, 2013. The adoption of ASU No.
2013-11 is not expected to have a material impact on the Company's
Consolidated Financial Statements.
In February 2013, the Financial
Accounting Standards Board (FASB) issued Accounting Standards Update (ASU)
No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts
Reclassified Out of Accumulated Other Comprehensive Income, to improve the
transparency of reporting these reclassifications. Other comprehensive
income includes gains and losses that are initially excluded from net income
for an accounting period. Those gains and losses are later reclassified out
of accumulated other comprehensive income into net income. The amendments in
the ASU do not change the current requirements for reporting net income or
other comprehensive income in financial statements. All of the information
that this ASU requires already is required to be disclosed elsewhere in the
financial statements under U.S. GAAP. The new amendments will require an
organization to:
- Present (either on the face of the statement where net income is
presented or in the notes) the effects on the line items of net income of
significant amounts reclassified out of accumulated other comprehensive
income - but only if the item reclassified is required under U.S. GAAP to be
reclassified to net income in its entirety in the same reporting period; and
- Cross-reference to other disclosures currently required under U.S. GAAP
for other reclassification items (that are not required under U.S. GAAP) to
be reclassified directly to net income in their entirety in the same
reporting period. This would be the case when a portion of the amount
reclassified out of accumulated other comprehensive income is initially
transferred to a balance sheet account (e.g., inventory for pension-related
amounts) instead of directly to income or expense.
The amendments apply to all public and private companies that report
items of other comprehensive income. Public companies are required to comply
with these amendments for all reporting periods (interim and annual). The
amendments are effective for reporting periods beginning after December 15,
2012, for public companies. Early adoption is permitted. The adoption of ASU
No. 2013-02 is not expected to have a material impact on our financial
position or results of operations.
In January 2013, the FASB issued
ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of
Disclosures about Offsetting Assets and Liabilities, which clarifies which
instruments and transactions are subject to the offsetting disclosure
requirements originally established by ASU 2011-11. The new ASU addresses
preparer concerns that the scope of the disclosure requirements under ASU
2011-11 was overly broad and imposed unintended costs that were not
commensurate with estimated benefits to financial statement users. In
choosing to narrow the scope of the offsetting disclosures, the Board
determined that it could make them more operable and cost effective for
preparers while still giving financial statement users sufficient
information to analyze the most significant presentation differences between
financial statements prepared in accordance with U.S. GAAP and those
prepared under IFRSs. Like ASU 2011-11, the amendments in this update will
be effective for fiscal periods beginning on, or after January 1, 2013. The
adoption of ASU 2013-01 is not expected to have a material impact on our
financial position or results of operations.
Note 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. On May 12, 2014 the Board
approved a 1 for 100 reverse split of the common stock. In conjunction with
the reverse split the Company redomiciled from New Jersey to Delaware. The
reverse split was treated retroactively in accordance with ASC 505-10-S99.
This treatment resulted in the following adjustments: (i) at December 31,
2013-Common Stock decreased from 284,548 to 2,845 and the decrease of
281,703 was reclassified from Common Stock to Additional Paid-in Capital;
and (ii) at June 30, 2014-Common Stock decreased from 259,240 to 2,592 and
the decrease of 256,648 was reclassified from Common Stock to Additional
Paid-in Capital.
Page 43
Recent Issuances of Common Stock in 2014:
During the period ended June 30, 2014, we received proceeds of $2,095,000
and recorded $500,000 in subscription receivable from the sale of shares of
common stock to approximately 40 investors at a subscription price of $0.40
per share, which resulted in the issuance of 6,437,500 shares on a
post-reverse basis, following the implementation of a 1:100 reverse split.
The shares, all of which were restricted, were issued as part of a Private
Placement of 10,000,000 shares. The corporate action involving the1:100
reverse split also involved the Company's redomicile from New Jersey to
Delaware, both of which became effective in August 2014. In addition,
253,080 shares previously issued to former related parties were returned and
cancelled.
We were obligated to issue 5,015,062 shares of our common stock, valued
at $9,196,023, in connection with the debt settlement with the note holders
and their subsequent conversion of $113,501 in principal amount of notes
plus accrued interest of $25,672. The terms of the settlement agreements
with the note holders in connection with their conversion included: (i) the
note holders agreement to pay the Company an additional $20,000, which sum
is carried in the equity section as a subscription receivable until paid;
and (ii) their agreement to return some pre-split shares. In connection with
the debt settlement with the note holders, more shares were issued upon
conversion than provided for under the terms of the notes and the number of
shares issued were not adjusted for the 1 for 100 reverse split. As a
result, a $9,036,850 loss was recognized.
We were also obligated to issue 7,391,600 shares of our common stock in
connection with the conversion of $71,545 in principal amount of a note due
to a related party plus accrued interest of $2,142. The number of shares
issued in connection with this conversion was also not adjusted for the 1
for 100 reverse split and, as a result, a $14,672,493 loss was recognized.
The above-referenced conversions at terms not consistent with the terms
of the notes and without adjustment for the 1 for 100 reverse split resulted
in the recognition of $23,709,343 in loss on settlement of debt expenses.
On September 23, 2014, we issued 65,000 shares of common stock for
services provided valued at $1,202.
Page 44
Historical Activity Prior to 2014:
On October 14, 2013 we issued 75,532 post-split shares of our common stock in
settlement of $50,000 due to a former related party plus associated accrued
interest of $25,532. The conversion occurred within the terms of the
promissory note and no gain or loss resulted.
On December 23, 2013 we issued 2,000,000 post-split shares of common stock in
exchange for $20,000.These shares were sold to an officer of the company at
a discount to market at the date of the agreement. The shares were valued at
the closing price as of the date of the agreement and resulted in
recognition of $1,000,000 in compensation services for the year ended
December 31, 2013.
In 2013, our former CEO provided services to the Company without cost
valued at $3,000.
Stock Issued upon conversion of debt-During the year ended December 31,
2012, we issued 70,205 post-split shares of our common stock in settlement of
$50,000 due to a former related party plus associated accrued interest of
$20,500. The conversion occurred within the terms of the promissory note and
no gain or loss resulted.
Preferred Stock-We are currently authorized to issue up to 20,000,000
shares of $0.00001 par value preferred stock. Effective December 31, 2007 the
board of directors approved the cancellation of all previously issued
preferred shares and approved the cancellation and extinguishment of all
common and preferred share conversion rights of any kind, including without
limitation, warrants, options, convertible debt instruments and convertible
preferred stock of every series and accompanying conversion rights of any
kind.
Stock Option-There are no employee or non-employee option grants.
Note 3. Related Party Transactions Not Disclosed Elsewhere
Mr. Zekri, our former Secretary and director, provided without cost to
the Company his services valued at $800 per month which totaled $4,800 for
2013. He also provided without cost to the Company office space valued at
$200 per month, which totaled $1,200 for the six-month period ended June 30,
2013.
On December 23, 2013, in consideration for the investment by
Mr. Weissberg of a total of $91,545, we issued and sold 2,000,000 shares of
Common Stock for $20,000 and issued a convertible note in the principal
amount of $71,545 for the remainder of the investment. Mr. Weissberg was
appointed our CEO, CFO and Chairman on December 27, 2013. These 2,000,000
shares were sold at a price of $0.10, which represented a discount to market
at the date of the transaction. In addition, the $71,545 note was
convertible at a price of $1.00 per share, also a discount to market at the
date of the transaction. The shares were valued at the closing price as of
December 23, 2013, the date of the transaction, and resulted in recognition
of $1,000,000 in compensation services for the year ended December 31, 2013.
During the 2nd quarter of 2014, Mr. Weissberg transferred and assigned
$62,383, including accrued interest, of the principal amount of his $71,545
convertible note to several unaffiliated, third-party, accredited investors,
retaining $11,536. All of these notes, in addition to a total of $57,373
evidenced by 11 other convertible notes held by non-affiliates, were
converted by the holders, including Mr. Weissberg, the only affiliate, prior
to June 30, 2014. The Company recognized a loss of $23.7 million because the
conversion prices of $0.35 and $1.00 per share, respectively, were at a
discount from the market price of the shares on the dates of the original
issuances of the convertible notes and the fact that the conversion prices
were not adjusted for the 1:100 reverse split.
Note 4. Disposition of Inactive Subsidiaries
On January 30, 2012, EQUR relinquished its 100% ownership and all rights
to Centriforce Technology Corporation and its 50% ownership in Sub Sea Oil
Technologies, Inc. The underlying assets of both Centriforce and SubSea had
no value at that time.
Page 45
Note 5. Convertible Notes
During 2013, the Company signed a series of twelve new unsecured
promissory notes, bearing interest at 15% per annum, for an aggregate of
$128,920 to related and unrelated parties, including one note for $71,545
which was due to the Company's chairman. The notes had maturity dates
ranging from February 5, 2014 to December 31, 2014, with all amounts
recorded as current liabilities. The notes have conversion rights that allow
the holder of the note to convert the principal balance into the Company's
common stock at the lender's sole discretion at $0.35 per share except for
the note payable to the chairman in the amount of $71,545, which is
convertible at $1.00 per share.
During the second quarter of 2014, Mr. Weissberg transferred and assigned
$62,382 in principal amount including accrued interest of his $71,545 in
principal amount of his convertible note to unaffiliated
accredited investors. Mr. Weissberg retained $11,536 of the note. All of the
Weissberg notes, which were originally convertible at $0.01 per share but
subject to adjustment in the event of a share recapitalization, together
with an additional $57,375 in notes plus accrued interest, which were to be
convertible at a price of $0.035 per share, but subject to adjustment in the
event of a share recapitalization were converted prior to June 30, 2014. The
Company recognized a loss of $23,709,343 because the number of shares issued
upon the conversion of the notes in the principal amount of $71,545 and
$57,375, respectively, were not adjusted for the 1 for 100 reverse split.
In accordance with ASC 470, the Company has analyzed the beneficial
nature of the conversion terms and determined that a beneficial conversion
feature (BCF) exists because the effective conversion price was less than
the quoted market price at the time of the issuance. The Company calculated
the value of the BCF using the intrinsic method as stipulated in ASC 470.
The BCF of $128,920 has been recorded as a discount to the 2013 notes
payable and a corresponding entry to Additional Paid-in Capital. The
historical aggregate discount arising from the BCF on all such notes is
$161,577, and for the note balance of $128,920 the
note discount was $128,063.
For the nine months ended September 30, 2014 and 2013, the Company has
recognized $11,510 and $54,709 in accrued interest expense, respectively, and
has amortized $91,066 and $0, respectively of the discount arising from
the beneficial conversion feature which has also been recorded as interest
expense.
Since Inception: On January 20, 2009, the Company received $50,000
through the issuance of a convertible note. The note bears interest at the
rate of 10% per annum and has a maturity date of 12 months. The note is
convertible into common stock at a price of $1.00 per share. The company
recorded a debt discount of $50,000 all of which was amortized to interest
expense during 2009. During the year ended December 31, 2012, the Company
issued 70,205 post-split shares in connection with the conversion of this debt into
equity, along with $20,500 of accrued interest. The conversion occurred
within the terms of the promissory note and no gain or loss resulted. The
net balance of the note was zero as of 12/31/2012 and $50,000 as of
12/31/2011.
In January 18, 2010, the Company received $50,000 through the issuance of
a convertible note. The note bears interest at the rate of 10% per annum and
has a maturity date of 12 months. The note is convertible into common stock
at a price of $1.00 per share. The company recorded a debt discount of
$50,000 all of which was amortized to interest expense during 2010. The net
balance of the note was $50,000 as of 12/31/2012 and 12/31/2011.
During
2012, the Company received $56,126 through the issuance of
convertible notes to 5 shareholders. The notes bear interest of
15% per annum, have a maturity date of 12 months and are convertible into common stock
at $0.1 per share. The Company
recorded interest expense in the amount of $12,525 during 2012 and $12,610
in amortization of debt discount during 2012.
Note 6. Development Stage Activities and Going Concern
The Company is currently in the development stage, which it re-entered on
January 1, 2011 and has limited operations. 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.
Page 46
Note 7. Subsequent Events
Effective
October 15, 2014, the Registrant, through its
wholly-owned Israeli subsidiary, Esqure Advanced Medical Devices Ltd. ("Esqure"),
entered into an Asset Purchase Agreement with Michael Cohen, a resident of
the State of Israel (the "Seller"). There were no other subsequent events following the period ended
September 30,
2014 through the date the financial statements were issued.
Page 47
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
We conducted our audits in accordance with standards of the
Public Company Accounting Oversight Board (United States). Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to have, nor
were we engaged to perform, an audit of its internal control over financial reporting. Our
audits included consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the Company's internal control
over financial reporting. Accordingly, we express no such opinion. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provides a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above
present fairly, in all material respects, the financial position of E-Qure Corp. as of December 31, 2013 and 2012 and the results of its operations and cash flows for
the periods described above in conformity with accounting principles generally accepted in
the United States of America.
The accompanying financial statements have been prepared
assuming that the Company will continue as a going concern. As discussed in Note 7 to the
financial statements, the Company suffered a net loss from operations and has a net
capital deficiency, which raises substantial doubt about its ability to continue as a
going concern. Managements plans regarding those matters are also described in Note
7. The financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
/s/ M&K CPAS, PLLC
Page 48
December
31, 2012
ASSETS
LIABILITIES
AND STOCKHOLDERS' EQUITY (DEFICIT)
$
Page 49
Page 50
Additional
Accumulated
Accumulated
Total
Common
Paid-in
Deficit after Re-Entry
Deficit before Re-Entry
Stockholders'
Shares
Amount
Capital
to
Development Stage
to
Development Stage
Equity
(Deficit)
699,743
$
700
$
2,172,741
-
$
(2,290,748)
$
(117,307)
-
-
12,000
-
-
12,000
-
-
-
(31,392)
-
(31,392)
699,743
$
700
$
2,184,741
(31,392)
$
(2,290,748)
$
(136,699)
70,205
70
70,430
-
-
70,500
-
-
12,000
-
-
12,000
-
-
33,514
-
-
33,514
-
-
-
(91,985)
-
(91,985)
769,948
$
770
$
2,300,685
(123,377)
$
(2,290,748)
$
(112,670)
75,532
75
75,457
-
-
75,532
2,000,000
2,000
18,000
-
-
20,000
-
-
1,000,000
-
-
1,000,000
-
-
12,000
-
-
12,000
-
-
128,063
-
-
128,063
-
-
6,847
-
-
6,847
-
-
-
(1,168,585)
-
(1,168,585)
2,845,480
$
2,845
$
3,541,052
(1,291,962)
$
(2,290,748)
$
(38,813)
Page 51
Page 52
E-QURE CORP.
1. The Company
Organizational Background:
E-Qure
Corp., ("EQUR" or the "Company") is a Delaware corporation with a mailing
address in New York, NY and offices in Israel.
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. Further, as of December 31,
2013, the cash resources of the Company were insufficient to meet its
current business plan, and the Company had negative working capital. 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.
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 Equivalents:
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 December 31, 2013 or 2012.
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.
Development Stage Enterprise:
As of January 1, 2011, the Company
re-entered the development stage. The financial statements have been updated to reflect
this change as of this date.
Page 53
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 Companys common stock, the
estimated volatility of the Companys 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 Companys Own Stock
: We account for obligations and instruments
potentially to be settled in the Companys 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 Companys 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 December
31, 2013 and 2012, 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:
Page 54
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 December 31, 2013 and 2012, 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. All per share disclosures retroactively
reflect shares outstanding or issuable as though the reverse split had
occurred January 1, 2011.
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, carry-forwards. 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.
Page 55
Uncertain Tax Positions
The Financial Accounting Standards Board issued Interpretation No. 740,
Accounting for Uncertainty in Income Taxes an interpretation of FASB
Statement No. 109, Accounting for Income Taxes (FIN No. 740) which was
effective for the Company on January 1, 2007. ASC No. 740 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 ASC No. 740, 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. ASC No. 740 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, 2007. We are not under examination by any jurisdiction for any tax year. At
December 31, 2013, we had no material unrecognized tax benefits and no adjustments to
liabilities or operations were required under ASC 740.
Recently Issued Accounting Pronouncements
In February 2013, the Financial Accounting Standards Board (FASB) issued
Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic
220): Reporting of Amounts Reclassified Out of Accumulated Other
Comprehensive Income, to improve the transparency of reporting these
reclassifications. Other comprehensive income includes gains and losses that
are initially excluded from net income for an accounting period. Those gains
and losses are later reclassified out of accumulated other comprehensive
income into net income. The amendments in the ASU do not change the current
requirements for reporting net income or other comprehensive income in
financial statements. All of the information that this ASU requires already
is required to be disclosed elsewhere in the financial statements under U.S.
GAAP. The new amendments will require an organization to:
- Present
(either on the face of the statement where net income is presented or in the
notes) the effects on the line items of net income of significant amounts
reclassified out of accumulated other comprehensive income - but only if the
item reclassified is required under U.S. GAAP to be reclassified to net
income in its entirety in the same reporting period; and
The amendments apply to all public and private companies that report
items of other comprehensive income. Public companies are required to comply
with these amendments for all reporting periods (interim and annual). The
amendments are effective for reporting periods beginning after December 15,
2012, for public companies. Early adoption is permitted. The adoption of ASU
No. 2013-02 is not expected to have a material impact on our financial
position or results of operations.
In October 2012, the Financial Accounting Standards Board (FASB) issued
Accounting Standards Update (ASU) 2012-04, Technical Corrections and
Improvements in Accounting Standards Update No. 2012-04. The amendments in this
update cover a wide range of Topics in the Accounting Standards Codification. These
amendments include technical corrections and improvements to the Accounting Standards
Codification and conforming amendments related to fair value measurements. The amendments
in this update will be effective for fiscal periods beginning after December 15, 2012. The
adoption of ASU 2012-04 is not expected to have a material impact on our financial
position or results of operations.
In August 2012, the FASB issued ASU 2012-03, Technical Amendments
and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff
Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No.
33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC
Update) in Accounting Standards Update No. 2012-03. This update amends various SEC
paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not
expected to have a material impact on our financial position or results of operations.
Page 56
In July 2012, the FASB issued ASU 2012-02, Intangibles
Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for
Impairment in Accounting Standards Update No. 2012-02. This update amends ASU
2011-08, Intangibles Goodwill and Other (Topic 350): Testing Indefinite-Lived
Intangible Assets for Impairment and permits an entity first to assess qualitative factors
to determine whether it is more likely than not that an indefinite-lived intangible asset
is impaired as a basis for determining whether it is necessary to perform the quantitative
impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other -
General Intangibles Other than Goodwill. The amendments are effective for annual and
interim impairment tests performed for fiscal years beginning after September 15, 2012.
Early adoption is permitted, including for annual and interim impairment tests performed
as of a date before July 27, 2012, if a public entitys financial statements for the
most recent annual or interim period have not yet been issued or, for nonpublic entities,
have not yet been made available for issuance. The adoption of ASU 2012-02 is not expected
to have a material impact on our financial position or results of operations.
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.
Recent Issuances of Common Stock-2013:
On October 14, 2013 we issued 75,532 shares of our common stock in
settlement of $50,000 due to a former related party plus associated accrued
interest of $25,532. The conversion occurred within the terms of the
promissory note and no gain or loss resulted.
On December 23, 2013 we issued 2,000,000 shares of common stock in
exchange for $20,000.These shares were sold to an officer of the company at
a discount to market at the date of the agreement. The shares were valued at
the closing price as of the date of the agreement and resulted in
recognition of $1,000,000 in compensation services for the year ended
December 31, 2013.
Historical Activity Prior to 2013:
In 2011, our former CEO provided services to the Company without cost
valued at $12,000.
Stock Issued upon conversion of debt
During the year ended December 31, 2012, we issued 70,205 shares of
our common stock in settlement of $50,000 due to a former related party plus
associated accrued interest of $20,500. The conversion occurred within the
terms of the promissory note and no gain or loss resulted.
Preferred Stock
We are currently authorized to issue up to 20,000,000 shares, $0.00001 par
value, preferred stock. Effective December 31, 2007 the board of directors
approved the cancellation of all previously issued preferred shares and
approved the cancellation and extinguishment of all common and preferred
share conversion rights of any kind, including without limitation, warrants,
options, convertible debt instruments and convertible preferred stock of
every series and accompanying conversion rights of any kind.
Stock Options
There are no employee or non-employee option grants.
Page 57
3. Related
Party Transactions not Disclosed Elsewhere
Mr. Zekri, our former Secretary and director, provided without cost to
the Company his services valued at $800 per month which totaled $9,600 for
2013 and 2012. He also provided without cost to the Company office space
valued at $200 per month, which totaled $2,400 for the twelve-month periods
ended December 31, 2013 and 2012.
On December 23, 2013, in consideration
for the investment by Ron Weissberg of a total of $91,545, we issued and
sold 2,000,000 shares of Common Stock for $20,000 and issued a convertible
note in the principal amount of $71,545 to Ron Weissberg, who was appointed
our CEO, CFO and Chairman on December 27, 2013. These shares were sold at a
price of $0.10, which represented a discount to market at the date of the
transaction. In addition, the $71,545 note was convertible at a price of
$1.00 per share, also a discount to market at the date of the transaction.
The shares were valued at the closing price as of December 23, 2013, the
date of the transaction, and resulted in recognition of $1,000,000 in
compensation services for the year ended December 31, 2013.
4. Disposition of Inactive Subsidiaries
On January 30, 2012, the Company
relinquished its 100% ownership and all rights to Centriforce Technology
Corporation and its 50% ownership in Sub Sea Oil Technologies, Inc. The
underlying assets of both Centriforce and SubSea had no value at that time.
5. Convertible Notes
Current Reporting Period-2013:
During 2013 the Company signed a series of twelve new unsecured
promissory notes for an aggregate of $128,920 to related parties. One note
for $71,545 is due to current officer/director of the company. The notes
bear interest at 15% per annum and are due approximately one year from the
date of issuance. The maturity dates range from February 5, 2014 to December
31, 2014 with all amounts recorded as current liabilities. The notes have
conversion rights that allow the holder of the note to convert the principal
balance into the Company's common stock at the lender's sole discretion at
$0.35 per share except for the officer/director note of $71,545, which is
convertible at $0.10 per share. The conversion price of these note were not
adjusted for the 1:100 reverse split which was effective August 4, 2014.
In accordance with ASC 470, the Company has analyzed
the beneficial nature of the conversion terms and determined that a
beneficial conversion feature (BCF) exists because the effective conversion
price was less than the quoted market price at the time of the issuance. The
Company calculated the value of the BCF using the intrinsic method as
stipulated in ASC 470. The BCF of $128,063 has been recorded as a discount
to the 2013 notes payable and a corresponding entry to Additional Paid-in
Capital. The aggregate discount arising from the BCF on the 2012 and 2013
notes is $161,577.
For the year ended December 31, 2013 the Company has
recognized $19,802 in accrued interest expense related to all convertible
notes and has amortized $57,901 of the beneficial conversion feature which
has also been recorded as interest expense. The aggregate carrying value of
convertible notes is as follows:
$185,046
(91,066)
$93,980
Since Inception:
On January 20, 2009, the Company received
$50,000 through the issuance of a convertible note. The note bears interest
at the rate of 10% per annum and has a maturity date of 12 months. The note
is convertible into common stock at a price of $1.00 per share. The company
recorded a debt discount of $50,000 all of which was amortized to interest
expense during 2009. During the year ended December 31, 2012, the Company
issued 70,205 shares in connection with the conversion of this debt into
equity, along with $20,500 of accrued interest. The conversion occurred
within the terms of the promissory note and no gain or loss resulted. The
net balance of the note was zero as of 12/31/2012 and $50,000 as of
12/31/2011.
Page 58
On January 18, 2010, the Company received $50,000 through the
issuance of a convertible note. The note bears interest at the rate of 10%
per annum and has a maturity date of 12 months. The note is convertible into
common stock at a price of $1.00 per share. The company recorded a debt
discount of $50,000 all of which was amortized to interest expense during
2010. The net balance of the note was $50,000 as of 12/31/2012 and
12/31/2011.
During 2012, the Company received a total of $56,126 through
the issuance of convertible notes to 5 shareholders. The notes bear interest
at the rate of 15% per annum and having a maturity date of 12 months. The
notes are convertible into common stock par value $0.10 per share. The
Company recorded interest expense on the amount of $12,525 during 2012 and
$12,610 in amortization of debt discount during 2012.
6. Income Taxes
We have adopted ASC 740 which provides for the recognition of a deferred tax
asset based upon the value the loss carry-forwards will have to reduce
future income taxes and management's estimate of the probability of the
realization of these tax benefits. Our net operating loss carryovers
incurred prior to 2008 considered available to reduce future income taxes
were reduced or eliminated through our recent change of control (I.R.C.
Section 382(a)) and the continuity of business limitation of I.R.C. Section
382(c).
We have a current operating loss carry-forward of $1,484,462
resulting in deferred tax assets of $519,562. We have determined it more
likely than not that these timing differences will not materialize and have
provided a valuation allowance against substantially all our net deferred
tax asset.
Future utilization of currently generated federal and state
NOL and tax credit carry forwards may be subject to a substantial annual
limitation due to the ownership change limitations provided by the Internal
Revenue Code of 1986, as amended and similar state provisions. The annual
limitation may result in the expiration of NOL and tax credit carry forwards
before full utilization.
December
31
2013
2012
Individual components giving rise to
the deferred tax assets are as follows:
$
$
Less valuation
allowance
(519,562)
(485,022)
Net
deferred asset
$
-
$
-
The Company is not under examination by any jurisdiction for any
tax year. Our federal and state income tax returns are open for fiscal years
ending on or after December 31, 2008.
7. Development Stage Activities
and Going Concern
The Company is currently in the development stage,
which it re-entered on January 1, 2011 and has limited operations. 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. Further,
as of December 31, 2013, the cash resources of the Company were insufficient
to meet its current business plan. 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.
8. Subsequent Events
There were no subsequent events following the period ended December, 31,
2013 through the date the financial statements were issued
Page 59
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Table of Contents
E-Qure Corp.
San Antonio, Texas
We have audited the accompanying balance sheets of
E-Qure Corp. (A
Development Stage Company) (formerly ADB International Group, Inc.) as of December 31, 2013 and 2012 and the related statements of
operations, stockholders deficit and cash flows for the years then ended
and for the period from re-entering the development stage (January 1, 2011) to
December 31, 2013. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on our audits.
www.mkacpas.com
Houston, Texas
March 26, 2014
E-QURE CORP.
(A
Development Stage Company)
f/k/a
ADB International Group, Inc.
BALANCE SHEETS
December 31, 2013
Current assets:
Cash
$
76,535
$
2,900
Prepaid expenses
-
909
Total current assets
76,535
3,809
Total Assets
$
76,535
$
3,809
Current liabilities:
Accrued expenses
$
21,368
$
31,383
Convertible notes payable, net of
discount
89,106
81,805
Convertible notes
payable to related parties, net of discount
4,874
3,291
Total current liabilities
115,348
116,479
Total liabilities
115,348
116,479
Stockholders' deficit:
Preferred stock,
$0.00001; 20,000,000 shares authorized; no shares issued and outstanding
-
-
Common stock,
$0.00001 par value; 500,000,000 shares authorized; and
2,845,480 and 769,948 issued and outstanding at December 31, 2013 and 2012,
respectively
2,845
770
Additional paid in
capital
3,541,052
2,300,685
Accumulated
deficit before re-entry to the development stage
(2,290,748)
(2,290,748)
Accumulated deficit
after re-entry to development stage
(1,291,962)
(123,377)
Total
stockholders' equity (deficit)
(38,813)
(112,670)
Total Liabilities and Stockholders' Equity (Deficit)
$
76,535
3,809
See
Summary of Significant Accounting Policies and Notes to Financial Statements.
E-QURE CORP.
(A Development Stage Company)
f/k/a ADB International Group, Inc.
STATEMENT
OF CHANGES IN STOCKHOLDERS' EQUITY
FOR PERIOD FROM RE-ENTRY INTO THE DEVELOPMENT STAGE
(JANUARY 1, 2011) UNTIL DECEMBER 31, 2013
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Table of Contents
Balance
at December 31, 2010 (Unaudited)
$
Donated services and rent
Net loss
Balance
at December 31, 2011
Note converted
Donated services and rent
Discount on convertible note
Net loss
Balance
at December 31, 2012
Note converted
Stock issued for cash
Excess of fair value of
stock cash paid
Donated services and rent
Discount on convertible note
Forgiveness of related
party salary accrual
Net loss
Balance
at December 31, 2013
$
See Summary of Significant Accounting Policies and Notes to Financial Statements.
(A Development Stage Company)
f/k/a
ADB International Group, Inc.
Background and
Significant Accounting Policies
December 31, 2013
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Table of Contents
Level 1:
Inputs to the valuation methodology are unadjusted quoted prices for
identical assets or liabilities in active markets that the Company has the
ability to access.
Level 2: Inputs to the valuation methodology
include:
- Quoted prices for similar assets or liabilities in active
markets;
- Quoted prices for identical or similar assets or liabilities
in inactive markets;
- Inputs other than quoted prices that are
observable for the asset or liability;
- Inputs that are derived
principally from or corroborated by observable market data by correlation or
other means.
If the asset or liability has a specified (contractual)
term, the level 2 input must be observable for substantially the full term
of the asset or liability.
Level 3: Inputs to the valuation
methodology are unobservable and significant to the fair value measurement.
The assets or liability's fair value measurement level within the fair value
hierarchy is based on the lowest level of any input that is significant to
the fair value measurement. Valuation techniques used need to maximize the
use of observable inputs and minimize the use of unobservable inputs. The
following table presents assets that were measured and recognize at fair
value on December 31, 2013 and 2012 and the year then ended on a recurring basis:
-
Cross-reference to other disclosures currently required under U.S. GAAP for
other reclassification items (that are not required under U.S. GAAP) to be
reclassified directly to net income in their entirety in the same reporting
period. This would be the case when a portion of the amount reclassified out
of accumulated other comprehensive income is initially transferred to a
balance sheet account (e.g., inventory for pension-related amounts) instead
of directly to income or expense.
December 31, 2013
December 31, 2012
Face amount of the notes
$106,126
Less unamortized discount
(21,030
Carrying Value
$85,096
Future tax benefit arising from net operating loss carryovers
519,562
485,022
MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
PLAN OF OPERATIONS
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.
The Companys 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.Page 60
During the quarter ended June 30, 2014, the Registrant raised over $2,095,000 in equity capital to fund its plans to obtain FDA approval, developing marketing and sales capacities and actively engage in the medical device industry, generally, and in wound treatment, specifically.
Effective October 15, 2014, through our wholly-owned Israeli subsidiary, Esqure, we entered into an Asset Purchase Agreement with Michael Cohen. We purchased all of Mr. Cohan's assets (the "Seller's Assets") related to our BST Device for the sum of $350,000.
Milestones, Anticipated Timeframe and Funds for Obtaining Regulatory FDA Approval
Milestone | Anticipated Timeframe for Milestone | Amounts and Sources of Funds for each Milestone |
We entered into an agreement with the Austen BioInnovation Institute in Akron ("ABIA" or the "Institute"), for the purpose of obtaining regulatory FDA approval for our BST Device. | Completed and executed on June 6, 2014. | Pursuant to the terms of the ABIA agreement, we paid $143,354 to ABIA. We working capital funds raised in equity capital during the second quarter of 2014. |
Preparation of initial trial, which includes 70 patients in a double-arm, randomized, multi-center study to assess the safety and efficacy of the BST Device. Selection of clinical trial facilities. | Period from July to December 2014. | Since July 2014, the Company has been paying a monthly fee of $55,000, which payments will total $330,000 for the period from July to December 2014. We use working capital funds raised through equity capital during the second quarter of 2014. |
Conducting clinical trial | Period from January 2015 to September 2015 | Starting in January 2015, the Company will pay ABIA a monthly fee of $23,713 for a total of $213,416. We will use working capital funds raised through equity capital during the second quarter of 2014. |
Submitting clinical trial results for FDA review and approval. | October 2015 | A last payment of $30,000 to ABIA will be required upon submission of the clinical trial study report to the FDA. |
Post FDA submission | October 2015 | We expect to incur approximately $120,000 in additional post-submission costs related to general administrative expenses and professional fees related to responses to FDA review inquiries. |
We believe to have sufficient funds available to complete to clinical trial study and FDA approval for our BST Device.
Results of Operations during the three months ended September 30, 2014 as compared to the three months ended September 30, 2013
We have not generated any revenues since inception. We had operating expenses related to general and administrative expenses, being a public company and interest expenses. During the three-month period ended September 30, 2014, we incurred a net loss of $616,103 due to general and administrative expenses of $180,303 and research and development expense of $435,800 compared to a net loss during the three-month period ended September 30, 2013 of $33,677 due to general and administrative expenses of $12,610 and interest expense of $21,067.
Page 61
Our general and administrative expenses increased by $167,693 during the
three-month period
ended September 30, 2014 as compared to the same period in the prior year mainly due increased
professional fees. During the three months ended September 30, 2014, we did not
incur interest expense compared to interest expense of $21,067 during the
same period in the prior year.
Results of Operations during the nine months ended September 30, 2014 as compared to the
nine
months ended September 30, 2013
We have not generated any revenues since inception. We had operating expenses related
to general and administrative expenses, being a public company and interest expenses.
During the nine-month period ended September 30, 2014, we incurred a net loss of $24,505,214 due
to general and administrative expenses of $243,556, research and development
expense of $435,800 and total other expenses of $23,811,919
consisting of interest expense of $11,510, $91,066 in amortization in debt discount,
$23,709,343 in loss on settlement of debt expenses and taxes of $13,939 compared to a net
loss during the nine-month period ended September 30, 2013 of $109,882 due to general and
administrative expenses of $55,173 and interest expense of $54,709.
Our general and administrative expenses increased by $188,383 during the
nine-month period ended September 30, 2014 compared to the same period in the prior year
mainly due increased professional fees. During the nine-months ended September 30, 2014, our
interest expenses decreased by $43,199 or 79% compared to the same period in the prior
year. We expensed amortization of debt discount of $91,066 during the nine
months ended September 30, 2104 compared to no expenses related to debt
discounts in the same
period in the prior year. The non-cash charge of $23,709,343 was related to a loss on debt settlement
and was a
one-time, non-recurring charge.
Results of Operations during the year ended December 31, 2013 as compared to the year ended December 31, 2012
We have not generated any revenues since inception. We had operating expenses related to general and administrative expenses, being a public company and interest expenses. During the year ended December 31, 2013, we incurred $1,168,585 in net loss due to general and administrative expenses of $1,090,882 and other expenses of $77,703 consisting of interest expenses of $19,802 and $57,901 in amortization in debt discount compared to a net loss during the year ended December 31, 2012 of $91,985 mainly due to general and administrative expenses of $66,850, interest expenses of $12,525 and $12,610 in amortization of debt discount.
Our general and administrative expenses increased by $1,024,032 during the year ended December 31, 2013 as compared to the same period in the prior year mainly due to non-cash compensation expenses. During the twelve months ended December 31, 2013, our interest expenses increased by $7,277 or 58% as compared to the same period in the prior year. Amortization of debt discount increase by $45,291 as compared to the same period in the prior year.
Liquidity, Capital Resources and Strategy
On September 30, 2014, we had total assets of $1,493,381 consisting of cash in the same amount compared to a cash balance of $76,535 at December 31, 2013. We had total current liabilities of $19,003 in accrued expenses compared to accrued expenses of $21,368 and $93,980 in convertible notes on December 31, 2013. Our accumulated deficits as of September 30, 2014 and December 31, 2013 were $28,087,924 and $3,582,710, respectively.
We used $678,154 in our operating activities during the nine months ended September 30, 2014, which was due to a net loss of $24,505,214 offset by a non-cash charge related to a loss on settlement of debt of $23,709,343, amortization of debt discount of $91,066, non-cash share compensation expense of $1,202 and an increase in accounts payable of $25,449. We used $49,432 in our operating activities during the nine months ended September 30, 2013, which was due to a net loss of $109,882 offset by donated services valued at $9,000, amortization of debt discount of $40,592, increase in prepaid expenses of $900 and an increase in accounts payable of $9,958.
We financed our negative cash flow during the nine months ended September 30, 2014 through proceeds from the issuance of stock of $2,095,000. We financed our negative cash flow from operations during the same period in the prior year through the issuance of convertible notes of $47,500.
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On December 31, 2013, we had total assets of $76,535 consisting of $76,535 in cash compared to $2,900 in cash on December 31, 2012. We had total current liabilities of $115,348 consisting of $21,368 in accrued expenses and convertible notes in the amount of $93,980 compared to accrued expenses of $31,383 and convertible notes in the amount of $85,096 on December 31, 2012. Our accumulated deficits as of December 31, 2013 and 2012 were $3,582,710 and $2,414,125, respectively.
We used $75,285 in our operating activities during the year 2013, which was due to a net loss of $1,168,585 offset by donated services and rent of $12,000, non-cash compensation of $1,000,000, amortization of debt discount of $57,901, increase in accounts payable of $22,490 and increase in prepaid expenses of $909. We used $53,226 in our operating activities during the year 2012, which was due to a net loss of $91,985 offset by donated services and rent of $12,000, amortization of debt discount of $12,610, increase in accounts payable of $15,058 a decrease in prepaid expenses of $909.
We financed our negative cash flow from operations in 2013 through borrowings in the amount of $128,920 and issuance of common stock of $20,000. We financed our negative cash flow from operations in 2012 through borrowings in the amount of $56,126.
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 2013 and 2012. 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 $24,505,214 during the nine months ended September 30, 2014 and $1,168,585 for the year ended December 31, 2013, a total accumulated deficit of $28,087,924 and $3,582,710, respectively.
The Company is a development stage company and does not have any revenues from operations. During the period ended September 30, 2014, the Company significantly improved the uncertainty related to our ability to continue as a going concern by successfully raising $2,095,000 through the issuance of equity capital. As of September 30, 2014, the Company had $1,493,381 cash on hand compared to $76,535 in cash as of December 31, 2013. We had working capital of $1,474,378 as of September 30, 2014 compared to negative working capital of $38,813 as of December 31, 2013.
Our operating expenses consist principally of professional fees related to being a public reporting company including audit fees and securities compliance fees in addition to the payments we have made in connection with our ABIA Agreement related to clinical trials necessary to obtain FDA approval for our BST Device of approximately $400,000 during 2014. Our professional fees are expected to be approximately $100,000 during the next twelve months and payments related to our ABIA Agreement will be approximately $400,000 during the next twelve months. Our total operating expenses for the next twelve month are expected to be approximately $500,000.
We believe that our current cash on hand of $1,493,381, as of September 30, 2014, will be sufficient to meet our operating requirements throughout the ensuing twelve month period. If we are unable to manage our working capital requirements with funding received from our most recent equity capital raise, we may require additional financing at satisfactory terms and conditions, of which there can be no assurance, in order to satisfy its ongoing capital requirements for the next 12 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 in a timely manner, which we estimate will take not less than 18 months.
Our management believes that our operations will generate initial revenues from the sale of our BST Device in the US beginning of 2017. 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 meet our cash needs through future 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.
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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. Consequently, the Company cannot predict
whether additional financing will be available, if and when needed, whether
in the form of equity or debt, at terms and conditions that we deem
satisfactory, on a timely basis, if at all. In any of these events, the
Company may be unable to implement its present plan of operation and any of
these events could have a material adverse effect on our business,
prospects, financial condition and results of operations.
Our
potential financing transactions may include the issuance of equity and/or
debt securities including convertible debt, obtaining credit facilities, or
other financing mechanisms. 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, any adverse
conditions in the financial markets could make it more difficult to obtain
future financing through the issuance of equity or debt securities when and
if needed. Even if we are able to raise a sufficient amount of funds that
may be required, it is possible that we could incur unexpected costs and
expenses or experience unexpected cash requirements that would force us to
seek additional and/or alternative financing. Further, if we issue
additional equity or debt securities, stockholders may experience additional
dilution or the new equity securities may have rights, preferences or
privileges senior to those of existing holders of our common stock. If
additional financing is not available or is not available on acceptable
terms, we may have to curtail our plan of operations.
We are not
aware of any material trend, event or capital commitment, which would or
could potentially adversely affect our liquidity. The Company currently has
no arrangements with any persons or entities with regard to our existing
debt, however limited. 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.
Off-Balance Sheet Arrangements
As of September 30, 2014 and December 31, 2013, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of Regulation S-K promulgated under the Securities Exchange Act of 1934.
Contractual Obligations and Commitments
As of September 30, 2014 and December 31, 2013, we did not have any contractual obligations.
Critical 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 Equivalents: 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 December 31, 2013 or 2012.
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.
Development Stage Enterprise: As of January 1, 2011, the Company re-entered the development stage. The financial statements have been updated to reflect this change as of this date.
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Valuation of Long-Lived Assets: We review the recoverability of our long-lived assets including equipment, goodwill and their 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 take estimates of these cash flows related to long-lived assets, as well as other fair value determination.
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 Companys Common Stock, the estimated volatility of the Companys 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 Companys Own Stock : We account for obligations and instruments potentially to be settled in the Companys 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 Companys 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 December 31, 2013 and 2012, 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: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that the Company has the ability to access.
Level 2: Inputs to the valuation methodology include:
- Quoted prices for similar assets or liabilities in active markets;
- Quoted prices for identical or similar assets or liabilities in inactive markets;
- Inputs other than quoted prices that are observable for the asset or liability;
- Inputs that are derived principally from or corroborated by observable market data by
correlation or other means.
If the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term of the asset or liability.
Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The assets or liability's fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs. The following table presents assets that were measured and recognize at fair value on December 31, 2013 and 2012 and the year then ended on a recurring basis:
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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 December 31, 2013 and 2012, 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. All per share disclosures retroactively reflect shares outstanding or issuable as though the reverse split had occurred January 1, 2011.
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.
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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. 740, Accounting for Uncertainty in Income Taxes an interpretation of FASB Statement No. 109, Accounting for Income Taxes (FIN No. 740) which was effective for the Company on January 1, 2007. ASC No. 740 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 ASC No. 740, 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. ASC No. 740 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, 2007. We are not under examination by any jurisdiction for any tax year. At December 31, 2013, we had no material unrecognized tax benefits and no adjustments to liabilities or operations were required under ASC 740.
Recently Issued Accounting Pronouncements
In February 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income, to improve the transparency of reporting these reclassifications. Other comprehensive income includes gains and losses that are initially excluded from net income for an accounting period. Those gains and losses are later reclassified out of accumulated other comprehensive income into net income. The amendments in the ASU do not change the current requirements for reporting net income or other comprehensive income in financial statements. All of the information that this ASU requires already is required to be disclosed elsewhere in the financial statements under U.S. GAAP. The new amendments will require an organization to:
- Present (either on the face of the statement where net income is presented or in the
notes) the effects on the line items of net income of significant amounts reclassified out
of accumulated other comprehensive income - but only if the item reclassified is required
under U.S. GAAP to be reclassified to net income in its entirety in the same reporting
period; and
- Cross-reference to other disclosures currently required under U.S. GAAP for other
reclassification items (that are not required under U.S. GAAP) to be reclassified directly
to net income in their entirety in the same reporting period. This would be the case when
a portion of the amount reclassified out of accumulated other comprehensive income is
initially transferred to a balance sheet account (e.g., inventory for pension-related
amounts) instead of directly to income or expense.
The amendments apply to all public and private companies that report items of other comprehensive income. Public companies are required to comply with these amendments for all reporting periods (interim and annual). The amendments are effective for reporting periods beginning after December 15, 2012, for public companies. Early adoption is permitted. The adoption of ASU No. 2013-02 is not expected to have a material impact on our financial position or results of operations.
In October 2012, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2012-04, Technical Corrections and Improvements in Accounting Standards Update No. 2012-04. The amendments in this update cover a wide range of Topics in the Accounting Standards Codification.
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These amendments include technical corrections and improvements to the Accounting Standards Codification and conforming amendments related to fair value measurements. The amendments in this update will be effective for fiscal periods beginning after December 15, 2012. The adoption of ASU 2012-04 is not expected to have a material impact on our financial position or results of operations.
In August 2012, the FASB issued ASU 2012-03, Technical Amendments and Corrections to SEC Sections: Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin (SAB) No. 114, Technical Amendments Pursuant to SEC Release No. 33-9250, and Corrections Related to FASB Accounting Standards Update 2010-22 (SEC Update) in Accounting Standards Update No. 2012-03. This update amends various SEC paragraphs pursuant to the issuance of SAB No. 114. The adoption of ASU 2012-03 is not expected to have a material impact on our financial position or results of operations.
In July 2012, the FASB issued ASU 2012-02, Intangibles Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment in Accounting Standards Update No. 2012-02. This update amends ASU 2011-08, Intangibles Goodwill and Other (Topic 350): Testing Indefinite-Lived Intangible Assets for Impairment and permits an entity first to assess qualitative factors to determine whether it is more likely than not that an indefinite-lived intangible asset is impaired as a basis for determining whether it is necessary to perform the quantitative impairment test in accordance with Subtopic 350-30, Intangibles - Goodwill and Other - General Intangibles Other than Goodwill. The amendments are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. Early adoption is permitted, including for annual and interim impairment tests performed as of a date before July 27, 2012, if a public entitys financial statements for the most recent annual or interim period have not yet been issued or, for nonpublic entities, have not yet been made available for issuance. The adoption of ASU 2012-02 is not expected to have a material impact on our financial position or results of operations.
Management does not anticipate that the adoption of these standards will have a material impact on the financial statements.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There have been no changes in or disagreements with accountants on accounting or financial disclosure matters.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our directors were elected to serve until the next annual meeting of shareholders and until his respective successors will have been elected and will have qualified. The following table sets forth the name, age and position held with respect to our present director and executive officer:
Name |
Age |
Title |
Executive Officer Since |
Ohad Goren |
45 |
Chief Executive Officer |
06/2014 |
Gal Peleg |
38 |
Chief Financial Officer |
08/2014 |
Ron Weissberg |
57 |
Chairman |
12/2013 |
Itsik Ben Yesha |
63 |
Chief Technology Officer |
06/2014 |
Dr. Michael Sessler |
57 |
Director |
08/2014 |
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Ohad Goren, age 45, Chief Executive Officer. During the past five years, Mr. Goren has served in the following positions: from 2011 through 2013 Mr. Goren served as an advisor to Triple Sense Ltd. and Filogan Ltd, private Israeli companies engaged in the business of remote fuel monitoring and agriculture, respectively. During 2010 and 2011, Mr. Goren served as CEO of Pollogen Ltd., a private Israeli company engaged in the development, manufacture and marketing of medical aesthetic devices with sales in Europe, North and South America, and major Asian countries. Prior to joining Pollogen Ltd., during 2008 to 2009, Mr. Goren served as a consultant to start-up companies principally in the biotechnology and hi-tech industries. From 2005 through 2008, Mr. Goren was the CEO of Lifewave Ltd., a public Israeli company, where he had responsibility for Lifewave's IPO, overseeing the development of its chronic wound treatment device and Lifewave's regulatory compliance, among other duties. From 1997 to 2005 Mr. Goren served as the Marketing and Sales Manager of the Services Division of Oracle Corp., in Israel. From 1990 to 1997 Mr. Goren served as the Deputy Consul at the Israeli Embassy, Washington, D.C. Mr. Goren received his BA degree and his MBA degree from the University of Maryland, in the U.S.
Gal Peleg, age 38, Chief Financial Officer. On August 21, 2014, the Registrant appointed Mr. Gal Peleg as Chief Financial Officer, replacing Ron Weissberg, the Registrant's Chairman and principal stockholder, who had served as interim CFO since December 27, 2013. Mr. Weissberg will continue to serve as Chairman of the Board of Directors.
Mr. Peleg is a Certified Public Accountant. From 2007 to the present, Mr. Peleg served as Chief Financial Officer of Medical Life-Wave, a medical device company that was listed on the Tel-Aviv Stock Exchange ("TASE"). He was responsible for quarterly, annual and other reports filed with TASE, compliance with regulatory protocol and the rules and regulations under the Israeli securities laws. From January 2006 through October 2007, Mr. Peleg served as controller of Tescom Software System Ltd, a TASE listed, software testing company with worldwide operations and offices in Israel, United States and Singaport. From 2004 to 2006, Mr. Peleg served as controller of Internet Gold, a majority stockholder of BCOM Ltd., an Israeli company listed on NASDAQ and TASE. From 2001 to 2004, Mr. Peleg worked at Ernst & Young as Senior, Bio-Tech/Medical Device Section, providing audit services in accordance with US GAAP and Israeli GAAP.
Ron Weissberg , age 57, Chairman of the Board since December 27, 2013.
From December 27, 2013 until June 5, 2014, Mr. Weissberg served as the Registrant's CEO, on which latter date the Board of Directors appointed Ohad Goren as the CEO. In addition, from December 27, 2013 until August 21, 2014, Mr. Weissberg also served as the Registrant's CFO, on which latter date the Board of Directors appointed Mr. Gal Peleg as CFO.
From May 2011 to the present, Mr. Weissberg has served as an executive officer and director of Bio-Light Israeli Life Sciences Investments Ltd, a public company listed on the Tel-Aviv Stock Exchange ("TASE"), engaged in the business of management and commercialization of biomed innovation. From May 2003 to the present, Mr. Weissberg has been a director of Midroog Ltd., an Israeli Credit Rating Agency, a company engaged in the business of credit rating for the domestic Israeli market as an affiliate of Moody's Corporation. From February 1988 to the present, Mr. Weissberg has been a director of The Israel Land Development Company Ltd ("ILDC"), a public company listed on the TASE, engaged in the business of owning and managing commercial real estate, shopping centers and logistic centers in Israel, Europe and Canada. Since 2011, Mr. Weissberg has been ILDC's Vice-Chairman. From 1994 until 2006, he was chairman of ILD Insurance Company Ltd, a public company engaged in the business of underwriting property, casualty and life insurance with total portfolio of approximately US$1 billion and 500 employees. ILD Insurance is listed on the TASE. From 1996 to 2000, Mr. Weissberg also served as its CEO. From June 2008 until October 2010, he was the CEO and a director of Portfolio Green Ltd., a public company listed on the TASE engaged in the business of Real Estate Development in the U.S.
The Registrant believes that Mr. Weissberg's many years of experience as a senior executive officer and director of several successful public companies in a variety in industries, all of which have had far greater resources and operating history than the Registrant, together with his material equity position in the Registrant, renders him highly qualified to serve on the Registrant's Board of Directors.
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Itsik Ben Yesha, age 63, Chief Technology Officer and was a founder and a principal and involved in the Registrant's efforts leading to the negotiations and closing of the above-referenced Patent Purchase Agreement. From 1991 through 2013, Mr. Ben Yesha was the founder and a partner of Hisense Ltd., an Israeli medical device company for respiratory monitoring devices for infants. He previously served as Executive Vice President of Lifewave Ltd. From 1998 to 2003 Mr. Ben Yesha was the Executive Vice President and VPL Division President with Valor Computerized Systems Ltd., a CAD/CAM Software company listed on the Frankfurt Stock Exchange and later acquired by Mentor Graphics (NASDAQ: MENT). From 1979 to 1997, Mr. Ben Yesha served in Tadiran Telecom Group in various rolls, starting as a R&D engineer, designing computerized electronic exchanges (Tadex, Coral), and finally serving as the CFO of Tadiran Wireless Telecom division, bringing it from $0 to $50 million in annual sales within 3 years.
Dr. Michael Sessler , age 57, Director. Dr. During the last 22 years, Dr. Sessler has been actively engaged in business development. From 1992 through 2009, Dr. Sessler was the director of business development for the Electra Consumer Products subsidiary of Elco Group (ELCO), a listed public company on the Tel-Aviv Stock Exchange ("TASE") with total assets in excess of $1.3 billion and net revenues in excess of $1.9 billion in 2013. During his tenure at ELCO, Dr. Sessler also established and managed new ELCO businesses in Europe, Asia, South America and Australia and also served as Senior Vice President of Electra Group until 2009.
Since 2009, Dr. Sessler has been a managing director of Allsons Ltd., an investment company with assets in Europe and Israel.
During the past 5 years, Dr. Sessler has also been member of the board of directors of The Leser Group Ltd., a private New York-based real-estate development company with bonds traded on the TASE and over $130 million in assets.
Dr. Sessler is a qualified and experienced BOD member due to his experience in developing and managing major subsidiaries of public companies, working in challenging domestic and international markets, as well as his experience in introducing new products to a wide variety of markets, together with his ability to manage and oversee manufacturing control processes. In the opinion of the Company's management and board of directors,Dr. Sessler is a highly qualified professional to serve as a member of the Company's board of directors.
Dr. Sessler is a medical doctor, having received is MD from the Medical University of Rome, Italy under the guidance of Prof. Rita Levi Montalccini, Nobel Prize winner in Physiology/Medicine in 1986.
Director Independence. In determining whether or not our directors are considered independent, the Company used the definition of independence as defined in NASDAQ Rule 4200. Based on that definition we believe that Dr. Michael Sessler is independent.
NASDAQ Rule 4200. The NASDAQ Rule 4200, which sets forth several tests to determine whether a director of a listed company is independent. Rule 4200 provides that a director would not be considered independent if the director or an immediate family member accepted any compensation from the listed company in excess of $120,000 during any period of 12 consecutive months within the three years preceding the determination of independence (excluding compensation for board or board committee service, compensation paid to an immediate family member as a non-executive employee, benefits paid under a tax-qualified retirement plan and non-discretionary compensation).
Directors Term of Office. Our directors are elected to serve until the next annual meeting of shareholders and until their respective successors will have been elected and will have qualified.
Audit Committee and Financial Expert, Compensation Committee, Nominations Committee. We do not have any of the above mentioned standing committees because our corporate financial affairs and corporate governance are simple in nature at this stage of development and each financial transaction is approved by our sole officer or director.
Code of Ethics. We do not currently have a Code of Ethics applicable to our principal executive officers; however, the Company plans to implement such a code in the fourth quarter of 2014.
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Potential Conflicts of Interest. Since we do not have an audit or compensation committee comprised of independent Directors, the functions that would have been performed by such committees are performed by our Board of Directors. Thus, there is a potential conflict of interest in that our Directors have the authority to determine issues concerning management compensation, in essence their own, and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our Executives or Directors.
Boards Role in Risk Oversight. The Board assesses on an ongoing basis the risks faced by the Company. These risks include financial, technological, competitive, and operational risks. In addition, since the Company does not have an Audit Committee, the Board is also responsible for the assessment and oversight of the Companys financial risk exposures.
Involvement in Certain Legal Proceedings. We are not aware of any material legal proceedings that have occurred within the past ten years concerning any Director or control person which involved a criminal conviction, a pending criminal proceeding, a pending or concluded administrative or civil proceeding limiting one's participation in the securities or banking industries, or a finding of securities or commodities law violations.
Section 16(a) Compliance. Section 16(a) of the Securities and Exchange Act of 1934 requires the Registrant's directors and executive officers, and persons who own beneficially more than ten percent (10%) of the Registrant's Common Stock, to file reports of ownership and changes of ownership with the Securities and Exchange Commission. Copies of all filed reports are required to be furnished to the Registrant pursuant to Section 16(a). Based solely on the reports received by the Registrant and on written representations from reporting persons, the Registrant was informed that its CEO and CTO and ten percent (10%) shareholders have not filed reports required to be filed under Section 16(a). Nevertheless, Mr. Weissberg, our Chairman filed a Schedule 13D on January 7, 2014 with respect to his acquisition on December 27, 2013 of 2,000,000 shares from the Registrant.
The following table sets forth information concerning the total compensation that we have paid or that has accrued on behalf of our chief executive officer and other executive officers during the fiscal years ending December 31, 2013, 2012 and 2011.
Page 71
Option Grants
There were no individual grants of stock options to purchase our Common Stock made to the executive officers named in the Summary Compensation Table.
Aggregated Option Exercises and Fiscal Year-End Option Value
There were no stock options exercised during period ending September 30, 2014 by the executive officers named in the Summary Compensation Table.
Long-Term Incentive Plan (LTIP) Awards
There were no awards made to a named executive officers in the last completed fiscal year under any LTIP.
Compensation of Directors
Directors are permitted to receive fixed fees and other compensation for their services as directors. The Board of Directors has the authority to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity.
Employment Agreements
Currently, we do not have an employment agreement in place with our officer and director.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below discloses any person (including any "group") who is known to the Registrant to be the beneficial owner of more than five (5%) percent of the Registrant's Common Stock securities and the beneficial ownership of Registrant's director and executive officer. As of November 10, 2014, the Registrant had 21,552,724 shares of Common Stock issued and outstanding.
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TRANSACTIONS WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS
Certain Related Party Transactions
On February 9, 2012, the Company issued 70,205 shares upon the conversion of a $50,000 convertible note plus accrued interest of $20,500, which note was due to Haim Silber, a former related party.
On October 14, 2013, the Company issued 75,532 shares upon the conversion of a $75,532 convertible note, which note was due to Haim Silber, a former related party.
On December 23, 2013, in consideration for the investment by Ron Weissberg of a total of $91,545, we issued 2,000,000 shares of Common Stock at a price of $0.10 per shares, which represented a discount to market at the date of the transaction, in consideration for $20,000 and a convertible note in the principal amount of $71,545 to Ron Weissberg. In addition, the $71,545 note was convertible at a price of $1.00 per share, also a discount to market at the date of the transaction. The shares were valued at the closing price as of December 23, 2013, the date of the transaction, and resulted in recognition of $1,000,000 in compensation services for the year ended December 31, 2013.
Mr. Zekri, our former Secretary and director, provided without cost to the Company his services valued at $800 per month which totaled $4,800 for 2013. He also provided without cost to the Company office space valued at $200 per month, which totaled $1,200 for the six-month period ended June 30, 2013.
During the second quarter of 2014, Mr. Weissberg transferred and assigned $62,382 in principal amount including accrued interest, of his $71,545 in principal amount of his convertible note to unaffiliated, third-party, accredited investors. Mr. Weissberg retained $11,536 of the note. All of the Weissberg notes, which were originally convertible at $0.01 per share but subject to adjustment in the event of a share recapitalization, together with an additional $57,375 in notes plus accrued interest, which were to be convertible at a price of $0.035 per share, but subject to adjustment in the event of a share recapitalization were converted prior to June 30, 2014. The Company recognized a loss of $23,709,343 because the number of shares issued upon the conversion of the notes in the principal amount of $71,545 and $57,375, respectively, were not adjusted for the 1 for 100 reverse split. As of September 30, 2014, the Company is not indebted to neither its officers nor directors.
Indebtedness of Management
No officer, director or security holder known to us to own of record or beneficially more than 5% of our Common Stock or any member of the immediate family or sharing the household (other than a tenant or employee) of any of the foregoing persons is indebted to us.
Disclosure of Commission Position on Indemnification of Securities Act Liabilities
Our directors and officers are indemnified as provided by the Delaware corporate law and our Bylaws. We have agreed to indemnify each of our directors and certain officers against certain liabilities, including liabilities under the Securities Act of 1933, as amended. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended may be permitted to our directors, officers and controlling persons pursuant to the provisions described above, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933, as amended and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
We have been advised that in the opinion of the Securities and Exchange Commission indemnification for liabilities arising under the Act is against public policy as expressed in the Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to a court of appropriate jurisdiction. We will then be governed by the courts decision.
Page 73
E-QURE CORP.
2,433,341 SHARES OF COMMON STOCK
PROSPECTUS
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL COMMON STOCK AND IS NOT SOLICITING AN OFFER TO BUY COMMON STOCK IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Until _____________, all dealers that effect transactions in these securities whether or not participating in this Offering may be required to deliver a Prospectus. This is in addition to the dealers obligation to deliver a Prospectus when acting as underwriters.
Page 74
The Date of This Prospectus is December __, 2014
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 13. Other Expenses of Issuance and Distribution
Securities and Exchange Commission registration fee | $ |
984 |
Transfer Agent Fees | $ |
0 |
Accounting fees and expenses | $ |
3,000 |
Legal fees and expense | $ |
25,000 |
Miscellaneous | $ |
0 |
Total | $ |
28,984 |
All amounts are estimates other than the Commissions registration fee. We are paying all expenses of the Offering listed above. No portion of these expenses will be borne by the Selling Shareholders. The Selling Shareholders, however, will pay any other expenses incurred in selling their Common Stock, including any brokerage commissions or costs of sale.
Item 14. Indemnification of Directors and Officers
Our directors and officers are indemnified as provided by the Delaware corporate law and our Bylaws. We have agreed to indemnify each of our directors and certain officers against certain liabilities, including liabilities under the Act. Insofar as indemnification for liabilities arising under the Act may be permitted to our directors, officers and controlling persons pursuant to the provisions described above, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
We have been advised that in the opinion of the Securities and Exchange Commission indemnification for liabilities arising under the Act is against public policy as expressed in the Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to a court of appropriate jurisdiction. We will then be governed by the courts decision.
Section 102 of the Delaware General Corporation Law permits a corporation to eliminate the personal liability of its directors or its stockholders for monetary damages for a breach of fiduciary duty as a director, except where the director breached his or her duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit. Our by-laws provides that no director shall be personally liable to us or our stockholders for monetary damages for any breach of fiduciary duty as a director, notwithstanding any provision of law imposing such liability, except to the extent that the Delaware General Corporation Law prohibits the elimination or limitation of liability of directors for breaches of fiduciary duty.
Section 145 of the Delaware General Corporation Law provides that a corporation has the power to indemnify a director, officer, employee or agent of the corporation and certain other persons serving at the request of the corporation in related capacities against expenses (including attorneys' fees), judgments, fines and amounts paid in settlements actually and reasonably incurred by the person in connection with an action, suit or proceeding to which he or she is party or is threatened to be made a party by reason of such position, if such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and,
Page 75
in any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful, except that, in the case of actions brought by or in the right of the corporation, no indemnification shall be made with respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the Court of Chancery or other adjudicating court determines that, despite the adjudication of liability but in view of all of the circumstances of the case, such person is fairly and reasonably entitled to indemnification for such expenses which the Court of Chancery or such other court shall deem proper.
Item 15. Recent Sales of Unregistered Securities
During the period from February 2014 through April 2014, the Registrant issued convertible notes to the accredited investors set forth below. In May 2014, each of the investors set forth in the table below agreed to convert their respective notes into an aggregate of 5,016,062 restricted shares of Common Stock, at the conversion rates of their respective notes. The Registrant and the Investors agreed that the restricted shares would not be issued until the effective date of the Registrant's change in domicile from the State of New Jersey to the State of Delaware and the implementation of the one-for-one hundred (1:100) reverse split (the "Effective Date"). On August 1, 2014, FINRA approved the Registrant's redomicile and the reverse split, with an Effective Date of August 4, 2014.
Name |
Date of Conversion |
Conversion Rate |
Common Stock Issued |
Itzchak Shrem |
5/14/2014 |
$0.05 |
247,000 |
Lavi Krasney |
5/13/2014 |
$0.03 |
543,000 |
Amir Uziel |
5/13/2014 |
$0.05 |
542,000 |
Kfir Silberman |
5/13/2014 |
$0.03 |
820,000 |
Eli Yoresh |
5/13/2014 |
$0.05 |
271,000 |
Ohad Goren |
5/18/2014 |
$0.01 |
1,150,000 |
Itsik Ben Yesha |
5/18/2014 |
$0.01 |
1,350,000 |
Leetal Weissberg |
5/17/2014 |
$0.05 |
93,062 |
Total |
5,016,062 |
Each of the Note Holders set forth below, other than Ron Weissberg, acquired their respective Notes as assignees of Ron Weissberg, our Chairman and CFO. The Registrant issued the original convertible note in the principal amount of $71,345 to Mr. Weissberg on December 23, 2013. The note was convertible at a price of $1,00 per share. Each of the individuals listed in the table represented to the Registrant and to Mr. Weissberg their status as "accredited investors."
Name |
Date of Conversion |
Amount of Note in US$ |
Common Stock Issued |
Yochanan Korman |
5/28/2014 |
14,000 |
1,400,000 |
Yoav Korman |
5/28/2014 |
10,000 |
1,000,000 |
Gerald Yaffe |
5/28/2014 |
10,200 |
1,020,000 |
Zeev Berr |
5/28/2014 |
2,500 |
250,000 |
Yehiel Weitzman |
5/28/2014 |
250 |
25,000 |
Ishai Birenboim |
5/30/2014 |
2,250 |
225,000 |
Jacob Dery |
5/28/2014 |
1,875 |
187,500 |
Benny Menashe |
5/28/2014 |
750 |
75,000 |
Eli Shlush |
6/27/2014 |
188 |
18,750 |
Sigal Tidhar |
6/27/2014 |
188 |
18,750 |
Benzi Weiner |
5/30/2014 |
255 |
25,500 |
Bracha Yaffe* |
5/28/2014 |
9,963 |
996,250 |
Ori Martin Rafaelowitz* |
5/28/2014 |
9963 |
996,250 |
Ron Weissberg |
5/28/2014 |
11,536 |
1,153,600 |
* U.S. residents |
Total |
7,391,600 |
Page 76
The Investors set forth in the following table subscribed for restricted shares of the Registrant's Common Stock at a price of $0.40 per share during the first week of June 2014, with the express understanding that the certificates evidencing the shares would not be issued until the Effective Date of the Registrant's redomicile from the State of New Jersey to the State of Delaware and the implementation of the one-for-one hundred (1:100) reverse split. The Effective Date was August 4, 2014.
Investor's Name |
Amount in US$ |
Shares Issued |
Michael Cohen |
350,000 |
875,000 |
Aryeh Deri |
300,000 |
750,000 |
Ron Weissberg |
150,000 |
375,000 |
Daniel Lavi |
100,000 |
250,000 |
Itshak Ben Yesha |
100,000 |
250,000 |
Pansk Assets A.Y. Ltd (1) |
100,000 |
250,000 |
Short Trade Ltd. (2) |
100,000 |
250,000 |
Eli Shlush |
75,000 |
187,500 |
Sigal Tidhar |
75,000 |
187,500 |
Daniel Younisian |
60,000 |
150,000 |
Yael Berant |
60,000 |
150,000 |
Yehoshua Abramovitz |
60,000 |
150,000 |
Yochanan Korman |
60,000 |
150,000 |
Yoel Yogev |
60,000 |
150,000 |
Attribute Ltd (3) |
50,000 |
125,000 |
Avdinco Ltd (4) |
50,000 |
125,000 |
Ben-Zion Weiner |
50,000 |
125,000 |
Emanuel Kronitz |
50,000 |
125,000 |
Moshe Manor |
50,000 |
125,000 |
Boruj Tenembounm |
50,000 |
125,000 |
R. P. Holdings (1992) Ltd (5) |
50,000 |
125,000 |
Menashe Arnon |
40,000 |
100,000 |
Ofer Maimon |
40,000 |
100,000 |
Yaelle Schnitzer |
40,000 |
100,000 |
Dor Noy |
36,000 |
90,000 |
Adi Mantsura |
30,000 |
75,000 |
Assaf Hadar |
30,000 |
75,000 |
Avital Roy Group Ltd (6) |
30,000 |
75,000 |
Benny Menache |
30,000 |
75,000 |
Boaz Raam |
30,000 |
75,000 |
HeliCon Knan (1989) Ltd (7) |
30,000 |
75,000 |
Ishai Birenboim |
30,000 |
75,000 |
Jacob Blau |
30,000 |
75,000 |
Kai Otherthinking Ltd (8) |
30,000 |
75,000 |
Moshe Datz |
30,000 |
75,000 |
Ron Bentsur* |
30,000 |
75,000 |
Sharon Brimer |
30,000 |
75,000 |
Shlomi Shabat Hafakot Ltd (9) |
30,000 |
75,000 |
Shmuel Pasternack |
22,000 |
55,000 |
Zvi Weil |
15,000 |
37,500 |
Amir Fischler |
12,000 |
30,000 |
* U.S. residents |
Total |
6,437,500 |
(1) The principal of this entity is Yehuda Zadik, a resident of Israel.
(2) The principal of this entity is Shlomo Noyman, a resident of Israel.
(3) The principal of this entity is Itzhak Shrem, a resident of Israel.
(4) The principal of this entity is Avner Cohen, a resident of Israel.
(5) The principal of this entity is Rubin Zimmerman, a resident of Israel.
(6) The principal of this entity is Shlomi Avital, a resident of Israel.
(7) The principal of this entity is Roni Brown, a resident of Israel.
(8) The principal of this entity is Ilan Tuviahu, a resident of Israel.
(9) The principal of this entity is Shlomi Shabat, a resident of Israel
Page 77
The Registrant's acceptance of the above note and restricted share subscriptions and the issuances of restricted shares immediately after the Effective Date were in reliance upon the exemption from registration pursuant to Section 4(2) of the Act and Regulation S promulgated by the SEC under the Act with respect to all Investors except for those persons designated as U.S. residents. With respect to the U.S. Investors, the Registrant relied upon exemption from registration pursuant to Section 4(2) of the Act and Regulation D promulgated by the SEC under the Act. The Registrant's purpose for the capital raise by the acceptance of subscriptions for restricted shares of the Delaware corporation was in furtherance of its business plan of entering into the medical device business with the intention of enabling the Registrant to become an operating company rather than its prior status as a "shell" company as that term is defined in Rule 144(i) promulgated by the SEC under the Act.
During the Registrant's fiscal years ended December 31, 2013, 2012 and 2011, the three most recent fiscal years, the Registrant issued and/or sold the following restricted securities.
Date |
Title |
Shares Issued |
Persons |
Consideration |
02/09/2012 |
Common Stock |
70,205 |
Haim Silber |
Conversion of $70,500 in debt into equity |
12/23/2013 |
Common Stock |
2,000,000 |
Ron Weissberg |
$0.01 per share pursuant to Section 4(2) |
10/14/2013 |
Common Stock |
75,532 |
Haim Silber |
Conversion of $75,532 in debt into equity |
The Company believes that the issuances and sale of the restricted shares were exempt from registration pursuant to Section 4(2) of the Act as privately negotiated, isolated, non-recurring transactions not involving any public solicitation. Mr. Weissberg represented his intention to acquire the securities for investment only and not with a view to the distribution thereof. Appropriate restrictive legend has been affixed to the stock certificate issued in such transaction. Mr. Weissberg received adequate information about the Company or had access, through employment, relation and/or business relationships with the Company to such information.
Item 16. Exhibits and Financial Statement Schedules
Exhibit | Description of Exhibit |
3.1 | Delaware Certificate of Incorporation, filed with the Company's S-1 on September 6, 2014. |
3.1(a) | Original Articles of Incorporation, attached to the Company's Form 10-12G as filed with the SEC on April 25, 2013. |
3.1(b) | Amended to Certificate of Incorporation reflecting name change, filed with the Company's S-1 on September 6, 2014. |
3.2 | Bylaws, filed with the Company's S-1 on September 6, 2014. |
5.1 | Opinion of Thomas J. Craft, Jr., Esq., filed herewith. |
10.4 | Consulting Agreement between the Company and Mr. Tal Yoresh, attached to the Company's Form 10-12G/A as filed with the SEC on November 20, 2013. |
10.5 | Consulting Agreement between the Company and Mr. Itai Weisberg, attached to the Company's Form 10-12G/A as filed with the SEC on November 20, 2013. |
10.6 | Securities Transfer Agreement between the Company and Amir Uziel and Lavi Krasney, attached to the Company's Form 10-12G/A as filed with the SEC on April 25, 2013. |
10.7 | Patent Purchase Agreement between the Company and Lifewave Ltd., dated January 6, 2014, attached to the Company's Form 8-K as filed with the SEC on June 6, 2014. |
10.8 | Clinical Trials Agreement between the Company and Austen BioInnovation Institute, dated June 5, 2014, filed with the Company's S-1 on September 6, 2014. |
10.9 | List of Company's patents, filed with the Company's S-1 on September 6, 2014. |
10.10 | Asset Purchase Agreement between the Company and Michael Cohen, attached to the Company's Form 8-K as filed with the SEC on October 10, 2014. |
10.11 | Service Agreement between the Company and Ron Weissberg, Chairman, filed herewith. |
10.12 | Service Agreement between the Company and Ohad Goren, CEO, filed herewith. |
10.13 | Service Agreement between the Company and Gal Peleg, CFO, filed herewith. |
10.14 | Service Agreement between the Company and Itsik Ben Yesha, CTO, herewith. |
23 | Consent of Independent Registered Public Accounting Firm, filed herewith. |
Page 78
(a) The undersigned registrant hereby undertakes:
(1)
To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include
any prospectus required by Section 10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
(iii) To include any
material information with respect to the plan of distribution not previously
disclosed in the registration statement or any material change to such
information in the registration statement;
(2) That, for the purpose of
determining any liability under the Securities Act of 1933, each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
(4) That, for the purpose of determining liability under the
Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule
424(b) as part of a registration statement relating to an offering, other than
registration statements relying on Rule 430B or other than prospectuses filed in
reliance on Rule 430A, shall be deemed to be part of and included in the
registration statement as of the date it is first used after effectiveness.
Provided, however, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will, as to a purchaser
with a time of contract of sale prior to such first use, supersede or modify any
statement that was made in the registration statement or prospectus that was
part of the registration statement or made in any such document immediately
prior to such date of first use.
(b) Insofar as indemnification for
liabilities arising under the Securities Act may be permitted to directors,
officers and controlling persons of the registrant pursuant to the foregoing
provisions, or otherwise, the registrant has been advised that in the opinion of
the SEC such indemnification is against public policy as expressed in the
Securities Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
Page 79
SIGNATURES
Pursuant to the requirement of the Securities Act of 1933, as amended, the registrant has duly caused this registration statement on Form S-1/A to be signed on its behalf by the undersigned, thereunto duly authorized in the City of Tel-Aviv, State of Israel, on December 5, 2014.
E-QURE CORP.
By: /s/ Ohad Goren
Ohad Goren
Chief Executive Officer
(Principal Executive Officer)
Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
Signature | Title | Date | ||
/s/ Ron Weissberg | Chairman of the Board | December 5, 2014 | ||
Ron Weissberg | ||||
/s/ Ohad Goren | Chief Executive Officer (Principal Executive Officer) | December 5, 2014 | ||
Ohad Goren | ||||
/s/ Gal Peleg | Chief Financial Officer (Principal Financial and Principal Accounting Officer) | December 5, 2014 | ||
Gal Peleg | ||||
/s/ Dr. Michael Sessler | Director | December 5, 2014 | ||
Dr. Michael Sessler | ||||
Exhibit 5.1
Thomas J. Craft, Jr., Esq.
5420 North Ocean Blvd.
Suite 2102
Singer Island, FL 33404
Phone: 561-317-7036 - Fax: 561-848-2279
December 5, 2014
E-Qure Corp.
20 West 64th Street, Suite 39G
New York, NY 10023
Board of Directors:
You have requested my opinion, as counsel, with respect to certain matters in
connection with the filing by E-Qure Corp., a Delaware
corporation (the "Company"), of a Registration Statement on Form S-1 (the
"Registration Statement") with the Securities and Exchange Commission, including
a related prospectus filed with the Registration Statement (the "Prospectus"),
covering the resale by selling stockholders (the "Selling Stockholders") of
2,433,341 shares of the Company's common stock, par value $0.00001 (the
"Shares") to be sold by the Selling Stockholders.
In connection with this opinion, I have examined and relied upon: (a) the
Registration Statement and related Prospectus: (b) the Company's Certificate of
Incorporation and Bylaws, as currently in effect as of the date hereof; and (c)
the originals or copies certified to my satisfaction of such records, documents,
certificates, memoranda and other instruments as in my judgment are necessary or
appropriate to enable me to render the opinion expressed below. I have assumed
the genuineness
and authenticity of all documents submitted to me as originals, and the
conformity to originals of all documents submitted to me as copies and the due
execution and delivery of all documents where due execution and delivery are a
prerequisite to the effectiveness thereof (except I have not assumed the due
execution and delivery by the Company of any such documents). As to certain
factual matters, I have relied upon a certificate of an officer of the Company
and have not sought independently to verify such matters.
My opinion is expressed only with respect to the General Corporation Law of the
State of Delaware and I express no opinion as to whether the laws of any other
jurisdiction are applicable to the subject matter hereof.
On the basis of the foregoing, and in reliance thereon, I am of the opinion that
the Shares subject to resale by the Selling Shareholders pursuant to the
Registration Statement and the related Prospectus are validly issued, fully paid
and non-assessable Shares.
I consent to the reference to my firm under the caption "Legal Matters" in the
Prospectus included in the Registration Statement and to the filing of this
opinion as an exhibit to the Registration Statement.
Sincerely,
By: /s/ Thomas J. Craft, Jr.
Thomas J. Craft, Jr. Esq.
Exhibit 10.11
Service Agreement
This AGREEMENT entered into, as of 1 June 2014, by and between ADB International Group Inc, USA (the "Company"), and Ron Weissberg Company R. Weissberg Consulting and Management Ltd, located at Savyon Israel ("MANAGER").
WITNESSETH:
Whereas MANAGER has the capacity to provide to the Company and its affiliates
certain executive management and consulting services in connection with the
Company operations and its affiliates;
Whereas The Company desires to receive the Services from MANAGER, and MANAGER is
interested to provide the Company with the Services upon the terms and
conditions detailed herein; and
Whereas the parties understand that payments are only available based on the
budget of the Company, and based on actual development, construction and
operation of projects by the Company and its affiliates.
NOW THEREFORE, in consideration of the mutual promises and agreements
hereinafter contained, the parties hereto agree as follows:
1. Preamble
The preamble to this agreement form an integral part thereof.
The titles of the clauses in this agreement are merely for convenience and the
agreement shall not be used in any way for purposes of interpretation.
This agreement can be assigned jointly by the parties.
2. Term of Agreement
2.1. This agreement is for a period of 3 years commencing on the 1st of June
2014 and ending on the 29 June of 2017 (hereinafter: the "Term of the
Agreement"), provided that the provision of Services hereunder may be terminated
by either party at any time after the Term of the Agreement upon prior written
notice of 3 months to the other party Unless so terminated, the Agreement shall
be automatically renewed at the end of the Term of the Agreement for an
additional term of three years.
2.2. Notwithstanding Section 2.1 above, MANAGER's engagement by the Company
hereunder may be terminated by the Company immediately in the event of (a)
MANAGER's conviction in illegal activity; (b) any material breach of this
Agreement and/or of MANAGER's fiduciary duties towards the Company; and/or (c)
fraud on its behalf.
2.3. MANAGER undertakes that at upon termination of this Agreement, it shall
deliver to the Company all documents, information and other material obtained or
prepared by it in connection with the Services, including all equipment in its
possession, provided to it by the Company (e.g., company car, computer, cellular
phone).
3. Services
3.1 MANAGER, shall provide the Company with services of executive management and
consulting in connection with the activities of the Company and its affiliates
and will serve as chairman of the board of directors of the company.
(Hereinafter: the "Services").
3.2 MANAGER will provide all Services to the Company or its affiliates soley by
its representative, Mr. Ron Weissberg, such that the Services will include the
1/2 of full time efforts of Ron Weissberg. Without derogating from that stated
above, in any event the MANAGER shall not be required to spend more than 200
hours in total per each calendar month.
3.3 MANAGER shall provide the Company with the Services as it shall be
requested, from time to time, provided however, that the Services will
coordinated in advance with MANAGER. Without derogating from the above, the
Manager shall be allowed to conduct other business obligation during his free
time, provided that such shall not interfere with the provision of the Services
and/or compete with the activities of the Company and its affiliates
4. Compensation
4.1 In consideration for the Services, the Company shall pay to MANAGER a sum of
between $ 1 per month, (the "Compensation"). In the event that the Company at
any time does not have available funds to make such payments to MANAGER, all
amounts that remain unpaid for any month or other period shall recorded as a
liability of the Company, shall accrue for the benefit of MANAGER, and shall be
paid to MANAGER as soon as Company funds become available therefor.
4.2 The Services should be rendered to the Company or its affiliates by the
MANAGER, and the Company shall be responsible for all payments hereunder to
MANAGER.
4.3 Subject to Section 4.1 above, the Basic Compensation shall be paid form the
Company to MANAGER within 15 days from the end of month during the Term of the
Agreement.
4.4. MANAGER shall be solely responsible and shall bear all taxes and levies of
any kind which shall be imposed on it in connection with the Compensation.
4.5. Other then as specifically provided herein MANAGER shall not be entitled to
any consideration with respect to the Services, unless otherwise agreed by the
parties in writing. Any MANAGER's liability which may arrise from this Agreement
is limited to the monthly Compensation fee.
4.6. MANAGER hereby understands, acknowledges and agrees that the payment to
MANAGER of the Compensation hereunder depends on the Company's business results
and that if the Company is not successful in its operation, MANAGER may not be
paid, and in such event MANAGER shall not have and hereby waives any claim
and/or demand against the Company and/or any of its shareholders and/or
directors.
5. Expenses
The Company shall reimburse MANAGER for transportation expenses, international
travel expenses, and other reasonable direct expenses in connection with the
provisions of the Services, provided such were approved in advance and in
writing (except expenses up to the monthly limit of $1,000) by the Company and
are in accordance with the Company's Budget.
6. Warrants
6.1 Within the first Warrants program that will be formed, The Company will
issue the MANAGER a total of 540,000 Warrants (series 1) which will be vesting
monthly pro-rata in the first three years.
7. Status
7.1. It is the intention of the parties that MANAGER shall be an independent
contractor pursuant to this Agreement, and that this Agreement shall not be
construed to create or give rise to any partnership, agency or joint venture,
not shall MANAGER nor any of its personnel be deemed to be employees of the
Company for any purpose.
7.2. MANAGER shall immediately indemnify the Company for any and all cost,
expenses or damages which may rise to the Company if an employment relationship
is claimed or based between the Company and MANAGER or anyone on its behalf.
8. Confidentiality and Non-Competition
Simultaneously with the execution of this Agreement and as a condition thereto,
MANAGER shall sign the Confidentiality and Non-Competition Undertaking attached
as Annex A hereto.
8. Entire Agreement
This Agreement constitutes the entire understanding and agreement between the
parties with respect to the subject matter hereof and supersedes any and all
prior discussions, arrangements, representations, understandings, agreements and
correspondence and may not be amended or modified in any respect, except by a
subsequent writing executed by both parties.
9. Applicable Law
This Agreement and the obligations hereunder shall be governed by US law.
Disputes hereunder shall be resolved by the courts Delaware USA.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.
E-QURE Corp R.
Weissberg Consulting and Management Ltd
Signature: /s/ Ron Weissberg
Signature: /s/ Ron Weissberg
Print Name: Ron Weissberg
Print Name: Ron Weissberg
Title
Title
Annex A
CONFIDENTIALITY AND NON-COMPETITION UNDERTAKING
This Confidentiality, Non-Competition and Proprietary Rights Undertaking (the
"Undertaking") is made effective as of the date of the Agreement by MANAGER, for
the benefit of the Company. This Annex A constitutes an integral part of the
Agreement to which it is annexed. For the purpose hereof, all references herein
to the "Company" shall include any parent corporation or entity of the Company,
subsidiary or other affiliate of the Company.
1. Confidentiality
(a) MANAGER recognizes and acknowledges that MANAGER's access to the trade
secrets, secret information and proprietary information (collectively, the
"Confidential Information") of the Company is essential to the performance of
MANAGER's duties as a consultant and service provider of the Company.
(b) By way of illustration and not limitation, such Confidential Information of
the Company shall include: (i) any and all trade secrets concerning the business
and affairs of the Company, product specifications, data, know-how,
compositions, processes, formulas, methods, designs, samples, inventions and
ideas, past, current and planned development or experimental work, current and
planned distribution methods and processes, customer lists, current and
anticipated customer requirements, price lists, market studies, business plans,
computer software and programs (including object code and source code), computer
software and technologies, systems, structures and architectures (and related
processes, algorithms, compositions, improvements, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information) of the Company,
information relating to the projects of the Company, and any other information,
however documented, of the Company that is a trade secret; (ii) any and all
information concerning the business and affairs of the Company (which includes
historical financial statements, financial projections and budgets, historical
and projected sales, capital spending budgets and plans, the names and
backgrounds of key personnel, personnel training and techniques and materials),
however documented; (iii) all derivatives, improvements and enhancements to the
Company's technology which are created or developed; (iv) information of third
parties as to which the Company has an obligation of confidentiality; and (v)
any and all notes, analysis, compilations, studies, summaries, and other
material prepared by or for the Company containing or based, in whole or in
part, on any information included in the foregoing.
(c) The Confidential Information shall not include information which has become
publicly known and made generally available through no wrongful act of MANAGER
or of others who were under confidentiality obligations as to the information
involved.
(d) MANAGER further recognizes and acknowledges that such Confidential
Information is a valuable and unique asset of the Company, and that its use or
disclosure (except use or disclosure as required for carrying out MANAGER's
duties as a MANAGER of the Company and providing the Services) would cause the
Company substantial loss and damages. Other than in connection with providing
the Services, MANAGER undertakes and agrees that MANAGER will not, in whole or
in part, disclose such Confidential Information to any person or organization
under any circumstances, will not make use of any such Confidential Information
for MANAGER's own purposes or for the benefit of any other person or
organization, and will not reproduce any of the Confidential Information without
the Company's prior written consent. MANAGER will take strict precautions to
maintain the confidentiality of the Confidential Information received from the
date of receipt, and take appropriate action, by instruction, agreement or
otherwise with any person permitted access to the Confidential Information
received, to ensure that MANAGER will be able to satisfy its obligations under
this Agreement.
(e) MANAGER further recognizes and acknowledges that the Company has received
and in the future will receive from third parties their confidential or
proprietary information subject to certain limited purposes. MANAGER agrees to
hold all such confidential or proprietary information in the strictest
confidence and not to disclose it to any person or entity or to use it except as
necessary in carrying out MANAGER's work for the Company consistent with the
Company's agreement with the third party, all in a fashion consistent with his
undertakings in (d) above.
(f) The obligations set forth in this Section are perpetual, and shall survive
termination of the Agreement and of the MANAGER's engagement with the Company.
2. Return of Materials. Upon termination of MANAGER's engagement with the
Company or at any time before termination if the Company so requests, MANAGER
will promptly deliver to the Company all copies of all written and tangible
material (without retaining any copies thereof) in MANAGER's possession or under
MANAGER's control, incorporating the Confidential Information or otherwise
relating to the Company's business. The obligations set forth in this Section
shall survive termination of the Agreement and of MANAGER's engagement with the
Company.
3. Non-Competition and Non-Solicitation. MANAGER and/or any of its
representatives shall not (either personally or via any of his agents,
affiliates or businesses in which it is a shareholder, partner, owner, employee,
officer, director, consultant or otherwise), during the Term of the Agreement:
(a) directly or indirectly solicit, hire, engage, endeavor to entice away from
the Company or otherwise interfere with the relationship of the Company with any
person or entity who is, or was within twelve (12) months period preceding the
termination of MANAGER's engagement with the Company, a customer or client of
the Company, or who is, or was within twelve (12) months period preceding the
termination of MANAGER's engagement with the Company, an employee, officer,
director, consultant or contractor of the Company; or
(b) directly or indirectly own an interest in, establish, open, manage, operate,
join, control, or participate in or be connected with, as a shareholder,
partner, owner, employee, officer, director, consultant or otherwise, in any
business, enterprise, trade or occupation similar to, or in competition with,
the business conducted, or proposed by the Company to be conducted, by the
Company.
(c) MANAGER further recognizes and acknowledges that a breach of this Section
would cause the Company substantial and irreparable damages.
(d) The obligations set forth in this Section 3 shall survive termination of the
Agreement and of MANAGER's engagement with the Company pursuant to the specific
terms set forth herein.
4. Intent of Parties. MANAGER recognizes and agrees: (i) that this Undertaking
is necessary and essential to protect the Company's business and to realize and
derive all the benefits, rights and expectations of conducting the Company's
business; (ii) that the area and duration of the protective covenants contained
herein are reasonable; and (iii) that good and valuable consideration exists
under the Agreement, for MANAGER to be bound by the provisions of this
Undertaking.
IN WITNESS WHEREOF, MANAGER has executed this Confidentiality and
Non-Competition Undertaking as of the date hereof.
____________________________
[Full Name of Manager]
Exhibit 10.12
Service Agreement
This AGREEMENT entered into, as of 1 August 2014, by and between ESQURE
Advanced Medical Devices Ltd, located in Israel (the “Company”), and Ohad Goren,
located at Modiin Israel (“MANAGER”).
WITNESSETH:
Whereas MANAGER has the capacity to provide to the Company and its affiliates
certain executive management and consulting services in connection with the
Company operations and its affiliates;
Whereas The Company desires to receive the Services from MANAGER, and MANAGER is
interested to provide the Company with the Services upon the terms and
conditions detailed herein; and
Whereas the parties understand that payments are only available based on the
budget of the Company, and based on actual development, construction and
operation of projects by the Company and its affiliates.
NOW THEREFORE, in consideration of the mutual promises and agreements
hereinafter contained, the parties hereto agree as follows:
1. Preamble
The preamble to this agreement form an integral part thereof.
The titles of the clauses in this agreement are merely for convenience and the
agreement shall not be used in any way for purposes of interpretation.
This agreement can be assigned jointly by the parties.
2. Term of Agreement
2.1. This agreement is for a period of 3 years commencing on the 1st of April
2014 and ending on the 29 April of 2018 (hereinafter: the “Term of the
Agreement”), provided that the provision of Services hereunder may be terminated
by either party at any time after the Term of the Agreement upon prior written
notice of 3 months to the other party Unless so terminated, the Agreement shall
be automatically renewed at the end of the Term of the Agreement for an
additional term of three years.
2.2. Notwithstanding Section 2.1 above, MANAGER’s engagement by the Company
hereunder may be terminated by the Company immediately in the event of (a)
MANAGER’s conviction in illegal activity; (b) any material breach of this
Agreement and/or of MANAGER’s fiduciary duties towards the Company; and/or (c)
fraud on its behalf.
2.3. MANAGER undertakes that at upon termination of this Agreement, it shall
deliver to the Company all documents, information and other material obtained or
prepared by it in connection with the Services, including all equipment in its
possession, provided to it by the Company (e.g., company car, computer, cellular
phone).
3. Services
3.1 MANAGER, shall provide the Company with services of Executive Management and
Consulting in connection with the activities of the Company and its affiliates
and will serve as General Manager of the company. (Hereinafter: the “Services”).
3.2 MANAGER will provide all Services to the Company or its affiliates solely by
Mr. Ohad Goren, such that the Services will include the full time efforts of
Ohad Goren.
3.3 MANAGER shall provide the Company with the Services as it shall be
requested, from time to time, provided however, that the Services will
coordinated in advance with MANAGER. Without derogating from the above, the
Manager shall be allowed to conduct other business obligation during his free
time, provided that such shall not interfere with the provision of the Services
and/or compete with the activities of the Company and its affiliates
4. Compensation 4.1 In consideration for the Services, the Company shall pay to
MANAGER a sum of $12,000 per month, (the “Compensation”). In the event that the
Company at any time does not have available funds to make such payments to
MANAGER, all amounts that remain unpaid for any month or other period shall
recorded as a liability of the Company, shall accrue for the benefit of MANAGER,
and shall be paid to MANAGER as soon as Company funds become available therefor.
4.2 The Services should be rendered to the Company or its affiliates by the
MANAGER, and the Company shall be responsible for all payments hereunder to
MANAGER.
4.3 Subject to Section 4.1 above, the Basic Compensation shall be paid form the
Company to MANAGER within 15 days from the end of month during the Term of the
Agreement.
4.4. MANAGER shall be solely responsible and shall bear all taxes and levies of
any kind which shall be imposed on it in connection with the Compensation.
4.5. Other then as specifically provided herein MANAGER shall not be entitled to
any consideration with respect to the Services, unless otherwise agreed by the
parties in writing. Any MANAGER’s liability which may arrise from this Agreement
is limited to the monthly Compensation fee.
4.6. MANAGER hereby understands, acknowledges and agrees that the payment to
MANAGER of the Compensation hereunder depends on the Company’s business results
and that if the Company is not successful in its operation, MANAGER may not be
paid, and in such event MANAGER shall not have and hereby waives any claim
and/or demand against the Company and/or any of its shareholders and/or
directors.
5. Expenses
The Company shall reimburse MANAGER for transportation expenses, international
travel expenses, and other reasonable direct expenses in connection with the
provisions of the Services, provided such were approved in advance and in
writing (except expenses up to the monthly limit of $1,000) )by the Company and
are in accordance with the Company’s Budget.
6. Acknowledgement
6.1 The MANAGER is providing services to the company’s parent company, ADB
International Group, under a separate and non-related agreement.
7. Status
7.1. It is the intention of the parties that MANAGER shall be an independent
contractor pursuant to this Agreement, and that this Agreement shall not be
construed to create or give rise to any partnership, agency or joint venture,
not shall MANAGER nor any of its personnel be deemed to be employees of the
Company for any purpose.
7.2. MANAGER shall immediately indemnify the Company for any and all cost,
expenses or damages which may rise to the Company if an employment relationship
is claimed or based between the Company and MANAGER or anyone on its behalf.
8. Confidentiality and Non-Competition
Simultaneously with the execution of this Agreement and as a condition thereto,
MANAGER shall sign the Confidentiality and Non-Competition Undertaking attached
as Annex A hereto.
8. Entire Agreement
This Agreement constitutes the entire understanding and agreement between the
parties with respect to the subject matter hereof and supersedes any and all
prior discussions, arrangements, representations, understandings, agreements and
correspondence and may not be amended or modified in any respect, except by a
subsequent writing executed by both parties.
9. Applicable Law
This Agreement and the obligations hereunder shall be governed by US law.
Disputes hereunder shall be resolved by the courts Delaware USA.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.
ESQURE Advanced Medical Devices LTD. Ohad Goren
Signature: /s/ Ron Weissberg Signature:
/s/ Ohad Goren
Print Name: Ron Weisberg Print Name:
Ohad Goren
Title: Chairman
Annex A
CONFIDENTIALITY AND NON-COMPETITION UNDERTAKING
This Confidentiality, Non-Competition and Proprietary Rights Undertaking (the
“Undertaking”) is made effective as of the date of the Agreement by MANAGER, for
the benefit of the Company. This Annex A constitutes an integral part of the
Agreement to which it is annexed. For the purpose hereof, all references herein
to the “Company” shall include any parent corporation or entity of the Company,
subsidiary or other affiliate of the Company.
1. Confidentiality
(a) MANAGER recognizes and acknowledges that MANAGER’s access to the trade
secrets, secret information and proprietary information (collectively, the
“Confidential Information”) of the Company is essential to the performance of
MANAGER’s duties as a consultant and service provider of the Company.
(b) By way of illustration and not limitation, such Confidential Information of
the Company shall include: (i) any and all trade secrets concerning the business
and affairs of the Company, product specifications, data, know-how,
compositions, processes, formulas, methods, designs, samples, inventions and
ideas, past, current and planned development or experimental work, current and
planned distribution methods and processes, customer lists, current and
anticipated customer requirements, price lists, market studies, business plans,
computer software and programs (including object code and source code), computer
software and technologies, systems, structures and architectures (and related
processes, algorithms, compositions, improvements, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information) of the Company,
information relating to the projects of the Company, and any other information,
however documented, of the Company that is a trade secret; (ii) any and all
information concerning the business and affairs of the Company (which includes
historical financial statements, financial projections and budgets, historical
and projected sales, capital spending budgets and plans, the names and
backgrounds of key personnel, personnel training and techniques and materials),
however documented; (iii) all derivatives, improvements and enhancements to the
Company’s technology which are created or developed; (iv) information of third
parties as to which the Company has an obligation of confidentiality; and (v)
any and all notes, analysis, compilations, studies, summaries, and other
material prepared by or for the Company containing or based, in whole or in
part, on any information included in the foregoing.
(c) The Confidential Information shall not include information which has become
publicly known and made generally available through no wrongful act of MANAGER
or of others who were under confidentiality obligations as to the information
involved.
(d) MANAGER further recognizes and acknowledges that such Confidential
Information is a valuable and unique asset of the Company, and that its use or
disclosure (except use or disclosure as required for carrying out MANAGER’s
duties as a MANAGER of the Company and providing the Services) would cause the
Company substantial loss and damages. Other than in connection with providing
the Services, MANAGER undertakes and agrees that MANAGER will not, in whole or
in part, disclose such Confidential Information to any person or organization
under any circumstances, will not make use of any such Confidential Information
for MANAGER’s own purposes or for the benefit of any other person or
organization, and will not reproduce any of the Confidential Information without
the Company’s prior written consent. MANAGER will take strict precautions to
maintain the confidentiality of the Confidential Information received from the
date of receipt, and take appropriate action, by instruction, agreement or
otherwise with any person permitted access to the Confidential Information
received, to ensure that MANAGER will be able to satisfy its obligations under
this Agreement.
(e) MANAGER further recognizes and acknowledges that the Company has received
and in the future will receive from third parties their confidential or
proprietary information subject to certain limited purposes. MANAGER agrees to
hold all such confidential or proprietary information in the strictest
confidence and not to disclose it to any person or entity or to use it except as
necessary in carrying out MANAGER’s work for the Company consistent with the
Company’s agreement with the third party, all in a fashion consistent with his
undertakings in (d) above.
(f) The obligations set forth in this Section are perpetual, and shall survive
termination of the Agreement and of the MANAGER’s engagement with the Company.
2. Return of Materials. Upon termination of MANAGER’s engagement with the
Company or at any time before termination if the Company so requests, MANAGER
will promptly deliver to the Company all copies of all written and tangible
material (without retaining any copies thereof) in MANAGER’s possession or under
MANAGER’s control, incorporating the Confidential Information or otherwise
relating to the Company’s business. The obligations set forth in this Section
shall survive termination of the Agreement and of MANAGER’s engagement with the
Company.
3. Non-Competition and Non-Solicitation. MANAGER and/or any of its
representatives shall not (either personally or via any of his agents,
affiliates or businesses in which it is a shareholder, partner, owner, employee,
officer, director, consultant or otherwise), during the Term of the Agreement:
(a) directly or indirectly solicit, hire, engage, endeavor to entice away from
the Company or otherwise interfere with the relationship of the Company with any
person or entity who is, or was within twelve (12) months period preceding the
termination of MANAGER’s engagement with the Company, a customer or client of
the Company, or who is, or was within twelve (12) months period preceding the
termination of MANAGER’s engagement with the Company, an employee, officer,
director, consultant or contractor of the Company; or
(b) directly or indirectly own an interest in, establish, open, manage, operate,
join, control, or participate in or be connected with, as a shareholder,
partner, owner, employee, officer, director, consultant or otherwise, in any
business, enterprise, trade or occupation similar to, or in competition with,
the business conducted, or proposed by the Company to be conducted, by the
Company.
(c) MANAGER further recognizes and acknowledges that a breach of this Section
would cause the Company substantial and irreparable damages.
(d) The obligations set forth in this Section 3 shall survive termination of the
Agreement and of MANAGER’s engagement with the Company pursuant to the specific
terms set forth herein.
4. Intent of Parties. MANAGER recognizes and agrees: (i) that this Undertaking
is necessary and essential to protect the Company’s business and to realize and
derive all the benefits, rights and expectations of conducting the Company’s
business; (ii) that the area and duration of the protective covenants contained
herein are reasonable; and (iii) that good and valuable consideration exists
under the Agreement, for MANAGER to be bound by the provisions of this
Undertaking.
IN WITNESS WHEREOF, MANAGER has executed this Confidentiality and
Non-Competition Undertaking as of the date hereof.
____________________________
[Full Name of Manager]
Exhibit 10.13
Service Agreement
This AGREEMENT entered into, as of 1 September 2014, by and between ESQURE
Advanced Medical Devices Ltd, located in Israel (the “Company”), and
Gal Peleg,
located at
Petach Tikva,
Israel (“MANAGER”).
WITNESSETH:
Whereas MANAGER has the capacity to provide to the Company and its affiliates
certain executive management and consulting services in connection with the
Company operations and its affiliates;
Whereas The Company desires to receive the Services from MANAGER, and MANAGER is
interested to provide the Company with the Services upon the terms and
conditions detailed herein; and
Whereas the parties understand that payments are only available based on the
budget of the Company, and based on actual development, construction and
operation of projects by the Company and its affiliates.
NOW THEREFORE, in consideration of the mutual promises and agreements
hereinafter contained, the parties hereto agree as follows:
1. Preamble
The preamble to this agreement form an integral part thereof.
The titles of the clauses in this agreement are merely for convenience and the
agreement shall not be used in any way for purposes of interpretation.
This agreement can be assigned jointly by the parties.
2. Term of Agreement
2.1. This agreement is for a period of 3 years commencing on the 1st of
September
2014 and ending on the August 31 of 2018 (hereinafter: the “Term of the
Agreement”), provided that the provision of Services hereunder may be terminated
by either party at any time after the Term of the Agreement upon prior written
notice of 3 months to the other party Unless so terminated, the Agreement shall
be automatically renewed at the end of the Term of the Agreement for an
additional term of three years.
2.2. Notwithstanding Section 2.1 above, MANAGER’s engagement by the Company
hereunder may be terminated by the Company immediately in the event of (a)
MANAGER’s conviction in illegal activity; (b) any material breach of this
Agreement and/or of MANAGER’s fiduciary duties towards the Company; and/or (c)
fraud on its behalf.
2.3. MANAGER undertakes that at upon termination of this Agreement, it shall
deliver to the Company all documents, information and other material obtained or
prepared by it in connection with the Services, including all equipment in its
possession, provided to it by the Company (e.g., company car, computer, cellular
phone).
3. Services
3.1 MANAGER, shall provide the Company with services of Executive Management and
Consulting in connection with the activities of the Company and its affiliates
and will serve as General Manager of the company. (Hereinafter: the “Services”).
3.2 MANAGER will provide all Services to the Company or its affiliates solely by
Mr. Gal Peleg, such that the Services will include the full time efforts of Gal
Peleg.
3.3 MANAGER shall provide the Company with the Services as it shall be
requested, from time to time, provided however, that the Services will
coordinated in advance with MANAGER. Without derogating from the above, the
Manager shall be allowed to conduct other business obligation during his free
time, provided that such shall not interfere with the provision of the Services
and/or compete with the activities of the Company and its affiliates
4. Compensation 4.1 In consideration for the Services, the Company shall pay to
MANAGER a sum of $1,500 per month, (the “Compensation”). In the event that the
Company at any time does not have available funds to make such payments to
MANAGER, all amounts that remain unpaid for any month or other period shall
recorded as a liability of the Company, shall accrue for the benefit of MANAGER,
and shall be paid to MANAGER as soon as Company funds become available therefor.
4.2 The Services should be rendered to the Company or its affiliates by the
MANAGER, and the Company shall be responsible for all payments hereunder to
MANAGER.
4.3 Subject to Section 4.1 above, the Basic Compensation shall be paid form the
Company to MANAGER within 15 days from the end of month during the Term of the
Agreement.
4.4. MANAGER shall be solely responsible and shall bear all taxes and levies of
any kind which shall be imposed on it in connection with the Compensation.
4.5. Other then as specifically provided herein MANAGER shall not be entitled to
any consideration with respect to the Services, unless otherwise agreed by the
parties in writing. Any MANAGER’s liability which may arrise from this Agreement
is limited to the monthly Compensation fee.
4.6. MANAGER hereby understands, acknowledges and agrees that the payment to
MANAGER of the Compensation hereunder depends on the Company’s business results
and that if the Company is not successful in its operation, MANAGER may not be
paid, and in such event MANAGER shall not have and hereby waives any claim
and/or demand against the Company and/or any of its shareholders and/or
directors.
5. Expenses
The Company shall reimburse MANAGER for transportation expenses, international
travel expenses, and other reasonable direct expenses in connection with the
provisions of the Services, provided such were approved in advance and in
writing (except expenses up to the monthly limit of $1,000) )by the Company and
are in accordance with the Company’s Budget.
6. Acknowledgement
6.1 The MANAGER is providing services to the company’s parent company, ADB
International Group, under a separate and non-related agreement.
7. Status
7.1. It is the intention of the parties that MANAGER shall be an independent
contractor pursuant to this Agreement, and that this Agreement shall not be
construed to create or give rise to any partnership, agency or joint venture,
not shall MANAGER nor any of its personnel be deemed to be employees of the
Company for any purpose.
7.2. MANAGER shall immediately indemnify the Company for any and all cost,
expenses or damages which may rise to the Company if an employment relationship
is claimed or based between the Company and MANAGER or anyone on its behalf.
8. Confidentiality and Non-Competition
Simultaneously with the execution of this Agreement and as a condition thereto,
MANAGER shall sign the Confidentiality and Non-Competition Undertaking attached
as Annex A hereto.
8. Entire Agreement
This Agreement constitutes the entire understanding and agreement between the
parties with respect to the subject matter hereof and supersedes any and all
prior discussions, arrangements, representations, understandings, agreements and
correspondence and may not be amended or modified in any respect, except by a
subsequent writing executed by both parties.
9. Applicable Law
This Agreement and the obligations hereunder shall be governed by US law.
Disputes hereunder shall be resolved by the courts Delaware USA.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.
ESQURE Advanced Medical Devices LTD.
Gal Peleg
Signature: /s/ Ron Weissberg
Signature: /s/ Gal Peleg
Print Name: Ron Weisberg
Print Name: Gal Peleg
Title: Chairman
Annex A
CONFIDENTIALITY AND NON-COMPETITION UNDERTAKING
This Confidentiality, Non-Competition and Proprietary Rights Undertaking (the
“Undertaking”) is made effective as of the date of the Agreement by MANAGER, for
the benefit of the Company. This Annex A constitutes an integral part of the
Agreement to which it is annexed. For the purpose hereof, all references herein
to the “Company” shall include any parent corporation or entity of the Company,
subsidiary or other affiliate of the Company.
1. Confidentiality
(a) MANAGER recognizes and acknowledges that MANAGER’s access to the trade
secrets, secret information and proprietary information (collectively, the
“Confidential Information”) of the Company is essential to the performance of
MANAGER’s duties as a consultant and service provider of the Company.
(b) By way of illustration and not limitation, such Confidential Information of
the Company shall include: (i) any and all trade secrets concerning the business
and affairs of the Company, product specifications, data, know-how,
compositions, processes, formulas, methods, designs, samples, inventions and
ideas, past, current and planned development or experimental work, current and
planned distribution methods and processes, customer lists, current and
anticipated customer requirements, price lists, market studies, business plans,
computer software and programs (including object code and source code), computer
software and technologies, systems, structures and architectures (and related
processes, algorithms, compositions, improvements, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information) of the Company,
information relating to the projects of the Company, and any other information,
however documented, of the Company that is a trade secret; (ii) any and all
information concerning the business and affairs of the Company (which includes
historical financial statements, financial projections and budgets, historical
and projected sales, capital spending budgets and plans, the names and
backgrounds of key personnel, personnel training and techniques and materials),
however documented; (iii) all derivatives, improvements and enhancements to the
Company’s technology which are created or developed; (iv) information of third
parties as to which the Company has an obligation of confidentiality; and (v)
any and all notes, analysis, compilations, studies, summaries, and other
material prepared by or for the Company containing or based, in whole or in
part, on any information included in the foregoing.
(c) The Confidential Information shall not include information which has become
publicly known and made generally available through no wrongful act of MANAGER
or of others who were under confidentiality obligations as to the information
involved.
(d) MANAGER further recognizes and acknowledges that such Confidential
Information is a valuable and unique asset of the Company, and that its use or
disclosure (except use or disclosure as required for carrying out MANAGER’s
duties as a MANAGER of the Company and providing the Services) would cause the
Company substantial loss and damages. Other than in connection with providing
the Services, MANAGER undertakes and agrees that MANAGER will not, in whole or
in part, disclose such Confidential Information to any person or organization
under any circumstances, will not make use of any such Confidential Information
for MANAGER’s own purposes or for the benefit of any other person or
organization, and will not reproduce any of the Confidential Information without
the Company’s prior written consent. MANAGER will take strict precautions to
maintain the confidentiality of the Confidential Information received from the
date of receipt, and take appropriate action, by instruction, agreement or
otherwise with any person permitted access to the Confidential Information
received, to ensure that MANAGER will be able to satisfy its obligations under
this Agreement.
(e) MANAGER further recognizes and acknowledges that the Company has received
and in the future will receive from third parties their confidential or
proprietary information subject to certain limited purposes. MANAGER agrees to
hold all such confidential or proprietary information in the strictest
confidence and not to disclose it to any person or entity or to use it except as
necessary in carrying out MANAGER’s work for the Company consistent with the
Company’s agreement with the third party, all in a fashion consistent with his
undertakings in (d) above.
(f) The obligations set forth in this Section are perpetual, and shall survive
termination of the Agreement and of the MANAGER’s engagement with the Company.
2. Return of Materials. Upon termination of MANAGER’s engagement with the
Company or at any time before termination if the Company so requests, MANAGER
will promptly deliver to the Company all copies of all written and tangible
material (without retaining any copies thereof) in MANAGER’s possession or under
MANAGER’s control, incorporating the Confidential Information or otherwise
relating to the Company’s business. The obligations set forth in this Section
shall survive termination of the Agreement and of MANAGER’s engagement with the
Company.
3. Non-Competition and Non-Solicitation. MANAGER and/or any of its
representatives shall not (either personally or via any of his agents,
affiliates or businesses in which it is a shareholder, partner, owner, employee,
officer, director, consultant or otherwise), during the Term of the Agreement:
(a) directly or indirectly solicit, hire, engage, endeavor to entice away from
the Company or otherwise interfere with the relationship of the Company with any
person or entity who is, or was within twelve (12) months period preceding the
termination of MANAGER’s engagement with the Company, a customer or client of
the Company, or who is, or was within twelve (12) months period preceding the
termination of MANAGER’s engagement with the Company, an employee, officer,
director, consultant or contractor of the Company; or
(b) directly or indirectly own an interest in, establish, open, manage, operate,
join, control, or participate in or be connected with, as a shareholder,
partner, owner, employee, officer, director, consultant or otherwise, in any
business, enterprise, trade or occupation similar to, or in competition with,
the business conducted, or proposed by the Company to be conducted, by the
Company.
(c) MANAGER further recognizes and acknowledges that a breach of this Section
would cause the Company substantial and irreparable damages.
(d) The obligations set forth in this Section 3 shall survive termination of the
Agreement and of MANAGER’s engagement with the Company pursuant to the specific
terms set forth herein.
4. Intent of Parties. MANAGER recognizes and agrees: (i) that this Undertaking
is necessary and essential to protect the Company’s business and to realize and
derive all the benefits, rights and expectations of conducting the Company’s
business; (ii) that the area and duration of the protective covenants contained
herein are reasonable; and (iii) that good and valuable consideration exists
under the Agreement, for MANAGER to be bound by the provisions of this
Undertaking.
IN WITNESS WHEREOF, MANAGER has executed this Confidentiality and
Non-Competition Undertaking as of the date hereof.
____________________________
[Full Name of Manager]
Exhibit 10.14
Service Agreement
This AGREEMENT entered into, as of 1 August 2014, by and between ESQURE Advanced
Medical Devices Ltd, located in Israel (the “Company”), and Bymed Ltd, located
at Shilat, Israel (“MANAGER”).
WITNESSETH:
Whereas MANAGER has the capacity to provide to the Company and its affiliates
certain executive management and consulting services in connection with the
Company operations and its affiliates;
Whereas The Company desires to receive the Services from MANAGER, and MANAGER is
interested to provide the Company with the Services upon the terms and
conditions detailed herein; and
Whereas the parties understand that payments are only available based on the
budget of the Company, and based on actual development, construction and
operation of projects by the Company and its affiliates.
NOW THEREFORE, in consideration of the mutual promises and agreements
hereinafter contained, the parties hereto agree as follows:
1. Preamble
The preamble to this agreement form an integral part thereof.
The titles of the clauses in this agreement are merely for convenience and the
agreement shall not be used in any way for purposes of interpretation.
This agreement can be assigned jointly by the parties.
2. Term of Agreement
2.1. This agreement is for a period of 3 years commencing on the 1st of April
2014 and ending on the 29 April of 2017 (hereinafter: the “Term of the
Agreement”), provided that the provision of Services hereunder may be terminated
by either party at any time after the Term of the Agreement upon prior written
notice of 3 months to the other party Unless so terminated, the Agreement shall
be automatically renewed at the end of the Term of the Agreement for an
additional term of three years.
2.2. Notwithstanding Section 2.1 above, MANAGER’s engagement by the Company
hereunder may be terminated by the Company immediately in the event of (a)
MANAGER’s conviction in illegal activity; (b) any material breach of this
Agreement and/or of MANAGER’s fiduciary duties towards the Company; and/or (c)
fraud on its behalf.
2.3. MANAGER undertakes that at upon termination of this Agreement, it shall
deliver to the Company all documents, information and other material obtained or
prepared by it in connection with the Services, including all equipment in its
possession, provided to it by the Company (e.g., company car, computer, cellular
phone).
3. Services
3.1 MANAGER, shall provide the Company with services of Executive Management and
consulting in connection with the activities of the Company and its affiliates
and will serve as Chief Technology Officer of the company. (Hereinafter: the
“Services”).
3.2 MANAGER will provide all Services to the Company or its affiliates solely by
Mr. Itsik Ben Yesha, such that the Services will include the full time efforts
of Itsik Ben Yesha.
3.3 MANAGER shall provide the Company with the Services as it shall be
requested, from time to time, provided however, that the Services will
coordinated in advance with MANAGER. Without derogating from the above, the
Manager shall be allowed to conduct other business obligation during his free
time, provided that such shall not interfere with the provision of the Services
and/or compete with the activities of the Company and its affiliates
4. Compensation
4.1 In consideration for the Services, the Company shall pay to
MANAGER a sum of $ 6,000 per month, (the “Compensation”). In the event that the
Company at any time does not have available funds to make such payments to
MANAGER, all amounts that remain unpaid for any month or other period shall
recorded as a liability of the Company, shall accrue for the benefit of MANAGER,
and shall be paid to MANAGER as soon as Company funds become available therefor.
4.2 The Services should be rendered to the Company or its affiliates by the
MANAGER, and the Company shall be responsible for all payments hereunder to
MANAGER.
4.3 Subject to Section 4.1 above, the Basic Compensation shall be paid form the
Company to MANAGER within 15 days from the end of month during the Term of the
Agreement.
4.4. MANAGER shall be solely responsible and shall bear all taxes and levies of
any kind which shall be imposed on it in connection with the Compensation.
4.5. Other then as specifically provided herein MANAGER shall not be entitled to
any consideration with respect to the Services, unless otherwise agreed by the
parties in writing. Any MANAGER’s liability which may arrise from this Agreement
is limited to the monthly Compensation fee.
4.6. MANAGER hereby understands, acknowledges and agrees that the payment to
MANAGER of the Compensation hereunder depends on the Company’s business results
and that if the Company is not successful in its operation, MANAGER may not be
paid, and in such event MANAGER shall not have and hereby waives any claim
and/or demand against the Company and/or any of its shareholders and/or
directors.
5. Expenses
The Company shall reimburse MANAGER for transportation expenses, international
travel expenses, and other reasonable direct expenses in connection with the
provisions of the Services, provided such were approved in advance and in
writing (except expenses up to the monthly limit of $1,000) )by the Company and
are in accordance with the Company’s Budget.
6. Acknowledgement
6.1 The MANAGER is providing services to the company’s parent company, E-QURE
Corp, under a separate and non-related agreement
7. Status
7.1. It is the intention of the parties that MANAGER shall be an independent
contractor pursuant to this Agreement, and that this Agreement shall not be
construed to create or give rise to any partnership, agency or joint venture,
not shall MANAGER nor any of its personnel be deemed to be employees of the
Company for any purpose.
7.2. MANAGER shall immediately indemnify the Company for any and all cost,
expenses or damages which may rise to the Company if an employment relationship
is claimed or based between the Company and MANAGER or anyone on its behalf.
8. Confidentiality and Non-Competition
Simultaneously with the execution of this Agreement and as a condition thereto,
MANAGER shall sign the Confidentiality and Non-Competition Undertaking attached
as Annex A hereto.
8. Entire Agreement
This Agreement constitutes the entire understanding and agreement between the
parties with respect to the subject matter hereof and supersedes any and all
prior discussions, arrangements, representations, understandings, agreements and
correspondence and may not be amended or modified in any respect, except by a
subsequent writing executed by both parties.
9. Applicable Law
This Agreement and the obligations hereunder shall be governed by US law.
Disputes hereunder shall be resolved by the courts Delaware USA.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date first
above written.
ESQURE Advances Medical Devices Ltd Bymed Ltd
Signature: /s/ Ron Weissberg Signature:
/s/ Itsik Ben Yesha
Print Name: Ron Weissberg Print Name:
Itsik Ben Yesha
Title: Chairman
Annex A
CONFIDENTIALITY AND NON-COMPETITION UNDERTAKING
This Confidentiality, Non-Competition and Proprietary Rights Undertaking (the
“Undertaking”) is made effective as of the date of the Agreement by MANAGER, for
the benefit of the Company. This Annex A constitutes an integral part of the
Agreement to which it is annexed. For the purpose hereof, all references herein
to the “Company” shall include any parent corporation or entity of the Company,
subsidiary or other affiliate of the Company.
1. Confidentiality
(a) MANAGER recognizes and acknowledges that MANAGER’s access to the trade
secrets, secret information and proprietary information (collectively, the
“Confidential Information”) of the Company is essential to the performance of
MANAGER’s duties as a consultant and service provider of the Company.
(b) By way of illustration and not limitation, such Confidential Information of
the Company shall include: (i) any and all trade secrets concerning the business
and affairs of the Company, product specifications, data, know-how,
compositions, processes, formulas, methods, designs, samples, inventions and
ideas, past, current and planned development or experimental work, current and
planned distribution methods and processes, customer lists, current and
anticipated customer requirements, price lists, market studies, business plans,
computer software and programs (including object code and source code), computer
software and technologies, systems, structures and architectures (and related
processes, algorithms, compositions, improvements, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information) of the Company,
information relating to the projects of the Company, and any other information,
however documented, of the Company that is a trade secret; (ii) any and all
information concerning the business and affairs of the Company (which includes
historical financial statements, financial projections and budgets, historical
and projected sales, capital spending budgets and plans, the names and
backgrounds of key personnel, personnel training and techniques and materials),
however documented; (iii) all derivatives, improvements and enhancements to the
Company’s technology which are created or developed; (iv) information of third
parties as to which the Company has an obligation of confidentiality; and (v)
any and all notes, analysis, compilations, studies, summaries, and other
material prepared by or for the Company containing or based, in whole or in
part, on any information included in the foregoing.
(c) The Confidential Information shall not include information which has become
publicly known and made generally available through no wrongful act of MANAGER
or of others who were under confidentiality obligations as to the information
involved.
(d) MANAGER further recognizes and acknowledges that such Confidential
Information is a valuable and unique asset of the Company, and that its use or
disclosure (except use or disclosure as required for carrying out MANAGER’s
duties as a MANAGER of the Company and providing the Services) would cause the
Company substantial loss and damages. Other than in connection with providing
the Services, MANAGER undertakes and agrees that MANAGER will not, in whole or
in part, disclose such Confidential Information to any person or organization
under any circumstances, will not make use of any such Confidential Information
for MANAGER’s own purposes or for the benefit of any other person or
organization, and will not reproduce any of the Confidential Information without
the Company’s prior written consent. MANAGER will take strict precautions to
maintain the confidentiality of the Confidential Information received from the
date of receipt, and take appropriate action, by instruction, agreement or
otherwise with any person permitted access to the Confidential Information
received, to ensure that MANAGER will be able to satisfy its obligations under
this Agreement.
(e) MANAGER further recognizes and acknowledges that the Company has received
and in the future will receive from third parties their confidential or
proprietary information subject to certain limited purposes. MANAGER agrees to
hold all such confidential or proprietary information in the strictest
confidence and not to disclose it to any person or entity or to use it except as
necessary in carrying out MANAGER’s work for the Company consistent with the
Company’s agreement with the third party, all in a fashion consistent with his
undertakings in (d) above.
(f) The obligations set forth in this Section are perpetual, and shall survive
termination of the Agreement and of the MANAGER’s engagement with the Company.
2. Return of Materials. Upon termination of MANAGER’s engagement with the
Company or at any time before termination if the Company so requests, MANAGER
will promptly deliver to the Company all copies of all written and tangible
material (without retaining any copies thereof) in MANAGER’s possession or under
MANAGER’s control, incorporating the Confidential Information or otherwise
relating to the Company’s business. The obligations set forth in this Section
shall survive termination of the Agreement and of MANAGER’s engagement with the
Company.
3. Non-Competition and Non-Solicitation. MANAGER and/or any of its
representatives shall not (either personally or via any of his agents,
affiliates or businesses in which it is a shareholder, partner, owner, employee,
officer, director, consultant or otherwise), during the Term of the Agreement:
(a) directly or indirectly solicit, hire, engage, endeavor to entice away from
the Company or otherwise interfere with the relationship of the Company with any
person or entity who is, or was within twelve (12) months period preceding the
termination of MANAGER’s engagement with the Company, a customer or client of
the Company, or who is, or was within twelve (12) months period preceding the
termination of MANAGER’s engagement with the Company, an employee, officer,
director, consultant or contractor of the Company; or
(b) directly or indirectly own an interest in, establish, open, manage, operate,
join, control, or participate in or be connected with, as a shareholder,
partner, owner, employee, officer, director, consultant or otherwise, in any
business, enterprise, trade or occupation similar to, or in competition with,
the business conducted, or proposed by the Company to be conducted, by the
Company.
(c) MANAGER further recognizes and acknowledges that a breach of this Section
would cause the Company substantial and irreparable damages.
(d) The obligations set forth in this Section 3 shall survive termination of the
Agreement and of MANAGER’s engagement with the Company pursuant to the specific
terms set forth herein.
4. Intent of Parties. MANAGER recognizes and agrees: (i) that this Undertaking
is necessary and essential to protect the Company’s business and to realize and
derive all the benefits, rights and expectations of conducting the Company’s
business; (ii) that the area and duration of the protective covenants contained
herein are reasonable; and (iii) that good and valuable consideration exists
under the Agreement, for MANAGER to be bound by the provisions of this
Undertaking.
IN WITNESS WHEREOF, MANAGER has executed this Confidentiality and
Non-Competition Undertaking as of the date hereof.
____________________________
[Full Name of Manager]
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation in this Registration Statement on Form
S-1/A, of our report dated March 26, 2014, of E-Qure Corp. (formerly ADB
International Group, Inc.) (A Development Stage Company) relating to the
financial statements as of December 31, 2013 and 2012 and for the years then
ended, as well as for the period from re-entering the development stage (January
1, 2011) to December 31, 2013, and the reference to our firm under the caption
"Experts" in the Registration Statement.
/s/M&K CPAS, PLLC
www.mkacpas.com
Houston, Texas
December 5, 2014