UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

 

FORM 10-Q

 

 

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2019

 

Commission file number 0-54862

 

E-QURE CORP.

(Exact Name Of Registrant As Specified In Its Charter)

 

Delaware   47-1691054

(State

of Incorporation)

 

(I.R.S. Employer

Identification No.)

 

20 West 64th Street, Suite 39G, New York, NY   10023
(Address of Principal Executive Offices)   (ZIP Code)

 

Registrant’s Telephone Number, Including Area Code: +(972) 54 427777

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes[X] No [  ]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes[  ] No [X]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act) or a smaller reporting company.

 

Large accelerated filer [  ] Accelerated filer [  ] Non-Accelerated filer [  ] Smaller reporting company[X]

 

On November 13, 2019, the Registrant had 34,546,060 shares of common stock issued and outstanding.

 

 

 

     
 

 

TABLE OF CONTENTS

 

Item

  Description  

Page

         
    PART I - FINANCIAL INFORMATION    
         
ITEM 1.   FINANCIAL STATEMENTS.   3
    Balance Sheets   3
    Statements of Operations   4
    Statements of Cash Flows   6
    Notes to Unaudited Financial Statements   7
ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.   12
ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.   14
ITEM 4.   CONTROLS AND PROCEDURES.   14
         
    PART II - OTHER INFORMATION    
         
ITEM 1.   LEGAL PROCEEDINGS.   15
ITEM 1A.   RISK FACTORS.   15
ITEM 2.   UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.   15
ITEM 3.   DEFAULT UPON SENIOR SECURITIES.   15
ITEM 4.   MINE SAFETY DISCLOSURE.   15
ITEM 5.   OTHER INFORMATION.   15
ITEM 6.   EXHIBITS.   15

 

  2  
 

 

PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

E-QURE CORP.

Balance Sheets

At September 30, 2019 (Unaudited) and December 31, 2018

 

    September 30, 2019     December 31, 2018  
      (Unaudited)          
Assets                
Current assets:                
Cash   $ 36,658     $ 390,495  
Total current assets     36,658       390,495  
Other assets     -       4,882  
Total Assets   $ 36,658     $ 395,377  
                 
Liabilities and Stockholders’ Equity (Deficit)                
                 
Current liabilities:                
Accrued interest, related party     1,564       1,564  
Accrued salary, related party     252,580       157,810  
Accrued expenses     -       27,566  
Loan from shareholder, related party     65,905       37,736  
Total current liabilities     320,049       224,676  
                 
Stockholders’ equity (deficit):                
Preferred stock, $0.00001 par value; 25,000,000 shares authorized; no shares issued and outstanding     -       -  
Common stock, $0.00001 par value; 500,000,000 shares authorized; and 34,546,060 issued and outstanding at September 30, 2019 and December 31, 2018     345       345  
Additional paid in capital     33,784,734       33,781,881  
Stock payable     21,000       21,000  
Accumulated deficit     (34,089,470 )     (33,632,525 )
Total stockholders’ equity (deficit)     (283,391 )     170,701  
Total Liabilities and Stockholders’ Equity (Deficit)   $ 36,658     $ 395,377  

 

See Notes to Unaudited Interim Financial Statements.

 

  3  
 

 

E-QURE CORP.

Statements of Operations

For the Three- and Nine-Month Periods Ended September 30, 2018 and 2017

(Unaudited)

 

    For the three     For the three     For the nine     For the nine  
    months ended     months ended     months ended     months ended  
    September 30, 2019     September 30, 2018     September 30, 2019     September 30, 2018  
                         
Revenues   $ -     $ -     $ -     $ -  
                                 
Expenses                                
General and administrative     71,792       1,514,327       343,500       1,688,995  
Research and development     37,772       7,418       110,592       22,200  
Total     109,564       1,521,745       454,092       1,711,195  
                                 
(Loss) from operations     (109,564 )     (1,521,745 )     (454,092 )     (1,711,195 )
Income tax     -       -       -       -  
                                 
Other expenses:                                
Interest expense     (982 )     (1,294 )     (2,853 )     (10,750 )
Total other expenses     -       (1,294 )     -       (10,750 )
                                 
Net loss   $ (110,546 )   $ (1,523,039 )   $ (456,945 )   $ (1,721,945 )
                                 
Basic and diluted per share amount:                                
Basic and diluted net loss   $ (0.00 )   $ (0.06 )   $ (0.01 )   $ (0.07 )
                                 
Weighted average shares outstanding (basic and diluted)     34,546,243       24,911,947       34,546,243       24,030,282  

 

See Notes to Unaudited Interim Financial Statements.

 

  4  
 

 

E-QURE CORP.

Statement of Changes in Stockholders’ Equity (Deficit)

For the Nine-Month Period ended September 30, 2019 and the Year Ended December 31, 2018

(Unaudited)

 

          Additional                 Total
Stockholders’
 
    Common     Paid-in     Stock     Accumulated     Equity  
    Shares     Amount     Deficit     Payable     Deficit     (Deficit)  
Balance at December 31, 2017     22,237,562     $ 222     $ 31,325,044     $ 21,000     $ (31,618,687 )   $ (272,421 )
Loss on debt conversion     -       -       315,900       -       -       315,900  
Capital raise     9,555,468       96       1,795,051       -       -       1,795,147  
Conversion of debt into equity     2,753,030       28       275,275       -       -       275,303  
Related party debt forgiveness     -       -       57,460       -       -       57,460  
Imputed interest     -       -       13,150       -       -       13,150  
Net loss     -       -       -       -       (2,013,838 )     (2,013,838 )
Balance at December 31, 2018     34,546,060     $ 345     $ 33,781,881     $ 21,000     $ (33,632,525 )   $ 170,701  
Imputed interest     -       -       2,853       -       -       2,853  
Net loss     -       -       -       -       (456,945 )     (456,945 )
Balance at September 30, 2019     34,546,060     $ 345     $ 33,784,734     $ 21,000     $ (34,089,470 )   $ (283,391 )

 

See Summary of Significant Accounting Policies and Notes to Financial Statements.

 

  5  
 

 

E-QURE CORP.

Statements of Cash Flows

For the Nine Months Ended September 30, 2018 and 2017

(Unaudited)

 

    For the nine     For the nine  
    months ended     months ended  
    September 30, 2019     September 30, 2018  
             
Cash flows from operating activities:                
Net loss   $ (456,945 )   $ (1,721,945 )
Adjustments to reconcile net loss to cash used in operating activities:                
Stock-based compensation     -       129,219  
Donated capital from related party     -       69,652  
Imputed interest     2,853       10,750  
Changes in assets and liabilities:                
(Increase) decrease in prepaid expenses     4,882       21,000  
(Increase) decrease in other assets     -       44,750  
(Increase) decrease in accounts receivable     -       -  
Increase (decrease) in accounts payable and accrued expenses     67,204       114,075  
Cash used in operating activities     (382,006 )     (1,332,499 )
                 
Cash flow from financing activities:                
Related party borrowings     28,169       64,648  
Proceeds from issuance of common stock     -       1,795,147  
Cash provided by financing activities     28,169       1,859,795  
                 
Change in cash     (353,837 )     527,296  
Cash - beginning of period     390,495       10,962  
Cash - end of period   $ 36,658     $ 538,258  
                 
Non-cash transaction:                
Debt and accrued wages converted into common stock   $ -     $ 275,303  

 

See Notes to Unaudited Interim Financial Statements.

 

  6  
 

 

E-QURE CORP.

Notes to Unaudited Financial Statements

September 30, 2019

 

1. The Company and Significant Accounting Policies

 

Organizational Background

 

E-Qure Corp. (“EQURE” or the “Company”) is a Delaware corporation with offices in Israel. The Company owns IP of innovate technology of wound healing device (BST).

 

Basis of Presentation:

 

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has not established any source of revenue to cover its operating costs, and as such, has incurred an operating loss since inception.

 

Significant Accounting Policies

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from the estimates.

 

Cash and Cash 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, 2019 and December 31, 2018.

 

Property and Equipment

 

New property and equipment are recorded at cost. Property and equipment included in the bankruptcy proceedings and transferred to the Trustee had been valued at liquidation value. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally 5 years. Expenditures for renewals and betterments are capitalized. Expenditures for minor items, repairs and maintenance are charged to operations as incurred. Gain or loss upon sale or retirement due to obsolescence is reflected in the operating results in the period the event takes place.

 

Valuation of Long-Lived Assets

 

We review the recoverability of our long-lived assets including equipment, goodwill and other intangible assets, when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on our ability to recover the carrying value of the asset from the expected future pre-tax cash flows (undiscounted and without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment loss is recognized for the difference between estimated fair value and carrying value. Our primary measure of fair value is based on discounted cash flows. The measurement of impairment requires management to make estimates of these cash flows related to long-lived assets, as well as other fair value determinations.

 

Stock Based Compensation

 

Stock-based awards are accounted for using the fair value method in accordance with ASC 718, Share-Based Payments. Our primary type of share-based compensation consists of stock options. We use the Black-Scholes option pricing model in valuing options. The inputs for the valuation analysis of the options include the market value of the Company’s common stock, the estimated volatility of the Company’s common stock, the exercise price of the warrants and the risk-free interest rate.

 

Accounting For Obligations And Instruments Potentially To Be Settled In The Company’s Own Stock

 

We account for obligations and instruments potentially to be settled in the Company’s stock in accordance with FASB ASC 815, Accounting for Derivative Financial Instruments. This issue addresses the initial balance sheet classification and measurement of contracts that are indexed to, and potentially settled in, the Company’s own stock.

 

  7  
 

 

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, 2019 and December 31, 2018, the carrying value of certain financial instruments (cash and cash equivalents, accounts payable and accrued expenses.) approximates fair value due to the short-term nature of the instruments or interest rates, which are comparable with current rates.

 

Fair Value Measurements

 

The Company measures fair value under a framework that utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three levels of inputs which prioritize the inputs used in measuring fair value are:

 

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

 

Level 2: Other inputs that are observable, directly or indirectly, such as quoted prices for similar assets and liabilities or market corroborated inputs.

 

Level 3: Unobservable inputs are used when little or no market data is available, which requires the Company to develop its own assumptions about how market participants would value the assets or liabilities. The fair value hierarchy gives the lowest priority to Level 3 inputs.

 

In determining fair value, the Company utilizes valuation techniques in its assessment that maximize the use of observable inputs and minimize the use of unobservable inputs. The following table presents the Company’s financial assets and liabilities that are carried at fair value, classified according to the three categories described above:

 

Fair Value Measurements at September 30, 2019

 

             

Quoted Prices

in Active

      Significant          
             

Markets for

Identical

Assets

     

Other

Observable

Inputs

      Significant Unobservable Inputs  
      Total       (Level 1)       (Level 2)       (Level 3)  
None   $ -     $ -     $ -     $ -  
Total assets and liabilities at fair value   $ -     $ -     $ -     $ -  

 

Fair Value Measurements at December 31, 2018

 

             

Quoted Prices

in Active

      Significant          
             

Markets for

Identical

Assets

     

Other

Observable

Inputs

      Significant Unobservable Inputs  
      Total       (Level 1)       (Level 2)       (Level 3)  
None   $ -     $ -     $ -     $ -  
Total assets and liabilities at fair value   $ -     $ -     $ -     $ -  

 

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, 2019 and December 31, 2018, 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.

 

  8  
 

 

Income Taxes

 

We have adopted ASC 740, Accounting for Income Taxes. Pursuant to ASC 740, we are required to compute tax asset benefits for net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward in future years.

 

We must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes.

 

Deferred tax assets and liabilities are determined based on the differences between financial reporting and the tax basis of assets and liabilities using the tax rates and laws in effect when the differences are expected to reverse. ASC 740 provides for the recognition of deferred tax assets if realization of such assets is more likely than not to occur. Realization of our net deferred tax assets is dependent upon our generating sufficient taxable income in future years in appropriate tax jurisdictions to realize benefit from the reversal of temporary differences and from net operating loss, or NOL, carryforwards. We have determined it more likely than not that these timing differences will not materialize and have provided a valuation allowance against substantially all of our net deferred tax asset. Management will continue to evaluate the realizability of the deferred tax asset and its related valuation allowance. If our assessment of the deferred tax assets or the corresponding valuation allowance were to change, we would record the related adjustment to income during the period in which we make the determination. Our tax rate may also vary based on our results and the mix of income or loss in domestic and foreign tax jurisdictions in which we operate.

 

In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We recognize liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether, and to the extent to which, additional taxes will be due. If we ultimately determine that payment of these amounts is unnecessary, we will reverse the liability and recognize a tax benefit during the period in which we determine that the liability is no longer necessary. We will record an additional charge in our provision for taxes in the period in which we determine that the recorded tax liability is less than we expect the ultimate assessment to be.

 

ASC 740 which requires recognition of estimated income taxes payable or refundable on income tax returns for the current year and for the estimated future tax effect attributable to temporary differences and carry-forwards. Measurement of deferred income tax is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available tax benefits not expected to be realized.

 

Uncertain Tax Positions

 

The Financial Accounting Standards Board issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109, Accounting for Income Taxes” (“FIN No. 48”) which was effective for the Company on January 1, 2007. FIN No. 48 addresses the determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements. Under FIN No. 48, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such position should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement. FIN No. 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure requirements.

 

Our federal and state income tax returns are open for fiscal years ending on or after December 31, 2008. We are not under examination by any jurisdiction for any tax year. At September 30, 2019, we had no material unrecognized tax benefits and no adjustments to liabilities or operations were required under FIN 48.

 

Recent Accounting Pronouncements

 

In February 2016, the FASB issued ASU 2016-02, “Lease” Topic 842, which amends the guidance in former ASC Topic 840, Leases. The new standard increases transparency and comparability most significantly by requiring the recognition by lessees of right-of-use (“ROU”) assets and lease liabilities on the balance sheet for all leases longer than 12 months. Under the standard, disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. For lessees, leases will be classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement.

 

The Company adopted the new lease guidance effective January 1, 2019 using the modified retrospective transition approach, applying the new standard to all of its leases existing at the date of initial application which is the effective date of adoption. Consequently, financial information will not be updated and the disclosures required under the new standard will not be provided for dates and periods before January 1, 2019. We elected the package of practical expedients which permits us to not reassess (1) whether any expired or existing contracts are or contain leases, (2) the lease classification for any expired or existing leases, and (3) any initial direct costs for any existing leases as of the effective date. We did not elect the hindsight practical expedient which permits entities to use hindsight in determining the lease term and assessing impairment. The adoption of the lease standard did not change our previously reported consolidated statements of operations and did not result in a cumulative catch-up adjustment to opening equity. As of September 30, 2019, the adoption of the standard had no impact on the Company, as there were no leases in place longer than 12 months.

 

  9  
 

 

In May 2014, the FASB issued ASU 2014-09 which will supersede virtually all existing revenue guidance. Under this update, an entity is required to recognize revenue upon transfer of promised goods or services to customers, in an amount that reflects the expected consideration received in exchange for those goods or services. As such, an entity will need to use more judgment and make more estimates than under the current guidance. ASU 2014-09 is to be applied retrospectively either to each prior reporting period presented in the financial statements, or only to the most current reporting period presented in the financial statements with a cumulative effect adjustment to retained earnings. The Company will elect to apply the impact (if any) of applying ASU 2014-09 to the most current reporting period presented in the financial statements with a cumulative effect adjustment to retained earnings. In August 2015, the FASB issued ASU No. 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date (“ASU 2015-14”). ASU 2015-14 deferred the effective date of ASU 2014-09 for one year, making it effective for the year beginning December 31, 2017, with early adoption permitted as of January 1, 2017. We adopted ASU 2014-09 as of January 1, 2018. The Company does not believe the adoption of ASU 2014-09 had any material impact on its condensed consolidated financial statements.

 

In May 2017, the FASB issued Update 2017-09 - Compensation - Stock Compensation (Topic 718): Effective for all entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for (1) public business entities for reporting periods for which financial statements have not yet been issued and (2) all other entities for reporting periods for which financial statements have not yet been made available for issuance. Early adoption is permitted. This adoption is not expected to have a material impact on our financial position or results of operations.

 

In February 2017, FASB issued Update 2017-06 - Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting (a consensus of the Emerging Issues Task Force). Under Topic 960, investments in master trusts are presented in a single line item in the statement of net assets available for benefits. Similar guidance is not provided in Topic 962 or 965, which has resulted in diversity in practice. For each master trust in which a plan holds an interest, the amendments in this Update require a plan’s interest in that master trust and any change in that interest to be presented in separate line items in the statement of net assets available for benefits and in the statement of changes in net assets available for benefits, respectively. Topics 960 and 962 require plans to disclose their percentage interest in the master trust and a list of the investments held by the master trust, presented by general type, within the plan’s financial statements. Stakeholders said that the disclosure can be misleading when the plan has a divided interest in the individual investments of the master trust (that is, when the plan has a specific, rather than a proportionate, interest in the master trust). The amendments in this Update remove the requirement to disclose the percentage interest in the master trust for plans with divided interests and require that all plans disclose the dollar amount of their interest in each of those general types of investments, which supplements the existing requirement to disclose the master trust’s balances in each general type of investments. Early adoption is permitted. This adoption is not expected to have a material impact on our financial position or results of operations.

 

In the opinion of management, the information furnished in these interim financial statements reflects all adjustments necessary for a fair statement of the financial position and results of operations and cash flows as of and for the six-month periods ended June 30, 2019 and 2018 and for the twelve-month period ended December 31, 2018. All such adjustments are of a normal recurring nature.

 

Management does not anticipate that the adoption of these standards will have a material impact on the financial statements.

 

2. Stockholders’ Equity

 

Common Stock

 

We are currently authorized to issue up to 500,000,000 shares of $0.00001 par value common stock.

 

Issuances of Common Stock During the Period ended September 30, 2019:

 

The Company did not issue any Common Stock during the three and nine months ended September 30, 2019.

 

Issuances of Common Stock in 2018:

 

During the year ended December 31, 2018, the Company raised $1,795,147 from a rights offering of a total of 9,555,468 Units at $0.10 per Unit, each consisting of: (i) one share of Common Stock; (ii) one Class A Warrant exercisable for a period of 24 months to purchase ½ share of Common Stock at the equivalent of $0.50 per share; and (iii) one Callable Class B Warrant exercisable for a period of 36 months to purchase ½ share of Common Stock at the equivalent of $1.25 per share. The Company intends to use the proceeds of the rights offering for general corporate purposes, including working capital, capital expenditures, as well as acquisitions and other strategic purposes. The warrants fair value is $408,093 and were valued using a Black- Scholes valuation model.

 

During the year ended December 31, 2018, the Company converted $167,800 in accrued wages and $107,503 in related party debt owed to management into 2,753,030 shares of Common Stock. In connection with this conversion, the Company issued 1,376,515 Class A Warrants; 1,376,515 Class B Warrants and 2,750,000 Class C Warrants. The warrants were valued at $385,552 and were recorded for a total as loss on conversion on debt under additional paid in capital of $315,900.

 

Preferred Stock

 

We are currently authorized to issue up to 25,000,000 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. There are no preferred shares outstanding as of September 30, 2019 and December 31, 2019.

 

  10  
 

 

3. Notes Payable

 

As of September 30, 2019 and December 31, 2018, the Company had notes for a total of $65,905 and $37,736, respectively, outstanding. For the nine months ended September 30, 2019 and the year ended December 31, 2018, we recorded $2,853 and $13,150, respectively, in imputed interest related to the notes outstanding. During the three months ended September 30, 2019, the Company received advances of $28,169 from a related party and expenses interest of $982.

 

During the year ended December 31, 2018, the Company received advances on outstanding notes for a total of $64,648 from a related party.

 

During the year ended December 31, 2018, the In Company’s chief executive officers and chairman converted debt and accrued wages in the aggregate amount of $275,303 into Units consisting of a total of: (i) 2,753,030 restricted shares, 1,376,515 Class A Warrants and Class B Warrants, having the same terms as the Class A and Class B Warrants set forth in the Reg S Unit Offering, and 2,750,000 Class C Warrants exercisable to purchase one share of Common Stock at a price of $1.00 per Share. The warrants were valued at $385,552 using the Black- Scholes valuation model and were recorded for a total as loss on conversion on debt under additional paid in capital of $315,900.

 

    September 30, 2019     December 31, 2018  
Michael Cohen   $ 65,905     $ 37,736  

 

4. Other Assets

 

As of September 30, 2019 and December 31, 2018, the Company recorded $0 and $4,882, as other assets representing securities compliance services to be repaid in cash or securities compliance services pursuant to an arrangement with the Company’s securities compliance consultant.

 

5. Related Party Transactions Not Disclosed Elsewhere

 

As of September 30, 2019 and December 31, 2019, the Company had short-term notes for a total of $65,905 and $37,736, respectively, outstanding. For the nine months ended September 30, 2019 and the year ended December 31, 2018, we recorded $2,853 and $13,150, respectively, in imputed interest related to the note outstanding.

 

During the year ended December 31, 2018, the Company received advances on outstanding notes for a total of $64,648 from a related party.

 

During the year ended December 31, 2018, the In Company’s chief executive officers and chairman converted debt and accrued wages in the aggregate amount of $275,303 into Units consisting of a total of: (i) 2,753,030 restricted shares, 1,376,515 Class A Warrants and Class B Warrants, having the same terms as the Class A and Class B Warrants set forth in the Reg S Unit Offering, and 2,750,000 Class C Warrants exercisable to purchase one share of Common Stock at a price of $1.00 per Share. The warrants were valued at $385,552 using the Black- Scholes valuation model and were recorded for a total as loss on conversion on debt under additional paid in capital of $315,900.

 

As of September 30, 2019 and December 31, 2018, we had accrued salaries of $252,580 and $157,810, respectively, due to three of our officers.

 

As of September 30, 2019 and December 31, 2018, we had accrued interest of $1,564 due to Mr. Weissberg, who is the Company’s Chairman of the audit committee. The principal underlying the note was converted in 2014.

 

6. Going Concern

 

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has not established any source of revenue to cover its operating costs, and as such, has incurred an operating loss since inception. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

 

7. Subsequent Events

 

There were no other subsequent events following the period ended September 30, 2019 through the date the financial statements were issued that would materially affect the financial statements.

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATION

 

The following plan of operation provides information which management believes is relevant to an assessment and understanding of our results of operations and financial condition. The discussion should be read along with our financial statements and notes thereto. This section includes a number of forward-looking statements that reflect our current views with respect to future events and financial performance. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend, project and similar expressions, or words which, by their nature, refer to future events. You should not place undue certainty on these forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our predictions.

 

Plan of Operations

 

In January 2014, Mr. Weissberg negotiated with Lifewave Ltd., a public company organized under the laws of the State of Israel, for the purpose of acquiring certain of Lifewave’s IP assets pertaining to a wound healing device. The Registrant signed a patent purchase agreement with Lifewave on January 6, 2014 (the “Agreement”), the closing of which was subject to several material conditions, including our ability of raising equity capital sufficient to develop and commercially exploit the technology.

 

On June 4, 2014, we completed the purchase of all right, title and interest to certain IP assets, including rights to a wound treatment device. The IP assets, including the wound healing device, acquired by the Registrant are designed for wound treatment incorporating Bioelectrical Signal Therapy (“BST Device”). The BST Device implements patented and proprietary electrical stimulation technologies to treat hard-to-cure wounds and ulcers up to complete closure and/or cure.

 

Pursuant to the Agreement, the Registrant has agreed to pay Lifewave a royalty of from 10% to 20% of the profits (as defined in the Agreement) generated from the BST Device.

 

In June 2014, the Registrant entered into an agreement with the Austen BioInnovation Institute in Akron (“ABIA” or the “Institute”), for the purpose of bringing our BST Device to the U.S. market.

 

The Company’s management selected ABIA’s Product Innovation and Commercialization Division, which has significant expertise in wound healing, clinical trial development, and regulatory operations, to spearhead its pre-market clinical trial program, which is necessary to apply for regulatory approval from the United States Food and Drug Administration (“FDA”) to distribute the BST Device in the United States. As part of the Institute’s fully integrated regulatory and device development service Offerings, ABIA will prepare on behalf of the Company an application to obtain FDA approval. The initial trial will include 70 patients in a double-arm, randomized, multi-center study to assess the safety and efficacy of the BST Device in patients with Stage II and III pressure and venous stasis ulcers; and submit data to the FDA to obtain approval.

 

On December 18, 2015, the Registrant confirmed certain information that it had received from ABIA that, while ABIA still anticipated that it would be able to provide the Registrant with a final draft of the IDE application, ABIA had sustained financial difficulties and key personnel losses that would likely adversely affect its ability to perform under the Agreement on a timely basis, if at all. As a result, the Registrant requested that ABIA fully refund the monies paid to ABIA under the Agreement. In addition, the Registrant agreed to engage a professional regulatory consultant, who was a former member of ABIA’s regulatory staff, to serve as the Registrant’s FDA regulatory consultant on an interim basis, subject to the execution of a separate services agreement. The Registrant is also evaluating the advisability of engaging another firm to replace ABIA, which process may be expected to delay the IDE approval process for the BST Device.

 

The Company’s success is dependent upon the successful FDA clinical trial of its BST Device. The Device may need additional development and may never achieve safety or efficacy. The Company believes that its design and procedure show promise, but the path to commercial success, even if development milestones are met, may take more time and might be more costly.

 

There are a number of potential obstacles the Company might face, including the following:

 

● We may not be able to raise additional funds we may need to complete the clinical trials.

 

● Competitors may develop alternatives that render BST Device redundant or unnecessary.

 

● We may not have a sufficient and sustainable intellectual property position.

 

● Our device may be shown to have harmful side effects or other characteristics that indicate it is unlikely to be safe and effective.

 

● Our device may not receive regulatory approval.

 

● Even if our device receives regulatory approval, it may not be accepted by patients, the medical community or third-party payers.

 

Recent Developments

 

On July 18, 2016, the Company received the CE Certificate of Conformity and the ISO 13485 Certification. The CE Certification for our BST Wound Healing Device is a declaration that it complies with the requirements of the EU related to health, safety and environmental protections and acknowledges that the BST Device may be legally marketed in the EU. As a result, we are prepared to commence manufacturing and marketing for our BST Device in Europe as well as other non-European countries that accept the CE Certification. The ISO is the International Organization for Standardization, and represents that the company’s quality systems and procedures satisfies the requirements for a comprehensive quality management for the design and manufacture of medical devices.

 

On October 14, 2016, the Registrant received notification from FDA that it has granted conditional approval to the IDE application, authorizing us to commence a clinical investigation of our BST Device for wound healing. The main condition set forth is that the trial shall begin initially with 10 patients, after which we will file a safety report with the FDA before proceeding with the trial, which contemplates testing the BST Device with 90 patients altogether.

 

On January 8, 2017, the Registrant entered into a five-year distribution agreement (the “Distribution Agreement”) with TekMedica SAS, organized under the laws of Colombia (“TekMedica” or the “Distributor”). Pursuant to the Distribution Agreement, the Registrant granted TekMedica the exclusive rights to distribute the Registrant’s medical device for the treatment of chronic wounds (the “BST Device™”) and the accompanying disposable electrodes (sometimes collectively, the “Products”) in Colombia (the “Territory”).

 

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The Distribution Agreement provides that Registrant will provide Distributor with supplies of the BST Devicee and disposable electrode for treatment of patients in hospitals, long-term care facilities, medical centers and out-patient clinics. The Distributor will make an initial advance payment to be applied against the first year’s quota together with an initial order supported by a Letter of Credit with subsequent orders as part of the quota, as set forth in the Distribution Agreement, with minimum annual quota’s during the five-year term. The Distributor will be responsible for securing any product certification, permit, license or approval that may be required in the Territory for the marketing, sale, sublicensing and delivery and use of the BST Devise and Products in the Territory.

 

On February 20, 2017, the Registrant received the official certification from the Israeli Ministry of Health authorizing the use of the Registrant’s BST Device in Israel. The BST Device implements patented and proprietary electrical stimulation technologies to treat hard-to-cure wounds and ulcers up to complete closure and/or cure.

 

Results of Operations during the three months ended September 30, 2019 as compared to the three months ended September 30, 2018

 

We have not generated any revenues during the three-month ended September 30, 2019 and 2018. We had operating expenses mainly related to general and administrative expenses and research and development expenses. During the three months ended September 30, 2019, we incurred a net loss from operations of $109,564 due to general and administrative expenses of $71,792 and research and development expenses of $37,772 as compared to a net loss from operation of $1,521,745 due to general and administrative expenses of $1,514,327 and research and development expenses of $7,418 in the same period in the prior year.

 

Our general and administrative expenses decreased by $1,442,535 during the three months ended September 30, 2019 as compared to the prior year mainly due to expenses related to our rights offering during the three-months ended September 30, 2018.

 

Our R&D expenses increased by $30,354 during the three months ended September 30, 2019 as compared to the prior year mainly due to increased expenses related to FDA approval for our BST device.

 

During the three months ended September 30, 2019 and 2018, we incurred interest expense of $982 and $1,294, respectively.

 

During the three months ended September 30, 2019 and 2018, we incurred a net loss of $110,546 and $1,523,039, respectively.

 

Results of Operations during the nine months ended September 30, 2019 as compared to the nine months ended September 30, 2018

 

We have not generated any revenues during the nine-month period ended September 30, 2019 and 2018. We had operating expenses mainly related to general and administrative expenses and research and development expenses. During the nine months ended September 30, 2019, we incurred a net loss from operations of $454,092 due to general and administrative expenses of $343,500 and research and development expenses of $110,592 as compared to a net loss from operations of $1,711,195 due to general and administrative expenses of $1,688,995 and research and development expenses of $22,200 in the same period in the prior year.

 

Our general and administrative expenses decreased by $1,345,495 during the nine months ended September 30, 2019 as compared to the prior year mainly due to expenses related to our rights offering during the three-months ended September 30, 2018.

 

Our R&D expenses increased by $88,392 during the nine months ended September 30, 2019 as compared to the prior year mainly due to increased expenses related to FDA approval for our BST device.

 

During the nine months ended September 30, 2019 and 2018, we incurred interest expense of $2,853 and $10,750, respectively.

 

During the nine months ended September 30, 2019 and 2018, we incurred a net loss of $456,945 and $1,721,945, respectively.

 

Liquidity, Capital Resources and Strategy

 

On September 30, 2019, we had current assets of $36,658 consisting of cash as compared to current assets of $390,495 at December 31, 2018 consisting of cash in the same amount. As of September 30, 2019 and December 31, 2018, we had other assets of $0 and $4,882, respectively. We had total assets of $36,658 as of September 30, 2019 and $395,377 as of December 31, 2018. We had current liabilities of $320,049 as of September 30, 2019 consisting of $1,564 in accrued interest, accrued salary of $252,580 and $65,905 in short-term notes payable to related parties. We had current liabilities of $224,676 as of December 31, 2018 consisting of $1,564 in accounts payable, $157,810 in accrued salary, accrued expenses of $27,566 and $37,736 in short-term notes payable to related parties. We had no long-term liabilities as of June 30, 2019 and December 31, 2018.

 

We used $382,006 in our operating activities during the nine months ended September 30, 2019, which was due to a net loss of $456,945 offset by imputed interest charges of $2,853, a decrease in prepaid expenses of $4,882 and an increase in accounts payable and accrued expenses of $67,204.

 

We used $1,332,499 in our operating activities during the nine months ended September 30, 2018, which was due to a net loss of $1,721,945 offset by stock-based compensation of $129,219, a gain of $69,652 on debt settlements, imputed interest charges of $10,750, a decrease of $44,750 in other assets, a decrease in prepaid expenses of $21,000, an increase in accounts payable and accrued expenses of $114,075.

 

  13  
 

 

We financed our negative cash flow from operations during the nine months ended September 30, 2019 through proceeds of $28,169 from related party borrowings and cash on hand.

 

We financed our negative cash flow from operations during the nine months ended September 30, 2018 through proceeds of $1,795,147 from our rights offering and $64,648 from related party borrowings.

 

We had no investing activities during the nine months ended September 30, 2019 and 2018.

 

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 2018 and 2017. 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 $456,945 during the nine months ended September 30, 2019 and had a total accumulated deficit of $34,089,470 as of September 30, 2019.

 

The Company had no revenues from operations during the three and nine months ended September 30, 2019 and 2018. As of September 30, 2019, the Company had $36,658 cash on hand and had negative working capital of $283,391.

 

We believe that our current cash on hand of $36,658, as of September 30, 2019, will not be sufficient to meet our operating requirements throughout the ensuing twelve-month period. We require additional financing at satisfactory terms and conditions, of which there can be no assurance, in order to satisfy our ongoing capital requirements for the next twelve months in order to execute our plan of operation as presently constituted.

 

We do not expect to generate cash flow from operations unless we receive FDA approval for our BST Device.

 

Our management believes that our operations will generate revenues in the US in the first half of 2020. We expect that FDA approval for our BST Device will improve our ability to generate revenues from sales in other geographic areas. Our future ability to generate cash flows from operations will depend on the demand for our BST Device, as well as general economic, financial, competitive and other factors, many of which are beyond our control.

 

If and when we receive FDA approval of our BST Device, of which there can be no assurance, our business might not generate sufficient future cash flow in an amount sufficient to enable us to fund our liquidity needs, including working capital, capital expenditures, investments and other general corporate requirements.

 

Availability of Additional Capital

 

We have no commitments or arrangements, formal or otherwise, from any person or entity to provide us with any additional capital. The Company may be unable to implement its present plan of operation and this could have a material adverse effect on our business, prospects, financial condition and results of operations.

 

Our future financing transactions may include the issuance of equity and/or debt securities. In the event that we seek to raise funds through additional private placements of equity or convertible debt, the trading price of our common stock could be adversely effected. Further, if we issue additional equity or debt securities, stockholders may experience dilution or the new equity securities may have rights, preferences or privileges senior to those of existing holders of our common stock. We are not aware of any material trend, event or capital commitment, which would or could potentially adversely affect our liquidity. We do not have any arrangements with potential investors or lenders to provide us with any additional financing and there can be no assurance that any such additional financing will be available when required in order to proceed with the business plan.

 

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

 

None.

 

ITEM 4. CONTROLS AND PROCEDURES.

 

Evaluation of disclosure controls and procedures.

 

As of September 30, 2019, the Company’s chief executive officer and chief financial officer conducted an evaluation regarding the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) or 15d-15(e) under the Exchange Act. Based upon the evaluation of these controls and procedures as provided under the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework (2013), our chief executive officer and chief financial officer concluded that our disclosure controls and procedures were ineffective as September 30, 2019. Management has identified corrective actions to address the weaknesses and plans to implement them during the first quarter of 2020.

 

Changes in Internal Control Over Financial Reporting

 

There were no changes in the Company’s internal control over financial reporting during the period covered by this report, which were identified in connection with management’s evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

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PART II - OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS.

 

We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. However, from time to time, we may become a party to certain legal proceedings in the ordinary course of business.

 

ITEM 1A. RISK FACTORS.

 

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1. Description of Business, subheading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2018, which could materially affect our business, financial condition or future results.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURE.

 

Not applicable.

 

ITEM 5. OTHER INFORMATION.

 

Not applicable.

 

ITEM 6. EXHIBITS.

 

(a) The following documents are filed as exhibits to this report on Form 10-Q or incorporated by reference herein. Any document incorporated by reference is identified by a parenthetical reference to the SEC filing that included such document.

 

Exhibit No.   Description
31.1   Section 302 Certification of the Sarbanes-Oxley Act of 2002 of Ohad Goren, filed herewith.
31.2   Section 302 Certification of the Sarbanes-Oxley Act of 2002 of Gal Peleg, filed herewith.
32.1   Section 906 of the Sarbanes-Oxley Act of 2002 of Ohad Goren, filed herewith
32.2   Section 906 of the Sarbanes-Oxley Act of 2002 of Gal Peleg, filed herewith

 

 

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SIGNATURES

 

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned.

 

E-QURE COR.

 

By: /s/ Ohad Goren  
  Ohad Goren  
  Chief Executive Officer  
  (Principal Executive Officer)  
Date: November 14, 2019  
     
By: /s/ Gal Peleg  
  Gal Peleg  
  Chief Financial Officer  
  (Principal Financial and Principal Accounting Officer)  
Date: November 14, 2019  

 

  16  
 

 

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