ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q/A contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws, and is subject to the safe-harbor created by such Act and laws. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of such terms, or other variations thereon or comparable terminology. The statements herein and their implications are merely predictions and therefore inherently subject to known and unknown risks, uncertainties, assumptions and other factors that may cause actual results, performance levels of activity, or our achievements, or industry results to be materially different from those contemplated by the forward-looking statements. Such forward-looking statements appear in this Item 2 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and may appear elsewhere in this Quarterly Report on Form 10-Q/A and include, but are not limited to, statements regarding the following:

Our business and operations are subject to substantial risks, which increase the uncertainty inherent in the forward-looking statements contained in this report.

In addition, historic results of scientific research, clinical and preclinical trials do not guarantee that the conclusions of future research or trials would not suggest different conclusions. Also, historic results referred to in this periodic report would be interpreted differently in light of additional research, clinical and preclinical trials results. Except as required by law, we undertake no obligation to release publicly the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Further information on potential factors that could affect our business is described under the heading “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, or the 2018 Annual Report. Readers are also urged to carefully review and consider the various disclosures we have made in that report.

As used in this quarterly report, the terms “we”, “us”, “our”, the “Company” and “TechCare” mean TechCare Corp. and our wholly owned subsidiary, Novomic Ltd., unless otherwise indicated or as otherwise required by the context.

The following financial data in this narrative are expressed in thousands, except for share and share data or as otherwise noted.

Overview and Recent Developments

We are a technology company engaged in the design, development and commercialization of a unique delivery platform utilizing vaporization of various natural compounds for multiple health, beauty and wellness applications. Our delivery platform is proprietary and patented.

Our current product offering includes Novokid® - an innovative home use device which vaporizes a natural, plant-based, pesticides, and silicone-free compound that effectively treats head lice and eggs. Following our soft launch of Novokid® in the Netherlands, we expanded our distribution network and launched Novokid in Israel during late May 2018 through Super Pharm, Israel’s largest and leading drugstore chain. The launch was accompanied by a radio and digital brand awareness and marketing campaign and supported by Meditrend, our Israeli distributor, specializing in health and wellness products while representing leading brands.

We intend to expand our sales points in Israel and began selling our products in additional pharmacies and various online outlets during 2019. As we remain focused on increasing our global footprint and expanding our distribution network, we showcased Novokid® and met potential distributors and partners at CPhI Worldwide, a renowned and leading pharma tradeshow held in Madrid during October 2018. Accordingly, we are exploring various opportunities to sign agreements with distributors in Europe during the fiscal year ending December 31, 2019. We are also working on erecting an automated production line which is expected to ramp up our manufacturing capacity while reducing its costs.

We believe that we will need to raise up to $2,000 thousand during the year ending December 31, 2019 in order to successfully implement our business plan, of which there can be no assurance. Failure to obtain the necessary capital at acceptable terms, if at all, when needed, may force us to delay, limit, or terminate our product development efforts and adversely effect our ability to secure regulatory approvals and would adversely impact our planned research and development efforts in connection with our future products, which may make it more difficult for us to attain profitability.

Our Treatment Solutions

Novokid® – Natural, Plant-based and Effective Lice Treatment

Parents and children exposed to head lice are now forced to use standard over-the-counter, or OTC, treatments that are toxic, often ineffective, time consuming and expensive. According to the Journal of Medical Entomology, 98% of lice have developed resistance to existing treatments in the US and they are now referred to as “super-lice”. Most current treatments contain pesticides, alcohol or silicone, which are all associated with a wide variety of hazardous side effects.

Novokid® is a non-pesticide, natural, plant-based and eco-friendly solution that eliminates lice and super lice with a 10 minute dry treatment. This compares with current treatments that require 20-40 minutes of shampooing and combing. Our treatment is fast, dry, clean, and easily administered at home or on the go. Novokid® can also be used as a maintenance treatment if used regularly.

Shine – Natural Haircare rejuvenation

Shine uses a patented vaporization process and formulation to clean, treat and improve the appearance of the hair and scalp. In addition to removing the residue, the treatments balance the hair’s pH levels, add body and shine, define curls, and strengthen and protect hair from further damage. We believe that the Shine treatment is user friendly, requiring the user to connect the Using Shine capsule to a designated tube, place the attached cap on their head and sit for a 10-minute treatment. There is no need to rinse or shampoo following the treatment. The treatment is expected to cleanse the scalp and leave the hair shiny and manageable.

Recent Developments and Plans

Our current and future products are all based on the vaporization platform, which was developed over a period of seven years. Since January 1, 2018, we have achieved the following:

During the next 12-18 months, we plan to focus our efforts on the following:

Novokid®:

Shine:

Other:

We may be required to obtain additional regulatory approvals for our head lice treatment platform and any future products. If unable to receive regulatory approval or commercialize our product candidates, our business will be adversely affected. CE approval, which was already obtained for our Novokid® product, is required for the marketing, distributing and sale of our products in the European Union, whereas FDA approval is required for such marketing, distributing and sale in the United States. In the event that our products are to be sold in certain territories requiring additional regulatory approvals, such approvals will need to be obtained by us or by our distributors.

In addition, in January 2019, we entered into a joint venture agreement with a Chinese partner for the formation of a Chinese joint venture intended to focus on the development of comprehensive and broad range of health, wellness, beauty and home products for customers by utilizing our patented technology of vaporization of natural and plant-based compounds. The joint venture intends to sell its products in the Greater China region, including mainland China, Hong Kong, Macao and Taiwan, directly or through others. We are currently working with our Chinese Partner on the formation of the Chinese joint venture entity.

On March 13, 2019, we issued and sold to ICB Biotechnology Investments Ltd. (“ICB”) 957,854 shares of our common for a price per Share of $0.261, for aggregate consideration of $250,000. In accordance with the terms of the subscription agreement, upon the formation of a joint venture with China-Israel Biological Technology Co. Ltd., (“CIBD”) the parent company of ICB, and the transfer of the relevant intellectual property rights to the joint venture, we will issue and sell to ICB an additional 957,854 Shares for an additional investment amount of $250,000 (the “Additional Investment”). In addition, subject to the consummation of the Additional Investment, we will grant ICB an option to purchase up to additional 833,333 shares of our common stock at a price per share of $0.60, for aggregate consideration of up to $1,000,000.

On April 28, 2019, we entered into a form of Securities Purchase Agreement (the “Securities Purchase Agreement”) with each of Y.M.Y. Industry Ltd., Traistman Radziejewski Fundacja Ltd. and Microdel Ltd. relating to an offering of an aggregate of 1,229,508 shares of our common stock at a purchase price of $0.183 per share for aggregate gross proceeds of approximately $225,000. In addition, we granted the investors an option, for a period of twelve months, to purchase up to an additional 375,001 shares of common stock at a price per share of $0.60, for additional aggregate consideration of $225,000. The closing of the offering took place on April 29, 2019.

Results of Operations during the three months ended March 31, 2019 as compared to the three months ended March 31, 2018

Revenues

During the three months ended March 31, 2019, we generated $58 thousand in revenues, compared to $27 thousand in revenues in the three months ended March 31, 2018. The increase is mainly attributable to an increase in the sale of for our product.

Research and Development Expenses

Our research and development expenses during the three months ended March 31, 2019 were $41 thousand and all expenses resulted from ongoing research and development expenses.

Our research and development expenses during the three months ended March 31, 2018 were $31 thousand. The increase is mainly attributable to expenses related to the new expected Shine product.

Marketing, General and Administrative Expenses

Our marketing, general and administrative expenses during the three months ended March 31, 2019 were $436 thousand and were comprised mainly of $320 thousand in payroll and payments to consultants. Our marketing, general and administrative expenses during the three months ended March 31, 2018 were $464 thousand and were comprised mainly of $286 thousand in payroll and payments to consultants. The decrease in our marketing, general and administrative expenses is mainly attributable to a decrease in marketing expenses and travel abroad expenses.

Net Loss

During the three months ended March 31, 2019 we incurred a net loss of $479 thousand. During the three months ended March 31, 2018, we incurred a net loss of $364 thousand. The increase in net loss is mainly attributable to a decrease in gross margins.

Liquidity and Capital Resources

Our balance sheet as of March 31, 2019 reflects total assets of $1,053 thousand, consisting mainly of cash and cash equivalents in the amount of approximately $371 thousand, inventory of approximately $224 thousand and property and equipment, net of approximately $163 thousand. As of December 31, 2018, our balance sheet reflects total assets of approximately $1,158 thousand consisting mainly of cash and cash equivalents in the amount of approximately $475 thousand, inventory in the amount of approximately $249 thousand, other receivables of approximately $177 thousand and property and equipment net, of approximately $161 thousand.

As of March 31, 2019, we had total current liabilities of approximately $337 thousand, consisting mainly of accounts payable and accrued expenses of approximately $187 thousand and a note payable of approximately $80 thousand. As of December 31, 2018, we had total current liabilities of approximately $385 thousand consisting mainly of accounts payable and accrued expenses of approximately $231 thousand and a note payable of approximately $80 thousand.

As of March 31, 2019, we had positive working capital of approximately $386 thousand, compared to positive working capital of approximately $573 thousand at December 31, 2018. The working capital has been sufficient to sustain our operations to date, although there is substantial doubt about our ability to continue as going concern. Our total liabilities as of March 31, 2019 were approximately $460 thousand, compared to approximately $417 thousand at December 31, 2018.

During the three months ended March 31, 2019, we used approximately $320 thousand of cash in our operating activities. This resulted mainly from an overall net loss of approximately $479 thousand, a decrease in other receivables of approximately $101 thousand and a decrease in inventory of approximately $32 thousand. During the three months ended March 31, 2018, we used approximately $540 thousand of cash in our operating activities. This resulted mainly from an overall net loss of approximately $364 thousand, an increase in accounts payable and accrued expenses of approximately $39 thousand and an increase in inventory of approximately $43 thousand.

During the three months ended March 31, 2019, we used approximately $11 thousand in our investing activities, as compared to approximately $1 thousand in the same period in the prior year.

During the three months ended March 31, 2019, our financing activities provided us with $232 thousand, as compared to $900 thousand in the same period in the prior year, through the issuance of common stock.

On March 13, 2019, we issued and sold to ICB 957,854 shares of our common stock at a price per share of $0.261, for aggregate consideration of $250,000. In addition, in April 2019, the Company entered into subscription agreements with several investors, consisting of our officers and directors, pursuant to which we issued 1,229,508 shares of common stock for aggregate consideration of $225,000.

While management believes the Company will be successful in its current and planned operating activities, there can be no assurance that the Company will be successful in the achievement of sales of its products that will generate sufficient revenues to earn a profit and sustain the operations of the Company. Our ability to create sufficient working capital to sustain us over the next twelve-month period and beyond, is dependent on our ability to raise additional funds through the issuance of equity or debt instrument. There can be no assurance that sufficient capital will be available to us. We currently have no agreements, arrangements or understandings with any person to obtain funds through bank loans, lines of credit or any other sources.

Going Concern Consideration

As result of the above, there is substantial doubt about our ability to continue as a going concern. Our financial statements contain additional note disclosures with respect to this matter, but no accounting adjustments that relate to this matter.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements.

Critical Accounting Policies

Please see Note 1B of Part I, Item I of this Quarterly Report on Form 10-Q/A for the summary of significant accounting policies. In addition, reference is made to Note 1B in the financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2018 (filed on March 28, 2019) with respect to our Critical Accounting Policies. There have been no other material changes to our critical accounting policies and estimates since our Annual Report on Form 10-K for the year ended December 31, 2018.