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 June 30, 2019

[   ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE EXCHANGE ACT

For the transition period from _________ to _________

Commission File No. 000-54394

ONLINE DISRUPTIVE TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)

Nevada 27-1404923
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization)  

P.O. Box 1080, 10 Stevens Street, Andover, MA 01810-3572
(Address of principal executive offices) (zip code)

978-886-1071
(Registrant’s telephone number, including area code)

_____________________________________________________________
(Former name, former address and former fiscal year, if changed since last report)

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 has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes [X]        No [   ]

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 definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer      [   ] Accelerated filer                      [   ] 
Non-accelerated filer        [   ] Smaller reporting company    [X]
(Do not check if a smaller reporting company) Emerging growth company    [   ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [   ]

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

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS
DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities and Exchange Act of 1933 subsequent to the distribution of securities under a plan confirmed by a court.
Yes [   ] No [   ]

APPLICABLE ONLY TO CORPORATE ISSUERS

State the number of shares outstanding of each of the issuer’s classes of common equity as of the latest practicable date:
As of November 5, 2019, there were 132,300,597 shares of common stock, par value $0.001, outstanding.

TABLE OF CONTENTS

PART I - FINANCIAL INFORMATION 1
   
ITEM 1. FINANCIAL STATEMENTS 1
   
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 3
   
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 15
   
ITEM 4. CONTROLS AND PROCEDURES. 16
   
PART II - OTHER INFORMATION 16
   
ITEM 1. LEGAL PROCEEDINGS 16
   
ITEM 1A. RISK FACTORS 16
   
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS 24
   
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 24
   
ITEM 4. MINE SAFETY DISCLOSURES 24
   
ITEM 5. OTHER INFORMATION 24
   
ITEM 6. EXHIBITS 24
   
SIGNATURES 26

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

 

 

ONLINE DISRUPTIVE TECHNOLOGIES, INC.

 

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

FOR THE QUARTER ENDED JUNE 30, 2019

(Unaudited)

 

 

 

Online Disruptive Technologies, Inc.
Condensed Interim Consolidated Balance Sheets
(U.S. Dollars)
(Unaudited)

    June 30, 2019     December 31, 2018  
    $      $   
ASSETS            
             
Current Assets            
Cash and Cash Equivalents   121,980     120,245  
Restricted Cash (Note 12(3))   30,976     29,185  
Prepaid Expenses   13,776     23,467  
VAT Receivable   22,591     20,141  
Total Current Assets   189,323     193,038  
             
Fixed Assets (Note 4)   39,054     45,274  
Right-of-use Assets (Note 3)   76,964     -  
Total Assets   305,341     238,312  
             
LIABILITIES            
             
Current Liabilities            
Accounts Payable   226,289     194,400  
Accrued Liabilities   184,005     196,316  
Promissory Note (Note 7)   42,544     50,000  
Current Portion of Lease Liability (Note 3)   57,181     -  
             
Total Current Liabilities   510,019     440,716  
             
Convertible Debentures (Note 8)   2,061,388     2,061,388  
Convertible Loan (Note 9)   603,201     537,000  
Lease Liabilities (Note 3)   25,769     -  
Total Liabilities   3,200,377     3,039,104  
             
DEFICIT            
Authorized:
   20,000,000 Preferred Shares, par value $0.001
   500,000,000 Common Shares, par value $0.001
Issued and outstanding:
   Nil Preferred Shares
   127,240,587 Common Shares (December 31, 2018:
   124,063,122 Common Shares) 		  127,241     124,063  
Shares Subscription Received   414,000     -  
Additional Paid-in Capital   13,042,422     12,340,094  
Accumulated Other Comprehensive Loss   (14,019 )   80,946  
Deficit   (16,265,714 )   (15,255,866 )
Deficit Attributable to Shareholders of the Company   (2,696,070 )   (2,710,763 )
Non-Controlling Interests   (198,966 )   (90,029 )
Total Deficit   (2,895,036 )   (2,800,792 )
Total Liabilities and Deficit   305,341     238,312  

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Online Disruptive Technologies, Inc.
Consolidated Statements of Operations and Comprehensive Loss
(U.S. Dollars)
(Unaudited)

    Three months     Three months     Six months     Six months  
    ended June 30,     ended June 30,     ended June     ended June  
    2019     2018     30, 2019     30, 2018  
General and Administrative Expenses   $     $     $     $  
Accounting Fees   7,500     7,500     15,000     15,000  
Audit & Tax Fees   30,182     57,882     40,633     72,446  
Bank Fees   302     229     412     365  
Consulting Fees   91,816     91,651     183,517     203,803  
Lease Expense (note 12)   4,090     -     17,464     -  
Filing and Transfer Agent Fees   7,077     3,776     8,626     3,866  
Insurance Expense   2,479     1,297     8,320     14,514  
Marketing Expense   3,321     -     4,419     -  
Legal Fees   3,776     6,379     8,740     10,044  
Office and Miscellaneous Expense   1,452     960     6,144     4,914  
Payroll Expense   9,020     9,078     17,936     18,460  
Research and Development Expense (Note 2l, 5)   402,507     1,137,940     787,253     1,404,762  
Travel Expenses   7,821     3,668     10,271     7,335  
    571,343     1,320,360     1,108,735     1,755,509  
                         
Other Expense                        
Lease Liability Expense (Note 3)   1,168     -     2,343     -  
Fair Value through Profit and Loss on Loan   -     (17,924 )   -     17,054  
Interest Accretion   -     25,817     -     148,562  
Interest Expense   67,439     46     68,769     102  
Foreign Currency (Gain) Loss   (29,045 )   63,419     (68,212 )   65,943  
Net Loss for the period   (610,905 )   (1,391,718 )   (1,111,635 )   (1,987,170 )
                         
Other Comprehensive Income                        
Currency Translation Adjustments   (49,987 )   56,525     (94,965 )   56,525  
Comprehensive Loss for the period   (660,892 )   (1,335,193 )   (1,206,600 )   (1,930,645 )
                         
Net Loss attributable to:                        
Common Stockholders   (558,717 )   (1,228,515 )   (1,009,848 )   (1,785,324 )
Non-Controlling Interests   (52,188 )   (163,203 )   (101,787 )   (201,846 )
    (610,905 )   (1,391,718 )   (1,111,635 )   (1,987,170 )
Net Comprehensive Loss Attributable to:                        
Common Stockholders   (604,464 )   (1,177,733 )   (1,096,117 )   (1,734,542 )
Non-Controlling Interests   (56,428 )   (157,460 )   (110,483 )   (196,103 )
    (660,892 )   (1,335,193 )   (1,206,600 )   (1,930,645 )
                         
Basic and Diluted Net Loss per Common Share   (0.01 )   (0.01 )   (0.02 )   (0.02 )
                         
Weighted Average Number of Common Shares Outstanding – Basic and Diluted   127,072,475     119,615,259     125,855,343     119,388,085  

The accompanying notes are an integral part of the Condensed Interim Consolidated Financial Statement

Online Disruptive Technologies, Inc.
Condensed Interim Consolidated Statements of Cash Flows
(U.S. Dollars)
(Unaudited)

    Six months     Six months  
    ended June     ended June 30,  
    30, 2019     2018  
Cash flow from Operating Activities   $      $   
Net loss for the period   (1,111,635 )   (1,987,170 )
Adjustment for items not involving cash:            
Lease expense   19,807     -  
Stock-based compensation   387,617     953,148  
Foreign exchange (gain) loss   (68,212 )   65,942  
Fair value through profit and loss on loan   -     17,278  
Depreciation – Fixed assets   8,453     11,169  
Interest accrued   68,769     148,562  
Changes in non-cash working capital items:            
(Increase) Decrease in VAT receivable   (1,423 )   7,385  
Decrease in prepaid expense   10,085     1,487  
(Decrease) Increase in accounts payable and accrued liabilities   (19,576 )   173,714  
Net cash used in operating activities   (706,115 )   (608,485 )
Cash flow from financing activities            
Common shares issued, net of issuance costs   310,740     4,812  
Share subscription received (note 10)   414,000     3,333  
Convertible loan issued   -     537,000  
Term loan repayment   (10,000 )   -  
             
Net cash provided by financing activities   714,740     545,145  
Cash flow from investing activities   -     -  
Cash utilized in purchase of assets   -     (625 )
Net cash used in investing activities   -     (625 )
             
Effects of exchange rate changes on cash and cash equivalents   (5,099 )   5,730  
             
Net increase (decrease) in cash, cash equivalents, and restricted cash   3,526     (58,235 )
Cash, cash equivalents, and restricted cash, beginning of period   149,430     232,247  
Cash, cash equivalents, and restricted cash, end of period   152,956     174,012  
Supplementary Information            
Interest Paid   -     -  
Income Taxes Paid   -     -  

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 1 - Nature of Operations and Going Concern

Online Disruptive Technologies, Inc. (“ODT” or the “Company”) was incorporated on November 16, 2009 in the State of Nevada, U.S.A. The Company was in the business of operating websites with advertising revenue platforms. However, as described below, the Company changed its primary business focus to the development and commercialization of a biotechnology platform. The Company has limited operations that has had no revenues from inception to date. The Company has a December 31 year-end.

Effective March 24, 2010, the Company acquired 100% of the issued and outstanding shares of RelationshipScoreboard.com Entertainment Inc. (“RS” or “RelationshipScoreboard.com”), a company incorporated on November 16, 2009 in the state of Nevada, U.S.A. in exchange for 16,000,000 shares of the Company’s common stock. Upon the completion of the acquisition, the former sole shareholder of RS held 89% of the Company’s issued and outstanding common stock. As a result, the transaction was accounted for as a reverse takeover transaction (“RTO”) for accounting purpose, as RS was deemed to be the acquirer, and these condensed interim consolidated financial statements are a continuation of the financial statements of RS. On January 28, 2013, RelationshipScoreboard.com was closed and dissolved. The Company sold the website assets for $10 to an arm’s length individual and wrote off all supplier payables in the amount of $430.

On April 23, 2012, the Company established an Israeli subsidiary named Savicell Diagnostic Ltd. (“Savicell”) with the intention of exploring business ventures in the biotechnology sector. On July 25, 2012, Savicell entered into a definitive licensing agreement with a division of the Tel Aviv University for the purpose of developing and commercializing a new technology relative to the early detection of various forms of disease. With the consummation of this transaction, the Company is now entirely focused on its biotechnology efforts.

These condensed interim consolidated financial statements have been prepared with the ongoing assumption that the Company will be able to realize its assets and discharge its liabilities in the normal course of business. The Company has a working capital deficit balance of $320,696 as at June 30, 2019 (working capital deficiency balance December 2018 – $247,678) and an accumulated deficit of $16,265,714. Furthermore, additional future losses are anticipated which raise substantial doubt about the Company’s ability to continue as a going concern. These condensed interim consolidated financial statements do not include any adjustments to the amounts and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

The operations of the Company have primarily been funded by the sale of common shares and loans received. Continued operations of the Company are dependent on the Company’s ability to complete equity financings or to generate profitable operations in the future. Management’s plan in this regard is to secure additional funds through future equity financings. Such financings may not be available or may not be available on reasonable terms to the Company. Failure to obtain the ongoing support of its equity financings and creditors may make the going concern basis of accounting inappropriate, in which case the Company’s assets and liabilities would need to be recognized at their liquidation values. These condensed interim consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets amounts and classification of liabilities that might arise from this uncertainty.

Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 2 - Significant Accounting Policies

a)        Basis of Presentation
These condensed interim consolidated financial statements have been prepared for interim financial reporting in conformity with generally accepted accounting principles in the United States of America (“US GAAP”), and are expressed in United States dollars, unless otherwise noted. All adjustments considered necessary for a fair presentation of financial position, results of operations and cash flows for the six months ended June 30, 2019 have been included.

b)        Principles of Consolidation
These condensed interim consolidated financial statements include the accounts of the Company and its 87.87% (December 31, 2018 – 87.81%) interest in Savicell. All significant intercompany accounts and transactions have been eliminated upon consolidation.

c)        Use of Estimates
The preparation of condensed interim consolidated financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Significant areas requiring the use of management estimates include assumptions and estimates relating to share-based payments, valuation allowances for deferred tax assets and assessment of lease.

d)        Foreign Currency Translation
The Company’s functional currency is the U.S. dollar. The Company’s subsidiary’s functional currency is the New Israeli Shekel (“NIS”). Transactions in other currencies are recorded in U.S. dollars at the rates of exchange prevailing when the transactions occur. Monetary assets and liabilities denominated in other currencies are translated into U.S. dollars at rates of exchange in effect at the balance sheet dates. Exchange gains and losses are recorded in the statements of operations.

Results of operations are translated into the Company’s presentation currency, U.S. dollars, at an appropriate average rate of exchange during the year. Net assets and liabilities are translated to U.S. dollars for presentation purposes at rates of exchange in effect at the end of the period. Gains or losses arising on translation are recognized in other comprehensive income (loss) as foreign currency translation adjustments.

e)        Cash and Cash Equivalents
Cash and cash equivalents consist entirely of readily available cash balances. There were no cash equivalents as of June 30, 2019 and December 31, 2018.

f)        Restricted cash
Restricted cash mainly consists of cash reserve and security deposits required for rental office.

Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 2 - Significant Accounting Policies (Continued)

g)        Stock-based Compensation
The Company accounts for its stock-based compensation awards in accordance with ASC Topic 718, Compensation—Stock Compensation (“ASC 718”). ASC 718 requires all stock-based payments to employees and non-employees including grants of stock options, to be recognized as expense in the statements of operations based on their grant date fair values. The Company estimates the grant date fair value of each option award using the Black-Scholes option-pricing model. The use of the Black-Scholes option-pricing model requires management to make assumptions with respect to the expected term of the option, the expected volatility of the common stock consistent with the expected life of the option, risk-free interest rates and expected dividend yields of the common stock.

h)        Stock for Services
The Company periodically issues common stock, warrants and common stock options to consultants for various services. Costs of these transactions are measured at the fair value of the service received or the fair value of the equity instruments issued, whichever is more reliably measurable. The value of the common stock is measured at the earlier of (i) the date at which a firm commitment for performance by the counterparty to earn the equity instruments is reached or (ii) the date at which the counterparty’s performance is complete.

i)        Income Taxes
Income taxes are accounted for under the liability method of accounting for income taxes. Under the liability method, deferred tax liabilities and assets are recognized for the estimated future tax consequences attributable to differences between the amounts reported in the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply when the asset is realized or the liability is settled. The effect of a change in income tax rates on deferred tax liabilities and assets is recognized in income in the period in which the change occurs. Deferred tax assets are recognized to the extent that they are considered more likely than not to be realized.

Per FASB ASC 740 “Income taxes” under the liability method, it is the Company’s policy to provide for uncertain tax positions and the related interest and penalties based upon management’s assessment of whether a tax benefit is more likely than not to be sustained upon examination by tax authorities. At June 30, 2019, the Company believes it has appropriately accounted for any unrecognized tax benefits. To the extent the Company prevails in matters for which a liability for an unrecognized benefit is established or is required to pay amounts in excess of the liability, the Company’s effective tax rate in a given financial statement period may be affected. Interest and penalties associated with the Company’s tax positions are recorded as Interest Expense.

Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 2 - Significant Accounting Policies (Continued)

j)        Comprehensive Income (Loss)
The Company accounts for comprehensive income under the provisions of ASC Topic 220-10, Comprehensive Income - Overall, which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. The Company is disclosing this information on its Statements of Operations and Comprehensive Loss.

k)        Earnings (Loss) Per Share
Basic loss per share is computed on the basis of the weighted average number of common shares outstanding during each period.

Diluted loss per share is computed on the basis of the weighted average number of common shares and dilutive securities outstanding. Stock options are considered to be common stock equivalents and were not included in the net loss per share calculation for the three and six months ended June 30, 2019 and 2018 because the inclusion of such underlying shares would have had an anti-dilutive effect.

l)        Financial Instruments and Fair Value of Financial Instruments
Fair Value of Financial Instruments – the Company adopted SFAS ASC 820-10-50, “Fair Value Measurements”. This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:

•

Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.

   

 

•

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

   

 

  •

Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.

As at June 30, 2019, the fair value of cash and cash equivalents was measured using Level 1 inputs, and the fair value of convertible debentures was measured using Level 2 inputs.

The Company’s financial instruments are cash and cash equivalents, restricted cash, accounts payable, accrued liabilities, promissory note, convertible debentures and convertible loans. The recorded values of our financial instruments approximate their current fair values because of their nature and respective maturity dates or durations.

Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 2 - Significant Accounting Policies (Continued)

m)        Research and Development Expenses
In the quarter ended June 30, 2019, all research and development costs are charged to expense as incurred. The majority of these costs are in-house expenses related to consulting fees, materials, salaries of employees working on the R&D projects, rent and legal expenses related to patents. A breakdown of the R&D costs is as follows:

      Six months     Six months     Three months     Three months  
      ended June 30,     ended June 30,     ended June 30,     ended June 30,  
      2019     2018     2019     2018  
  Research and Development   $     $     $     $  
  Expenses                        
  Consulting fees   23,809     14,900     20,110     5,441  
  Legal fees   13,835     8,306     9,133     7,590  
  Office and Miscellaneous Expense   4,175     6,947     2,718     1,743  
  Payroll expense   312,915     387,638     147,682     233,540  
  R&D materials and supplies   42,865     16,326     34,521     1,863  
  Rent   2,037     17,497     612     8,638  
  Share-based compensation   387,617     953,148     187,731     879,125  
  Total   787,253     1,404,762     402,507     1,137,940  

Savicell’s financing commitment related to the License and Research Funding Agreement (as defined in Note 4 below) entered into with Ramot at Tel Aviv University was completely fulfilled by December 31, 2015.

n)        Fixed Assets
The depreciation rates applicable to each category of fixed assets are as follows:

Class of Properties Depreciation Rate
Furniture and Fixtures 15-year; straight-line basis
Computer Equipment 3 to 4-year; straight-line basis
Lab Equipment 3 to 15-year; straight-line basis

o)        Convertible Debentures
Convertible debentures, for which the embedded conversion feature does not qualify for derivative treatment, is evaluated to determine if the effective or actual rate of conversion per the terms of the convertible note agreement is below market value. In these instances, the Company accounts for the value of the beneficial conversion feature as a debt discount, which is then accreted to interest expense over the life of the related debt using the effective interest method.

p)        Convertible Loans
Convertible loans are accounted for in accordance with ASC 470-20. The Company has determined that the embedded conversion options in the convertible loans are not required to be separately accounted for as a derivative under GAAP.

Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 2 - Significant Accounting Policies (Continued)

q)        Modifications to Debt
The Company evaluates any modifications to its debt in accordance with the applicable guidance in ASC 470-50, Debt-Modifications and Extinguishments. If the debt instruments are substantially modified, the modification is accounted for in the same manner as a debt extinguishment (i.e., a major modification) and the fees paid are recognized as expense at the time of the modification. Otherwise, such fees are deferred and amortized as an adjustment of interest expense over the remaining term of the modified debt instrument using the interest method.

r)        Recently Adopted Accounting Pronouncements
In July 2017, the FASB issued ASU 2017-11“Earnings Per Share (Topic 260); Distinguishing Liabilities from Equity (Topic 480); Derivatives and Hedging (Topic 815): (Part I) Accounting for Certain Financial Instruments with Down Round Features; (Part II) Replacement of the Indefinite Deferral for Mandatorily Redeemable Financial Instruments of Certain Nonpublic Entities and Certain Mandatorily Redeemable Noncontrolling Interests with a Scope Exception” (“ASU 2017-11”). ASU 2017-11 allows companies to exclude a down round feature when determining whether a financial instrument (or embedded conversion feature) is considered indexed to the entity’s own stock. As a result, financial instruments (or embedded conversion features) with down round features may no longer be required to be accounted for as derivative liabilities. A company will recognize the value of a down round feature only when it is triggered, and the strike price has been adjusted downward. For equity-classified freestanding financial instruments, an entity will treat the value of the effect of the down round as a dividend and a reduction of income available to Common Stock holders in computing basic earnings per share. For convertible instruments with embedded conversion features containing down round provisions, entities will recognize the value of the down round as a beneficial conversion discount to be amortized to earnings. ASU 2017-11 is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption is permitted. The Company has early adopted the methodologies prescribed by this ASU for the year ended December 31, 2018 and there is no material impact on the Company’s condensed interim consolidated financial statements.

In July 2018, the FASB issued ASU 2018-10, Codification Improvements to Topic 842, Leases. For entities that early adopted Topic 842, the amendments are effective upon issuance of ASU 2018-10, and the transition requirements are the same as those in Topic 842. For entities that have not adopted Topic 842, the effective date and transition requirements will be the same as the effective date and transition requirements in Topic 842. ASU 2018-10 will be effective for use for fiscal years beginning after December 15, 2018. The Company has adopted the methodologies prescribed by this ASU on January 1, 2019 and there is no material impact on the Company’s condensed interim consolidated financial statements.

In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting. These amendments expand the scope of Topic 718, Compensation—Stock Compensation (which currently only includes share-based payments to employees) to include share-based payments issued to nonemployees for goods or services. Consequently, the accounting for share-based payments to nonemployees and employees will be substantially aligned. The ASU supersedes Subtopic 505-50, Equity—Equity-Based Payments to Non-Employees. This standard is effective for fiscal years beginning after December 15, 2018, including interim periods within that fiscal year.

Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 2 - Significant Accounting Policies (Continued)

r)        Recently Adopted Accounting Pronouncements (continued)

The Company has adopted the methodologies prescribed by this ASU on January 1, 2019 and there is no material impact on the Company’s condensed interim consolidated financial statements.

In February 2016, the Financial Accounting Standards Board (“FASB”) issued ASC 842 which requires lessees to recognize a right-of-use (“ROU”) asset and lease liability on the balance sheet for virtually all leases. From a lessee perspective, ASC 842 retains a dual model requiring leases to be classified as either operating or finance leases for the income statement. Operating leases will result in straight-line expense, and financing leases will have a front-loaded expense pattern with an interest expense component. On January 1, 2019, the Company adopted ASC 842 and all related amendments using the prospective transition approach. The comparative information has not been restated and continues to be reported under the accounting standards in effect for those periods. Adoption of the new standard resulted in the recording of lease ROU assets and lease liabilities of approximately $90,146 as of January 1, 2019. In accordance with ASC 842, the Company determines if an arrangement is a lease at inception based on whether there is an identified asset, whether the Company has the right to obtain substantially all of the economic benefits from the use of the asset and whether the Company has the right to direct the use of the asset. Currently, the Company only has operating leases and does not have any financing leases. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. See note 3, Leases, for further disclosures and detail regarding our operating leases.

s)        Recently Issued Accounting Pronouncements Not Yet Adopted

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement. For all entities, amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted. An entity is permitted to early adopt any removed or modified disclosures upon issuance of ASU No. 2018-13 and delay adoption of the additional disclosures until their effective date. The Company is currently evaluating the potential impact this guidance will have on the condensed interim consolidated financial statements, if any.

Note 3 – Adoption of ASC 842, Leases

On January 1, 2019, the Company adopted ASC 842 using the prospective transition approach, which applies the provisions of the new guidance at the effective date without adjusting the comparative periods presented. The adoption of the lease standard did not result in a cumulative-effect adjustment to opening equity. Results for reporting periods beginning after January 1, 2019 are presented under ASC 842 while prior period amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 840, “Leases,” (“ASC 840”).

Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 3 - Adoption of ASC 842, Leases (Continued)

The Company leases office space. For leases with terms greater than 12 months, the Company records the related right-of-use (“ROU”) asset and lease obligation at the present value of lease payments over the term. Leases may include fixed rental escalation clauses, renewal options and / or termination options that are factored into the determination of lease payments when appropriate. The Company’s leases do not usually provide a readily determinable implicit rate; therefore, an estimate of the Company’s incremental borrowing rate is used to discount the lease payments based on information available at the lease commencement date. The discount rate used was 5%.

Operating lease costs during the six months ended June 30, 2019 were $28,076.

The adoption of ASC 842 resulted in the recognition of ROU assets and lease liabilities of approximately $90,146 as of January 1, 2019. As at June 30, 2019, ROU Asset is $76,964, current portion and long term portion of these lease liabilities are $57,181 and $25,769 respectively. The standard did not materially impact the Company’s condensed interim consolidated statement of operations or its condensed interim consolidated statement of cash flows for the six months ended June 30, 2019. See below for the Company’s updated lease policy and the required disclosures under ASC 842. The Company is a lessee in a rental lease that has expiry dates within the next 2 years.

    Right-of-use Asset     Lease Liability  
    $      $   
Balance, December 31, 2018   -     -  
Adoption of ASC 842   90,146     103,917  
Lease expense   (17,464 )   -  
Lease liability expense   -     2,343  
Lease payments   -     (28,157 )
Effect of foreign exchange rate changes   4,282     4,847  
    76,964     82,950  
Current   -     57,181  
Non-current   -     25,769  

The Company is a lessee in two leases that have expiry dates ranging between two (2) and three (3) years. The table below summarizes the remaining expected lease payments under our operating leases as of June 30, 2019.

Future Lease Payments   June 30,  
    2019  
2019 $  28,157  
2020   45,312  
2021   11,653  
Less: imputed interest   (2,172 )
       
Present value of operating lease liabilities $  82,950  

Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 3 - Adoption of ASC 842, Leases (Continued)

Update to Lease Policy

Accounting and reporting guidance for leases requires that leases be evaluated and classified as either operating or finance leases by the lessee and as either operating, sales-type or direct financing leases by the lessor. The Company’s operating leases are included in ROU assets, lease liabilities-current portion and lease liability-less current portion in the accompanying consolidated balance sheets. ROU assets represent the Company’s right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease.

Note 4 – Fixed Assets

As of June 30, 2019, the fixed assets balance on the consolidated financial statement consist of the following:

    Furniture and     Computer              
Cost:   Fixtures     Equipment     Lab Equipment     Total  
December 31, 2017 $  3,871   $ 29,325   $  49,191   $  82,387  
Additions   -     9,933     10,897     20,830  
Exchange difference   (286 )   (2,580 )   (4,089 )   (6,955 )
December 31, 2018 $  3,585   $  36,678   $  55,999   $  96,262  
Additions   -     -     -     -  
Exchange difference   183     1872     2,858     4,913  
June 30, 2019 $  3,768   $  38,550   $  58,857   $  101,175  

    Furniture and     Computer     Lab        
Amortization:   Fixtures     Equipment     Equipment     Total  
December 31, 2017 $  887   $  19,497   $  14,868   $  35,252  
Additions   137     6,692     12,311     19,140  
Exchange difference   (65 )   (1,440 )   (1,899 )   (3,404 )
December 31, 2018 $  959   $  24,749   $  25,280   $  50,988  
Additions   120     2,198     6,135     8,453  
Exchange difference   2,271     202     207     2,680  
June 30, 2019 $  3,350   $  27,149   $  31,622   $  62,121  

    Furniture and     Computer     Lab        
Net Book Value:   Fixtures     Equipment     Equipment     Total  
December 31, 2018 $  2,626   $  11,929   $  30,719   $  45,274  
June 30, 2019 $  418   $  11,401   $  27,235   $  39,054  

The Company recorded depreciation in R&D materials and supplies in Research and Development expenses as disclosed in Note 2 (l).

Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 5 – License and Research Funding Agreement

On July 25, 2012, the Company’s subsidiary Savicell entered into a License and Research Funding Agreement (“R&D Agreement”) with Ramot at Tel Aviv University (“Ramot”) pursuant to which:

  • In the course of research performed at Tel-Aviv University ("TAU"), Prof. Fernando Patolsky has developed technology relating to early detection of diseases by measuring metabolic activity in the immune system;
  • Savicell wishes to fund further research at TAU relating to such technology; and
  • Savicell wishes to obtain a license from Ramot with respect to such technology and the results of such further funded research in order to develop and commercialize products in the diagnostics space, and Ramot wishes to grant the Company such license, all in accordance with the terms and conditions of this R&D Agreement.

Pursuant to the above noted R&D Agreement, Savicell funded research expenditures amounting to a total of $1,600,000 (paid in prior years).

  • $81,000 within 5 business days of the R&D Agreement (paid)
  • Before October 2012; $359,500 plus VAT as applicable (paid)
  • Before January 3, 2013; $359,500 plus VAT as applicable (paid)
  • Before April 3, 2013; $400,000 plus VAT as applicable (paid)

The payments originally due on April 3, 2013 and July 3, 2013 were postponed by the parties until such time as the funds were actually required in furtherance of the joint research and development initiatives. As of December 31, 2015, Savicell’s entire financing commitment has been met and no more expenditures are mandated by the R&D Agreement on behalf of Ramot. Savicell is continuing the clinical research within its own laboratory situated in Haifa, Israel.

In addition, during fiscal year 2013, Savicell agreed to issue to Ramot warrants (the “Warrants”) to purchase a number of ordinary shares of Savicell which shall together comprise 15% of issued shares of Savicell on an as-converted, fully diluted basis (equivalent to 1,765 Warrant Shares of Savicell). The Warrants shall be exercisable at an exercise price equal to the par value of the Warrant Shares, at any time and from time to time before Savicell completes a deemed liquidity event or the first underwritten offering of the Savicell's ordinary shares to the general public. The fair value of the Warrant Shares has been estimated at $1,698.97 per Warrant Share which is equivalent to the price at which Savicell has issued shares to third parties, for a total of $2,998,682 which has been included in research and development costs. As the exercise price inherent in the warrant certificate to purchase 1,765 common shares of Savicell is at nominal value, the warrant certificate is valued at the price of the subsequent equity issuance by Savicell ($1,698.97 per share) and the related common shares are considered to be issued and outstanding.

Upon successful development and commercialization of the technology, and in recognition of the rights and licenses granted to Savicell pursuant to this R&D Agreement, Savicell will be subject to (a) royalties based on the worldwide sales related to the technology; and (b) minimum annual royalties with respect to any calendar year following the first commercial sales as follows. The minimum annual royalties are subject to increases for each successive year.

During the three and six months ended June 30, 2019, Savicell incurred research and development costs of $402,507 and $787,253 respectively (June 30, 2018 $1,137,940 and $1,404,762) which were included in the consolidated statements of operations and comprehensive loss.

Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 6 – Related Party Transactions

The Company completed the following related party transactions:

During the three and six months ended June 30, 2019, the Company incurred consulting fees and salaries of $128,102 and $255,608 (June 30, 2018 - $124,703 and $265,488) payable to its directors and officers.

As at June 30, 2019, there was $148,148 (December 31, 2018 – $94,045) payable to current officers and directors of the Company.

As at June 30, 2019, included in convertible debentures are amounts of $2,061,388 (December 31, 2018 - $2,061,388) that was entered into with two directors, one consultant, and one key management personnel of the Company (Note 8).

Note 7 – Promissory Note

During the year ended December 31, 2018, the Company issued a promissory note to the spouse of a consultant and former director of the Company for $50,000. The note bears interest at the rate of 10% per annum with an initial maturity date of the earlier of February 28, 2019 or the closing by the Company of an equity financing of at least $250,000. Interest incurred during the three and six months ended June 30, 2019 is $1,364 and $2,568 (June 30, 2018 $nil and $nil).

During the six months ended the Company has repaid $10,000. The remaining balance is due on demand and the parties have agreed to allow for ultimate repayment beyond the originally contemplated maturity date.

Note 8 – Convertible Debentures

On April 15, 2015, the Company entered into debt conversion option agreements with two directors, one consultant and one employee of the Company pursuant to which the Company collectively settled debts in the aggregate amount of $852,418. Pursuant to the agreements, these individuals may convert a portion or all of the debt amounts into common shares of the Company at a price per share of $0.055 over a seven year term.

On December 31, 2015, the Company entered into debt conversion option agreements with two directors, one consultant and one employee of the Company pursuant to which the Company collectively settled debts in the aggregate amount of $188,085 with an unsecured and non-interest bearing convertible debenture. Pursuant to the agreements, these individuals may convert a portion or all of the debt amounts into common shares of the Company at a price per share of $0.20 over a seven year term.

On December 31, 2016, the Company entered into debt conversion option agreements with two directors, one consultant and one employee of the Company pursuant to which the Company collectively settled debts in the aggregate amount of $172,895 with an unsecured and non-interest bearing convertible debenture. Pursuant to the agreements, these individuals may convert a portion or all of the debt amounts into common shares of the Company at a price per share of $0.20 over a seven-year term.

Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 8 – Convertible Debentures (continued)

On December 31, 2018, the Company entered into debt conversion option agreements with two directors, one consultant and one employee of the Company pursuant to which the Company collectively settled debts in the aggregate amount of $843,266 with an unsecured and non- interest bearing convertible debenture. Pursuant to the agreements, these individuals may convert a portion or all of the debt amounts into common shares of the Company at a price per share of $0.20 over a ten-year term.

The Company evaluated these convertible debentures for derivatives and determined that they do not qualify for derivative treatment. The Company then evaluated the debenture for beneficial conversion features and determined that the convertible debenture issued on April 15, 2015 does contain beneficial conversion features.

The aggregate intrinsic value of the beneficial conversion features was determined to be $852,418. This amount was recorded as a debt discount on April 15, 2015 that is being amortized over the life of the debenture at effective interest rate of 71%. The total debt discount amortization of $852,418 was fully recognised as of December 31, 2018.

    December 31, 2018     Additions     June 30, 2019  
                   
Giora Davidovits $  860,293   $  -   $  860,293  
Eyal Davidovits   402,861     -     402,861  
Irit Arbel   355,746     -     355,746  
Robbie Manis   437,763     -     437,763  
Total $  2,056,663   $  -   $  2,056,663  

    December 31, 2018     Additions     June 30, 2019  
                   
Convertible debentures $  2,056,663   $  -   $  2,056,663  
Convertible discount   (852,418 )   -     (852,418 )
Net convertible debentures   1,204,245     -     1,204,245  
Interest accretion   852,418     -     852,418  
Exchange difference   4,725     -     4,725  
Balance $  2,061,388   $  -   $  2,061,388  

Note 9 – Convertible Loan

On March 8, 2018, the Company issued one convertible loan in the face amount of $350,000 to two current shareholders. The convertible loan matures after two years and bears interest at a rate of 10% per annum. The convertible loan may be converted into common shares of the Company at the earlier of fifteen days after the maturity date and the date the Company raises gross proceeds of $5,000,000 through private placements or files a registration statement with the Securities and Exchange Commission in the United States. The conversion price is $0.20 per share or such lesser price that the Company may issue additional shares to third parties, and, on conversion or repayment of the convertible loan, the Company will issue warrants in a number that is equal to the amount of the loan divided by the conversion price, exercisable at the funding price. In addition, the Company will reset the prior investment price issuable to each Lender for the amount equal to the lower of the prior investment made by such lenders and the amount invested by such lenders under this loan agreement. Such lower amount is referred to as “ Covered Investment”. The incremental number of common shares to be issued to the lenders by the Company is the Covered Investment divided by the reduced share price less the number of common shares previously issued by the Company in respect of the Covered Investment

Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 9 – Convertible Loan (continued).

During the year ended December 31, 2018, the Company issued four convertible loans in the aggregate amount of $187,000 to four individual lenders. The debentures are interest bearing at a rate of 10% per annum and have a term to maturity of two years. The loans are convertible into common shares of the Company at the lower of $0.20 per share and the price of a future financing initiative. Moreover, warrants will be granted to the lenders upon the earlier of repayment of the loans or conversion thereof, in a number that is equal to the amount of the convertible loans divided by the conversion price, exercisable at the funding price.

The Company evaluated these convertible loans for derivatives and determined that they do not qualify for derivative treatment. Interest will be accrued and be due and payable upon the maturity date of the loan. The accrued interest will also be converted into common shares of the company. Interest incurred during the three and six months ended June 30, 2019 is $nil and $66,201 (three and six months ended June 30, 2018: $nil).

Note 10 – Equity

Common Shares

On April 17, 2018, stock options previously granted by the Company were exercised, resulting in the issuance of 481,179 common shares at $0.01 per share for total proceeds of $4,812.

On June 20, 2018, the Company issued 117,660 shares at $0.20 per share for an aggregate amount of $23,532 in exchange for consulting services rendered during the year ended December 31, 2018.

On August 24, 2018, the Company issued 16,665 common shares at $0.20 per share for total proceeds of $3,333 for stock options that were exercised during the year ended December 31, 2018.

On August 27, 2018, stock options previously granted by the Company to a consultant were exercised resulting in the issuance of 800,000 common shares at $0.01 per share. The Company will receive consulting services from this consultant in 2019 in lieu of receiving cash proceeds from this issuance.

On September 7, 2018, the Company issued an aggregate of 2,300,000 units at a price of $0.20 per unit for gross proceeds of $460,000. Each unit is comprised of one common share of the Company and one non-transferable common share purchase warrant with each warrant being exercisable into one additional share at an exercise price of $0.20 per warrant share for a period of two years after the closing of the financing.

On December 18, 2018, the Company issued 78,625 shares at $0.20 per share for an aggregate amount of $15,725 in respect of future consulting services to be rendered up from January 1, 2019 to December 31, 2019.

On December 19, 2018, the Company issued an aggregate of 605,585 units at a price of $0.20 per unit. The total proceeds consist of $95,000 which was previously recorded as a share subscription received on the balance sheet with the remaining gross proceed of $26,117 received in 2018. Each unit comprises one share and one non-transferable common stock share purchase warrant. Each warrant entitles the holder to acquire one additional share of common stock at a price of $0.20 per share until December 19, 2020. On December 19, 2018, the Company issued an aggregate of 500,000 units at a price of $0.20 per unit for total proceeds of $100,000. Each unit comprises one share and one non-transferable common stock share purchase warrant. Each warrant entitles the holder to acquire of $0.20 per share until December 19, 2020.

Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 10 – Equity (continued)

Common Shares (continued)

On March 4, 2019, the Company issued an aggregate of 1,252,000 common shares at a price of $0.20 per share for gross proceeds of $250,400.

On March 4, 2019, the Company issued 50,000 shares at $0.20 per share for an aggregate amount of $10,000, for proceeds received in previous year.

On March 4, 2019, an employee exercised 500,000 options and accordingly received 500,000 common shares at an exercise price of $0.01 per share for aggregate consideration of $5,000.

On April 12, 2019, the Company issued an aggregate of 618,985 unit at a price of $0.20 per share for gross proceeds of $123,797. Each unit is comprised of one common share and non-transferable common share purchase warrant with each warrant being exercisable into one additional share at an exercise price of $0.20 per warrant share for a period of two years after the closing of the financing.

On April 12, 2019, one shareholder of Savicell exercised their right to convert their shareholding in Savicell into common shares of the Company. Accordingly, the Company issued 756,480 common shares at $0.16 per share which equals to 80% of the share pricing of the financing completed on April 19, 2015. Total book value of the issued common shares is $6,392.

As at June 30, 2019, the Company has $414,000 share subscription received but not issue shares yet and 127,240,587 common shares (December 31, 2018 – 124,063,122) issued and outstanding.

Warrants

A summary of warrants as at June 30, 2019 and December 31, 2018 is as follows:

          Warrant Outstanding  
             
          Weighted Average  
    Number of warrant     Exercise Price  
Balance, December 31, 2018   5,186,835   $  0.20  
Granted   1,920,985     0.20  
Expired   (1,693,750 )   0.20  
Balance, June 30, 2019   5,414,070   $  0.20  

    Warrant Outstanding
     
    Weighted Average
  Number of warrant Exercise Price

Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 10 – Equity (Continued)

Warrants (continued)

Number Outstanding Weighted Average Expiry Date Weighted Average
  Exercise Price   Remaining Life
2,300,000 $0.20 September 7, 2020 1.19
87,500 $0.20 September 17, 2021 2.22
1,105,585 $0.20 December 19, 2020 1.47
618,985 $0.20 April 12, 2021 1.79
1,302,000 $0.20 March 4, 2021 1.68
5,414,070 $0.20   1.45

Preferred Shares

The Company has authorized 20,000,000 preferred shares at a par value of $0.001 per share. No preferred shares have been issued by the Company and accordingly none are outstanding.

Stock Options

In August 2015 the Company granted a total of 1,730,000 stock options to four advisors of the Company. The stock options are exercisable at an exercise price of $0.20 per share and may be exercised for six-seven years. One third of the options will vest at end of each completed year for which the consultant provides the services. The options were valued based on the Black Scholes model. For the six months ended June 30, 2019, the Company recorded stock based compensation of nil (2018: $9,382) for such options.

On November 22, 2015 the Company granted a total of 50,000 stock options to an employee. The stock options are exercisable at an exercise price of $0.20 per share and may be exercised for seven years. One third of the options will vest at the grant date of each of November 22, 2016, November 22, 2017 and November 22, 2018 that the employee remains an employee of the Company or its subsidiaries. The options were valued based on the Black Scholes model. For the six months ended June 30, 2019, the Company recorded stock based compensation of nil (2018: $3,392) for such options.

On December 1, 2015 the Company granted a total of 125,000 stock options to an employee. The stock options are exercisable at an exercise price of $0.20 per share and may be exercised for seven years. One third of the options will vest at the grant date of each of December 1, 2016, December 1, 2017 and December 1, 2018 that the employee remains an employee of the Company or its subsidiaries. The options were valued based on the Black Scholes model. For the six months ended June 30, 2019, the Company recorded stock based compensation of nil (2018: $1,987) for such options.

On December 6, 2015 the Company granted a total of 100,000 stock options to an employee. The stock options are exercisable at an exercise price of $0.20 per share and may be exercised for seven years. One third of the options will vest at the grant date of each of December 6, 2016, December 6, 2017 and December 6, 2018 that the employee remains an employee of the Company or its subsidiaries. The options were valued based on the Black Scholes model. For the six months ended June 30, 2019 the Company recorded stock based compensation of nil (2018: $1,658) for such options.

Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 10 – Equity (Continued)

Stock Options (continued)

On February 15, 2016 the Company granted a total of 50,000 stock options to an employee. The stock options are exercisable at an exercise price of $0.20 per share and may be exercised for seven years. One third of the options will vest on each of the first, second and third anniversaries of the date of grant provided the employee remains an employee of the Company or its subsidiaries. The options were valued based on the Black Scholes model. During the six months ended June 30, 2018, 16,665 options were exercised at $0.20 per share resulting in total proceeds of $3,333. The remainder options 33,335 were cancelled and no stock based compensation was recorded for the six months ended June 30, 2019.

On March 7, 2016 the Company granted a total of 75,000 stock options to two employees. The stock options are exercisable at an exercise price of $0.20 per share and may be exercised for seven years. One third of the options will vest on each of the first, second and third anniversaries of the date of grant provided the employee remains an employee of the Company or its subsidiaries. The options were valued based on the Black Scholes model. For the six months ended June 30, 2019, the Company recorded stock based compensation of $163 (2018: $843) for such options.

On May 5, 2016 the Company granted a total of 150,000 stock options to an consultant. The stock options are exercisable at an exercise price of $0.20 per share and may be exercised for ten years. One third of the options will vest on each of the first, second and third anniversaries of the date of grant provided the employee remains an employee of the Company or its subsidiaries. The options were valued based on the Black Scholes model. For the six months ended June 30, 2019 the Company recorded stock based compensation of $636 (2018: $2,086) for such options.

On June 6, 2016 the Company granted a total of 800,000 stock options to a consultant. The stock options are exercisable at the exercise price of $0.20 per share and may be exercised for five years. 480,000 of the options so granted will vest as to one quarter of such options at the end of each completed year that the consultant provides the services. The remaining 320,000 options will be fully vested when the consultant has completed the provision of a minimum of 600 blood samples of lung cancer and control patients during the 4 years following June 6, 2016. One twelfth of these options will vest upon each 50 blood samples having been delivered by the consultant to the Company. The options were valued based on the Black Scholes model. For the six months ended June 30, 2019, 626,667 option vested and the Company recorded stock based compensation of $6,599 (2018: $12,434) for such options.

On November 1, 2016, the Company granted a total of 360,000 stock options to an employee. The stock options are exercisable at an exercise price of $0.20 per share and may be exercised for seven years. One half of the options will vest immediately and one-half shall vest on the on the first anniversary date of grant provided the grantee remains a board member of the Company or its subsidiaries. The options were valued based on the Black Scholes model. For the six months ended June 30, 2019, the Company recorded stock based compensation of nil (2018: nil).

On May 31, 2017, the Company granted a total of 875,000 stock options to six employees. The stock options are exercisable at an exercise price of $0.20 per share and may be exercised for seven years. One third of the options will vest on each of the first, second and third anniversaries of the date of grant provided the employee remains an employee of the Company or its subsidiaries. The options were valued based on the Black Scholes model. For the six months ended June 30, 2019, the Company recorded stock based compensation of $15,314 (2018: $47,930) for such options.

Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 10 – Equity (Continued)

Stock Options (continued)

On July 2, 2017, the Company granted a total of 150,000 stock options to an employee. The stock options are exercisable at an exercise price of $0.20 per share and may be exercised for seven years. One third of the options will vest on each of the first, second and third anniversaries of the grant date provided the provided the employee remains an employee of the Company or its subsidiaries. The options were valued based on the Black Scholes model. For the six months ended June 30, 2019, the Company recorded stock based compensation of $2,832 (2018: $9,144) for such options.

On July 12, 2017, the Company granted a total of 260,000 stock options to an employee. The stock options are exercisable at an exercise price of $0.20 per share and may be exercised for ten years. 50,000 options vested on grant date. Off the remaining 210,000, one third of the options will vest on each of the first, second and third anniversaries of the grant date provided the employee remains a consultant of the Company or its subsidiaries. The options were valued based on the Black Scholes model. For the six months ended June 30, 2019, the Company recorded stock based compensation of $4,172 (2018: $12,314) for such options.

On February 13, 2018, the Company granted a total of 231,250 stock options to a consultant. The stock options vest immediately and are exercisable at an exercise price of $0.20 per share and may be exercised over five years. The options were valued based on the Black Scholes model. For the six months ended June 30, 2019, the Company recorded stock based compensation of nil (2018: $26,317) for such options.

On June 22, 2018, the Company granted a total of 4,100,000 stock options to a group of employees. The stock options are exercisable at an exercise price of $0.20 per share and may be exercised for seven years. One third of the options will vest on each of the first, second and third anniversaries of the date of grant, namely June 22, 2019, June 22, 2020 and June 22, 2021 provided the employees remains an employee of the Company or its subsidiaries. The options were valued based on the Black Scholes model. For the six months ended June 30, 2019, the Company recorded stock based compensation of $168,720 (2018: $182,608) for such options.

On June 22, 2018, the Company granted a total of 1,500,000 stock options to an employee. The stock options are exercisable at an exercise price of $0.20 per share and may be exercised for seven years. One quarter of the options will vest immediately. The remaining 1,125,000 options will vest in equal amounts on each of June 22, 2019, June 22, 2020 and June 22, 2021 provided the employee remains an employee of the Company or its subsidiaries. The options were valued based on the Black Scholes model. For the six months ended June 30, 2019, the Company recorded stock based compensation of $46,096 (2018; $102,090) for such options.

On June 22, 2018, the Company granted a total of 200,000 stock options to a consultant. The stock options are exercisable at an exercise price of $0.20 per share and may be exercised for seven years. One third of the options will vest on each of June 22, 2019, June 22, 2020 and June 22, 2021. The options were valued based on the Black Scholes model. For the six months ended June 30, 2019, the Company recorded stock based compensation of $7,758 (2018: $8,432) for such options.

Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 10 – Equity (Continued)

Stock Options (continued)

On June 22, 2018, the Company granted a total of 4,000,000 stock options to a consultant. The stock options are exercisable at an exercise price of $0.20 per share and may be exercised for seven years. One quarter of the options vest on the date of grant, and a further quarter will vest on each of June 22, 2019, June 22, 2020 and June 22, 2021. The options were valued based on the Black Scholes model. For the six months ended June 30, 2019, the Company recorded stock based compensation of $116,359 (2018: $265,751) for such options.

On June 22, 2018, the Company granted a total of 4,600,000 stock options to a group of employees, consultants and directors. The stock options are exercisable at an exercise price of $0.20 per share and may be exercised for seven years. The options vest immediately on grant date. The options were valued based on the Black Scholes model. For the six months ended June 30, 2019, the Company recorded stock based compensation of nil (2018: $640,432) for such options.

On July 18, 2018, the Company granted a total of 360,000 stock options to a consultant. The stock options are exercisable at an exercise price of $0.20 per share and may be exercised for ten years. 150,000 of the options vest on the date of grant, and one third of the options will vest at the end of each year of service as at July 18, 2019, 2020 and 2021. The options were valued based on the Black Scholes model. For the six months ended June 30, 2019, the Company recorded stock based compensation of $10,106 (2018: $34,548) for such options.

On September 12, 2018, the Company granted a total of 150,000 stock options to a consultant. The stock options are exercisable at an exercise price of $0.20 per share and may be exercised for ten years. 30,000 of the options vest on the date of grant, and 40,000 of the options will vest at the end of each year of service as at September 12, 2019, 2020 and 2021. The options were valued based on the Black Scholes model. For the six months ended June 30, 2019, the Company recorded stock based compensation of $5,965 (2018: $8,709) for such options.

On September 14, 2018, the Company granted a total of 105,000 stock options to a consultant. The stock options are exercisable at an exercise price of $0.20 per share and expired on April 25, 2023. 15,000 options vested at the end of each 7 months of services. The options were valued based on the Black Scholes model. For the six months ended June 30, 2019, the Company recorded stock based compensation of $2,901 (2018: $2,072) for such options.

On November 22, 2018, the Company granted a total of 250,000 stock options to a consultant. The stock options vest immediately and are exercisable at an exercise price of $0.20 per share and may be exercised over seven years. The options were valued based on the Black Scholes model. For the six months ended June 30, 2019, the Company recorded stock based compensation of nil (2018: $212,893) for such options.

Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 10 – Equity (Continued)

Stock Options (continued)

The fair value of each option grant is calculated using the following assumptions:

  2019 2018
Expected life – year 5-10 5-10
Interest rate 1.53% - 2.86% 1.53% - 2.86%
Volatility 55.54% - 77.08% 65.68% - 94.22%
Dividend yield --% --%
Forfeiture rate --% --%
Weighted average fair value of options granted $0.13 $0.13

      Number of Options     Weighted     Expire date  
            Average Exercise        
            Price        
   Balance, December 31, 2016   17,345,896   $  0.05        
   Granted, on May 31, 2017   875,000     0.20     May 31, 2024  
   Expired, July 1, 2017   (75,000 )   0.20        
   Granted, on July 2, 2017   150,000     0.20     July 2, 2024  
   Granted, on July 12th, 2017   260,000     0.200     July 12, 2027  
   Exercised, on September 25, 2017   (150,000 )   0.01        
   Balance, December 31, 2017   18,405,896   $  0.04        
   Granted, on February 13, 2018   231,250     0.20     February 13, 2023  
   Exercised, on January 28, 2018   (16,665 )   0.20        
   Cancelled, on January 28 2018   (33,335 )   0.20        
   Exercised, on March 20, 2018   (481,179 )   0.001        
   Granted, on June 22, 2018   14,400,000     0.20     June 22, 2025  
   Granted, on July 18, 2018   360,000     0.20     July 18, 2028  
   Exercised, on August 14, 2018   (800,000 )   0.01        
   Granted, on September 12, 2018   150,000     0.20     September 12, 2028  
   Granted, on September 14, 2018   105,000     0.20     April 25, 2023  
   Expired, on September 28, 2018   (25,000 )   0.20        
   Granted, on November 22, 2018   250,000     0.20     November 22, 2025  
   Balance, December 31, 2018   32,545,967   $  0.13        
   Exercised on March 04, 2019   (500,000 )   0.20        
   Balance, June 30, 2019   32,045,967   $  0.13        

Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 10 – Equity (Continued)

Stock Options (continued)

          Outstanding June 30, 2019     Exercisable as at June 30, 2019  
                    Weighted                 Weighted  
                Weighted     Average           Weighted     Average  
                Average     Remaining           Average     Remaining  
    Exercise     Number of     Exercise     Contractual     Number of     Exercise     Contractual  
    Price     Options     Price     Life (years)     Options     Price     Life (years)  
  $  0.01     9,750,000   $  0.01     3.18     9,750,000   $  0.01     3.18  
    0.01     1,924,717     0.01     1.37     1,924,717     0.01     1.37  
    0.20     150,000     0.20     0.82     150,000     0.20     0.82  
    0.20     120,000     0.20     2.16     120,000     0.20     2.16  
    0.20     1,610,000     0.20     3.11     1,610,000     0.20     3.11  
    0.20     75,000     0.20     3.18     75,000     0.20     3.18  
    0.20     50,000     0.20     3.40     50,000     0.20     3.40  
    0.20     100,000     0.20     3.44     100,000     0.20     3.44  
    0.20     125,000     0.20     3.42     125,000     0.20     3.42  
    0.20     75,000     0.20     3.69     75,000     0.20     3.69  
    0.20     150,000     0.20     6.85     150,000     0.20     6.85  
    0.20     800,000     0.20     1.94     626,667     0.20     1.94  
    0.20     360,000     0.20     4.34     360,000     0.20     4.34  
    0.20     850,000     0.20     4.92     570,834     0.20     4.92  
    0.20     150,000     0.20     5.01     50,000     0.20     5.01  
    0.20     260,000     0.20     8.04     120,000     0.20     8.04  
    0.20     231,250     0.20     3.63     231,250     0.20     3.63  
    0.20     4,100,000     0.20     5.98     1,366,667     0.20     5.98  
    0.20     1,500,000     0.20     5.99     750,000     0.20     5.99  
    0.20     200,000     0.20     5.99     66,667     0.20     5.99  
    0.20     4,000,000     0.20     5.99     2,000,000     0.20     5.99  
    0.20     4,600,000     0.20     5.99     4,600,000     0.20     5.99  
    0.20     360,000     0.20     9.06     150,000     0.20     9.06  
    0.20     105,000     0.20     3.82     15,000     0.20     3.82  
    0.20     150,000     0.20     9.21     30,000     0.20     9.21  
    0.20     250,000     0.20     6.40     250,000     0.20     6.40  
          32,045,967   $  0.13     4.53     25,316,802   $  0.10     2.82  

Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 10 – Equity (Continued)

Non-Controlling Interests

The Company’s subsidiary, Savicell, granted a third party a warrant certificate to purchase 1,765 common shares of Savicell that initially represented 15% of the underlying common equity of Savicell. In the course of its initial equity issuances up to October 30, 2012 (the “Initial Closing”), Savicell issued a total of 592 ordinary shares at $1,698.97 per share to the non-related third party representing approximately 4.79% of the fully diluted common equity of Savicell for aggregate proceeds of $1,005,795. The Savicell investors are entitled to convert their Savicell shares into common shares of ODT (1:10,625) at a price equal to 80% of the per share pricing of the first completed ODT financing of over $500,000 conducted after July 1, 2012 (the “Financing Price”) provided that for purposes of such conversion, the deemed maximum Financing Price shall be the per share price of the common shares of ODT based on (a) an aggregate ODT equity valuation of $30,000,000; and (b) the number of common shares of ODT outstanding at the time of the financing. Savicell continued its equity issuances following the Initial Closing.

As at December 31, 2012, Savicell had issued a total of 684 shares at $1,698.97 per share representing approximately 5.11% of the fully diluted common equity of Savicell for aggregate proceeds of $1,162,192.

During the year ended December 31, 2013, Savicell issued a total of 760 shares at $1,700 per share representing approximately 5.68% of the fully diluted common equity of Savicell for aggregate proceeds of $1,292,000.

During the year ended December 31, 2014, Savicell issued a total of 183 shares at $1,699 per share representing approximately 1.37% of the fully diluted common equity of Savicell for aggregate proceeds of $310,977.

During the year ended December 31, 2015, Savicell issued a total of 417 shares at $1,700 per share to third parties for aggregate proceeds of $709,087. As at December 31, 2015, Savicell also issued 516 shares at $1,700 to ODT, which of $532,084 has not been received as at December 31, 2015. In addition, Savicell investors exchanged 588 Savicell shares for 6,248,672 of ODT common shares with ODT receiving the Savicell shares so exchanged.

During the year ended December 31, 2016, Savicell investors exchanged 1,132 Savicell shares for 12,026,654 of ODT common shares with ODT receiving the Savicell shares so exchanged. As at December 31, 2016, Savicell received $1,786,656 from ODT and issued 1,051 shares to ODT in return.

During the year ended December 31, 2017, Savicell investors exchanged 27 Savicell shares for 288,830 of ODT common shares with ODT receiving the Savicell shares so exchanged. Savicell issued 387 shares to settle inter-company debts with ODT.

During the year ended December 31, 2018, Savicell issued 1,467 shares to settle inter-company debts with ODT. The Company, the Warrant holder and the Savicell investors held underlying interests in the equity of Savicell of 87.81%, 10.43% and 1.76%, respectively (December 31, 2017 - 86.65%, 11.42% and 1.93%).

Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 10 – Equity (Continued)

Non-Controlling Interests (continued)

During the six months ended June 30, 2019, Savicell investors exchanged 89 Savicell shares for 756,480 of ODT Common Shares with ODT receiving the Savicell shares so exchanged.

As at June 30, 2019, The Company, the Warrant holder and the Savicell investors held underlying interests in the equity of Savicell of 87.87%, 10.37% and 1.76%, respectively (December 31, 2018 – 87.81%, 10.43% and 1.76%).

Savicell’s Common Shares

      Number     Amount in NIS  
      of Shares        
               
  Balance, December 31, 2017   15,450     6,264,821  
  Shares issued to settle inter-company debts   1,467     2,494,219  
               
  Balance, December 31, 2018   16,917     8,759,040  
  Shares issued to settle inter-company debts   89     151,296  
               
  Balance, June 30, 2019   17,006     8,910,336  

As the exercise price inherent in the warrant certificate to purchase 1,765 common shares of Savicell is at nominal value, the warrant certificate is valued at the price of the subsequent equity issuance by Savicell ($1,698.97 per share) and the related common shares are considered to be issued and outstanding.

Note 11 – Loss per Share

We present both basic and diluted income per share on the face of our consolidated statements of operations. Basic and diluted income per share are calculated as follows:

    June 30, 2019     December 31,  
          2018  
             
Net loss $  (1,111,635 ) $  (3,587,653 )
Weighted average common shares outstanding:            
   Basic and diluted   125,855,343     120,542,611  
Net loss per common share:            
   Basic and diluted $  (0.02 ) $  (0.03 )

Certain stock options whose terms and conditions are described in Note 10, “Stock Options” could potentially dilute basic and dilute loss per share in the future, but were not included in the computation of diluted loss per share because to do so would have been anti-dilutive. Those anti-dilutive options are as follows.

Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 11 – Loss per Share (continued)

    2019     2018  
             
Anti-dilutive options   2,218,196     22,570,970  

Note 12 – Commitments and Guarantees

The Company was not a guarantor to any parties as at June 30, 2019.

1.

On September 11, 2012, ODT signed an employment agreement with Giora Davidovits, its chief executive officer and President, which agreement entailed an effective date of September 1, 2012. In return for acting as its chief executive officer, the Company will provide Mr. Davidovits an annual salary of $250,000 together with other benefits and the potential for additional bonuses as declared from time to time by the Company’s board of directors. The agreement is effective until August 31, 2022 unless terminated early in accordance with the termination provisions contained within the employment agreement and subject to agreed severance amounts. In connection with the execution of the employment agreement, the Company issued to Giora Davidovits options to purchase 3,750,000 common shares at a price per share of $0.01. The options are exercisable for 10 years. Mr. Davidovits is eligible for subsequent option grants at the discretion of the board of directors.

   
2.

On October 30, 2012, ODT and Savicell signed an employment agreement with Eyal Davidovits, its chief operating officer, which agreement entailed an effective date of September 1, 2012. In return for acting as its chief operating officer, the Company will provide Mr. Davidovits an annual salary of $120,180 (NIS 432,000), together with other fringe benefits including those related to the use of an automobile, health insurance, contributions to government run retirement programs and the potential for additional bonuses as declared from time to time by the Company’s board of directors. The agreement is effective until August 31, 2022 unless terminated early in accordance with the termination provisions contained within the employment agreement and subject to agreed severance amounts. In connection with the execution of the employment agreement, the Company issued to Eyal Davidovits options to purchase 2,750,000 common shares at a price per share of $0.01. The options are exercisable for 10 years. Mr. Davidovits is eligible for subsequent option grants at the discretion of the board of directors.

   
3.

On July 20, 2015, the Company signed an operating lease agreement to lease offices for a period ending July 31, 2018 with an option to renew the lease for an additional period of 2 years. On August 3, 2018, the lease was renewed for an additional two years. The monthly lease expense is $3,372 (NIS 12,121). On July 1, 2018, the Company signed an operating lease agreement for additional office space for a period ending May 31, 2019 with an option to renew the lease for an additional period of 2 years. The monthly lease expense is $1,959 (NIS 7,032). Future minimum lease commitment under the operating lease agreement is approximately $73,863 (NIS 265,168). The Company pledged a bank deposit which is used as a bank guarantee at an amount of $21,875 (NIS 78,531) to secure its payments under the lease agreement.


Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 12 – Commitments and Guarantees (continued)

The minimum future payments for the above commitments are as follows:

      Consulting fee and              
  Year   Salaries     Office rent     Total  
                     
  2019   277,635     28,157     305,792  
  2020   370,180     45,312     415,492  
  2021   370,180     11,653     381,833  
  2022   246,787     -     246,787  
  2023   -     -     -  
  Total $ 1,264,782   $ 85,122   $ 1,349,904  

Note 13 – Geographic Information

The Company’s head office is located in the United States (“US”). The operations of the Company are primarily in two geographic areas: the US and Israel. A summary of geographical information for the Company’s long-lived assets are as follows:

Period ended June 30, 2019   US     Israel     Total  
Long-lived assets $  -   $  39,054   $  39,054  

Year ended December 31, 2018   US     Israel     Total  
Long-lived assets $  -   $  45,274   $  45,274  

Note 14 – Subsequent Events

1.

On July 30, 2019, the Company entered into a Finder’s Fee Agreement in which the Company shall issue 35,000 finder’s warrants to purchase 35,000 common shares of the Company. These warrants will each be exercisable into one share at US$0.20.

   
2.

In two separate transactions in July, 2019, the Company entered into a Finder’s Fee Agreement pursuant to which the Company issued a total of 120,000 finder’s warrants to purchase 120,000 common shares of the Company. These warrants will each be exercisable into common shares at US$0.20 per share.

   
3.

On July 19, 2019, the Company granted a total of 125,000 stock options to a consultant. The stock options are exercisable at an exercise price of $0.20 per share until July 19, 2026. 65,000 options vested immediately upon issuance and the balance of 60,000 will vest after 6 completed months of consulting service.

   
4.

On August 1, 2019, the Company granted a total of 525,000 stock options to two employees. The stock options are exercisable at an exercise price of $0.20 per share until August 1, 2026 subject to vesting provisions. One third of the options will vest on each of August 1, 2020, August 1, 2021 and August 1, 2022 provided the employee remains an employee of the Company or its subsidiaries.


Online Disruptive Technologies, Inc.
Notes to the Condensed Interim Consolidated Financial Statements
June 30, 2019
(Unaudited)

Note 14 – Subsequent Events (continued)

5.

On September 19, 2019, the Company granted a total of 600,000 stock options to two consultants. The stock options are exercisable at an exercise price of $0.20 per share until September 19, 2024. One-third of the options vest immediately upon issuance and a further one-third vests on each of the first two anniversary dates of the grant.

   
6.

On October 25th, the Company raised capital investments totalling $1,012,000 which represent a total share issuance of 5,060,0000 units at an issuance price of $0.20 each. Each unit comprises one common share and one non-transferable common stock share purchase warrant. Each warrant entitles the holder to acquire one additional share of common stock at a price of $0.20 per share for two years.


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

Forward Looking Statements

This quarterly report on Form 10-Q contains forward-looking statements. Forward-looking statements are projections in respect of future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. Forward-looking statements made in this Form 10-Q include statements about:

  • our anticipation that future broad clinical trial studies encompassing larger populations of cancer patients with varying cancers should reveal the full potential of the existing developed strategy;
  • our beliefs regarding the future of our competitors;
  • our belief that there is a large unmet need in cancer diagnostics exists in early diagnosis; accurate diagnosis;
  • our belief that there is a need in this segment for an easier blood-based test that will increase compliance and minimize discomfort;
  • our expectation that the demand for our products will eventually increase;
  • our expectation that we will be able to raise capital when we need it; and
  • our expectation that there is a new market for screening tests.

These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors” and the risks set out below, any of which may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. These risks include, by way of example and not in limitation:

  • general economic and business conditions;
  • our ability to identify attractive products and negotiate their acquisition or licensing;
  • volatility in prices for our products;
  • risks inherent in the pharmaceutical industry;
  • competition for, among other things, capital, pharmaceutical products and skilled personnel; and
  • other factors discussed under the section entitled “Risk Factors”.

While these forward-looking statements and any assumptions upon which they are based are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

As used in this interim report on Form 10-Q and unless otherwise indicated, the terms “we”, “us” and “our” refer to Online Disruptive Technologies Inc. and our subsidiary, Savicell Diagnostic Ltd., an Israeli corporation (the “Subsidiary” or “Savicell”). Unless otherwise specified, all dollar amounts are expressed in United States dollars.

3

Corporate Overview

We were incorporated in the State of Nevada on November 16, 2009 under the name “Online Disruptive Technologies, Inc.” with authorized capital of 500,000,000 shares of common stock with a par value of $0.001 per share and 20,000,000 shares of preferred stock with a par value of $0.001 per share. On March 24, 2010, we entered into a share purchase agreement with Benjamin Cherniak, whereby we acquired all of the issued and outstanding shares of RelationshipScoreboard.com Entertainment, Inc. in consideration for the issuance of 16,000,000 of our common shares. RSE was incorporated in the State of Nevada on November 16, 2009. There were no related party interests in the acquisition of RelationshipScoreboard.com Entertainment, Inc.

Pursuant to a license agreement and research funding agreement (the “License Agreement”) dated July 24, 2012 and entered into on July 25, 2012 executed by our Subsidiary and Ramot at Tel Aviv University Ltd. (“Ramot”), a private company incorporated in the State of Israel and having a place of business at 5 Shenker Street, Herzliah, Israel, our Subsidiary was granted a license to certain patented technology relating to the early detection of diseases by measuring metabolic activity in the immune system (the “Technology”). The products (the “Products”) means any instrument, device, process, method, product, component, or system that contain or is based on, in whole or in part, the Technology.

As consideration for the worldwide exclusive license of the Products, our Subsidiary will pay, issue and fund the following to Ramot:

  (a)

a royalty (the “Royalty”) on worldwide net sales of the Products by our company and its affiliates or sublicensee;

     
  (b)

a minimum annual royalty, credited against the Royalty;

     
  (c)

percentages of all payments received in connection with a sublicense;

     
  (d)

issue warrants to purchase, for nominal consideration, the number of common shares of the Subsidiary such that Ramot holds a minority interest in the Subsidiary; and

     
  (e)

fund research expenditures for the research of the Technology.

After the entry into of the License Agreement, we are focused on the development of Savicell.

Our Current Business

Savicell

Savicell is a Liquid ImmunoBiopsyTM company that targets early, non-invasive (blood test) detection of multiple diseases with a patented immunometabolism platform. In addition, it may be used to track/predict treatment effectiveness, including immunotherapy. This exciting field of “immunometabolism” is emerging in pharmaceutical development, given that a normal metabolic state of the immune system is linked to its ability to combat infectious disease and cancer. There are growing publications linking the spectrum of immune system metabolic states as a basis for categorizing human disease. Savicell is at the forefront of developing diagnostics in this new space. This is an important differentiator in the multi-billion liquid biopsy market as it gives Savicell a very strong capability for early stage detection where other liquid biopsy technologies have difficulties.

Initially, Savicell is focused on the multibillion-dollar cancer diagnosis market. Savicell deploys Well-Shield™ technology, a Liquid ImmunoBiopsy™ diagnostic platform. In contrast to existing technologies that evaluate secretions of cancer cells, Well-Shield’s ImmunoBiopsy platform receives data directly from the immune system. Importantly, Well-Shield is different in that it is a functional test measuring the metabolic activation profile of the immune system as an indicator of disease status. As an immune system metabolic test, it is inherently suited for early detection.

4

The technology has now received intellectual property protection with a patent approved in the United States, China, Japan and Europe. Furthermore, the patent process is ongoing in several other countries.

Metabolic changes in the immune system modulate cell fate and function, influencing immune response outcomes. Savicell technology measures the energy changes of the immune system, which are disease-specific, and identifies the ailment.

Immune cells are the first to recognize and respond to the formation of cancer cells. When naïve lymphocytes detect cancer antigen, they undergo various differentiation processes aimed at initiating the immune response and bringing it to an optimal level of activity.

One of the most important recent discoveries is that immune system cells alter their energy generation in order to obtain an effector function. The metabolic change is called a metabolic shift, and its key purpose is command and control of the effector function, which produces and secretes cytokines and chemokines.

The immune system is composed of several groups each with a number of subgroups. Each group and subgroup has a specific energy generation profile. Example of groups are naïve cells, effector cells, regulator cells, and memory cells. The metabolic changes of the immune system cells are direct indicators of the performance of the immune system.

Immune cells use various processes to generate energy. These include oxidative phosphorylation, glycolysis, and the breakdown of proteins and nitrogenous bases. The energy generation produces changes in extracellular acidification. Lactic acid is generated in glycolysis, carbon dioxide from oxidative phosphorylation, and ammonia from the breakdown of proteins and nitrogenous bases. Acidification is measured in "open" versus "closed" (air-sealed) wells to track the accumulations of soluble versus volatile metabolic products (lactic acid versus carbon dioxide and ammonia). Savicell's tests measure these acidification (pH) changes.

Our technology exposes the immune system cells to stimulants that have been characterized specifically for the method. The process of acid production described above and the monitoring of the pH level in the cell environment allows early detection of disease. This is because the metabolic profiles of immune cells in sick people are different from those of the healthy.

Immune cells of sick people have already been activated (metabolic shift) in vivo against cancer proteins. As a result, acidification rates are different compared to the immune cells of healthy individuals that have not been exposed in vivo to cancer proteins. To measure extracellular acidification Savicell adds a pH-sensitive impermeable fluorescence probe along with the cells and stimulants to the microwell plate, which is monitored over time. Various stimulants are chosen to increase the pH signal and to more specifically characterize the disease.

Savicell ImmunoBiopsy platform uses three types of stimulants:

1. General stimulants that activate all immune system cells in a non-specific mode, and are used as positive controls for testing. Examples are para-methoxyamphetamine (PMA), lipopolysaccharides (LPS), and concanavalinA (ConA).

2. Metabolic stimulants used as substrates, whose consumption increases in activated cells, especially those undergoing increased glycolysis. Examples are glucose and L-glutamine.

3. Cancer-specific stimulants, including those by cancer type (e.g. lung). These enhance separation by specific cancer type as well as distinguishing cancer from healthy and other diseases. Examples are human epidermal growth factor receptor 2 (HER2) and New York esophageal squamous cell carcinoma 1 (NY-ESO-1).

5

The Savicell vision is to develop and commercialize a line of patient-friendly blood tests that enable early diagnosis, staging, and monitoring, thereby saving lives and ensuring appropriate treatment. Cancer is our initial focus.

The need for early diagnosis

Cancer cases are increasing, with more than 20 million new cases predicted in 2025, compared to 12 million in 2008. Early detection is very important because it can improve outcomes. Typically, more treatment options are available when cancer is diagnosed early, and survival improves. In the United States, the five-year survival rate improves by at least four times with early diagnosis and before cancer has spread. Unfortunately, to date, the majority of cancer patients are diagnosed at later stages.

While surgical biopsies are the norm, they are invasive and expensive. The need for simpler and more efficient processes for cancer detection has incentivized some 38 companies in the United States to work on creating liquid biopsies. In a 2015 report, investment bank Piper Jaffray valued the potential market for liquid biopsies at $29 billion in the United States alone.

Using technologies based on circulating tumor cells, exosomes, and circulating tumor nucleic acids, liquid biopsy companies are making progress in developing products that have advantages versus current technologies. However, it appears more likely that these types of liquid biopsy technologies best support late stage cancers, with technical challenges remaining for early-stage cancers and early cancer screening.

In contrast, the Well-Shield patented ImmunoBiopsy platform is unique in the Liquid Biopsy market. And we believe that as an immune system functional test it is inherently better suited for early detection.

6

Product focus

Savicell conducted clinical work for tests specific to breast and lung cancers in multiple medical centers. We had encouraging early reviews of our breast cancer and lung cancer analyses albeit on relatively small sample sizes. Specifically, we distinguished between breast cancer patients and healthy donors, and lung cancer patients and healthy donors, with high sensitivity and specificity of greater than 95% in both cancers. In addition, we were able to show that there is a metabolic profile difference between other breast disease donors and breast cancer donors and between COPD (chronic obstructive pulmonary disease) donors and lung cancer donors.Based on this early potential, Savicell has decided to focus our resources on lung cancer as our lead product.

Savicell's lung cancer clinical study results were published in Cancer Immunology and

Immunotherapy that validate the promise of Savicell’s Liquid ImmunoBiopsy™. The published study uses the Savicell Diagnostics, Ltd. platform to diagnose lung cancer, producing 91% sensitivity and 80% specificity in a 20-fold cross-validation. Diagnosis of Stage 1 lung cancer is as accurate as later stages.

Novel non-invasive early detection of lung cancer using liquid immunobiopsy metabolic activity profiles Adir, Y., Tirman, S., Abramovitch, S. et al. Cancer Immunol Immunother (2018). https://doi.org/10.1007/s00262 -018-2173-5 https://link.springer.com/article/10.1007%2Fs00262 -018-2173-5

Abstract

Lung cancer is the leading cause of cancer death worldwide. Survival is largely dependent on the stage of diagnosis: the localized disease has a 5-year survival greater than 55%, whereas, for spread tumors, this rate is only 4%. Therefore, the early detection of lung cancer is key for improving prognosis. In this study, we present an innovative, non-invasive, cancer detection approach based on measurements of the metabolic activity profiles of immune system cells. For each Liquid ImmunoBiopsy test, a 384 multi-well plate is loaded with freshly separated PBMCs, and each well contains 1 of the 16 selected stimulants in several increasing concentrations. The extracellular acidity is measured in both air-open and hermetically-sealed states, using a commercial fluorescence plate reader, for approximately 1.5 h. Both states enable the measurement of real-time accumulation of ‘soluble’ versus ‘volatile’ metabolic products, thereby differentiating between oxidative phosphorylation and aerobic glycolysis. The metabolic activity profiles are analyzed for cancer diagnosis by machine-learning tools. We present a diagnostic accuracy study, using a multivariable prediction model to differentiate between lung cancer and control blood samples. The model was developed and tested using a cohort of 200 subjects (100 lung cancer and 100 control subjects), yielding 91% sensitivity and 80% specificity in a 20-fold cross-validation. Our results clearly indicate that the proposed clinical model is suitable for non-invasive early lung cancer diagnosis, and is indifferent to lung cancer stage and histological type.

7

 

8

 

9

Savicell had a poster presentation on clinical results focused on early stage lung cancer at the European Respiratory Society International Congress in September 2018. Specifically, 328 subjects of which are 82 are early stages and 246 are healthy controls. 77% of the cancer patients were Stage1 and 33% were Stage 2. Test results were 92% sensitivity and 76% specificity using stratified 10-fold cross-validation. Negative predictive value was 0.97 and area under the ROC curve was 0.93.

Lung cancer

American Cancer Society estimates there will be 222,500 new cases of lung cancer in the USA in 2017, representing 13.6% of all cancer diagnoses. Worldwide, there were an estimated 1.8 million new cases of lung cancer in 2012, accounting for 12.9% of all cancers. Lung cancer is the leading cancer killer in both men and women in the USA and worldwide. (7) (8)

Less than 20% of lung cancers are diagnosed at an early stage, with a five-year survival rate (completely resected NSCLC stage 1A) that ranges from 67 to 89% (4). Unfortunately, the majority of lung cancer cases (57%) are diagnosed at an advanced stage when five-year survival is as low as 4%. This is because lung cancer symptoms present themselves at later stages of the disease.

Cigarette smoke remains the main risk factor for lung cancer, with 85% to 90% of lung cancer cases in the USA occurring in current or former smokers. There are about 94 million current and former smokers in the USA. While clinicians can identify those at risk, they lack effective tools to diagnose lung cancer early.

With improved low-dose computed tomography (LDCT) technology, it is possible to detect potential malignant nodules in high-risk populations. Pulmonary nodules are small, focal, radiographic opacities that may be solitary or multiple. The management goal of patients with pulmonary nodules is to distinguish between benign and malignant nodules, speeding diagnosis for malignant nodules while minimizing unnecessary and invasive testing of those that are benign. Many pulmonary nodules are detected incidentally in computed tomography (CT) and chest x-rays examination (not related to the indication for obtaining the CT or x-rays examination) and in scheduled LDCT screening.

10

The largest USA National Screening Trial (NLST) demonstrated that screening high-risk subjects decreases mortality. The current standard of care for diagnosing lung cancer in high-risk patients is LDCT scanning. This large trial of 53,454 current or former heavy smokers, ages 55 to 74, demonstrated that screening high-risk subjects using LDCT decreases mortality from lung cancer by 20%. Based on this study, the United States Preventive Services Task force (“USPSTF”) guidelines recommend annual LDCTs for patients at high risk for lung cancer. However, there are major limitations to CT screening that create the following two important market needs:

Broader Screening

Because of cost-benefit ratios (including possible radiation risks), LDCT was approved only for a heavy- use segment of past and current smokers. Specifically, Americans aged 55 to 80 years old who have a 30 pack-year smoking history and currently smoke or have quit within the past 15 years. This represents about 10 million people or about 11% of the 94 million past and current smokers in the US. There is still a major unmet need for a safer, cost- effective liquid biopsy test that can help screen for lung cancer in the broader past and current smoker population.

Indeterminate Nodules

A total of 96.4% of the positive screening results (NLST) in the low- dose CT group and 94.5% in the radiography group were false positive results. The estimated number of pulmonary nodules in the USA ranges from 2 million to 4.9 million annually (1)(2)(3). Using an estimate of 3 million annual pulmonary nodules, and a false positive rate of 96.4% for LDCT and 94% for x-ray, would generate up to 2.8 million false positive cases a year. In addition, 25% of all LDCTs are indeterminate, and require additional follow-up procedures. A full implementation of LDCT screening in the USA will identify 2.5 million indeterminate nodules and is expected to further increase the number of false positive cases.

After nodule findings, the follow-up procedures to diagnose lung cancer are expensive, invasive procedures like biopsy. Bronchoscopy can have significant complication risks, and follow-up imaging adds to radiation risks. Millions of false positive cases annually could lead to unnecessary invasive procedures on many smokers or past smokers who do not actually have lung cancer, driving higher costs, mortality and morbidity.

There is an important need for a safer liquid biopsy test that can assist in the diagnosis of indeterminate nodules and significantly reduce the number of false positive results.

Lung cancer strategy

In the longer term, we plan to develop a screening test for lung cancer. However, our initial goal is to provide an additional tool for clinicians, designed to assist in the diagnosis of indeterminate nodules identified by imaging. The Well-Shield test is intended to help a clinician decide on invasive and/or non-invasive follow- up. It could help reduce the majority of the false positive results and reduce the number of unnecessary invasive procedures by more than 200,000 annually in the US (5)(6). As a result, Well-Shield’s test could drive $3.6 billion in annual cost savings in the USA alone.

Sources Quoted

(1) Luba Frank and Leslie E. Quint Chest CT incidentalomas: thyroid lesions, enlarged mediastinal lymph nodes, and lung nodules Cancer Imaging. 2012; 12(1): 41–48

(2) MacMahon H, Austin JH, Gamsu G, et al. Guidelines for management of small pulmonary nodules detected on CT scans: a statement from the Fleischner Society. Radiology. 2005;237:395–400. doi:10.1148/radiol. 2372041887. [PubMed]

11

(3) Michael K. Gould et al. Recent Trends in the Identification of Incidental Pulmonary Nodules. Am J Respir Crit Care Med Vol 192, Iss 10, pp 1208–1214, Nov 15, 2015

(4) Apichat Tantraworasin et al. ISRN Surgery Volume 2013, Article ID 175304, 7 pages

(5) Moving Beyond the National Lung Screening Trial: Discussing Strategies for Implementation of Lung Cancer Screening Programs Bernando H.L. Goulard, The Oncologist. 2013 Aug; 18(8): 941–946

(6) Assume 10 million patients screened and sensitivity and specificity of 92% and 75% respectively. Well-Shield may have higher or lower sensitivity and specificity.

(7) Cancer Facts & Figures 2015.

(8) World Cancer Report 2014.

Results of Operations

Revenues

We have not earned any revenue from operations since our inception and further losses are anticipated in the development of our business. We are currently in the development stage of our business and we can provide no assurances that we will generate revenue in the foreseeable future.

Expenses

For the three and six months ended June 30, 2019 and 2018, we incurred the following general and administrative expenses:

    Three months     Three     Six months     Six months  
    ended June     months     ended June     ended June  
    30, 2019     ended June     30, 2019     30, 2018  
          30, 2018              
General and Administrative Expenses   $      $     $     $  
Accounting Fees   7,500     7,500     15,000     15,000  
Audit & Tax Fees   30,182     57,882     40,633     72,446  
Bank Fees   302     229     412     365  
Consulting Fees   91,816     91,651     183,517     203,803  
Lease Expense   4,090     -     17,464     -  
Filing and Transfer Agent Fees   7,077     3,776     8,626     3,866  
Insurance Expense   2,479     1,297     8,320     14,514  
Marketing Expense   3,321     -     4,419     -  
Legal Fees   3,776     6,379     8,740     10,044  
Office and Miscellaneous Expense   1,452     960     6,144     4,914  
Payroll Expense   9,020     9,078     17,936     18,460  
Research and Development Expense   402,507     1,137,940     787,253     1,404,762  
Travel Expenses   7,821     3,668     10,271     7,335  
    571,343     1,320,360     1,108,735     1,755,509  

Three-Month Period Ended June 30, 2019

Our expenses decreased by approximately 56.7% during the three months ended June 30, 2019 compared to the same period in 2018. This decrease resulted primarily from (a) a large decrease in research and development expenses that related primarily to a decrease in share-based compensation payable to employees and consultants engaged in the ongoing research and development as well as corporate activities; (b) a reduction in audit and tax fees recognized in the current fiscal quarter primarily due to timing differences; and (c) a modest reduction in legal fees due to a slower pace of equity financings that typically require the services of legal professionals to implement such transactions. Mitigating these expense reductions were increases in filing and transfer agent fees, recognized lease expenses, insurance expense and marketing expenses.

12

Six-Month Period Ended June 30, 2019

Our expenses decreased by approximately 36.8% during the six months ended June 30, 2019 compared to the same period in 2018. The significant component of this decrease in expense profile related to reduced stock compensation expense that is included in the overall research and development expenses. There were significant grants of stock options to employees and consultants working the R&D area in June of 2018 that led to a material expense recognition for that fiscal quarter. The corresponding expense recognition in the 2019 year to date fiscal period has been more moderate.

Liquidity And Capital Resources

Working Capital




June 30, 2019
$ 		December 31,
2018
$
Total Current Assets 189,323 193,038
Total Current Liabilities 510,019 440,716
Working Capital (Deficiency) (320,696) (247,678)

Our operations consumed more cash in the first half of 2019 as compared to the corresponding 6 months in 2018 as less reliance was placed on current payables as a means of financing the ongoing operations. However, we raised more financing dollars between debt and equity issuances in the first 6 months of 2019 compared to 2018. Overall, we saw a decrease in our working capital position relative to our most recent year end, December 31, 2018 of about $100,484.

Given that we are incurring significant monthly cash operating expenses, there is a need to raise additional financing in the short term as current cash balances are not sufficient to sustain our operations. Efforts are ongoing to secure additional convertible debt and equity financing and we are hopeful to realize such transactions imminently.

Recent Financings

On April 12, 2019, we sold 618,985 shares of common stock at a price of US$0.20 per share for gross proceeds of US$123,797. We issued the shares of common stock to one U.S. person in reliance upon Rule 506 of Regulation D of the Securities Act of 1933, as amended, and to two non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933, as amended) in an offshore transaction in which we relied on the registration exemption provided for in Regulation S and/or Section 4(2) of the

Securities Act of 1933, as amended.

On April 12, 2019, pursuant to the Savicell conversion and participation rights agreement, one investor of Savicell have elected to exchange 89 shares of Savicell for common shares of the Company. The conversion resulted in an issuance of 756,480 common shares at a price per share of $0.20.

13

Cash Flows

      Six months ended     Six months ended  
      June 30, 2019     June, 2018  
      $     $  
  Net Cash (Used in) Operating Activities   (706,115 )   (608,485 )
  Net Cash Provided by Financing Activities   714,740     545,145  
  Net Cash (Used in) Investing Activities   -     -  

Cash (Used in) Operating Activities

The increase in cash used in operating activities compared to the same period last year is due primarily to reduced reliance on short term liabilities to finance current operations.

Cash Provided by Financing Activities

The increase in cash provided by financing activities compared to the same period last year results primarily from the fact that the aggregate debt and equity financings realized in the first half of 2019 exceeded that realized in the first half of 2018.

Cash Used in Investing Activities

No funds were used in purchasing capital assets during the second quarter of 2019.

Plan of Operation

We are an early-stage company. There exists substantial doubt that we can continue as an on-going business for the next 12 months unless we obtain additional capital to pay our expenses. This is because we have not generated any revenues and no material revenues are anticipated until we further develop our business. There is no assurance we will reach this point.

Our primary objectives for the next twelve-month period are to further develop the Technology and to advance the Technology and the related clinical testing. The pace at which we will advance the development of the Technology will depend, in part, on the quantum of additional financing that we are able to raise within the balance of 2019. Once such amount becomes known, we will be in a position to estimate the overall expenditure profile for the ensuing 12 months.

If we are not able to obtain the additional financing on a timely basis, if and when it is needed, we may be forced to cease the operation of our business.

Going Concern

The financial statements accompanying this report have been prepared on a going concern basis, which implies that our company will continue to realize its assets and discharge its liabilities and commitments in the normal course of business. Our company has not generated revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of our company as a going concern is dependent upon the continued financial support from our shareholders, the ability of our company to obtain necessary equity financing to achieve our operating objectives, and the attainment of profitable operations. As at June 30, 2019, our company has accumulated deficit of $16,265,714 since inception. We do not have sufficient working capital to enable us to carry out our stated plan of operation for the next 12 months.

Due to the uncertainty of our ability to meet our current operating expenses and the capital expenses noted in their report on the financial statements for the year ended December 31, 2018, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.

14

The continuation of our business is dependent upon us raising additional financial support. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

Future Financings

We will require additional financing to fund our planned operations, including further development, clinical testing, regulatory requirements, and commercializing our existing assets. We currently do not have committed sources of additional financing and may not be able to obtain additional financing, particularly, if the volatile conditions in the stock and financial markets, and more particularly, the market for early development stage pharmaceutical company stocks persist.

There can be no assurance that additional financing will be available to us when needed or, if available, that it can be obtained on commercially reasonable terms. If we are not able to obtain the additional financing on a timely basis, if and when it is needed, we will be forced to delay or scale down some or all of our development activities or perhaps even cease the operation of our business.

Since inception we have funded our operations primarily through equity and debt financings and we expect that we will continue to fund our operations through the equity and debt financing. If we raise additional financing by issuing equity securities, our existing stockholders’ ownership will be diluted. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

There is no assurance that we will be able to maintain operations at a level sufficient for an investor to obtain a return on his, her, or its investment in our common stock. Further, we may continue to be unprofitable.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

15

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

Disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), are our controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Rules 13a-15(b) and 15d-15(b) under the Exchange Act, requires us to carry out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of June 30, 2019. This evaluation was implemented under the supervision and with the participation of our Chief Executive Officer.

Based on this evaluation, management concluded that, as of June, 2019, our disclosure controls and procedures are not fully effective. The ineffectiveness of our disclosure controls and procedures was due to the existence of material weaknesses identified in our annual report on Form 10-K filed with the SEC on April 3, 2019. As we continue to grow we are adding additional personnel in key positions, including accounting, that will enable us to improve our overall control procedures.

Changes in Internal Control over Financial Reporting

During the fiscal quarter ended June 30, 2019, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We know of no material pending legal proceedings to which our company or our subsidiary is a party or of which any of our properties, or the properties of our subsidiary, is the subject. In addition, we do not know of any such proceedings contemplated by any governmental authorities.

We know of no material proceedings in which any of our directors, officers or affiliates, or any registered or beneficial stockholder is a party adverse to our company or our subsidiary or has a material interest adverse to our company or our subsidiary.

ITEM 1A. RISK FACTORS

An investment in our common stock involves a number of very significant risks. You should carefully consider the following risks and uncertainties in addition to other information in this quarterly report on Form 10-Q in evaluating our company and our business before purchasing shares of our common stock. Our business, operating results and financial condition could be seriously harmed as a result of the occurrence of any of the following risks. You could lose all or part of your investment due to any of these risks. You should invest in our common stock only if you can afford to lose your entire investment.

Risks Related to our Company

The slowing of the worldwide economic growth may reduce our ability to obtain the financing necessary to continue our business and may reduce the number of viable products and businesses that we may wish to acquire. If we cannot raise the funds that we need or find a suitable product or business to acquire, we may go out of business and investors will lose their entire investment in our company.

16

There has been a downturn in general worldwide economic conditions due to many factors, including the effects of slower economic activity, decreased consumer confidence, reduced corporate profits and capital spending, adverse business conditions, increased unemployment and liquidity concerns. In addition, these economic effects, including the resulting recession in various countries and slowing of the global economy, will likely result in fewer business opportunities as companies face increased financial hardship. Tightening credit and liquidity issues will also result in increased difficulties for our company to raise capital for our continued operations. We may not be able to raise money through the sale of our equity securities or through borrowing funds on terms we find acceptable. If we cannot raise the funds that we need or find a suitable product or business to acquire, we will go out of business. If we go out of business, investors will lose their entire investment in our company.

Our independent auditors have expressed substantial doubt about our ability to continue as a going concern.

We have not generated any revenue from operations since our incorporation. We expect that our operating expenses will increase over the next 12 months as we continue to ramp-up the scope of our business operations and work toward the commercialization of the Technology. We estimate our average monthly expenses over the next 12 months to be approximately $100,000-$120,000 ($1,200,000-$1,440,000 for the ensuing year), which includes the sum of (a) ongoing research and development expenses; (b) general and administrative expenses; and (c) capital asset acquisitions in furtherance of our product development initiatives. On June, 2019, we had cash and cash equivalents of $104,594. As of June 30, 2019, we had total current liabilities of $510,019. We currently have negative working capital of $320,696 with a significant portion of the current liabilities representing salary and consulting fees owing to management and consultants which have been forestalled. If we are unable to meet our financial obligations, we could be forced to restructure or refinance, seek additional equity capital or sell our assets. We might then be unable to obtain such financing or capital or sell our assets on satisfactory terms.

We need to raise additional funds in the future which may not be available on acceptable terms or at all.

We may consider issuing additional debt or equity securities in the future to fund potential acquisitions or investments, to refinance existing debt, or for general corporate purposes. If we issue equity or convertible debt securities to raise additional funds, our existing stockholders may experience dilution, and the new equity or debt securities may have rights, preferences and privileges senior to those of our existing stockholders. If we incur additional debt, it may increase our leverage relative to our earnings or to our equity capitalization, requiring us to pay additional interest expenses. We may not be able to market such issuances on favorable terms, or at all, in which case, we may not be able to develop or enhance our products, execute our business plan, take advantage of future opportunities, or respond to competitive pressures or unanticipated customer requirements.

We are an early-stage company with a limited operating history, which may hinder our ability to successfully meet our objectives.

We are an early-stage company with only a limited operating history upon which to base an evaluation of our current business and future prospects. As a result, the revenue and income potential of our business is unproven. In addition, because of our limited operating history, we have limited insight into trends that may emerge and affect our business. Errors may be made in predicting and reacting to relevant business trends and we will be subject to the risks, uncertainties and difficulties frequently encountered by early-stage companies in evolving markets. We may not be able to successfully address any or all of these risks and uncertainties. Failure to adequately do so could cause our business, results of operations and financial condition to suffer.

17

Because our directors and officers are not all residents of the United States, investors may find it difficult to enforce, within the United States, any judgments obtained against our directors and officers.

Our directors and officer are not all residents of the United States, and all or a substantial portion of their assets are located outside the United States. As a result, it may be difficult for investors to enforce within the United States any judgments obtained against our directors and officers, including judgments predicated upon the civil liability provisions of the securities laws of the United States or any state thereof.

If we are unable to successfully recruit and retain qualified personnel, we may not be able to continue our operations.

In order to successfully implement and manage our business plan, we will depend upon, among other things, successfully recruiting and retaining qualified personnel having experience in the pharmaceutical industry. Competition for qualified individuals is intense. We may not be able to find, attract and retain qualified personnel on acceptable terms. If we are unable to find, attract and retain qualified personnel with technical expertise, our business operations could suffer.

Future growth could strain our resources, and if we are unable to manage our growth, we may not be able to successfully implement our business plan.

We hope to experience rapid growth in our operations, which will place a significant strain on our management, administrative, operational and financial infrastructure. Our future success will depend in part upon the ability of our executive officers to manage growth effectively. This will require that we hire and train additional personnel to manage our expanding operations. In addition, we must continue to improve our operational, financial and management controls and our reporting systems and procedures. If we fail to successfully manage our growth, we may be unable to execute upon our business plan.

Risks Relating to our Operations in Israel

Conditions in Israel and the surrounding Middle East may materially adversely affect our Subsidiary’s operations and personnel.

Our Subsidiary has significant operations in Israel, including research and development. Since the establishment of the State of Israel in 1948, a number of armed conflicts and terrorist acts have taken place, which in the past, and may in the future, lead to security and economic problems for Israel. In addition, certain countries in the Middle East adjacent to Israel, including Egypt and Syria, recently experienced and some continue to experience political unrest and instability marked by civil demonstrations and violence, which in some cases resulted in the replacement of governments and regimes. Current and future conflicts and political, economic and/or military conditions in Israel and the Middle East region may affect our operations in Israel. The exacerbation of violence within Israel or the outbreak of violent conflicts involving Israel may impede our Subsidiary’s ability to engage in research and development, or otherwise adversely affect its business or operations. In addition, our Subsidiary’s employees in Israel may be required to perform annual mandatory military service and are subject to being called to active duty at any time under emergency circumstances. The absence of these employees may have an adverse effect on our Subsidiary’s operations. Hostilities involving Israel may also result in the interruption or curtailment of trade between Israel and its trading partners, which could materially adversely affect our results of operations.

The ability of our Subsidiary to pay dividends is subject to limitations under Israeli law and dividends paid and loans extended by our Subsidiary may be subject to taxes.

The ability of our Subsidiary to pay dividends is governed by Israeli law, which provides that dividends may be paid by an Israeli corporation only out of its earnings as defined in accordance with the Israeli Companies Law of 1999, provided that there is no reasonable concern that such payment will cause such subsidiary to fail to meet its current and expected liabilities as they come due. Cash dividends paid by an Israeli corporation to United States resident corporate parents are subject to provisions of the Convention for the Avoidance of Double Taxation between Israel and the United States, which may result in our Subsidiary having to pay taxes on any dividends it declares.

18

Risks Relating to the Pharmaceutical Business

If we are unable to successfully acquire, develop or commercialize new products, our operating results will suffer.

Our future results of operations will depend to a significant extent upon our ability to successfully develop and commercialize new products and businesses in a timely manner. There are numerous difficulties in, developing and commercializing new products, including:

•

there are still major developmental steps required to bring the product to a clinical testing stage;

  •

clinical testing may not be positive;

•

developing, testing and manufacturing products in compliance with regulatory standards in a timely manner;

•

failure to receive requisite regulatory approvals for such products in a timely manner or at all;

•

developing and commercializing a new product is time consuming, costly and subject to numerous factors, including legal actions brought by our competitors, that may delay or prevent the development and commercialization of new products;

  •

incomplete, unconvincing or equivocal clinical trials data;

  •

experiencing delays or unanticipated costs;

•

significant and unpredictable changes in the payer landscape, coverage and reimbursement for our products;

  •

experiencing delays as a result of limited resources at regulatory agencies; and

  •

changing review and approval policies and standards at regulatory agencies.

As a result of these and other difficulties, products in development by us may or may not receive timely regulatory approvals, or approvals at all, necessary for marketing by us or other third-party partners. If any of our products are not approved in a timely fashion or, when acquired or developed and approved, cannot be successfully manufactured, commercialized or reimbursed, our operating results could be adversely affected. We cannot guarantee that any investment we make in developing products will be recouped, even if we are successful in commercializing those products.

Our expenditures may not result in commercially successful products.

We cannot be sure our business expenditures will result in the successful acquisition, development or launch of products that will prove to be commercially successful or will improve the long-term profitability of our business. If such business expenditures do not result in successful acquisition, development or launch of commercially successful brand products our results of operations and financial condition could be materially adversely affected.

Third parties may claim that we infringe their proprietary rights and may prevent us from manufacturing and selling some of our products.

The manufacture, use and sale of new products that are the subject of conflicting patent rights have been the subject of substantial litigation in the pharmaceutical industry. These lawsuits relate to the validity and infringement of patents or proprietary rights of third parties. Litigation may be costly and time-consuming, and could divert the attention of our management and technical personnel. In addition, if we infringe on the rights of others, we could lose our right to develop, manufacture or market products or could be required to pay monetary damages or royalties to license proprietary rights from third parties. Although the parties to patent and intellectual property disputes in the pharmaceutical industry have often settled their disputes through licensing or similar arrangements, the costs associated with these arrangements may be substantial and could include ongoing royalties. Furthermore, we cannot be certain that the necessary licenses would be available to us on commercially reasonable terms, or at all. As a result, an adverse determination in a judicial or administrative proceeding or failure to obtain necessary licenses could prevent us from manufacturing and selling our products, and could have a material adverse effect on our business, results of operations, financial condition and cash flows.

19

Extensive industry regulation has had, and will continue to have, a significant impact on our business, especially our product development, manufacturing and distribution capabilities.

All pharmaceutical companies are subject to extensive, complex, costly and evolving government regulation. For the U.S., this is principally administered by the FDA and to a lesser extent by the DEA and state government agencies, as well as by varying regulatory agencies in foreign countries where products or product candidates are being manufactured and/or marketed. The Federal Food, Drug and Cosmetic Act, the Controlled Substances Act and other federal statutes and regulations, and similar foreign statutes and regulations, govern or influence the testing, manufacturing, packing, labeling, storing, record keeping, safety, approval, advertising, promotion, sale and distribution of our products.

Under these regulations, we may become subject to periodic inspection of our facilities, procedures and operations and/or the testing of our products by the FDA, the DEA and other authorities, which conduct periodic inspections to confirm that we are in compliance with all applicable regulations. In addition, the FDA and foreign regulatory agencies conduct pre-approval and post-approval reviews and plant inspections to determine whether our systems and processes are in compliance with GMP and other regulations. Following such inspections, the FDA or other agency may issue observations, notices, citations and/or warning letters that could cause us to modify certain activities identified during the inspection. FDA guidelines specify that a warning letter is issued only for violations of “regulatory significance” for which the failure to adequately and promptly achieve correction may be expected to result in an enforcement action. We may also be required to report adverse events associated with our products to the FDA and other regulatory authorities. Unexpected or serious health or safety concerns would result in labeling changes, recalls, market withdrawals or other regulatory actions.

The range of possible sanctions includes, among others, FDA issuance of adverse publicity, product recalls or seizures, fines, total or partial suspension of production and/or distribution, suspension of the FDA’s review of product applications, enforcement actions, injunctions, and civil or criminal prosecution. Any such sanctions, if imposed, could have a material adverse effect on our business, operating results, financial condition and cash flows. Under certain circumstances, the FDA also has the authority to revoke previously granted drug approvals. Similar sanctions as detailed above may be available to the FDA under a consent decree, depending upon the actual terms of such decree. If internal compliance programs do not meet regulatory agency standards or if compliance is deemed deficient in any significant way, it could materially harm our business.

The product would be licensed for sale in the EU through an EC certification process, frequently shorthanded as “CE Mark” under the IVDD 98/79/EC. It is possible that general controls are sufficient and a conformity assessment of a QMS would be sufficient to support clinical testing in the EU. If a Notified Body must be used, the CE Marking process has two stages: a certification of the manufacturer’s QMS (ability to safely develop devices) and the certification of the device performance and safety itself. Regulatory approval may be delayed, limited or denied for a number of reasons, including insufficient clinical data, the product not meeting safety or efficacy requirements or any relevant manufacturing processes or facilities not meeting applicable requirements.

Further trials and other costly and time-consuming assessments of the product may be required to obtain or maintain regulatory approval. We may be required to conduct additional trials beyond those currently planned, which could require significant time and expense.

20

The diagnostic industry is highly competitive.

The diagnostic industry has an intensely competitive environment that will require an ongoing, extensive search for technological innovations and the ability to market products effectively, including the ability to communicate the effectiveness, safety and value of products to healthcare professionals in private practice, group practices and payers in managed care organizations, group purchasing organizations and Medicare & Medicaid services. We are smaller than almost all of our competitors. Most of our competitors have been in business for a longer period of time than us, have a greater number of products on the market and have greater financial and other resources than we do. Furthermore, recent trends in this industry are toward further market consolidation of large drug companies into a smaller number of very large entities, further concentrating financial, technical and market strength and increasing competitive pressure in the industry. If we directly compete with them for the same markets and/or products, their financial strength could prevent us from capturing a profitable share of those markets. It is possible that developments by our competitors will make any products or technologies that we acquire non-competitive or obsolete.

Even if our product candidates receive regulatory approval, they may still face future development and regulatory difficulties.

Even if U.S. regulatory approval or clearance is obtained, the FDA can impose significant restrictions on a product’s indicated uses or marketing or may impose ongoing requirements for potentially costly post-approval studies. Any of these restrictions or requirements could adversely affect our potential product revenues. Our product candidates will also be subject to ongoing FDA requirements for the labeling, packaging, storage, advertising, promotion, record-keeping and submission of safety and other post-market information on the drug. In addition, approved products, manufacturers and manufacturers’ facilities are subject to continual review and periodic inspections. If a regulatory agency discovers previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured, a regulatory agency may impose restrictions on that product or us, including requiring withdrawal of the product from the market. If our product candidates fail to comply with applicable regulatory requirements, such as current Good Manufacturing Practices, or “CGMPs”, a regulatory agency may:

  • issue warning letters or untitled letters;
  •

require us to enter into a consent decree, which can include imposition of various fines, reimbursements for inspection costs, required due dates for specific actions and penalties for noncompliance;

  •

impose other civil or criminal penalties;

  •

suspend regulatory approval;

  •

suspend any ongoing clinical trials;

  •

refuse to approve pending applications or supplements to approved applications filed by us;

  •

impose restrictions on operations, including costly new manufacturing requirements; or

  •

seize or detain products or require a product recall.

Our commercialization efforts will be greatly dependent upon our ability to demonstrate product efficacy in clinical trials. Laboratories will be reluctant to order our products, and medical practitioners will be reluctant to prescribe our products, without compelling supporting data. The failure to demonstrate efficacy in our clinical trials, or a delay or failure to complete our clinical trials, would have a material adverse effect on our business, prospects, financial condition and operating results.

Our failure to convince medical practitioners to use our technologies will limit our revenue and profitability.

If we, or our commercialization partners, fail to convince medical practitioners to prescribe products using our technologies, we will not be able to sell our products or license our technologies in sufficient volume for our business to become profitable. We will need to make leading physicians aware of the benefits of products using our technologies through published papers, presentations at scientific conferences and favorable results from our clinical studies. Our failure to be successful in these efforts would make it difficult for us to convince medical practitioners to prescribe products using our technologies for their patients. Failure to convince medical practitioners to prescribe our products will damage our commercialization efforts and would have a material adverse effect on our business, prospects, financial condition and operating results.

21

We may not be able to market or generate sales of our products to the extent anticipated.

Assuming that we are successful in receiving regulatory clearances to market any of our products, our ability to successfully penetrate the market and generate sales of those products may be limited by a number of factors, including the following:

•

Certain of our competitors in the field have already received regulatory approvals for and have begun marketing similar products, which may result in greater physician awareness of their products as compared to ours;

•

Information from our competitors or the academic community indicating that current products or new products are more effective than our products could, if and when it is generated, impede our market penetration or decrease our existing market share;

•

The price for our products, as well as pricing decisions by our competitors, may have an effect on our revenues; and

•

Our revenues may diminish if third-party payers, including private health coverage insurers and health maintenance organizations, do not provide adequate coverage or reimbursement for our products.

If any of our future marketed products were to experience problems related to their efficacy, safety, or otherwise, or if new, more effective treatments were to be introduced, our revenues from such marketed products could decrease.

If any of our current or future marketed products become the subject of problems, including those related to, among others:

  • efficacy or safety concerns with the products, even if not justified;
  • regulatory proceedings subjecting the products to potential recall;
  • publicity affecting doctor prescription or patient use of the product;
  • pressure from competitive products; or
  • introduction of more effective tests.

Our revenues from such marketed products could decrease. For example, efficacy or safety concerns may arise, whether or not justified, that could lead to the recall or withdrawal of such marketed products. In the event of a recall or withdrawal of a product, our revenues would significantly decline.

Risks Relating to our Common Stock

If we issue additional shares in the future, it will result in the dilution of our existing shareholders.

Our articles of incorporation authorize the issuance of up to 500,000,000 shares of common stock with a par value of $0.001 per share and 20,000,000 shares of preferred stock with a par value of $0.001 per share. Our board of directors may choose to issue some or all of such shares to acquire one or more companies or products and to fund our overhead and general operating requirements. The issuance of any such shares will reduce the book value per share and may contribute to a reduction in the market price of the outstanding shares of our common stock. If we issue any such additional shares, such issuance will reduce the proportionate ownership and voting power of all current shareholders. Further, such issuance may result in a change of control of our corporation.

22

Trading of our stock is restricted by the Securities Exchange Commission’s penny stock regulations, which may limit a stockholder’s ability to buy and sell our common stock.

The Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and “accredited investors”. The term “accredited investor” refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the Securities and Exchange Commission, which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer’s 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 effecting the transaction and must be given to the customer in writing before or with the customer’s confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules; the broker-dealer must 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. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.

FINRA sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.

In addition to the “penny stock” rules described above, the Financial Industry Regulatory Authority (known as “FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.

Our common stock is illiquid and the price of our common stock may be negatively impacted by factors which are unrelated to our operations.

Although our common stock is currently listed for quotation on the OTC Markets Pink Sheets, there is no market for our common stock. Even when a market is established and trading begins, trading through the OTC Markets Pink Sheets is frequently thin and highly volatile. There is no assurance that a sufficient market will develop in our stock, in which case it could be difficult for shareholders to sell their stock. The market price of our common stock could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of our competitors, trading volume in our common stock, changes in general conditions in the economy and the financial markets or other developments affecting our competitors or us. In addition, the stock market is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our common stock.

23

We do not intend to pay dividends on any investment in the shares of stock of our company.

We have never paid any cash dividends and currently do not intend to pay any dividends for the foreseeable future. Because we do not intend to declare dividends, any gain on an investment in our company will need to come through an increase in the stock’s price. This may never happen and investors may lose all of their investment in our company.

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

On April 12, 2019, we sold 618,985 shares of common stock at a price of US$0.20 per share for gross proceeds of US$123,797. We issued the shares of common stock to one U.S. person in reliance upon Rule 506 of Regulation D of the Securities Act of 1933, as amended, and to two non-U.S. persons (as that term is defined in Regulation S of the Securities Act of 1933, as amended) in an offshore transaction in which we relied on the registration exemption provided for in Regulation S and/or Section 4(2) of the

Securities Act of 1933, as amended.

On April 12, 2019, pursuant to the Savicell conversion and participation rights agreement, one investor of Savicell have elected to exchange 89 shares of Savicell for common shares of the Company. The conversion resulted in an issuance of 756,480 common shares at a price per share of $0.20.

All the proceeds of the various financings were used for working capital.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

ITEM 6. EXHIBITS

Exhibits required by Item 601 of Regulation S-K:

Exhibit
Number


Description

(2)

Plan of acquisition, reorganization, arrangement, liquidation or succession

2.1

License and Research Funding Agreement dated July 25, 2012 between Ramot at Tel Aviv University Ltd. and Savicell Diagnostic Ltd. (portions of the exhibit has been omitted pursuant to a request for confidential treatment) (incorporated by reference to an exhibit to a current report on Form 8-K filed July 16, 2013)

(3)

Articles of Incorporation and Bylaws

3.1

Articles of Incorporation (incorporated by reference to an exhibit to a registration statement on Form S-1 filed on August 10, 2010)

3.2

Bylaws (incorporated by reference to an exhibit to a registration statement on Form S-1 filed on August 10, 2010)

(10)

Material Contracts

10.1

Loan Terms Agreement dated February 13, 2012 with Ori Ackerman (incorporated by reference to an exhibit to a current report on Form 8-K filed February 13, 2012)

10.2

Form of Subscription Agreement for Non-US Subscribers (incorporated by reference to an exhibit to a current report on Form 8-K filed May 24, 2012)

24


Exhibit
Number


Description

10.3

Form of Subscription Agreement for US Subscribers (incorporated by reference to an exhibit to a current report on Form 8-K filed May 24, 2012)

10.4

Form of Shares for Debt Agreement for Canadian Subscribers (incorporated by reference to an exhibit to a current report on Form 8-K filed July 18, 2012)

10.5

Warrant Agreement dated July 25, 2012 between Savicell Diagnostic Ltd. and Ramot at Tel Aviv University Ltd. (incorporated by reference to an exhibit to a current report on Form 8-K filed August 19, 2013)

10.6

Employment Agreement with Giora Davidovits dated September 1, 2012 (incorporated by reference to an exhibit to a current report on Form 8-K filed September 19, 2012)

10.7

Form of Conversion and Participation Rights Agreement (incorporated by reference to an exhibit to a current report on Form 8-K filed November 1, 2012)

10.8

Employment Agreement with Eyal Davidovits dated October 30, 2012 (incorporated by reference to an exhibit to a current report on Form 8-K filed November 5, 2012)

10.9

Form of Debt Conversion Agreement (incorporated by reference to an exhibit to a current report on Form 8-K filed November 16, 2012)

10.10

Form of Offshore Debt Conversion Agreement (incorporated by reference to an exhibit to a current report on Form 8-K filed November 16, 2012)

10.11

Form of Canadian Debt Conversion Agreement (incorporated by reference to an exhibit to a current report on Form 8-K filed November 16, 2012)

10.12

Form of Debt Conversion Option Agreement (incorporated by reference to an exhibit to a current report on Form 8-K filed April 22, 2015)

10.13

Form of Private Placement Subscription Agreement (incorporated by reference to an exhibit to a current report on Form 8-K filed April 22, 2015)  

10.14

Form of Private Placement Subscription Agreement (incorporated by reference to an exhibit to a current report on Form 8-K filed June 2, 2015)  

10.15

Shares for Debt Acknowledgement and Subscription Agreement (incorporated by reference to an exhibit to a current report on Form 8-K filed June 2, 2015)

10.16

Form of Private Placement Subscription Agreement (incorporated by reference to an exhibit to a current report on Form 8-K filed July 9, 2015)

10.17

Form of Board of Advisors Consulting Agreement (incorporated by reference to an exhibit to a current report on Form 8-K filed August 26, 2015)  

10.18

Form of Stock Option Agreement (incorporated by reference to an exhibit to a current report on Form 8-K filed August 26, 2015)  

10.19

Form of Convertible Note and Warrant Subscription Agreement (incorporated by reference to an exhibit to a current report on Form 8-K filed on April 13, 2018)

(21)

Subsidiaries

21.1

Savicell Diagnostic Ltd. our approximately 86.65% subsidiary incorporated in Israel

(31)

Rule 13a-14 Certifications

31.1*

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 of Giora Davidovits

(32)

Section 1350 Certifications

32.1*

Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Giora Davidovits

(101)

XBRL

101.INS*

XBRL INSTANCE DOCUMENT

101.SCH*

XBRL TAXONOMY EXTENSION SCHEMA

101.CAL*

XBRL TAXONOMY EXTENSION CALCULATION LINKBASE

101.DEF*

XBRL TAXONOMY EXTENSION DEFINITION LINKBASE

101.LAB*

XBRL TAXONOMY EXTENSION LABEL LINKBASE

101.PRE*

XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE

*Filed herewith.

25

SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

ONLINE DISRUPTIVE TECHNOLOGIES, INC.

By
         /s/ Giora Davidovits 
         Giora Davidovits
         Chief Executive Officer, Chief Financial Officer,
         President, Secretary, Treasurer and Director
         (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

November 5, 2019

26