UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended March 31, 2020

 

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

 

For the transition period from                   to                   

 

Commission File No. 333-188920

 

SCOUTCAM INC.
(Exact name of registrant as specified in its charter)

 

Nevada   847-4257143

(State or other jurisdiction

of incorporation or organization)

 

(I.R.S. Employer

Identification No.)

 

Suite 7A, Industrial Park    
P.O. Box 3030, Omer, Israel    8496500
(Address of Principal Executive Offices)   (Zip Code)

 

+972 72 260-2200
(Registrant’s telephone number, including area code)

 

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

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of exchange on which  registered
N/A   N/A   N/A

 

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 every Interactive Data File required to be submitted 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 such files). Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

[  ] Large accelerated filer [  ] Accelerated filer
[X] Non-accelerated filer [X] 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]

 

As of March 31, 2020, the registrant had 28,844,425 shares of common stock, par value $0.001, of the registrant issued and outstanding.

 

As used in this Quarterly Report and unless otherwise indicated, the terms “ScoutCam,” “we,” “us,” “our,” or “our Company” refer to ScoutCam Inc. Unless otherwise specified, all dollar amounts are expressed in United States dollars.

 

Explanatory Note

 

On March 25, 2020, the U.S. Securities and Exchange Commission issued an order under Section 36 (Release No. 34-88465) of the Securities Exchange Act of 1934 (the “Exchange Act”) granting exemptions from specified provisions of the Exchange Act and certain rules thereunder (the “Order”). The Order provides conditional relief to public companies that are unable to timely comply with their filing obligations as a result of the novel coronavirus (“COVID-19”) pandemic. ScoutCam Inc. (the “Company”) relied on the Order to delay the filing of this Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2020, due to circumstances related to COVID-19. The Company’s headquarters and other accounting offices are located in Israel where “lock-down” or “stay at home” orders were previously implemented in response to the COVID-19 pandemic. While the Israeli government has since relaxed certain of the restrictions previously imposed on business and individuals alike, during the period prior to May 15, 2020, the Company’s accounting personnel and other related service providers worked remotely, and, as a result, the Company’s accounting workflow and its ability to complete necessary review processes and procedures with respect to its financial statements were negatively impacted.  Accordingly, the Company required additional time to prepare and finalize this report.

 

 

 

 
  - 2 -  

 

SCOUTCAM INC.

 

QUARTERLY REPORT ON FORM 10-Q

 

TABLE OF CONTENTS

 

  Page
   
Cautionary Note Regarding Forward-Looking Statements 3
   
PART 1-FINANCIAL INFORMATION  
     
Item 1. Consolidated Financial Statements (unaudited) 4
     
  Consolidated Balance Sheets 5
     
  Consolidated Statements of Comprehensive Loss 7
     
  Statements of Stockholders’ Equity 8
     
  Consolidated Statements of Cash Flows 9
     
  Notes to Consolidated Financial Statements 10
     
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 20
     
Item 3. Quantitative and Qualitative Disclosures about Market Risk 23
     
Item 4. Control and Procedures 23
   
PART II-OTHER INFORMATION  
     
Item 1A. Risk Factors 24
     
Item 6. Exhibits 25
   
SIGNATURES 26

 

 
  - 3 -  

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

Certain information set forth in this Quarterly Report on Form 10-Q, including in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere herein may address or relate to future events and expectations and as such constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements which are not historical reflect our current expectations and projections about our future results, performance, liquidity, financial condition, prospects and opportunities and are based upon information currently available to us and our management and their interpretation of what is believed to be significant factors affecting our business, including many assumptions regarding future events.

 

Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “should,” “would,” “could,” “scheduled,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “seek,” or “project” or the negative of these words or other variations on these words or comparable terminology. Actual results, performance, liquidity, financial condition and results of operations, prospects and opportunities could differ materially and perhaps substantially from those expressed in, or implied by, these forward-looking statements as a result of various risks, uncertainties and other factors. These statements may be found under the section of our Annual Report on Form 10-K for the year ended December 31, 2019 (filed on March 16, 2020) entitled “Risk Factors” as well as in our other public filings.

 

In light of these risks and uncertainties, and especially given the start-up nature of our business, there can be no assurance that the forward-looking statements contained herein will in fact occur. Readers should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

 

 
  - 4 -  

 

ScoutCam INC.

INTERIM FINANCIAL STATEMENTS

AS OF MARCH 31, 2020

 

CONSOLIDATED SCOUTCAM INC.

 

  Page
Interim Condensed Consolidated Financial Statements - in US Dollars (USD) in thousands
Interim Condensed Consolidated Balance Sheets (unaudited) 5
Interim Condensed Consolidated Statements of Operations (unaudited) 7
Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity (unaudited) 8
Interim Condensed Consolidated Statements of Cash Flows (unaudited) 9
Notes to the Interim Condensed Consolidated Financial Statements 10

 

 
  - 5 -  

 

SCOUTCAM INC.

 

INTERIM CONDENSED CONSOLIATED BALANCE SHEETS

 

    March 31,     December 31,  
    2020     2019  
    Unaudited     Audited  
    USD in thousands  
Assets                
                 
CURRENT ASSETS:                
Cash and cash equivalents     2,847       3,245  
Accounts receivables     12       22  
Inventory     1,044       900  
Parent company     48       73  
Other current assets     256       78  
      4,207       4,318  
                 
NON-CURRENT ASSETS:                
Property and equipment, net     108       59  
Operating lease right-of-use assets     72       53  
Severance pay asset     289       327  
      469       439  
                 
TOTAL ASSETS     4,676       4,757  

 

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

 

 
  - 6 -  

 

SCOUTCAM INC.

 

INTERIM CONDENSED CONSOLIDATED BALANCE SHEETS (CONTINUED)

 

    March 31,     December 31,  
    2020     2019  
    Unaudited     Audited  
    USD in thousands  
Liabilities and shareholders’ equity                
                 
CURRENT LIABILITIES:                
Accounts payables     40       35  
Loan from Parent company     378       500  
Contract liabilities     546       502  
Operating lease liabilities - short term     32       24  
Accrued compensation expenses     273       297  
Other accrued expenses     351       552  
      1,620       1,910  
NON-CURRENT LIABILITIES:                
Operating lease liabilities - long term     40       29  
Liability for severance pay     297       296  
      337       325  
TOTAL LIABILITIES     1,957       2,235  
                 
SHAREHOLDERS’ EQUITY:                
Ordinary shares Common stock, $0.001 par value; 75,000,000 shares authorized, 28,844,425 and 26,884,921 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively     29       27  
Additional paid-in capital     5,743       4,135  
Accumulated deficit     (3,053 )     (1,640 )
TOTAL SHAREHOLDERS’ EQUITY     2,719       2,522  
                 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY     4,676       4,757  

 

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

 

 
  - 7 -  

 

SCOUTCAM INC.

 

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

 

    Three months ended  
    March 31,  
    2020     2019  
    Unaudited  
    USD in thousands
(except per share data)
 
Revenues:                
Products     40       24  
Services     -       -  
      40       24  
Cost of revenues:                
Products     130       109  
Services     -       -  
      130       109  
                 
Gross Loss     (90 )     (85 )
Research and development expenses     255       87  
Sales and marketing expenses     52       41  
General and administrative expenses     1,112       116  
Operating loss     (1,509 )     (329 )
Financing income, net     96       -  
Net Loss     (1,413 )     (329 )
                 
Net loss per ordinary share (basic and diluted, USD)     (0.05 )     (0.02 )
Weighted average ordinary shares (basic and diluted, in thousands)     27,488       16,131  

 

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

 

 
  - 8 -  

 

SCOUTCAM INC.

 

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY

 

Three Months Ended March 31, 2020 (Unaudited)

 

    Ordinary shares     Additional paid-in     Accumulated     Total Shareholders’  
    Number     Amount     capital     deficit     equity  
          USD in thousands  
Balance at January 1, 2020     26,885     $ 27       4,135       (1,640 )     2,522  
Issuance of shares and warrants     1,960       2       907       -       909  
Stock based compensation     -       -       701       -       701  
Net loss     -       -       -       (1,413 )     (1,413 )
                                         
Balance at March 31, 2020     28,845     $ 29       5,743       (3,053 )     2,719  

 

Three Months Ended March 31, 2019 (Unaudited)

 

    Ordinary shares     Additional paid-in     Parent company     Accumulated     Total Shareholders’  
    Number     Amount     capital     deficit     deficit     equity  
          USD in thousands  
Balance at January 1, 2019     16,131       16       (16 )     (118 )     -       (118 )
Net transfer from Parent company     -       -       -       514       -       514  
Net loss     -       -       -       (189 )     (140 )     (329 )
Consummation of the Carve-out     -       -       207       (207 )     -       -  
Capital contribution from Parent company     -       -       90       -       -       90  
                                                 
Balance at March 31, 2019     16,131       16       281       -       (140 )     157  

 

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

 

 
  - 9 -  

 

SCOUTCAM INC.

 

INTERIM CONDENSED CONOLIDATED STATEMENTS OF CASH FLOWS

 

    Three months ended  
    March 31,  
    2020     2019  
    Unaudited  
    USD in thousands  
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net loss     (1,413 )     (329 )
Adjustments to reconcile net loss to net cash used in operations:                
Depreciation     11       1  
Other non-cash items     39       19  
Share based compensation     682       -  
Profit from exchange differences on cash and cash equivalents     (96 )     -  
                 
CHANGES IN OPERATING ASSET AND LIABILITY ITEMS:                
Accounts receivable     10       87  
Inventory     (125 )     (218 )
Other current assets     (53 )     29  
Accounts payables     5       (18 )
Parent company     (16 )     (76 )
Contract liabilities     44       -  
Accrued compensation expenses     (24 )     8  
Other accrued expenses     (201 )     (17 )
Net cash flows used in operating activities     (1,137 )     (514 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:                
                 
Purchase of property and equipment     (185 )     -  
Net cash flows used in investing activities     (185 )     -  
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Loan repayment to Parent company     (81 )     -  
Transfer from Parent company     -       514  
Capital Contribution from Parent company     -       90  
Proceeds from issuance of shares and warrants     909       -  
Net cash flows provided by financing activities     828       604  
                 

PROFIT FROM EXCHANGE DIFFERENCES ON CASH AND CASH EQUIVALENTS

    96       -  
                 
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS     (398 )     90  
BALANCE OF CASH AND CASH EQUIVALENTS AT THE BEGINNING OF THE PERIOD     3,245       -  
BALANCE OF CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD     2,847       90  

 

 SUPPLEMENTAL INFORMATION FOR CASH FLOW:

 

Non cash activities - 

 

   

Three months ended

March 31,

 
    2020     2019  
    USD in thousands  
Parent Company loan settled against Parent Company receivable     41       -  

 

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

 

 
  - 10 -  

 

SCOUTCAM INC.

 

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 – GENERAL:

 

  a.

ScoutCam Inc. (the “Company”), formally known as Intellisense Solutions Inc., was incorporated under the laws of the State of Nevada on March 22, 2013 under the name Intellisense Solutions Inc., or Intellisense. The Company was initially engaged in the business of developing web portals to allow companies and individuals to engage in the purchase and sale of vegetarian food products over the Internet. The Company was unable to execute it original business plan, develop significant operations or achieve commercial sales. Prior to the closing of the Securities Exchange Agreement (as defined below), the Company was a “shell company”.

 

ScoutCam Ltd., or ScoutCam, was formed in the State of Israel on January 3, 2019 as a wholly-owned subsidiary of Medigus Ltd. (the “Parent Company”, “Medigus”), an Israeli company traded both on the Nasdaq Capital Market and the Tel Aviv Stock Exchange, and commenced operations on March 1, 2019. Upon incorporation, ScoutCam issued to Medigus 1,000,000 Ordinary shares with no par value. On March 2019, ScoutCam issued to Medigus an additional 1,000,000 Ordinary shares with no par value.

 

ScoutCam was incorporated as part of a reorganization of Medigus, which was designed to distinguish ScoutCam’s miniaturized imaging business, or the micro ScoutCam™ portfolio, from Medigus’s other operations and to enable Medigus to form a separate business unit with dedicated resources focused on the promotion of such technology. In December 2019, Medigus and ScoutCam consummated a certain Amended and Restated Asset Transfer Agreement, under which Medigus transferred and assigned certain assets and intellectual property rights related to its miniaturized imaging business to ScoutCam.

 

On September 16, 2019, Intellisense entered into a Securities Exchange Agreement (the “Exchange Agreement”), with Medigus, pursuant to which Medigus assigned, transferred and delivered 100% of its holdings in ScoutCam to Intellisense, in exchange for consideration consisting of shares of Intellisense’s common stock representing 60% of the issued and outstanding share capital of Intellisense immediately upon the closing of the Exchange Agreement (the “Closing”). The Closing occurred on December 30, 2019 (the “Closing Date”).

 

Although the transaction resulted in ScoutCam becoming a wholly owned subsidiary of Intellisense, the transaction constituted a reverse recapitalization since Medigus, the only shareholder of ScoutCam prior to the Exchange Agreement, was issued a substantial majority of the outstanding capital stock of Intellisense upon consummation of the Exchange Agreement, and also taking into account that prior to the Closing Date, Intellisense was considered as a shell corporation. Accordingly, ScoutCam is considered the accounting acquirer of the merged company.

 

ScoutCam has developed a range of micro CMOS (complementary metal-oxide semiconductor) and CCD (charge-coupled device) video cameras, including micro ScoutCam™ 1.2. These innovative cameras are suitable for both medical and industrial applications. Based on its proprietary technology, the Company designs and manufactures endoscopy and micro camera systems for partner companies.

 

 
  - 11 -  

 

SCOUTCAM INC.

 

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 – GENERAL (continued):

 

 

b.

 

The accompanying comparative consolidated financial statements include the historical accounts of ScoutCam as a “Carve-out Business”, a division of Medigus. Throughout the comparative periods included in these Financial Statements, the Carve-out Business operated as part of Medigus. Separate financial statements have not historically been prepared for the Carve-out Business. These comparative carve-out financial data has been prepared on a standalone basis and is derived from Medigus’s consolidated financial statements and accounting records. The carve-out comparative financial data reflects ScoutCam’s financial position, results of operations, changes in net parent deficit and cash flows in accordance with U.S. GAAP.

 

The financial position, results of operations, changes in net parent deficit, and cash flows of the Carve-out Business may not be indicative of its results had it been a separate stand-alone entity during the comparative periods presented.

 

The comparative carve-out financial data of the Company include expenses which were allocated from Medigus for certain functions, including general corporate expenses related to corporate strategy, procurement, Information Technology (“IT”), Human Resources (“HR”) and legal. These allocation have been made on the basis of direct usage when identifiable, with the remainder allocated on the basis of headcount. Management believes the expense allocation methodology and results are reasonable and consistently applied for all comparative periods presented. However, these allocations may not be indicative of the actual expenses that would have been incurred by an independent company or of the costs to be incurred in the future.

 

The carve-out comparative financial statements include assets and liabilities specifically attributable to the Carve-out Business. Medigus uses a centralized approach for managing cash and financing operations. Accordingly, a substantial portion of the cash balances are transferred to Medigus’ cash management accounts regularly and therefore are not included in the financial statements. Transfers of cash between Carve-out business and Medigus are included within “Net transfers from Parent company” on the Statements of Cash Flows and the Statements of changes in shareholder’s equity (capital deficiency).

 

As the carve-out comparative financial information has been prepared on a carve-out basis, the amounts reflected in Parent Company deficit in the comparative statement of changes in shareholder’s equity (capital deficiency) refer to net loss for the period attributed to ScoutCam in addition to transactions between Medigus and ScoutCam.

     
  c. During the three month ended March 31, 2020, the Company incurred a loss of USD 1,413 thousand and negative cash flows from operating activities of approximately USD 1,137 thousand. Based on the projected cash flows, the Company’s Management is of the opinion that without further fundraising it will not have sufficient resources to enable it to continue its operating activities including the development, manufacturing and marketing of its products within one year after the issuance date of these financial statements. As a result, there is a substantial doubt about the Company’s ability to continue as a going concern within one year after the issuance date of these financial statements.
     
    Management’s plans include continuing commercialization of the Company’s products and securing sufficient financing through the sale of additional equity securities, debt or capital inflows from strategic partnerships and other opportunities. There are no assurances however, that the Company will be successful in obtaining the level of financing needed for its operations. If the Company is unsuccessful in commercializing its products and securing sufficient financing, it may need to reduce activities, curtail or even cease operations.
     
   

These consolidated financial statements have been prepared assuming the Company will continue as a going concern, which assumes the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. Accordingly, the consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

The accounting policies set out below have, unless otherwise stated, been applied consistently.

 

 
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SCOUTCAM INC.

 

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 2 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

 

  A. Unaudited Interim Financial Statements

 

The accompanying unaudited interim condensed financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of U.S. Securities and Exchange Commission Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included (consisting only of normal recurring adjustments except as otherwise discussed). For further information, reference is made to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

 

  B. Principles of Consolidation

 

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.

 

  C. Use of estimates

 

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The Company evaluates on an ongoing basis its assumptions, including those related to contingencies, deferred taxes, inventory impairment, stock based compensation, as well as in estimates used in applying the revenue recognition policy. Actual results may differ from those estimates.

 

  D. Significant Accounting Policies

 

The significant accounting policies followed in the preparation of these unaudited interim condensed consolidated financial statements are identical to those applied in the preparation of the latest annual financial statements.

 

  E. Recently Adopted Accounting Pronouncement

 

The significant accounting policies followed in the preparation of these unaudited interim consolidated financial statements are identical to those applied in the preparation of the latest annual audited financial statements with the exception of the following:

 

In June 2016, the FASB issued ASU 2016-13 “Financial Instruments – Credit Losses” to improve information on credit losses for financial assets and net investment in leases that are not accounted for at fair value through net income. The ASU replaces the current incurred loss impairment methodology with a methodology that reflects expected credit losses. The Company adopted this ASU on January 1, 2020. There was not a material impact on the interim consolidated financial statements.

 

In August 2018, the FASB issued ASU 2018-13, “Changes to Disclosure Requirements for Fair Value Measurements,” which will improve the effectiveness of disclosure requirements for recurring and nonrecurring fair value measurements. The standard removes, modifies, and adds certain disclosure requirements and is effective for the Company beginning on January 1, 2020. This standard did not have a material effect on the Company’s interim consolidated financial statements.

 

In November 2018, the FASB issued ASU 2018-18 – “Collaborative Arrangements (Topic 808),” which clarifies the interaction between Topic 808 and Topic 606, Revenue from Contracts with Customers. The Company adopted this standard in the first quarter of fiscal year 2020. This standard did not have a material impact on the Company’s consolidated financial statements and related disclosures.

 

  F. Recent Accounting Pronouncements

 

In December 2019, the FASB issued ASU No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which is intended to simplify various aspects related to accounting for income taxes. ASU 2019-12 removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This guidance is effective for the Company beginning on January 1, 2021, with early adoption permitted. The Company does not expect that the adoption of this standard will have a significant impact on the consolidated financial statements and related disclosures.

 

 
  - 13 -  

 

SCOUTCAM INC.

 

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 3 – LEASES:

 

On January 1, 2019, the Company adopted ASU 2016-02 using the modified retrospective approach for all lease arrangements at the beginning period of adoption. ScoutCam Ltd. leases office and vehicles under operating leases. At March 31, 2020, the Company’s ROU assets and lease liabilities for operating leases totaled $72 thousand.

 

In January 2020, ScoutCam Ltd. entered into a lease agreement for office space in Omer, Israel. The agreement is for 11 months beginning on February 1, 2020. Monthly lease payments under the agreement are approximately $6 thousand. Lease expenses recorded in the interim consolidated statements of operations were $15 thousand for the three months ended March 31, 2020. The Company has elected the short-term lease exception for this lease. As part of this election it will not recognize right-of-use assets and lease liabilities on the balance sheet for this lease.

 

Supplemental cash flow information related to operating leases was as follows:

 

   

Three months ended

March 31, 2020

 
    USD in thousands  
Cash payments for operating leases     12  
Cash payments for short-term lease     15  
Total lease expenses     27  

 

As of March 31, 2020, the Company’s operating leases had a weighted average remaining lease term of 1.5 years and a weighted average discount rate of 10%. Future lease payments under operating leases as of March 31, 2020 were as follows:

 

    Operating leases  
    USD in thousands  
Remainder of 2020     25  
2021     33  
2022     23  
Total future lease payments     81  
Less imputed interest     (9 )
Total lease liability balance     72  

 

 
  - 14 -  

 

SCOUTCAM INC.

 

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 4 – EQUITY:

 

Private placement:

 

  a. In December 2019, the Company allotted in a private issuance, a total of 3,413,312 units at a purchase price of USD $0.968 per unit. Each unit was comprised of two shares of common stock par value US$0.001 per share, one Warrant A (defined below) and two Warrants B (defined below). The immediate proceeds (gross) from the issuance of the units amounted to approximately USD 3.3 million.

 

Each Warrant A is exercisable into one share of common stock of the Company at an exercise price of USD 0.595 per share during the 12 month period following the allotment. Each Warrant B is exercisable into one share of common stock of the Company at an exercise price of USD 0.893 per share during the 18 month period following the allotment.

 

In addition, Shrem Zilberman Group Ltd. (the “Consultant”) will be entitled to receive the amount representing 3% of any exercise price of each Warrant A or Warrant B that may be exercised in the future. In the event the total proceeds received as a result of exercise of Warrants will be less than $2 million at the time of their expiration, the Consultant will be required to invest $250,000 in the Company in return for shares of common stock of Company.

 

  b. On March 3, 2020, the Company allotted in a private issuance a total of 979,754 units at a purchase price of USD $0.968 per unit.

 

Each unit was comprised of two shares of common stock par value US$0.001 per share, one Warrant A (defined below) and two Warrants B (defined below).

 

Each Warrant A is exercisable into one share of common stock of the Company at an exercise price of USD 0.595 per share during the 12 month period following the allotment.

 

Each Warrant B is exercisable into one share of common stock of the Company at an exercise price of USD 0.893 per share during the 18 month period following the allotment.

 

The immediate proceeds (gross) from the issuance of all securities offered amounted to approximately USD 948 thousands. After deducting closing costs and fees, the Company received proceeds of approximately USD 909 thousand, net of issuance expenses.

 

As of March 31, 2020, the Company had the following outstanding warrants to purchase Common Stock as follows:

 

Warrant   Issuance Date   Expiration Date   Exercise Price Per Share ($)     Number of Shares of Common Stock Underlying Warrants  
Warrant A   December 30, 2019   December 30, 2020     0.595       3,413,317  
Warrant B   December 30, 2019   June 30, 2021     0.893       6,826,623  
Warrant A   March 3, 2020   March 3, 2021     0.595       979,754  
Warrant B   March 3, 2020   September 3, 2021     0.893       1,959,504  
                      13,179,198  

 

 
  - 15 -  

 

SCOUTCAM INC.

 

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 4 – EQUITY (continued):

 

Share-based compensation to employees and to directors:

 

In February 2020, the Company’s Board of Directors approved the 2020 Share Incentive Plan (the “Plan”). The Plan initially included a pool of 5,228,007 shares of common stock for grant to Company employees, consultants, directors and other service providers. On March 15, 2020, the Company’s Board of Directors approved an increase to the Company’s option pool pursuant to the Plan by an additional 576,888 shares of Common Stock.

 

The Plan is designed to enable the Company to grant options to purchase ordinary shares and RSUs under various and different tax regimes including, without limitation: (i) pursuant and subject to Section 102 of the Israeli Tax Ordinance or any provision which may amend or replace it and any regulations, rules, orders or procedures promulgated thereunder and to designate them as either grants made through a trustee or not through a trustee; and (ii) pursuant and subject to Section 3(i) of the Israeli Tax Ordinance.

 

On February 12, 2020, the Company granted 4,367,515 options pursuant to the Plan. Each option is convertible into one share of common stock of the Company of $0.001 par value at the exercise price of $0.29.

 

On March 15, 2020, the Company granted 576,888 options pursuant to the Plan to each of the Company’s then serving directors, excluding Professor Benad Goldwasser. Each option is convertible into one share of common stock of the Company of $0.001 par value at the exercise price of $0.29.

 

The fair value of each option was estimated as of the date of grant or reporting period using the Black-Scholes option-pricing model, using the following assumptions:

 

    February 12, 2020     March 15, 2020  
Underlying value of ordinary shares ($)     0.484       0.484  
Exercise price ($)     0.29       0.29  
Expected volatility (%)     43.35       45.25  
Term of the options (years)     7       7  
Risk-free interest rate     1.55       0.89  

 

The cost of the benefit embodied in the options granted during the three months ended March 31, 2020, based on their fair value as at the grant date, is estimated to be approximately $2.9 million. These amounts will be recognized in statements of operations over the vesting period.

 

 
  - 16 -  

 

SCOUTCAM INC.

 

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 4 – EQUITY (continued):

 

The following table summarizes stock option activity for the three months ended March 31, 2020:

 

    For the
Three months ended
March 31, 2020
 
    Amount of options     Weighted average exercise price  
              $  
Outstanding at beginning of period     -       -  
Granted     4,944,403       0.29  
Outstanding at end of period     4,944,403       0.29  
                 
Vested at end of period     739,021       0.29  

  

The following table sets forth the total share-based payment expenses resulting from options granted, included in the statements of operation:

 

   

Three months ended

March 31, 2020

 
    USD in thousands  
Research and development     108  
General and administrative     574  
Total expenses     682  

 

 
  - 17 -  

 

SCOUTCAM INC.

 

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 5 – REVENUES:

 

Contract liabilities: 

 

The Company’s contract liabilities as of March 31, 2020 and December 31, 2019 were as follows:

 

    March 31,     December 31,  
    2020     2019  
    USD in thousands  
Contract liabilities     546       502  

 

Contract liabilities include advance payments, which are primarily related to advanced billings for development services.

 

Remaining Performance Obligations

 

Remaining Performance Obligations (“RPO”) represents contracted revenue that has not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenue in future periods. As of March 31, 2020, the total RPO amounted to $900 thousand, which the Company expects to recognize during the next 12 months.

 

NOTE 6 – INVENTORY

 

Composed as follows:

 

    March 31,     December 31,  
    2020     2019  
    USD in thousands  
Raw materials and supplies     20       24  
Work in progress     457       316  
Finished goods     567       560  
      1,044       900  

 

During the period ended March 31, 2020, no impairment occurred.

 

 
  - 18 -  

 

SCOUTCAM INC.

 

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 7 – LOSS PER SHARE

 

Basic loss per share is computed by dividing net loss attributable to ordinary shareholders of the Company, by the weighted average number of ordinary shares as described below.

 

In computing the Company’s diluted loss per share, the numerator used in the basic loss per share computation is adjusted for the dilutive effect, if any, of the Company’s potential shares of common stock. The denominator for diluted loss per share is a computation of the weighted-average number of ordinary shares and the potential dilutive ordinary shares outstanding during the period.

 

The loss per share information in these consolidated financial statements is reflected and calculated as if the Company had existed since January 1, 2019. Accordingly, loss per share for all periods was calculated based on the number of shares retroactively adjusted for the exchange ratio determined in the reverse recapitalization.

 

NOTE 8 – RELATED PARTIES

 

On May 30, 2019, ScoutCam Ltd. entered into an intercompany agreement with Medigus (the “Intercompany Agreement”) according to which ScoutCam Ltd. agreed to hire and retain certain services from Medigus. The agreed upon services provided under the Intercompany Agreement included: (1) lease of office space and clean room based on actual space utilized by ScoutCam Ltd. and in shared spaces according to employee ratio; (2) utilities such as electricity water, IT and communication services based on employee ratio; (3) car services, including car rental, gas usage, payment for toll roads based on 100% of expense incurred from a ScoutCam Ltd. employee car; (4) external accountant services at a price of USD 6,000 per annum; (5) directors and officers insurance at a sum of 1/3 of Parent company cost; (6) CFO services at a sum of 50% of Parent company CFO employer cost; (7) every direct expense of ScoutCam Ltd. that is paid by the Parent company in its entirety subject to approval of such direct expenses in advance; and (8) any other mutual expense that is borne by the parties according to the Respective portion of the Mutual Expense

 

In addition, ScoutCam Ltd.’s employees provide support services to Medigus.

 

On April 20, 2020, ScoutCam Ltd. entered into an amended and restated intercompany services agreement with Medigus.

 

Balances with related parties:

 

    March 31, 2020     December 31, 2019  
             
Parent Company     48       73  
Loan from Parent Company     378       500  

 

Transactions with related parties:

 

    Three months ended March 31,  
    2020     2019  
Revenues     5       -  
Cost of revenues     5       -  

 

 
  - 19 -  

 

SCOUTCAM INC.

 

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 9 - SUBSEQUENT EVENTS:

 

On May 18, 2020, the Company allotted in a private issuance a total of 2,066,116 units at a purchase price of USD $0.968 per unit.

 

Each unit was comprised of two shares of common stock par value US$0.001 per share, one Warrant A (defined below) and two Warrants B (defined below).

 

Each Warrant A is exercisable into one share of common stock of the Company at an exercise price of USD 0.595 per share during the 18 month period following the allotment.

 

Each Warrant B is exercisable into one share of common stock of the Company at an exercise price of USD 0.893 per share during the 24 month period following the allotment.

 

The immediate proceeds (gross) from the issuance of all securities offered amounted to approximately USD 2 million.

 

 
  - 20 -  

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

Readers are advised to review the following discussion and analysis of our financial condition and results of operations together with our consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the consolidated financial statements and related notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2019. Some of the information contained in this discussion and analysis or set forth elsewhere in this Quarterly Report, including information with respect to our plans and strategy for our business, includes forward-looking statements that involve risks and uncertainties. See “Cautionary Note Regarding Forward-Looking Statements”. You should review the “Risk Factors” section of our Annual Report for the fiscal year ended December 31, 2019 for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.

 

Overview

 

ScoutCam Ltd. was formed in Israel on January 3, 2019, as a wholly owned subsidiary of Medigus Ltd., an Israeli company (“Medigus”), and commenced operations on March 1, 2019. ScoutCam was incorporated as part of the reorganization of Medigus, which was designed to distinguish ScoutCam’s miniaturized imaging business, or the micro ScoutCam portfolio, from Medigus’s other operations and to enable Medigus to form a separate business unit with dedicated resources focused on the promotion of such technology (the “Reorganization”). In December 2019, Medigus and ScoutCam consummated that Amended and Restated Asset Transfer Agreement, which transferred and assigned certain assets and intellectual property rights related to its miniaturized imaging business.

 

On March 1, 2019, 12 employees moved from Medigus to ScoutCam.

 

 
  - 21 -  

 

The following table summarizes our results of operations for the three month ended March 31, 2020 and 2019, together with the changes in those items in dollars and as a percentage:

 

    2020     2019     % Change  
Revenues     40,000       24,000       67 %
Cost of Revenues     130,000       109,000       19 %
Gross Loss     (90,000 )     (85,000 )     6 %
Research and development expenses     255,000       87,000       193 %
Sales and marketing expense     52,000       41,000       27 %
General and administrative expenses     1,112,000       116,000       859 %
Operating Loss     (1,509,000 )     (329,000 )     359 %

 

Revenues

 

For the three months ended March 31, 2020, ScoutCam generated revenues of $40,000, an increase of $16,000 from the three months ended March 31, 2019 revenues.

 

The increase in revenues was primarily due to an overall increase in the sales of the Company’s component products to occasional customers.

 

Cost of Revenues

 

Cost of revenues for the three months ended March 31, 2020 were $130,000, an increase of $21,000 compared to cost of revenues of $109,000 for the three months ended March 31, 2019. The increase was primarily due to an increase in payroll expenses, as result of hiring additional employees and losses in severance pay assets.

 

Gross Loss

 

Gross loss for the three months ended March 31, 2020 was $90,000, an increase of $5,000 compared to gross loss of $85,000 for the three months ended March 31, 2019.

 

Research and Development Expenses

 

Research and development expenses for the three months ended March 31, 2020, were $255,000, an increase of $168,000, or 193%, compared to $87,000 for the three months ended March 31, 2019. The increase was primarily due to an increase in payroll expenses, as result of an increase in share - based compensation expenses (see note 4 to our interim condensed consolidated financial statements as of March 31, 2020), hiring additional employees and losses in severance pay assets.

 

Sales and Marketing Expenses

 

Sales and marketing expenses for the three months ended March 31, 2020, were $52,000, an increase of $11,000, or 27%, compared to $41,000 for the three months ended March 31, 2019. The increase was primarily due to an increase in payroll expenses, as result of hiring additional employees.

 

General and Administrative Expenses

 

General and Administrative expenses for the three months ended March 31, 2020, were $1,112,000, an increase of $996,000, or 859%, compared to $116,000 for the three months ended March 31, 2019. The increase was primarily due to an increase in payroll expenses, as result an increase in share - based compensation expenses (see note 4 to our interim condensed consolidated financial statements as of March 31, 2020) and hiring additional employees and an increase in professional services. The increase in professional services resulted from the incorporation of ScoutCam Ltd. as an independent company and in connection with the execution of that certain securities exchange agreement involving ScoutCam Ltd.

 

 
  - 22 -  

 

Operating loss

 

We incurred an operating loss of $1,509,000 for the three months ended March 31, 2020, an increase of $1,180,000, or 359%, compared to operating loss of $329,000 for the three months ended March 31, 2019. The increase in operating loss was due to $5,000 increase in gross loss, $168,000 increase in research and development expenses, $11,000 increase in sales and marketing expenses and $996,000 increase in administrative and general expenses.

 

Liquidity and Capital Resources

 

Sources of Liquidity

 

The Company has financed its operations primarily through Medigus, private placement transactions for the issuance of common stock and warrants, and sales to customers.

 

Cash Flows

 

The following table sets forth the significant sources and uses of cash for the periods set forth below (in dollars):

 

    2020     2019  
Cash used in Operating Activity     (1,137,000 )     (514,000 )
Cash used in Investing Activity     (185,000 )     -  
Cash provided by Financing Activity     828,000       604,000  
Profit from exchange differences on cash equivalents     96,000       -  

 

Operating Activities

 

For the three months ended March 31, 2020, net cash flows used in operating activities was $1,137,000, compared to net cash flows used in operating activities of $514,000 for the three months ended March 31, 2019, an increase of $623,000. The change was mainly due to an increase in net loss, an increase in inventory and other accrued expenses, which was partially offset by an increase in stock-based compensation.

 

Investing Activities

 

For the three months ended March 31, 2020, net cash flows used in investing activities was $185,000 as compared to $0 for the same period of 2019. The change was due to the purchase of property and equipment during the three months ended March 31, 2020.

 

Financing Activities

 

For the three months ended March 31, 2020, net cash flows provided by financing activities was $828,000, compared to net cash flows provided by financing activities of $604,000 for three months ended March 31, 2019.

 

Net cash provided by financing activities in the three months ended March 31, 2020 consisted of $909,000 in proceeds from the issuance of shares and warrants, and $81,0000 in loan repayments from Medigus. Net cash provided by financing activities in the three months ended March 31, 2019 was generated from the transfer of funds from Medigus.

 

Profit from exchange differences on cash equivalents

 

During the three months ended March 31, 2020, ScoutCam Ltd. generated profit from exchange differences on cash equivalents of $96,000. This profit represents a change in the Company's cash and cash equivalents as a result of the change in the dollar exchange rate against the NIS during the three months ended March 31, 2020.

 

Future Funding Requirements

 

The Company believes that it will require additional financing in order to provide the capital it needs to achieve its growth targets.

 

Off-Balance Sheet Arrangements

 

ScoutCam Ltd. leases its headquarters in Omer, Israel, with a total of approximately 807 gross square meters. In January 2020, ScoutCam extended the agreement through the end of 2020. The rental payments are linked to the Israeli CPI.

 

 
  - 23 -  

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

As a smaller reporting company, we are not required to provide the information requested by this Item.

 

Item 4. Controls and Procedures.

 

Evaluation of Disclosure Controls and Procedures

 

Our management, with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2020. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits 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 a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. As a result of the material weakness in our internal control over financial reporting described below, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were not effective at the reasonable assurance level as of March 31, 2020.

 

In connection with the audit of our 2019 annual consolidated financial statements, we identified a material weakness in our internal control over financial reporting related to the complexities involving the accounting for our reverse recapitalization transaction. The cause of this material weakness was due to the complex accounting related to the reverse recapitalization transaction, which required additional qualified accounting personnel with an appropriate level of experience, and additional controls in the period-end financial reporting process commensurate with the complexity of the matter. A material weakness is defined as a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected and corrected on a timely basis. The material weakness did not result in any identified misstatements to the financial statements, and there were no changes to previously released financial results. In light of the material weakness, we performed additional analyses and other post-closing procedures and hired an additional accounting personnel to ensure our consolidated financial statements are prepared in accordance with U.S. GAAP. Accordingly, our CEO and CFO have certified that, based on their knowledge, the consolidated financial statements, and other financial information included in this Form 10-Q, fairly present in all material respects our financial condition, results of operations and cash flows as of, and for, the periods presented in this Form 10-Q.

 

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

 

Remediation Efforts to Address Material Weakness

 

We began remediation efforts in the second quarter of 2020 for our accounting of non-routine complex transactions control by hiring additional personnel for our finance team.  We continue to evaluate our internal and external technical accounting resources to ensure they are appropriate for us and our needs. Additionally, there is a renewed emphasis on our process going forward for initial identification of potential contracts and transactions that may be non-routine and complex during a reporting period, and then conducting the necessary procedures with the full internal accounting team and external consultants to review and research the proper guidance and approach toward the accounting, and documenting as such in a white paper or memo as needed.

 

We believe these measures, and others that may be implemented, will remediate the material weakness in internal control over financial reporting described above.

 

 
  - 24 -  

 

The material weakness will not be considered formally remediated until the control has operated effectively for a sufficient period of time, and after management has concluded, through testing, that the control is operating effectively.

 

Changes in Internal Control over Financial Reporting

 

Other than the changes intended to remediate the material weakness noted above, there was no change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter ended March 31, 2020 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

PART II- OTHER INFORMATION

 

ITEM 1. LEGAL PROCEEDINGS

 

Not applicable.

 

ITEM 1A. RISK FACTORS.

 

Our business faces many risks, a number of which are described under the caption “Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “2019 Annual Report”). Other than as set forth below, there have been no material changes from the risk factors previously disclosed in our 2019 Annual Report. The risks described in the 2019 Annual Report and below may not be the only risks we face. Other risks of which we are not yet aware, or that we currently believe are not material, may also materially and adversely impact our business operations or financial results. If any of the events or circumstances described in the risk factors contained in the 2019 Annual Report or described below occurs, our business, financial condition or results of operations could be adversely impacted and the value of an investment in our securities could decline. Investors and prospective investors should consider the risks described in the 2019 Annual Report and below, and the information contained under the caption “Forward-Looking Statements” and elsewhere in this Quarterly Report on Form 10-Q before deciding whether to invest in our securities.

 

The COVID-19 pandemic has adversely affected our business and operations, and the continued outbreak of the pandemic may cause further material and adverse harm to our business and operations.

 

The recent outbreak of COVID-19, which originated in Wuhan, China in late 2019, has since spread to multiple countries, including the United States and Israel. On March 11, 2020, the World Health Organization declared the outbreak a pandemic. While COVID-19 is still spreading and the final implications of the pandemic are difficult to estimate at this stage, it is clear that it has affected the lives of a large portion of the global population. At this time, the pandemic has caused states of emergency to be declared in various countries, travel restrictions imposed globally, quarantines established in certain jurisdictions and various institutions and companies being closed. We are actively monitoring the pandemic and we are taking necessary measures to respond to the situation in cooperation with the various stakeholders.

 

Based on guidelines instituted by the Israeli government, employers (including us) are required to allow employees to work remotely. In that regard, and in compliance with all applicable Israeli rules and guidelines, our offices have remained open since the middle of March 2020, but certain of our essential employees worked, and continue to work, remotely. Accordingly, Israeli containment measures have caused a number of disruptions to our business operations, including, but not limited to, the inability of our employees to access our facilities in a normal fashion, and likewise certain of our professional advisors have been precluded from effectively rendering their services to us as well. This, in turn, prevented us from obtaining all of the necessary financial records required in order to effectively prepare and file our Form 10-Q Quarterly Report in a timely manner.

 

 
  - 25 -  

 

Additionally, COVID-19 may also result in the inability of our manufacturers to deliver components or finished products on a timely basis, and may also result in the inability of our suppliers to deliver the parts required by our manufacturers to complete manufacturing of components or finished products. The extent to which COVID-19 will impact our operations moving forward remains uncertain. A number of factors will determine the trajectory of such impact, including the duration and severity of the outbreak, the possibility of a “second wave”, and the actions that may be required to contain and/or treat COVID-19. In particular, the continued spread of COVID-19 globally could adversely impact our operations and workforce, including our research and clinical trials and its ability to raise capital, which in turn could have an adverse impact on our business, financial condition and results of operation.

 

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

 

None.

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

 

None.

 

ITEM 4. MINE SAFETY DISCLOSURE

 

Not applicable.

 

ITEM 5. OTHER INFORMATION

 

None.

  

ITEM 6. EXHIBITS.

 

(a) The following documents are filed as exhibits to this Quarterly Report or incorporated by reference herein.

 

Exhibit

Number

  Description
10.1   Form of Securities Purchase Agreement, dated March 3, 2020, by and among ScoutCam Inc. and certain investors listed therein (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the SEC on March 5, 2020)
     
10.2   Form of Registration Rights Agreement, dated March 3, 2020, by and among ScoutCam Inc. and those certain investors that are a party to the Securities Purchase Agreement dated March 3, 2020 (incorporated by reference to Exhibit 10.2 to our Current Report on Form 8-K filed with the SEC on March 5, 2020)
     
10.3   Form of Warrant A, by and among ScoutCam Inc. and those certain investors that are a party to the Securities Purchase Agreement dated March 3, 2020 (incorporated by reference to Exhibit 10.3 to our Current Report on Form 8-K filed with the SEC on March 5, 2020)
     
10.4   Form of Warrant B, by and among ScoutCam Inc. and those certain investors that are a party to the Securities Purchase Agreement dated March 3, 2020 (incorporated by reference to Exhibit 10.4 to our Current Report on Form 8-K filed with the SEC on March 5, 2020)
     
31.1*   Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
     
31.2*   Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
     
32.1**   Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
32.2**   Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
     
101.INS   XBRL Instance Document
     
101.INS   XBRL Taxonomy Extension Schema Document
     
101.CAL   XBRL Taxonomy Extension Calculation Linkbase Document
     
101.DEF   XBRL Taxonomy Extension Definition Linkbase Document
     
101.LAB   XBRL Taxonomy Extension Label Linkbase Document
     
101.PRE   XBRL Taxonomy Extension Presentation Linkbase Document
     
*   Filed herewith.
     
**   Furnished herewith.

 

 
  - 26 -  

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date: June 22, 2020 SCOUTCAM INC.
     
  By: /s/ Yaron Silberman
  Name: Yaron Silberman
  Title: Chief Executive Officer
    ScoutCam Inc.
     
  By: /s/ Tanya Yosef
  Name: Tanya Yosef
  Title: Chief Financial Officer
    ScoutCam Inc.

 

 

 

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