UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________
FORM 10-Q
___________________
ý
QUARTERLY REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended
September 30, 2015
Commission
file number: 333-168527
T
ech
C
are
C
orp.
(Exact Name Of Registrant
As Specified In Its Charter)
Delaware
|
98-0663823
|
(State of Incorporation)
|
(I.R.S. Employer
Identification No.)
|
|
|
40 Wall Street, 28th
Floor, New York, NY
|
10005
|
(Address of Principal
Executive Offices)
|
(ZIP Code)
|
Registrant's
Telephone Number, Including Area Code: (212) 400-7198
Indicate by check
mark whether the registrant (1) has filed all reports required to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. Yes
x
No
¨
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes
¨
No
x
Indicate by check
mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer
(as
defined in Rule 12b-2 of the Exchange Act)
or a smaller
reporting company
.
Large accelerated
filer
¨
|
Accelerated filer
¨
|
Non-Accelerated
filer
¨
|
Smaller reporting
company
x
|
On
December 20, 2016,
the Registrant had 14,876,090 shares of common stock outstanding.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM
1. FINANCIAL STATEMENTS
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to Table of Contents
TechCare Corp.
|
Balance Sheets
|
As of September 30, 2016 (Unaudited) and December 31, 2015
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Table of Contents
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September 30, 2016 (Unaudited)
|
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December
31, 2015
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Assets
|
|
|
|
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Current assets:
|
|
|
|
|
Cash and cash equivalents
|
$
|
686,381
|
$
|
254,324
|
Prepaid assets
|
|
30,485
|
|
82,337
|
Total current assets
|
|
716,866
|
|
336,661
|
|
|
|
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Property and equipment, net
|
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29,126
|
|
14,445
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Total assets
|
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745,992
|
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351,106
|
|
|
|
|
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Liabilities
and Stockholders' Equity
|
|
|
|
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Current liabilities:
|
|
|
|
|
Accounts payable and accrued expenses
|
$
|
211,663
|
$
|
168,448
|
Deferred revenues
|
|
115,170
|
|
-
|
Notes payable
|
|
81,524
|
|
78,740
|
Total
current liabilities
|
|
408,357
|
|
247,188
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Total liabilities
|
|
408,357
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247,188
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|
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Stockholders' equity:
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|
|
|
|
Common stock, par
value $0.0001 per share, 500,000,000 shares authorized:
|
|
|
|
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14,876,090
and 4,973,972 shares issued and outstanding at September 30, 2016 and December 31,
2015, respectively.
|
|
149
|
|
50
|
Treasury stock
|
|
(29)
|
|
(29)
|
Stock payable
|
|
1,291,388
|
|
456,741
|
Stock subscription
receivable
|
|
(1,532)
|
|
(1,532)
|
Accumulated other comprehensive loss
|
|
(104,859)
|
|
(56,504)
|
Additional paid-in
capital
|
|
1,809,037
|
|
1,333,995
|
Accumulated
deficit
|
|
(2,656,519)
|
|
(1,628,803)
|
Total stockholders' equity
|
|
337,635
|
|
103,918
|
Total liabilities and
stockholders' equity
|
$
|
745,992
|
$
|
351,106
|
|
The accompanying notes are an integral part of these financial statements.
|
TechCare Corp.
|
Statements of Operations
|
For
the Three and Nine-Month Periods Ended September 30, 2016 and 2015
|
(Unaudited)
|
Back to
Table of Contents
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|
|
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For the three
|
|
For the three
|
|
For the
nine
|
|
For the
nine
|
|
|
months ended
|
|
months ended
|
|
months ended
|
|
months ended
|
|
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September 30, 2016
|
|
September 30, 2015
|
|
September 30, 2016
|
|
September 30, 2015
|
|
|
|
|
|
|
|
|
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Revenues
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
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Research and development
|
|
64,020
|
|
63,337
|
|
211,222
|
|
99,904
|
General and administrative
|
|
287,462
|
|
9,704
|
|
946,169
|
|
51,568
|
Total operating expenses
|
|
351,482
|
|
73,041
|
|
1,157,391
|
|
151,472
|
|
|
|
|
|
|
|
|
|
Income (loss) from operations
|
|
(351,482)
|
|
(73,041)
|
|
(1,157,391)
|
|
(151,472)
|
|
|
|
|
|
|
|
|
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Interest expense
|
|
(3,297)
|
|
(3,132)
|
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(4,924)
|
|
(3,132)
|
Other income / (expense)
|
|
134,599
|
|
-
|
|
134,599
|
|
-
|
Financial income (expense)
|
|
131,302
|
|
(3,132)
|
|
129,675
|
|
(3,132)
|
|
|
|
|
|
|
|
|
|
Provision for
income taxes
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
Net loss
from continuing operations
|
|
(220,180)
|
|
(76,173)
|
|
(1,027,716)
|
|
(154,604)
|
|
|
|
|
|
|
|
|
|
Net loss
|
$
|
(220,180)
|
$
|
(76,173)
|
$
|
(1,027,716)
|
$
|
(154,604)
|
|
|
|
|
|
|
|
|
|
Net loss per common share -
basic and diluted
|
$
|
(0.02)
|
$
|
(131.23)
|
$
|
(0.15)
|
$
|
(164.25)
|
|
|
|
|
|
|
|
|
|
Weighted average number of
common shares outstanding - basic
|
|
10,570,821
|
|
580
|
|
6,853,206
|
|
941
|
|
The accompanying
notes are an integral part of these financial statements.
|
TechCare Corp.
|
Statements of Comprehensive
Income (Loss)
|
For
the Three and Nine-Month Periods Ended September 30, 2016 and 2015
|
(Unaudited)
|
Back to
Table of Contents
|
|
|
|
For the three
|
|
For the three
|
|
For the
nine
|
|
For the
nine
|
|
|
months ended
|
|
months ended
|
|
months ended
|
|
months ended
|
|
|
September 30, 2016
|
|
September 30, 2015
|
|
September 30, 2016
|
|
September 30, 2015
|
|
|
|
|
|
|
|
|
|
Net loss
from continuing operations
|
$
|
(220,180)
|
$
|
(76,173)
|
$
|
(1,027,716)
|
$
|
(154,604)
|
Less loss attributable to
foreign currency translation
|
|
16,431
|
|
-
|
|
48,355
|
|
-
|
Comprehensive loss
|
$
|
(203,749)
|
$
|
(76,173)
|
$
|
(979,361)
|
$
|
(154,604)
|
|
The accompanying
notes are an integral part of these financial statements.
|
TechCare Corp.
|
Statements of Cash Flows
|
For
the Nine-Month Periods Ended September 30, 2016 and 2015
|
(Unaudited)
|
Back to
Table of Contents
|
|
|
For the
nine
|
|
For the
nine
|
|
|
months ended
|
|
months ended
|
|
|
September 30, 2016
|
|
September 30, 2015
|
Operating
Activities:
|
|
|
|
|
Net loss
|
$
|
(1,027,716)
|
$
|
(154,604)
|
Adjustments to reconcile net
(loss) to net cash (used in) operating activities:
|
|
|
|
|
Depreciation
expense
|
|
5,574
|
|
5,424
|
Imputed interest
|
|
4,923
|
|
-
|
Changes in net assets and
liabilities:
|
|
|
|
|
Decrease (increase)
in prepaid assets
|
|
51,852
|
|
(53,914)
|
(Decrease) increase
in accounts payable
|
|
(8,338)
|
|
10,329
|
(Decrease) increase
in accrued expenses
|
|
52,407
|
|
15,437
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(Decrease) increase in deferred revenue
|
|
115,170
|
|
-
|
Net cash used in operating
activities
|
|
(806,128)
|
|
(177,328)
|
|
|
|
|
|
Investing activities:
|
|
|
|
|
Purchases of
property and equipment
|
|
(23,391)
|
|
(16,271)
|
Effect of reverse merger
|
|
1,144,931
|
|
-
|
Net cash
provided by (used in) investing
activities
|
|
1,121,540
|
|
(16,271)
|
|
|
|
|
|
Financing activities:
|
|
|
|
|
Proceeds from
sale of common stock
|
|
165,000
|
|
150,000
|
Net cash provided by
financing activities
|
|
165,000
|
|
150,000
|
|
|
|
|
|
Foreign
currency adjustment
|
|
(48,355)
|
|
(2,472)
|
|
|
|
|
|
Net increase (decrease)
in cash
|
|
432,057
|
|
(46,071)
|
Cash and cash equivalents
-
beginning of period
|
|
254,324
|
|
245,483
|
Cash and cash equivalents
-
end of period
|
$
|
686,381
|
$
|
199,412
|
|
|
|
|
|
Non cash transactions:
|
|
|
|
|
Shares issued for reverse merger
|
$
|
99
|
$
|
-
|
|
|
|
|
|
The accompanying
notes are an integral part of these financial statements.
|
TechCare Corp.
Notes to Unaudited Financial Statements
September 30, 2016 (Unaudited)
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Table of Contents
Note 1.
Summary of Significant Accounting Policies
Basis of Presentation and
Organization
Techcare Corp. ("Techcare " or the "Company") formally
known as BreedIT corp. is a Delaware corporation. The Company was
incorporated under the laws of the State of Delaware on May 26, 2010. The
company originally engaged in agriculture breeding and its business plan was
to develop and market the IDSS software system globally.
On February 10, 2016, Techcare Corp., a Delaware
corporation (the "Registrant," the "Company" or "Techcare") filed a Form 8-K
reporting that on February 8, 2016, it had signed a Merger Agreement (the
"Merger Agreement" or the "Agreement") with Novomic Corp., a private Company
organized under the laws of the State of Israel ("Novomic"). On August 9,
2016, the closing of the merger occurred, pursuant to which Novomic became a
wholly-owned subsidiary of the Registrant.
The following disclosure information constitutes the
Registrant's Form 10 Disclosure regarding its new, wholly-owned operating
subsidiary, Novomic, effective as of the Closing of the Merger Agreement. In
connection with the Closing, the Registrant's name will be changed from
BreedIT Corp. to Novomic Corp. (the "Name Change"); (ii) the 149,219,173
outstanding shares of the Registrant's Common Stock will be subject to a
reverse split on a one-for-thirty (1:30) basis (the "Reverse Split")
resulting in 4,973,972 outstanding Shares of Common Stock; and (iii) the
authorization of ten million (10,000,000) shares of preferred stock, par
value $0.0001 (the "Preferred Stock"), which may be issued in one or more
classes or series, having such designations, preferences, privileges and
rights as the Board of Directors may determine. The foregoing are referred
to collectively, as the "Corporate Actions" and are subject to the approval
of FINRA following the filing of an Information Statement on Schedule 14C.
Pursuant to the terms of the above-referenced Shareholders' Agreement, the
Registrant, Novomic and the Novomic shareholders agreed that following the
Closing, the Registrant's Board of Directors shall consist of three persons,
one of whom will be designated by the present BreedIT shareholders and the
remaining two will be designated by the Novomic shareholders
The 4,973,972 post-Reverse Shares presently outstanding
will represent 26.47% of the 14,876,090 total outstanding Shares after the
issuance of 9,902,118 post-Reverse Split Shares, representing 66.56% of the
total outstanding Shares, to the Novomic shareholders.
On October 31, 2016, following the closing of the merger
agreement between TechCare Corp., f/k/a BreedIT Corp. (the "Registrant") and
Novomic Ltd. and the appointment of new members to the Registrant's Board of
Directors as disclosed below, the Registrant's Board of Directors accepted
the resignation of Mr. Erez Zino as a director, effective immediately. Mr.
Zino was a founder of a predecessor of the Registrant and a former principal
stockholder, executive officer and a director of the Registrant. Mr. Zino
served as CEO from July 2012 and became acting CFO in January 2013. In
connection with the acquisition of 66.67% of BreedIT Israel in January 2014,
Mr. Zino resigned as an executive officer of the Company but continued to
serve as a director.
Also on October 31, 2016, the Board of Directors accepted
the resignation of Liran Chen as Chief Executive Officer, effective
immediately.
In addition, in connection with the change in control and
the appointment of new management, the Board of Directors also accepted the
resignation of Oded Gilboa as Chief Financial Officer, effective October 31,
2016. Mr. Gilboa was appointed as the Registrant's CFO on December 4, 2013.
Effective October 31, 2016, the Registrant's Board of
Directors appointed: (i) Zvi Yemini, the Registrant's Chairman, as Chief
Executive Officer; (ii) Messrs. Mordechai Bignitz, Oren Traistman and Yossef
De-Levy to the Registrant's Board of Directors; and (iii) Josh Johnson as
the Registrant's new Chief Financial Officer, following the resignation of
Oded Gilboa as CFO.
The accompanying unaudited financial statements of the
Company are presented in accordance with the requirements of Form 10-Q and
Article 10 of Regulation S-X. Certain information and footnote disclosures
normally included in financial statements prepared in accordance with
accounting principles generally accepted in the United States of America
("US GAAP") have been condensed or omitted pursuant to such SEC rules and
regulations. In the opinion of management, all adjustments (consisting of
normal recurring adjustments) considered necessary for an air presentation
have been made. The accompanying financial statements have been prepared to
reflect the assets, liabilities and operations of the Company.
The accompanying financial statements have been prepared
in conformity with accounting principles generally accepted in the United
States of America, which contemplate continuation of the Company as a going
concern. The Company has not established any source of revenue to cover its
operating costs, and as such, has incurred an operating loss since
inception. Further, as of September 30, 2016 and December 31, 2015, the cash
resources of the Company were insufficient to meet its current business
plan. This and other factors raise substantial doubt about the Company's
ability to continue as a going concern. The accompanying financial
statements do not include any adjustments to reflect the possible future
effects on the recoverability and classification of assets or the amounts
and classification of liabilities that may result from the possible
inability of the Company to continue as a going concern.
Significant Accounting Policies
Use of Estimates:
The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date
of the financial statement and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from the estimates.
Cash and Cash Equivalents:
For financial statement presentation purposes, the Company
considers those short-term, highly liquid investments with original
maturities of three months or less to be cash or cash equivalents. As of
September 30, 2016 and December 31, 2015, there were no cash equivalents.
Other Receivables:
The company treats VAT refunds claimed resulting from
excess VAT paid over VAT received as other receivables.
Currency translation and other comprehensive loss: balance
sheet items are translated using all-current translation method for
Self-contained foreign operations (where functional currency = foreign
currency) whereby assets and liabilities are translated using the exchange
rate on the date of the balance sheet. It translates revenues, expenses, and
net income using the average exchange rate during the period. The foreign
exchange adjustment that results from applying the all-current method
appears in accumulated other comprehensive loss, a separate shareholders'
equity account, and does not affect net income each period.
Property and Equipment:
Property and equipment are stated at cost, net of
accumulated depreciation. Depreciation is calculated by the straight-line
method over the estimated useful lives of the assets. The annual
depreciation rates are as follows: Computers and electronic equipment 33%.
Deferred Revenue:
Deferred revenue consists
substantially of amounts received from third party vendors in advance of the
Company's product completion for payment of fees and expenses related to the
product. Deferred revenue will be recognized as Other Income on a systematic
basis that is proportionate to completion of the final product.
Valuation of Long-Lived Assets:
We review the recoverability of our long-lived assets
including equipment, goodwill and other intangible assets, when events or
changes in circumstances occur that indicate that the carrying value of the
asset may not be recoverable. The assessment of possible impairment is based
on our ability to recover the carrying value of the asset from the expected
future pre-tax cash flows (undiscounted and without interest charges) of the
related operations. If these cash flows are less than the carrying value of
such asset, an impairment loss is recognized for the difference between
estimated fair value and carrying value. Our primary measure of fair value
is based on discounted cash flows. The measurement of impairment requires
management to make estimates of these cash flows related to long-lived
assets, as well as other fair value determinations.
Stock Based Compensation:
Stock-based awards are accounted for using the fair value
method in accordance with ASC 718, Share-Based Payments. Our primary type of
share-based compensation consists of stock options. We use the Black-Scholes
option pricing model in valuing options. The inputs for the valuation
analysis of the options include the market value of the Company's common
stock, the estimated volatility of the Company's common stock, the exercise
price of the warrants and the risk free interest rate.
Accounting For Obligations And Instruments Potentially
To Be Settled In The Company's Own Stock:
We account for obligations and instruments potentially to
be settled in the Company's stock in accordance with FASB ASC
815, Accounting for Derivative Financial Instruments. This issue addresses
the initial balance sheet classification and measurement of contracts that
are indexed to, and potentially settled in, the Company's own stock.
Fair Value of Financial Instruments:
Pursuant to ASC No. 820, "Fair Value Measurements and
Disclosures", the Company is required to estimate the fair value of all
financial instruments included on its balance sheet as of September 30, 2016 and
December 31, 2015. The Company's financial instruments consist of cash and
derivative liabilities. The Company considers the carrying value of such
amounts in the financial statements to approximate their fair value due to
the short-term nature of these financial instruments.
The Company adopted ASC No. 820-10 (ASC 820-10), Fair
Value Measurements. ASC 820-10 relates to financial assets and financial
liabilities. ASC 820-10 defines fair value, establishes a framework for
measuring fair value in accounting principles generally accepted in the
United States of America (GAAP), and expands disclosures about fair value
measurements. The provisions of this standard apply to other accounting
pronouncements that require or permit fair value measurements and are to be
applied prospectively with limited exceptions.
ASC 820-10 defines fair value as the price that would be
received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date. This
standard is now the single source in GAAP for the definition of fair value,
except for the fair value of leased property as defined in SFAS 13. ASC
820-10 establishes a fair value hierarchy that distinguishes between
(1) market participant assumptions developed based on market data obtained
from independent sources (observable inputs) and (2) an entity's own
assumptions, about market participant assumptions, that are developed based
on the best information available in the circumstances (unobservable
inputs). The fair value hierarchy consists of three broad levels, which
gives the highest priority to unadjusted quoted prices in active markets for
identical assets or liabilities (Level 1) and the lowest priority to
unobservable inputs (Level 3). The three levels of the fair value hierarchy
under ASC 820-10 are described below:
Level 1: Unadjusted quoted prices in
active markets that are accessible at the measurement date for identical,
unrestricted assets or liabilities.
Level 2: Inputs other than quoted prices
included within Level 1 that are observable for the asset or liability,
either directly or indirectly, including quoted prices for similar assets or
liabilities in active markets; quoted prices for identical or similar assets
or liabilities in markets that are not active; inputs other than quoted
prices that are observable for the asset or liability (e.g., interest
rates); and inputs that are derived principally from or corroborated by
observable market data by correlation or other means.
Level 3. Inputs that are both
significant to the fair value measurement and unobservable. These inputs
rely on management's own assumptions about the assumptions that market
participants would use in pricing the asset or liability. (The unobservable
inputs are developed based on the best information available in the
circumstances and July include the Company's own data.)
The following presents the Company's
fair value hierarchy for those assets and liabilities measured at fair value
on a non-recurring basis as of September 30, 2016 and December 31, 2015:
Fair Value Measurements at
September 30, 2016
|
|
|
|
|
Quoted Prices in Active
|
|
Significant Other
|
|
Significant
|
|
|
|
|
Markets for Identical Assets
|
|
Observable Inputs
|
|
Unobservable Inputs
|
|
|
Total
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
Notes payable
|
$
|
81,524
|
$
|
-
|
$
|
-
|
$
|
81,524
|
Total assets
and liabilities at fair value
|
$
|
81,524
|
$
|
-
|
$
|
-
|
$
|
81,524
|
Fair Value Measurements at
December 31, 2015
|
|
|
|
|
Quoted Prices in Active
|
|
Significant Other
|
|
Significant
|
|
|
|
|
Markets for Identical Assets
|
|
Observable Inputs
|
|
Unobservable Inputs
|
|
|
Total
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
Notes payable
|
$
|
78,740
|
$
|
-
|
$
|
-
|
$
|
78,740
|
Total assets
and liabilities at fair value
|
$
|
78,740
|
$
|
-
|
$
|
-
|
$
|
78,740
|
Going Concern:
The accompanying financial statements have been prepared
in conformity with accounting principles generally accepted in the United
States of America, which contemplate continuation of the Company as a going
concern. The Company has not established any source of revenue to cover its
operating costs, and as such, has incurred an operating loss since
inception. Further, as of September 30, 2016, the cash resources of the
Company were insufficient to meet its current business plan, and the Company
had negative working capital. These and other factors raise substantial
doubt about the Company's ability to continue as a going concern. The
accompanying financial statements do not include any adjustments to reflect
the possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may result from
the possible inability of the Company to continue as a going concern.
Impact of Recently Issued Accounting Standards
In March 2016, the FASB issued ASU No. 2016-06,
Derivatives and Hedging (Topic 815): Contingent Put and Call Options in Debt
Instruments. The new standard simplifies the embedded derivative analysis
for debt instruments containing contingent call or put options by removing
the requirement to assess whether a contingent event is related to interest
rates or credit risks. The new standard will be effective for us on January
1, 2017. The adoption of this standard is not expected to have an impact on
our financial position or results of operations.
In March 2016, the FASB issued ASU No. 2016-07,
Investments - Equity Method and Joint Ventures (Topic 323): Simplifying the
Transition to the Equity Method of Accounting. The new standard eliminates
the requirement that when an investment qualifies for use of the equity
method as a result of an increase in the level of ownership interest or
degree of influence, an adjustment must be made to the investment, results
of operations and retained earnings retroactively on a step-by-step basis as
if the equity method had been in effect during all previous periods that the
investment had been held. The new standard will be effective for us on
January 1, 2017. The adoption of this standard is not expected to have a
material impact on our financial position or results of operations.
In March 2016, the FASB issued ASU No. 2016-09,
Compensation - Stock Compensation (Topic 718): Improvements to Employee
Share-Based Payment Accounting. The new standard requires recognition of the
income tax effects of vested or settled awards in the income statement and
involves several other aspects of the accounting for share-based payment
transactions, including the income tax consequences, classification of
awards as either equity or liabilities and classification on the statement
of cash flows. The new standard will be effective for us on January 1, 2017.
The adoption of this standard is not expected to have a material impact on
our financial position, results of operations or statements of cash flows
upon adoption.
In June 2016, the FASB issued ASU No. 2016-13, Financial
Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on
Financial Instruments. The new standard changes the impairment model for
most financial assets and certain other instruments. Under the new standard,
entities holding financial assets and net investment in leases that are not
accounted for at fair value through net income to be presented at the net
amount expected to be collected. An allowance for credit losses will be a
valuation account that will be deducted from the amortized cost basis of the
financial asset to present the net carrying value at the amount expected to
be collected on the financial asset. The new standard will be effective for
us on January 1, 2020. The adoption of this standard is not expected to have
a material impact on our financial position or results of operations.
In August 2016, the FASB issued ASU No. 2016-15, Statement
of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash
Payments. The new standard clarifies certain aspects of the statement of
cash flows, including the classification of debt prepayment or debt
extinguishment costs, settlement of zero-coupon debt instruments or other
debt instruments with coupon interest rates that are insignificant in
relation to the effective interest rate of the borrowing, contingent
consideration payments made after a business combination, proceeds from the
settlement of insurance claims, proceeds from the settlement of
corporate-owned life insurance policies, distributions received from equity
method investees and beneficial interests in securitization transactions.
The new standard also clarifies that an entity should determine each
separately identifiable source or use within the cash receipts and cash
payments on the basis of the nature of the underlying cash flows. In
situations in which cash receipts and payments have aspects of more than one
class of cash flows and cannot be separated by source or use, the
appropriate classification should depend on the activity that is likely to
be the predominant source or use of cash flows for the item. The new
standard will be effective for us on January 1, 2018. The adoption of this
standard is not expected to have a material impact on our statements of cash
flows upon adoption.
In September, 2015, the Financial Accounting Standards
Board ("FASB") issued Accounting Standard Update ("ASU") No. 2015-16,
Business Combinations (Topic 805) ("ASU 2015-16"). Topic 805 requires that
an acquirer retrospectively adjust provisional amounts recognized in a
business combination, during the measurement period. To simplify the
accounting for adjustments made to provisional amounts, the amendments in
the Update require that the acquirer recognize adjustments to provisional
amounts that are identified during the measurement period in the reporting
period in which the adjustment amount is determined. The acquirer is
required to also record, in the same period's financial statements, the
effect on earnings of changes in depreciation, amortization, or other income
effects, if any, as a result of the change to the provisional amounts,
calculated as if the accounting had been completed at the acquisition date.
In addition an entity is required to present separately on the face of the
income statement or disclose in the notes to the financial statements the
portion of the amount recorded in current-period earnings by line item that
would have been recorded in previous reporting periods if the adjustment to
the provisional amounts had been recognized as of the acquisition date. ASU
2015-16 is effective for fiscal years beginning December 15, 2015. The
adoption of ASU 2015-016 is not expected to have a material effect on the
Company's consolidated financial statements.
In August, 2015, the FASB issued ASU No. 2015-14, Revenue
from Contracts with Customers (Topic 606): Deferral of the Effective Date
("ASU 2015-14"). The amendment in this ASU defers the effective date of ASU
No. 2014-09 for all entities for one year. Public business entities, certain
not-for-profit entities, and certain employee benefit plans should apply the
guidance in ASU 2014-09 to annual reporting periods beginning December 15,
2017, including interim reporting periods within that reporting period.
Earlier application is permitted only as of annual reporting periods
beginning after December 31, 2016, including interim reporting periods with
that reporting period.
In April 2015, the FASB issued ASU No. 2015-03,
Interest-Imputation of Interest (Subtopic 835-30) ("ASU 2015-03"), which
changes the presentation of debt issuance costs in financial statements. ASU
2015-03 requires an entity to present such costs in the balance sheet as a
direct deduction from the related debt liability rather than as an asset.
Amortization of the costs will continue to be reported as interest expense.
It is effective for annual reporting periods beginning after December 15,
2016. Early adoption is permitted. The new guidance will be applied
retrospectively to each prior period presented. The Company is currently in
the process of evaluating the impact of adoption of ASU 2015-03 on its
balance sheets.
Note 2. Stockholders' Equity.
The Company has 510,000,000 ordinary shares authorized, of
which 14,876,090 and 4,973,972 ordinary shares were issued and outstanding
as of September 30, 2016 and December 31, 2015 respectively. The shares have
a par value of $0.00001. Novomic holds 100 of its own shares, valued at $29
as of September 30, 2016 and December 31, 2015.
Recent Issuances of Common Stock
Between January 1 and December 31, 2015 the following
ordinary shares were issued for cash consideration:
- 227 shares sold to Moshe Fisher for $75,000 cash. The
shares were issued at $0.2875 per share.
- 227 shares sold to Eyal Anavi for $75,000 cash. The shares
were issued at $0.2875 per share.
- 308 shares sold to George Fabilian
$102,000 cash. The shares were issued at $0.2875 per share.
In addition, between January 1 and December 31, 2015
Novomic recorded the following stock payable transactions:
- YMY Ltd. - 1,152 shares for $150,000 cash and converted
$150,526 note payable into 1,330 share of common stock worth $176,890. The
converted shares were valued at $133.00 per share which is the average most
recent price per 3rd party sale of common stock, resulting in a loss of
$26,364.
- Oren
Treitsman -199 shares for $25,660 cash.
- Ner Gonen Management Ltd. - 192 shares for $25,000 cash.
- Amnon Skali - 154 shares for $20,000 cash.
- Sami Dahan - 144 shares for $20,000 cash.
- Dganit Dahan - 144 shares for $20,000 cash.
- Nir Nagar - 3 shares for $39 cash.
- Microdel Ltd. - 88 shares issued for the conversion of
$20,016 of accounts payable to equity worth $11,704. Shares were valued at
$133.00 per share which is the average most recent price per 3rd party sale
of common stock. The transaction resulted in a gain which was recorded as
contributed capital due to related party relationship.
- Yosef De Levi - 56 shares issued for the conversion of
$12,960 of accounts payable to equity worth $7,448. Shares were valued at
$133.00 per share which is the average most recent price per 3rd party sale
of common stock. The transaction resulted in a gain which was recorded as
contributed capital due to related party relationship.
In addition, $17,389 was recorded under additional paid-in
capital for imputed interest on outstanding notes payable.
In addition, $38,801 was recorded under other
comprehensive income.
Between January 1 and September 30, 2016 Novomic recorded
the following stock payable transactions:
- George Pehlivanian - 770 shares for $100,000 cash.
- Serge Tirosh - 385 shares for $50,000 cash.
- Dina Duadi - 115 shares for $15,000 cash.
As of September 30, 2016, the above stock payable shares
of common stock have not been issued.
In addition, $4,923 was recorded under additional paid-in
capital for imputed interest on outstanding notes payable for the nine
months ended September 30, 2016.
In addition, $48,355 was recorded under other
comprehensive loss.
Note 3. Reverse Merger.
On February 10, 2016, Techcare Corp., a Delaware
corporation (the "Registrant," the "Company" or "Techcare") filed a Form 8-K
reporting that on February 8, 2016, it had signed a Merger Agreement (the
"Merger Agreement" or the "Agreement") with Novomic Corp., a private Company
organized under the laws of the State of Israel ("Novomic"). On August 9,
2016, the closing of the merger occurred, pursuant to which Novomic became a
wholly-owned subsidiary of the Registrant.
The following disclosure information constitutes the
Registrant's Form 10 Disclosure regarding its new, wholly-owned operating
subsidiary, Novomic, effective as of the Closing of the Merger Agreement. In
connection with the Closing, the Registrant's name will be changed from
BreedIT Corp. to Novomic Corp. (the "Name Change"); (ii) the 149,219,173
outstanding shares of the Registrant's Common Stock will be subject to a
reverse split on a one-for-thirty (1:30) basis (the "Reverse Split")
resulting in 4,973,972 outstanding Shares of Common Stock; and (iii) the
authorization of ten million (10,000,000) shares of preferred stock, par
value $0.0001 (the "Preferred Stock"), which may be issued in one or more
classes or series, having such designations, preferences, privileges and
rights as the Board of Directors may determine. The foregoing are referred
to collectively, as the "Corporate Actions" and are subject to the approval
of FINRA following the filing of an Information Statement on Schedule 14C.
Pursuant to the terms of the above-referenced Shareholders' Agreement, the
Registrant, Novomic and the Novomic shareholders agreed that following the
Closing, the Registrant's Board of Directors shall consist of three persons,
one of whom will be designated by the present BreedIT shareholders and the
remaining two will be designated by the Novomic shareholders
The 4,973,972 post-Reverse Shares presently outstanding
will represent 26.47% of the 14,876,090 total outstanding Shares after the
issuance of 9,902,118 post-Reverse Split Shares, representing 66.56% of the
total outstanding Shares, to the Novomic shareholders.
Note 4. Related Party Transactions.
The company contracted book-keeping services from Microdel
Ltd. a Novomic shareholder and as of December 31, 2014 had an accounts
payable balance due to this related party in the amount $20,016. During 2015
Microdel Ltd. converted amount payable to 88 ordinary shares worth $11,704
resulting in a gain in stock payable at December 31, 2015. Gain will be
treated as contribution to capital due to the Microdel Ltd being a related
party. and as a result as of September 30, 2016 there is $0 accounts payable
due to this related party.
Prior to 2012 two shareholders loaned amounts to company,
totaling $228,855 notes payable as of December 31, 2014 with no maturity
dates and bearing an interest rate of 0% per annum, and is not convertible
to common stock. As further described in Note 4, YMY Ltd. a Novomic
shareholder has converted $150,526 long term debt to Novomic shares worth
$176,890 resulting in a conversion loss of $26,364. The shares were valued
at $133.00 per share which is the average most recent price per 3rd party
sale of common stock.
Yosef De Levi a company director converted a note payble
of $12,960 to 56 shares worth $7,448 resulting in a gain that will be
recorded as contributed capital due to related party relationship. Shares
were valued at $133.00 per share which is the average most recent price per
3rd party sale of common stock. This is also in stock payable, as it was not
yet issued at September 30, 2016.
As of September 30, 2016 there is an advance from Breedit
Corp. on behalf of the closing of the merger agreement of $1,104,204
reflecting the cash to be transferred from Breedit Corp. to the company.
Note 5. Notes Payable.
In 2008, two shareholders loaned amounts to company,
totaling $228,855, with no maturity
date, bearing no interest rate, and is not convertible
to common stock. For the period ended September 30, 2016 and December 31,
2015, Novomic recorded imputed interest expense of $4,923 and $17,389 and an
had an ending note payable balance of $81,524 and $78,740, respectively.
Note 6. Income Taxes.
The Company is not under examination by any jurisdiction
for any tax year. The Company is current with filing its Israeli income tax
returns, with the most recent tax return filed for the period ending on or
after December 31, 2015.
Note 7. Property and Equipment.
Property and equipment are stated at cost, net of
accumulated depreciation. Depreciation is calculated by the straight-line
method over the estimated useful lives of the assets. The annual
depreciation rates are as follows:
Computers and electronic
equipment 33%
For the period ended September 30, 2016, total
property and equipment was $41,301, total accumulated depreciation is
$12,175 and total depreciation expense for the nine-month period ended
September 30, 2016 is $5,574. For the year ended December 31, 2015 total property and equipment was
$16,968, total accumulated depreciation is $2,523 and total depreciation
expense for the year is $2,449.
Following is a summary of Property and Equipment, net for
the period ended September 30, 2016 and the year ended December 31, 2015.
|
September 30, 2016
|
|
December 31, 2015
|
Computers
|
$
41,301
|
|
$
16,968
|
Accumulated
depreciation
|
(
12,175)
|
|
(
2,523)
|
Property and
Equipment, net
|
$29,126
|
|
$14,445
|
Note 8. Deferred Revenues
The deferred revenue balance of $115,170 consists
substantially of amounts received from third party vendors in advance of the
Company's product completion for payment of fees and expenses related to the
product. Deferred revenue will be recognized as Other Income on a systematic
basis that is proportionate to completion of the final product. For the
period ended September 30, 2016 and December 31, 2015, deferred revenue was
$115,170 and $0, respectively.
Note 9. Contingencies.
Capital expenditures.
At September 30, 2016, we had no commitments for capital
expenditures.
Lease commitments.
We lease from an unaffiliated third party approximately
1,080 square feet of office space in Rosh Haayin, Israel at a monthly rental
amount of $1,215. The lease was entered into on December 1, 2014 and is for
a five year period through November 30, 2019.
Litigation.
At September 30, 2016 the company was not involved in any
litigation.
Note 10. Prepaid Expense.
The company treats VAT refunds claimed resulting from
excess VAT paid over VAT received as prepaid expenses. As of September 30,
2016 and December 31, 2015, the Company had $23,477 and $12,953,
respectively, in prepaid
expenses relating to VAT claimed.
In addition, the Company has $7,008 of prepaid expense
related to prepaid consulting and related fees.
Note 11. Stock Payable.
During the nine-month period ended September 30, 2016 and
period from inception to December 31, 2015 the company received a total of $165,000 and
$456,741 cash from investors for purchase of shares which were recorded as
stock payable. See further discussion in Note 2.
Note 12. Foreign Currency.
The functional currency of TechCare Corp. is New Israeli
Shekels.
Note 13. Subsequent Events.
On October 31, 2016, following the closing of the merger
agreement between TechCare Corp., f/k/a BreedIT Corp. (the "Registrant") and
Novomic Ltd. and the appointment of new members to the Registrant's Board of
Directors as disclosed below, the Registrant's Board of Directors accepted
the resignation of Mr. Erez Zino as a director, effective immediately. Mr.
Zino was a founder of a predecessor of the Registrant and a former principal
stockholder, executive officer and a director of the Registrant. Mr. Zino
served as CEO from July 2012 and became acting CFO in January 2013. In
connection with the acquisition of 66.67% of BreedIT Israel in January 2014,
Mr. Zino resigned as an executive officer of the Company but continued to
serve as a director.
Also on October 31, 2016, the Board of Directors accepted
the resignation of Liran Chen as Chief Executive Officer, effective
immediately.
In addition, in connection with the change in control and
the appointment of new management, the Board of Directors also accepted the
resignation of Oded Gilboa as Chief Financial Officer, effective October 31,
2016. Mr. Gilboa was appointed as the Registrant's CFO on December 4, 2013.
Effective October 31, 2016, the Registrant's Board of
Directors appointed: (i) Zvi Yemini, the Registrant's Chairman, as Chief
Executive Officer; (ii) Messrs. Mordechai Bignitz, Oren Traistman and Yossef
De-Levy to the Registrant's Board of Directors; and (iii) Josh Johnson as
the Registrant's new Chief Financial Officer, following the resignation of
Oded Gilboa as CFO.
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATION.
Back to Table of Contents
FORWARD-LOOKING STATEMENTS
The following plan of operation provides information which management
believes is relevant to an assessment and understanding of our results of
operations and financial condition. The discussion should be read along with our
financial statements and notes thereto. This section includes a number of
forward-looking statements that reflect our current views with respect to future
events and financial performance. Certain statements that the Company may make
from time to time, including all statements contained in this Form 10-Q that are
not statements of historical fact, constitute "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995 and
the safe harbor provisions set forth in Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements may be identified by words such as "plans," "expects," "believes,"
"anticipates," "estimates," "projects," "will," "should," and other words of
similar meaning used in conjunction with, among other things, discussions of
future operations, financial performance, product development and new product
launches, market position and expenditures. The Company assumes no obligation to
update any forward-looking statements. Additional information concerning factors
which could cause differences between forward-looking statements and future
actual results is discussed under the heading "Risk Factors" in the Company's
Current Report on Form 8-k/12g, as filed with the SEC on November 10, 2016. You
should not place undue certainty on these forward-looking statements. These
forward-looking statements are subject to certain risks and uncertainties that
could cause actual results to differ materially from our predictions.
The following Management's Discussion and Analysis of Financial Condition
and Results of Operations ("MD&A") is intended to help you understand our
historical results of operations during the periods presented and our
financial condition for the period ended September 30, 2016 and December 31,
2015. This MD&A should be read in conjunction with our consolidated
financial statements and the accompanying notes to consolidated financial
statements, together with the financial statements of Novomic Ltd for the
years ended December 31, 2015 and 2014 and for the interim period ended
March 31, 2016, contains forward-looking statements that involve risks and
uncertainties. See section entitled "Forward-Looking Statements" above. It
should be understood that as a result of the Closing of the Merger Agreement
with Novomic on August 9, 2016, our historical results are not expected to
be indicative of our future results.
Overview and Recent Developments
We are a company with limited operations and no significant revenues from
our business operations. There is substantial doubt that we can continue as
an on-going business for the next twelve months without the success of our
new business operations of Novomic. We do not anticipate that Novomic will
generate revenues from the sale of its head lice treatment platform until it
receives regulatory approval from the CE, which is anticipated to occur
during the year 2017, which will permit us to commence sales and marketing
activities in Europe. Before we enter the U.S. market, we will need to
secure approval from the FDA which should take approximately 12 months at a
cost of approximately $150,000.
As a relatively new business engaged in "start-up" operations and
activities, we will require substantial additional funding to successfully
launch and commercially exploit our head lice treatment platform, fund the
costs of securing regulatory approvals that we estimate will cost
approximately $150,000 during the next 12 months and potentially significant
additional costs if there are any unanticipated delays. We also must fund
the estimated $1,000,000 in additional R&D expense and $850,000 in
manufacturing and marketing costs. We project that we will need to raise
approximately $1,200,000 during the next 12 months in order to successfully
implement our business plan and to become profitable, of which there can be
no assurance. Failure to obtain this necessary capital at acceptable terms,
if at all, when needed, may force us to delay, limit, or terminate our
product development efforts and secure regulatory approvals and would
adversely impact our planned research and development efforts in connection
with the Company's future products, which may make it more difficult for us
to attain profitability.
On February 10, 2016, we signed a Merger Agreement (the "Merger Agreement" or the
"Agreement") with Novomic Ltd, a private Company organized under the laws of the State of Israel ("Novomic") and a Shareholders' Agreement with the Novomic shareholders (the "Shareholders' Agreement"). The Merger Agreement was by and between the Registrant, on the one hand, and Novomic together with YMY Industry Ltd ("YMY") and Microdel Ltd ("Microdel"), the latter two of which are hereinafter referred to as the "Novomic Founders," on the other hand. On
August 9, 2016, the closing of the merger occurred, pursuant to which Novomic became a wholly-owned subsidiary of the Registrant.
Novomic Ltd.
("Novomic" or the "Company") was incorporated as a private limited liability Company in Israel in 2009. Since
inception, Novomic has been a technology Company engaged in the design, development, manufacturing and commercialization of a
unique platform enabling a variety of medical treatments utilizing Novomic's proprietary device that vaporizes liquids from a
contained capsule into the treatment area (the "Device"). Novomic's first product utilizing the Device will be for the
treatment of head lice. Its first and principal product is its head lice treatment product (the "Product") which is
comprised of three key major components: Compressor, Head Cap and Treatment Capsule. The lice treatment solution has completed
the development and prototype stages and the Company expects that in Q3 2016 it should receive CE regulatory approval (European
Union) and also expects to finalize preparations for establishing a mass production line for our Capsules, which use readily available
materials. The Company does not expect that there will be any future shortage in the availability or access to this materials
in the foreseen future.
In a clinical
report published in 2015 by the American Academy of Pediatrics (the "Report") it noted that while head lice (Pediculus
humanus capitis) has been a companion of the human species since antiquity, that
anecdotal reports from the 1990s estimated annual direct and indirect costs
totaling $367 million, including remedies and other consumer costs. The Report
stated that more recent estimates are that treatment costs are $1 billion
annually. It further noted that while head lice are not a health hazard or a
sign of poor hygiene, there is significant stigma resulting from head lice
infestations in many developed countries, resulting in children being ostracized
from their schools, friends, and other social events. The Report concluded that
optimal treatments should be safe, should rapidly rid the individual of live
lice, viable eggs, and residual nits, and should be easy to use and affordable.
Recent Developments
and Plans
TechCare's current
and future products are all based on the Device which was developed over a period of 7 years. During the past 18 months,
TechCare
has achieved the following:
|
·
|
Performed
extensive market research for the lice treatment/prevention market;
|
|
·
|
Completed
product development, which included finalization of commercial design of compressor,
Capsules and head cap, optimizing the product efficiency, negotiating and finalizing
the product supply chain across various suppliers;
|
|
·
|
Received
the Israeli Ministry of health approval (AMAR) to market the lice product in Israel;
|
|
·
|
Attained
ISO 9001certification;
|
|
·
|
Regulation:
In advance stages of obtaining CE certificate;
|
|
·
|
Conducted
extensive tests and measurements for treatment calibration protocol and efficiency;
|
|
·
|
Obtained
recommendations from leading senior pediatrics; and
|
|
·
|
Opened
Company headquarters offices in Israel’s Rosh Ha’ayin Industrial Park.
|
During the next 12-18 months,
TechCare
plans to focus its efforts on the following:
·
|
Finalizing
distribution, OEM and JV agreements with well-known companies, in Israel and abroad;
|
·
|
Further
optimization of the Device platform performance;
|
·
|
Reduction
of manufacturing costs;
|
·
|
Commencing
the development and commercialization of the Company’s future product line mainly
to the fields of hair cosmetics and pest treatments;
|
·
|
Obtain
additional regulatory approvals from the following regulatory agencies CE and the FDA
among others;
|
·
|
Complete
preparations for mass production by launching an automated capsule production line;
|
·
|
Presenting
the platform and its application in leading conferences around the globe; and
|
·
|
Online
sales of the head lice treatment platform.
|
With respect to FDA approval,
TechCare
is in advanced negotiations with a US distributor which will be responsible for obtaining and maintaining FDA approval for the
head lice treatment platform including the Device and capsules. While there can be no assurance, the Company expects to sign a
binding term sheet with the US distributor in or about August 2016; and expects that the FDA approval process should take approximately
12 months at a cost of approximately $150,000.
As a relatively new business engaged in "start-up"
operations and activities, we will require substantial additional funding to successfully launch and commercially exploit our
head lice treatment platform, fund the costs of securing regulatory approvals that we estimate will cost approximately $150,000
during the next 12 months and potentially significant additional costs if there are any unanticipated delays. We also must fund
the estimated $1,000,000 in additional R&D expense and $850,000 in manufacturing and marketing costs. We project that we will
need to raise approximately $1,200,000 during the next 12 months in order to successfully implement our business plan and to become
profitable, of which there can be no assurance. Failure to obtain this necessary capital at acceptable terms, if at all, when
needed, may force us to delay, limit, or terminate our product development efforts and secure regulatory approvals and would adversely
impact our planned research and development efforts in connection with the Company’s future products, which may make it
more difficult for us to attain profitability.
TechCare may be required to obtain additional regulatory approvals
for the head lice treatment platform and its future products. If unable to receive regulatory approval or commercialize our product
candidates,
TechCare
’s business will be adversely affected. CE approval is required for the marketing, distributing and sale
of
TechCare
’s products in the EU, whereas FDA approval for such marketing, distributing and sale in the US. In the
event the products are to be sold in certain territories requiring additional regulatory approvals, such will be obtained by
TechCare
and/or by its distributors.
Our Treatment Solution
The intuitive logic behind the Company's
approach to head-lice treatment and prevention is quite simple: In almost any living creature, the skin is built to isolate and
protect from harsh environment, while the breathing system is relatively sensitive. Our research and laboratory experiments have
made clear that lice are very sensitive to surrounding chemical vapors. Therefore, the environment created in our head cap is
saturated with vapor that clings to the lice skin and essentially suffocates them. Even the lice eggs (nits) have breathing holes
and are similarly affected.
Unlike existing solutions, the active
ingredient in our treatment Capsules is not a nerve poison pesticide, but an organic substance, akin to vinegar, which attacks
the lice breathing system.
Other benefits:
·
|
Safe
for use for all ages;
|
·
|
Effectively
kills adult lice, nymphs and eggs every time;
|
·
|
No
need to stay wet in the shower with the shampoo or gel on, treatment can be administered
in front of TV or computer;
|
·
|
Playful
- colorful cap is illustrated with many designs to choose from, making the experience
more acceptable by children;
|
·
|
Clean,
dry treatment with no sticky residue means; and
|
·
|
Multiuse
device – only need to replace inexpensive cartridge
.
|
Sales and Marketing
While the Compressor
component of our Product is designated to be a one-time purchase, the Head Cap and especially the Capsules will be sold separately
and based on our estimates, which we believe are both reasonable and conservative, our target customers are expected to purchase
between 12-16 Capsule units per year. Therefore, we estimate that the majority of the revenues the Company will generate in the
future will be based on Capsules sales for both treatment and prevention of head lice.
The Company plans
to focus its initial sales and marketing efforts on two of the largest markets in the world – the EU and US markets, starting
in the EU where regulatory approval is expected in 2017.
In order to achieve
its intended global footprint and market presence, the Company's primary distribution method will be based on the OEM model, in
which the distributor will sell our Product under its own name and branding. We believe that the OEM model will reduce our marketing
costs to a minimum while starting to generate revenues to support the our R&D efforts for utilizing our technological platform
to expand our product line.
The Company also
plans to market and advertise its products through online and e-commerce channels, which we believe will present a huge opportunity
for generating sales and market acceptance.
Intellectual Property
Due to the importance
of patents, the Company has devoted significant efforts and resources and will continue to invest resources in strengthening its
patent portfolio. Below is the list of patents registered by the Company to date:
Patents
|
|
Each patent's
relevance to the program
|
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Date and
status of registration
|
|
|
|
|
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Mechanism of using vapors inside a hat for lice treatment (provisional 60878351)
|
|
Description of the mechanism and method
|
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04.01.2007
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|
|
|
|
|
Mechanism of using vapors inside a hat for lice treatment PCT (PCT/IL2008/000031)
|
|
Description of the mechanism and method
|
|
06.01.2008
|
|
|
|
|
|
US Pat. 2009/0235949
|
|
Description of the mechanism and method
|
|
27.05.2009
|
|
|
|
|
|
PCT
|
|
Description of the mechanism and method
|
|
16.06.2009
|
|
|
|
|
|
US 12/901,544
|
|
Description of the mechanism and method
|
|
10.10.2010
|
|
|
|
|
|
EP 11182376.1
EP 2 438 830 A1
|
|
Description of the mechanism and method
|
|
16.07.2014
|
|
|
|
|
|
US 13/544,269
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|
Expanding on the basic patent
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|
09.07.2012
|
The Company plans to expand existing patents
related to pushing air using its mechanical Compressor and new substances which are now being researched and documented, and more
subjects that will be developed during research.
Research and Development
The Company has spent approximately
$1.3 million on R&D during the past three years. During this period the Company completed the lice product development, which
included finalization of commercial design of compressor, Capsules and head cap and optimizing the product efficiency.
The Company plans to build upon the
R&D achievements it had with the completion of the head lice treatment product as the basis to expand its variety of treatments
and solutions, which will also be based on the developed platform and the knowledge the Company gained in principally during the
past three years.
Results of Operations during the three and nine months ended
September 30, 2016 as compared to the three and nine months ended September 30, 2015
During the three and nine months ended September 30,
2016 and 2015, we generated no revenues.
Our research and development expenses increased to $64,020
during the three months ended September 30, 2016 compared to $63,337 during the
same period in the prior year and increased to $211,222 during the nine
months ended September 30, 2016 compared to $99,904 during the same period
in the prior year.
Our general and administrative expenses during the three
and nine months ended September 30, 2016 were $287,462 and $946,169 as
compared to $9,704 and $51,568 during the same period in the prior
year. The significant increase was due to reverse-merger related expenses.
We incurred a net loss of $220,180 and $1,027,716 during the three and nine months ended
September 30, 2016 compared to a net loss of $76,173 and $154,604 in same
period in the prior year.
Purchase or Sale of Equipment
Other than the purchase of computers, work stations and
printers, we do not expect to purchase or sell any plant or
significant equipment.
Liquidity and Capital Resources
Our balance sheet as of September 30, 2016 reflects
assets of $745,992 consisting of cash of $686,381, prepaid assets of $30,485
and property and equipment net, of $29,126. As of December 31, 2015, the
balance sheet reflects assets of $351,106 consisting of cash of $254,324,
property and equipment net, of $14,445 and prepaid assets of $82,337.
As of September 30, 2016, we had total current
liabilities of $408,357 consisting of accounts payable and accrued expenses
of $211,643, deferred revenue of $115,170 and notes payable of $81,524.
As of December 31, 2015, we had total current liabilities
of $247,188 consisting of $168,448 in accounts payable and accrued
liabilities and $78,740 in notes payable.
We had positive working capital of $337,635 as of
September 30, 2016 compared to positive working capital of $103,918 at
December 31, 2015. The working capital has been sufficient to sustain our
operations to date, although please see note regarding going concern. Our
total liabilities as of September 30, 2016 were $408,357 compared to
$247,188 at December 31, 2015.
During the nine months ended September 30, 2016, we used
$806,128 in our operating activities. This resulted from a net loss of
$1,027,716, offset by depreciation expenses of $5,574, imputed interest
expense of $4,923, decrease in prepaid assets of $51,852, decrease in
accounts in accounts payable of $8,338, increase in accrued expenses of
$52,407 and an increase in deferred revenues of $115,170.
During the nine months ended September 30, 2015,
we used $177,328 in our operating activities. This resulted from a net loss
of $154,604, offset by depreciation expenses of $5,424, an increase in
prepaid assets of $53,914, an increase in accounts in accounts payable of
$10,329 and an increase in accrued expenses of $15,437.
During the nine months ended September 30, 2016, investing activities
provided us with of $1,121,540 due to the purchase of property and equipment
valued at $23,391 and $1,144,931 related to the effect of our reverse
merger.
During the nine months ended September 30, 2015, we used
$16,271 in our investing activities related to the purchase of property and
equipment valued at $16,271.
During the nine months ended September 30, 2016, our
financing activities provided us with of $165,000 through the issuance of
common stock as compared to proceeds from the issuance of common stock of
$150,000 in the same period in the prior year.
While management of the Company believes that the Company
will be successful in its current and planned operating activities, there
can be no assurance that the Company will be successful in the achievement
of sales of its products that will generate sufficient revenues to earn a
profit and sustain the operations of the Company.
Our ability to create sufficient working capital to
sustain us over the next twelve month period, and beyond, is dependent on
our entering into additional licensing agreement and on our success in
issuing additional debt or equity, or entering into strategic arrangement
with a third party.
There can be no assurance that sufficient capital will be
available to us. We currently have no agreements, arrangements or
understandings with any person to obtain funds through bank loans, lines of
credit or any other sources.
Going Concern Consideration
There is substantial doubt about our ability to continue
as a going concern. Our financial statements contain additional note
disclosures with respect to this matter.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Critical Accounting Policies
Our significant accounting policies are described in the
notes to our financial statements for the periods ended September 30, 2016
and the year ended December 31, 2015, and are included elsewhere in this report on Form
10-Q.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
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None.
ITEM 4.
CONTROLS AND PROCEDURES
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to Table of Contents
Evaluation of disclosure controls and
procedures.
As of
September 30, 2016, the Company's chief executive officer and chief financial
officer conducted an evaluation regarding the effectiveness of the Company's
disclosure controls and procedures (as defined in Rules 13a-15(e) or
15d-15(e) under the Exchange Act.
Based upon the evaluation of these controls and procedures as provided under
the
Committee of Sponsoring
Organizations of the Treadway Commission in Internal Control-Integrated
Framework (2013)
, our chief executive officer and chief financial
officer concluded that our disclosure controls and procedures were
ineffective as September 30, 2016.
Management has identified corrective actions to address the weaknesses and
plans to implement them during the fourth quarter of 2016.
Changes
in Internal Control Over Financial Reporting
There were no changes in
the Company's internal control over financial reporting during the
period covered by this report, which were identified in connection with
management's evaluation required by paragraph (d) of Rules 13a-15 and
15d-15 under the Exchange Act, that have materially affected, or are
reasonably likely to materially affect, the Company's internal control
over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL
PROCEEDINGS
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Contents
We are not currently subject to any material legal proceedings, nor, to
our knowledge, is any material legal proceeding threatened against us. However, from time
to time, we may become a party to certain legal proceedings in the ordinary course of
business.
ITEM 1A.
RISK FACTORS
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Contents
In addition to the other
information set forth in this report, you should carefully consider the factors discussed
in our Current Report on Form 8-k12g3 in Item 1. Description of Business, subheading "Risk Factors, which
could materially affect our business, financial condition or future results. The risks
described in our Current Report on Form 8-K12g3 are not the only risks facing our
company. Additional risks and uncertainties not currently known to us or that we currently
deem to be immaterial also may materially adversely affect our business, financial
condition and/or operating results.
ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEED
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N/A.
ITEM
3. DEFAULTS UPON SENIOR SECURITIES
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None.
ITEM
4. MINE SAFETY DISCLOSURE.
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to Table of Contents
Not applicable.
ITEM
5. OTHER INFORMATION
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to Table of Contents
Not applicable.
ITEM 6. EXHIBITS
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(a) The following documents
are filed as exhibits to this report on Form 10-Q or incorporated by reference herein. Any
document incorporated by reference is identified by a parenthetical reference to the SEC
filing that included such document.
Exhibit No.
|
Description
|
31.1
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Section 302
Certification of the Sarbanes-Oxley Act of 2002 of Zvi Yemini, filed herewith.
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31.2
|
Section 302
Certification of the Sarbanes-Oxley Act of 2002 of Josh Johnson, filed herewith.
|
32.1
|
Section 906 of
the Sarbanes-Oxley Act of 2002 of Zvi Yemini, filed herewith
|
32.2
|
Section 906 of
the Sarbanes-Oxley Act of 2002 of Josh Johnson, filed herewith
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|
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned.
TechCare Corp.
By: /s/
Zvi Yemin
Zvi Yemini
Chief Executive Officer and Director
(Principal Executive Officer)
Date: December 20, 2016
By:
/s/ Josh Johnson
Josh Johnson
Chief Financial Officer
(Principal Financial and Principal Accounting Officer)
Date: December 20, 2016
Pursuant to the requirements of the Securities Act of 1934, this report has been signed by
the following persons on behalf of the registrant and in the capacities and on the dates
indicated.
By:
/s/
Zvi Yemini
Zvi Yemini
Chairman
Date: December 20, 2016
By:
/s/
Mordechai Bignitz
Mordechai Bignitz
Director
Date: December 20, 2016