Notes
to Unaudited Interim Financial Statements
June,
30,2018
1.
The Company and Significant Accounting Policies
Organizational
Background
E-Qure
Corp. (“EQURE” or the “Company”) is a Delaware corporation with offices in Israel. E-QURE CORP. (“EQURE”)
owns IP of innovate technology of wound healing device (BST).
Basis
of Presentation:
The
accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United
States of America, which contemplate continuation of the Company as a going concern. The Company has not established any source
of revenue to cover its operating costs, and as such, has incurred an operating loss since inception.
Significant
Accounting Policies
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statement and the reported amounts of revenues and expenses during the reporting period. Actual results
could differ from the estimates.
Cash
and Cash Equivalent
s
For
financial statement presentation purposes, the Company considers those short-term, highly liquid investments with original maturities
of three months or less to be cash or cash equivalents. There were no cash equivalents as of June 30, 2018 and December 31, 2017.
Property
and Equipment
New
property and equipment are recorded at cost. Property and equipment included in the bankruptcy proceedings and transferred to
the Trustee had been valued at liquidation value. Depreciation is computed using the straight-line method over the estimated useful
lives of the assets, generally 5 years. Expenditures for renewals and betterments are capitalized. Expenditures for minor items,
repairs and maintenance are charged to operations as incurred. Gain or loss upon sale or retirement due to obsolescence is reflected
in the operating results in the period the event takes place.
Valuation
of Long-Lived Assets
We
review the recoverability of our long-lived assets including equipment, goodwill and other intangible assets, when events or changes
in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment
is based on our ability to recover the carrying value of the asset from the expected future pre-tax cash flows (undiscounted and
without interest charges) of the related operations. If these cash flows are less than the carrying value of such asset, an impairment
loss is recognized for the difference between estimated fair value and carrying value. Our primary measure of fair value is based
on discounted cash flows. The measurement of impairment requires management to make estimates of these cash flows related to long-lived
assets, as well as other fair value determinations.
Stock
Based Compensation
Stock-based
awards are accounted for using the fair value method in accordance with ASC 718,
Share-Based Payments
. Our primary type
of share-based compensation consists of stock options. We use the Black-Scholes option pricing model in valuing options. The inputs
for the valuation analysis of the options include the market value of the Company’s common stock, the estimated volatility
of the Company’s common stock, the exercise price of the warrants and the risk free interest rate.
Accounting
For Obligations And Instruments Potentially To Be Settled In The Company’s Own Stock
We
account for obligations and instruments potentially to be settled in the Company’s stock in accordance with FASB ASC 815,
Accounting for Derivative Financial Instruments.
This issue addresses the initial balance sheet classification and measurement
of contracts that are indexed to, and potentially settled in, the Company’s own stock.
Fair
Value of Financial Instruments
FASB
ASC 825, “Financial Instruments,” requires entities to disclose the fair value of financial instruments, both assets
and liabilities recognized and not recognized on the balance sheet, for which it is practicable to estimate fair value. FASB ASC
825 defines fair value of a financial instrument as the amount at which the instrument could be exchanged in a current transaction
between willing parties. At June 30, 2018 and December 31, 2017, the carrying value of certain financial instruments (cash and
cash equivalents, accounts payable and accrued expenses.) approximates fair value due to the short-term nature of the instruments
or interest rates, which are comparable with current rates.
Fair
Value Measurements
The
Company measures fair value under a framework that utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques
used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical
assets or liabilities (level 1 measurements) and the lowest priority to unobservable inputs (level 3 measurements). The three
levels of inputs which prioritize the inputs used in measuring fair value are:
Level
1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair
value hierarchy gives the highest priority to Level 1 inputs.
Level
2: Other inputs that are observable, directly or indirectly, such as quoted prices for similar assets and liabilities or market
corroborated inputs.
Level
3: Unobservable inputs are used when little or no market data is available, which requires the Company to develop its own assumptions
about how market participants would value the assets or liabilities. The fair value hierarchy gives the lowest priority to Level
3 inputs.
In
determining fair value, the Company utilizes valuation techniques in its assessment that maximize the use of observable inputs
and minimize the use of unobservable inputs. The following table presents the Company’s financial assets and liabilities
that are carried at fair value, classified according to the three categories described above:
Fair Value Measurements at June 30, 2018
|
|
|
|
|
|
Quoted Prices
in Active
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
Markets for
Identical
Assets
|
|
|
Other
Observable
Inputs
|
|
|
Significant Unobservable Inputs
|
|
|
|
Total
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
None
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Total assets and liabilities at fair value
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Fair Value Measurements at December 31, 2017
|
|
|
|
|
|
Quoted Prices
in Active
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
Markets for
Identical
Assets
|
|
|
Other
Observable
Inputs
|
|
|
Significant Unobservable Inputs
|
|
|
|
Total
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
None
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Total assets and liabilities at fair value
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
When
the Company changes its valuation inputs for measuring financial assets and liabilities at fair value, either due to changes in
current market conditions or other factors, it may need to transfer those assets or liabilities to another level in the hierarchy
based on the new inputs used. The Company recognizes these transfers at the end of the reporting period that the transfers occur.
For the fiscal periods ended June 30, 2018 and December 31, 2017, there were no significant transfers of financial assets or financial
liabilities between the hierarchy levels.
Earnings
per Common Share
We
compute net income (loss) per share in accordance with ASC 260,
Earning per Share
. ASC 260 requires presentation of both
basic and diluted earnings per share (EPS) on the face of the income statement. Basic EPS is computed by dividing net income (loss)
available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period.
Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method
and convertible preferred stock using the if-converted method. In computing Diluted EPS, the average stock price for the period
is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS
excludes all dilutive potential shares if their effect is anti-dilutive.
Income
Taxes
We
have adopted ASC 740,
Accounting for Income Taxes.
Pursuant to ASC 740, we are required to compute tax asset benefits for
net operating losses carried forward. The potential benefits of net operating losses have not been recognized in these financial
statements because the Company cannot be assured it is more likely than not it will utilize the net operating losses carried forward
in future years.
We
must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates
and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition
of revenue and expense for tax and financial statement purposes.
Deferred
tax assets and liabilities are determined based on the differences between financial reporting and the tax basis of assets and
liabilities using the tax rates and laws in effect when the differences are expected to reverse. ASC 740 provides for the recognition
of deferred tax assets if realization of such assets is more likely than not to occur. Realization of our net deferred tax assets
is dependent upon our generating sufficient taxable income in future years in appropriate tax jurisdictions to realize benefit
from the reversal of temporary differences and from net operating loss, or NOL, carryforwards. We have determined it more likely
than not that these timing differences will not materialize and have provided a valuation allowance against substantially all
of our net deferred tax asset. Management will continue to evaluate the realizability of the deferred tax asset and its related
valuation allowance. If our assessment of the deferred tax assets or the corresponding valuation allowance were to change, we
would record the related adjustment to income during the period in which we make the determination. Our tax rate may also vary
based on our results and the mix of income or loss in domestic and foreign tax jurisdictions in which we operate.
In
addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of complex tax regulations.
We recognize liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on our estimate of whether,
and to the extent to which, additional taxes will be due. If we ultimately determine that payment of these amounts is unnecessary,
we will reverse the liability and recognize a tax benefit during the period in which we determine that the liability is no longer
necessary. We will record an additional charge in our provision for taxes in the period in which we determine that the recorded
tax liability is less than we expect the ultimate assessment to be.
ASC
740 which requires recognition of estimated income taxes payable or refundable on income tax returns for the current year and
for the estimated future tax effect attributable to temporary differences and carry-forwards. Measurement of deferred income tax
is based on enacted tax laws including tax rates, with the measurement of deferred income tax assets being reduced by available
tax benefits not expected to be realized.
Uncertain
Tax Positions
The
Financial Accounting Standards Board issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes – an
interpretation of FASB Statement No. 109, Accounting for Income Taxes” (“FIN No. 48”) which was effective for
the Company on January 1, 2007. FIN No. 48 addresses the determination of whether tax benefits claimed or expected to be claimed
on a tax return should be recorded in the financial statements. Under FIN No. 48, the Company may recognize the tax benefit from
an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing
authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such position
should be measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon ultimate
settlement. FIN No. 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim
periods and disclosure requirements.
Our
federal and state income tax returns are open for fiscal years ending on or after December 31, 2008. We are not under examination
by any jurisdiction for any tax year. At June 30, 2018, we had no material unrecognized tax benefits and no adjustments to liabilities
or operations were required under FIN 48.
Recent
Accounting Pronouncements
In
May 2017, the FASB issued Update 2017-09 - Compensation - Stock Compensation (Topic 718): Effective for all entities for annual
periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including
adoption in any interim period, for (1) public business entities for reporting periods for which financial statements have not
yet been issued and (2) all other entities for reporting periods for which financial statements have not yet been made available
for issuance. Early adoption is permitted. This adoption is not expected to have a material impact on our financial position or
results of operations.
In
February 2017, FASB issued Update 2017-06 - Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension
Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting (a consensus of
the Emerging Issues Task Force). Under Topic 960, investments in master trusts are presented in a single line item in the statement
of net assets available for benefits. Similar guidance is not provided in Topic 962 or 965, which has resulted in diversity in
practice. For each master trust in which a plan holds an interest, the amendments in this Update require a plan’s interest
in that master trust and any change in that interest to be presented in separate line items in the statement of net assets available
for benefits and in the statement of changes in net assets available for benefits, respectively. Topics 960 and 962 require plans
to disclose their percentage interest in the master trust and a list of the investments held by the master trust, presented by
general type, within the plan’s financial statements. Stakeholders said that the disclosure can be misleading when the plan
has a divided interest in the individual investments of the master trust (that is, when the plan has a specific, rather than a
proportionate, interest in the master trust). The amendments in this Update remove the requirement to disclose the percentage
interest in the master trust for plans with divided interests and require that all plans disclose the dollar amount of their interest
in each of those general types of investments, which supplements the existing requirement to disclose the master trust’s
balances in each general type of investments. Early adoption is permitted. This adoption is not expected to have a material impact
on our financial position or results of operations.
In
the opinion of management, the information furnished in these interim financial statements reflects all adjustments necessary
for a fair statement of the financial position and results of operations and cash flows as of and for the three month-periods
ended June 30, 2018 and 2017 and for the twelve-month period ended December 31, 2017. All such adjustments are of a normal recurring
nature.
Management
does not anticipate that the adoption of these standards will have a material impact on the financial statements.
2.
Stockholders’ Equity
Common
Stock
We
are currently authorized to issue up to 500,000,000 shares of $0.00001 par value common stock. All issued shares of common stock
are entitled to vote on a 1 share/1 vote basis. On May 12, 2014 the Board approved a 1 for 100 reverse split of the common stock.
In conjunction with the reverse split the Company domiciled from New Jersey to Delaware.
Issuances
of Common Stock During the Period ended June 30, 2018:
During
the period ended June 30, 2018, we did not issue any shares of Common Stock.
Issuances
of Common Stock in 2017:
On
April 20, 2017, we issued 225,000 shares valued at $39,128 to two consultants for services provided. During the three months ended
June 30, 2017, we authorized the issuance of 75,000 additional shares to the same two consultants valued at $0.14 or $21,000,
which was recorded as stock payable.
Preferred
Stock
We
are currently authorized to issue up to 20,000,000 shares of $0.00001 par value preferred stock. There are no preferred shares
outstanding as of June 30, 2018 and December 31, 2017.
Stock
Options
On
January 1, 2015, the Company authorized the adoption of the 2015 Employee Incentive Plan.
Stock
Option Grants
On
January 1, 2015, the board of director approved the 2015 Employee Incentive Plan. The total number of shares of Common Stock reserved
for issuance by the Company either directly as Stock Awards or underlying Options granted under this Plan is 5,000,000 shares
of Common Stock. On January 1, 2015, the Company granted options as follows under its 2015 Employee Incentive Plan: (i) Professor
Ohry was granted options to purchase 250,000 shares of the Registrant’s common stock (“Option Shares”) at an
exercise price equal to one dollar ($1.00) per Option Share. The Option Shares shall vest pursuant to the terms of a Scientific
Advisory Board Agreement dated January 1, 2015 (the “Ohry SAB Agreement”). Provided the Ohry SAB Agreement remains
in effect, 75,000 shares shall vest July 1, 2015, and the remaining 175,000 Option Shares shall vest at the rate of 25,000 Option
Shares per quarter on the first day of each consecutive quarter; (ii) Dr. Ben Zion Weiner was granted options to purchase 350,000
Option Shares at an exercise price equal to one dollar ($1.00) per Option Share. The Option Shares shall vest pursuant to the
terms of a Scientific Advisory Board Agreement dated January 1, 2015 (the “Weiner SAB Agreement”). Provided the Weiner
SAB Agreement remains in effect, 105,000 Option Shares shall vest July 1, 2015 and the remaining 245,000 Option Shares shall vest
at the rate of 35,000 Option Shares per quarter on the first day of each consecutive quarter; and (iii) Michel Sessler was granted
options to purchase 150,000 Option Shares at an exercise price equal to one dollar ($1.00) per Option Share. The Option Shares
shall vest pursuant to the terms of a Scientific Advisory Board Agreement dated January 1, 2015 (the “Sessler SAB Agreement”).
Provided the Sessler SAB Agreement remains in effect, 45,000 Option Shares shall vest July 1, 2015 and the remaining 105,000 Option
Shares shall vest at the rate of 15,000 Option Shares per quarter on the first day of each consecutive quarter.
Following
is a table summarizing options still outstanding and exercisable along with exercise price and range of remaining term.
Type
|
|
Quantity
|
|
|
Exercise Price
|
|
|
Term
|
|
Avi Ohry
|
|
|
250,000
|
|
|
$
|
1.00
|
|
|
|
24 Months
|
|
Dr. Ben Zion Weiner
|
|
|
350,000
|
|
|
$
|
1.00
|
|
|
|
24 Months
|
|
Michael Sessler
|
|
|
150,000
|
|
|
$
|
1.00
|
|
|
|
24 Months
|
|
Total
|
|
|
750,000
|
|
|
|
|
|
|
|
|
|
During
the six months ended June 30, 2018 and the year ended December 31, 2017, we expensed $0 and $107,176, respectively, in relation
the options granted above.
3.
Notes Payable
As
of June 30, 2018, the Company had four short-term notes for a total of $190,679 outstanding.
During
the six months ended June 30, 2018, the Company received additional funds of $52,628. The notes are due on demand and bear no
interest rate. As such, imputed interest is calculated and included under additional paid-in capital. As of June 30, 2018, the
Company has recorded $9,456 in imputed interest with respect to these notes.
During
the year ended December 31, 2017, the Company issued three notes for a total of $138,051, two of which were issued to related
parties. The notes are due on demand and bear no interest rate. As such, the imputed interest is calculated and included under
additional paid-in capital. As of December 31, 2017, the Company has recorded $6,900 in imputed interest.
|
|
June
30, 2018
|
|
|
December
31, 2017
|
|
Roni
Weisberg, Chairman
|
|
$
|
60,783
|
|
|
$
|
57,172
|
|
Itsik
Ben Yesha, CTO
|
|
$
|
92,160
|
|
|
$
|
49,745
|
|
Michael
Cohen
|
|
|
37,736
|
|
|
|
31,134
|
|
4.
Other Assets
As
of June 30, 2018 and December 31, 2017, the Company recorded $56,382 and $63,382, respectively, as other assets representing securities
compliance services to be repaid in cash or securities compliance services pursuant to an arrangement with the Company’s
securities compliance consultant.
5.
Related Party Transactions not Disclosed Elsewhere
As
of June 30, 2018, the Company had four short-term notes for a total of $190,679 outstanding.
On
January 1, 2015, the board of director approved the 2015 Employee Incentive Plan. The total number of shares of Common Stock reserved
for issuance by the Company either directly as Stock Awards or underlying Options granted under this Plan is 5,000,000 shares
of Common Stock. On January 1, 2015, the Company granted options as follows under its 2015 Employee Incentive Plan: (i) Professor
Ohry was granted options to purchase 250,000 shares of the Registrant’s common stock (“Option Shares”) at an
exercise price equal to one dollar ($1.00) per Option Share. The Option Shares shall vest pursuant to the terms of a Scientific
Advisory Board Agreement dated January 1, 2015 (the “Ohry SAB Agreement”). Provided the Ohry SAB Agreement remains
in effect, 75,000 shares shall vest July 1, 2015, and the remaining 175,000 Option Shares shall vest at the rate of 25,000 Option
Shares per quarter on the first day of each consecutive quarter; (ii) Dr. Ben Zion Weiner was granted options to purchase 350,000
Option Shares at an exercise price equal to one dollar ($1.00) per Option Share. The Option Shares shall vest pursuant to the
terms of a Scientific Advisory Board Agreement dated January 1, 2015 (the “Weiner SAB Agreement”). Provided the Weiner
SAB Agreement remains in effect, 105,000 Option Shares shall vest July 1, 2015 and the remaining 245,000 Option Shares shall vest
at the rate of 35,000 Option Shares per quarter on the first day of each consecutive quarter; and (iii) Michel Sessler was granted
options to purchase 150,000 Option Shares at an exercise price equal to one dollar ($1.00) per Option Share. The Option Shares
shall vest pursuant to the terms of a Scientific Advisory Board Agreement dated January 1, 2015 (the “Sessler SAB Agreement”).
Provided the Sessler SAB Agreement remains in effect, 45,000 Option Shares shall vest July 1, 2015 and the remaining 105,000 Option
Shares shall vest at the rate of 15,000 Option Shares per quarter on the first day of each consecutive quarter. We expensed $0
and $107,176, respectively, in relation to the option granted.
As
of June 30, 2018 and December 31, 2017, we had accrued interest of $1,564 due to Mr. Weissberg, who is the Company’s Chairman
of the audit committee. As of June 30, 2018 and December 31, 2017, we had accrued salaries of $342,225 and $228,150, respectively,
due to three of our officers.
6.
Going Concern
The
accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United
States of America, which contemplate continuation of the Company as a going concern. The Company has not established any source
of revenue to cover its operating costs, and as such, has incurred an operating loss since inception. These and other factors
raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements
do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the
amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
7.
Subsequent Events
After
the quarter ended June 30, 2018, the Company raised $423,400 from the private sale of a total of 4,234,000 Units at $0.10 per
Unit, each consisting of: (i) one share of Common Stock; (ii) one Class A Warrant exercisable for a period of 24 months to purchase
½ share of Common Stock at the equivalent of $0.50 per share; and (iii) one Callable Class B Warrant exercisable for a
period of 36 months to purchase ½ share of Common Stock at the equivalent of $1.25 per share. The sale of the Units was
made to 18 accredited investors, as that term is defined in Rule 501 of Regulation D promulgated by the SEC under the Act, without
registration, in reliance upon the exemption provided by Regulation S promulgated by the SEC under the Act. Each of the 18 accredited
investors is a citizen and/or resident of the State of Israel and is a “non-U.S. Person” as defined in Rule 902 of
Regulation S. The units sold in the Reg S offering were identical to the Units offered and sold in the Company’s registered
Subscription Rights Offering, Registration No. 333-220371, declared effective by the SEC on May 10, 2018, incorporated by reference
herein.
The
Company received net proceeds of $510,943from this rights offering which it intends to use for general corporate purposes, including
working capital, capital expenditures, as well as acquisitions and other strategic purposes.
In
addition, subsequent to June 30, 2018, the Company’s executive officers and chairman converted debt in the aggregate amount
of $275,303 into units consisting of a total of 2,753,030 shares, 1,376,515 Class A Warrants and Class B Warrants, having the
same terms as the Class A and Class B Warrants set forth above, and 2,750,000 Class C Warrants each exercisable for a period of
ten years to purchase one share of Common Stock at a price of $1.00.
There
were no other subsequent events following the period ended June 30, 2018 through the date the financial statements were issued
that would materially affect the financial statements.