ITEM
1. FINANCIAL STATEMENTS
E-QURE
CORP.
Balance
Sheets
At
March 31, 2020 (Unaudited) and December 31, 2019
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|
March 31, 2020
|
|
|
December 31, 2019
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|
|
|
|
(Unaudited)
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|
|
|
|
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Assets
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
193,878
|
|
|
$
|
18,278
|
|
Total current assets
|
|
|
193,878
|
|
|
|
18,278
|
|
Other assets
|
|
|
-
|
|
|
|
-
|
|
Total Assets
|
|
$
|
193,878
|
|
|
$
|
18,278
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable - trade
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|
$
|
-
|
|
|
$
|
4,050
|
|
Accrued interest, related party
|
|
|
1,564
|
|
|
|
1,564
|
|
Accrued salary, related party
|
|
|
167,287
|
|
|
|
105,862
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|
Accrued expenses
|
|
|
-
|
|
|
|
-
|
|
Loan from shareholder, related party
|
|
|
165,905
|
|
|
|
165,905
|
|
Total current liabilities
|
|
|
334,756
|
|
|
|
277,381
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|
|
|
|
|
|
|
|
|
|
Stockholders’ equity (deficit):
|
|
|
|
|
|
|
|
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Preferred stock, $0.00001 par value; 25,000,000 shares authorized; no shares issued and outstanding
|
|
|
-
|
|
|
|
-
|
|
Common stock, $0.00001 par value; 500,000,000 shares authorized; and 34,546,060 issued and outstanding at March 31, 2020 and December 31, 2019
|
|
|
345
|
|
|
|
345
|
|
Additional paid in capital
|
|
|
33,793,025
|
|
|
|
33,788,889
|
|
Stock payable
|
|
|
291,976
|
|
|
|
21,000
|
|
Accumulated deficit
|
|
|
(34,226,224
|
)
|
|
|
(34,069,337
|
)
|
Total stockholders’ equity (deficit)
|
|
|
(140,878
|
)
|
|
|
(259,103
|
)
|
Total Liabilities and Stockholders’ Equity (Deficit)
|
|
$
|
193,878
|
|
|
$
|
18,278
|
|
E-QURE
CORP.
Statements
of Operations
For
The Three Months Ended March 31, 2020 and 2019
(Unaudited)
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|
For the three
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|
|
For the three
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|
months ended
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|
|
months ended
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|
March 31, 2020
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|
|
March 31, 2019
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|
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Revenues
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
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|
Expenses
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|
|
|
|
|
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|
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General and administrative
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93,371
|
|
|
|
119,541
|
|
Research and development
|
|
|
59,380
|
|
|
|
43,581
|
|
Total
|
|
|
152,751
|
|
|
|
163,122
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|
|
|
|
|
|
|
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Other income (expenses)
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|
|
|
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|
|
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|
Interest expense
|
|
|
4,136
|
|
|
|
930
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|
Total expenses
|
|
|
4,136
|
|
|
|
930
|
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before income taxes
|
|
|
(156,887
|
)
|
|
|
(164,052
|
)
|
Income tax
|
|
|
-
|
|
|
|
-
|
|
Net loss
|
|
$
|
(156,887
|
)
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|
$
|
(164,052
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)
|
|
|
|
|
|
|
|
|
|
Basic and diluted net loss per share
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$
|
(0.00
|
)
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|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding (basic and
diluted)
|
|
|
34,546,060
|
|
|
|
34,546,060
|
|
See
Notes to Unaudited Interim Financial Statements.
E-QURE
CORP.
Statement
of Changes in Stockholders’ Equity (Deficit)
For
the Three-Month Periods ended March 31, 2020 and 2019
(Unaudited)
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Additional
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Total Stockholders’
|
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Common
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Paid-in
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Stock
|
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Accumulated
|
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|
Equity
|
|
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Shares
|
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|
Amount
|
|
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Capital
|
|
|
Payable
|
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|
Deficit
|
|
|
(Deficit)
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|
Balance at December 31, 2018
|
|
|
34,546,060
|
|
|
$
|
345
|
|
|
$
|
33,781,881
|
|
|
$
|
21,000
|
|
|
$
|
(33,632,525
|
)
|
|
$
|
170,701
|
|
Imputed interest
|
|
|
-
|
|
|
|
-
|
|
|
|
930
|
|
|
|
-
|
|
|
|
-
|
|
|
|
930
|
|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(164,052
|
)
|
|
|
(164,052
|
)
|
Balance at March 31, 2019
|
|
|
34,546,060
|
|
|
$
|
345
|
|
|
$
|
33,782,811
|
|
|
$
|
21,000
|
|
|
$
|
(33,796,577
|
)
|
|
$
|
7,579
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Balance at December 31, 2019
|
|
|
34,546,060
|
|
|
|
345
|
|
|
|
33,788,889
|
|
|
|
21,000
|
|
|
|
(34,069,337
|
)
|
|
|
(259,103
|
)
|
Stock payable
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
270,976
|
|
|
|
|
|
|
|
270,976
|
|
Imputed interest
|
|
|
-
|
|
|
|
-
|
|
|
|
4,136
|
|
|
|
-
|
|
|
|
-
|
|
|
|
4,136
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|
Net loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(156,887
|
)
|
|
|
(156,887
|
)
|
Balance at March 31, 2020
|
|
|
34,546,060
|
|
|
$
|
345
|
|
|
$
|
33,793,025
|
|
|
$
|
291,976
|
|
|
$
|
(34,226,224
|
)
|
|
$
|
(140,878
|
)
|
See
Summary of Significant Accounting Policies and Notes to Financial Statements.
E-QURE
CORP.
Statements
of Cash Flows
For
The Three Months Ended March 31, 2020 and 2019
(Unaudited)
|
|
For the three
|
|
|
For the three
|
|
|
|
months ended
|
|
|
months ended
|
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|
|
March 31, 2020
|
|
|
March 31, 2019
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|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(156,887
|
)
|
|
$
|
(164,052
|
)
|
Adjustments required to reconcile net loss to cash used in operating activities:
|
|
|
|
|
|
|
|
|
Imputed interest
|
|
|
4,136
|
|
|
|
930
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
Increase (decrease) in accounts payable and accrued expenses
|
|
|
57,375
|
|
|
|
19,819
|
|
Increase (decrease) in prepaid expenses and other assets
|
|
|
-
|
|
|
|
4,882
|
|
Cash provided by (used in) operating activities
|
|
|
(95,376
|
)
|
|
|
(138,421
|
)
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from stock payable
|
|
|
270,976
|
|
|
|
-
|
|
Cash provided by financing activities
|
|
|
270,976
|
|
|
|
-
|
|
|
|
|
|
|
|
|
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Change in cash
|
|
|
175,600
|
|
|
|
(138,421
|
)
|
Cash - beginning of period
|
|
|
18,278
|
|
|
|
390,495
|
|
Cash - end of period
|
|
$
|
193,878
|
|
|
$
|
252,074
|
|
See
Notes to Unaudited Interim Financial Statements.
E-Qure
Corp.
Notes
to Unaudited Interim Financial Statements
March
31, 2020
1.
The Company and Significant Accounting Policies
Organizational
Background
E-Qure
Corp. (“EQURE” or the “Company”) is a Delaware corporation with offices in Israel. 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 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. There were no cash equivalents as of March 31, 2020 and December 31, 2019.
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 March 31, 2020 and December 31, 2019, 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 March 31, 2020
|
|
|
|
|
|
|
Quoted Prices
in Active
Markets for Identical Assets
|
|
|
|
Significant
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, 2019
|
|
|
|
|
|
|
Quoted Prices in Active
Markets for Identical Assets
|
|
|
|
Significant
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 March 31, 2020 and December 31, 2019, 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, 2009. We are not under examination
by any jurisdiction for any tax year. At March 31, 2020, we had no material unrecognized tax benefits and no adjustments to liabilities
or operations were required under FIN 48.
Recent
Accounting Pronouncements
In
July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases. The amendments in ASU 2018-10 provide
additional clarification and implementation guidance on certain aspects of the previously issued ASU No. 2016-02, Leases (Topic
842) (“ASU 2016-02”) and have the same effective and transition requirements as ASU 2016-02. Upon the effective date,
ASU 2018-10 will supersede the current lease guidance in ASC Topic 840, Leases. Under the new guidance, lessees will be required
to recognize for all leases, lease with the exception of short-term leases, a lease liability, which is a lessee’s obligation
to make payments arising from a lease, measured on a discounted basis. Concurrently, lessees will be required to recognize a right-of-use
asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease
term. ASU 2018-10 is effective for private companies and emerging growth public companies for interim and annual reporting periods
beginning after December 15, 2019, with early adoption permitted. The guidance is required to be applied using a modified retrospective
transition approach for leases existing at, or entered into after, the beginning of the earliest comparative periods presented
in the financial statements. During the year ended December 31, 2019, the Company assessed the impact this guidance had on its
financial statements and concluded that at present ASU No. 2018-10 has no impact on its financial statements due to not having
any commitment to stay in our property longer than a year.
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.
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.
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 March 31, 2020 and 2019. 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.
Issuances
of Common Stock During the Period ended March 31, 2020:
The
Company did not issue any Common Stock during the three months ended March 31, 2020.
Issuances
of Common Stock in 2019:
During
the year ended December 31, 2019, we did not issue any restricted stock.
Preferred
Stock
We
are currently authorized to issue up to 25,000,000 shares of $0.00001 par value preferred stock. There are no preferred shares
outstanding as of March 31, 2020 and December 31, 2019.
Stock
Options
On
January 1, 2015, the Company authorized the adoption of the 2015 Employee Incentive Plan.
Stock
Options and Warrants Granted
Following
is a table summarizing warrants outstanding and exercisable along with exercise price and range of remaining term.
Name
|
|
Description
|
|
Grant Date of Options/Warrants
|
|
Number of Options/Warrants
|
|
|
Stock Price on Measurement
Date
|
|
|
Exercise Price of
Options/Warrants
|
|
|
Terms of Options/warrants
|
|
Warrants Class A
|
|
Shares for cash
|
|
09/05/2018
|
|
|
4,777,734
|
|
|
$
|
0.08
|
|
|
$
|
0.50
|
|
|
|
2
years
|
|
Warrants Class B
|
|
Shares for cash
|
|
09/05/2018
|
|
|
4,777,734
|
|
|
$
|
0.08
|
|
|
$
|
0.50
|
|
|
|
3
years
|
|
Warrants Class A
|
|
Debt conversion
|
|
07/01/2018
|
|
|
1,376,515
|
|
|
$
|
0.07
|
|
|
$
|
0.50
|
|
|
|
2
years
|
|
Warrants Class B
|
|
Debt conversion
|
|
07/01/2018
|
|
|
1,376,515
|
|
|
$
|
0.07
|
|
|
$
|
1.25
|
|
|
|
3
years
|
|
Warrants Class C
|
|
Debt conversion
|
|
07/01/2018
|
|
|
2,750,000
|
|
|
$
|
0.07
|
|
|
$
|
1.00
|
|
|
|
10
years
|
|
Total
|
|
|
|
|
|
|
15,058,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3.
Notes Payable
During
the period ended March 31, 2020 and the year ended December 31, 2019, the Company received advances on outstanding notes for a
total of $0 and $128,169, respectively, from a related party. As of March 31, 2020 and December 31, 2019, the Company had outstanding
loans due to related parties of $165,905.
|
|
March 31, 2020
|
|
|
December 31, 2019
|
|
Itsik Ben Yesha, CTO
|
|
$
|
137,736
|
|
|
$
|
137,736
|
|
Investor, unrelated party
|
|
$
|
28,169
|
|
|
$
|
28,169
|
|
4.
Related Party Transactions not Disclosed Elsewhere
During
the period ended March 31, 2020 year ended December 31, 2019, the Company received advances on outstanding notes for a total of
$0 and $128,169, respectively, from a related party. As of March 31, 2020 and December 31, 2019, the Company had outstanding loans
due to related parties of $165,905.
During
the three months ended, the Company received proceeds from stock subscriptions of $270,976. These stock subscriptions have been
recorded as stock payable as the conversion ratio has not yet been determined. Itsik Ben Yesha, our CTO, invested $120,906 and
unrelated investors invested $150,070.
As
of March 31, 2020 and December 31, 2019, we had accrued salaries of $167,287 and $105,862, respectively, due to three of our officers.
As
of March 31, 2020 and December 31, 2019, we had accrued interest of $1,564 due to Mr. Weissberg, who is the Company’s Chairman
of the audit committee. The principal underlying the note was converted in 2014.
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
There
were no subsequent events following the period ended March 31, 2020 through the date the financial statements were issued that
would materially affect the financial statements.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATION
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. Forward-looking statements are often identified by words like believe, expect, estimate, anticipate, intend,
project and similar expressions, or words which, by their nature, refer to future events. 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.
Plan
of Operations
In
January 2014, Mr. Weissberg negotiated with Lifewave Ltd., a public company organized under the laws of the State of Israel, for
the purpose of acquiring certain of Lifewave’s IP assets pertaining to a wound healing device. The Registrant signed a patent
purchase agreement with Lifewave on January 6, 2014 (the “Agreement”), the closing of which was subject to several
material conditions, including our ability of raising equity capital sufficient to develop and commercially exploit the technology.
On
June 4, 2014, we completed the purchase of all right, title and interest to certain IP assets, including rights to a wound treatment
device. The IP assets, including the wound healing device, acquired by the Registrant are designed for wound treatment incorporating
Bioelectrical Signal Therapy (“BST Device”). The BST Device implements patented and proprietary electrical stimulation
technologies to treat hard-to-cure wounds and ulcers up to complete closure and/or cure.
Pursuant
to the Agreement, the Registrant has agreed to pay Lifewave a royalty of from 10% to 20% of the profits (as defined in the Agreement)
generated from the BST Device.
In
June 2014, the Registrant entered into an agreement with the Austen BioInnovation Institute in Akron (“ABIA” or the
“Institute”), for the purpose of bringing our BST Device to the U.S. market.
The
Company’s management selected ABIA’s Product Innovation and Commercialization Division, which has significant expertise
in wound healing, clinical trial development, and regulatory operations, to spearhead its pre-market clinical trial program, which
is necessary to apply for regulatory approval from the United States Food and Drug Administration (“FDA”) to distribute
the BST Device in the United States. As part of the Institute’s fully integrated regulatory and device development service
Offerings, ABIA will prepare on behalf of the Company an application to obtain FDA approval. The initial trial will include 70
patients in a double-arm, randomized, multi-center study to assess the safety and efficacy of the BST Device in patients with
Stage II and III pressure and venous stasis ulcers; and submit data to the FDA to obtain approval.
On
December 18, 2015, the Registrant confirmed certain information that it had received from ABIA that, while ABIA still anticipated
that it would be able to provide the Registrant with a final draft of the IDE application, ABIA had sustained financial difficulties
and key personnel losses that would likely adversely affect its ability to perform under the Agreement on a timely basis, if at
all. As a result, the Registrant requested that ABIA fully refund the monies paid to ABIA under the Agreement. In addition, the
Registrant agreed to engage a professional regulatory consultant, who was a former member of ABIA’s regulatory staff, to
serve as the Registrant’s FDA regulatory consultant on an interim basis, subject to the execution of a separate services
agreement. The Registrant is also evaluating the advisability of engaging another firm to replace ABIA, which process may be expected
to delay the IDE approval process for the BST Device.
The
Company’s success is dependent upon the successful FDA clinical trial of its BST Device. The Device may need additional
development and may never achieve safety or efficacy. The Company believes that its design and procedure show promise, but the
path to commercial success, even if development milestones are met, may take more time and might be more costly.
There
are a number of potential obstacles the Company might face, including the following:
|
●
|
We
may not be able to raise additional funds we may need to complete the clinical trials.
|
|
●
|
Competitors
may develop alternatives that render BST Device redundant or unnecessary.
|
|
●
|
We
may not have a sufficient and sustainable intellectual property position.
|
|
●
|
Our
device may be shown to have harmful side effects or other characteristics that indicate it is unlikely to be safe and effective
|
|
●
|
Our
device may not receive regulatory approval.
|
|
●
|
Even
if our device receives regulatory approval, it may not be accepted by patients, the medical community or third-party payers.
|
Recent
Developments
During
the first quarter of fiscal 2020, we were granted approval from the Helsinki committee to launch a Randomized Control Study (RCT)
on 60-100 patients in order to assess the efficacy of the BST Device on diabetic foot patients in collaboration with Clalit Health
Services Organization, Israel’s largest HMO, and the Israeli Ministry of Health (MOH). The study will be performed in 3-5
sites including leading clinics and hospitals in Israel. The Company intends to enroll the first patients to the study during
the first quarter of 2020 and expects the trial to be conducted for 12-18 months until completion.
The
Company has concluded a 35-wound, one arm clinical pilot, treating recalcitrant wounds in a leading wound clinic in Tel Aviv Israel,
with 78% of the treated wounds completely healed within 20 weeks (Avg. wound duration at the base was 8 months) and an additional
16% of the treated wounds reaching wound area reduction of greater than 75%. Only 6% of the patients had no substantial positive
clinical effect.
The
Company’s distributor in Colombia, TekMedica SAS, has successfully concluded a clinical pilot study at the Hospital de la
Samaritana in Bogota, Colombia. Starting in January 2020, Colsanitas, a leading Colombian HMO/Health insurance provider and operator
of comprehensive healthcare services in Colombia and a member of the Sanitas group worldwide, will commence a clinical pilot study
which is expected to be concluded by the end of the first half of 2020. If positive results are achieved, similar to those achieved
in the Tel Aviv clinical trials, the Company believes that it will contribute to the penetration of the BST device treatment with
Colsanitas health services in Colombia.
During
the year ended December 31, 2018, the Company raised $1,795,147 from a rights offering of a total of 9,555,468 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 Company intends
to use the proceeds of the rights offering for general corporate purposes, including working capital, capital expenditures, as
well as acquisitions and other strategic purposes. The warrants fair value is $408,093 and were valued using a Black- Scholes
valuation model.
On
February 20, 2017, the Registrant received the official certification from the Israeli Ministry of Health authorizing the use
of the Registrant’s BST Device in Israel. The BST Device implements patented and proprietary electrical stimulation technologies
to treat hard-to-cure wounds and ulcers up to complete closure and/or cure.
On
January 8, 2017, the Registrant entered into a five-year distribution agreement (the “Distribution Agreement”) with
TekMedica SAS, organized under the laws of Colombia (“TekMedica” or the “Distributor”). Pursuant to the
Distribution Agreement, the Registrant granted TekMedica the exclusive rights to distribute the Registrant’s medical device
for the treatment of chronic wounds (the “BST Device™”) and the accompanying disposable electrodes (sometimes
collectively, the “Products”) in Colombia (the “Territory”).
The
Distribution Agreement provides that Registrant will provide Distributor with supplies of the BST Devicee and disposable electrode
for treatment of patients in hospitals, long-term care facilities, medical centers and out-patient clinics. The Distributor will
make an initial advance payment to be applied against the first year’s quota together with an initial order supported by
a Letter of Credit with subsequent orders as part of the quota, as set forth in the Distribution Agreement, with minimum annual
quota’s during the five-year term. The Distributor will be responsible for securing any product certification, permit, license
or approval that may be required in the Territory for the marketing, sale, sublicensing and delivery and use of the BST Devise
and Products in the Territory.
Results
of Operations during the three months ended March 31, 2020 as compared to the three months ended March 31, 2019
We
have not generated any revenues during the three-month ended March 31, 2020 and 2019. We had operating expenses mainly related
to general and administrative expenses and research and development expenses. During the three month ended March 31, 2020, we
incurred a net loss from operations of $152,751 due to general and administrative expenses of $93,371 and research and development
expenses of $59,380 as compared to a net loss from operation of $163,122 due to general and administrative expenses of $119,541
and research and development expenses of $43,581 in the same period in the prior year.
During
the three months ended March 31, 2020 and 2019, we incurred interest expenses of $4,136 and 930, respectively.
During
the three months ended March 31, 2020 and 2019, we had a net loss of $156,887 and $164,052, respectively.
Liquidity,
Capital Resources and Strategy
On
March 31, 2020, we had total assets of $193,878 consisting of cash in the same amount. On December 31, 2019, we had total assets
of $18,278 consisting of cash in the same amount. We had total current liabilities of $334,756 as of March 31, 2020 consisting
of $1,564 in accrued interest, $167,287 in accrued salaries and $165,905 in loans payable to shareholders. We had total current
liabilities of $277,381 as of December 31, 2019 consisting of $4,050 in accounts payable, $1,564 in accrued interest, $105,862
in accrued salaries and $165,905 in loans from shareholders.
We
used $95,376 in our operating activities during the three months ended March 31, 2020, which was due to a net loss of $156,887
offset by imputed interest of $4,136 and an increase in accounts payable and accrued expenses of $57,375.
We
used $138,421 in our operating activities during the three months ended March 31, 2019, which was due to a net loss of $164,052
offset by imputed interest of $930, an increase in accounts payable and accrued expenses of $19,819 and an increase in prepaid
expenses and other assets of $4,882.
We
financed our negative cash flow from operations during the three months ended March 31, 2020 through proceeds from stock payable
of $270,976. We had no financing activities during the three months ended March 31, 2019.
We
had no investing activities during the three months ended March 31, 2020 and 2019.
The
accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United
States of America with an auditor’s going concern opinion for the years 2019 and 2018. This means that there is substantial
doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills
and meet our other financial obligations. This is because we have not generated any revenues and no revenues are anticipated.
The
Company has reported a net loss of $156,887 during the three months ended March 31, 2020 and $436,812 for the year ended December
31, 2019 and had accumulated deficits of $34,226,224 and $34,069,337 as of March 31, 2020 and December 31, 2019, respectively.
The
Company had no revenues from operations during the three months ended March 31, 2020 and 2019. As of March 31,2020, the Company
had $193,878 cash on hand and had negative working capital of $141,027.
We
believe that our current cash on hand of $193,878 as of March 31, 2020, will not be sufficient to meet our operating requirements
throughout the ensuing twelve-month period. We require additional financing at satisfactory terms and conditions, of which there
can be no assurance, in order to satisfy our ongoing capital requirements for the next twelve months in order to execute our plan
of operation as presently constituted.
We
do not expect to generate cash flow from operations unless we receive FDA approval for our BST Device.
Our
management believes that our operations will generate revenues in the US beginning of 2022. We expect that FDA approval for our
BST Device will improve our ability to generate revenues from sales in other geographic areas. Our future ability to generate
cash flows from operations will depend on the demand for our BST Device, as well as general economic, financial, competitive and
other factors, many of which are beyond our control.
If
and when we receive FDA approval of our BST Device, of which there can be no assurance, our business might not generate sufficient
future cash flow in an amount sufficient to enable us to fund our liquidity needs, including working capital, capital expenditures,
investments and other general corporate requirements.
Availability
of Additional Capital
We
have no commitments or arrangements, formal or otherwise, from any person or entity to provide us with any additional capital.
The Company may be unable to implement its present plan of operation and this could have a material adverse effect on our business,
prospects, financial condition and results of operations.
Our
future financing transactions may include the issuance of equity and/or debt securities. In the event that we seek to raise funds
through additional private placements of equity or convertible debt, the trading price of our common stock could be adversely
effected. Further, if we issue additional equity or debt securities, stockholders may experience dilution or the new equity securities
may have rights, preferences or privileges senior to those of existing holders of our common stock. We are not aware of any material
trend, event or capital commitment, which would or could potentially adversely affect our liquidity. We do not have any arrangements
with potential investors or lenders to provide us with any additional financing and there can be no assurance that any such additional
financing will be available when required in order to proceed with the business plan.
Off-Balance
Sheet Arrangements
As
of March 31, 2020 and December 31, 2019, we did not have any off-balance sheet arrangements as defined in Item 303(a)(4)(ii) of
Regulation S-K promulgated under the Securities Exchange Act of 1934.
Critical
Accounting Policies
Our
significant accounting policies are described in the notes to our financial statements for the period ended March 31, 2020, and
are included elsewhere in this quarterly report.