Company Quick10K Filing
Techcare
Closing Price ($) Shares Out (MM) Market Cap ($MM)
$0.00 35 $9
10-Q 2019-11-19 Quarter: 2019-09-30
10-Q 2019-08-13 Quarter: 2019-06-30
10-Q 2019-05-14 Quarter: 2019-03-31
10-K 2019-03-28 Annual: 2018-12-31
10-Q 2018-11-13 Quarter: 2018-09-30
10-Q 2018-08-13 Quarter: 2018-06-30
10-Q 2018-05-14 Quarter: 2018-03-31
10-K 2018-04-02 Annual: 2017-12-31
10-Q 2017-11-09 Quarter: 2017-09-30
10-Q 2017-08-07 Quarter: 2017-06-30
10-Q 2017-06-13 Quarter: 2017-03-31
10-K 2017-05-10 Annual: 2016-12-31
10-Q 2016-12-21 Quarter: 2016-09-30
10-Q 2016-08-12 Quarter: 2016-06-30
10-Q 2016-05-13 Quarter: 2016-03-31
10-K 2016-04-04 Annual: 2015-12-31
10-Q 2015-11-18 Quarter: 2015-09-30
10-Q 2015-08-12 Quarter: 2015-06-30
10-Q 2015-05-15 Quarter: 2015-03-31
10-K 2015-03-31 Annual: 2014-12-31
10-Q 2014-11-12 Quarter: 2014-09-30
10-Q 2014-08-06 Quarter: 2014-06-30
10-Q 2014-05-15 Quarter: 2014-03-31
10-K 2014-03-31 Annual: 2013-12-31
10-Q 2013-11-08 Quarter: 2013-09-30
10-Q 2013-08-08 Quarter: 2013-06-30
10-Q 2013-05-10 Quarter: 2013-03-31
10-K 2013-04-01 Annual: 2012-12-31
10-Q 2012-11-15 Quarter: 2012-09-30
10-Q 2012-08-14 Quarter: 2012-06-30
10-Q 2012-05-15 Quarter: 2012-03-31
10-K 2012-03-30 Annual: 2011-12-31
10-Q 2011-11-14 Quarter: 2011-09-30
10-Q 2011-08-12 Quarter: 2011-06-30
10-Q 2011-05-16 Quarter: 2011-03-31
10-K 2011-03-22 Annual: 2010-12-31
10-Q 2010-12-09 Quarter: 2010-09-30
8-K 2020-01-15 Other Events
8-K 2020-01-09 Enter Agreement, Sale of Shares, Exhibits
8-K 2019-10-25 Officers, Other Events
8-K 2019-10-10 Other Events
8-K 2019-09-20 Officers
8-K 2019-08-26 Enter Agreement, Sale of Shares, Amend Bylaw, Exhibits
8-K 2019-07-25 Officers
8-K 2019-04-28 Enter Agreement, Sale of Shares
8-K 2019-04-25 Accountant, Exhibits
8-K 2019-03-18 Other Events
8-K 2019-02-13 Officers
8-K 2019-01-28 Sale of Shares
8-K 2019-01-22 Enter Agreement, Sale of Shares, Officers, Exhibits
8-K 2019-01-22 Officers, Exhibits
8-K 2018-12-26 Officers
8-K 2018-11-14 Officers, Exhibits
8-K 2018-10-10 Officers
8-K 2018-07-16 Officers
8-K 2018-03-27 Amendment
8-K 2018-03-07 Officers
8-K 2018-02-21 Officers, Exhibits
8-K 2018-01-16 Sale of Shares
TECR 2019-09-30
Part I - Financial Information
Item 1. Financial Statements
Note 1: Nature of Operations and Summary of Significant Accounting Policies
Note 2: New Accounting Pronouncements
Note 3: Income Taxes
Note 4: Loss per Share
Note 5: Fair Value of Financial Instruments
Note 6: Related Party Transactions
Note 7: Subsequent Events
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Item 4. Controls and Procedures
Part II - Other Information
Item 5. Other Information
Item 6. Exhibits
EX-31.1 ex31-1.htm
EX-31.2 ex31-2.htm
EX-32.1 ex32-1.htm
EX-32.2 ex32-2.htm

Techcare Earnings 2019-09-30

TECR 10Q Quarterly Report

Balance SheetIncome StatementCash Flow

Comparables ($MM TTM)
Ticker M Cap Assets Liab Rev G Profit Net Inc EBITDA EV G Margin EV/EBITDA ROA
WIZD 9 1 7 11 2 -3 -3 9 18% -3.1 -192%
SYEV 9 4 1 3 1 0 0 7 51% 25.0 5%
STLY 9 15 0 0 0 2 2 7 3.4 14%
TECR 9 1 0 0 -0 -2 -2 9 -17% -3.9 -286%
ARCK 9 18 19 16 3 -1 0 9 18% 708.6 -5%
WLKR 9 0 0 -2 -2 9 -5.7 156,300,000%
TBTC 9 7 3 6 5 1 1 9 90% 11.5 8%
GTII 9 0 6 0 0 -3 -3 9 -2.8 -1,271%
RGUS 9 0 3 0 0 -2 -2 10 0% -5.1 -3,192%
HHER 9 7 1 12 5 -7 -7 8 43% -1.2 -107%

10-Q 1 form10-q.htm

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

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

 

For the Quarterly Period Ended: September 30, 2019

or

 

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

 

For the transition period from ________________ to ________________

 

Commission file number: 000-55680

 

TECHCARE CORP.

(Exact Name Of Registrant As Specified In Its Charter)

 

Delaware   68-0080601
(State of Incorporation)   (I.R.S. Employer Identification No.)

 

1140 Avenue of the Americas, New York, NY   10036
(Address of Principal Executive Offices)   (ZIP Code)

 

+ (972) 3 750-3060 or (646) 380-6645
Registrant’s Telephone Number, Including Area Code:

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). [X] Yes [  ] No

 

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

 

Large accelerated filer [  ] Accelerated filer [  ] Non-Accelerated filer [X] Smaller reporting company [X]
Emerging Growth Company [  ]      

 

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

 

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

 

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

 

Title of each class   Trading Symbol(s)   Name of exchange on which registered
Common stock, par value $0.0001 per share   TECR   OTCQB

 

On November 17, 2019, the registrant had 35,449,398 shares of common stock outstanding.

 

 

 

   
 

 

TABLE OF CONTENTS

 

Item   Description   Page
         
    PART I - FINANCIAL INFORMATION    
         
ITEM 1.   FINANCIAL STATEMENTS (UNAUDITED).    
    Condensed Consolidated Balance Sheets   3
    Condensed Consolidated Statements of Operations   4
    Condensed Consolidated Statements of Changes in Stockholders’ Equity   5-6
    Condensed Consolidated Statements of Cash Flows   7
    Notes to Unaudited Financial Statements   8
ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF OPERATIONS.   14
ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.   19
ITEM 4.   CONTROLS AND PROCEDURES.   19
         
    PART II - OTHER INFORMATION    
         
ITEM 5.   OTHER INFORMATION.   20
ITEM 6.   EXHIBITS.   20
    SIGNATURES.   21

 

2
 

 

PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

TechCare Corp.

Condensed Consolidated Balance Sheets

As of September 30, 2019 and December 31, 2018

(Unaudited)

 

   September 30, 2019   December 31, 2018 
Assets          
Current assets:          
Cash and cash equivalents  $125,691   $474,715 
Inventory   197,578    248,912 
Accounts receivable   31,615    13,462 
Inventory subject to refund   3,465    44,529 
Other receivables   15,360    176,583 
Total current assets   373,709    958,201 
           
Non-current assets:          
Severance pay fund, net   18,091    - 
Long-term deposits   11,746    11,366 
Operating lease right of use asset, net   107,512    - 
Property and equipment, net   155,509    161,401 
Total non-current assets   292,858    172,767 
Total assets  $666,567   $1,130,968 
           
Liabilities and Stockholders’ Equity          
Current liabilities:          
Accounts payable and accrued expenses  $163,593   $231,311 
Note payable   80,026    80,026 
Current maturities of long-term operating lease liability   23,990    - 
Derivative liability   763    - 
Refund liability   1,827    73,464 
Total current liabilities   270,199    384,801 
           
Non-current liability:          
Lease operating liability   83,522    - 
Liability for severance pay, net   -    4,713 
Total liabilities   353,721    389,514 
           
Redeemable preferred stock:          
Redeemable Series A preferred stock, par value $0.0001 per share
12,413,794 shares authorized; 8,275,862 and 0 issued and
outstanding at September 30, 2019 and December 31, 2018,
respectively
   240,000    - 
           
Stockholders’ equity:          

Preferred stock, par value $0.0001 per share, 50,000,000 shares authorized; none issued and outstanding at September 30, 2019 and December 31, 2018, respectively

   -    - 
Common stock, par value $0.0001 per share, 500,000,000 shares authorized; 35,449,398 and 33,212,036 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively   3,545    3,322 
Accumulated other comprehensive income   122,180    106,870 
Additional paid-in capital   9,987,533    9,329,419 
Stock to be issued   30,000    30,000 
Accumulated deficit   (10,070,412)   (8,728,157)
Total stockholders’ equity   72,846    741,454 
Total liabilities and stockholders’ equity  $666,567   $1,130,968 

 

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

 

3
 

 

TechCare Corp.

Condensed Consolidated Statements of Operations and Comprehensive loss

For the Nine and Three Month Periods ended September 30, 2019 and 2018

(Unaudited)

 

   Nine months ended   Three months ended 
   September 30,   September 30, 
   2019   2018   2019   2018 
                 
Revenues   120,849    188,809    35,652    90,367 
Cost of revenues   150,384    128,842    32,656    71,224 
Gross profit (loss)   (29,535)   59,967    2,996    19,143 
                     
Research and development expenses   114,511    191,316    34,479    143,400 
Marketing, general and administrative expenses   1,177,133    1,489,784    365,806    522,864 
Change in fair value of option liability   (6,944)   (132,470)   (6,944)   - 
Operating loss   1,314,235    1,488,663    390,345    647,121 
                     
Financial expenses (income), net   28,020    26,265    15,314    9,110 
                     
Net loss  $1,342,255    1,514,928    405,659    656,231 
                     
Net loss per common stock:                    
Basic  $(0.04)   (0.05)   (0.01)   (0.02)
                     
Weighted average number of common stock outstanding:                    
Basic   34,680,182    31,709,944    35,449,398    32,529,717 
                     
Comprehensive loss:                    
Net loss   1,342,255    1,514,928    405,659    656,231 
Other comprehensive loss (income) attributable to foreign currency translation   (15,311)   (7,003)   (5,777)   8,702 
Comprehensive loss   1,326,944    1,507,925    399,882    664,933 

 

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

 

4
 

 

TechCare Corp.

Condensed Consolidated Statements of changes in Stockholders’ Equity

(Unaudited)

 

Consolidated statements of stockholders’ equity for nine months ended September 30, 2019:

 

   Common Stock   Additional Paid-in   Stock To Be    Accumulated   Accumulated Other
Comprehensive
   Total  
   Stock   Amount   Capital   Issued   Deficit   Income   Stockholders’ 
Balance at December 31, 2018   33,212,036    3,322    9,329,419    30,000    (8,728,157)   106,870    741,454 
Issuance of common stock   2,237,362    223    457,232    -    -    -    449,748 
Option liability   -    -    (7,707)   -    -    -    (7,707)
Waiver of fee by related party   -    -    199,237    -    -    -    199,237 
Stock-based compensation   -    -    9,352    -    -    -    9,352 
Other comprehensive income   -    -    -    -    -    15,310    15,310 
Net loss for the period   -    -    -    -    (1,342,255)   -    (1,342,255)
Balance at September 30, 2019   35,449,400    3,545    9,987,533    30,000    (10,070,412)   122,180    72,846 

 

Consolidated statements of stockholders’ equity for nine months ended September 30, 2018:

 

   Common Stock   Additional
Paid-in
   Stock To Be   Accumulated   Accumulated
Other Comprehensive
   Total Stockholders’ 
   Stock   Amount   Capital   Issued   Deficit   Income   Equity 
Balance at December 31, 2017   25,835,401    2,584    6,945,151    30,000    (6,571,083)   104,777    511,429 
Issuance of common stock and warrants, net   4,113,695    411    1,591,591    -    -    -    1,592,002 
Other comprehensive income   -    -    -    -    -    7,003    7,003 
Stock-based compensation   -    -    27,544    -    -    -    27,544 
Funds Received for Shares   -    -    -    30,000    -    -    30,000 
Net loss for the period   -    -    -    -    (1,514,928)   -    (1,514,928)
Balance at September 30, 2018   29,949,096    2,995    8,564,286    60,000    (8,086,011)   111,780    653,050 

 

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

 

5
 

 

TechCare Corp.

Condensed Consolidated Statements of changes in Stockholders’ Equity

(Unaudited)

 

Consolidated statements of stockholders’ equity for three months ended September 30, 2019:

 

    Common Stock   Additional
Paid-in
   Stock To Be   Accumulated   Accumulated Other Comprehensive   Total Stockholders’ 
    Stock   Amount   Capital   Issued   Deficit   Income   Equity 
Balance at June 30, 2019    35,449,400   $3,545    9,931,207    30,000    (9,664,753)  $116,403  $416,404 
Waiver of fee by related party    -    -    54,339    -    -    -    54,339 
Stock-based compensation    -    -    3,117    -    -    -    3,117 
Option liability    -    -    (1,130)   -    -    -    (1,130)
Other comprehensive income    -    -    -    -    -    5,777    5,777 
Net loss for the period    -    -    -    -    (405,659)   -    (405,659)
Balance at September 30, 2019    35,449,400    3,545    9,987,533    30,000    (10,070,412)   122,180    72,846 

 

Consolidated statements of stockholders’ equity for three months ended September 30, 2018:

 

   Common Stock   Additional
Paid-in
   Stock To Be   Accumulated   Accumulated
Other Comprehensive
   Total Stockholders’ 
   Stock   Amount   Capital   Issued   Deficit   Income   Equity 
Balance at June 30, 2018   28,160,982    2,816    7,863,463    72,000    (7,429,780)   103,078    611,577 
Funds Received for Shares   1,788,114    179    691,821    -    -    -    692,000 
Stock-based compensation   -    -    9,002    -    -    -    9,002 
Funds Received for Shares   -    -    -    (12,000)   -    -    (12,000)
Other comprehensive income (expenses)   -    -    -    -    -    8,702    8,702 
Net loss for the period   -    -         -    (656,231)   -    (656,231)
Balance at September 30, 2018   29,949,096    2,995    8,564,286    60,000    (8,086,011)   111,780    653,050 

 

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

 

6
 

 

TechCare Corp.

Condensed Consolidated Statements of Cash Flows

For the Nine Month Periods ended September 30, 2019 and 2018

(Unaudited)

 

   Nine months ended 
   September 30, 
   2019   2018 
Cash flows from operating activities:          
Net loss  $(1,342,255)   (1,514,928)
Adjustments to reconcile net loss to net cash used in operating activities:          
Depreciation   21,811    17,681
Change in fair value of option liability   (6,944)   (132,470)
Right of use asset depreciation   11,242    - 
Finance expenses, net   999    - 
Inventory subject to refund   43,157    - 
Management fee waiver   199,237    - 
Stock-based compensation   9,352    27,544 
Changes in operating assets and liabilities:          
Lease liability   (12,241)   - 
Accounts receivables   (16,949)   (172,917)
Other receivables   169,222    (137,960)
Inventory   68,362    (120,978)
Accounts payable and accrued expenses   (82,609)   151,413 
Refund liability   (74,994)   107,088 
Severance payment, net   (22,791)   (3,129)
Net cash used in operating activities   (1,035,423)   (1,778,656)
           
Cash flow from investing activities:          
Purchase of fixed assets   (3,888)   (59,009)
Long-term deposit   603    - 
Net cash used in investing activities   (3,285)   (59,009)
           
Cash flow from financing activities:          
Proceeds from issuance of common stock and warrants, net   698,585    1,592,000 
Proceeds from stock to be issued   -    30,000 
Net cash provided by financing activities   698,585    1,622,000 
           
Effect of exchange rates on cash and cash equivalents   (8,901)   10,342 
Net decrease in cash and cash equivalents   (349,024)   (205,323)
           
Cash and cash equivalents - beginning of period   474,715    589,818 
Cash and cash equivalents - end of period  $125,691    384,495 

 

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

 

7
 

 

TechCare Corp.

Notes to Condensed Consolidated Financial Statements

September 30, 2019

(Unaudited)

 

NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

A. Nature of operations

 

TechCare Corp. (“Techcare” or the “Company”) was incorporated under the laws of the State of Delaware on May 26, 2010. The Company’s common stock is traded in the United States on the OTCQB market under the ticker symbol “TECR.”

 

On February 8, 2016, the Company signed a Merger Agreement with Novomic Ltd. (“Novomic”), a private company incorporated under the laws of the state of Israel. The closing of the merger took place on August 9, 2016, pursuant to which Novomic became a wholly-owned subsidiary of the Company.

 

Novomic was incorporated as a private company in Israel in 2009. Since inception, Novomic has been a technology company engaged in the design, development, and commercialization of a unique delivery platform utilizing vaporization of various natural compounds for multiple health, beauty and wellness applications. Novomic’s delivery platform is proprietary and patented.

 

Novomic’s first product is Novokid® - an innovative home use device which vaporizes a natural, plant-based, pesticides and silicone-free compound that effectively treats head lice and eggs. The Novokid® kit includes a vaporizer, treatment capsules and treatment cap alongside ancillary components. Novokid® is currently being sold in Israel and the Netherlands.

 

Novomic is currently working on the research and development of future product offerings for its delivery platform, including Shine, a revolutionary cosmetic device for the treatment and rejuvenation of the hair and scalp.

 

The Company operates in one operating segment and substantially all assets of the Company and subsidiary are located in Israel.

 

Going Concern

 

During the period ended September 30, 2019, the Company had a total comprehensive loss of $1.3 million and had incurred $1 million loss from operating cash flow. As of September 30, 2019, the Company incurred accumulated losses of approximately $10 million. Based on the projected cash flows and Company’s cash balance as of September 30, 2019, the Company’s management is of the opinion that without further fundraising it will not have sufficient resources to enable it to continue advancing its activities including the development, manufacturing, and marketing of its products for a period of at least 12 months from the date of issuance of these financial statements. As a result, there is substantial doubt about the Company’s ability to continue as a going concern.

 

Management’s plans include the continued commercialization of their products, to continue taking cost reduction steps and securing sufficient financing through the sale of additional equity securities, debt or capital inflows from strategic partnerships and exploring strategic alternatives to enhance stockholder value, which may include future acquisitions, a merger with another company, a potential sale of certain assets, including Novomic, or the sale of the Company as a public shell company. There are no assurances, however, that the Company will be successful in obtaining the level of financing needed for its operations. If the Company is unsuccessful in commercializing its products and securing sufficient financing, it may need to reduce activities, or curtail or cease operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

8
 

 

TechCare Corp.

Notes to Condensed Consolidated Financial Statements

September 30, 2019

(Unaudited)

 

NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.):

 

B. Summary of significant accounting policies

 

The accounting policies adopted are consistent with those of the previous financial year.

 

Basis of Presentation

 

The accompanying unaudited condensed consolidated financial statements and condensed footnotes have been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by the accounting principles generally accepted in the United States of America (“U.S. GAAP”), for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring items) considered necessary for fair statement of results for the interim periods presented have been included. The results of operations for nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the period or for future years. The consolidated balance sheet as of December 31, 2018 is derived from audited financial statements as of that date; however, it does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018, which was filed with the SEC on March 28, 2019.

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of TechCare, and its subsidiary, Novomic. All intercompany accounts and transactions have been eliminated in consolidation.

 

Use of Estimates

 

The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from those estimates.

 

Functional Currency and Foreign Currency Translation and Transactions.

 

The currency of the primary economic environment in which the operations of the Company and its subsidiary are conducted is the New Israeli Shekel (“NIS”).

 

The presentation currency of the financial statements is the U.S. dollar. Assets and liabilities are translated at year-end exchange rates, while revenues and expenses are translated at actual exchange rates during the year. Differences resulting from translation are presented in equity, under accumulated other comprehensive income (loss). Gains and losses arising from foreign currency transactions of monetary balances denominated in non-functional currencies are reflected in financial income (expense), net in the consolidated statements of operations and comprehensive loss.

 

Financial expenses (income), net in the consolidated statements of operations and comprehensive loss comprised mainly of exchange rate differentials.

 

9
 

 

TechCare Corp.

Notes to Condensed Consolidated Financial Statements

September 30, 2019

(Unaudited)

 

NOTE 1: NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Cont.):

 

B. Summary of significant accounting policies (Cont.):

 

Impairment of long-lived assets

 

Long-lived assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. In the event that the sum of the expected future undiscounted cash flows expected to be generated by the long-lived assets is less than the carrying amount of such assets, an impairment charge would be recognized and the assets would be written down to their estimated fair values. During the periods ended September 30, 2019, and 2018, no impairment was recorded.

 

Fair Value Measurements

 

Fair value is defined 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. A hierarchy has been established for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that are developed using market data, such as publicly available information about actual events or transactions, and that reflect the assumptions that market participants would use when pricing the asset or liability. Unobservable inputs are inputs for which market data are not available and that are developed using the best information available about the assumptions that market participants would use when pricing the asset or liability. The fair value hierarchy categorizes into three levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity can access at the measurement date. Level 2 inputs include inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs). Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

 

Preferred stock subject to possible redemption

 

The Company’s Series A convertible preferred stock includes certain redemption rights that are not considered to be solely within the Company’s control. The Company accounted for its contingently redeemable preferred stock in accordance with Accounting Standard Codification Topic 480, “Distinguishing Liabilities from Equity, and classified them accordingly as temporary equity (mezzanine equity).” The Series A convertible preferred stock are presented at their redemption value, outside of stockholders’ equity. The Company classified the call options that permits the holder of Series A convertible preferred stock to compel the purchase its contingently redeemable preferred stock as a liability.

 

10
 

 

TechCare Corp.

Notes to Condensed Consolidated Financial Statements

September 30, 2019

(Unaudited)

 

NOTE 2: NEW ACCOUNTING PRONOUNCEMENTS

 

Accounting Pronouncements Adopted in Current Period

 

In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-02 “Leases.” The guidance establishes a right-of-use (“ROU”) model that requires a lessee to recognize an ROU asset and lease liability on the balance sheet for all leases with a term longer than 12 months. Leases are classified as finance or operating, with classification affecting the pattern and classification of expense recognition in the income statement. The guidance became effective on January 1, 2019. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. The adoption of this standard did not have a material effect on the Company’s financial statements.

 

The Company adopted the new accounting standard Accounting Standards Codification 842 “Leases,” and all the related amendments, on January 1, 2019 and used the standard’s effective date as the Company’s date of initial application. Consequently, financial information was not updated and the disclosures required under the new standard are not provided for dates and periods before January 1, 2019. The new standard also provides practical expedients for an entity’s ongoing accounting. The adoption of this standard did not have a material effect on the Company’s financial statements. On January 1, 2019, the Company recognized ROU assets of approximately $113 thousand and lease liabilities of approximately $113 thousand for its operating leases of real estate and vehicles. The adoption of this standard did not have a material impact on the Company’s consolidated statements of income and consolidated statements of cash flows.

 

NOTE 3: INCOME TAXES

 

a. Basis of taxation

 

The Company and its subsidiary are taxed under the domestic tax laws of the jurisdiction of incorporation of each entity (United States and Israel).

 

b. Carryforward Tax Losses

 

Carryforward Tax Losses of the Company as of September 30, 2019, amounted to approximately $0.5 million. Carryforward Tax Losses of Novomic amounted to approximately $6.8 million. A full valuation allowance was created against these carry forward tax losses since the realization of any future benefit from these net operating losses cannot be sufficiently assured at September 30, 2019.

 

NOTE 4: LOSS PER SHARE

 

Loss per share is based on the loss that is attributed to the aggregate number of outstanding shares of common stock, divided by the weighted average number of shares of common stock in issue during the period.

 

11
 

 

TechCare Corp.

Notes to Condensed Consolidated Financial Statements

September 30, 2019

(Unaudited)

 

NOTE 5: FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The carrying amount of the Company’s financial instruments, including cash equivalents, accounts receivable and other current assets, accounts payable and accrued liabilities and note payable approximate their fair value, due to their short term in nature and their carrying amounts approximates the amounts expected to be received or paid.

 

A hierarchy has been established for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. The Company accounts for option liability as Level 3 since its inputs are unobservable inputs for the liability.

 

The following table is a reconciliation of the change for the financial liability where fair value measurement is estimated utilizing Level 3 inputs:

 

   2019   2018 
   US dollar   US dollar 
Fair value as of January 1  $-    132,470 
Issuance of a derivative liability   7,707    - 
Change in fair value recognized in statement of operations and comprehensive loss   (6,944)   (132,470)
Fair value as of September 30  $763    - 

 

NOTE 6: RELATED PARTY TRANSACTIONS

 

a. On May 31, 2015, the Company entered into a consulting agreement with Mr. Yossef De-Levy, a member of the Company’s Board. Pursuant to the consulting agreement, Mr. De-Levy receives a gross monthly amount of NIS 10,000 (approximately $2,900). The foregoing payment is in addition to, and independent of, the fee that Mr. De-Levy is entitled to receive for continued services as a member of the Board. In March 2019 and April 2019, the Company entered into amendments to the consulting agreement, pursuant to which the monthly retainer was waived commencing on November 15, 2018, through December 31, 2019. The Company recorded the expense against equity.
   
b. On December 31, 2015, the Company entered into a consulting agreement with Zvi Yemini, the Company’s Chairman of the Board and with his affiliated entity Y.M.Y Industry Ltd. (“YMY”). Pursuant to the consulting agreement, Mr. Yemini received a gross monthly amount of NIS 24,000 (approximately $6,200). The foregoing payment is in addition to, and independent of, the fee that Mr. Yemini is entitled to receive for continued services as a member of the Board. On February 22, 2017, the Company signed an amendment to the original agreement with Mr. Yemini and YMY. Pursuant to the amendment, Mr. Yemini’s monthly payment was increased to NIS 45,000 (approximately $13,000) starting February 2017. In March 2019 and April 2019, the Company entered into amendments to the consulting agreement, pursuant to which the monthly retainer was waived commencing on November 15, 2018, through December 31, 2019. The Company recorded the expense against equity.
   
c. On July 31, 2016, the Company entered into a consulting agreement with Mr. Oren Traistman, a member of the Board. Pursuant to the consulting agreement, Mr. Traistman receives a gross monthly amount of NIS 10,000 (approximately $2,900). In March 2019 and April 2019, the Company entered into an amendment to the consulting agreement, pursuant to which the monthly retainer was waived commencing on November 15, 2018 through December 31, 2019. The Company recorded the expense against equity.
   
d. On December 31, 2017, the Company entered into a consulting agreement with Mr. Ran Tuttnauer, a member of the advisory Board. Pursuant to the consulting agreement, Mr. Tuttnauer receives a gross monthly amount of $2,000. In March 2019 and April 2019, the Company entered into an amendment to the consulting agreement, pursuant to which the monthly retainer was waived commencing on November 15, 2018 through August 31, 2019. In April 2019 the consulting agreement was terminated, The Company recorded the expense against equity.

 

12
 

 

TechCare Corp.

Notes to Condensed Consolidated Financial Statements

September 30, 2019

(Unaudited)

 

e.

On April 28, 2019, the Company entered into a form of Securities Purchase Agreement with each of Y.M.Y. Industry Ltd. (“YMY”), Traistman Radziejewski Fundacja Ltd. (“TRF”) and Microdel Ltd. relating to an offering of an aggregate of 1,229,508 shares of the Company’s common stock at a purchase price of $0.183 per share for aggregate gross proceeds of approximately $225,000. In addition, the Company granted the investors an option, for a period of twelve months, to purchase up to an additional 375,001 shares of common stock at a price per share of $0.60, for additional aggregate consideration of $225,000. The closing of the offering took place on April 29, 2019. The option was classified as a derivative financial liability and are re-measured each reporting date, with changes in fair value recognized in finance expense (income), net, since the exercise price of the warrants is denominated in USD and the functional currency of the Company is the NIS.

   
f.

On August 20, 2019, the Company entered into an additional form of securities purchase agreement with YMY and TRF, relating to an offering of an aggregate of 8,275,862 shares of the Company’s newly designated Series A Convertible Preferred Stock at a purchase price of $0.029 per share for aggregate gross proceeds of approximately $240,000. In addition, the Company granted YMY and TRF an option, for a period of twelve months, to purchase an additional 400,000 Series A Convertible Preferred Stock, in the aggregate, at a price per share of $0.60, for additional aggregate consideration of $240,000. The closing of the offering took place on August 29, 2019. Proceeds from issuance were allocated on a relative fair value basis between the preferred stock and the freestanding call option issued to purchase the Company’s preferred stock.

 

The option was classified as a derivative financial liability and are re-measured each reporting date, with changes in fair value recognized in finance expense (income), net, since the exercise price of the warrants is denominated in USD and the functional currency of the Company is the NIS.

 

NOTE 7: SUBSEQUENT EVENTS

 

On October 6, 2019, Mrs. Osnat Philipp, the Chief Executive Officer of Novomic, and the Company jointly agreed to terminate her employment agreement. Mrs. Philipp continued providing her services to Novomic as required under Israeli law until October 30, 2019.. Mrs. Philipp’s resignation was not as a result of any disagreement or dispute with either the Company or Novomic.

 

On October 22, 2019, Mrs. Tali Dinar, the Chief Financial Officer of the Company, and the Company, jointly agreed to extend Mr. Dinar terminate notice period. Mrs. Dinar will continue to provide her services to the Company as required under Israeli law until December 22, 2019, unless otherwise agreed to by Mrs. Dinar and the Company.

 

On October 23, 2019, Novomic appointed Idan Traitsman to serve as the Chief Executive Officer of Novomic, effective immediately. In connection with Mr. Traitsman’s appointment, the Company agreed to pay Mr. Traitsman a monthly salary of NIS 10,000 (approximately $2,800) plus VAT.

 

On November 17, 2019, the Company entered into a form of securities purchase agreement with YMY and TRF, relating to an offering of an aggregate of 3,000,000 shares of the Company’s newly designated Series A Convertible Preferred Stock at a purchase price of $0.029 per share for aggregate gross proceeds of approximately $87,000. In addition, the Company granted YMY and TRF an option, for a period of twelve months, to purchase up to an additional 145,000 Series A Convertible Preferred Stock, in the aggregate, at a price per share of $0.60, for additional aggregate consideration of $87,000. The option was classified as a derivative financial liability and are re-measured each reporting date, with changes in fair value recognized in finance expense (income), net, since the exercise price of the warrants is denominated in USD and the functional currency of the Company is the NIS.

 

13
 

 

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

 

FORWARD-LOOKING STATEMENTS

 

This Quarterly Report on Form 10-Q contains certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and other Federal securities laws, and is subject to the safe-harbor created by such Act and laws. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of such terms, or other variations thereon or comparable terminology. The statements herein and their implications are merely predictions and therefore inherently subject to known and unknown risks, uncertainties, assumptions and other factors that may cause actual results, performance levels of activity, or our achievements, or industry results to be materially different from those contemplated by the forward-looking statements. Such forward-looking statements appear in this Item 2 – “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and may appear elsewhere in this Quarterly Report on Form 10-Q and include, but are not limited to, statements regarding the following:

 

  our plan to execute our strategy, including but limited to, exploring strategic alternatives, which may include future acquisitions, a merger with another company, a potential sale of certain assets, including Novomic, or the sale of the public company as a shell company;
     
  our expectations regarding our short- and long-term capital requirements;
     
  our outlook for the coming months and future periods, including but not limited to our expectations regarding future revenue and expenses;
     
  our ability and the effects, if any, of a manufacture cost reduction program;
     
  achieving regulatory approvals;
     
  the proposed joint venture of a Chinese entity in accordance with a joint venture agreement;
     
  our outlook for the coming months and future periods, including but not limited to our expectations regarding future revenue and expenses; and
     
  information with respect to any other plans and strategies for our business.

 

Our business and operations are subject to substantial risks, which increase the uncertainty inherent in the forward-looking statements contained in this report.

 

14
 

 

In addition, historic results of scientific research, clinical and preclinical trials do not guarantee that the conclusions of future research or trials would not suggest different conclusions. Also, historic results referred to in this periodic report would be interpreted differently in light of additional research, clinical and preclinical trials results. Except as required by law, we undertake no obligation to release publicly the result of any revision to these forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events. Further information on potential factors that could affect our business is described under the heading “Risk Factors” in Part I, Item 1A, of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018, or the 2018 Annual Report. Readers are also urged to carefully review and consider the various disclosures we have made in that report.

 

As used in this quarterly report, the terms “we”, “us”, “our”, the “Company” and “TechCare” mean TechCare Corp. and our wholly owned subsidiary, Novomic Ltd., unless otherwise indicated or as otherwise required by the context.

 

Overview and Recent Developments

 

We are a technology company engaged in the design, development and commercialization of a unique delivery platform utilizing vaporization of various natural compounds for multiple health, beauty and wellness applications. Our delivery platform is proprietary and patented.

 

Our current product offering includes Novokid® - an innovative home use device which vaporizes a natural, plant-based, pesticides, and silicone-free compound that effectively treats head lice and eggs. Following our soft launch of Novokid® in the Netherlands, we expanded our distribution network and launched Novokid in Israel during late May 2018 through Super Pharm, Israel’s largest and leading drugstore chain. The launch was accompanied by a radio and digital brand awareness and marketing campaign and supported by Meditrend, an Israeli distributor, specializing in health and wellness products while representing leading brands. On September 15, 2019, the Company terminated the agreement with its existing distributer and began selling the Novokid product directly to Super Pharm.

 

We believe that we will continue to experience losses and increased negative working capital and negative cash flows in the near future and will not be able to return to positive cash flow without either obtaining additional financing in the near term or completing a business transaction. Failure to obtain the necessary capital at acceptable terms, if at all, when needed, may force us to delay, limit, or terminate our product development efforts and adversely effect our ability to secure regulatory approvals and would adversely impact our planned research and development efforts in connection with our future products, which may make it more difficult for us to attain profitability.

 

Our Board of Directors is exploring strategic alternatives to enhance stockholder value, which may include future acquisitions, a merger with another company, a potential sale of certain assets, including Novomic, or the sale of the Company as a public shell company.

 

15
 

 

In January 2019, we entered into a joint venture agreement with a Chinese partner for the formation of a Chinese joint venture intended to focus on the development of comprehensive and broad range of health, wellness, beauty and home products for customers by utilizing our patented technology of vaporization of natural and plant-based compounds. The joint venture intends to sell its products in the Greater China region, including mainland China, Hong Kong, Macao, and Taiwan, directly or through others. We are currently working with our Chinese Partner on the formation of the Chinese joint venture entity.

 

On March 13, 2019, we issued and sold to ICB Biotechnology Investments Ltd. (“ICB”) 957,854 shares of our common stock for a price per share of $0.261, for aggregate consideration of $250 thousand. In accordance with the terms of the subscription agreement, upon the formation of a joint venture with China-Israel Biological Technology Co. Ltd., (“CIBD”) the parent company of ICB, and the transfer of the relevant intellectual property rights to the joint venture, we will issue and sell to ICB an additional 957,854 Shares for an additional investment amount of $250 thousand (the “Additional Investment”). In addition, subject to the consummation of the Additional Investment, we will grant ICB an option to purchase up to additional 833,333 shares of our common stock at a price per share of $0.60, for aggregate consideration of up to $1 million. To date, the Company has met all of the milestones required for the closing of the Additional Investment. Currently, there is no guarantee that the Company will be able to close on the Additional Investment.

 

On April 28, 2019, we entered into a form of securities purchase agreement with each of Y.M.Y. Industry Ltd. (“YMY”), Traistman Radziejewski Fundacja Ltd. (“TRF”) and Microdel Ltd. (“Microdel” and collectively, the “Investors”) relating to an offering of sale of an aggregate of 1,229,508 shares of our common stock at a purchase price of $0.183 per share for aggregate gross proceeds of approximately $225 thousand. In addition, we granted the Investors an option, for a period of twelve months, to purchase up to an additional 375,001 shares of common stock at a price per share of $0.60, for additional aggregate consideration of $225 thousand. The closing of the offering took place on April 29, 2019. The option was classified as a derivative financial liability and are re-measured each reporting date, with changes in fair value recognized in finance expense (income), net, since the exercise price of the warrants is denominated in USD and the functional currency of the Company is the NIS.

 

On August 20, 2019, we entered into an additional form of securities purchase agreement with YMY and TRF, relating to an offering of an aggregate of 8,275,862 shares of the Company’s newly designated Series A Convertible Preferred Stock at a purchase price of $0.029 per share for aggregate gross proceeds of approximately $240 thousand. In addition, the Company granted YMY and TRF an option, for a period of twelve months, to purchase additional 400,000 Series A Convertible Preferred Stock, in the aggregate, at a price per share of $0.60, for additional aggregate consideration of $240 thousand. The closing of the offering took place on August 29, 2019. The option was classified as a derivative financial liability and are re-measured each reporting date, with changes in fair value recognized in finance expense (income), net, since the exercise price of the warrants is denominated in USD and the functional currency of the Company is the NIS.

 

On November 17, 2019, we entered into a form of securities purchase agreement with YMY and TRF, relating to an offering of an aggregate of 3,000,000 shares of the Company’s newly designated Series A Convertible Preferred Stock at a purchase price of $0.029 per share for aggregate gross proceeds of approximately $87,000. In addition, the Company granted YMY and TRF an option, for a period of twelve months, to purchase up to an additional 145,000 Series A Convertible Preferred Stock, in the aggregate, at a price per share of $0.60, for additional aggregate consideration of $87,000.

 

Results of Operations during the three and nine months ended September 30, 2019 as compared to the three and nine months ended September 30, 2018

 

Revenues

 

During the three and nine months ended September 30, 2019, we generated $36 and $121 thousand in revenues, compared to $90 and $189 thousand in revenues in the three and nine months ended September 30, 2018. The decrease is mainly attributable to a decrease in the sales of our products.

 

Gross Profit

 

Our gross profit (loss) during the three and nine months ended September 30, 2019, were $3 and $(30) thousand, compared to $19 and $60 thousand in the three and nine months ended September 30, 2018. The decrease is mainly attributable to decrease in the sales volume and a decrease in inventory value.

 

16
 

 

Research and Development Expenses

 

Our research and development expenses during the three and nine months ended September 30, 2019 were $34 thousand and $115 thousand and all expenses resulted from ongoing research and development expenses.

 

Our research and development expenses during the three and nine months ended September 30, 2018 were $143 thousand and $191 thousand. The decrease is mainly attributable to decrease in expenses related to the lice product.

 

Marketing, General and Administrative Expenses

 

Our marketing, general and administrative expenses during the three and nine months ended September 30, 2019 were $365 thousand and $1,177 thousand and were comprised mainly of $819 thousand in payroll and payments to consultants for the nine months ended September 30, 2019. Our marketing, general and administrative expenses during the three and nine months ended September 30, 2018 were $523 thousand and $1,490 thousand and were comprised mainly of $881 thousand in payroll and payments to consultants and professional services for the nine months ended September 30, 2018. The decrease in our marketing, general and administrative expenses is mainly attributable to a decrease in marketing expenses and professional services.

 

Net Loss

 

During the three and nine months ended September 30, 2019 we incurred a net loss of $406 thousand and $1,342 thousand. During the three and nine months ended September 30, 2018, we incurred a net loss of $656 thousand and $1,515 thousand. The decrease in net loss is mainly attributable to a decrease in operating expenses.

 

Liquidity and Capital Resources

 

Our balance sheet as of September 30, 2019 reflects total assets of $666 thousand, consisting mainly of cash and cash equivalents in the amount of approximately $126 thousand, inventory of approximately $198 thousand and property and equipment, net of approximately $156 thousand. As of December 31, 2018, our balance sheet reflects total assets of approximately $1,131 thousand consisting mainly of cash and cash equivalents in the amount of approximately $475 thousand, inventory in the amount of approximately $249 thousand, other receivables of approximately $177 thousand and property and equipment net, of approximately $161 thousand.

 

As of September 30, 2019, we had total current liabilities of approximately $270 thousand, consisting mainly of accounts payable and accrued expenses of approximately $164 thousand and a note payable of approximately $80 thousand. As of December 31, 2018, we had total current liabilities of approximately $385 thousand consisting mainly of accounts payable and accrued expenses of approximately $231 thousand and a note payable of approximately $80 thousand.

 

As of September 30, 2019, we had positive working capital of approximately $104 thousand, compared to positive working capital of approximately $573 thousand at December 31, 2018. The working capital has been sufficient to sustain our operations to date, although there is substantial doubt about our ability to continue as going concern. Our total liabilities as of September 30, 2019 were approximately $354 thousand, compared to approximately $390 thousand at December 31, 2018.

 

During the nine months ended September 30, 2019, we used approximately $1,035 thousands of cash in our operating activities. This resulted mainly from an overall net loss of approximately $1,342 thousand, a decrease in other receivables of approximately $169 thousand and a decrease in inventory of approximately $68 thousand. During the nine months ended September 30, 2018, we used approximately $1,779 thousand of cash in our operating activities. This resulted mainly from an overall net loss of approximately $1,515 thousand, an increase in accounts payable and accrued expenses of approximately $151 thousand and an increase in inventory of approximately $121 thousand.

 

During the nine months ended September 30, 2019, we used approximately $3 thousand in our investing activities, as compared to approximately $59 thousand in the same period in the prior year.

 

During the nine months ended September 30, 2019, our financing activities provided us with $697 thousand, as compared to $1,622 thousand in the same period in the prior year, through the issuance of common stock.

 

17
 

 

On March 13, 2019, we issued and sold to ICB 957,854 shares of our common stock at a price per share of $0.261, for aggregate consideration of $250 thousand. In April 2019, the Company entered into subscription agreements with several investors, consisting of our officers and directors, pursuant to which we issued 1,229,508 shares of common stock for aggregate consideration of $225 thousand. The Company recorded derivative liability in its books. In addition, in August 2019, the Company entered into subscription agreements with several investors, consisting of our officers and directors, pursuant to which we issued 8,275,862 newly designated Series A Convertible Preferred Stock at a purchase price of $0.029 per share for aggregate gross proceeds of approximately $240 thousand. The Company recorded derivative liability in its books.

 

On April 28, 2019, we entered into a form of securities purchase agreement with the Investors relating to an offering of sale of an aggregate of 1,229,508 shares of our common stock at a purchase price of $0.183 per share for aggregate gross proceeds of approximately $225 thousand. In addition, we granted the Investors an option, for a period of twelve months, to purchase up to an additional 375,001 shares of common stock at a price per share of $0.60, for additional aggregate consideration of $225 thousand. The closing of the offering took place on April 29, 2019.

 

On August 20, 2019, we entered into an additional form of securities purchase agreement with YMY and TRF, relating to an offering of an aggregate of 8,275,862 shares of the Company’s newly designated Series A Convertible Preferred Stock at a purchase price of $0.029 per share for aggregate gross proceeds of approximately $240 thousand. In addition, the Company granted YMY and TRF an option, for a period of twelve months, to purchase additional 400,000 Series A Convertible Preferred Stock, in the aggregate, at a price per share of $0.60, for additional aggregate consideration of $240 thousand. The closing of the offering took place on August 29, 2019.

 

On November 17, 2019, we entered into a form of securities purchase agreement with YMY and TRF, relating to an offering of an aggregate of 3,000,000 shares of the Company’s newly designated Series A Convertible Preferred Stock at a purchase price of $0.029 per share for aggregate gross proceeds of approximately $87,000. In addition, the Company granted YMY and TRF an option, for a period of twelve months, to purchase up to an additional 145,000 Series A Convertible Preferred Stock, in the aggregate, at a price per share of $0.60, for additional aggregate consideration of $87,000.

 

While management believes 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 ability to raise additional funds through the issuance of equity or debt instrument. 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. In addition, our Board of Directors is exploring strategic alternatives to enhance stockholder value, which may include future acquisitions, a merger with another company, a potential sale of certain assets, including Novomic, or the sale of the Company as a public shell company.

 

Going Concern Consideration

 

As a result of the above, 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, but no accounting adjustments that relate to this matter.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Critical Accounting Policies

 

Please see Note 1B of Part I, Item I of this Quarterly Report on Form 10-Q for the summary of significant accounting policies. In addition, reference is made to Note 1B in the financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2018 (filed on March 28, 2019) with respect to our Critical Accounting Policies.

 

All other material changes to our critical accounting policies and estimates since our Annual Report on Form 10-K for the year ended December 31, 2018 are recorded in Note 1b of this quarterly report

 

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

Not Applicable.

 

ITEM 4. CONTROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures.

 

The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed in the Company’s reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including the Company’s Chairman of the Board of Directors (who is the Company’s principal executive officer) and the Company’s Chief Financial Officer (CFO) (who is the Company’s principal financial officer) to allow for timely decisions regarding required disclosure. In designing and evaluating the Company’s disclosure controls and procedures, the Company’s management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and the Company’s management is required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on our evaluation of the effectiveness of our disclosure controls and procedures as of September 30, 2019, our Company’s Chairman and CFO concluded that the Company’s disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed by the Company in reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chairman and CFO, to allow timely decisions regarding required disclosure.

 

Management’s Remediation Plan

 

Since the time our initial material weaknesses were identified in early 2017 relating to (i) inadequate segregation of duties consistent with control objectives; and (ii) ineffective controls over period-end financial reporting and disclosure processes, we have initiated the following procedures during the year ended December 31, 2017:

 

  (i) Due to inadequate financial resources as of the end of the first quarter of 2017, we hired during the second quarter of 2017 a new outsourced finance team and replaced our CFO. We believe that this first step should assist in detecting errors that have occurred since the first quarter of 2017.
     
  (ii) We began implementing processes and controls to properly perform an effective period-end financial reporting process.

 

We also plan to implement additional steps as follows: (i) appoint qualified personnel to address inadequate segregation of duties and ineffective controls over period-end financial reporting as well as continue implementing modifications to our operating procedures and financial controls to address such inadequacies; and (ii) adopt sufficient written policies and procedures for period-end financial reporting.

 

The remediation efforts, which are not completed as of September 30, 2019, are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

 

Changes in Internal Control over Financial Reporting

 

During the nine months ended September 30, 2019, there were no changes in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect the Company’s internal control over financial reporting.

 

19
 

 

PART II - OTHER INFORMATION

 

ITEM 5. OTHER INFORMATION

 

On November 14, 2019, Zvi Yemini voluntarily resigned from his position as Chief Executive Officer and as a member of the Board of Directors of the Company and of Novomic. Mr. Yemini did not resign as a result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

 

On November 17, 2019, we entered into a form of securities purchase agreement with YMY and TRF, relating to an offering of an aggregate of 3,009,000 shares of the Company’s newly designated Series A Convertible Preferred Stock at a purchase price of $0.029 per share for aggregate gross proceeds of approximately $87,000. In addition, the Company granted YMY and TRF an option, for a period of twelve months, to purchase up to an additional 145,000 Series A Convertible Preferred Stock, in the aggregate, at a price per share of $0.60, for additional aggregate consideration of $87,000.

 

ITEM 6. EXHIBITS

 

(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*   Rule 13a-14(a) Certification of Chief Executive Officer.
31.2*   Rule 13a-14(a) Certification of Chief Financial Officer.
32.1**   Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350.
32.2**   Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350.
101.1*   The following materials from our Quarterly Report on Form 10-Q for the quarter ended September 30, 2019 formatted in XBRL (eXtensible Business Reporting Language): (i) the Interim Condensed Consolidated Balance Sheets, (ii) the Interim Condensed Consolidated Statements of Operations, (iii) the Interim Condensed Consolidated Statements of Comprehensive Loss, (iv) the Interim Condensed Statements of Changes in Equity, (v) the Interim Condensed Consolidated Statements of Cash Flows, and (vi) the Notes to Interim Condensed Consolidated Financial Statements, tagged as blocks of text and in detail.

 

* Filed herewith

** Furnished herewith

 

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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/ Oren Traisman
    Oren Traisman
    Chairman of the Board
    (Principal Executive Officer)
     
  Date: November 19, 2019
     
  By: /s/ Tali Dinar
    Tali Dinar
    Chief Financial Officer
    (Principal Financial and Principal Accounting Officer)
     
  Date: November 19, 2019

 

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