Filed
Pursuant to Rule 424(b)(3)
Registration
No. 333-220371
PROSPECTUS
E-QURE
CORP.
5,559,436
Shares of Common Stock Issuable Upon Exercise of Rights to Subscribe for Such Shares at $0.10 per Share; 2,779,718 Shares of Common
Stock Issuable Upon Exercise of the Class A Warrants; and 2,779,718 Shares of Common Stock Issuable Upon Exercise of the Callable
Class B Warrants.
Subject
to the conditions described in this prospectus, we are distributing, at no charge, to our holders of our Common Stock non-transferable
subscription rights to purchase during a period of thirty (30) days from the effective date of this Registration Statement (the
“Subscription Rights Offering Period”) an aggregate of up to 5,559,436 Units, each consisting of: (i) one (1) share
of our Common Stock, par value $0.00001 per share (the “Common Stock”); (ii) a 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) a 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 foregoing
are referred to collectively, as the “Unit Subscription Right”).We refer to this offering as the “Unit Rights
Offering,” in which you will receive a Unit Subscription Right for every four (4) share of Common Stock that you own, as
of 5:00 p.m., Eastern Time, on September 6, 2017, the record date. Each whole Unit Subscription Right will entitle you to purchase
one Unit, as defined herein, at a subscription price of $0.10 per Unit, which we refer to as the “basic subscription privilege.”
The per Unit subscription price was determined by our board of directors after a review of recent historical trading prices of
our Common Stock on the OTCQB. We will not issue fractional shares of Common Stock as part of the Unit Rights Offering, but rather
the number of shares of Common Stock issued upon the exercise by our stockholders will be rounded down to the nearest whole number
a holder would otherwise be entitled to purchase. Reference is made to the disclosure under “Description of Securities to
be Registered” below.
If
you exercise your subscription rights in full, and other stockholders do not fully exercise their Unit Subscription Rights, you
will be entitled to an over-subscription privilege to purchase a portion of the unsubscribed Units at the subscription price during
a ten (10) day period following the expiration of the Subscription Rights Offering Period, subject to proration and ownership
limitations, which we refer to as the “over-subscription privilege.” To the extent you properly exercise your over-subscription
privilege for an amount of Units that exceeds the number of unsubscribed Units available to you, any excess subscription payment
received by the rights agent will be returned promptly, without interest or deduction/deduction. If all of the rights are exercised,
the total purchase price of the Units offered in the Units Rights Offering, not including any proceeds from the exercise of the
Class A and Class B Warrants, would be $555,943.60. The net proceeds to the Company, after deducting offering expenses of approximately
$45,000, would be $510,943.60.
We
have entered into a standby purchase agreement with respect to the purchase of any Units not subscribed for (the “Unsubscribed
Units”) through the basic subscription privilege or the over-subscription privilege with a standby purchaser (the “Standby
Purchaser”) pursuant to a Standby Purchase Agreement, as described more fully below, a form of which is attached as Exhibit
10.19 hereto (the “Standby Purchase Agreement”). However, there can be no certainty that any or all of the Units will
be purchased pursuant to the Unit Rights Offering or under the Standby Purchase Agreement and there is no minimum purchase requirement
as a condition to accepting subscriptions. Notwithstanding the foregoing, we reasonably expect that the Standby Purchaser will
purchase Unsubscribed Units in an amount up to $150,000, if necessary.
The
Unit Subscription Rights will expire void and worthless to our stockholders if they are not exercised by 5:00 p.m., Eastern Time,
on the date that is thirty (30) days from the filing of this Prospectus, unless we extend the Subscription Rights Offering Period.
We may extend the expiration of the Subscription Rights Offering Period for exercising your Unit Subscription Rights in our sole
discretion. You should carefully consider whether to exercise your Unit Subscription Rights prior to the expiration of the Subscription
Rights Offering Period. All exercises of subscription rights are irrevocable, even if we extend the expiration of the Subscription
Rights Offering Period. We are not making any recommendation regarding your exercise of the subscription rights.
We
have contracted with Transfer Online, Inc., 512 SE Salmon Street, Portland, OR 97214 to serve as the rights agent for the Unit
Rights Offering. The rights agent will hold in escrow the funds we receive from subscribers until we complete, abandon or terminate
the Unit Rights Offering. If you want to participate in this Unit Rights Offering and you are the record holder of your shares
of Common Stock, we recommend that you submit your subscription documents to the rights agent well before that deadline of the
Subscription Rights Offering Period. If you want to participate in this Unit Rights Offering and you hold shares through your
broker, dealer, custodian bank or other nominee, you should promptly contact your broker, dealer, custodian, bank or other nominee
and submit your subscription documents in accordance with the instructions and within the time-period provided by your broker,
dealer, custodian bank or other nominee. For a detailed discussion, see “The Unit Rights Offering - The Subscription Rights.”
We
are not requiring an overall minimum subscription to complete the rights offering. However, we reserve the right to terminate
the rights offering for any reason at any time before it expires. If we terminate the rights offering, all subscription payments
received will be returned promptly, without interest or deduction.
Our
Common Stock is quoted on the OTCQB Market under the symbol “EQUR”. The closing price of our Common Stock on the OTCQB
Market on September 6, 2017, was $0.10 per share.
Our
Board of Directors is not making any recommendation regarding your exercise of the subscription rights. You should carefully consider
whether to exercise your subscription rights prior to the expiration of the rights offering.
We
are an emerging growth company as that term is used in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”)
and are subject to reduced public company reporting requirements.
Our
independent registered public accounting firm has expressed substantial doubt as to our ability to continue as a going concern.
Investing
in our Common Stock involves a high degree of risk. See “Risk Factors” beginning on page 12 to read about
factors you should consider before buying shares of our Common Stock.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The
Date of This Prospectus is: June 11, 2018
TABLE
OF CONTENTS
Please
read this Prospectus carefully and in its entirety. This Prospectus contains disclosure regarding our business, our financial
condition and results of operations and risk factors related to our business and our Common Stock, among other material disclosure.
We have prepared this Prospectus so that you will have the information necessary to make an informed investment decision.
You
should rely only on information contained in this Prospectus. We have not authorized any other person to provide you with different
information. This Prospectus is not an offer to sell, nor is it seeking an offer to buy, these securities in any state where the
offer or sale is not permitted. The information in this Prospectus is complete and accurate as of the date on the front cover,
but the information may have changed since that date.
For
investors outside the United States: We have not done anything that would permit this offering or possession or distribution of
this prospectus in any jurisdiction where action for that purpose is required, other than in the United States. Persons outside
the United States who come into possession of this prospectus must inform themselves about, and observe any restrictions relating
to, the offering of the securities and the distribution of this prospectus outside the United States.
Until
July 11, 2018, thirty (30) days after the commencement of the offering, all dealers that effect transactions in these securities,
whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’
obligation to deliver a prospectus when acting as an underwriter and with respect to unsold allotments or subscriptions.
The
Registration Statement containing this Prospectus, including the exhibits to the Registration Statement, provides additional information
about us and the Common Stock offered under this Prospectus. The Registration Statement, including the exhibits and the documents
incorporated herein by reference, can be read on the Securities and Exchange Commission website or at the Securities and Exchange
Commission offices mentioned under the heading “Where You Can Find More Information.”
QUESTIONS
AND ANSWERS RELATING TO THE RIGHTS OFFERING
The
following are examples of what we anticipate will be common questions about the rights offering. The answers are based on selected
information from this prospectus and the documents incorporated by reference herein. The following questions and answers do not
contain all of the information that may be important to you and may not address all of the questions that you may have about the
rights offering. This prospectus and the documents incorporated by reference herein contain more detailed descriptions of the
terms and conditions of the rights offering and provide additional information about us and our business, including potential
risks related to the rights offering, our Common Stock and our business. We urge you to read this entire prospectus and the documents
incorporated by reference into this prospectus.
What
is the rights offering?
Subject
to the conditions described below, we will distribute to holders of our Common Stock as of September 6, 2017 ( the “Record
Date”), at no charge, non-transferable subscription rights to purchase Units, each consisting of: (i) one (1) share of our
Common Stock, par value $0.00001 per share (the “Common Stock”); (ii) a Class A Warrant exercisable for a period of
24 months to purchase ½ share of Common Stock; and (iii) a Callable Class B Warrant exercisable for a period of 36 months
to purchase ½ share of Common Stock. You will receive a subscription right to purchase one (1) Unit for each four (4) shares
of Common Stock you owned as of 5:00 p.m., Eastern Time, on the Record Date. The subscription rights will not be tradable. Each
subscription right entitles the holder to a basic subscription right and an over-subscription privilege, which is described below.
The subscription rights will expire if they are not exercised by 5:00 p.m., Eastern Time, on July 11, 2018, thirty (30) days
from the date of filing of this Prospectus, unless we extend the Subscription Rights Offering Period.
What
is each subscription right?
Each
subscription right gives the holder the opportunity to purchase one (1) Unit at a subscription price of $0.10 per Unit. Only whole
rights are exercisable and any fractional rights remaining after aggregating all of the subscription rights issued to you will
be rounded down to the nearest whole number. You will not receive any payment with respect to fractional rights that are rounded
up. For example, if you own 100 shares of our Common Stock as of 5:00 p.m., Eastern Time, on the record date, you would receive
subscription rights and would have the right to purchase 25 Units for $0.10 per Unit with your subscription rights. You may exercise
any whole number of your subscription rights, or you may choose not to exercise any subscription rights. In order to properly
exercise your subscription right, you must deliver the subscription payment and a properly completed subscription rights certificate
provided to you, or if you hold your rights through a broker, dealer, custodian bank or other nominee, complete and return to
your record holder the form entitled “Beneficial Owner Election Form” or such other appropriate documents as are provided
by your record holder related to your subscription right prior to the expiration of the rights offering.
If
you hold your shares in the name of a broker, dealer, custodian bank or other nominee who uses the services of the Depository
Trust Company, or “DTC,” DTC will issue the appropriate number of subscription rights to your nominee for each share
of our Common Stock you own on the record date. The subscription right of each whole subscription right can then be used to purchase
one (1) Unit for $0.10 per Unit. If you are not contacted by your nominee, you should contact your nominee as soon as possible.
What
is the over-subscription privilege?
We
do not expect all of our rights holders to exercise all of their subscription rights. The over-subscription privilege provides
rights holders that exercise all of their basic subscription rights the opportunity to purchase the Units that are not purchased
by other rights holders. If you fully exercise your basic subscription right, the over-subscription privilege of each right entitles
you to subscribe for additional Units unclaimed by other holders of rights in this Unit Rights Offering at the same subscription
price of $0.10 per Unit. If an insufficient number of Units are available to fully satisfy all over-subscription privilege requests,
the available Units will be distributed proportionately among rights holders who exercise their over-subscription privilege based
on the number of Units each rights holder subscribed for under the basic subscription right.
In
order to properly exercise your over-subscription privilege, you must deliver the subscription payment for exercise of your over-subscription
privilege before the expiration of the Unit Rights Offering. Because we will not know the total number of unsubscribed Units before
the expiration of the Subscription Rights Offering Period, if you wish to maximize the number of Units you purchase pursuant to
your over-subscription privilege, you will need to deliver payment in an amount equal to the aggregate subscription price for
the maximum number of Units available, assuming that no rights holder other than you has purchased any Units pursuant to their
basic subscription right and over-subscription privilege. The rights agent will return any excess payments by mail without interest
or deduction promptly after the expiration of the subscription period. See “The Rights Offering - The Subscription Rights
- Over-Subscription Privilege.”
What
should I do if I want to participate in the rights offering but my shares are held in the name of my broker, dealer, custodian
bank or other nominee?
If
you hold your shares of our Common Stock in the name of a broker, dealer, custodian bank or other nominee, then your broker, dealer,
custodian bank or other nominee is the record holder of the shares you own. The record holder must exercise the subscription rights
on your behalf for the shares of our Common Stock you wish to purchase.
If
you wish to participate in the rights offering and purchase shares of our Common Stock, please promptly contact the record holder
of your shares. We will ask your broker, dealer, custodian bank or other nominee to notify you of the rights offering. You should
complete and return to your record holder the form entitled “Beneficial Owner Election Form.” You should receive this
form from your record holder with the other rights offering materials.
Will
fractional subscription rights be issued?
Yes.
Fractional subscription rights remaining after aggregating all of the rights distributed to you will be rounded down to the nearest
whole number of shares a holder would otherwise be able to purchase. You will not receive any payment with respect to fractional
shares that are rounded down.
Why
are we conducting the rights offering?
We
are conducting the rights offering to raise additional capital for general corporate purposes, other related research and development
expenditures, general administrative expenses, working capital and capital expenditures.
Our
board of directors has chosen the structure of a Unit Rights Offering to raise capital to allow existing stockholders to purchase
additional shares of our Common Stock based on their pro rata ownership percentage, while giving existing stockholders the opportunity
to limit their ownership dilution.
How
was the subscription price determined?
Our
Board of Directors, comprised of Ron Weissberg and Dr. Michael Sessler, determined the terms of the Units Rights Offering, including
the subscription price, based on a variety of factors, including historical and current trading prices for our Common Stock, general
business conditions, our need for capital, alternatives available to us for raising capital, potential market conditions, and
our desire to provide an opportunity to our stockholders to participate in the rights offering on a pro rata basis. In conjunction
with its review of these factors, the Board of Directors also reviewed our history and prospects, including our past and present
earnings and cash requirements, our prospects for future earnings, and the outlook for our industry, and our current financial
condition. They also believed that the subscription price should be designed to provide an incentive to our current stockholders
to participate in the rights offering and exercise their basic subscription rights and their over-subscription privilege.
The
subscription price does not necessarily bear any relationship to any established criteria for value. You should not consider the
subscription price as an indication of actual value of our Company or our Common Stock. The market price of our Common Stock may
decline during or after the rights offering. You should obtain a current price quote for our Common Stock before exercising your
Unit Subscription Rights and make your own assessment of our business and financial condition, our prospects for the future, the
terms of the rights offering, the information in this prospectus and the other considerations relevant to your circumstances.
Once made, all exercises of subscription rights are irrevocable.
Am
I required to exercise all of the subscription rights I receive in the rights offering?
No.
You may exercise any whole number of your subscription rights, or you may choose not to exercise any subscription rights. If you
do not exercise any subscription rights, the number of shares of our Common Stock you own will not change. However, if you choose
not to exercise your subscription rights, your proportionate ownership interest in the Company will be diluted by the issuance
of Units, including shares of our Common Stock, to others who do choose to exercise their subscription rights.
How
soon must I act to exercise my subscription rights?
If
you received a subscription rights certificate and elect to exercise any or all of your subscription rights, the rights agent
must receive your completed and signed subscription rights certificate and payment for both your basic subscription rights and
any over-subscription privilege you elect to exercise before the rights offering expires on July 11, 2018, at 5:00 p.m., Eastern
Time (a date that will be thirty (30) days from the date of filing of this Prospectus, unless we extend the Subscription Rights
Offering Period. If you hold your shares in the name of a broker, dealer, bank, or other nominee, your nominee may establish a
deadline before the expiration of the rights offering by which you must provide it with your instructions to exercise your subscription
rights, along with the required subscription payment.
The
subscription rights may be exercised at any time beginning after the commencement of the rights offering and prior to the expiration
of the rights offering. The rights offering will expire at 5:00 p.m., Eastern Time, on the date that is four weeks after the effectiveness
of the Registration Statement representing the rights offering. The rights offering is currently expected to expire at 5:00 p.m.,
Eastern Time, on July 11, 2018 (thirty (30) days from the date of filing of this Prospectus, unless we extend the Subscription
Rights Offering Period. If you elect to exercise any rights, the rights agent must actually receive all required documents and
payments from you prior to the expiration of the rights offering. If your required subscription exercise documentation is received
by the rights agent after the expiration of the rights offering, we may, in our sole discretion, choose to accept your subscription,
but we shall be under no obligation to do so. We may extend the expiration of the rights offering in our sole discretion. However,
we currently do not intend to extend the expiration of the rights offering.
When
will I receive my subscription rights certificate?
As
soon as practicable after the conditions to the commencement of the rights offering described below have been met, we will distribute
the subscription rights certificates to individuals who owned shares of our Common Stock as of 5:00 p.m., Eastern Time, on the
Record Date, September 6, 2017, based on our stockholder registry maintained at the transfer agent for our Common Stock. However,
if you hold your shares of Common Stock in “street name” through a broker, dealer, custodian bank or other nominee,
you will not receive an actual subscription rights certificate. Instead, as described in this prospectus, you must instruct your
broker, dealer, custodian bank or other nominee whether or not to exercise rights on your behalf. If you wish to obtain a separate
subscription rights certificate, you should promptly contact your broker, dealer, custodian bank or other nominee and request
a separate subscription rights certificate. It is not necessary to have a physical subscription rights certificate to elect to
exercise your rights if your shares are held by a broker, dealer, custodian bank or other nominee.
May
I transfer my subscription rights?
No.
The subscription rights may be exercised only by the stockholders to whom they are distributed and they may not be sold, transferred,
assigned or given away to anyone else, other than by operation of law. As a result, subscription rights certificates may be completed
only by the stockholder who receives the certificate. The subscription rights will not be listed for trading on any stock exchange
or market.
Are
we requiring a minimum subscription to complete the rights offering?
No.
Are
there any conditions to completing the rights offering?
No.
Can
we extend, terminate or amend the rights offering?
Yes.
We may decide to terminate the rights offering at any time and for any reason before the closing of the rights offering. If we
terminate the rights offering, any money received from subscribing rights holders will be returned promptly, without interest
or deduction. We also have the right to extend the expiration of the rights offering for additional periods at our sole discretion.
If we elect to extend the expiration of the rights offering, we will issue a press release announcing such extension no later
than 9:00 a.m., Eastern Time, on the next business day after the most recently announced expiration date. We do not presently
intend to extend the expiration of the rights offering.
How
do I exercise my subscription rights? What forms and payment are required to purchase the Units?
If
you are a stockholder of record (meaning you hold your shares of our Common Stock in your name and not through a broker, dealer,
bank, or other nominee) and you wish to participate in the Unit Rights Offering, you must deliver a properly completed and signed
subscription rights certificate, together with payment of the subscription price of $0.10 per Unit for your subscription rights
you elect to exercise, to the rights agent before 5:00 p.m., Eastern Time, on July 11, 2018. If you are exercising your subscription
rights through your broker, dealer, custodian bank or other nominee, you should promptly contact your broker, dealer, custodian
bank or other nominee and submit your subscription documents and payment for the Units subscribed for in accordance with the instructions
and within the time period provided by your broker, dealer, custodian bank or other nominee.
If
you cannot deliver your subscription rights certificate to the rights agent prior to the expiration of the Subscription Rights
Offering Period, you may follow the guaranteed delivery procedures described under “The Units Rights Offering—Guaranteed
Delivery Procedures.”
If
you send a payment that is insufficient to purchase the number of Units you requested, or if the number of Units you requested
is not specified in the forms, the payment received will be applied to exercise your subscription rights to the full extent possible
based on the amount of the payment received.
When
will I receive my new shares?
If
you purchase Units through the Unit Rights Offering, you will receive your new shares as soon as practicable after the closing
of the rights offering.
After
I send in my payment and subscription rights certificate, may I cancel my exercise of subscription rights?
No.
All exercises of subscription rights are irrevocable, even if you later learn information that you consider to be unfavorable
to the exercise of your subscription rights and even if we extend the expiration of the rights offering. You should not exercise
your subscription rights unless you are certain that you wish to purchase the additional shares of our Common Stock included in
the Unit Rights Offering, at a subscription price of $0.10 per Unit.
What
effects will the rights offering have on our outstanding Common Stock?
Assuming
no other transactions by us involving our shares of Common Stock, and no options or warrants for our Common Stock are exercised,
prior to the expiration of the Unit Rights Offering, if the offering is fully subscribed through the exercise of the subscription
rights, then an additional 5,559,436 shares of our Common Stock will be issued and outstanding after the closing of the Unit Rights
Offering, for a total of 27,796,998 shares of Common Stock outstanding, not including any additional shares that may be issued
upon the exercise of the Class A and Callable Class B Warrants. As a result of the Unit Rights Offering, the ownership interests
and voting interests of the existing stockholders that do not fully exercise their basic subscription rights will be diluted.
The exact number of shares that we will issue in this rights offering will depend on the number of Units that are subscribed for
in the rights offering by our stockholders.
In
addition, if the subscription price of the Units is less than the market price of our Common Stock it will likely reduce the market
price of the shares of Common Stock you already hold.
Are
any of the Company’s officers or directors participating in the rights offering?
To
the extent they hold Common Stock as of the record date, our directors and executive officers will be entitled to participate
in the Unit Rights Offering on the same terms and conditions applicable to other stockholders.
Have
any other stockholders indicated that they will exercise their rights?
At
present, we do not know whether our other stockholders will or will not exercise rights in the Units Rights Offering. Nevertheless,
we do believe that several of our existing stockholders will participate but do not know the extent of their likely participation.
How
much will our Company receive from the rights offering?
If
the Unit Rights Offering is fully subscribed, meaning that we issue the maximum possible number of shares of Common Stock upon
exercise of rights, we expect to receive an aggregate of approximately $555,943.60, excluding any proceeds that may be received
upon the exercise of the Class A and Class B Warrants, of which there can be no assurance. The net proceeds to the Company, after
deducting offering expenses of $45,000, would be $510,943.60. See “Use of Proceeds.”
Are
there risks in exercising my subscription rights?
Yes.
The exercise of your subscription rights involves risks. Exercising your subscription rights involves the purchase of additional
shares of our Common Stock pursuant to your exercise of the Unit Subscription Rights, and should be considered as carefully as
you would consider any other equity investment. Among other things, you should carefully consider the risks described under the
heading “Risk Factors” in this prospectus and the documents incorporated by reference herein.
If
the rights offering is not completed, will my subscription payment be refunded to me?
Yes.
The rights agent will hold all funds it receives in a segregated bank account until completion of the rights offering. If the
rights offering is not completed, all subscription payments received by the rights agent will be returned, without interest or
deduction, as soon as practicable. If you own shares in “street name,” it may take longer for you to receive payment
because the rights agent will return payments through the record holder of the shares.
How
do I exercise my subscription rights if I live outside the United States?
We
will not mail this prospectus or the subscription rights certificates to stockholders whose addresses are outside the United States
or who have an army post office or foreign post office address. The rights agent will hold the subscription rights certificates
for their account. To exercise subscription rights, our foreign stockholders, who will have access to all filings via the SEC’s
Edgar website, must notify the rights agent and timely follow the procedures described in “The Unit Rights Offering—Foreign
Stockholders.”
What
fees or charges apply if I purchase Units?
We
are not charging any fee or sales commission to issue subscription rights to you or to issue shares to you if you exercise your
subscription rights. If you hold your shares through a nominee and exercise your subscription rights through the record holder
of your shares, you are responsible for paying any fees your record holder may charge you. Nevertheless, to the extent that one
or more Standby Purchasers purchase Units that are not subscribed for in our Unit rights Offering, we expect to pay fees under
the Standby Purchase Agreement. Reference is made to the disclosure under “The Standby Purchase Agreement” below.
What
are the U.S. federal income tax consequences of exercising subscription rights?
For
U.S. federal income tax purposes, we believe and intend to take the position that you generally should not recognize income or
loss in connection with the receipt or exercise of subscription rights for U.S. federal income tax purposes, but the treatment
of the receipt and exercise of subscription rights is unclear in certain respects. You are urged to consult your own tax advisor
as to your particular tax consequences resulting from the receipt and exercise of subscription rights and the receipt, ownership
and disposition of our Common Stock. For further information, please see “Material U.S. Federal Income Tax Consequences.”
To
whom should I send my forms and payment?
If
your shares are held in the name of a broker, dealer, custodian bank or other nominee, then you should send your beneficial owner
election form and subscription payment to that record holder. If you are the record holder, then you should send your subscription
rights certificate and subscription payment by hand delivery, first class mail or courier service to:
By
mail, hand or overnight courier:
Transfer
Online, Inc.
12
SE Salmon Street
Portland,
OR 97214
You
are solely responsible for completing delivery of your subscription rights certificate and payment to the rights agent or, if
you are not a record holder your beneficial owner election form and payment to your broker, dealer, custodian bank or other nominee.
We urge you to allow sufficient time for delivery of your subscription materials to the rights agent or your broker, dealer, custodian
bank or other nominee.
Whom
should I contact if I have other questions?
If
you have other questions or need assistance, please contact the rights agent, Transfer Online, Inc., 512 SE Salmon Street, Portland,
OR 97214, Phone: (503) 227-2950.
PROSPECTUS
SUMMARY
This
summary highlights selected information contained elsewhere in this Prospectus. This summary does not contain all the information
that you should consider before investing in the Common Stock. You should carefully read the entire Prospectus, including “Risk
Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and
the Financial Statements, before making an investment decision. In this Prospectus, the terms “E-Qure,” “Company,”
“Registrant,” “we,” “us” and “our” refer to E-Qure Corp., a Delaware corporation.
Plan
We
are a medical device Company planning to commercialize our
Bioelectrical Signal Therapy
device (“BST Device,”
or “Device”). Our BST Device treats wounds via electrical stimulation, which is believed to result in accelerated
wound healing by imitating the natural electrical current that occurs in injured skin on the human body. Our BST Device stimulates
renewed blood flow and oxygen in order to induce local cell regeneration and therefore promote wound healing. Our mission is to
improve non-invasive wound care treatments and to become a leading provider of non-invasive wound and ulcer healing treatment.
Our device is designed to specifically address many of the limitations associated with other invasive and non-invasive wound care
devices.
We
believe our BST Device is a simple and effective wound heal method that can be used in and incorporated as an adjunctive therapy
in wound healing. Treatment is safe, effective, and well-tolerated.
Our
BST Device had the Communaute Europeenne (“CE”) mark which is now being renewed, and was approved to be sold in the
EU market. We are in the initial clinical trial process for the purpose of obtaining approval from the United States Food and
Drug Administration (the “FDA”).
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 the requisite safety and efficacy, prerequisites for FDA approval. The Company believes that
the BST Device’s design and procedure is safe and effective, but the path to commercial success in the US, even if FDA approval
is granted, may take more time and may be more costly that we expect or for which we have sufficient resources.
Our
BST Device is designed to treat chronic wounds – primarily Stage III and Stage IV ulcers, which we believe comprises about
11% and 7% of all chronic wounds, respectively, and severe Stage II wounds.
We
plan to sell the BST Device commercially in the United States only after we receive the requisite FDA approvals, which we expect
by the end of 201 9. We have not generated any revenues from our BST Device to date.
Our
independent registered public accounting firm has expressed substantial doubt as to our ability to continue as a going concern.
Summary
of Risk Factors
This
offering involves substantial risk. Our ability to execute our strategy is also subject to certain risks. The risks described
under the heading “Risk Factors” included elsewhere in this prospectus may cause us not to realize the full benefits
of our business plan and strategy or may cause us to be unable to successfully execute all or part of our strategy. Some of the
most significant challenges and risks include the following:
●
We Have Limited Operating History And Face Many Of The Risks And Difficulties Frequently Encountered By Start-Up Companies.
●
If The Clinical Trial Studies Of Our Current Patented Device Does Not Produce Results Necessary To Support Regulatory Clearance
Or Approval In The United States, We Will Be Unable To Commercialize Our Device.
●
We May Face Product Liability Claims That Could Result In Costly Litigation And Significant Liabilities.
●
You Shareholders Who Decide Not To Participate In This Rights Offering Will Experience Dilution Of Their Ownership Interest.
●
Our Independent Registered Public Accounting Firm Has Expressed Substantial Doubt As To Our Ability To Continue As A Going Concern.
Before
you invest in our Common Stock through your subscription of Units, you should carefully consider all the information in this prospectus,
including matters set forth under the heading “Risk Factors.”
Where
You Can Find Us
We
presently maintain our principal offices at 20 West 64th Street, Suite 39G, New York, NY 10023. Our telephone number is (972)
54 427777.
Implications
of Being an Emerging Growth Company
We
qualify as an emerging growth company as that term is used in the JOBS Act. An emerging growth company may take advantage of specified
reduced reporting and other burdens that are otherwise applicable generally to public companies. These provisions include:
●
A requirement to have only two years of audited financial statements and only two years of related MD&A;
●
Exemption from the auditor attestation requirement in the assessment of the EGC’s internal control over financial reporting
under Section 404 of the Sarbanes-Oxley Act of 2002 (“SOX”);
●
Reduced disclosure about the emerging growth company’s executive compensation arrangements; and
●
No non-binding advisory votes on executive compensation or golden parachute arrangements.
We
have already taken advantage of these reduced reporting burdens in this Prospectus, which are also available to us as a smaller
reporting company as defined under Rule 12b-2 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
In
addition, Section 107 of the JOBS Act also provides that an emerging growth company can take advantage of the extended transition
period provided in Section 7(a)(2)(B) of the Securities Act of 1933, as amended (the “Act”) for complying with new
or revised accounting standards. We have elected to take advantage of the extended transition period for complying with new or
revised accounting standards, which allows us to delay the adoption of new or revised accounting standards that have different
effective dates for public and private companies until those standards apply to private companies. As a result of this election,
our financial statements contained in this Form S-1 may not be comparable to companies that comply with public company effective
dates. The existing scaled executive compensation disclosure requirements for smaller reporting companies will continue to apply
to our filings for so long as our Company is an emerging growth company, regardless of whether the Company remains a smaller reporting
company.
We
could remain an emerging growth company for down to five years, or until the earliest of (i) the last day of the first fiscal
year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer”
as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our Common Stock that is held by non-affiliates
exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which
we have issued more than $1 billion in non-convertible debt during the preceding three year period.
For
more details regarding this exemption, see “Management’s Discussion and Analysis of Financial Condition and Results
of Operations - Critical Accounting Policies.”
The
Offering
Common
Stock offered
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|
Subject
to the conditions described in this prospectus, we are distributing, at no charge to our stockholders non-transferable
subscription rights for each four (4) shares of Common Stock owned at 5:00 p.m., Eastern Time, as of the Record Date as
defined herein below. Each whole subscription right has the right to purchase one (1) Unit, each consisting of: (i) one
(1) share of our Common Stock; (ii) a Class A Warrant exercisable for a period of 24 months to purchase ½ share
of Common Stock; and (iii) a Callable Class B Warrant exercisable for a period of 36 months to purchase ½ share
of Common Stock, at a price of $0.10 per Unit.
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Record
Date
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5:00
p.m., Eastern Time, September 6, 2017
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Expiration
of the Rights Offering
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The
rights offering will expire at 5:00 p.m., Eastern Time, on the date that is thirty (30) days after the filing of this Prospectus.
The Unit Rights Offering is currently expected to expire at 5:00 p.m., Eastern Time, on July 11, 2018. We may extend the expiration
of the rights offering in our sole discretion. If your required subscription exercise documentation is received by the rights
agent after the expiration of the Subscription Rights Offering Period, we may, in our sole discretion, choose to accept your
subscription, but we shall be under no obligation to do so.
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Subscription
Price
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$0.10
per each Unit, payable in cash. To be effective, any payment related to the exercise of a right must clear prior to the expiration
of the rights offering.
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Trading
Market
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Our
Common Stock is subject to quotation on the OTCQB Market under the symbol “EQUR”.
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Use
of Proceeds
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|
We
intend to use the net proceeds of this offering for general corporate purposes, including working capital, capital expenditures,
as well as acquisitions and other strategic purposes. See “Use of Proceeds.”
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Basic
Subscription Right
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Holders
of our Common Stock will receive a subscription right to purchase one (1) Unit for a price of $0.10 per Unit, for each four
(4) shares of Common Stock owned as of the Record Date. The number of subscription rights you may exercise appears on your
subscription rights certificate or beneficial owner election form.
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Over-Subscription
Privilege
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|
If
you exercise your basic subscription rights in full, you may also choose to purchase a number of Units that are not purchased
by our other rights holders through the exercise of their basic subscription rights, subject to proration and stock ownership
limitations described elsewhere.
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Non-Transferability
of Rights
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The
subscription rights may not be sold, transferred, assigned or given away to anyone. The subscription rights will not be listed
for trading on any stock exchange or subject to quotation on any market.
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No
Board Recommendation
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Our
Board of Directors is not making a recommendation regarding your exercise of the subscription rights. You are urged to make
your decision based on your own assessment of our business and the rights offering. Please see “Risk Factors”
for a discussion of some of the risks involved in investing in our securities.
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Conditions/No
Revocation
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We
are not requiring a minimum subscription to complete the rights offering.
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All
exercises of subscription rights are irrevocable, even if you later learn information that you consider to be unfavorable
to the exercise of your subscription rights and even if we extend the expiration of the rights offering. You should not exercise
your subscription rights unless you are certain that you wish to purchase additional Units at a subscription price of $0.10
per each whole share.
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U.S.
Federal Income Tax Considerations
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|
We
believe and intend to take the position that you generally should not recognize income or loss in connection with the receipt
or exercise of subscription rights for U.S. federal income tax purposes. However, the rules applicable to the receipt and
exercise of subscription rights are complicated and unclear in certain respects, and it is possible that the Internal Revenue
Service (“IRS”) could challenge our position. You are urged to consult your own tax advisor as to your particular
tax consequences resulting from the receipt and exercise of subscription rights and the receipt, ownership and disposition
of shares of our Common Stock following exercised of the Unit Subscription Rights. For further information, please see “Risk
Factors - The tax treatment of the rights offering may be treated as a taxable event to you” and “Material U.S.
Federal Income Tax Consequences.”
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Extension,
Amendment, Withdrawal and Termination
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The
period for exercising your subscription rights may be extended by us in our sole discretion. We may extend the expiration date
of the rights offering by giving oral or written notice to the rights agent on or before the scheduled expiration date. If we
elect to extend the expiration of the rights offering, we will issue a press release announcing such extension no later than 9:00
a.m., Eastern Time, on the next business day after the most recently announced expiration date.
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Procedures
for Exercising Rights
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To
exercise your subscription rights, a holder of record must complete the subscription rights certificate and deliver it to
the rights agent, Transfer Online, Inc., 12 SE Salmon Street, Portland, OR 97214, together with full payment for all the subscription
rights and any over-subscription privilege you elect to exercise under the subscription right. A beneficial owner must complete
the beneficial owner election form and deliver it to their broker, dealer, bank or nominee, together will full payment for
all subscription rights and any over-subscription privilege you elect to exercise under the subscription right. You may deliver
such subscription documents and payments by mail or commercial carrier. If regular mail is used for this purpose, we recommend
using registered mail, properly insured, with return receipt requested or, if you are not a record holder and if you cannot
deliver your subscription rights certificate to the rights agent prior to the expiration of the rights offering, you may follow
the guaranteed delivery procedures described under “The Unit Rights Offering - Guaranteed Delivery Procedures.”
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Transfer
Online, Inc., 12 SE Salmon Street, Portland, OR 97214
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Shares
Outstanding Before the Record Date
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Approximately
22,237,745 shares of our Common Stock are issued and outstanding as of the Record Date of September 6, 2017.
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Shares
Outstanding After Completion of the Rights Offering
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If
the rights offering is fully subscribed, meaning that we issue the maximum possible number of shares of Common Stock upon exercise
of the Unit Subscription Rights, we will issue an aggregate of 5,559,436 shares in connection with the rights offering in exchange
for an aggregate exercise price of $555,943.60. This does not include any issuance of shares upon the exercise of any Class A
and Class B Warrants, of which there can be no assurance, or the receipt of proceeds from the exercise of the subject warrants.
Post rights Offering, the Company will have approximately 27,796,998 shares of Common Stock issued and outstanding, excluding
any shares that may be issued upon exercise of the Class A and Class B Warrants.
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Risk
Factors
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Stockholders
considering making an investment by exercising subscription rights in the rights offering or by purchasing rights in the
open market or otherwise should carefully read and consider the information set forth in “Risk Factors” beginning
on page of this prospectus, the documents incorporated by reference herein and the risks that we have highlighted in other
sections of this prospectus.
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(1)
|
Based
on 22,237,562 shares of Common Stock outstanding as of June 11, 2018 and the date of this Prospectus.
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SUMMARY
OF FINANCIAL INFORMATION
The
following summary financial data should be read in conjunction with “Management’s Discussion and Analysis,”
“Plan of Operation” and the Financial Statements and Notes thereto, included elsewhere in this Prospectus. The balance
sheet and the statement of operations data are derived from our audited financial statements for the years ended December 31,
2017 and 2016.
Statement
of Operations Data:
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For the Year Ended
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For the Year Ended
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December 31, 2017
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December 31, 2016
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Revenues
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|
$
|
-
|
|
|
$
|
-
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Total general and administrative
|
|
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628,717
|
|
|
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912,627
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Total research and development
|
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224,451
|
|
|
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342,602
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Total
|
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(853,168
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)
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(1,255,229
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)
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Net loss
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$
|
(853,168
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)
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$
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(973,829
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)
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Net Loss Per Share – Basic and Diluted
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|
$
|
(0.04
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)
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|
$
|
(0.04
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)
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Weighted Average Number of Common Shares Outstanding - Basic and Diluted
|
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22,169,754
|
|
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22,012,562
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Balance
Sheet Data:
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December 31, 2017
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December 31, 2016
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Cash and cash equivalents
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$
|
10,962
|
|
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$
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292,976
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Total assets
|
|
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95,344
|
|
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408,108
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Total current liabilities
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367,765
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|
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1,564
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Total liabilities
|
|
|
367,765
|
|
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|
1,564
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Total stockholders’ equity (deficit)
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|
$
|
(272,421
|
)
|
|
$
|
406,544
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Total Liabilities and Shareholders’ Equity
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|
$
|
95,344
|
|
|
$
|
408,108
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SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
The
information contained in this Prospectus, including in the documents incorporated by reference into this Prospectus, includes
some statements that are not purely historical and that are “forward-looking statements.” Such forward-looking statements
include, but are not limited to, statements regarding our management’s expectations, hopes, beliefs, intentions and/or strategies
regarding the future, including our financial condition and results of operations. In addition, any statements that refer to projections,
forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking
statements. The words “anticipates,” “believes,” “continue,” “could,” “estimates,”
“expects,” “intends,” “may,” “might,” “plans,” “possible,”
“potential,” “predicts,” “projects,” “seeks,” “should,” “would”
and similar expressions, or the negatives of such terms, may identify forward-looking statements, but the absence of these words
does not mean that a statement is not forward-looking.
The
forward-looking statements contained in this Prospectus are based on current expectations and beliefs concerning future developments
and the potential effects on the parties and the transaction. There can be no assurance that future developments actually affecting
us will be those anticipated. These that may cause actual results or performance to be materially different from those expressed
or implied by these forward-looking statements, including the following forward-looking statements involve a number of risks,
uncertainties (some of which are beyond the parties’ control) or other assumptions.
RISK
FACTORS
The
shares of our Common Stock being offered for resale by the Selling Shareholders are highly speculative in nature, involve a high
degree of risk and should be purchased only by persons who can afford to lose their entire amount invested in the Common Stock.
Accordingly, prospective investors should carefully consider, along with other matters referred to herein, the following risk
factors in evaluating our business before purchasing any shares of Common Stocks. If any of the following risks actually occurs,
our business, financial condition or operating results could be materially adversely affected. In such case, you may lose all
or part of your investment. You should carefully consider the risks described below and the other information in this Prospectus
before investing in our Common Stock.
Risks
Related to Our Business
Our
Independent Registered Public Accounting Firm Has Expressed Substantial Doubt As To Our Ability To Continue As A Going Concern.
The
audited financial statements included in the Registration Statement have been prepared assuming that we will continue as a going
concern and do not include any adjustments that might result if we cease to continue as a going concern. We believe that in order
to continue as a going concern, including the costs of being a public company, we will need approximately $35,000 per year simply
to cover the administrative, legal and accounting fees. We have incurred significant losses since our inception. We have funded
these losses primarily through the sale of restricted shares of our Common Stock and the issuance of convertible notes, which
have subsequently been converted into restricted shares of Common Stock.
Based
on our financial history, our independent registered public accounting firm has expressed substantial doubt as to our ability
to continue as a going concern. We are a development stage company that has generated no revenue.
There
can be no assurance that we will have adequate capital resources or be able to continue to raise equity and/or debt capital to
fund planned operations or that any additional funds will be available to us when needed or at all, or, if available, will be
available on favorable terms or in amounts required by us. If we are unable to obtain adequate capital resources to fund operations,
we may be required to delay, scale back or eliminate some or all of our plan of operations, which may have a material adverse
effect on our business, results of operations and ability to operate as a going concern.
We
Have Limited Operating History And Face Many Of The Risks And Difficulties Frequently Encountered By Start-Up Companies.
In
January 2014, the Company acquired certain patents pertaining to a wound healing device. The Company’s new plan of operation
has not yet generated any revenues. We have no operation history as a medical device company upon which an evaluation of the Company
and its prospects could be based. There can be no assurance that management of the Company will be successful in commercially
exploiting our wound healing device and implementing the corporate infrastructure to support its new operations so that the Company
will generate sufficient revenues to meet its expenses or to achieve or maintain profitability.
If
we are unable to raise sufficient capital as needed, we may be required to reduce the scope of our business development activities,
which could harm our business plans, financial condition and operating results, or cease our operations entirely, in which case,
you will lose all your investment.
If
The Clinical Trial Studies Of Our Current Patented Device Does Not Produce Results Necessary To Support Regulatory Clearance Or
Approval In The United States, We Will Be Unable To Commercialize Our Device.
On
June 6, 2014, the Company entered into an agreement with Austen BioInnovation Institute (“ABIA”), for purpose of ABIA:
(i) obtaining an Investigational Device Exemption (IDE) approval from the FDA; and (ii) conducting a clinical trial for the Registrant’s
BST Device, a prerequisite for securing FDA approval in the U.S. market. After determining that ABIA was unable, because of substantial
financial difficulties and key personnel losses, to perform its obligation, we demanded that ABIA fully-refund the monies paid
to ABIA. We subsequently commenced a lawsuit against ABIA. The Company signed a settlement agreement with ABIA from which it received
$300,000 in satisfaction of all claims against ABIA.
The
Company engaged IMARC Research Inc. to provide a broad range of services related to its BST Device and the FDA application process.
On October 14, 2016, the Company received notification from FDA that it has granted conditional approval to the IDE application,
authorizing us to commence a clinical investigation of our BST Device for wound healing. We are dependent upon the success of
our FDA application for us to be able to market our BST Device in the U.S.
●
the FDA, institutional review boards or other regulatory authorities do not approve a clinical study protocol, force us to modify
a previously approved protocol, or place a clinical study on hold;
●
patients do not enroll in, or enroll at a lower rate than we expect, or do not complete a clinical study;
●
patients or investigators do not comply with study protocols;
●
patients do not return for post-treatment follow-down at the expected rate;
●
patients experience serious or unexpected adverse side effects for a variety of reasons that may or may not be related to our
product causing a clinical trial study to be put on hold;
●
sites participating in an ongoing clinical study withdraw, requiring us to engage new sites;
●
difficulties or delays associated with establishing additional clinical sites;
●
third-party clinical investigators decline to participate in our clinical studies, do not perform the clinical studies on the
anticipated schedule, or act in ways inconsistent with the investigator agreement, clinical study protocol, good clinical practices,
and other FDA and Institutional Review Board requirements;
●
third-party entities do not perform data collection and analysis in a timely or accurate manner;
●
regulatory inspections of our clinical studies require us to undertake corrective action or suspend or terminate our clinical
studies;
●
changes in federal, state, or foreign governmental statutes, regulations or policies;
●
interim results are inconclusive or unfavorable as to immediate and long-term safety or efficacy; or
●
the study design is inadequate to demonstrate safety and efficacy.
Clinical
trial failure can occur at any stage of the testing. Our clinical study may produce negative or inconclusive results, and we may
decide, or regulators may require us, to conduct additional clinical and/or non-clinical testing in addition to those we have
planned. Our failure to adequately demonstrate the safety and efficacy of our device would prevent receipt of regulatory clearance
or approval and, ultimately, the commercialization of that device or indication for use. Any of these occurrences may harm our
business, financial condition and prospects significantly.
Our
Expected Revenue Will Be Generated From Our Sole Product, And Any Decline In The Future Sales Of This Product Or Failure To Gain
Market Acceptance Of This Product Will Negatively Impact Our Business.
We
expect our revenue to be derived entirely from sales of our wound healing Device for the foreseeable future. If we are unable
to achieve and maintain market acceptance of our product and do not achieve sustained positive cash flow, we will be severely
constrained in our ability to fund our operations, fulfill our business plan and be able to possibly develop and commercialize
other potential products. In addition, if we are unable to market our product as a result of a quality problem, failure to maintain
or obtain regulatory approvals, unexpected or serious complications or other unforeseen negative effects related to our product
or the other factors discussed in these risk factors, we would lose our only potential source of revenue, and our business will
be materially adversely affected.
If
We Fail To Develop And Retain Our Sales Force, Our Business Could Suffer.
We
plan to develop a direct sales force in the United States. As we launch our product, assuming that we are successful in securing
FDA approval, any efforts to increase our marketing efforts and expand into new geographies will be dependent on our ability to
hire and retain, as well as grow and develop our sales personnel. We intend to make a significant investment in recruiting and
training sales representatives. There is significant competition for sales personnel experienced in relevant medical device sales.
Once hired, the training process may be expected to be lengthy because it requires significant education for new sales representatives
to achieve the level of competency with our product and meet the expectations of potential clients. Upon completion of the training,
and any previous experience in marketing medical devices, generally, our sales representatives typically require lead time in
the field to grow their network of accounts and achieve the productivity levels we expect them to reach in any individual territory.
If we are unable to attract, motivate, develop and retain a sufficient number of qualified sales personnel, and if our sales representatives
do not achieve the productivity levels we expect them to reach, our revenue will not grow at the rate we expect and our financial
performance will suffer. Also, to the extent we hire personnel from our competitors, we may have to wait until applicable non-competition
provisions have expired before deploying such personnel in restricted territories or incur costs to relocate personnel outside
of such territories, and we may be subject to allegations that these new hires have been improperly solicited, or that they have
divulged to us proprietary or other confidential information of their former employers.
If
We Are Unable To Educate Physicians On The Safe And Effective Use Of Our Product, We May Be Unable To Achieve Our Expected Growth.
An
important part of our sales process will include the education of physicians on the safe and effective use of our wound healing
device. There is a learning process for physicians to become proficient in the use of our product and, based upon the use of our
Device in Europe, it typically takes several procedures for a physician to become comfortable using the device. If a physician
experiences difficulties during an initial procedure or otherwise, that physician may be less likely to continue to use our product,
or to recommend it to other physicians. It is critical to the success of our commercialization efforts to educate physicians on
the proper use of the device, and to provide them with adequate product support during training. It is important for our expected
growth that these physicians advocate for the benefits of our product in the broader marketplace. If physicians are not properly
trained, they may misuse or ineffectively use our product. This may also result in unsatisfactory patient outcomes, negative publicity
or lawsuits against us, any of which could have a material adverse effect on our business.
There
May Not Be A Wide Enough Client Base To Sustain Our Business.
The
Company’s principal business is to engage in marketing and selling its wound healing treatments with our device. The Company
hopes to sell its wound healing device treatments in numbers large enough to make its business model work for profitability, of
which there can b no assurance.
If
We Are Unable To Protect Our Intellectual Property, Our Business Will Be Negatively Affected.
The
market for medical devices is subject to frequent litigation regarding patent and other intellectual property rights. It is possible
that our device may not withstand challenges made by others or that our patents protect our rights adequately.
Our
success depends in large part on our ability to secure and maintain effective patent protection for our product in the United
States and internationally. We have acquired patents that have been granted as well as patents pending and expect to continue
to file patent applications for various aspects of our device technology. However, we face the risks that:
-
we may fail to secure necessary patents on our patents pending prior to or after obtaining regulatory clearances, thereby permitting
competitors to market competing products; and
- our already-granted patents may be re-examined, invalidated or not extended.
If
we are unable to protect our intellectual property adequately, our business and commercial prospects will suffer.
We
May Be Accused Of Infringing Intellectual Property Rights Of Third Parties.
Other
parties may claim that our Device infringes on their proprietary rights. We may be subject to claims and legal proceedings regarding
alleged infringement by us of the intellectual property rights of third parties. Such claims, whether or not meritorious, may
result in the expenditure of significant financial and managerial resources, legal fees, injunctions or the payment of damages.
In the event that our patents do not fully protect us, we may need to obtain licenses from third parties who allege that we have
infringed their rights, but such licenses may not be available on terms acceptable to us or at all. In addition, we may not be
able to obtain or utilize on terms that are favorable to us, or at all, licenses or other rights with respect to intellectual
property we do not own.
We
May Face Product Liability Claims That Could Result In Costly Litigation And Significant Liabilities.
Marketing
of our device and clinical testing of our product may expose us to product liability and other tort claims. Although we intend
to purchase and maintain product liability insurance, the coverage limits of our policies may not be adequate and one or more
successful claims brought against us may have a material adverse effect on our business and results of operations. Additionally,
product liability claims could negatively affect our business reputation, adversely impacting continued product sales as well
as our ability to obtain and maintain regulatory approval for our products.
Current
Or Future Government Regulations May Add To Our Operating Costs.
We
may face unanticipated increases in operating costs because of any changes in governmental regulations related to our wound healing
Device, specifically, and/or medical devices, generally. We have no assurance that the independent clinical trials will result
in favorable data that will be accepted by the FDA. Laws and regulations may be introduced and court decisions may be rendered
that materially affect the demand for our product. Complying with new regulations and/or court decisions could increase our operating
costs. Furthermore, we may be subject to the laws of various jurisdictions where we actually conduct business. Our failure to
qualify to do business in a jurisdiction that requires us to do so could subject us to fines or penalties and could have a material
adverse impact on our business and operations.
We
Are Required To Comply With Medical Device Reporting, Or MDR, Requirements And Must Report Certain Malfunctions, Deaths And Serious
Injuries Associated With Our Device Which Can Result In Voluntary Corrective Actions, Mandatory Recall Or Agency Enforcement Actions.
Under
applicable FDA MDR regulations, medical device manufacturers are required to submit information to the FDA when they receive a
report or become aware that a device has or may have caused or contributed to a death or serious injury or has or may have a malfunction
that would likely cause or contribute to death or serious injury if the malfunction were to recur. All manufacturers placing medical
devices on the market in the European Economic Area and the United States are legally bound to report any serious or potentially
serious incidents involving devices they produce or sell to the regulatory agency, or Competent Authority, in whose jurisdiction
the incident occurred.
Malfunction
of our wound healing Device could result in future voluntary corrective actions, such as recalls, including corrections, or customer
notifications, or agency action, such as inspection or enforcement actions. If malfunctions do occur, we may be unable to correct
the malfunctions adequately or prevent further malfunctions, in which case we may need to cease manufacture and distribution of
the affected products, initiate voluntary recalls, and redesign the products. Regulatory authorities may also take actions against
us, such as ordering recalls, imposing fines, or seizing the affected products. Any corrective action, whether voluntary or involuntary,
will require the dedication of our time and capital, distract management from operating our business, and may harm our reputation
and financial results.
We
May Be Subject To Federal, State And Foreign Healthcare Laws And Regulations, And A Finding Of Failure To Comply With Such Laws
And Regulations Could Have A Material Adverse Effect On Our Business.
Our
operations are, and will continue to be, directly and indirectly affected by various federal, state or foreign healthcare laws,
including, but not limited to, those described below. In particular, we are subject to the federal Anti-Kickback Statute, which
prohibit, among other things, any person or entity from knowingly and willfully offering, paying, soliciting or receiving any
remuneration, directly or indirectly, in cash or in kind, in return for or to induce the referring, ordering, leasing, purchasing
or arranging for or recommending the referring, ordering, purchasing or leasing of any good, facility, item or service, for which
payment may be made, in whole or in part, under federal healthcare programs, such as the Medicare and Medicaid programs.
We
are also subject to the federal HIPAA statute, which, among other things, created federal criminal laws that prohibit knowingly
and willfully executing, or attempting to execute, a scheme or artifice to defraud any health care benefit program or making any
materially false, fictitious or fraudulent statements relating to health care matters.
We
are also subject to the federal “sunshine” law, which requires us to track and report annually to the Centers for
Medicare & Medicaid Services, or CMS, information related to “payments or other transfers of value” made to physicians
(defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals and to report annually
to CMS ownership and investment interests held by physicians, as defined above, and their immediate family members in our company
so long as it is privately held.
In
addition, we are subject to the federal civil and criminal false claims laws and civil monetary deduction laws, which prohibit,
among other things, persons or entities from knowingly presenting, or causing to be presented, a false or fraudulent claim to,
or the knowing use of false records or statements to obtain payment from, or approval by, the federal government. Suits filed
under the False Claims Act, known as “qui tam” actions, can be brought by any individual on behalf of the government
and such individuals, commonly known as “whistleblowers”, may share in any amounts paid by the entity to the government
in fines or settlement. When an entity is determined to have violated the False Claims Act, it may be required to pay down to
three times the actual damages sustained by the government, plus civil penalties for each separate false claim.
Many
states have also adopted laws similar to each of the above federal laws, such as anti-kickback and false claims laws which may
be broader in scope and apply to items or services reimbursed by any third-party payor, including commercial insurers, as well
as laws that restrict our marketing activities with physicians, and require us to report consulting and other payments to physicians.
Some states mandate implementation of compliance programs to ensure compliance with these laws. We also are subject to foreign
fraud and abuse laws, which vary by country.
If
our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply
to us now or in the future, we may be subject to penalties, including civil and criminal penalties, damages, fines, disgorgement,
exclusion from governmental health care programs, and the curtailment or restructuring of our operations, any of which could adversely
affect our ability to operate our business and our financial results.
Our
Future Success Is Dependent, In Part, On The Performance And Continued Service Of Ohad Goren and Itsik Ben Yesha, Our Chief Executive
Officer and Chief Technology Officer.
The
Company will be dependent on its key executives, Ohad Goren and Itsik Ben Yesha, our CEO and CTO, respectively, for the foreseeable
future. The loss of the services from either one could have a material adverse effect on the operations and prospects of the Company.
They are expected to handle all aspects of our medical device business and manage our operations. Their responsibilities include
developing business arrangements, directing the development of the Company’s technology and IP, overseeing technical aspects
of our business, regulations and formulating strategies and materials to be used during our presentations and meetings. At this
time, the Company does not have an employment agreement with either Mr. Goren or Ben Yesha, though the Company may enter into
such an agreement with Mr. Goren, its CEO and Mr. Ben Yesha, its CTO, on terms and conditions usual and customary in our industry.
The Company does not currently have “key man” life insurance on neither Mr. Goren, Mr. Ben Yesha nor on Mr. Ron Weissberg,
our Chairman and control shareholder.
We
Operate In A Highly Competitive Industry And Compete Against Several Large Companies Which Could Adversely Affect Our Ability
to Succeed.
There
are numerous established companies that offer wound healing products including products from Kinetic Concepts, Inc. and Smith
& Nephew, which have far greater financial and other resources and far longer operating histories than we do. We are a new
entry into this competitive market and may struggle to differentiate ourselves as a viable competitor whose wound healing Device
provides more value and efficacy than the competition.
We
are a “smaller reporting company” and, as a result of the reduced disclosure and governance requirements applicable
to smaller reporting companies, our Common Stock may be less attractive to investors.
We
are a “smaller reporting company,” meaning that we are not an investment company, an asset-backed issuer, or a majority-owned
subsidiary of a parent company that is not a “smaller reporting company,” have a public float of less than $75 million
and have annual revenues of less than $50 million during the most recently completed fiscal year. As a “smaller reporting
company”, we are subject to lesser disclosure obligations in our SEC filings compared to other issuers. Specifically, “smaller
reporting companies” are able to provide simplified executive compensation disclosures in their filings, are exempt from
the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide
an attestation report on the effectiveness of internal control over financial reporting and have certain other decreased disclosure
obligations in their SEC filings, including, among other things, only being required to provide two years of audited consolidated
financial statements in annual reports. Decreased disclosures in our SEC filings due to our status a “smaller reporting
company” may make it harder for investors to analyze our operating results and financial prospects.
We
Are An “Emerging Growth Company” Under The Recently Enacted Jobs Act And We Cannot Be Certain If The Reduced Disclosure
Requirements Applicable To Emerging Growth Companies Will Make Our Common Stock Less Attractive To Investors.
We
qualify as an “emerging growth company” under the recently enacted JOBS Act. As a result, we are permitted to, and
intend to, rely on exemptions from certain disclosure requirements. For so long as we are an emerging growth company, among other
things, we will not be required to:
●
have an auditor report on our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;
●
submit certain executive compensation matters to shareholder advisory votes, such as “say-on-pay” and “say-on-frequency”;
●
obtain shareholder approval of any golden parachute payments not previously approved; and
●
disclose certain executive compensation related items such as the correlation between executive compensation and performance and
comparisons of the CEO’s compensation to median employee compensation.
In
addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended
transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards.
In other words, an “Emerging Growth Company” can delay the adoption of certain accounting standards until those standards
would otherwise apply to private companies. We have elected to take advantage of the benefits of this extended transition period.
Our financial statements may therefore not be comparable to those of companies that comply with such new or revised accounting
standards.
We
will remain an “Emerging Growth Company” for up to five years, or until the earliest of (i) the last day of the first
fiscal year in which our total annual gross revenues exceed $1 billion; (ii) the date that we become a “large accelerated
filer” as defined in Rule 12b-2 under the Securities Exchange Act of 1934, which would occur if the market value of our
ordinary shares that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed
second fiscal quarter or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding
three-year period.
Until
such time, however, because the JOBS Act has only recently been enacted, we cannot predict whether investors will find our stock
less attractive because of the more limited disclosure requirements that we may be entitled to follow and other exemptions on
which we are relying while we are an “emerging growth company”. If some investors find our Common Stock less attractive
as a result, there may be a less active trading market for our Common Stock and our stock price may be more volatile.
Our
By-Laws Provide For Indemnification Of Our Directors And the Purchase Of D&O Insurance At Our Expense And Limit Their Liability
Which May Result In A Major Cost To Us And Hurt The Interest Of Our Shareholders Because Corporate Resources May Be Expended For
The Benefit Of Our Directors.
The
Company’s By-Laws include provisions that eliminate the personal liability of the directors of the Company for monetary
damages to the fullest extent possible under the laws of the State of Delaware or other applicable law. These provisions eliminate
the liability of directors to the Company and its stockholders for monetary damages arising out of any violation of a director
of his fiduciary duty of due care. Under Delaware law, however, such provisions do not eliminate the personal liability of a director
for (i) breach of the director’s duty of loyalty, (ii) acts or omissions not in good faith or involving intentional misconduct
or knowing violation of law, (iii) payment of dividends or repurchases of stock other than from lawfully available funds, or (iv)
any transaction from which the director derived an improper benefit. These provisions do not affect a director’s liabilities
under the federal securities laws or the recovery of damages by third parties.
Reporting
Requirements Under The Exchange Act And Compliance With The Sarbanes-Oxley Act Of 2002, Including Establishing And Maintaining
Acceptable Internal Controls Over Financial Reporting, Are Costly And May Increase Substantially.
The
rules and regulations of the SEC require a public company to prepare and file periodic reports under the Exchange Act, which will
require that the Company engage legal, accounting, auditing and other professional services. The engagement of such services is
costly. Additionally, the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) requires, among other things, that
we design, implement and maintain adequate internal controls and procedures over financial reporting. The costs of complying with
the Sarbanes-Oxley Act and the limited technically qualified personnel we have may make it difficult for us to design, implement
and maintain adequate internal controls over financial reporting. We expect these costs to be approximately $35,000 per year.
In the event that we fail to maintain an effective system of internal controls or discover material weaknesses in our internal
controls, we may not be able to produce reliable financial reports or report fraud, which may harm our overall financial condition
and result in loss of investor confidence and a decline in our share price.
As
a public company, we may be subject to the reporting requirements of the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank
Act of 2010 and other applicable securities rules and regulations. Despite recent reforms made possible by the JOBS Act, compliance
with these rules and regulations will nonetheless increase our legal and financial compliance costs, make some activities more
difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are no longer an “Emerging
Growth Company.” The Exchange Act requires, among other things, that we file annual, quarterly, and current reports with
respect to our business and operating results.
We
are working with our legal, independent accounting and financial advisors to identify those areas in which changes should be made
to our financial and management control systems to manage our growth and our obligations as a public company. These areas include
corporate governance, corporate control, disclosure controls and procedures and financial reporting and accounting systems. We
have made, and will continue to make, changes in these and other areas. However, we anticipate that the expenses that will be
required for being a public company could be material. We estimate that the aggregate cost of increased legal services; accounting
and audit functions; personnel, such as a chief financial officer familiar with the obligations of public company reporting; consultants
to design and implement internal controls could be material. In addition, if and when we retain independent directors and/or additional
members of senior management, we may incur additional expenses related to director compensation and/or premiums for directors’
and officers’ liability insurance, the costs of which we cannot estimate at this time. We may also incur additional expenses
associated with investor relations and similar functions, the cost of which we also cannot estimate at this time. However, these
additional expenses individually, or in the aggregate, may also be material.
In
addition, being a public company could make it more difficult or more costly for us to obtain certain types of insurance, including
directors’ and officers’ liability insurance, and we may be forced to accept reduced policy limits and coverage or
incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more difficult
for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.
The
increased costs associated with operating as a public company may decrease our operating performance, and may cause us increase
the prices of our product to offset the effect of such increased costs. Additionally, if these requirements divert our management’s
attention from other business concerns, they could have a material adverse effect on our business, financial condition and results
of operations.
Future
Manufacturing Of Our Product May Be Interrupted Due To International Political Situations, Natural Disasters Or Other Causes.
Once
FDA approval is granted, we plan to manufacture our BST Device principally in Israel. Domestic situations in Israel and surrounding
countries could possibly result in production and delivery problems. We are subject to the risk that future manufacturing and
delivery of our BST Device may be interrupted as a result of natural disasters or capacity constraints with our vendors’
or suppliers’ hardware. Any such interruptions may lead to a loss of customers or distributors and, accordingly, may adversely
affect our business and results of operations.
Risks
Relating to our Common Stock and this Offering
The
market price of our Common Stock is volatile and may decline before or after the subscription rights expire in the rights offering.
Currently,
our Common Stock is quoted on the OTCQB market under the symbol “EQUR.” Our Common Stock currently trades in small
volumes. There can be no assurance that any trading market will ever develop or be maintained on the OTCQB market. Any trading
market that may develop in the future for our Common Stock will most likely be very volatile; and numerous factors beyond our
control may have a significant effect on the market.
The
market price of our Common Stock could be subject to wide fluctuations in response to numerous factors, some of which are beyond
our control. These factors include, among other things, actual or anticipated variations in our costs of doing business, operating
results and cash flow, the nature and content of our earnings releases and our competitors’ earnings releases, changes in
financial estimates by securities analysts, business conditions in our markets and the general state of the securities markets
and the market for other financial stocks, changes in capital markets that affect the perceived availability of capital to companies
in our industry, and governmental legislation or regulation, as well as general economic and market conditions, such as downturns
in our economy and recessions.
Once
you exercise your subscription rights, you may not revoke them. We cannot assure you that the market price of our Common Stock
will not decline after you elect to exercise your subscription rights. If you exercise your subscription rights and, afterwards,
the public trading market price of our shares of Common Stock decreases below the subscription price, you will have committed
to buying shares of our Common Stock at a price above the prevailing market price and could have an immediate unrealized loss.
Currently, our Common Stock is quoted on the OTCQB market under the symbol “EQUR.” Our Common Stock currently trades
in small volumes. There can be no assurance that any trading market will ever develop or be maintained on the OTCQB market. Any
trading market that may develop in the future for our Common Stock will most likely be very volatile; and numerous factors beyond
our control may have a significant effect on the market. The market price of our Common Stock may also fluctuate significantly
in response to the following factors, some which are beyond our control:
●
actual or anticipated variations in our quarterly operating results;
●
changes in securities analysts’ estimates of our financial performance;
●
changes in market valuations of similar companies;
●
increased competition;
●
announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures, capital
commitments, new products or product enhancements;
●
loss of a major customer or failure to complete significant transactions;
●
additions or departures of key personnel; and
●
the number of shares in our public float.
The
trading price of our Common Stock on OTCQB market may fluctuate significantly based upon factors unrelated or disproportionate
to our operating performance. These market fluctuations, as well as general economic, political and market conditions, such as
recessions, interest rates or international currency fluctuations may adversely affect the market price of our Common Stock.
The
subscription price determined for the rights offering is not necessarily an indication of the fair value of our Common Stock.
The
per share subscription price is not necessarily related to our book value, tangible book value, multiple of earnings or any other
established criteria of fair value and may or may not be considered the fair value of our Common Stock to be offered in the rights
offering. After the date of this prospectus, our shares of Common Stock may trade at prices below the subscription price.
Once
you agree to subscribe to our shares pursuant to the rights offering, you are committed to buying shares of our Common Stock at
a price which may be above the prevailing market rate.
Once
you exercise your subscription rights, you may not revoke the exercise of such rights. The trading price of our Common Stock may
decline before the rights offering is concluded or before the subscription rights expire. If you exercise your subscription rights
and, thereafter, the trading price of our Common Stock decreases below the subscription price, you will have committed to buying
shares of our Common Stock at a price above the prevailing market price, in which case you will have an immediate, unrealized
loss. No assurance can be given that following the exercise of your subscription rights, you will be able to sell your shares
of Common Stock at a price equal to or greater than the subscription price paid for such shares. As such, you may lose all or
part of your investment in our Common Stock. Further, until the certificate representing the shares purchased under the rights
offering is delivered to you, you will not be able to sell such shares of our Common Stock.
If
you do not act promptly and follow the subscription instructions, your exercise of subscription rights may be rejected.
Stockholders
who desire to purchase shares in the rights offering must act promptly to ensure that all required forms and payments are actually
received by the rights agent before 5:00 p.m., New York time, on __________, 2018, (four weeks from the date of effectiveness
of this Registration Statement), the expiration date of the rights offering, unless extended by us, in our sole discretion. If
you are a beneficial owner of shares, but not a record holder, you must act promptly to ensure that your broker, bank, or other
nominee acts for you and that all required forms and payments are actually received by the rights agent before the expiration
date of the rights offering. We will not be responsible if your broker, custodian, or nominee fails to ensure that all required
forms and payments are actually received by the rights agent before the expiration date of the rights offering. If you fail to
complete and sign the required subscription forms, send an incorrect payment amount or otherwise fail to follow the subscription
procedures of the rights offering, the rights agent may reject your subscription or accept it only to the extent of the payment
received. Neither we, nor the rights agent, undertakes to contact you concerning an incomplete or incorrect subscription form
or payment, nor are we under any obligation to correct such forms or payment. We have the sole discretion to determine whether
a subscription exercise properly follows the subscription procedures.
Significant
sales of our Common Stock, or the perception that significant sales thereof may occur in the future, could adversely affect the
market price for our Common Stock.
The
sale of substantial amounts of our Common Stock could adversely affect the price of these securities. Sales of substantial amounts
of our Common Stock in the public market, and the availability of shares for future sale could adversely affect the prevailing
market price of our Common Stock and could cause the market price of our Common Stock to remain low for a substantial amount of
time.
If
you do not exercise your subscription rights, your percentage ownership in E-Qure will be diluted.
Assuming
we sell the full amount of shares issuable in connection with the rights offering, we will issue approximately 5,559,436 shares
of our Common Stock. If you choose not to exercise your basic subscription rights and you do not exercise your over-subscription
privilege prior to the expiration of the rights offering and we sell any shares to other existing stockholders, your relative
ownership interest in our Common Stock will be diluted.
We
may cancel the rights offering at any time without further obligation to you.
We
may, in our sole discretion, cancel the rights offering before it expires. If we cancel the rights offering, neither we nor the
rights agent will have any obligation to you with respect to the rights except to return any payment received by the rights agent,
without interest, as soon as practicable.
We
have broad discretion in the use of the net proceeds from this offering and may not use them effectively.
Our
management will have broad discretion in the application of the net proceeds from this offering, including for any of the purposes
described in the section of this prospectus entitled “Use of Proceeds.” The failure by our management to apply these
funds effectively could harm our business. Pending their use, we may invest the net proceeds from this offering in short-term,
investment-grade, interest-bearing securities. These investments may not yield a favorable return to our stockholders.
The
subscription rights are not transferable and there is no market for the subscription rights.
You
may not sell, give away or otherwise transfer your subscription rights. The subscription rights are only transferable by operation
of law. Because the subscription rights are non-transferable, there is no market or other means for you to directly realize any
value associated with the subscription rights. You must exercise the subscription rights and acquire shares to realize any potential
value from your subscription rights.
The
failure to comply with the internal control evaluation and certification requirements of Section 404 of Sarbanes-Oxley Act could
harm our operations and our ability to comply with our periodic reporting obligations.
The
Company is subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
We are also required to comply with the internal control evaluation and certification requirements of Section 404 of the Sarbanes-Oxley
Act of 2002 (“Section 404”). This process may divert internal resources and will take a significant amount of time,
effort and expense to complete. If it is determined that we are not in compliance with Section 404, we may be required to implement
new internal control procedures and reevaluate our financial reporting. We may experience higher than anticipated operating expenses
as well as independent auditor fees during the implementation of these changes and thereafter. Further, we may need to hire additional
qualified personnel in order for us to be compliant with Section 404. If we are unable to implement these changes effectively
or efficiently, it could harm our operations, financial reporting or financial results.
We
are a “smaller reporting company” and, as a result of the reduced disclosure and governance requirements applicable
to smaller reporting companies, our Common Stock may be less attractive to investors.
We
are a “smaller reporting company,” meaning that we are not an investment company, an asset-backed issuer, or a majority-owned
subsidiary of a parent company that is not a “smaller reporting company,” have a public float of less than $75 million
and have annual revenues of less than $50 million during the most recently completed fiscal year. As a “smaller reporting
company”, we are subject to lesser disclosure obligations in our SEC filings compared to other issuers. Specifically, “smaller
reporting companies” are able to provide simplified executive compensation disclosures in their filings, are exempt from
the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide
an attestation report on the effectiveness of internal control over financial reporting and have certain other decreased disclosure
obligations in their SEC filings, including, among other things, only being required to provide two years of audited consolidated
financial statements in annual reports. Decreased disclosures in our SEC filings due to our status a “smaller reporting
company” may make it harder for investors to analyze our operating results and financial prospects.
There
Is No Assurance Of A Liquid Public Market Of Our Common Stock Or That You May Be Able To Liquidate Your Investment In Our Common
Stock.
At
present, our Common Stock is subject to quotation of the OTCQB market. There is only a limited, liquid public trading marketing
for our Common Stock and there can be no assurance that one will ever develop. Market liquidity will depend on the perception
of our business and any steps that our management might take to bring us to the awareness of investors. There can be given no
assurance that there will be any awareness generated. Consequently, investors may not be able to liquidate their investment or
liquidate it at a price that reflects the value of the business or the value of their initial investment in our Common Stock.
As a result, holders of our securities may not find purchasers for our securities should they to decide to sell securities held
by them. Consequently, our securities should be purchased only by investors who have no need for liquidity in their investment
and who can hold our securities for a prolonged period of time.
The
Market Price Of Our Common Stock May Be Volatile.
In
the event an active trading market develops for our Common Stock, the market price of our Common Stock may be highly volatile,
as is the stock market in general, and the market for securities subject to quotation on OTC Markets in particular. Some of the
factors that may materially affect the market price of our Common Stock are beyond our control, such as changes in conditions
or trends in the industry in which we operate or sales of our Common Stock. These factors may materially adversely affect the
market price of our Common Stock, regardless of our business performance. Public stock markets have experienced extreme price
and trading volume volatility. This volatility has significantly affected the market prices of securities of many companies for
reasons frequently unrelated to the operating performance of the specific companies. These market fluctuations may adversely affect
the market price of our Common Stock.
You
Will Experience Dilution Of Your Ownership Interest Because Of The Future Issuance Of Additional Shares Of Our Common Stock Or
Our Preferred Stock.
In
the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership
interests of our present stockholders. We are authorized to issue an aggregate of 500,000,000 shares of Common Stock, par value
$0.00001 per share, of which 22,237,562 are currently outstanding.
We
may also issue additional shares of our Common Stock or other securities that are convertible into or exercisable for Common Stock
in connection with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital
raising purposes, or for other business purposes. The future issuance of any such additional shares of our Common Stock or other
securities may have a negative impact on the market price of our Common Stock. There can be no assurance that we will not be required
to issue additional shares, warrants or other convertible securities in the future in conjunction with hiring or retaining employees
or consultants, future acquisitions, future sales of our securities for capital raising purposes or for other business purposes,
including at a price (or exercise prices) below the price at which shares of our Common Stock will be quoted on the OTCQB Markets.
We
May Never Pay Any Dividends To Our Shareholders.
We
currently intend to retain any future earnings for use in the operation and expansion of our business. Accordingly, we do not
expect to pay any dividends in the foreseeable future, but will review this policy as circumstances dictate. The declaration and
payment of all future dividends, if any, will be at the sole discretion of our board of directors, which retains the right to
change our dividend policy at any time. Consequently, stockholders must rely on sales of their Common Stock after price appreciation,
which may never occur, as the only way to realize any future gains on their investment.
Insider
Will Continue To Have Substantial Control Over Us After This Offering and Will Be Able To Influence Corporate Matters.
Upon
completion of this Offering, our directors and executive officers and stockholders holding more than 5% of our Common Stock and
their affiliates will beneficially own, in the aggregate, approximately 30% of our outstanding Common Stock. As a result, if these
stockholders were to choose to act together, they would be able to exercise significant influence over all matters requiring stockholder
approval, including the election of directors and approval of significant corporate transactions, such as a merger or other sale
of our company or its assets. This concentration of ownership could limit your ability to influence corporate matters and may
have the effect of delaying or preventing a third party from acquiring control over us. For information regarding the ownership
of our outstanding stock by our executive officers and directors and their affiliates, see “Security Ownership of Certain
Beneficial Owners and Management.”
We
cannot assure you that the interests of our management team will coincide with the interests of the investors. So long as our
management team collectively controls a significant portion of our Common Stock, these individuals, or entities controlled by
them, will continue to collectively be able to strongly influence or effectively control our decisions.
Anti-Takeover
Provisions Of The Delaware General Corporation Law May Discourage Or Prevent A Change Of Control, Even If An Acquisition Would
Be Beneficial To Our Shareholders, Which Could Reduce Our Stock Price.
We
are subject to the provisions of Section 203 of the Delaware General Corporation Law, which may prohibit certain business combinations
with stockholders owning 15% or more of our outstanding voting stock. These and other provisions in our amended and restated certificate
of incorporation, amended and restated bylaws and Delaware law could make it more difficult for stockholders or potential acquirers
to obtain control of our board of directors or initiate actions that are opposed by our then-current board of directors, including
a merger, tender offer or proxy contest involving our company. Any delay or prevention of a change of control transaction or changes
in our board of directors could cause the market price of our Common Stock to decline.
State
Blue Sky Registration, Potential Limitations On Resale Of Our Common Stock.
The
holders of our shares of Common Stock and those persons, who desire to purchase our Common Stock in any trading market that might
develop, should be aware that there may be state blue-sky law restrictions upon the ability of investors to resell our securities.
Accordingly, investors should consider the secondary market our securities to be a limited one.
It
is the present intention of management after the active commencement of operations in to seek coverage and publication of information
regarding the Company in an accepted publication manual, which permits a manual exemption. The manual exemption permits a security
to be distributed in a particular state without being registered if the Registrant issuing the security has a listing for that
security in a securities manual recognized by the state. However, it is not enough for the security to be listed in a recognized
manual. The listing entry must contain (1) the names of issuer’s officers, and directors, (2) an issuer’s balance
sheet, and (3) a profit and loss statement for either the fiscal year preceding the balance sheet or for the most recent fiscal
year of operations. Furthermore, the manual exemption is a non-issuer exemption restricted to secondary trading transactions,
making it unavailable for issuers selling newly issued securities.
Most
of the accepted manuals are those published in Standard and Poor’s, Moody’s Investor Service, Fitch’s Investment
Service, and Best’s Insurance Reports, and many states expressly recognize these manuals. A smaller number of states declare
that they “recognize securities manuals” but do not specify the recognized manuals. The following states do not have
any provisions and therefore do not expressly recognize the manual exemption: Alabama, Georgia, Illinois, Kentucky, Louisiana,
Montana, South Dakota, Tennessee, Vermont and Wisconsin.
Our
Common Stock Is Considered A Penny Stock, Which May Be Subject To Restrictions On Marketability, So You May Not Be Able To Sell
Your Shares.
We
may be subject now and in the future to the Penny Stock rules if our shares of Common Stock sell below $5.00 per share. Penny
stocks generally are equity securities with a price of less than $5.00. The penny stock rules require broker-dealers to deliver
a standardized risk disclosure document prepared by the SEC which provides information about penny stocks and the nature and level
of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for
the penny stock, the compensation of the broker-dealer and its salesperson, and monthly account statements showing the market
value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson
compensation information must be given to the customer orally or in writing prior to completing the transaction and must be given
to the customer in writing before or with the customer’s confirmation.
In
addition, the penny stock rules require that prior to a transaction, the broker dealer must make a special written determination
that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction.
The penny stock rules are burdensome and may reduce purchases of any Offerings and reduce the trading activity for shares of our
Common Stock. As long as our shares of Common Stock are subject to the penny stock rules, the holders of such shares of Common
Stock may find it more difficult to sell their securities.
The
Control Deficiencies In Our Internal Control Over Financial Reporting May Until Remedied Cause Errors in Our Financial Statements
Or Cause Our Filings With The SEC To Not Be Timely.
We
have identified control deficiencies in our internal control over financial reporting as of the evaluation done by management
as of December 31, 2017, including those related to (i) absent or inadequate segregation of duties within a significant account
or process, (ii) inadequate documentation of the components of internal control, and (iii) inadequate design of information technology
general and application controls that prevent the information system from providing complete and accurate information consistent
with financial reporting objectives and current needs. If our internal control over financial reporting or disclosure controls
and procedures are not effective, there may be errors in our financial statements that could require a restatement or our filings
may not be timely made with the SEC. Based on the work undertaken and performed by us, however, we believe the financial statements
contained in our reports filed with the SEC are fairly stated in all material respects in accordance with GAAP for each of the
periods presented. We intend to implement additional corporate governance and control measures to strengthen our control environment
as we are able, but we may not achieve our desired objectives. We may identify material weaknesses and control deficiencies in
our internal control over financial reporting in the future that may require remediation and could lead investors losing confidence
in our reported financial information, which could lead to a decline in our stock price.
USE
OF PROCEEDS
If
the rights offering is fully subscribed, meaning that we issue the maximum possible number of shares of Common Stock upon exercise
of rights, we expect to receive an aggregate of approximately $510,943 from the sale of Units pursuant to the Unit Rights Offering
after deducting estimated offering expenses payable by us. This does not include any proceeds from the exercise of any Class A
or Class B Warrants, of which there can be no assurance.
We
intend to use the net proceeds of this offering for general corporate purposes, including working capital, capital expenditures,
and strategic acquisitions. A portion of the net proceeds may also be used for the acquisition of businesses, assets, and technologies
that are complementary to ours, or for other strategic purposes, although we have no current understandings, commitments or agreements
to do so.
We
will have broad discretion over the uses of the net proceeds from this offering. Pending these uses, we intend to invest the net
proceeds from this offering in short-term, investment-grade interest-bearing securities such as money market funds, certificates
of deposit, commercial paper and guaranteed obligations of the U.S. government.
DETERMINATION
OF OFFERING PRICE
In
considering the subscription price, our board of directors considered a number of factors, including the price at which our stockholders
might be willing to participate in the rights offering, historical and current trading prices for our common shares, the need
for liquidity and capital, and the desire to provide an opportunity to our stockholders to participate in the rights offering
on a pro rata basis. In conjunction with its review of these factors, the board of directors is currently reviewing our history
and prospects, including our prospects for future earnings, our current financial condition and regulatory status, and a range
of discounts to market value represented by the subscription prices in various prior rights offerings of public companies. The
subscription price will not necessarily be related to our book value, net worth, or any other established criteria of value and
may or may not be considered the fair value of our common shares to be offered in the rights offering. You should not assume or
expect that, after the rights offering, our common shares will trade at or above the subscription price and we cannot assure you
that our common shares will trade at or above the subscription price in any given time period. We also cannot assure you that
you will be able to sell common shares purchased during the rights offering at a price equal to or greater than the Unit Offering
Subscription Price of $0.10 per Unit. Accordingly, we urge you to obtain a current quote for our common shares before exercising
your subscription rights.
DILUTION
Existing
stockholders of our Common Stock in the rights offering will experience an immediate increase in the net tangible book value per
share of our Common Stock. Our net tangible book value as of December 31, 2017, was approximately ($272,421), or ($0.0122) per
share of our Common Stock (based upon 22,237,562 shares of our Common Stock outstanding). Net tangible book value per share is
equal to our total net tangible book value, which is our total tangible assets less our total liabilities, divided by the number
of shares of our outstanding Common Stock. Increase per share equals the difference between the amount per share paid by purchasers
of shares of Common Stock in the rights offering and the net tangible book value per share of our Common Stock immediately after
the rights offering.
Based
on the aggregate offering of a maximum of 5,559,436 shares and after deducting estimated offering expenses payable by us of $45,000,
and the application of the estimated $510,943 of net proceeds from the rights offering, our pro forma net tangible book value
as of December 31, 2017, would be approximately $238,522 or $0.0107 per share. This represents an immediate increase in pro forma
net tangible book value to existing stockholders of $0.0229 per share.
The
following table illustrates this per-share increase (assuming a fully subscribed for rights offering of 5,559,436 shares of Common
Stock at the subscription price of $0.10 per share):
Subscription price
|
|
|
0.10
|
|
Net tangible book value per share prior to the rights offering
|
|
$
|
(0.0122
|
)
|
Increase per share attributable due to the rights offering
|
|
$
|
0.0229
|
|
Pro forma net tangible book value per share after the rights offering
|
|
$
|
0.0107
|
|
Capitalization
The
following table sets forth historical and pro forma cash and cash equivalents and capitalization as of December 31, 2017.
For
purposes of this table, we have assumed that $510,943 net is raised in this rights offering. However, it is impossible to predict
how many rights will be exercised in this offering and therefore how much proceeds will actually be raised.
This
table should be read in conjunction with our consolidated financial statements and the notes thereto which are elsewhere in this
prospectus.
|
|
December 31, 2017
|
|
|
|
Actual
|
|
|
Pro Forma
|
|
Cash and cash equivalents
|
|
$
|
10,962
|
|
|
$
|
521,905
|
|
Total assets
|
|
|
93,344
|
|
|
|
604,287
|
|
Total liabilities
|
|
|
367,765
|
|
|
|
367,765
|
|
Common stock, $0.00001 par value, 500,000,000 shares authorized, 22,237,562 shares and 27,796,998 shares issued on an actual and pro-forma basis, respectively.
|
|
|
222
|
|
|
|
278
|
|
Additional paid-in capital
|
|
|
31,325,044
|
|
|
|
31,880,932
|
|
Stock payable
|
|
|
21,000
|
|
|
|
21,000
|
|
Accumulated deficit
|
|
|
(31,618,687
|
)
|
|
|
(31,663,687
|
)
|
Total stockholders’ equity (deficit)
|
|
|
(272,421
|
)
|
|
|
238,523
|
)
|
Total liabilities and stockholders’ equity
|
|
$
|
95,344
|
|
|
$
|
606,288
|
|
THE
UNIT RIGHTS OFFERING
The
Unit Subscription Rights
We
are distributing to the record holders of our Common Stock as of 5:00 p.m., Eastern Time, on the Record Date, following the effective
date of the Registration Statement, of which this prospectus is a part, non-transferable rights to purchase Units, each consisting
of: (i) one (1) share of our Common Stock; (ii) a Class A Warrant exercisable for a period of 24 months to purchase ½ share
of Common Stock; and (iii) a Callable Class B Warrant exercisable for a period of 36 months to purchase ½ share of Common
Stock, at a subscription price of $0.10 per Unit. The rights will entitle the holders of our Common Stock to purchase one (1)
Unit for each four (4) shares of our Common Stock owned by our stockholders on the Record Date, As of the Record date, our stockholders
own an aggregate of 22,237,562 shares of our Common Stock. If all of the Units are subscribed for, of which there can be no assurance,
we will receive approximately $550,314 before the expenses of this Unit Rights Offering.
Basic
Subscription Rights
In
this distribution, each holder of record of our Common Stock will receive a basic subscription right to purchase one (1) Unit
for each four (4) shares of Common Stock owned as of 5:00 p.m., Eastern Time, on the Record Date, at a price of $0.10 per Unit.
For example, if you owned 100 shares of Common Stock as of the Record Date, you will receive 25 subscription rights and will have
the right to purchase Units for $0.10 per Unit. You may exercise all or a portion of your basic subscription rights, or you may
choose not to exercise any of your basic subscription rights. If you do not exercise your basic subscription rights in full, you
will not be entitled to exercise your over-subscription privilege.
Over-Subscription
Privilege
If
you exercise your basic subscription rights in full, you may also choose to exercise your over-subscription privilege. Subject
to proration and stock ownership limitations, if applicable, we will seek to honor the over-subscription privilege requests in
full. If over-subscription privilege requests exceed the number of shares of our Common Stock available, however, we will allocate
the available shares pro rata among the stockholders as of the record date exercising the over-subscription privilege in proportion
to the number of shares of our Common Stock each of those stockholders owned on the record date, relative to the number of shares
owned on the record date by all stockholders as of the record date exercising the over-subscription privilege. If this pro-rata
allocation results in any stockholder receiving a greater number of shares than the record holder subscribed for pursuant to the
exercise of the over-subscription privilege, then such record holder will be allocated only that number of shares for which the
record holder oversubscribed, and the remaining shares will be allocated among all other stockholders exercising the over-subscription
privilege on the same pro rata basis described above. The proration process will be repeated until all shares have been allocated.
Transfer
Online, Inc., 512 SE Salmon Street, Portland, OR 97214, the rights agent for the rights offering, will determine the over-subscription
allocation based on the formula described above.
To
the extent the aggregate subscription payment of the actual number of unsubscribed shares of Common Stock available to you pursuant
to the over-subscription privilege is less than the amount you actually paid in connection with the exercise of the over-subscription
privilege, you will be allocated only the number of unsubscribed shares of Common Stock available to you, and any excess subscription
payments will be returned to you, without interest or deduction, with ten (10) business days after expiration of the rights offering.
We
can provide no assurances that you will actually be entitled to purchase the number of shares of Common Stock issuable upon the
exercise of your over-subscription privilege in full at the expiration of the rights offering. We will not be able to satisfy
any requests for shares pursuant to the over-subscription privilege if all of our rights holders exercise their basic subscription
rights in full, and we will only honor an over-subscription privilege to the extent sufficient shares of Common Stock are available
following the exercise of basic subscription rights.
Dilutive
Effects of the Rights Offering
If
you choose not to exercise your rights, your ownership interest in the Company will be diluted by the issuance of shares to others
who do choose to exercise their rights. See “Risk Factors”.
Limitation
on the Exercise of Rights
The
number of rights that you may exercise in the rights offering may be limited by the number of shares of our Common Stock you held
on the record date and by the extent to which other rights holders exercise their basic subscription rights and over-subscription
privilege, which we cannot determine prior to completion of the rights offering. We may also choose to not issue shares pursuant
to the rights offering to the extent that a stockholder would beneficially own, together with any other person with whom such
stockholder’s shares may be aggregated under applicable law, more than 19.9% of our outstanding shares of Common Stock.
Method
of Exercising Rights by Stockholders
The
exercise of rights is irrevocable and may not be cancelled or modified, even if we extend the expiration of the rights offering
in our sole discretion. You may exercise your rights as follows:
Subscription
by Registered Holders
You
may exercise your rights by properly completing and executing the subscription rights certificate together with any required signature
guarantees and forwarding it, together with your full subscription payment for your subscription rights and any over-subscription
privilege, to the rights agent at the address set forth below under “Rights Agent,” prior to the expiration of the
rights offering described below.
Subscription
by DTC Participants
We
expect that the exercise of your rights may be made through the facilities of DTC. If your rights are held of record through DTC,
you may exercise your rights by instructing DTC, or having your broker, dealer, custodian bank or other nominee instruct DTC,
to transfer your rights from your account to the account of the rights agent, together with certification as to the aggregate
number of rights you are exercising and the number of shares of our Common Stock you are subscribing for under your subscription
right.
Subscription
by Beneficial Owners
If
you are a beneficial owner of shares of our Common Stock that are registered in the name of a broker, dealer, custodian bank or
other nominee, or if you hold our Common Stock certificates and would prefer to have an institution conduct the transaction relating
to the rights on your behalf, you should instruct your broker, dealer, custodian bank or other nominee or institution to exercise
your rights and deliver all subscription documents and payment on your behalf prior to the expiration of the rights offering described
below. Your rights will not be considered exercised unless the rights agent receives from you, your broker, dealer, custodian
bank, nominee or institution, as the case may be, all of the required subscription documents and your full subscription payment
for your subscription rights and any over-subscription privilege prior to this expiration time.
Only
whole rights are exercisable. Fractional rights remaining after aggregating all of the rights distributed to you will be rounded
down to the nearest whole number. You will not receive any payment with respect to fractional shares that are rounded down. Any
excess subscription payments received by the rights agent will be returned, without interest, as soon as practicable.
Payment
Method
Payments
must be made in full in U.S. currency by:
●
check or bank draft payable to Transfer Online upon a U.S. bank or
●
wire transfer of immediately available funds to accounts maintained by the rights agent.
The
rights agent will be deemed to receive payment upon:
●
receipt by the rights agent of any certified check bank draft drawn upon a U.S. bank; or
●
receipt of collected funds in the rights agent’s account.
If
you elect to exercise your rights, we urge you to consider using a certified or cashier’s check or wire transfer of funds
to ensure that the rights agent receives your funds prior to the expiration of the rights offering. If you send a certified check
bank draft drawn upon a U.S. bank or wire or transfer funds directly to the rights agent’s account, payment will be deemed
to have been received by the rights agent immediately upon receipt of such instruments and wire or transfer.
You
should read the instruction letter accompanying the subscription rights certificate carefully and strictly follow it. DO NOT SEND
RIGHTS CERTIFICATES OR PAYMENTS DIRECTLY TO US. Except as described below under “Guaranteed Delivery Procedures,”
we will not consider your subscription received until the rights agent has received delivery of a properly completed and duly
executed subscription rights certificate and payment of the full subscription amount. The risk of delivery of all documents and
payments is borne by you or your nominee, not by the rights agent or us.
The
method of delivery of subscription rights certificates and payment of the subscription amount to the rights agent will be at the
risk of the holders of rights. If sent by mail, we recommend that you send those certificates and payments by overnight courier
or by registered mail, properly insured, with return receipt requested, and that a sufficient number of days be allowed to ensure
delivery to the rights agent and clearance of payment prior to the expiration of the rights offering.
Unless
a subscription rights certificate provides that the shares of our Common Stock are to be delivered to the record holder of such
rights or such certificate is submitted for the account of a bank or a broker, signatures on such subscription rights certificate
must be guaranteed by an “eligible guarantor institution,” as such term is defined in Rule 17Ad-15 of the Exchange
Act, subject to any standards and procedures adopted by the rights agent.
Missing
or Incomplete Subscription Information
If
you do not indicate the number of rights being exercised, or the rights agent does not receive the full subscription payment for
the number of rights that you indicate are being exercised, then you will be deemed to have exercised the maximum number of rights
that may be exercised with the aggregate subscription payment you delivered to the rights agent. If we do not apply your full
subscription payment to your purchase of shares of our Common Stock, any excess subscription payment received by the rights agent
will be returned, without interest, as soon as practicable.
Expiration
Date and Extensions
The
subscription period, during which you may exercise your rights, is currently set to expire at 5:00 p.m., Eastern Time, on July
11, 2018 (four weeks from the date of filing of this Prospectus, unless we extend the Subscription Rights Offering Period. If
you do not exercise your rights prior to that time, your rights will expire and will no longer be exercisable. We will not be
required to issue shares of our Common Stock to you if the rights agent receives your subscription rights certificate or your
subscription payment after that time, regardless of when the subscription rights certificate and subscription payment were sent,
unless you send the documents in compliance with the guaranteed delivery procedures described below. We may extend the period
for exercising your rights in our sole discretion. If the expiration date of the rights offering is so extended, we will give
oral or written notice to the rights agent on or before the scheduled expiration date and we will issue a press release announcing
such extension no later than 9:00 a.m., Eastern Time, on the next business day after the most recently announced expiration of
the rights offering. We will extend the duration of the rights offering as required by applicable law or regulation and may choose
to extend it. We do not currently intend to extend the expiration of the rights offering. To the extent that any completed subscription
exercise documentation is received by the rights agent after the expiration of the rights offering, we may, in our sole discretion,
choose to accept such subscription, but we shall be under no obligation to do so.
Subscription
Price
The
subscription price is not necessarily related to our book value, results of operations, cash flows, financial condition or the
future market value of our Common Stock. The market price of our Common Stock may decline during or after the rights offering,
and you may not be able to sell the underlying shares of our Common Stock purchased in the rights offering at a price equal to
or greater than the subscription price. We do not intend to change the subscription price in response to changes in the trading
price of our Common Stock prior to the closing of the rights offering. You should obtain a current quote for our Common Stock
before deciding whether to exercise your rights and make your own assessment of our business and financial condition, our prospects
for the future and the terms of the rights offering.
Amendment,
Withdrawal and Termination
We
may decide to terminate the rights offering at any time and for any reason before the closing of the rights offering. If we terminate
the rights offering, any money received from subscribing stockholders will be returned promptly, without interest or deduction.
In addition, we may extend the period for exercising your rights and adjust the subscription price in our sole discretion. We
do not currently intend to extend the expiration of the rights offering.
Rights
Agent
The
rights agent for this offering is Transfer Online, Inc. The address to which subscription rights certificates and subscription
payments other than wire transfers should be mailed or delivered is:
By
mail, hand or overnight courier:
Transfer
Online, Inc.
512
SE Salmon Street,
Portland,
OR 97214
If
you deliver subscription rights certificates in a manner different than that described in this prospectus, then we may not honor
the exercise of your rights.
You
should direct any questions or requests for assistance concerning the method of subscribing for the shares of our Common Stock
or for additional copies of this prospectus to the rights agent at the above contact information.
Fees
and Expenses
We
will pay all fees charged by the rights agent. You are responsible for paying any other commissions, fees, taxes or other expenses
incurred in connection with the exercise of the rights.
Notice
to Nominees
If
you are a broker, dealer, custodian bank or other nominee holder that holds shares of our Common Stock for the account of others
on the record date, you should notify the beneficial owners of the shares for whom you are the nominee of the rights offering
as soon as possible to learn their intentions with respect to exercising their rights. You should obtain instructions from the
beneficial owner, as set forth in the instructions we have provided to you for your distribution to beneficial owners. If the
beneficial owner so instructs, you should complete the appropriate subscription rights certificate and submit it to the rights
agent with the proper subscription payment. If you hold shares of our Common Stock for the account(s) of more than one beneficial
owner, you may exercise the number of rights to which all beneficial owners in the aggregate otherwise would have been entitled
had they been direct holders of our Common Stock on the record date, provided that you, as a nominee record holder, make a proper
showing to the rights agent by submitting the form entitled “Nominee Holder Certification,” which is provided with
your rights offering materials. If you did not receive this form, you should contact the rights agent to request a copy.
Beneficial
Owners
If
you are a beneficial owner of shares of our Common Stock or will receive your rights through a broker, dealer, custodian bank
or other nominee, we will ask your broker, dealer, custodian bank or other nominee to notify you of the rights offering. If you
wish to exercise your rights, you will need to have your broker, dealer, custodian bank or other nominee act for you. If you hold
certificates of our Common Stock directly and would prefer to have your broker, dealer, custodian bank or other nominee act for
you, you should contact your nominee and request it to effect the transactions for you. To indicate your decision with respect
to your rights, you should complete and return to your broker, dealer, custodian bank or other nominee the form entitled “Beneficial
Owners Election Form” (or such other appropriate documents as are provided by your nominee related to your rights). You
should receive this form from your broker, dealer, custodian bank or other nominee with the other rights offering materials. If
you wish to obtain a separate subscription rights certificate, you should contact the nominee as soon as possible and request
that a separate subscription rights certificate be issued to you. You should contact your broker, dealer, custodian bank or other
nominee if you do not receive this form, but you believe you are entitled to participate in the rights offering. We are not responsible
if you do not receive the form from your broker, dealer, custodian bank or nominee or if you receive it without sufficient time
to respond.
Guaranteed
Delivery Procedures
If
you wish to exercise rights, but you do not have sufficient time to deliver the subscription rights certificate evidencing your
rights to the rights agent prior to the expiration of the rights offering, you may exercise your rights by the following guaranteed
delivery procedures:
●
deliver to the rights agent prior to the expiration of the rights offering the subscription payment for each share you elected
to purchase pursuant to the exercise of rights in the manner set forth above under “Payment Method”;
●
deliver to the rights agent prior to the expiration of the rights offering the form entitled “Notice of Guaranteed Delivery”;
and
●
deliver the properly completed subscription rights certificate evidencing your rights being exercised and the related nominee
holder certification, if applicable, with any required signatures guaranteed, to the rights agent within three (3) business days
following the date you submit your Notice of Guaranteed Delivery.
Your
Notice of Guaranteed Delivery must be delivered in substantially the same form provided with the “Form of Instructions for
Use of Subscription Rights Certificates,” which will be distributed to you with your subscription rights certificate. Your
Notice of Guaranteed Delivery must include a signature guarantee from an eligible institution, acceptable to the rights agent.
A form of that guarantee is included with the Notice of Guaranteed Delivery.
In
your Notice of Guaranteed Delivery, you must provide:
●
your name;
●
the number of rights represented by your subscription rights certificate, and the number of shares of our Common Stock for which
you are subscribing under your subscription right; and
●
your guarantee that you will deliver to the rights agent a subscription rights certificate evidencing the rights you are exercising
within three (3) business days following the date the rights agent receives your Notice of Guaranteed Delivery.
You
may deliver your Notice of Guaranteed Delivery to the rights agent in the same manner as your subscription rights certificate
at the address set forth above under “Rights Agent.”
The
rights agent will send you additional copies of the form of Notice of Guaranteed Delivery if you need them. You should call the
rights agent at (503) 227-2950 to request additional copies of the form of Notice of Guaranteed Delivery.
Transferability
of Rights; Listing
The
subscription rights may not be sold, transferred, assigned or given away to anyone. The subscription rights will not be listed
for trading on any stock exchange or market. The shares of Common Stock issued in the rights offering will be listed on the OTCQB
market under the symbol “EQUR.”
Validity
of Subscriptions
We
will resolve all questions regarding the validity and form of the exercise of your rights, including time of receipt and eligibility
to participate in the rights offering. In resolving all such questions, we will review the relevant facts, consult with our legal
advisors and we may request input from the relevant parties. Our determination will be final and binding. Once made, subscriptions
and directions are irrevocable, even if you later learn information that you consider to be unfavorable to the exercise of your
rights and even if we extend the rights offering, and we will not accept any alternative, conditional or contingent subscriptions
or directions. We reserve the absolute right to reject any subscriptions or directions not properly submitted or the acceptance
of which would be unlawful. You must resolve any irregularities in connection with your subscriptions before the subscription
period expires, unless waived by us in our sole discretion. Neither we nor the rights agent shall be under any duty to notify
you or your representative of defects in your subscriptions. A subscription will be considered accepted, subject to our right
to withdraw or terminate the rights offering, only when a properly completed and duly executed subscription rights certificate
and any other required documents and the full subscription payment have been received by the rights agent. Our interpretations
of the terms and conditions of the rights offering will be final and binding.
Escrow
Arrangements; Return of Funds
The
rights agent will hold funds received in payment for shares of our Common Stock in a segregated account pending completion of
the rights offering. The rights agent will hold this money in escrow until the rights offering is completed or is withdrawn and
terminated. If the rights offering is terminated for any reason, all subscription payments received by the rights agent will be
returned, without interest, as soon as practicable.
Stockholder
Rights
You
will have no rights as a holder of the shares of our Common Stock you purchase in the rights offering, if any, until the closing
of the rights offering has taken place. You will have no right to revoke your subscriptions after you deliver your completed subscription
rights certificate, the full subscription payment and any other required documents to the rights agent.
No
Revocation or Change
Once
you submit the form of subscription rights certificate to exercise any rights, you are not allowed to revoke or change the exercise
or request a refund of monies paid. All exercises of rights are irrevocable, even if you later learn information that you consider
to be unfavorable to the exercise of your rights and even if we extend the rights offering or adjust the subscription price. You
should not exercise your rights unless you are certain that you wish to purchase additional shares of our Common Stock at the
subscription price.
Foreign
Rights Holders
We
will not mail this prospectus or subscription rights certificates to rights holders with addresses that are outside the United
States or that have an army post office or foreign post office address. The rights agent will hold these subscription rights certificates
for their account. To exercise rights, our foreign stockholders must notify the rights agent prior to 11:00 a.m., Eastern Time,
at least three (3) business days prior to the expiration of the rights offering and demonstrate to the satisfaction of the rights
agent that the exercise of such rights does not violate the laws of the jurisdiction of such stockholder.
Regulatory
Limitation
We
will not be required to issue to you shares of our Common Stock pursuant to the rights offering if, in our opinion, you are required
to obtain prior clearance or approval from any state or federal regulatory authorities to own or control such shares and if, at
the time the rights offering expires, you have not obtained such clearance or approval.
U.S.
Federal Income Tax Treatment of Rights Distribution
We
believe and intend to take the position that the distribution and receipt and the exercise of the subscription rights by any U.S.
holder of Common Stock will not be taxable to such holder for U.S. federal income tax purposes for the reasons described below
in “Material U.S. Federal Income Tax Consequences.”
No
Board Recommendation to Rights Holders
Our
Board of Directors is making no recommendation regarding your exercise of the rights. You are urged to make your decision based
on your own assessment of our business and the rights offering. Please see “Risk Factors”
PLAN
OF DISTRIBUTION
We
are distributing the subscription rights to individuals who owned shares of our Common Stock as of September 6, 2017, 5:00 p.m.,
Eastern Time. If you wish to exercise your subscription rights and purchase shares of our Common Stock, you should complete the
subscription rights certificate and return it with payment for the shares to the rights agent, Transfer Online, Inc., 512 SE Salmon
Street, Portland, OR 97214, at the address set forth under “The Rights Offering—Method of Exercising Rights by Stockholders”
If you have any questions, you should contact the rights agent by calling (503) 227-2950.
THE
STANDBY PURCHASE AGREEMENT
Pursuant
to this Rights Offering, stockholders of record will receive the Right, for each four (4) shares of Common Stock held by them
as of the Record Date, to purchase one (1) Unit, each of which shall include one (1) share of Common Stock and one (1) Class A
Warrant, and one (1) Class B Warrant, at the Unit Subscription Price of $0.10. The Shares, Class A Warrants and Class B Warrants
that constitute the Unit may be collectively referred to as the “Securities.”
The
Company has entered into a Standby Purchase Agreement with JFS Investments Inc. (the “Standby Purchaser”) pursuant
to which the Standby Purchaser has agreed to purchase from the Company upon expiration of the Rights Offering, and the Standby
Purchasers are willing to so purchase, Units, at the Subscription Price, to the extent such Units are not purchased by stockholders
pursuant to the exercise of Rights. The Company and the Standby Purchaser reasonably agree that this commitment will not require
the Standby Purchaser to purchase Unsubscribed Units in an amount in excess of $150,000.
Pursuant
to the Standby Purchase Agreement, the Standby Purchasers has agreed to purchase from the Company, at the Subscription Price,
all of the Units that will be available for purchase pursuant to their Basic Subscription Privilege. Nevertheless, the Company
and the Standby Purchaser believe that this commitment will not result in the requirement by the Standby Purchaser to exceed $150,000
and may, in fact, be less than that amount, depending upon the number of Units subscribed for by existing Stockholders as of the
Record Date.
Notwithstanding
anything else contained in the Standby Purchase Agreement, the Standby Purchaser shall not acquire Securities hereunder which
would result in it or any “group” (within the meaning of Section 13(d)(3) of the Exchange Act) of which it is a member
owning: (i) 20% or more of the issued and outstanding shares of Common Stock on fully diluted basis without the requisite prior
written consent of the Company or (ii) greater than 35% of the issued and outstanding shares of Common Stock. If the Standby Purchasers
would otherwise exceed such maximum number of shares, such excess shall either be: (i) purchased by another Standby Purchaser;
or (ii) the Company and the Standby Purchasers may elect to waive the above-referenced percentage limitations.
Payment
of the Subscription Price for the Securities shall be made, on the Closing Date, against delivery of certificates evidencing the
Securities, in United States dollars by means of certified or cashier’s checks, bank drafts, money orders or wire transfers.
MATERIAL
U.S. FEDERAL INCOME TAX CONSEQUENCES
THE
FOREGOING DISCUSSION IS FOR GENERAL INFORMATION PURPOSES ONLY AND SHOULD NOT BE VIEWED AS COMPLETE OR COMPREHENSIVE TAX ADVICE.
BOTH (I) HOLDERS RECEIVING A DISTRIBUTION OF STOCK RIGHTS CONTEMPLATED IN THIS OFFERING, AND (II) HOLDERS CONSIDERING THE PURCHASE
OF OUR UNITS BY EXERCISING SUCH STOCK RIGHTS, ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE APPLICATION OF THE U.S.
FEDERAL TAX LAWS TO THEIR PARTICULAR SITUATIONS AND THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN LAWS TO THEM.
This
following discussion addresses certain material U.S. federal income tax considerations relating to (i) the receipt and exercise
(or expiration) of the subscription rights as contemplated throughout this rights offering, and (ii), if applicable in connection
with the exercise of the basic subscription right or, if applicable, the over-subscription privilege, the acquisition, ownership
and sale of Units that are subject to the rights offering, which Units consist of shares of our common stock (“Common Stock”)
and a Class A and Callable Class B Common Stock Purchase Warrant (the “Warrants”). This discussion addresses only
the treatment to a holder of our Common Stock that is a U.S. holder (defined below), and who receives subscription rights pursuant
to this offering, or holds shares of our stock issued upon the exercise of the basic right privilege or, if applicable, the over-subscription
privilege, in each instance as capital assets within the meaning of Section 1221 of the Code. This discussion does not provide
a complete or comprehensive analysis of all potential tax considerations. The information provide herein is based on the Company’s
understanding of existing United States federal income tax authorities, including but not limited to, the Code, the Treasury Regulations
promulgated thereunder, legislative history, judicial authority and published rulings, any of which may subsequently change, possibly
retroactively, or be interpreted differently by the IRS, so as to result in U.S. federal income tax consequences different from
those discussed throughout this offering. This discussion neither binds nor precludes the IRS from adopting a position contrary
to, or otherwise challenging, the positions addressed in this prospectus, and we cannot assure you that such a contrary position
could not be asserted successfully by the IRS or adopted by a court if the position or matter was litigated. We have not sought,
and will not seek, either (i) a ruling from the IRS or (ii) an opinion from legal counsel or an independent public accounting
firm, in either instance regarding the tax considerations discussed herein, as provided in Section III.A.2. of Staff Legal Bulletin
No. 19.
This
discussion does not address all of the tax consequences that may be relevant to U.S. holders in light of their particular circumstances
or to holders subject to special rules under the U.S. federal income tax laws, including, without limitation, financial institutions,
banks, regulated investment companies, real estate investment trusts, dealers in securities or foreign currency, traders in securities
that elect to use a mark-to-market method of accounting for securities holdings, tax-exempt organizations or entities, tax-deferred
or other retirement accounts, insurance companies, persons liable for alternative minimum tax, holders who hold stock or warrants
as part of a hedge, straddle, conversion, constructive sale or other integrated security transaction, holders whose functional
currency is not the U.S. dollar, certain former citizens or residents of the U.S., and holders who received our stock on which
the subscription rights are distributed in satisfaction of our indebtedness or in a compensatory transaction. This discussion
is not a complete analysis of all potential U.S. federal income tax consequences and does not address any tax consequences arising
under any state, local or foreign tax laws or any other U.S. federal tax laws, including the U.S. federal estate or gift tax laws.
As
used throughout this discussion, a “U.S. holder” means a beneficial owner of subscription rights, or stock acquired
pursuant to the exercise of the basic subscription right or, if applicable, the over-subscription privilege, that is:
●
An individual who is a citizen or resident of the United States, including an alien individual who either is a lawful permanent
resident of the United States;
●
A corporation (or entity treated as a corporation for U.S. federal income tax purposes) created or organized, or treated as created
or organized, in or under the laws of the United States, any state thereof or the District of Columbia;
●
An estate whose income is subject to U.S. federal income tax regardless of its source; or
●
A trust (i) if a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons
are authorized to control all substantial decisions of the trust, or (ii) that has a valid election in effect under applicable
Treasury Regulations to be treated as a U.S. person.
In
addition, as used throughout this discussion, the phrase “Securities,” means both (i) shares of our Common Stock,
and (ii) rights or warrants to acquire shares of our Common Stock; and the term “Stockholder,” means a U.S. holder
who is either (i) a holder of shares of our Common Stock, or (ii) a holder of rights or warrants to acquire shares of our Common
Stock. As such, this discussion addresses the receipt of the subscription rights contemplated in this offering by current holders
of shares of our Common Stock.
If
a partnership (including any entity treated as a partnership for U.S. federal income tax purposes) receives the subscription rights
or holds the stock received upon exercise of the basic subscription right or, if applicable, the over-subscription privilege,
the tax treatment of a partner in such partnership generally will depend upon the status of the partner and the activities of
the partnership. Such a partner and the partnership are urged to consult their own tax advisors as to the U.S. federal income
tax consequences of receiving the subscription rights, exercising (or allowing to expire) the basic subscription right or, if
applicable, the over-subscription privilege, and acquiring, holding or disposing of our shares of stock.
EACH
HOLDER OF SHARES OF OUR COMMON STOCK IS STRONGLY URGED TO CONSULT SUCH HOLDER’S OWN TAX ADVISORS REGARDING THE SPECIFIC
FEDERAL, STATE, LOCAL AND NON-U.S. INCOME AND OTHER TAX CONSIDERATIONS OF THE RECEIPT AND EXERCISE OF THE SUBSCRIPTION RIGHTS
AND THE RECEIPT, OWNERSHIP AND DISPOSITION OF OUR STOCK.
U.S.
Federal Income Tax Considerations Applicable to the Receipt of Subscription Rights Assuming the Rights
As
a result of the fact the authorities governing the transactions such as this rights offering are complex and unclear in certain
respects, we cannot take the position that the distribution of subscription rights to a Stockholder with respect to such Stockholder’s
Securities should generally be treated, for U.S. federal income tax purposes, as a non-taxable distribution.
The
reason for our inability to take a position that for U.S. federal income tax purposes, the distribution of subscription rights
is a non-taxable distribution is because the general rule regarding non-recognition is subject to certain exceptions, including
if receipt by a Stockholder of subscription rights is part of a “disproportionate distribution.” A “disproportionate
distribution” is a distribution or a series of distributions, including deemed distributions, that have the effect of the
receipt of cash or other property by some Stockholders and an increase in the proportionate interest of other Stockholders in
our assets or earnings and profits. During the last 36 months, we have not made any distributions of cash or other property with
respect to our stock, nor do we have any current intention of making any distributions with respect to our stock. Currently, our
Common Stock is our sole outstanding class of stock, and we have no current intention of issuing another class of stock or convertible
debt. However, the fact that we have outstanding options, warrants and similar equity-based awards could cause, under certain
circumstances that cannot currently be predicted, the receipt of subscription rights pursuant to this offering to be part of a
disproportionate distribution. The Company intends to take the position that the outstanding options, warrants and similar equity-based
awards do not cause the subscription rights issued pursuant to this rights offering to be part of a disproportionate distribution,
but there can be no assurances in this regard.
As
a result, in the event that we made an affirmative statement that the distribution of subscription rights is a non-taxable distribution,
our position regarding the tax-free treatment of the receipt of subscription rights would not be binding on the IRS or the courts.
Either the IRS or the courts could determine that the distribution is taxable, whether on the basis that the issuance of the
subscriptions rights is a “disproportionate distribution” or otherwise, the fair market value of the subscription
rights would be taxable to holders of our Common Stock as a dividend to the extent of the holder’s pro rata share of our
current and accumulated earnings and profits, if any, with any excess being treated as a return of capital to the extent of the
holder’s basis in shares of our Common Stock and thereafter as capital gain. Although no assurance can be given, it is anticipated
that we will not have current and accumulated earnings and profits through the end of 2017.
The
Following discussion is based upon the treatment of the receipt of the subscription rights in this offering as a non-taxable distribution
with respect to a Stockholder’s Securities for U.S. federal income tax purposes, notwithstanding the fact that there can
be no assurance that receipt of the subscription rights is a non-taxable distribution.
The
remainder of this section entitled “U.S. Federal Income Tax Considerations Applicable to the Receipt of Subscription Rights”
assumes that the receipt by a Stockholder of subscription rights with respect to such Stockholder’s Securities pursuant
to this rights offering is non-taxable for U.S. federal income tax purposes, of which there can be no assurance.
Tax
Basis in the Subscription Rights
If
the fair market value of the subscription rights received by a Stockholder who holds our Common Stock is less than 15% of the
fair market value of such Stockholder’s Common Stock as of the date the subscription rights are distributed, then such holder’s
subscription rights will be allocated a zero tax basis for U.S. federal income tax purposes. However, in such a case, a Stockholder
who holds our Common Stock may affirmatively elect to allocate a portion of such holder’s tax basis in such holder’s
existing shares of our Common Stock between (i) such holder’s shares of our Common Stock and (ii) such holder’s subscription
rights received pursuant to this offering, in proportion to the relative fair market values of such existing shares of Common
Stock and subscription rights determined as of the date of the receipt of the subscription rights. If a Stockholder who holds
our Common Stock chooses to make such an election, then such holder must make this election on a statement included with such
holder’s tax return for the taxable year in which such holder receives subscription rights pursuant to this offering. Such
an election, if made, is irrevocable.
If
the fair market value of the subscription rights received by a Stockholder who holds our Common Stock is 15% or more of the fair
market value of such holder’s Common Stock as of the date the subscription rights are distributed, then such holder must
allocate such holder’s tax basis in such holder’s existing Common Stock between (i) such holder’s shares of
our Common Stock, and (ii) such holder’s subscription rights received pursuant to this offering, in proportion to the relative
fair market values of such existing shares of Common Stock and subscription rights determined as of the date of the distribution
of the subscription rights.
The
fair market value of the subscription rights on the date the subscription rights are received is uncertain, and we have not obtained,
and do not intend to obtain, an appraisal of the fair market value of the subscription rights as of that date. Fair market value
is defined generally as the price at which property would hypothetically change hands between a willing buyer and a willing seller,
where neither is under any compulsion to buy or sell. Fair market value is a factual determination. In determining the fair market
value of the subscription rights, you should consider all relevant facts and circumstances, including but not limited to any difference
between the subscription price of the subscription rights and the trading price of our Common Stock on the date that the subscription
rights are distributed or received, the length of the time period during which the subscription rights may be exercised, the fact
that the subscription rights are non-transferable, and any other relevant facts and circumstances.
Exercise
of the Subscription Rights
A
Stockholder generally will not recognize any gain or loss upon the exercise of subscription rights received pursuant to this rights
offering. A Stockholder’s tax basis of shares of our Common Stock acquired through the exercise of such subscription rights
will equal the sum of (i) the subscription price paid for the shares, plus (ii) the tax basis, if any, in the subscription rights
immediately prior to such exercise. The holding period for shares of our Common Stock acquired through the exercise of such subscription
rights will begin on the date the subscription rights are exercised.
Expiration
of the Subscription Rights
A
Stockholder who allows subscription rights received pursuant to this rights offering to expire generally will not recognize any
gain or loss upon such expiration. If, in connection with the receipt of subscription rights pursuant to this offering, a Stockholder
who holds our Common Stock, by election or otherwise, allocated a portion of the tax basis in such holder’s then existing
Common Stock to such holder’s subscription rights, then upon the expiration of such subscription rights, the portion of
the tax basis previously allocated to the subscription rights will be re-allocated, or re-attributed, to such holder’s Common
Stock, and the tax basis of such Common Stock will be restored to what it was immediately before the receipt of the subscription
rights in this offering.
Ownership
and Disposition of Shares of Our Common Stock
Distributions
and Dividends
Distributions,
if any, of cash or property on shares of our Common Stock acquired through the exercise of subscription rights will be taxable
to a U.S. holder as a dividend to the extent such distribution is paid from our current and accumulated earnings and profits,
as determined under U.S. federal income tax principles for the year in which the distribution is made. Dividends received by corporate
U.S. holders are taxable at ordinary corporate income tax rates, subject to any applicable dividends-received deduction. Subject
to the discussion below regarding the additional Medicare tax (see, “Net Investment Income Tax”), qualified dividends
received by non-corporate U.S. holders are taxable at a maximum rate of 20%, provided the holder meets applicable holding period
requirements. Any distributions in excess of the Company’s current and accumulated earnings and profits will be treated
as a tax-free return of a U.S. holder’s basis in our Common Stock, and any further distributions in excess of a U.S. holder’s
basis in our Common Stock will be treated as gain from the sale or exchange of such Common Stock.
Sale
or Other Taxable Disposition
Upon
the sale or other taxable disposition of shares of our Common Stock (including a redemption, but only if the redemption would
be treated as a sale or exchange rather than a distribution U.S. federal income tax purposes), a U.S. holder will generally recognize
capital gain or loss equal to the difference between (i) the amount realized by such U.S. holder in connection with such sale
or other taxable disposition, and (ii) such U.S. holder’s adjusted tax basis in such stock. Such capital gain or loss will
generally be long-term capital gain or loss if the U.S. holder’s holding period in such stock is more than twelve months.
U.S. holders who are individuals are eligible for preferential rates of taxation in respect of their long-term capital gains.
For example, long-term capital gains recognized by individuals are taxable at a maximum rate of twenty percent (20%), in addition
to the additional Medicare tax (see, “Net Investment Income Tax”), if applicable. A U.S. holder’s ability to
use a capital loss may be subject to limitations.
Net
Investment Income Tax
In
addition to the United States federal income tax, discussed above, certain U.S. holders are subject to an additional 3.8% Medicare
tax (the “net investment income tax”) on their “net investment income” to the extent that their net investment
income, when added to their other modified adjusted gross income, exceeds certain thresholds (e.g., $250,000 for married individuals
filing jointly). For these purposes, “net investment income” generally equals a U.S. Holder’s gross investment
income (e.g., interest income, dividends and gain from the sale or other disposition of stock) reduced by deductions that are
allocable to such income. The net investment income tax is determined in a manner which is different than the manner in which
the U.S. federal income tax is determined. U.S. holders are urged to consult their own tax advisors regarding the implications
of the net investment income tax.
Qualified
Small Business Stock
Section
1202 of the Internal Revenue Code, as amended, provides taxpayers, other than corporations, with a 100 percent exclusion of gain
from the sale or exchange of “qualified small business stock” acquired after September 28, 2010 and held for more
than five years. In general, a taxpayer’s exclusion per taxable year with respect to “qualified small business stock”
of any one issuer is the greater of (a) $10 million ($5 million in the case of married taxpayers filing separate returns), reduced
by the amount of the taxpayer’s gain in prior years on stock of such issuer eligible for the exclusion or (b) ten times
the taxpayer’s basis for “qualified small business stock” of such issuer sold or exchanged during the taxable
year. The amount excluded with respect to “qualified small business stock” constitutes an item of tax preference for
alternative minimum tax purposes.
“Qualified
small business stock” is stock of a “qualified small business” issued after August 10, 1993 which is generally
acquired at its original issuance by the taxpayer for money or other property (not including stock) or in connection with the
performance of services. In order to qualify as “qualified small business stock”, the issuer must be a domestic corporation
which: (i) had gross assets of no greater than $50 million at all times from inception down to the issuance of the stock in question
and immediately thereafter (taking into account amounts received upon such issuance) and (ii) agrees to submit such reports to
its stockholders and the Internal Revenue Service as required by the statute and regulations. In order for us to qualify as a
“qualified small business stock”, 80 percent of our assets of (based on the reported value of our assets) must be
used by us in the active conduct of one or more qualified trades or businesses.
We
believe that our assets have never exceeded $50 million from our inception on August 31, 1988 to the date of this rights offering,
and we do not expect our asset size to exceed $50 million in the foreseeable future. We have submitted and plan to continue to
submit the required reports as long as we believe we qualify as a “qualified small business” under Section 1202.
There
can be no assurance that we will continue to qualify as a qualified small business” or that the Internal Revenue Service
will agree with our determination that we are a “qualified small business.” For a discussion of risks related to “qualified
small business stock,” please see “Risk Factors”.
Information
Reporting and Backup Withholding
U.S.
backup withholding (currently at a rate of 28%) is imposed upon certain distributions (or deemed distributions) to persons who
fail (or are unable) to furnish the information required pursuant to U.S. information reporting requirements. Distributions (or
deemed distributions or similar transactions) to a Stockholder will generally be exempt from backup withholding, provided the
Stockholder meets applicable certification requirements, including (i) providing the Company with such holder’s U.S. taxpayer
identification number (e.g., an individual’s social security number or individual taxpayer identification number, or an
entity’s employer identification number, each a “TIN”) or (ii) otherwise establishing an exemption (e.g., an
exemption from backup withholding as a corporate payee), in each instance on a properly filled out IRS Form W-9, certifying under
penalties of perjury that, among others, such TIN or exemption is correct, together with such other certifications as may be required
by law.
Backup
withholding does not represent an additional tax. Any amounts withheld from a payment to a U.S. holder under the backup withholding
rules will generally be allowed as a credit against such U.S. holder’s U.S. federal income tax liability, and may entitle
such U.S. holder to a refund, provided the required information and returns are timely furnished by such U.S. holder to the IRS.
AS
INDICATED ABOVE, THE FOREGOING DISCUSSION IS FOR GENERAL INFORMATION PURPOSES ONLY AND SHOULD NOT BE VIEWED AS COMPLETE OR COMPREHENSIVE
TAX ADVICE. BOTH (I) HOLDERS RECEIVING A DISTRIBUTION OF STOCK RIGHTS CONTEMPLATED IN THIS OFFERING, AND (II) HOLDERS CONSIDERING
THE PURCHASE OF OUR COMMON STOCK BY EXERCISING SUCH STOCK RIGHTS, ARE URGED TO CONSULT THEIR OWN TAX ADVISORS REGARDING THE APPLICATION
OF THE U.S. FEDERAL TAX LAWS TO THEIR PARTICULAR SITUATIONS AND THE APPLICABILITY AND EFFECT OF STATE, LOCAL AND FOREIGN LAWS
TO THEM.
DESCRIPTION
OF SECURITIES TO BE REGISTERED
General
We
are authorized to issue an aggregate number of 520,000,000 shares of capital stock, $0.00001 par value per share, consisting of
20,000,000 shares of Preferred Stock and 500,000,000 shares of Common Stock.
Preferred
Stock
We
are authorized to issue 20,000,000 shares of Preferred Stock, $0.00001 par value per share. As of December 31, 2017, no preferred
shares issued and outstanding. The Board of Directors has the authority to establish one or more series of Preferred Stock and
fix relative rights and preferences of any series of Preferred Stock.
Common
Stock
We
are authorized to issue 500,000,000 shares of Common Stock, $0.00001 par value per share. As of December 31, 2017, we had 22,237,562
shares of Common Stock issued and outstanding.
Each
share of Common Stock shall have one (1) vote per share for all purpose. Our Common Stock does not provide a preemptive, subscription
or conversion rights and there are no redemption or sinking fund provisions or rights. Our Common Stock holders are not entitled
to cumulative voting for election of Board of Directors.
Unit
Rights Offering an Warrants
The
Company is offering up to 5,559,436 Units, each consisting of: (ii) a Class A Warrant exercisable to purchase one-half (1/2) of
additional Share at $0.50 per share for a period of 24 months; and (iii) a callable class B Warrant exercisable to purchase one-half
(1/2) of additional Shares at a price of $1.25 per share for a period of 36 months; at a price of $0.10 per Unit. This Registration
Statement is registering: (a) the 5,559,436 shares of Common Stock; and (b) the shares of Common Stock deliverable upon the exercise
of the underlying Class A and callable Class B Warrants. The Class B Warrants are callable in the event that the shares of the
Company’s Common Stock have an average closing price on the OTCQB of at least $0.90 during the thirty (30) day period prior
to the Company’s notice of its intention to “call” the Class B Warrants. During said thirty (30) day period,
any holder will have the absolute right in his/her/its sole discretion, to exercise the Class B Warrants at the exercise price
of $1.25 per share.
Dividends
We
have not paid any cash dividends to our shareholders. The declaration of any future cash dividends is at the discretion of our
board of directors and depends upon our earnings, if any, our capital requirements and financial position, our general economic
conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future,
but rather to reinvest earnings, if any, in our business operations.
Options
On
January 1, 2015, the board of director approved the 2015 Employee Incentive Plan. The total number of shares of Common Stock reserved
for issuance by the Company either directly as Stock Awards or underlying Options granted under this Plan is 5,000,000 shares
of Common Stock. On January 1, 2015, the Company granted options as follows under its 2015 Employee Incentive Plan: (i) Professor
Ohry was granted options to purchase 250,000 shares of the Registrant’s common stock (“Option Shares”) at an
exercise price equal to one dollar ($1.00) per Option Share. The Option Shares shall vest pursuant to the terms of a Scientific
Advisory Board Agreement dated January 1, 2015 (the “Ohry SAB Agreement”). Provided the Ohry SAB Agreement remains
in effect, 75,000 shares shall vest July 1, 2015, and the remaining 175,000 Option Shares shall vest at the rate of 25,000 Option
Shares per quarter on the first day of each consecutive quarter; (ii) Dr. Ben Zion Weiner was granted options to purchase 350,000
Option Shares at an exercise price equal to one dollar ($1.00) per Option Share. The Option Shares shall vest pursuant to the
terms of a Scientific Advisory Board Agreement dated January 1, 2015 (the “Weiner SAB Agreement”). Provided the Weiner
SAB Agreement remains in effect, 105,000 Option Shares shall vest July 1, 2015 and the remaining 245,000 Option Shares shall vest
at the rate of 35,000 Option Shares per quarter on the first day of each consecutive quarter; and (iii) Michel Sessler was granted
options to purchase 150,000 Option Shares at an exercise price equal to one dollar ($1.00) per Option Share. The Option Shares
shall vest pursuant to the terms of a Scientific Advisory Board Agreement dated January 1, 2015 (the “Sessler SAB Agreement”).
Provided the Sessler SAB Agreement remains in effect, 45,000 Option Shares shall vest July 1, 2015 and the remaining 105,000 Option
Shares shall vest at the rate of 15,000 Option Shares per quarter on the first day of each consecutive quarter.
Transfer
Agent and Registrar
The
transfer agent is Transfer Online, 512 SE Salmon Street, Portland, OR 97214, Phone: (503) 227-2950.
INTEREST
OF NAMED EXPERTS AND COUNSEL
No
expert or counsel named in this Prospectus as having prepared or certified any part of this Prospectus or having given an opinion
upon the validity of the securities being registered or upon other legal matters in connection with the registration or Offering
of the Common Stock was employed on a contingency basis, or had, or is to receive, in connection with the Offering, a substantial
interest, direct or indirect, in the registrant. Nor was any such person connected with the registrant as a promoter, managing
or principal underwriter, voting trustee, director, officer, or employee.
Thomas
J. Craft, Jr., Esq., 18096 SE Heritage Drive, Tequesta, FL 33469, will pass on the validity of the Common Stock being offered
pursuant to this Registration Statement.
Our
audited financial statements for the years ended December 31, 2017 and 2016 included in this Prospectus and the Registration Statement
have been reviewed and audited by M&K CPAS, PLLC, an independent registered public accounting firm, to the extent and for
the periods set forth in their report appearing elsewhere herein and in the Registration Statement, and are included in reliance
upon such report given upon the authority of said firm as experts in auditing and accounting.
WHERE
YOU CAN FIND MORE INFORMATION
We
filed this Registration Statement on Form S-1/A with the SEC under the Act with respect to the Common Stock offered by Selling
Shareholders in this Prospectus. This Prospectus, which constitutes a part of the Registration Statement, does not contain all
of the information set forth in the Registration Statement or the exhibits and schedules filed therewith. For further information
with respect to us, please see the Registration Statement and the exhibits and schedules filed with the Registration Statement.
Statements contained in this Prospectus regarding the contents of any contract or any other document that is filed as an exhibit
to the Registration Statement are not necessarily complete, and each such statement is qualified in all respects by reference
to the full text of such contract or other document filed as an exhibit to the Registration Statement. The Registration Statement,
including its exhibits and schedules, may be inspected without charge at the public reference room maintained by the SEC, located
at 100 F Street, N.E., Room 1580, Washington, D.C. 20549, and copies of all or any part of this Form S-1 may be obtained from
such offices upon the payment of the fees prescribed by the SEC. Please call the SEC at 1-800-SEC-0330 for further information
about the public reference room. The SEC also maintains an Internet website that contains reports, proxy and information statements
and other information regarding registrants that file electronically with the SEC. The address of the site is
www.sec.gov
.
DESCRIPTION
OF BUSINESS
Overview
Business
Operations
We
are a medical device Company planning to commercialize our
Bioelectrical Signal Therapy
device (“BST Device,”
or “Device”). Our BST Device treats wounds via electrical stimulation, which is believed to result in accelerated
wound healing by imitating the natural electrical current that occurs in injured skin on the human body. Our BST Device stimulates
renewed blood flow and oxygen in order to induce local cell regeneration and therefore promote wound healing. Our mission is to
improve non-invasive wound care treatments and to become a leading provider of non-invasive wound and ulcer healing treatment.
Our device is designed to specifically address many of the limitations associated with other invasive and non-invasive wound care
devices.
We
believe our BST Device is a simple and effective wound heal method that can be used in and incorporated as an adjunctive therapy
in wound healing. Treatment is safe, effective, and well-tolerated.
Our
BST Device has the Communaute Europeenne (“CE”) mark and is approved to be sold in the EU market. We are planning
to initiate a FDA clinical trial for the purpose of obtaining approval from the United States Food and Drug Administration (the
“FDA”), which we reasonably believe should commence in or about Q2/3 2018 and is expected to cost approximately $1.8M.
The initial phase of the first 10 patients (out of 90) is estimated to cost $200K.
The
Company’s success greatly depends upon the successful FDA clinical trial of its BST Device as well as our ability to raise
sufficient equity capital through our pending Rights Offering Registrations Statement from which we are expected to receive approximately
$500,000 (not including any proceeds from the exercise of the warrants included as part of the Unit Rights Offering. The Device
may need additional development and there can be no assurance that we will, in fact, achieve the requisite safety and efficacy,
prerequisites for FDA approval and/or that FDA approval will be received in a timely manner, if at all. Nevertheless, the Company
believes that its BST Device’s design and procedure is safe and effective, but the path to commercial success in the US,
even if FDA approval is granted, may take more time and may be more costly that we expect or for which we have sufficient resources
at the present.
Our
BST Device is designed to treat chronic wounds – primarily Stage III and Stage IV ulcers, which we believe comprises about
11% and 7% of all chronic wounds, respectively, and severe Stage II wounds.
Our
anticipated plan to be able to sell the BST Device commercially in the United States, assuming success in our FDA approval process,
is not expected before the end of 2019. We have not generated any sales revenues from our BST Device to date other than the payment
of US$40,000 we have received from Colombia in January 2018 representing an initial order for our BST Device.
Our
Wound Healing Strategy
The
objective of our BST Device is to reduce healing time and allow patients to receive treatment at home while delivering optimal
therapeutic results, which eventually should result in significantly higher healing rates along with lower wound treatment costs
presently available on the market.
The
costs associated with untreated and/or unhealed wounds are far in excess of the costs of the physician, hospital and medical equipment,
particularly when there are subsequent complications that require additional medical treatment which are virtually certain to
occur as a result of untreated and/or unhealed wounds in a patient.
The
healing time of chronic wounds usually ranges from a few weeks to up to several months depending on the size and type of the wound
and the patient’s medical condition. Wound treatment typically can involve many direct and indirect costs. Wound dressings
comprise only 10-15% of the total direct treatment cost according to the International Committee of Wound Management. In contrast,
a significant percentage of the total cost is attributable to care providers’ salaries and staff expenses. As a result,
treatment methods that reduce healing time to closure of the wound and reduce staff time inevitably lead to lower cost of care.
We
believe that our BST Device is a very effective and cost-saving method for the chronic wound treatment market. Our belief is based
on the knowledge and experience of our management in the wound care industry that our BST Device is designed to be able to significantly
lower treatment cost compared to other wound therapies modalities due to the fact that our wound heal method requires shorter
healing times, treatment can be easily given at patient homes and therefore reduce per day treatment costs.
Marketing
and Sales
The
Company intends to launch marketing efforts in the US assuming receipt of FDA approval which we anticipate during 2019, of which
there can be no assurance. Until such time, most of our efforts will be related to internally preparing for the launch of our
BST Device in the US as well as proceeding with marketing efforts in the EU, Colombia, Argentina and a few other territories.
Assuming
FDA approval, which we reasonably believe can be achieved by end of 2019 based, in part, because of approval that our BST Device
been received in Europe, the Company plans to indirectly sell its wound treatment solution by entering into distribution agreements
with distributors specializing in wound care therapy solutions or by creating its own sales and marketing force. The distributors
or the Company will then sell the treatment to hospitals, nursing homes, geriatric institutions and private wound care clinics.
In
addition to indirect sales through distribution agreements, the Company considers the outright sale of its treatment to each institution
such as hospitals, nursing homes, geriatric institutions, and private clinics, which would rent the Device to their patients on
a monthly basis. Upon completion of the wound healing treatment, the patient would return the Device, which would then re-enter
the medical device rental market.
Competition
Our
principal competition in the chronic wound care market are expected to be the wound care products manufactured by Acelity (formerly
known as KCI) and Smith & Nephew. Acelity is considered a market leader and, we believe, commands a market share of approximately
21% in the United States. Smith & Nephew’s U.S. market share is believed to be approximately 19% based on revenues.
Other significant competitors are ConvaTec, Johnson & Johnson and others, all manufacturers of wound healing devices.
We
also face competition from numerous companies that offer a variety of wound healing methods including traditional wound care dressings,
advanced wound care dressings, such as hydrogels, hydrocolloids, and alginates, skin substitutes, and products containing growth
factors. While many of these methods compete with our BST Device, such methods can also be utilized as complementary therapies
to our BST Device and V is versa.
We
believe that the following treatments or therapies represent alternatives or complementary treatments and/or therapies to our
BST device:
Hyperbaric
oxygen therapy (“HBOT”):
Hyperbaric oxygen therapy is a medical treatment that utilizes pressurized oxygen to
heal wounds. The treatment is administered by placing a patient in a comfortable pressure chamber that circulates oxygen at two
to three times the atmospheric pressure rate. The HBOT method is not specifically designed for chronic wounds and the treatment
process is both very long and very expensive. HBOT treatments typically last 90-120 minutes and are administered 1-2 times a daily
for a period of 5 to 6 days a week. The length of treatment depends on the wound’s severity, with some patients requiring
20-40 treatments. There are many companies that offer HBOT treatment in clinics as a direct service to patients.
Vacuum-assisted
closure
(“V.A.C.”) method: The V.A.C. method is designed for the treatment of acute care setting, serious trauma
wounds, failed surgical closures, amputations, and serious pressure ulcers. The leading V.A.C. product was launched in 1995 by
KCI, a major global medical technology company, recently acquired by Acelity.
EZCARE
(Smith & Nephew) - Following the acquisition of BlueSky Medical in May 2007, Smith & Nephew provide negative pressure
wound therapy (NPWT). NPWT is a technology used to treat chronic wounds such as diabetic ulcers, pressure ulcers, as well as post-operative
and hard-to-heal wounds. It aids in the healing of open wounds by the application of sub-atmospheric pressure (Similar technology
to KCI).
In
addition, recently developed technologies, or technologies that may be developed in the future, are or may be the basis for products
which compete with our BST Device. There can be given no assurance that we will be able to successfully enter into the chronic
wound heal market with our BST Device or that we will be able to compete effectively against such companies in the future.
Many
of these companies have substantially greater capital and marketing resources, and greater experience in commercializing products
and services than we have.
Patents,
Trademarks, and Copyrights
We
have a list of all pending and granted patents to date attached as exhibit 10.9 to our S-1 Registration Statement as filed with
the Company’s S-1 on September 6, 2014. To the extent that we determine that additional intellectual property (“IP”)
protection may be necessary, we plan to secure such protection by applying for additional patents, trademarks or copyrights related
to our business and IP, as we deem necessary.
Government
Regulation
Our
operations and the marketing of our BST Device is subject to extensive regulation by numerous federal and state governmental authorities
in the United States, foremost of which is the FDA. There can be no assurance that the FDA, other governmental agencies or a third
party will not contend that certain aspects of our business and our BST Device is either subject to or is not in compliance with
applicable laws, regulations or rules or that the state or federal regulatory agencies or courts would interpret such laws, regulations
and rules in our favor. The sanctions for failure to comply with such laws, regulations or rules could include denial of the right
to conduct business, significant fines and criminal and civil penalties. Additionally, any increase in the complexity or substantive
requirements of such laws, regulations or rules could have a material adverse effect on our business.
Any
change in current regulatory requirements or related interpretations by or positions of, state officials where we operate could
adversely affect our operations within those states. State regulatory requirements could adversely affect our ability to establish
operations in such other states.
Timeline
and Estimated Costs for Regulatory FDA Approval of Our BST Device
We
expect FDA approval of our BST Device during 2019 after total costs and expenses of approximately $1.5 million. We have received
IDE approval from the FDA which involved a more lengthy process and are currently preparing to commence our clinical trial in
the U.S. To that end, we have engaged IMARC Research Inc., a leading clinical research organization located in Ohio, to conduct
our Randomized Control Trial (RCT) based upon a monthly payment schedule with payments determined by the amount of work provided, the number of patients enrolled to the study and the expenses incurred IMARC during the RCT.
Based
upon our current estimations, which we believe are based on sound business analysis after consultation with IMARC, we expect that
we should be able to complete: (i) the first phase of the RCT with 10 patients by the end of Q4 2018; and (ii) the second phase
of the RCT with 80 patients by the end of Q4 2019, depending on patient enrollment rate. We will incur fixed costs during the
RCT and additional costs paid to IMARC and other service providers based upon the time devoted during the RCT process.
Various
state and federal laws apply to the operations of medical device providers including, but are not limited to, the following:
Licensing
Requirements:
Certain medical device providers are required to be licensed by various state regulatory bodies. However,
if we are found to not be in compliance, we could be subject to fines and penalties or ordered to cease operations which could
have an adverse effect on our business.
False
Claims Act:
The Federal False Claims Act and some state laws impose requirements in connection with the submission of
claims for payment for health care services and products, including prohibiting the knowing submission of false or fraudulent
claims and submission of false records or statements for reimbursement and payment to the United States government or state government.
Such requirements would apply to the hospitals to which we provide our Device related to wound care treatment services. Not only
are government agencies active in investigating and enforcing actions with respect to applicable health laws, but also health
care providers are often subject to actions brought by individuals on behalf of the government. As such, “whistleblower”
lawsuits, also known as “qui tam” actions, are generally filed under seal with a court to allow the government adequate
time to investigate and determine whether it will intervene in the action. As a result, health care providers subject to qui tam
actions are often unaware of the lawsuit until the government has made its determination whether to intervene, or not, at which
time the seal is lifted. The Federal False Claims Act provides for penalties equal to three (3) times the actual amount of any
overpayments plus $11,000 per claim. Under legislation passed in 2009, those who bill third parties are now obligated to discover
and disclose any overpayments received or be subject to False Claims Act penalties as well.
Fraud
and Abuse Laws:
Since a significant portion of reimbursement for healthcare products and services are currently paid through
reimbursements under Medicare, Medicaid or similar programs, the federal government and many states have adopted statutes and
regulations that address fraudulent and/or abusive behavior in connection with such programs.
As
part of this regulatory scheme, the federal government believes that an “inducement” to refer a Medicare or Medicaid
patient is likely to result in fraud or abuse on the Medicare or Medicaid programs. Therefore, the federal government adopted
a number of laws and regulations to recoup funds and assess penalties which it believes were paid inappropriately. In cases of
criminal fraud, the individuals responsible for the fraudulent activity can be subject to imprisonment.
One
of the principal federal statutes regulating fraud and abuse is the Anti-Kickback Statute. The Anti-Kickback statute prohibits
the solicitation, payment, receipt or offering of any direct or indirect remuneration in exchange for the referral of Medicare
and Medicaid patients or for the purchasing, arranging for or recommending the purchasing, leasing or ordering of Medicare or
Medicaid covered services, items or equipment. To be convicted of a violation of the Anti-Kickback Statute, the party must have
had specific intent to induce the referral of Medicare or Medicaid patients or the purchase, lease or ordering of a good, item
or service reimbursable by Medicare or Medicaid. Some of the federal courts have broadly construed the Anti-Kickback Statute and
held that the “intent” required to support a criminal conviction will exist if only one purpose of the referral is
to induce a prohibited referral.
To
clarify some of the issues created by the Anti-Kickback Statute, the Center for Medicare and Medicaid Services issued “safe
harbor” regulations identifying actions which will not be deemed to violate the Anti-Kickback Statute. Some of these “safe
harbors” are in the area of joint ventures, personal services, and other arrangements. Conducting an activity that falls
within a “safe harbor” regulation provides comfort that such activity will not be prosecuted. Compliance with each
element of a particular “safe harbor” is required in order to assured of the protection provided by such “safe
harbor”. Even though a transaction that does not fall within a “safe harbor” may be perfectly appropriate, the
arrangement will be evaluated based on its facts and circumstances to determine if the parties intended to induce the referral
of Medicare or Medicaid patients or the purchase, lease or ordering of a good, item or service reimbursable under Medicare or
Medicaid.
An
allegation of violation and/or a conviction for violation of the Anti-Kickback Statute and parallel state laws could have a significant
impact on our ability to conduct our business. As noted earlier, significant fines, penalties, exclusion from Medicare and Medicaid
programs and imprisonment of individuals can result. Because the burden to prove specific intent under the Anti-Kickback Statute
can sometimes be difficult, the government has been pursuing enforcement under statutes that do not require specific intent such
as the False Claims Act. In fact, in recent legislation the Congress has required that those submitting claims for third party
reimbursement are required to discover and repay any overpayments, or they are subject to additional penalties.
The
Stark Law:
Federal and some state laws prohibit physician referrals to an entity in which the physician or his or her
immediate family members have a financial interest for provision of certain designated health services that are reimbursed by
Medicare or Medicaid. We cannot assure you that the federal government, or other states in which we operate, will not enact similar
or more restrictive legislation or restrictions or interpret existing laws and regulations in a manner that could harm our business.
Health
Care Reform:
There are currently a number of legislative proposals that have been proposed as health care reform in the
United States Congress. At this time, it is not clear which, if any, of these proposals will be enacted. Therefore, although one
or more of these proposals, if enacted, could have an impact on our business, we cannot predict at this time what that impact
will be until there is legislation that becomes law.
Ongoing
Investigations:
Federal and state investigations and enforcement actions continue to focus on the health care industry,
scrutinizing a wide range of items such as joint venture arrangements and referral and billing practices. We believe planned activities
will be substantially in compliance with applicable legal requirements. We cannot assure you, however, that a governmental agency
or a third party will not contend that certain aspects of our business are subject to, or are not in compliance with, such laws,
regulations or rules, or that state or federal regulatory agencies or courts would interpret such laws, regulations and rules
in our favor, or that future interpretations of such laws will not require structural or organizational modifications of our business
or have a negative impact on our business. Applicable laws and regulations are very broad and complex, and, in many cases, the
courts interpret them differently, making compliance difficult. Although we try to comply with such laws, regulations and rules,
a violation could result in denial of the right to conduct business, significant fines and criminal penalties. Additionally, an
increase in the complexity or substantive requirements of such laws, regulations or rules, or reform of the structure of health
care delivery systems and payment methods, could have a material adverse effect on our business.
Employees
We
presently have one full-time employee, which is our CEO, Ohad Goren. Our CFO, Gal Peleg, dedicates 25% of his professional time
to our business and Itsik Ben Yesha, our CTO, dedicates 50% of his professional time to our business. Our CEO, CTO and CFO are
employed under separate service agreements with the Company.
DESCRIPTION
OF PROPERTY
Our
principal executive office is located at 20 West 64th Street, Suite 39G, New York, NY 10023. Our telephone number is (972) 54-427777,
which is the telephone of the offices of our Chairman, Ron Weissberg, located in Israel. There is no lease on the premises the
Company is occupying and the Company is not responsible for paying rent. We are not generating sufficient revenue at this time
to justify a separate corporate office. Once our business grows and generates revenue, we will look for more office space in a
separate corporate office.
LEGAL
PROCEEDINGS
From
time to time, we may become involved in various lawsuits and legal proceedings, which arise, in the ordinary course of business.
However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time
to time that may harm our business. We are currently not aware of any legal proceedings or claims that we believe will have a
material adverse effect on our business, financial condition or operating results.
MARKET
FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market
Information
The
Company’s Common Stock is subject to quotation on the OTCQB Market under the symbol “EQUR”. There is currently
no active trading market in the Common Stock on the OTCQB market. There can be no assurance that there will be an active trading
market for the Common Stock once the Company becomes a reporting company under the Exchange Act. In the event that an active trading
market commences, there can be no assurance as to the market price of the shares of Common Stock, whether any trading market will
provide liquidity to investors, or whether any trading market will be sustained.
For
the periods indicated, the following table sets forth the high and low bid prices per share of Common Stock. The below prices
represent inter-dealer quotations without retail markup, markdown, or commission and may not necessarily represent actual transactions
but does reflect the price of our Common Stock adjusted for the reverse split.
|
|
Price Range
|
|
Period
|
|
High
|
|
|
Low
|
|
Year Ending December 31, 2016:
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
0.10
|
|
|
$
|
0.10
|
|
Second Quarter
|
|
$
|
0.10
|
|
|
$
|
0.10
|
|
Third Quarter
|
|
$
|
0.12
|
|
|
$
|
0.12
|
|
Fourth Quarter
|
|
$
|
0.13
|
|
|
$
|
0.13
|
|
Year Ending December 31, 2017:
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
0.17
|
|
|
$
|
0.17
|
|
Second Quarter
|
|
$
|
0.14
|
|
|
$
|
0.14
|
|
Third Quarter
|
|
$
|
0.08
|
|
|
$
|
0.08
|
|
Fourth Quarter
|
|
$
|
0.13
|
|
|
$
|
0.13
|
|
Year Ending December 31, 2018:
|
|
|
|
|
|
|
|
|
First Quarter
|
|
$
|
0.08
|
|
|
$
|
0.04
|
|
Second Quarter (throughout April 20, 2018)
|
|
$
|
0.04
|
|
|
$
|
0.04
|
|
Our
transfer agent is Transfer Online, Inc., 512 SE Salmon Street, Portland, OR 97214.
Holders
of Capital Stock
We
have 223 holders of record of our Common Stock. This does not include an indeterminate number of persons who hold our Common Stock
in brokerage accounts and otherwise in “street name.”
Rule
144 Shares
As
of the date of this prospectus, there were approximately 477,762,255 shares of our Common Stock that are currently available for
sale to the public in accordance with the volume and trading limitations of Rule 144.
Stock
Option Grants
On
January 1, 2015, the board of director approved the 2015 Employee Incentive Plan. The total number of shares of Common Stock reserved
for issuance by the Company either directly as Stock Awards or underlying Options granted under this Plan is 5,000,000 shares
of Common Stock. On January 1, 2015, the Company granted options as follows under its 2015 Employee Incentive Plan: (i) Professor
Ohry was granted options to purchase 250,000 shares of the Registrant’s common stock (“Option Shares”) at an
exercise price equal to one dollar ($1.00) per Option Share. The Option Shares shall vest pursuant to the terms of a Scientific
Advisory Board Agreement dated January 1, 2015 (the “Ohry SAB Agreement”). Provided the Ohry SAB Agreement remains
in effect, 75,000 shares shall vest July 1, 2015, and the remaining 175,000 Option Shares shall vest at the rate of 25,000 Option
Shares per quarter on the first day of each consecutive quarter; (ii) Dr. Ben Zion Weiner was granted options to purchase 350,000
Option Shares at an exercise price equal to one dollar ($1.00) per Option Share. The Option Shares shall vest pursuant to the
terms of a Scientific Advisory Board Agreement dated January 1, 2015 (the “Weiner SAB Agreement”). Provided the Weiner
SAB Agreement remains in effect, 105,000 Option Shares shall vest July 1, 2015 and the remaining 245,000 Option Shares shall vest
at the rate of 35,000 Option Shares per quarter on the first day of each consecutive quarter; and (iii) Michel Sessler was granted
options to purchase 150,000 Option Shares at an exercise price equal to one dollar ($1.00) per Option Share. The Option Shares
shall vest pursuant to the terms of a Scientific Advisory Board Agreement dated January 1, 2015 (the “Sessler SAB Agreement”).
Provided the Sessler SAB Agreement remains in effect, 45,000 Option Shares shall vest July 1, 2015 and the remaining 105,000 Option
Shares shall vest at the rate of 15,000 Option Shares per quarter on the first day of each consecutive quarter.
Following
is a table summarizing options still outstanding and exercisable along with exercise price and range of remaining term.
Type
|
|
Quantity
|
|
|
Exercise Price
|
|
|
Term
|
|
Avi Ohry
|
|
|
250,000
|
|
|
$
|
1.00
|
|
|
|
24 Months
|
|
Dr. Ben Zion Weiner
|
|
|
350,000
|
|
|
$
|
1.00
|
|
|
|
24 Months
|
|
Michael Sessler
|
|
|
150,000
|
|
|
$
|
1.00
|
|
|
|
24 Months
|
|
Total
|
|
|
750,000
|
|
|
|
|
|
|
|
|
|
During
the years ended December 31, 2017 and 2016, we expensed $107,176 and $401,298, respectively, in relation the options granted
above.
Securities
Authorized for Issuance Under Equity Compensation Plans
No
equity compensation plan or agreements under which our Common Stock is authorized for issuance has been adopted during the period
ended June 30, 2017 and during the fiscal years ended December 31, 2017 and 2016.
Sale
of Unregistered Securities
Issuances
of Common Stock and Common Stock Receivable in 2015:
During
the three months ended March 31, 2015, we received $70,000 in stock receivable. During the three months ended June 30, 2015, we
received $100,000 in stock receivable.
Issuances
of Common Stock in 2016:
During
the year ended December 31, 2016, we did not issue any restricted stock.
Issuances
of Common Stock and Common Stock Receivable in 2017:
On
April 20, 2017, we issued 225,000 shares valued at $39,128 to two consultants for services provided. During the three months ended
June 30, 2017, we authorized the issuance of 75,000 additional shares to the same two consultants valued at $0.14 or $21,000,
which was recorded as stock payable.
The
Registrant’s acceptance issuances of restricted shares were in reliance upon the exemption from registration pursuant to
Section 4(2) of the Act and Regulation S promulgated by the SEC under the Act with respect to all Investors except for those persons
designated as U.S. residents. With respect to the U.S. Investors, the Registrant relied upon exemption from registration pursuant
to Section 4(2) of the Act and Regulation D promulgated by the SEC under the Act.
Penny
Stock Considerations
Our
Common Stock will be deemed to be “penny stock” as that term is generally defined in the Securities Exchange Act of
1934 to mean equity securities with a price of less than $5.00. Our shares thus will be subject to rules that impose sales practice
and disclosure requirements on broker-dealers who engage in certain transactions involving a penny stock.
Under
the penny stock regulations, a broker-dealer selling a penny stock to anyone other than an established customer or accredited
investor must make a special suitability determination regarding the purchaser and must receive the purchaser’s written
consent to the transaction prior to the sale, unless the broker-dealer is otherwise exempt. Generally, an individual with a net
worth in excess of $1,000,000 or annual income exceeding $100,000 individually or $300,000 together with his or her spouse is
considered an accredited investor. In addition, under the penny stock regulations the broker-dealer is required to:
-
Deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the SEC relating to the penny stock
market, unless the broker-dealer or the transaction is otherwise exempt;
-
Disclose commissions payable to the broker-dealer and our registered representatives and current bid and offer quotations for
the securities;
-
Send monthly statements disclosing recent price information pertaining to the penny stock held in a customer’s account,
the account’s value and information regarding the limited market in penny stocks; and
-
Make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s
written agreement to the transaction, prior to conducting any penny stock transaction in the customer’s account.
Because
of these regulations, broker-dealers may encounter difficulties in their attempt to buy or sell shares of our Common Stock, which
may affect the ability of Selling Shareholders or other holders to sell their shares in the secondary market and have the effect
of reducing the level of trading activity in the secondary market. These additional sales practice and disclosure requirements
could impede the sale of our Common Stock even if our Common Stock becomes publicly traded. In addition, the liquidity for our
Common Stock may be decreased, with a corresponding decrease in the price of our Common Stock. Our shares are likely to be subject
to such penny stock rules for the foreseeable future.
INDEX
TO FINANCIAL STATEMENTS
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors and
Stockholders
of E-Qure Corp.
Opinion
on the Financial Statements
We
have audited the accompanying balance sheets of E-Qure Corp. (the Company) as of December 31, 2017 and 2016, and the related statements
of income, comprehensive income, stockholders’ equity (deficit), and cash flows for each of the years in the two-year period
ended December 31, 2017, and the related notes and schedules (collectively referred to as the financial statements). In our opinion,
the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017
and 2016, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31,
2017, in conformity with accounting principles generally accepted in the United States of America.
Basis
for Opinion
These
financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error
or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial
reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but
not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.
Accordingly, we express no such opinion.
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to
error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.
The
accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 8 to the financial statements, the Company suffered a net loss from operations and has a net capital deficiency, which
raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are
also described in Note 8. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
M&K
CPAS, PLLC
We
have served as the Company’s auditor since 2011.
Houston,
TX
April
16, 2018
E-QURE
CORP.
Balance
Sheets
At
December 31, 2017 and 2016
|
|
December 31, 2017
|
|
|
December 31, 2016
|
|
Assets
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
10,962
|
|
|
$
|
292,976
|
|
Receivables
|
|
|
-
|
|
|
|
62,816
|
|
Prepaid expenses
|
|
|
21,000
|
|
|
|
52,316
|
|
Total current assets
|
|
|
31,962
|
|
|
|
408,108
|
|
Other assets
|
|
|
63,382
|
|
|
|
-
|
|
Total Assets
|
|
$
|
95,344
|
|
|
$
|
408,108
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders’ Equity (Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable - trade
|
|
$
|
1,564
|
|
|
$
|
1,564
|
|
Accrued salary
|
|
|
228,150
|
|
|
|
-
|
|
Loan from shareholder
|
|
|
138,051
|
|
|
|
-
|
|
Total current liabilities
|
|
|
367,765
|
|
|
|
1,564
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ equity (deficit):
|
|
|
|
|
|
|
|
|
Preferred stock, $0.00001 par value; 20,000,000 shares authorized; no shares issued and outstanding
|
|
|
|
|
|
|
-
|
|
Common stock, $0.00001 par value; 500,000,000 shares authorized; and 22,237,562 and 22,012,562 issued and outstanding at December 31, 2017 and 2016, respectively.
|
|
|
222
|
|
|
|
220
|
|
Additional paid in capital
|
|
|
31,325,044
|
|
|
|
31,171,843
|
|
Stock payable
|
|
|
21,000
|
|
|
|
-
|
|
Accumulated deficit
|
|
|
(31,618,687
|
)
|
|
|
(30,765,519
|
)
|
Total stockholders’ equity (deficit)
|
|
|
(272,421
|
)
|
|
|
406,544
|
|
Total Liabilities and Stockholders’ Equity (Deficit)
|
|
$
|
95,344
|
|
|
$
|
408,108
|
|
See
Summary of Significant Accounting Policies and Notes to Financial Statements.
E-QURE
CORP.
Statements
of Operations
For
the Years Ended December 31, 2017 and 2016
|
|
December 31, 2017
|
|
|
December 31, 2016
|
|
|
|
|
|
|
|
|
Revenues
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
General and administrative
|
|
|
(628,717
|
)
|
|
|
(912,627
|
)
|
Research and development
|
|
|
(224,451
|
)
|
|
|
(342,602
|
)
|
Total
|
|
|
(853,168
|
)
|
|
|
(1,255,229
|
)
|
|
|
|
|
|
|
|
|
|
(Loss) from operations
|
|
|
(853,168
|
)
|
|
|
(1,255,229
|
)
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
|
|
|
|
|
|
Gain on legal settlement
|
|
|
-
|
|
|
|
281,400
|
|
Total other income (expense)
|
|
|
(853,168
|
)
|
|
|
281,400
|
|
Total expenses
|
|
|
(853,168
|
)
|
|
|
(973,829
|
)
|
|
|
|
|
|
|
|
|
|
Loss from continuing operations before income tax
|
|
|
(853,168
|
)
|
|
|
(973,829
|
)
|
Income tax
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(853,168
|
)
|
|
$
|
(973,829
|
)
|
|
|
|
|
|
|
|
|
|
Basic and diluted per share amount:
|
|
|
|
|
|
|
|
|
Basic and diluted net loss
|
|
$
|
(0.04
|
)
|
|
$
|
(0.04
|
)
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding (basic and diluted)
|
|
|
22,169,754
|
|
|
|
22,012,562
|
|
See
Summary of Significant Accounting Policies and Notes to Financial Statements.
E-QURE
CORP.
Statement
of Changes in Stockholders’ Equity
For
the Years Ended December 31, 2017 and 2016
|
|
|
|
|
Common
Stock
|
|
|
Additional
|
|
|
|
|
|
|
|
|
Total
Stockholders’
|
|
|
|
Common
|
|
|
Subscription
|
|
|
Paid-in
|
|
|
Stock
|
|
|
Accumulated
|
|
|
Equity
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Receivable
|
|
|
Deficit
|
|
|
Payable
|
|
|
Deficit
|
|
|
(Deficit)
|
|
Balance
at December 31, 2015
|
|
|
22,012,562
|
|
|
$
|
220
|
|
|
$
|
(100,000
|
)
|
|
$
|
30,770,545
|
|
|
$
|
-
|
|
|
$
|
(29,791,690
|
)
|
|
$
|
879,075
|
|
Stock-based
compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
401,298
|
|
|
|
|
|
|
|
-
|
|
|
|
401,298
|
|
Loss
on stock receivable
|
|
|
-
|
|
|
|
-
|
|
|
|
100,000
|
|
|
|
-
|
|
|
|
|
|
|
|
-
|
|
|
|
100,000
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(973,829
|
)
|
|
|
(973,829
|
)
|
Balance at December
31, 2016
|
|
|
22,012,562
|
|
|
$
|
220
|
|
|
$
|
-
|
|
|
$
|
31,171,843
|
|
|
$
|
-
|
|
|
$
|
(30,765,519
|
)
|
|
$
|
406,544
|
|
Stock-based
compensation
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
107,176
|
|
|
|
-
|
|
|
|
-
|
|
|
|
107,176
|
|
Shares
for services
|
|
|
225,000
|
|
|
|
2
|
|
|
|
-
|
|
|
|
39,125
|
|
|
|
21,000
|
|
|
|
-
|
|
|
|
60,128
|
|
Imputed
interest
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,900
|
|
|
|
-
|
|
|
|
-
|
|
|
|
6,900
|
|
Net
loss
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
(853,168
|
)
|
|
|
(853,168
|
)
|
Balance
at December 31, 2017
|
|
|
22,237,562
|
|
|
$
|
222
|
|
|
$
|
-
|
|
|
$
|
31,325,044
|
|
|
$
|
21,000
|
|
|
$
|
(31,618,687
|
)
|
|
$
|
(272,421
|
)
|
See
Summary of Significant Accounting Policies and Notes to Financial Statements.
E-QURE
CORP.
Statements
of Cash Flows
For
the Years Ended December 31, 2017 and 2016
|
|
December 31, 2017
|
|
|
December 31, 2016
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(853,168
|
)
|
|
$
|
(973,829
|
)
|
Adjustments to reconcile net loss to cash used in operating activities:
|
|
|
|
|
|
|
|
|
Stock-based compensation
|
|
|
167,303
|
|
|
|
401,298
|
|
Imputed interest
|
|
|
6,900
|
|
|
|
-
|
|
Loss on stock receivable
|
|
|
-
|
|
|
|
100,000
|
|
Changes in assets and liabilities:
|
|
|
|
|
|
|
|
|
Increase (decrease) in accounts payable and accrued expenses
|
|
|
228,150
|
|
|
|
-
|
|
(Increase) decrease in accounts receivable
|
|
|
62,618
|
|
|
|
(62,816
|
)
|
(Increase) decrease in other assets
|
|
|
(63,382
|
)
|
|
|
-
|
|
(Increase) decrease in prepaid expenses
|
|
|
31,316
|
|
|
|
(52,316
|
)
|
Cash used in operating activities
|
|
|
(420,065
|
)
|
|
|
(587,663
|
)
|
|
|
|
|
|
|
|
|
|
Cash flow from financing activities:
|
|
|
|
|
|
|
|
|
Proceeds from borrowings of debt
|
|
|
138,051
|
|
|
|
-
|
|
Cash provided by financing activities
|
|
|
138,051
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Change in cash
|
|
|
(282,014
|
)
|
|
|
(587,663
|
)
|
Cash - beginning of year
|
|
|
292,976
|
|
|
|
880,639
|
|
Cash - end of year
|
|
$
|
10,962
|
|
|
$
|
292,976
|
|
See
Summary of Significant Accounting Policies and Notes to Financial Statements.
E-Qure
Corp.
Notes
to Financial Statements
December
31, 2017
1.
The Company
Organizational
Background:
Organizational
Background: E-Qure Corp., (“EQUR” or the “Company”) is a Delaware corporation with a mailing address in
New York, NY and offices in Israel.
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. Further,
as of December 31, 2016, the cash resources of the Company were insufficient to meet its current business plan, and the Company
had negative working capital. These and other factors raise substantial doubt about the Company’s ability to continue as
a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on
the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible
inability of the Company to continue as a going concern.
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 December 31, 2017 or 2016.
Accounts
Receivable:
Receivable
consist primarily of other receivables, which is a balance due from a service provider to the Company. The Company does not need
to provide an allowance for doubtful receivables. The allowance for doubtful other receivables was $0 as of December 31, 2017
and 2016.
Prepaid
Expenses
Prepaid
expenses consist primarily of payments made for legal expenses to be earned and expensed during the following fiscal year.
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 December 31, 2017 and 2016, 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: Inputs to the valuation methodology are unadjusted quoted prices for identical assets or liabilities in active markets that
the Company has the ability to access.
Level
2: Inputs to the valuation methodology include:
-
Quoted prices for similar assets or liabilities in active markets;
-
Quoted prices for identical or similar assets or liabilities in inactive markets;
-
Inputs other than quoted prices that are observable for the asset or liability;
-
Inputs that are derived principally from or corroborated by observable market data by correlation or other means.
If
the asset or liability has a specified (contractual) term, the level 2 input must be observable for substantially the full term
of the asset or liability.
Level
3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement.
The
assets or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input
that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and
minimize the use of unobservable inputs. The following table presents assets that were measured and recognize at fair value on
December 31, 2017 and 2016 and the year then ended on a recurring basis:
Fair
Value Measurements at December 31, 2017
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
|
|
|
Active
Markets
for Identical Assets
|
|
|
|
Other
Observable Inputs
|
|
|
|
Significant
Unobservable Inputs
|
|
|
|
|
Total
|
|
|
|
(Level 1)
|
|
|
|
(Level 2)
|
|
|
|
(Level 3)
|
|
None
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Total assets and liabilities at fair value
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Fair
Value Measurements at December 31, 2016
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
|
Significant
|
|
|
|
|
|
|
|
|
|
|
|
|
Active
Markets for Identical Assets
|
|
|
|
Other
Observable Inputs
|
|
|
|
Significant
Unobservable Inputs
|
|
|
|
|
Total
|
|
|
|
(Level 1)
|
|
|
|
(Level 2)
|
|
|
|
(Level 3)
|
|
None
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Total assets and liabilities at fair value
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
When
the Company changes its valuation inputs for measuring financial assets and liabilities at fair value, either due to changes in
current market conditions or other factors, it may need to transfer those assets or liabilities to another level in the hierarchy
based on the new inputs used. The Company recognizes these transfers at the end of the reporting period that the transfers occur.
For the fiscal periods ended December 31, 2017 and 2016, 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. All per share disclosures retroactively reflect shares
outstanding or issuable as though the reverse split had occurred January 1, 2011.
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. 740, “Accounting for Uncertainty in Income Taxes –
an interpretation of FASB Statement No. 109, Accounting for Income Taxes” (“FIN No. 740”) which was effective
for the Company on January 1, 2007. ASC No. 740 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 ASC No. 740, 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. ASC No. 740 also provides guidance on derecognition, classification, interest and penalties, accounting
in interim periods and disclosure requirements.
Our
federal and state income tax returns are open for fiscal years ending on or after December 31, 2008. We are not under examination
by any jurisdiction for any tax year. At December 31, 2017, we had no material unrecognized tax benefits and no adjustments to
liabilities or operations were required under ASC 740.
Recently
Issued Accounting Pronouncements
In
May 2017, the FASB issued Update 2017-09 - Compensation - Stock Compensation (Topic 718): Effective for all entities for annual
periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including
adoption in any interim period, for (1) public business entities for reporting periods for which financial statements have not
yet been issued and (2) all other entities for reporting periods for which financial statements have not yet been made available
for issuance. Early adoption is permitted. This adoption is not expected to have a material impact on our financial position or
results of operations.
In
February 2017, FASB issued Update 2017-06 - Plan Accounting: Defined Benefit Pension Plans (Topic 960), Defined Contribution Pension
Plans (Topic 962), Health and Welfare Benefit Plans (Topic 965): Employee Benefit Plan Master Trust Reporting (a consensus of
the Emerging Issues Task Force). Under Topic 960, investments in master trusts are presented in a single line item in the statement
of net assets available for benefits. Similar guidance is not provided in Topic 962 or 965, which has resulted in diversity in
practice. For each master trust in which a plan holds an interest, the amendments in this Update require a plan’s interest
in that master trust and any change in that interest to be presented in separate line items in the statement of net assets available
for benefits and in the statement of changes in net assets available for benefits, respectively. Topics 960 and 962 require plans
to disclose their percentage interest in the master trust and a list of the investments held by the master trust, presented by
general type, within the plan’s financial statements. Stakeholders said that the disclosure can be misleading when the plan
has a divided interest in the individual investments of the master trust (that is, when the plan has a specific, rather than a
proportionate, interest in the master trust). The amendments in this Update remove the requirement to disclose the percentage
interest in the master trust for plans with divided interests and require that all plans disclose the dollar amount of their interest
in each of those general types of investments, which supplements the existing requirement to disclose the master trust’s
balances in each general type of investments. Early adoption is permitted. This adoption is not expected to have a material impact
on our financial position or results of operations.
In
the opinion of management, the information furnished in these interim financial statements reflects all adjustments necessary
for a fair statement of the financial position and results of operations and cash flows as of and for the twelve-month periods
ended December 31, 2017 and 2016. All such adjustments are of a normal recurring nature.
Management
does not anticipate that the adoption of these standards will have a material impact on the financial statements.
2.
Stockholders’ Equity
Common
Stock
We
are currently authorized to issue up to 500,000,000 shares of $0.00001 par value common stock. All issued shares of common stock
are entitled to vote on a 1 share/1 vote basis. On May 12, 2014 the Board approved a 1 for 100 reverse split of the common stock.
In conjunction with the reverse split the Company domiciled from New Jersey to Delaware.
Issuances
of Common Stock and Common Stock Receivable in 2016:
During
the year ended December 31, 2016, we did not issue any shares of Common Stock. The Company decided to write off its remaining
outstanding balance of $100,000 in stock receivable because it was deemed to be uncollectible.
Issuances
of Common Stock in 2017:
On
April 20, 2017, we issued 225,000 shares valued at $39,128 to two consultants for services provided. During the three months ended
June 30, 2017, we authorized the issuance of 75,000 additional shares to the same two consultants valued at $0.14 or $21,000,
which was recorded as stock payable.
Preferred
Stock
We
are currently authorized to issue up to 25,000,000 shares of $0.00001 par value preferred stock. Effective December 31, 2007 the
board of directors approved the cancellation of all previously issued preferred shares and approved the cancellation and extinguishment
of all common and preferred share conversion rights of any kind, including without limitation, warrants, options, convertible
debt instruments and convertible preferred stock of every series and accompanying conversion rights of any kind. There are no
preferred shares outstanding as of December 31, 2017 and 2016.
Stock
Options
On
January 1, 2015, the Company authorized the adoption of the 2015 Employee Incentive Plan.
Stock
Option Grants
On
January 1, 2015, the board of director approved the 2015 Employee Incentive Plan. The total number of shares of Common Stock reserved
for issuance by the Company either directly as Stock Awards or underlying Options granted under this Plan is 5,000,000 shares
of Common Stock. On January 1, 2015, the Company granted options as follows under its 2015 Employee Incentive Plan: (i) Professor
Ohry was granted options to purchase 250,000 shares of the Registrant’s common stock (“Option Shares”) at an
exercise price equal to one dollar ($1.00) per Option Share. The Option Shares shall vest pursuant to the terms of a Scientific
Advisory Board Agreement dated January 1, 2015 (the “Ohry SAB Agreement”). Provided the Ohry SAB Agreement remains
in effect, 75,000 shares shall vest July 1, 2015, and the remaining 175,000 Option Shares shall vest at the rate of 25,000 Option
Shares per quarter on the first day of each consecutive quarter; (ii) Dr. Ben Zion Weiner was granted options to purchase 350,000
Option Shares at an exercise price equal to one dollar ($1.00) per Option Share. The Option Shares shall vest pursuant to the
terms of a Scientific Advisory Board Agreement dated January 1, 2015 (the “Weiner SAB Agreement”). Provided the Weiner
SAB Agreement remains in effect, 105,000 Option Shares shall vest July 1, 2015 and the remaining 245,000 Option Shares shall vest
at the rate of 35,000 Option Shares per quarter on the first day of each consecutive quarter; and (iii) Michel Sessler was granted
options to purchase 150,000 Option Shares at an exercise price equal to one dollar ($1.00) per Option Share. The Option Shares
shall vest pursuant to the terms of a Scientific Advisory Board Agreement dated January 1, 2015 (the “Sessler SAB Agreement”).
Provided the Sessler SAB Agreement remains in effect, 45,000 Option Shares shall vest July 1, 2015 and the remaining 105,000 Option
Shares shall vest at the rate of 15,000 Option Shares per quarter on the first day of each consecutive quarter.
Following
is a table summarizing options still outstanding and exercisable along with exercise price and range of remaining term.
Type
|
|
Quantity
|
|
|
Exercise Price
|
|
|
Term
|
|
Avi Ohry
|
|
|
250,000
|
|
|
$
|
1.00
|
|
|
|
24 Months
|
|
Dr. Ben Zion Weiner
|
|
|
350,000
|
|
|
$
|
1.00
|
|
|
|
24 Months
|
|
Michael Sessler
|
|
|
150,000
|
|
|
$
|
1.00
|
|
|
|
24 Months
|
|
Total
|
|
|
750,000
|
|
|
|
|
|
|
|
|
|
During
the years ended December 31, 2017 and 2016, we expensed $107,176 and $401,298, respectively, in relation the options granted
above.
3.
Notes Payable
During
the year ended December 31, 2017, the Company issued three notes for a total of $138,051, two of which were issued to related
parties. The notes are due on demand and bear no interest rate. As such, the imputed interest is calculated and included under
additional paid-in capital. As of December 31, 2017, the Company has recorded $6,900 in imputed interest.
|
|
December 31, 2017
|
|
|
December 31, 2016
|
|
Roni Weisberg, Chairman
|
|
$
|
57,172
|
|
|
|
-
|
|
Itsik Ben Yesha, CTO
|
|
$
|
44,005
|
|
|
|
-
|
|
Michael Cohen
|
|
$
|
36,874
|
|
|
|
-
|
|
4.
Other Assets
As
of December 31, 2017 and 2016, the Company recorded $63,382 and $0, respectively, as other assets representing securities compliance
services to be repaid in cash or securities compliance services pursuant to an arrangement with the Company’s securities
compliance consultant.
5.
Related Party Transactions
On
January 1, 2015, the board of director approved the 2015 Employee Incentive Plan. The total number of shares of Common Stock reserved
for issuance by the Company either directly as Stock Awards or underlying Options granted under this Plan is 5,000,000 shares
of Common Stock. On January 1, 2015, the Company granted options as follows under its 2015 Employee Incentive Plan: (i) Professor
Ohry was granted options to purchase 250,000 shares of the Registrant’s common stock (“Option Shares”) at an
exercise price equal to one dollar ($1.00) per Option Share. The Option Shares shall vest pursuant to the terms of a Scientific
Advisory Board Agreement dated January 1, 2015 (the “Ohry SAB Agreement”). Provided the Ohry SAB Agreement remains
in effect, 75,000 shares shall vest July 1, 2015, and the remaining 175,000 Option Shares shall vest at the rate of 25,000 Option
Shares per quarter on the first day of each consecutive quarter; (ii) Dr. Ben Zion Weiner was granted options to purchase 350,000
Option Shares at an exercise price equal to one dollar ($1.00) per Option Share. The Option Shares shall vest pursuant to the
terms of a Scientific Advisory Board Agreement dated January 1, 2015 (the “Weiner SAB Agreement”). Provided the Weiner
SAB Agreement remains in effect, 105,000 Option Shares shall vest July 1, 2015 and the remaining 245,000 Option Shares shall vest
at the rate of 35,000 Option Shares per quarter on the first day of each consecutive quarter; and (iii) Michel Sessler was granted
options to purchase 150,000 Option Shares at an exercise price equal to one dollar ($1.00) per Option Share. The Option Shares
shall vest pursuant to the terms of a Scientific Advisory Board Agreement dated January 1, 2015 (the “Sessler SAB Agreement”).
Provided the Sessler SAB Agreement remains in effect, 45,000 Option Shares shall vest July 1, 2015 and the remaining 105,000 Option
Shares shall vest at the rate of 15,000 Option Shares per quarter on the first day of each consecutive quarter. See also Note
2 above. We expensed $107,176 and $401,298, respectively, in relation to the option granted.
As
of December 31, 2017 and 2016, 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. As of December 31, 2017 and 2016, we had accrued
salaries of $228,150 and $0, respectively, due to three of our officers.
6.
Prepaid Expenses
As
of December 31, 2017 and 2016, the Company had $21,000 and $52,316 in prepaid expenses representing prepaid securities compliance
services pursuant to an arrangement with the Company’s securities compliance services provider.
|
|
December 31
|
|
|
|
2017
|
|
|
2016
|
|
Legal expenses
|
|
$
|
21,000
|
|
|
$
|
52,316
|
|
Total prepaid expenses
|
|
$
|
21,000
|
|
|
$
|
52,316
|
|
7.
Taxes
We
have adopted ASC 740 which provides for the recognition of a deferred tax asset based upon the value the loss carry-forwards will
have to reduce future income taxes and management’s estimate of the probability of the realization of these tax benefits.
Our net operating loss carryovers incurred prior to 2008 considered available to reduce future income taxes were reduced or eliminated
through our recent change of control (I.R.C. Section 382(a)) and the continuity of business limitation of I.R.C. Section 382(c).
We
have a current operating loss carry-forward of $2,028,871 resulting in deferred tax assets of $710,105. We have determined it
more likely than not that these timing differences will not materialize and have provided a valuation allowance against substantially
all our net deferred tax asset.
Future
utilization of currently generated federal and state NOL and tax credit carry forwards may be subject to a substantial annual
limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended and similar state
provisions. The annual limitation may result in the expiration of NOL and tax credit carry forwards before full utilization.
|
|
December 31
|
|
|
|
2017
|
|
|
2016
|
|
Individual components giving rise to the deferred tax assets are as follows:
|
|
$
|
|
|
|
$
|
|
|
Future tax benefit arising from net operating loss carryovers
|
|
|
710,105
|
|
|
|
1,282,879
|
|
Less valuation allowance
|
|
|
(710,105
|
)
|
|
|
(1,282,879
|
)
|
Net deferred asset
|
|
$
|
-
|
|
|
$
|
-
|
|
The
Company is not under examination by any jurisdiction for any tax year. Our federal and state income tax returns are open for fiscal
years ending on or after December 31, 2008.
8.
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.
9.
Commitments and Contingencies
During
2016, the Company had filed a lawsuit against one of its suppliers for lack of services performed. During October 2016, the Company
signed with the supplier a confidential settlement agreement. Pursuant to the agreement, the supplier was obligated to pay the
Company $281,400, which was paid during October 2016.
10.
Subsequent Events
There
were no subsequent events following the year ended December 31, 2017 through the date the financial statements were issued that
would materially affect the financial statements.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATIONS
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 down 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.
On
June 6, 2014, the Company entered into an agreement with Austen Biolnnovation Institute (“ABIA”), for purpose of ABIA:
(i) obtaining an Investigational Device Exemption (IDE) approval from the FDA; and (ii) conducting a clinical trial for the Registrant’s
BST Device, a prerequisite for securing FDA approval in the U.S. market. After determining that ABIA was unable, because of substantial
financial difficulties and key personnel losses, to perform its obligation, we demanded that ABIA fully-refund the monies paid
to ABIA. We subsequently commenced a lawsuit against ABIA. The Company signed a settlement agreement with ABIA from which it received
$300,000 in satisfaction of all claims against ABIA.
The
Company engaged IMARC Research Inc. to provide a broad range of services related to its BST Device and the FDA application process.
On October 14, 2016, the Company received notification from FDA that it has granted conditional approval to the IDE application,
authorizing us to commence a clinical investigation of our BST Device for wound healing. We are dependent upon the success of
our FDA application for us to be able to market our BST Device in the U.S.
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 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.
During
the year ended December 31, 2016, the Registrant did not raise any equity and debt capital.
Recent
Developments
Effective
October 15, 2014, through our wholly-owned Israeli subsidiary, ESQURE, we entered into an Asset Purchase Agreement with Michael
Cohen. We purchased all of Mr. Cohan’s assets (the “Seller’s Assets”) related to our BST Device for 875,000
restricted shares of Common Stock valued at $350,000. The Seller’s Assets settled a subscription receivable under a previous
subscription agreement for the same number of shares. Pursuant to the terms of the Asset Purchase Agreement, we purchased all
of Seller’s Assets related to our BST Device.
On
December 28, 2014, the Registrant entered into a preliminary distribution agreement with Rubifarm S.A., an entity organized under
the laws of Argentina (“Rubifarm”), which agreement is subject to approval by the regulatory authorities of Argentina.
At the date of regulatory approval, which is anticipated during the 4th quarter of 2015, a definitive agreement will be executed
and filed with the SEC. The agreement contemplates that Rubifarm will be granted exclusive distribution rights for the BST Device™
in Argentina for an initial term of 5 years subject to Rubifarm meeting a minimum purchase quota of $1.5 million during the initial
5-year term in order to retain its exclusivity.
On
July 30, 2015, the Company reported that it entered into an exclusive distribution agreement (the “Distribution Agreement”)
with Chemipal Ltd, a closely-held Tel-Aviv Stock Exchange listed company organized under the laws of the State of Israel (“Chemipal”).
Chemipal has been actively engaged in the distribution of medical products in srael since 1941. Under the Distribution Agreement,
the Registrant has granted Chemipal exclusive distribution rights to the BST Device and the accompanying disposable electrodes
(sometimes collectively, the “Products”) in Israel for an initial 5 year term, subject to Chemipal satisfying a minimum
purchase quota of $3 million during the term.
On
December 18, 2015, the Registrant confirmed certain information that it had received from ABIA stating that it had sustained financial
difficulties and key personnel losses that would adversely a ffect 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
May 2016, the Company commenced legal action against ABIA in the Supreme Court of the State of New York, New York County alleging
the breach of contract against ABIA of the Clinical Trial Agreement dated June 5, 2014 (the “CTA”) based upon, among
other reasons: (i) the failure of ABIA to commit sufficient personnel to the Company’s BST device project; (ii) misrepresenting
the ability of its staff to perform its obligations under the CTA; (iii) failing to provide the FDA with adequate evidence to
support the IDE applications and providing incorrect responses to the FDA; and (v) misappropriating the Company’s funds
for use on other ABIA projects and expenses rather than in fulfillment of its contract obligations. The Lawsuit seeks approximately
$475,000 in actual damages, representing the fees paid by the Company to ABIA, loss of profits in an amount not less than $3 million
and reasonable attorneys’ fees and costs and expenses. During October 2016, the Company signed settlement agreement with
ABIA on the amount of $300,000.
The
Company engaged IMARC Research Inc. to provide a broad range of services related to its BST Device and the FDA application process.
On October 14, 2016, the Company received notification from FDA that it has granted conditional approval to the IDE application,
authorizing us to commence a clinical investigation of our BST Device for wound healing. We are dependent upon the success of
our FDA application for us to be able to market our BST Device in the U.S.
On
July 18, 2016, the Company received the CE Certificate of Conformity and the ISO 13485 Certification. The CE Certification for
our BST Wound Healing Device is a declaration that it complies with the requirements of the EU related to health, safety and environmental
protections and acknowledges that the BST Device may be legally marketed in the EU. As a result, we are prepared to commence manufacturing
and marketing for our BST Device in Europe as well as other non-European countries that accept the CE Certification. The ISO is
the International Organization for Standardization, and represents that the company’s quality systems and procedures satisfies
the requirements for a comprehensive quality management for the design and manufacture of medical devices.
On
October 14, 2016, the Registrant received notification from FDA that it has granted conditional approval to the IDE application,
authorizing us to commence a clinical investigation of our BST Device for wound healing. The main condition set forth is that
the trial shall begin initially with 10 patients, after which we will file a safety report with the FDA before proceeding with
the trial, which contemplates testing the BST Device with 90 patients altogether.
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.
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 down to complete closure and/or cure.
Results
of Operations during the year ended December 31, 2017 as compared to the year ended December 31, 2016
We
have not generated any revenues since inception. We had operating expenses mainly related to general and administrative expenses
and research and development expenses. During the year ended December 31, 2017, we incurred $853,168 in net loss from operations
due to general and administrative expenses of $628,717 and research and development expenses of $224,451 as compared to a net
loss from operations of $973,829 due to general and administrative expenses of $912,627 and research and development expenses
of $342,602 during the year ended December 31, 2016, and other income received of $281,400 due to a gain on legal settlement.
Our
net loss from continuing operations during the years 2017 and 2016 were $853,168 and $973,829, respectively. We paid no income
tax in 2017 and 2016.
Liquidity,
Capital Resources and Strategy
On
December 31, 2017, we had total assets of $95,344, consisting of $10,962 in cash, $21,000 in prepaid expenses and other assets
of $63,382, as compared to total assets of $408,108 at December 31, 2016. consisting of $292,976 in cash, $62,816 in accounts
receivable and $52,316 in prepaid expenses. We had total current liabilities of $367,765 as of December 31, 2017 consisting of
$229,714 in accounts payable and accrued salaries to management and $138,051 in loans from shareholders. We had total current
liabilities of $1,564 as of December 31, 2016 consisting of accounts payable. We had no long-term liabilities as of December 31,
2017 and 2016.
We
used $420,065 in our operating activities during the year 2017, which was due to a net loss of $853,168 offset by stock-based
compensation of $167,303, imputed interest of $6,900, an increase in accounts payable and accrued expenses of $228,150, a decrease
in accounts receivable of $62,816, an increase in other assets of $63,382 and a decrease of $31,316 in prepaid expenses.
We
used $587,663 in our operating activities during the year 2016, which was due to a net loss of $973,829 offset by stock-based
compensation of $401,298, a loss on stock receivable of $100,000, an increase in accounts receivable of $62,816 and a decrease
in prepaid expenses of $52,316.
We
financed our negative cash flow from operations in 2017 through proceeds from borrowings on notes payable of $138,051. We financed
our negative cash flow from operations in 2016 through available cash resources.
We
had no investing activities during the years ended December 31, 2017 and 2016.
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 2017 and 2016. 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 $853,168 for the year ended December 31, 2017 and $973,829 for the year ended December 31,
2016 and total accumulated deficits of $31,618,687 and $30,765,519 as of December 31, 2017 and 2016, respectively.
The
Company had no revenues from operations during the years ended December 31, 2017 and 2016. As of December 31, 2017, the Company
had $10,962 cash on hand and had negative working capital of $335,803.
We
believe that our current cash on hand of $10,962, as of December 31, 2017, 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 2019. 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 December 31, 2017 and 2016, 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 years ended December 31, 2017 and
2016, and are included elsewhere in this prospectus.
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There
have been no changes in or disagreements with accountants on accounting or financial disclosure matters.
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Our
directors were elected to serve until the next annual meeting of shareholders and until his respective successors will have been
elected and will have qualified. The following table sets forth the name, age and position held with respect to our present director
and executive officer:
Name
|
|
Age
|
|
Title
|
|
Executive
Officer Since
|
Ohad
Goren
|
|
46
|
|
Chief
Executive Officer
|
|
06/2014
|
Gal
Peleg
|
|
39
|
|
Chief
Financial Officer
|
|
08/2014
|
Ron
Weissberg
|
|
58
|
|
Chairman
|
|
12/2013
|
Itsik
Ben Yesha
|
|
64
|
|
Chief
Technology Officer
|
|
06/2014
|
Dr.
Michael Sessler
|
|
58
|
|
Director
|
|
08/2014
|
Ohad
Goren,
age 46, Chief Executive Officer. During the past five years, Mr. Goren has served in the following positions: from
2011 through 2013 Mr. Goren served as an advisor to several biot-ech and high-tech startup companies. During 2010 and 2011, Mr.
Goren served as CEO of Pollogen Ltd., a private Israeli company engaged in the development, manufacture and marketing of medical
aesthetic devices with sales in Europe, North and South America, and major Asian countries. Prior to joining Pollogen Ltd., during
2008 to 2009, Mr. Goren served as a consultant to start-down companies principally in the biotechnology and hi-tech industries.
From 2005 through 2008, Mr. Goren was the CEO of Lifewave Ltd., a public Israeli company, where he had responsibility for Lifewave’s
IPO, overseeing the development of its chronic wound treatment device and Lifewave’s regulatory compliance, among other
duties. From 1997 to 2005 Mr. Goren served as the Marketing and Sales Manager of the Services Division of Oracle Corp., in Israel.
From 1990 to 1997 Mr. Goren served as the Deputy Consul at the Israeli Embassy, Washington, D.C. Mr. Goren received his BA degree
and his MBA degree from the University of Maryland, in the U.S.
Gal
Peleg,
age 39, Chief Financial Officer. On August 21, 2014, the Registrant appointed Mr. Gal Peleg as Chief Financial
Officer, replacing Ron Weissberg, the Registrant’s Chairman and principal stockholder, who had served as interim CFO since
December 27, 2013. Mr. Weissberg will continue to serve as Chairman of the Board of Directors.
Mr.
Peleg is a Certified Public Accountant. From 2007 to the present, Mr. Peleg served as Chief Financial Officer of Medical Life-Wave,
a medical device company that was listed on the Tel-Aviv Stock Exchange (“TASE”). He was responsible for quarterly,
annual and other reports filed with TASE, compliance with regulatory protocol and the rules and regulations under the Israeli
securities laws. From January 2006 through October 2007, Mr. Peleg served as controller of Tescom Software System Ltd, a TASE
listed, software testing company with worldwide operations and offices in Israel, United States and Singaport. From 2004 to 2006,
Mr. Peleg served as controller of Internet Gold, a majority stockholder of BCOM Ltd., an Israeli company listed on NASDAQ and
TASE. From 2001 to 2004, Mr. Peleg worked at Ernst & Young as Senior, Bio-Tech/Medical Device Section, providing audit services
in accordance with US GAAP and Israeli GAAP.
Ron
Weissberg
, age 58, Chairman of the Board since December 27, 2013. From December 27, 2013 until June 5, 2014, Mr. Weissberg
served as the Registrant’s CEO, on which latter date the Board of Directors appointed Ohad Goren as the CEO. In addition,
from December 27, 2013 until August 21, 2014, Mr. Weissberg also served as the Registrant’s CFO, on which latter date the
Board of Directors appointed Mr. Gal Peleg as CFO.
From
May 2011 to the present, Mr. Weissberg has served as an executive officer and director of Bio-Light Israeli Life Sciences Investments
Ltd, a public company listed on the Tel-Aviv Stock Exchange, engaged in the business of biomed innovation. From May 2003 to the
present, Mr. Weissberg has been a director of Midroog Ltd., an Israeli Credit Rating Agency, a company engaged in the business
of credit rating for the domestic Israeli market. From February 1988 to the present, Mr. Weissberg has been a director of The
Israel Land Development Company Ltd (“ILDC”), a public company listed on the TASE, engaged in the business of owning
and managing commercial real estate in Israel, Europe and Canada.
Since
2011, Mr. Weissberg has been ILDC’s Vice-Chairman. From 1994 until 2006, he was chairman of ILD Insurance Company Ltd, a
public company engaged in the business of underwriting property, casualty and life insurance with total portfolio of approximately
US$1 billion and 500 employees. ILD Insurance is listed on the TASE. From 1996 to 2000, Mr. Weissberg also served as its CEO.
From June 2008 until October 2010, he was the CEO and a director of Portfolio Green Ltd., a public company listed on the TASE
engaged in the business of Real Estate Development in the U.S.
The
Registrant believes that Mr. Weissberg’s many years of experience as a senior executive officer and director of several
successful public companies in a variety in industries, all of which have had far greater resources and operating history than
the Registrant, together with his material equity position in the Registrant, renders him highly qualified to serve on the Registrant’s
Board of Directors.
Itsik
Ben Yesha,
age 64, Chief Technology Officer and was a founder and a principal and involved in the Registrant’s efforts
leading to the negotiations and closing of the above-referenced Patent Purchase Agreement. From 1991 through 2013, Mr. Ben Yesha
was the founder and a partner of Hisense Ltd., an Israeli medical device company for respiratory monitoring devices for infants.
He previously served as Executive Vice President of Lifewave Ltd. From 1998 to 2003 Mr. Ben Yesha was the Executive Vice President
and VPL Division President with Valor Computerized Systems Ltd., a CAD/CAM Software company listed on the Frankfurt Stock Exchange
and later acquired by Mentor Graphics (NASDAQ: MENT). From 1979 to 1997, Mr. Ben Yesha served in Tadiran Telecom Group in various
rolls, starting as a R&D engineer, designing computerized electronic exchanges (Tadex, Coral), and finally serving as the
CFO of Tadiran Wireless Telecom division, bringing it from $0 to $50 million in annual sales within 3 years.
Dr.
Michael Sessler
, age 58, Director. Dr. During the last 22 years, Dr. Sessler has been actively engaged in business development.
From 1992 through 2009, Dr. Sessler was the director of business development for the Electra Consumer Products subsidiary of Elco
Group (ELCO), a listed public company on the Tel-Aviv Stock Exchange (“TASE”) with total assets in excess of $1.3
billion and net revenues in excess of $1.9 billion in 2013. During his tenure at ELCO, Dr. Sessler also established and managed
new ELCO businesses in Europe, Asia, South America and Australia and also served as Senior Vice President of Electra Group until
2009.
Since
2009, Dr. Sessler has been a managing director of Allsons Ltd., an investment company with assets in Europe and Israel. During
the past 5 years, Dr. Sessler has also been member of the board of directors of The Leser Group Ltd., a private New York-based
real-estate development company with bonds traded on the TASE and over $130 million in assets.
Dr.
Sessler is a qualified and experienced BOD member due to his experience in developing and managing major subsidiaries of public
companies, working in challenging domestic and international markets, as well as his experience in introducing new products to
a wide variety of markets, together with his ability to manage and oversee manufacturing control processes. In the opinion of
the Company’s management and board of directors,Dr. Sessler is a highly qualified professional to serve as a member of the
Company’s board of directors.
Dr.
Sessler is a medical doctor, having received is MD from the Medical University of Rome, Italy under the guidance of Prof. Rita
Levi Montalccini, Nobel Prize winner in Physiology/Medicine in 1986.
Director
Independence
.
In determining whether or not our directors are considered independent, the Company used the definition
of independence as defined in NASDAQ Rule 4200. Based on that definition we believe that Dr. Michael Sessler is independent.
NASDAQ
Rule 4200.
The NASDAQ Rule 4200, which sets forth several tests to determine whether a director of a listed company is independent.
Rule 4200 provides that a director would not be considered independent if the director or an immediate family member accepted
any compensation from the listed company in excess of $120,000 during any period of 12 consecutive months within the three years
preceding the determination of independence (excluding compensation for board or board committee service, compensation paid to
an immediate family member as a non-executive employee, benefits paid under a tax-qualified retirement plan and non-discretionary
compensation).
Directors’
Term of Office
.
Our directors are elected to serve until the next annual meeting of shareholders and until their respective
successors will have been elected and will have qualified.
Audit
Committee and Financial Expert, Compensation Committee, Nominations Committee.
We do not have any of the above mentioned standing
committees because our corporate financial affairs and corporate governance are simple in nature at this stage of development
and each financial transaction is approved by our sole officer or director.
Code
of Ethics.
We do not currently have a Code of Ethics applicable to our principal executive officers; however, the Company
plans to implement such a code in the third quarter of 2018.
Potential
Conflicts of Interest.
Since we do not have an audit or compensation committee comprised of independent Directors, the functions
that would have been performed by such committees are performed by our Board of Directors. Thus, there is a potential conflict
of interest in that our Directors have the authority to determine issues concerning management compensation, in essence their
own, and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our
Executives or Directors.
Board’s
Role in Risk Oversight.
The Board assesses on an ongoing basis the risks faced by the Company. These risks include financial,
technological, competitive, and operational risks. In addition, since the Company does not have an Audit Committee, the Board
is also responsible for the assessment and oversight of the Company’s financial risk exposures.
Involvement
in Certain Legal Proceedings.
We are not aware of any material legal proceedings that have occurred within the past ten years
concerning any Director or control person which involved a criminal conviction, a pending criminal proceeding, a pending or concluded
administrative or civil proceeding limiting one’s participation in the securities or banking industries, or a finding of
securities or commodities law violations.
Section
16(a) Compliance.
Section 16(a) of the Securities and Exchange Act of 1934 requires the Registrant’s directors and executive
officers, and persons who own beneficially more than ten percent (10%) of the Registrant’s Common Stock, to file reports
of ownership and changes of ownership with the Securities and Exchange Commission. Copies of all filed reports are required to
be furnished to the Registrant pursuant to Section 16(a). Based solely on the reports received by the Registrant and on written
representations from reporting persons, the Registrant was informed that its executive officers, directors and ten percent (10%)
shareholders have not filed reports required to be filed under Section 16(a).
EXECUTIVE
COMPENSATION
The
following table sets forth information concerning the total compensation that we have paid or that has accrued on behalf of our
chief executive officer and other executive officers during the fiscal years ending December 31, 2017, 2016 and 2015.
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Long Term
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Annual Compensation
|
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Compensation Awards
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Other
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Restricted
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Securities
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Annual
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Stock
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Underlying
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All Other
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Name and Principal Position
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Year
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Salary
($)
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Bonus
($)
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Compensation
($)
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Award(s)
($)
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Options
($)
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Compensation
($)
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Ohad Goren, CEO
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2017
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140,400
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0
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0
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0
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0
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0
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2016
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0
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0
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0
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0
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0
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0
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2015
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0
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0
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0
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0
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0
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0
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Gal Peleg, CFO
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2017
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17,550
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0
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0
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0
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0
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0
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2016
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0
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0
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0
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0
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0
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0
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2015
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0
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0
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0
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0
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0
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0
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Itsik Ben Yesha, CTO
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2017
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72,500
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0
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0
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0
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0
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0
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2016
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0
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0
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0
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0
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0
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0
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2015
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0
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0
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0
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0
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0
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0
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Option
Grants
On
January 1, 2015, the board of director approved the 2015 Employee Incentive Plan. The total number of shares of Common Stock reserved
for issuance by the Company either directly as Stock Awards or underlying Options granted under this Plan is 5,000,000 shares
of Common Stock. On January 1, 2015, the Company granted options as follows under its 2015 Employee Incentive Plan: (i) Professor
Ohry was granted options to purchase 250,000 shares of the Registrant’s common stock (“Option Shares”) at an
exercise price equal to one dollar ($1.00) per Option Share. The Option Shares shall vest pursuant to the terms of a Scientific
Advisory Board Agreement dated January 1, 2015 (the “Ohry SAB Agreement”). Provided the Ohry SAB Agreement remains
in effect, 75,000 shares shall vest July 1, 2015, and the remaining 175,000 Option Shares shall vest at the rate of 25,000 Option
Shares per quarter on the first day of each consecutive quarter; (ii) Dr. Ben Zion Weiner was granted options to purchase 350,000
Option Shares at an exercise price equal to one dollar ($1.00) per Option Share. The Option Shares shall vest pursuant to the
terms of a Scientific Advisory Board Agreement dated January 1, 2015 (the “Weiner SAB Agreement”). Provided the Weiner
SAB Agreement remains in effect, 105,000 Option Shares shall vest July 1, 2015 and the remaining 245,000 Option Shares shall vest
at the rate of 35,000 Option Shares per quarter on the first day of each consecutive quarter; and (iii) Michel Sessler was granted
options to purchase 150,000 Option Shares at an exercise price equal to one dollar ($1.00) per Option Share. The Option Shares
shall vest pursuant to the terms of a Scientific Advisory Board Agreement dated January 1, 2015 (the “Sessler SAB Agreement”).
Provided the Sessler SAB Agreement remains in effect, 45,000 Option Shares shall vest July 1, 2015 and the remaining 105,000 Option
Shares shall vest at the rate of 15,000 Option Shares per quarter on the first day of each consecutive quarter.
Following
is a table summarizing options still outstanding and exercisable along with exercise price and range of remaining term.
Type
|
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Quantity
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|
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Exercise Price
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Term
|
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Avi Ohry
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250,000
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$
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1.00
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24 Months
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Dr. Ben Zion Weiner
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350,000
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$
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1.00
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24 Months
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Michael Sessler
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150,000
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$
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1.00
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24 Months
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Total
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750,000
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Aggregated
Option Exercises and Fiscal Year-End Option Value
There
were no stock options exercised during the years ended December 31, 2017 and 2016 by the executive officers named in the Summary
Compensation Table.
Long-Term
Incentive Plan (“LTIP”) Awards
There
were no awards made to a named executive officers in the last completed fiscal year under any LTIP.
Compensation
of Directors
Directors
are permitted to receive fixed fees and other compensation for their services as directors. The Board of Directors has the authority
to fix the compensation of directors. No amounts have been paid to, or accrued to, directors in such capacity.
Employment
Agreements
We
have employment agreement in place with our CEO, CFO and CTO.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
table below discloses any person (including any “group”) who is known to the Registrant to be the beneficial owner
of more than five (5%) percent of the Registrant’s Common Stock securities and the beneficial ownership of Registrant’s
director and executive officer. As of April 20, 2018, the Registrant had 22,237,562 shares of Common Stock issued and outstanding.
Name of Beneficial Owner
|
|
Common Stock
Beneficially Owned
|
|
|
Percentage of Common Stock Owned
|
|
Ohad Goren, CEO
|
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31 Nahal Ga’aton Street, Modiin, 71700, Israel
|
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1,150,000
|
|
|
|
5.17
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%
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Gal Peleg, CFO
|
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|
11 Yosef Nakar Street, Petach Tikva, Israel
|
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0
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|
0
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%
|
Ron Weissberg, Chairman
|
|
|
|
|
|
|
|
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7 Hamitnachalim Street, Savyon, Israel
|
|
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3,545,624
|
|
|
|
15.94
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%
|
Itsik Ben Yesha, Chief Technology Officer
|
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126 Alon Street, Shilat, 73188, Israel
|
|
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1,600,000
|
|
|
|
7.27
|
%
|
Dr. Michael Sessler, Director
|
|
|
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50 Hagiva Street, Savyon, Israel
|
|
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0
|
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0
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%
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Yochanan Korman, Shareholder
|
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13 Haprahim Street, Ramat Hasharon, Israel
|
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1,523,541
|
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|
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7.19
|
%
|
Director and Officer (4 people)
|
|
|
6,290,786
|
|
|
|
28.29
|
%
|
(1)
Applicable percentage ownership is based on 22,237,562 shares of Common Stock outstanding as of April 20, 2018. Beneficial ownership
is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment
power with respect to securities. Shares of Common Stock that are currently exercisable or exercisable within 60 days of April
20, 2018 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage
of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other
person.
TRANSACTIONS
WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS
Certain
Related Party Transactions During the Last Two Fiscal Years
There
have been no related party transactions during the last two fiscal years.
Indebtedness
of Management
No
officer, director or security holder known to us to own of record or beneficially more than 5% of our Common Stock or any member
of the immediate family or sharing the household (other than a tenant or employee) of any of the foregoing persons is indebted
to us.
Disclosure
of Commission Position on Indemnification of Securities Act Liabilities
Our
directors and officers are indemnified as provided by the Delaware corporate law and our Bylaws. We have agreed to indemnify each
of our directors and certain officers against certain liabilities, including liabilities under the Securities Act of 1933, as
amended. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended may be permitted to our
directors, officers and controlling persons pursuant to the provisions described above, or otherwise, we have been advised that
in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities
Act of 1933, as amended and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities
(other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities
being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the
Act and will be governed by the final adjudication of such issue.
We
have been advised that in the opinion of the Securities and Exchange Commission indemnification for liabilities arising under
the Act is against public policy as expressed in the Act, and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities is asserted by one of our directors, officers, or controlling persons in connection with the securities
being registered, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit
the question of whether such indemnification is against public policy to a court of appropriate jurisdiction. We will then be
governed by the court’s decision.
E-QURE
CORP.
5,559,436
SHARES OF COMMON STOCK
PROSPECTUS
YOU
SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE
TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL COMMON STOCK AND IS NOT SOLICITING
AN OFFER TO BUY COMMON STOCK IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
Until
_____________, all dealers that effect transactions in these securities whether or not participating in this Offering may be required
to deliver a Prospectus. This is in addition to the dealer’s obligation to deliver a Prospectus when acting as underwriters.
The
Date of This Prospectus is June 11, 2018
Section
16.
Governing Law
. This Agreement shall be governed by and construed in accordance with the internal laws of the State
of New York (other than its rules of conflict of laws to the extent the application of the laws of another jurisdiction would
be required thereby).
Section
17.
Severability
. If any provision of this Agreement or the application thereof to any person or circumstances is determined
by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application
of such provision to persons or circumstances other than those as to which it has been held invalid or unenforceable, shall remain
in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance
of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination, the parties
shall negotiate in good faith in an effort to agree upon a suitable and equitable substitute provision to effect the original
intent of the parties.
Section
18.
Extension or Modification of Rights Offering
. Without the prior written consent of the Standby Purchaser, the Company
may (i) waive irregularities in the manner of exercise of the Rights, and (ii) waive conditions relating to the method (but not
the timing) of the exercise of the Rights to the extent that such waiver does not materially adversely affect the interests of
the Standby Purchaser.
Section
20.
Miscellaneous
.
(a)
The Company shall not after the date of this Agreement enter into any agreement with respect to its securities which is inconsistent
with or violates the rights granted to holders of Securities in this Agreement.
(b)
The headings in this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning of this
Agreement.
(c)
This Agreement may be executed in any number of counterparts, each of which shall be deemed to be an original, but all of which,
when taken together, shall constitute one and the same instrument.
[Signatures
on Following Page]
IN
WITNESS WHEREOF, the parties have caused this Agreement to be duly executed and delivered as of the date first above written.
E-QURE
CORP.
|
|
|
|
By:
|
/s/:
Ron Weissberg
|
|
Name:
|
Ron
Weissberg
|
|
Title:
|
Chairman
|
|
|
|
|
STANDBY
[PURCHASER
|
|
|
|
|
By:
|
/s/:
Joe Salvani
|
|
Name:
|
Joe
Salvani
|
|
Title:
|
President
|
|
Grafico Azioni E Qure (CE) (USOTC:EQUR)
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Da Giu 2024 a Lug 2024
Grafico Azioni E Qure (CE) (USOTC:EQUR)
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