This Quarterly Report on Form 10-Q contains certain forward-looking statements
within the meaning of the Private Securities Litigation Reform Act of 1995 and
other Federal securities laws, and is subject to the safe-harbor created by such
Act and laws. In some cases, you can identify forward-looking statements by
terminology such as "may," "will," "should," "expect," "intend," "plan,"
"anticipate," "believe," "estimate," "predict," "potential" or "continue," the
negative of such terms, or other variations thereon or comparable terminology.
The statements herein and their implications are merely predictions and
therefore inherently subject to known and unknown risks, uncertainties,
assumptions and other factors that may cause actual results, performance levels
of activity, or our achievements, or industry results to be materially different
from those contemplated by the forward-looking statements. Such forward-looking
statements appear in this Item 2 - "Management's Discussion and Analysis of
Financial Condition and Results of Operations," and may appear elsewhere in this
Quarterly Report on Form 10-Q and include, but are not limited to, statements
regarding the following:
? the prospects of signing agreements with distributors in Europe and the
timeline within which that may occur;
? our intention to expand our sales points in Israel;
? our plan to execute our strategy;
? our intention to sell our products in additional pharmacies and various
online outlets and the timeline within which that may occur;
? our expectations regarding our short- and long-term capital
? our outlook for the coming months and future periods, including but not
limited to our expectations regarding future revenue and expenses;
? our product development and distribution plans, including those for
Novokid® and Shine;
? our marketing plans, including timing and regions for marketing our
? our ability and the effects, if any, of a manufacture cost reduction
? achieving regulatory approvals;
? the proposed joint venture of a Chinese entity in accordance with a
joint venture agreement;
? our outlook for the coming months and future periods, including but not
limited to our expectations regarding future revenue and expenses; and
? information with respect to any other plans and strategies for our
Our business and operations are subject to substantial risks, which increase the
uncertainty inherent in the forward-looking statements contained in this report.
In addition, historic results of scientific research, clinical and preclinical
trials do not guarantee that the conclusions of future research or trials would
not suggest different conclusions. Also, historic results referred to in this
periodic report would be interpreted differently in light of additional
research, clinical and preclinical trials results. Except as required by law, we
undertake no obligation to release publicly the result of any revision to these
forward-looking statements that may be made to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
Further information on potential factors that could affect our business is
described under the heading "Risk Factors" in Part I, Item 1A, of our Annual
Report on Form 10-K for the fiscal year ended December 31, 2018, or the 2018
Annual Report. Readers are also urged to carefully review and consider the
various disclosures we have made in that report.
As used in this quarterly report, the terms "we", "us", "our", the "Company" and
"TechCare" mean TechCare Corp. and our wholly owned subsidiary, Novomic Ltd.,
unless otherwise indicated or as otherwise required by the context.
Overview and Recent Developments
We are a technology company engaged in the design, development and
commercialization of a unique delivery platform utilizing vaporization of
various natural compounds for multiple health, beauty and wellness applications.
Our delivery platform is proprietary and patented.
Our current product offering includes Novokid® - an innovative home use device
which vaporizes a natural, plant-based, pesticides, and silicone-free compound
that effectively treats head lice and eggs. Following our soft launch of
Novokid® in the Netherlands, we expanded our distribution network and launched
Novokid in Israel during late May 2018 through Super Pharm, Israel's largest and
leading drugstore chain. The launch was accompanied by a radio and digital brand
awareness and marketing campaign and supported by Meditrend, our Israeli
distributor, specializing in health and wellness products while representing
We intend to expand our sales points in Israel and began selling our products in
additional pharmacies and various online outlets during 2019. As we remain
focused on increasing our global footprint and expanding our distribution
network, we showcased Novokid® and met potential distributors and partners at
CPhI Worldwide, a renowned and leading pharma tradeshow held in Madrid during
We believe that we will need to raise up to $2,000 thousand during the next 12
months in order to successfully implement our business plan, of which there can
be no assurance. Failure to obtain the necessary capital at acceptable terms, if
at all, when needed, may force us to delay, limit, or terminate our product
development efforts and adversely effect our ability to secure regulatory
approvals and would adversely impact our planned research and development
efforts in connection with our future products, which may make it more difficult
for us to attain profitability.
Our Treatment Solutions
Novokid® - Natural, Plant-based and Effective Lice Treatment
Parents and children exposed to head lice are now forced to use standard
over-the-counter, or OTC, treatments that are toxic, often ineffective, time
consuming and expensive. According to the Journal of Medical Entomology, 98% of
lice have developed resistance to existing treatments in the US and they are now
referred to as "super-lice". Most current treatments contain pesticides, alcohol
or silicone, which are all associated with a wide variety of hazardous side
Novokid® is a non-pesticide, natural, plant-based and eco-friendly solution that
eliminates lice and super lice with a 10 minute dry treatment. This compares
with current treatments that require 20-40 minutes of shampooing and combing.
Our treatment is fast, dry, clean, and easily administered at home or on the go.
Novokid® can also be used as a maintenance treatment if used regularly.
Shine - Natural Haircare rejuvenation
Shine uses a patented vaporization process and formulation to clean, treat and
improve the appearance of the hair and scalp. In addition to removing the
residue, the treatments balance the hair's pH levels, add body and shine, define
curls, and strengthen and protect hair from further damage. We believe that the
Shine treatment is user friendly, requiring the user to connect the Using Shine
capsule to a designated tube, place the attached cap on their head and sit for a
10-minute treatment. There is no need to rinse or shampoo following the
treatment. The treatment is expected to cleanse the scalp and leave the hair
shiny and manageable.
Recent Developments and Plans
Our current and future products are all based on the vaporization platform,
which was developed over a period of seven years. Since January 1, 2018, we have
achieved the following:
? launched Novokid® in Israel during late May 2018 through Super Pharm, Israel's
largest and leading drugstore chain, accompanied by a radio and digital brand
awareness and marketing campaign;
? expanded our sales points in Israel and penetrated to additional pharmacies;
? contracted and setup production facilities in China and Israel through
? showcased Novokid® in CPhI Madrid, the world's leading pharma tradeshow, held
in Madrid, Spain, during October 2018;
? entered into a joint venture agreement with a Chinese partner for the formation
of a Chinese joint venture intended to focus on the development of
comprehensive and broad range of health, wellness, beauty and home products for
customers by utilizing our patented technology of vaporization of natural and
? launched Novokid® on Amazon.co.uk during August 2019;
? obtained regulatory approval and registration of Shine, as a cosmetic product,
in the United States.
? fine-tuned the Shine formulation for the base capsule product; and
? kicked-off the development for new formulations to create additional capsule
lines for the Shine product.
During the next 12-18 months, we plan to focus our efforts on the following:
? obtain FDA approval for Novokid, as a cosmetic product; and
? prepare and implement a manufacture cost reduction program, allowing us to
reduce the manufacturing and procurement costs for our Novokid® product.
? develop new capsules for personalized treatment, such as dry and curly hair.
? define the joint venture work plan relating to the Chinese joint venture;
? transitioning its focus to the sale of products online, as opposed to
distribution arrangements; and
? explore new ventures to be aligned with the Company's current business model
and its operations.
We may be required to obtain additional regulatory approvals for our head lice
treatment platform and any future products. If unable to receive regulatory
approval or commercialize our product candidates, our business will be adversely
affected. CE approval, which was already obtained for our Novokid® product, is
required for the marketing, distributing and sale of our products in the
European Union, whereas FDA approval is required for such marketing,
distributing and sale in the United States. In the event that our products are
to be sold in certain territories requiring additional regulatory approvals,
such approvals will need to be obtained by us or by our distributors.
In addition, in January 2019, we entered into a joint venture agreement with a
Chinese partner for the formation of a Chinese joint venture intended to focus
on the development of comprehensive and broad range of health, wellness, beauty
and home products for customers by utilizing our patented technology of
vaporization of natural and plant-based compounds. The joint venture intends to
sell its products in the Greater China region, including mainland China, Hong
Kong, Macao, and Taiwan, directly or through others. We are currently working
with our Chinese Partner on the formation of the Chinese joint venture entity.
On March 13, 2019, we issued and sold to ICB Biotechnology Investments Ltd.
("ICB") 957,854 shares of our common for a price per share of $0.261, for
aggregate consideration of $250,000. In accordance with the terms of the
subscription agreement, upon the formation of a joint venture with China-Israel
Biological Technology Co. Ltd., ("CIBD") the parent company of ICB, and the
transfer of the relevant intellectual property rights to the joint venture, we
will issue and sell to ICB an additional 957,854 Shares for an additional
investment amount of $250,000 (the "Additional Investment"). In addition,
subject to the consummation of the Additional Investment, we will grant ICB an
option to purchase up to additional 833,333 shares of our common stock at a
price per share of $0.60, for aggregate consideration of up to $1,000,000. To
date, the Company has met all of the milestones required for the closing of the
Additional Investment. Currently, the Company and ICB are in negotiations with
respect to the Additional Investment and there is no guarantee that the Company
will be able to close on the Additional Investment.
On April 28, 2019, we entered into a form of Securities Purchase Agreement (the
"Securities Purchase Agreement") with each of Y.M.Y. Industry Ltd., Traistman
Radziejewski Fundacja Ltd. and Microdel Ltd. relating to an offering of an
aggregate of 1,229,508 shares of our common stock at a purchase price of $0.183
per share for aggregate gross proceeds of approximately $225,000. In addition,
we granted the investors an option, for a period of twelve months, to purchase
up to an additional 375,001 shares of common stock at a price per share of
$0.60, for additional aggregate consideration of $225,000. The closing of the
offering took place on April 29, 2019. The option was classified as a derivative
financial liability and are re-measured each reporting date, with changes in
fair value recognized in finance expense (income), net, since the exercise price
of the warrants is denominated in USD and the functional currency of the Company
is the NIS.
Results of Operations during the three and six months ended June 30, 2019 as
compared to the three and six months ended June 30, 2018
During the three and six months ended June 30, 2019, we generated $27 and $85
thousand in revenues, compared to $71 and $98 thousand in revenues in the three
and six months ended June 30, 2018. The decrease is mainly attributable to a
decrease in the sales of for our product.
Our gross profit (Loss) during the three and six months ended June 30, 2019,
were ($36) and ($33) thousand, compared to $24 and $41 thousand in the three and
six months ended June 30, 2018. The decrease is mainly attributable to decrease
in the sales volume and decrease in inventory value.
Research and Development Expenses
Our research and development expenses during the three and six months ended June
30, 2019 were $39 thousand and $80 thousand and all expenses resulted from
ongoing research and development expenses.
Our research and development expenses during the three and six months ended June
30, 2018 were $17 thousand and $48 thousand. The increase is mainly attributable
to expenses related to the new expected Shine product.
Marketing, General and Administrative Expenses
Our marketing, general and administrative expenses during the three and six
months ended June 30, 2019 were $376 thousand and $811 thousand and were
comprised mainly of $581 thousand in payroll and payments to consultants for the
six months ended June 30, 2019. Our marketing, general and administrative
expenses during the three and six months ended June 30, 2018 were $503 thousand
and $967 thousand and were comprised mainly of $571 thousand in payroll and
payments to consultants for the six months ended June 30, 2018. The decrease in
our marketing, general and administrative expenses is mainly attributable to a
decrease in marketing expenses, professional services and travel abroad
During the three and six months ended June 30, 2019 we incurred a net loss of
$458 thousand and $937 thousand. During the three and six months ended June 30,
2018, we incurred a net loss of $495 thousand and $859 thousand. The increase in
net loss is mainly attributable to a decrease in gross margins.
Liquidity and Capital Resources
Our balance sheet as of June 30, 2019 reflects total assets of $780 thousand,
consisting mainly of cash and cash equivalents in the amount of approximately
$231 thousand, inventory of approximately $204 thousand and property and
equipment, net of approximately $160 thousand. As of December 31, 2018, our
balance sheet reflects total assets of approximately $1,131 thousand consisting
mainly of cash and cash equivalents in the amount of approximately $475
thousand, inventory in the amount of approximately $249 thousand, other
receivables of approximately $177 thousand and property and equipment net, of
approximately $161 thousand.
As of June 30, 2019, we had total current liabilities of approximately $276
thousand, consisting mainly of accounts payable and accrued expenses of
approximately $167 thousand and a note payable of approximately $80 thousand. As
of December 31, 2018, we had total current liabilities of approximately $385
thousand consisting mainly of accounts payable and accrued expenses of
approximately $231 thousand and a note payable of approximately $80 thousand.
As of June 30, 2019, we had positive working capital of approximately $218
thousand, compared to positive working capital of approximately $573 thousand at
December 31, 2018. The working capital has been sufficient to sustain our
operations to date, although there is substantial doubt about our ability to
continue as going concern. Our total liabilities as of June 30, 2019 were
approximately $364 thousand, compared to approximately $390 thousand at December
During the six months ended June 30, 2019, we used approximately $690 thousand
of cash in our operating activities. This resulted mainly from an overall net
loss of approximately $937 thousand, a decrease in other receivables of
approximately $132 thousand and a decrease in inventory of approximately $57
thousand. During the six months ended June 30, 2018, we used approximately
$1,049 thousand of cash in our operating activities. This resulted mainly from
an overall net loss of approximately $859 thousand, an increase in accounts
payable and accrued expenses of approximately $116 thousand and an increase in
inventory of approximately $99 thousand.
During the six months ended June 30, 2019, we used approximately $4 thousand in
our investing activities, as compared to approximately $32 thousand in the same
period in the prior year.
During the six months ended June 30, 2019, our financing activities provided us
with $457 thousand, as compared to $942 thousand in the same period in the prior
year, through the issuance of common stock.
On March 13, 2019, we issued and sold to ICB 957,854 shares of our common stock
at a price per share of $0.261, for aggregate consideration of $250 thousand. In
addition, in April 2019, the Company entered into subscription agreements with
several investors, consisting of our officers and directors, pursuant to which
we issued 1,229,508 shares of common stock for aggregate consideration of $225
thousand. The Company recorded derivative liability in its books.
While management believes the Company will be successful in its current and
planned operating activities, there can be no assurance that the Company will be
successful in the achievement of sales of its products that will generate
sufficient revenues to earn a profit and sustain the operations of the Company.
Our ability to create sufficient working capital to sustain us over the next
twelve-month period and beyond is dependent on our ability to raise additional
funds through the issuance of equity or debt instrument. There can be no
assurance that sufficient capital will be available to us. We currently have no
agreements, arrangements or understandings with any person to obtain funds
through bank loans, lines of credit or any other sources.
Going Concern Consideration
As a result of the above, there is substantial doubt about our ability to
continue as a going concern. Our financial statements contain additional note
disclosures with respect to this matter, but no accounting adjustments that
relate to this matter.
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements.
Critical Accounting Policies
Please see Note 1B of Part I, Item I of this Quarterly Report on Form 10-Q for
the summary of significant accounting policies. In addition, reference is made
to Note 1B in the financial statements contained in our Annual Report on Form
10-K for the year ended December 31, 2018 (filed on March 28, 2019) with respect
to our Critical Accounting Policies.
All other material changes to our critical accounting policies and estimates
since our Annual Report on Form 10-K for the year ended December 31, 2018 are
recorded in Note 1b of this quarterly report
© Edgar Online, source Glimpses