Delaware | |||
(State or | 98-0668934 (I.R.S. Employer Identification No.) | ||
19 P.O. Box 12163 Ashdod, Israel | L3 7760049 | ||
(Address of | Principal Executive Offices) (Zip Code) Telephone: 972 (8) 675-7878 ( N/A (Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report) |
Large accelerated filer ☐ | Accelerated filer ☐ | |
Non-accelerated filer ☐ | Smaller reporting company ☒ |
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22 | |||
US dollars (except share data) | ||||||||
September 30, | December 31, | |||||||
2016 | 2015 | |||||||
(unaudited) | ||||||||
A S S E T S | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | 696,159 | 608,701 | ||||||
Accounts receivable, net | 71,601 | 18,446 | ||||||
Inventories | 674,099 | 816,223 | ||||||
Other current assets | 116,668 | 268,792 | ||||||
Total current assets | 1,558,527 | 1,712,162 | ||||||
Property and Equipment, Net | 262,843 | 220,463 | ||||||
Long-Term Restricted Cash | 36,499 | 35,152 | ||||||
Funds in Respect of Employee Rights Upon Retirement | 171,200 | 164,883 | ||||||
Total assets | 2,029,069 | 2,132,660 | ||||||
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ DEFICIT | ||||||||
Current Liabilities | ||||||||
Accounts payable | 297,034 | 1,082,546 | ||||||
Other current liabilities | 718,284 | 427,886 | ||||||
Total current liabilities | 1,015,318 | 1,510,432 | ||||||
Long-Term Liabilities | ||||||||
Long-Term Loans from Stockholders | 166,457 | 160,314 | ||||||
Liability for Employee Rights Upon Retirement | 180,810 | 174,137 | ||||||
Warrants with down-round protection | 835,080 | 321,695 | ||||||
Total long-term liabilities | 1,182,347 | 656,146 | ||||||
Total liabilities | 2,197,665 | 2,166,578 | ||||||
Commitments and Contingent Liabilities | ||||||||
Temporary Equity | ||||||||
Convertible Preferred Stock of $ 0.001 par value ("Preferred Stock"): | ||||||||
10,000,000 shares of Preferred Stock authorized as of September 30, 2016 and December 31, 2015 | ||||||||
376 shares of Series A Preferred Stock issued and outstanding as of September 30, 2016 and December 31, 2015 | 221,152 | 221,152 | ||||||
15,031 shares of Series B Preferred Stock issued and outstanding as of September 30, 2016 and December 31, 2015 | 6,715,844 | 6,715,844 | ||||||
5,323 and 0 shares of Series C Preferred Stock issued and outstanding as of September 30, 2016 and December 31, 2015, respectively | 2,832,314 | - | ||||||
Total temporary equity | 9,769,310 | 6,936,996 | ||||||
Stockholders' Deficit | ||||||||
Common Stock of $ 0.001 par value ("Common Stock"): | ||||||||
40,000,000 shares authorized as of September 30, 2016 and December 31, 2015; 5,912,702 and 5,690,097 shares issued and outstanding as of September 30, 2016 and December 31, 2015, respectively | 5,914 | 5,691 | ||||||
Additional paid in capital | 24,166,078 | 22,309,742 | ||||||
Accumulated other comprehensive income | 79,785 | 90,168 | ||||||
Accumulated deficit | (34,189,683 | ) | (29,376,515 | ) | ||||
Total stockholders' deficit | (9,937,906 | ) | (6,970,914 | ) | ||||
Total liabilities, temporary equity and stockholders’ deficit | 2,029,069 | 2,132,660 |
US dollars (except share data) | ||||||||
June 30, 2017 | December 31, 2016 | |||||||
(unaudited) | ||||||||
A S S E T S | ||||||||
Current Assets | ||||||||
Cash and cash equivalents | 1,132,622 | 148,836 | ||||||
Accounts receivable, net | 130,296 | 92,061 | ||||||
Inventories | 1,508,312 | 1,419,604 | ||||||
Other current assets | 157,868 | 356,994 | ||||||
Total current assets | 2,929,098 | 2,017,495 | ||||||
Property and Equipment, Net | 235,230 | 240,452 | ||||||
Long-Term Restricted Cash | 39,234 | 35,673 | ||||||
Funds in Respect of Employee Rights Upon Retirement | 184,031 | 167,326 | ||||||
Total assets | 3,387,593 | 2,460,946 | ||||||
LIABILITIES, TEMPORARY EQUITY AND STOCKHOLDERS’ DEFICIT | ||||||||
Current Liabilities | ||||||||
Accounts payable | 1,789,026 | 1,634,642 | ||||||
Other current liabilities | 957,436 | 713,549 | ||||||
Total current liabilities | 2,746,462 | 2,348,191 | ||||||
Long-Term Liabilities | ||||||||
Long-Term Loans from Stockholders | 178,186 | 162,034 | ||||||
Liability for Employee Rights Upon Retirement | 184,030 | 176,719 | ||||||
Warrants with down-round protection | 764,545 | 681,970 | ||||||
Total long-term liabilities | 1,126,761 | 1,020,723 | ||||||
Total liabilities | 3,873,223 | 3,368,914 | ||||||
Temporary Equity | ||||||||
Convertible Preferred Stock of $ 0.001 par value (“Preferred Stock”): | ||||||||
10,000,000 shares of Preferred Stock authorized as of June 30, 2017 and December 31, 2016; 376 shares of Series A Preferred Stock issued and outstanding as of June 30, 2017 and December 31, 2016 | 221,152 | 221,152 | ||||||
15,031 shares of Series B Preferred Stock issued and outstanding as of June 30, 2017 and December 31, 2016 | 6,715,844 | 6,715,844 | ||||||
11,004 and 5,829 shares of Series C Preferred Stock issued and outstanding as of June 30, 2017 and December 31, 2016, respectively | 5,943,451 | 3,104,466 | ||||||
Total temporary equity | 12,880,447 | 10,041,462 | ||||||
Stockholders’ Deficit | ||||||||
Common Stock of $ 0.001 par value (“Common Stock”): | ||||||||
40,000,000 shares authorized as of June 30, 2017 and December 31, 2016; 6,381,149 and 6,026,527 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively | 6,384 | 6,028 | ||||||
Additional paid in capital | 27,967,185 | 24,586,142 | ||||||
Accumulated other comprehensive income | 127,012 | 62,576 | ||||||
Accumulated deficit | (41,466,658 | ) | (35,604,176 | ) | ||||
Total stockholders’ deficit | (13,366,077 | ) | (10,949,430 | ) | ||||
Total liabilities, temporary equity and stockholders’ deficit | 3,387,593 | 2,460,946 |
US dollars (except share data) | ||||||||||||||||
Nine month period ended September 30, | Three month period ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Revenues | 482,177 | 143,167 | 11,299 | - | ||||||||||||
Research and development expenses | 2,226,833 | 1,596,494 | 695,437 | 560,189 | ||||||||||||
Selling, marketing and general and administrative expenses | 2,589,504 | 1,647,054 | 802,195 | 563,292 | ||||||||||||
Total operating expenses | 4,816,337 | 3,243,548 | 1,497,632 | 1,123,481 | ||||||||||||
Operating loss | 4,334,160 | 3,100,381 | 1,486,333 | 1,123,481 | ||||||||||||
Financing (income) expenses, net | (63,654 | ) | 1,196,926 | (31,589 | ) | (27,511 | ) | |||||||||
Loss for the period | 4,270,506 | 4,297, 307 | 1,454,744 | 1,095,970 | ||||||||||||
Other comprehensive (income) loss: | ||||||||||||||||
Foreign currency translation adjustment | 10,383 | (9,639 | ) | (19,656 | ) | 46,081 | ||||||||||
Comprehensive loss for the period | 4,280,889 | 4,287,668 | 1,435,088 | 1,142,051 | ||||||||||||
Loss per share (Basic) | (0.84 | ) | (0.85 | ) | (0.30 | ) | (0.22 | ) | ||||||||
Loss per share (Diluted) | (0.84 | ) | (0.85 | ) | (0.30 | ) | (0.22 | ) | ||||||||
Common shares used in computing Basic income (loss) per share | 5,746,838 | 5,426,688 | 5,806,724 | 5,513,265 | ||||||||||||
Common shares used in computing Diluted income (loss) per share | 5,746,838 | 5,426,688 | 5,806,724 | 5,513,265 |
US dollars (except share data) | ||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||
Common Stock | Accumulated other | Total | ||||||||||||||||||||||
Number of shares | Amount | Additional paid in capital | comprehensive income | Accumulated deficit | Stockholders’ deficit | |||||||||||||||||||
Balance as of January 1, 2016 | 5,690,097 | 5,691 | 22,309,742 | 90,168 | (29,376,515 | ) | (6,970,914 | ) | ||||||||||||||||
Loss for the period of nine months | - | - | - | - | (4,270,506 | ) | (4,270,506 | ) | ||||||||||||||||
Other comprehensive loss | - | - | - | (10,383 | ) | - | (10,383 | ) | ||||||||||||||||
Amounts allocated to Series C-1 and Series C-2 Warrants, net | - | - | 1,402,606 | - | - | 1,402,606 | ||||||||||||||||||
Amount classified out of stockholders deficit and presented as Warrants with Down-Round Protection within long-term liabilities | - | - | (341,662 | ) | - | - | (341,662 | ) | ||||||||||||||||
Incremental fair market value adjustments of modified warrants issued to placement agent | - | - | 211,077 | - | - | 211,077 | ||||||||||||||||||
Stock dividend on Series C Preferred Stock | 33,690 | 34 | 80,048 | - | (80,082 | ) | - | |||||||||||||||||
Stock dividend on Series B Preferred Stock | 188,915 | 189 | 448,862 | - | (449,051 | ) | - | |||||||||||||||||
Cash dividend on Series A Preferred Stock | - | - | - | - | (13,529 | ) | (13,529 | ) | ||||||||||||||||
Stock-based compensation | - | - | 55,405 | - | - | 55,405 | ||||||||||||||||||
Balance as of September 30, 2016 | 5,912,702 | 5,914 | 24,166,078 | 79,785 | (34,189,683 | ) | (9,937,906 | ) |
US dollars (except share data) | ||||||||||||||||
Six-month period ended June 30, | Three-month period ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Revenues | 104,981 | 470,878 | 8,744 | 381,731 | ||||||||||||
Research and development expenses | 1,198,363 | 1,531,396 | 616,824 | 880,696 | ||||||||||||
Selling and marketing expenses | 598,234 | 614,121 | 361,295 | 349,804 | ||||||||||||
General and administrative expenses | 3,556,078 | 1,173,188 | 1,678,719 | 734,661 | ||||||||||||
Total operating expenses | 5,352,675 | 3,318,705 | 2,656,838 | 1,965,161 | ||||||||||||
Operating loss | 5,247,694 | 2,847,827 | 2,648,094 | 1,583,430 | ||||||||||||
Financing income (expenses), net | 160,168 | 32,065 | 90,893 | (5,568 | ) | |||||||||||
Loss for the period | 5,087,526 | 2,815,762 | 2,557,201 | 1,588,998 | ||||||||||||
Other comprehensive (income) loss: | ||||||||||||||||
Foreign currency translation loss (income) | (64,436 | ) | 30,039 | (31,697 | ) | 8,063 | ||||||||||
Comprehensive loss for the period | 5,023,090 | 2,845,801 | 2,525,504 | 1,597,061 | ||||||||||||
Loss per share (Basic and Diluted) | (0.96 | ) | (0.54 | ) | (0.48 | ) | (0.30 | ) | ||||||||
Common shares used in computing loss per share (Basic and Diluted) | 6,116,366 | 5,716,566 | 6,205,104 | 5,742,468 |
US dollars (except share data) | ||||||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||
Number of shares | Common Stock Amount | Additional paid in capital | Accumulated other comprehensive income | Accumulated deficit | Total Stockholders’ deficit | |||||||||||||||||||
Balance as of January 1, 2017 | 6,026,527 | 6,028 | 24,586,142 | 62,576 | (35,604,176 | ) | (10,949,430 | ) | ||||||||||||||||
Loss for the period of six months | (5,087,526 | ) | (5,087,526 | ) | ||||||||||||||||||||
Other comprehensive income | 64,436 | 64,436 | ||||||||||||||||||||||
Amounts allocated to Series C-1 and Series C-2 Warrants, net | 1,404,911 | 1,404,911 | ||||||||||||||||||||||
Stock dividend on Series C Preferred Stock | 116,354 | 117 | 276,457 | (276,574 | ) | |||||||||||||||||||
Stock dividend on Series B Preferred Stock | 206,844 | 207 | 491,461 | (491,668 | ) | |||||||||||||||||||
Cash dividend on Series A Preferred Stock | (6,714 | ) | (6,714 | ) | ||||||||||||||||||||
Stock-based compensation | 31,424 | 32 | 1,208,214 | 1,208,246 | ||||||||||||||||||||
Balance as of June 30, 2017 | 6,381,149 | 6,384 | 27,967,185 | 127,012 | (41,466,658 | ) | (13,366,077 | ) |
US dollars | ||||||||
Nine month period ended September 30, | ||||||||
2016 | 2015 | |||||||
(unaudited) | ||||||||
Cash flows from operating activities: | ||||||||
Loss for the period | (4,270,506 | ) | (4,297,307 | ) | ||||
Adjustments to reconcile income (loss) for the period to net cash used in operating activities: | ||||||||
Depreciation | 41,951 | 29,709 | ||||||
Stock-based compensation | 55,405 | 15,675 | ||||||
Incremental fair market value adjustments of modified warrants issued to placement agent | 211,077 | - | ||||||
Change in the fair value of Warrants with down-round protection | (110,498 | ) | (119,148 | ) | ||||
Linkage difference on principal of loans from stockholders | 27 | (1,384 | ) | |||||
Loss on partial extinguishment of Series A Preferred Stock and Series A Warrants | - | 1,284,354 | ||||||
Changes in assets and liabilities: | ||||||||
Decrease (increase) in accounts receivable | (51,356 | ) | 1,251 | |||||
Decrease (increase) in inventory | 170,274 | (180,144 | ) | |||||
Decrease (increase) in other current assets | 157,149 | (135,485 | ) | |||||
(Decrease) increase in accounts payable | (815,795 | ) | 363,639 | |||||
Increase (decrease) in other current liabilities | 265,983 | (68,374 | ) | |||||
Net cash used in operating activities | (4,346,289 | ) | (3,107,214 | ) | ||||
Cash flows from investing activities: | ||||||||
Increase in funds in respect of employee rights upon retirement | - | (24,279 | ) | |||||
Purchase of property and equipment | (75,269 | ) | (94,714 | ) | ||||
Net cash used in investing activities | (75,269 | ) | (118,993 | ) | ||||
Cash flows from financing activities | ||||||||
Cash dividend on Series A Preferred Stock | (13,529 | ) | (52,361 | ) | ||||
Proceeds allocated to Series C Preferred Stock, net of cash issuance expenses | 3,021,063 | - | ||||||
Proceeds allocated to Series C Warrants, net of cash issuance expenses | 1,496,077 | - | ||||||
Repayment of loan from stockholders | - | (439,939 | ) | |||||
Net cash provided by (used in) financing activities | 4,503,611 | (492,300 | ) | |||||
Effect of exchange rate changes on cash and cash equivalents | 5,405 | (4,195 | ) | |||||
Increase (decrease) in cash and cash equivalents | 87,458 | (3,722,702 | ) | |||||
Cash and cash equivalents at beginning of the period | 608,701 | 5,827,560 | ||||||
Cash and cash equivalents at end of the period | 696,159 | 2,104,858 |
US dollars | ||||||||
Six-month period ended June 30, | ||||||||
2017 | 2016 | |||||||
(unaudited) | ||||||||
Cash flows from operating activities: | ||||||||
Loss for the period | (5,087,526 | ) | (2,815,762 | ) | ||||
Adjustments to reconcile loss for the period to net cash used in operating activities: | ||||||||
Depreciation | 33,024 | 27,980 | ||||||
Stock-based compensation | 1,208,246 | 34,297 | ||||||
Remeasurement adjustment of warrants issued to placement agent | 211,077 | |||||||
Change in the fair value of Warrants with down-round protection | (191,075 | ) | (64,212 | ) | ||||
Linkage difference on principal of loans from stockholders | 26 | (639 | ) | |||||
Changes in assets and liabilities: | ||||||||
(Increase) in accounts receivable | (28,615 | ) | (51,053 | ) | ||||
Decrease in inventory | 49,255 | 130,203 | ||||||
Decrease in other current assets | 222,952 | 147,697 | ||||||
(Decrease) increase in accounts payable | 26,829 | (638,908 | ) | |||||
Increase in other current liabilities | 171,018 | 132,153 | ||||||
Decrease in liability for employee rights upon retirement | (10,148 | ) | - | |||||
Net cash used in operating activities | (3,606,014 | ) | (2,887,167 | ) | ||||
Cash flows from investing activities: | ||||||||
Purchase of property and equipment | (4,849 | ) | (46,397 | ) | ||||
Net cash used in investing activities | (4,849 | ) | (46,397 | ) | ||||
Cash flows from financing activities: | ||||||||
Cash dividend on Series A Preferred Stock | 2,686 | (4,753 | ) | |||||
Proceeds allocated to Series C Preferred Stock, net of cash issuance expenses | 3,022,002 | 2,508,321 | ||||||
Proceeds allocated to Series C Warrants, net of cash issuance expenses | 1,495,541 | 1,242,158 | ||||||
Net cash provided by financing activities | 4,520,229 | 3,745,726 | ||||||
Effect of exchange rate changes on cash and cash equivalents | 74,420 | (15,329 | ) | |||||
Increase in cash and cash equivalents | 983,786 | 796,833 | ||||||
Cash and cash equivalents at beginning of the period | 148,836 | 608,701 | ||||||
Cash and cash equivalents at end of the period | 1,132,622 | 1,405,534 |
A. | Integrity Applications, Inc. (the |
B. | Going concern uncertainty |
C. | Risk factors |
D. | Use of estimates in the preparation of financial statements |
A. | Basis of presentation |
B. | Warrants with down-round protection |
Series A Warrants | ||||||||||||||||
September 30, | Warrants with down-round Protection June 30, | |||||||||||||||
2016 | 2015 | 2017 | 2016 | |||||||||||||
(unaudited) | ||||||||||||||||
Balance, Beginning of the period | 321,695 | 2,057,618 | 681,970 | 321,695 | ||||||||||||
Warrants issued as consideration for placement services | 282,221 | - | 273,650 | 234,008 | ||||||||||||
Amount classified out of stockholders deficit and presented as Warrants with Down-Round Protection | 341,662 | - | ||||||||||||||
Exchange of Series A Warrants pursuant to the “most favored nation” provision | - | (1,586,831 | ) | |||||||||||||
Change in fair value Warrants with Down-Round Protection | (110,498 | ) | (119,148 | ) | ||||||||||||
Amount classified out of stockholders’ deficit and presented as Warrants with down-round protection | - | 341,662 | ||||||||||||||
Change in fair value Warrants with down-round protection | (191,075 | ) | (64,212 | ) | ||||||||||||
Balance, End of period | 835,080 | 351,639 | 764,545 | 833,153 |
September 30, | June 30, | |||||||||||||||
2016 | 2015 | 2017 | 2016 | |||||||||||||
Dividend yield (%) | - | - | - | - | ||||||||||||
Expected volatility (%) (*) | 62.16 | 105.14 | 56.59 | 62.16 | ||||||||||||
Risk free interest rate (%) | 0.72-1.21 | 1.01 | 0.92 | 0.72-1.11 | ||||||||||||
Expected term of options (years) (**) | 1.45-5.00 | 2.45 | ||||||||||||||
Expected term of options (years) | 0.70-4.98 | 1.70-5.00 | ||||||||||||||
Exercise price (US dollars) | 4.50-7.75 | 5.80 | 4.50, 7.75 | 4.50, 7.75 | ||||||||||||
Share price (US dollars) (***) | 2.38 | 2.31 | ||||||||||||||
Share price (US dollars) (**) | 2.38 | 2.38 | ||||||||||||||
Fair value (US dollars) | 0.26-0.60 | 0.92 | 0.06-0.76 | 0.61 |
(*) | Due to the low trading volume of the Company’s Common Stock, the expected volatility was based on the historical volatility of the share price of other public companies that operate in the same industry sector as the Company. |
(**) |
The Common Stock price, per share reflects the Company’s management’s estimation of the fair value per share of Common Stock as of |
C. | Recently issued accounting pronouncements |
1. | Accounting Standards Update |
Accounting Standards Update 2015-11, “Simplifying the Measurement of Inventory” |
3. | Accounting Standard Update (ASU) No. 2017-11, “Earnings Per Share” |
D. | Reclassified Amounts |
Effective April |
4. | Pursuant to the terms of |
5. | Effective April 7, 2017, Integrity Israel entered into an amended and restated personal employment agreement (the “Malka Employment Agreement”) with David Malka for his continued service as Vice President of Operations of the Company and Integrity Israel, effective as of March 20, 2017 (the “Malka Effective Date”). Pursuant to the terms of the Malka Employment Agreement, Mr. Malka (a) receives a base monthly salary of NIS 20,000 (approximately $5,508 based on an exchange rate of 3.63 NIS / 1 USD in effect on August 8, 2017), which may increase to NIS 35,000 per month (approximately $9.639 using the same exchange rate) in the event certain performance milestones are met (the “Malka Base Salary”); (b) is eligible to earn an annual performance bonus between 420-864% of the Malka Base Salary, subject to certain performance criteria to be established by the Board within the first ninety (90) days of each fiscal year; (c) is eligible to earn a retention bonus equal to 60% of the aggregate Malka Base Salary earned through the one-year anniversary of the Malka Effective Date, payable thirty days following the one-year anniversary of the Malka Effective Date and provided that Mr. Malka remains employed with Integrity Israel through and on the one-year anniversary of the Malka Effective Date; (d) received a modification to the terms of his option to purchase Common Stock at an exercise price per share equal to $6.25 whereby the unvested portion of such options will accelerate and will be immediately exercisable, effective as of the Malka Effective Date (since the original performance conditions were not expected to be satisfied as of the date of the modification of the terms, the fair value of such grant was measured based on the fair value of the modified award at the modification date); and (e) received certain additional equity awards (pursuant to the Plan) under the terms and conditions as set forth in the Malka Employment Agreement. In addition, the Malka Employment Agreement provides for the payment of certain social benefits and the |
6. | On May 4, 2017, the Board unanimously voted to appoint Angela Strand, a member of the Board, as the interim Chief Strategy Officer of the Company, effective as of May 1, 2017 through September 30, 2017. On May 5, 2017, the Company entered into a letter agreement (the “Strand Employment Agreement”) with Ms. Angela Strand confirming her appointment as interim Chief Strategy Officer of the Company. Pursuant to the terms of the Strand Employment Agreement, Ms. Strand receives aggregate compensation of $150,000 for her service during the term of employment, paid monthly on the schedule mutually agreed upon by the parties. |
7. | On May 23, 2017, the Board approved the following compensation for all non-employee directors and interim officers serving on the Board: |
a. | an annual cash payment to each non-employee director and interim officer of the Company in the amount of $35,000, payable in four equal quarterly installments of $8,750 each on the last day of each calendar quarter commencing with the fourth quarter of 2017, subject to their continued service as of each such date; |
b. | an additional annual cash payment to each member of a Board committee who is not the Chairperson of that particular committee in the amount of $5,000, payable in four equal quarterly installments of $1,250 each on the last day of each calendar quarter commencing with the second quarter of 2017, subject to their continued service as of each such date; |
c. | an additional annual cash payment to the chairperson of a Board committee in the amount of $12,500, payable in four equal quarterly installments of $3,125 each on the last day of each calendar quarter commencing with the second quarter of 2017, subject to their continued service as of each such date; |
d. | the grant to each non-employee director and each interim officer of the Company of a one-time award of options to purchase up to an aggregate of |
e. | the grant to each non-employee director and each interim officer of the Company of an award of Restricted Stock Units (“RSUs”), to be granted on June 1, 2017 and vesting on June 1, 2018, with a fair value of $45,000 based on the 30-day volume weighted average price of the Company’s Common Stock on June 1, 2017, subject to |
f. | an additional annual fair value payment to the vice chairperson of the Board in the amount of $20,000, payable in RSUs under the same vesting terms. |
8. | On May 23, 2017, the Board appointed Michael Hauck to serve as |
9. | On May 23, 2017, the Board established an Audit Committee of the Board and appointed each of Leslie Seff and Revan Schwartz to serve as members of the committee. Mr. Schwartz will serve as chairperson of the committee. The Board determined that each of the members of the Audit Committee designated above is independent pursuant to the required standards set forth in Rule 10A-3(b) of the Securities Exchange Act of 1934, as amended, based on an evaluation of the relationships between the Company and each of the members. |
10. | On June 7, 2017, the Board appointed David Podwalski as the Chief Commercial Officer of the Company, effective as of June 26, 2017 (the “Podwalski Effective Date”). |
Year ended December 31, 2016 | Six month period ended June 30, 2017 | |||||||
Thousands of U.S. $ (except units sold) (unaudited) | ||||||||
Number of units sold | 5,828.9 | 5,174.9 | ||||||
Gross amount | 5,829 | 5,175 | ||||||
Net of related cash expenses | 4,951 | 4,520 | ||||||
Net amount | 4,642 | 4,246 |
US dollars | ||||||||
June 30, 2017 | December 31, 2016 | |||||||
(unaudited) | ||||||||
Raw materials | 705,810 | 735,201 | ||||||
Work in process | 794,582 | 633,132 | ||||||
Finished products | 7,920 | 51,271 | ||||||
1,508,312 | 1,419,604 |
US dollars | ||||||||
June 30, 2017 | December 31, 2016 | |||||||
(unaudited) | ||||||||
Employees and related institutions | 353,250 | 363,738 | ||||||
Accrued expenses | 588,338 | 261,651 | ||||||
Other current liabilities | 15,848 | 88,160 | ||||||
957,436 | 713,549 |
US dollars | ||||||||
September 30, | December 31, | |||||||
2016 | 2015 | |||||||
(unaudited) | ||||||||
Raw materials | 169,446 | 205,645 | ||||||
Work in process | 408,600 | 551,111 | ||||||
Finished products | 96,053 | 59,467 | ||||||
674,099 | 816,223 |
US dollars | US dollars | |||||||||||||||
Nine month period ended September 30, | Three month period ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Israeli CPI linkage difference on principal of loans from stockholders | 27 | (1,384 | ) | 666 | 488 | |||||||||||
Exchange rate differences | 33,329 | 23,877 | 9,118 | (14,392 | ) | |||||||||||
Change in fair value of Warrants with down round protection | (110,498 | ) | (119,148 | ) | (46,286 | ) | (27,839 | ) | ||||||||
Interest expenses on credit from banks and other | 13,488 | 9,227 | 4,913 | 849 | ||||||||||||
Loss on partial extinguishment of Series A Preferred Stock and Series A Warrants | - | 1,284,354 | - | 13,383 | ||||||||||||
(63,654 | ) | 1,196,926 | (31,589 | ) | (27,511 | ) |
US dollars | US dollars | |||||||||||||||
Six month period ended June 30, | Three month period ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Israeli CPI linkage difference on principal of loans from stockholders | 26 | (639 | ) | 1,393 | 825 | |||||||||||
Exchange rate differences | 17,194 | 24,211 | 6,720 | 19,296 | ||||||||||||
Change in fair value of Warrants with down-round protection | (191,075 | ) | (64,212 | ) | (106,976 | ) | (20,702 | ) | ||||||||
Interest expenses on credit from banks and other | 13,687 | 8,575 | 7,970 | 6,149 | ||||||||||||
(160,168 | ) | (32,065 | ) | (90,893 | ) | 5,568 |
US dollars | US dollars | US dollars | US dollars | |||||||||||||||||||||||||||||
Nine month period ended September 30, | Three month period ended September 30, | Six month period ended June 30, | Three month period ended June 30, | |||||||||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||||||
(unaudited) | (unaudited) | (unaudited) | (unaudited) | |||||||||||||||||||||||||||||
Loss for the period | (4,270,506 | ) | (4,297, 307 | ) | (1,454,744 | ) | (1,095,970 | ) | (5,087,526 | ) | (2,815,762 | ) | (2,557,201 | ) | (1,588,998 | ) | ||||||||||||||||
Cash dividend on Series A Preferred Stock | (13,529 | ) | (52,361 | ) | (4,076 | ) | (5,325 | ) | (6,714 | ) | (9,453 | ) | (2,014 | ) | (4,753 | ) | ||||||||||||||||
Stock dividend on Series B Preferred Stock | (449,051 | ) | (270,307 | ) | (194,950 | ) | (84,512 | ) | (491,668 | ) | (254,101 | ) | (245,637 | ) | (131,281 | ) | ||||||||||||||||
Stock dividend on Series C Preferred Stock | (80,082 | ) | - | (59,727 | ) | - | (276,574 | ) | (20,355 | ) | (160,588 | ) | (20,355 | ) | ||||||||||||||||||
Loss for the period attributable to common stockholders | (4,813,168 | ) | (4,619,975 | ) | (1,713,497 | ) | (1,185,807 | ) | (5,862,482 | ) | (3,099,671 | ) | (2,965,440 | ) | (1,745,387 | ) |
Number of shares | Number of shares | |||||||||||||||
Nine month period ended September 30, | Three month period ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Number of shares: | ||||||||||||||||
Common shares used in computing basic income (loss) per share | 5,746,838 | 5,426,688 | 5,806,724 | 5,513,265 | ||||||||||||
Common shares used in computing diluted income (loss) per share | 5,746,838 | 5,426,688 | 5,806,724 | 5,513,265 | ||||||||||||
Total weighted average number of common shares related to outstanding convertible Preferred Stock, options and warrants excluded from the calculations of diluted income (loss) per share (*) | 12,125,368 | 9,425,407 | 13,915,740 | 9,539,832 |
Number of shares | Number of shares | |||||||||||||||
Six month period ended June 30, | Three month period ended June 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Number of shares: | ||||||||||||||||
Common shares used in computing basic income (loss) per share | 6,116,366 | 5,716,566 | 6,205,104 | 5,742,468 | ||||||||||||
Common shares used in computing diluted income (loss) per share | 6,116,366 | 5,716,566 | 6,203,104 | 5,742,468 | ||||||||||||
Total weighted average number of common shares related to outstanding convertible Preferred Stock, options and warrants excluded from the calculations of diluted income (loss) per share (*) | 19,868,112 | 11,220,345 | 21,001,400 | 12,210,613 |
(*) | All outstanding convertible Preferred Stock, stock options and warrants have been excluded from the calculation of the diluted net loss per share for all the reported periods, because the effect of the common shares issuable as a result of the exercise or conversion of these instruments was determined to be anti-dilutive. |
· | Approval for Glucotrack DF-F as a medical device in China is advancing. CFDA (the local regulatory body in China) approval is expected in 2017. |
· | U.S. Food and Drug Administration (“FDA”) approval activities are moving forward, with the required clinical trial expected to start before the end of 2017. We are in discussions with U.S. clinical and regulatory advisors and trial centers. Study start date is dependent on funding. |
· | Further EU member state approvals are progressing and may broaden our market entry opportunities. |
· | U.S. pre-launch commercial leadership in place. |
· | New clinical data presented at the American Diabetes Association Congress on June 12, 2017. |
· | We plan to be present and present at the European Association for the Study of Diabetes Congress (EASD) in September 2017 |
· | Glucotrack DF-F European launch and commercial strategy re-defined. |
· | 3rd U.S. patent issued on July 27th, 2017, following issuances in China, South Korea and Israel. |
· | Future generations of Glucotrack devices defined and undergoing feasibility studies; including wireless ear-clip, consumer oriented devices, digital health applications, smartphone, tablet and cloud connectivity. |
· | Partnering discussions underway with a number of potential strategic partners in Europe and Asia. |
· | David Podwalski appointed Chief Commercial Officer. |
· | an annual cash payment to each non-employee director and interim officer of the Company in the amount of $35,000, payable in four equal quarterly installments of $8,750 each on the last day of each calendar quarter commencing with the fourth quarter of 2017, subject to their continued service as of each such date; |
· | an additional annual cash payment to each member of a Board committee who is not the Chairperson of that particular committee in the amount of $5,000, payable in four equal quarterly installments of $1,250 each on the last day of each calendar quarter commencing with the second quarter of 2017, subject to their continued service as of each such date; |
· | an additional annual cash payment to the chairperson of a Board committee in the amount of $12,500, payable in four equal quarterly installments of $3,125 each on the last day of each calendar quarter commencing with the second quarter of 2017, subject to their continued service as of each such date; |
· | the grant to each non-employee director and each interim officer of the Company of a one-time award of options to purchase up to an aggregate of 14,894 shares of Common Stock, at an exercise price of $4.50, under and pursuant to the Plan, which options vest in 12 equal monthly increments commencing as of June 1, 2017 (subject to their continued service as of each such date) and have a term of 10 years; |
· | the grant to each non-employee director and each interim officer of the Company of an award of Restricted Stock Units (“RSUs”), to be granted on June 1, 2017 and vesting on June 1, 2018, with a fair value of $45,000 based on the 30-day volume weighted average price of the Company’s Common Stock on June 1, 2017, subject to their continued service on and through such date; and |
· | an additional annual fair value payment to the vice chairperson of the Board in the amount of $20,000, payable in RSUs under the same vesting terms. |
1. |
Exhibit No. | Description | |
3.1 | Certificate of Incorporation of Integrity Applications, Inc. (1) | |
3.2 | Certificate of Amendment to Certificate of Incorporation of Integrity Applications, Inc. (1) | |
3.3 | Bylaws of Integrity Applications, Inc. (1) | |
3.4 | Certificate of Designation of Preferences and Rights of Series A 5% Convertible Preferred Stock (2) | |
3.5 | Certificate of Designation of Preferences and Rights of Series B 5.5% Convertible Preferred Stock (3) | |
3.6 | Certificate of Designation of Preferences and Rights of Series C 5.5% Convertible Preferred Stock (4) | |
4.1 | Form of Securities Purchase Agreement (4) | |
4.2 | Form of Series C-1 Common Stock Purchase Warrant (4) | |
4.3 | Form of Series C-2 Common Stock Purchase Warrant (4) | |
4.4 | Form of Registration Rights Agreement (4) | |
10.1 * | Letter Agreement, effective as of April 7, 2017, among Integrity Applications, Inc., A.D. Integrity Applications Ltd., and Avner Gal (6) | |
10.2 * | First Amendment to Employment Agreement, effective as of April 7, 2017, between Integrity Applications, Inc. and John Graham (6) | |
10.3 * | Amended and Restated Personal Employment Agreement, effective as of April 7, 2017, between A.D. Integrity Applications Ltd. and David Malka (6) | |
10.4 * | Amendment No. 2 to Integrity Applications, Inc. 2010 Incentive Compensation Plan (6) | |
10.5* | Letter Agreement, effective as of April 7, 2017, among Integrity Applications, Inc. and Angela Strand | |
10.6* | Personal Employment Agreement between Integrity Applications, Inc. and David Podwalski | |
31.1 | Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
31.2 | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | |
32.1 | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
32.2 | Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | |
101.INS | XBRL Instance Document | |
101.SCH | XBRL Schema Document | |
101.CAL | XBRL Calculation Linkbase Document | |
101.LAB | XBRL Label Linkbase Document | |
101.PRE | XBRL Presentation Linkbase Document | |
101.DEF | XBRL Definition Linkbase Document |
(1) | Previously filed as an exhibit to the Company’s Registration Statement on Form S-1, as filed with the SEC on August 22, 2011, which exhibit is incorporated herein by reference. |
(2) | Previously filed as an exhibit to the Company’s Current Report on Form 8-K, as filed with the SEC on March 18, 2013, which exhibit is incorporated herein by reference. |
(3) | Previously filed as an exhibit to the Company’s Current Report on Form 8-K, as filed with the SEC on September 5, 2014, which exhibit is incorporated herein by reference. |
(4) | Previously filed as an exhibit to the Company’s Current Report on Form 8-K, as filed with the SEC on April 14, 2016, which exhibit is incorporated herein by reference. |
(5) | Previously filed as an exhibit to the Company’s Annual Report on Form 10-K, as filed with the SEC on March 31, 2017, which exhibit is incorporated herein by reference. |
(6) | Previously filed as an exhibit to the Company’s Current Report on Form 8-K, as filed with the SEC on April 13, 2017, which exhibit is incorporated herein by reference. |
(7) | Pursuant to Rule 406T of Regulation S-T, the interactive files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. |
* | Compensation Plan or Arrangement or Management Contract. |
INTEGRITY APPLICATIONS, INC. | ||
By: | /s/ | |
John Graham Name: | ||
John Graham Title: Chairman of the Board and Chief Executive Officer |
By:/s/ John Graham Name: | ||
John Graham Title:Chairman of the Board and Chief (Principal |
Exhibit No. | Description | |
10.6* | ||
101.INS | XBRL Instance Document | |
101.SCH | XBRL Schema Document | |
101.CAL | XBRL Calculation Linkbase Document | |
101.LAB | XBRL Label Linkbase Document | |
101.PRE | XBRL Presentation Linkbase Document | |
101.DEF | XBRL Definition Linkbase Document |
(1) | Previously filed as an exhibit to the Company’s Registration Statement on Form S-1, as filed with the SEC on August 22, 2011, which exhibit is incorporated herein by reference. |
(2) | Previously filed as an exhibit to the Company’s Current Report on Form 8-K, as filed with the SEC on March 18, 2013, which exhibit is incorporated herein by reference. |
(3) | Previously filed as an exhibit to the Company’s Current Report on Form 8-K, as filed with the SEC on September 5, 2014, which exhibit is incorporated herein by reference. |
(4) | Previously filed as an exhibit to the Company’s Current Report on Form 8-K, as filed with the SEC on April 14, 2016, which exhibit is incorporated herein by reference. |
(5) | Previously filed as an exhibit to the Company’s Annual Report on Form 10-K, as filed with the SEC on March 31, 2017, which exhibit is incorporated herein by reference. |
(6) | Previously filed as an exhibit to the Company’s Current Report on Form 8-K, as filed with the SEC on April 13, 2017, which exhibit is incorporated herein by reference. |
(7) | Pursuant to Rule 406T of Regulation S-T, the interactive files on Exhibit 101 hereto are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections. |
* | Compensation Plan or Arrangement or Management Contract. |