Commitment and Contingent Liabilities
|12 Months Ended|
Dec. 31, 2017
|Commitment and Contingent Liabilities [Abstract]|
|COMMITMENT AND CONTINGENT LIABILITIES||
NOTE 9 – COMMITMENT AND CONTINGENT LIABILITIES
Without any connection to the Company’s sales, the Company is required to pay minimum royalties to the Licensors according to the following schedule (subject to the termination clause described below):
1. Year 2015 - $10,000
2. Year 2016 - $25,000
3. Year 2017 and on - $50,000 per year.
In any specific year, the total royalties payable to the Licensors shall be the higher of:
● the regular royalties based on the royalty rates as described above and
● the minimum royalties.
The minimum royalties will be paid to the Licensors regardless of whether the Company succeeds in generating revenues from sales of the products arising from the usage of the Licensors’ technology.
The license agreement is for an unlimited term, unless terminated earlier by either of the parties. Each party is entitled to terminate the agreement as a result of a material breach or a failure to comply with a material term by the other party, as a result of liquidation or insolvency of the other party (“Termination for Cause”). In addition, the Company is entitled to terminate the agreement if at any time, during the period of 7 years following the effective date of the transaction, the Company, at its sole discretion, determines that commercialization of the leukemia licensed products is not commercially viable. After such period, the Company is not entitled to terminate this license agreement other than in accordance with the Termination for Cause provisions. As of December 31, 2017, the Company had not yet reached a determination regarding the probability of the commercialization of the licensed products.
However, as this 7 years’ period already passed as of December 31, 2017, the Company accrued the amount of the non-cancellable minimum royalties and the future liability with respect to the commitment to pay minimum royalties to the Licensors for any future periods in a total amount of $323,000 of which $135,000 is considered as current liability and $188,000 is considered as non current. This balance was measured based on the future cash payments discounted using an interest rate of 21% which represents, according to management estimate, the applicable rate of risk for the Company.
During 2017, the Company and the Licensors agreed on an amendment to the agreement in respect of the years 2015, 2016 and 2017 (in an aggregate amount of $85,000), according to which the minimum royalties payable to the Licensors shall be paid on the earlier of (i) August 1, 2017; and (ii) within 3 days following the date on which the Company shall have received an equity investment with net proceeds of not less than $10,000,000. As of December 31, 2017, the Company had not paid any of the minimum royalties to the Licensors. As of May 15 2018 the Company and the Licensor are negotiate to reanneal the agreement in respect of the amounts of the minimum royalties.
The entire disclosure for commitments and contingencies.
Reference 1: http://www.xbrl.org/2003/role/presentationRef