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Share Name | Share Symbol | Market | Type |
---|---|---|---|
EZTD Inc (CE) | USOTC:EZTD | OTCMarkets | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 0.0001 | 0.00 | 01:00:00 |
Delaware
|
98-0374121
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Common Stock, par value $0.001 per share
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Large accelerated filer | o | Accelerated filer | o | |||
Non-accelerated filer
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o (Do not check if a smaller reporting company)
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Smaller reporting company
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x
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1
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12
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25
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34
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34
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36
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38
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42
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43
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43
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45
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47
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48
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49
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49
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49
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·
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“Sign-Up Bonus”: a Sign-Up Bonus may be granted after a customer registers a new account with the Company. The client is not required to make a prior deposit into the account. The customer can capitalize the free initial credit granted to him or her as a result of the Sign-Up Bonus only if he or she meets the withdrawal preconditions (volume generation must be equal to 25 times the initial bonus provided within 90 days).
|
·
|
“Deposit Bonus”: a Deposit Bonus may be granted to a customer once he or she makes a deposit into his or her trading account. In the case of Deposit Bonuses, customer funds, including profits and losses, are available for withdrawal at any given time; the only element dependent on the withdrawal preconditions is the bonus itself. This Deposit Bonus is only available for withdrawal if the customer meets the withdrawal preconditions (volume generation must be equal to 25 times the initial bonus provided within 90 days).
|
·
|
the Trading Platform provides a simple and consistent interface for customers across a number of different devices;
|
·
|
we aim to offer competitive dealing options which vary by instrument category. These instrument categories include options on indices, equities, foreign currency and commodities. We constantly add new assets to our offerings which also include new listings. New assets are comprised of individual options for the above mentioned instrument categories. In addition, we accommodate customers’ requests to add certain new assets;
|
·
|
we offer binary options linked to a broad range of underlying instruments, including indices, international stocks, commodities and currency pairs; and
|
·
|
our strategy involves offering bonuses which are designed to attract new customers and encourage existing customers to trade on the Trading Platform.
|
·
|
no commission on trades;
|
·
|
a technology platform which is not reliant on third party software;
|
·
|
a simple offering consisting of only binary options across four underlying asset classes;
|
·
|
a user-friendly Trading Platform which allows the users to handle his or her trades in a very simple way; and
|
·
|
a state of the art Trading Platform application for mobile devices.
|
·
|
technical difficulties with respect to the use of our binary options platform; and
|
·
|
adverse regulatory developments in the business of binary options.
|
·
|
that a broker or dealer approve a person’s account for transactions in penny stocks; and
|
·
|
the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.
|
·
|
obtain financial information and investment experience objectives of the person; and
|
·
|
make a reasonable determination that the transactions in penny stocks are suitable for that person and the person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks.
|
·
|
sets forth the basis on which the broker or dealer made the suitability determination; and
|
·
|
that the broker or dealer received a signed, written statement from the investor prior to the transaction.
|
·
|
Amortization of acquired intangible assets - We are required to amortize the intangible assets, included in our U.S. GAAP financial statements, related to the acquisition of the software platform from Venice Technologies Ltd. in June 2011. The amount of an acquisition’s purchase price allocated to intangible assets and term of its related amortization are unique to these transactions. The amortization of acquired intangible assets is a non-cash charge. We believe that such charges do not reflect our operational performance. Therefore, we exclude amortization of acquired intangible assets to provide investors with a consistent basis for comparing pre-and post-transaction operating results.
|
|
·
|
Stock-based compensation is a share-based award granted to certain individuals. It is non-cash and affected by our historical stock prices which are irrelevant to forward-looking analyses and are not necessarily linked to our operational performance.
|
|
·
|
Impairment of bank deposit is a non-recurring loss in the amount of $4,100,000 due to CCB’s bankruptcy, which is not relevant to forward-looking analyses and is not linked to our operational performance.
|
Year ended
12/31/14
|
Year ended
12/31/13
|
Three months ended 3/31/15
|
Three months ended 3/31/14
|
|||||||||||||
GAAP-operating income (loss)
|
$ | (7,876,669 | ) | $ | (2,999,810 | ) | $ | 98,060 | $ | 320,348 | ||||||
Amortization of acquired intangible assets
|
$ | 39,028 | $ | 93,666 | $ | 23,418 | ||||||||||
Stock-based compensation
|
$ | 1,644,356 | $ | 105,955 | $ | 457,521 | $ | 197,649 | ||||||||
Impairment of bank deposit
|
$ | 4,121,544 | ||||||||||||||
Non-GAAP operating income (loss)
|
$ | (2,071,741 | ) | $ | (2,800,189 | ) | $ | 555,581 | $ | 541,415 |
·
|
“Sign-Up Bonus”: a Sign-Up Bonus may be granted after a customer registers a new account with the Company. The client is not required to make a prior deposit into the account. The customer can capitalize the free initial credit granted to him or her as a result of the Sign-Up Bonus only if he or she meets the withdrawal preconditions (volume generation must be equal to 25 times the initial bonus provided within 90 days).
|
·
|
“Deposit Bonus”: a Deposit Bonus may be granted to a customer once he makes a deposit into his or her or her trading account. In the case of Deposit Bonuses, customer funds, including profits and losses, are available for withdrawal at any given time; the only element dependent on the withdrawal preconditions is the bonus itself. This Deposit Bonus is only available for withdrawal if the customer meets the withdrawal preconditions (volume generation must be equal to 25 times the initial bonus provided within 90 days).
|
1)
|
The amount was received in United States dollars and not in Euros whereas the banks we worked with, received deposits in Euros only.
|
2)
|
Depositing the funds with an Israeli bank was not practical due to 20% withholding tax deduction required by local law, making it impossible to use the funds.
|
3)
|
Deposit to a new bank account was not practical and could take approximately 6 months.
|
4)
|
The Company had a good history with CCB, with approximately $1,000,000 held by the bank prior to the above deposit, and no commission or withholding tax deduction was needed in order for us to deposit and use the funds.
|
1)
|
Permanent administrators have been appointed to determine CCB’s assets that will be available for distribution to the depositors. We have hired local legal counsel and filed a claim with the administrators.
|
2)
|
We have met with the U.S. Ambassador in Sofia in order to get assistance in receiving fair and equitable treatment. We have followed up with the U.S. Ambassador in Sofia, who has since met with the permanent administrators and has brought our case to their attention.
|
3)
|
Our local counsel is filing a partial claim against KPMG Bulgaria for €500,000. The court fees for filing the claim are 4% of the claim amount. We have also reserved the right to increase the amount of the claim at any time once we learn what the administrators will distribute to depositors.
|
4)
|
We have hired an investigative firm to assess the relationship between KPMG international in Switzerland and KPMG Bulgaria. They have interviewed 30 people, including former KPMG employees. KPMG Bulgaria pays a franchise fee to KPMG international. In addition KPMG International reviews audits of its member firms once every year or two. KPMG international is also very active in training partners of its member firms to perform services according to its practices.
|
5)
|
We have engaged a law firm in Switzerland to represent us against KPMG International.
|
Number of shares
beneficially owned (2)
|
Percentage of shares
beneficially owned (3)
|
|||||||
5% BENEFICIAL OWNERS
|
||||||||
HV Markets Limited (4)
|
15,490,175
|
14.76
|
%
|
|||||
P.O. Box 3175
|
||||||||
Road Town, Tortola
|
||||||||
British Virgin Islands
|
||||||||
Ricx Investments Ltd. (5)
|
26,404,264
|
23.56
|
%
|
|||||
Anemomylos Office Building
|
||||||||
8 Michael Karaolis Street
|
||||||||
1095 Nicosia
|
||||||||
Cyprus
|
||||||||
AFTH S.C.Sp.
|
9,215,376
|
8.70
|
%
|
|||||
10 Rue Antoine Jans Luxembourg L-1820
|
||||||||
Shimon Citron (6)
|
12,320,108
|
10.84
|
%
|
|||||
Ron Lubash (7)
|
2,962,082
|
2.77
|
%
|
|||||
Gustavo Perrotta (8)
|
2,075,000
|
1.94
|
% | |||||
Stephan Fitch (9)
|
500,000
|
*
|
||||||
Itai Loewenstein (10)
|
0
|
*
|
||||||
All directors and current executive officers as a group (5 persons)(6)(7)(8)(9)(10)
|
17,857,190
|
16.02
|
%
|
NAME
|
AGE
|
POSITION
|
POSITION SINCE
|
|||
Shimon Citron
|
59
|
Director and Chief Executive Officer
|
2001
|
|||
Itai Loewenstein
|
37
|
Director and Chief Financial Officer
|
2015
|
|||
Ron Lubash
|
56
|
Director, member of the Nomination and Compensation Committees
|
2012
|
|||
Gustavo Perrotta
|
48
|
Chairman, member of the Nomination Committee
|
2012
|
Stephan A. Fitch
|
57
|
Director, member of the Audit and Compensation Committees
|
2015
|
|||
Liran Gilboa
|
34
|
Chief Operating Officer
|
2014
|
Mike Mor
|
37
|
Chief Technology Officer
|
2014
|
|||
Tomer Yulzari
|
30
|
Chief Risk Officer
|
2010
|
Tal Golan
|
33
|
Vice President of Sales &Support
|
2013
|
NAME AND PRINCIPAL POSITION
|
YEAR
|
SALARY ($)
|
BONUS ($)
|
STOCK AWARDS ($)
|
OPTION AWARDS ($)(1)
|
NONEQUITY INCENTIVE PLAN COMPENSATION($)
|
Total ($)
|
|||||||||||||||||||
Shimon Citron
|
2014
|
378,174 | 278,438 | 448,246 | 1,104,858 | |||||||||||||||||||||
Chief Executive Officer
|
2013
|
244,979 | 80,000 | 17,342 | 342,321 | |||||||||||||||||||||
Tal Golan
|
2014
|
80,756 | 184,085 | 20,120 | 284,961 | |||||||||||||||||||||
Vice President of Sales & Support
|
2013
|
61,320 | 58,351 | 1,461 | 121,133 | |||||||||||||||||||||
Yariv Citron
|
2014
|
72,148 | 181,270 | 61,192 | 314,610 | |||||||||||||||||||||
Media Manager
|
2013
|
19,992 | 22,334 | 42,326 | ||||||||||||||||||||||
1,401,125 | 929,745 | 779,461 | 3,110,330 |
(1)
|
The dollar value recognized for the stock option award was determined in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718. For information on the determination of the fair value of each option granted as of the grant date, and of assumptions made with respect to the value of option awards, see in this Registration Statement on Form 10, note 10.D to our Consolidated Financial Statements for the year ended December 31, 2014.
|
Name
|
Number of securities
underlying unexercised
options (#) exercisable
|
Number of securities
underlying unexercised
options (#) unexercisable
|
Option exercise price ($)
|
Option expiration date
|
|||||||||
Shimon Citron
|
1,863,000 | - | 0.10 |
July 31, 2018
|
|||||||||
Shimon Citron
|
1,000,000 | - | 0.06 |
September 15, 2018
|
|||||||||
Shimon Citron
|
1,000,000 | 2,000,000 | 0.10 |
October 24, 2018
|
|||||||||
Shimon Citron
|
950,000 | 2,850,000 | 0.10 |
January 6, 2019
|
|||||||||
Shimon Citron
|
675,000 | 1,125,000 | 0.10 |
March 13, 2019
|
|||||||||
Ron Lubash
|
600,000 | - | 0.10 |
March 29, 2017
|
|||||||||
Ron Lubash
|
200,000 | 400,000 | 0.10 |
October 24, 2018
|
|||||||||
Ron Lubash
|
675,000 | 1,125,000 | 0.10 |
March 13, 2019
|
|||||||||
Gustavo Perotta
|
600,000 | - | 0.10 |
September 13, 2017
|
|||||||||
Gustavo Perotta
|
200,000 | 400,000 | 0.10 |
October 24, 2018
|
|||||||||
Gustavo Perotta
|
675,000 | 1,125,000 | 0.10 |
March 13, 2019
|
|||||||||
Liran Gilboa
|
66,667 | 333,333 | 0.10 |
July 1, 2019
|
|||||||||
Tomer Yulzari
|
20,000 | 10,000 | 0.10 |
January 1, 2018
|
|||||||||
Tomer Yulzari
|
110,000 | 10,000 | 0.10 |
January 6, 2019
|
|||||||||
Tomer Yulzari
|
256,667 | 23,333 | 0.10 |
July 1, 2019
|
|||||||||
Tal Golan
|
80,000 | 40,000 | 0.10 |
January 1, 2018
|
|||||||||
Tal Golan
|
163,333 | 116,667 | 0.10 |
January 6, 2019
|
|||||||||
Itai Loewenstein
|
- | - | - | ||||||||||
Mike Mor
|
- | - | - |
NAME
|
YEAR
|
Director Fees
|
Stock based
compensation (1)
|
Other
|
Total
|
|||||||||||||
Gustavo Perrotta
|
2014
|
80,000 | 214,218 | 9,850 | 304,068 | |||||||||||||
Adiv Baruch (2)
|
2014
|
7,000 | 20,810 | - | 27,810 | |||||||||||||
Ron Lubash
|
2014
|
90,000 | 211,321 | 19,530 | 320,851 | |||||||||||||
177,000 | 446,349 | 29,380 | 652,729 |
(1)
|
The dollar value recognized for the stock option award was determined in accordance with FASB ASC Topic 718. For information on the determination of the fair value of each option granted as of the grant date, and of assumptions made with respect to the value of option awards, see in this Registration Statement on Form 10 note 10.D to our Consolidated Financial Statements for the year ended December 31, 2014.
|
|
(2)
|
Mr. Baruch ceased to be a director on March 1, 2014.
|
Period
|
HIGH
|
LOW
|
||||||
FISCAL YEAR ENDED DECEMBER 31, 2015
|
||||||||
First Quarter Ended March 31, 2015
|
$
|
0.20
|
$
|
0.12
|
||||
FISCAL YEAR ENDED DECEMBER 31, 2014
|
||||||||
First Quarter Ended March 31, 2014
|
$
|
0.25
|
$
|
0.03
|
||||
Second Quarter Ended June 30, 2014
|
$
|
0.23
|
$
|
0.13
|
||||
Third Quarter Ended September 30, 2014
|
$
|
0.29
|
$
|
0.12
|
||||
Fourth Quarter Ended December 31, 2014
|
$
|
0.28
|
$
|
0.11
|
||||
FISCAL YEAR ENDED DECEMBER 31, 2013
|
||||||||
Third Quarter Ended September 30, 2013
|
$
|
0.06
|
$
|
0.03
|
||||
Fourth Quarter Ended December 31, 2013
|
$
|
0.04
|
$
|
0.02
|
•
|
1% of the number of shares of our common stock then outstanding, which as of August 17, 2015, equaled approximately 104,974 shares of our common stock; or
|
•
|
the average weekly trading volume of our common stock, if and when our common stock is traded on the OTC Bulletin Board, during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.
|
Plan Category
|
Number of securities
to be issued upon
exercise of outstanding
options, warrants and rights
|
Weighted-average exercise
price of outstanding
options, warrants and
rights
|
Number of securities
remaining available for
future issuance under
equity compensation plans
|
|||||||||
Equity compensation plans approved by security holders-2004 Global Share Option Plan
|
28,603,000
|
$
|
0.18
|
1,397,000
|
||||||||
Equity compensation plans not approved by security holders
|
0
|
0
|
0
|
|||||||||
Total
|
28,603,000
|
$
|
0.18
|
1,397,000
|
Report of Independent Registered Public Accounting Firm.
|
Consolidated Balance Sheets for the three month period ended March 31, 2015 (unaudited) and for the years ended December 31, 2014 and 2013.
|
Consolidated Statements of Operations for the three month period ended March 31, 2015 (unaudited) and for the years ended December 31, 2014 and 2013.
|
Consolidated Statements of Comprehensive Income for the three month period ended March 31, 2015 (unaudited) and for the years ended December 31, 2014 and 2013.
|
Statements of Changes in Equity for the years ended December 31, 2014, 2013 and 2012.
|
Page
|
|
F-2 - F-3
|
|
F-4
|
|
F-5
|
|
F-6 - F-7
|
|
F-8 - F-9
|
|
F-10 - F-20
|
March 31,
2015
|
December 31,
2014
|
|||||||
ASSETS
|
||||||||
CURRENT ASSETS:
|
||||||||
Cash and cash equivalents
|
$ | 230,242 | $ | - | ||||
Segregated client cash accounts
|
2,367,971 | 2,343,017 | ||||||
Restricted cash
|
190,676 | 41,627 | ||||||
Receivable from credit card companies
|
722,588 | 699,832 | ||||||
Other current assets
|
590,051 | 638,837 | ||||||
Total current assets
|
$ | 4,101,528 | $ | 3,723,313 | ||||
NON-CURRENT ASSETS:
|
||||||||
Property and equipment, net
|
$ | 1,092,122 | $ | 834,272 | ||||
Total non-current assets
|
$ | 1,092,122 | $ | 834,272 | ||||
Total assets
|
$ | 5,193,650 | $ | 4,557,585 | ||||
March 31,
2015
|
December 31,
2014
|
||||||||||
Note
|
|||||||||||
LIABILITIES AND EQUITY
|
|||||||||||
CURRENT LIABILITIES:
|
|||||||||||
Obligation to customers
|
$ | 2,729,785 | $ | 3,127,273 | |||||||
Financial Liability
|
360,774 | - | |||||||||
Convertible loans
|
4 | 4,523,926 | 5,088,024 | ||||||||
Accounts payable
|
982,195 | 1,043,485 | |||||||||
Related parties
|
67,103 | 103,097 | |||||||||
Accrued expenses and other accounts payable
|
1,471,810 | 1,827,514 | |||||||||
Total current liabilities
|
$ | 10,135,593 | $ | 11,189,393 | |||||||
LONG TERM LIABILITIES:
|
|||||||||||
Accrued severance pay, net
|
152,182 | 110,306 | |||||||||
Total liabilities
|
$ | 10,287,775 | $ | 11,299,699 | |||||||
EQUITY (DEFICIENCY):
|
5 | ||||||||||
Common stock of $ 0.001 par value:
|
|||||||||||
Authorized: 300,000,000 shares at March 31, 2015 and December 31, 2014; Issued and outstanding: 95,097,802 and 94,385,302 shares at March 31, 2015 and December 31, 2014, respectively
|
95,098 | 94,386 | |||||||||
Additional paid-in capital
|
29,701,483 | 27,900,278 | |||||||||
Prepayment on account of shares
|
1,097,642 | - | |||||||||
Accumulated deficit
|
(35,988,348 | ) | (34,736,778 | ) | |||||||
Equity (deficiency)
|
$ | (5,094,125 | ) | $ | (6,742,114 | ) | |||||
Total liabilities and equity
|
$ | 5,193,650 | $ | $4,557,585 |
Three months ended
|
||||||||
March 31, 2015
|
March 31, 2014
|
|||||||
Revenues
|
$ | 7,143,209 | $ | 4,035,249 | ||||
Operating expenses:
|
||||||||
Sales and marketing
|
5,425,053 | 2,806,621 | ||||||
General and administrative
|
749,866 | 444,842 | ||||||
Research and development
|
412,709 | 265,789 | ||||||
Stock-based compensation
|
457,521 | 197,649 | ||||||
Total operating expenses
|
7,045,149 | 3,714,901 | ||||||
Operating income
|
98,060 | 320,348 | ||||||
Financial expenses, net
|
1,349,630
|
118,993 | ||||||
Net income (loss) before taxes on income
|
$ | (1,251,570 | ) | $ | 201,355 | |||
Taxes on income
|
- | - | ||||||
Net income (loss) attributable to the Company
|
$ | (1,251,570 | ) | $ | 201,355 | |||
Total basic net gain (loss) per share
|
$ | (0.01 | ) | $ | 0.00 | |||
Weighted average number of common stock used in computing basic net loss per share
|
94,794,746 | 86,116,302 | ||||||
Total diluted net gain (loss) per share
|
$ | (0.01 | ) | 0.00 | ||||
Weighted average number of common stock used in computing diluted net gain per share
|
94,794,746 | 116,384,173 |
Three months ended
|
||||||||
March 31, 2015
|
March 31, 2014
|
|||||||
Net income (loss)
|
(1,251,570 | ) | 201,355 | |||||
Other comprehensive income (loss), net of tax:
|
- | - | ||||||
Total comprehensive income (loss)
|
$ | (1,251,570 | ) | $ | 201,355 |
Common stock
|
Share capital
|
Additional paid-in capital
|
Prepayment on account of shares
|
Accumulated deficit
|
Total shareholders’ equity (deficiency)
|
|||||||||||||||||||
Number
|
Amount
|
|||||||||||||||||||||||
Balance as of December 31, 2014
|
94,385,302 | $ | 94,386 | $ | 27,900,278 | $ | - | $ | (34,736,778 | ) | $ | (6,742,114 | ) | |||||||||||
Conversion of loan
|
- | - | - | 364,205 | - | 364,205 | ||||||||||||||||||
Exercise of warrants and options
|
563,000 | 563 | 49,438 | - | - | 50,001 | ||||||||||||||||||
Prepayment on account of shares upon exercise of warrants
|
- | - | - | 733,437 | - | 733,438 | ||||||||||||||||||
Exercise of options
|
150,000 | 150 | 14,850 | - | - | 15,000 | ||||||||||||||||||
Grant of warrants
|
1,279,396 | - | - | 1,279,396 | ||||||||||||||||||||
Stock - based compensation
|
- | - | 457,521 | - | - | 457,521 | ||||||||||||||||||
Net loss
|
- | - | - | - | (1,251,570 | ) | (1,251,570 | ) | ||||||||||||||||
Balance as of March 31, 2015
|
94,785,302 | $ | 95,099 | $ | 29,701,483 | $ | 1,097,642 | $ | (35,988,348 | ) | $ | (5,094,125 | ) |
Common stock
|
Share capital
|
Additional paid-in capital
|
Prepayment on account of shares
|
Accumulated deficit
|
Total shareholders’ equity (deficiency)
|
|||||||||||||||||||
Number
|
Amount
|
|||||||||||||||||||||||
Balance as of December 31, 2013
|
84,195,671 | $ | 84,196 | $ | 22,163,156 | $ | 346,463 | $ | (25,795,261 | ) | $ | (3,201,446 | ) | |||||||||||
Issuance of shares
|
1,920,631 | 1,921 | 344,542 | (346,463 | ) | - | - | |||||||||||||||||
Stock - based compensation
|
- | - | 197,649 | - | - | 197,649 | ||||||||||||||||||
Net Income
|
- | - | - | - | 201,355 | 201,355 | ||||||||||||||||||
Balance as of March 31, 2014
|
86,116,302 | $ | 86,117 | $ | 22,705,347 | $ | - | $ | (25,593,906 | ) | $ | (2,802,442 | ) |
Three months ended
|
||||||||
March 31, 2015 | March 31, 2014 | |||||||
Cash flows from operating activities:
|
||||||||
Net income (loss)
|
$ | (1,251,570 | ) | $ | 201,355 | |||
Adjustments required to reconcile net loss to net cash used in operating activities:
|
||||||||
Stock-based compensation
|
457,520 | 197,649 | ||||||
Depreciation and amortization
|
86,720 | 19,456 | ||||||
Fair value of warrants granted to shareholders
|
1,279,396 | - | ||||||
Accrued interest and amortization of discount and exchange differences of convertible loans
|
(199,892
|
) | (91,082 | ) | ||||
Decrease (increase) in receivable from credit card companies
|
(22,756 | ) | 219,453 | |||||
Decrease (increase) in other current assets
|
48,786 | (20,525 | ) | |||||
Decrease in trade payables
|
(61,290 | ) | (154,253 | ) | ||||
Increase (decrease) in obligation to customers and other payables
|
(753,193 | ) | 269,286 | |||||
Increase in financial liability
|
360,774 | - | ||||||
Increase in severance pay, net
|
41,876 | 19,276 | ||||||
Decrease in related parties
|
(35,994 | ) | (434,047 | ) | ||||
Net cash (used in) provided by operating activities
|
$ | (49,623 | ) | $ | 226,568 | |||
Cash flows from investing activities:
|
||||||||
Purchase of property and equipment
|
$ | (344,570 | ) | $ | (73,731 | ) | ||
Decrease (Increase) in Segregated client cash accounts
|
$ | (24,954 | ) | $ | (1,643,792 | ) | ||
Decrease (Increase) in restricted cash
|
(149,048 | ) | 1,331,787 | |||||
Net cash used in investing activities
|
$ | (518,572 | ) | $ | (385,736 | ) | ||
Cash flows from financing activities:
|
||||||||
Issuance of shares and warrants
|
$ | 65,000 | $ | - | ||||
Prepayment on account of shares
|
733,437 | - | ||||||
Proceeds received from convertible loans
|
- | 2,799,830 | ||||||
Repayment of convertible loans
|
- | (75,005 | ) | |||||
Short-term bank credit, net
|
- | (5,513 | ) | |||||
Net cash provided by financing activities
|
$ | 798,437 | $ | 2,719,312 |
Three months ended
|
||||||||
March 31, 2015
|
March 31, 2014
|
|||||||
Increase in cash and cash equivalents
|
$ | 230,242 | $ | 2,560,144 | ||||
Cash and cash equivalents at the beginning of the period
|
$ | - | $ | 114,286 | ||||
Cash and cash equivalents at the end of the period
|
$ | 230,242 | $ | 2,674,430 | ||||
Supplemental disclosure of cash flows information:
|
||||||||
Interest paid
|
$ | 10,657 | $ | - | ||||
Conversion of convertible loan to prepayment on account of shares
|
$ | 364,205 | $ | - |
A.
|
EZTD Inc. (formerly: EZTrader Inc.) ("the Company") was incorporated in April 2002 under the laws of the State of Nevada. On June 3, 2015, the Company reincorporated in Delaware. The Company is engaged in offering online trading of binary options. The Company's shares were quoted on the OTCQB in the United States under the symbol "EZTD" from 2010 until August 2013, when the Company terminated its registration under the Securities Exchange Act of 1934, as amended, and as a result the Company’s shares are now quoted on the OTC Pink.
|
|
The Company conducts its operations and business with and through its active wholly-owned subsidiaries, (a) Win Global Markets Inc (Israel) Ltd., an Israeli company, and (b) WGM Services Ltd., a company registered in Cyprus (“WGM”). On January 26, 2015 the Company changed its name from EZTrader, Inc. to EZTD Inc. (the "Company").
|
1)
|
The amounts were received in United States dollars and not in Euros whereas the banks the Company worked with received deposits in Euros only.
|
2)
|
Depositing the funds with an Israeli bank was not practical due to 20% withholding tax deduction required by local law, making it impossible to use the funds.
|
3)
|
Deposit to a new bank account was not practical and could take approximately 6 months.
|
4)
|
The Company had a good history with CCB, with approximately $1,000,000 held by the bank prior to the above deposit, and no commission or withholding tax deduction was needed in order for the Company to deposit and use the funds.
|
1)
|
Permanent administrators have been appointed to determine CCB’s assets that will be available for distribution to the depositors. The Company has hired local legal counsel and filed a claim with the administrators.
|
2)
|
The Company has met with the U.S. Ambassador in Sofia in order to get assistance in receiving fair and equitable treatment. The Company has followed up with the U.S. Ambassador in Sofia, who has since met with the permanent administrators and has brought our case to their attention.
|
3)
|
The Company’s local counsel is filing a partial claim against KPMG Bulgaria for €500,000. The court fees for filing the claim are 4% of the claim amount. The Company has also reserved the right to increase the amount of the claim at any time once it learns what the administrators will distribute to depositors.
|
4)
|
The Company has hired an investigative firm to assess the relationship between KPMG international in Switzerland and KPMG Bulgaria. They have interviewed 30 people including former KPMG employees. KPMG Bulgaria pays a franchise fee to KPMG international. In addition KPMG International reviews audits of its member firms once every year or two. KPMG international is also very active in training partners of its member firms to perform services according to its practices.
|
5)
|
The Company has engaged a law firm in Switzerland to represent it against KPMG International.
|
|
B.
|
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered losses from operations and negative cash flows from operations since inception. For the period ended March 31, 2015, the net loss attributable to the Company was $1,251,570 and the negative cash flows from operations were $49,623. As of March 31, 2015, obligation to customers amounted to $2,729,785, while current assets were $4,101,528. Customers may withdraw their deposits upon demand. According to the regulatory requirement in Cyprus, the Company’s subsidiary in Cyprus has to comply with the covenant of maintaining a capital of at least €730,000 and having funds in excess of client obligations. Funds consist of cash, segregated client cash accounts, restricted cash and receivables from credit card companies. Despite its negative cash flows, the Company has been able to secure financing to support its operations to date, based on share issuances. The Company plans to seek additional funds from equity issuances in order to continue its operations and to leverage its binary options business. The consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty.
|
C.
|
Between November 20, 2014 and December 22, 2014, the Company’s authorization from Cyprus Securities and Exchange Commission (“CYSEC”) was temporarily suspended due to a shortfall in client funds. The shortfall was due to the fact that CCB, in which the Company had customer deposits of $4.2 million ceased operations in June 2014 and was subsequently, declared bankrupt in November 2014. Upon the additional injection of approximately $1 million, sourced from a convertible loan received from new and existing investors on December 5, 2014, in order to meet client obligations (see also note 4(D)), CYSEC decided to withdraw the suspension, as it is satisfied that the Company has complied with the provisions of Law 144(I)/2007.
The consolidated financial statements are prepared in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”).
|
Fair value measurements using input type
|
||||||||||||||||
March 31, 2015
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Cash and cash equivalents
|
$ | 230,242 | $ | - | $ | - | $ | 230,242 | ||||||||
Segregated client cash accounts
|
2,367,971 | - | - | 2,367,971 | ||||||||||||
Restricted cash
|
190,676 | - | - | 190,676 | ||||||||||||
Financial Liability
|
- | - | 360,774 | 360,774 | ||||||||||||
$ | 2,788,889 | $ | - | $ | 360,774 | $ | 3,149,663 |
Liabilities
|
Fair value
|
Methodology
|
Input
|
Weighted Average
|
||||
Derivative options based on commodities
|
$ 108,707
|
Cash or Nothing- option model
|
Expected volatility
Risk-free interest rate
Expected contractual life
|
8.3103%
0.01%
0.25
|
||||
Derivative options based on exchange differences
|
$ 135,207
|
Cash or Nothing- option model
|
Expected volatility
Risk-free interest rate
Expected contractual life
|
2.8108%
0.01%
0.25
|
||||
Derivative options based on equity shares
|
$ 116,860
|
Cash or Nothing- option model
|
Expected volatility
Risk-free interest rate
Expected contractual life
|
5.2203%
0.01%
0.25
|
Fair value measurements using input type
|
||||||||||||||||
December 31, 2014
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Segregated client cash accounts
|
$ | 2,343,017 | $ | - | $ | - | $ | 2,343,017 | ||||||||
Restricted cash
|
41,627 | - | - | 41,627 | ||||||||||||
$ | 2,384,644 | $ | - | $ | - | $ | 2,384,644 |
A.
|
On May 12, 2013, the Company entered into a Finance Agreement with Activa Red Green (the "Lender"), pursuant to which the Lender loaned to the Company $100,000 with a maturity date of May 11, 2014 (the "Loan"). The Loan bears annual interest of 20%. In addition, in the event of default and nonpayment the Loan shall bear additional penalty interest of 4% per annum. The Lender is entitled to convert the loan into shares of common stock of the Company at a conversion price of $0.10 per share and upon such conversion receive with a warrant to purchase 1/10 share of common stock at the a price per share of $0.10. The loan was fully paid in May, 2014.
|
B.
|
On October 29, 2013 (the "Closing Date"), the Company entered into a Convertible Loan agreement, according to which, the lenders will provide a loan in the amount of $1,391,000. The loan is linked to the Euro and bears an annual interest of 10% to be repaid in one lump sum with the loan principal upon the lapse of one year as of the Closing Date. The lenders may convert the loan into shares on each of the dates falling upon: (1) the lapse of six (6) months after the Closing Date, and (2) the lapse of one (1) year as of the Closing Date. The loan is convertible into "Conversion Units" which in total include 7,224,777 common shares of the Company, and Warrants exercisable into 722,478 ordinary shares of the Company each at a strike price of $0.19078 for a period of 18 months after issuance. The lenders are entitled to require that the loan shall be repaid upon the lapse of six (6) months after the Closing Date, by delivering a written notice to the Company at least 21 days prior to such date, and in such case the Company is required to repay the loan (principal and interest accrued until such date) on such earlier date. During 2014 the lenders and the Company agreed to extend the payment date under the same terms to October 29, 2015. The Company determined that the convertible loan does not fall within the scope of ASC 480-10. The embedded conversion feature and the prepayment clause should not be bifurcated in accordance with ASC 815. In addition, the Company followed ASC 470-20 to determine whether a beneficial conversion feature exists at loan inception and came to the conclusion that a beneficial conversion feature should not be recognized. The Company recorded issuance costs of approximately $73 thousand, which is amortized using the effective interest rate of the loan over the loan period. As of December 31, 2014, all the deferred issuance costs were recorded in the Statements of Operations.
|
C.
|
On February 13 and 27, 2014, the Company entered into a Convertible Loans Agreement (the "February 2014 Convertible Loans Agreement") with some of its shareholders and new investors, in order to raise an aggregated amount of $2,800,000. The loans are convertible into total of 7,963,542 ordinary shares of the Company. Some of the Loans are linked to the Euro, all the loans bear interest at an annual rate of 10%. The Company shall repay the Loan Amount and the Interest, in one lump sum, on the “Final Repayment Day”, which is 12 months after the Closing or, if extended by the lender- 24 months from the Closing date.
|
D.
|
In December 2014, the Company entered into a convertible loan agreement with lenders, according to which, the lenders will provide a loan in the amount of $922,500. The loan is linked to the Euro and matures in December 2015, and bears an annual interest of 10% to be repaid in a lump sum on such maturity date. This loan is convertible into "Conversion Units" which in total include 4,835,413 shares of common stock, and warrants exercisable into 2,417,706 shares of common stock each at an exercise price of $0.19078 for a period of 60 months after issuance.
|
1.
|
In March 2015, several investors exercised 7,542,969 warrants into shares of common stock, for which the Company received $733,438 in cash. As additional consideration, the Company issued these investors 15,085,938 fully vested warrants at an exercise price of $0.19078 per share, for a period of five years commencing six months after the date of the issuance of the warrants. At the issuance date the total fair value amounted to $1.2 million which was measured by using the Black-Scholes model, applying the following assumptions: expected life period of 5 years, share price - $0.15, interest risk free - 1.65%, volatility - 70%. In accordance with ASC 820: Fair Value Measurements and Disclosures, the $1.2 million was recorded as financing expense against additional paid in capital.
|
2.
|
In March 2015, the Company entered into a securities purchase agreement (the "SPA") with an investor pursuant to which the Company issued to the Investor 262,082 shares of common stock of the Company at a price of $0.19078 per share.
|
Three months ended March 31,
|
||||||||||||||||
2015
|
2014
|
|||||||||||||||
Unaudited
|
Unaudited
|
|||||||||||||||
Weighted
|
Weighted
|
|||||||||||||||
average
|
average
|
|||||||||||||||
Number
|
exercise
|
Number
|
exercise
|
|||||||||||||
of options
|
price
|
of options
|
price
|
|||||||||||||
$ | $ | |||||||||||||||
Outstanding at the beginning of the year
|
28,603,000 | 0.18 | 12,915,261 | 0.27 | ||||||||||||
Granted*
|
- | - | 11,820,000 | 0.10 | ||||||||||||
Exercised
|
(150,000 | ) | 0.1 | (10,000 | ) | 0.10 | ||||||||||
Forfeited
|
(625,357 | ) | 0.1 | (40,000 | ) | 0.10 | ||||||||||
Expired
|
(324,643 | ) | 0.1 | (402,261 | ) | 0.84 | ||||||||||
Outstanding at the end of the quarter
|
27,503,000 | 0.18 | 24,283,000 | 0.178 | ||||||||||||
|
||||||||||||||||
Options exercisable at the end of the quarter
|
15,648,833 | 0.10 | 8,103,833 | 722,633 |
*
|
The fair value of each option granted in 2014 is estimated on the date of grant, using the Black-Scholes option-pricing model with the following weighted average assumptions: dividend yield of 0% for all years; expected volatility - 85%; risk-free interest rate - 1.0%; expected life 5 years.
|
|
A.
|
In April 2015, the Company repaid $107,600 plus interest of the February 2014 loans. In addition, $364,205 of the February 2014 loans were converted into 1,040,586 of shares of common stock. Additionally, $800,000 of the February loans were extended for an additional six months to be repaid with interest in August 2015. The remaining $1,391,193 of loans were extended for one additional year in consideration of the issuance of additional an 1,285,714 warrants at an exercise price of $0.35 per share. Furthermore, the Company granted 7,530,000 options to employees, board members and consultants in accordance to the terms and conditions of the 2004 Global Share Option Plan and entered into a securities purchase agreement with an investor pursuant to which the Company issued to the investor 3,794,947 shares of common stock of the Company at a price of $0.19078 per share. As additional consideration, the Company issued this investor 1,138,484 warrants.
|
|
B.
|
In June 2015, the Company entered into a securities purchase agreement with two investors pursuant to which the Company issued to these investors 1,179,370 shares of common stock of the Company at a price of $0.19078 per share. As additional consideration, the Company issued these investors 353,811 warrants.
|
|
C.
|
On June 17, 2015, for the purpose of e expanding into new markets, the Company signed a share purchase agreement with GKFX Financial Services Limited, to purchase all of its outstanding shares. GKFX Financial Services Limited operates as a foreign exchange brokerage business, and holds a corresponding Type 1 Financial Instruments Business Registration under the Financial Instruments and Exchange Act. GKFX Financial Services Limited is also in the process of obtaining a Japanese regulatory license to offer online binary options products and services. The aggregate purchase price for all outstanding shares in GKFX Financial Services Limited was $400,000, plus the value of net assets of GKFX Financial Services Limited on the closing date, which took place on July 3, 2015.
|
|
D.
|
On July 28, 2015, the Company entered into a convertible loan agreement pursuant to which the lender, an entity affiliated with the Chairman of the Board of Directors of the Company, loaned the Company the principal amount of $1,000,000. The loan matures in July 2016, subject to certain prepayment rights of the lender. The lender is entitled to require that the loan be repaid within six months after the closing date, at which time the lender may demand prepayment of the loan amount, including any accrued and unpaid interest. The loan bears an annual interest rate of 10%, to be paid every six months. The loan is convertible into 5,241,640 shares of common stock of the Company upon either: (i) the maturity date, or (ii) the occurrence of an event of default. In connection with the loan, the Company also granted the lender warrants to acquire 1,572,492 shares of common stock of the company at an exercise price of $0.19078 per share, exercisable over a period of five years from the date of issuance.
|
|
E.
|
Commencing August 1 2015, the Company has upgraded the terms and conditions of granting trading benefits to be consistent with Circular 68 issued by CYSEC regarding the granting of trading benefits. The Company has separated trading benefits into two separate types of trading bonuses, as follows
|
|
·
|
"Sign-Up Bonus": a Sign-Up Bonus may be granted after a customer registers a new account with the Company. The client is not required to make a prior deposit into the account. The customer can capitalize the free initial credit granted to him or her as a result of the Sign-Up Bonus only if he meets the withdrawal preconditions (volume generation must be equal to 25 times the initial bonus provided within 90 days).
|
|
·
|
"Deposit Bonus": a Deposit Bonus may be granted to a customer once he makes a deposit into his or her trading account. In the case of Deposit Bonuses, customer funds, including profits and losses, are available for withdrawal at any given time; the only element dependent on the withdrawal preconditions is the bonus itself. This Deposit Bonus is only available for withdrawal if the customer meets the withdrawal preconditions (volume generation must be equal to 25 times the initial bonus provided within 90 days)/
|
Page
|
|
F-2
|
|
F-3 - F-4
|
|
F-5
|
|
F-6
|
|
F-7
|
|
F-8 - F-9
|
|
F-10 - F-32
|
/s/ Ziv Haft
Certified Public Accountants (Isr.)
BDO Member Firm
|
Note
|
December 31,
|
||||||||||
2014
|
2013
|
||||||||||
ASSETS
|
|||||||||||
CURRENT ASSETS:
|
|||||||||||
Cash and cash equivalents
|
$ | - | $ | 114,286 | |||||||
Segregated client cash accounts
|
2,343,017 | 61,526 | |||||||||
Restricted cash
|
41,627 | 1,377,672 | |||||||||
Receivable from credit card companies
|
699,832 | 705,004 | |||||||||
Other current assets
|
4 | 638,837 | 119,143 | ||||||||
Total current assets
|
$ | 3,723,313 | $ | 2,377,631 | |||||||
NON-CURRENT ASSETS:
|
|||||||||||
Property and equipment, net
|
5 | $ | 834,272 | $ | 151,550 | ||||||
Intangible assets
|
6 | - | 39,028 | ||||||||
Total non-current assets
|
$ | 834,272 | $ | 190,578 | |||||||
Total assets
|
$ | 4,557,585 | $ | 2,568,209 | |||||||
Note
|
December 31,
|
||||||||||
2014
|
2013
|
||||||||||
CURRENT LIABILITIES:
|
|||||||||||
Short-term bank credit
|
$ | - | $ | 78,696 | |||||||
Obligation to customers
|
7 | 3,127,273 | 2,144,201 | ||||||||
Account payables
|
8 | 1,043,485 | 646,383 | ||||||||
Related parties
|
15 | 103,097 | 435,143 | ||||||||
Accrued expenses and other account payables
|
9 | 1,827,514 | 911,490 | ||||||||
Convertible loans
|
10 | 5,088,024 | 1,518,598 | ||||||||
Total current liabilities
|
$ | 11,189,393 | $ | 5,734,511 | |||||||
LONG TERM LIABILITIES:
|
|||||||||||
Accrued severance pay, net
|
110,306 | 35,144 | |||||||||
Total liabilities
|
$ | 11,299,699 | $ | 5,769,655 | |||||||
EQUITY (DEFICIENCY)
|
12 | ||||||||||
Common stock of $ 0.001 par value:
|
|||||||||||
Authorized: 300,000,000 and 150,000,000 shares at December 31, 2014 and 2013, respectively
|
|||||||||||
Issued and outstanding: 94,385,302 shares at December 31, 2014 and 84,195,671 at December 31, 2013.
|
94,386 | 84,196 | |||||||||
Additional paid-in capital
|
27,900,278 | 22,163,156 | |||||||||
Prepayment on account of shares
|
- | 346,463 | |||||||||
Accumulated deficit
|
(34,736,778 | ) | (25,795,261 | ) | |||||||
Equity (deficiency)
|
$ | (6,742,114 | ) | $ | (3,201,446 | ) | |||||
Total liabilities and equity
|
$ | 4,557,585 | $ | 2,568,209 |
Year ended December 31,
|
|||||||||||
Notes
|
2014
|
2013
|
|||||||||
Revenues
|
$ | 20,113,803 | $ | 5,340,040 | |||||||
Operating expenses:
|
|||||||||||
Sales and marketing
|
17,785,621 | 5,654,134 | |||||||||
General and administrative
|
3,073,162 | 1,824,221 | |||||||||
Research and development
|
1,365,789 | 755,540 | |||||||||
Stock-based compensation
|
1,644,356 | 105,955 | |||||||||
Impairment of bank deposit
|
1C | 4,121,544 | - | ||||||||
Total operating expenses
|
27,990,472 | 8,339,850 | |||||||||
Operating loss
|
(7,876,669 | ) | (2,999,810 | ) | |||||||
Financial expenses, net
|
14 | (1,064,848 | ) | (342,216 | ) | ||||||
Net loss before taxes on income
|
$ | (8,941,517 | ) | $ | (3,342,026 | ) | |||||
Taxes on income
|
13 | - | - | ||||||||
Net loss attributable to the Company
|
$ | (8,941,517 | ) | $ | (3,342,026 | ) | |||||
Total basic and diluted net loss per share
|
$ | (0.10 | ) | $ | (0.04 | ) | |||||
Weighted average number of common stock used in
computing basic and diluted net loss per share
|
90,579,670 | 82,037,502 |
Year ended December 31,
|
||||||||
2014
|
2013
|
|||||||
Net loss
|
$ | (8,941,517 | ) | $ | (3,342,026 | ) | ||
Other comprehensive income, net of tax
|
- | - | ||||||
Total comprehensive loss
|
$ | (8,941,517 | ) | $ | (3,342,026 | ) |
Common stock
|
Share capital
|
Additional paid-in capital
|
Prepayment on account of shares
|
Accumulated deficit
|
Total shareholders’ equity (deficiency)
|
|||||||||||||||||||
Number
|
Amount
|
|||||||||||||||||||||||
Balance as of December 31, 2012
|
78,531,531 | $ | 78,532 | $ | 21,579,829 | $ | - | $ | (22,453,235 | ) | $ | (794,874 | ) | |||||||||||
Prepayment on account of shares, net
|
- | - | - | 346,463 | - | 346,463 | ||||||||||||||||||
Issuance of shares and warrants
|
5,664,140 | 5,664 | 477,372 | - | - | 483,036 | ||||||||||||||||||
Stock - based compensation
|
- | - | 105,955 | - | - | 105,955 | ||||||||||||||||||
Net loss
|
- | - | - | - | (3,342,026 | ) | (3,342,026 | ) | ||||||||||||||||
Balance as of December 31, 2013
|
84,195,671 | $ | 84,196 | $ | 22,163,156 | $ | 346,463 | $ | (25,795,261 | ) | $ | (3,201,446 | ) | |||||||||||
Issuance of shares and warrants
|
10,189,631 | 10,190 | 4,092,766 | (346,463 | ) | - | 3,756,493 | |||||||||||||||||
Stock - based compensation
|
- | - | 1,644,356 | - | - | 1,644,356 | ||||||||||||||||||
Net loss
|
- | - | - | - | (8,941,517 | ) | (8,941,517 | ) | ||||||||||||||||
Balance as of December 31, 2014
|
94,385,302 | $ | 94,386 | $ | 27,900,278 | $ | - | $ | (34,736,778 | ) | $ | (6,742,114 | ) |
Year ended December 31,
|
||||||||
2014
|
2013
|
|||||||
Cash flows from operating activities:
|
||||||||
Net loss
|
$ | (8,941,517 | ) | $ | (3,342,026 | ) | ||
Adjustments required to reconcile net loss to net cash used in operating activities:
|
||||||||
Depreciation and amortization
|
114,027 | 134,645 | ||||||
Stock-based compensation
|
1,644,356 | 105,955 | ||||||
Accrued interest and amortization of discount and exchange differences of convertible loans
|
(51,499 | ) | 41,418 | |||||
Decrease (increase) in credit cards companies
|
5,172 | (482,461 | ) | |||||
Increase in other current assets
|
(519,694 | ) | (56,248 | ) | ||||
Increase in trade payables
|
397,102 | 199,887 | ||||||
Increase in obligation to customers and other payables
|
1,899,096 | 2,378,017 | ||||||
Increase in severance pay, net
|
75,162 | 35,143 | ||||||
Increase (decrease) in related parties
|
(332,046 | ) | 240,668 | |||||
Net cash used in operating activities
|
$ | (5,709,841 | ) | $ | (745,002 | ) | ||
Cash flows from investing activities:
|
||||||||
Purchase of property and equipment
|
$ | (757,721 | ) | $ | (71,919 | ) | ||
Decrease (increase) in segregated client cash accounts
|
(2,281,491 | ) | 1,674 | |||||
Decrease (increase) in restricted cash
|
1,336,045 | (1,354,956 | ) | |||||
Net cash used in investing activities
|
$ | (1,703,167 | ) | $ | (1,425,201 | ) |
Year ended December 31,
|
||||||||
2014 | 2013 | |||||||
Cash flows from financing activities:
|
||||||||
Short-term bank credit, net
|
$ | (78,696 | ) | $ | 36,204 | |||
Proceeds received from Convertible loans
|
3,720,925 | 1,418,785 | ||||||
Repayment of convertible loans
|
(100,000 | ) | - | |||||
Issuance of shares and warrants
|
3,756,493 | 483,037 | ||||||
Prepayment on account of shares
|
- | 346,463 | ||||||
Net cash provided by financing activities
|
$ | 7,298,722 | $ | 2,284,489 | ||||
Increase (decrease) in cash and cash equivalents
|
$ | (114,286 | ) | $ | 114,286 | |||
Cash and cash equivalents at the beginning of the year
|
$ | 114,286 | $ | - | ||||
Cash and cash equivalents at the end of the year
|
$ | - | $ | 114,286 | ||||
Supplemental disclosure of cash flows information:
|
||||||||
Cash paid during the period for:
|
||||||||
Interest
|
$ | 112,143 | $ | 10,400 | ||||
|
A.
|
EZTD Inc. (formerly: EZTrader Inc.) ("the Company") was incorporated in April 2002 under the laws of the State of Nevada. On June 3, 2015, the Company reincorporated in Delaware. The Company is engaged in offering online trading of binary options. The Company's shares were quoted on the OTCQB in the United States under the symbol "EZTD" from 2010 until August 2013, when the Company terminated its registration under the Securities Exchange Act of 1934, as amended, and as a result the Company’s shares are now quoted on the OTC Pink.
|
|
The Company conducts its operations and business with and through its active wholly-owned subsidiaries, (a) Win Global Markets Inc (Israel) Ltd., an Israeli company, and (b) WGM Services Ltd., a company registered in Cyprus (“WGM”). On January 26, 2015 the Company changed its name from EZTrader, Inc. to EZTD Inc. (the "Company").
|
1)
|
The amounts were received in United States dollars and not in Euros whereas the banks the Company worked with received deposits in Euros only.
|
2)
|
Depositing the funds with an Israeli bank was not practical due to 20% withholding tax deduction required by local law, making it impossible to use the funds.
|
3)
|
Deposit to a new bank account was not practical and could take approximately 6 months.
|
4)
|
The Company had a good history with CCB, with approximately $1,000,000 held by the bank prior to the above deposit, and no commission or withholding tax deduction was needed in order for the Company to deposit and use the funds.
|
|
1)
|
Permanent administrators have been appointed to determine CCB’s assets that will be available for distribution to the depositors. The Company has hired local legal counsel and filed a claim with the administrators.
|
|
2)
|
The Company has met with the U.S. Ambassador in Sofia in order to get assistance in receiving fair and equitable treatment. The Company has followed up with the U.S. Ambassador in Sofia, who has since met with the permanent administrators and has brought our case to their attention.
|
|
3)
|
The Company’s local counsel is filing a partial claim against KPMG Bulgaria for €500,000. The court fees for filing the claim are 4% of the claim amount. The Company has also reserved the right to increase the amount of the claim at any time once it learns what the administrators will distribute to depositors.
|
|
4)
|
The Company has hired an investigative firm to assess the relationship between KPMG international in Switzerland and KPMG Bulgaria. They have interviewed 30 people including former KPMG employees. KPMG Bulgaria pays a franchise fee to KPMG international. In addition KPMG International reviews audits of its member firms once every year or two. KPMG international is also very active in training partners of its member firms to perform services according to its practices.
|
|
5)
|
The Company has engaged a law firm in Switzerland to represent it against KPMG International.
|
|
B.
|
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The Company has suffered losses from operations and negative cash flows from operations since inception. For the year ended December 31, 2014, the net loss attributable to the Company was $8,941,517 and the negative cash flows from operations were $5,709,841. As of December 31, 2014, the Company’s obligation to customers amounted to $3,127,273, while current assets were $3,723,313. Customers may withdraw their deposits upon demand. According to the regulatory requirements in Cyprus, the Company’s subsidiary in Cyprus has to comply with the covenant of maintaining a capital account balance of at least €730,000 and having funds in excess of client obligations. Funds consist of cash, segregated client cash accounts, restricted cash and receivables from credit card companies. Despite its negative cash flows, the Company has been able to secure financing to support its operations to date, based on share issuances. The Company plans to seek additional funds from equity issuances in order to continue its operations and to leverage its binary options business. The consolidated financial statements do not include any adjustments that may result from the outcome of this uncertainty.
|
C.
|
Between November 20, 2014 and December 22, 2014, the Company’s authorization from Cyprus Securities and Exchange Commission (“CYSEC”) was temporarily suspended due to a shortfall in client funds. The shortfall was due to the fact that CCB, in which the Company had customer deposits of $4.2 million ceased operations in June 2014 and was subsequently, declared bankrupt in November 2014. Upon the additional injection of approximately $1 million, sourced from a convertible loan received from new and existing investors on December 5, 2014, in order to meet client obligations (see also note 10(D)), CYSEC decided to withdraw the suspension, as it is satisfied that the Company has complied with the provisions of Law 144(I)/2007.
|
A.
|
Use of estimates:
|
|
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions. The Company's management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
|
B.
|
Financial statements in U.S. dollars:
|
|
The currency of the primary economic environment in which the operations of the Company and its subsidiaries are conducted is the U.S. dollar (“dollar”). In addition, a substantial portion of the Company’s revenues and costs are incurred in dollars. Thus, the functional and reporting currency of the Company is considered to be the dollar. The functional currency of all subsidiaries is the U.S. dollar, therefore there is no unrealized gain/loss.
|
|
Transactions and balances denominated in U.S. dollars are presented at their original amounts. Monetary accounts maintained in currencies other than the dollar are re-measured into dollars in accordance with Accounting Standards Codification No. 830-10, Foreign Currency Matters. All transaction gains and losses of the re-measurement of monetary balance sheet items are reflected in the consolidated statements of operations as financial income or expenses, as appropriate.
|
C.
|
Principles of consolidation:
|
|
The consolidated financial statements include the accounts of the Company and its subsidiaries. Intercompany transactions and balances have been eliminated upon consolidation.
|
D.
|
Cash equivalents:
|
E.
|
Segregated client cash accounts:
|
F.
|
Restricted cash:
|
G.
|
Property and equipment:
|
%
|
|
Computers and peripheral equipment
|
33
|
Electronic devices
|
15
|
Leasehold improvements
|
Over the shorter of lease term or
the life of the assets
|
Office furniture and equipment
|
6
|
H.
|
Intangible assets:
|
I.
|
Impairment of long lived assets and intangible assets subject to amortization:
|
J.
|
Accounting for stock-based compensation:
|
K.
|
Revenue recognition from binary option business:
|
L.
|
Research and development costs:
|
|
Research and development costs, including direct and allocated expenses are expensed as incurred.
|
M.
|
Accrued Severance Pay, Net:
|
1.
|
Accrued Liability:
|
M.
|
Accrued Severance Pay, Net (Cont.):
|
December 31,
|
||||||||
2014
|
2013
|
|||||||
Accrued severance pay
|
$ | 246,480 | $ | 115,117 | ||||
Less - amount funded
|
136,174 | 79,973 | ||||||
$ | 110,306 | $ | 35,144 |
2.
|
Expenses:
|
N.
|
Comprehensive loss:
|
O.
|
Income taxes:
|
P.
|
Financial Instruments:
|
|
1.
|
Concentrations of credit risk:
|
|
2.
|
Fair value measurement:
|
Q.
|
Basic and diluted net loss per share - EPS:
|
R.
|
Reclassifications:
|
S.
|
Recently Issued Accounting Pronouncements:
|
Fair value measurements using input type
|
||||||||||||||||
December 31, 2014
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Segregated client cash accounts
|
$ | 2,343,017 | $ | - | $ | - | $ | 2,343,017 | ||||||||
Restricted cash
|
41,627 | - | - | 41,627 | ||||||||||||
$ | 2,384,644 | $ | - | $ | - | $ | 2,384,644 |
Fair value measurements using input type
|
||||||||||||||||
December 31, 2013
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
Cash and cash equivalents
|
$ | 114,286 | $ | - | $ | - | $ | 114,286 | ||||||||
Segregated client cash accounts
|
$ | 61,526 | $ | - | $ | - | $ | 61,526 | ||||||||
Restricted cash
|
1,377,672 | - | - | 1,377,672 | ||||||||||||
$ | 1,553,484 | $ | - | $ | - | $ | 1,553,484 |
December 31,
|
||||||||
2014
|
2013
|
|||||||
Government authorities
|
$ | 135,645 | $ | 36,639 | ||||
Deferred issuance costs
|
82,334 | 58,395 | ||||||
Prepaid Media
|
157,878 | - | ||||||
Prepaid expenses and others
|
262,980 | 24,109 | ||||||
$ | 638,837 | $ | 119,143 |
December 31,
|
||||||||
2014
|
2013
|
|||||||
Cost:
|
||||||||
Computers and peripheral equipment
|
$ | 866,582 | $ | 187,631 | ||||
Electronic devices
|
35,744 | 11,619 | ||||||
Leasehold improvements
|
61,068 | 36,576 | ||||||
Office furniture and equipment
|
53,788 | 23,635 | ||||||
1,017,182 | 259,461 |
December 31,
|
||||||||
2014
|
2013
|
|||||||
Accumulated depreciation:
|
||||||||
Computers and peripheral equipment
|
161,591 | 86,942 | ||||||
Electronic devices
|
5,112 | 4,090 | ||||||
Leasehold improvements
|
12,972 | 7,443 | ||||||
Office furniture and equipment
|
3,235 | 9,436 | ||||||
182,910 | 107,911 | |||||||
Depreciated cost
|
$ | 834,272 | $ | 151,550 |
December 31,
|
||||||||
2014
|
2013
|
|||||||
Trade Payables
|
$ | 441,737 | $ | 327,855 | ||||
Affiliates
|
601,748 | 318,528 | ||||||
$ | 1,043,485 | $ | 646,383 |
December 31,
|
||||||||
2014
|
2013
|
|||||||
Accrued expenses to suppliers and others
|
$ | 1,283,308 | $ | 510,358 | ||||
Employees and wage-related liabilities
|
544,206 | 401,132 | ||||||
$ | 1,827,514 | $ | 911,490 |
A.
|
On May 12, 2013, the Company entered into a Finance Agreement with Activa Red Green (the "Lender"), pursuant to which the Lender loaned to the Company $100,000 with a maturity date of May 11, 2014 (the "Loan"). The Loan bears annual interest of 20%. In addition, in the event of default and nonpayment the Loan shall bear additional penalty interest of 4% per annum. The Lender is entitled to convert the loan into shares of common stock of the Company at a conversion price of $0.10 per share and upon such conversion receive with a warrant to purchase 1/10 share of common stock at the a price per share of $0.10. The loan was fully paid in May, 2014.
|
B.
|
On October 29, 2013 (the "Closing Date"), the Company entered into a Convertible Loan agreement, according to which, the lenders will provide a loan in the amount of $1,391,000. The loan is linked to the EURO and bears an annual interest of 10% to be repaid in one lump sum with the loan principal upon the lapse of one year as of the Closing Date. The lenders may convert the loan into shares on each of the dates falling upon: (1) the lapse of six (6) months after the Closing Date, and (2) the lapse of one (1) year as of the Closing Date. The loan is convertible into "Conversion Units" which in total include 7,224,777 common shares of the Company, and Warrants exercisable into 722,478 ordinary shares of the Company each at a strike price of $0.19078 for a period of 18 months after issuance. The lenders are entitled to require that the loan shall be repaid upon the lapse of six (6) months after the Closing, by delivering a written notice to the Company at least 21 days prior to such date, and in such case the Company shall repay the loan (principal and interest accrued until such date) on such earlier date. During 2014 the lenders and the Company agreed to extend the payment date, under the same terms to October 29, 2015.
|
C.
|
On February 13 and 27, 2014, the Company entered into a Convertible Loans Agreement (the "February 2014 Convertible Loans Agreement") with some of its shareholders and new investors, in order to raise an aggregated amount of $ 2,800,000. The loans are convertible into total of 7,963,542 ordinary shares of the Company. Some of the loans are linked to the Euro , all the loans bear interest at an annual rate of 10%. The Company shall repay the Loan Amount and the Interest, in one lump sum, on the “Final Repayment Day”, which is 12 months after the Closing or, if extended by the lender- 24 months from the Closing date (see also note 16 - "subsequent events").
|
D.
|
In December 2014, the Company entered into a convertible loan agreement with lenders, according to which, the lenders will provide a loan in the amount of $922,500. The loan is linked to the EURO and matures in December 2015, and bears an annual interest of 10% to be repaid in a lump sum on such maturity date. This loan is convertible into "Conversion Units" which in total include 4,835,413 shares of common stock, and warrants exercisable into 2,417,706 shares of common stock each at a strike price of $0.19078 for a period of 60 months after issuance.
|
Rental of
|
||||
Year ending December 31,
|
premises
|
|||
2015
|
$ | 119,884 | ||
2016
|
120,364 | |||
$ | 240,248 |
A.
|
Shareholders’ rights:
|
B.
|
On November 8, 2012, the Company entered into securities purchase agreements with three existing shareholders, including certain of its management, pursuant to which the Company sold 3,790,000 shares and warrants to purchase an aggregate of 379,000 shares of common stock (the “Warrants”) at exercise prices per share of $0.10. No separate consideration was paid for the Warrants. The Warrants are exercisable on or after May 8, 2013 until twenty-four months from the date of issuance thereof. The aggregate net proceeds from the sale of the shares and issuance of the Warrants amounted to $379,000.
|
C.
|
On March 5, 2013, the Company issued an aggregate of 1,368,920 shares of common stock in connection with the cashless and cash-based (aggregate cash amount of $53,513) exercises of $500,000 of warrants issued in connection with the Company's March 2008 convertible debt transaction with related parties.
|
D.
|
On June 12, 2013, the Company entered into a securities purchase agreement (the "SPA") with Ricx Investments Ltd. (the "Investor"), pursuant to which the Company issued to the Investor 4,295,220 shares of restricted common stock (the "Investor's Shares") of the Company at a price of $0.10 per share, and issued a warrant to purchase 859,044 shares of common stock (the "Warrant") at an exercise price per share of $0.10. No separate consideration was paid for the Warrant. The Warrant expires on June 12, 2016. The net proceeds from the issuance of the Investor's Shares and the Warrant amounted to $429,522 and were recorded in equity. The transaction closed on June 12, 2013. On December 10, 2013, the Company entered into a securities purchase agreement (the "December SPA") with three investors (the "Investors"), pursuant to which the Company issued to the Investors 1,920,631 shares of common stock (the "Investor's Shares") at a price of $0.19 per share, and issued a warrant to purchase 192,063 shares of common stock (the "December Warrant") of the Company at an exercise price per share of $0.19. No separate consideration was paid for the December Warrant. The December Warrant expires on December 10, 2015. The net proceeds from the issuance of the Investor's Shares and the Warrant amounted to $366,418 and was recorded in equity under prepayment on account of shares due to delay in issuing the shares, but the December SPA was approved by the Company’s Board of Directors.
|
E.
|
In May 2014, the Company entered into a share purchase agreement with certain investors, pursuant to which the Company issued 7,880,000 shares of common stock for a total consideration of $3,940,000, and warrants to purchase 788,000 shares of common stock at an exercise price per share of $0.50. These warrants expire in November 2019. The net proceeds from the sale of shares and issuance of warrants amounted to $3,717,620 and were recorded in equity. The transaction closed on June 6, 2014. The total consideration of $3,940,000 from this transaction was deposited in CCB in Bulgaria (see also Note- 1D). The transaction costs of approximately $20 thousand were recorded as a deduction from prepayment on account of shares.
|
F.
|
In November 2014 several investors exercised 379,000 warrants in consideration of $37,900 of cash. The Company issued 379,000 shares to these investors.
|
G.
|
Warrants to purchase common stock:
|
Expiration Date
|
Warrants for
common stock
|
Exercise price
per share
|
||||||
$ | ||||||||
October 2015
|
1,875,000 | 0.08 | ||||||
December 2015
|
192,063 | 0.19 | ||||||
June 2016
|
3,125,000 | 0.08 | ||||||
June 2016
|
859,044 | 0.10 | ||||||
August 2016
|
2,925,000 | 0.08 | ||||||
February 2018
|
6,250,000 | 0.08 | ||||||
June, 2018
|
6,250,000 | 0.10 | ||||||
June, 2019
|
788,000 | 0.50 | ||||||
22,264,107 |
H.
|
Stock option plans:
|
1.
|
On November 23, 2004, the Company adopted the 2004 Global Share Option Plan (the “2004 Global Share Option Plan”). The 2004 Global Share Option Plan is intended to provide incentives to employees, directors and consultants by providing them with opportunities to purchase shares of the Company’s common stock. Under the terms of the 2004 Global Share Option Plan, it is effective as of November 23, 2004 and terminates at the end of ten years from such date, which has been extended for additional ten years expiring in 2024. The Company initially reserved 5,000,000 authorized but unissued shares of its common stock to be issued under the 2004 Global Share Option Plan. On May 4, 2006, April 15, 2012 and September 13, 2012, and July 15, 2014 the Company’s Board approved amendments to its 2004 Global Share Option Plan under which the number of shares reserved by the Company for the purpose of the 2004 Global Share Option Plan were increased from 5,000,000 to 8,000,000, 16,000,000 and 20,000,000 and 30,000,000, respectively. The exercise price of the options granted under the plans may not be less than the nominal value of the shares into which such options are exercised. The options vest primarily over three years. Any options that are forfeited or not exercised before expiration become available for future grants.
|
H.
|
Stock option plans (Cont.):
|
2.
|
A summary of the Company’s share option activity to employees and directors and related information is as follows:
|
Year ended December 31,
|
||||||||||||||||
2014
|
2013
|
|||||||||||||||
Weighted
|
Weighted
|
|||||||||||||||
average
|
average
|
|||||||||||||||
Number
|
exercise
|
Number
|
exercise
|
|||||||||||||
of options
|
price
|
of options
|
price
|
|||||||||||||
$ | $ | |||||||||||||||
Outstanding at the beginning of the year
|
12,915,261 | 0.27 | 8,705,261 | 0.44 | ||||||||||||
Granted
|
17,660,000 | 0.11 | 7,610,000 | 0.10 | ||||||||||||
Exercised
|
(10,000 | ) | 0.10 | |||||||||||||
Forfeited
|
(1,214,670 | ) | 0.10 | (1,572,500 | ) | 0.10 | ||||||||||
Expired
|
(747,591 | ) | 0.46 | (1,827,500 | ) | 0.51 | ||||||||||
Outstanding at the end of the year
|
28,603,000 | 0.18 | 12,915,261 | 0.27 | ||||||||||||
Options exercisable at the end of the year
|
14,268,833 | 0.10 | 7,185,261 | 0.40 | ||||||||||||
Weighted-average fair value of options granted during the year
|
$ | 0.25 | $ | 0.08 |
H.
|
Stock option plans (Cont.):
|
3.
|
The Company granted options in 2013 and 2014. The fair value of each option granted is estimated on the date of grant, using the Black-Scholes option-pricing model with the following weighted average assumptions: dividend yield of 0% for 2014 and 2013; expected volatility: 2014 - 84%, 2013 - 86%; risk-free interest rate 2014 - 1.5%, 2013 - 0.37%; expected life: 2014 - 3.5 years, 2013 - 3.5 years. There was no intrinsic value for options outstanding during 2014 and 2013 as the market price of the share was lower than the exercise price.
|
4.
|
The Company is required to assume a dividend yield as an input in the Black-Scholes option-pricing model. The dividend yield assumption is based on the Company’s historical experience and expectation of future dividend payouts and may be subject to change in the future. The Company uses historical volatility in accordance with FASB ASC Topic 718, “Stock Compensation”. The computation of volatility uses volatility derived from similar traded companies. The risk-free interest rate assumption is the implied yield currently available on U.S. Treasury zero coupon bonds, issued with a remaining term equal to the expected life term of the Company’s options. Pre-vesting forfeiture rates were estimated based on pre-vesting forfeiture experience. The Company uses the simplified method to compute the expected option term for options granted. The options outstanding as of December 31, 2013, have been classified by ranges of exercise price, as follows:
|
Options outstanding
as of
|
Weighted average remaining
|
Options exercisable as of
|
||||||||||||
December 31,
|
contractual
|
December 31,
|
||||||||||||
Exercise price
|
2014
|
life
|
2014
|
|||||||||||
$ |
(years)
|
|||||||||||||
0.06 | 2,100,000 | 3.71 | 2,100,000 | |||||||||||
0.1 | 23,403,000 | 3.94 | 10,352,166 | |||||||||||
0.11 | 1,500,000 | 0.72 | 1,500,000 | |||||||||||
0.20 | 1,000,000 | 4.50 | 166,667 | |||||||||||
0.35 | 600,000 | 4.50 | 150,000 | |||||||||||
28,603,000 | 14,268,833 |
A.
|
Loss before taxes on income:
|
Year ended December 31,
|
||||||||
2014
|
2013
|
|||||||
Domestic
|
$ | 8,015,561 | $ | 1,776,361 | ||||
Foreign
|
925,956 | 1,565,665 | ||||||
$ | 8,941,517 | $ | 3,342,026 |
B.
|
Deferred income taxes:
|
Year ended December 31,
|
||||||||
2014
|
2013
|
|||||||
Operating loss carry-forwards and temporary differences
|
$ | 7,723,036 | $ | 4,566,597 | ||||
Deferred tax asset before valuation allowance
|
7,723,036 | 4,566,597 | ||||||
Valuation allowance
|
$ | (7,723,036 | ) | $ | (4,566,597 | ) | ||
Net deferred tax asset
|
$ | - | $ | - |
C.
|
Net operating losses carry-forwards:
|
D.
|
Tax rates on Israeli subsidiary:
|
E.
|
A reconciliation of the theoretical tax:
|
F.
|
Income taxes on non-U.S. subsidiaries:
|
G.
|
Uncertain tax position:
|
Year ended December 31
|
||||||||
2014
|
2013
|
|||||||
Foreign currency exchange differences
|
$ | (457,630 | ) | $ | (118,407 | ) | ||
Interest, bank charges and fees, net
|
(607,218 | ) | (223,809 | ) | ||||
$ | (1,064,848 | ) | $ | (342,216 | ) |
Transactions
|
Year ended December 31,
|
|||||||
2014
|
2013
|
|||||||
Stock-based compensation
|
$ | 955,787 | $ | 76,377 | ||||
Management fees (1), salaries (2), and bonuses (3)
|
1,087,030 | 484,979 | ||||||
$ | 2,042,817 | $ | 561,356 |
Balances
|
December 31,
|
|||||||
2014
|
2013
|
|||||||
Short-term loan
|
$ | - | $ | 75,460 | ||||
Accrued fees and bonuses
|
103,097 | 359,683 | ||||||
$ | 103,097 | $ | 435,143 |
|
(1)
|
Management fees of $253, 800 for 2014 paid to the Company’s CEO.
|
|
(2)
|
Salaries paid to the Company’s CEO and Media Manager in the amount of $124,374 and NIS $72,148 for 2014 respectively, and fees of $177,000 to the Company’s directors.
|
|
(3)
|
Bonus paid to Company’s CEO in the amount of $278,438 which is equal to 1.25% of total net deposits; bonus paid to Company’s Media Manager in the amount of 181,269 which is equal to $10 for each first-time deposit.
|
A.
|
In April 2015, the Company repaid $107,600 plus interest of the February 2014 loans. In addition, $364,205 of the February 2014 loans were converted into 1,040,586 of shares of common stock. Additionally, $800,000 of the February loans were extended for an additional six months to be repaid with interest in August 2015. The remaining $1,391,193 loans were extended for one additional year in consideration of the issuance of additional 1,285,714 of warrants at an exercise price of $0.35 per share. Furthermore, the Company granted 7,530,000 options to employees, board members and consultants in accordance to the terms and condition of the 2004 Global Share Option Plan and entered into a securities purchase agreement with an investor pursuant to which the Company issued to the investor 3,794,947 shares of common stock of the Company at a price of $0.19078 per share. As additional consideration, the Company issued this investor 1,138,484 warrants.
|
B.
|
In the first quarter of 2015, several investors and a related party exercised 7,230,469 and 312,500 warrants respectively into shares of common stock, and the Company received $708,438 and $25,000 in cash respectively. As additional consideration, the Company issued these investors and related party 14,460,938 and 625,000 warrants respectively at an exercise price of $0.19078 per share, for a period of five years commencing six months after the date of the closing of the Common Stock Purchase Warrant.
|
C.
|
In March 2015, the Company entered into a securities purchase agreement with a related party pursuant to which the Company issued to the Investor 262,082 shares of common stock of the Company at a price of $0.19078 per share.
|
NOTE 16 - SUBSEQUENT EVENTS (Cont.):
|
D.
|
In June 2015, the Company entered into a securities purchase agreement with two investors pursuant to which the Company issued to these Investors 1,179,370 shares of common of the Company at a price of $0.19078 per share. As additional consideration, the company issued these investors 353,811 warrants.
|
E.
|
On June 17, 2015, for the purpose of expanding into new markets, The Company signed a share purchase agreement with GKFX Financial Services Limited, to all of its outstanding shares. GKFX Financial Services Limited GKFX Financial Services operates as a foreign exchange brokerage business and holds a corresponding Type 1 Financial Instruments Business Registration under the Financial Instruments and Exchange Act. GKFX Financial Services Limited is also in the process of obtaining a Japanese regulatory license to offer online binary options products and services.
|
F.
|
On July 28, 2015, the Company entered into a convertible loan agreement pursuant to which the lender, an entity affiliated with the Chairman of the Board of Directors of the Company, loaned the Company the principal amount of $1,000,000. The loan matures in July 2016, subject to certain prepayment rights of the lender. The lender is entitled to require that the loan be repaid within six months after the closing date, at which time the lender may demand prepayment of the loan amount, including any accrued and unpaid interest. The loan bears an annual interest rate of 10%, to be paid every six months. The loan is convertible into 5,241,640 shares of common stock of the Company upon either: (i) the maturity date, or (ii) the occurrence of an event of default. In connection with the loan, the Company also granted the lender warrants to acquire 1,572,492 shares of common stock of the company at an exercise price of $0.19078 per share, exercisable over a period of five years from the date of issuance.
|
G.
|
Commencing August 1, 2015 the Company has upgraded the terms and conditions of granting trading benefits to be consistent with Circular 68 issued by CYSEC regarding the granting of trading benefits. The Company has separated trading benefits into two separate types of trading bonuses, as follows:
|
|
·
|
"Sign-Up Bonus": a Sign-Up Bonus may be granted after a customer registers a new account with the Company. The client is not required to make a prior deposit into the account. The customer can capitalize the free initial credit granted to him or her as a result of the Sign-Up Bonus only if he meets the withdrawal preconditions (volume generation must be equal to 25 times the initial bonus provided within 90 days).
|
|
·
|
"Deposit Bonus": a Deposit Bonus may be granted to a customer once he makes a deposit into his or her trading account. In the case of Deposit Bonuses, customer funds, including profits and losses, are available for withdrawal at any given time; the only element dependent on the withdrawal preconditions is the bonus itself. This Deposit Bonus is only available for withdrawal if the customer meets the withdrawal preconditions (volume generation must be equal to 25 times the initial bonus provided within 90 days).
|
Exhibit
Number
|
Exhibit Description
|
3.1
|
Composite copy of the Company’s Articles of Incorporation as amended on July 14, 2014 (incorporated by reference to Exhibit 3.1 to our Form 10 (File No. 000-51255) filed with the Securities and Exchange Commission on September 15, 2014).
|
3.2
|
Bylaws (incorporated by reference to Exhibit 3.2 to our Form SB-2 (File No. 333-91356) filed with the Securities and Exchange Commission on June 27, 2002).
|
4.1
|
Common Stock Purchase Warrant dated March 6, 2008 issued by the Company to Shimon Citron (incorporated by reference to Exhibit 10.4 to our Current Report on Form 8-K (File No. 000-51255) filed with the Securities and Exchange Commission on March 14, 2008).
|
4.2
|
Form of Common Stock Purchase Warrant dated November 8, 2012 (incorporated by reference to Exhibit 4.7 to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 27, 2013).
|
4.3
|
Form of Common Stock Purchase Warrant dated June 12, 2013, issued by the Company to Ricx Investments Ltd. (incorporated by reference to Exhibit 4.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on June 14, 2013).
|
4.4
|
Form of Common Stock Purchase Warrant dated December 10, 2013, issued by the Company to certain investors (incorporated by reference to Exhibit 4.4 to our Form 10 (File No. 000-51255) filed with the Securities and Exchange Commission on September 15, 2014).
|
4.5
|
Form of Common Stock Purchase Warrant dated May 2014, issued by the Company to certain investors (incorporated by reference to Exhibit 4.5 to our Form 10 (File No. 000-51255) filed with the Securities and Exchange Commission on September 15, 2014).
|
4.6
|
Form of Common Stock Purchase Warrant dated April March and June, 2015, issued by the Company to certain investors (incorporated by reference to Exhibit 4.6 to our Form 10 (File No. 000-51255) filed with the Securities and Exchange Commission on July 2, 2015).
|
4.7 *
|
Form of Common Stock Purchase Warrant dated April March and July 28, 2015, issued by the Company to an investor.
|
10.1
|
2004 Global Share Option Plan (incorporated by reference to Exhibit 10.1 to our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 27, 2013).
|
10.2
|
Sample Agreement under the Company’s 2004 Global Share Option Plan (incorporated by reference to Exhibit 10.25 to our Annual Report on Form 10K-SB (File No. 000-51255) filed with the Securities and Exchange Commission on April 11, 2006).
|
10.3
|
Consulting Agreement, dated September 23, 2008, between the Company and Citron Investments Ltd. (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K (File No. 000-51255) filed with the Securities and Exchange Commission on September 25, 2008).
|
10.4
|
Addendum dated December 9, 2010, to Consulting Agreement, dated September 23, 2008, between the Company and Citron Investments Ltd. (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on December 13, 2010).
|
10.5
|
Addendum dated November 1, 2013, to Consulting Agreement, dated September 23, 2008, between the Company and Citron Investments Ltd. (incorporated by reference to Exhibit 3.1 to our Form 10 (File No. 000-51255) filed with the Securities and Exchange Commission on September 15, 2014).
|
10.6
|
Employment Agreement, dated October 31, 2013, between the Company and Shimon Citron (incorporated by reference to Exhibit 10.6 to our Form 10 (File No. 000-51255) filed with the Securities and Exchange Commission on September 15, 2014).
|
10.7 *
|
Employment Agreement, dated August 13, 2015, between the Company and Itai Loewenstein.
|
10.8 *
|
Employment Agreement, dated August 2, 2015, between the Company and Michael Ekstein.
|
10.9
|
Securities Purchase Agreement, dated June 12, 2013, between Ricx Investments Ltd. and the registrant (incorporated by reference to Exhibit 10.1 to our Current Report on Form 8-K filed with the Securities and Exchange Commission on June 14, 2013).
|
10.10
|
Finance Agreement dated May 12, 2013, by and among the Company, Win Global Markets (Israel) Ltd. and Activa Red Green Ltd. (incorporated by reference to Exhibit 10.8 to our Form 10 (File No. 000-51255) filed with the Securities and Exchange Commission on September 15, 2014).
|
10.11
|
Form of Convertible Loan Agreement dated October 29, 2013, by and among the Company and certain Company shareholders (incorporated by reference to Exhibit 10.9 to our Form 10 (File No. 000-51255) filed with the Securities and Exchange Commission on September 15, 2014).
|
10.12
|
Form of Securities Purchase Agreement dated December 10, 2013, by and among the Company and certain Company shareholders (incorporated by reference to Exhibit 10.10 to our Form 10 (File No. 000-51255) filed with the Securities and Exchange Commission on September 15, 2014).
|
10.13
|
Form of Convertible Loan Agreement dated February and December 2014, by and among the Company and certain Company shareholders (incorporated by reference to Exhibit 10.11 to our Form 10 (File No. 000-51255) filed with the Securities and Exchange Commission on September 15, 2014).
|
10.14*
|
Convertible Loan Agreement dated July 28, 2015, by and between the Company and AFTH S.C.Sp.
|
10.15
|
Form of Share Purchase Agreement dated May and June, 2014, by and among the Company and certain Company shareholders (incorporated by reference to Exhibit 10.12 to our Form 10 (File No. 000-51255) filed with the Securities and Exchange Commission on September 15, 2014).
|
10.16
|
Schedule of Omitted Documents to the form of Convertible Loans Agreement dated October 29, 2013, by and among the Company and Company’s shareholders (incorporated by reference to Exhibit 10.13 to our Form 10/A (File No. 000-51255) filed with the Securities and Exchange Commission on October 30, 2014).
|
10.17
|
Schedule of Omitted Documents to the form of Securities Purchase Agreement dated December 10, 2013, by and among the Company and Company’s shareholders (incorporated by reference to Exhibit 10.14 to our Form 10/A (File No. 000-51255) filed with the Securities and Exchange Commission on October 30, 2014).
|
10.18
|
Schedule of Omitted Documents to the form of Convertible Loans Agreement dated February 2014, by and among the Company and Company’s shareholders (incorporated by reference to Exhibit 10.14 to our Form 10/A (File No. 000-51255) filed with the Securities and Exchange Commission on October 30, 2014).
|
10.19
|
Schedule of Omitted Documents to the form of Share Purchase Agreement dated May and June, 2014, by and among the Company and Company’s shareholders (incorporated by reference to Exhibit 10.15 to our Form 10/A (File No. 000-51255) filed with the Securities and Exchange Commission on October 30, 2014).
|
10.20
|
Schedule of Omitted Documents to the form of Convertible Loans Agreement dated December 5, 2014, by and among the Company and Company’s shareholders (incorporated by reference to Exhibit 10.18 to our Form 10 (File No. 000-51255) filed with the Securities and Exchange Commission on July 2, 2015).
|
16.1
|
BDO resignation letter dated November 17, 2014 (incorporated by reference to Exhibit 4.6 to our Form 10 (File No. 000-51255) filed with the Securities and Exchange Commission on July 2, 2015).
|
21.1
|
List of subsidiaries (incorporated by reference to Exhibit 21.1 to our Form 10 (File No. 000-51255) filed with the Securities and Exchange Commission on September 15, 2014).
|
101**
|
The following materials from the Company’s Registration Statement on Form 10 are formatted in XBRL (eXtensible Business Reporting Language): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Stockholders’ Equity, (iv) the Consolidated Statements of Cash Flows, and (v) related notes to these financial statements, tagged as blocks of text and in detail.
|
*
|
Filed herewith.
|
**
|
Furnished herewith.
|
EZTD INC.
|
|||
By:
|
/s/ Shimon Citron
|
||
Name:
|
Shimon Citron
|
||
Title:
|
Chief Executive Officer
|
Warrant No.:28072015
|
Original Issue Date: 28.7.2015
|
|
Initial Holder: AFTH SCSp
|
Initial Exercisable Date: Exercisable after 6 months
|
|
B 194799
(Luxembourg Registre de Commerce et des Societes)
|
No. of Shares Subject to Warrant: 1,572,492
|
|
Address:
10 Rue Antoine Jans
Luxembourg L-1820
|
Exercise Price Per Share: $ 0.19078
|
|
Expiration Date: 4 p.m., New York time, on: the date
falling twenty four (60) months as of the Original Issue Date
|
||
EZTD Inc.
|
|||
By:
|
s/ Shimon Citron
|
||
Name: |
Shimon Citron
|
||
Title: |
Chief Executive Officer
|
Dated:
|
HOLDER:
|
|||
Print name
|
||||
By:
|
||||
Title:
|
Dated:
|
TRANSFEROR:
|
|||
Print name
|
||||
By:
|
||||
Title:
|
||||
TRANSFEREE:
|
||||
Print name
|
||||
By:
|
||||
Title:
|
||||
WITNESS:
|
||||
Address of Transferee:
|
||||
Print name
|
||||
1.
|
Employment
|
|
1.1
|
The Company agrees to employ the Employee and the Employee agrees to be employed by the Company on the terms and conditions set out in this Agreement. The Employee shall serve in the position described in Exhibit A attached hereto. The Employee's duties shall include, but shall not be limited to, the actions, responsibilities and authorities set forth in Exhibit A attached hereto.
|
|
1.2
|
The Employee shall perform the duties, undertake the responsibilities and exercise the authority customarily performed, undertaken and exercised by persons acting in the same position as the Employee. The Employee shall comply with the Company's policies, procedures and directives, as may be updated from time to time. The Employee shall be subordinated and shall report to its direct superior which shall be designated by the Company.
|
|
1.3
|
Excluding periods of vacation, sick leave and military reserve service to which the Employee is entitled or required, the Employee agrees to devote his/her full working time and attention to the business and affairs of the Company and its subsidiaries. During the term of this Agreement, the Employee shall not engage, whether as an employee or otherwise, in any business, commercial or professional activities, whether or not for compensation, including during after work hours, on weekends, or during vacation time, without the prior written consent of the Company.
|
|
1.4
|
This Agreement is a personal agreement governing the employment relationship between the Parties hereto. This Agreement and the employment relationships hereunder shall not be subject to any general or special collective employment agreement relating to employees in any trade or position that is the same or similar to the Employee’s position, unless specifically provided herein.
|
2.
|
Representations and Warranties of the Employee
|
|
2.1
|
There are no other undertakings or agreements preventing him/her from committing himself/herself in accordance with this Agreement and performing his/her obligations under it.
|
|
2.2
|
To the best of the Employee’s knowledge, the Employee is not currently, nor will he/she by entering into this Agreement be deemed to be, violating any rights of his/her former employer and/or in breach of any of his/her obligations towards his/her former employer.
|
|
2.3
|
The Employee shall inform the Company, immediately upon becoming aware of, on every matter in which he/she or his/her immediate family has a personal interest and which might create a conflict of interests with his/her duties under the employment hereunder.
|
|
2.4
|
In carrying out the duties under this Agreement, the Employee shall not make any representations or give any guarantees on behalf of the Company, except as expressly and in advance authorized to do so.
|
|
2.5
|
The Employee shall not receive any payment and/or benefit from any third party, directly or indirectly in connection with his/her employment. In the event the Employee breaches this undertaking, without derogating from any of the Company’s right by law or contract, such benefit or payment shall become the sole property of the Company and the Company may set-off the value thereof from any sums due to the Employee.
|
|
2.6
|
The Employee undertakes to use the Company’s equipment and facilities only for the purpose of his/her employment. The Employee acknowledges and agrees that the Company is entitled to conduct inspections within the Company’s offices and on the Company’s computers, including inspections of electronic mail transmissions, Internet usage and inspections of their content, for the Company’s relevant needs. For the avoidance of any doubt, it is hereby clarified that all examination’s finding shall be the Company’s sole property. It is further agreed that the Employee's e-mail box shall be "professional box" designated for use solely for his/her work and not for personal purposes. The Employee acknowledges that the Company may inspect such e-mail box and agrees that such inspection shall not be deemed a violation of the Employee's privacy and/or other rights.
|
3.
|
Salary
|
|
3.1
|
In consideration for the employment of the Employee with the Company, the Company shall pay the Employee a gross monthly salary as set forth in Exhibit A (the "Salary"). It is agreed that the Salary is comprised of a base compensation and of a global monthly payment payable for overtime working hours (the "Overtime Global Compensation"), as set forth in Exhibit A'. The Salary shall serve as the basis for deductions and contributions of social benefits to which Employee shall be entitled. The Salary shall be payable monthly in arrears, no later than the 9th day of each month. The Company shall deduct from the Salary all the deductions as required under the law. The Company shall be entitled to deduct from any and/or all payments to which the Employee shall be entitled from the Company, any and/or all amounts to which the Company shall be entitled from the Employee.
|
|
3.2
|
The Parties confirm that the Employee’s position may require overtime work and work at irregular hours. It is agreed that the Overtime Global Compensation shall be payable to the Employee on account of up to the number of overtime working hours as specified in Exhibit A (the "Overtime Quota"), and this regardless of the number of overtime hours actually worked. It is hereby agreed that the Overtime Global Compensation is the full and complete compensation to which the Employee is entitled and/or will be entitled for overtime work and/or work at irregular hours up to the Overtime Quota. The Employee shall not be permitted to work overtime beyond the Overtime Quota unless the direct superior of the Employee shall approve it in advance.
|
4.
|
Employees Benefits
|
|
4.1
|
Vacation. The Employee shall be entitled to the number of vacation days per year as set forth in Exhibit A (the "Annual Vacation Quota"), to be taken at times subject to the approval of the Company. The Employee may not accrue vacation days in a number exceeding the number of vacation days included in the Annual Vacation Quota.
|
|
4.2
|
Sick Leave; Convalescence Pay. The Employee shall be entitled to paid sick leave, pursuant to the Sick Pay Law 5736 – 1976, in a number per year as set forth in Exhibit A (with unused sick leave days to be accumulated up to the limit set pursuant to applicable law). The Employee shall be entitled to Convalescence Pay ("Dmei Havra'a") pursuant to applicable law.
|
|
4.3
|
Social Benefits.
|
|
a.
|
Pension Plan: Commencing as of the "Commencement Date" of the "Managers Insurance" set forth in Exhibit A, the Company shall insure the Employee under an accepted "Manager’s Insurance Scheme" (the "Managers Insurance Scheme"), as follows:
|
(i)
|
The Company shall pay towards compensatory payments for the Employee’s benefit, an amount equal to 7% of the Salary. The Company shall deduct from the Salary an amount equal to 5% of the Salary, and pay such amount, on behalf of the Employee, towards compensatory payments for the Employee’s benefit (and by signing this Agreement, the Employee gives his/her consent for such deduction);
|
(ii)
|
the Company shall pay an amount equal to 8 1/3% of the Salary, for severance compensation; and
|
|
b.
|
Continuing Education Fund. Commencing as of the "Commencement Date" of the "Education Fund" set forth in Exhibit A, the Company shall contribute toward a continuing education fund (the "Education Fund") a sum equal to 7.5% of the Salary or the maximum amount which is exempted from taxes under the provisions of the applicable law in effect from time to time (the "Education Fund Ceiling"), provided that the Employee contributes to such Continuing Education Fund an additional sum equal to 2.5% of the Salary or the Education Fund Ceiling. Use of the funds in the Education Fund shall be in accordance with its by-laws.
|
|
c.
|
Without derogating from the above, it is agreed that the Employee shall bear all the tax imposed under any applicable law with respect to any payment made toward the Managers Insurance Scheme and/or Education Fund which exceeds the maximum amount exempt from tax payment under applicable laws.
|
|
4.4
|
Other Benefits. The Employee shall be entitled to additional benefits as and to the extent set forth in Exhibit A.
|
|
4.5
|
Expenses Reimbursement. Subject to the advanced approval of the Employee’s direct superior in writing, the Company will reimburse the Employee for reasonable expenses borne by the Employee during the discharge of his/her duties hereunder, against valid invoices thereof furnished by the Employee to the Company, all in accordance with the Company's policy as amended from time to time.
|
|
4.6
|
Any benefit provided by the Company to the Employee under this section 4 and under Exhibit A, including for the removal of doubt the Bonuses (to the extent applicable), shall not be considered as part of the Employee’s salary for purposes of calculating the Employee’s social and other benefits, such as severance payments, redemption of unused vacation days etc., and such social and other benefits shall be calculated only out of the Salary.
|
|
4.7
|
The Company shall withhold, or charge the Employee with, all taxes and other compulsory payments as required under applicable law with respect to all payments, benefits and/or other compensation paid to the Employee in connection with the Employee’s employment with the Company.
|
|
4.8
|
The Employee acknowledges that apart from the benefits provided for hereunder and in Exhibit A, the Employee shall not be entitled to any additional benefits and/or payments unless the Parties shall agree otherwise.
|
5.
|
Term and Termination
|
|
5.1
|
This Agreement shall be in effect for an undefined period of time commencing on the date set forth in Exhibit A (the "Commencement Date"), and shall continue until it is terminated pursuant to the terms set forth herein (the "Term").
|
|
5.2
|
Either Party may terminate the employment relationship hereunder at any time, without the obligation to provide any reason, by giving the other party a prior written notice as set forth in Exhibit A (the "Notice Period"). Notwithstanding the foregoing, the Company is entitled to terminate this Agreement with immediate effect upon a written notice to the Employee and to pay the Employee an amount equal to the Salary the Employee is entitled to receive under this Agreement that would have been paid to the Employee during the Notice Period, in lieu of such prior notice. In the event that the Employee shall terminate this Agreement with immediate effect or upon shorter notice than the Notice Period and/or shall not continue working during all the Notice Period, then: (i) the Employee shall not be entitled to receive the Salary and/or any other benefit for the part of the Notice Period during which the Employee did not work for the Company; and (ii) the Employee shall be obligated to pay the Company an amount equal to the Salary that would have been payable to the Employee by the Company for the part of the Notice Period during which the Employee did not work for the Company (and the Company may deduct such amount from any payment due to the Employee by the Company).
|
|
5.3
|
During the Notice Period and unless otherwise determined by the Company in a written notice to the Employee, the employment relationship hereunder shall remain in full force and effect, the Employee shall continue discharging and performing all of his/her duties and obligations with Company, and the Employee shall cooperate with the Company and assist the Company with the integration into the Company of the person who will assume the Employee's responsibilities.
|
|
5.4
|
Notwithstanding, the Company may immediately terminate the employment relationship for Cause, without paying the Employee any payment with respect to the term commencing following such termination, and such termination shall be effective as of the time of notice of the same. "Cause" means (a) a material breach of this Agreement (including its Exhibits) by the Employee and/or a breach of the Employee's undertakings under Exhibit B hereto; (b) any willful failure to perform any of the Company's reasonable instructions or any of the Employee's fundamental functions or duties hereunder; (c) the Employee's engagement in willful misconduct or acting in bad faith with respect to the Company, (d) the Employee's conviction of a felony involving moral turpitude; or (e) any cause justifying termination or dismissal in circumstances in which the Company can deny the Employee severance payment under applicable law.
|
|
5.5
|
Following the termination and/or expiration of the Term, the Employee shall return to the Company all documents, professional literature and equipment belonging to the Company, which may be in his/her possession at such time.
|
6.
|
Proprietary Information; Assignment of Inventions and Non-Competition
|
|
6.1
|
On the date of this Agreement, the Employee executes the Non-Disclosure, Non-Competition and Proprietary Information Undertaking attached as Exhibit B hereto. Without derogating from the provisions of Exhibit B, the Employee undertakes to keep all the terms and conditions of this Agreement in strict confidence.
|
|
6.2
|
Due to the nature of the Company's business in Binary Option Trading, the Employee may be exposed to sensitive and/or confidential financial materials. The Employee understands and undertakes that he/she will not wrongfully or illegally use, in any manner or form, any such financial information for personal gain, whether directly or indirectly or through any proxy or family member.
|
|
6.3
|
The Employee acknowledges that, due to the nature of the Company's business in Binary Option Trading, the Company may require that the Employee shall undergo a polygraph test and/or security checks, as provided in Exhibit C hereto. The Employee agrees to undergo such polygraph test and/or security checks and agrees that any refusal to undergo these test/checks shall be considered as a material breach of the Agreement by the Employee.
|
7.
|
Miscellaneous
|
|
7.1
|
Law and Venue. The validity, construction and performance of this Agreement shall be governed by and interpreted in accordance with the laws of the State of Israel, without giving effect to the principles of conflict of laws thereof. The competent courts of the city of Tel Aviv-Jaffa, Israel shall have exclusive jurisdiction to settle all disputes arising in connection with this Agreement and no other courts shall have any jurisdiction whatsoever in respect of such disputes.
|
|
7.2
|
Counterparts and Signatures. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
|
|
7.3
|
Non-Waiver The waiver, express or implied, by either Party hereto of any rights hereunder or of any failure to perform or of a breach hereof by the other Party hereto shall not constitute or be deemed a waiver of any other right hereunder or any other failure to perform or a breach hereof by the other Party hereto, whether of a similar or dissimilar nature.
|
|
7.4
|
Entire Agreement. This Agreement and the Exhibits attached hereto constitute the entire agreement between the Parties with respect to the subject matter hereof and supersedes any prior agreement, written or oral, including the terms of any negotiations in connection with or relating to this Agreement.
|
|
7.5
|
Modification of Agreement. No addition or modification of this Agreement shall be effective or binding on either of the Parties hereto unless reduced to writing and executed by the respective duly authorized representatives of each of the Parties hereto.
|
|
7.6
|
Notice. Any notices to be given hereunder shall be served on a Party by prepaid registered letter, facsimile or telegram to its address given herein or such other address as may from time to time be notified for this purpose. Any notice given by letter shall be deemed to have been served four days after the time at which it was posted and any notice given by facsimile or telegram shall be deemed to have been served 24 hours after it is dispatched.
|
|
7.7
|
Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.
|
|
7.8
|
Notice to Employee. For the purpose of delivering a notice with respect to the employment terms pursuant to the Law of Notice to Employee (Employment Terms), 5762 – 2002, this Agreement shall be considered as complying with the requirements under such Law.
|
Win Global Markets Inc. (Israel) Ltd.
By: /s/ Shimon Citron
Title: Chief Executive Officer
|
The Employee
By: Itai Zwi Loewenstein
Title: The Employee
|
1. Name:
|
Itai Zwi Loewenstein
|
2. Position:
|
CFO
|
3. Commencement Date:
|
13/08/2015
|
4. Scope of Employment:
|
Full Time
|
5. Base Salary:
|
28,000 NIS
|
6. Overtime Global Payment:
|
7,000 NIS
|
7. Annual Vacation:
|
16 days.
|
8. Sick Leave:
|
From the first day.
|
9. Managers Insurance:
|
As required by law
I currently have/do not have (Delete as appropriate) an active Managers Insurance Scheme/pension fund (Delete as appropriate), which details are as follows:
________________________________________________________________________________________________.
|
10. Education Fund:
|
Commencing three (3) months after the Commencement Date, and applying retroactively (as of the Commencement Date).
|
11. Travel Expenses
|
The Employee shall be entitled to receive car and gas from the Company [in lieu of the Travel Expenses]. The employee bears the burden of tax from this benefit.
In such event, the Employee shall execute all the Company's standard documents for employees receiving a car from the Company.
In addition, Parking Place (Beit Gaon parking) or Expenses Reimbursement with regard to parking – subject to the Company's discretion.
|
12. Notice Period:
|
60 days.
|
13. Options:
|
The parent company of the Company, Win Global Markets, Inc. (the "Parent Company"), shall grant the Employee the following options:
400,000 (Four Hundred Thousand) Options to purchase shares of the Parent Company (the "Options") from the commencement date.
The Options shall be granted under the following terms:
(1) The Options shall be subject to the terms of the Parent Company's Stock Option Plan and the Stock Option Agreement to be entered into between the Parent Company and the Employee;
(2) 66,667 (Sixty Six Thousand Six Hundred and Sixty Seven) Options shall be fully vested 6 months after the commencement date, provided that the Employee shall remain employee of the Company at the end of such period; the rest of the Options shall vest over a period of Thirty (30) months (the "Vesting Period"), commencing 6 months after the grant of the Options (the "Effective Date"), in accordance with the following vesting schedule, provided that the Employee shall remain employee of the Company at the end of each relevant part of the vesting period: 333,333 (Three Hundred Thirty Three Thousand Three Hundred and Thirty Three) Options shall vest on a three-months basis as of the Effective Date, in a total of ten (10) installments, each of which shall be equal to 1/12 of the total number of the Options. Following the termination of the Employment Agreement, all unvested Options shall ipso facto terminate and become null and void.
(4) The vested Options shall be exercisable commencing on the date in which they shall become vested and until the earlier of: (i) the lapse of 60 (Sixty) months from the date of grant thereof; or (ii) the lapse of 3 (Three) months from the termination date of this Agreement.
(5) The vested Options shall be exercisable at a purchase price of US$0.50 (Fifty cents) per share.
(6) The Employee shall bear all the taxes (if any) associated with the grant and/or exercise of the Options.
|
1.
|
Non - Disclosure
|
1.1
|
The Employee acknowledges that the Employee has had and is expected to have access to information that relates to the Company, its business, assets, financial condition, affairs, activities, plans and projections, customers, suppliers, partners, and other third parties with whom the Company agreed or agrees, from time to time, to hold information of such party in confidence (the "Confidential Information"). The Confidential Information shall not include information generally available to the public not as a result of a breach of this Undertaking by the Employee.
|
1.2
|
By way of illustration, such Confidential Information shall include, without limitation, (i) any and all trade secrets concerning the business and affairs of the Company, product specifications, data, know-how, compositions, processes, formulas, methods, designs, samples, inventions and ideas, past, current and planned development or experimental work, current and planned distribution methods and processes, customer lists, customers' data, current and anticipated customer requirements, price lists, market studies, business plans, computer software and programs (including object code and source code), computer software and database technologies, systems, structures and architectures (and related processes, algorithms, compositions, improvements, know-how, inventions, discoveries, concepts, ideas, designs, methods and information), of the Company and any other information, however documented of the Company that is a trade secret; (ii) any and all information concerning the business and affairs of the Company (which includes historical financial statements, financial projections and budgets, historical and projected sales, capital spending budgets and plans, the names and backgrounds of key personnel, personnel training and techniques and materials), however documented; (iii) any and all notes, analysis, compilations, studies, summaries, and other material prepared by or for the Company containing or based, in whole or in part, on any information included in the foregoing; (iv) any third parties' information to be received by the Company or by the Employee during his/her employment with the Company; and (v) the terms and conditions of the Employment Agreement.
|
1.3
|
The Employee further recognizes and acknowledges that: (a) the employment by the Company and the access to Confidential Information creates a relationship of confidence and trust with respect to such Confidential Information; and (b) such Confidential Information is a valuable and unique asset of the Company's business and affairs, and (c) its unauthorized use or disclosure would cause the Company substantial loss and damages. Accordingly, the Employee undertakes and agrees that he/she will keep in strict confidence and trust, shall safeguard, and shall not, in whole or in part, disclose such Confidential Information to any person or organization under any circumstances, and that he/she will not make use of any such Confidential Information for his/her own purposes or for the benefit of any other person or organization. The obligations set forth in this section are perpetual, and shall apply both during and after the termination of the Employment Agreement, for any reason.
|
1.4
|
Upon termination of his/her employment with the Company, the Employee will promptly deliver to the Company all documents and materials of any nature pertaining to his/her work with the Company.
|
2.
|
Ownership of Property and Rights
|
2.1
|
The Employee confirms that all Confidential Information is, will be and shall remain the exclusive property of the Company. All business records, papers and documents however documented, kept or made by the Employee relating to the business and affairs of the Company (including documents prepared prior to the Company’s incorporation) (the "Proprietary Information") shall be and remain the property of the Company. Upon termination of his/her employment with the Company, the Employee shall promptly deliver to the Company all Proprietary Information and, without limitation, all copies of materials relating to the business and affairs of the Company and not previously made available to the public, without retaining any copies thereof. The obligations set forth in this subsection shall survive the termination of the Employment Agreement.
|
2.2
|
The Employee will notify and disclose in writing to the Company, or any persons designated by the Company from time to time, all information, improvements, inventions, formulas, processes, techniques, know-how and data, whether or not patentable or registerable under copyright or any similar laws, made or conceived or reduced to practice or learned by the Employee, either alone or jointly with others, during the Employee’s employment with the Company (including after hours, on weekends or during vacation time) (all such information, improvements, inventions, formulae, processes, techniques, know-how and data are hereinafter referred to as the "Invention(s)") immediately upon discovery, receipt or invention thereof as applicable.
|
2.3
|
Without derogating from any of the provisions of this Undertaking, the Employee agrees that all the Inventions are, upon creation, considered Inventions of the Company, shall be the sole property of the Company and its assignees, and the Company and its assignees shall be the sole owner of all patents, copyrights, trade secret and all other rights of any kind or nature, including Moral Rights (as defined below), in connection with such Inventions. The Employee hereby irrevocably and unconditionally assigns to the Company all the following with respect to any and all Inventions: (i) patents, patent applications, and patent rights, including any and all continuations or extensions thereof; (ii) rights associated with works of authorship, including copyrights and copyright applications, Moral Rights (as defined below) and mask work rights; (iii) rights relating to the protection of trade secrets and confidential information; (iv) design rights and industrial property rights; (v) any other proprietary rights relating to intangible property including trademarks, service marks and applications therefore, trade names and packaging and all goodwill associated with the same; and (vi) all rights to sue for any infringement of any of the foregoing rights and the right to all income, royalties, damages and payments with respect to any of the foregoing rights. The Employee also hereby forever waives and agrees never to assert any and all Moral Rights (as defined below) the Employee may have in or with respect to any Inventions, even after termination of employment on behalf of the Company. "Moral Rights" means any right to claim authorship of a work, any right to object to any distortion or other modification of a work, and any similar right, existing under the law of any country in the world, or under any treaty.
|
2.4
|
The Employee further agrees to perform, during and after his/her employment with the Company, all acts deemed reasonably necessary or desirable by the Company to permit and assist it, at the Company’s expense, in obtaining, maintaining, defending and enforcing the Inventions in any and all countries. Such acts may include, but are not limited to, execution of documents and assistance or cooperation in legal proceedings. The Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents, as the Employee’s agents and attorneys-in-fact to act for and on the Employee’s behalf and instead of the Employee, to execute and file any documents and to do all other lawfully permitted acts to further the above purposes with the same legal force and effect as if executed by the Employee.
|
2.5
|
The Employee shall not be entitled, with respect to all of the above, to any monetary consideration or any other consideration except as explicitly set forth in the Employment Agreement. Without limitation of the foregoing, the Employee irrevocably confirms that the consideration explicitly set forth in the Employment Agreement is in lieu of any rights for compensation that may arise in connection with the Inventions under applicable law and waives any right to claim royalties or other consideration with respect to any Invention, including under Section 134 of the Israeli Patent Law – 1967. With respect to all of the above any, oral understanding, communication or agreement not memorialized in writing and duly signed by the Company shall be void.
|
3.
|
No Competition and Non-Solicitation
|
3.1
|
The Employee acknowledges that in light of the Employee’s position with the Company and in view of the Employee’s exposure to, and involvement in, the Company’s sensitive and valuable proprietary information, property (including, intellectual property) and technologies, as well as its goodwill and business plans (the "Company’s Major Assets"), the provisions of this Section 3 are reasonable and necessary to legitimately protect the Company’s Major Assets, and are being undertaken by the Employee as a condition to the employment of the Employee by the Company.
|
3.2
|
The Employee confirms that the Employee has carefully reviewed the provisions of this Section 3, fully understands the consequences thereof and has assessed the respective advantages and disadvantages to the Employee of entering into this Undertaking and, specifically, Section 3 hereof. In light of the above provisions, the Employee undertakes that during the term of his/her employment with the Company and for a period of twelve (12) months thereafter:
|
|
3.2.1
|
The Employee shall not engage, establish, open or in any manner whatsoever become involved, directly or indirectly, either as an employee, owner, partner, agent, shareholder, director, consultant or otherwise, in any business, occupation, work or any other activity which is reasonably likely to involve or require the use of any of the Company’s Major Assets. The Employee confirms that engagement, establishment, opening or involvement, directly or indirectly, either as an employee, owner, partner, agent, shareholder, director, consultant or otherwise, in any business, occupation, work or any other activity which competes directly with the business of the Company as conducted during the term of his/her employment or contemplated, during such term, to be conducted, is likely to require the use of all or a portion of the Company’s Major Assets.
|
|
3.2.2
|
The Employee shall not, directly or indirectly, solicit, hire or retain as an employee, consultant or otherwise, any employee or consultant of the Company or induce or attempt to induce any such employee or consultant to terminate or reduce the scope of his/her employment and/or engagement with the Company.
|
3.3
|
The Employee further undertakes that, for so long as the Employee is employed by the Company and continuing for twelve (12) months after the termination or expiration of such employment, the Employee shall not, directly or indirectly, solicit, endeavor to entice away from the Company or otherwise interfere with the relationship of the Company with any person or organization who is, or was within the preceding two (2) years, a customer or a supplier of the Company.
|
4.
|
General
|
4.1
|
The Employee represents that the performance of all the terms of this Undertaking and the Employee’s duties as an employee of the Company does not and will not breach any invention assignment, proprietary information, non-compete, confidentiality or similar agreements with, or rules, regulations or policies of, any former employer or other party (including, without limitation, any academic institution or any entity related thereto). The Employee acknowledges that the Company is relying upon the truthfulness and accuracy of such representations in employing the Employee.
|
4.2
|
The Employee acknowledges that the provisions of this Undertaking serve as an integral part of the terms of the Employee’s employment and reflect the reasonable requirements of the Company in order to protect its legitimate interests with respect to the subject matter hereof.
|
4.3
|
The Employee recognizes and acknowledges that in the event of a breach or threatened breach of this Undertaking by the Employee, the Company may suffer irreparable harm or damage and will, therefore, be entitled to injunctive relief to enforce this Undertaking (without limitation to any other remedy at law or in equity).
|
4.4
|
This Undertaking is governed by and construed in accordance with the laws of the State of Israel, without giving effect to its laws pertaining to conflict of laws. The Employee agrees that any and all disputes in connection with this Undertaking shall be submitted to the exclusive jurisdiction of the competent courts located in the city of Tel-Aviv-Jaffa, Israel.
|
4.5
|
If any provision of this Undertaking is determined by any court or arbitrator of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such provision will be enforced to the maximum extent possible given the intent of the parties hereto. If such clause or provision cannot be so enforced, such provision shall be stricken from this Undertaking only with respect to such jurisdiction in which such clause or provision cannot be enforced, and the remainder of this Undertaking shall be enforced as if such invalid, illegal or unenforceable clause or provision had (to the extent not enforceable) never been contained in this Undertaking. In addition, if any particular provision contained in this Undertaking shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, it shall be construed by limiting and reducing the scope of such provision so that the provision is enforceable to the fullest extent compatible with applicable law.
|
4.6
|
The provisions of this Undertaking shall continue and remain in full force and effect following the termination or expiration of the employment relationship between the Company and the Employee, for whatever reason. This Undertaking shall not serve in any manner so as to derogate from any of the Employee’s obligations and liabilities under any applicable law.
|
4.7
|
This Undertaking constitutes the entire agreement between the Employee and the Company with respect to the subject matter hereof. No amendment of or waiver of, or modification of any obligation under this Undertaking will be enforceable unless set forth in a writing signed by the Company. No delay or failure to require performance of any provision of this Undertaking shall constitute a waiver of that provision as to that or any other instance. No waiver granted under this Undertaking as to any one provision herein shall constitute a subsequent waiver of such provision or of any other provision herein, nor shall it constitute the waiver of any performance other than the actual performance specifically waived.
|
4.8
|
This Undertaking, the rights of the Company hereunder, and the obligations of the Employee hereunder, will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives. The Company may assign any of its rights under this Undertaking. The Employee may not assign, whether voluntarily or by operation of law, any of its obligations under this Undertaking, except with the prior written consent of the Company.
|
Printed Name:
|
Itai Zwi Loewenstein
|
Signature:
|
By:
|
/s/ Itai Zwi Loewenstein
|
|
Name:
|
Itai Zwi Loewenstein
|
|
Title:
|
The Employee
|
/s/ Itai Zwi Loewenstein
Employee
/s/ Sima Cohen
Witness
|
1.
|
Employment
|
|
1.1
|
The Company agrees to employ the Employee and the Employee agrees to be employed by the Company on the terms and conditions set out in this Agreement. The Employee shall serve in the position described in Exhibit A attached hereto. The Employee's duties shall include, but shall not be limited to, the actions, responsibilities and authorities set forth in Exhibit A attached hereto.
|
|
1.2
|
The Employee shall perform the duties, undertake the responsibilities and exercise the authority customarily performed, undertaken and exercised by persons acting in the same position as the Employee. The Employee shall comply with the Company's policies, procedures and directives, as may be updated from time to time. The Employee shall be subordinated and shall report to its direct superior which shall be designated by the Company.
|
|
1.3
|
Excluding periods of vacation, sick leave and military reserve service to which the Employee is entitled or required, the Employee agrees to devote his/her full working time and attention to the business and affairs of the Company and its subsidiaries. During the term of this Agreement, the Employee shall not engage, whether as an employee or otherwise, in any business, commercial or professional activities, whether or not for compensation, including during after work hours, on weekends, or during vacation time, without the prior written consent of the Company..
|
|
1.4
|
This Agreement is a personal agreement governing the employment relationship between the Parties hereto. This Agreement and the employment relationships hereunder shall not be subject to any general or special collective employment agreement relating to employees in any trade or position that is the same or similar to the Employee’s position, unless specifically provided herein.
|
2.
|
Representations and Warranties of the Employee
|
|
2.1
|
There are no other undertakings or agreements preventing him/her from committing himself/herself in accordance with this Agreement and performing his/her obligations under it.
|
|
2.2
|
To the best of the Employee’s knowledge, the Employee is not currently, nor will he/she by entering into this Agreement be deemed to be, violating any rights of his/her former employer and/or in breach of any of his/her obligations towards his/her former employer.
|
|
2.3
|
The Employee shall inform the Company, immediately upon becoming aware of, on every matter in which he/she or his/her immediate family has a personal interest and which might create a conflict of interests with his/her duties under the employment hereunder.
|
|
2.4
|
In carrying out the duties under this Agreement, the Employee shall not make any representations or give any guarantees on behalf of the Company, except as expressly and in advance authorized to do so.
|
|
2.5
|
The Employee shall not receive any payment and/or benefit from any third party, directly or indirectly in connection with his/her employment. In the event the Employee breaches this undertaking, without derogating from any of the Company’s right by law or contract, such benefit or payment shall become the sole property of the Company and the Company may set-off the value thereof from any sums due to the Employee.
|
|
2.6
|
The Employee undertakes to use the Company’s equipment and facilities only for the purpose of his/her employment. The Employee acknowledges and agrees that the Company is entitled to conduct inspections within the Company’s offices and on the Company’s computers, including inspections of electronic mail transmissions, Internet usage and inspections of their content, for the Company’s relevant needs. For the avoidance of any doubt, it is hereby clarified that all examination’s finding shall be the Company’s sole property. It is further agreed that the Employee's e-mail box shall be "professional box" designated for use solely for his/her work and not for personal purposes. The Employee acknowledges that the Company may inspect such e-mail box and agrees that such inspection shall not be deemed a violation of the Employee's privacy and/or other rights.
|
3.
|
Salary
|
|
3.1
|
In consideration for the employment of the Employee with the Company, the Company shall pay the Employee a gross monthly Base Salary as set forth in Exhibit A (the "Base Salary").
|
|
3.2
|
The Employee shall also receive a global monthly payment payable for overtime working hours (the "Overtime Global Compensation"), as set forth in Exhibit A.
|
|
3.3
|
The Base Salary along with the Overtime Global Compensation shall be hereby referred to as: the "Salary" and shall serve as the basis for deductions and contributions of any and all social benefits to which Employee shall be entitled.
|
|
3.4
|
The Parties confirm that the Employee’s position may require overtime work and work at irregular hours from time to time. It is agreed that the Overtime Global Compensation shall be payable to the Employee on an average monthly account of up to the number of overtime working hours as specified in Exhibit A (the "Average Overtime Quota"), and this regardless of the number of overtime hours actually worked.
|
|
3.5
|
It is hereby agreed that the Overtime Global Compensation is the full and complete compensation to which the Employee is entitled and/or will be entitled for overtime work and/or work at irregular hours up to the Average Overtime Quota. The Employee shall not be permitted to work overtime beyond the Average Overtime Quota unless the direct superior of the Employee shall approve it in advance.
|
|
3.6
|
The Salary shall be payable monthly in arrears, no later than the 9th day of each month. The Company shall deduct from the Salary all the deductions as required under the law. The Company shall be entitled to deduct from any and/or all payments to which the Employee shall be entitled from the Company, any and/or all amounts to which the Company shall be entitled from the Employee.
|
|
3.7
|
The Employee undertakes to use the attendance card to be provided to the Employee by the Company each time that the Employee enters into and leaves the premises of the Company. The Company shall send the Employee, at the end of each calendar month, an automatic hours report referring to the number of hours in which the Employee was present at work during such month. The Employee shall be deemed to approve such reports unless he/she shall notify its superior, within 2-days from the date in which each hours report was sent to the Employee, of his/her disagreement to the number of hours specified in such hours report.
|
4.
|
Employees Benefits
|
|
4.1
|
Vacation. The Employee shall be entitled to the number of vacation days per year as set forth in Exhibit A (the "Annual Vacation Quota"), to be taken at times subject to the approval of the Company. The Employee may not accrue vacation days in a number exceeding the number of vacation days included in the Annual Vacation Quota.
|
|
4.2
|
Sick Leave; Convalescence Pay. The Employee shall be entitled to paid sick leave, pursuant to the Sick Pay Law 5736 – 1976, in a number per year as set forth in Exhibit A (with unused sick leave days to be accumulated up to the limit set pursuant to applicable law). The Employee shall be entitled to Convalescence Pay ("Dmei Havra'a") pursuant to applicable law.
|
|
4.3
|
Social Benefits.
|
|
4.4
|
Other Benefits. The Employee shall be entitled to additional benefits as and to the extent set forth in Exhibit A.
|
|
4.5
|
Any benefit provided by the Company to the Employee under this section 4 and under Exhibit A, including for the removal of doubt the Bonuses (to the extent applicable), shall not be considered as part of the Employee’s salary for purposes of calculating the Employee’s social and other benefits, such as severance payments, redemption of unused vacation days etc., and such social and other benefits shall be calculated only out of the Salary.
|
|
4.6
|
The Company shall withhold, or charge the Employee with, all taxes and other compulsory payments as required under applicable law with respect to all payments, benefits and/or other compensation paid to the Employee in connection with the Employee’s employment with the Company.
|
|
4.7
|
The Employee acknowledges that apart from the benefits provided for hereunder and in Exhibit A, the Employee shall not be entitled to any additional benefits and/or payments unless the Parties shall agree otherwise.
|
5.
|
Term and Termination
|
|
5.1
|
This Agreement shall be in effect for an undefined period of time commencing on the date set forth in Exhibit A (the "Commencement Date"), and shall continue until it is terminated pursuant to the terms set forth herein (the "Term").
|
|
5.2
|
Either Party may terminate the employment relationship hereunder at any time, without the obligation to provide any reason, by giving the other party a prior written notice as set forth in Exhibit A (the "Notice Period"). Notwithstanding the foregoing, the Company is entitled to terminate this Agreement with immediate effect upon a written notice to the Employee and to pay the Employee an amount equal to the Salary the Employee is entitled to receive under this Agreement that would have been paid to the Employee during the Notice Period, in lieu of such prior notice. In the event that the Employee shall terminate this Agreement with immediate effect or upon shorter notice than the Notice Period and/or shall not continue working during all the Notice Period, then: (i) the Employee shall not be entitled to receive the Salary and/or any other benefit for the part of the Notice Period during which the Employee did not work for the Company; and (ii) the Employee shall be obligated to pay the Company an amount equal to the Salary that would have been payable to the Employee by the Company for the part of the Notice Period during which the Employee did not work for the Company (and the Company may deduct such amount from any payment due to the Employee by the Company).
|
|
5.3
|
During the Notice Period and unless otherwise determined by the Company in a written notice to the Employee, the employment relationship hereunder shall remain in full force and effect, the Employee shall continue discharging and performing all of his/her duties and obligations with Company, and the Employee shall cooperate with the Company and assist the Company with the integration into the Company of the person who will assume the Employee's responsibilities.
|
|
5.4
|
Notwithstanding, the Company may immediately terminate the employment relationship for Cause, without paying the Employee any payment with respect to the term commencing following such termination, and such termination shall be effective as of the time of notice of the same. "Cause" means (a) a material breach of this Agreement (including its Exhibits) by the Employee and/or a breach of the Employee's undertakings under Exhibit B hereto; (b) any willful failure to perform any of the Company's reasonable instructions or any of the Employee's fundamental functions or duties hereunder; (c) the Employee's engagement in willful misconduct or acting in bad faith with respect to the Company, (d) the Employee's conviction of a felony involving moral turpitude; or (e) any cause justifying termination or dismissal in circumstances in which the Company can deny the Employee severance payment under applicable law.
|
|
5.5
|
Following the termination and/or expiration of the Term, the Employee shall return to the Company all documents, professional literature and equipment belonging to the Company, which may be in his/her possession at such time.
|
6.
|
Proprietary Information; Assignment of Inventions and Non-Competition
|
|
6.1
|
On the date of this Agreement, the Employee executes the Non-Disclosure, Non-Competition and Proprietary Information Undertaking attached as Exhibit B hereto. Without derogating from the provisions of Exhibit B, the Employee undertakes to keep all the terms and conditions of this Agreement in strict confidence.
|
|
6.2
|
Due to the nature of the Company's business in Binary Option Trading, the Employee may be exposed to sensitive and/or confidential financial materials. The Employee understands and undertakes that he/she will not wrongfully or illegally use, in any manner or form, any such financial information for personal gain, whether directly or indirectly or through any proxy or family member.
|
|
6.3
|
The Employee acknowledges that, due to the nature of the Company's business in Binary Option Trading, the Company may require that the Employee shall undergo a polygraph test and/or security checks, as provided in Exhibit C hereto. The Employee agrees to undergo such polygraph test and/or security checks and agrees that any refusal to undergo these test/checks shall be considered as a material breach of the Agreement by the Employee.
|
7.
|
Miscellaneous
|
|
7.1
|
Law and Venue. The validity, construction and performance of this Agreement shall be governed by and interpreted in accordance with the laws of the State of Israel, without giving effect to the principles of conflict of laws thereof. The competent courts of the city of Tel Aviv-Jaffa, Israel shall have exclusive jurisdiction to settle all disputes arising in connection with this Agreement and no other courts shall have any jurisdiction whatsoever in respect of such disputes.
|
|
7.2
|
Counterparts and Signatures. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
|
|
7.3
|
Non-Waiver The waiver, express or implied, by either Party hereto of any rights hereunder or of any failure to perform or of a breach hereof by the other Party hereto shall not constitute or be deemed a waiver of any other right hereunder or any other failure to perform or a breach hereof by the other Party hereto, whether of a similar or dissimilar nature.
|
|
7.4
|
Entire Agreement. This Agreement and the Exhibits attached hereto constitute the entire agreement between the Parties with respect to the subject matter hereof and supersedes any prior agreement, written or oral, including the terms of any negotiations in connection with or relating to this Agreement.
|
|
7.5
|
Modification of Agreement. No addition or modification of this Agreement shall be effective or binding on either of the Parties hereto unless reduced to writing and executed by the respective duly authorized representatives of each of the Parties hereto.
|
|
7.6
|
Notice. Any notices to be given hereunder shall be served on a Party by prepaid registered letter, facsimile or telegram to its address given herein or such other address as may from time to time be notified for this purpose. Any notice given by letter shall be deemed to have been served four days after the time at which it was posted and any notice given by facsimile or telegram shall be deemed to have been served 24 hours after it is dispatched.
|
|
7.7
|
Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof.
|
|
7.8
|
Notice to Employee. For the purpose of delivering a notice with respect to the employment terms pursuant to the Law of Notice to Employee (Employment Terms), 5762 – 2002, this Agreement shall be considered as complying with the requirements under such Law.
|
Win Global Markets Inc. (Israel) Ltd.
By: /s/ Shimon Citron
Title: Chief Executive Officer
|
The Employee
By: /s/Michael Ekstein
Title: Employee
|
1. Name:
|
Michael (Mickey) Ekstein
|
2. Position:
|
CTO
|
3. Commencement Date:
|
9.8.15
|
4. Scope of Employment:
|
Full Time
|
5. Base Salary:
|
32,800 NIS
After 3 months of employment the salary will be updated as follows:
33,600 NIS
|
6. Overtime Global
|
8,200 NIS
After 3 months of employment the salary will be updated as follows:
8,400 NIS
|
7. Annual Vacation:
|
19 days.
|
8. Sick Leave:
|
Pursuant to applicable law.
|
9. Managers Insurance:
|
As required by law
I currently have/do not have (Delete as appropriate) an active Managers Insurance Scheme/pension fund (Delete as appropriate), which details are as follows:
________________________________________________________________________________________.
|
10. Education Fund:
|
Commencing three (3) months after the Commencement Date, and applying retroactively (as of the Commencement Date).
|
11. Travel Expenses:
|
The Employee shall be entitled to receive car and gas from the Company [in lieu of the Travel Expenses]. The employee bears the burden of tax from this benefit.
In such event, the Employee shall execute all the Company's standard documents for employees receiving a car from the Company.
In addition, Parking Place (Beit Gaon parking) or Expenses Reimbursement with regard to parking – subject to the Company's discretion.
|
12. Notice Period:
|
30 days for the first six (6) month
60 days after six (6) month
|
13. Options:
|
The parent company of the Company, Win Global Markets, Inc. (the "Parent Company"), shall grant the Employee the following options:
a) 400,000 (Four Hundred Thousand) Options to purchase shares of the Parent Company (the "Options") from the commencement date.
b) 300,000 (Three Hundred Thousand) Options to purchase shares of the Parent Company (the "Options") after six (6) months from the commencement date.
The Options shall be granted under the following terms:
(1) The Options shall be subject to the terms of the Parent Company's Stock Option Plan and the Stock Option Agreement to be entered into between the Parent Company and the Employee;
(2) 66,667 (Sixty Six Thousand Six Hundred and Sixty Seven) Options shall be fully vested 6 months after the commencement date, provided that the Employee shall remain employee of the Company at the end of such period; the rest of the Options shall vest over a period of Thirty (30) months (the "Vesting Period"), commencing 6 months after the grant of the Options (the "Effective Date"), in accordance with the following vesting schedule, provided that the Employee shall remain employee of the Company at the end of each relevant part of the vesting period: 333,333 (Three Hundred Thirty Three Thousand Three Hundred and Thirty Three) Options shall vest on a three-months basis as of the Effective Date, in a total of ten (10) installments, each of which shall be equal to 1/12 of the total number of the Options. Following the termination of the Employment Agreement, all unvested Options shall ipso facto terminate and become null and void.
(3) 50,000 (Fifty Thousand) Options shall be fully vested 6 months after the commencement date, provided that the Employee shall remain employee of the Company at the end of such period; the rest of the Options shall vest over a period of Thirty (30) months (the "Vesting Period"), commencing 6 months after the grant of the Options (the "Effective Date"), in accordance with the following vesting schedule, provided that the Employee shall remain employee of the Company at the end of each relevant part of the vesting period: 250,000 (Two Hundred & Fifty Thousand) Options shall vest on a three-months basis as of the Effective Date, in a total of ten (10) installments, each of which shall be equal to 1/12 of the total number of the Options. Following the termination of the Employment Agreement, all unvested Options shall ipso facto terminate and become null and void.
(4) The vested Options shall be exercisable commencing on the date in which they shall become vested and until the earlier of: (i) the lapse of 60 (Sixty) months from the date of grant thereof; or (ii) the lapse of 3 (Three) months from the termination date of this Agreement.
(5) The vested Options shall be exercisable at a purchase price of US$0.50 (Fifty cents) per share.
(6) The Employee shall bear all the taxes (if any) associated with the grant and/or exercise of the Options.
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1.
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Non - Disclosure
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1.1
|
The Employee acknowledges that the Employee has had and is expected to have access to information that relates to the Company, its business, assets, financial condition, affairs, activities, plans and projections, customers, suppliers, partners, and other third parties with whom the Company agreed or agrees, from time to time, to hold information of such party in confidence (the "Confidential Information"). The Confidential Information shall not include information generally available to the public not as a result of a breach of this Undertaking by the Employee.
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1.2
|
By way of illustration, such Confidential Information shall include, without limitation, (i) any and all trade secrets concerning the business and affairs of the Company, product specifications, data, know-how, compositions, processes, formulas, methods, designs, samples, inventions and ideas, past, current and planned development or experimental work, current and planned distribution methods and processes, customer lists, customers' data, current and anticipated customer requirements, price lists, market studies, business plans, computer software and programs (including object code and source code), computer software and database technologies, systems, structures and architectures (and related processes, algorithms, compositions, improvements, know-how, inventions, discoveries, concepts, ideas, designs, methods and information), of the Company and any other information, however documented of the Company that is a trade secret; (ii) any and all information concerning the business and affairs of the Company (which includes historical financial statements, financial projections and budgets, historical and projected sales, capital spending budgets and plans, the names and backgrounds of key personnel, personnel training and techniques and materials), however documented; (iii) any and all notes, analysis, compilations, studies, summaries, and other material prepared by or for the Company containing or based, in whole or in part, on any information included in the foregoing; (iv) any third parties' information to be received by the Company or by the Employee during his/her employment with the Company; and (v) the terms and conditions of the Employment Agreement.
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1.3
|
The Employee further recognizes and acknowledges that: (a) the employment by the Company and the access to Confidential Information creates a relationship of confidence and trust with respect to such Confidential Information; and (b) such Confidential Information is a valuable and unique asset of the Company's business and affairs, and (c) its unauthorized use or disclosure would cause the Company substantial loss and damages. Accordingly, the Employee undertakes and agrees that he/she will keep in strict confidence and trust, shall safeguard, and shall not, in whole or in part, disclose such Confidential Information to any person or organization under any circumstances, and that he/she will not make use of any such Confidential Information for his/her own purposes or for the benefit of any other person or organization. The obligations set forth in this section are perpetual, and shall apply both during and after the termination of the Employment Agreement, for any reason.
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1.4
|
Upon termination of his/her employment with the Company, the Employee will promptly deliver to the Company all documents and materials of any nature pertaining to his/her work with the Company.
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2.
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Ownership of Property and Rights
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2.1
|
The Employee confirms that all Confidential Information is, will be and shall remain the exclusive property of the Company. All business records, papers and documents however documented, kept or made by the Employee relating to the business and affairs of the Company (including documents prepared prior to the Company’s incorporation) (the "Proprietary Information") shall be and remain the property of the Company. Upon termination of his/her employment with the Company, the Employee shall promptly deliver to the Company all Proprietary Information and, without limitation, all copies of materials relating to the business and affairs of the Company and not previously made available to the public, without retaining any copies thereof. The obligations set forth in this subsection shall survive the termination of the Employment Agreement.
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2.2
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The Employee will notify and disclose in writing to the Company, or any persons designated by the Company from time to time, all information, improvements, inventions, formulas, processes, techniques, know-how and data, whether or not patentable or registerable under copyright or any similar laws, made or conceived or reduced to practice or learned by the Employee, either alone or jointly with others, during the Employee’s employment with the Company (including after hours, on weekends or during vacation time) (all such information, improvements, inventions, formulae, processes, techniques, know-how and data are hereinafter referred to as the "Invention(s)") immediately upon discovery, receipt or invention thereof as applicable.
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2.3
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Without derogating from any of the provisions of this Undertaking, the Employee agrees that all the Inventions are, upon creation, considered Inventions of the Company, shall be the sole property of the Company and its assignees, and the Company and its assignees shall be the sole owner of all patents, copyrights, trade secret and all other rights of any kind or nature, including Moral Rights (as defined below), in connection with such Inventions. The Employee hereby irrevocably and unconditionally assigns to the Company all the following with respect to any and all Inventions: (i) patents, patent applications, and patent rights, including any and all continuations or extensions thereof; (ii) rights associated with works of authorship, including copyrights and copyright applications, Moral Rights (as defined below) and mask work rights; (iii) rights relating to the protection of trade secrets and confidential information; (iv) design rights and industrial property rights; (v) any other proprietary rights relating to intangible property including trademarks, service marks and applications therefore, trade names and packaging and all goodwill associated with the same; and (vi) all rights to sue for any infringement of any of the foregoing rights and the right to all income, royalties, damages and payments with respect to any of the foregoing rights. The Employee also hereby forever waives and agrees never to assert any and all Moral Rights (as defined below) the Employee may have in or with respect to any Inventions, even after termination of employment on behalf of the Company. "Moral Rights" means any right to claim authorship of a work, any right to object to any distortion or other modification of a work, and any similar right, existing under the law of any country in the world, or under any treaty.
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2.4
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The Employee further agrees to perform, during and after his/her employment with the Company, all acts deemed reasonably necessary or desirable by the Company to permit and assist it, at the Company’s expense, in obtaining, maintaining, defending and enforcing the Inventions in any and all countries. Such acts may include, but are not limited to, execution of documents and assistance or cooperation in legal proceedings. The Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents, as the Employee’s agents and attorneys-in-fact to act for and on the Employee’s behalf and instead of the Employee, to execute and file any documents and to do all other lawfully permitted acts to further the above purposes with the same legal force and effect as if executed by the Employee.
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2.5
|
The Employee shall not be entitled, with respect to all of the above, to any monetary consideration or any other consideration except as explicitly set forth in the Employment Agreement. Without limitation of the foregoing, the Employee irrevocably confirms that the consideration explicitly set forth in the Employment Agreement is in lieu of any rights for compensation that may arise in connection with the Inventions under applicable law and waives any right to claim royalties or other consideration with respect to any Invention, including under Section 134 of the Israeli Patent Law – 1967. With respect to all of the above any, oral understanding, communication or agreement not memorialized in writing and duly signed by the Company shall be void.
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3.
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No Competition and Non-Solicitation
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3.1
|
The Employee acknowledges that in light of the Employee’s position with the Company and in view of the Employee’s exposure to, and involvement in, the Company’s sensitive and valuable proprietary information, property (including, intellectual property) and technologies, as well as its goodwill and business plans (the "Company’s Major Assets"), the provisions of this Section 3 are reasonable and necessary to legitimately protect the Company’s Major Assets, and are being undertaken by the Employee as a condition to the employment of the Employee by the Company.
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3.2
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The Employee confirms that the Employee has carefully reviewed the provisions of this Section 3, fully understands the consequences thereof and has assessed the respective advantages and disadvantages to the Employee of entering into this Undertaking and, specifically, Section 3 hereof. In light of the above provisions, the Employee undertakes that during the term of his/her employment with the Company and for a period of twelve (12) months thereafter:
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3.2.1
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The Employee shall not engage, establish, open or in any manner whatsoever become involved, directly or indirectly, either as an employee, owner, partner, agent, shareholder, director, consultant or otherwise, in any business, occupation, work or any other activity which is reasonably likely to involve or require the use of any of the Company’s Major Assets. The Employee confirms that engagement, establishment, opening or involvement, directly or indirectly, either as an employee, owner, partner, agent, shareholder, director, consultant or otherwise, in any business, occupation, work or any other activity which competes directly with the business of the Company as conducted during the term of his/her employment or contemplated, during such term, to be conducted, is likely to require the use of all or a portion of the Company’s Major Assets.
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3.2.2
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The Employee shall not, directly or indirectly, solicit, hire or retain as an employee, consultant or otherwise, any employee or consultant of the Company or induce or attempt to induce any such employee or consultant to terminate or reduce the scope of his/her employment and/or engagement with the Company.
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3.3
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The Employee further undertakes that, for so long as the Employee is employed by the Company and continuing for twelve (12) months after the termination or expiration of such employment, the Employee shall not, directly or indirectly, solicit, endeavor to entice away from the Company or otherwise interfere with the relationship of the Company with any person or organization who is, or was within the preceding two (2) years, a customer or a supplier of the Company.
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4.
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General
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4.1
|
The Employee represents that the performance of all the terms of this Undertaking and the Employee’s duties as an employee of the Company does not and will not breach any invention assignment, proprietary information, non-compete, confidentiality or similar agreements with, or rules, regulations or policies of, any former employer or other party (including, without limitation, any academic institution or any entity related thereto). The Employee acknowledges that the Company is relying upon the truthfulness and accuracy of such representations in employing the Employee.
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4.2
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The Employee acknowledges that the provisions of this Undertaking serve as an integral part of the terms of the Employee’s employment and reflect the reasonable requirements of the Company in order to protect its legitimate interests with respect to the subject matter hereof.
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4.3
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The Employee recognizes and acknowledges that in the event of a breach or threatened breach of this Undertaking by the Employee, the Company may suffer irreparable harm or damage and will, therefore, be entitled to injunctive relief to enforce this Undertaking (without limitation to any other remedy at law or in equity).
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4.4
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This Undertaking is governed by and construed in accordance with the laws of the State of Israel, without giving effect to its laws pertaining to conflict of laws. The Employee agrees that any and all disputes in connection with this Undertaking shall be submitted to the exclusive jurisdiction of the competent courts located in the city of Tel-Aviv-Jaffa, Israel.
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4.5
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If any provision of this Undertaking is determined by any court or arbitrator of competent jurisdiction to be invalid, illegal or unenforceable in any respect, such provision will be enforced to the maximum extent possible given the intent of the parties hereto. If such clause or provision cannot be so enforced, such provision shall be stricken from this Undertaking only with respect to such jurisdiction in which such clause or provision cannot be enforced, and the remainder of this Undertaking shall be enforced as if such invalid, illegal or unenforceable clause or provision had (to the extent not enforceable) never been contained in this Undertaking. In addition, if any particular provision contained in this Undertaking shall for any reason be held to be excessively broad as to duration, geographical scope, activity or subject, it shall be construed by limiting and reducing the scope of such provision so that the provision is enforceable to the fullest extent compatible with applicable law.
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4.6
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The provisions of this Undertaking shall continue and remain in full force and effect following the termination or expiration of the employment relationship between the Company and the Employee, for whatever reason. This Undertaking shall not serve in any manner so as to derogate from any of the Employee’s obligations and liabilities under any applicable law.
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4.7
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This Undertaking constitutes the entire agreement between the Employee and the Company with respect to the subject matter hereof. No amendment of or waiver of, or modification of any obligation under this Undertaking will be enforceable unless set forth in a writing signed by the Company. No delay or failure to require performance of any provision of this Undertaking shall constitute a waiver of that provision as to that or any other instance. No waiver granted under this Undertaking as to any one provision herein shall constitute a subsequent waiver of such provision or of any other provision herein, nor shall it constitute the waiver of any performance other than the actual performance specifically waived.
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4.8
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This Undertaking, the rights of the Company hereunder, and the obligations of the Employee hereunder, will be binding upon and inure to the benefit of their respective successors, assigns, heirs, executors, administrators and legal representatives. The Company may assign any of its rights under this Undertaking. The Employee may not assign, whether voluntarily or by operation of law, any of its obligations under this Undertaking, except with the prior written consent of the Company.
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Printed Name:
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Michael (Mickey) Ekstein
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Signature:
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By:
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/s/ Michael Ekstein
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Name:
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Michael Ekstein
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Title:
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Employee
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/s/ Michael Ekstein
Employee
/s/ Sima Cohen
Witness
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1.1.
|
The preamble to this Agreement forms an integral and a binding part of this Agreement.
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1.2.
|
The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. All references in this Agreement to sections, paragraphs and exhibits shall, unless otherwise provided, refer to sections and paragraphs hereof and exhibits attached hereto.
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1.3.
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In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement the following terms shall have the meanings given to them in this Section 1.3:
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1.3.1.
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"Agreement" means this Agreement, including all annexes, exhibits, appendices and schedules hereto as the same may hereafter be amended, modified or supplemented from time to time.
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1.3.2.
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"Business Day" means the day on which commercial banks in London, U.K. are open to the public.
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1.3.3.
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"Conversion Date" means one (1) year from the Closing.
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1.3.4.
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"Conversion Shares" means 5,241,640 shares of Common Stock, par value $0.001 per share, of the Company, subject to the requirements of Section 3.1.2 below.
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1.3.5.
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"Default" means an Event of Default or an event or circumstance which would be, with the expiration of the applicable grace period, the giving of notice or the making of any determination under the Transaction Documents or any combination of them, an Event of Default. A Default is "continuing" if it has not been remedied or waived. An Event of Default is "remedied" only if: (i) the Borrower has notified the Lender of the existence of the relevant Default; (ii) the Default is of a type that is reasonably capable of remedy; and (iii) prior to the Lender delivering a Conversion Notice or otherwise notifying the Borrower that it has exercised or will exercise any of its rights or remedies under the Transaction Documents (including but not limited to its right to accelerate the Loan Amount), the Lender confirms to the Borrower that the Event of Default has been cured to the Lender's reasonable satisfaction.
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1.3.6.
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"Event of Default" means an event or circumstance specified as such in Section 6 (Default) herein provided that in each case an Event of Default shall occur only after the expiration of any applicable cure period as set forth in Section 6 (Default) (if any) and the Default is continuing.
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1.3.7.
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"Governmental Authority" means any governmental, legislative, regulatory or administrative body, agency or authority, any court of judicial authority, any arbitrator or any public, regulatory authority, whether international, national, state, municipal or local.
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1.3.9
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"Law" means any statute, law, regulation, treaty, rule, official directive or guideline of any Governmental Authority, or any interpretation of any of the foregoing by any Governmental Authority.
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1.3.10.
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"Transaction Documents" means: (a) this Agreement; (b) and any other agreement or document executed pursuant to any of the above or in connection with any of the foregoing which is designated in writing by the Lender and the Borrower as a "Transaction Document".
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2.1.
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Grant of Loan
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|
2.1.1.
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Subject to the terms and conditions hereof and within three (3) Business Days following the date hereof (the "Closing"), the Lender shall grant the Company a loan in the principal amount of $1,000,000 (one million), (the "Loan" or "Loan Amount").
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2.1.2.
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The Loan Amount shall be wired to the Borrower by bank wire transfer to a bank account the details of which shall be provided to the Lender at the Closing.
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2.2.
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Interest. The Loan Amount shall bear interest at an annual rate of 10% (ten percent) (calculated on the basis of the actual number of days elapsed and a 360 (three hundred and sixty) day year). The Interest shall be due and payable every six (6) months.
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2.3.
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Repayment. The Company shall repay the Loan Amount including any accrued and unpaid Interest, in one lump sum, within one (1) year from the Closing (the "Repayment Date"), subject to the Company's right to prepay the Loan in accordance with Section 2.5 herein.
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2.4.
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Payments. All payments to be made by the Company to the Lender in connection with the Loan, including any repayment, prepayment, payment of Interest, fees and all other amounts required to be paid to the Lender under the Transaction Documents, together with VAT (to the extent applicable), shall be made in U.S. dollars by bank transfer to an account designated in writing by the Lender.
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2.5
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Prepayment. The Lender shall have the right, at its sole discretion, to call the Loan and demand repayment of the Loan Amount, including any accrued and unpaid interest, at any time after six (6) months from the Closing. Such prepayment date shall be referred to herein as the "Prepayment Date"
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2.6
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Warrant. In connection with this Loan and in order to induce the Lender to make the Loan, the Company shall issue to the Lender, on the Closing, a warrant to acquire 1,572,492 shares of Common Stock of the Company at an exercise price of $0.19078 per share, exercisable over a period of five years from the date of issuance (the "Warrant").
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3.1.
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Repayment Conversion.
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3.1.1.
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Upon: (i) the Conversion Date, or (ii) the occurrence of an Event of Default, and at any time thereafter as long as such Event of Default is continuing, the Lender shall have the right (but not the obligation), by written notice to the Borrower (the "Conversion Notice"), to convert all or part of the principal amount of the Loan outstanding at such time, including any accrued and unpaid interest into the Conversion Shares or a pro rata portion thereof in case of partial conversion (the "Repayment Conversion").
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3.1.2.
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The Repayment Conversion shall occur upon the delivery of the Conversion Notice, whereupon the Conversion Shares or pro rata portion thereof, as applicable, shall be validly issued in the name of the Lender, fully-paid, free and clear of any liens, encumbrances, claims or third party rights of any kind.
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3.1.3
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Upon the issuance in the name of the Lender of the Conversion Shares or a pro rata portion thereof, as applicable, under the Repayment Conversion hereunder: (i) the Company shall be deemed to have discharged any and all obligations or a pro rata portion thereof, as applicable, with respect to the principal amount of the Loan, (ii) the Interest accrued and unpaid prior to the Repayment Conversion shall be paid by the Company to Lender upon such Conversion of Shares date, and (iii) the Lender shall not be entitled to further Interest or to any other payment hereunder as of the date of the Repayment Conversion, except as set forth herein.
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4.1.
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The Company is duly organized and validly existing under the laws of its jurisdiction of incorporation, and has the full power and authority to consummate the transactions contemplated hereunder.
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4.2.
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The consummation of the transactions contemplated hereunder and the performance of this Agreement by the Company do not violate the provisions of its corporate documents, or any applicable Law, and will not result in any breach of, or constitute a default under, any agreement or instrument to which it is a party or under which it is bound.
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4.3.
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The execution and performance of this Agreement by the Company have been duly authorized by all necessary actions, and this Agreement has been duly executed and delivered by the Company. This Agreement is valid and binding upon the Company and enforceable in accordance with its terms.
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4.4.
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This Agreement, when executed and delivered by or on behalf of the Company, will constitute the valid and legally binding obligations of the Company, legally enforceable against the Company in accordance with their respective terms.
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4.5.
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The shares issuable upon conversion of the Loan pursuant to Section 3.1 of this Agreement will be duly authorized and upon issuance in accordance with this Agreement will be validly issued, fully paid, and non-assessable, free and clear of any liens or encumbrances of any kind.
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4.6.
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Other than as explicitly set forth under this Section 4, the Company makes no other representations and warranties with respect to any transaction contemplated herein.
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5.1.
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The Lender is duly organized and validly existing under the laws of its jurisdiction of incorporation, and has the full power and authority to consummate the transactions contemplated hereunder.
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5.2.
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The consummation of the transactions contemplated hereunder and the performance of this Agreement by the Lender do not violate the provisions of its corporate documents, or any applicable law, and will not result in any breach of, or constitute a default under, any agreement or instrument to which it is a party or under which it is bound.
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5.3.
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The execution, delivery and performance of this Agreement by the Lender have been duly authorized by all necessary actions, and this Agreement has been duly executed and delivered by the Lender. This Agreement is valid and binding upon such Lender and enforceable in accordance with its terms.
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5.4
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The Lender understands that the Warrants, the Conversion Shares and the shares issuable upon the exercise of the Warrants (the "Warrant Shares" and together with the Warrants and the Conversion Shares, the "Securities") are “restricted securities” and have not been registered under the Securities Act of 1933, as amended (the "Securities Act") or any applicable state securities law and is acquiring the Securities as principal for its own account and not with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law.
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5.5
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At the time such Lender was offered the Securities, it was, and as of the date hereof it is, and on each date on which it exercises any Warrants, it will be a “non-US person” as defined in Regulation S (“Regulation S”) as promulgated under the Securities Act.
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5.6
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Such Lender, either alone or together with its representatives, has such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment in the Securities, and has so evaluated the merits and risks of such investment. Such Lender is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment. Such Lender acknowledges that as of the date hereof, the Company has very limited financial resources, and thus an investment in the Securities is subject to significant risk.
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5.7
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Such Lender acknowledges that it has had the opportunity to review the Transaction Documents and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the transaction contemplated hereunder; (ii) access to information about the Company and its financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment; and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. Such Lender acknowledges and agrees that neither the Company nor any affiliate of the Company has provided such Lender with any information or advice with respect to the Securities nor is such information or advice necessary or desired.
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5.8
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The Lender further makes the representations and warranties to the Company set forth on Exhibit A pursuant to Regulation S promulgated under the Securities Act.
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5.9
|
Each certificate representing the Conversion Shares and the Warrant Shares shall be stamped or otherwise imprinted with a legend substantially in the following form (in addition to any legend required by applicable state securities or “blue sky” laws):
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“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS AND NEITHER SUCH SECURITIES NOR ANY INTEREST THEREIN MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED EXCEPT (1) IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S PROMULGATED UNDER THE SECURITIES ACT, AND BASED ON AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT THE PROVISIONS OF REGULATION S HAVE BEEN SATISFIED, (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR (3) PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, IN WHICH CASE THE HOLDER MUST, PRIOR TO SUCH TRANSFER, FURNISH TO THE COMPANY AN OPINION OF COUNSEL, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY, THAT SUCH SECURITIES MAY BE OFFERED, SOLD, PLEDGED, ASSIGNED OR OTHERWISE TRANSFERRED IN THE MANNER CONTEMPLATED PURSUANT TO AN AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.”
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6.1
|
Non-Payment. The Company fails to pay on the Repayment Date or the Prepayment Date any amount due and payable pursuant to the Transaction Document, unless payment is made as soon as practicable and in any event within fourteen (14) Business Days of the applicable due date;
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6.2
|
Invalidity. Any of the Transaction Documents shall cease to be in full force and effect in any respect or shall not, or shall cease to, constitute the legal, valid, binding and enforceable obligations of the Company, as applicable, or might become unlawful or the exercise or enforcement of any rights and remedies of the Lender under the Transaction Documents becomes subject to material legal impediments. Any default under this Section 6.2 may be cured within seven (7) Business Days (without prejudice to any other Event of Default pursuant hereto).
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6.3.
|
Insolvency. The Borrower shall become insolvent, however evidenced, or make an assignment for the benefit of creditors, or file with a court of competent jurisdiction an application for appointment of a receiver, or similar official with respect to it or any substantial part of its assets, or there shall be filed against the Borrower by any third party any such application or petition, which application or petition is not dismissed or withdrawn within thirty (30) Business Days from the date of filing thereof;
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6.4.
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Merger without assumption. The Borrower consolidates or merges with or into, or transfers all or substantially all its assets to, or reorganizes, reincorporates or reconstitutes into or as, another entity and, at the time of such consolidation, amalgamation, merger, transfer, reorganization, reincorporation or reconstitution the resulting, surviving or transferee entity fails to assume all the obligations and undertakings of such party under this Agreement (including, for the avoidance of doubt, the obligations and undertakings relating to Repayment Conversion under Section 3.1 above).
Upon the occurrence of an Event of Default and at any time, the Lender may, by written notice to the Borrower, declare that an Event of Default has occurred and/or that all or part of the outstanding Loan Amount is immediately due and payable, whereupon it shall become immediately due and payable, together with all interest accrued thereon and all other amounts payable under the Transaction Documents (including Interest, fees and Repayment Amount, to the extent applicable). For avoidance of doubt, nothing in this Section shall operate or be construed so as to prejudice or derogate from any other rights, remedies and relief available to the Lender under this Agreement, the other Transaction Documents or by law.
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7.1.
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Confidentiality. The terms and conditions of this Agreement and the other Transaction Documents shall be treated by the Parties as confidential information and shall not be disclosed to any person or entity except as required by applicable law, to its auditors and other advisors (subject to confidentiality in accordance with the principles set out herein), or in connection with any assignment or transfer permitted hereunder.
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7.2.
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Assignment. Neither Party may assign their rights and/or obligation hereunder, or any of them, without the prior written approval of the other Party.
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7.3.
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Successors and Assigns. Without prejudice to the provisions of Section 7.2 (Assignment), this Agreement shall inure to the benefit of, and be binding upon, the heirs, executors, administrators, successors and assigns of the parties hereto.
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7.4.
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Notices. Any notice or other communication required to be given by one party hereto to another under this Agreement shall be in writing and shall be deemed to have been served: (i) if personally delivered, when actually delivered; or (ii) if sent by facsimile or e-mail, the next Business Day after receipt of confirmation of transmission; or (iii) three (3) Business Days after being mailed by certified or registered mail, postage prepaid (for the purposes of proving such service, it being sufficient to prove that such notice was properly addressed and posted) to the respective addresses of the parties set out herein:
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7.5
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Entire Agreement. This Agreement constitutes the entire agreement and understanding between the Parties with respect to the subject matter hereof, and supersedes any and all prior agreements, understandings, promises and representation, whether written or oral, between the Parties with respect to the subject matter hereof.
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7.6
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Costs. Each Party shall bear its own costs incurred in connection with the execution and consummation of this Agreement and the transaction contemplated hereunder.
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7.7
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Amendments. This Agreement may not be amended, modified, released, or discharged in any manner except by an instrument in writing, referring to this Agreement, and signed by all Parties.
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7.5
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Severability. If, and solely to the extent that, any provision of this Agreement shall for any reason be held to be excessively broad, the term shall be construed in a manner to enable it to be enforced to the extent compatible with applicable law. If, and solely to the extent that, any provision of this Agreement shall be invalid or unenforceable, or shall render this entire Agreement to be unenforceable or invalid, such offending provision shall be of no effect and shall not affect the validity of the remainder of this Agreement; provided, however, the Parties shall use their respective reasonable efforts to renegotiate the offending provisions to best accomplish the original intentions of the Parties.
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7.6
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Choice of Law and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of Luxembourg. Each party agrees that all legal proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other transaction documents (whether brought against a party hereto or its respective affiliates, directors, officers, shareholders, employees or agents) shall be commenced exclusively in the competent courts in Luxembourg. Each party hereby irrevocably submits to the exclusive jurisdiction of the courts of Luxembourg for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of any of the transaction documents), and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court, that such suit, action or proceeding is improper or is an inconvenient venue for such proceeding.
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7.7
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Waiver. No waiver of any right under this Agreement shall be deemed effective unless contained in writing and signed by the Party charged with such waiver, and no waiver of any right shall be deemed to be a waiver of any future right or any other right arising under this Agreement.
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7.8
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Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed
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1.
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At the time of (a) the offer by the Company and (b) the acceptance of the offer by such person or entity, of the Securities, such person or entity was outside the United States.
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2.
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Such person or entity is acquiring the Securities for such Lender's own account, for investment and not for distribution or resale to others and is not purchasing the Securities for the account or benefit of any U.S. person, or with a view towards distribution to any U.S. person, in violation of the registration requirements of the Securities Act.
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3.
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Such person or entity will make all subsequent offers and sales of the Securities either (x) outside of the United States in compliance with Regulation S; (y) pursuant to a registration under the Securities Act; or (z) pursuant to an available exemption from registration under the Securities Act. Specifically, such person or entity will not resell the Securities to any U.S. person or within the United States prior to the expiration of a period commencing on the Closing and ending on the date that is one year thereafter (the “Distribution Compliance Period”), except pursuant to registration under the Securities Act or an exemption from registration under the Securities Act.
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4.
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Such person or entity has no present plan or intention to sell the Securities in the United States or to a U.S. person at any predetermined time, has made no predetermined arrangements to sell the Securities and is not acting as a distributor of such Securities.
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5.
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Neither such person or entity, its affiliates nor any person acting on behalf of such person or entity, has entered into, has the intention of entering into, or will enter into any put option, short position or other similar instrument or position in the U.S. with respect to the Securities at any time after the Closing through the Distribution Compliance Period except in compliance with the Securities Act.
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6.
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Such person or entity consents to the placement of a legend on any certificate or other document evidencing the Securities substantially in the form set forth in Section 5.9 of this Agreement.
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7.
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Such person or entity is not acquiring the Securities in a transaction (or an element of a series of transactions) that is part of any plan or scheme to evade the registration provisions of the Securities Act.
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8.
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Such person or entity has sufficient knowledge and experience in finance, securities, investments and other business matters to be able to protect such person’s or entity’s interests in connection with the transactions contemplated by this Agreement.
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9.
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Such person or entity has consulted, to the extent that it has deemed necessary, with its tax, legal, accounting and financial advisors concerning its investment in the Securities.
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10.
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Such person or entity understands the various risks of an investment in the Securities and can afford to bear such risks for an indefinite period of time, including, without limitation, the risk of losing its entire investment in the Securities.
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11.
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Such person or entity has had access to the Company’s publicly filed reports with the Securities and Exchange Commission and has been furnished during the course of the transactions contemplated by this Agreement with all other public information regarding the Company that such person or entity has requested and all such public information is sufficient for such person or entity to evaluate the risks of investing in the Securities.
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12.
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Such person or entity has been afforded the opportunity to ask questions of and receive answers concerning the Company and the terms and conditions of the issuance of the Securities.
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13.
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Such person or entity is not relying on any representations and warranties concerning the Company made by the Company or any officer, employee or agent of the Company, other than those contained in this Agreement.
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14.
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Such person or entity will not sell or otherwise transfer the Securities unless either (A) the transfer of such securities is registered under the Securities Act or (B) an exemption from registration of such securities is available.
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15.
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Such person or entity represents that the address furnished on the cover page to this Agreement is the principal residence if he is an individual or its principal business address if it is a corporation or other entity.
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Such person or entity understands and acknowledges that the Securities have not been recommended by any federal or state securities commission or regulatory authority, that the foregoing authorities have not confirmed the accuracy or determined the adequacy of any information concerning the Company that has been supplied to such person or entity and that any representation to the contrary is a criminal offense.
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