| Contingent Liabilities and Commitments |
Note
10 - Contingent Liabilities and Commitments
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A. |
Israel
Innovation Authority |
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The
Company operates within the framework of the Incubators Program (Directive No. 8.3 of the Ministry of Economy) (“The program”).
As part of this plan, 60% of the approved program budget was financed by the IIA and 40% by the shareholders. In return for the participation
of the IIA, the Company is required to pay royalties at the rate of 3.5% - 3% of the sales of the developed products linked to the
dollar until the repayment date of the full amount of the grants, plus annual interest at the SOFR rate. In addition, the IIA may
stipulate any arrangement whereby the Company will be able to transfer the technology or development from Israel.
On
January 25, 2024, the Israel Innovation Authority (the “IIA”) approved a program to develop a device for the early assessment
of diabetic foot ulcers among diabetic patients, with a project budget of NIS 3,761,978 (approximately US$ 1,030,000) which includes
an amount equal to 50% grant of the total budget provided at the time of the grant, disbursed in installments over the course of 13 months,
in accordance with the project’s progress. In consideration for the grant by the IIA, the Subsidiary is required to pay royalties
at the rate of 3%-5% from the total sales until the repayment date of the full amount of the grant, plus annual interest at the SOFR
rate. In addition, the IIA must approve any arrangement whereby the Subsidiary seeks to transfer the technology relating to the project,
or its development, from Israel. |
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As
of December 31, 2024, the Company’s maximum possible future royalties commitment, subject to future sales of such products
and based on grants received from the IIA and not yet repaid, is approximately $761 thousand (including interest in the amount of
approximately $32 thousand). |
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For
the years ending December 31, 2024, and 2023, IIA grants that were obtained are $ 439 thousand and $0 ,respectively. |
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During
2021 the Company received a bank credit line in the amount of NIS 40,711 (approximately US$11,000) and pledged a security in the
same amount. |
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On
May 29, 2023, a lawsuit was filed against the Company, the Subsidiary and Mr. Aharon Klein, a Company Director and the Company’s
Chief Technology Officer in the Tel Aviv District Court of Israel, by an individual (the “Plaintiff”) who provided, on
part time basis, certain consulting services to the Subsidiary between October 2015 and October 2016, before the acquisition of the
Subsidiary by the Company. The suit alleges breach of contract by the defendants based on non-payment of amounts purportedly owed
to the Plaintiff in respect of the services rendered, including the market value of the Company’s common stock that the Plaintiff
alleges should have been issued to him in respect of services. The suit seeks declaratory judgment that the defendants breached certain
agreements with the Plaintiff and claimed damages in the aggregate amount of approximately $2.1 million based on the current exchange
rate between the U.S. Dollar and the Israeli NIS. |
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The
Company records a provision in its financial statements to the extent that it concludes that a contingent liability is probable,
and the amount thereof is reasonably estimable. Based upon the status of the case described above, management’s assessments
of the likelihood of damages, and the advice of counsel, no provisions have been made regarding the matter disclosed in this note.
Litigation outcomes and contingencies are unpredictable, and excessive verdicts can occur. |
IR-Med,
Inc.
Notes
to the Consolidated Financial Statements
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