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Commitments and Contingencies
9 Months Ended
Sep. 30, 2017
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Note 6. Commitments and Contingencies.

 

The Company received grants to fund research and development projects from the State of Israel according to guidelines and procedures of the Innovation Authority of the Ministry of Industry and Trade. According to the agreement, the Company is obligated to pay royalties on the sale of products developed with the participation of the Chief Scientist. The royalty rate is 3.5% of sales and the total royalties will not exceed the amount of the grants received. As of September 30, 2017, and December 31, 2016, total grants received amounted approximately $222 thousands.

 

The obligation to pay royalties is contingent upon the successful outcome of the Company’s research and development projects and the attainment of sales. The Company has no obligation to pay royalties, if sales are not generated, and if the research and development project fails.

 

In April 2017, a lawsuit was filed with the Tel Aviv court by Emerald’s former CEO and founder, claiming certain damages to the total amount of $100,000, under the assertion of wrongful dismissal by the Company. The Company believes these claims to be unsubstantiated and wholly without merit and intends to defend itself against these claims. At this early stage of the proceeding and based on the limited information that is currently available, the Company’s legal advisors are unable to estimate the outcome of the claim.

 

In December 2017, a liquidation request was filed with the Tel Aviv District Court by a group of former Company’s employees (“Applicants”), under the assertion of delay of pay and insolvency. On December 20, 2017, a hearing discussion took place according to which the court decision that the Company shall settle its pension debts to the Applicants within 21 days and settle its other debts to them in 60 days, otherwise a winding-up order could be given. Based on the collaboration of both parties and the fact that the Company is in negotiation with third-parties for the infusion of equity capital and has started negotiating the sale of certain assets, the Company’s legal advisors believe that the liquidation claim will be dismissed by the court. The amounts being claimed by the Applicants are less than $96,000 and are included in current liabilities.