OWC
PHARMACEUTICAL RESEARCH CORP.


 


Audit
Committee Charter


 


Purpose


 


The
Committee is appointed by the Board of Directors of OWC Pharmaceutical Research Corp. (the “Company”) to (a) assist
the Board in its oversight of (i) the integrity of the Company’s consolidated financial statements, (ii) the Company’s
compliance with legal and regulatory requirements, (iii) the Company’s system of internal controls, (iv) certain aspects
of the Company’s risk management as described herein, (v) the qualifications and independence of the Company’s independent
registered public accounting firm (“independent auditor”) and (vi) the performance of the Company’s internal
and independent auditors, and (b) prepare a report to be included in the Company’s annual proxy statement.


 


It
is the responsibility of the Company’s management to prepare consolidated financial statements that are complete and accurate
and in accordance with generally accepted accounting principles in the United States (“GAAP”) and to establish satisfactory
internal control over financial reporting. It is the responsibility of the Company’s independent auditor to audit the Company’s
financial statements and the effectiveness of the Company’s internal control over financial reporting. The Committee’s
responsibility in this regard is one of oversight and review. The Committee does not provide any expert or other special assurance
as to such financial statements concerning compliance with laws, regulations or GAAP.


 


Membership


 


	 	1.	The
    Committee shall be comprised of at least three Board members appointed by the Board after considering the recommendation of
    the Nominating and Governance Committee, if any. No Board member shall serve simultaneously on the Committee and the audit
    committee of more than two other public companies, unless the Board shall determine that such simultaneous service would not
    impair the Board member’s ability to serve effectively on the Committee and such determination is disclosed in the Company’s
    proxy statement. Committee members shall serve at the pleasure of the Board and for such term as the Board determines. The
    Board shall designate one Committee member as the Committee’s chair (the “Chair”).
	 	 	 
	 	2.	Each
    Committee member shall have no material relationship with the Company and shall satisfy the independence requirements of the
    Company, the New York Stock Exchange (“NYSE”), the Securities Exchange Act of 1934 (the “Exchange Act”),
    and the rules and regulations of the Securities and Exchange Commission (“SEC”).
	 	 	 
	 	3.	Each
    Committee member shall be financially literate in accordance with NYSE requirements or must become financially literate in
    accordance with such requirements within a reasonable period of time after his or her appointment to the Committee.
	 	 	 
	 	4.	At
    least one Committee member shall have accounting or related financial management expertise in accordance with NYSE requirements,
    and at least one Committee member shall, in the judgment of the Board, be an “audit committee financial expert”
    as defined by the SEC.


 






    	 



     


    

 


Operations


 


	 	1.	The
    Committee shall hold regular meetings at least four times per year and report to the Board on a regular basis. Meetings shall
    include any participants the Committee deems appropriate and shall be of sufficient duration and scheduled at such times as
    the Committee deems appropriate to discharge properly its responsibilities. The Chairman and Chief Executive Officer, Chief
    Financial Officer and other Executive Officers, if any, shall generally attend all regularly scheduled in person quarterly
    meetings of the Committee.
	 	 	 
	 	2.	The
    Committee shall meet, as deemed necessary and appropriate, with the independent auditor and with management, including the
    Chief Financial Officer and other Executive Officers, if any, in separate executive sessions.
	 	 	 
	 	3.	The
    Committee shall receive information and participate in informal meetings and briefings with management, including the Chief
    Financial Officer and other Executive Officers, if any, and representatives of the independent auditor, as necessary and appropriate
    between formal meetings of the Committee. Such briefings and informal meetings may be through the Committee Chair or individual
    Committee members, as appropriate.
	 	 	 
	 	4.	The
    Committee, or the Chair or other individual committee members, may meet with regulators as requested or when determined appropriate,
    regarding matters applicable to the mandate of the Committee.
	 	 	 
	 	5.	The
    Committee shall evaluate the independent auditor’s qualifications, performance and independence and present its conclusions
    to the Board of Directors. The Committee shall review with the full Board any issues arising with respect to the quality or
    integrity of the Company’s financial statements, the Company’s compliance with legal or regulatory requirements,
    the performance and independence of the Company’s independent auditor, or the performance of the internal audit department.
	 	 	 
	 	6.	The
    Committee may form and delegate to one or more subcommittees all or any portion of the Committee’s authority, duties
    and responsibilities, and may establish such rules as it determines necessary or appropriate to conduct the Committee’s
    business.



 






    	 



     


    

 


	 	7.	The
    Committee shall have direct access to, and complete and open communication with, the Company’s management and internal
    and independent auditors and may obtain advice and assistance from internal legal, accounting or other advisors. The Committee
    may retain independent legal, accounting or other advisors. The Committee shall have authority to perform or supervise investigations,
    and the Company shall provide for appropriate funding, as determined by the Committee, for the payment of expenses related
    to any such investigation.
	 	 	 
	 	8.	The
    Company shall provide for appropriate funding, as determined by the Committee, for the payment of: (i) compensation to the
    independent auditor engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest
    services or other permitted services for the Company; (ii) ordinary administrative expenses of the Committee that are necessary
    or appropriate in carrying out its duties and responsibilities; and (iii) compensation to independent legal, accounting or
    other advisors retained by the Committee.
	 	 	 
	 	9.	The
    Committee shall review and assess annually its performance and report the results to the Board.
	 	 	 
	 	10.	The
    Committee shall review and assess annually the adequacy of this charter and, if appropriate, recommend changes to the charter
    to the Board.


 


Authority,
Duties and Responsibilities


 


The
Committee shall:


 


Oversight
of the Company’s Relationship with the Independent Auditor


 


	 	1.	Have
    the sole authority and responsibility to appoint (which appointment may be presented to shareholders for ratification), compensate,
    retain, oversee, evaluate and, when appropriate, replace the independent auditor engaged for the purpose of preparing or issuing
    an audit report or performing other audit, review and attest services. The independent auditor shall report directly to the
    Committee.
	 	 	 
	 	2.	Preapprove
    all audit, review and attest services and permitted non-audit services to be performed for the Company by its independent
    auditor, subject to the de minimis exception for non-audit services described in Section 10A(i)(1)(B) of the Exchange
    Act that are approved by the Committee prior to the completion of the audit. The Committee may form and delegate authority
    to subcommittees consisting of one or more members the authority to grant preapprovals of audit and permitted non-audit services,
    provided that decisions of such subcommittee to grant preapprovals shall be presented to the full Committee at its next quarterly
    meeting.
	 	 	 
	 	3.	Review
    and evaluate annually the qualifications, performance and independence of the lead partner of the independent auditor and
    assure regular rotation of the lead audit partner, reviewing partner and other audit engagement team partners of the independent
    auditor as required by law. Consider, as appropriate, the rotation of the independent auditor. Review and assess annually
    the qualifications and performance of the independent auditor.



 






    	 



     


    

 


	 	4.	Evaluate
    the independence of the independent auditor by, among other things, ensuring that the independent auditor periodically, and
    at least annually, submits to the Committee a formal written report delineating all relationships between the independent
    auditor and the Company, including any non-audit service permitted under the Exchange Act provided to the Company and the
    matters set forth in Public Company Accounting Oversight Board (“PCAOB”) rules or other applicable laws, regulations
    or standards. Review and evaluate such report and engage in a dialogue with the independent auditor with respect to any disclosed
    relationships or services that may impact their objectivity and independence.
	 	 	 
	 	5.	Obtain,
    review and evaluate, at least annually, a report by the independent auditor describing the independent auditor’s internal
    quality-control procedures, any material issues raised by the most recent internal quality-control review, peer review, or
    PCAOB review, of the independent auditor, or by any inquiry or investigation by governmental or professional authorities,
    within the preceding five years, respecting one or more independent audits carried out by the independent auditor, and any
    steps taken in response to any such issues.
	 	 	 
	 	6.	Set
    policies for the Company with respect to hiring current and former employees of the independent auditor.


 


Oversight
of the Company’s Internal Audit Department and Internal Controls


 


7. Approve
the appointment and, when and if appropriate, replacement of the Global Audit Director, who shall functionally report directly
to the Committee and administratively to the Chief Executive Officer. Review the qualifications, performance and compensation
of the Global Audit Director.


 


8. Review
the significant reports to management, or summaries thereof, prepared by the internal audit department, management’s responses
and the status of associated remediation plans.


 


9. Discuss,
as appropriate, the adequacy of the Company’s internal controls with the internal and independent auditors and management
including, without limitation, reports from the Chief Executive Officer and the Chief Financial Officer regarding significant
deficiencies and material weaknesses in the design or operation of internal control over financial reporting or any fraud, whether
or not material, that involves management or other employees who have a significant role in the Company’s internal controls.


 


10. Review
and discuss, as appropriate, any major issues as to the adequacy of the Company’s internal controls and any special audit
steps adopted in light of material control deficiencies.


 






    	 



     


    

 


11. Review
the Chief Executive Officer and Chief Financial Officer certification process and the role of the Company’s Disclosure Committee.


 


12. Review
and discuss with management and the internal and independent auditors management’s annual report on, and the independent
auditor’s evaluation of the effectiveness of, the Company’s internal control over financial reporting. Receive reports
from management regarding management’s quarterly evaluations of changes in internal control over financial reporting and
discuss with management and the internal and independent auditors as appropriate.


 


13. Review
the annual plan and scope of work and coverage of the internal audit department, including the risk-based approach to development
of the plan, and receive updates on significant changes in scope of the plan and coverage during the year, as appropriate. Review
the responsibilities, budget, resources and staffing of the internal audit department, including any outsourcing or co-sourcing
of services. Review the results of internal and external quality assurance reviews of the internal audit department, and participate
in selection of the third parties engaged to conduct external quality assurance reviews. Review and approve the internal audit
department charter, as appropriate.


 


Oversight
of the Financial Statements, Audit and Disclosure


 


14. Review
(i) the results of internal and independent audits and reviews of, and meet to review and discuss with management and the independent
auditor, the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q (including the Company’s annual
audited consolidated financial statements and condensed consolidated quarterly and year-to-date financial statements) and (ii)
the Company’s specific disclosures under “Management’s Discussion and Analysis of Financial Condition and Results
of Operations,” and other matters required by applicable PCAOB standards or under applicable legal, regulatory or NYSE requirements.


 


15. Regularly
review with the independent auditor significant issues regarding accounting principles and financial statement presentations,
including (i) any significant changes in the Company’s selection or application of accounting principles; (ii) analyses
prepared by management and/or the independent auditor setting forth significant financial reporting issues and judgments made
in connection with the preparation of the financial statements, including analyses of the effects of alternative GAAP methods
on the financial statements; and (iii) any significant communications between the independent audit team and the independent auditor’s
national office respecting auditing or accounting issues presented by the engagement.


 


16. Review
and discuss with the independent auditor and, to the extent appropriate, management, in connection with the Company’s Annual
Report on Form 10-K, and otherwise, as appropriate, any reports of the independent auditor required by law or professional auditing
standards, including reports on: (i) critical accounting policies and practices used in preparing the financial statements; (ii)
alternative treatments under GAAP for policies and procedures related to material items discussed with management, ramifications
of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditor; and (iii) other
material written communications between the independent auditor and management of the Company, such as any “management”
or “internal control” letter issued, or proposed to be issued, by the independent auditor to the Company, and a schedule
of unadjusted differences, if any.


 






    	 



     


    

 


17. Discuss
with the independent auditor the matters required to be discussed relating to the audit, in accordance with applicable audit standards,
including the quality and appropriateness of the Company’s accounting principles, difficulties encountered in the course
of the audit work, restrictions on the scope of activities or access to requested information, significant disagreements with
management, and management’s response.


 


18. Review
the annual plan and scope of work and coverage of the independent auditor. Receive updates on significant changes in scope of
the plan and coverage and status of the plan during the year.


 


19. Obtain
a statement from the independent auditor that the audit was conducted in a manner consistent with PCAOB standards and applicable
portions of Section 10A of the Exchange Act.


 


20. After
review, recommend to the Board the acceptance and inclusion of the annual audited consolidated financial statements in the Company’s
Annual Report on Form 10-K.


 


21. Review
or discuss, as and when appropriate: (i) the information to be disclosed and the type of presentation to be made in earnings press
releases, including the use of “pro forma” or “adjusted” non-GAAP information and any reconciliation to
GAAP information, that have been, or will be, issued by the Company, as well as the financial information and earnings guidance
that have been, or will be, provided to analysts and rating agencies; and (ii) the effect of regulatory and accounting initiatives
and off-balance sheet structures on the Company’s consolidated financial statements.


 


22. Be
responsible for resolution of disagreements between management and the independent auditor regarding financial reporting.


 


Oversight
of Compliance with Legal and Regulatory Requirements


 


23. When
deemed appropriate, review with the Company’s SEC Counsel or appropriate delegates, legal, disclosure or other matters that
may have a material impact on the Company’s consolidated financial statements or on the Company’s compliance policies.


 


24. Review
significant regulatory reports and findings of regulators, as applicable to the mandate of the Committee, including management’s
associated remediation plans and progress against such plans.


 






    	 



     


    

 


25. Obtain,
review and evaluate reports from the SEC Counsel or management with respect to the Company’s policies and procedures regarding
compliance with applicable legal and regulatory requirements, and the Company’s Code of Ethics and Business Conduct. The
Company’s SEC Counsel shall have the authority to communicate personally to the Committee promptly on any matter involving
criminal conduct or potential criminal conduct and, at least annually, shall report to the Committee on the implementation and
effectiveness of the Company’s compliance and ethics program.


 


26. Obtain,
review and evaluate reports from the Company’s SEC Counsel with respect to the Company’s Anti-Money Laundering/Bank
Secrecy Act and Office of Foreign Assets Control compliance program.


 


27. Establish
procedures for: (i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal
accounting controls, or auditing matters; and (ii) the confidential, anonymous submission by Company employees of concerns regarding
questionable accounting or auditing matters.


 


28. Discuss
with management and the independent auditor any significant correspondence with regulators or governmental agencies and any external
or employee complaints or published reports that raise material issues regarding the Company’s financial statements or accounting
policies.


 


29. Review
and discuss, as and when appropriate, the Internal Audit department’s review of perquisites, expenses and conflicts of interest,
if any, of members of senior management.


 


30. Provide
the report of the Committee as required by the SEC for inclusion in the Company’s annual proxy statement.


 


Oversight
of the Company’s Risk Management


 


31. Review
or discuss, as and when appropriate, with the members of management, the Company’s guidelines and policies that govern the
process for risk assessment and risk management.


 


32. Review
the major legal and compliance risk exposures of the Company and the steps management has taken to monitor and control such exposures.


 


33. The
management shall each have access to communicate with the Committee on any matter relevant to risk and compliance.


 


Coordination
with Management and Other Board Committees


 


34. Coordinate
with management (which coordination may be through the Committee Chair) to help ensure that the committees have received the information
necessary to permit them to fulfill their duties and responsibilities with respect to oversight of risk management and risk assessment
guidelines and policies.


 






    	 



     


    

 


35. Coordinate
with the Chief Executive Officer and the Compensation, Management Development and Succession Committee, if any (which coordination
may be through the Committee Chair) in relation to the compensation and performance of the Company’s management.


 


Other
Authority


 


36. Make
such recommendations with respect to any of the above and other matters as the Committee deems necessary or appropriate.


 


37. Have
such other authority, duties and responsibilities as may be delegated to the Committee by the Board.


 


The
Committee’s authority, duties and responsibilities are discharged through evaluating reports given to the Committee, presentations
made to the Committee and other significant financial reporting decisions reported to the Committee by management, the internal
and independent auditors and by other persons or organizations the Committee deems appropriate.


 


Ratified
and Approved:


 


	Dated:
    January 1, 2018	 	 	 	 
	 	 	 	 	 
	/s/
    Mordechai Bignitz, Director	 	/s/
    Dr. Stanley Hirsch, Chairman	 	/s/
    Hannah Feuer, Director