The accompanying notes are an integral part of the consolidated
Financial Statements.
The accompanying notes are an integral part of the consolidated
Financial Statements.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share
and per share data
|
a.
|
Wize Pharma, Inc. (the “Company”
or “Wize”) was incorporated in the State of Delaware.
|
On November 16, 2017, the Company
completed the acquisition of Wize Pharma Ltd., an Israeli company (“Wize Israel”) by way of a reverse triangular
merger (the “Merger”).
Wize Israel is a clinical-stage
biopharmaceutical company currently focused on the treatment of ophthalmic disorders, including dry eye syndrome (“DES”).
Commencing August 30, 2016, Wize
Israel manages most of its activity through OcuWize Ltd. (“OcuWize”), a wholly-owned Israeli subsidiary which
manages and develops most of the Company’s activity under the License Agreement.
For
discussion regarding the issuance of mandatorily redeemable B preferred shares as a partial financing, together with the grant
of a right to receive 37% of future L02A-based products (“LO2A
Proceeds”) (if any) and the purchase of Bonus BioGroup Ltd. (“Bonus”) shares occurring in January
2020, see also Note 14.
|
b.
|
Going concern uncertainty and management plans:
|
The Company has not yet generated
any material revenues from its current operations, and therefore is dependent upon external sources for financing its operations.
As of December 31, 2019, the Company has an accumulated deficit of $33,899.
In addition, in each of the years
ended December 31, 2019 and 2018, the Company reported losses and negative cash flows from operating activities.
Management considered the significance
of such conditions in relation to the Company’s ability to meet its current and future obligations and determined that such
conditions raise substantial doubt about the Company’s ability to continue as a going concern.
WIZE PHARMA INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share
and per share data
The accompanying financial statements
do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the
amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.
Until such time as the Company
generates sufficient revenue to fund its operations (if ever), the Company plans to finance its operations and repay existing
indebtedness through the sale of equity or equity-linked securities and/or debt securities and, to the extent available, short-term
and long-term loans. There can be no assurance that the Company will succeed in obtaining the necessary financing to continue
its operations as a going concern.
Regarding a transaction with Bonus
in January 2020 see also Note 14.
As of December 31, 2019, the Company
had an accumulated deficit of $33,899. The Company has historically incurred net losses and is not able to determine whether or
when it will become profitable, if ever. To date, the Company has not commercialized any products or generated any revenues from
product sales and accordingly it does not have a revenue stream to support its cost structure. The Company’s losses have
resulted principally from costs incurred in development and discovery activities along with the general and administrative expenses
it incurs to support these activities.
The Company expects to continue
to incur losses for the foreseeable future, and these losses will likely increase as it:
|
●
|
initiates
and manages pre-clinical development and clinical trials for LO2A (as defined below);
|
|
●
|
seeks regulatory
approvals for LO2A;
|
|
●
|
implements
internal systems and infrastructures;
|
|
●
|
seeks to
license additional technologies to develop;
|
|
●
|
pays royalties
related to the License Agreement;
|
|
●
|
hires management
and other personnel; and
|
|
●
|
moves towards
commercialization.
|
No certainty exists that the Company
will be able to complete the development of LO2A for Conjunctivochalasis (“CCH”), Sjögren’s syndrome
(“Sjögren’s”) or any other ophthalmic disorder, due to financial, technological or other difficulties.
If LO2A fails in clinical trials or does not gain regulatory clearance or approval, or if LO2A does not achieve market acceptance,
the Company may never become profitable.
The Company’s inability
to achieve and then maintain profitability would negatively affect its business, financial condition, results of operations and
cash flows. Moreover, the Company’s prospects must be considered in light of the risks and uncertainties encountered by
an early-stage company and in highly regulated and competitive markets, such as the biopharmaceutical market, where regulatory
approval and market acceptance of its products are uncertain. There can be no assurance that the Company’s efforts will
ultimately be successful or result in revenues or profits.
WIZE PHARMA INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share
and per share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES
|
The consolidated Financial Statements
have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).
|
a.
|
Use of estimates in preparation of Financial
Statements:
|
The preparation of consolidated
Financial Statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect
the amounts reported in the consolidated Financial Statements and accompanying notes. The Company evaluates on an ongoing basis
its 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 consolidated Financial Statements,
and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates.
As applicable to the consolidated
Financial Statements, the most significant estimates and assumptions relate to the going concern assumptions, determining the
fair value of embedded and freestanding financial instruments related to convertible loans and rights to future investment as
part of modification or the settlement of the convertible loans and the determination of whether modification of terms of financial
instruments is considered substantial.
|
b.
|
Principles of consolidation:
|
The consolidated Financial Statements
include the accounts of the Company and its wholly owned subsidiaries. Inter-company balances and transactions have been eliminated
upon consolidation.
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
The Company aims to direct its
main operations in the United States market. In addition, the convertible loans were denominated in U.S. dollars. Similarly, the
Company issued warrants eligible for exercise for the Company’s shares of Common Stock at an exercise price denominated
in U.S. dollars and during January 2020 the Company completed the issuance of 7,500 Series B Non-Voting Redeemable Preferred Stock
for a purchase price of $1 per share. Also, the management believes the Company will raise funds through private investment rounds
and / or from issuance of equity in dollar amounts by approaching the market in the United States. As a result, it was determined
that the U.S dollar is the currency of the primary economic environment in which the Company operates and expects to continue
to operate in the foreseeable future. Thus, the functional currency of the Company is the U.S. dollar. The Company maintains its
books and records in local currency, which is NIS.
Balances denominated in, or linked
to foreign currency are stated on the basis of the exchange rates prevailing at the balance sheet date. For foreign
currency transactions included in the consolidated statement of comprehensive loss, the exchange rates applicable on the relevant
transaction dates are used. Transaction gains or losses arising from changes in the exchange rates used in the translation
of such balances are carried to financing income or expenses as applicable.
The following table presents data
regarding the dollar exchange rate of relevant currencies:
|
|
As of December 31,
|
|
|
% of change
|
|
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
USD 1 = NIS
|
|
|
3.456
|
|
|
|
3.748
|
|
|
|
(7.8
|
)
|
|
|
8.1
|
|
|
d.
|
Cash and cash equivalents:
|
Cash equivalents are short-term
highly liquid investments that are readily convertible to cash with original maturities of three months or less at acquisition.
WIZE PHARMA INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share
and per share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
For presentation of statement
of cash flows purposes, restrict cash balances are included with cash and cash equivalents, when reconciling the reported period
total amounts.
|
|
December 31
|
|
|
|
2019
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
718
|
|
Restricted bank deposit
|
|
|
41
|
|
Total cash, cash equivalents, and restricted cash shown in the statement
of cash flows
|
|
$
|
759
|
|
There were no restricted cash
amounts as of December 31, 2018.
|
e.
|
Restricted bank deposit:
|
Restricted bank deposit is a deposit
with maturities of more than three months and up to one year. The restricted bank deposit was presented at its cost, including
accrued interest and represents cash which is used as collateral for Wize Israel’s credit card used for certain corporate
business expenses.
|
f.
|
Marketable equity securities:
|
The Company’s investment
in marketable equity securities which is based on equity securities with readily determinable fair values was classified as financial
instruments at fair value with any changes in fair value recognized periodically in net income.
WIZE PHARMA INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share
and per share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
g.
|
Property and equipment, net:
|
Property and equipment are stated
at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful
lives of the assets at the following rates:
|
|
%
|
|
|
|
|
|
Computers and electronic
equipment
|
|
|
33
|
|
Furniture and office equipment
|
|
|
10
|
|
|
h.
|
Impairment of long-lived assets:
|
The Company’s long-lived
assets are reviewed for impairment in accordance with Accounting Standards Codification (“ASC”) 360, “Property,
Plant and Equipment”. Whenever events or changes in circumstances indicate that the carrying amount of an asset may not
be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to
the future undiscounted cash flows expected to be generated by the assets. If such asset is considered to be impaired, the impairment
to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Assets to be disposed
of are reported at the lower of the carrying amount or fair value less costs to sell. During the years ended December 31, 2019
and 2018, no impairment losses have been identified.
|
i.
|
Research and development expenses:
|
Research and development expenses
are charged to the statement of comprehensive loss as incurred.
In-Process Research and Development
assets, acquired in an asset acquisition (i.e., assets acquired outside a business combination transactions) that are to
be used in a research and development project which are determined not to have an alternative future use are charged to expense
at the acquisition date in accordance with ASC 730, “Research and Development”.
Wize Israel has two employee as
of December 31, 2019 and 2018. Wize Israel’s liability for severance pay is subject to Section 14 of Israel’s the
Severance Compensation Act, 1963 (“Section 14”), pursuant to which all Wize Israel’s employees are included
under Section 14, and are entitled only to monthly deposits, at a rate of 8.33% of their monthly salary, made in the employee’s
name with insurance companies. Under Israeli employment law, payments in accordance with Section 14 release Wize Israel from any
future severance payments in respect of those employees. Wize Israel has made all of the required payments as of December 31,
2019 and 2018.
WIZE PHARMA INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share
and per share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
The fund is made available to
the employee at the time the employer-employee relationship is terminated, regardless of cause of termination.
The severance pay liabilities
and deposits under Section 14 are not reflected in the consolidated balance sheets as the severance pay risks have been irrevocably
transferred to the severance funds.
Severance expenses for the years
ended December 31, 2019 and 2018 amounted to $17 and $10, respectively.
The Company accounts for income
taxes in accordance with ASC 740, “Income Taxes”. This topic prescribes the use of the liability method whereby deferred
tax assets and liability account balances are determined based on differences between financial reporting and tax bases of assets
and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected
to reverse. Valuation allowances in respect of deferred tax assets are provided for, if necessary, to reduce deferred tax assets
to amounts more likely than not to be realized.
The Company implements a two-step
approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position taken or expected to
be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on
an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals
or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% (cumulative
basis) likely to be realized upon ultimate settlement. As of December 31, 2019 and 2018, no liability for unrecognized tax positions
has been recognized.
|
l.
|
Concentrations of credit risk:
|
Financial instruments that potentially
subject the Company to concentrations of credit risk consist principally of cash, cash equivalents, marketable securities and
restricted bank deposits. Cash and cash equivalents and restricted bank deposits are invested in major banks in Israel.
Management believes that the financial
institutions that hold the Company’s investments are financially sound and, accordingly, minimal credit risk exists with
respect to these investments.
The Company has no off-balance-sheet
concentration of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements.
WIZE PHARMA INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share
and per share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
Allocation of proceeds:
The proceeds received upon the
original issuance of the 2016 Loan (as defined below) together with a freestanding derivative financial instrument (derivative
liability for right to future investment) were allocated to the financial instruments issued based on the residual value method.
The detachable derivative financial
instrument related to the 2016 Loan was recognized based on its fair value and the remaining amount of the proceeds was allocated
to the 2016 Loan component.
The 2017 Loan (as defined below)
was not issued with any detachable instruments.
Beneficial Conversion Features
(“BCFs”):
|
a.
|
Upon initial recognition,
the Company has considered the provisions of ASC 815-40, “Derivatives and Hedging – Contracts in Entity’s
Own Equity” (“ASC 815-40”), and determined that the embedded conversion feature of the 2016 Loan
should not be separated from the host instrument because it qualifies for equity classification. Furthermore, the Company
applied ASC 470-20, “Debt – Debt with Conversion and Other Options” (“ASC 470-20) which clarifies
the accounting for instruments with BCFs or contingently adjustable conversion ratios, and has applied the BCFs guidance to
determine whether the conversion feature is beneficial to the investor.
|
The BCFs was calculated by allocating
the proceeds received in financing transactions to the 2016 Loan and to any detachable freestanding financial instrument (derivative
liability for future investment) included in the transaction, and by measuring the intrinsic value of the conversion option based
on the effective conversion price as a result of the allocated proceeds.
The intrinsic value of the conversion
option with respect to the 2016 Loan was recorded as a discount on the 2016 Loan with a corresponding amount credited directly
to equity as additional paid-in capital. After the initial recognition, the discount on the 2016 Loan was amortized as interest
expense over the contractual term of the 2016 Loan (before its modification) by using the effective interest method.
WIZE PHARMA INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share
and per share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
b.
|
Upon initial recognition,
the Company has considered the provisions of ASC 815-15, “Derivatives and Hedging - Embedded Derivatives”,
and determined that the embedded conversion feature of the 2017 Loan cannot be considered as clearly and closely related to
the host debt instrument, However, it was determined that the embedded conversion feature should not be separated from the
host instrument because the embedded conversion option, if freestanding, did not meet the definition of a derivative in accordance
with the provisions of ASC 815-10, “Derivatives and Hedging” since its terms did not require or permit
net settlement. Thus, it was determined that the conversion feature does not meet the characteristic of being readily convertible
to cash.
|
Furthermore, the Company applied
ASC 470-20 which clarifies the accounting for instruments with BCFs or contingently adjustable conversion ratios.
Pursuant to ASC 470-20-30, the
amount of the BCFs with respect to the 2017 Loan was calculated at the commitment date, as the difference between the conversion
price (i.e., the entire proceeds received for the 2017 Loan) and the aggregate fair value of the Common Stock and other
securities (which consist of the future Investment Rights) into which the 2017 Loan was convertible.
As such difference was determined
to be greater than the amount of the entire proceeds originally received for the 2017 Loan, the amount of the discount assigned
to the BCFs was limited to the amount of the entire proceeds.
|
c.
|
Following modifications
or exchanges of convertible loans that were accounted for as an extinguishment (see below), upon each additional recognition
of the convertible loans based on their modified terms, the Company applied ASC 470-20, “Debt – Debt with conversion
and other options” to determine whether the conversion feature is considered beneficial to the investors. However, due
to the fact that following each of the extinguishments of the convertible loans, such modified convertible loans were recognized
based on their fair value as of the modification date, the conversion terms were not considered beneficial to the investors.
|
|
d.
|
Modifications
or Exchanges:
|
Modifications to, or exchanges
of, financial instruments such as convertible loans, are accounted for as a modification or an extinguishment, following to provisions
of ASC 470-50, “Debt- Modification and Extinguishments” (“ASC 470-50”). Such an assessment done
by management either qualitatively or quantitatively based on the facts and circumstances of each transaction.
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
Under ASC 470-50, modifications
or exchanges are generally considered extinguishments with gains or losses recognized in current earnings if the terms of the
new debt and original instrument are substantially different. The instruments are considered “substantially different”
when the present value of the cash flows under the terms of the new debt instrument is at least 10% different from the present
value of the remaining cash flows under the terms of the original instrument.
If the terms of a debt instrument
are changed or modified and the present value of the cash flows under the terms of the new debt instrument is less than 10%, the
debt instruments are not considered to be substantially different, except in the following two circumstances (i) The
transaction significantly affects the terms of an embedded conversion option, such that the change in the fair value of the embedded
conversion option (calculated as the difference between the fair value of the embedded conversion option immediately before and
after the modification or exchange) is at least 10% of the carrying amount of the original debt instrument immediately before
the modification or exchange or (ii) The transaction adds a substantive conversion option or eliminates a conversion
option that was substantive at the date of the modification or exchange.
If the original and new debt
instruments are considered as “substantially different”, the original debt is derecognized and the new debt is initially
recorded at fair value, with the difference recognized as an extinguishment gain or loss under financial expense or income as
applicable.
If a convertible debt instrument
with a beneficial conversion option that was separately accounted for in equity, is extinguished prior to its conversion or stated
maturity date, a portion of the reacquisition price is allocated to the repurchase of the beneficial conversion option. The amount
of the reacquisition price allocated to the beneficial conversion option is measured using the intrinsic value of that conversion
option at the extinguishment date. The residual amount, if any, is allocated to the convertible debt instrument.
The gain or loss on the extinguishment
of the convertible debt instrument is determined based on the difference between the carrying amount and the fair value of the
allocated reacquisition price.
Modifications to, or exchanges
of equity financial instruments such as right to future investment, are accounted for as a modification or an extinguishment in
a similar manner as described above. Such an assessment is done by management either qualitatively or quantitatively based on
the facts and circumstances of each transaction. Among others, management considers whether, the fair value of the financial instruments
before and after the modification or exchange are substantially different.
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
If the original and new equity
instruments are considered as “substantially different”, the excess fair value of the allocated reacquisition price
over the fair value of the modified financial instrument before the modification, is recognized directly to retained earnings
as a deemed dividend.
Issuance costs of convertible
loan:
|
a.
|
Upon initial recognition,
costs incurred in respect of obtaining financing through issuance of the 2016 Loan (or costs allocated to such component in
a package issuance) are presented as a direct deduction from the amount of the 2016 Loan and in subsequent periods such costs
(together with the discount created by BCFs if applicable) expensed as financing expenses over the contractual term of the
2016 Loan by using the effective interest method. Any such costs that were allocated to the derivative component were expensed
as incurred.
|
|
b.
|
Upon initial recognition,
costs incurred in respect of obtaining financing through issuance of the 2017 Loan also discussed in Note 8 (or costs allocated
to such component in a package issuance) were presented as a deferred asset since the 2017 Loan was completely discounted
at the initial recognition. In subsequent periods, such expenses were amortized ratably over the original term of the 2017
Loan.
|
Extinguishment of convertible
loans:
Upon the final extinguishment
of the convertible loans upon their maturity, the difference between the reacquisition price which consist of the cash paid, the
fair value of instruments issued (shares and warrants) and the modification of loans and cancellation of existing financial instruments)
and the carrying amounts of the convertible loans being extinguished is recognized as a gain or loss in the period of extinguishment.
|
n.
|
Fair value of financial
instruments:
|
ASC 820, “Fair Value Measurements
and Disclosures” (“ASC 820”), defines fair value as the price that would be received to sell an asset
or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants
at the measurement date.
In determining fair value, the
Company uses various valuation approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes
the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used
when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based
on market data obtained from sources independent of the Company.
Unobservable inputs are inputs
that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability
developed based on the best information available in the circumstances.
The hierarchy is broken down into
three levels based on the inputs as follows:
|
Level 1
|
-
|
Valuations based
on quoted prices in active markets for identical assets that the Company has the ability to access.
|
|
|
|
|
|
Level 2
|
-
|
Valuations based
on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly
or indirectly.
|
|
|
|
|
|
Level 3
|
-
|
Valuations based
on inputs that are unobservable and significant to the overall fair value measurement.
|
The availability of observable
inputs can vary from investment to investment and is affected by a wide variety of factors, including, for example, the type of
investment, the liquidity of markets and other characteristics particular to the transaction. To the extent that valuation is
based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more
judgment and the investments are categorized as Level 3.
The carrying amounts of cash and
cash equivalents, short-term bank deposits, other accounts receivable, trade payables and other accounts payable approximate their
fair value due to the short-term maturities of such instruments.
Fair value of the marketable equity
securities is determined based on a Level 1 input.
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
o.
|
Legal and other contingencies:
|
The Company accounts for its contingent
liabilities in accordance with ASC 450 “Contingencies”. A provision is recorded when it is both probable that a liability
has been incurred and the amount of the loss can be reasonably estimated. With respect to legal matters, provisions are reviewed
and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information
and events pertaining to a particular matter. As of December 31, 2019, the Company is not a party to any litigation that
could have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.
Legal costs incurred in connection
with loss contingencies are expensed as incurred.
Shares held by the Company are
presented as a reduction of equity, at their cost to the Company as treasury stock, until such shares are retired and removed
from the account.
WIZE PHARMA INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share
and per share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
|
q.
|
Series A Warrants and December 2019 Warrants
with Down-Round Protection
|
Commencing January 1, 2018 and
following the early adoption of Accounting Standard Update (“ASU”) No. 2017-11, “I. Accounting for certain
financial instruments with Down Round Features” (ASU 2017-11) as described in Note 2.r, the Company disregard certain down-round
features when assessing whether a financial instrument is indexed to its own stock, for purposes of determining liability or equity
classification.
Based on its evaluation, management
has determined that the Series A Warrants (as defined below) and warrants that were issued on October 2018 (the “October
2018 Warrants”) and on December 20, 2019 (the “December 2019 Warrants”), as part of a private placement
, as described in Note 11h and 11u, respectively, which include a down-round protection that would adjust the exercise price
of the Series A Warrants based on the price at which the Company subsequently issues shares or other equity-linked financial instruments,
if that price is less than the original exercise price of the Series A Warrants, are eligible for equity classification.
In accordance with the provisions
of ASU 2017-11, upon the occurrence of an event that triggers a down round protection (i.e., when the exercise price of
the Series A Warrants is adjusted downward because of the down round feature), the effect is accounted for as a deemed dividend
and as a reduction of income available (increase of loss applicable) to common shareholders for purposes of basic earnings per
share (EPS) calculation.
Regarding a triggering event that
required down-round adjustment of the exercise price of the warrants during 2019, see Note 8e.
|
r.
|
Basic and diluted loss per share:
|
Basic loss per share is computed
by dividing the loss for the period applicable to Ordinary Shareholders by the weighted average number of shares of Common Stock
outstanding during the period. Securities that may participate in dividends with the Common Stock (such as the convertible Series
A Preferred Stock) are considered in the computation of basic income (loss) per share using the two-class method. In periods of
net loss, such participating securities are included in the computation, since the holders of such securities have a contractual
obligation to share the losses of the Company (as the convertible Series A Preferred Stock do not have a right to receive any
mandatory redemption amount and as they are entitled only to dividends on an as-converted basis together with the common shares).
In computing diluted loss per
share, basic loss per share is adjusted to reflect the potential dilution that could occur upon the exercise of options, warrants
and rights for future investment issued or granted using the “treasury stock method” and upon the conversion of 2017
Loan and 2016 Loan using the “if-converted method”, if the effect of each of such financial instruments is dilutive.
For the years ended December 31,
2019 and 2018, all outstanding stock options and other convertible instruments have been excluded from the calculation of the
diluted net loss per share as all such securities are anti-dilutive for all years presented.
WIZE PHARMA INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share
and per share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
The loss and the weighted average
number of shares used in computing basic and diluted net loss per share for the years ended December 31, 2019 and 2018, is as
follows:
|
|
Year ended
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Numerator:
|
|
|
|
|
|
|
Net loss
|
|
$
|
(3,450
|
)
|
|
$
|
(3,279
|
)
|
Add: Loss attributed to preferred stock (*)
|
|
|
136
|
|
|
|
147
|
|
Less: Deemed dividend with respect
to right for future investment
|
|
$
|
(185
|
)
|
|
$
|
(292
|
)
|
Less: Deemed dividend due to down
round adjustment
|
|
|
(267
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Net loss applicable to stockholders of Common Stock
|
|
$
|
(3,766
|
)
|
|
$
|
(3,424
|
)
|
|
|
|
|
|
|
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
Shares of Common Stock used in computing basic and diluted
net loss per share
|
|
|
10,519,682
|
|
|
|
5,649,262
|
|
Net loss per share of Common Stock, basic and diluted
|
|
$
|
(0.36
|
)
|
|
$
|
(0.61
|
)
|
|
(*)
|
During the year
ended December 31, 2018 the Company issued preferred stock pursuant to the Purchase Agreement
(as defined below). These preferred shares are participating securities as described
in Note 12h. During the years ended December 31, 2019 and 2018 there were no other potentially
dilutive instruments.
|
|
|
Year
ended
December
31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Number of shares:
|
|
|
|
|
|
|
Common shares used
in computing basic loss per share
|
|
|
10,519,682
|
|
|
|
5,649,262
|
|
Common shares used in computing
diluted loss per share
|
|
|
10,519,682
|
|
|
|
5,649,262
|
|
|
|
|
|
|
|
|
|
|
Preferred Stock, options and warrants
excluded from the calculations of diluted loss per share
|
|
|
16,931,097
|
|
|
|
10,498,954
|
|
The components of accumulated
other comprehensive income (loss) which resulted from foreign currency translation adjustment as of December 31, 2019 and
2018 were as follows:
|
|
Total accumulated other comprehensive
income (loss)
|
|
|
|
|
|
Balance at December 31, 2018
|
|
$
|
(73
|
)
|
|
|
|
|
|
Balance at December 31, 2019
|
|
$
|
(73
|
)
|
|
t.
|
Stock-based compensation:
|
Stock-based compensation to employees
is accounted for in accordance with ASC 718, “Compensation - Stock Compensation” (“ASC 718”), which
requires estimation of the fair value of equity - based payment awards on the date of grant using an option pricing model. The
value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service period.
WIZE PHARMA INC. AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in thousands, except share
and per share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
Stock-based compensation expense
is recognized for the value of awards granted based on the accelerated method over the requisite service period of each of the
awards, net of estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary,
in subsequent periods if actual forfeitures differ from those estimates.
The fair value of stock options
granted to Wize Israel employees was estimated using the Black- Scholes option pricing model, which requires a number of assumptions,
of which the most significant are the expected stock price volatility and the expected option term. Expected volatility was calculated
based upon historical volatilities of Wize Israel on a weekly basis since the marketability of Wize Israel is less than the expected
option term. The expected option term represents the period that Wize Israel’s stock options are expected to be outstanding
and is determined based on the simplified method until sufficient historical exercise data will support using expected life assumptions.
The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term.
The expected dividend yield assumption
is based on Wize Israel’s historical experience and expectation of no future dividend payouts. Wize Israel has historically
not paid cash dividends and has no foreseeable plans to pay cash dividends in the future.
Until December 31, 2017, ASC 505-50,
“Equity-Based Payments to Non-Employees” provisions were applied with respect to options and warrants issued to non-employees
which requires the use of option valuation models to measure the fair value of the options and warrants at the grant date, and
at the end of each accounting period between the grant date and the final measurement date. Following the adoption of ASU2018-07
all equity-classified nonemployee share-based payment awards granted during 2018 and 2019 were measured at grant-date fair value
of the equity instruments that the Company is obligated to issue.
|
u.
|
Disclosure of new accounting standards
|
In February 2016, the Financial
Accounting Standards Board (“FASB”) issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”).
ASU 2016-02 requires lessees to recognize their leases contracts as assets and liabilities in the Financial Statements. Furthermore,
with respect to operating lease transactions, ASU 2016-02 requires the Company to continue recognizing expenses but recognize
expenses on their income statements in a manner similar to current lease accounting. The amendments in this ASU became effective
on January 1, 2019. In July 2018, the FASB issued ASU 2018-11, Leases - Targeted Improvements, to allow a company to elect an
optional modified retrospective transition method that applies the new lease requirements through a cumulative-effect adjustment
in the period of adoption. Effective January 1, 2019, the Company adopted the new lease accounting standard using the modified
retrospective transition option of applying the new standard at the adoption date. The Company elected to apply the package of
practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company
to carry forward the historical lease classification.
The Company recognized $42
of operating lease right of use assets and operating lease liabilities at January 1, 2019. As of December 31, 2019, total of right-of-use
assets related to the Company’s operating leases and operating lease liabilities was $22.
The Company recorded an amortization
of $20 in right of use assets and operating lease liabilities for the year ended December 31, 2019.
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 2:-
|
SIGNIFICANT ACCOUNTING POLICIES (Cont.)
|
The components of lease costs,
lease terms and discount rate are as follows:
|
|
Year Ended
December 31,
2019
|
|
Operating lease costs:
|
|
|
|
Office rent
|
|
|
22
|
|
Total operating lease cost
|
|
|
22
|
|
|
|
|
|
|
Remaining Lease Term
|
|
|
|
|
Office rent
|
|
|
0.9 years
|
|
|
|
|
|
|
Weighted Average Discount Rate
|
|
|
|
|
Office rent
|
|
|
15
|
%
|
|
|
|
|
|
Period:
|
|
|
|
|
2020
|
|
|
22
|
|
|
|
|
22
|
|
|
v.
|
Recent Accounting Pronouncements not adopted
yet
|
ASU 2016-13, “Financial
Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”)
On June 2016, the FASB issued
ASC Update 2016-13, “Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial
Instruments” (“ASC Update 2016-3”) ASC Update 2016-13 revised the criteria for the measurement,
recognition, and reporting of credit losses on financial instruments to be recognized when expected. This update is effective
for fiscal years beginning after December 15, 2019, including the interim periods within those years, with early adoption
permitted for fiscal years beginning after December 15, 2018, including interim periods within those years.
The Company is in the process
of evaluating the effect that ASU 2016-13 will have on the results of operations and financial statements, if any.
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 3:-
|
MARKETABLE EQUITY SECURITIES
|
|
a.
|
The Company owns 52,249 ordinary
shares of Can-Fite representing approximately 0.04% and 0.12% of Can-Fite’s issued
and outstanding share capital as of December 31, 2019 and 2018, respectively. As of December
31, 2019, the investment amounts to $6. During the year ended December 31, 2019 the Company
recorded a loss of $26.
|
|
b.
|
As
of December 31, 2019 the Company owns 25,000 ordinary shares of Cannabics Pharmaceuticals,
Inc. (“Cannabics”) representing less than 1% of its issued and outstanding
share capital as of that day, see Note 11k. As of December 31, 2019, the investment amounts
to $3.
|
|
c.
|
In
respect with Note b above, during the fourth quarter of 2019, the Company sold 2,238,944
shares through a broker at the amount of $260 (see also Note 4) which were received as
of the date of Financial Statements. The Company made a payment of $1 to the broker as
a deposit for the Broker’s activity. During the year ended December 31, 2019 the
Company recorded a loss of $501.
|
NOTE 4:-
|
OTHER CURRENT ASSETS
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Prepaid expenses
|
|
$
|
92
|
|
|
$
|
97
|
|
Receivables from governmental authorities
|
|
|
26
|
|
|
|
75
|
|
Other receivable (Note 3)
|
|
|
260
|
|
|
|
-
|
|
Other
|
|
|
-
|
|
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
378
|
|
|
$
|
180
|
|
NOTE 5:-
|
LICENSE AGREEMENT
|
In May 2015, Wize Israel entered
into an Exclusive Distribution and Licensing Agreement (as amended, the “License Agreement”) with Resdevco
Ltd. (“Resdevco”), whereby Resdevco granted to Wize Israel an exclusive license to purchase, market, sell and
distribute a formula known as LO2A (“LO2A”) in the United States and China as well as a contingent right to
do the same in other countries. LO2A is a drug developed for the treatment of DES, and other ophthalmological illnesses, including
CCH and Sjögren’s. Pursuant to the LO2A License Agreement, Wize Israel is required to pay Resdevco royalties for sales
in the licensed territories, payable on a semi-annual basis, subject to making certain minimum royalty payments as set forth in
the LO2A License Agreement. In January 2019 and January 2020, the Company paid Resdevco royalties in the amount of $150.
Pursuant to the License Agreement,
the minimum royalties payable by Wize Israel to Resdevco shall be $150 per year through 2021. A one-time payment to Resdevco
by Wize Israel in an amount of $650 shall be due no later than the second anniversary of the receipt of Food and Drug Administration
(“FDA”) approval (the “Deferred Amount”); however, following FDA approval, if annual royalties
due to Resdevco by Wize Israel exceed the Minimum Royalties (as defined in the License Agreement), an amount equal to 50% of such
excess shall be added towards settlement of the Deferred Amount. As to royalty payments, Resdevco shall be entitled to the greater
of $0.60 per unit sold, or a percentage of revenues, not to exceed 10%, from sales made in the United States and other countries,
excluding Israel, China and Ukraine, but not less than the Minimum Royalties.
The Company has determined not
to pursue currently any activities outside the USA until the Company will obtain from Resdevco satisfactory registration file
including DES and at least one more indication such as CCH or Sjögren’s. The Company seeks to approve a proposed regulatory
strategy acceptable to the Chinese market based on the regulatory files provided.
As of the date of these Financial
Statements, the Company had not received FDA approval for LO2A.
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 5:-
|
LICENSE AGREEMENT (Cont.)
|
As of December 31, 2019, the
Company has recognized a liability of $250, representing the minimum commitment to pay royalties based on the upcoming January
2020 payment in an amount of $150 and an amount of $100 which represents a termination fee payable to Resdevco if the Company
exercises its right to terminate the License Agreement.
As of December 31, 2019 and
2018, the current liability to pay future royalties amounts to $250 (see also Note 6).
On February 28, 2019, the Company
terminated the distribution agreements in the territory of Ukraine.
NOTE 6:-
|
LICENSE PURCHASE OBLIGATION
|
|
a.
|
In July 2017, Wize Israel and
Resdevco amended the License Agreement pursuant to which the annual royalties amount of $475 were reduced to $150 for
2018 and 2019. In addition, If Wize Israel would have obtained an FDA marketing license during 2019, the Company was also
required to pay Resdevco the remainder of the payment of 2019, however, such approval was not achieved in 2019. Consequently,
during the third quarter of 2017 the Company has recognized an amount of $150 as an additional liability with respect
to the 2018 minimum commitment, which was paid during the third quarter of 2018. In addition, during the third quarter
of 2018 and 2019, the Company has recognized an amount of $150 as a liability in respect to the 2019 and 2020, respectively,
minimum commitment. Such amount was reflected as an expense under research and development expenses in 2018 and 2019 as
applicable. In February 2019, the Company and Resdevco agreed that the Company shall pay Resdevco minimum yearly payments
of $150,000 per year through 2021, and then annual payments of $475,000 per year, and shall pay Resdevco $650,000 within
two years after receipt of FDA approval for eye drops utilizing the licensed technology.
On May 31, 2018, The Company entered
into a distribution agreement with the Chinese distributor. As a result of entering into the agreement above, the term
of the Third Amendment did not expire on June 1, 2018.
|
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 6:-
|
LICENSE PURCHASE OBLIGATION (Cont.)
|
|
b.
|
The following table
details the repayment dates of the remaining Minimal Commitment on the financial liability and the balance in the consolidated
Financial Statements:
|
|
|
As
of
December
31,
|
|
|
|
2019
|
|
|
2018
|
|
Repayment dates:
|
|
|
|
|
|
|
January 1, 2019
|
|
$
|
-
|
|
|
$
|
250
|
|
January 1, 2020 (see to Note 5)
|
|
|
250
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Remaining balance
|
|
|
250
|
|
|
|
250
|
|
|
|
|
|
|
|
|
|
|
Current liability
|
|
|
250
|
|
|
|
250
|
|
Non-current liability
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
250
|
|
|
$
|
250
|
|
NOTE 7:-
|
ACCOUNTS PAYABLES
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Employees and payroll accruals
|
|
$
|
87
|
|
|
$
|
130
|
|
Accrued expenses
|
|
|
278
|
|
|
|
142
|
|
Trade payables
|
|
|
4
|
|
|
|
34
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
369
|
|
|
$
|
306
|
|
NOTE 8:-
|
CONVERTIBLE LOANS
|
On March 20, 2016, Wize Israel
entered into an agreement (as amended, the “2016 Loan Agreement”) pursuant to which Rimon Gold Assets Ltd.
(“Rimon Gold”) extended a loan in the principal amount of up to NIS 2 million (approximately $531 according
to an exchange rate at 2016 loan originate date), which bears interest at an annual rate of 4% (the “2016 Loan”).
Pursuant to the 2016 Loan Agreement, as modified by the 2017 Loan Agreement (as defined below) and the 2017 Loan Amendment (as
defined below), the 2016 Loan had a maturity date of December 31, 2018. Regarding the modifications of the maturity date of the
2016 Loan on October 2018, March 2019 and May 2019, see also Note 8a, 8b, 8c and 8d. Regarding loan extinguishment, refer to Note
8e.
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 8:-
|
CONVERTIBLE LOANS (Cont.)
|
Under the 2016 Loan Agreement,
Rimon Gold had the right, at its sole discretion, to convert any outstanding portion of the 2016 Loan, but not less than NIS 100,000
(approximately $26 according to an exchange rate at 2016 loan origination date), into Wize Israel ordinary shares at a conversion
price of NIS 15.2592 per share (approximately $3.84), subject to adjustments for stock splits and similar events set forth in
the 2016 Loan Agreement. As a result of the Merger and based on the Exchange Ratio, the conversion price per share for the 2016
Loan was adjusted to NIS 3.6 (approximately $0.96). As a result of the 2017 Loan Amendment, the aggregate principal amount of
the 2016 Loan was adjusted to $531 and the conversion price per share for the 2016 Loan was adjusted to $0.9768.
In addition, under the 2016
Loan Agreement, as modified by the 2017 Loan Agreement and the 2017 Loan Amendment, Rimon Gold had the right (the “2016
Investment Right”), until June 30, 2019, to invest up to $797, in the aggregate, at an agreed price per share, which
was adjusted based on the Exchange Ratio (as defined in the Agreement and Plan of Merger with Bufiduck Ltd., a company formed
under the laws of the State of Israel and our wholly owned subsidiary and Wize Israel) from NIS 20.4 (approximately $6.00) to
NIS 5.04 (approximately $1.44) and based on the 2017 Loan Amendment, from NIS 5.04 to $1.308 (subject to adjustments in case of
stock splits or similar events).
Rimon Gold was entitled, under
certain circumstances, to demand repayment of the 2016 Loan subject to certain conditions. However, as described in note 8e below
the convertible loan was extinguishment in November 2019.
On January 15, 2017, Wize Israel
entered into the loan agreement (the “2017 Loan Agreement”, and together with the 2016 Loan Agreement the “Loan
Agreements”) with Ridge Valley Corporation (“Ridge”), and, by way of entering into assignments and
assumption agreements following such date, also with Rimon Gold and Shimshon Fisher (“Fisher”, and together
with Ridge and Rimon Gold, the “2017 Lenders”), whereby each of the 2017 Lenders extended a loan in the principal
amount of up to NIS 1 million (approximately $274 according to an exchange rate at 2017 loan originate date) and in the aggregate
principal amount of up to NIS 3 million (approximately $822 according to an exchange rate at 2017 loan originate date), which
bears interest at an annual rate of 4% (the “2017 Loan”, and together with the 2016 Loan, the “Loans”).
Pursuant to the 2017 Loan Agreement and the 2017 Loan Amendment, the 2017 Loan had a maturity date of December 31, 2018. Regarding
the modification of the maturity date of the 2017 loan in October 2018, March 2019 and May 2019, see also Note 8b, 8c and 8d.
Regarding loan extinguishment, refer to Note 8e.
Under the 2017 Loan Agreement,
each of the 2017 Lenders had the right, at its sole discretion, to convert any outstanding portion of the 2017 Loan, but no less
than NIS 100,000 (approximately $28 according to an exchange rate at 2017 loan originate date), that the lender provided to Wize
Israel (each such portion converted into Wize Israel ordinary shares at a conversion price per share equal to the lower of (1)
NIS 24 (approximately $6.72) and (2) the lowest price per share of Wize Israel in any offering made by Wize Israel following the
date of the 2017 Loan Agreement and through the date of such requested conversion, subject to adjustments for stock splits and
similar events set forth in the 2017 Loan Agreement (the “2017 Loan Conversion Price”). As a result of the
private placement agreement, dated June 23, 2017 between Wize Israel, Yosef Eliyahu Peretz, Yaakov Zarachia, Simcha Sadan and
Jonathan Brian Rubini (see also Note 12b to the 2018 consolidated Financial Statements), the 2017 Loan Conversion Price for Rimon
Gold, Fisher and Ridge was adjusted to NIS 16.8 (approximately $4.80), and as a result of the Merger, the 2017 Loan Conversion
Price of NIS16.8 (approximately $4.8) was adjusted in accordance with the Exchange Ratio to NIS 4.05 (approximately $1.15).
As a result of the 2017 Loan
Amendment, the aggregate principal amount of the 2017 Loan was adjusted to $822 and the 2017 Loan Conversion Price was adjusted
to $1.1112. See “2017 Loan Amendment” below.
In addition, under the 2017
Loan Agreement, as modified by the 2017 Loan Amendment, the 2017 Lenders had the right (the “2017 Investment Right”,
and together with the 2016 Investment Right the “Investment Rights”), until June 30, 2019, to invest up to
$1,233, in the aggregate, at an agreed price per share equal to 120% of the applicable 2017 Loan Conversion Price, which was adjusted
in December 2017, based on the 2017 Loan Amendment, to a fixed exercise price of $1.332 (subject to adjustments in case of stock
splits or similar events).
Ridge was entitled, under certain
circumstances, to demand repayment of the 2017 Loan subject to certain conditions. However, as described in note 8e below, the
convertible loan was extinguished on November 2019. On April 21, 2019, Ridge transferred the loan and the 2017 Investment Right
to Mobigo Inc, a company wholly owned by the Company’s CEO, Noam Danenberg (“Mobigo”). Mr. Danenberg
waived a debt owed to him directly by Ridge (that did not involve the Company) as consideration for these derivative securities.
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 8:-
|
CONVERTIBLE LOANS (Cont.)
|
On December 21, 2017, the Company
entered into an amendment (the “2017 Loan Amendment”) to the 2016 Loan Agreement and the 2017 Loan Agreement.
Pursuant to the 2017 Loan Amendment, (i) the maturity date of the Loans was extended from December 31, 2017 to December 31,
2018; (ii) the exercise period of the 2016 Investment Right was amended so that it shall expire on June 30, 2019; (iii) the exercise
period of the 2017 Investment Right was amended so that it shall expire, without the need to first convert the 2017 Loan, on June
30, 2019; and (iv) the below terms of the Loans were amended to be denominated in U.S. dollars instead of NIS:
|
|
2017 Loan
|
|
|
2016 Loan
|
|
|
|
|
|
|
|
|
Aggregate principal amount
|
|
$
|
822
|
(*)
|
|
$
|
531
|
|
|
|
|
|
|
|
|
|
|
Conversion price per Company’s share
|
|
$
|
1.1112
|
|
|
$
|
0.9768
|
|
|
|
|
|
|
|
|
|
|
Aggregate maximum of Right to Future Investment
|
|
$
|
1,233
|
(**)
|
|
$
|
797
|
|
|
|
|
|
|
|
|
|
|
Exercise price per Company’s share of Right to Future Investment
|
|
$
|
1.332
|
|
|
$
|
1.308
|
|
(*)
|
Principal loan amount
of $274 for each of the three 2017 Lenders.
|
(**)
|
Maximum of Right
to Future Investment of $411 for each of the three 2017 Lenders.
|
(***)
|
As of December 31,
2019, the remaining of Right to Future Investment amounts to $40 and $31 with respect to the 2017 Loan and 2016 Loan, respectively
(see also Note 8e)
|
Accordingly, each of the modified
financial instruments was initially recorded at fair value. Then, the total fair value of the modified financial instruments related
to the 2017 Loan and 2016 Loan (the “Reacquisition Price”) was allocated to the original financial instruments
included in the 2017 Loan and 2016 Loan, as applicable, based on the relative fair value of such financial instruments as of the
date of the extinguishment. As a result, an aggregate amount of $2,104 was allocated to the 2016 Loan and an aggregate amount
of $2,985 was allocated to the 2017 Loan.
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 8:-
|
CONVERTIBLE LOANS (Cont.)
|
In connection with the Purchase
Agreement (as defined below), on October 19, 2018, the Company and Wize Israel entered into an amendment to the existing convertible
loans (the “2018 Loan Amendment”). Pursuant to the 2018 Loan Amendment, the maturity date under the (i) 2016
Loan Agreement, and (ii) 2017 Loan Agreement, was amended to be the earliest of (a) 90 days following the date that the registration
statement the Company will file under the registration rights agreement dated October 22, 2018 (the “Registration Rights
Agreement”) covering the resale of all Common Stock, issued pursuant to the Purchase Agreement, and issuable upon conversion
of the Series A Preferred Stock and exercise of the Series A Warrants, are registered for resale for investors who are not a party
to the 2018 Loan Amendment, (b) 90 days following the date on which all securities issued to investors under the Purchase Agreement
are no longer deemed registrable securities under the Registration Rights Agreement, and (c) one year following the closing under
the Purchase Agreement. In addition, pursuant to the 2018 Loan Amendment, the expiration date of the Investment Rights under the
2016 Loan Agreement and the 2017 Loan Agreement was amended to be 180 days after the Loan Agreements maturity date.
The 2018 Loan Amendment was accounted
for as an extinguishment on October 19, 2018.
According to ASC 470-50, each
of the modified financial instruments were measured at fair value. Then, the Reacquisition Price was allocated to the original
financial instruments included in the 2017 Loan and 2016 Loan, as applicable, based on the relative fair value of such financial
instruments as of the date of the extinguishment. As a result, an aggregate amount of $2,314 was allocated to the 2016 Loan and
its related right to future investment and an aggregate amount of $3,286 was allocated to the 2017 Loan and its related right
to future investment.
The difference between the Reacquisition
Price that was allocated to the Right to Future Investment amounting to $874 which was included in the 2016 Loan and its fair
value as of that date amounting to $764 was recorded directly to additional paid in capital (as a deemed dividend in an amount
of $110). In addition, the Reacquisition Price that was allocated to the Right to Future Investment amounting to $1,336 which
was included in the 2017 Loan and its fair value as of that date amounting to $1,154, was recorded directly to additional paid-in
capital (as a deemed dividend in an amount of $182). The difference between reacquisition price that was allocated to the 2017
Loan and to the 2016 Loan, respectively and their respective carrying value of the 2017 Loan and 2016 Loan was recorded as a loss
on extinguishment amounting to $1,709 of the 2017 Loan and 2016 Loan.
The 2018 Loan Amendment became
effective in the fourth quarter of 2018 and all of the accounting effects were recognized in the fourth quarter of 2018.
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 8:-
|
CONVERTIBLE LOANS (Cont.)
|
|
c.
|
March 2019 Loan
Amendment
|
On March 4, 2019, the Company
and Wize Israel entered into another amendment to convertible loan agreements (the “March 2019 Amendment”)
with Rimon Gold, Ridge, and Fisher. Pursuant to the March 2019 Amendment, the maturity date under the (i) 2016 Loan Agreement,
and (ii) 2017 Loan Agreement were extended to May 31, 2019 from March 4, 2019. The parties also agreed that Rimon Gold’s,
Ridge’s and Fisher’s remaining 2016 Investment Rights (as of that date) under the 2016 Loan Agreement to invest up
to $512.8, in the aggregate, at $1.308 per share, and the expiration date of Rimon Gold’s, Ridge’s and Fisher’s
remaining 2017 Investment Rights (as of that date) under the 2017 Loan Agreement to invest up to $663.4, in the aggregate, at
$1.332 per share, be extended from June 30, 2019 to November 30, 2019.
The March 2019 Amendment was accounted
for as an extinguishment on March 4, 2019. Until that date, the 2017 Loan and the 2016 Loan were being accounted for under the
terms of the 2018 Loan Amendment discussed in paragraph b above.
According to ASC 470-50, each
of the modified financial instruments were measured at fair value on the extinguishment date. Then, the Reacquisition Price was
allocated to the original financial instruments included in the 2017 Loan and 2016 Loan, as applicable, based on the relative
fair value of such financial instruments as of the date of the extinguishment. As a result, an aggregate amount of $986 was allocated
to the 2016 Loan its related right to future investment and an aggregate amount of $1,423 was allocated to the 2017 Loan and its
right to future investment.
The difference between the Reacquisition
Price that was allocated to the Right to Future Investment amounting to $237 which was included in the 2016 Loan and its fair
value as of that date amounting to $192 was recorded directly to additional paid-in capital (as a deemed dividend in an amount
of $45). In addition, the Reacquisition Price that was allocated to the Right to Future Investment amounting to $348 which was
included in the 2017 Loan and its fair value as of that date amounting to $289, was recorded directly to additional paid-in capital
(as a deemed dividend in an amount of $59). The difference between reacquisition price that was allocated to the 2017 Loan and
to the 2016 Loan, respectively and their respective carrying value of the 2017 Loan and 2016 Loan was recorded as gain on extinguishment
amounting to $48 of the 2017 Loan and 2016 Loan.
On May 31, 2019, the Company and
Wize Israel entered into an additional extension to convertible loan agreements (the “May 2019 Amendment”)
with Rimon Gold, Noam Danenberg, and Fisher. Pursuant to the May 2019 Amendment, the maturity date under the (i) 2016 Loan Agreement,
and (ii) 2017 Loan Agreement was extended to November 30, 2019 from May 31, 2019 (as previously described under the March 2019
Amendment). The parties also agreed that the expiration date of Rimon Gold’s, Mr. Danenberg’s and Fisher’s remaining
2016 Investment Rights (as of that date) under the 2016 Loan Agreement to invest up to $512.8, in the aggregate, at $1.308 per
share, and Rimon Gold’s, Mr. Danenberg’s and Fisher’s remaining 2017 Investment Rights (as of that date) under
the 2017 Loan Agreement to invest up to $663.4, in the aggregate, at $1.332 per share, be extended from November 30, 2019 to May
31, 2021. As consideration for extending the maturity date of the loans, the Company issued to Rimon Gold, Mr. Danenberg, and
Fisher two-year warrants to purchase an aggregate of 868,034 shares of Common Stock at a fixed price of $1.10 per share.
The May 2019 Amendment was accounted
for as an extinguishment on May 31, 2019. Until that date, the 2017 Loan and the 2016 Loan were being accounted for under the
terms of the March 2019 Loan Amendment discussed in paragraph c above.
According to ASC 470-50, each
of the modified financial instruments were measured at fair value on the extinguishment date. Then, the Reacquisition Price was
allocated to the original financial instruments included in the 2017 Loan and 2016 Loan, as applicable, based on the relative
fair value of such financial instruments as of the date of the extinguishment. As a result, an aggregate amount of $1,015 was
allocated to the 2016 Loan and an aggregate amount of $1,498 was allocated to the 2017 Loan and its related right to future investment.
The difference between the
Reacquisition Price that was allocated to the Right to Future Investment amounting to $94 which was included in the 2016 Loan
and its fair value as of that date amounting to $61 was recorded directly to additional paid-in capital (as a deemed dividend
in an amount of $33). In addition, the Reacquisition Price that was allocated to the Right to Future Investment amounting to $139
which was included in the 2017 Loan and its fair value as of that date amounting to $91, was recorded directly to additional paid-in
capital (as a deemed dividend in an amount of $48). The difference between reacquisition price that was allocated to the 2017
Loan and to the 2016 Loan, respectively and their respective carrying value of the 2017 Loan and 2016 Loan was recorded as loss
on extinguishment amounting to $926 of the 2017 Loan and 2016 Loan.
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 8:-
|
CONVERTIBLE LOANS (Cont.)
|
|
e.
|
November 2019
Amendment
|
Effective November 29, 2019, the
Company and Wize Israel entered into an amendment to convertible loan agreements (the “November 2019 Amendment”)
with Rimon Gold, Mobigo, and Fisher.
Pursuant to the November 2019
Amendment, the Company repaid in cash approximately $760 of the $1,520 ($1,353 of principal and $167 accrued interest) outstanding
under the loans on November 29, 2019 and Rimon Gold, Mobigo, and Fisher agreed to convert the remaining outstanding amounts of
the loans at a later date. On December 13, 2019, the Company issued to Rimon Gold, Mobigo, and Fisher an aggregate of 2,816,196
shares of Common Stock upon conversion of the loans at a reduced conversion price of $0.27 per share and issued the December 2019
Warrants to purchase an aggregate of 5,632,392 shares of Common Stock at an exercise price of $0.27.
The December 2019 Warrants have
a term of five years and will be exercisable five days following the public announcement of positive clinical data results for
LO2A. In addition, the parties agreed that effective December 13, 2019, the exercise price or conversion price of all other convertible
securities (rights for future investment) previously issued to Rimon Gold, Mobigo, and Fisher in connection with the loans (the
“Existing Convertible Securities”) shall be adjusted to $0.27 per share and that the aggregate number
of shares of Common Stock issuable upon exercise or conversion of a lender’s Existing Convertible Securities shall be reduced
in accordance with the percent of such lender’s conversion of its outstanding loan. In addition, it was agreed that in any
case when the exercise price of the October 2018 Warrants is reduced as a result of dilutive issuance to an exercise price lower
than the exercise or conversion price of the Investment Rights granted under the Loan Agreements, than the exercise or conversion
price of the Investment Rights shall be reduced to the new October 2018 Warrants exercise price (“New Exercise Price”).
As of December 31, 2019, the New Exercise Price of such Investment Rights is $0.16.
The difference between the
aggregate reacquisition price of the loans (i.e, the cash, the fair value of the shares and the December 2019 Warrants
and the incremental fair value related to the existing convertible loans) approximate $1,619 and the carrying amount of the convertible
loans (principal and accrued interest) was recognized as a loss from extinguishment in an amount of $99 as part of financial income
(expense)
Management considered the provisions
of ASC 815-40 and has determined that the December 2019 Warrants are considered indexed to the Company’s stock and that
all other relevant criteria required for equity classifications are met. Accordingly, it was determined that the December 2019 Warrants
are eligible for equity classification.
The below table describes the
roll forward of 2017 Loan and 2016 Loan for the year ended December 31, 2019 and December 31, 2018:
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Opening balance (including accrued interest)
|
|
$
|
2,635
|
|
|
$
|
3,204
|
|
Amortization of premium related to convertible loans prior to 2018 modification
|
|
|
-
|
|
|
|
(1,458
|
)
|
Amortization of premium related to convertible loans following 2018 modification
|
|
|
(641
|
)
|
|
|
(691
|
)
|
Derecognition of carrying amount of 2016 Loan and 2017
Loan upon extinguishments – March 2019 modification
|
|
|
(1,873
|
)
|
|
|
(1,680
|
)
|
Accrued interest on 2017 Loan and 2016 Loan
|
|
|
45
|
|
|
|
56
|
|
Amount allocated to 2016 Loan and 2017 Loan based on modified
terms – March 2019 modification
|
|
|
1,767
|
|
|
|
3,204
|
|
Amortization of premium related to convertible loans following March 2019 modifications
|
|
|
(413
|
)
|
|
|
-
|
|
Derecognition of carrying amount of 2016 Loan and 2017
Loan upon extinguishments – May 2019 extension
|
|
|
(1,353
|
)
|
|
|
-
|
|
Amount allocated to 2016 Loan and 2017 Loan based on modified terms – May 2019 extension
|
|
|
1,556
|
|
|
|
-
|
|
Amortization of premium related to convertible loans – May 2019 extension
|
|
|
(203
|
)
|
|
|
-
|
|
November 2019 repayment in cash and Common Stock (Note 8e)
|
|
|
(1,520
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ending balance
|
|
$
|
-
|
|
|
$
|
2,635
|
|
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
|
a.
|
Tax rates applicable to the Company:
|
On December 22, 2017, the Tax
Cuts and Jobs Act was enacted and made key changes to US tax law which include (i) establish a flat corporate income tax rate
of 21% to replace previous rates that ranged from 15% to 35% and eliminates the corporate alternative minimum tax; (ii) create
a territorial tax system rather than a worldwide system, which will generally allow companies to repatriate future foreign source
earnings without incurring additional US taxes by providing a 100% exemption for the foreign source portion of dividends from
certain foreign subsidiaries; (iii) subject certain foreign earnings on which US income tax is currently deferred to a one-time
transition tax; (iv) create a “minimum tax” on certain foreign earnings and a new base erosion anti-abuse tax that
subjects certain payments made by a US company to a related foreign company to additional taxes; (v) create an incentive for US
companies to sell, lease or license goods and services abroad by effectively taxing them at a reduced rate; (vi) reduce the maximum
deduction for Net Operating Loss (“NOL”) carryforwards arising in tax years beginning after 2017 to a percentage
of the taxpayer’s taxable income, allows any NOLs generated in tax years beginning after December 31, 2017 to be carried
forward indefinitely and generally repeals carrybacks;
(vii) elimination of foreign tax
credits or deductions for taxes (including withholding taxes) paid or accrued with respect to any dividend to which the new exemption
applies, but foreign tax credits will continue to be allowed to offset tax on foreign income taxed to the US shareholder subject
to limitations; (viii) limit the deduction for net interest expense incurred by US corporations, (ix) allow businesses to immediately
write off (or expense) the cost of new investments in certain qualified depreciable assets made after September 27, 2017 (but
would be phased down starting in 2023); (x) may require certain changes in tax accounting methods for revenue recognition; (xi)
repeal the Section 199 domestic production deductions beginning in 2018; (xii) eliminate or reduce certain deductions, exclusions
and credits, and adds other provisions that broaden the tax base.
After the enactment of the Tax
Act, the Securities and Exchange Commission (the “SEC”) issued Staff Accounting Bulletin No. 118 to address
the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed
(including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act.
The Company has calculated an
estimate of the impact of the Tax Act in our year-end income tax provision in accordance with our understanding of the Tax Act
and guidance available as of December 31, 2019. The provisional amount related to the re-measurement of the Company’s net
U.S. deferred tax asset, based on the rate at which they are now expected to reverse in the future, considered immaterial, but
which was fully and equally offset by a corresponding reduction in the Company’s valuation allowance. The effect of the
change in federal corporate tax rate from 34% to 21% is subject to change based on resolution of estimates used in determining
the amounts of deferred tax assets and liabilities that were re-measured.
The change in U.S tax law had
no impact on the consolidated Financial Statements.
|
b.
|
Tax rates applicable to Wize Israel and OcuWize:
|
|
1.
|
Taxable income of the Subsidiary is subject
to the Israeli Corporate tax rate, which was 23% in 2019 and 2018.
|
|
2.
|
In December 2016, the Israeli Parliament approved
the Economic Efficiency Law (Legislative Amendments for Applying the Economic Policy for the 2017 and 2018 Budget Years),
a reduction of the corporate tax rate in 2017 from 25% to 24%, and in 2018 and thereafter from 24% to 23%.
|
The change in Israeli tax law
had no impact on the consolidated Financial Statements.
|
c.
|
Net operating loss carry forward:
|
As of December 31, 2019, the Company
has NOL carry forwards for federal income tax purposes of approximately $6,233. The application of the NOL carry forwards
is limited due to IRC section 382 limitation. The annual NOL carry forward (pre-merger, approximately $2,734) is limited to $10.965
per year. The balance as of December 31, 2019 of the NOL carry forwards of approximately $1,691 is available in full.
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 9:-
|
TAXES ON INCOME (Cont.)
|
As of December 31, 2019,
the Company’s subsidiaries, Wize Israel and OcuWize have accumulated losses for tax purposes in the amount of approximately
$9,785 and $1,338 respectively, which may be carried forward and offset against taxable income in the future for an indefinite
period in Israel.
|
d.
|
As of December 31, 2019, Wize Israel’s
2011 tax assessment was considered final. OcuWize has not received final tax assessment since its inception.
|
|
e.
|
Loss before taxes on income consists of the
following:
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Domestic
|
|
$
|
(2,218
|
)
|
|
$
|
(1,810
|
)
|
Foreign (*)
|
|
|
(1,232
|
)
|
|
|
(1,469
|
)
|
|
|
$
|
(3,450
|
)
|
|
$
|
(3,279
|
)
|
|
(*)
|
Relates to Wize Israel and OcuWize.
|
|
f.
|
Deferred income taxes:
|
Deferred income taxes reflect
the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets are as follows:
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
Deferred tax assets:
|
|
|
|
|
|
|
Operating loss carry forwards
|
|
$
|
2,974
|
|
|
$
|
2,097
|
|
Reserves and allowances
|
|
|
6
|
|
|
|
6
|
|
Research and development
|
|
|
128
|
|
|
|
136
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset before valuation allowance
|
|
|
3,108
|
|
|
|
2,239
|
|
Valuation allowance
|
|
|
(3,108
|
)
|
|
|
(2,239
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
In assessing the realization of
deferred tax assets, management considers whether it is more likely than not that all or some portion of the deferred tax assets
will not be realized.
The ultimate realization of the
deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences
are deductible and NOLs are utilized. Based on consideration of these factors, the Company recorded a full valuation allowance
at December 31, 2019 and 2018.
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 9:-
|
TAXES ON INCOME (Cont.)
|
|
g.
|
Below is the reconciliation
between the “theoretical” income tax expense or benefit, assuming that all the income was taxed at the regular
tax rate applicable to companies in Israel and the taxes recorded in the statements of comprehensive loss in the reporting
year:
|
|
|
Year
ended
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Loss
before taxes on income, as reported in the statements of comprehensive loss
|
|
|
(3,450
|
)
|
|
|
(3,279
|
)
|
|
|
|
|
|
|
|
|
|
Theoretical
tax benefit on this loss
|
|
|
725
|
|
|
|
689
|
|
Expenses
not deductible for tax purposes
|
|
|
(86
|
)
|
|
|
(72
|
)
|
Increase
in taxes resulting mainly from taxable losses in the reported year for which no net deferred tax assets were recognized
|
|
|
(639
|
)
|
|
|
(617
|
)
|
|
|
|
|
|
|
|
|
|
Tax
benefit
|
|
|
-
|
|
|
|
-
|
|
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 10:-
|
COMMITMENTS AND CONTINGENCIES
|
|
1.
|
Starting November
22, 2018, the Company rents its offices from a third party for a rental monthly fee of $2. The rent period is for a period
of 12 months with an option to extend the lease period for additional 12 months.
|
|
2.
|
For the Company’s
engagement in a License Agreement to market a drug and amendment to such an agreement, see also Note 5 and 6 above.
|
|
3.
|
On June 19, 2017 (the “Effective
Date”), Wize Israel entered into a finder’s fee agreement with a service provider (through his wholly
owned company), who is also a director of the Company (the “Vendor”), pursuant to which the Vendor
is entitle to receive a royalty rate of 5% on all of Wize Israel’s revenues to the extent such revenues are earned
from relationships initiated by the Vendor and agreed to by Wize Israel. The term of the agreement is for 12 months unless
earlier terminated. Either party may terminate upon 21 days’ notice. The service provider will be entitled to the
finder fee of 5% even if the agreement will be terminated.
The Vendor introduced Wize Israel
and the Company to the Chinese Distributor (see also Note 5). During the period commencing the Effective Date and ended
December 31, 2019, the Vendor has not earned any royalties, and the Company has no obligation to pay any royalties.
|
NOTE 11:-
|
STOCKHOLDERS’ EQUITY
|
|
a.
|
The Common Stock
confers upon their holders the right to participate and vote in general shareholder meetings of the Company and to share in
the distribution of dividends, if any, declared by the Company, and rights to receive a distribution of assets upon liquidation.
|
|
b.
|
On December 11,
2017, the Company announced a notice of special meeting of stockholders, according to which, a special meeting of the stockholders
was held on February 19, 2018, for the purpose of considering to grant the Company’s Board of Directors (the “Board”)
the authority, in its sole direction, to approve an amendment to the Company’s Certificate of Incorporation to effect
a reverse stock split of the Company’s issued and outstanding Common Stock by a ratio of not less than 1-for-10 and
not more than 1-for-200.
|
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 11:-
|
STOCKHOLDERS’ EQUITY (Cont.)
|
|
c.
|
On February 19,
2018, the stockholders of the Company approved a reverse stock split of the Company’s issued and outstanding Common
Stock by a ratio of not less than 1-for-10 and not more than 1-for-200 at any time prior to February 19, 2019, with such ratio
to be determined by the Company’s Board, in its sole discretion. On February 22, 2018, the Company’s Board approved
a reverse stock split of the Company’s issued and outstanding Common Stock by a ratio of 1-for-24 (the “Reverse
Stock Split”).
|
For accounting purposes, all share
and per share amounts for Common Stock, warrants stock, options stock and loss per share amounts reflect the Reverse Stock Split
for all periods presented in these Financial Statements. Any fractional shares that resulted from the Reverse Stock Split were
rounded up to the nearest whole share.
|
d.
|
On February 28,
2018, the Company received notices from existing stockholders and lenders to exercise 2016 Investment Right and 2017 Investment
Rights and warrants issued in a private placement of Wize Israel that was completed in July and August 2017 (the “PIPE
Warrants”) to purchase an aggregate of 788,658 shares of Common Stock. During 2018, the Company received the aggregate
exercise price of approximately $1,145 and issued 788,658 shares of Common Stock as follows:
|
|
1.
|
144,168 PIPE Warrants
were exercised into 144,168 shares of Common Stock by certain stockholder. The aggregate exercise price amounted to approximately
$292 was received in cash. As of December 31, 2019, 759,871 PIPE Warrants remain outstanding.
|
|
2.
|
Certain holders
of the 2016 Investment Right and 2017 Investment Right exercised approximately $853 of their right and invested a total amount
of $853 for 217,442 and 427,048 respectively, shares of Common Stock ($1.308 and $1.332 per share, respectively). As of December
31, 2019, the remaining 2016 Investment Right and 2017 Investment Rights amount to approximately $71 (see also Note 8e regarding
the modification to exercise price of the Investment Rights).
|
|
e.
|
In April and June
2018, the Company issued 24,306 shares of Common Stock to two of its service providers in exchange for their services provided
in 2018. The Company recognized an amount of $126 in 2018.
|
|
f.
|
On May 10, 2018,
the Company filed an amendment to the S-1 Registration Statement, for the purpose of registering (i) 922,330 shares of Common
Stock that were outstanding as of that date; and (ii) 338,945 shares of Common Stock which are issuable upon conversion of
the 2016 Loan and/or the 2017 Loan. On July 12, 2018, the S-1 Registration Statement was declared effective by the SEC.
|
|
g.
|
In July 2018, the
Company issued 67,778 shares of Common Stock to certain service providers in exchange for their services provided in 2018.
The Company recognized an amount of $381 in its Financial Statements for year ended December 31, 2018.
|
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 11:-
|
STOCKHOLDERS’ EQUITY (Cont.)
|
|
h.
|
On October 22, 2018,
the Company entered into a securities purchase agreement (the “Purchase Agreement”). Pursuant to the Purchase
Agreement, the Company sold to the investors, and the investors purchased from the Company, in a private placement, an aggregate
of (i) 3,100,000 shares of Common Stock, for a purchase price of $1.00 per share, and (ii) 1,350 shares of newly created Series
A Preferred Stock (each convertible into 1,000 shares of Common Stock), for a purchase price of $1,000 per share, for aggregate
gross proceeds under the Purchase Agreement of $4,450.
|
The Company also issued to the
investors Series A Warrants to purchase an aggregate of 4,450,000 shares of Common Stock (equal to 100% of the shares of Common
Stock sold (on an as-converted basis with respect to shares of Series A Preferred Stock)) (the “Series A Warrants”),
and Series B Warrants (the “Series B Warrants”, and together with the Series A Warrants, the “Warrants”),
to purchase an aggregate of 4,450,000 shares of Common Stock (equal to 100% of the shares of Common Stock sold (on an as-converted
basis with respect to shares of Series A Preferred Stock)).
The Series A Warrants have an
exercise price of $1.10 per share, and the Series B Warrants have an exercise price of $1.00 per share. The investors under the
Purchase Agreement include prior investors in the Company and a lender to the Company.
The Series A Warrants have a term
of 5 years from issuance, and the Series B Warrants have a term that expires 20 days following the later of (i) the public announcement
of Phase II clinical data for LO2A and (ii) six months following the issuance date, provided that, for each day after the issuance
date that an Equity Conditions Failure (as defined in the Series B Warrants) has occurred, the expiration date of the Series B
Warrants will be extended by one day. On May 20, 2019, following the public announcement of Phase II clinical data for LO2A, the
Series B Warrants expired.
In the event that, during the
period commencing upon execution of the Purchase Agreement, and expiring on the trading day immediately following the date that
the Company has raised, beginning after the issuance date of the Warrants, at least $10,000 in gross proceeds from the issuance
of the Company’s securities, the Company issues or sells Common Stock (or securities convertible into or exercisable into
Common Stock) at a purchase price (or conversion or exercise price, as applicable) lower than the exercise price of the Warrants,
than the exercise price of the Warrants will be reduced to such lower price, subject to certain exceptions.
According to the above, on December
2019, due to issuance of the December 2019 Warrants, the Series A Warrants exercise price was reduced to $0.16 due to the triggering
of certain down-round anti-dilution protection or price protection features included in the warrants. The difference between the
fair value of the warrants and the incremental fair value was recognized as a deemed dividend and as an increase of the loss applicable
to common stockholders in an amount of $234.
Pursuant to the Purchase Agreement,
the Company granted to the investors thereunder, for a period of three years from the closing date of the Purchase Agreement,
a right of participation of up to an aggregate of 35% in any subsequent offering of the Company, subject to certain exceptions.
The Warrants are exercisable on
a cashless basis in the event that, six months after the closing of the Purchase Agreement, there is not an effective registration
statement for the resale of the shares underlying the Warrants. The Warrants may not be exercised to the extent such exercise
would cause the holder to beneficially own more than 4.99% (or 9.99%, at the election of the investor) of the Company’s
outstanding Common Stock.
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 11:-
|
STOCKHOLDERS’ EQUITY (Cont.)
|
Pursuant to the Purchase Agreement,
the Company agreed that it will not, for a period commencing upon the closing of the Purchase Agreement, until the earlier of
(i) 150 days following the date that all of the Common Stock, issued pursuant to the Purchase Agreement, and issuable upon conversion
of the Series A Preferred Stock and exercise of the Warrants, are registered for resale, (ii) six months after the date that a
non-affiliate investor under the Purchase Agreement may first sell securities purchased thereunder under Rule 144, (iii) 120 days
following the listing of the Common Stock on a Qualified Market (as defined below) and (iv) the first trading day that the weighted
average price of the Common Stock exceeds $5.00 per share for 10 consecutive trading days occurring after the date that a registration
statement covering the resale of all of the Common Stock, issued pursuant to the Purchase Agreement, and issuable upon conversion
of the Series A Preferred Stock and exercise of the Warrants, are registered for resale, offer or sell any Common Stock (or securities
convertible into or exercisable into Common Stock), or file any registration statement, other than pursuant to the Registration
Rights Agreement or on Form S-8, subject to certain exceptions.
In connection with the Purchase
Agreement, on October 22, 2018, the Company filed a Certificate of Designations of Series A Preferred Stock (the “Series
A Certificate of Designations”) with the Secretary of State of Delaware. Pursuant to the Series A Certificate of Designations,
the Company designated 1,350 shares of preferred stock as Series A Preferred Stock. The Series A Preferred Stock has a stated
value of $1,000 per share and is convertible into shares of Common Stock in an amount determined by dividing the stated value
of $1,000 by the conversion price of $1.00, such that each share of Series A Preferred Stock is convertible into 1,000 shares
of Common Stock. The Series A Preferred Stock may not be converted into Common Stock to the extent such conversion would cause
the holder to beneficially own more than 4.99% (or 9.99%, at the election of the investor) of the Company’s outstanding
Common Stock. The Series A Preferred Stock is entitled to dividends on an as-converted basis with the Common Stock. The Series
A Preferred Stock votes with the Common Stock on an as-converted basis, subject to the beneficial ownership limitation. The Series
A Preferred Stock are not entitled to any redemption amount. See also Note 8 above
The Company will be obligated
to pay liquidated damages to the investors if the Company fails to file the resale registration statement when required, fails
to cause the Registration Statement to be declared effective by the SEC when required, fails to maintain the Registration Statement
and upon the occurrence of certain other events. The Company shall pay to each investor cash equal to 2% of such investor’s
total purchase price on the dates of each deficiency and on the 30th day after such deficiencies until such deficiencies are cured,
up to a maximum of 10% of the purchase price. The Company received notice of effectiveness on the resale registration statement
on December 4, 2018.
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 11:-
|
STOCKHOLDERS’ EQUITY (Cont.)
|
The Company engaged ThinkEquity,
a division of Fordham Financial Management, Inc. (“ThinkEquity”), as the placement agent for the private placement,
pursuant to a placement agency agreement between the Company and ThinkEquity. The Company paid ThinkEquity a fee equal to 8% of
the gross proceeds, excluding proceeds received from certain investors for its services as placement agent, and issued to ThinkEquity
or its designees warrants to purchase 267,000 shares of Common Stock (equal to 6% of the shares of Common Stock sold (on an as-converted
basis with respect to shares of Series A Preferred Stock)) (the “Placement Agent Warrants”).
The Placement Agent Warrants have
an exercise price of $1.00 per share and have the same terms as the Series A Warrants issued to the investors under the Purchase
Agreement. The Company also paid to ThinkEquity a non-accountable expense allowance of $30 and reimbursed ThinkEquity for its
legal expenses in connection with the offering in the amount of $50. The Company granted to ThinkEquity a right of first refusal
for a period of nine months following the closing of the offering, to act as sole financial advisor, sole investment banker, sole
book-runner, and/or sole placement agent, for each and every future public and private equity and debt offering of the Company
during such period, on terms and conditions customary to ThinkEquity. The Company also paid Mesodi Consultation & Investments,
Ltd. (“Mesodi”) a fee of $89 and issued to Mesodi warrants (the “Mesodi Warrants”) to purchase
89,000 shares of Common Stock. The Mesodi Warrants have the same terms as the Warrants issued to the investors, in connection
with the Purchase Agreement.
In connection with the Purchase
Agreement, the Company and Wize Israel entered into the 2018 Loan Amendment. Pursuant to the 2018 Loan Amendment, the maturity
date under the (i) 2016 Loan Agreement, and (ii) 2017 Loan Agreement, was amended to be the earliest of (a) 90 days following
the date that the registration statement the Company will file under the Registration Rights Agreement covering the resale of
all Common Stock, issued pursuant to the Purchase Agreement, and issuable upon conversion of the Series A Preferred Stock and
exercise of the Warrants, are registered for resale for investors who are not a party to the Loan Agreements Amendment, (b) 90
days following the date on which all securities issued to investors under the Purchase Agreement are no longer deemed registrable
securities under the Registration Rights Agreement, and (c) one year following the closing under the Purchase Agreement. In addition,
pursuant to the 2018 Loan Amendment, the expiration date of the Investment Rights was amended to be 180 days after the Loan Agreements
maturity date. The difference between the fair value of the warrants and the incremental fair value was recorded in finance expenses,
refer also to Note 11h.
According to the above, on December
2019, due to issuance of the December 2019 Warrants, the Placement Agent Warrants and the Mesodi Warrants, exercise price was
adjusted to $0.16 due to the triggering of certain down-round anti-dilution protection or price protection features included in
the warrants. The difference between the fair value of the warrants and the incremental fair value was recognized as a deemed
dividend and as an increase of the loss applicable to common stockholders in an amount of $18.
See also note 8e above.
In accordance with ASU 2017-11,
which was early applied by the Company, the Company concluded that the Series A Convertible Preferred Stock and related Warrants
meet the requirements for equity classification since they are considered to be indexed to the Company’s Common Stock and
as they meet all other equity classification criteria described in ASC 815-40-25.
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 11:-
|
STOCKHOLDERS’ EQUITY (Cont.)
|
|
i.
|
In December 2018,
the Company issued 440,000 shares of Common Stock to certain investors in exchange for conversion of 440 Preferred A stock,
which was in accordance with the terms of the Purchase Agreement.
|
|
j.
|
In December 2018,
the Company issued 55,000 shares of Common Stock to certain service providers in exchange for their services to be provided
in 2019. The fair value of the stock issued amounts to $54 and was recognized in its Financial Statements for year ended December
31, 2019.
|
|
k.
|
On
February 7, 2019, the Company entered into a joint venture agreement with Cannabics traded
on the Over-The-Counter (OTC) markets in the United States.
Pursuant to the agreement, the
parties agreed to form a new joint venture company for the purpose of researching, developing and administering cannabinoid
formulations to treat ophthalmic conditions. The new company will initially be owned 50% each by the Company and Cannabics.
Promptly following the effective date, the Company and Cannabics will work together to prepare a business plan for the
new company. The initial board of directors of the new company will consist of three members, including one each appointed
by the Company and Cannabics, and one industry expert recommended by the Company and approved by Cannabics. The initial
officers of the Company will be Noam Danenberg and Eyal Barad (Cannabics’ chief executive officer), who will serve
as co-chief executive officers.
On March 1, 2019, the Company’s
joint venture agreement with Cannabics became effective following receipt of an opinion, within 30 days from execution
of the agreement, from a mutually selected third party describing the regulatory pathway for eye drops containing cannabinoids
or cannabinoid strings. Pursuant to the terms of the agreement, the Company issued to Cannabics 900,000 shares of its
Common Stock and Cannabics issued to the Company 2,263,944 shares of Cannabics’ common stock, which represented
a holding percentage less than 5 percent of Cannabic’s then outstanding share capital. The joint venture currently
has no assets or liabilities and has not started conducting any of its planned operations.
In connection with the foregoing,
the Company relied upon the exemption from registration provided by Section 4(a)(2) under the Securities Act of 1933,
as amended, for transactions not involving a public offering.
As a result of the share issuance,
the Company recorded an amount of $765 as an increase to Common Stock (at par value) and additional paid-in capital with
a corresponding amount of $765 as an investment in marketable securities. Such amount was based on the fair value of Cannabics’
shares as of the date at which the agreement became effective. The investment in marketable securities is remeasured in
subsequent periods at fair value with changes carried to profit or loss. During the year ended December 31, 2019 the Company
recognized loss of $501 due to the change in fair value from March 1, 2019 to December 31, 2019.
On November 13, 2019, the Company
determined to terminate all activities under the joint venture until such time as the parties jointly determine that no
uncertainty remains with respect to U.S. federal enforcement of the cannabis industry.
|
|
|
|
|
l.
|
In March 2019, the
Company issued 60,000 shares of Common Stock to certain investors in exchange for conversion of 60 shares of Preferred A stock,
which was in accordance with the terms of the Purchase Agreement.
|
|
m.
|
In April 29,
2019, the Company issued 336,000 shares of Common Stock to certain investors in exchange for conversion of 336 shares
of Preferred A stock, which was in accordance with the terms of the Purchase Agreement.
In May 7,
2019, the Company issued 336,000 shares of Common Stock to certain investors in exchange for conversion of 336 shares
of Preferred A stock, which was in accordance with the terms of the Purchase Agreement.
|
|
|
|
|
n.
|
On
April 23, 2019, the Company’s Board appointed Mark Sieczkarek as the Company’s Chairman of the Board (the “Chairman
Appointment”).
|
|
|
|
|
o.
|
On
July 18, 2019, the Company issued to a consultant, 6,945 shares of Common Stock in exchange for its services provided in the
three months ended September 30, 2019. The Company recognized an amount of $3 in the year ended December 31, 2019.
|
|
p.
|
On
August 20, 2019, the Company issued to a consultant, 45,000 shares of Common Stock in exchange for its services provided in
2019. The Company recognized an amount of $18 in the year ended December 31, 2019.
|
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 11:-
|
STOCKHOLDERS’ EQUITY (Cont.)
|
|
q.
|
In connection
with Mr. Sieczkarek’s appointment, the Company and Mr. Sieczkarek entered into a Chairman Agreement (the “Chairman
Agreement”) whereby Mr. Sieczkarek shall receive 202,399 restricted stock units (“RSUs”)
and options to purchase 102,222 shares of the Company’s Common Stock at an exercise price of $2.00 per share (the
“Chairman Awards”). The Chairman Awards shall vest 1/8 on the effective date of the Chairman Agreement and
subsequently in seven equal quarterly installments commencing July 1, 2019. The Chairman Agreement has an initial term
of two years (the “Term”) and provides that in the event of a change of control (as defined in the Chairman
Agreement) the Chairman Awards shall automatically vest in full as of that date. The Chairman Agreement also contains
standard representations and warranties regarding confidential information, non-competition and non-solicitation.
Total
value of the options granted is $29, which is recorded quarterly over the vesting period. The total value of the share
based expense related to the RSU is $185, which is recognized ratably over the vesting period.
The Company
recognized $164 during the year ended December 31, 2019 as a share-based expense in connection to the RSU’s and
options granted.
On May
14, 2019, July 1, 2019 and October 15, 2019 the Company issued 25,300, 25,300 and 25,300, respectively, shares to the
Chairman pursuant to the agreement above following the vesting of certain portions of the RSUs.
As a
result of and in connection with the Chairman Appointment, Mr. Danenberg, the current Chairman of the Board, resigned
from the Board and as Chairman and was named Chief Executive Officer.
As a
result of and in connection with the Chairman Appointment, Or Eisenberg, the Company’s Chief Financial Officer and
Acting Chief Executive Officer, resigned from his position as Acting Chief Executive Officer. Mr. Eisenberg’s resignation
was not due in any way to any dispute with the Company and he remains Chief Financial Officer of the Company.
|
|
r.
|
In
April 2019, Mr. Danenberg purchased directly from Ridge all Ridge’s rights under the second convertible loan agreement.
|
|
s.
|
On May 14, 2019, the Company issued
to a consultant, 135,000 shares of restricted Common Stock which is due and issuable according to the following schedule:
25% as of May 1, 2019 and additional 25% every quarter following May 1, 2019. The aggregate fair value of these shares
of RSUs at grant date issued was $106, and is being recognized over a period of 1 year following May 1, 2019.
The Company
recognized $104 during the year ended December 31, 2019 as a share-based expense in connection to the RSU’s.
|
|
t.
|
On
May 15, 2019, the Company granted to a consultant, 10,000 fully vested RSUs. The Company determined the fair value of the
RSUs to be the quoted market price of the Company’s Common Stock on the date of issuance. The aggregate fair value of
these RSUs issued at grant date was $5, and was recognized during the year ended December 31, 2019.
|
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 11:-
|
STOCKHOLDERS’ EQUITY (Cont.)
|
|
u.
|
On May 19, 2019,
the Company granted to one of its directors options exercisable into 30,000 shares of Common Stock with an exercise price
of $0.58 per share. The options will vest monthly over a period of six (6) months. The Company recognized $13 of share-based
compensation expense during year ended December 31, 2019.
|
|
v.
|
On December 13,
2019, the Company issued to Rimon Gold, Mobigo, and Fisher an aggregate of 2,816,196 shares of Common Stock as part of the
extinguishment of the loans, see also Note 8e.
|
|
w.
|
On December 20, 2019, the Company
entered into a securities purchase agreement (the “2019 Purchase Agreement”) with an accredited investor.
Pursuant to the 2019 Purchase Agreement, the Company agreed to sell to the investor, and the investor agreed to purchase
from the Company, in a private placement, an aggregate of 2,037,037 shares of Common Stock for a purchase price of $0.27
per share, for aggregate gross proceeds under the 2019 Purchase Agreement of $550. The Company also agreed to issue to
the investor the December 2019 Warrants, a five-year warrants to purchase an aggregate of 4,074,047 shares of Common Stock.
The December 2019 Warrants have an exercise price of $0.27 per share and will be exercisable five days following the public
announcement of positive clinical data results for LO2A.
The December 2019 Warrants will
be exercisable on a cashless basis in the event that, six months after issuance, there is not an effective registration
statement for the resale of the shares underlying the December 2019 Warrants.
Management considered the provisions
of ASC 815-40, and has determined that the December 2019 Warrants are considered indexed to the Company’s stock
and that all other relevant criteria required for equity classification are met. Accordingly, it was determined that the
December 2019 Warrants are eligible for equity classification.
On December 2019, the December
2019 Warrants exercise price was reduced to $0.16 due to the triggering of certain down-round anti-dilution protection
or price protection features included in the warrants. The difference between the fair value of the warrants and the incremental
fair value was recognized as a deemed dividend and as an increase of the loss applicable to common stockholders in an
amount of $15.
|
|
x.
|
Stock based-compensation:
|
The 2012 Plan
In 2012, the Company’s Board
approved the adoption of the 2012 Stock Incentive Plan (the “2012 Plan”).
An Israeli annex was subsequently
adopted in 2013 to comply with the requirements set by the Israeli law in general and in particular with the provisions of section
102 of the Israeli tax ordinance. Under the 2012 Plan and Israeli annex, the Company may grant its officers, directors, employees
and consultants, stock options, restricted stocks and RSUs of the Company. Each Stock option granted shall be exercisable at such
times and terms and conditions as the Company’s Board may specify in the applicable option agreement, provided that no option
will be granted with a term in excess of 10 years. Upon the adoption of the 2012 Plan, the Company reserved for issuance 45,370
shares of Common Stock, $0.001 par value each.
As of December 31, 2019, the Company
has 40,474 shares of Common Stock available for future grant under the 2012 Plan. As of December 31, 2019, under the 2012 Plan,
the Company had options exercisable into 4,896 shares of Common Stock outstanding and exercisable.
The 2018 Plan
On February 22, 2018, the Company’s
Board approved the adoption of the 2018 Stock Incentive Plan (the “2018 Plan”), including an Israeli annex
to comply with Israeli law, in particular the provisions of section 102 of the Israeli Income Tax Ordinance.
Under the 2018 Plan, the Company
may grant its employees, directors, consultants and/or contractors’ stock options, shares of Common Stock, restricted stock
and RSUs of the Company. The Compensation Committee of the Board is currently serving as the administrator of the 2018 Plan. Each
stock option granted is exercisable, unless otherwise determined by the administrator, in twelve equal installments over the three
- year period from the date of grant. Unless otherwise determined by the administrator, the term of each award will be seven years.
The exercise price per share subject
to each option will be determined by the administrator, subject to applicable laws and to guidelines adopted by the Board from
time to time. In the event the exercise price is not determined by the administrator, the exercise price of an option will be
equal to the closing stock price of the Common Stock on the last trading day prior to the date of grant.
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 11:-
|
STOCKHOLDERS’ EQUITY (Cont.)
|
Upon the adoption of the 2018
Plan, the Board reserved for issuance 435,053 shares of Common Stock. On August 15, 2018, the Company amended the 2018 Plan to
increase the number of shares issuable under the Plan to 2,500,000 shares of Common Stock. In addition, the Board approved to
increase the number of shares issuable under the Plan on the first day of each fiscal year beginning with the 2019 fiscal year,
by an amount equal to the lesser of (i) 1,000,000 shares or (ii) 5% of the outstanding shares on the last day of the immediately
preceding fiscal year.
As of December 31, 2019, the Company
has 967,178 shares of Common Stock available for future grant under the 2018 Plan.
Through December 31, 2019, 352,072
options to directors, officers and consultants are outstanding.
Grants under the 2018 Plan
|
1.
|
On April 4, 2018,
the Company granted to its officers, directors and a consultant, 131,200 fully vested RSUs. The Company determined the fair
value of the RSUs to be the quoted market price of the Company’s Common Stock on the date of issuance. The aggregate
fair value of these RSUs issued was $471, and was recognized during the three months ended June 30, 2018.
|
|
2.
|
On April 4, 2018,
the Company granted to its officers, directors and a consultant options exercisable into 229,500 shares of Common Stock with
an exercise price of $3.59 per share. The options will vest quarterly over a period of 36 months. The Company recognized $154
and $295 during the year ended December 31, 2019 and 2018, respectively.
|
|
3.
|
On August 15, 2018,
the Company granted to its consultant options exercisable into 25,500 shares of Common Stock with an exercise price of $4.5
per share. The options will vest quarterly over a period of 36 months. The Company recognized $19 and $16 during the year
ended December 31, 2019 and 2018, respectively.
|
|
4.
|
Stock-based compensation:
On March 31, 2019, the Company’s
Board approved the following:
|
|
1.
|
To grant to each
of Company’s four directors 100,000 RSU’s. The RSU’s will vest quarterly over a period of 24 months.
|
|
2.
|
To grant to each
its officers (Company’s Chief executive officer and to Company’s Chief financial officer) 140,000 RSU’s.
The RSU’s will vest quarterly over a period of 24 months.
|
The Company determined the fair
value of the RSUs to be the quoted market price of the Company’s Common Stock on the date of grant. The aggregate fair value
of these RSUs issued was $476. The Company is recognizing this amount ratably over the vesting period of 24 months following March
31, 2019.
In connections with the above,
on July 25, 2019 (the initial quarterly vesting date) the Company issued 85,000 Common shares to its officers and directors.
The Company recognized $337 during
the year ended December 31, 2019.
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 11:-
|
STOCKHOLDERS’ EQUITY (Cont.)
|
|
5.
|
On April 18, 2019,
the Company granted to its employee, 21,600 options exercisable into 21,600 shares of Common Stock at an exercise price of
$0.75 per share of Common Stock. The options began vesting quarterly over a period of 36 months commencing April 18, 2019.
The Company recognized $2 during the year ended December 31, 2019 as a share-based expense. The total value of the share based
expense is $10, which is recorded quarterly over the vesting period. Since the Company has terminated its employment agreement
in December 2019, as of December 31, 2019, 3,600 options are outstanding and 18,000 were forfeited.
|
Transactions related to the grant
of options to employees and directors under the 2012 Plan during the year ended December 31, 2019 and 2018, were as follows:
|
|
Year Ended December 31, 2019
and 2018
|
|
|
|
Number of options
|
|
|
Weighted average exercise
price
|
|
|
Weighted average remaining
contractual life
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding at beginning of year
|
|
|
4,896
|
|
|
$
|
190.7
|
|
|
|
3.86
|
|
Granted
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding and exercisable
at end of year
|
|
|
4,896
|
|
|
$
|
190.7
|
|
|
|
2.86
|
|
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 11:-
|
STOCKHOLDERS’ EQUITY (Cont.)
|
Transactions related to the grant
of options to employees and directors under the 2018 Plan during the year ended December 31, 2019 and 2018, were as follows:
|
|
Year Ended December 31, 2019
|
|
|
|
Number of options
|
|
|
Weighted average exercise
price
|
|
|
Weighted average remaining
contractual life
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding as of December 31, 2018
|
|
|
255,000
|
|
|
$
|
3.68
|
|
|
|
5.55
|
|
Granted
|
|
|
153,822
|
|
|
|
1.55
|
|
|
|
7
|
|
Forfeited
|
|
|
(56,750
|
)
|
|
|
2.69
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding as of December 31, 2019
|
|
|
352,072
|
|
|
$
|
2.91
|
|
|
|
5.72
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable as of December 31, 2018
|
|
|
181,799
|
|
|
$
|
2.75
|
|
|
|
5.72
|
|
|
|
Year Ended December 31, 2018
|
|
|
|
Number of options
|
|
|
Weighted average exercise
price
|
|
|
Weighted average remaining
contractual life
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding as of December 31, 2017
|
|
|
-
|
|
|
$
|
-
|
|
|
|
-
|
|
Granted
|
|
|
255,000
|
|
|
$
|
3.68
|
|
|
|
6.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options outstanding as of December 31, 2018
|
|
|
255,000
|
|
|
$
|
3.68
|
|
|
|
6.55
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options exercisable as of December 31, 2018
|
|
|
38,246
|
|
|
$
|
3.59
|
|
|
|
6.25
|
|
At December 31, 2019, there was
$117 of total unrecognized compensation cost related to non-vested option grants that is expected to be recognized over a weighted-average
period of 2.5 years. The intrinsic value of options outstanding and exercisable at December 31, 2019 was not significant.
The Company uses the Black-Scholes
option-pricing model to estimate fair value of grants of stock options. With respect to grants of options, the risk-free rate
of interest was based on the U.S. Treasury rates appropriate for the contractual term of the grant, expected volatility was calculated
based on average volatility of the Company and five representative companies and expected term of stock-based grants of 7 years.
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 12:-
|
SELECTED STATEMENTS OF OPERATIONS DATA
|
|
a.
|
General and administrative expenses:
|
|
|
Year
ended
December
31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Overseas travel
|
|
$
|
103
|
|
|
$
|
118
|
|
Stock-based compensation
|
|
|
688
|
|
|
|
783
|
|
Rent and office maintenance
|
|
|
49
|
|
|
|
46
|
|
Payroll and benefits
|
|
|
470
|
|
|
|
518
|
|
Professional services and consultation
|
|
|
953
|
|
|
|
1,187
|
|
Taxes and tolls
|
|
|
24
|
|
|
|
16
|
|
Director salary and insurance
|
|
|
183
|
|
|
|
191
|
|
Others
|
|
|
208
|
|
|
|
77
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
2,678
|
|
|
$
|
2,936
|
|
|
b.
|
Financial income (expense), net:
|
|
|
Year
ended
December
31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Financial income:
|
|
|
|
|
|
|
Exchange rate gains, net
|
|
|
15
|
|
|
|
4
|
|
Amortization of premium related
to convertible loans
|
|
$
|
1,257
|
|
|
|
2,149
|
|
|
|
|
|
|
|
|
|
|
Total finance income
|
|
|
1,272
|
|
|
|
2,153
|
|
|
|
|
|
|
|
|
|
|
Financial expenses:
|
|
|
|
|
|
|
|
|
Accrued interest on convertible loans
|
|
|
(45
|
)
|
|
|
(56
|
)
|
Loss on marketable equity securities
|
|
|
(527
|
)
|
|
|
(33
|
)
|
Bank commissions and exchange rates
|
|
|
(3
|
)
|
|
|
(4
|
)
|
Loss from extinguishment of convertible
loans (Note 8c, 8d, 8e)
|
|
|
(977
|
)
|
|
|
(1,709
|
)
|
|
|
|
|
|
|
|
|
|
Total financial expenses
|
|
|
(1,552
|
)
|
|
|
(1,802
|
)
|
|
|
|
|
|
|
|
|
|
Total financial income (expense),
net
|
|
$
|
(280
|
)
|
|
$
|
351
|
|
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 13:-
|
RELATED PARTIES BALANCES AND TRANSACTIONS
|
|
a.
|
Balances with interested and related parties:
|
|
|
December 31,
|
|
|
|
2019
|
|
|
2018
|
|
|
|
|
|
|
|
|
Other receivables
|
|
$
|
52
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
104
|
|
|
$
|
97
|
|
|
|
|
|
|
|
|
|
|
Convertible Loans
|
|
$
|
-
|
|
|
$
|
2,590
|
|
|
b.
|
Transactions with interested and related parties:
|
|
|
Year
ended
December
31,
|
|
|
|
2019
|
|
|
2018
|
|
Amounts charged to:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and administrative expenses
|
|
$
|
1,140
|
|
|
$
|
1,209
|
|
|
|
|
|
|
|
|
|
|
Finance expenses, net (income)
|
|
$
|
(625
|
)
|
|
$
|
(306
|
)
|
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 14:-
|
SUBSEQUENT EVENTS
|
|
1.
|
On
January 9, 2020, the Company entered into the Bonus Agreements and the Series B Purchase
Agreement (as such terms are defined below), whereby, subject to the closing of both
transactions, (i) the Company will sell 37% of future revenues (if any) from its LO2A
Proceeds to Bonus, an Israeli company whose ordinary shares are traded on the Tel Aviv
Stock Exchange (“TASE”), and invest cash amount of $7,400 in Bonus
and (ii) in consideration therefor, Bonus will issue to Wize new ordinary shares of Bonus
in a number equal to $16,400 divided by a purchase price per share of NIS 0.50. The fair
value of Bonus ordinary shares based on a quote of the share price of the date of the
agreement was $0.12.
|
The Bonus/LO2A
Transaction
On January
9, 2020, the Company entered into (i) an exchange agreement (the “Bonus Exchange Agreement”), with Bonus and
(ii) a share purchase agreement (the “Bonus Purchase Agreement” and, together with the Bonus Exchange Agreement,
the “Bonus Agreements”) with Bonus.
Pursuant
to the Bonus Agreements, the Company agreed to grant Bonus, in consideration for the issuance of 62,370,000 ordinary shares of
Bonus (the “LO2A Shares”), the right to receive 37% of future LO2A Proceeds (if any), which, as more fully
defined in the Bonus Exchange Agreement, includes proceeds generated by the Company, Wize Israel and OcuWize, as a result of (i)
the sale, license or other disposal of products or other rights underlying the LO2A technology licensed to OcuWize under the License
Agreement; and (ii) a Sale Transaction, which, as more fully defined in the Bonus Exchange Agreement, includes the sale of shares
or assets of Wize Israel and/or OcuWize. In addition, if the Sale Transaction involves a change of control of the Company, Bonus
will be entitled to elect, to either remain with its right to 37% of the LO2A Proceeds or receive a one-time payment equal to
37% of the value attributed to Wize Israel out of the total proceeds payable for the Company in such transaction.
In addition,
pursuant to the Bonus Purchase Agreement, the Company agreed to purchase 51,282,000 ordinary shares of Bonus (the “PIPE
Shares”, and together with the LO2A Shares, the “Bonus Shares”), for an aggregate purchase price
of $7,400 in cash, which funds will be deposited into an escrow account (the “Bonus Escrow Account”), of which
(i) $500 will be paid to Bonus as an advance promptly following execution of the Bonus Purchase Agreement, (ii) $3,200 will be
released to Bonus concurrently with the closing of the transactions contemplated by the Bonus Agreements in exchange for 50% of
the PIPE Shares and (iii) $3,700 will be released to Bonus upon the Milestone Closing (as defined in the Bonus Purchase Agreement),
in exchange for the remaining 50% of the PIPE Shares that will be issued by Bonus and deposited into the escrow at the closing.
The Company’s obligation to consummate the Milestone Closing is conditioned upon the satisfaction by Bonus of certain conditions,
including the listing of its ordinary shares (or, if an ADR Program is to be implemented by Bonus, the American Depositary Shares
representing such ordinary shares) on the Nasdaq Capital Market (or another superior tier of the Nasdaq market) (the “Nasdaq
Listing”).
The Bonus Agreements contain customary
covenants, representations and warranties of the parties thereto, including, among others, (i) a covenant by the Company to use
its reasonable commercial efforts to commercialize the LO2A technology or otherwise generate the LO2A Proceeds; (ii) a covenant
by Bonus to issue additional shares to the Company upon certain events, including if Bonus conducts a private placement of its
ordinary shares during the nine-month period following the closing at a price per share that is below NIS 0.30 per share; (iii)
a covenant by Bonus to use its reasonable commercial efforts to conduct the Nasdaq Listing as soon as practicable, and in any
event within 180 days following the closing (the “Initial Deadline”) and, if the Nasdaq Listing does not occur
by the Initial Deadline, the Company will be entitled to liquidated damages for each 30 days of delay. The liquidated damages,
which range between $20 to $164 depending on the length of the delay, may be paid, at Bonus’ election, in either cash or
ordinary shares of Bonus; (iv) a post-closing covenant by the Company to create, and cause Wize Israel and OcuWize to create,
certain first priority liens in favor of Bonus to secure the Company’s obligations under the Bonus Exchange Agreement, including
certain related negative covenants; and (v) an undertaking by Bonus to cover nearly 50% of the Company’s fees and expenses
payable to H.C. Wainwright & Co., LLC in connection with the transactions contemplated by the Bonus Agreements and the Series
B Purchase Agreement.
WIZE PHARMA INC.
AND SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S. dollars in
thousands, except share and per share data
NOTE 14:-
|
SUBSEQUENT EVENTS (Cont.)
|
According to the Bonus Agreements,
the total number of Bonus Shares issuable to the Company (including the shares to be released at the Milestone Closing) is computed
as the number of ordinary shares of Bonus equal to the quotient obtained by dividing (A) $16,400 expressed in NIS (based on the
exchange rate between NIS and the dollar as of January 8, 2020) by (B) NIS 0.50. As of January 9, 2020, such total number of Bonus
Shares represents (on a post-issuance basis) approximately 12% of the outstanding share capital of Bonus. The fair value of Bonus
Ordinary shares based on a quote of the share price at the date of the agreement was $0.12 per share.
The closing of the transactions
contemplated by the Bonus Agreements is subject to several customary conditions, including (i) approval of the TASE to list the
Bonus Shares, and (ii) the execution by Bonus and the Company of a Registration Rights Agreement (the “Bonus Registration
Rights Agreement”), pursuant to which Bonus will be required to file a resale registration statement (the “Resale
Registration Statement”) with the SEC to register the Bonus Shares for resale, within 30 days following the Nasdaq Listing,
and to have sthe Resale Registration Statement declared effective within 45 days after the Nasdaq Listing in the event the Resale
Registration Statement is not reviewed by the SEC, or 120 days after the Nasdaq Listing in the event the Resale Registration Statement
is reviewed by the SEC.
The Bonus Agreements may be terminated
under certain circumstances, including if (i) the closing thereof is not consummated on or before 5:00 p.m., Israel time, within
30 days following the signing date thereof, or (ii) the Company shall have not provided evidence to Bonus that it has received
$7,400 on or before 5:00 p.m., Israel time, on January 20, 2020. After several mutual agreements between the Company and Bonus
for extension of such date, the transaction was completed on February 19, 2020.
The Series B Investment
In order to finance the transactions
contemplated by the Bonus Purchase Agreement, on January 9, 2020, the Company entered into a Securities Purchase Agreement (the
“Series B Purchase Agreement”) with certain accredited investors.
Pursuant to the Series B Purchase
Agreement, the Company agreed to sell to the investors, and the investors agreed to purchase from the Company, in a private placement,
an aggregate of 7,500 shares of newly created Series B Non-Voting Redeemable Preferred Stock, par value $0.001 per share, of the
Company (“Series B Preferred Stock”) for a purchase price of $1 per share, for aggregate gross proceeds under
the Series B Purchase Agreement of $7,500, which funds will be deposited into an escrow account, of which (i) $500 will be paid
to the Bonus Escrow Account and $100 will be paid to the Company to cover certain of its transactions expenses, in each case,
promptly following the execution of the Series B Purchase Agreement, and (ii) the remaining $6,900 will be released to the Bonus
Escrow Account upon the closing of the transactions contemplated by the Series B Purchase Agreement (of which, as described above,
$3,200 shall be released upon the earlier of the Milestone Closing or upon written consent of the holders of at least a majority
of the Series B Preferred Stock).
The Series B Purchase Agreement
contains customary covenants, representations and warranties of the parties thereto, including, among others, (i) a covenant by
the investors not to transfer the Series B Preferred Stock without the approval of the Company; (ii) a covenant by the Company,
for as long as any Series B Preferred Stock remain outstanding, not to sell any Bonus Shares for a price per share equal to less
than NIS 0.40 (the “Price Restriction”); and (iii) a covenant by the Company, simultaneously with, or
promptly after, the redemption of the Series B Preferred Stock, to assign certain rights under the Bonus Purchase Agreement, such
as the right to liquidated damages in the event of delayed Nasdaq Listing, and under the Bonus Registration Rights Agreement to
the investors.
In connection with the Series
B Purchase Agreement, the Company agreed to file, at the closing, a Certificate of Designations of Series B Non-Voting Redeemable
Preferred Stock with the Secretary of State of Delaware (the “Series B Certificate of Designations”). Pursuant
to the Series B Certificate of Designations, the Company designated 7,500 shares of preferred stock as Series B Preferred Stock.
The Series B Preferred Stock are not convertible into shares of Common Stock of the Company and have no voting powers, except
as related to certain rights to protect the rights and preferences of the Series B Preferred Stock and with respect to sales or
dispositions of the Series B Preferred Stock at a price per share below the Price Restriction. The Series B Preferred Stock entitles
its holders to (i) 80% of the proceeds received by the Company through future sales of the Bonus Shares issued to the Company
under the Bonus Agreements and (ii) 80% of any cash dividends received by the Company on such Bonus Shares. Under the Series B
Certificate of Designations, the Company has the option to redeem the Series B Preferred Stock at any time by distributing to
holders of the Series B Preferred Stock (i) 80% of the Bonus Shares then held by the Company and (ii) 80% of all dividends received
by the Company but not yet paid to holders of the Series B Preferred Stock (the “Redemption Payment”). The
Company is required to redeem the Series B Preferred Stock through payment of the Redemption Payment upon the earlier of (i) 60
days following the Nasdaq Listing, and (ii) December 28, 2020.
(b) Exhibits
Exhibit
Number
|
|
Description
|
2.1†
|
|
Agreement
and Plan of Merger, dated as of May 21, 2017, by and among the Company, Bufiduck Ltd. and Wize Pharma Ltd. (Incorporated by
reference to Company’s Current Report on Form 8-K filed with the SEC on May 22, 2017)
|
|
|
|
2.2
|
|
Amendment
No. 1 to Agreement and Plan of Merger, dated as of October 31, 2017, by and among the Company, Bufiduck Ltd. and Wize Pharma
Ltd. (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on November 1, 2017)
|
|
|
|
3.1
|
|
Certificate
of Incorporation (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on April 5, 2012)
|
|
|
|
3.2
|
|
Certificate
of Amendment to Certificate of Incorporation (Incorporated by reference to Company’s Current Report on Form 8-K filed
with the SEC on July 18, 2013)
|
|
|
|
3.3
|
|
Certificate
of Amendment to Certificate of Incorporation dated November 15, 2017 (Incorporated by reference to Company’s Current
Report on Form 8-K filed with the SEC on November 21, 2017)
|
|
|
|
3.4
|
|
Certificate
of Amendment to Certificate of Incorporation dated March 1, 2018 (Incorporated by reference to Company’s Current Report
on Form 8-K filed with the SEC on March 5, 2018)
|
|
|
|
3.5
|
|
Bylaws
(Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on May 10, 2013)
|
|
|
|
3.6#
|
|
Certificate of Designations, Preferences and Rights of Series B Non-Voting Redeemable Preferred Stock
|
|
|
|
4.1
|
|
Specimen
Common Stock Certificate (Incorporated by reference to Company’s Registration Statement on Form S-1 filed with the SEC
on February 6, 2018)
|
|
|
|
4.2
|
|
Form
of PIPE Warrant (Incorporated by reference to Company’s Registration Statement on Form S-1 filed with the SEC on February 6,
2018)
|
|
|
|
4.3#
|
|
Description of Securities
|
|
|
|
10.1+
|
|
2012
Stock Incentive Plan (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on February
9, 2012)
|
|
|
|
10.2+
|
|
2012
Stock Incentive Plan, Annex A (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC
on March 8, 2013)
|
|
|
|
10.3
|
|
Chairman
Agreement between the Company and Mark Sieczkarek dated as of April 23, 2019 (Incorporated by reference to Company’s
Current Report on Form 8-K filed with the SEC on April 29, 2019)
|
10.4
|
|
Form
of Stock Purchase Agreement (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on
May 22, 2017)
|
|
|
|
10.5
|
|
Form
of Termination of License Agreement (Incorporated by reference to Company’s Current Report on Form 8-K filed with the
SEC on May 22, 2017)
|
|
|
|
10.6
|
|
Form
of Termination of Services Agreement (Incorporated by reference to Company’s Current Report on Form 8-K filed with the
SEC on May 22, 2017)
|
|
|
|
10.7
|
|
Exclusive
Distribution and Licensing Agreement dated May 1, 2015 between Resdevco Ltd. and Wize Pharma Ltd. (formerly Star Night Technologies
Ltd.) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
|
|
|
|
10.8
|
|
Amendment
to Licensing Agreement dated November 22, 2015 between Resdevco Ltd. and Wize Pharma Ltd. (Incorporated by reference to Company’s
Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
|
|
|
|
10.9
|
|
Amendment
No. 2 to Licensing Agreement dated March 20, 2016 between Resdevco Ltd. and Wize Pharma Ltd. (Incorporated by reference to
Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
|
|
|
|
10.10
|
|
Amendment
No. 1 to Licensing Agreement – Israeli Market dated May 31, 2016 between Resdevco Ltd. and Wize Pharma Ltd. (Incorporated
by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
|
|
|
|
10.11
|
|
Amendment
No. 2 to Licensing Agreement – Ukraine Market dated May 31, 2016 between Resdevco Ltd. and Wize Pharma Ltd. (Incorporated
by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
|
|
|
|
10.12
|
|
Addition
to Amendment to Licensing Agreement dated January 6, 2017 between Resdevco Ltd. and Wize Pharma Ltd. (Incorporated by reference
to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
|
|
|
|
10.13
|
|
Second
Addition to Amendment to Licensing Agreement dated March 30, 2017 between Resdevco Ltd. and Wize Pharma Ltd. (Incorporated
by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
|
|
|
|
10.14
|
|
Correction
to Licensing Agreement dated June 16, 2017 between Resdevco Ltd. and Wize Pharma Ltd. (Incorporated by reference to Company’s
Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
|
|
|
|
10.15
|
|
Appendix
F to Exclusive Distribution and Licensing Agreement between Resdevco Ltd. and Wize Pharma Ltd. signed on May 1, 2015 dated
July 20, 2017 (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July
27, 2017)
|
|
|
|
10.16
|
|
Appendix
G to Exclusive Distribution and Licensing Agreement between Resdevco Ltd. and Wize Pharma Ltd. signed on May 1, 2015 dated
July 20, 2017 (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July
27, 2017)
|
10.17
|
|
Assumption
Agreement dated August 30, 2016 between Resdevco Ltd. and OcuWize Ltd (Incorporated by reference to Company’s Registration
Statement on Form S-4 filed with the SEC on July 27, 2017)
|
|
|
|
10.18
|
|
Convertible
Loan Agreement dated March 20, 2016 between Wize Pharma Ltd. and Rimon Gold Assets Ltd. (unofficial English translation from
Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
|
|
|
|
10.19
|
|
Addendum
to Convertible Loan Agreement dated March 30, 2016 between Wize Pharma Ltd. and Rimon Gold Assets Ltd. (unofficial English
translation from Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC
on July 27, 2017)
|
|
|
|
10.20
|
|
Second
Convertible Loan Agreement dated January 12, 2017 between Wize Pharma Ltd. Ridge Valley Corporation and Rimon Gold Assets
Ltd. (unofficial English translation from Hebrew) (Incorporated by reference to Company’s Registration Statement on
Form S-4 filed with the SEC on July 27, 2017)
|
|
|
|
10.21
|
|
Debenture
Floating Charge dated March 20, 2016 between Wize Pharma Ltd. and Rimon Gold Assets Ltd. (unofficial English translation from
Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
|
|
|
|
10.22
|
|
Debenture
- Fixed Charge dated March 20, 2016 between Wize Pharma Ltd. and Rimon Gold Assets Ltd. (unofficial English translation from
Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
|
|
|
|
10.23
|
|
Debenture
Floating Charge dated October 26, 2016 between Ocu Wize Ltd. and Rimon Gold Assets Ltd. (unofficial English translation from
Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
|
|
|
|
10.24
|
|
Debenture
– Fixed Charge dated October 26, 2016 between Ocu Wize Ltd. and Rimon Gold Assets Ltd. (unofficial English translation
from Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27,
2017)
|
|
|
|
10.25
|
|
Amendment
to Debenture – Floating Charge dated March 28, 2017 between Wize Pharma Ltd. and Rimon Gold Assets Ltd. (unofficial
English translation from Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with
the SEC on July 27, 2017)
|
|
|
|
10.26
|
|
Amendment
to Debenture – Fixed Charge dated March 28, 2017 between Wize Pharma Ltd. and Rimon Gold Assets Ltd. (unofficial English
translation from Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC
on July 27, 2017)
|
|
|
|
10.27
|
|
Amendment
to Debenture – Floating Charge dated March 28, 2017 between Ocu Wize Ltd. and Rimon Gold Assets Ltd. (unofficial English
translation from Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC
on July 27, 2017)
|
|
|
|
10.28
|
|
Amendment
to Debenture – Fixed Charge dated March 28, 2017 between Ocu Wize Ltd. and Rimon Gold Assets Ltd. (unofficial English
translation from Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC
on July 27, 2017)
|
|
|
|
10.29
|
|
Form
of Irrevocable Guaranty and Undertaking (Incorporated by reference to Company’s Registration Statement on Form S-4 filed
with the SEC on July 27, 2017)
|
|
|
|
10.30
|
|
Private
Placement Agreement dated May 25, 2017 between Wize Pharma Ltd. and Jonathan Brian Rubini (Incorporated by reference to Company’s
Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
|
10.31
|
|
Addendum
to Private Placement Agreement dated June 15, 2017 between Wize Pharma Ltd. and Jonathan Brian Rubini (Incorporated by reference
to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
|
|
|
|
10.32
|
|
Private
Placement Agreement dated June 23, 2017 between Wize Pharma Ltd. and Simcha Sadan (Incorporated by reference to Company’s
Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
|
|
|
|
10.33
|
|
Private
Placement Agreement dated June 23, 2017 between Wize Pharma Ltd. and Yaakov Zarachia (Incorporated by reference to Company’s
Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
|
|
|
|
10.34
|
|
Private
Placement Agreement dated June 23, 2017 between Wize Pharma Ltd. and Peretz Yosef Eliahu (Incorporated by reference to Company’s
Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
|
|
|
|
10.35+
|
|
Employment
Agreement dated September 30, 2015 between Wize Pharma Ltd. and Or Eisenberg (unofficial English translation from Hebrew)
(Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
|
|
|
|
10.36+
|
|
Agreement
for Provision of Services Agreement dated September 30, 2015 between Wize Pharma Ltd. and N Danenberg Holdings (2000) Ltd.
(unofficial English translation from Hebrew) (Incorporated by reference to Company’s Registration Statement on Form
S-4 filed with the SEC on July 27, 2017)
|
|
|
|
10.37
|
|
Finder’s
Agreement dated June 19, 2017 between Wize Pharma Ltd. and Harbin Israel (Trading) Ltd. (Incorporated by reference to Company’s
Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
|
|
|
|
10.38
|
|
Letter
dated September 6, 2017 from Resdevco Ltd. (Incorporated by reference to Company’s Current Report on Form 8-K filed
with the SEC on November 21, 2017)
|
|
|
|
10.39
|
|
Agreement
dated September 25, 2017 between Resdevco Ltd. and Wize Pharma Ltd. (Incorporated by reference to Company’s Current
Report on Form 8-K filed with the SEC on November 21, 2017)
|
|
|
|
10.40
|
|
Letter
Amendment to Convertible Loans, dated as of December 21, 2017, by and between Wize Pharma, Inc., Wize Pharma Ltd., Ridge Valley
Corporation, Rimon Gold Assets Ltd. and Shimshon Fisher. (unofficial English translation from Hebrew) (Incorporated
by reference to Company’s Current Report on Form 8-K filed with the SEC on December 27, 2017)
|
|
|
|
10.41*
|
|
Third
Amendment to Exclusive Distribution and Licensing Agreement by and between Wize Pharma Ltd. and Resdevco Research and Development
Company Ltd., dated December 26, 2017 (Incorporated by reference to Company’s Annual Report on Form 10-K filed with
the SEC on March 29, 2018)
|
|
|
|
10.42*
|
|
Memorandum
of Understanding by and between Wize Pharma Ltd. and Resdevco Research and Development Company Ltd., dated January 8, 2018
(Incorporated by reference to Amendment No. 1 to Company’s Annual Report on Form 10-K filed with the SEC on June 5,
2018)
|
|
|
|
10.43+
|
|
2018
Equity Incentive Plan (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on February
28, 2018)
|
|
|
|
10.44*
|
|
Exclusive
Distribution Agreement between Wize Pharma Ltd. and HPGC Medical Co., Ltd. dated May 31, 2018 (Incorporated by reference to
Company’s Current Report on Form 8-K filed on June 5, 2018)
|
|
|
|
10.45+
|
|
Amendment
to 2018 Equity Incentive Plan (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC
on August 21, 2018)
|
|
|
|
10.46+
|
|
Employment
Agreement, dated August 21, 2018, between Wize Pharma Ltd. And Or Eisenberg (Incorporated by reference to Company’s
Current Report on Form 8-K filed with the SEC on August 22, 2018)
|
|
|
|
10.47+
|
|
Consulting
Services Agreement, dated August 20, 2018, between Wize Pharma Ltd., N. Danenberg Holdings (2000) Ltd. and Noam Danenberg
(Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on August 22, 2018)
|
|
|
|
10.48
|
|
Form
of Purchase Agreement dated October 22, 2018 (Incorporated by reference to Company’s Current Report on Form 8-K filed
with the SEC on October 23, 2018)
|
|
|
|
10.49
|
|
Form
of Registration Rights Agreement dated October 22, 2018 (Incorporated by reference to Company’s Current Report
on Form 8-K filed with the SEC on October 23, 2018)
|
|
|
|
10.50
|
|
Placement
Agency Agreement dated October 22, 2018 (Incorporated by reference to Company’s Current Report on Form 8-K filed with
the SEC on October 23, 2018)
|
10.51
|
|
Convertible
Loan Amendment dated October 19, 2018 (Incorporated by reference to Company’s Current Report on Form 8-K filed with
the SEC on October 23, 2018)
|
|
|
|
10.52
|
|
Amendment
No.1 to Consulting Services Agreement dated November 7, 2018 (Incorporated by reference to Company’s Current Report
on Form 8-K filed with the SEC on November 14, 2018)
|
|
|
|
10.53+
|
|
Consulting
Agreement dated November 7, 2018 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC
on November 14, 2018)
|
|
|
|
10.54
|
|
Joint
Venture Agreement between Wize Pharma, Inc. and Cannabics Pharmaceuticals, Inc. dated February 7, 2019 ((Incorporated by reference
to Company’s Current Report on Form 8-K filed with the SEC on February 12, 2019)
|
|
|
|
10.55#*
|
|
Memorandum of Understanding between Wize Pharma Ltd. and Resdevco, Research and Development Ltd. dated February 24, 2019
|
|
|
|
10.56
|
|
Amendment
to Convertible Loans Agreements dated March 4, 2019 (Incorporated by reference to Company’s Current Report on Form 8-K
filed with the SEC on March 4, 2019)
|
|
|
|
10.57
|
|
Amendment
to Convertible Loans Agreements dated May 31, 2019 (Incorporated by reference to Company’s Current Report on Form 8-K
filed with the SEC on June 4, 2019)
|
|
|
|
10.58
|
|
Amendment to Convertible Loans Agreements dated November 29, 2019 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on December 5, 2019)
|
|
|
|
10.59
|
|
Exchange
Agreement by and between Bonus BioGroup Ltd. and Wize Pharma Inc., dated January 9, 2020 (Incorporated by reference to Company’s
Current Report on Form 8-K filed with the SEC on January 15, 2020)
|
|
|
|
10.60
|
|
Share
Purchase Agreement by and between Bonus BioGroup Ltd. and Wize Pharma Inc., dated January 9, 2020 (Incorporated by reference
to Company’s Current Report on Form 8-K filed with the SEC on January 15, 2020)
|
|
|
|
10.61
|
|
Form
of Registration Rights Agreement (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC
on January 15, 2020)
|
|
|
|
10.62
|
|
Series
B Purchase Agreement by and between Wize Pharma Inc. and various investors, dated January 9, 2020 (Incorporated by reference
to Company’s Current Report on Form 8-K filed with the SEC on January 15, 2020)
|
|
|
|
21.1
|
|
Subsidiaries
of the Company (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on November 21,
2017)
|
|
|
|
23.1#
|
|
Consent of Independent Registered Public Accounting Firm
|
#
|
Filed
herewith
|
|
|
†
|
Exhibits
and schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. We will furnish the omitted
exhibits and schedules to the Securities and Exchange Commission upon request by the Securities and Exchange Commission.
|
|
|
+
|
Management
compensatory plan.
|
|
|
*
|
Confidential
treatment was requested with respect to certain portions of this exhibit pursuant to 17.C.F.R. §240.24b-2. Omitted portions
were filed separately with the SEC.
|
ITEM
16. FORM 10-K SUMMARY.
None.