| STOCKHOLDERS' EQUITY | 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
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
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.
h. On October 22, 2018,
the Company entered into a securities purchase agreement (the " Purchase Agreement 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 Series B Warrants Warrants 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. 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. The Company engaged ThinkEquity,
a division of Fordham Financial Management, Inc. (" ThinkEquit 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 Mesodi Warrants 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.
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.
q. In connection
with Mr. Sieczkarek's appointment, the Company and Mr. Sieczkarek entered into a Chairman Agreement (the " Chairman
Agreement RSUs 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.
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 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. 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.
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 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. |
