| SIGNIFICANT TRANSACTIONS | NOTE
5:- SIGNIFICANT
TRANSACTIONS 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 directly 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").
However, as of June 30, 2020 and as of the date of these Financial Statements, Bonus has not satisfied the Nasdaq Listing condition
and the condition of the Milestone Closing has not occurred. 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;
and (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. In addition, pursuant to the Bonus
Agreements (as amended as of June 24, 2020), Bonus agreed to cover nearly 50% of the Company's fees and expenses payable
by the Company in cash, Bonus shares and/or a combination thereof to H.C. Wainwright & Co., LLC ("HCW") in connection
with the transactions contemplated by the Bonus Agreements and the Series B Purchase Agreement (as defined below). In particular,
Bonus agreed to reimburse the Company or pay HCW directly $350 in cash, Bonus shares and/or a combination thereof. Regarding the requirement to release
the remaining escrow amount of $3,700 to the Series B investors subject to Bonus failure to achieve listing in Nasdaq, see below. According to the Bonus Agreements,
as amended, the total number of Bonus Shares issuable to the Company (including the shares to be released at the Milestone Closing)
was computed 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 represented (on a post-issuance basis) approximately 12% of the outstanding share capital of Bonus. The fair value
of Bonus shares based on a quote of the share price on January 9, 2020, the date of signing the Bonus Agreements, was $0.12 per
share and, as of the date of the closing was $0.11 per share. The closing of the transactions contemplated
by the Bonus Agreements, as amended, was subject to several customary conditions, including 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 the 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 transactions contemplated by the
Bonus Agreements were completed on February 19, 2020. As of the date of closing of the Bonus
Agreements, the Company received 85,239,000 of Bonus ordinary shares. Pursuant to the Bonus Agreements, an additional 28,413,000
Bonus ordinary shares will be released to the Company upon the Nasdaq Listing and concurrently with the release of the $3,700 from
the escrow account to Bonus. However, as of June 30, 2020 and as of the date of these financial statements, Bonus has not satisfied
the Nasdaq Listing condition and the Milestone Closing has not occurred. As the Bonus Shares represent marketable
securities with readily determinable fair value, Bonus shares issued to the Company were recognized upon initial recognition based
on their quoted price (less applicable non-marketability discount) as of the date of the completion of the Bonus Agreements at
an aggregate amount of $8,759. The difference between the fair value of Bonus shares and the amount of cash that was transferred
directly to Bonus from an escrow account was recognized as financial liability, representing the Company's obligation to
Bonus with respect to the LO2A Proceeds in an amount of $5,059 (see Note 2). In addition, during the period from
completion of the Bonus Agreements (February 19, 2020) and through June 30, 2020, the Company recognized financial income from
revaluation of its investment in Bonus marketable securities in an amount of $1,000 (the Company recognized a loss of $2,388 for
the three month period ended March 31, 2020, resulting in financial income of $3,388 for the three month period ended June 30,
2020) due to the change in the quoted market price of these shares on TASE. Such amount was presented as part of financial income
(expenses), net. The
Mandatorily Redeemable 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 were deposited into an escrow account, of
which (i) $500 was to be paid to the Bonus Escrow Account and $100 was to 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 was
to 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 was to 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
contained 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 were 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 entitled 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 had 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 was 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 of the
Bonus Shares, and (ii) December 28, 2020. However, until the completion of the
Nasdaq Listing, an amount of $3,700 shall remain in an escrow account upon the failure of such listing by Bonus, such amount shall
be required to be released in its entirely to the Series B investors. This escrow account of $3,700 is presented as Restricted
deposit in the accompanying consolidated balance sheet as of June 30, 2020. As of the completion date (February
19, 2020), the Company recognized a liability in light of its obligation to redeem the Series B Preferred Stock at its fair value
in an amount of $10,707, representing the sum of the remaining escrow amount of $3,700 (which, in case the Milestone Closing will
not be met, will be paid to the Series B investors) and 80% of the Company's investment in Bonus marketable shares, see Note
2. The difference between the amount of
the liability recognized with respect to the Series B Preferred Stock ($10,707) and the cash amount actually invested by such preferred
stock investors ($7,500), amounting to $3,207 was recognized immediately as financial expense, net upon the completion of the Bonus
agreement and the Series B Purchase Agreement, within financial income (loss), net. In addition, from the date of the completion
and until June 30, 2020, the Company recognized a loss in an amount of $803 (the Company recognized a gain of $1,910 during the
three month period ended March 31, 2020, resulting in a loss of $2,703 for the three month period ended June 30, 2020) as part
of financial income (loss), net due to the revaluation of the mandatorily redeemable Series B Preferred Stock liability. On July 8, 2020, the Company elected
to redeem all of the Series B Preferred Stock. As a result, the Company distributed 68,191,200 Bonus Shares to the holders of Series
B Preferred Stock representing 80% of the Bonus shares then held by the Company. As a result of such distribution, as of the date
of these Financial Statements, the Company owns the remaining 17,047,800 Bonus Shares, representing approximately 1.76% of the
outstanding shares of Bonus. |
