| STOCKHOLDERS' EQUITY | NOTE 13:- 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 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. On March 1, 2019, the Company's joint
venture agreement with Cannabics became effective. 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 was 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.
c. 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.
d. 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.
e. On
April 23, 2019, the Company's Board appointed Mark Sieczkarek as the Company's Chairman of the Board (the " Chairman
Appointment
f. 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.
g. 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.
h.
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 being recognized ratably over the vesting period. On August 11, 2020, the Company's Board of Directors approved
the equity grant of 150,000 restricted stock units vesting quarterly over a period of two years to the Chairman of the Board of
Directors of the Company, see also note 13p below. On January 6,
2020, April 15, 2020, July 1, 2020 and October 1, 2020 the Company issued 25,300, 25,300, 25,300 and 44,050, respectively, shares
to the Chairman pursuant to the agreement above following the vesting of certain portions of the RSUs. The Company
recognized $46 during the year ended December 31, 2020 as a share-based expense in connection to the RSU's and options granted.
i. In
April 2019, Mr. Danenberg purchased directly from Ridge all Ridge's rights under the second convertible loan agreement.
j. 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 and $2 during the years ended December
31, 2019 and 2020, respectively as a share-based expense in connection to the RSU's.
k. 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.
l. On May 19, 2019,
the Company granted to one of its directors certain 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.
m. 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.
n. 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 original terms of these warrants. The difference between the fair value of the warrants and the incremental fair value resulting
from the triggering of the above mentioned features was recognized as a deemed dividend and as an increase of the loss applicable
to common stockholders in an amount of $15. See also note 13p and 13q below.
o. On August 11, 2020, the Company's Board of Directors approved
the following equity grants: (i) 150,000 restricted stock units vesting quarterly over a period of two years to the Chairman of
the Board of Directors of the Company and (ii) 100,000 restricted stock units vesting quarterly over a period of two years to each
of the other three non-executive directors. The aggregate fair value of these shares of RSUs at grant date issued was $73, and
is being recognized over a period of 2 years following August 11, 2020. The Company recognized $34 during the year ended December
31, 2020, as a share-based expense in connection to the RSU's.
p. On December 8, 2020, the Company
entered into exchange agreements (the "Exchange Agreements") with certain holders (the "Series A
Holders") of 3,000,000 Series A Warrants. Pursuant to the terms of the Exchange
Agreements, the Holders agreed to surrender their Warrants for cancellation and received, as consideration for such cancellation,
an aggregate of 3,000,000 shares of common stock. The securities issued pursuant to the foregoing are exempt
from the registration requirements of the Securities Act of 1933, as amended (the "Securities Act"), pursuant
to Section 3(a)(9) and/or Section 4(a)(2) of the Securities Act and/or Rule 506(b) of Regulation D promulgated thereunder
because, among other things, the transaction did not involve a public offering and the warrant holders are accredited
investors. The difference between the fair value of the warrants before the exchange and the fair value of the shares
was recognized as a deemed dividend and as an increase of the loss applicable to common stockholders in an amount of $63.
q. On December 24, 2020, the Company entered into an agreement (the
"Agreement") with certain holders (the "Series A Holders") representing a majority of the Series A Warrants.
Pursuant to the terms of the Agreement, the Company and Series A Holders mutually agreed that the Company would voluntarily reduce
the exercise price of the Warrants to $0.001 per share until January 7, 2021, after which such exercise price shall revert back
to $0.16 per share. As a result of the adjustment
to the exercise price of the Series A Warrants, the exercise price of the warrants issued in November 2017 (the "2017
Warrants"), the placement agent warrants issued in October 2018 (the "2018 Placement Agent Warrants"),
the warrants issued to certain lenders in May 2019 (the "May 2019 Warrants"), the warrants issued to certain
lenders in November 2019 (the "November 2019 Warrants"), the warrants issued to certain purchasers from the
private placement in December 2019 (the "December 2019 Warrants") and certain investment rights issued on
January 2017 (the "Investment Rights") were also adjusted to reflect a reduced exercise price of $0.001 per
share (collectively, the "Warrant Adjustments"). As a result of the Warrant Adjustments, on December 29, 2020
an aggregate of 13,332,654 shares of common stock were issued as a result of the exercise of such warrants, each on a
cashless basis. Among others, such warrant exercises also included warrants beneficially owned by our Chief Executive
Officer, Noam Dannenberg. The difference between the fair value of the warrants before and after the adjustment was recognized
as a deemed dividend and as an increase of the loss applicable to common stockholders in an amount of $327.
r. 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, 2020, the Company
has 40,474 shares of Common Stock available for future grant under the 2012 Plan. As of December 31, 2020, 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, 2020, the Company
has 2,184,813 shares of Common Stock available for future grant under the 2018 Plan. Through December 31, 2020, 290,222
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 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 $51
and $154 during the year ended December 31, 2020 and 2019, respectively.
2. 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 RSUs. The RSUs 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 $132 and
$337 during the year ended December 31, 2020 and 2019 respectively.
3. 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, 2020, all of the options were forfeited. Transactions related to the grant of options to employees and
directors under the 2012 Plan during the year ended December 31, 2020 and 2019, were as follows:
Year Ended December 31, 2020
Number Weighted Weighted
Options outstanding at beginning of year 4,896 $ 190.7 3.86
Granted - - -
Forfeited (544 ) $ 216 -
Options outstanding and exercisable at end of year 4,352 $ 81.81 3.32
Year Ended December 31, 2019
Number Weighted Weighted
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, 2020 and 2019, were as follows:
Year Ended December 31, 2020
Number Weighted Weighted
Options outstanding as of December 31, 2019 352,072 $ 2.91 5.72
Granted - - -
Forfeited (61,850 ) $ 2.97 -
Options outstanding as of December 31, 2020 290,222 $ 2.64 5.84
Options exercisable as of December 31, 2020 255,459 $ 2.56 5.82
Year Ended December 31, 2019
Number Weighted Weighted
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, 2019 181,799 $ 2.75 5.72 At December 31, 2020, there was
$3 of total unrecognized compensation cost related to non-vested option grants that is expected to be recognized over a weighted-average
period of 0.5 years. The intrinsic value of options outstanding and exercisable at December 31, 2020 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. |
