| SHAREHOLDERS' EQUITY (DEFICIT) | NOTE 6 - SHAREHOLDERS' EQUITY (DEFICIT): The ordinary shares in the Company confer upon
their holders the right to receive notice to participate and vote in general meetings of the Company, and the right to receive dividends,
if and when declared.
Number of shares(*)
June 30, 2022 December 31, 2021
Unaudited Audited
Authorized Issued
and Authorized Issued and
Ordinary shares of $0.09 par value 2,000,000,000 24,386,680 2,000,000,000 13,579,032
Warrants** 3,450,000 3,450,000 3,450,000 3,450,000
(*) See also Note 9D.
(**) the Warrants will be exercisable
at a price equal to $6.25 per share and for a period of five years, starting from June 2021. During the period the six months period ended
June 30, 2022 the Company issued 10,807,647 ordinary shares related to: conversion of performance shares, exercise of options, payment
made to a service provider, issuances for private placement investments in the Company and issuance to the Company’s CEO. See also
Notes 3 and 5. In January 2022, the Company granted four series of performance shares
in a total amount of 2,000,000 units to directors, officers and certain employees of the Company to be exercised upon achieving certain
market capitalization of the Company. The Performance shares units will expire two years from the date of issuance. 50% of the units granted will become vested and exercisable when the
company market cap reaches $75,000 (“Series E”), 16.67% of the units granted will become vested and exercisable when the company
market cap reaches $100.000 (“Series F”), 16.67% of the units granted will become vested and exercisable when the company
market cap reaches $125,000 (“Series G”) and 16.67% of the units granted will become vested and exercisable when the company
market cap reaches $150,000 (“Series H”). In January 2022, the Company’s market value reached $75,000 and
therefore Series E units were exercised to 1,000,000 ordinary shares of the Company. On January 19, 2022, the Company granted two additional series of performance
shares in a total amount of 2,650,000 units to directors, officers and certain employees of the Company to be exercised upon achieving
certain market capitalization of the Company. The Performance shares units will expire five years from the date of issuance. 50% of the units granted will become vested and exercisable when the
company market cap reaches $175,000 (“Series I”), and the remaining 50% of the units granted will become vested and exercisable
when the company market cap reaches $200,000 (“Series J”). All the incentive performance rights were valued using a Monte-Carlo
based risk-neutral valuation model, which is designed to model the Company’s equity value over time. The total fair value of the
performance shares, as measured on issuance date, amounted to $10,927 and the Company recorded an expense amounted to $2,418 through profit
and loss in the six months period ended June 30, 2022. The key inputs that were used in the valuations of the Performance shares were:
risk-free interest rate of 0.895% and expected volatility of 60% for Series E, F, G and H; and risk-free interest rate of 1.62% and expected
volatility of 60% for Series I and J. In January 2022, the Company granted 150,000 warrants to two service
providers which will become vested and exercisable over 3 years, as follows, 33.33% after one year and then 8.33% per quarter following
the first vesting date and for a period of eight consecutive quarterly periods. The warrants have an exercise price of $3.5 per option
share. The total fair value of the warrants, as measured on issuance date, amounted to $212 and the Company recorded an expense of $66
through profit and loss in the six months period ended June 30, 2022. In July 2021, the Company signed an agreement with a service provider
to provide consulting services. As part of the consideration, on April 8, 2022, the Company issued to the service provider 50,000 of the
Company’s ordinary shares. The Company’s share price on the date of issuance was $1.29 per share and the Company recorded
an expense of $64 through profit and loss. In June 2022 the Company granted 2,225,000 share options to directors,
officers and certain employees of the Company at an exercise price of $0.65 per share that will be vested after one year and shall be
exercisable over 5-year term, commencing on the grant date. The total fair value of the share options, as measured on issuance date, amounted
to $1,207 and the Company recorded an expense of $46 through profit and loss in the six months period ended June 30, 2022. In June 2022, the Company issued warrants to purchase 50,000 ordinary
shares to a service provider with an exercise price of $2.0 per share. The warrants shall become vested and exercisable commencing two
years after the grant date, and shall be exercisable over 5-year term, commencing on the grant date. The total fair value of the warrants,
as measured on issuance date, amounted to $21 and the Company recorded it as an expense profit and loss in the six months period ended
June 30, 2022. Share repurchase program On May 20, 2022, the Company announced that its
board of directors authorized a share repurchase program to acquire up to $1 million of the Company's ordinary shares. Until June 30,
2022, the Company purchased 199,471 ordinary shares in consideration for $121. | NOTE
14 - SHAREHOLDERS’ EQUITY (DEFICIT):
A. The
ordinary shares in the Company entitle their holders the right to receive notice to participate
and vote in general meetings of the Company and the right to receive dividends, if and when
declared.
Number
of shares
December
31, 2021 December
31, 2020*
Authorized Issued
and Authorized Issued
and
Ordinary shares of $0.09 par value 2,000,000,000 13,579,032 2,000,000,000 9,103,924
* After
giving effect to the reverse stock split (see also Note 14B)
B. reverse
stock split: On
March 25, 2021, the Company’s shareholders approved, a 1-for-5 consolidation (hereinafter referred to as a reverse stock split
of 5:1) of the Company’s ordinary shares pursuant to which holders of the Company’s ordinary shares received one ordinary
share for every 5 ordinary share held. All ordinary shares (issued and unissued) will be consolidated on the basis that every five ordinary
shares of par value $0.018 will be consolidated into one ordinary share of par value $0.09, such that the authorized ordinary share capital
of the Company following such consolidation is $180,000 divided into 2,000,000,000 ordinary shares of a par value of $0.09 each.
C. In May and August 2020, the Company issued 2,061,425 shares pursuant to private placements in consideration of an aggregate of approx. $7,100 in net proceeds to the Company.
D. On June 29, 2021, the Company closed its initial public offering (the “IPO”) of 3,000,000 units. Each unit consisted of one Ordinary shares and one warrant to purchase one ordinary share at a price of $5 per unit. The gross proceeds to the Company from the initial public offering were $15,000 before deducting underwriting discounts and commissions and estimated offering expenses payable by the Company. The total issuance expenses were in the amount of $2,150, only the costs in the amount of $1,583 which were attributed to the offer of new shares are deducted from equity. The
Company also granted an option to the underwriter to purchase up to 450,000 additional warrants at the public offering price less the
underwriting discount. The underwriters exercised the option to purchase the 450,000 warrants. The
IPO warrants are immediately exercisable on the date of the issuance at an exercise price of $6.25 per ordinary share (125% of the public
offering price per Unit) and will expire four years from the date of issuance. In
addition, and upon the consummation of the Company’s initial public offering, the Company issued 305,267 ordinary shares upon the
conversion of approximately $1,222 of outstanding debt (part of the Company’s loans) associated with the Company’s acquisition
of CardioStaff in November 2017, which was calculated based upon 80% of the public offering price of $5 per unit in the initial public
offering. The
Company issued 1,055,555 ordinary shares at par value of $0.09 to the Company’s CEO, Dr. Yacov Geva, as part of a bonus for completing
the Company’s IPO.
E. On December 3, 2021, the Company entered into a development and distribution agreement with Heartbuds AK LLC. Following this agreement, the Company issued 114,286 ordinary shares (see also note 14G.6).
F. The
warrants that were granted to financial advisors and consultants during 2020 and 2021 are
as follows:
Amount Exercise
price Expiration
date
62,777 A$ 22.5 January 23, 2022
23,333 A$ 3.87 October 22, 2025
77,778 A$ 4.5 October 22, 2025
43,196 A$ 7.47 October 22, 2025
2,567 A$ 4.95 October 22, 2025
460,915 A$ 4.5 June 29,2030
460,915 $ 1.25 June 29,2030
210,000 $ 6.25 June 25,2026
458,716 $ 3.27 December 30, 2026
600,000 $ 3.5 December 30, 2026
250,000 $ 4 December 30, 2026
250,000 $ 5 December 30, 2026
G. Options,
warrants and shares granted to employees and service providers:
1. In January 2017, the Board of Directors approved a Global Equity Incentive Plan (the “Plan”). The Plan will expire in December 2026. As of the December 31, 2021, the number of ordinary shares reserved for the exercise of options granted under the Plan is 841,066.
2. The
Company and the Company’s subsidiaries employees, directors, officers, and service
providers, including major shareholder are eligible to participate in this Plan and receive
awards of options, share appreciation rights (“SARs”), restricted shares, restricted
share units (“RSUs”), and any other share-based grant, referred to as, individually
or collectively. A summary of the status of the Company’s option plan granted to employees
as of December 31, 2021, and changes during the relevant period ended on that date is
presented below:
Year
ended Year
ended Year
ended
Number
Weighted Number Weighted Number Weighted
Outstanding
at beginning of year 23,531 17.625 31,002 $ 18.900 36,420 $ 17.46
Exercised - - (213 ) $ 0.0009 (1,763 ) $ 0.0009
Granted 2,525,000 2.5 - - - -
Forfeited
and cancelled (10,146 ) 21.75 (7,258 ) $ 20.825 (3,655 ) $ 18.84
Outstanding
at end of year 2,538,385 2.66 23,531 $ 17.625 31,002 $ 18.900
Exercisable
options 12,708 14.14 18,037 $ 16.430 14,479 $ 16.805
* After
giving effect to the reverse stock split The
options to employees outstanding as of December 31, 2021, are comprised, as follows:
Exercise
price Outstanding
as of Weighted
average Exercisable
as of Weighted
average
(years) (years)
$ 0.0009 4,314 0.1 4,314 0.1
$ 21.78 7,356 1.2 6,893 1.2
$ 19.71 1,715 1.4 1,501 1.4
$ 3.27 925,000 4.7 - -
$ 2.10 1,025,000 4.9 - -
$ 1.98 575,000 5.0 - -
2,538,385 12,708
3. On September 5, 2021, the Board of Directors approved to issue a total of 925,000 options to Directors and management, that will become vested over a period of three years, with an expiry period of five years and an exercise price per Option of $ 3.27.
4. On November 15, 2021, the Board of Directors approved to issue a total of 1,025,000 options to Directors and management that will become vested over a period of three years with an expiry period of five years and an exercise price per Option of $ 2.1.
5. On December 23, 2021, the Board of Directors approved to issue a total of 575,000 options to Directors and management that will become vested over a period of two years with an expiry period of five years and an exercise price per Option of $ 1.98.
6. On
November 30, 2021, the Company entered a joint development, licensing, and distribution agreement
with Heartbuds AK, LLC. Pursuant to the joint development agreement, the company and Heartbuds
will jointly develop a newer, enhanced model or generation of Heartbuds product to be included
with the sale and distribution of the company’s Prisma devise (the “HB2”). On
the date of the agreement, the Company issued Heartbuds 114,286 of the Company’s ordinary shares, and warrants to purchase 458,716
of the Company’s ordinary shares with an exercise price of $3.27 and expiration period of five years. From
the date that the HB2 is approved by the FDA until the last day of the 18-calendar month thereafter the warrants shall vest on a pro
rata basis based on the actual number of devices that Heartbuds will sell to be calculated relative to the agreed target of 20,000 devices. 7. In December 2021, the Company issued warrants to purchase 1,100,000 ordinary shares to a service provider with an exercise price ranging from $3.50 to $5.00. The warrants shall become vested and exercisable commencing one year after the grant date, and shall be exercisable over 5-year term, commencing on the grant date All
the options and shares granted during 2021 to employees and service providers were valued using a Black Scholes model based, which is
designed to model the Company’s equity value over time. The main assumptions used were: (1) risk-free rate: 0.78-1.27%; (2) volatility:
50%-60%; and (3) time until expiration: 5 years. 8. In 2020 the Company granted 162,544 shares to its employees and Board members, 210,807 shares to consultants, 146,874 warrants to consultants and 5,556 performance rights which were granted in 2019 vested and converted into ordinary shares. in addition, 72,040 restricted shares were granted to employees and to a consultant.
9. Performance
rights: In
May 2017, the Company had granted three classes of performance rights, which were approved by the Company’s shareholders, to certain
officers, directors, employees and service providers as incentive securities. Such performance rights were granted pursuant to the 2016
Plan, subject to entering into a performance rights agreement. The
performance rights are convertible into ordinary shares of the Company on a 1:1 basis, upon the occurrence of the following vesting milestones
for each class of performance rights:
● 777,778 Class A Performance Right milestone requires an FDA approval for the Prizma device clearance within 12 months from grant date (May 2017), the Performance Rights will be expired in one year. After the Company obtained U.S. FDA clearance for its Prizma device in Sep. 2017, Class A Performance Rights were vested and converted into ordinary shares.
● 666,667 Class B Performance Rights milestone requires rolling 12 months revenues of at least $30,000, the Performance Rights will be expired in 2 years from May 2017.
● 666,667 Class C Performance Rights require cumulative EBITDA of at least $25,000, the Performance Rights will be expired in 3 years from May 2017.
● Since
the Company did not meet the performance criteria, Class B and Class C, those Performance
rights were forfeited.
● 5,556 Class D performance rights were granted in July 2019 and were vested and converted into ordinary shares in July 2020. From
July 2020 the Company granted 111,111 ordinary shares and 744,442 with four classes of performance rights, to certain officers, directors,
employees and service providers as incentive securities. The
performance rights are convertible into ordinary shares of the Company on a 1:1 basis, upon the occurrence of the following vesting milestones
for each class of performance rights:
● Class A incentive performance right – 55,555 incentive performance rights, which vests upon achieving a market capitalization of greater than $100,000, which will be calculated based on:
i. The
Company’s 20-day VWAP of ordinary shares of the Company on the ASX (adjusted by the
AUD/USD exchange rate quoted on the Reserve Bank of Australia prior to the last trading day
pursuant to which the Company’s VWAP of ordinary shares is being calculated); or
ii. If
applicable, the Company’s closing market price on a trading day on Nasdaq, (Conversion
Price) multiplied by the total issued share capital of the Company.
● Class B incentive performance right – 166,666 incentive performance rights, which vests upon achieving a market capitalization of greater than $150,000.
● Class C incentive performance right – 222,222 incentive performance rights, vests upon achieving a market capitalization of greater than $200,000.
● Class D incentive performance right – 299,999 incentive performance rights, vests upon achieving a market capitalization of greater than $250,000. All
the incentive performance rights were valued using a Monte-Carlo based risk-neutral valuation model, which is designed to model the Company’s
equity value over time. The main assumptions used in the valuation model were: (1) risk-free rate: 0.27%; (2) volatility: 88%: (3) time
until expiration: 3 years; and (4) the AUD/USD rate: 0.71245. The total fair value of the incentive performance rights amounted to $635.
The total value of ordinary shares issued was $380. The Company recorded an expense amounted to $1,015 through profit and loss at grant
date. In
2021, 2020 and 2019 the Company recorded an expense related to options and shares granted at the amount of $648, $2,872 and $1,562 respectively.
H. On September 5, 2018, the Company entered into a Controlled Placement Agreement with Acuity Capital Investment Management Pty Ltd (“Acuity”) which provides the Company with up to AUD 10,000 thousand (approximately $7,200) of standby equity over a period of 28 months. Pursuant to the Controlled Placement Agreement, the Company issued to Acuity an option to require the Company to issue and allot, subject to prior notice, ordinary shares at an exercise price per Ordinary Share equal to the greater of (i) 90% of the VWAP of our ordinary shares traded by Acuity on ASX during a valuation period and (ii) a floor price for such valuation period, to be determined by us from time to time. Subject to the terms of the Controlled Placement Agreement, we may, at any time, terminate the Controlled Placement Agreement, following which Acuity may not require us to issue or allot any additional ordinary shares. As part of the agreement with Acuity, The Company issued to Acuity 188,888 ordinary shares to be held in collateral for no consideration. Upon the termination of the controlled placement agreement, the Company may buy back the 188,888 ordinary shares to Acuity. On
April 9, 2020, the Company increased the standby equity to AUD 15,000 (approximately $9,300) and issued to Acuity additional 181,111
ordinary shares to be held in collateral for no consideration. Upon the termination of the Controlled Placement Agreement, the Company
may buy back all collateral shares for no consideration. In
the aggregate, during 2020, Acuity exercised its option to purchase 225,556 ordinary shares, for aggregate net proceeds of AUD 2,075
(approximately $1,348). On October 29, 2020, the Company’s shareholders approved the termination of the Controlled Placement Agreement
with Acuity, the paid the amount up to the par value of those shares and the subsequent repurchase for nil consideration and cancellation
of 444,444 ordinary shares previously issued to Acuity. I.
Capital Commitment Agreement with GEM: In
November 2019, the Company entered into the Capital Commitment Agreement with GEM Yield Fund LLC SCS and GEM Yield Bahamas Ltd (“GEM”)
(the ” Capital Commitment Agreement”). The Capital Commitment Agreement secures a capital commitment of up to approximately
A$30,000 over a three
J. The
Convertible Securities Warrants (see also Notes 10) were classified as a derivative financial
liability and measured with changes in fair value recognized in finance expense (income),
net. The
December 2021 measurement was applied using a Monte -Carlo simulation model for Lind. The Black Scholes model was applied for all others
below and the key parameters used were as follows:
Fair
Value Risk
free Volatility Expected Expected
Convertible
Securities Warrants and GEM Warrants 3 1.265 % 60 % 0.06-3 years 0 %
Rubini
warrants 47 1.265 % 60 % 4 years 0 %
Alpha
Capital warrants 37 1.265 % 60 % 4 years 0 %
Lind
warrants 1,174 1.265 % 60 % 5 years 0 %
Total
derivative liabilities -warrants 1,261 |
