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Short Term Loan and Issues of Shares

12 Months Ended

Dec. 31, 2020

Note 7.

Short term loan and Issues of shares

On December 18, 2020, the company entered into a Loan Agreement (the “Loan”) and Stock Subscription Agreement with certain Investors as described in note 1e, pursuant to which the Investors lent an aggregate amount of $69,000 (the “Principal Amount”). In accordance with the terms of the Loan, the company prepaid the interest on the Principal Amount of 8% compounded annually to the Investors as an issuance of 552,000 shares of Common Stock, at a price per share of $0.01. Under the Stock Subscription Agreement, the Investors transferred an amount of $ 30,587 to the company as consideration for the issued shares.

The Company allocated the total proceeds in respect of the shares issued and the Loan extended based on its relative fair values. As a result of the allocation, a discount of $19 was recorded on the loan. The discount is amortized over the term of the loan as finance expense.

The allocation of the proceeds to the fair value distribution of the liability and equity components on the transactions date was as follows:

Instrument

Fair Value

% of total fair

Allocated

amount

Loan

55,200

49.45

49,246

54,000

50.55

50,340

Total

109,200

100

99,586

The composition of short term loan balance as of the transaction is as follows:


Principal amount	69
Discount on Short term loan	(19	)
Short term loan, Net	50