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General | 12 Months Ended
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Dec. 31, 2021
NATURE OF OPERATIONS |
General | Note 1 - General 1.Chemomab Therapeutics Ltd. (hereinafter - "the Company") is an Israeli based company incorporated under the laws of the State of Israel in September 2011. The Company’s registered office is located in Kiryat Atidim, Tel Aviv, Israel. The Company is a clinical-stage biotech company discovering and developing innovative therapeutics for conditions with high-unmet medical need that involve inflammation and fibrosis. 2.The Company currently has no products approved for sale. The Company’s operations are funded primarily by its Shareholders. The Company has incurred operating losses in each year since its inception and does not expect to generate significant revenue unless and until it obtains marketing approval for its products. Continuation of the Company’s development programs depend on its future ability to raise sources of financing. 3.Since January 2020, the COVID-19 outbreak has dramatically expanded into a worldwide pandemic creating macro-economic uncertainty and disruption in the business and financial markets. Many countries around the world, including Israel, have been taking measures designated to limit the continued spread of the Coronavirus, including the closure of workplaces, restricting travel, prohibiting assembling, closing international borders and quarantining populated areas. Chemomab's clinical trial sites have been affected by the COVID-19 pandemic, and as a result, enrollment rate of patients to Chemomab’s clinical trials has been affected. There might be additional delays in the enrollment for Chemomab’s CM-101 phase 2 trials. In addition, after enrollment in these trials, patients might drop out of Chemomab’s trials because of the COVID-19 possible implications. Based on management’s assessment, the extent to which the coronavirus will further impact Chemomab’s operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration and severity of the outbreak, and the actions that may be required to contain the coronavirus or treat its impact. Chemomab’s is carefully monitoring the restrictions due to the COVID-19 outbreak and will adjust activities accordingly. 4.On December 14, 2020, the Company (formerly known as Anchiano Therapeutics Ltd.) entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Chemomab Ltd., an Israeli limited company, and CMB Acquisition Ltd., an Israeli limited company and a wholly owned subsidiary of the Company (“Merger Sub”). On March 16, 2021, (the “Effective Time”), the Company consummated a merger (the “Merger”) pursuant to the Merger Agreement by and among the Company, the Merger Sub and Chemomab Ltd. Pursuant to the terms of the Merger Agreement, Merger Sub merged with and into Chemomab Ltd., with Chemomab Ltd. surviving the Merger as the Company's wholly owned subsidiary. In connection with the Merger, on March 16, 2021, the Company changed its name from “Anchiano Therapeutics Ltd.” To “Chemomab Therapeutics Ltd” and the business conducted by Chemomab Ltd. became primarily the business conducted by the Company. At the Effective Time(a) each Chemomab Ltd. ordinary share outstanding immediately prior to the Effective Time was converted solely into number of American Depository Shares equal to the exchange ratio described in the Merger Agreement, and each outstanding Chemomab Ltd. option was assumed by the Company, based on the same exchange ratio. Under the exchange ratio formula in the Merger Agreement, immediately following the closing of the Merger (the “Closing”), the former Chemomab Ltd security holders immediately before the Merger owned approximately 90% of the aggregate number of the outstanding securities of the Company, and the securityholders of the Company immediately prior to the Merger owned approximately 10% of the number of issued and outstanding ordinary shares of the Company (all on a fully diluted basis). F - 7
Chemomab Therapeutics Ltd. and its subsidiaries
Notes to the Financial Statements as at December 31, 2021
Note 1 - General. (cont’d) For accounting purposes, Chemomab Ltd. is considered to have acquired the Company based upon the terms of the Merger as well as other factors including; (i) Chemomab Ltd.’s former shareholders owned approximately 90% of the combined Company’s outstanding ordinary shares immediately following the closing of the Merger, and (ii) Chemomab Ltd. Management holds key management positions of the combined Company. The Merger has been accounted for as an asset acquisition (reverse recapitalization transaction) rather than a business combination, as the assets acquired, and the liabilities assumed by Chemomab Ltd. do not meet the definition of a business under U.S. GAAP. The net assets acquired in connection with the Merger were recorded at their estimated acquisition date fair market value as of March 16, 2021, the date of completion of the Merger. In connection with the Merger, and following the effective time of the Merger, the Company effected a reverse share split of the Company’s ordinary shares at a ratio of 4:1 (the “Reverse Split”) and increased the number of ordinary shares underlying each American Depositary Share (“ADS”) from 5 to 20 ordinary shares. At the effective time of the Merger, each Chemomab Ltd. ordinary shares outstanding immediately prior to the effective time of the Merger automatically converted into the right to receive approximately 12.86 ADSs, each representing 20 ordinary shares of the Company, and a warrant to purchase additional ADSs that may become exercisable only under certain circumstances. The exchange ratio was calculated by a formula that was determined through arms-length negotiations between the Company and Chemomab Ltd. The combined Company assumed all of the outstanding options of Chemomab Ltd., vested and not vested, under the Chemomab Share Incentive Plan (the “2015 Plan”), with such options representing the right to purchase a number of ADSs equal to approximately 12.86 multiplied by the number of Chemomab Ltd. ordinary shares previously represented by such options. The following table summarizes the net assets acquired based on their estimated fair values as of March 16, 2021, immediately prior to completion of the Merger (in USD thousands):
Cash and cash equivalents |  |  | 2,427 |
Asset held for sale |  |  | 1,000 |
Prepaid and other assets |  |  | 236 |
Accrued liabilities |  |  | (1,187 | )
Net acquired assets |  |  | 2,476 |

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