10-K 1 f10k2018_wizepharmainc.htm ANNUAL REPORT

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended: December 31, 2018

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _____________ to _____________

Commission File No. 000-52545

Wize Pharma, Inc.

(Exact name of registrant as specified in its charter)

Delaware |  | 88-0445167
(State or other jurisdiction of incorporation or organization) |  | (I.R.S. Employer Identification No.)

5b Hanagar Street, Hod Hasharon, Israel, 4527708

(Address of principal executive offices)

Issuer’s telephone number: +972 (72) 260-0536

Securities Registered pursuant to Section 12(b) of the Act: None

Securities Registered pursuant to Section 12(g) of the Exchange Act: Common Stock, $0.001 Par Value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.

Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer: ☐ | Accelerated filer: ☐
Non-accelerated filer: ☐ | Smaller reporting company: ☒
| Emerging growth company: ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).

Yes ☐ No ☒

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was $945,458 computed by reference to the average bid and asked price of the Common Stock as of the last business day of the registrant’s most recently completed second fiscal quarter.

As of March 31, 2019, there were 9,917,550 shares of the registrant’s Common Stock outstanding.

DOCUMENTS INCORPORATED BY REFERENCE: NONE

TABLE OF CONTENTS

PART I |
Item 1 | Business | 1
Item 1a | Risk Factors | 32
Item 1b | Unresolved Staff Comments | 58
Item 2 | Properties | 58
Item 3 | Legal Proceedings | 58
Item 4 | Mine Safety Disclosures | 58
PART II |
|  | 59
Item 5 | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 59
Item 6 | Selected Financial Data | 60
Item 7 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 60
Item 7a | Quantitative and Qualitative Disclosures About Market Risk | 68
Item 8 | Financial Statements and Supplementary Data | 68
Item 9 | Changes In and Disagreements With Accountants on Accounting and Financial Disclosure | 68
Item 9a | Controls and Procedures | 68
Item 9b | Other Information | 69
PART III |
Item 10 | Directors, Executive Officers and Corporate Governance | 70
Item 11 | Executive Compensation | 76
Item 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 80
Item 13 | Certain Relationships and Related Transactions, Director Independence | 84
Item 14 | Principal Accounting Fees and Services | 85
PART IV |
Item 15 | Exhibits, Financial Statement Schedules | 86
Item 16 | Form 10-K Summary | 92
SIGNATURES | 93

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K (this “Annual Report”) (including the section regarding Management’s Discussion and Analysis of Financial Condition and Results of Operations) contains forward-looking statements, about our expectations, beliefs or intentions regarding, among other things, our product development efforts, business, financial condition, results of operations, strategies or prospects. In addition, from time to time, our representatives have made or may make forward-looking statements, orally or in writing. Forward-looking statements can be identified by the use of forward-looking words such as “believe,” “expect,” “intend,” “plan,” “may,” “should” or “anticipate” or their negatives or other variations of these words or other comparable words or by the fact that these statements do not relate strictly to historical or current matters. These forward-looking statements may be included in, but are not limited to, various filings made by us with the United States Securities and Exchange Commission, or the SEC, press releases or oral statements made by or with the approval of one of our authorized executive officers. Forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made. Because forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause our actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause our actual activities or results to differ materially from the activities and results anticipated in forward-looking statements, including, but not limited to, the factors summarized below.

This Annual Report identifies important factors which could cause our actual results to differ materially from those indicated by the forward-looking statements, particularly those set forth under Item 1A - “RISK FACTORS,” beginning on page 32 of this report. The risk factors included in this Annual Report are not necessarily all of the important factors that could cause actual results to differ materially from those expressed in any of our forward-looking statements. Given these uncertainties, you are cautioned not to place undue reliance on such forward-looking statements. Factors that could cause our actual results to differ materially from those expressed or implied in such forward-looking statements include, but are not limited to:

| ● | we have substantial debt which may adversely affect us by limiting future sources of financing, interfering with our ability to pay interest and principal on our indebtedness and subjecting us to additional risks;

| ● | we need to raise additional capital to meet our business requirements in the future, and such capital raising may be costly or difficult to obtain and will dilute current stockholders’ ownership interests;

| ● | our current pipeline is based on a single compound known as LO2A (“LO2A”) and on the continuation of our license to commercialize LO2A;

| ● | our inability to expand our rights under our license agreement for LO2A may have a detrimental effect on our business;

| ● | the initiation, timing, progress and results of our preclinical studies, clinical trials and other product candidate development efforts;

| ● | our ability to advance our product candidate into clinical trials or to successfully complete our preclinical studies or clinical trials;

| ● | our receipt of regulatory approvals for our product candidate, and the timing of other regulatory filings and approvals;

| ● | the clinical development, commercialization and market acceptance of LO2A;

| ● | our ability to establish and maintain corporate collaborations;

| ● | the implementation of our business model and strategic plans for its business and product candidate;

| ● | the scope of protection we are able to establish and maintain for intellectual property rights covering LO2A and its ability to operate its business without infringing the intellectual property rights of others;

| ● | the possibility that we and our joint venture partner Cannabics Pharmacueticals, Inc. (“Cannabics”) will not be able to agree on a business plan by June 30, 2019, causing our joint venture to terminate, or, if we do agree on a business plan, our ability to successfully operate our joint venture together with Cannabics;

| ● | estimates of our expenses, future revenues, and capital requirements;

| ● | competitive companies, technologies and our industry; and

| ● | statements as to the impact of the political and security situation in Israel on our business.

All forward-looking statements attributable to us or persons acting on our behalf speak only as of the date of this report and are expressly qualified in their entirety by the cautionary statements included in this Annual Report. We undertake no obligations to update or revise forward-looking statements to reflect events or circumstances that arise after the date made or to reflect the occurrence of unanticipated events. In evaluating forward-looking statements, you should consider these risks and uncertainties.

ii

PART I

Throughout this Annual Report, unless otherwise designated, the terms “we,” “us,” “our,” the “Company,” “Wize” and “our company” refer to Wize Pharma, Inc. (formerly known as OphthaliX, Inc.), a Delaware corporation, and its wholly-owned Israeli subsidiary, Wize Pharma Ltd. (“Wize Israel”).

All dollar amounts refer to U.S. dollars unless otherwise indicated.

Unless derived from Wize’s financial statements or otherwise indicated, U.S. dollar translations of New Israeli Shekels (“NIS”) amounts presented in this report are translated using the rate of NIS 3.636 to one U.S. dollar, the exchange rate reported by the Bank of Israel for March 28, 2019.

On March 5, 2018, we effected a reverse stock split of our Common Stock at a ratio of one for twenty-four (1:24), or the Reverse Stock Split. Unless otherwise indicated, all share and per share amounts included in this Annual Report reflect the effects of the Reverse Stock Split.

Wize Pharma, Inc.®, the Wize logo and other trademarks or service marks of Wize appearing in this Annual Report are the property of Wize or its subsidiaries. Trade names, trademarks and service marks of other companies appearing in this Annual Report are the property of their respective holders.

ITEM 1. BUSINESS.

Overview

We are a clinical-stage biopharmaceutical company currently focused on the treatment of ophthalmic disorders, including dry eye syndrome (“DES”). We have in-licensed certain rights to purchase, market, sell and distribute a formula known as LO2A, a drug developed for the treatment of DES, and other ophthalmological illnesses, including Conjunctivochalasis (“CCH”) and Sjögren’s syndrome (“Sjögren’s”).

LO2A is currently registered and marketed by its inventor in Germany and Switzerland for the treatment of DES, in Hungary for the treatment of DES, CCH and Sjögren’s and in the Netherlands for the treatment of DES and Sjögren’s.

We intend to market LO2A as a treatment for DES and other ophthalmic inflammations, including CCH and / or Sjögren’s, in the United States, Israel and China (collectively, the “Licensed Territories”), and in additional territories, subject to purchasing the rights to market, sell and distribute LO2A in those additional territories. We believe that the potential for the most economic success is in marketing LO2A for treating CCH and Sjögren’s. Currently, we have a distribution agreement for marketing in Israel, where LO2A is approved for the treatment of DES only, and a distribution agreement for distribution in China, where the evaluation and preparation for the registration process commenced in December 2017 by the Chinese Distributor (as defined below). The registration process in certain countries, including the United States, requires us to conduct additional clinical trials, in addition to the Phase II clinical trials that we have completed and Phase IV clinical trials that we are currently conducting.

1

We plan to engage local or multinational distributors to handle the distribution of LO2A. In particular, we intend to engage, subject to obtaining the requisite rights in LO2A, pharmaceutical companies or distributors around the world with relevant marketing capabilities in the pharmaceutical field, in order for such pharmaceutical companies to sell LO2A, with us prioritizing those territories where we may expedite the registration process of LO2A based on existing knowledge and studies previously conducted on LO2A, without requiring additional studies.

In August 2016, we commenced the Multi-Center Trial, which is a Phase II randomized, double-blind, placebo-controlled, clinical trial, in parallel groups which is intended for the repeated confirmation of the effectiveness and safety of LO2A for patients suffering from moderate to severe CCH. The trial is a multi-center trial in five different medical centers in Israel with a treatment time of three months for each patient. All 62 patients have completed their treatment. We believe that we currently have sufficient funds to complete the Multi-Center Trial by the end of 2018. In November 2018 we received the top line results for the Multi-Center trial which describe analysis of the primary endpoint, defined as the reduction in Lissamine green conjunctival staining (LGCS) score from baseline to 3 months. The originally planned primary analysis was based upon recruitment of a sample size of 62 patients. Analysis was performed on the 49 fully evaluable patients using a mixed model with repeated measures (MMRM) and utilized all post baseline observations, (1-month and 3-month follow-ups) demonstrating statistical significance between the LO2A group and the placebo group (P=0.0079). The planned primary endpoint analysis compared average reduction in LGCS score from baseline to three months. This analysis also demonstrated a strong trend towards significance (P=0.0713) with average reduction in LGCS score between baseline and 3 months of -3.5 and -1.6 in the LO2A and placebo groups, respectively. We expect the full statistical report to be published as soon as the statistical results and conclusion are available and approved.

In March 2018, we commenced a Phase IV Study. The Phase IV Study is a multi-center trial in three different medical centers in Israel and will evaluate the safety and efficacy of LO2A for symptomatic improvement of DES in 60 adult patients with Sjögren’s. Enrolled patients will be randomized in a 1:1 ratio to one of two treatment groups, LO2A or Systane® Ultra UD. Drops will be administered topically to the eye over a three month period. This Phase IV Study is designed to support our clinical approval pathway for LO2A for the treatment of DES in patients with Sjögren’s within certain markets including the U.S., China and Israel.

On February 7, 2019, we entered into a joint venture agreement with Cannabics, which became effective on March 1, 2019. Pursuant to the agreement, we agreed to form a new joint venture company for the purpose of researching, developing and administering cannabinoid formulations to treat ophthalmic conditions across a range of disease and illness categories. The joint venture will pursue therapeutic pathways with cannabinoids, supported by a growing body of research that we believe indicates cannabinoid-based therapies have the potential to address significant unmet medical needs in the market. We and Cannabics will initially own 50% of the joint venture. The initial board of directors of the new company will consist of three members: one Company appointee, one Cannabics appointee and one industry expert recommended by us and approved by Cannabics. The initial officers of the Company will be our Chairman Noam Danenberg and Cannabics’ Chief Executive Officer Eyal Barad, who will serve as co-chief executive officers. If the joint venture’s business plan is not approved by the Company and Cannabics by June 30, 2019, the joint venture agreement will then expire. In connection with forming the joint venture we issued Cannabics 900,000 shares of our Common Stock and Cannabics issued us 2,263,944 shares of its common stock.

Historical Background and Corporate Details

We were originally incorporated in the State of Nevada on December 10, 1999, under the name Bridge Capital.com, Inc. which was a nominally capitalized corporation that did not commence its operations until it changed its name to Denali Concrete Management, Inc., or Denali, in March 2001. Denali was a concrete placement company specializing in providing concrete improvements in the road construction industry and operated primarily in Anchorage, Alaska, placing curb and gutter, sidewalks and retaining walls for state, municipal and military projects. In December 2005, Denali ceased its principal business operations and focused its efforts on seeking a business opportunity.

Denali consummated a reverse merger transaction on November 21, 2011, in connection with which the following events occurred:

| ● | We entered into and completed a stock purchase agreement with Can-Fite BioPharma Ltd. (“Can-Fite”), our former controlling shareholder, whereby Can-Fite purchased 333,333 of shares of our common stock, $0.001 par value (“Common Stock”) in exchange for all of the issued and outstanding ordinary shares of Eye-Fite Ltd. (“Eye-Fite”). As a result of the consummation of the actions contemplated by such agreement, Eyefite became our wholly-owned subsidiary and Can-Fite became our majority stockholder and a parent;

| ● | Eyefite and Can-Fite entered into a license agreement dated November 21, 2011 (the “Can-Fite License Agreement”) pursuant to which Can-Fite granted to Eyefite a sole and exclusive worldwide license for the use of CF101, Can-Fite’s therapeutic drug candidate, solely in the field of ophthalmic indications; and

| ● | Eyefite and Can-Fite entered into a services agreement dated November 21, 2011 (the “Eyefite Services Agreement”) pursuant to which Can-Fite managed, as an independent contractor, all activities relating to pre-clinical and clinical studies performed for the development of the ophthalmic indications of CF101.

2

Upon completion of that transaction, and after giving effect to the transactions described above, we had an aggregate of 435,053 issued and outstanding shares of Common Stock. Of these shares Can-Fite owned approximately 82%. Following the transactions, we, through our wholly owned subsidiary, Eyefite, became a clinical-stage biopharmaceutical company focused on developing therapeutic products for the treatment of ophthalmic diseases.

On November 10, 2016, we entered into a non-binding letter of intent with Wize Israel for a proposed reverse merger. Subsequently, on May 21, 2017, we entered into an Agreement and Plan of Merger (as amended, the “Merger Agreement”), with Bufiduck Ltd., a company formed under the laws of the State of Israel and our wholly owned subsidiary (“Merger Sub”) and Wize Israel, which contemplated the merger of Merger Sub with and into Wize Israel, with Wize Israel continuing as the surviving entity and becoming our wholly owned subsidiary (the “Merger”).

On October 10, 2017, at our annual meeting of stockholders (the “2017 Annual Meeting”), our stockholders approved, among other matters, (a) an amendment to our Certificate of Incorporation to increase the number of authorized shares of Common Stock, from 100,000,000 to 500,000,000, (b) an amendment to our Certificate of Incorporation to change our name from “OphthaliX, Inc.” to “Wize Pharma, Inc.” immediately prior to the Merger, and (c) the re-election of Pnina Fishman, Ilan Cohn, Guy Regev, Roger Kornberg and Michael Belkin to hold office until the next annual meeting of stockholders and until their respective successors are duly elected and qualified; provided, however, that, if the Merger was completed, our Board would be reconstituted as described in the proxy statement/prospectus relating to our 2017 Annual Meeting.

On October 31, 2017, we, Merger Sub and Wize Israel entered into an amendment to the Merger Agreement which extended the expiration date of the Merger Agreement until November 30, 2017.

On November 16, 2017, we were renamed “Wize Pharma, Inc.,” and completed our transaction with Wize Israel in accordance with the terms of the Merger Agreement pursuant to which Merger Sub merged with and into Wize Israel, with Wize Israel surviving as our wholly owned subsidiary. Prior to the Merger, we had no active business and were a “shell company” as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). As a result of the Merger, we have ceased to be a “shell company.”

In connection with the Merger and under the terms of the Merger Agreement:

| ● | at the effective time of the Merger (the “Effective Time”) each ordinary share of Wize Israel that was issued and outstanding was automatically cancelled and converted into 4.1445791236989 shares of our Common Stock (the “Exchange Ratio”) (not adjusted for the Reverse Stock Split). As a result, an aggregate of 3,915,469 shares of our Common Stock were issued to former Wize Israel shareholders. Our pre-Merger stockholders retained an aggregate of 435,053 shares of our Common Stock;

| ● | a convertible loan (the “2016 Convertible Loan”) entered into between Wize Israel and Rimon Gold Assets Ltd. (“Rimon Gold”) on March 20, 2016 (as amended on March 30, 2016, December 21, 2017, October 19, 2018 and March 4, 2019, the “2016 Loan Agreement”) in the principal amount of $531,067 was adjusted based on the Exchange Ratio and became convertible into shares of our Common Stock at a conversion price of $0.9768, subject to adjustments for stock splits and similar events set forth in the 2016 Loan Agreement;

| ● | a convertible loan (the “2017 Convertible Loan”, and together with the 2016 Convertible Loan, the “Convertible Loans”) entered into between Wize Israel and Ridge Valley Corporation (“Ridge”), and, by way of entering into assignments and assumption agreements following such date, also with Rimon Gold and Shimshon Fisher (“Fisher,” and together with Ridge and Rimon Gold, the “2017 Lenders”), entered into on January 15, 2017 (as amended on December 21, 2017, October 19, 2018 and March 4, 2019, the “2017 Loan Agreement” and, together with the 2016 Loan Agreement, the “Loan Agreements”) in the principal amount of $822,144, was adjusted based on the Exchange Ratio and became convertible into shares of our Common Stock at a conversion price of $1.1112, subject to adjustments for stock splits and similar events set forth in the 2017 Loan Agreement;

3

| ● | under the 2016 Loan Agreement, as modified by the 2017 Loan Agreement, the 2017 Lenders have the right until November 30, 2019, to invest up to $796,603, in the aggregate, at $1.308 per share (the “2016 Investment Right”), and under the 2017 Loan Agreement, to invest up to $1,233,216, in the aggregate, at $1.332 per share (the “2017 Investment Right” and, together with the 2016 Investment Right, the “Investment Rights”);

| ● | Wize Israel undertook to cause us to issue, to investors in a private placement of Wize Israel that was completed in July and August 2017, warrants to purchase (as adjusted based on the Exchange Ratio) an aggregate of 904,036 shares of our Common Stock at an exercise price of $1.9728 (the “2017 Warrants”), which 2017 Warrants were granted on November 16, 2017;

| ● | immediately prior to the Effective Time, we sold on an “as is” basis to Can-Fite all the ordinary shares of Eyefite, in exchange for the irrevocable cancellation and waiver of all indebtedness owed by us and Eyefite to Can-Fite, including approximately $5 million of deferred payments owed by us and Eyefite to Can-Fite and, as part of the purchase of Eyefite, Can-Fite also assumed certain accrued milestone payments in the amount of $175,000 under the Can-Fite License Agreement. In addition, that certain exclusive license of Can-Fite’s CF101 drug candidate for the treatment of ophthalmic diseases granted to us and the Eyefite Services Agreement was terminated pursuant to a Termination of License Agreement and a Termination of Services Agreement that was entered into on the Closing Date;

| ● | immediately following the Effective Time, Ron Mayron, Yossi Keret, Dr. Franck Amouyal and Joseph Zarzewsky were appointed to our Board to hold office until the earlier of the next annual meeting where directors will be appointed, such director’s successor is elected and qualified, or until such director’s earlier resignation or removal and following those appointments, Pnina Fishman, Ph.D. Ilan Cohen, Ph.D., Guy Regev and Roger Kornberg, Ph.D. resigned from our Board. Accordingly, our Board consisted of five members: Ron Mayron, Yossi Keret, Dr. Franck Amouyal, Joseph Zarzewsky and Dr. Michael Belkin;

| ● | immediately following the Effective Time, Pnina Fishman, Ph.D., Itay Weinstein and Ronen Kantor resigned as our officers and the newly constituted board appointed Or Eisenberg as Acting Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary and Noam Danenberg as Chief Operating Officer;

| ● | our Common Stock continued to be quoted on the OTC Pink under the new trading symbol “WIZP” until January 4, 2018, when we commenced trading our Common Stock on the OTCQB; and
| ● | Wize Israel’s ordinary shares were delisted from the TASE and there was no longer a public trading market for Wize Israel ordinary shares.

Immediately following the completion of the Merger, our pre-Merger stockholders continued to hold 435,053 shares, or 10% of our issued and outstanding Common Stock, and former Wize Israel shareholders owned 3,915,469 shares, or 90% of our issued and outstanding Common Stock (both percentages excluding (i) shares of Common Stock issuable upon the exercise of the Convertible Loans, (ii) shares of Common Stock issuable upon the exercise of the Investment Rights, (iii) shares of Common Stock issuable upon the exercise of the 2017 Warrants, and (iv) shares of Common Stock issuable upon the exercise of certain options held by our pre-Merger directors and officers (the “Wize Stock Options”). In the event all the Convertible Loans, Investment Rights, 2017 Warrants and Wize Stock Options outstanding as of the Effective Time were to be exercised in full, then our pre-Merger stockholders and option holders would own 439,949 shares and their combined ownership percentage would be reduced to approximately 5.4% of our issued and outstanding Common Stock, and the former Wize Israel shareholders and holders of Convertible Loans, Investment Rights, 2017 Warrants and Wize Stock Options on a combined basis would own 7,750,651 shares, or approximately 94.6% of our issued and outstanding Common Stock, assuming, for the purposes of this calculation, a total of 8,190,600 shares of our Common Stock issued and outstanding on a fully diluted basis.

4

As a result of the Merger, the business of Wize Israel became our ongoing business.

The Merger was accounted for as a reverse recapitalization of us by Wize Israel. Under reverse recapitalization accounting, our assets and liabilities were recorded, as of the completion of the Merger, at their historical amounts. Consequently, the annual consolidated financial information of Wize Israel for the years ended December 31, 2018 and 2017 reflect the operations of the acquirer for accounting purposes together with a deemed issuance of shares, equivalent to the shares held by the former stockholders of the legal acquirer and a recapitalization of the equity of the accounting acquirer. The annual consolidated financial information of Wize Pharma, Inc. for the years ended December 31, 2018 and 2017 include the accounts of Wize Israel since inception and our accounts since the effective date of the reverse recapitalization.

On March 5, 2018, we effected the Reverse Stock Split.

The following is a historical background and corporate history of Wize Israel prior to the Merger:

Wize Israel’s legal and commercial name is Wize Pharma Ltd. It was formed under the laws of the State of Israel as a company limited by shares on June 23, 1982, under the name Eitam Eretz Israel Advanced Industries Ltd. In November 1997, Wize Israel changed its name to Orlil Holdings (1982) Ltd. and in June 2011, Wize Israel changed its name to Star Night Technologies Ltd. In July 2015, Wize Israel changed its name to its current name.

In June 1982, Wize Israel completed its initial public offering in Israel and its ordinary shares began trading on the TASE. Prior to the Merger, Wize Israel’s ordinary shares were traded on the TASE under the symbol “WIZP”. From inception until February 2015, Wize Israel engaged in various businesses and in February 2015 Wize Israel became a public shell company.

In December 2014, an Israeli court approved a creditors arrangement (the “Creditors’ Arrangement”) under the Israeli Companies Law between Wize Israel (then known as Star Night Technologies Ltd.), its creditors and its shareholders, in which Wize Israel was purchased by a group of investors led by Ridge. Upon the completion of the Creditors’ Arrangement, all of Wize Israel’s assets, rights and obligations were transferred to the creditors’ arrangement fund, so that Wize Israel’s equity after the approval of such arrangement was zero and Wize Israel remained a public shell company without any activity, rights or obligations. The Creditors’ Arrangement was completed in February 2015.

Below is a summary of the major business developments in Wize Israel following the completion of the Creditors’ Arrangement and prior to the Merger:

| ● | On May 1, 2015, Wize Israel entered into an Exclusive Distribution and Licensing Agreement with Resdevco Ltd. (“Resdevco”), as amended and supplemented thereafter (the “LO2A License Agreement”), whereby Resdevco granted to Wize Israel an exclusive license to purchase, market, sell and distribute LO2A in the United States, Israel and Ukraine as well as a contingent right to do the same in other countries. For more information about the LO2A License Agreement, see under “- LO2A License Agreement,” beginning on page 8 of this report.

| ● | Between April 2015 and August 2017, Wize Israel entered into a series of equity and debt financings, raising a total of approximately NIS 12.6 million (approximately $3.7 million). For more information about these financings, see “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,” beginning on page 60 of this report.

| ● | In August 2016, Wize Israel commenced a Phase II, randomized, double-blind, placebo-controlled, clinical trials to evaluate the safety and efficacy of LO2A for patients suffering from moderate to severe CCH.

Our corporate headquarters are located in Hod Hasharon, Israel. Our telephone number is +972-72-2600536, and our website is located at www.wizepharma.com. This website is an inactive textual reference only and not an active hyperlink. The information on or that can be accessed through our website is specifically not incorporated by reference into this report, and is not a part of this report.

5

The Market Opportunity

We (through Wize Israel) have licensed certain rights to purchase, market, sell and distribute LO2A for the treatment of DES and other ophthalmological illnesses, including CCH and Sjögren’s in the United States, Israel, Ukraine, China and have an option to purchase the rights to additional territories as further described in the LO2A License Agreement below. We have determined not to pursue any activities in the Ukraine for the moment and specifically not until we will obtain from the inventor a regulatory file with DES and additional indications such as CCH or Sjögren’s.

Dry Eye Syndrome: DES is an eye disease caused by eye dryness, which, in turn, is caused by either decreased tear production or increased tear film evaporation. The tear film is comprised of the lower mucous layer which helps the tear film adhere to the eyes, a middle layer of water and an upper oil layer that seals the tear film and prevents evaporation. The tear film keeps the eye moist, creates a smooth surface for light to pass through the eye, nourishes the front of the eye and provides protection from injury and infection. DES is usually caused by aqueous tear deficiency, or inadequate tear production, whereby the lachrymal gland, the gland that secretes the aqueous layer of the tear film, does not produce sufficient tears to keep the entire conjunctiva, or the tissue inside the eyelids that covers the sclera, and cornea covered by a complete layer of tear film. In rare cases, aqueous tear deficiency may be a symptom of collagen vascular diseases, including rheumatoid arthritis, Wegener’s granulomatosis, an incurable form of vasculitis (the inflammatory destruction of blood vessels), systemic lupus erythematosus, an autoimmune connective tissue disease, Sjögren’s, an autoimmune process in which patients suffer from mouth and eye dryness, and autoimmune diseases associated with Sjögren’s. DES can also be caused by abnormal tear composition resulting in rapid evaporation or premature destruction of tears. Additional causes include, but are not limited to, age, use of certain drugs and the use of contact lenses.

DES is characterized by eye irritation symptoms, blurred and fluctuating vision, tear film instability, increased tear osmolarity and ocular surface epithelial disease. DES causes constant ocular discomfort, typically dryness, burning, a sandy-gritty eye irritation and a decrease in visual function. Over an extended period of time, DES can lead to tiny abrasions on the surface of the eyes. In advanced cases, the epithelium undergoes pathologic changes, namely squamous metaplasia, a non-cancerous change of surface-lining cells, and loss of goblet cells, which secrete mucin, which in turn dissolves in water to form mucous. Some severe cases result in thickening of the corneal surface, corneal erosion, epithelial defects, corneal ulceration (sterile and infected), corneal neovascularization, or excessive ingrowth of blood vessels, corneal scarring, corneal thinning, and even corneal perforation. In the most severe cases, DES may result in deterioration of vision.

In a GlobalData Dry Eye Syndrome report (the “GlobalData Report”), it was estimated that in 2016, pharmaceutical sales within the DES market were approximately $2.2 billion across the 8 major markets, with the US contributing 79.6% of these sales, and GlobalData expects that by 2026 those sales are expected to grow to $5.6 billion. According to the GlobalData Report, the major drivers of growth of DES include the introduction of novel drugs, an increasingly aging society and increasing urbanized living with greater use of computers and better disease awareness leading to increased diagnosis and treatment rates. In addition, extended viewing of television, computer and smartphone screens, weather conditions, exposure to air conditioning and increased life expectancy are additional factors that contribute to the increase in the number of those suffering from DES.

Conjunctivochalasis: CCH refers to the presence of redundant folds of loose conjunctiva. CCH is thought to be caused by both a gradual thinning and stretching of the conjunctiva that accompanies age and a loss of adhesion between the conjunctiva and underlying sclera due to the dissolution of Tenon’s capsule. A correlation may also exist between eye inflammation and CCH, though it is unclear if this correlation is causal. CCH may also be associated with previous surgery, blepharitis, Meibomian gland disorder, Ehlers-Danlos Syndrome and aqueous tear deficiency. The resulting loose, excess conjunctiva may mechanically irritate the eye and disrupt the tear film and its outflow, leading to dry eye and excess tearing. Most patients with CCH complain of foreign body sensation, tearing, difficulty reading, blurred vision, “red eyes” and general irritation.

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Lid Parallel Conjunctival Folds (“LIPCOF”) grading measures the number and severity of the lid-parallel conjunctival folds. LIPCOF grade 0 signifies the absence of conjunctival folds, LIPCOF grade 1 signifies just one conjunctival fold, LIPCOF grade 2 signifies for multiple conjunctival folds, not extending beyond the tear meniscus, and LIPCOF grade 3 signifies multiple conjunctival folds extending above the tear meniscus. The LIPCOF grades show a strong correlation with both the subjective and objective complaints of DES, as well as with the severity of the disease.

The treatment of LIPCOF grade 3 CCH usually requires invasive therapies like surgery or treatment of the conjunctival folds with argon laser or with heat cauterization. A previous study conducted by Resdevco in 2013, has shown Conheal® (Hungarian brand name for LO2A) to be effective in reducing the severity of CCH as measured by a reduction in the (i) LIPCOF score, (ii) Oxford scheme grade and (iii) ocular surface disease index (“OSDI”) and an increase in tear film break-up time (“TFBUT”). This raises the possibility that vision-related quality of life can be significantly improved by conservative therapies even in severe CCH.

There is little epidemiological data for CCH. A community based study in Shanghai reported that in patients over the age of 60, 4% had LIPCOF grade 3 CCH and 16% had LIPCOF grade 2 CCH. In the European Union, about 20% of the population is over the age of 65. From the aforementioned data, it might be assumed, as presented in a study conducted by Dr. Huba J. Kiss and János Németh, that in the total European Union population, 0.8% have LIPCOF grade 3 CCH and 3.2% have LIPCOF grade 2 CCH. Since DES complaints occur in 5.5% to 33.7% of the population, Dr. Kiss and Németh further assumed that the incidence of the CCH-caused DES in the population is about one-third of all DES cases.

Sjögren’s syndrome: Sjögren’s syndrome is a heterogeneous, chronic, inflammatory, autoimmune disease characterized by lymphocytic infiltration of exocrine glands and expression of autoantibodies including antinuclear antibody (ANA), anti-Ro (also termed anti SSA), anti-La (also termed anti SSB) as well as rheumatoid factor (RF). Hypergammaglobulinemia is common as well. Sjögren’s may be an isolated disease, termed primary Sjögren’s syndrome or may accompany another autoimmune diseases, such as lupus, rheumatoid arthritis, or scleroderma, thus termed secondary Sjögren’s syndrome. Clinical presentation varies from mild symptoms such as classic sicca symptoms of dry eyes (xerophthalmia), dry mouth (xerostomia) and parotid gland enlargements to severe systemic symptoms involving multiple organ systems such as fever, fatigue, malaise, arthritis, arthralgia, myalgia, interstitial lung disease, kidney disease, gastrointestinal disease and neurological manifestations. Sjögren’s treatment is highly individualized and is based on a patient’s disease severity, organ involvement and previous response. Mild forms of Sjögren’s may be treated symptomatically with artificial tears and salivary flow stimulation. More severe, systemic manifestations may be treated with high-dose glucocorticoids and immunosuppressive or cytotoxic drugs to suppress the immune system.

Estimations of Sjögren’s prevalence vary from 2.5 million to 4 million patients (Sjögren’s Syndrome Foundation) in the US alone, with a worldwide estimate of up to 7.7 million in the 7 Major Markets (US, France, Germany, Italy, Spain, the UK and Japan) by the year 2024 (Global Data Research). Sjögren’s affects mostly middle aged women (40-50 years of age) with a female to male prevalence ratio of 9:1.

Global Data estimates the drug sales for Sjögren’s in 2014 were approximately $1.1 billion across the markets covered in its forecast. By the end of the forecast period of 2024, sales are estimated to grow to $2.2 billion across the markets covered in its forecast with a Compound Annual Growth Rate of 7.2%. The market size estimate in 2014 includes Salagen (pilocarpine) and Evoxac (cevimeline), the only two agents to ever be approved for Sjögren’s, and the use of off-label agents, such as biologics approved for other autoimmune diseases, and systemic and topical immunosuppressants and corticosteroids. This growth is expected to be driven by the anticipated approval of Orencia for use in patients with Sjögren’s in the US and EU in 2021 and Japan in 2022.

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LO2A License Agreement

The following summary of the LO2A License Agreement as well as all summaries of agreements provided herein are qualified to the full text of the agreements, which are filed as exhibits hereto.

In May 2015, Wize Israel entered into the LO2A License Agreement with Resdevco, a company controlled by Professor Shabtay Dikstein, the inventor of LO2A. Pursuant to the LO2A License Agreement, Resdevco granted to Wize Israel (and thereafter, to OcuWize Ltd. (“OcuWize”), Wize Israel’s wholly owned subsidiary, as described below) an exclusive license to develop in the United States, Israel and Ukraine, under the LO2A licensed technology, products in the field of ophthalmic disorders, and to mutually agree upon a manufacturer and to purchase, market, sell and distribute LO2A in finished product form in the Licensed Territories in the field of ophthalmic disorders. Subject to certain limited exceptions, Wize Israel may not sublicense or sell or transfer any of its rights under the LO2A License Agreement without the advance written approval of Resdevco. We have determined not to pursue any activities in the Ukraine for the moment and specifically not until we will obtain from the inventor a regulatory file with DES and additional indications such as CCH or Sjögren’s.

The LO2A License Agreement grants Wize Israel the right to add additional territories in the future, subject to a commitment by Wize Israel to pay minimum royalties according to a formula set forth in the LO2A License Agreement with respect to the additional territory, and provided that Resdevco has not granted exclusive rights in such additional territory or is in ongoing negotiations. The LO2A License Agreement also grants Wize Israel the right to purchase Resdevco’s agreements with its existing distributors of LO2A in other jurisdictions (namely, Germany, Hungary, Netherlands and Switzerland (collectively, the “Reserved Territories”) for ten times the greater of the net royalties received in the previous 12 months under such agreements or the minimum royalty payment under such agreements. The LO2A License Agreement furthermore grants Wize Israel a right of first negotiation with potential distributors to whom Resdevco may in the future grant distribution rights to LO2A outside of the Reserved Territories and the Licensed Territories and provides that if Wize Israel enters into such distribution agreement in accordance with the LO2A License Agreement, then Wize Israel has agreed to guarantee in writing to Resdevco that it will pay to Resdevco minimum royalties according to a formula set forth in the LO2A License Agreement. The LO2A License Agreement historically included an option to purchase all remaining territories for a fixed amount and such option was cancelled on March 30, 2017.

The LO2A License Agreement provides that Wize Israel is required to pay to Resdevco certain royalties for sales in the Licensed Territories based on an agreed-upon price per unit of (i) $0.60 in Israel, (ii) the low single digits in US dollars in China, and (iii) for sales in additional territories and in the United States, the higher of $0.60 and a percentage of net sales (not to exceed ten percent) for the duration of the local distribution agreement signed separately with each local distributor, which royalties, as applicable, are subject to making certain minimum royalty payments, which (1) with respect to the United States, means the non-refundable and non-deductible aggregate amount of $400,000 over a period of three years commencing from 2015 (which amount was already fully paid by Wize Israel) and an advance against royalties of $150,000 per year from 2018 through 2021, and then $475,000 per year, which annual advance shall be credited towards any royalties payable to Resdevco for that particular year, and (2) with respect to Israel, means an upfront non-refundable and non-deductible payment of $30,000, payable at commencement of local sales, and an annual advance against royalties starting January 1, 2017 in increasing payments depending on the year (up to a maximum of $36,000) which annual advance shall be credited towards any royalties payable to Resdevco for that particular year, and (3) with respect to Ukraine, means an annual advance against royalties, starting in 2016, in increasing payments depending on the year (up to a maximum of $30,000), which yearly advance shall be credited towards any royalties payable to Resdevco for that particular year. We have determined not to pursue any activities in the Ukraine for the moment and specifically not until we will obtain from the inventor a regulatory file with DES and additional indications such as CCH or Sjögren’s.

On January 5, 2017, Wize Israel and Resdevco entered into an amendment to the LO2A License Agreement, pursuant to which the payment of $150,000 that Wize Israel was obligated to pay to Resdevco on January 1, 2017, was postponed to March 31, 2017. On March 30, 2017, Wize Israel and Resdevco entered into a second amendment to the LO2A License Agreement, pursuant to which the payment of $150,000 was further postponed to May 31, 2017. In the end of May 2017, the parties agreed to postpone the aforementioned payment to the beginning of July 2017, when the payment was made. In the end of December 2017, Resdevco notified Wize Israel that the minimum royalty payment with respect to the United States would be postponed until January 20, 2018 and in January 2018, Resdevco agreed to postpone such payment until July 29, 2018. In February 2019, Wize Israel and Resdevco agreed that Wize Israel shall pay Resdevco minimum yearly payments of $150,000 per year through 2021, and then annual payments of $475,00 per year, and shall pay Resdevco $650,000 within two years after receipt of FDA approval for eye drops utilizing the licensed technology.

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The LO2A License Agreement has an initial term of seven years that expires in May 2022, and, unless Wize Israel provides prior notice of at least 12 months terminating the agreement, the LO2A License Agreement renews automatically each year. Wize Israel may terminate the LO2A License Agreement prior to May 2022 upon 180 days prior notice; provided that all payments previously made to Resdevco shall be non-refundable, any payments due during the 180 day notice period shall be payable to Resdevco and Wize Israel is required to pay a penalty of $100,000, depending on the timing of termination. Additionally, if Wize Israel terminates the LO2A License Agreement, it is required to exert reasonable best efforts to find a third party willing to sell LO2A under the same terms as the LO2A License Agreement. The LO2A License Agreement may be terminated by either party upon the occurrence of certain other customary termination triggers, including material breaches of the LO2A License Agreement by either party, as well as the right of Resdevco to terminate the LO2A License Agreement (or halt the manufacturing agreement or cease delivery of any finished product for any period of time) as a result of Wize Israel not paying all royalties due under the LO2A License Agreement. In addition, Resdevco may terminate the LO2A License Agreement, upon 30 days written notice, if (1) an application for the marketing approval of LO2A, for the treatment of DES is not submitted to the FDA or the equivalent regulatory authority in the Licensed Territories by May 1, 2019, (2) such FDA approval is not obtained from the FDA or the equivalent regulatory authority in the Licensed Territories by May 1, 2021, (3) such approval has been obtained, commercial sales of LO2A have not commenced within three months thereafter, (4) commercial sales of LO2A have commenced, any royalties, including any minimum royalties are not timely paid, or (5) Wize Israel attempts to sell competing products in or outside the Licensed Territory. Resdevco may also terminate the LO2A License Agreement if Wize Israel contests the validity of any patents covering LO2A or any related know-how or if Wize Israel makes, sells or exploits a competing product to LO2A.

The LO2A License Agreement contains other provisions, including representations and warranties of the parties, reporting, confidentiality and other covenants, such as an undertaking by Wize Israel not to sell competing products in the Licensed Territories during the term of the agreement and for five years thereafter. The LO2A License Agreement further provides that any improvements or modifications made by Wize Israel to LO2A or any related intellectual property or know-how shall belong to Resdevco and Wize Israel shall receive a license to distribute and sell the same in the Licensed Territories on the same terms set forth in the LO2A License Agreement.

In order to secure Wize Israel’s obligations and performance pursuant to Convertible Loans made by Rimon Gold, Wize Israel’s rights under the LO2A License Agreement serve as collateral. For details related to those security interests, see “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,” beginning on page 60 of this report.

In August 2016, Resdevco granted Wize Israel an option to purchase its ownership rights to LO2A, including the patents and trademarks thereunder, except in countries in which LO2A is already sold by Resdevco. In accordance with the terms of this option, Wize Israel was required to pay for such ownership rights a non-recurring payment of $440,000 as well as royalties from future sales of LO2A and to issue an option to purchase 41,667 of its ordinary shares. This option expired on December 31, 2016.

In August 2016, Wize Israel and Resdevco also entered into an agreement pursuant to which Wize Israel assigned all of its rights and obligations under the LO2A License Agreement to OcuWize.

On September 6, 2017, Resdevco granted to Wize Israel, sole rights to commercialize LO2A in China. By agreement dated September 25, 2017, Wize Israel and Resdevco agreed that Wize Israel’s sole rights to commercialize LO2A in China would be limited to one year if by September 6, 2018, Wize Israel had not signed a distribution agreement for LO2A in China. On May 31, 2018, we entered into the Chinese Distribution Agreement (as defined below), pursuant to which the Chinese Distributor will distribute LO2A in China. As a result of us entering into the Chinese Distribution Agreement, Wize Israel’s sole rights to commercialize LO2A in China shall not be limited to one year. See “BUSINESS — Marketing, Sales and Distribution,” beginning on page 18 of this report.

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On December 26, 2017 Wize Israel, entered into an amendment to the LO2A License Agreement (the “Third Amendment”). The Third Amendment includes: (i) China in the list of Licensed Territories, (ii) the commercial terms of the parties with respect to the activities of Wize Israel in China, including the minimum annual royalty payments from Wize Israel to Resdevco, and, (iii) an undertaking by Wize Israel to include in the distribution agreement to be entered into with the Chinese Distributor that the Chinese Distributor will transfer the Chinese market license to Resdevco upon termination of the distribution agreement. In the event Wize Israel failed to execute a distribution agreement with the Chinese Distributor by June 1, 2018, the Third Amendment would have been deemed null, void and of no force. On May 31, 2018, we entered into the Chinese Distribution Agreement (as defined below). As a result of us entering into the Chinese Distribution Agreement, the term of the Third Amendment did not expire on June 1, 2018. See “BUSINESS — Marketing, Sales and Distribution,” beginning on page 18 of this report.

On January 8, 2018, Wize Israel entered into a Memorandum of Understanding (the “MOU”) with Resdevco. Pursuant to the MOU, Resdevco granted to Wize Israel (and its permitted assignees) an exclusive royalty bearing license to sell and distribute worldwide (excluding the United States, Israel, Ukraine, Switzerland, Germany, Netherlands and China, the “Additional Territories”), under the LO2A licensed technology, products in the field of ophthalmic disorders, under the terms and conditions set forth in the MOU, including the following: (i) the license for each Additional Territory shall be conditional on signing a specific license agreement for each Additional Territory that shall include the basic terms and conditions set forth in the MOU, including reaching minimum sales targets in such Additional Territory pursuant to a formula set forth in the MOU; (ii) for each Additional Territory, both Wize Israel and the local distributor shall be responsible to pay Resdevco a minimum per product fee in accordance with a formula set forth in the MOU and the agreement with the distributor shall be subject to Resdevco’s prior approval (which shall not be unreasonably withheld); (iii) if Resdevco introduces Wize Israel to a distributor in any Additional Territory, Wize Israel will enter good faith negotiations with such distributor and, if Wize Israel does not reach an agreement with such distributor, Resdevco may enter into a distribution agreement with such distributor, in which case, Wize Israel will provide the services it typically provides to its other distributors in consideration for a portion of the royalties payable to Resdevco; and (iv) the license granted under the MOU is for an initial term of 5 years and, thereafter, automatically renews for additional terms of 5 years each, subject to full compliance with the terms set forth in the MOU and as long as the LO2A License Agreement is in effect. The MOU provides that it shall be in effect until a definitive agreement reflecting the terms of the MOU is executed, which the parties committed to exercise their best efforts to do within three months. The MOU also provides that it will terminate by June 30, 2019 if the Company has not completed certain clinical trials by such date. The Company does not expect to complete these trials within such time period.

LO2A

LO2A is a drug developed by Prof. Dikstein in the 1990s, initially for the treatment of DES, and later on for other ophthalmological disorders, including CCH and Sjögren’s. LO2A is a sterile, preservative-free, single-dose artificial tear preparation containing 0.015% sodium hyaluronate (“SH”) as the drug substance. It has been developed as a substitute for natural tears, in order to lubricate and protect the ocular surface tissues.

SH is a salt of hyaluronic acid (“HA”). HA is present in the extracellular matrix (“ECM”) of all tissues and is particularly abundant in vitreous humour, skin, cartilage and the synovial fluid of joints. HA’s long chain molecules form a filter matrix interspersed with cellular fluids, which provide visco-elastic properties to the tissues. In the eye, endogenous HA forms a layer over the surface of the cornea. It serves to protect the corneal cells and reduce cell damage; so it is important in maintaining cell viability.

HA is an important pericellular and cell-surface constituent and is involved in the regulation of cellular activity through its interaction with other macromolecules. Recently, nonclinical pharmacological experiments have shown that HA promotes the viability of corneal cells and corneal epithelial wound healing by direct interaction with cell receptors. It acts as a signaling molecule in the ECM and is a ligand for specific receptor molecules, notably CD44, a cell surface adhesion molecule found on human corneal cells. Increased expression of CD44 receptors has been shown to be associated with corneal re-epithelialization. Any disruption of corneal integrity, as may occur with dry eyes, triggers the re-synthesis of HA and increases cell proliferation. These effects have been demonstrated to be dose-dependent.

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LO2A eye drops incorporate a high molecular weight SH (1.5-1.65 million Da), which enables it to be effective in solution at a low concentration. It confers specific physical properties upon a solution. Its complex molecular structure, adsorbs a relatively high volume of water, so that the solution takes on a gelatinous form. This water is released upon an increase in pressure. The viscosity of high MW SH is affected by shear rate; at high shear rate the macromolecules change their shape, align in the treatment of flow and its viscosity decreases. This enables the LO2A solution to flow across the corneal surface immediately after blinking. The physiochemical property of SH is similar to that of mucin, which constitutes the base layer of the lacrimal film and interacts strongly with the corneo-conjunctival surface. Molecules of mucin are able to bind water molecules up to 80 times greater in weight than their own. This is due to a large number of negatively-charged glycoside groups that are attached to the terminal section of the polypeptide skeleton.

All excipients included in LO2A eye drops comply with the relevant monographs of the European Pharmacopoeia. None of the excipients are of animal or human origin. They are established excipients for pharmaceutical products, including those approved for ocular use. Their functions include adjusting tonicity and increasing the viscosity of the formulation. This allows the LO2A eye drops to have a lubricating effect that is compatible with the external ocular environment. The visco-elasticity of LO2A eye drops ensures that they are retained on the corneal surface for a period of 4-6 hours, as demonstrated in a Phase I clinical pharmacology study conducted with LO2A in the University Hospital of Antwerp, Belgium in 1992. In this Phase I, randomized, blinded, cross-over study, fluorescence was used to measure pre-corneal retention time in healthy volunteers following a single instillation of LO2A and placebo (isotonic phosphate buffered saline) both labeled with fluorescein. The study compared the elimination coefficient and area under fluorescence decay curve for LO2A versus placebo.

LO2A eye drops do not contain any preservatives. This is an important feature of the formulation as preservatives have a recognized potential for irritation and sensitization and can damage the ocular surface and the cornea. This is of particular relevance to patients with symptoms of DES, in whom the corneal surface is already compromised.

The adverse events reported both from clinical trials of LO2A and from literature reports of different eye drop formulations containing SH, were minor ocular events which are expected to occur with any ophthalmic formulation. LO2A eye drops are presented in sterile, unit-dose vials to minimize the risk of infection and contamination.

We believe that the properties of the LO2A formulation described above make it a suitable candidate for use in a variety of dry eye indications including those with an inflammatory component. LO2A is currently registered and marketed in Germany and Switzerland for the treatment of DES, in Hungary for the treatment of DES, CCH and Sjögren’s and in the Netherlands for the treatment of DES and Sjögren’s. LO2A is sold under the brand name Hylan® in Germany and the Netherlands, Lacrycon® in Switzerland, and Conheal® in Hungary. LO2A has been sold by Resdevco through local distributors in these countries for a number of years. In these countries, the drug is sold in a unit dose format, and is manufactured in Germany and France. We currently intend to market LO2A as a treatment for DES, CCH and Sjögren’s in the Licensed Territories, and believe that LO2A for treatment of ophthalmic inflammatory disorders such as CCH and Sjögren’s presents a significant market opportunity.

We intend to distribute LO2A via local or multi-national distributors, including by cooperation with a major medical company with means and experience in the end processes of approving and marketing drugs. In order to register LO2A for the treatment of dry eye patients suffering from CCH and Sjögren’s, we estimate that LO2A will be required to undergo additional clinical trials in addition to the Phase II and Phase IV clinical trials that we are currently conducting.

The following paragraphs describe the non-clinical and clinical data upon which approvals were granted.

Non-clinical data

A summary of the toxicology studies conducted on LO2A and the drug substance is provided in Table 1 below. The acute and sub-acute toxicity studies conducted with the drug substance and LO2A demonstrated a low order of toxicity. This is in-line with published reports of acute toxicity studies conducted with SH administered to rodents and other species, including beagle dogs. Similarly, literature reports of sub-acute and chronic toxicity studies conducted in a wide range of species using different exposure routes, including ocular application, have repeatedly demonstrated that it did not cause significant toxic effects.

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The systemic absorption of SH is clinically negligible and published reproductive and developmental toxicity tests have demonstrated that it does not cause any teratogenic effects or adverse effects on reproduction. Animal studies have shown that it is secreted into breast milk after parenteral injection, but no adverse effects were caused in the young.

Ocular tolerance studies have been conducted with the drug substance and LO2A solution. Sodium hyaluronate was found to cause mild irritation when applied in powder form to the eyes of rabbits; the signs of irritation were more frequent and more severe in the group that did not receive eye irrigation immediately after instillation. In such studies, no other macroscopic ocular findings were reported. A further 28-day study of the primary eye irritation of LO2A solution in rabbits caused mild ocular irritation; all other ocular and systemic investigations revealed no adverse effects. In both of these studies all signs of irritation had resolved within 48 hours. Application of the concentrated drug substance would be expected to cause a degree of non-specific irritation, by virtue of its physical presence in the eye.

After instillation of eye drops, there is inevitably a degree of spillage onto surrounding skin. Therefore, a standard skin sensitization study was conducted on LO2A. This demonstrated that it had no sensitization potential. This is in-line with published reports of skin irritation and sensitizing studies conducted in guinea pigs and rabbits.

The drug substance was shown not to be mutagenic in a bacterial mutation test. Published reports of the chromosome aberration and mouse micronucleus tests confirm that it is not mutagenic or genotoxic. No carcinogenicity testing has been conducted, but SH has well-established safety for long-term use.

Table 1: List of Toxicology Studies Performed During the Development of LO2A / Sodium Hyaluronate

Acute Toxicity

Species/Strain |  | Route |  | Number of animals |  | Treatment |  | Control |  | Test Period |  | Tests conducted |  | Deaths |  | Other findings
Mouse ICR |  | Oral |  | 5M/5F |  | 1500 mg/kg |  |  |  | 14 days |  | Clinical observation Body Weight |  | Nil |  | LDLo > 1500 mg/kg.
Sub-acute Toxicity
New Zealand Albino Rabbits |  | Ocular |  | 6M/6F |  | One drop LO2A 6x daily to right eye |  | One drop NaCl 0.9% 6x daily to left eye |  | 28 days |  | Clinical observation Food consumption Body weight Clinical hemistry / Haematology Autopsy / Organ weights / Histology Ocular macroscopic examination (Draize) Slit Lamp eye examination/visual reflexes |  | Nil |  | No abnormalities detected in tests conducted; Ocular examinations showed good tolerance to LO2A.
Ocular Tolerance
Japanese White Albino Rabbits |  | Lower Conjunctival Sac |  | 9M |  | 15.7 mg sodium hyaluronate to right eye; in 3 rabbits followed by 30s irrigation with distilled water |  | No treatment to left eye |  | 96 hours |  | Clinical observation Body weight Ocular macroscopic examination (Draize) |  | Nil |  | Weak, reversible irritation observed.
Skin Sensitisation
Hartley Guinea-Pigs |  | Induction (I):Intra-dermal injection + Challenge (C): Topical with closed patch |  | 40M |  | 0.05 ml (1.5%) |  | Vehicle (distilled water) Positive control (DNCB) + Vehicle (Olive oil) |  | Day 0 (I) - Day 7 (C) + 48hrs |  | Body weight Dermal reaction scores at 24 and 48hr after Challenge |  | Nil |  | Dermal reactions noted in DNCB group only.

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Mutagenicity in-vitro

Test Cells |  | Metabolising System |  | Controls |  | Dose |  | Results
Salmonella typhirium TA: 98, 100, 535, 1537; Escherichia coli WP2 uvrA |  | Aroclor-induced rat liver S9-mix |  | Positive: 2-(2-Furyl)-3-(5-nitro-2-furyl)acrylamide, NaN3, N-Ethyl-N’-nitro-N-nitrosoguanidine, 9-Aminoacridine, 2-Aminoamthracene and Benz(a)pyrene Negative: Purified Water |  | 62.5 - 1000μg/plate (highest tested concentration due to high viscosity of sodium hyaluronate) Experiment repeated x 2 Cultures replicated x 2 |  | Cytotoxic: No bacteriostatic effect Genotoxic effect: No significant increase of the number of revertants against negative control Effect of positive control: High number of revertants.

Clinical Data

A pivotal clinical trial conducted with LO2A eye drops in six centers in France, is summarized below. There are a further seven published clinical studies on LO2A, which are also summarized. Six of these studies documented the efficacy of LO2A eye drops by both the Investigators and the patients. Adverse events and tolerance parameters were also recorded. The remaining study specifically investigated tolerance parameters after application of LO2A eye drops. No clinical Pharmacokinetics studies have been conducted for LO2A eye drops. The PK profile of SH is well established. Extensive safety monitoring in both animal and human studies have shown that, after ocular application, no clinically meaningful systemic absorption is expected.

A Phase I study was performed at the University of Antwerp, Belgium in 1992 to measure the pre-corneal residence time of LO2A eye drops versus placebo in healthy volunteers (Study EC-914-1B). This was a single blind study in which 6 healthy volunteers received a single administration of LO2A eye drops to one eye and placebo to the other eye, both labeled with fluorescein. Variance analysis (ANOVA) for the area under the fluorescence delay curve demonstrated that LO2A was retained on the corneal surface significantly longer than placebo eye drops (p=0.048; significance level p=0.05). No adverse events were reported.

Six Phase II studies were performed. These are described below:

Randomized Controlled Trial of High Molecular Weight Hyaluronic Acid (LO2A) in DES

This study was performed in 1992 at the Hospital San Biagio, Domodossola, Italy. The objectives of the study were to evaluate the efficacy of 30-day treatment with LO2A in reducing the severity of DES, to confirm an optimum dosing schedule for LO2A (3, 4, 6 or 8 drops/day) and to assess the interference of LO2A with other ocular therapies. One hundred patients with moderate-to-severe DES were randomized 1:1 to treatment (LO2A) or comparator (Hyalistil containing 0.2% SH and the preservative thimerosal at 0.005%). Statistical analyses were performed using Wilcoxon, Mann-Whitney U test and Chi square test. The significance level was p=0.05.

The study demonstrated significant improvement in composite score from objective parameters including Schirmer test, fluorescein staining, TFBUT and Rose Bengal staining (p<0.001 for both treatments using Wilcoxon test), but no significant difference between treatment groups in the reduction in total scores at Day 30 (p=0.998 using Mann-Whitney U test). For LO2A, a dosing schedule of four applications/day reduced scores at Day 30 significantly more than lower dosing schedules (p=0.02 using Mann-Whitney U test). There was no significant difference between 4 applications/day and higher dosing schedules. The number of patients rating tolerance as ‘good’ or above was significantly higher for LO2A (96%) than the comparator (78%)(p = 0.029 using Chi square test). Adverse events were experienced by two patients in the LO2A group (both “sticky eye”) and 11 patients in the comparator group. There were no serious adverse events (“SAEs”) or apparent interactions between LO2A and concomitant eye treatments.

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Double-Masked, Crossover Comparison of a New Artificial Tear Preparation containing Hyaluronic Acid (LO2A) and Lacrisol® in DES Treatment

This study was performed in 1992 at the University of Florence, Italy. The objectives of the study were to compare the efficacy of LO2A with Lacrisol® at reducing the severity of DES and reducing ocular signs and symptoms. Thirty-five patients with moderate-to-severe DES were treated alternately with LO2A for a 30-day treatment period and then Lacrisol® for a further 30-day treatment period. The trial was double-blind and allocation of treatments at Day 0 was randomized. Lacrisol® is an eye drop product containing 0.5% Hydroxypropyl Methylcellulose (“HPMC”). Statistical analyses were performed using Wilcoxon tests. All analyses were performed using two-sided tests and results were considered to be statistically significant if the p value was less than or equal to 0.05.

This study demonstrated a statistically significant improvement in mean, objective dry eye score (based on Schirmer test, fluorescein staining, TFBUT and Rose Bengal staining) following LO2A treatment compared to the Lacrisol® group (p<0.001). The severity of ocular signs and symptoms including redness, burning, foreign body sensation and photophobia was significantly less following LO2A treatment (p<0.02 for photophobia and p<0.01 for other symptoms). Adverse events were experienced by 4 patients treated with LO2A (two patients with mild burning, one patient with blurred vision and one patient with “thread sensation”) and 10 patients treated with Lacrisol®. There were no SAEs reported.

Double-Masked Clinical Trial of an Unpreserved Hyaluronic Acid Based Eye Drops (LO2A) in DES

This study was performed in 1992 at the University of Genoa, Italy. The objective of the study was to compare the efficacy of LO2A with Lacrisol® in reducing the severity of DES and ocular symptoms. Twenty-three patients with moderate to severe DES applied LO2A to the first eye and Lacrisol® (0.5% HPMC) to the second eye. The trial was double-blind and the treatment regime was five applications/day for 30 days. The recorded data were statistically analyzed by using the Student’s t test and Mann-Whitney U test. The threshold for clinical significance was p=0.05.

This study demonstrated that after 30 days of treatment the mean, objective dry eye scores (based on measurement of meniscal thickness, fluorescein staining, TFBUT and Rose Bengal staining) for LO2A treatment were significantly lower than for Lacrisol® treatment for three out of the four tests (p=0.011 for TFBUT [Student t test], p=0.046 for fluorescein staining [Mann-Whitney U test] and p=0.032 for Rose Bengal staining [Mann-Whitney U test]). The thickness of the lacrimal meniscus did not change significantly in any patient; however, the range of values recorded at Day 0 (0.1-0.2 mm) was not indicative of pathological changes. The severity of the ocular symptoms (burning, foreign body sensation and photophobia) was also significantly reduced for LO2A treatment compared to Lacrisol® at Day 30 (p=0.009 for burning, p=0.006 for foreign body sensation and p=0.025 for photophobia using Mann-Whitney U test). There were no adverse events associated with LO2A treatment.

Clinical Evaluation of LO2A Eye Drops versus Reference in Patients suffering from DES

This study was performed in 1992 at the University of Rome “Tor Vergata”, Italy. The objective of the study was to compare the efficacy of LO2A with eye drops containing 0.5% HPMC in reducing the severity of DES. Sixteen patients were treated with LO2A or HPMC eye drops. The study was double blind and assessed the treatment of 5 drops/day for 3-4 weeks. The data were statistically analyzed by comparing the scores obtained by the Wilcoxon test and adopting a significance threshold of p = 0.05. This study demonstrated that LO2A eye drops had significantly lower scores than HPMC in the fluorescein (p=0.001), TFBUT (p=0.015) and Rose Bengal test (p=0.007). There was no difference between treatments in meniscal thickness measurements and Schirmer tests. Adverse events were reported by one patient treated with LO2A (blurred vision). There were no SAEs reported.

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Assessment of Tolerance to LO2A Eye Drops

This study was performed at the University of Catania, Italy in 1992. The objective of the study was to assess the ocular tolerance of patients with moderate to severe DES to the application of LO2A drops compared with eye drops containing 0.5% HPMC. Eighteen patients applied LO2A drops to the first eye and HPMC in the second eye. The study was double-blind and assessed treatment of 4 drops/day for 20 days. This study demonstrated that 11 out of 18 patients (61.1%) experienced no discomfort upon application of LO2A compared to 1 out of 18 patients (5.6%)) with HPMC eye drops. This difference was found to be highly significant (p=0.0004) according to chi-squared test (significance level was p=0.05). The subjective symptoms reported at the time of HPMC instillation included blurred vision (16/18; 89%), foreign body sensation (11/18; 61%), stinging (7/18; 39%), photophobia (2/18; 11%) itching (1/18; 6%) and pain (1/18; 6%). The subjective symptoms reported at the time of LO2A instillation included foreign body sensation (5/18; 28%), stinging (4/18; 22%), blurred vision (3/18; 17%) and photophobia (2/18; 11%). No SAEs were reported.

The Effect of a New Tear Substitute Containing Glycerol and Hyaluronate on Keratoconjunctivitis Sicca

This study was performed in 1998 at Hadassah University Hospital, Jerusalem, Israel. The objective of the study was to evaluate the efficacy of LO2A in patients suffering from keratoconjunctivitis sicca compared to their current tear substitute. Twenty-five patients with a history of dry eye symptoms for at least one year who were using a known tear substitute preparation (containing either cellulose derivatives or polyvinylpyrolidone plus hydroxyethylcellulose) and had positive Rose Bengal staining were included. One eye was randomized to topical treatment with LO2A and the other “control” eye to continued treatment with the pre-existing tear substitute preparation. In the first stage of the study, 15 patients received treatment for one week and in the second stage, 10 patients received treatment for two weeks. Statistical analysis of the results included the Wilcoxon signed rank test for comparison between scores for the same eye at different times, and Mann-Whitney test for comparison between scores of study versus control eyes adopting a significance threshold of p = 0.05.

The average patient satisfaction score for LO2A was significantly higher compared to the control preparation at 1 week (p=0.0003) and at 2 weeks (p=0.0232). A highly significant reduction in Rose Bengal staining was demonstrated following one week of treatment with LO2A (p<0.0001) and the LO2A-treated eyes had significantly less staining compared to control eyes at both one (p=0.021) and two weeks (p=0.023). The paper did not report any adverse events associated with LO2A treatment.

The pivotal, Phase III study is described below:

Acceptability and Efficacy of LO2A Eye Drops vs Gel-Larmes® in Moderate to Severe DES - Clinical Trial Protocol No. EC-921-3

This study was performed in 1993 at the Hospital Hôtel-Dieu, Paris, France with additional sites in Brest, Montpellier, Limoges, Lyon and Nice. The objective of this study was to demonstrate the superiority of LO2A to Gel-Larmes® (0.3% Carbomer containing the preservative thimerosal at 0.005%) in improving patient symptoms and to demonstrate equivalence of the study treatments in reducing the severity of DES. One hundred patients with moderate to severe DES were randomized 1:1 to treatment (LO2A) or Gel-Larmes®. The study assessed treatment of four applications/day for 12 weeks. Differences between the study treatment groups were analyzed statistically using either the Student’s t test (means) or Chi squared test (percentages). Equivalence between the treatment groups was tested by comparison of distributions using the Dunett and Gent’s Chi squared test. Probability level was 0.05.

This study demonstrated that LO2A was significantly superior to Gel-Larmes® in improving patient symptoms (p=0.024). The severity of DES was measured using Schirmer test, fluorescein staining, TFBUT and Rose Bengal staining. A reduction in total score of ≥4, obtained from these four objective tests, was achieved by 17 patients (left eye) and 23 patients (right eye) in the LO2A group and by 20 patients (left eye) and 16 patients (right eye) in the Gel-Larmes® group, demonstrating that LO2A and Gel-Larmes® were equivalent in improving signs of DES (probability of equivalence: p=0.039 right eye and p=0.00002 left eye). The number of patients rating tolerance as ‘good’ or above was significantly higher in the LO2A group compared to Gel-Larmes® at all time points (Days 15 - p=0.031; Day 45 -p=0.00006; Day 90 - p=0.0004). Adverse events were experienced by 10 patients (21.7%) in the LO2A group and 17 patients (36.2%) in the Gel-Larmes® group. The adverse events experienced by patients in the LO2A group included inflammatory reaction (2 patients), burning/itching/stinging sensation (7 patients) and secretions (1 patient). One unrelated SAE was reported in this study (chest pain) in a patient randomized to the Gel-Larmes® group. In conclusion, this study demonstrated that LO2A was significantly better than Gel-Larmes® in terms of subjective symptoms and tolerability in treating DES with a treatment regimen of four drops/day for 12 weeks and equivalent in improving signs of DES.

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A Phase II study was performed at Semmelweis University, Budapest, Hungary between 2012-2013 to assess the efficacy of LO2A eye drops in patients with severe CCH. Twenty patients with Grade 2 or 3 CCH (according to LIPCOF score), who had previously failed treatment on a variety of artificial tear preparations, applied LO2A eye drops to both eyes in a single arm, open label study. Patients applied 4 drops/day for each eye for 3 months. A mean decrease from baseline of one LIPCOF degree was assumed to be clinically relevant. Statistical comparisons were performed using a paired t-test (TFBUT) or Wilcoxon Signed Rank Test (LIPCOF degree, Oxford grade and OSDI score) at a two-sided significance level of 5% (p=0.05).

This study demonstrated that after 3 months, CCH decreased from a mean LIPCOF degree of 2.9±0.4 in both eyes to 1.4±0.6 on the right (median decrease of -2 points, 95% confidence interval (“CI”) from -2.0 to -1.0), and to 1.4±0.7 on the left eye (median decrease of -1 points, 95% CI from -2.0 to -1.0) (p< 0.001 for both sides). The TFBUT increased significantly after one-month treatment (right eye median increase of 1.1 sec, 95% CI from 0.2 to 1.0 sec; left eye median increase of 0.9 sec, 95% CI from 0.3 to 1.5 sec)(p=0.02 right eye; p=0.004 left eye). The mean Oxford Scheme grade staining decreased significantly during the entire period of the examination (right eye median decrease of -1.0 grade, 95% CI from -1.0 to -1.0 grade; left eye median decrease of -1.0 grade, 95% CI from -1.0 to -1.0 grade after three months)(p<0.001 both sides). The subjective complaints of the patients measured with the OSDI questionnaire showed a significant improvement after 3 months’ treatment (median decrease of -13.1 scores, 95% CI from -25.0 to -8.3 scores)(p<0.001). During the study period, two patients complained of a greasy sensation on their eyelids, but they did not stop the treatment. No other adverse reactions were reported.

Based on the results of this trial, the Hungarian health authorities approved the amendment of the LO2A labeling to include the treatment of DES patients suffering from CCH, and patents were filed in the United States, Israel and Japan for the use of the active component of the drug for treating CCH.

A further Phase II study was performed at Semmelweis University, Budapest, Hungary in 2016. This study explored the safety and efficacy of LO2A in patients with moderate severity dry eye associated with Sjögren’s where the ocular surface showed Lissamine Green staining causing marked subjective symptoms using the OSDI questionnaire. Twenty-one patients applied LO2A eye drops to both eyes in a single arm, open label study. Patients applied 4 drops a day to each eye for 3 months. LIPCOF score, Lissamine Green staining, tear production and OSDI questionnaire were measured. The study demonstrated a reduction in the LIPCOF score, a decrease in Lissamine Green staining according to the Oxford scale and mitigation of subjective symptoms of dry eye according to the OSDI questionnaire. However, there was no change in tear production during the study.

We are evaluating such information and are considering the potential consequences on our business. In addition, we plan to use the clinical results and approval received in the Netherlands the treatment of Sjögren’s to assist our Company in the registration of LO2A as a treatment for Sjögren’s in the Licensed Territories.

Our Clinical Trials

We have finished a Multi-Center Trial at five different centers in Israel that commenced in August 2016. The Multi-Center Trial is a Phase II randomized, double-blind, placebo-controlled study carried out in parallel groups that is evaluating the safety and efficacy of LO2A for patients suffering from moderate to severe CCH. The trial completed enrollment of all 62 patients on March 26, 2018, with the treatment time for each patient being 3 months. The primary efficacy endpoint for this study is the change from baseline in lissamine green conjunctival staining score at 3 months; secondary endpoints include change from baseline in lissamine green conjunctival staining score at 1 month, change from baseline in LIPCOF score at 1 and 3 months, change from baseline in TFBUT at 1 and 3 months and change from baseline in OSDI questionnaire score at 1 and 3 months. Safety endpoints include adverse events recorded throughout the trial, best-corrected visual acuity, slit lamp biomicroscopy findings, undilated fundoscopy findings and intraocular pressure measurements. We consulted with ophthalmology consultants from the United States in the preparation of the protocol for the Multi-Center Trial.

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It is envisioned that the clinical study required for approval in Israel will be of a similar design to the Multi-Center Trial, but appropriately powered to demonstrate clinical significance according to the treatment effect observed in the current study. We will consult with the Israel Ministry of Health before a registration study to confirm acceptability of the efficacy endpoints.

The comprehensive cost of the Multi-Center Trial is estimated at $850,000. As of November 14, 2018, the Multi-Center Trial had completed treatment of all of the planned 62 patients, with the treatment time for each patient being three months. In November 2018 we received the top line results for the Multi-Center trial which describe analysis of the primary endpoint, defined as the reduction in Lissamine green conjunctival staining (LGCS) score from baseline to 3 months. The originally planned primary analysis was based upon recruitment of a sample size of 62 patients. Analysis was performed on the 49 fully evaluable patients using a mixed model with repeated measures (MMRM) and utilized all post baseline observations, (1-month and 3-month follow-ups) demonstrating statistical significance between the LO2A group and the placebo group (P=0.0079). The planned primary endpoint analysis compared average reduction in LGCS score from baseline to three months. This analysis also demonstrated a strong trend towards significance (P=0.0713) with average reduction in LGCS score between baseline and 3 months of -3.5 and -1.6 in the LO2A and placebo groups, respectively. We expect the full statistical report to be published as soon as the statistical results and conclusion are available and approved.

On October 26, 2017, Wize Israel announced the termination of its Single Center Trial. The Single Center Trial was a Phase II, randomized, double-blind, placebo-controlled, pilot study carried out in parallel groups that was intended to evaluate the safety and efficacy of LO2A for patients suffering from moderate to severe CCH, with Wize Israel having sole access to the trial data. On October 24, 2017, Wize Israel received notice from the contract research organization that manages and supervises Wize Israel’s clinical trials, that an inadequate amount of quality information may be derived from the results collected thus far, given that there is no correlation in the reaction of both eyes to LO2A, in contrast to professional literature and other trials. In addition, the recruitment rate of patients was less than required and there was a higher than expected dropout rate. In light of the above, the CRO concluded that the results of the trial would be of no use even if the trial continued until the end of its term. Based on the CRO’s conclusion, Wize Israel determined to terminate the trial and to save the future costs that would be incurred in connection with such trial.

In February 2018, we received Institutional Review Board (IRB) approval for the protocol of our planned Phase IV Study, which is a randomized, double-masked, study of LO2A versus Alcon’s Systane® Ultra UD, an over-the-counter lubricant eye drop product used to relieve dry and irritated eyes. The Phase IV Study will take place in Israel and will evaluate the safety and efficacy of LO2A for symptomatic improvement of DES in 60 adult patients with Sjögren’s. Enrolled patients will be randomized in a 1:1 ratio to one of two treatment groups, LO2A or Systane® Ultra UD. Drops will be administered topically to the eye over a three month period. The primary efficacy endpoint for this study is change from baseline in corneal and conjunctival staining score at 3 months. Secondary efficacy endpoints include change from baseline in corneal and conjunctival staining score at 1 month, change from baseline in eye dryness score (visual analogue scale) at 1 and 3 months and change from baseline in OSDI questionnaire score at 1 and 3 months. Safety will be evaluated by collection of adverse event data throughout the study, best-corrected visual acuity and slit lamp biomicroscopy findings.

This Phase IV Study is designed to support our clinical approval pathway for LO2A for the treatment of DES in patients with Sjögren’s within certain markets including the U.S., China and Israel. We enrolled our first patient in the Phase IV Study in the end of March 2018. Data obtained from this study will be submitted to the Israel Ministry of Health and will be included in the clinical data package submitted during interactions with the FDA. The study is considered necessary as the existing clinical data in this indication is considered of insufficient quality for submission to the regulatory agencies mentioned above.

Research and development expenses for the year ended December 31, 2018 were approximately $694,000, for the year ended December 31, 2017 were approximately $450,000.

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Raw Materials and Suppliers

We believe that the raw materials that would be required to manufacture LO2A are widely available from numerous suppliers and are generally considered to be generic industrial chemical supplies.

Manufacturing

There can be no assurance that LO2A can be manufactured in sufficient commercial quantities, in compliance with regulatory requirements and at an acceptable cost. We and our contract manufacturers are, and will be, subject to extensive governmental regulation in connection with LO2A. We and our manufacturer must ensure that all of the processes, methods and equipment are compliant with both cGMP, and current Good Laboratory Practices for drugs on an ongoing basis, as mandated by the applicable regulatory authorities, and conduct extensive audits of vendors, contract laboratories and suppliers. We have entered into agreements with a manufacturer in Germany relating to the manufacturing of LO2A. We have completed the production of LO2A for purposes of our ongoing Phase II clinical trial and expect to begin production for commercial use only after obtaining the requisite regulatory approvals in Israel to market LO2A and receive orders from the distributors (for more information, see “—Marketing, Sales and Distribution” below).

Marketing, Sales and Distribution

We plan to engage local or multinational distributors to handle the distribution of LO2A. In particular, we intend to enter into agreements with pharmaceutical companies with relevant marketing capabilities in the field of pharmaceuticals in order to have them distribute and sell LO2A in the Licensed Territories. To date, we have entered into exclusive distribution agreements in Israel to market LO2A for the treatment of DES, and in Ukraine for the treatment of DES. The registration process in certain countries, including the United States, requires us to undertake additional clinical trials, in addition to the Phase II and Phase IV clinical trials that we are currently conducting. In August, 2015, LO2A received the approval of the Israel Ministry of Health for use in Israel as a medical preparation for the treatment of DES, under the brand name “Eyecon®”. In July 2017, we received our first order from the distributor in Israel, for an immaterial amount.

On November 3, 2017, Wize Israel entered into a framework agreement with the Chinese Distributor, whereby, subject to the negotiation and execution of a detailed distribution agreement and obtaining necessary regulatory approvals in China, the Chinese Distributor will act as exclusive distributor in China of LO2A. The framework agreement includes, among other things, minimum purchase obligations of the Chinese Distributor, which Wize Israel estimated to range, over the five-year period of the contemplated agreement, between $22.5 million to $39 million. The Chinese Distributor plans to import LO2A from one of the existing European countries, most likely Hungary, and thus the indications shall include DES and any additional indication already approved in the specific European country. If such indications are imported from Hungary, the indications would include DES, CCH and Sjögren’s. Clinical trials in China may be required by the China Food and Drug Administration (“CFDA”) as part of the regulatory requirements for approving LO2A in China. At this stage it is not certain whether such clinical trials will be required.

On May 31, 2018, we entered into an Exclusive Distribution Agreement with the Chinese Distributor (the “Chinese Distribution Agreement”). Pursuant to the terms of the Chinese Distribution Agreement, Wize Israel has granted to the Chinese Distributor the exclusive right to sell and distribute LO2A Lacrycon® formula products (manufactured by Pharma Stulln GmbH) in the mainland of China (excluding Hong Kong, Macau and Taiwan) subject to certain terms and conditions. Pursuant to the Chinese Distribution Agreement, the the Chinese Distributor will be responsible for all necessary regulatory approvals, registration procedures, licenses, permits and authorizations required for the marketing, importation, sale and service of LO2A in China. Wize Israel will assist the the Chinese Distributor in completing clinical trials, if such needed. Pursuant to the Chinese Distribution Agreement, the Chinese Distributor has the option of designating certain affiliates, dealers, distributors, medical institutions and other parties (the “Designated Entities), however the Chinese Distributor will remain fully liable for the activities or omissions of any such Designated Entities. Wize Israel is required, among others, to (i) utilize best efforts to obtain certain approvals with respect to Sjögren’s, DES and CCH, (ii) obtain a valid patent registration for the Uni-dose Products and the Multi-dose Products with respect to certain indications and (iii) obtain certain marketing approvals in Hungary, among other things. The Chinese Distribution Agreement includes certain product pricing terms and minimum binding order quantities. The Chinese Distribution Agreement has an initial term of 5 years and, thereafter, automatically renews for additional terms of 5 years each, subject to full compliance with the terms of the Chinese Distribution Agreement.

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We intend to engage pharmaceutical companies or distributors around the world with relevant marketing capabilities in the pharmaceutical field, in order for such pharmaceutical companies to sell LO2A, with us prioritizing those countries where we may expedite the registration process of LO2A based on existing knowledge and studies previously conducted on LO2A, without requiring additional studies. In this respect, we have been studying the possibility of marketing LO2A for DES treatment only in the United States, but have not made any determinations regarding the best route that can be used to obtain FDA approval to market LO2A. Currently, we intend to approach the FDA as part of our preliminary request procedure (Pre-IND) and discuss possible alternatives for approving LO2A for treating DES in the United States. However, as this FDA process is both time consuming and costly, we do not intend to approach the FDA on a Pre-IND basis until we are able to secure additional funding.

Competition

The pharmaceutical industry is characterized by rapidly evolving technology, intense competition and a highly risky, costly and lengthy research and development process. Adequate protection of intellectual property, successful product development, adequate funding and retention of skilled, experienced and professional personnel are among the many factors critical to success in the pharmaceutical industry. We operate in markets featuring competition between competing manufacturers in the field of DES treatment, while, to our knowledge, no therapy is currently approved specifically for Sjögren’s or CCH.

The global DES market features three particularly dominant companies, which are responsible for an estimated 82% of all revenues: Novartis/Alcon (through its Celluvisc®, Hyalein®, Vismed® and Systane® drugs); Allergan (Restasis®, Refresh®) and Santen. In July 2016, the FDA approved an additional medicine, Xiidra®, produced by Shire Plc, for the treatment of DES, and sales began in August 2016.

To date, no therapeutic agent has received approval specifically for Sjögren’s. Drugs that are used for the symptomatic relief of ocular signs and symptoms associated with Sjögren’s include cholinergic agonists e.g. Salagen (pilocarpine) and Evoxac (cevilemine) and the immunomodulatory agent Restasis (cyclosporine). Systemic Immunomodulary treatments, usually for extra-glandular disease, which may be used include hydroxychloroquine (mild inflammatory symptoms of joints, muscles and skin), corticosteroids (rare but serious symptoms: vasculitic rash, interstitial lung disease, interstitial nephritis, glomerulonephritis), immunosuppressive agents e.g. methotrexate, azathioprine, cyclophosphamide (used to treat serious internal organ manifestations) and biologic agents e.g. rituximab. Corticosteroids and immunosuppressants lead to broad, non-selective immunosuppression often associated with significant adverse events.

The pipeline of drugs in development for the indication of Sjögren’s is relatively small with only one product in Phase III, Orencia, being developed by Bristol-Myers Squibb. There are a number of drugs in Phase I or II stages of development including AMG/MEDI5872 developed by Amgen, BIIB063 developed by Biogen, CFZ533 and VAY736 developed by Novartis, GSK618960 developed by GSK, LY3090106 developed by Eli Lilly, MEDI4920 developed by MedImmune, RG7625 developed by Roche, RSLV developed by Resolve Therapeutics and Actemra developed by the University Hospital of Strasbourg. In addition, there is an ongoing Phase II combination study combining Benlysta and Rituxan.

We believe that LO2A has a number of advantages over competing products in the DES and Sjögren’s markets, including LO2A lacking preservatives, its ability to be used with any contact lenses, its anti-irritant properties and its non-Newtonian viscosity profile. On the other hand, other drugs on the market, including new drugs under development, may all be competitive to LO2A. In fact, some of these drugs are well established and accepted among patients and physicians in their respective markets, can be efficiently produced and marketed, and are relatively safe. Moreover, other companies of various sizes engage in activities similar to ours. Most, if not all, of our competitors have substantially greater financial and other resources available to them. Competitors include companies with marketed products and/or an advanced research and development pipeline.

Intellectual Property

Our success depends in part on our ability (directly or through Resdevco) to obtain and maintain proprietary protection for LO2A and its underlying technology and know-how, and to operate without infringing the proprietary rights of others and to prevent others from infringing such proprietary rights.

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The LO2A composition and use thereof for treating or alleviating DES was covered by US Patent No. 5,106,615, which has expired. Accordingly, we are currently focusing our marketing and commercial efforts with respect to CCH and Sjögren’s rather than DES, as more fully described elsewhere in this report. The use of LO2A for treating or alleviating CCH under US Patent No. 8,912,166 has been granted to us under the LO2A License Agreement.

The use of LO2A for treating or alleviating CCH is protected by the patent family of International Patent Application Publ. No. WO2012150583, filed on April 5, 2012, assigned to Resdevco, entitled EYE DROPS FOR TREATMENT OF CONJUNCTIVOCHALASIS. Corresponding members include US Patent No. 8,912,166, Israeli Patent No. 212725, Japanese Patent No. 5957517 and pending European Pat. Appl. 2704747. Granted patents and patents to issue of this patent family will expire, without extension, in 2032.

The use of LO2A for treating or alleviating irritation of the eye caused non-infectious diseases, such as Sjögren’s, is covered by Provisional Patent Application No. 62/467139, filed on March 5, 2017, assigned to Resdevco, entitled EYE DROPS FOR TREATMENT OF IRRITATION NOT DUE TO INFECTION. Patents to issue based on this provisional application will expire, without extension, in 2038.

Pursuant to the LO2A License Agreement, Resdevco has contractually agreed to be responsible for the payment of all relevant fees associated with the maintenance of its intellectual property rights. The patent positions of biopharmaceutical companies, such as Resdevco and us, are generally uncertain and involve complex legal and factual questions. Resdevco’s ability to maintain and solidify its proprietary position for LO2A will depend on its success in obtaining effective claims and enforcing those claims once granted. There is no certainty that any of Resdevco’s pending patent applications or those pending patent applications that it licenses will result in the issuance of any patents or that we will obtain rights to any further patents or patent applications. Any issued patents and those that may issue in the future may be challenged, narrowed, circumvented or found to be invalid or unenforceable, which could limit our ability to stop competitors from marketing related products or the length of term of patent protection that we may have for LO2A under the LO2A License Agreement. We cannot be certain that Resdevco was the first to invent the inventions claimed in its owned or licensed patents or pending patent applications. In addition, our competitors may independently develop similar technologies or duplicate any technology developed by Resdevco, and the rights granted under any issued patents may not provide Resdevco or us with any meaningful competitive advantages against these competitors. Please see under “RISK FACTORS – Risks Related to our Intellectual Property,” beginning on page 45 of this report.

Environmental Matters

We and our manufacturers, distributors and other service providers are subject to various environmental, health and safety laws and regulations, including those governing air emissions, water and wastewater discharges, noise emissions, the use, management and disposal of hazardous, radioactive and biological materials and wastes and the cleanup of contaminated sites. We believe that our business, including those of our service providers, are being operated in compliance in all material respects with applicable environmental and health and safety laws and regulations. Based on information currently available to us, we do not expect environmental costs and contingencies to have a material adverse effect on our business. However, significant expenditures may be imposed on those third party service providers should they be required to comply with new or more stringent environmental or health and safety laws, regulations or requirements, which may in turn adversely affect us.

Government Regulations

We operate in a highly controlled regulatory environment. Stringent regulations establish requirements relating to analytical, toxicological and clinical standards and protocols in respect of the testing of pharmaceuticals. Regulations also cover research, development, manufacturing and reporting procedures, both pre- and post-approval. In many markets, especially in Europe, marketing and pricing strategies are subject to national legislation or administrative practices that include requirements to demonstrate not only the quality, safety and efficacy of a new product, but also its cost-effectiveness relating to other treatment options. Failure to comply with regulations can result in stringent sanctions, including product recalls, withdrawal of approvals, seizure of products and criminal prosecution.

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Before obtaining regulatory approvals for the commercial sale of LO2A or any of our future product candidates, we must demonstrate through clinical trials that any of our product candidates are safe and effective. Historically, the results from preclinical studies and early clinical trials often have not accurately predicted results of later clinical trials. In addition, a number of pharmaceutical products have shown promising results in clinical trials but subsequently failed to establish sufficient safety and efficacy results to obtain necessary regulatory approvals. We have incurred and will continue to incur substantial expense for, and devote a significant amount of time to, clinical trials. Many factors can delay the commencement and rate of completion of clinical trials, including the inability to recruit patients at the expected rate, the inability to follow patients adequately after treatment, the failure to manufacture sufficient quantities of materials used for clinical trials, and the emergence of unforeseen safety issues and governmental and regulatory delays. If a product candidate fails to demonstrate safety and efficacy in clinical trials, this failure may delay development of other product candidates and hinder our ability to conduct related clinical trials. Additionally, as a result of these failures, we may also be unable to obtain additional financing.

Governmental authorities in all major markets require that a new pharmaceutical product be approved before it is marketed, and have established high standards for technical appraisal, which can result in an expensive and lengthy approval process. The time to obtain approval varies by country and some products are never approved. The lengthy process of conducting clinical trials, seeking approval and the subsequent compliance with applicable statutes and regulations, if approval is obtained, are very costly and require the expenditure of substantial resources.

A summary of the regulatory processes in countries where we are seeking or will seek regulatory approval follow below.

United States

In the United States, the Public Health Services Act and the Federal Food, Drug, and Cosmetic Act, as amended, and the regulations promulgated thereunder, and other federal and state statutes and regulations govern, among other things, the quality, safety and effectiveness standards for any of our product candidates and the raw materials and components used in the production of, testing, manufacture, labeling, storage, record keeping, approval, advertising and promotion of our products on a product-by-product basis.

Before the clinical studies, the FDA requires from the applicants to complete extensive preclinical laboratory tests, drug chemistry, animal (in vivo), formulation, stability and other studies.

Certain preclinical tests must be conducted in compliance with good laboratory practice (GLP) regulations. Non-compliance with GLP standard can, in some cases, lead to invalidation of the studies, requiring them to be replicated. After laboratory analysis and preclinical testing, a sponsor files an Investigational New Drug (“IND”) application, with the FDA to begin human testing.

The results of the preclinical studies, together with manufacturing information and analytical data, are submitted to the FDA as part of an IND application. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises concerns or questions about the conduct of the clinical trial, including concerns that human research subjects will be exposed to unreasonable health risks. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. Submission of an IND may result in the FDA not allowing the clinical trials to commence or not allowing the clinical trials to commence on the terms originally specified in the IND. A separate submission to an existing IND must also be made for each successive clinical trial conducted during drug development, and the FDA must grant permission, either explicitly or implicitly by not objecting, before each clinical trial can begin.

Typically, a manufacturer conducts a three-phase human clinical testing program which itself is subject to numerous laws and regulatory requirements, including adequate monitoring, reporting, record keeping and informed consent.

Clinical trials involve the administration of the investigational drug to human subjects under the supervision of qualified investigators. Clinical trials are conducted under protocols detailing, among other things, the objectives of the clinical trial, the parameters to be used in monitoring safety and the effectiveness criteria to be used. Each protocol must be submitted to the FDA as part of the IND. An independent institutional review board (“IRB”), for each medical center proposing to conduct a clinical trial must also review and approve a plan for any clinical trial before it can begin at that center and the IRB must monitor the clinical trial until it is completed. The FDA, the IRB, or the sponsor may suspend or discontinue a clinical trial at any time on various grounds. Clinical testing also must satisfy extensive Good Clinical Practice (“GCP”), requirements, including the requirements for informed consent.

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All clinical research performed in the United States in support of a new drug application (“NDA”) must be authorized in advance by the FDA under the IND regulations and procedures described above. However, a sponsor who wishes to conduct a clinical trial outside the United States may, but need not, obtain FDA authorization to conduct the clinical trial under an IND. If a foreign clinical trial is not conducted under an IND, the sponsor may submit data from the clinical trial to FDA in support of an NDA so long as the clinical trial is conducted in compliance with an international guideline for the ethical conduct of clinical research known as the Declaration of Helsinki and/or the laws and regulations of the country or countries in which the clinical trial is performed, whichever provides the greater protection to the participants in the clinical trial.

In Phase I, small clinical trials are conducted to determine the safety and proper dose ranges of any of our product candidates. In Phase II, clinical trials are conducted to assess safety and gain preliminary evidence of the efficacy of any of our product candidates. In Phase III, clinical trials are conducted to provide sufficient data for the statistically valid evidence of safety and efficacy and these studies include a large number of participants. The time and expense required for us to perform this clinical testing can vary and is substantial. We cannot be certain that we will successfully complete Phase I, Phase II or Phase III testing of any of our product candidates within any specific time period, if at all. Furthermore, the FDA, the IRB responsible for approving and monitoring the clinical trials at a given site, the Data Safety Monitoring Board, where one is used, or we may suspend the clinical trials at any time on various grounds, including a finding that subjects or patients are exposed to unacceptable health risk.

If the clinical data from these clinical trials (Phases I, II and III) is deemed to support the safety and effectiveness of the candidate product for its intended use, then we may proceed to seek to file with the FDA an NDA seeking approval to market a new drug for one or more specified intended uses. We cannot ascertain whether the clinical data will support and justify filing an NDA. Nevertheless, if and when we are able to ascertain that the clinical data supports and justifies filing an NDA, we intend to make such appropriate filings.

The purpose of an NDA is to provide the FDA with sufficient information so that it can assess whether it ought to approve the candidate product for marketing for specific intended uses. The NDA normally contains, among other things, sections describing the chemistry, manufacturing, and controls, non-clinical pharmacology and toxicology, human pharmacokinetics and bioavailability, microbiology, the results of the clinical trials, and the proposed labeling which contains, among other things, the intended uses of the candidate product.

We cannot take any action to market any new drug or biologic product in the United States until our appropriate marketing application has been approved by the FDA. The FDA has substantial discretion over the approval process and may disagree with our interpretation of the data submitted. The process may be significantly extended by requests for additional information or clarification regarding information already provided. As part of this review, the FDA may refer the application to an appropriate advisory committee, typically a panel of clinicians. Satisfaction of these and other regulatory requirements typically takes several years, and the actual time required may vary substantially based upon the type, complexity and novelty of the product. Government regulation may delay or prevent marketing of potential products for a considerable period of time and impose costly procedures on our activities. We cannot be certain that the FDA or other regulatory agencies will approve any of our products on a timely basis, if at all. Success in early stage clinical trials does not assure success in later-stage clinical trials. Even if a product receives regulatory approval, the approval may be significantly limited to specific indications or uses and these limitations may adversely affect the commercial viability of the product. Delays in obtaining, or failures to obtain regulatory approvals, would have a material adverse effect on our business.

We may also seek approval under programs designed to accelerate the FDA’s review and approval of NDAs. For instance, a sponsor may seek FDA designation of a drug candidate as a “fast track product.” Fast track products are those products intended for the treatment of a serious or life-threatening disease or condition and which demonstrate the potential to address unmet medical needs for such disease or condition. If fast track designation is obtained, the FDA may initiate review of sections of an NDA before the application is complete. This “rolling review” is available if the applicant provides and the FDA approves a schedule for submission to the FDA of the remaining information. In some cases, a fast track product may be approved on the basis of either a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the availability or lack of alternative treatments. Approvals of this kind, referred to as accelerated approvals, typically include requirements for appropriate post-approval Phase IV clinical trials to validate the surrogate endpoint or otherwise confirm the effect of the clinical endpoint.

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In addition, the Food and Drug Administration Safety and Innovation Act, which was enacted and signed into law in 2012, established a new category of drugs referred to as “breakthrough therapies” that may be subject to accelerated approval. A sponsor may seek FDA designation of a drug candidate as a “breakthrough therapy” if the drug is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. Drug candidates may also be eligible for “priority review,” or review within a six-month timeframe from the date a complete NDA is accepted for filing, if a sponsor shows that its drug candidate provides a significant improvement compared to marketed drugs. Fast track designation, accelerated approval, breakthrough therapy designation and priority review do not change the standards for approval, but may expedite the development or approval process. When appropriate, we intend to seek fast track designation, accelerated approval, breakthrough therapy designation and priority review, as applicable for our drug candidates. We cannot predict whether any of our drug candidates will obtain such designations or approvals, or the ultimate impact, if any, of such designations or approvals on the timing or likelihood of FDA approval of any of its proposed drugs.

Even after we obtain FDA approval, we may be required to conduct further clinical trials (i.e., Phase IV trials) and provide additional data on safety and effectiveness. We are also required to gain separate approval for the use of an approved product as a treatment for indications other than those initially approved. Before approving an application, the FDA will inspect the facility or the facilities at which the finished drug product, and sometimes the active drug ingredient, is manufactured, and will not approve the drug unless cGMP compliance is satisfactory. The FDA may also inspect the sites at which the clinical trials were conducted to assess their compliance, and will not approve the drug unless compliance with GCP requirements is satisfactory.

If, as a result of these inspections, the FDA determines that our facilities do not comply with applicable FDA regulations and conditions of product approval, the FDA may seek civil, criminal or administrative sanctions and/or remedies against us including the suspension of our manufacturing operations.

Drugs may be marketed only for the FDA approved indications and in accordance with the provisions of the approved labeling. Further, if there are any modifications to the drug, including changes in indications, labeling, or manufacturing processes or facilities, the applicant may be required to submit and obtain FDA approval of a new NDA or NDA supplement, which may require us to develop additional data or conduct additional preclinical studies and clinical trials.

We have currently received no approvals to market our products from the FDA or other foreign regulators, besides Israel and the countries where LO2A is already marketed by Resdevco.

Post-Marketing Requirements

Following approval of a new product, a pharmaceutical company generally must engage in numerous specific monitoring and recordkeeping activities and continue to submit periodic and other reports to the applicable regulatory agencies, including any cases of adverse events and appropriate quality control records. Modifications or enhancements to the products or labeling or changes of site of manufacture are often subject to the approval of the FDA and other regulators, which may or may not be received or may result in a lengthy review process.

Prescription drug advertising is subject to federal, state and foreign regulations. In the United States, the FDA regulates prescription drug promotion, including direct-to-consumer advertising. Prescription drug promotional materials must be submitted to the FDA in conjunction with their first use. Any distribution of prescription drug products and pharmaceutical samples must comply with the U.S. Prescription Drug Marketing Act, a part of the U.S. Federal Food, Drug, and Cosmetic Act.

In the United States, once a product is approved, its manufacture is subject to comprehensive and continuing regulation by the FDA. The FDA regulations require that products be manufactured in specific approved facilities and in accordance with current good manufacturing practices, or cGMPs, and NDA holders must list their products and register their manufacturing establishments with the FDA. These regulations also impose certain organizational, procedural and documentation requirements with respect to manufacturing and quality assurance activities. NDA holders using contract manufacturers, laboratories or packagers are responsible for the selection and monitoring of qualified firms, and, in certain circumstances, qualified suppliers to these firms. These firms and, where applicable, their suppliers are subject to inspections by the FDA at any time, and the discovery of violative conditions, including failure to conform to cGMPs, could result in enforcement actions that interrupt the operation of any such facilities or the ability to distribute products manufactured, processed or tested by them.

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Healthcare Laws and Regulations

We are also subject to various federal, state and international laws pertaining to health care “fraud and abuse,” including anti-kickback laws and false claims laws. The federal Anti-kickback law, which governs federal healthcare programs (e.g., Medicare, Medicaid), makes it illegal to solicit, offer, receive or pay any remuneration in exchange for, or to induce, the referral of business, including the purchase or prescription of a particular drug. Many states have similar laws that are not restricted to federal healthcare programs. Federal and state false claims laws prohibit anyone from knowingly and willingly presenting, or causing to be presented for payment to third party payors (including Medicare and Medicaid), claims for reimbursement, including claims for the sale of drugs or services, that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services.

If the government or other relevant party were to allege that we violated these laws there could be a material adverse effect on our stock price. Even an unsuccessful challenge could cause adverse publicity and be costly to respond to, which could have a materially adverse effect on our business, results of operations and financial condition. A finding of liability under these laws can have significant adverse financial implications for us and can result in payment of large penalties and possible exclusion from federal healthcare programs. We will consult counsel concerning the potential application of these and other laws to our business and our sales, marketing and other activities and will make good faith efforts to comply with them. However, given their broad reach and the increasing attention given by law enforcement authorities, we cannot assure you that some of our activities will not be challenged or deemed to violate some of these laws.

European Economic Area

We do not currently have license or right to distribute in countries in the European Union (“EU”). Although we are not currently seeking regulatory approval in the European Union (“EU”), we may do so in the future. As such, a summary of the EU regulatory processes follows below.

A medicinal product may only be placed on the market in the European Economic Area (the “EEA”), composed of the 28 EU member states, plus Norway, Iceland and Lichtenstein, when a marketing authorization has been issued by the competent authority of a member state pursuant to Directive 2001/83/EC (as recently amended by Directive 2004/27/EC), or an authorization has been granted under the centralized procedure in accordance with Regulation (EC) No. 726/2004 or its predecessor, Regulation 2309/93. There are essentially three community procedures created under prevailing European pharmaceutical legislation that, if successfully completed, allow an applicant to place a medicinal product on the market in the EEA.

Centralized Procedure

Regulation 726/2004/EC now governs the centralized procedure when a marketing authorization is granted by the European Commission, acting in its capacity as the European Licensing Authority on the advice of the EMA. That authorization is valid throughout the entire community and directly or (as to Norway, Iceland and Liechtenstein) indirectly allows the applicant to place the product on the market in all member states of the EEA. The EMA is the administrative body responsible for coordinating the existing scientific resources available in the member states for evaluation, supervision and pharmacovigilance of medicinal products. Certain medicinal products, as described in the Annex to Regulation 726/2004, must be authorized centrally. These are products that are developed by means of a biotechnological process in accordance with Paragraph 1 to the Annex to the Regulation. Medicinal products for human use containing a new active substance for which the therapeutic indication is the treatment of acquired immune deficiency syndrome, or AIDS, cancer, neurodegenerative disorder or diabetes must also be authorized centrally. Starting on May 20, 2008, the mandatory centralized procedure was extended to autoimmune diseases and other immune dysfunctions and viral diseases. Finally, all medicinal products that are designated as orphan medicinal products pursuant to Regulation 141/2000 must be authorized under the centralized procedure. An applicant may also opt for assessment through the centralized procedure if it can show that the medicinal product constitutes a significant therapeutic, scientific or technical innovation or that the granting of authorization centrally is in the interests of patients at the community level. For each application submitted to the EMA for scientific assessment, the EMA is required to ensure that the opinion of the Committee for Medicinal Products for Human Use (“CHMP”), is given within 210 days after receipt of a valid application. This 210 days period does not include the time that the applicant to answer any questions raised during the application procedure, the so-called ‘clock stop’ period. If the opinion is positive, the EMA is required to send the opinion to the European Commission, which is responsible for preparing the draft decision granting a marketing authorization. This draft decision may differ from the CHMP opinion, stating reasons for diverging for the CHMP opinion. The draft decision is sent to the applicant and the member states, after which the European Commission takes a final decision. If the initial opinion of the CHMP is negative, the applicant is afforded an opportunity to seek a re-examination of the opinion. The CHMP is required to re-examine its opinion within 60 days following receipt of the request by the applicant. All CHMP refusals and the reasons for refusal are made public on the EMA website. Without a centralized marketing authorization it is prohibited to place a medicinal product that must be authorized centrally on the market in the EU.

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National Procedure

This procedure is available for medicinal products that do not fall within the scope of mandatory centralized authorization and are intended for use in only one EU member state. Specific procedures and timelines differ between member states, but the duration of the procedure is generally 210 days and based on a risk/efficacy assessment by the competent authority of the member state concerned, followed by determination of Summary of Product Characteristics (“SmPC”) package leaflet and label text/layout and subsequently grant of the marketing authorization. Marketing authorizations granted on this basis are not mutually recognized by other member states.

The majority of medicines available in the EU were authorized at national level, either because they were authorized before EMA’s creation or they were not in the scope of the centralized procedure. Each EU Member State has its own national authorization procedures. If a company wishes to request marketing authorization in several EU Member States for a medicine that is outside the scope of the centralized procedure, it may use one of the following routes:

| ● | the mutual-recognition procedure, whereby a marketing authorization granted in one Member State can be recognized in other EU countries; or

| ● | the decentralized procedure, whereby a medicine that has not yet been authorized in the EU can be simultaneously authorized in several EU Member States.

Mutual Recognition and Decentralized Procedures

With the exception of products that are authorized centrally, the competent authorities of the member states are responsible for granting marketing authorizations for medicinal products placed on their national markets. If the applicant for a marketing authorization intends to market the same medicinal product in more than one member state, the applicant may seek an authorization progressively in the community under the mutual recognition or decentralized procedure. Mutual recognition is used if the medicinal product has already been authorized in a member state. In this case, the holder of this marketing authorization requests the member state where the authorization has been granted to act as reference member state by preparing an updated assessment report that is then used to facilitate mutual recognition of the existing authorization in the other member states in which approval is sought (the so-called concerned member state(s)). The reference member state must prepare an updated assessment report within 90 days of receipt of a valid application. This report together with the approved SmPC (which sets out the conditions of use of the product), and a labeling and package leaflet are sent to the concerned member states for their consideration. The concerned member states are required to approve the assessment report, the SmPC and the labeling and package leaflet within 90 days of receipt of these documents. The total procedural time is 180 days.

The decentralized procedure is used in cases where the medicinal product has not received a marketing authorization in the EU at the time of application. The applicant requests a member state of its choice to act as reference member state to prepare an assessment report that is then used to facilitate agreement with the concerned member states and the grant of a national marketing authorization in all of these member states. In this procedure, the reference member state must prepare, for consideration by the concerned member states, the draft assessment report, a draft SmPC and a draft of the labeling and package leaflet within 120 days after receipt of a valid application. As in the case of mutual recognition, the concerned member states are required to approve these documents within 90 days of their receipt.

For both mutual recognition and decentralized procedures, if a concerned member state objects to the grant of a marketing authorization on the grounds of a potential serious risk to public health, it may raise a reasoned objection with the reference member state. The points of disagreement are in the first instance referred to the Co-ordination Group on Mutual Recognition and Decentralized Procedures (“CMD”), to reach an agreement within 60 days of the communication of the points of disagreement. If member states fail to reach an agreement, then the matter is referred to the EMA and CHMP for arbitration. The CHMP is required to deliver a reasoned opinion within 60 days of the date on which the matter is referred. The scientific opinion adopted by the CHMP forms the basis for a binding European Commission decision.

Irrespective of whether the medicinal product is assessed centrally, de-centrally or through a process of mutual recognition, the medicinal product must be manufactured in accordance with the principles of good manufacturing practice as set out in Directive 2003/94/EC and Volume 4 of the rules governing medicinal products in the European community. Moreover, community law requires the clinical results in support of clinical safety and efficacy based upon clinical trials conducted in the European community to be in compliance with the requirements of Directive 2001/20/EC, which implements good clinical practice in the conduct of clinical trials on medicinal products for human use. Clinical trials conducted outside the European community and used to support applications for marketing within the EU must have been conducted in a way consistent with the principles set out in Directive 2001/20/EC. The conduct of a clinical trial in the EU requires, pursuant to Directive 2001/20/EC, authorization by the relevant national competent authority where a trial takes place, and an ethics committee to have issued a favorable opinion in relation to the arrangements for the trial. It also requires that the sponsor of the trial, or a person authorized to act on his behalf in relation to the trial, be established in the community.

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There are various types of applications for marketing authorizations:

Full Applications

A full application is one that is made under any of the community procedures described above and “stands alone” in the sense that it contains all of the particulars and information required by Article 8(3) of Directive 2001/83 (as amended) to allow the competent authority to assess the quality, safety and efficacy of the product and in particular the balance between benefit and risk. Article 8(3)(l) in particular refers to the need to present the results of the applicant’s research on (i) pharmaceutical (physical-chemical, biological or microbiological) tests, (ii) preclinical (toxicological and pharmacological) studies and (iii) clinical trials in humans. The nature of these tests, studies and trials is explained in more detail in Annex I to Directive 2001/83/EC. Full applications would be required for products containing new active substances not previously approved by the competent authority, but may also be made for other products.

Abridged Applications

Article 10 of Directive 2001/83/EC contains exemptions from the requirement that the applicant provide the results of its own preclinical and clinical research. There are three regulatory routes for an applicant to seek an exemption from providing such results, namely (i) cross-referral to an innovator’s results without consent of the innovator, (ii) well established use according to published literature and (iii) consent to refer to an existing dossier of research results filed by a previous applicant.

Cross-referral to Innovator’s Data

Articles 10(1) and 10(2)(b) of Directive 2001/83/EC provide the legal basis for an applicant to seek a marketing authorization on the basis that its product is a generic medicinal product (a copy) of a reference medicinal product that has already been authorized, in accordance with community provisions. A reference product is, in principle, an original product granted an authorization on the basis of a full dossier of particulars and information. This is the main exemption used by generic manufacturers for obtaining a marketing authorization for a copy product. The generic applicant is not required to provide the results of preclinical studies and of clinical trials if its product meets the definition of a generic medicinal product and the applicable regulatory results protection period for the results submitted by the innovator has expired. A generic medicinal product is defined as a medicinal product:

| ● | having the same qualitative and quantitative composition in active substance as the reference medicinal product;

| ● | having the same pharmaceutical form as the reference medicinal product; and

| ● | whose bioequivalence with the reference medicinal product has been demonstrated by appropriate bioavailability studies.

Applications in respect of a generic medicinal product cannot be made before the expiry of the protection period. Where the reference product was granted a national marketing authorization pursuant to an application made before October 30, 2005, the protection period is either six years or 10 years, depending upon the election of the particular member state concerned. Where the reference product was granted a marketing authorization centrally, pursuant to an application made before November 20, 2005, the protection period is 10 years. For applications made after these dates, Regulation 726/2004 and amendments to Directive 2001/83/EC provide for a harmonized protection period regardless of the approval route utilized. The harmonized protection period is in total 10 years, including eight years of research data protection and two years of marketing protection. The effect is that the originator’s results can be the subject of a cross-referral application after eight years, but any resulting authorization cannot be exploited for a further two years. The rationale of this procedure is not that the competent authority does not have before it relevant tests and trials upon which to assess the efficacy and safety of the generic product, but that the relevant particulars can, if the research data protection period has expired, be found on the originator’s file and used for assessment of the generic medicinal product. The 10-year protection period can be extended to 11 years where, in the first eight years post-authorization, the holder of the authorization obtains approval for a new indication assessed as offering a significant clinical benefit in comparison with existing products.

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If the copy product does not meet the definition of a generic medicinal product or if certain types of changes occur in the active substance(s) or in the therapeutic indications, strength, pharmaceutical form or route of administration in relation to the reference medicinal product, Article 10(3) of Directive 2001/83/EC provides that the results of the appropriate preclinical studies or clinical trials must be provided by the applicant.

Well-established Medicinal Use

Under Article 10a of Directive 2001/83/EC, an applicant may, in substitution for the results of its own preclinical and clinical research, present detailed references to published literature demonstrating that the active substance(s) of a product have a well-established medicinal use within the community with recognized efficacy and an acceptable level of safety. The applicant is entitled to refer to a variety of different types of literature, including reports of clinical trials with the same active substance(s) and epidemiological studies that indicate that the constituent or constituents of the product have an acceptable safety/efficacy profile for a particular indication. However, use of the published literature exemption is restricted by stating that in no circumstances will constituents be treated as having a well-established use if they have been used for less than 10 years from the first systematic and documented use of the substance as a medicinal product in the EU. Even after 10 years’ systematic use, the threshold for well-established medicinal use might not be met. European pharmaceutical law requires the competent authorities to consider among other factors the period over which a substance has been used, the amount of patient use of the substance, the degree of scientific interest in the use of the substance (as reflected in the scientific literature) and the coherence (consistency) of all the scientific assessments made in the literature. For this reason, different substances may reach the threshold for well-established use after different periods, but the minimum period is 10 years. If the applicant seeks approval of an entirely new therapeutic use compared with that to which the published literature refers, additional preclinical and/or clinical results would have to be provided.

Consent to refer to an existing dossier info

Under Article 10c of Directive 2001/83/EC, following the grant of a marketing authorization the holder of such authorization may consent to a competent authority utilizing the pharmaceutical, preclinical and clinical documentation that it submitted to obtain approval for a medicinal product to assess a subsequent application relating to a medicinal product possessing the same qualitative and quantitative composition with respect to the active substances and the same pharmaceutical form.

Law Relating to Pediatric Research

Regulation (EC) 1901/2006 (as amended by Regulation (EC) 1902/2006) was adopted on December 12, 2006. This Regulation governs the development of medicinal products for human use in order to meet the specific therapeutic needs of the pediatric population. It requires any application for marketing authorization made after July 26, 2008 in respect of a product not authorized in the European Community on January 26, 2007 (the time the Regulation entered into force), to include the results of all studies performed and details of all information collected in compliance with a pediatric investigation plan agreed by the Pediatric Committee of the EMA, unless the product is subject to an agreed waiver or deferral or unless the product is excluded from the scope of Regulation 1902/2006 (generics, hybrid medicinal products, biosimilars, homeopathic and traditional (herbal) medicinal products and medicinal products containing one or more active substances of well-established medicinal use). Waivers can be granted in certain circumstances where pediatric studies are not required or desirable. Deferrals can be granted in certain circumstances where the initiation or completion of pediatric studies should be deferred until appropriate studies in adults have been performed. Moreover, this regulation imposes the same obligation from January 26, 2009 on an applicant seeking approval of a new indication, pharmaceutical form or route of administration for a product already authorized and still protected by a supplementary protection certificate granted under Regulation EC 469/2009 and its precursor (EEC) 1768/92 or by a patent that qualifies for the granting of such a supplementary protection certificate. The pediatric Regulation 1901/2006 also provides, subject to certain conditions, a reward for performing such pediatric studies, regardless of whether the pediatric results provided resulted in the grant of a pediatric indication. This reward comes in the form of an extension of six months to the supplementary protection certificate granted in respect of the product, unless the product is subject to orphan drug designation, in which case the 10-year market exclusivity period for such orphan products is extended to 12 years. If any of the non-centralized procedures for marketing authorization have been used, the six-month extension of the supplementary protection certificate is only granted if the medicinal product is authorized in all member states.

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Post-authorization Obligations

In the pre-authorization phase the applicant must provide a detailed pharmacovigilance plan that it intends to implement post-authorization. An authorization to market a medicinal product in the EU carries with it an obligation to comply with many post-authorization organizational and behavioral regulations relating to the marketing and other activities of authorization holders. These include requirements relating to post-authorization efficacy studies, post-authorization safety studies, adverse event reporting and other pharmacovigilance requirements, advertising, packaging and labeling, patient package leaflets, distribution and wholesale dealing. The regulations frequently operate within a criminal law framework and failure to comply with the requirements may not only affect the authorization, but also can lead to financial and other sanctions levied on the company in question and responsible officers.

As a result of the currently on-going overhaul of EU pharmacovigilance legislation the financial and organizational burden on market authorization holders will increase significantly, such as the obligation to maintain a pharmacovigilance system master file that applies to all holders of marketing authorizations granted in accordance with Directive 2001/83/EC or Regulation (EC) No 726/2004. Marketing authorization holders must furthermore collect data on adverse events associated with use of the authorized product outside the scope of the authorization. Pharmacovigilance for biological products and medicines with a new active substance will be strengthened by subjecting their authorization to additional monitoring activities. The EU is currently in the process of issuing implementing regulations for the new pharmacovigilance framework.

Any authorization granted by member state authorities, which within three years of its granting is not followed by the actual placing on the market of the authorized product in the authorizing member state ceases to be valid. When an authorized product previously placed on the market in the authorizing member state is no longer actually present on the market for a period of three consecutive years, the authorization for that product shall cease to be valid. The same two three year periods apply to authorizations granted by the European Commission based on the centralized procedure.

Israel

In addition to regulations of other countries where we are seeking or will seek regulatory approval, Israeli government regulations will also govern the development of our product candidates.

Clinical Testing in Israel

In order to conduct clinical testing on humans in Israel, special authorization must first be obtained from the ethics committee and general manager of the institution in which the clinical studies are scheduled to be conducted, as required under the Guidelines for Clinical Trials in Human Subjects implemented pursuant to the Israeli Public Health Regulations (Clinical Trials in Human Subjects), as amended from time to time, and other applicable legislation. These regulations also require authorization from the Israel Ministry of Health, except in certain circumstances, and in the case of genetic trials, special fertility trials and similar trials, an additional authorization of the overseeing institutional ethics committee. The institutional ethics committee must, among other things, evaluate the anticipated benefits that are likely to be derived from the project to determine if it justifies the risks and inconvenience to be inflicted on the human subjects, and the committee must ensure that adequate protection exists for the rights and safety of the participants as well as the accuracy of the information gathered in the course of the clinical testing. Since we intend to perform a portion of the clinical studies on certain of our therapeutic candidates in Israel, we will be required to obtain authorization from the ethics committee and general manager of each institution in which we intend to conduct our clinical trials, and in most cases, from the Israel Ministry of Health.

Israel Ministry of Health

Israel’s Ministry of Health, which regulates medical testing, has adopted protocols that correspond, generally, to those of the FDA and the EMA, making it comparatively straightforward for studies conducted in Israel to satisfy FDA and the EMA requirements, thereby enabling medical technologies subjected to clinical trials in Israel to reach U.S. and EU commercial markets in an expedited fashion. Many members of Israel’s medical community have earned international prestige in their chosen fields of expertise and routinely collaborate, teach and lecture at leading medical centers throughout the world. Israel also has free trade agreements with the United States and the European Union.

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China

Historically the regulatory environment for the medicinal products in China has been considered a challenging one, due to:

| ● | discrepancies between national and international quality standards;

| ● | timeframes for review and approval of new drugs that is longer than in most major countries; and

| ● | a lack of capacity of the regulatory bodies that has resulted in a backlog of applications.

In August 2015, the China State Council issued “Opinions on Reforming the Review and Approval System for Drugs and Medical Devices.” The overarching intention of this initiative was to promote transformation and upgrade of the pharmaceutical industry and bring marketed products up to international standards in terms of efficacy, safety and quality, so as to better meet the public needs for drugs. For future NDAs, the CFDA requires applicants to include a clinical trial self-inspection report, which the CFDA will further review.

Review Process

In February 2016, the CFDA initiated a priority review procedure, pursuant to which the following medicinal product categories will be eligible for the priority review status:

| ● | Innovative drugs not approved anywhere worldwide;

| ● | Innovative drugs where there is a plan to transfer the manufacturing site to China;

| ● | Global clinical trial application (“CTA”) to China in parallel with the US or EU;

| ● | Innovative drugs for HIV/AIDS, viral hepatitis, rare disease(s), malignant tumors and pediatric indications; and

| ● | Newly launched generic drugs.

After the CFDA approves the priority review process request, applicants are given priority reviewer resources allocated by the Center for Drug Evaluation (“CDE”) and additional channels to communicate with and obtain quick feedback from the CDE/CFDA. Target approval time from submission is within six months.

China started to implement a pilot program MAH System in ten provinces in 2015. The MAH system will be implemented throughout China and the Drug Administration Law of China will be amended accordingly. Under such program, a research and development organization or its personnel can be an MAH. The MAH will be fully responsible for any liability with respect to the drug during the lifecycle. The parties authorized by the MAH to conduct relevant work, including research and production, will bear liability in accordance with the law and the applicable agreements. In addition, the MAH will also be required to establish a system to directly report adverse drug reactions or adverse drug events.

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CFDA has also created a new classification “new to the world”, to replace the previous “new to China” category. This is based on the global marketing authorization approval status and the location of the manufacturing sites inside or outside of China. This removes the previous definitions that were based on the specific status in China and aligns classification more closely to other regulatory agencies.

On October 10, 2017, the CFDA issued the Decision to Adjust Relevant Items concerning Imported Drug Registration (the “Imported Drug Decision”). The Imported Drug Decision implemented changes to facilitate the review and approval process for imported drugs, particularly for innovative imported drugs. Pursuant to the Imported Drug Decision, the CFDA will accept foreign clinical trial data as part of international multi-center clinical trials. In addition, the Imported Drug Decision provides that an overseas applicant intending to conduct an international multi-center clinical trial in China can simultaneously conduct a Phase I clinical trial inside and outside China, which essentially means foreign Phase I clinical trial data can be used for the approval application of imported drugs.

The Submission Policy

Previously, the CFDA required that a foreign-developed drug must be approved in another country, and then proceed to China for NDA/MAA submission. Even if there is multinational clinical trial (“MNCT”) data in China, the applicant had to wait for the Certificates of Pharmaceutical Product (“CPP”) from the US, EU or other countries, and only then could there be a second submission (submission to the CFDA to request clinical trial waiver).

Under the new policy, there is no need for the CPP. After completing the MNCT with the necessary relevant clinical study report (CSR), a sponsor can make an NDA/MAA submission to the CFDA without CPP. This means, theoretically, that the China NDA/MAA submission and approval can be in parallel with (or even precede) the foreign MAA approval. These changes more closely align China to global standards, processes and timelines and should have a substantial impact on the China local pharmaceutical market and on the global pharmaceutical industry.

This new policy is expected to have a strong positive impact on foreign-developed new drug innovators who can have a full clinical development program inside China, with significantly shortened regulatory review processes. The CFDA marketing authorization approval can be in parallel with the US, EU or any other country’s approval.

During 2017, the CFDA announced the following policies which may also positively impact the product registration process in China:

| ● | Policy on reform of clinical trial management. The CFDA will no longer accredit clinical sites with GCP. This opens clinical sites to all qualified hospitals, meaning a likely increase in the number of sites able to manage clinical trials in order to meet the need of increase of drug and medical device trials in China. The CFDA retains responsibility for site inspections.

| ● | Policy on acceleration of drug and medical device registration review process. For medicinal products indicated for serious life-threatening conditions or for significant unmet medical needs, where early or mid-stage clinical data can predict clinical benefits, the CFDA will be able to grant a conditional approval to allow early marketing in China, with a defined risk management plan and commitment to complete required clinical trial(s) based on the CFDA’s review and conclusion. China’s Ministry of Health will issue a rare disease list for China and set up a rare disease patient registration process. The orphan drug and medical device manufacturer/applicant can apply for a clinical trial waiver or an agreed decrease in trial subject numbers. For orphan drugs or medical devices that are already approved outside of China, the CFDA can issue a conditional approval to allow marketing in China, while the sponsor completes commitment for clinical trial based on the CFDA’s review and conclusion.

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In general, positive changes for China’s regulatory environment are expected to better align China with global regulatory norms by achieving the following:

| ● | Shortening the new IND and NDA review timeline. This may reverse the previous reluctance to include China in global studies or programs because of the long IND timelines.

| ● | Increasing transparency and globalization. The CFDA is encouraging foreign sponsors to undertake global studies in China and recommending that local clinical sites join global studies to help ensure clinical trial data meet the requirements needed for China and global registration.

| ● | Minimizing the drug lag. The change in the foreign drug registration process by eliminating the CPP requirement may allow the drug approval process in China to be in parallel with the US and/or the EU.

Other Countries

In addition to regulations in the United States, the EU, Israel and China, we may be subject to a variety of other regulations governing clinical trials and commercial sales and distribution of drugs in other countries. Whether or not our products receive approval from the FDA or EMA approval of such products must be obtained by the comparable regulatory authorities of countries other than the United States or European Union before we can commence clinical trials or marketing of the product in those countries. The approval process varies from country to country, and the time may be longer or shorter than that required for FDA or EMA approval. The requirements governing the conduct of clinical trials and product licensing vary greatly from country to country.

The requirements that we and our collaborators must satisfy to obtain regulatory approval by government agencies in other countries prior to commercialization of our products in such countries can be rigorous, costly and uncertain. In the European countries, Canada and Australia, regulatory requirements and approval processes are similar in principle to those in the United States. Additionally, depending on the type of drug for which approval is sought, there are currently two potential tracks for marketing approval in the European countries: mutual recognition and the centralized procedure. These review mechanisms may ultimately lead to approval in all European Union countries, but each method grants all participating countries some decision-making authority in product approval. Foreign governments also have stringent post-approval requirements including those relating to manufacture, labeling, reporting, record keeping and marketing. Failure to substantially comply with these on-going requirements could lead to government action against the product, us and/or our representatives.

Related Matters

From time to time, legislation is drafted, introduced and passed in governmental bodies that could significantly change the statutory provisions governing the approval, manufacturing and marketing of products regulated by the FDA or EMA and other applicable regulatory bodies to which we are subject. In addition, regulations and guidance are often revised or reinterpreted by the national agency in ways that may significantly affect our business and our therapeutic candidates. It is impossible to predict whether such legislative changes will be enacted, whether FDA or EMA regulations, guidance or interpretations will change, or what the impact of such changes, if any, may be. We may need to adapt our business and therapeutic candidates and products to changes that occur in the future.

Seasonality

Our business and operations are generally not affected by seasonal fluctuations or factors.

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Implications of Being an Emerging Growth Company

We qualify as an “emerging growth company” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act. As an emerging growth company, we may take advantage of specified reduced disclosure and other requirements that are otherwise applicable generally to public companies. These provisions include:

| ● | a requirement to provide only two years of audited financial statements in addition to any required unaudited interim financial statements with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure;

| ● | reduced disclosure about executive compensation arrangements;

| ● | no non-binding advisory votes on executive compensation or golden parachute arrangements; and

| ● | an exemption from the auditor attestation requirement in the assessment of internal control over financial reporting.

We may take advantage of these provisions for up to five years or such earlier time that we are no longer an emerging growth company. We would cease to be an emerging growth company on the date that is the earliest of (i) the last day of the fiscal year in which we had total annual gross revenues of $1.07 billion or more; (ii) the last day of our fiscal year following the fifth anniversary of the date of the completion of our initial public offering; (iii) the date on which we had issued more than $1 billion in nonconvertible debt during the previous three years; or (iv) the date on which we are deemed to be a large accelerated filer under the rules of the SEC.

To the extent that we continue to qualify as a “smaller reporting company,” as such term is defined in Rule 12b-2 under the Exchange Act, after we cease to qualify as an emerging growth company, certain of the exemptions available to us as an emerging growth company may continue to be available to us as a smaller reporting company, including: (1) not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes Oxley Act; (2) scaled executive compensation disclosures; and (3) the requirement to provide only two years of audited financial statements, instead of three years.

Employees

We currently have one full time employee, Or Eisenberg, our Acting Chief Executive Officer and Chief Financial Officer, and one part time employee. In addition, we engage certain outside consultants that are, in general, compensated on an hourly basis, with compensation taking the form of both cash and share-based payment.

ITEM 1A. RISK FACTORS.

RISK FACTORS

An investment in our securities involves a high degree of risk. You should consider carefully the following information about these risks, together with the other information contained in this Annual Report, including the matters addressed in the section entitled “CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS,” beginning on page ii of this report, before making an investment decision. Our business, prospects, financial condition, and results of operations may be materially and adversely affected as a result of any of the following risks. The value of our securities could decline as a result of any of these risks. You could lose all or part of your investment in our securities. Some of the statements in “RISK FACTORS” are forward-looking statements. The following risk factors are not the only risk factors facing our company. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business, prospects, financial condition, and results of operations and it is not possible to predict all risk factors, nor can we assess the impact of all factors on us or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in or implied by any forward-looking statements.

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Risks Related to our Business

We have incurred operating losses since our inception and anticipate that we will continue to incur substantial operating losses for the foreseeable future.

We are a clinical-stage biopharmaceutical company currently focused on the treatment of ophthalmic disorders, including DES. We have in-licensed certain rights to LO2A, a drug developed for the treatment of DES, and other ophthalmological illnesses, including CCH and Sjögren’s. Since April 2015, we have been financing our operations through numerous financing activities, including the issuance of ordinary shares and from loans from Ridge Valley Corporation (“Ridge”) and Rimon Gold Assets Ltd. (“Rimon Gold”) and from third parties. We have historically incurred net losses, including net losses of approximately $3.28 million and $2.97 million for the years ended December 31, 2018 and 2017, respectively. At December 31, 2018, we had an accumulated deficit of approximately $30.1 million. We do not know whether or when we will become profitable. To date, we have not commercialized any products or generated any material revenues from product sales and accordingly we do not have a revenue stream to support our cost structure. Our losses have resulted principally from costs incurred in development and discovery activities as well as from certain financial expenses related mainly to convertible loans. We expect to continue to incur losses for the foreseeable future, and these losses will likely increase as we:

| ● | initiate and manage pre-clinical development and clinical trials for LO2A;

| ● | seek regulatory approvals for LO2A;

| ● | implement internal systems and infrastructures;

| ● | seek to license additional technologies to develop;

| ● | pay royalties and other payments related to the LO2A License Agreement;

| ● | hire management and other personnel; and

| ● | move towards commercialization.

No certainty exists that we will be able to complete the development of LO2A for CCH, Sjögren’s or any other ophthalmic disorder, due to financial, technological or other difficulties. If LO2A fails in clinical trials or does not gain regulatory clearance or approval, or if LO2A does not achieve market acceptance, we may never become profitable. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our inability to achieve and then maintain profitability would negatively affect our business, financial condition, results of operations and cash flows. Moreover, our prospects must be considered in light of the risks and uncertainties encountered by an early-stage company and in highly regulated and competitive markets, such as the biopharmaceutical market, where regulatory approval and market acceptance of our products are uncertain. There can be no assurance that our efforts will ultimately be successful or result in revenues or profits.

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We have substantial debt which may adversely affect us by limiting future sources of financing, interfering with our ability to pay interest and principal on the Convertible Loans and subjecting us to additional risks.

We have a significant amount of indebtedness. As of December 31, 2018, we had a total of $1.48 million of loans (principal and interest) outstanding under Convertible Loans, of which (1) Ridge extended a principal amount of $0.27 million, (2) Rimon Gold extended a principal amount of $0.8 million, and (3) Fisher extended a principal amount of $0.27 million. If we incur additional indebtedness to our current indebtedness levels, including other short or long-term credit facilities, the related risks that we now face could increase. For more information relating to the Convertible Loans and the agreements relating thereto, please see “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,” beginning on page 60 of this report.

Our substantial debt could have important consequences, including:

| ● | making it more difficult for us to satisfy our obligations with respect to the Convertible Loans and other obligations;

| ● | limiting our ability to obtain additional financing on satisfactory terms and to otherwise fund working capital, capital expenditures, and other general corporate requirements;

| ● | our ability to adjust to changing market conditions;

| ● | increasing our vulnerability to general adverse economic and industry conditions;

| ● | placing us at a competitive disadvantage compared to our competitors that have no debt or are less leveraged;

| ● | limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and

| ● | restricting us from making strategic acquisitions or exploiting business opportunities.

Our assets are subject to security interests in favor of Rimon Gold. Our failure to repay the Convertible Loans, if required, could result in legal action against us, which could require the sale of all of our assets.

In order to secure our obligations and performance pursuant to the Convertible Loans from Rimon Gold, we recorded a first priority fixed charge in favor of Rimon Gold on all of our rights, including our distribution rights, under the LO2A License Agreement, and a first priority floating charge on all of our rights, title and interest in all of our assets, as exist from time to time. If we are unable to repay the Convertible Loans from Rimon Gold when due, Rimon Gold could foreclose on our assets in order to recover the amounts due. Any such action would require us to curtail or cease operations.

The Convertible Loans contain restrictive covenants that may limit our corporate activities, which could have an adverse effect on our financial condition and results of operations.

We delivered to Rimon Gold an Irrevocable Guaranty and Undertaking (the “Wize Guaranty”) pursuant to which we irrevocably guarantee Wize Israel’s obligations to Rimon Gold under the Convertible Loans. The Wize Guaranty contains a number of restrictive covenants that limit our operating flexibility. Furthermore, the Convertible Loans (including the Security Agreements associated therewith) contain a number of undertakings and restrictive covenants that, until the full repayment of such loans (including by way of conversion into our shares), limit our operating and financial flexibility. The covenants in the Convertible Loans (including the Security Agreements associated therewith) and the Wize Guaranty include, among other things, limitations on the creations of liens; on the incurrence of indebtedness; on dispositions of assets, mergers, acquisitions and change of control transactions; on changes in the general nature of our business; and on the distribution of dividends. Such obligations may hinder our future operations or the manner in which we operate our business, which could have a material adverse effect on our business, financial condition or results of operations. These restrictions could also limit our ability to plan for or react to market conditions or meet extraordinary capital needs or otherwise restrict corporate activities. These provisions, when taken as a whole, may also have the effect of making an acquisition of us more difficult and, consequently, also cause our shares to trade at prices below the price for which third parties might be willing to pay to gain control of us.

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As a result of the restrictions in the Convertible Loans (including the Security Agreements associated therewith) and the Wize Guaranty, or similar restrictions in our future financing arrangements, we may need to seek permission from our lenders in order to engage in certain corporate actions. Our lenders’ interests may be different from ours and we may not be able to obtain their permission when needed or at all. This may prevent us from taking actions that we believe are in our best interest, which may adversely impact our revenues, results of operations and financial condition.

We will need to raise additional capital to meet our business requirements in the future, and such capital raising may be costly or difficult to obtain and will dilute current stockholders’ ownership interests.

The sources of financing at our disposal are estimated by our management to be currently insufficient (i) to conduct our ongoing business for the next 12 months, (ii) to conduct any future clinical trials, and (iii) for LO2A’s commercial production and marketing. No certainty exists that we will be able to secure the additional sources of finance we need to perform the advanced and necessary stages of receiving regulatory approvals for marketing and distributing our products, including the costs derived from performing clinical trials and the requirements of the regulatory authorities. The lack of satisfactory means of financing may bring our business activity to a halt. As of December 31, 2018, we had cash and cash equivalents of approximately $3.18 million. We have expended and believe that we will continue to expend substantial resources for the foreseeable future developing LO2A. These expenditures will include costs associated with research and development, manufacturing, conducting clinical trials, as well as commercializing any products approved for sale. Because the outcome of our planned and anticipated clinical trials is highly uncertain, we cannot reasonably estimate the actual amounts necessary to successfully complete the development and commercialization of LO2A. In addition, other unanticipated costs may arise. As a result of these and other factors currently unknown to us, we will require additional funds, through public or private equity or debt financings or other sources, such as strategic partnerships and alliances and licensing arrangements. In addition, we may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans.

Our future capital requirements will depend on many factors, including the progress and results of our clinical trials, the duration and cost of discovery and preclinical development, and laboratory testing and clinical trials of LO2A, the timing and outcome of regulatory review of LO2A, the number and development requirements of other product candidates that we pursue, if any, and the costs of activities, such as product marketing, sales, and distribution. Because of the numerous risks and uncertainties associated with the development and commercialization of LO2A, we are unable to estimate the amounts of increased capital outlays and operating expenditures associated with our anticipated clinical trials.

Our future capital requirements depend on many factors, including:

| ● | the need to service debt obligations under the Convertible Loans;

| ● | any payments to be made to Resdevco under the LO2A License Agreement;

| ● | the failure to obtain regulatory approval or achieve commercial success of LO2A;

| ● | the results of our preclinical studies and clinical trials for any future earlier stage product candidate, and any decisions to initiate clinical trials if supported by the preclinical results;

| ● | the costs, timing and outcome of regulatory review of LO2A that progress to clinical trials;

| ● | the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our issued patents and defending intellectual property-related claims;

| ● | the cost of commercialization activities if any LO2A is approved for sale for a particular indication, including marketing, sales and distribution costs;

| ● | the cost of manufacturing LO2A;

| ● | the timing, receipt and amount of sales of, or royalties on, our future products, if any;

| ● | the expenses needed to attract and retain skilled personnel;

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| ● | any product liability or other lawsuits related to our products;

| ● | the extent to which we acquire or invest in businesses, products or technologies and other strategic relationships; and

| ● | the costs of financing unanticipated working capital requirements and responding to competitive pressures.

Additional funds may not be available when we need them, on terms that are acceptable to us, or at all. If adequate funds are not available to us on a timely basis, we may be required to delay, limit, reduce or terminate preclinical studies, clinical trials or other research and development activities for LO2A or delay, limit, reduce or terminate our establishment of sales and marketing capabilities or other activities that may be necessary to commercialize LO2A.

We may incur substantial costs in pursuing future capital financing, including investment banking fees, legal fees, accounting fees, securities law compliance fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we issue, such as convertible notes and warrants, which may adversely impact our financial condition.

According to management estimates, liquidity resources as of December 31, 2018 will not be sufficient to maintain our operations for the next twelve months which raises substantial doubt regarding our ability to continue as a going concern. If we do not continue as a going concern, investors could lose their entire investment.

According to management estimates, liquidity resources as of December 31, 2018, will not be sufficient to maintain our operations for the next 12 months. Our inability to raise funds to conduct our research and development activities may have a severe negative impact on our ability to remain a viable company. These conditions raise substantial doubt about our ability to continue as a going concern. As such, the report of our independent registered public accounting firm on our audited financial statements as of and for the year ended December 31, 2018 contains an emphasis of matter paragraph regarding substantial doubt about our ability to continue as a going concern. This emphasis of matter paragraph could materially limit our ability to raise additional funds through the issuance of debt or equity securities or otherwise. Future reports on our annual financial statements may include an emphasis of matter paragraph with respect to our ability to continue as a going concern.

If we fail to obtain necessary funds for our operations, we will be unable to maintain and improve our licensed technology, and we will be unable to develop and commercialize LO2A.

Our present and future capital requirements depend on many factors, including:

| ● | the level of research and development investment required to develop LO2A;

| ● | the costs of obtaining or manufacturing LO2A for research and development and testing;

| ● | the results of preclinical and clinical testing, which can be unpredictable in drug development;

| ● | changes in drug development plans needed to address any difficulties that may arise in manufacturing, preclinical activities or clinical studies;

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| ● | our ability and willingness to enter into new agreements with strategic partners and the terms of these agreements;

| ● | our success rate in preclinical and clinical efforts associated with milestones and royalties;

| ● | the costs of investigating patents that might block us from developing potential product candidates;

| ● | the costs of recruiting and retaining qualified personnel;

| ● | the time and costs involved in obtaining regulatory approvals;

| ● | our revenues, if any;

| ● | the costs of filing, prosecuting, defending and enforcing patent claims and other intellectual property rights; and

| ● | our need or decision to acquire or license complementary technologies or new platform or product candidate targets.

If we are unable to obtain the funds necessary for our operations, we will be unable to maintain and improve our licensed technology, and we will be unable to develop and commercialize our products and technologies, which would materially and adversely affect our business, liquidity and results of operations.

Potential administrative enforcement proceedings may have an adverse effect on our business and financial condition.

To our knowledge, the Israel Securities Authority (the “ISA”) is conducting an administrative inquiry regarding Wize Israel’s public reports with the ISA in Israel regarding its applicable regulatory path necessary for the marketing of LO2A for the treatment of DES in the United States. As part of the inquiry, the ISA requested Wize Israel to provide certain documentation and has also questioned its officers with respect to such reports. Wize Israel and its officers cooperated with the ISA and, at the ISA’s request, Wize Israel also publicly filed a supplemental report to provide additional information in connection with the said regulatory path and marketing plans, which we believe contained all the required information. In October 2018, the Company was informed that the ISA intends to commence administrative enforcement proceedings against Wize Israel, the Company’s former Chairman and the Company’s Chief Executive Officer in connection with the foregoing reports, pending a hearing with the ISA staff. The hearing with the ISA staff was recently held and the ISA is expected to inform the Company in the near future whether it intends to pursue such administrative enforcement proceedings. As of the date of this report, it is uncertain whether such inquiry will lead to any administrative enforcement proceedings by the ISA, if at all. In the event the ISA commences enforcement proceedings against Wize Israel or its office holders, this could result, among other things, in financial sanctions against Wize Israel or its office holders, which can adversely effect our business and financial condition.

We and our joint venture partner Cannabics may not be able to agree on a business plan by June 30, 2019, causing our joint venture to terminate, or, even if we do agree on a business plan, we may not be able to successfully operate the joint venture.

On February 7, 2019, we entered into a joint venture agreement with Cannabics, which became effective on March 1, 2019. Pursuant to the agreement, we agreed to form a new joint venture company for the purpose of researching, developing and administering cannabinoid formulations to treat ophthalmic conditions across a range of disease and illness categories. The joint venture will pursue therapeutic pathways with cannabinoids, supported by a growing body of research that we believe indicates cannabinoid-based therapies have the potential to address significant unmet medical needs in the market. According to the terms of our joint venture agreement, if the joint venture’s business plan is not approved by the Company and Cannabics by June 30, 2019, the joint venture agreement will then expire. Further, even if we and Cannabics agree on a business plan, there is no guarantee that we will be able to successfully operate the joint venture, which could adversely effect our business and financial condition.

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Risks Related to our Business and Regulatory Matters

We have not yet commercialized LO2A, and may never become profitable.

Although LO2A is approved for sale for certain indications in a limited number of jurisdictions, we have not yet commenced commercialization of LO2A, and may never be able to do so other than with respect to the entry into of distribution agreements in Israel, which are not expected to result in material revenues. Our activity is influenced by the policies of regulatory authorities. Changes and developments in regulatory requirements or our failure to meet such requirements may lead to restrictions or delays in developing LO2A and cause material expenses for us. We do not know when or if we will complete any of our product development efforts of LO2A, obtain regulatory approval for any future product candidates incorporating our technologies or successfully commercialize any approved products. Even if we are successful in developing LO2A that is approved for marketing, we will not be successful unless these products gain market acceptance for appropriate indications at favorable reimbursement rates. The degree of market acceptance of these products will depend on a number of factors, including:

| ● | the timing of regulatory approvals in the countries, and for the uses, we seek;

| ● | the competitive environment;

| ● | the establishment and demonstration in the medical community of the safety and clinical efficacy of LO2A and its potential advantages over existing therapeutic products;

| ● | our ability to enter into strategic agreements with pharmaceutical and biotechnology companies with strong marketing and sales capabilities;

| ● | the adequacy and success of distribution, sales and marketing efforts; and

| ● | the pricing and reimbursement policies of government and third-party payors, such as insurance companies, health maintenance organizations and other plan administrators.

Physicians, patients, thirty-party payors or the medical community in general may be unwilling to accept, utilize or recommend, and in the case of third-party payors, cover any of our products or products incorporating our technologies. As a result, we are unable to predict the extent of future losses or the time required to achieve profitability, if at all. Even if we successfully develop one or more products that incorporate our technologies, we may not become profitable.

Our current pipeline is based on a single compound, LO2A. Failure to develop LO2A will have a material adverse effect on us.

In August 2016, we commenced the Multi-Center Trial. As of March 26, 2018, the Multi-Center Trial had already enrolled all the planned 62 patients, with the treatment time for each patient being three months. On October 26, 2017, Wize Israel announced the termination of the Single Center Trial. In March 2018, we enrolled our first patient in the Phase IV Study. We currently do not have sufficient funds to complete the Phase IV Study.

LO2A is at various stages of clinical development and may never be commercialized for the indications in the territories that we presently have rights under the LO2A License Agreement. The progress and results of any future clinical trials are uncertain, and the failure of LO2A to receive regulatory approvals will have a material adverse effect on our business, operating results and financial condition to the extent we are unable to commercialize LO2A. In addition, we face the risks of failure inherent in developing therapeutic products.

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Furthermore, LO2A must satisfy rigorous standards of safety and efficacy before it can be approved by the U.S. Food and Drug Administration (the “FDA”), and any applicable foreign regulatory authorities for commercial use. The FDA and foreign regulatory authorities have full discretion over this approval process. We will need to conduct significant additional research, involving testing in animals and in humans, before we can file applications for product approval. Typically, in the pharmaceutical industry, there is a high rate of attrition for product candidates in pre-clinical testing and clinical trials. Also, satisfying regulatory requirements typically takes many years, is dependent upon the type, complexity and novelty of the product and requires the expenditure of substantial resources. In addition, delays or rejections may be encountered based upon additional government regulation, including any changes in FDA policy, during the process of product development, clinical trials and regulatory reviews.

In order to receive FDA approval or approval from foreign regulatory authorities to market a product candidate, we must demonstrate through pre-clinical testing and through human clinical trials that the product candidate is safe and effective for its intended uses (e.g., treatment of a specific condition in a specific way subject to contradictions and other limitations). Even if we comply with all FDA requests, the FDA may ultimately reject one or more of our new drug applications (“NDA”) or grant approval for a narrowly intended use that is not commercially feasible. We might not obtain regulatory approval for LO2A in a timely manner, if at all. Failure to obtain FDA approval for LO2A in a timely manner or at all will severely undermine our business by reducing the number of salable products and, therefore, corresponding product revenues.

Results of earlier clinical trials may not be predictive of the results of later-stage clinical trials.

The results of preclinical studies and early clinical trials of product candidates may not be predictive of the results of later-stage clinical trials. Product candidates in later stages of clinical trials may fail to show the desired safety and efficacy results despite having progressed through preclinical studies and initial clinical trials. Many companies in the pharmaceutical industry have suffered significant setbacks in advanced clinical trials due to adverse safety profiles or lack of efficacy, notwithstanding promising results in earlier studies. Any delay in, or termination or suspension of, our clinical trials will delay the requisite filings with the FDA or any applicable foreign regulatory authority and, ultimately, our ability to commercialize LO2A and generate product revenues. If the clinical trials do not support our product claims, the completion of development of such product candidates may be significantly delayed or abandoned, which will significantly impair our ability to generate product revenues and will materially adversely affect our results of operations.

This drug candidate development risk is heightened by any changes in the planned clinical trials compared to the completed clinical trials. As product candidates are developed from preclinical through early to late stage clinical trials towards approval and commercialization, it is customary that various aspects of the development program, such as manufacturing and methods of administration, are altered along the way in an effort to optimize processes and results. While these types of changes are common and are intended to optimize the product candidates for late stage clinical trials, approval and commercialization, such changes do carry the risk that they will not achieve these intended objectives.

Changes in our clinical trials or future clinical trials could cause LO2A or any future product candidate to perform differently, including causing toxicities, which could delay completion of our clinical trials, delay approval of our product candidates, and/or jeopardize our ability to commence product sales and generate revenues.

We might be unable to develop LO2A that will achieve commercial success in a timely and cost-effective manner, or ever.

Even if regulatory authorities approve LO2A for the indications in the territories that we presently have rights under the LO2A License Agreement, they may not be commercially successful. LO2A may not be commercially successful because government agencies and other third-party payors may not cover the product or the coverage may be too limited to be commercially successful; physicians and others may not use or recommend our products, even following regulatory approval. A product approval, assuming one issues, may limit the uses for which the product may be distributed thereby adversely affecting the commercial viability of the product. Third parties may develop superior products or have proprietary rights that preclude us from marketing our products. Patient acceptance of and demand for LO2A for which we obtain regulatory approval or license will depend largely on many factors, including but not limited to the extent, if any, of reimbursement of costs by government agencies and other third-party payors, pricing, the effectiveness of our marketing and distribution efforts, the safety and effectiveness of alternative products, and the prevalence and severity of side effects associated with our products. If physicians, government agencies and other third-party payors do not accept our products, we will not be able to generate significant revenue.

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Clinical trials are very expensive, time-consuming and difficult to design and implement, and, as a result, we may suffer delays or suspensions in future trials which would have a material adverse effect on our ability to generate revenues.

Human clinical trials are very expensive and difficult to design and implement, in part because they are subject to rigorous regulatory requirements. Regulatory authorities, such as the FDA, may preclude clinical trials from proceeding. Additionally, the clinical trial process is time-consuming, failure can occur at any stage of the trials, and we may encounter problems that cause us to abandon or repeat clinical trials.

For example, in October 2017, we terminated our Single Center Trial. The Single Center Trial was a Phase II, randomized, double-blind, placebo-controlled, pilot study carried out in parallel groups that was intended to evaluate the safety and efficacy of LO2A for patients suffering from moderate to severe CCH, with Wize Israel having sole access to the trial data. On October 24, 2017, Wize Israel received notice from the CRO that manages and supervises Wize Israel’s clinical trials, that an inadequate amount of quality information may be derived from the results collected thus far, given that there is no correlation in the reaction of both eyes to LO2A, in contrast to professional literature and other trials. In addition, the recruitment rate of patients was less than required and there was a higher than expected dropout rate. In light of the above, the CRO concluded that the results of the trial would be of no use even if the trial continued until the end of its term. Based on the CRO’s conclusion, Wize Israel determined to terminate the trial and to save the future costs that would be incurred in connection with such trial. For the avoidance of doubt, this does not impact the Multi-Center Trial.

The commencement and completion of clinical trials may be delayed by several factors, including:

| ● | unforeseen safety issues;

| ● | determination of dosing issues;

| ● | lack of effectiveness or efficacy during clinical trials;

| ● | failure of third party suppliers to perform final manufacturing steps for the drug substance;

| ● | slower than expected rates of patient recruitment and enrollment;

| ● | lack of healthy volunteers and patients to conduct trials;

| ● | inability to monitor patients adequately during or after treatment;

| ● | failure of third party contract research organizations to properly implement or monitor the clinical trial protocols;

| ● | failure of institutional review boards to approve our clinical trial protocols;

| ● | inability or unwillingness of medical investigators and institutional review boards to follow our clinical trial protocols; and

| ● | lack of sufficient funding to finance the clinical trials.

We have experienced the risks involved with conducting clinical trials, including but not limited to, increased expense and delay and failure to meet end points of the trial.

In addition, we or regulatory authorities may suspend our clinical trials at any time if it appears that we are exposing participants to unacceptable health risks or if the regulatory authorities find deficiencies in our regulatory submissions or the conduct of these trials. Any suspension of clinical trials will delay possible regulatory approval, if any, and adversely impact our ability to develop products and generate revenue.

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If we acquire or license additional technology or product candidates, we may incur a number of costs, may have integration difficulties and may experience other risks that could harm our business and results of operations.

We may acquire and license additional product candidates and technologies. Any product candidate or technology we license from others or acquire will likely require additional development efforts prior to commercial sale, including extensive pre-clinical or clinical testing, or both, and approval by the FDA and applicable foreign regulatory authorities, if any. All product candidates are prone to risks of failure inherent in pharmaceutical product development, including the possibility that the product candidate or product developed based on licensed technology will not be shown to be sufficiently safe and effective for approval by regulatory authorities. In addition, we cannot assure you that any product candidate that we develop based on acquired or licensed technology that is granted regulatory approval will be manufactured or produced economically, successfully commercialized or widely accepted in the marketplace. Moreover, integrating any newly acquired product candidates could be expensive and time-consuming. If we cannot effectively manage these aspects of our business strategy, our business may not succeed.

If any third party upon whom we rely to manufacture LO2A is unable to timely manufacture LO2A in compliance with current Good Manufacturing Practices (“cGMP”) and other regulations our business will be harmed.

We do not currently have the ability to manufacture the compounds that we need to conduct our clinical trials and, therefore, rely upon, and intend to continue to rely upon, a certain contract manufacturer to produce and supply LO2A (including the active pharmaceutical ingredients, or APIs) for use in clinical trials and for future sales. If such manufacturer is unable to manufacture the compounds in a timely fashion or in compliance with current cGMP and other applicable regulations or if there is a strain on the relationship with such manufacturer, our clinical development programs may be delayed which could have a detrimental effect on our business.

The manufacture of LO2A is a chemical synthesis process and if our manufacturer encounters problems manufacturing LO2A, our business could suffer.

Regulators throughout the world, including the FDA, require manufacturers to register manufacturing facilities. Such regulators also inspect these facilities to confirm compliance with requirements that such regulators establish. We have engaged a contract manufacturer to produce and supply LO2A and such third party manufacturer may face manufacturing or quality control problems causing product production and shipment delays or a situation where such manufacturer may not be able to maintain compliance with the applicable regulators’ requirements necessary to continue manufacturing LO2A. In addition, drug manufacturers may be subject to ongoing periodic unannounced inspections by regulators to ensure strict compliance with requirements and other regulations and applicable standards. Any failure to comply with such requirements could adversely affect our clinical research activities and our ability to market and develop LO2A.

We do not currently have sales, marketing or distribution capabilities or experience, and are unable to effectively sell, market or distribute LO2A now and do not expect to be able to do so in the future. The failure to enter into agreements with third parties that are capable of performing these functions would have a material adverse effect on our business and results of operations.

We intend to enter into agreements with pharmaceutical companies and distributors with relevant marketing capabilities in the field of pharmaceuticals in order to use them to sell LO2A in countries around the world where we hold rights to sell LO2A. To date, we have entered into two distribution agreements and one additional framework agreement to market LO2A for DES only. We do not currently have and do not expect to develop our own sales, marketing and distribution capabilities. If we are unable to enter into agreements with third parties to perform these functions, we will not be able to successfully market LO2A. In order to successfully market LO2A, we must make arrangements with third parties to perform these services.

As we do not intend to develop a marketing and sales force with technical expertise and supporting distribution capabilities, we will be unable to market LO2A directly. To promote any of our potential products through third parties, we will have to locate acceptable third parties for these functions and enter into agreements with them on acceptable terms, and may not be able to do so. Any third-party arrangements we are able to enter into may result in lower revenues than we could achieve by directly marketing and selling our potential products. In addition, to the extent that we depend on third parties for marketing and distribution, any revenues we receive will depend upon the efforts of such third parties, as well as the terms of our agreements with such third parties, which cannot be predicted in most cases at this time. As a result, we might not be able to market and sell LO2A in the United States or overseas, which would have a material adverse effect on our business.

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We face significant competition and continuous technological change, and developments by competitors may render our products or technologies obsolete or non-competitive. If we cannot successfully compete with new or existing products, our marketing and sales will suffer and may not ever be profitable.

We are active in a competitive market. The fierce competition in the field and the introduction of new competitors to the field may negatively impact our monetary results. We will compete against fully integrated pharmaceutical and biotechnology companies and smaller companies that are collaborating with larger pharmaceutical companies, academic institutions, government agencies and other public and private research organizations. In addition, many of these competitors, either alone or together with their collaborative partners, operate larger research and development programs than ours, and have substantially greater financial resources, as well as significantly greater experience in:

| ● | developing drugs;

| ● | undertaking pre-clinical testing and human clinical trials;

| ● | obtaining FDA, addressing various regulatory matters and other regulatory approvals of drugs;

| ● | formulating and manufacturing drugs; and

| ● | launching, marketing and selling drugs.

If our competitors develop and commercialize products faster, or develop and commercialize products that are superior to LO2A, our commercial opportunities will be reduced or eliminated. The extent to which LO2A achieves market acceptance will depend on competitive factors, many of which are beyond our control. Competition in the biotechnology and biopharmaceutical industry is intense and has been accentuated by the rapid pace of technology development. Our competitors include large integrated pharmaceutical companies, biotechnology companies that currently have drug and target discovery efforts, universities, and public and private research institutions. Almost all of these entities have substantially greater research and development capabilities and financial, scientific, manufacturing, marketing and sales resources than us. These organizations also compete with us to:

| ● | attract parties for acquisitions, joint ventures or other collaborations;

| ● | license proprietary technology that is competitive with the technology we are developing;

| ● | attract funding; and

| ● | attract and hire scientific talent and other qualified personnel.

Our competitors may succeed in developing and commercializing products earlier and obtaining regulatory approvals from the FDA and other foreign regulatory authorities more rapidly. Our competitors may also develop products or technologies that are superior to those we are developing, and render LO2A or any future product candidate or technology obsolete or non-competitive. If we cannot successfully compete with new or existing products, our marketing and sales will suffer and may never be profitable.

We may suffer losses from product liability claims if LO2A causes harm to patients.

LO2A could cause adverse events. There is also a risk that certain adverse events may not be observed in clinical trials, but may nonetheless occur in the future. If any of these adverse events occur, they may render LO2A ineffective or harmful in some patients, and our sales would suffer, materially adversely affecting our business, financial condition and results of operations.

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The clinical trials we carry out are with an insurance policy that allows the trials to be conducted. Accordingly, it is uncertain whether we will be able to complete our receipt of the regulatory approvals for marketing the drug. Furthermore, it is uncertain whether indemnification will be provided by the insurance companies. In addition, potential adverse events caused by LO2A could lead to product liability lawsuits. If product liability lawsuits are successfully brought against us, we may incur substantial liabilities and may be required to limit the marketing and commercialization of LO2A. Our business is exposed to potential product liability risks, which are inherent in the testing, manufacturing, marketing and sale of pharmaceutical products. We may not be able to avoid product liability claims. Product liability insurance for the pharmaceutical and biotechnology industries is generally expensive, if available at all. If, at any time, we are unable to obtain sufficient insurance coverage on reasonable terms or to otherwise protect against potential product liability claims, we may be unable to clinically test, market or commercialize LO2A. A successful product liability claim brought against us in excess of our insurance coverage, if any, may cause us to incur substantial liabilities, and, as a result, our business, liquidity and results of operations would be materially adversely affected.

LO2A will remain subject to ongoing regulatory requirements even if it receives marketing approval, and if we fail to comply with these requirements, we could lose these approvals, and the sales of any approved commercial products could be suspended.

Even if we receive regulatory approval to market LO2A, the product will remain subject to extensive regulatory requirements, including requirements relating to manufacturing, labeling, packaging, adverse event reporting, storage, advertising, promotion, distribution and recordkeeping. Even if regulatory approval of a product is granted, the approval may be subject to limitations on the uses for which the product may be marketed or the conditions of approval, or may contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the product, which could negatively impact us or our collaboration partners by reducing revenues or increasing expenses, and cause the approved product candidate not to be commercially viable. In addition, as clinical experience with a drug expands after approval, typically because it is used by a greater number and more diverse group of patients after approval than during clinical trials, side effects and other problems may be observed after approval that were not seen or anticipated during pre-approval clinical trials or other studies. Any adverse effects observed after the approval and marketing of a product candidate could result in limitations on the use of or withdrawal of any approved products from the marketplace. Absence of long-term safety data may also limit the approved uses of our products, if any. If we fail to comply with the regulatory requirements of the FDA and other applicable U.S. and foreign regulatory authorities, or previously unknown problems with any approved commercial products, manufacturers or manufacturing processes are discovered, we could be subject to administrative or judicially imposed sanctions or other setbacks, including the following:

| ● | restrictions on the products, manufacturers or manufacturing process;

| ● | warning letters;

| ● | civil or criminal penalties, fines and injunctions;

| ● | product seizures or detentions;

| ● | import or export bans or restrictions;

| ● | voluntary or mandatory product recalls and related publicity requirements;

| ● | suspension or withdrawal of regulatory approvals;

| ● | total or partial suspension of production; and

| ● | refusal to approve pending applications for marketing approval of new products or supplements to approved applications.

If we or our collaborators are slow or unable to adapt to changes in existing regulatory requirements or adoption of new regulatory requirements or policies, marketing approval for LO2A may be lost or cease to be achievable, resulting in decreased revenue from milestones, product sales or royalties, which would have a material adverse effect on our results of operations.

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We rely significantly on information technology and any failure, inadequacy, interruption or security lapse of that technology, including any cybersecurity incidents, could harm our ability to operate our business effectively.

Despite the implementation of security measures, our internal computer systems and those of third parties with which we contract are vulnerable to damage from cyber-attacks, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. System failures, accidents or security breaches could cause interruptions in our operations, and could result in a material disruption of our clinical activities and business operations, in addition to possibly requiring substantial expenditures of resources to remedy. The loss of clinical trial data could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and our research and development programs and the development of LO2A could be delayed.

We may encounter difficulties in managing our growth. Failure to manage our growth effectively will have a material adverse effect on our business, results of operations and financial condition.

We may not be able to successfully grow and expand. Successful implementation of our business plan will require management of growth, including potentially rapid and substantial growth, which will result in an increase in the level of responsibility for management personnel and place a strain on our human and capital resources. To manage growth effectively, we will be required to continue to implement and improve our operating and financial systems and controls to expand, train and manage our employee base. Our ability to manage our operations and growth effectively requires us to continue to expend funds to enhance our operational, financial and management controls, reporting systems and procedures and to attract and retain sufficient numbers of talented personnel. If we are unable to scale up and implement improvements to our control systems in an efficient or timely manner, or if we encounter deficiencies in existing systems and controls, then we will not be able to make available the products required to successfully commercialize our technology. Failure to attract and retain sufficient numbers of talented personnel will further strain our human resources and could impede our growth or result in ineffective growth. Moreover, the management, systems and controls currently in place or to be implemented may not be adequate for such growth, and the steps taken to hire personnel and to improve such systems and controls might not be sufficient. If we are unable to manage our growth effectively, it will have a material adverse effect on our business, results of operations and financial condition.

If we are unable to obtain adequate insurance, our financial condition could be adversely affected in the event of uninsured or inadequately insured loss or damage. Our ability to effectively recruit and retain qualified officers and directors could also be adversely affected if we experience difficulty in obtaining adequate directors’ and officers’ liability insurance.

We may not be able to obtain insurance policies on terms affordable that would adequately insure our business and property against damage, loss or claims by third parties. To the extent our business or property suffers any damages, losses or claims by third parties, which are not covered or adequately covered by insurance, our financial condition may be materially adversely affected.

We may be unable to maintain sufficient insurance as a public company to cover liability claims made against our officers and directors. If we are unable to adequately insure our officers and directors, we may not be able to retain or recruit qualified officers and directors to manage our business.

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Risks Related to our Intellectual Property

Our ability to pursue the purchase, marketing, sale and distribution of LO2A depends upon the continuation of the LO2A License Agreement.

We do not own LO2A. We have entered into the LO2A License Agreement with Resdevco to license certain rights to LO2A (see “BUSINESS — LO2A License Agreement,” beginning on page 8 of this report). The LO2A License Agreement requires us to, among other things, make certain minimum royalty payments to Resdevco and meet certain regulatory milestones. If we do not meet our obligations under the LO2A License Agreement in a timely manner, or if we otherwise breach the terms of the LO2A License Agreement, Resdevco could terminate the LO2A License Agreement and we would lose the rights to LO2A. From time to time, in the ordinary course of business, we may have disagreements with Resdevco regarding the terms of the LO2A License Agreement or ownership of proprietary rights, which could lead to delays in the research, development, collaboration and commercialization of LO2A, or could require or result in litigation or arbitration, which could be time-consuming and expensive. If the LO2A License Agreement is terminated, it would have a material adverse effect on our business, prospects and results of operations.

Our inability to expand our rights under the LO2A License Agreement may have a detrimental effect on our business.

Pursuant to the LO2A License Agreement, we have (i) the right to add additional territories in the future, subject to a commitment by us to pay minimum royalties, (ii) the right to purchase Resdevco’s agreements with its existing distributors of LO2A in other jurisdictions, subject to the payment by us of the amount set forth in the LO2A License Agreement, and (iii) a right of first negotiation with potential distributors to whom Resdevco may in the future grant distribution rights to LO2A in certain territories, subject to the payment by us of certain minimum royalties. The LO2A License Agreement historically included an option for us to purchase from Resdevco all remaining territories for a fixed amount and such option was cancelled on March 30, 2017.

Our ability to exercise our rights mentioned above and to expand our business is subject to us having sufficient cash resources to make the applicable payments to Resdevco. If we do not have sufficient cash resources to make such payments, we will not be able to exercise our expansion rights under the LO2A License Agreement and our business may suffer.

The failure to obtain or maintain patents and other intellectual property could impact our ability to compete effectively.

Our success, competitive position, and future revenues, if any, depend in part on our ability to obtain and successfully leverage intellectual property covering LO2A, know-how, methods, processes, and other technologies, to protect our trade secrets, to prevent others from using our intellectual property and to operate without infringing the intellectual property rights of third parties.

The risks and uncertainties that we face with respect to our intellectual property rights include, but are not limited to, the following:

| ● | while any patents that we license under the LO2A License Agreement have been issued, their scope of protection is limited to the CCH indication in the United States;

| ● | we may not obtain rights from Resdevco to any further patents or patent applications related to LO2A;

| ● | we or Resdevco may be subject to interference proceedings;

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| ● | we or Resdevco may be subject to opposition proceedings in foreign countries;

| ● | any patent that is issued may not provide meaningful protection;

| ● | we or Resdevco may not be able to develop additional proprietary technologies that are patentable;

| ● | other companies may challenge patents licensed or issued to us or our customers;

| ● | other companies may independently develop similar or alternative technologies, or duplicate our technologies;

| ● | other companies may design around technologies we have licensed or developed; and

| ● | enforcement of patents is complex, uncertain and expensive.

If patent rights covering LO2A are not sufficiently broad or expire, they may not provide us with any protection against competitors with similar products and technologies. For example, a patent covering the composition and use of LO2A for treating or alleviating DES has expired. Furthermore, if the United States Patent and Trademark Office (the “USPTO”), or foreign patent offices issue patents to us or our licensors, others may challenge the patents or design around the patents, or the patent office or the courts may invalidate the patents. Thus, any patents we own or license from or to third parties may not provide any protection against our competitors.

We cannot be certain that patents will be issued as a result of any pending applications, and cannot be certain that any of our issued patents, including those licensed from Resdevco or any other third-party in the future, will give us adequate protection from competing products. For example, issued patents, including the patents licensed by us, may be circumvented or challenged, declared invalid or unenforceable, or narrowed in scope.

In addition, since publication of discoveries in the scientific or patent literature often lags behind actual discoveries, we cannot be certain that we or Resdevco were or will be the first to make our inventions or to file patent applications covering those inventions.

It is also possible that others may obtain issued patents that could prevent us from commercializing LO2A or require us to obtain licenses requiring the payment of significant fees or royalties in order to enable us to conduct our business. As to those patents that we have licensed, our rights depend on maintaining our obligations to the licensor under the applicable license agreement, and we may be unable to do so.

In addition to patents and patent applications, we depend upon trade secrets and proprietary know-how to protect our proprietary technology. We require our employees, consultants, advisors and collaborators to enter into confidentiality agreements that prohibit the disclosure of confidential information to any other parties. We require our employees and consultants to disclose and assign their ideas, developments, discoveries and inventions to us. These agreements may not, however, provide adequate protection for our trade secrets, know-how or other proprietary information in the event of any unauthorized use or disclosure.

Costly litigation may be necessary to protect our or Resdevco’s intellectual property rights and we or Resdevco may be subject to claims alleging the violation of the intellectual property rights of others.

Our activity in the field of life sciences exposes us to the possibility of legal proceedings connected with our business activities. We may face significant expense and liability as a result of litigation or other proceedings relating to patents and other intellectual property rights of others. In the event that another party has also filed a patent application or been issued a patent relating to an invention or technology claimed by us or Resdevco in pending applications, we may be required to participate in an interference proceeding declared by the USPTO to determine priority of invention, which could result in substantial uncertainties and costs for us, even if the eventual outcome was favorable to us. We, or our licensors, could be required to participate in interference proceedings involving issued patents and pending applications of another entity. An adverse outcome in an interference proceeding could require us to cease using the technology or to license rights from prevailing third parties.

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The cost to us of any patent litigation or other proceeding relating to our licensed patents or patent applications, even if resolved in our favor, could be substantial. The ability of us and Resdevco to enforce our patent protection could be limited by our financial resources, and may be subject to lengthy delays. If we are unable to effectively enforce our or Resdevco’s proprietary rights, or if we are found to infringe the rights of others, we may be in breach of the LO2A License Agreement.

A third party may claim that we or Resdevco are using inventions claimed by their patents and may go to court to stop us or Resdevco from engaging in our normal operations and activities, such as research, development and the sale of any future products. Such lawsuits are expensive and would consume time and other resources. There is a risk that the court will decide that we or Resdevco are infringing the third party’s patents and will order us or Resdevco to stop the activities claimed by the patents, redesign our products or processes to avoid infringement or obtain licenses (which may not be available on commercially reasonable terms). In addition, there is a risk that a court will order us to pay the other party damages for having infringed their patents.

Moreover, there is no guarantee that any prevailing patent owner would offer us or Resdevco a license so that we or Resdevco could continue to engage in activities claimed by the patent, or that such a license, if made available, could be acquired on commercially acceptable terms. In addition, third parties may, in the future, assert other intellectual property infringement claims against us or Resdevco with respect to its product candidates, technologies or other matters.

We rely on our and Resdevco’s confidentiality agreements that could be breached and may be difficult to enforce, which could result in third parties using our intellectual property to compete against us.

Although we believe that we take reasonable steps to protect our intellectual property, including the use of agreements relating to the non-disclosure of confidential information to third parties, as well as agreements that purport to require the disclosure and assignment of the rights to the ideas, developments, discoveries and inventions of our employees and consultants while they are employed by us and we believe that Resdevco also takes such measures, the agreements can be difficult and costly to enforce. Although we believe that our licensors seek to obtain these types of agreements from our contractors, consultants, advisors and research collaborators, to the extent that employees and consultants utilize or independently develop intellectual property in connection with any of our projects, disputes may arise as to the intellectual property rights associated with our products. If a dispute arises, a court may determine that the right belongs to a third party. In addition, enforcement of our and Resdevco’s rights can be costly and unpredictable. We and Resdevco also rely on trade secrets and proprietary know-how that we believe that Resdevco seeks to protect in part by confidentiality agreements with employees, contractors, consultants, advisors or others. Despite the protective measures we and Resdevco employ, we still face the risk that:

| ● | these agreements may be breached;

| ● | these agreements may not provide adequate remedies for the applicable type of breach;

| ● | our and Resdevco’s trade secrets or proprietary know-how will otherwise become known; or

| ● | our competitors will independently develop similar technology or proprietary information.

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Patent protection outside the United States is particularly uncertain, and if we are involved in opposition proceedings outside the United States, we may have to expend substantial sums and management resources.

Patent law outside the United States is different than in the United States. Further, the laws of some foreign countries may not protect our or Resdevco’s intellectual property rights to the same extent as the laws of the United States, if at all. A failure to obtain sufficient intellectual property protection in any country could materially and adversely affect our business, results of operations and future prospects. Moreover, we may participate in opposition proceedings to determine the validity of our foreign patents or our competitors’ foreign patents, which could result in substantial costs and divert management’s resources and attention.

We may not be able to enforce employees’ and consultants covenants not to compete and therefore may be unable to prevent our competitors from benefiting from the expertise of some of our former employees or consultants.

We have entered into non-competition agreements with our key employees and key consultants, within the framework of their employment agreements or consultant agreements, respectively. These agreements prohibit such persons, if they cease working for us, from competing directly with us or working for our competitors for a limited period. Under applicable law, we may be unable to enforce these agreements. If we cannot enforce our non-competition agreements with such persons, then we may be unable to prevent our competitors from benefiting from the expertise of our former employees and consultants, which could materially adversely affect our business, results of operations and ability to capitalize on our proprietary information.

Intellectual property rights do not necessarily address all potential threats to our competitive advantage.

The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations, and may not adequately protect our business, or permit us to maintain our competitive advantage. The following examples are illustrative:

| ● | Others may be able to make compounds that are the same as or similar to LO2A but that are not covered by the claims of the patents that we have exclusively licensed;

| ● | Resdevco or any future strategic partners might not have been the first to make the inventions covered by the issued patent or pending patent applications that we have exclusively licensed;

| ● | Resdevco or any future strategic partners might not have been the first to file patent applications covering certain of our technology;

| ● | Others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights;

| ● | It is possible that any pending patent applications will not lead to issued patents;

| ● | Issued patents that we have exclusively licensed may not provide us with any competitive advantages, or may be held invalid or unenforceable, as a result of legal challenges by our competitors;

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| ● | Our competitors might conduct research and development activities in countries where we do not have patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets;

| ● | We may not develop additional proprietary technologies that are patentable; and

| ● | The patents of others may have an adverse effect on our business.

We may be subject to claims challenging the inventorship of our patents and other intellectual property.

We may be subject to claims that former employees, collaborators or other third parties have an interest in our patents or other intellectual property as an inventor or co-inventor. For example, we may have inventorship disputes arise from conflicting obligations of consultants or others who are involved in developing our product candidates. Litigation may be necessary to defend against these and other claims challenging inventorship. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

Risks Related to our Industry

We are subject to government regulations and we may experience delays in obtaining required regulatory approvals to market LO2A.

Various aspects of our operations are subject to federal, state or local laws, rules and regulations, any of which may change from time to time. Costs arising out of any regulatory developments could be time-consuming and expensive and could divert management resources and attention and, consequently, could adversely affect our business operations and financial performance.

Delays in regulatory approval, limitations in regulatory approval and withdrawals of regulatory approval may have a material adverse effect on us. If we experience significant delays in testing or receiving approvals or sign-offs to conduct clinical trials, our product development costs, or our ability to license LO2A, will increase. If certain country’s regulatory authority grants regulatory approval to market a product, this approval will be limited to those disease states and conditions for which the product has demonstrated, through clinical trials, to be safe and effective. Any product approvals that we receive in the future could also include significant restrictions on the use or marketing of our products. Product approvals, if granted, can be withdrawn for failure to comply with regulatory requirements or upon the occurrence of adverse events following commercial introduction of the products. Failure to comply with applicable regulatory requirements may result in criminal prosecution, civil penalties, recall or seizure of products, total or partial suspension of production or injunction, as well as other regulatory action against us or LO2A. If approval is withdrawn for a product, or if a product were seized or recalled, we would be unable to sell or license that product and our revenues would suffer.

We expect the healthcare industry to face increased limitations on reimbursement as a result of healthcare reform, which could adversely affect third-party coverage of our products and how much or under what circumstances healthcare providers will prescribe or administer our products.

In both the United States and other countries, sales of our products will depend in part upon the availability of reimbursement from third-party payors, which include governmental authorities, managed care organizations and other private health insurers. Third-party payors are increasingly challenging the price and examining the cost effectiveness of medical products and services.

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Increasing expenditures for healthcare have been the subject of considerable public attention in the United States. Both private and government entities are seeking ways to reduce or contain healthcare costs. Numerous proposals that would effect changes in the U.S. healthcare system have been introduced or proposed in Congress and in some state legislatures, including reducing reimbursement for prescription products and reducing the levels at which consumers and healthcare providers are reimbursed for purchases of pharmaceutical products.

In 2010, the United States Congress enacted the Patient Protection and Affordable Care Act of 2010 or, Affordable Care Act. The Affordable Care Act seeks to reduce the federal deficit and the rate of growth in health care spending through, among other things, stronger prevention and wellness measures, increased access to primary care, changes in health care delivery systems and the creation of health insurance exchanges. Enrollment in the health insurance exchanges began in October 2013. The Affordable Care Act requires the pharmaceutical industry to share in the costs of reform, by, among other things, increasing Medicaid rebates and expanding Medicaid rebates to cover Medicaid managed care programs. Other components of healthcare reform include funding of pharmaceutical costs for Medicare patients in excess of the prescription drug coverage limit and below the catastrophic coverage threshold. Under the Affordable Care Act, pharmaceutical companies are now obligated to fund 50% of the patient obligation for branded prescription pharmaceuticals in this gap, or “donut hole.” Additionally, commencing in 2011, an excise tax was levied against certain branded pharmaceutical products. The tax is specified by statute to be approximately $3 billion in 2012 through 2016, $3.5 billion in 2017, $4.2 billion in 2018, and $2.8 billion each year thereafter. The tax is to be apportioned to qualifying pharmaceutical companies based on an allocation of their governmental programs as a portion of total pharmaceutical government programs.

Although we cannot predict the full effect on our business of the implementation of existing legislation, including the Affordable Care Act or the enactment of additional legislation, we believe that legislation or regulations that reduce reimbursement for or restrict coverage of our products could adversely affect how much or under what circumstances healthcare providers will prescribe or administer our products. This could materially and adversely affect our business by reducing our ability to generate revenue, raise capital, obtain additional collaborators and market our products. In addition, we believe the increasing emphasis on managed care in the United States has and will continue to put pressure on the price and usage of pharmaceutical products, which may adversely impact product sales.

We may be subject to U.S. and foreign anti-kickback laws and regulations. Our failure to comply with these laws and regulations could have adverse consequences.

There are extensive U.S. federal and state laws and regulations prohibiting fraud and abuse in the healthcare industry that can result in significant criminal and civil penalties. These federal laws include: the anti-kickback statute, which prohibits certain business practices and relationships, including the payment or receipt of remuneration for the referral of patients whose care will be paid by Medicare or other federal healthcare programs; the physician self-referral prohibition, commonly referred to as the Stark Law; the anti-inducement law, which prohibits providers from offering anything to a Medicare or Medicaid beneficiary to induce that beneficiary to use items or services covered by either program; the False Claims Act, which prohibits any person from knowingly presenting or causing to be presented false or fraudulent claims for payment by the federal government, including the Medicare and Medicaid programs; and the Civil Monetary Penalties Law, which authorizes the U.S. Department of Health and Human Services to impose civil penalties administratively for fraudulent or abusive acts.

Sanctions for violating these federal laws include criminal and civil penalties that range from punitive sanctions, damage assessments, money penalties, imprisonment, denial of Medicare and Medicaid payments, or exclusion from the Medicare and Medicaid programs, or both, and debarment. As federal and state budget pressures continue, federal and state administrative agencies may also continue to escalate investigation and enforcement efforts to root out waste and to control fraud and abuse in governmental healthcare programs. Private enforcement of healthcare fraud has also increased, due in large part to amendments to the civil False Claims Act in 1986 that were designed to encourage private persons to sue on behalf of the government. A violation of any of these federal and state fraud and abuse laws and regulations or any similar law in a different jurisdiction which is applicable to us could have a material adverse effect on our liquidity and financial condition. An investigation into the use by physicians of any of our products once commercialized may dissuade physicians from either purchasing or using them, and could have a material adverse effect on our ability to commercialize those products.

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Risks Related to Our Common Stock

The failure of our business to succeed may result in the depression in the value of our Common Stock.

While LO2A is approved for sale in certain jurisdictions for the treatment of DES, LO2A is only approved for sale for the treatment of CCH in Hungary and for the treatment of Sjögren’s in the Netherlands. LO2A may never be successfully developed and approved for sale or successfully commercialized for the treatment of CCH or for Sjögren’s in any other jurisdiction. The failure to successfully commercialize LO2A for the treatment of CCH and Sjögren’s may have a material adverse effect on our business and could depress the value of our Common Stock.

Our restricted shares are subject to resale restrictions imposed by Rule 144, including those set forth in Rule 144(i) which applies to a “shell company.”

Prior to the Merger, we were a “shell company” under applicable SEC rules and regulations. Pursuant to Rule 144, promulgated under the Securities Act, sales of the securities of a shell company, such as ours under that rule are not permitted until at least 12 months have elapsed from the date on which we file with the SEC Form 10 information in a Current Report on Form 8-K, reflecting our status as a non-shell company (which occurred on November 21, 2017). As a result, some of our stockholders would be forced to hold their shares of Common Stock for at least that 12-month period before they are eligible to sell those shares, and even after that 12-month period, sales may not be made under Rule 144 unless we and our relevant stockholders are in compliance with other requirements of Rule 144. Further, it will be more difficult for us to raise funding to support our operations through the sale of debt or equity securities, unless we agree to register such securities under the Securities Act, which could cause us to expend additional time and cash resources. The lack of liquidity of our securities as a result of the inability to sell under Rule 144 for a longer period of time could cause the market price of our securities to decline.

A large number of shares are issuable upon conversion or exercise of outstanding Convertible Loans, Investment Rights, 2017 Warrants, Series A Preferred Stock, Series A Warrants, Series B Warrants, Placement Agent Warrants and Advisor Warrants. The conversion or exercise of these securities could result in the substantial dilution of your investment in terms of your percentage ownership in our company. The sale of a large amount of Common Stock received upon exercise of these securities on the public market, or the perception that such sales could occur, could substantially depress the prevailing market prices for our shares.

As of March 26, 2019, there were outstanding presently convertible or exercisable (i) Convertible Loans entitling the holders to purchase 1,403,949 shares of Common Stock at a weighted average exercise price of $1.053 per share, (ii) Investment Rights entitling the holders to purchase 890,138 shares of Common Stock at a weighted average exercise price of $1.321 per share, (iii) 2017 Warrants entitling the holders to purchase 759,871 shares of Common Stock at a weighted average exercise price of $1.9728 per share, (iv) 910 shares of Series A Preferred Stock issuable into 910,000 shares of Common Stock, (v) Series A Warrants entitling the holders to purchase 4,450,000 shares of Common Stock at an exercise price of $1.10 per share, (vi) Series B Warrants entitling the holders to purchase 4,450,000 shares of Common Stock at an exercise price of $1.00 per share, (vii) Placement Agent Warrants entitling the holders to purchase 267,000 shares of Common Stock at an exercise price of $1.00 per share and (viii) Advisor Warrants entitling the holder to purchase 89,000 shares of Common Stock at an exercise price of $1.10 per share. The exercise or conversion price for all of the aforesaid securities may be less than your cost to acquire our shares. In the event of the exercise or conversion of these securities, you could suffer substantial dilution of your investment in terms of your percentage ownership in our company. In addition, the holders of such securities may sell shares in tandem with their exercise of those securities to finance that exercise, which could further depress the market price of the Common Stock.

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Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to LO2A.

We may seek additional capital through a combination of private and public equity offerings, debt financings, strategic partnerships and alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of existing stockholders will be diluted, and the terms may include liquidation or other preferences that adversely affect stockholder rights. Furthermore, the number of shares available for future grant under our equity compensation plans may be increased in the future. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take certain actions, such as incurring debt, making capital expenditures or declaring dividends. If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our LO2A, or grant licenses on terms that are not favorable. If we are unable to raise additional funds through equity or debt financing when needed, we may be required to delay, limit, reduce or terminate our product development or commercialization efforts or grant rights to develop and market LO2A that we would otherwise prefer to develop and market ourselves.

Because our Common Stock may be a “penny stock,” it may be more difficult for investors to sell shares of our Common Stock, and the market price of our Common Stock may be adversely affected.

Our Common Stock may be a “penny stock” if, among other things, the stock price is below $5.00 per share, it is not listed on a national securities exchange or it has not met certain net tangible asset or average revenue requirements. Broker-dealers who sell penny stocks must provide purchasers of these stocks with a standardized risk-disclosure document prepared by the SEC. This document provides information about penny stocks and the nature and level of risks involved in investing in the penny-stock market. A broker must also give a purchaser, orally or in writing, bid and offer quotations and information regarding broker and salesperson compensation, make a written determination that the penny stock is a suitable investment for the purchaser, and obtain the purchaser’s written agreement to the purchase. Broker-dealers must also provide customers that hold penny stock in their accounts with such broker-dealer a monthly statement containing price and market information relating to the penny stock. If a penny stock is sold to an investor in violation of the penny stock rules, the investor may be able to cancel its purchase and get its money back.

If applicable, the penny stock rules may make it difficult for investors to sell our shares of Common Stock. Because of the rules and restrictions applicable to a penny stock, there is less trading in penny stocks and the market price of our Common Stock may be adversely affected. Also, many brokers choose not to participate in penny stock transactions. Accordingly, investors may not always be able to resell their shares of our Common Stock publicly at times and prices that they feel are appropriate.

We may not be able to attract the attention of major brokerage firms, which may limit the liquidity of our Common Stock and may make it more difficult for us to raise additional capital in the future.

Securities analysts of major brokerage firms may not provide coverage of our Common Stock because there may be little incentive for brokerage firms to recommend the purchase of our Common Stock. As a result, our Common Stock may have limited liquidity and investors may have difficulty selling it. Furthermore, we cannot assure you that brokerage firms will want to conduct any secondary offerings on our behalf if we seek to raise additional capital in the future. Our inability to raise additional capital may have a material adverse effect on our business.

Future sales of our Common Stock could reduce our stock price.

Sales by stockholders of substantial amounts of our Common Stock, or the perception that these sales may occur in the future, including the sale of shares by certain stockholders upon the expiration of the tax withholding deferral period set forth in the 104(h) Tax Ruling, could materially and adversely affect the market price of our Common Stock. Furthermore, the market price of our Common Stock could drop significantly if our executive officers, directors, or certain large shareholders sell their shares, or are perceived by the market as intending to sell them.

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The concentration of the capital stock ownership with our insiders will likely limit the ability of our stockholders to influence corporate matters.

As of March 26, 2019, our executive officers, directors, five percent or greater stockholders, and their respective affiliated entities in the aggregate beneficially own approximately 68.32% of our Common Stock. As a result of such ownership, despite the fact that each one of them, to our knowledge, will continue to operate independently from the other with respect to their respective shareholding of the Company’s shares, these stockholders, if acting together, will have control over matters that require approval by our stockholders, including the election of directors and approval of significant corporate transactions. Corporate actions might be taken even if other stockholders oppose them. This concentration of ownership might also have the effect of delaying or preventing a corporate transaction that other stockholders may view as beneficial, including preventing changes in control or in management. For more information about our current share ownership, please see “SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT,” beginning on page 80 of this report.

We may not be able to timely and effectively implement controls and procedures required by Section 404 of the Sarbanes-Oxley Act of 2002.

Prior to the Merger, Wize Israel was traded on the Tel Aviv Stock Exchange (“TASE”) and was not subject to Section 404 of the Sarbanes-Oxley Act of 2002. The standards required for a public company under Section 404 of the Sarbanes-Oxley Act of 2002 are different from those required of a public company whose shares are traded on the TASE. Management may not be able to effectively and timely implement controls and procedures that adequately respond to the regulatory compliance and reporting requirements that are applicable to us after the Merger. If management is not able to implement the additional requirements of Section 404 of the Sarbanes-Oxley Act of 2002 in a timely manner or with adequate compliance, it may not be able to assess whether its internal control over financial reporting is effective, which may subject us to adverse regulatory consequences and could harm investor confidence and the market price of our Common Stock.

As a result of the Merger, we may be required to take restructuring or other charges that could have a significant negative effect on our financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.

As a result of the Merger, the liabilities of Wize Israel, our wholly owned Israeli subsidiary, including contingent liabilities, were consolidated into our financial statements. Although both parties conducted due diligence on each other, there can be no assurances that the diligence revealed all material issues that may be present in the other company’s business, that all material issues through a customary amount of due diligence will be uncovered, or that factors outside of our control will not later arise. As a result, we may be forced to later restructure operations, or other charges that could result in losses. Even if due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with each company’s preliminary risk analysis. Even though these charges may be non-cash items and not have an immediate impact on liquidity, the fact that we report charges of this nature could contribute to negative market perceptions about us or our securities. In addition, charges of this nature may make future financing difficult to obtain on favorable terms or at all. If unknown pre-Merger liabilities arise, we may be required to divert cash from other business purposes to discharge such liabilities, which may have an adverse effect on our business.

As an “emerging growth company” under the JOBS Act, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements.

As an “emerging growth company” under the JOBS Act, we are permitted to, and intend to, rely on exemptions from certain disclosure requirements. We are an emerging growth company until the earliest of: (i) the last day of the fiscal year during which hawse have total annual gross revenues of $1.07 billion or more, (ii) the last day of the fiscal year following the fifth anniversary of the date of the first sale of our Common Stock pursuant to an effective registration statement, (iii) the date on which we have, during the previous three-year period, issued more than $1 billion in non-convertible debt or (iv) the date on which we are deemed a “large accelerated issuer” as defined in Regulation S-K of the Securities Act. For so long as we remain an emerging growth company, we will not be required to:

| ● | have an auditor report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

| ● | comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (auditor discussion and analysis);

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| ● | submit certain executive compensation matters to stockholders advisory votes pursuant to the “say on frequency” and “say on pay” provisions (requiring a non-binding stockholder vote to approve compensation of certain executive officers) and the “say on golden parachute” provisions (requiring a non-binding stockholder vote to approve golden parachute arrangements for certain executive officers in connection with mergers and certain other business combinations) of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010; and

| ● | include detailed compensation discussion and analysis in its filings under the Exchange Act, and instead may provide a reduced level of disclosure concerning executive compensation.

Although we intend to rely on the exemptions provided in the JOBS Act, the exact implications of the JOBS Act are still subject to interpretations and guidance by the SEC and other regulatory agencies. In addition, as our business grows, we may no longer satisfy the conditions of an emerging growth company.

We have not paid, and do not intend to pay, dividends on our Common Stock and therefore, unless our Common Stock appreciates in value, our investors may not benefit from holding our Common Stock.

We have not paid any cash dividends on our Common Stock since inception and do not anticipate paying any cash dividends on our Common Stock in the foreseeable future. In addition, we are restricted from paying any dividends without Rimon Gold’s consent so long as our loans from Rimon Gold have not been repaid in full. As a result, investors in our Common Stock will not be able to benefit from owning our Common Stock unless the market price of our Common Stock becomes greater than the price paid for the stock by these investors.

Anti-takeover provisions under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by the stockholders to replace or remove management.

We will be subject to the anti-takeover provisions of the Delaware General Corporation Law (“DGCL”), including Section 203. Under these provisions, if anyone becomes an “interested stockholder,” the combined company may not enter into a “business combination” with that person for three years without special approval, which could discourage a third party from making a takeover offer and could delay or prevent a change of control. For purposes of Section 203 of the DGCL, “interested stockholder” means, generally, someone owning 15% or more of the combined company’s outstanding voting stock or an affiliate of the combined company that owned 15% or more of the combined company’s outstanding voting stock during the past three years, subject to certain exceptions as described in Section 203 of the DGCL. In addition, our Certificate of Incorporation contains provisions, such as blank check preferred stock, advance notice, and stockholder action by written consent which could make it more difficult for a third party to acquire us. These provisions may have the effect of preventing or hindering any attempts by our stockholders to replace our Board of Directors (our “Board”) or management.

The public trading market for our Common Stock is volatile and may result in higher spreads in stock prices, which may limit the ability of our investors to sell their shares at a profit, if at all.

Our Common Stock trades in the over-the-counter market and is quoted on the OTCQB. The over-the-counter market for securities has historically experienced extreme price and volume fluctuations during certain periods. These broad market fluctuations may adversely affect the market price of our Common Stock and result in substantial losses to its investors. In addition, the spreads on stock traded through the over-the-counter market are generally unregulated and higher than on stock exchanges, which mean that the difference between the price at which shares could be purchased by investors in the over-the-counter market compared to the price at which they could be subsequently sold would be greater than on these exchanges. Significant spreads between the bid and asked prices of the stock could continue during any period in which a sufficient volume of trading is unavailable or if the stock is quoted by an insignificant number of market makers. Historically our trading volume has been insufficient to significantly reduce this spread and has had a limited number of market makers sufficient to affect this spread. These higher spreads could adversely affect investors who purchase the shares at the higher price at which the shares are sold, but subsequently sell the shares at the lower bid prices quoted by the brokers. Unless the bid price for the stock exceeds the price paid for the shares by the investor, plus brokerage commissions or charges, the investor could lose money on the sale. For higher spreads such as those on over-the-counter stocks, this is likely a much greater percentage of the price of the stock than for exchange listed stocks. There is no assurance that at the time an investor in our Common Stock wishes to sell the shares, the bid price will have sufficiently increased to create a profit on the sale.

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An active market for our Common Stock may not develop.

Although our Common Stock trades on the OTCQB, we do not have an active trading market and an active trading market may not develop. If an active trading market does not develop, or is not sustained, it may be difficult for investors to sell their shares without depressing the market price for the shares or at all. Further, an inactive market may also impair our ability to raise capital by selling shares of our Common Stock and may impair our ability to enter into strategic partnerships or acquire companies or products by using our shares of Common Stock as consideration.

Our Common Stock is thinly traded, so you may be unable to sell at or near ask prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares.

Our Common Stock has historically been sporadically traded on the OTCQB, meaning that the number of persons interested in purchasing our shares at or near ask prices at any given time may be relatively small or non-existent. This situation is attributable to a number of factors, including the fact that we are a small company which is relatively unknown to stock analysts, stock brokers, institutional investors and others in the investment community that generate or influence sales volume, and that even if we came to the attention of such persons, they tend to be risk-averse and would be reluctant to follow an unproven company such as ours or purchase or recommend the purchase of our shares until such time as we became more seasoned and viable. As a consequence, there may be periods of several days or more when trading activity in our shares is minimal or non-existent, as compared to a seasoned issuer which has a large and steady volume of trading activity that will generally support continuous sales without an adverse effect on share price. We cannot give you any assurance that a broader or more active public trading market for our Common Stock will develop or be sustained, or that current trading levels will be sustained.

Our Board can, without stockholder approval, cause preferred stock to be issued on terms that adversely affect common stockholders or which could be used to resist a potential take-over of us.

Under our Certificate of Incorporation, our Board is authorized to issue up to 1,000,000 shares of preferred stock, 910 of which are issued and outstanding as of the date of this report. Also, our Board, without stockholder approval, may determine the price, rights, preferences, privileges and restrictions, including voting rights, of those shares. If the Board causes shares of preferred stock to be issued, the rights of the holders of our Common Stock could be adversely affected. The Board’s ability to determine the terms of preferred stock and to cause its issuance, while providing desirable flexibility in connection with possible acquisitions and other corporate purposes, could have the effect of making it more difficult for a third party to acquire a majority of our outstanding voting stock. Preferred shares issued by the Board could include voting rights, or even super voting rights, which could shift the ability to control us to the holders of the preferred stock. Preferred shares could also have conversion rights into shares of Common Stock at a discount to the market price of the Common Stock which could negatively affect the market for our Common Stock. In addition, preferred shares would have preference in the event of liquidation of the corporation, which means that the holders of preferred shares would be entitled to receive the net assets of the corporation distributed in liquidation before the Common Stock holders receive any distribution of the liquidated assets. We have no current plans to issue any shares of preferred stock.

The market price of our Common Stock may fluctuate significantly, which could result in substantial losses by our investors.

The market price of our Common Stock may fluctuate significantly in response to numerous factors, some of which are beyond its control, such as:

| ● | announcements of technological innovations, new products or product enhancements by us or others;

| ● | announcements by us of significant strategic partnerships, out-licensing, in-licensing, joint ventures, acquisitions or capital commitments;

| ● | expiration or terminations of licenses, research contracts or other collaboration agreements;

| ● | public concern as to the safety of LO2A;

| ● | success of research and development projects;

| ● | success in clinical and preclinical studies;

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| ● | developments concerning intellectual property rights or regulatory approvals;

| ● | variations in our and our competitors’ results of operations;

| ● | changes in earnings estimates or recommendations by securities analysts, if our Common Stock is covered by analysts;

| ● | changes in government regulations or patent decisions;

| ● | developments by our licensees;

| ● | developments in the biotechnology industry;

| ● | the results of product liability or intellectual property lawsuits;

| ● | future issuances of Common Stock or other securities;

| ● | the addition or departure of key personnel;

| ● | announcements by us or our competitors of acquisitions, investments or strategic alliances;

| ● | general market conditions, including the volatility of market prices for shares of biotechnology companies generally, and other factors, including factors unrelated to our operating performance; and

| ● | the other factors described in the section entitled “RISK FACTORS,” beginning on page 32 of this report.

These factors and any corresponding price fluctuations may materially and adversely affect the market price of our Common Stock and result in substantial losses by our investors.

Further, the stock market in general, and the market for biotechnology companies in particular, has experienced extreme price and volume fluctuations in the past. Continued market fluctuations could result in extreme volatility in the price of our Common Stock, which could cause a decline in the value of our Common Stock. Price volatility of our Common Stock might be worse if the trading volume of our Common Stock is low. In the past, following periods of market volatility, stockholders have often instituted securities class action litigation. If we are involved in securities litigation, it could have a substantial cost and divert resources and attention of management from our business, even if successful. Future sales of our Common Stock could also reduce the market price of such stock.

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Risks Related to our Operations in Israel

Potential political, economic and military instability in the State of Israel, where our senior management and our head executive office facilities are located, may adversely affect our results of operations.

Our executive office where we conduct initial research and development activities, as well as some of our clinical sites and suppliers are located in Israel. Our officers and our directors are residents of Israel. Accordingly, political, economic and military conditions in Israel and the surrounding region may directly affect our business and operations. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its Arab neighbors. Any hostilities involving Israel or the interruption or curtailment of trade within Israel or between Israel and its trading partners could adversely affect our operations and results of operations and could make it more difficult for us to raise capital. During the summer of 2014 and the winter of 2012 and 2008, Israel was engaged in an armed conflict with Hamas, a militia group and political party operating in the Gaza Strip, and during the summer of 2006, Israel was engaged in an armed conflict with Hezbollah, a Lebanese Islamist Shiite militia group and political party. These conflicts involved missile strikes against civilian targets in various parts of Israel, and negatively affected business conditions in Israel. To date, Israel faces political tension with respect to its relationships with Turkey, Iran and other Arab neighbor countries. In addition, recent political uprisings and social unrest in various countries in the Middle East and North Africa are affecting the political stability of those countries. This instability may lead to deterioration of the political relationships that exist between Israel and these countries, and have raised concerns regarding security in the region and the potential for armed conflict. Any armed conflicts, terrorist activities or political instability in the region could adversely affect business conditions and could harm our results of operations. For example, any major escalation in hostilities in the region could result in a portion of our employees and service providers being called up to perform military duty for an extended period of time. Parties with whom we do business have sometimes declined to travel to Israel during periods of heightened unrest or tension, forcing us to make alternative arrangements when necessary. In addition, the political and security situation in Israel may result in parties with whom we have agreements involving performance in Israel claiming that they are not obligated to perform their commitments under those agreements pursuant to force majeure provisions in such agreements. Any future deterioration in the political and security situation in Israel will negatively impact our business.

Our commercial insurance does not cover losses that may occur as a result of events associated with the security situation in the Middle East. Although the Israeli government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained. Any losses or damages incurred by us could have a material adverse effect on our business. Any armed conflicts or political instability in the region would likely negatively affect business conditions and could harm our results of operations.

Further, in the past, the State of Israel and Israeli companies have been subjected to an economic boycott. Several countries still restrict business with the State of Israel and with Israeli companies. These restrictive laws and policies may have an adverse impact on our operating results, financial condition or the expansion of our business.

Our operations may be disrupted as a result of the obligation of Israeli citizens to perform military service.

Many Israeli citizens, including Or Eisenberg, our Acting Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary, are obligated to perform one month, and in some cases more, of annual military reserve duty until they reach the age of 45 (or older, for reservists with certain occupations) and, in the event of a military conflict, may be called to active duty. In response to increases in terrorist activity, there have been periods of significant call-ups of military reservists. It is possible that there will be military reserve duty call-ups in the future. Our operations could be disrupted by such call-ups, which may include the call-up of Or Eisenberg. Such disruption could materially adversely affect our business, financial condition and results of operations.

Because a certain portion of our expenses is incurred in currencies other than the US Dollar, our results of operations may be harmed by currency fluctuations and inflation.

Our reporting and functional currency is the U.S. Dollar, but some portion of our clinical trials and operations expenses are in NIS and Euro. As a result, we are exposed to some currency fluctuation risks, largely derived from our current and future engagements for financing and distribution. Fluctuation in the exchange rates of foreign currency has an influence on the cost of goods sold and our financing revenues and expenses. We may, in the future, decide to enter into currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchange rate of the currencies mentioned above in relation to the US Dollar. These measures, however, may not adequately protect us from adverse effects.

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Investors may have difficulties enforcing a U.S. judgment, including judgments based upon the civil liability provisions of the U.S. federal securities laws against us and our officers and directors or asserting U.S. securities laws claims in Israel.

Our directors and officers are not residents of the United States and our assets are located outside the United States. Service of process upon our directors and officers and enforcement of judgments obtained in the United States against us, and our directors and officers may be difficult to obtain within the United States. We have been informed by our legal counsel in Israel that it may be difficult to assert claims under U.S. securities laws in original actions instituted in Israel or obtain a judgment based on the civil liability provisions of U.S. federal securities laws. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws against our officers and directors because Israel may not be the most appropriate forum to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel addressing the matters described above. Israeli courts might not enforce judgments rendered outside Israel, which may make it difficult to collect on judgments rendered against us and/or our officers and directors.

Moreover, among other reasons, including but not limited to, fraud, a lack of due process, a judgment which is at variance with another judgment that was given in the same matter and if a suit in the same matter between the same parties was pending before a court or tribunal in Israel, an Israeli court will not enforce a foreign judgment if it was given in a state whose laws do not provide for the enforcement of judgments of Israeli courts (subject to exceptional cases) or if its enforcement is likely to prejudice the sovereignty or security of the State of Israel.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

None.

ITEM 2. PROPERTIES.

Our principal executive offices are located at 24 Hanagar Street, Hod Hasharon, Israel, 4527708 where we lease approximately 710 square feet of office space for annual rent of approximately $18,000. Other than such office lease, we do not own or lease any material tangible fixed assets. We believe that our existing facilities are suitable and adequate to meet our current business requirements. In the event that we should require additional or alternative facilities, we believe that such facilities can be obtained on short notice at competitive rates.

ITEM 3. LEGAL PROCEEDINGS.

To our knowledge, the Israel Securities Authority (the “ISA”) has been conducting an administrative inquiry regarding Wize Israel’s public reports with the ISA in Israel regarding its applicable regulatory path necessary for the marketing of LO2A for the treatment of DES in the United States. As part of the inquiry, the ISA requested Wize Israel to provide certain documentation and has also questioned its officers with respect to such reports. Wize Israel and its officers cooperated with the ISA and, at the ISA’s request, Wize Israel also publicly filed a supplemental report to provide additional information in connection with the said regulatory path and marketing plans, which we believe contained all the required information. In October 2018, the Company was informed that the ISA intends to commence administrative enforcement proceedings against Wize Israel, the Company’s former Chairman and the Company’s Chief Executive Officer in connection with the foregoing reports, pending a hearing with the ISA staff. Following the hearing with the ISA staf, and while the Company does not believe the ISA position has any merits, the Company and the aforesaid officers are engaged in ongoing discussions with the ISA regarding a potential settlement of the matter. The Company cannot give any assurance as to the terms of the settlement, if any, or if such settlement is eventually not reached, what will be remedies or sanctions the ISA may seek, if any.

Except as described above, we are currently not, and have not been in the recent past, a party to any legal proceedings which may have or have had in the recent past significant effects on our financial position or profitability. However, we have been in the past, and may be from time to time in the future, named as a defendant in certain routine litigation incidental to our business.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Price for our Common Stock

Our Common Stock began trading on the OTC Pink under the symbol “OPLI” on January 25, 2012 through November 15, 2017, and under the symbol “WIZP” from November 16, 2017 through January 3, 2018. Since January 4, 2018, our Common Stock has been traded on the OTCQB under the symbol “WIZP.” Following the Reverse Stock Split, a “D” was placed on our ticker symbol (WIZPD) for 20 business days from March 5, 2018, the effective date of the Reverse Stock Split. After 20 business days, the symbol was then changed back to “WIZP.”

The following table sets forth the range of the high and low closing prices of our Common Stock for the periods indicated, as adjusted for the Reverse Stock Split.

2019 |  | HIGH |  |  | LOW |
First Quarter (through March 29, 2019) |  | $ | 0.85 |  |  | $ | 0.61 |

2018 |  | HIGH |  |  | LOW |
First Quarter |  | $ | 3.74 |  |  | $ | 2.99 |
Second Quarter |  | $ | 6.05 |  |  | $ | 3.59 |
Third Quarter |  | $ | 6.10 |  |  | $ | 2.00 |
Fourth Quarter |  | $ | 3.25 |  |  | $ | 0.75 |

2017 |  | HIGH |  |  | LOW |
First Quarter |  | $ | 24.00 |  |  | $ | 8.40 |
Second Quarter |  | $ | 36.00 |  |  | $ | 2.64 |
Third Quarter |  | $ | 23.48 |  |  | $ | 2.64 |
Fourth Quarter |  | $ | 10.80 |  |  | $ | 1.68 |

The foregoing quotations were provided by OTCQB and the quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not represent actual transactions. The last reported closing price per share of our Common Stock as quoted on the OTCQB was $0.70 on March 29, 2019.

Holders

As of March 29, 2019, there were approximately 85 stockholders of record holding 4,914,405 shares of our Common Stock. This number does not include an indeterminate number of stockholders whose shares are held by brokers in street name. The holders of our Common Stock are entitled to one vote for each share held of record on all matters submitted to a vote of stockholders. Holders of our Common Stock have no preemptive rights and no right to convert their Common Stock into any other securities. There are no redemption or sinking fund provisions applicable to our Common Stock.

Dividend Policy

We have never paid any cash dividends on our Common Stock and do not anticipate paying any cash dividends on our Common Stock in the foreseeable future. We intend to retain future earnings to fund ongoing operations and future capital requirements of our business. Any future determination to pay cash dividends will be at the discretion of our Board and will be dependent upon our financial condition, results of operations, capital requirements and such other factors as our Board deems relevant. Our ability to pay cash dividends is subject to limitations imposed by state law. In addition, we are restricted from paying any dividends without Rimon Gold’s consent so long as our loans from Rimon Gold have not been repaid in full.

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Securities Authorized for Issuance under Equity Compensation Plans

The following table provides certain information with respect to all of the Company’s equity compensation plans in effect as of December 31, 2018. The weighted-average exercise price does not take into account the shares issuable upon vesting of outstanding awards of restricted stock units, as they have no exercise price.

|  | (a) |  |  | (b) |  |  | (c) |
Plan Category |  | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights |  |  | Weighted-average Exercise Price of Outstanding Options, Warrants and Rights |  |  | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a) |
Equity compensation plans approved by security holders |  |  | 391,096 |  |  | $ | 6.73 |  |  |  | 2,164,800 |
Equity compensation plans not approved by security holders |  |  |  |  |  |  |  |  |  |  |  |
Total |  |  | 391,096 |  |  | $ | 6.73 |  |  |  | 2,164,800 |

Unregistered Sales of Equity Securities and Use of Proceeds

Other than as set forth below or as previously disclosed in our filings with the Securities and Exchange Commission, we did not sell any equity securities during the year ended December 31, 2018 in transactions that were not registered under the Securities Act. The issuance of such securities were made in transactions exempt from registration under Section 4(a)(2) of the Securities Act and/or Rule 506 promulgated thereunder.

ITEM 6. SELECTED FINANCIAL DATA.

As a “smaller reporting company,” the information required by this item is not required to be provided.

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion and analysis of our financial condition and results of operations together with our audited annual consolidated financial statements as of December 31, 2018 and December 31, 2017 and accompanying notes appearing elsewhere in this Annual Report. This discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. The actual results may differ materially from those anticipated in these forward-looking statements as a result of certain factors, including, but not limited to, those set forth under “Risk Factors” and elsewhere in this Annual Report. All amounts are in U.S. dollars and rounded.

Overview

We are a clinical-stage biopharmaceutical company currently focused on the treatment of ophthalmic disorders, including DES. We have in-licensed LO2A, a drug developed for the treatment of DES and other ophthalmological illnesses, including CCH and Sjögren’s.

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We have not generated any material revenues from operations since our inception and we do not currently expect to generate any significant revenues for the foreseeable future, primarily because LO2A is still in early clinical stage development in the markets and for the indications we are currently targeting (DES with CCH and/or Sjögren’s). Our operating expenses have increased from $1,481,000 in the year ended December 31, 2017 to $3,630,000 in the year ended December 31, 2018. We will require significant additional capital and, assuming we will have sufficient liquidity resources, we anticipate we will incur significantly higher costs in the foreseeable future, in order to finance our current strategic plans, including the conduct of ongoing and future clinical trials as well as further research and development.

Wize Israel was deemed to be the accounting acquirer in the Merger. The consolidated financial statements of Wize Israel included in this Annual Report are as of and for the periods that are prior to the Merger, and have therefore, not been adjusted to reflect the impact of the Merger.

Results of Operations

Year Ended December 31, 2018 Compared to Year Ended December 31, 2017

|  | Year Ended December 31, |
|  | 2018 |  |  | 2017 |
Operating expenses: |  |  |  |  |  |
Research and development |  | $ | (694,000 | ) |  | $ | (450,000 | )
General and administrative |  |  | (2,936,000 | ) |  |  | (1,031,000 | )
Total operating costs |  |  | (3,630,000 | ) |  |  | (1,481,000 | )
Financial expenses (income), net |  |  | 351,000 |  |  |  | (1,485,000 | )
Net loss |  | $ | (3,279,000 | ) |  | $ | (2,966,000 | )

Revenues

We did not generate any material revenues from operations during the years ended December 31, 2018 and 2017. We had no revenues primarily because (1) from the time of the creditors’ arrangement in February 2015 until May 2015, when we (through Wize Israel) entered into the LO2A License Agreement, Wize Israel did not conduct any business operations and (2) thereafter, currently, Wize Israel is engaged primarily in research and development.

Operating Expenses

Research and development expenses. Research and development expenses were $694,000 for the year ended December 31, 2018, compared to $450,000 for the year ended December 31, 2017, an increase of $244,000 or 54%. The increase in research and development expenses is primarily related to additional expenses related to clinical trials. In 2017, all research and development expenses related to CCH clinical trial, while in 2018 research and development expenses related both to CCH and Sjögren clinical trials. For more information with respect to our expenses in connection with entering into the LO2A License Agreement, please see Note 5 of the audited consolidated financial statements of Wize Israel appearing elsewhere in this Annual Report.

General and administrative expenses. General and administrative expenses were $2,936,000 for the year ended December 31, 2018, compared to $1,031,000 for the year ended December 31, 2017, an increase of $1,905,000 or 184%. The increase in general and administrative expenses during these periods is primarily related to increases in professional services of $579,000, increase in expenses related to stock-based compensation expense of $783,000 and increase in payroll and benefits expenses of $218,000.

Financial expenses (income), Net. Financial income, net was $351,000 for the year ended December 31, 2018 compared to financial expenses, net of $1,485,000 for the year ended December 31, 2017, a change of $1,836,000 or 123%. The decrease in financial expenses during this period is primarily related to the amortization of BCF, proceeds allocated to the derivative liability and debt issuance costs for convertible loans of $1,122,000 during the year ended December 31, 2017 compared to no such expense in 2018, change in the fair value of derivative liability for Right to Future Investment of $253,000 during the year ended December 31, 2017 compared to no such expense in 2018, and from income from amortization of premium related to convertible loans of $2,149,000 which we did not have in the year ended December 31, 2017 and from a loss from extinguishment of convertible loans of $1,709,000 which we did not have during the year ended December 31, 2017.

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Net Loss. As a result of the foregoing, we incurred a net loss of $3,279,000 for the year ended December 31, 2018 compared to a net loss of $2,966,000 for the year ended December 31, 2017, an increase in the net loss of $313,000 or 13%.

Liquidity and Capital Resources

General

Liquidity is the ability of a company to generate funds to support its current and future operations, satisfy its obligations, and otherwise operate on an ongoing basis. Significant factors in the management of liquidity are funds generated by operations, levels of accounts receivable and accounts payable and capital expenditures. Since the court-approved Creditors Arrangement completed in February 2015, as described below, we financed our operations primarily through equity and convertible debt financings in private placements, as described below.

Working Capital and Cash Flows

As of December 31, 2018 and December 31, 2017, we had $3,183,000 and $215,000 in cash and cash equivalents, respectively.

As of December 31, 2018 and December 31, 2017, we had $2,635,000 and $3,204,000, respectively, of outstanding loans, including accrued interest and net of discounts, all of which relates to the Convertible Loans, as described below.

As of December 31, 2018 and December 31, 2017, we had $204,000 and ($3,103,000) of working capital (deficit), respectively. As of December 31, 2018, we had an accumulated deficit of $29,997,000. The increase in working capital was primarily due to the October 2018 transaction and modifications of convertible loans during 2018, the implications of modifications of terms for such Convertible Loans, reclassification of repurchase feature and Investment Rights and of license purchase obligations from being a non-current liability to a current liability, based on the repayment terms under the LO2A License Agreement. Since the LO2A License Agreement relates to an exclusive license to develop LO2A in the United States, Israel, Ukraine and China, and to purchase, market, sell and distribute LO2A in finished product, which product has not yet been approved by the FDA, we determined, that the current status of LO2A is in substance an In-Process Research and Development asset (“IPR&D”). As the IPR&D was received by Wize Israel through a direct acquisition and not through a business combination and as it was determined that the IPR&D does not have future alternative use, the acquisition cost, together with the related direct expenses (including the stock-based compensation) were recorded as part of our R&D expenses during the year ended December 31, 2015.

The following table presents the major components of net cash flows (used in) provided by operating, investing and financing activities for the periods presented:

|  | Year Ended December 31, |
|  | 2018 |  |  | 2017 |
Net cash used in operating activities |  | $ | (2,208,000 | ) |  | $ | (1,364,000 | )
Net cash provided by (used in) investing activities |  | $ | 253,000 |  |  | $ | (4,000 | )
Net cash provided by financing activities |  | $ | 4,910,000 |  |  | $ | 1,538,000 |

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Year Ended December 31, 2018 Compared to Year Ended December 31, 2017

For the years ended December 31, 2018 and 2017, net cash used in operating activities was $2,208,000 and $1,364,000, respectively. The increase in net cash used in operating activities was mainly due to an increase in net loss of $313,000, increase in amortization of premium related to convertible loans of $2,149,000 and amortization of discounts and issuance costs related to convertible loans of $1,122,000 which was partly mitigated by an increase in Stock-based compensation of $1,289,000 and increase in loss from extinguishment of convertible loans of $1,709,000.

For the years ended December 31, 2018 and 2017, net cash provided by (used in) investing activities was $253,000 and $(4,000), respectively. The increase in net cash provided by (used in) investing activities was mainly due to an increase in proceeds from sale of marketable equity securities of $258,000.

For the years ended December 31, 2018 and 2017, net cash provided by financing activities was $4,910,000 and $1,538,000, respectively. Cash was provided in 2018 primarily by proceeds of: (1) $3,915,000 from issuance of units consisting of common stock and warrants and (2) $1,145,000 from issuance of shares with respect to exercise of PIPE warrants and right for future investment. The increase in net cash provided by financing activities was partly offset by cash proceeds of $707,000 from certain loans in 2017. No such proceeds were received in 2018.

Outlook

According to management estimates, liquidity resources as of December 31, 2018 may not be sufficient to maintain our planned level of operations for the next 12 months. In particular, if needed, we may raise additional funding (in addition to the October 2018 Privet Placement). However, for a long-term solution, we will need to seek additional capital for the purpose of implementing our business strategy and managing our business and developing drug candidates. Conducting clinical trials and commercializing products is expensive and we will need to raise substantial additional funds to achieve our strategic objectives. We have not yet generated any material revenues from our current operations, and therefore we are dependent upon external sources for financing our operations. We will require significant additional financing in the near future. Additional financing may not be available on acceptable terms, if at all. Our future capital requirements as well as the ability to obtain financing will depend on many factors, including those listed under “RISK FACTORS – Risks Related to our Business,” beginning on page 33 of this report. As of December 31, 2018, we had an accumulated deficit and a minimal amount of stockholders’ equity. In addition, during the years ended December 31, 2018 and 2017, we reported losses and negative cash flows from operating activities. Our management considered the significance of such conditions in relation to our ability to meet our current and future obligations and determined that such conditions raise substantial doubt about each our ability to continue as a going concern. As such, the report of our independent registered public accounting firm on the audited financial statements as of and for the year ended December 31, 2018 contains an emphasis of matter paragraph regarding substantial doubt about our ability to continue as a going concern. Substantial doubt about our ability to continue as a going concern could materially limit our ability to raise additional funds through the issuance of new debt or equity securities or otherwise. Future reports on our financial statements may also include an emphasis of matter paragraph with respect to our ability to continue as a going concern.

We currently have no agreements, arrangements, or understandings with any person to obtain funds through bank loans, lines of credit, or any other sources. Until we can generate significant continuing revenues, we expect to satisfy our future cash needs through debt or equity financings, or by out-licensing our distribution rights. We cannot be certain that additional funding will be available to us on acceptable terms, or at all. If funds are not available, we may be required to delay, reduce the scope of, or eliminate one or more of our commercialization efforts.

We are addressing our liquidity issues by implementing initiatives to raise additional funds as well as other measures that we believe will allow us to continue as a going concern. Such initiatives may include monetizing of our assets, including the sale of the Can-Fite shares that we currently own that are presented as marketable equity securities in our financial statements.

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Principal Financing Activities. The following is a summary of the equity and debt financings conducted by Wize Israel since the Creditors’ Arrangement:

In December 2014, an Israeli court approved the Creditors’ Arrangement under the Israeli Companies Law between Wize Israel (then known as Star Night Technologies Ltd.), its creditors and its shareholders, in which Wize Israel was purchased by a group of investors led by Ridge. Upon the completion of the Creditors’ Arrangement, all of Wize Israel’s assets, rights and obligations were transferred to the creditors’ arrangement fund, so that Wize Israel’s equity after the approval of such arrangement was zero and Wize Israel remained a public shell company without any activity, rights or obligations. The Creditors’ Arrangement was completed in February 2015. In connection with the Creditors’ Arrangement, on February 15, 2015, Wize Israel issued 692,307 ordinary shares of Wize Israel, in the aggregate, to Ridge, Zarachia, Avner Arazi (“Arazi”) and Amir Bramli (“Bramli”, and together with Ridge, Zarachia and Arazi, the “2015 Investors”), in exchange for their purchase of the public shell for NIS 1,800,000 (approximately $463,000). In addition, on April 7, 2015, for no consideration, the 2015 Investors provided Wize Israel with a capital amount of NIS 4,056,000 (approximately $1,044,000) in cash.

As of December 31, 2018, we (through Wize Israel) had a total principal and accrued interest balance of approximately $1.48 million of loans outstanding under the Convertible Loans described below, of which (1) Ridge extended a principal amount of $0.27 million, (2) Rimon Gold extended a principal amount of $0.8 million, and (3) Fisher (not affiliated, to Wize Israel’s knowledge, with Ridge or Rimon Gold) extended a principal amount of $0.27 million. Below is a summary of the material provisions of the Loan Agreements.

The 2016 Loan. On March 20, 2016, Wize Israel entered into a convertible loan (as amended on March 30, 2016, December 21, 2017 and October 19, 2018, and March 4, 2018 (the “2016 Loan Agreement”) with Rimon Gold, whereby Rimon Gold extended a loan in the principal amount of up to NIS 2 million (approximately $531,000, according to exchange rate of originate date), which bears interest at an annual rate of 4% (the “2016 Loan”). The 2016 Loan Agreement and the 2017 Loan Agreement (as defined below) have a maturity date of May 31, 2019 and the lenders’ investment rights under the 2016 Loan Agreement to invest up to $512,809, in the aggregate, at $1.308 per share, and the lender’s investment rights under the 2017 Loan Agreement to invest up to $663,446, in the aggregate, at $1.332 per share, expires on November 30, 2019.

Under the 2016 Loan Agreement, Rimon Gold had the right, at its sole discretion, to convert any outstanding portion of the 2016 Loan, but not less than NIS 100,000 (approximately $26,000), into Wize Israel ordinary shares at a conversion price per share of NIS 15.2592 (approximately $3.84), subject to adjustments for stock splits and similar events set forth in the 2016 Loan Agreement. As a result of the Merger and based on the Exchange Ratio, the conversion price per share for the 2016 Loan was adjusted to NIS 3.60 (approximately $0.96). As a result of the 2017 Loan Amendment (as defined below), the aggregate principal amount of the 2016 Loan is $531,067 and the conversion price per share for the 2016 Loan was adjusted to $0.9768.

In order to secure its obligations and performance pursuant to the 2016 Loan Agreement, Wize Israel recorded a first priority fixed charge in favor of Rimon Gold on all of Wize Israel’s rights, including its distribution rights, under the LO2A License Agreement, and a first priority floating charge on all of Wize Israel’s rights, title and interest in all of its assets, as they may exist from time to time (the agreements relating to such charges being referred to as the “Security Agreements”).

Rimon Gold is entitled, under certain circumstances, to demand repayment of the 2016 Loan, including among others: (i) if Wize Israel breaches or fails to perform or is shown to have made a false statement, under the 2016 Loan Agreement or the Security Agreements; (ii) any failure of Wize Israel to make a timely payment; (iii) upon the appointment of a receiver; (iv) the imposition of a lien on a material asset of Wize Israel; (v) if Wize Israel files a motion to stay proceedings; (vi) upon the expiration or termination of the LO2A License Agreement or if any party is in material breach of the LO2A License Agreement or if any party notifies the other of its intention to terminate the LO2A License Agreement; (vii) an adverse material change; and (viii) upon the non-performance of Wize Israel pursuant to the 2017 Loan Agreement described below. We believe that we have complied with the aforementioned covenants through the date of this report.

The 2016 Loan Agreement and the Security Agreements contain a number of other restrictive covenants that limit Wize Israel’s operating flexibility. These covenants include, among other things, limitations on the creation of liens; on the incurrence of indebtedness; on dispositions of assets, mergers, acquisitions and other change of control transactions; on changes in the general nature of Wize Israel’s business; restrictions on payments to related parties; restrictions on conducting rights offerings, and on the distribution of dividends. We believe that we have complied with the aforementioned covenants through the date of this report.

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In addition, under the 2016 Loan Agreement, as modified by the 2017 Loan Agreement and the 2017 Loan Amendment, Rimon Gold has the right, which we refer to as the 2016 Investment Right, until June 30, 2019, to invest up to $796,601, in the aggregate, at an agreed price per share, which was adjusted based on the Exchange Ratio from NIS 20.4 (approximately $6.00) to NIS 5.04 (approximately $1.44) and based on the 2017 Loan Amendment, from NIS 5.04 to a fixed price of $1.308 (subject to adjustments in case of stock splits or similar events). See “-December 2017 Loan Amendment” below.

The 2017 Loan. On January 15, 2017, Wize Israel entered into the 2017 Loan Agreement (as amended on December 21, 2017, and October 19, 2018 the “2017 Loan Agreement”) with Ridge, and, by way of entering into assignments and assumption agreements following such date, also with Rimon Gold and Fisher (together, the “2017 Lenders”), whereby each of the lenders extended a loan in the principal amount of up to NIS 1 million (approximately $283,000) and in the aggregate principal amount of up to NIS 3 million (approximately $850,000), which bears interest at an annual rate of 4% (the “2017 Loan”, and together with the 2016 Loan, the “Loans”)). Pursuant to the 2017 Loan Agreement and the 2017 Loan Amendment, the 2017 Loan has a maturity date which is the New Loan Agreements Maturity Date. In addition, pursuant to the 2017 Loan Amendment, the expiration date of the investment right under the 2017 Loan Agreement was amended to be 180 days after the New Loan Agreements Maturity Date.

Under the 2017 Loan Agreement, each of the 2017 Lenders had the right, at its sole discretion, to convert any outstanding portion of the 2017 Loan, but no less than NIS 100,000 (approximately $28,000), that the lender provided to Wize Israel (each such portion converted, the into Wize Israel ordinary shares at a conversion price per share equal to the lower of (1) NIS 24 (approximately $6.72) and (2) the lowest price per share of Wize Israel in any offering made by Wize Israel following the date of the 2017 Loan Agreement and through the date of such requested conversion, subject to adjustments for stock splits and similar events set forth in the 2017 Loan Agreement (the “2017 Loan Conversion Price”). As a result of the 2017 PIPE (as defined below), the 2017 Loan Conversion Price for Rimon Gold, Fisher and Ridge was adjusted to NIS 16.80 (approximately $4.80), and as a result of the Merger, the 2017 Loan Conversion Price of NIS16.80 (approximately $4.80) was adjusted in accordance with the Exchange Ratio to NIS 4.05 (approximately $1.15). As a result of the 2017 Loan Amendment, the aggregate principal amount of the 2017 Loan is $822,144 and the 2017 Loan Conversion Price was adjusted to a fixed price of $1.1112. See “-December 2017 Loan Amendment” below.

In addition, under the 2017 Loan Agreement, as modified by the 2017 Loan Amendment, the 2017 Lenders have the right, which we refer to as the 2017 Investment Right, until June 30, 2019, to invest up to $1,233,216, in the aggregate, at an agreed price per share equal to 120% of the applicable 2017 Loan Conversion Price, which was adjusted based on the 2017 Loan Amendment, to a fixed exercise price of $1.332 (subject to adjustments in case of stock splits or similar events). See “-December 2017 Loan Amendment” below.

Ridge is entitled, under certain circumstances, to demand repayment of the 2017 Loan, including: (i) if Wize Israel breaches or fails to perform or is shown to have made a false statement, under the 2017 Agreement or the Security Agreements; (ii) any failure of Wize Israel to make a timely payment; (iii) upon the appointment of a receiver; (iv) the imposition of a lien on a material asset of Wize Israel; (v) if Wize Israel files a motion to freeze proceedings; and (vi) an adverse material change. We believe that we have complied with the aforementioned covenants through the date of this report.

The 2017 Loan contains a number of restrictive covenants that limit Wize Israel’s operating flexibility. These covenants include, among other things, limitations on the creation of liens; on the incurrence of indebtedness; on dispositions of assets, mergers, acquisitions and other change of control transactions; on changes in the general nature of Wize Israel’s business; restrictions on payments to related parties; and on the distribution of dividends. Wize Israel has complied with the aforementioned covenants through the date of this report.

It should be noted that, prior to entering into the 2017 Loan Agreement, Ridge provided the following three loans to Wize Israel, all of which bore interest at an annual rate equal to the interest rates of the Israeli government bonds: (1) NIS 250,000 was extended in November 2016, (2) NIS 300,000 was extended in December 2016 and (3) NIS 200,000 was extended in February 2017 (together, the “Ridge Interim Loans”). On March 30, 2017, after Ridge already provided NIS 250,000 under the 2017 Loan Agreement out of the NIS 1 million committed by Ridge thereunder, Ridge exercised its right to have the Ridge Interim Loans treated as a portion of the remaining NIS 1 million.

In addition, as part of the 2017 Loan Agreement, Wize Israel and the other lenders agreed that (1) the security interests made under the Security Agreements will also serve to secure the loans made by Rimon Gold under the 2017 Loan Agreement, and (2) Rimon Gold will have the right to be repaid the full 2016 Loan prior to any repayment of the 2017 Loan.

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December 2017 Loan Amendment. On December 21, 2017, we entered into an amendment (the “2017 Loan Amendment”) to the 2016 Loan Agreement and the 2017 Loan Agreement. Pursuant to the 2017 Loan Amendment, (i) the maturity date of the Loans was extended from December 31, 2017 to December 31, 2018; (ii) the exercise period of the 2016 Investment Right was amended so that it shall expire on June 30, 2019; (iii) the exercise period of the 2017 Investment Right was amended so that it shall expire, without the need to first convert the 2017 Loan, on June 30, 2019; and (iv) the below terms of the Loans were amended to be denominated in U.S. dollars instead of NIS:

|  | 2016 Loan |  |  | 2017 Loan |
Aggregate Principal Amount |  | $ | 531,067 |  |  | $ | 822,144 | *
Conversion Price Per Wize US Share |  | $ | 0.9768 |  |  | $ | 1.1112 |
Aggregate Maximum Investment Right |  | $ | 796,601 |  |  | $ | 1,233,216 | **
Exercise Price of Investment Right |  | $ | 1.308 |  |  | $ | 1.332 |

* | Principal loan amount of $274,048 for each of the three 2017 Lenders.

** | Maximum Investment Right of $411,072 for each of the three 2017 Lenders.

Rimon Gold and Ridge Consents to the Merger Agreement. In connection with the Merger Agreement, Wize Israel sought and obtained the written consents of Rimon Gold and Ridge to the transactions contemplated by the Merger Agreement. The consent provided by Rimon Gold provided that it is based upon, among other things, the following obligations: (1) following the closing of the Merger Agreement, we will assist Rimon Gold with its filing requirements, if any, with the SEC with respect to beneficial ownership and similar reports; and (2) at closing of the Merger Agreement, we will execute and deliver to Rimon Gold the Wize Guaranty, which we executed and delivered to Rimon Gold.

Under the Wize Guaranty, we irrevocably guarantee Wize Israel’s obligations to Rimon Gold under the Convertible Loans. In addition, the Wize Guaranty contains a number of restrictive covenants that limit our operating flexibility. These covenants include, among other things, limitations on the creation of liens; on the incurrence of indebtedness; on dispositions of assets, mergers, acquisitions and other change of control transactions; on changes in the general nature of our business; and on the distribution of dividends. Wize Israel has complied with the aforementioned covenants through the date of this report.

2017 PIPE. On June 23, 2017, Wize Israel entered into a Private Placement Agreement (the “2017 PIPE Agreements”) with each of Yosef Eliyahu Peretz (“Peretz”), Yaakov Zarachia (“Zarachia”), Simcha Sadan (“Sadan”) and Jonathan Brian Rubini (“Rubini”, and together with Peretz, Zarachia and Sadan, the “2017 PIPE Investors”). Pursuant to the 2017 PIPE Agreements, the 2017 PIPE Investors invested a total of up to NIS 3.49 million (approximately $1 million) in exchange for a total of 207,739 ordinary shares of Wize Israel, at a price per share of NIS 16.8 (approximately $4.8), with Peretz investing NIS 490,000 (approximately $139,000) in exchange for the private placement of 29,167 ordinary shares of Wize Israel (the “Peretz Financing”) and each of Zarachia, Sadan and Rubini (the “Other Investors”) investing NIS 1 million (approximately $282,000) in exchange for the private placement of 59,524 ordinary shares of Wize Israel each (together, the “Other Financing”), and together with the Peretz Financing, the “2017 PIPE”). At the Effective Time, the 207,739 ordinary shares of Wize Israel that were issued to the 2017 PIPE Investors as part of the 2017 PIPE were automatically cancelled and converted, based on the Exchange Ratio, into an aggregate of 860,987 shares of our Common Stock.

Subject to the closing of the Merger, Wize Israel also undertook to cause us to grant 2017 Warrants to each of the 2017 PIPE Investors, with each PIPE Warrant being exercisable into one share of our Common Stock, with a term of three years from the date of grant. According to the 2017 PIPE Agreements, the number of 2017 Warrants and the exercise price thereof will reflect, prior to giving effect to an adjustment based on the exchange ratio, (i) 30,625 warrants to Peretz and (ii) 62,500 warrants to each of the Other Investors, each warrant exercisable into one ordinary share of Wize Israel, at an exercise price of NIS 28.8 per share (approximately $8.40). Based on the Exchange Ratio, Peretz was granted 126,928 2017 Warrants and each of the Other Investors was granted 259,036 2017 Warrants, each at an exercise price of $1.9728. Consistent with the foregoing, we executed and delivered the 2017 Warrants to the 2017 PIPE Investors on November 16, 2017.

On June 22, 2017, Ridge provided notice to Wize Israel that it had waived its right to adjust the 2017 Loan Conversion Price in connection with the Peretz Investment. On July 4, 2017, Wize Israel completed the Peretz Investment. However, Ridge did not waive its right to adjust the 2017 Loan Conversion Price in connection with the Other Investments. On July 31, 2017, at a general meeting of the shareholders of Wize Israel, the Other Investments was approved and on August 7, 2017 Wize Israel completed the Other Investments.

October 2018 Private Placement. On October 22, 2018, the Company entered into a securities purchase agreement with certain accredited investors. Pursuant to the 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 (i) 3,100,000 shares of common stock, for a purchase price of $1.00 per share, and (ii) 1,350 shares of newly created Series A Preferred Stock (each convertible into 1,000 shares of common stock), for a purchase price of $1,000 per share, for aggregate gross proceeds under the purchase agreement of $4,450. The Company also agreed to issue to the investors Series A Warrants to purchase an aggregate of 4,450,000 shares of common stock (equal to 100% of the shares of common stock sold (on an as-converted basis with respect to shares of Series A Preferred Stock)), and Series B Warrants to purchase an aggregate of 4,450,000 shares of common stock (equal to 100% of the shares of common stock sold (on an as-converted basis with respect to shares of Series A Preferred Stock)). The Series A Warrants have an exercise price of $1.10 per share, and the Series B Warrants have an exercise price of $1.00 per share. The investors under the purchase agreement include prior investors in the Company and a lender to the Company.

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Off-Balance Sheet Arrangements

As of December 31, 2018 and December 31, 2017, we did not have any off-balance sheet arrangements, as such term is defined under Item 303 of Regulation S-K, that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Recently Issued Accounting Pronouncements

For information with respect to recent accounting pronouncements, see Note 2v and 2w to our audited consolidated financial statements for the year ended December 31, 2018.

Critical Accounting Policies

Classification and measurement of the Loans (including modifications accounting). The proceeds received upon issuance of the 2016 Loan together with a freestanding derivative financial instrument (derivative liability for the 2016 Investment Right) were allocated to the financial instruments issued, based on the residual value method. The detachable derivative financial instrument was recognized based on its fair value and the remaining amount was allocated to the 2016 Loan component.

| a. | Wize Israel considered the applicability of the “Derivatives and Hedging” guidance and determined that the embedded conversion feature of the 2016 Loan should not be separated from the host instrument because it qualifies for equity classification. Furthermore, Wize Israel applied the “Beneficial Conversion Features” (“BCF”) guidance to determine whether the conversion feature is beneficial to the investor.

The BCF was calculated by allocating the proceeds received in financing transactions to the 2016 Loan and to any detachable freestanding financial instrument (derivative liability for the 2016 Investment Right) included in the transaction, and by measuring the intrinsic value of the conversion option based on the effective conversion price as a result of the allocated proceeds.

The intrinsic value of the conversion option was recorded as a discount on the 2016 Loan with a corresponding amount credited directly to equity as additional paid-in capital. After the initial recognition, the discount on the 2016 Loan was amortized as interest expense over the contractual term of the 2016 Loan by using the effective interest method.

| b. | Wize Israel considered the applicability of the “Derivatives and Hedging” guidance and determined that the embedded conversion feature of the 2017 Loan should not be separated from the host instrument because the embedded conversion option, if freestanding, does not meet the definition of a derivative, since its terms do not require or permit net settlement. Furthermore Wize Israel applied the BCF guidance to determine whether the conversion feature is beneficial to the investor.

The amount of the BCF with respect to the 2017 Loan was calculated at the commitment date, as the difference between the conversion price (i.e. the entire proceeds received for the 2017 Loan) and the aggregate fair value of the Common Stock and other securities (which consist of the 2017 Investment Right) into which the 2017 Loan is convertible. As such difference was determined to be greater than the amount of the entire proceeds received for the 2017 Loan, the amount of the discount assigned to the BCF was limited to the amount of the entire proceeds.

In connection with the 2018 loan amendment, the Company applied ASC 470-50.

According to ASC 470-50, each of the modified financial instruments were measured at fair value. Then, the total fair value of the modified financial instruments related to the 2017 Loan and 2016 Loan (the “Reacquisition Price”) was allocated to the original financial instruments included in the 2017 Loan and 2016 Loan, as applicable, based on the relative fair value of such financial instruments as of the date of the extinguishment.

The difference between the Reacquisition Price that was allocated to the Right to Future Investment amounting which was included in the 2016 Loan and its fair value as of that date was recorded directly to additional paid in capital (as a deemed dividend). In addition, the Reacquisition Price that was allocated to the Right to Future Investment which was included in the 2017 Loan and its fair value as of that date, was recorded directly to additional paid-in capital (as a deemed dividend). The difference between reacquisition price that was allocated to the 2017 loan and to the 2016 loan and the carrying value of the 2017 Loan and 2016 Loan was recorded as gain on extinguishment.

In connection with October 2018 Purchase agreement, The Company applied ASU 2017-11. In accordance with ASU 2017-11, which was early applied by the Company, the Company concluded that the Series A Convertible Preferred Stock and related Warrants meet the requirements for equity classification since they are considered to be indexed to the Company’s common stock and all other equity classification criteria described in ASC 815-40-25.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

As a smaller reporting company, we have elected not to provide the disclosure required by this item.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

All information required by this item is included in Item 15 of Part IV of this report and is incorporated into this item by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

ITEM 9A. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Acting Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a- 15(e) and 15d- 15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)), as of the end of the period covered by this Annual Report. Based on such evaluation, our Acting Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2018, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our Acting Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of our company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management assessed our internal control over financial reporting as of December 31, 2018, the end of our fiscal year. Management based its assessment on criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Management’s assessment included evaluation of such elements as the design and operating effectiveness of key financial reporting controls, process documentation, accounting policies, and our overall control environment.

Based on our assessment, management has concluded that our internal control over financial reporting was effective, as of the end of the fiscal year, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with generally accepted accounting principles.

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Report of Independent Registered Public Accounting Firm

This Annual Report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s independent registered public accounting firm pursuant to the rules of the SEC, applicable to emerging growth companies that permit the Company to provide only management’s report in this Annual Report.

Changes in Internal Control

There were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the fourth quarter of 2018 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures and Internal Control over Financial Reporting

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

ITEM 9B. OTHER INFORMATION.

None.

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PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

Directors and Executive Officers

Set forth below is certain information with respect to the individuals who are our directors and executive officers.

Name |  | Age |  | Position
Noam Danenberg |  | 48 |  | Chairman of the Board
Michael Belkin |  | 76 |  | Director
Yossi Keret |  | 53 |  | Director
Franck Amouyal |  | 35 |  | Director
Joseph Zarzewsky |  | 58 |  | Director
Or Eisenberg |  | 37 |  | Acting Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary

Business Experience

The following is a brief account of the education and business experience during at least the past five years of each director and executive officer, indicating the principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.

Noam Danenberg. Noam Danenberg has served as a director and as our Chairman since November 7, 2018. He served as our Chief Operating Officer from the closing of the Merger on November 15, 2017 until November 7, 2018. Mr. Danenberg has served as a strategic advisor of Wize Israel since April 2015. Mr. Danenberg co-founded Panmed Inc. (“Panmed”) in January 2014, a biomed investment company. Since 2000, Mr. Danenberg has provided private investment consulting services to numerous private and public companies through his wholly owned company, N. Danenberg Holding (2000) Ltd. From May 2014 to January 2015, Mr. Danenberg served as a director of Go.D.M. Investments Ltd. (TASE: GODM). From 2000 to 2012, Mr. Danenberg served as an investment advisor at International Software Consulting Limited and from 2004 to 2008 he served as the Chairman and CEO of Fitracks Inc. From 2006 to 2012, he also served as the Chairman of the Board of Hawk Medical Technologies Ltd. Mr. Danenberg holds a B.B.A. in Computer Science from the European University in Antwerp, Belgium and an M.B.A. from the Boston University Brussels Graduate Center.

Michael Belkin, M.A., M.D. Michael Belkin has served on our board since July 1, 2013. Dr. Belkin is, and has been since 1980, a Professor, and since 2010, a Professor Emeritus, of Ophthalmology at Tel Aviv University in Tel Aviv, Israel, and the Director of the Ophthalmic Technologies Laboratory at the university’s Eye Research Institute at the Sheba Medical Center since 1997. Since 2006, Dr. Belkin also serves as a Senior Consultant to the Eye Research Institute at the Singapore National Eye Institute. He was awarded a master’s degree in natural sciences by Cambridge University, England, and received a doctorate in medicine from the Hebrew University of Jerusalem. Dr. Belkin previously served as Director of Research, Development and Non-Conventional Warfare Medicine in the Israel Defense Forces Medical Corps. He also established and was the first full-time Director of the Tel Aviv University Eye Research Institute, Chairman of the Tel-Aviv University Department of Ophthalmology and the President of the Israel Society of Eye and Vision Research, of which he was one of the founders. Dr. Belkin is an author of over 250 scientific publications and more than 25 patents. He is an internationally recognized eye researcher and has received various research awards. His laboratory is dedicated to enabling the transfer of technologies from university-level research to clinical practice by providing expertise and facilities for laboratory, preclinical and clinical studies. He is an entrepreneur and advisor of several ophthalmic companies in the fields of lasers, optics, ophthalmic devices, pharmaceutics and biotechnology. One of hisinventions, the ExPRESS miniature glaucoma shunt, is currently used worldwide. He serves as chairman and member of various international and local scientific and professional committees as well as scientific journals’ editorial boards. Dr. Belkin’s qualifications to serve on our Board of Directors include his expertise in ophthalmic medical research, his medical experience, and his experience as an advisor to several ophthalmic companies.

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Yossi Keret. Yossi Keret has served on our board since the closing of the Merger on November 15, 2017. Mr. Keret has served as the Chief Executive Officer, Managing Director and Director of Weebit-Nano Ltd. (ASX:WBT) from August 2015 to October 2017. From October 1996 to October 2015, Mr. Keret served as the Chief Financial Officer of numerous public and private companies, including Eric Cohen Books Ltd. & Burlington English Ltd., Daimler Financial Services Israel Ltd., Pluristem Life Systems Inc. (NASDAQ:PST), M.L.L. Software and Computers Industries Ltd. (TASE:MLL), Internet-Zahav Group, Ltd. (NASDAQ:IGLD) and Top Image Systems Ltd. (NASDAQ:TISA). Mr. Keret commenced his career at Kost Forer Gabbay & Kasierer, registered public accounting firm, a member firm of Ernst & Young Global. Mr. Keret holds a B.A. from Haifa University in Economics and Accounting and is a Certified Public Accountant in Israel. Mr. Keret’s qualifications to serve on our Board of Directors include his expertise in financial matters and his serving as the Chief Financial Officer in numerous private and public companies.

Dr. Franck Amouyal. Dr. Franck Amouyal has served on our board since the closing of the Merger on November 15, 2017. Dr. Amouyal practices as a medical and surgical ophthalmologist in Israel at Neve Tsedek Medical Center since October 2016 and Koupat Holim Clalit and Meuhedet since November 2016. From February 2016 to June 2016 he practiced as an ophthalmologist at Sourasky Medical Center, Ichilov. He conducted his residency and fellowship at the Nord Hospital and La Timone Hospital in Marseille, France, at the Lariboisière Hospital, Paris, France and in the Jules Stein Eye Institute, UCLA, California, USA, as a research assistant. Dr. Amouyal is the author of over 10 scientific publications and is a member of the French Society of Ophthalmology (SFO) and the Association for Research in Vision and Ophthalmology (ARVO). He also lectures on ophthalmology to optometrists, nurses and medical students. Dr. Amouyal holds a First Cycle and a Second Cycle of Medical Studies degree from the Medical University of Purpan, Toulouse, France. Dr. Amouyal’s qualifications to serve on our Board of Directors include his expertise in ophthalmic medical research and his medical experience.

Joseph Zarzewsky. Joseph Zarzewsky has served on our board since the closing of the Merger on November 15, 2017. Mr. Zarzewsky has served as the Vice President of Business Development at the Mitrelli Group (“Mitrelli”) since June 2010. He has served as the Chairman of “SMAD”, a joint venture between Mitrelli and the Harbin Government, China, since June 2011. Mr. Zarzewsky has also served as the Chairman of the Investment Committee of the Harbin Israel Fund since 2012. He has also previously served as the Vice President of marketing at Clal Insurance Enterprises Holdings Ltd. (TASE: CLIS) and as the Vice President of Marketing for the Israel Postal Authority. Mr. Zarzewsky has served as a director of Excellence Underwriter House Ltd. since 2007. In 2008, he was appointed as the Honorary Economic Advisor of the Harbin Government, China. In addition, in June 2012, he was honored as an Honorary Citizen of Harbin, China. Mr. Zarzewsky holds an MA in Commercial Law from both the University of Tel Aviv and University of California, Berkeley. Mr. Zarzewsky’s qualifications to serve on our Board of Directors include his expertise in financial matters.

Or Eisenberg. Or Eisenberg has served as our Acting Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary since the closing of the Merger on November 15, 2017. Mr. Eisenberg has served as the Chief Financial Officer and Acting Chief Executive Officer of Wize Israel since March 2015. From October 2010 to December 2014, he served as the controller of the Katzir Fund Group. From March 2013 to December 2014, he served as either an external controller or Chief Financial Officer of a number of public companies whose shares are listed for trading on the TASE. From October 2007 to October 2010, Mr. Eisenberg was an accountant at Kost Forer Gabbay & Kasierer, a registered public accounting firm, a member firm of Ernst & Young Global. Mr. Eisenberg holds a B.A. from Haifa University in Economics and Accounting and is a Certified Public Accountant in Israel.

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Scientific Advisory Board

We maintain a Scientific Advisory Board consisting of internationally recognized scientists who advise us on the scientific and technical aspects of our business. The Scientific Advisory Board reviews and consults with respect to projects and occasionally assesses the value of new technologies and developments. In addition, individual members of the Scientific Advisory Board meet with us periodically to provide advice in their particular areas of expertise. The Scientific Advisory Board consists of the following members:

Professor Penny Asbell, MD. joined our Scientific Advisory Board in July 2018. She is a Key Opinion Leader in the treatment of dry eye syndrome. As a principal investigator in countless clinical studies sponsored by the National Institute of Health's National Eye Institute and by industry sponsors, Dr. Asbell has participated in the development of pharmaceuticals that have included pivotal treatments for ocular conditions including dry eyes. In June 2018, Dr. Asbell was named to her current position as the Barrett G. Haik Endowed Chair for Ophthalmology in the College of Medicine and Director of the Hamilton Eye Institute at the University of Tennessee Health Science Center (UTHSC). Dr. Asbell joined UTHSC from the Icahn School of Medicine at Mount Sinai (ISMMS) in New York, where she is a professor of Ophthalmology and director of the Cornea Service and of the Cornea Clinical and Research Fellowships, which she initiated. She is the vice chair of the ISMMS Appointment and Promotion Committee, medical director of the Faculty Practice for Ophthalmology, and system vice chair for Academic Affairs for the Department of Ophthalmology. She established Mount Sinai's Lowenstein Foundation Sjogren's Center to provide multi-specialty care for patients with dry eyes and associated systemic problems and founded the Ocular Inflammatory Biomarker Laboratory at Mount Sinai that is actively seeking validated biomarkers for ocular surface disease. Dr. Asbell has authored and co-authored hundreds of articles, authored 25 book chapters, and has presented over 200 lectures and courses. In addition, she has been extensively interviewed by the New York Times, CBS News, Good Morning America, Bloomberg News, CNN, and many other nationally broadcasted events. She is a world-renowned educator and has lectured throughout the United States, Europe, Japan, India, and South America. Dr. Asbell has served on the board of directors of the Tear Film and Ocular Surface Society, the Cornea Society, the Eye Bank for Sight Restoration and Program Committee-Cornea for ARVO. She is currently the Deputy Editor of Eyewiki which is sponsored by the American Academy of Ophthalmology, Editor in Chief of ECL, the official journal of CLAO, and Section Editor of Cornea for BMC.

Dr. Joseph Tauber, MD. Dr. Tauber joined our Scientific Advisory Board in March 2018. He has been a principal investigator in over 125 research studies of high-risk corneal transplantation, inflammation and allergic eye diseases, corneal infectious diseases and numerous studies related to DES. Dr. Tauber has written five book chapters and over 60 articles in ophthalmology medical journals. He has been awarded the Heed Ophthalmic Foundation Fellowship Award and the National Eye Institute Individual NRSA Award. Dr. Tauber received his doctorate from Harvard Medical School, his training in internal medicine at Beth Israel Hospital and in ophthalmology at Tufts-New England Medical Center. He has served as Clinical Professor of Ophthalmology at Kansas University School of Medicine and University of Missouri-Kansas City School of Medicine. Dr. Tauber specializes in anterior segment surgery, corneal transplantation, the treatment of corneal and external diseases and laser vision correction procedures. A board-certified ophthalmologist, Dr. Tauber is the Founder of Tauber Eye Center in Kansas City, Missouri.

Professor Janos Nemeth, MD. Dr. Nemeth joined the Wize Israel Scientific Advisory Board in October 2015 and has been a member of our Scientific Advisory Board since the closing of the Merger on November 16, 2017. He has performed clinical trials with LO2A in the treatment of CCH and Sjögren’s demonstrating efficacy in these indications. He has been a principal investigator or co-investigator in 25 ophthalmology clinical trials, most of them in Phase III. Dr. Nemeth has written and/or edited 10 books, authored 37 book chapters, and authored 351 scientific articles. He has received numerous awards including the Chibret Award, the Dr. Ferenc Papolczy Foundation First Prize, both in Hungary, as well as the Imre-Blaskovics Prize and the Schulek Vilmos Prize of the Hungarian Ophthalmological Society and the Gábor Brooser Prize of the Hungarian Ophthalmological and Diabetes Societies. Dr. Nemeth is an ophthalmologic surgeon and Board Member of the Drug Discovery and Safety Center at Semmelweis University, Budapest, Hungary. Dr. Nemeth received his doctorate of medicine from the University of Szeged, Hungary. He was a professor of ophthalmology at the University of Szeged, Semmelweis University and at Pazmany Peter Catholic University in Hungary. Dr. Nemeth’s research fields of interest include numerous ophthalmic indications, including Sjögren’s and tear film dynamics.

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Family Relationships

Dr. Franck Amouyal is the son-in-law of Philippe Halfon, who is a business partner of Noam Danenberg (in businesses unrelated to Wize). Otherwise, there are no family relationships among our executive officers and directors.

There have been no events under any bankruptcy act, no criminal proceedings and no judgments, injunctions, orders or decrees material to the evaluation of the ability and integrity of any of our directors, executive officers, or control persons during the past ten years.

Election of Directors

Directors are elected to hold office until such director’s successor is elected and qualified or until such director’s earlier resignation or removal. Annual meetings of the stockholders, for the election of directors to succeed those whose terms expire, are to be held at such time each year as designated by our Board of Directors, which date shall be within 13 months of the last annual meeting of stockholders. Officers are elected by the Board of Directors, which is required to consider that subject at its first meeting after every annual meeting of stockholders. Each officer holds his office until his successor is elected and qualified or until his earlier resignation or removal.

Legal Proceedings

We are not aware of any legal proceedings in which any of our directors, officers or affiliates, any owner of record or beneficially of more than five percent of any class of our voting securities, or any associate of any such director, officer, or affiliate of our company, or security holder is a party adverse to us or our subsidiaries or has a material interest adverse to us or our subsidiaries.

Code of Ethics

We have not adopted a code of ethics that applies to our officers, directors and employees.

Director Independence

Our securities are not listed on a national securities exchange or in an inter-dealer quotation system which has requirements that directors be independent. However, we have adopted the independence standards of the NASDAQ Capital Market to determine the independence of our directors and those directors serving on any committee. These standards provide that a person will be considered an independent director if he or she is not an officer of the company and is, in the view of the company’s board of directors, free of any relationship that would interfere with the exercise of independent judgment. Our Board has determined that each of Dr. Michael Belkin, Yossi Keret, Dr. Franck Amouyal and Joseph Zarzewsky are independent as defined under the rules promulgated by the NASDAQ Capital Market. Other than Mr. Amouyal and Mr. Zarzewsky, none of the independent directors has any relationship with us besides serving on our Board. Dr. Franck Amouyal is the son-in-law of Philippe Halfon, who is a business partner of Noam Danenberg.

On June 19, 2017, Wize Israel entered into a finder’s fee agreement with Harbin Israel (Trading) Ltd., an affiliate of Mr. Zarzewsky, pursuant to which Mr. Zarzewsky will receive a 5% royalty on all of Wize Israel’s revenues to the extent such revenues are earned from relationships initiated by Mr. Zarzewsky and agreed to by Wize Israel. The term of the agreement is for 12 months unless earlier terminated. Either party may terminate upon twenty-one days’ notice. Mr. Zarzewsky introduced us to the Chinese Distributor. See “BUSINESS — Marketing, Sales and Distribution,” beginning on page 18 of this report. Our Board considered these relationships and determined that they would not interfere with Mr. Amouyal’s or Mr. Zarzewsky’s exercise of independent judgment in carrying out the responsibilities of a director.

We have determined that each of the directors is qualified to serve as a director of the Company based on a review of the experience, qualifications, attributes and skills of each director. In reaching this determination, we have considered a variety of criteria, including, among other things: character and integrity; ability to review critically, evaluate, question and discuss information provided, to exercise effective business judgment and to interact effectively with the other directors; and willingness and ability to commit the time necessary to perform the duties of a director.

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We have determined that each of the directors is qualified to serve as a director of the Company based on a review of the experience, qualifications, attributes and skills of each director. In reaching this determination, we have considered a variety of criteria, including, among other things: character and integrity; ability to review critically, evaluate, question and discuss information provided, to exercise effective business judgment and to interact effectively with the other directors; and willingness and ability to commit the time necessary to perform the duties of a director.

Board Meeting Attendance

During the year ended December 31, 2018, our Board of Directors held six meetings. All of our directors attended such meetings.

Committees

Audit Committee and Audit Committee Financial Expert

The members of our Audit Committee are Yossi Keret, Joseph Zarzewsky and Dr. Franck Amouyal. Our Board of Directors has determined that Yossi Keret is an “audit committee financial expert” as set forth in Item 407(d)(5) of Regulation S-K and that all members of the Audit Committee are “independent” as defined by the rules of the SEC and the NASDAQ Capital Market rules and regulations. Our Board of Directors has not yet adopted a written charter.

Compensation Committee

The members of our Compensation Committee are Yossi Keret, Dr. Michael Belkin and Joseph Zarzewsky. The Board of Directors has determined that all of the members of the Compensation Committee are “independent” as defined by the rules of the SEC and the NASDAQ Capital Market rules and regulations. Our Board of Directors has not yet adopted a written charter.

We plan to organize a nominating and corporate governance committee during the first half of 2019. Because of our small size, our Board of Directors carries out the duties of the nominating and corporate governance committee. In selecting nominees for directorships, our Board of Directors considers a broad range of characteristics related to qualifications, background and diversity of nominees based on our current business needs. Our Board of Directors has not adopted written guidelines regarding nominees for director. There have been no material changes to the procedures by which security holders may recommend nominees to our Board of Directors.

Board Leadership Structure and Role in Risk Oversight

In accordance with our Bylaws, our Board appoints our officers, including our Chief Executive Officer, Chief Financial Officer, and such other officers as our Board may appoint from time to time. Mr. Noam Danenberg currently serves as our Chairman of the Board and Mr. Or Eisenberg currently serves as our Acting Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary. Our Board periodically considers whether changes to our overall leadership structure are appropriate.

Our Chairman is responsible for chairing meetings of our Board. Our Bylaws provide that if our Chairman is unable to preside at meetings of our Board, our Chief Executive Officer, if such officer is a director, shall preside at such meetings. Our Chairman is also responsible for chairing meetings of stockholders. In his absence, our Board may appoint another party to chair the stockholders’ meeting.

Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including strategic risks, enterprise risks, financial risks, regulatory risks, and others. Management is responsible for the day-to-day management of risks the company faces, while our Board, as a whole, has responsibility for the oversight of risk management. In its risk oversight role, our Board has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed.

Our Board believes that full and open communication between management and our Board is essential for effective risk management and oversight. Senior management attends Board of Directors meetings and is available to address any questions or concerns raised by our Board on risk management-related and any other matters.

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Communications by Stockholders with Directors

We encourage stockholder communications to our Board of Directors and/or individual directors. Stockholders who wish to communicate with our Board of Directors or an individual director should send their communications to the care of Secretary, Wize Pharma, Inc., 5b Hanagar Street, Hod Hasharon, Israel 4527708. The Secretary will maintain a log of such communications and will transmit as soon as practicable such communications to the Chairman of the Board or to the identified individual director(s), although communications that are abusive, in bad taste or that present safety or security concerns may be handled differently, as determined by the Secretary.

Director Attendance at Annual Meetings

We will make every effort to schedule our annual meeting of stockholders at a time and date to accommodate attendance by directors taking into account the directors’ schedules. While all directors are encouraged to attend our annual meeting of stockholders, there is no formal policy as to their attendance at annual meetings of stockholders.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our directors, executive officers and persons who own more than 10% of our Common Stock to file with the SEC reports of ownership and changes in ownership of our Common Stock. Our directors, executive officers and greater than 10% beneficial owners of our Common Stock are required by SEC regulation to furnish us with copies of all Section 16(a) reports they file. Based solely upon information furnished to us and contained in reports filed with the SEC, we believe that all Section 16(a) reports of our directors, executive officers and greater than 10% beneficial owners were filed timely for the fiscal year ended December 31, 2018 except as set forth below:

| ● | Yaakov Zarachia filed three late Form 4s;

| ● | Franck Amouyal filed one late Form 4;

| ● | Noam Danenberg filed one late Form 4;

| ● | Or Eisenberg filed one late Form 4;

| ● | Ron Mayron filed one late Form 4;

| ● | Joseph Zarzewsky filed one late Form 4;

| ● | Yosef Keret filed one late Form 4;

| ● | Ridge Valley filed one late Form 4;

| ● | Simcha Sadan filed one late Form 4;

| ● | Rimon Gold filed one late Form 4; and

| ● | Michael Belkin filed one late Form 4.

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ITEM 11. EXECUTIVE COMPENSATION.

Executive Compensation

The following table sets forth information concerning the annual compensation awarded to, earned by, or paid to the following named executive officers for all services rendered in all capacities to us for the years ended December 31, 2018 and 2017. The amounts set forth for Mr. Eisenberg and Mr. Danenberg were originally denominated in NIS and were translated into U.S. Dollars at the average current exchange rate for each year.

Name And Position |  | Year |  |  | Salary ($) (1) |  |  | Bonus ($) |  |  | Stock Awards ($) |  |  | Option Awards ($) (2) |  |  | All Other Compensation ($) |  |  | Total ($) |
Or Eisenberg, Acting Chief Executive Officer |  |  | 2018 |  |  |  | 210,000 |  |  |  |  |  |  |  |  |  |  |  | 198,000 |  |  |  | 3,000 | (3) |  |  | 411,000 |
and Chief Financial Officer (4) |  |  | 2017 |  |  |  | 163,000 |  |  |  |  |  |  |  |  |  |  |  | 2,000 |  |  |  | 10,000 | (3) |  |  | 175,000 |
Noam Danenberg, Chairman and Former Chief Operating Officer and Strategic Advisor (5) |  |  | 2018 |  |  |  | 204,000 |  |  |  |  |  |  |  |  |  |  |  | 198,000 |  |  |  | 4,000 | (3) |  |  | 406,000 |
|  |  | 2017 |  |  |  | 87,000 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 20,000 | (3) |  |  | 107,000 |
Itay Weinstein Former Chief Financial Officer (6) |  |  | 2018 |  |  |  | - |  |  |  |  |  |  |  |  |  |  |  | - |  |  |  | - |  |  |  | - |
|  |  | 2017 |  |  |  | 18,000 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 18,000 |

(1) | Amounts shown represent consulting fees earned or paid during the fiscal year.

(2) | Reflects the aggregate grant date fair value of option awards granted during the relevant fiscal year calculated in accordance with FASB ASC Topic 718.

(3) | Amount represents car allowance.

(4) | Mr. Eisenberg was appointed as our Acting Chief Executive Officer and Chief Financial Officer on November 16, 2017 in connection with the Merger. He has served as the Acting Chief Executive Officer and Chief Financial Officer of Wize Israel since 2015.

(5) | Mr. Danenberg resigned as our Chief Operating Officer and Strategic Advisor in November 2018. The services of Mr. Danenberg were provided via N. Danenberg Holdings (2000) Ltd. (“Danenberg Holdings”), a services company wholly owned by Mr. Danenberg, pursuant to the terms of the services agreement by and between Wize Israel and Danenberg Holdings. Mr. Danenberg was appointed as our Chief Operating Officer on November 16, 2017 in connection with the Merger. He had served as a strategic advisor to Wize Israel since 2015.

(6) | Mr. Weinstein served as our Chief Financial Officer until his resignation on November 16, 2017 in connection with the Merger. Mr. Weinstein is also the controller of Can-Fite, our former majority stockholder and parent, and was compensated by Can-Fite for services provided to Can-Fite.

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Executive Employment Agreements

Except as set forth below, we have not entered into any employment agreements with the named executive officers listed in the table above.

Employment Agreement with Or Eisenberg

Mr. Eisenberg has served as Wize Israel’s Chief Financial Officer and Acting Chief Executive Officer since March 2015 and as our Financial Officer and Acting Chief Executive Officer since the Merger. Mr. Eisenberg’s employment agreement is with Wize Israel. On August 21, 2018, Wize Israel entered into a restated employment agreement with Mr. Eisenberg, which provides for an initial term of three years, subject to automatic one year renewals thereafter unless the agreement is terminated in accordance with its terms. Mr. Eisenberg is entitled to receive an annual base salary of 480,000 NIS ($131,052), subject to adjustment by the Board of Directors of Wize Israel. The salary shall be increased by 10% upon each of the listing of the Company’s securities on a national exchange and the completion of the Phase IV study randomized, double-masked study of LO2A versus Alcon’s Systane® Ultra UD. The salary shall also be increased by NIS 10,000 upon each final closing of a financing of the Company or Wize Israel during the course of Mr. Eisenberg’s employment in which the Company receives net proceeds of $4,000,000. Mr. Eisenberg’s salary was so increased following consummation of the Company’s October 2018 private placement. As compensation for his role as Chief Executive Officer, he will receive a monthly bonus of 5,000 NIS ($1,366). He is also eligible to receive a transaction bonus in connection with certain material transactions, subject to the Company’s clawback rights, as outlined in the employment agreement. In addition, he is eligible to participate in all health insurance and benefit plans offered by the Company to its executives and is entitled to the reimbursement of business expenses and a vehicle allowance.

In the event Mr. Eisenberg’s employment is terminated by Wize Israel other than for Cause or if he resigns for Good Reason (as such terms are defined in his employment agreement), he will be entitled to receive severance benefits under Israeli law as well as his salary for the remainder of the term of the agreement. In the event Mr. Eisenberg is terminated for Cause, he will be not entitled to receive any payments other than such amounts owing and outstanding prior to the termination of his employment. Mr. Eisenberg is subject to non-competition and non-solicitation restrictions throughout his employment and for a period of six months following the termination of his employment.

Services Agreement with Noam Danenberg

On August 20, 2018, Wize Israel entered into a restated consulting services agreement with N. Danenberg Holdings (2000) Ltd. (the “Consulting Company”) and Noam Danenberg, the Chief Operating Officer of the Company at the time and the Company’s current Chairman. The Consulting Services Agreement provides that Mr. Danenberg will provide consulting services including, but not limited to, general strategic consulting services around business development and fund raising for an initial term of three years. As payment for the consulting services, the Company will pay the Consulting Company 40,000 NIS ($10,921) per month subject to adjustment by the Board of Wize Israel. In addition, the Consulting Company will be eligible to receive a transaction bonus in connection with certain material transactions, subject to the Company’s clawback right, as outlined in the consulting services agreement. The consulting fees shall be increased by 10% upon each of the listing of the Company’s securities on a national exchange and the completion of the Phase IV study randomized, double-masked study of LO2A versus Alcon’s Systane® Ultra UD. The consulting fees shall also be increased by NIS 10,000 upon each final closing of a financing of the Company or Wize Israel during the course of the services agreement in which the Company receives net proceeds of $4,000,000. The consulting fees were so increased following consummation of the Company’s October 2018 private placement.

In the event that the Consulting Company terminates the engagement for Good Reason as defined in the consulting services agreement, it is entitled to receive the balance of the remaining service fees for the term of the agreement. In the event that Wize Israel terminates the agreement for Cause as defined in the consulting services agreement, the Consulting Company will not be entitled to receive any payments other than amounts owing and outstanding prior to the termination of the agreement. Following the initial three year term, the agreement may be terminated by either party upon 120 days prior written notice. The Consulting Company and Mr. Danenberg are subject to non-competition and non-solicitation restrictions throughout the engagement and for a period of six-months following the termination of the consulting services.

On November 7, 2018, the consulting agreement was amended in connection with Mr. Danenberg’s resignation as Chief Operating Officer and appointment to the Board and as Chairman of the Board. The material terms of the agreement were not revised.

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Outstanding Equity Awards at Fiscal Year-End

The following table provides information regarding all outstanding equity awards for our named executive officers as of December 31, 2018:

|  | Option Awards |
|  | Number of |  |  | Number of |  |  |  |  |  |  |
|  | Securities |  |  | Securities |  |  |  |  |  |  |
|  | Underlying |  |  | Underlying |  |  |  |  |  |  |
|  | Unexercised |  |  | Unexercised |  |  |  |  |  |  |
|  | Options |  |  | Options |  |  | Option |  |  | Option |
|  | (#) |  |  | (#) |  |  | Exercise Price |  |  | Expiration |
Name |  | Exercisable |  |  | Unexercisable |  |  | ($) |  |  | Date |
Or Eisenberg (1) |  |  | 6,000 |  |  |  | 30,000 |  |  |  | 3.59 |  |  |  | 4/4/25 |
Noam Danenberg (2) |  |  | 6,000 |  |  |  | 30,000 |  |  |  | 3.59 |  |  |  | 4/4/25 |

(1) | These options were granted on April 1, 2018 and vested as follows: the options vests in twelve (12) consecutive equal installments over a three year period commencing the April 1, 2019.
(2) | These options were granted on April 1, 2018 and vested as follows: the options vests in twelve (12) consecutive equal installments over a three year period commencing the April 1, 2019.

Compensation of Directors

The following table provides information regarding the total compensation that we paid or awarded to our directors during the year ended December 31, 2018. Mr. Danenberg’s compensation is described under “Executive Compensation” commencing on page 76 of this report.

Name |  | Fees Earned or Paid in Cash |  |  | Stock Awards |  |  | Option Awards |  |  | Nonqualified Deferred Compensation Earnings |  |  | All Other Compensation |  |  | Total |
|  | ($) |  |  | ($) |  |  | ($)(1) |  |  | ($) |  |  | ($) |  |  | ($) |
Dr. Michael Belkin (2)(3) |  |  | 19,000 |  |  |  | - |  |  |  | 37,500 |  |  |  | - |  |  |  | - |  |  |  | 56,500 |
Ron Mayron (4) |  |  | 13,000 |  |  |  | 143,600 |  |  |  | 21,000 |  |  |  | - |  |  |  | - |  |  |  | 177,600 |
Yossi Keret |  |  | 20,000 |  |  |  | - |  |  |  | 37,500 |  |  |  | - |  |  |  | - |  |  |  | 57,500 |
Dr. Franck Amouyal |  |  | 13,500 |  |  |  | - |  |  |  | 37,500 |  |  |  | - |  |  |  | - |  |  |  | 51,000 |
Joseph Zarzewsky |  |  | 19,000 |  |  |  | - |  |  |  | 37,500 |  |  |  | - |  |  |  | - |  |  |  | 56,500 |

(1) | Reflects the aggregate grant date fair value of option awards granted during the relevant fiscal year calculated in accordance with FASB ASC Topic 718.

(2) | In connection with the appointment of Dr. Belkin, we entered into an agreement to pay director fees for attendance at board meetings or any committee of the board. Dr. Belkin will receive $2,000 for attendance in person at a meeting of the Board of Directors, $750 for attendance by telephone at a meeting of the Board of Directors, and $750 for attendance at each meeting of any committee of the Board of Directors. The agreement with Dr. Belkin was terminated on February 22, 2018.

(3) | On July 1, 2013, we granted to Dr. Belkin options to purchase 2,176 shares of our Common Stock at $159.12 per share. The options are fully vested and will be expire on the ten year anniversary of the grant date.
(4) | Mr. Mayron received NIS 32,866 (approximately $9,400) in cash from Wize Israel for serving as the Chairman of the Board of Wize Israel. Mr. Mayron has served on the Board of Directors of Wize Israel since February 24, 2015 and resigned on November 7, 2018.

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Services Agreement and Consulting Agreement with Ron Mayron

Wize Israel entered into a services agreement with Ron Med Ltd. (“RML”), a services company wholly owned by Mr. Mayron, with respect to the engagement of the services of Mr. Mayron which include active chairman of the board of directors services to Wize Israel and to all subsidiaries and/or related companies of Wize Israel to the extent required from time to time by Wize Israel and in accordance with its needs. Mr. Mayron was required to devote at least 20% of his time to providing services to Wize Israel. Mr. Mayron had served as Wize Israel’s Chairman of the Board since February 24, 2015. Mr. Mayron resigned from all positions with us in November 2018 and the agreement with RML terminated at such time. In November, 2018, we entered into a consulting agreement with RML pursuant to which RML shall serve as a strategic advisor to the Company's senior management and Board. RML shall receive a monthly compensation of NIS 20,000 (approximately $5,415). The Consulting Agreement shall have a term of one year (the “Initial Term”) and shall be renewed for additional one year periods. The Consulting Agreement may be terminated by either party following the Initial Term.

Finder’s Fee Agreement with Joseph Zarzewsky

On June 19, 2017, Wize Israel entered into a finder’s fee agreement with Harbin Israel (Trading) Ltd., an affiliate of Mr. Zarzewsky, pursuant to which Mr. Zarzewsky will receive a 5% royalty on all of Wize Israel’s revenues to the extent such revenues are earned from relationships initiated by Mr. Zarzewsky and agreed to by Wize Israel. The term of the agreement is for 12 months unless earlier terminated. Either party may terminate upon twenty-one days’ notice. Mr. Zarzewsky introduced us to the Chinese Distributor. See “BUSINESS — Marketing and Sales,” beginning on page 18 of this reportreport.

Consulting Agreement with Michael Belkin.

On March 31, 2019, we entered into a consulting agreement with Michael Belkin, pursuant to which we agreed to pay him a monthly retainer of NIS 5,000 (approximately $1,350) and options 5,000 shares of common stock per month.

Compensation of Directors

In March, 2019, our board approved annual cash fees of $15,000 in addition to $1,400 per in person meeting, $500 per signed unanimous consent and $700 per telephonic meeting, with respect to meetings and/or signed resolutions, as applicable, of the Board of Directors or a committee of the Board of Directors.

Our board also approved the following equity grants:

| ● | 100,000 restricted stock units vesting quarterly over a period of two years to each director

| ● | 140,000 restricted stock units vesting quarterly over a period of two years to Mr. Danenberg as compensation for his services as Chairman

| ● | 140,000 restricted stock units vesting quarterly over a period of two years to our Acting Chief Executive Officer and Chief Financial Officer

We have also purchased Directors and Officers insurance to cover the potential liability of our directors and executive officers. Prior to the Effective Time of the Merger, Wize Israel purchased, for a period of seven years following the Effective Time, a directors’ and officers’ liability “tail” insurance policy or policies covering the then current and former directors or officers of Wize Israel for events occurring at or prior to the Effective Time, which insurance will be of at least the same coverage and amounts and contain terms and conditions which are no less advantageous to such persons than the coverage, amounts, terms and conditions of the directors’ and officers’ liability insurance policy maintained by Wize Israel as of the date of the Merger Agreement.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

The following table sets forth information as of March 26, 2019 regarding the beneficial ownership of our Common Stock by (i) those persons who are known to us to be the beneficial owner(s) of more than 5% of our Common Stock, (ii) each of our directors and named executive officers, and (iii) all of our directors and executive officers as a group. Except as otherwise indicated, the beneficial owners listed in the table below possess the sole voting and dispositive power in regard to such shares and have an address of c/o Wize Pharma, Inc., 5b Hanagar Street, Hod Hasharon, Israel 4527708. As of March 26, 2019, there were 9,917,550 shares of our Common Stock outstanding.

Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of our Common Stock subject to options, warrants, notes or other conversion privileges currently exercisable or convertible, or exercisable within 60 days of the date of this table, are deemed outstanding for computing the percentage of the person holding such option, warrant, note, or other convertible instrument but are not deemed outstanding for computing the percentage of any other person. Where more than one person has a beneficial ownership interest in the same shares, the sharing of beneficial ownership of these shares is designated in the footnotes to this table. Unless otherwise indicated in the footnotes to this table, we believe that each of the stockholders named in this table has sole voting and investment power with respect to the shares indicated as beneficially owned.

Address of Beneficial Owner |  | Amount and Nature of Beneficial Ownership |  |  | Percent of Class |
5% and Greater Shareholders |  |  |  |  |  |
Rimon Gold Assets Ltd. (1) |  |  | 2,990,751 |  |  |  | 24.33 | %
Ridge Valley Corporation (2) |  |  | 1,400,673 |  |  |  | 13.63 | %
Yaakov Zarachia (3) |  |  | 774,533 |  |  |  | 7.61 | %
Simcha Sadan (4) |  |  | 682,843 |  |  |  | 6.81 | %
Shimshon Fisher (5) |  |  | 574,391 |  |  |  | 5.59 | %
Bigger Capital Fund, LP (6) |  |  | 750,000 |  |  |  | 7.03 | %
District 2 Capital Fund L.P. (7) |  |  | 750,000 |  |  |  | 7.03 | %
Jonathan Rubini (8) |  |  | 1,555,739 |  |  |  | 14.07 | %
Cannabics Pharmaceuticals, Inc. (9) |  |  | 900,000 |  |  |  | 9.07 | %
Named Executive Officers and Directors |  |  |  |  |  |  |  |
Ron Mayron (10) |  |  | 74,009 |  |  |  | * |
Dr. Franck Amouyal (11) |  |  | 8,332 |  |  |  | * |
Dr. Michael Belkin (12) |  |  | 10,508 |  |  |  | * |
Yossi Keret (13) |  |  | 8,332 |  |  |  | * |
Joseph Zarzewsky (14) |  |  | 8,332 |  |  |  | * |
Or Eisenberg (15) |  |  | 52,100 |  |  |  | * |
Noam Danenberg (16) |  |  | 110,515 |  |  |  | 1.11 | %
Executive Officers and Directors as a Group (7 Persons) (17) |  |  | 272,128 |  |  |  | 2.74 | %

* | Represents ownership of less than 1%

(1) | Represents (i) 617,442 shares of Common Stock, (ii) 607,110 shares of Common Stock issuable upon the conversion of the 2016 Convertible Loan, (iii) 265,531 shares of Common Stock issuable upon the conversion of the 2017 Convertible Loan, (iv) 400,000 shares of Common Stock issuable upon exercise of Series A Warrants, (v) 400,000 shares of Common Stock issuable upon exercise of Series B Warrants , (vi) 392,055 shares of Common Stock issuable upon the exercise of the 2016 Investment Rights and (vii) 308,613 shares of Common Stock issuable upon the exercise of the 2017 Investment Rights. Rimon Gold is an Israeli private company wholly owned by the Goldfinger Trust (the “Trust”), whose trustee is Abir Raveh (the “Trustee”) and whose beneficiary is Yair Goldfinger. The Trust directs the management of Rimon Gold, its investment and voting decisions and the Trustee directs the management of the Trust, its investment and voting decisions. The address of Rimon Gold, the Trust and the Trustee is 32 Habarzel, Tel Aviv, Israel. Mr. Goldfinger does not direct the management of Rimon Gold, the Trust or the Trustee, its investment or voting decisions and disclaims beneficial ownership of the shares reported in this table.

(2) | Represents (i) 1,040,760 shares of Common Stock, (ii) 265,531 shares of Common Stock issuable upon the conversion of the Convertible Loans and (iii) 94,382 shares of Common Stock issuable upon the exercise of the Investment Rights. Ridge is a Seychelles corporation, whose address is Room 206, Premier Building, P.O Box 332, Victoria, Mahe, Seychelles. Priscilla Julie is the sole director of Ridge and holds the voting and dispositive power of the shares of Common Stock beneficially owned by Ridge. Noam Danenberg, our Chairman, is married to Tali Danenberg Harpaz, who owns 49% of Ridge.

(3) | Represents (i) 515,496 shares of Common Stock and (ii) 259,037 shares of Common Stock issuable upon the exercise of the 2017 Warrants. The address for Mr. Zarachia is 10 Tzemach Tzedek Street, Lod, Israel.

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(4) | Represents (i) 567,974 shares of Common Stock and (ii) 114,869 shares of Common Stock issuable upon the exercise of the 2017 Warrants. The address for Mr. Sadan is Hashunit 10, Herzliya, Israel.

(5) | Represents (i) 213,524 shares of Common Stock, (ii) 265,778 shares of Common Stock issuable upon the conversion of the Convertible Loans and (ii) 95,089 shares of Common Stock issuable upon the exercise of the Investment Rights. The address of Mr. Fisher is 3 HaRav Shmuel Rozovski Street, Bnei Brak, Israel.

(6) | Represents (i) 250,000 shares of Common Stock, (ii) 250,000 shares of Common Stock issuable upon exercise of Series A Warrants and (iii) 250,000 shares of Common Stock issuable upon exercise of Series B Warrants. The address for Bigger Capital Fund, LP is 159 Jennings Road, Cold Spring Harbor, NY 11724. Michael Bigger, as the managing member of the general partner of Bigger Capital Fund LP, has voting and dispositive power over securities of the Company held by Bigger Capital Fund LP.
(7) | Represents (i) 250,000 shares of Common Stock, (ii) 250,000 shares of Common Stock issuable upon exercise of Series A Warrants and (iii) 250,000 shares of Common Stock issuable upon exercise of Series B Warrants. The address for District 2 Capital Fund, LP is 175 West Carver Street, Huntington, NY 11743. Eric Schlanger, as the general partner of District 2 Capital Fund LP, has voting and dispositive power over securities of the Company held by District 2 Capital Fund LP.
(8) | Represents (i) 418,702 shares of Common Stock, (ii) 178,000 shares of Common Stock issuable upon conversion of Series A Preferred Stock, (iii) 259,037 shares of Common Stock issuable upon the exercise of the 2017 Warrants, (iv) 350,000 shares of Common Stock issuable upon exercise of Series A Warrants and (v) 350,000 shares of Common Stock issuable upon exercise of Series B Warrants. The address for Mr. Rubini is 2655 Marston Drive, Anchorage, Alaska 99517.

(9) | The address for Cannabics Pharmaceuticals, Inc. is #3 Bethesda Metro Center, Suite 700, Bethesda, MD 20814. Eyal Barad, as Chief Executive Officer of Cannabics Pharmaceuticals, Inc., has voting and dispositive power over securities of the Company held by Cannabics Pharmaceuticals, Inc.

(10) | Represents (i) 66,259 shares of Common Stock which are held by Mr. Mayron, including 40,000 shares of Common Stock which were issued upon the vesting of RSUs that were granted by us on April 4, 2018 and (ii) 7,750 shares of Common Stock issuable upon the exercise of stock options currently exercisable or exercisable within 60 days of March 26, 2019. Mr. Mayron resigned from our Board on November 7, 2018.
(11) | Represents 8,332 shares of Common Stock issuable upon the exercise of stock options currently exercisable or exercisable within 60 days of March 26, 2019.
(12) | Represents 10,503 shares of Common Stock issuable upon the exercise of stock options currently exercisable or exercisable within 60 days of March 26, 2019.
(13) | Represents 8,332 shares of Common Stock issuable upon the exercise of stock options currently exercisable or exercisable within 60 days of March 26, 2019.
(14) | Represents 8,332 shares of Common Stock issuable upon the exercise of stock options currently exercisable or exercisable within 60 days of March 26, 2019.
(15) | Represents (i) 40,100 shares of Common Stock which were issued to Mr. Eisenberg upon the vesting of RSUs that were granted by us on April 4, 2018 and (ii) 12,000 shares of Common Stock issuable upon the exercise of stock options currently exercisable or exercisable within 60 days of March 26, 2019. See footnote 2 above.
(16) | Represents (i) 58,415 shares of Common Stock which are held by a company where Mr. Danenberg holds a minority interest and he does not serve as a director or an officer, (ii) 40,100 shares of Common Stock which were issued to Danenberg Holdings, a services company wholly owned by Mr. Danenberg, upon the vesting of RSUs that were granted by us on April 4, 2018 and (iii) 12,000 shares of Common Stock issuable upon the exercise of stock options currently exercisable or exercisable within 60 days of March 26, 2019. See footnote 2 above.
(17) | Represents (i) 204,874 shares of Common Stock, including 120,200 shares of Common Stock which were issued upon the vesting of RSUs that were granted by us on April 4, 2018 and (ii) 67,254 shares of Common Stock issuable upon the exercise of stock options currently exercisable or exercisable within 60 days of March 26, 2019.

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Equity Compensation Plan Information

Stock Option Plans

2012 Stock Incentive Plan

On February 6, 2012, our Board of Directors and stockholders adopted the 2012 Stock Incentive Plan (the “2012 Plan”). The purpose of the 2102 Plan is to advance the interests of our stockholders by enhancing the Company’s ability to attract, retain and motivate persons who are expected to make important contributions to us and by providing such persons with equity ownership opportunities and performance-based incentives that are intended to better align the interests of such persons with those of our stockholders.

Each stock option granted shall be exercisable at such times and terms and conditions as the Board of Directors 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, we reserved for issuance 45,370 shares of Common Stock. There are 45,370 shares of Common Stock authorized for non-statutory and incentive stock options, restricted stock units, and stock grants under the 2012 Plan, which are subject to adjustment in the event of stock splits, stock dividends, and other situations. As of December 31, 2017, we had 40,474 shares of Common Stock available for future grant under the 2012 Plan. During the years ended December 31, 2017 and 2016, we did not grant any new stock options.

The 2012 Plan is administered by our Board of Directors. The persons eligible to participate in the 2012 Plan are as follows: all of our employees, officers and directors, as well as consultants and advisors to the Company (as such terms consultants and advisors are defined and interpreted for purposes of Form S-8 under the Securities Act of 1933, as amended, or any successor form) are eligible to be granted Awards under the 2012 Plan. Each person who is granted an Award under the 2012 Plan is deemed a “Participant.” “Award” means Options (as defined in Section 5(a)), “Restricted Stock” (as defined in Section 6(a)), “Restricted Stock Units” (as defined in Section 6(a)), “Other Stock-Based Awards” (as defined in Section 7(a)) and “Performance Awards” (as defined in Section 8(a)). follows: (a) our employees and any of our subsidiaries; (b) non-employee members of the board or non-employee members of our Board of Directors or any of our subsidiaries; and (c) consultants and other independent advisors who provide services to us or any of our subsidiaries.

The 2012 Plan will continue in effect until all of the stock available for grant or issuance has been acquired through exercise of options or grants of shares, or until February 6, 2022, whichever is earlier. The 2012 Plan may also be terminated in the event of certain corporate transactions such as a merger or consolidation or the sale, transfer or other disposition of all or substantially all of our assets.

On January 29, 2013, our Board of Directors conditionally approved the adoption of an annex (the “Annex”) to the 2012 Plan. Approval of the Annex by our Board of Directors was contingent upon the following: 1) 30 days elapsing since approval of the Annex by the Board of Directors, and 2) filing with Israeli income tax authorities (the “Tax Authorities”). On February 7, 2013, the Annex was filed with the Tax Authorities and on March 8, 2013, the Annex became effective.

The Annex applies only to grantees who are residents of the State of Israel at the date of grant or those who are deemed to be residents of the State of Israel for the payment of tax at the date of grant. U.S. tax rules and regulations will not apply to any grants to a grantee who is a resident of the State of Israel at the date of grant or those who are deemed to be residents of the State of Israel for the payment of tax at the date of grant.

The purpose of the approval and adoption of the Annex is to harmonize the terms and conditions of the 2012 Plan with applicable Israeli law and provide specific provisions regarding optionees who are subject to Section 102(a) of the Israeli Income Tax Ordinance (New Version), 5721-1961 (the “Ordinance”). The Annex is intended to promote our interests by providing present and future officers, other employees (including directors who are also our employees) and consultants with an incentive to enter into and continue in our employ and to acquire a proprietary interest in our long-term success. Our Board of Directors shall have the authority to determine additional persons which will be granted rights under the Annex.

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Pursuant to the Annex, our Board of Directors is authorized to grant stock options to persons subject to the Ordinance. Our Board of Directors may grant to employees, officers, and directors options under Section 102 of the Ordinance, or 102 Options, and to consultants and other service providers options under Section 3(i) of the Ordinance, or 3(i) Options. Our Board of Directors may designate 102 Options as “Approved 102 Options,” for which the options and shares upon exercise must be held in trust and granted through a trustee, and as “Unapproved 102 Options,” for which the options and shares upon exercise do not have to be held in trust. As described further below, the type of option and duration of time the option and shares upon exercise are held in trust will determine the tax consequences to the participant. Of the Approved 102 Options, our Board of Directors may grant options as “Work Income Options,” for which the options and shares upon exercise must be held in trust for 12 months from the date of grant, or as “Capital Gain Options,” for which the options and shares upon exercise must be held in trust for 24 months from the date of grant. If the requirements of the Approved 102 Options are not met, the options are regarded as Unapproved 102 Options. 3(i) Options and the shares upon exercise may be held in trust as well, depending upon the agreement between our Board of Directors, optionee, and the trustee of the trust. Approved 102 Options which have been granted as “Capital Gains Options” enable the optionee to pay capital gains tax on such option provided the terms of the grant and Section 102 of the Ordinance have been met whilst all other option grants under the Annex are treated as regular income and are subject to the taxation applicable thereto. The trustee appointed under the Annex is required to qualify as a trustee under Section 102 of the Ordinance and shall hold any options granted under the Annex in trust for the respective holding periods as designated under the Annex and Section 102 of the Ordinance. The grant of options under the Annex requires the delivery of a grant notification letter to each optionee in which all the relevant terms and conditions of such grant are set out. The grant notification letter may include additional matters relating to the vesting of the options, exercise periods, events of termination of employment, etc. The Annex sets out that for as long as options or shares purchased pursuant to thereto are held by the trustee on behalf of the optionee, all rights of the optionee over the shares are personal, cannot be transferred, assigned, pledged or mortgaged, other than by will or laws of descent and distribution. The Annex shall be governed by and construed and enforced in accordance with the laws of the State of Delaware.

The following table summarizes information as of the close of business on December 31, 2018 concerning the 2012 Plan and other options outstanding.

Plan category |  | Number of securities to be issued upon exercise of outstanding options (a) |  |  | Weighted-average exercise price of outstanding options (b) |  |  | Securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (c) |
Equity compensation plans approved by security holders |  |  | 4,896 |  |  |  | 191.04 |  |  |  | 40,474 |
Equity compensation plans not approved by security holders |  |  | - |  |  |  | - |  |  |  | - |
Total |  |  | 4,896 |  |  |  | 191.04 |  |  |  | 40,474 |

2018 Stock Incentive Plan

On February 22, 2018, the Board approved the adoption of the 2018 Stock Incentive Plan (the “2018 Plan”), including an Israeli annex to comply with Israeli law, in particular the provisions of section 102 of the Israeli Income Tax Ordinance. Under the 2018 Plan, we may grant our employees, directors, consultants and/or contractors stock options, shares of Common Stock, restricted stock and restricted stock units of our company. The Board is currently serving as the administrator of the 2018 Plan, although the 2018 Plan allows for the administrator to be a committee of the Board appointed by the Board for the purpose of the administration 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, and 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.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR INDEPENDENCE.

Described below are the transactions and series of similar transactions since January 1, 2018 to which we were a party in which:

| ● | the amounts involved exceeded the lesser of $120,000 or one percent of our total assets at year end for the last two completed fiscal years; and

| ● | any of the directors, executive officers, holders of more than 5% of our share capital, or any member of their respective immediate family had or will have a direct or indirect material interest.

Wize Israel Loan Agreements

In connection with the October 2018 private placement, on October 19, 2018 the Company and Wize Israel entered into an amendment to convertible loan agreements with Rimon Gold, Ridge and Fisher (the “Loan Agreements Amendment”). Pursuant to the Loan Agreements Amendment, the maturity date (the “Loan Agreements Maturity Date”) under the 2016 Loan Agreement and the 2017 Loan Agreement was amended to be the earliest of (a) 90 days following the date that the registration statement of which this report forms a part is declared effective by the SEC, (b) 90 days following the date on which all securities issued to investors in the October 2018 private placement are no longer deemed “registrable securities” under the Registration Rights Agreement (as defined below), and (c) October 24, 2019. In addition, pursuant to the Loan Agreements Amendment, the expiration date of the investment right under the 2016 Loan Agreement and the 2017 Loan Agreement was amended to be 180 days after the Loan Agreements Maturity Date. On March 4, 2019, the Loans Agreements Maturity Date was extended to May 31, 2019, and the parties also agreed that the lenders’ investment rights under the 2016 Loan Agreement to invest up to $512,809, in the aggregate, at $1.308 per share, and the lenders’ investment rights under the 2017 Loan Agreement to invest up to $663,446, in the aggregate, at $1.332 per share, be extended to November 30, 2019.

For more information relating to the Convertible Loans, the agreements relating thereto and the 2017 PIPE Agreements, please see “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,” beginning on page 60 of this report.

Agreements with Executive Officers and Directors

Mr. Noam Danenberg, our Chairman and Former Chief Operating Officer and Wize Israel’s strategic advisor, is also the husband of Tali Harpaz, who owns 49% of Ridge.

Wize Israel has entered into employment, services and other agreements with certain of its directors and executive officers. For more information regarding these other agreements entered into by Wize Israel with certain of its directors and executive officers, please see “EXECUTIVE COMPENSATION — Executive Employment Agreements,” beginning on page 77 of this report, “EXECUTIVE COMPENSATION — Compensation of Directors -- Services Agreement and Consulting Agreement with Ron Mayron,” beginning on page 79 of this report, and “EXECUTIVE COMPENSATION — Compensation of Directors -- Finder’s Fee Agreement with Joseph Zarzewsky,” on page 79 of this report.

Director Independence

See Item 10 – “DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE –Director Independence,” beginning on page 73 of this report.

Procedures for Approval of Related Party Transactions

Our Board is charged with reviewing and approving all potential related party transactions. All such related party transactions must then be reported under applicable SEC rules. We have not adopted other procedures for review, or standards for approval, of such transactions, but instead review them on a case-by-case basis.

84

ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES.

On February 15, 2018, the Company dismissed Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global (“EY”) as the Company’s independent registered public accounting firm and engaged Fahn Kanne & Co. Grant Thornton Israel (“Grant Thornton”) as its new independent registered public accounting firm. The Board of Directors made the decision to dismiss EY and engage Grant Thornton, the independent registered public accounting firm of Wize Pharma Ltd., the Company’s wholly owned subsidiary.

None of the reports of EY on the Company’s financial statements for either of the past two years or subsequent interim period contained an adverse opinion or disclaimer of opinion, or was qualified or modified as to uncertainty, audit scope or accounting principles, except that EY’s report on the Company’s audited financial statements for the years ended December 31, 2016 and 2015 included an explanatory paragraph regarding substantial doubt about the Company’s ability to continue as a going concern.

During the years ended December 31, 2016 and 2015, and the subsequent interim periods preceding its dismissal, there were (i) no disagreements with EY, whether or not resolved, on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure, which, if not resolved to the satisfaction of EY, would have caused it to make reference to the subject matter of the disagreement in connection with its report on the Company’s financial statements and (ii) no reportable events (as described in paragraph 304(a)(1)(v)) of Regulation S-K).

During the two most recent fiscal years and the interim periods preceding the engagement of Grant Thornton, neither the Company nor anyone on its behalf hadpreviously consulted with Grant Thornton regarding either (a) the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit opinion that might be rendered on the Company’s financial statements, and neither a written report was provided nor oral advice was provided to the Company that concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (b) any matter that was either the subject of a disagreement (as defined in paragraph 304(a)(1)(iv) of Regulation S-K and the related instructions thereto) or a reportable event (as described in paragraph 304(a)(1)(v)) of Regulation S-K).

Audit Fee

The following table shows the fees paid or accrued by us for the audit and other services provided by Grant Thornton and EY for 2018 and 2017:

|  | 2018 |  |  | 2017 |
Audit Fees - Grant Thornton (1) |  | $ | 89,000 |  |  | $ | 120,000 |
Audit Fees - EY (1) |  |  |  |  |  |  | 31,000 |
Audit Related Fees - Grant Thornton |  |  | - |  |  |  | - |
Audit Related Fees - EY |  |  | - |  |  |  | - |
Tax Fees – Grant Thornton (2) |  |  | - |  |  |  | - |
Tax Fees – EY (2) |  |  | - |  |  |  | - |
All other Fees – Grant Thornton (3) |  |  | - |  |  |  | - |
All other Fees – EY (3) |  |  | 5,000 |  |  |  | 17,000 |
Total Fees |  | $ | 94,000 |  |  | $ | 168,000 |

| (1) | Consists of fees billed for the audit of our annual financial statements and the review of financial statements included in our 10-Q, 8-K reports and our Form S-4 Registration Statement and services normally provided by the accountant in connection with statutory and regulatory filings or engagements.

| (2) | The aggregate fees billed in each of the last two fiscal years for professional services rendered by the named accountant for tax compliance, tax advice, and tax planning.

| (3) | The aggregate fees billed in each of the last two fiscal years for products and services provided by the named accountant, other than the services reported above.

Audit Committee Pre-approval Policies and Procedures

Until February 22, 2018, we did not have an audit committee and as a result our Board of Directors performed the duties of an audit committee. Our audit committee evaluates and approves in advance, the scope and cost of the engagement of an auditor before the auditor renders audit and non-audit services. We do not rely on pre-approval policies and procedures.

85

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a) Index to Financial Statements

The following consolidated financial statements are filed as part of this report:

WIZE PHARMA, INC. AND SUBSIDIARIES

CONSOLIDATED FINANCIAL STATEMENTS

AS OF DECEMBER 31, 2018

U.S. DOLLARS IN THOUSANDS

INDEX

| Page
Report of Independent Registered Public Accounting Firm | F-1
Consolidated Balance Sheets | F-2
Consolidated Statements of Comprehensive Loss | F-3
Consolidated Statements of Changes in Stockholders’ Equity (Deficit) | F-4
Consolidated Statements of Cash Flows | F-6
Notes to Consolidated Financial Statements | F-7 - F-47

86

| Fahn Kanne & Co.
| Head Office
| 32 Hamasger Street Tel-Aviv 6721118, ISRAEL PO Box 36172, 6136101
| T +972 3 7106666
| F +972 3 7106660
| www.gtfk.co.il

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors and Stockholders

Wize Pharma, Inc.

Opinion on the financial statements

We have audited the accompanying consolidated balance sheets of Wize Pharma, Inc. (a Delaware corporation) and subsidiaries (the “Company”) as of December 31, 2018 and 2017, the related consolidated statements of comprehensive loss, changes in stockholders’ equity (deficit), and cash flows for each of the two years in the period ended December 31, 2018, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2018 and 2017, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2018, in conformity with accounting principles generally accepted in the United States of America.

Going Concern

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1b to the financial statements, the Company has incurred net losses since its inception, and has not yet generated any material revenues. As of December 31, 2018, there is an accumulated deficit of $29,997,000. These conditions, along with other matters as set forth in Note 1b, raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 1b. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Basis for opinion

These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ FAHN KANNE & CO. GRANT THORNTON ISRAEL

We have served as the Company’s auditor since 2018.

Tel-Aviv, Israel

April 1, 2019

F-1

WIZE PHARMA INC. AND SUBSDIARIES

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands (except share data)

|  | As of December 31, |
|  | 2018 |  |  | 2017 |
ASSETS |  |  |  |  |  |
CURRENT ASSETS: |  |  |  |  |  |
Cash and cash equivalents |  | $ | 3,183 |  |  | $ | 215 |
Restricted bank deposit |  |  | - |  |  |  | 12 |
Marketable equity securities (Note 3) |  |  | 32 |  |  |  | 323 |
Other current assets (Note 4) |  |  | 180 |  |  |  | 40 |
Total current assets |  |  | 3,395 |  |  |  | 590 |
PROPERTY AND EQUIPMENT, NET |  |  | 8 |  |  |  | 5 |
TOTAL ASSETS |  | $ | 3,403 |  |  | $ | 595 |
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |  |  |  |  |  |  |  |
CURRENT LIABILITIES: |  |  |  |  |  |  |  |
Trade payables |  | $ | 34 |  |  | $ | 43 |
Other accounts payable (Note 7) |  |  | 272 |  |  |  | 196 |
Current portion of license purchase obligation (Note 6) |  |  | 250 |  |  |  | 250 |
Convertible loans, net (Note 8) |  |  | 2,635 |  |  |  | 3,204 |
Total current liabilities |  |  | 3,191 |  |  |  | 3,693 |
COMMITMENTS AND CONTINGENCIES (Note 11) |  |  |  |  |  |  |  |
STOCKHOLDERS’ EQUITY (DEFICIT) (Note 12): |  |  |  |  |  |  |  |
Preferred Stock A, with $0.001 par value per share - |  |  |  |  |  |  |  |
Authorized: 1,000,000 shares at December 31, 2018 and 2017; Issued and outstanding: 910 and 0 shares at December 31, 2018 and 2017, respectively |  |  | 1 |  |  |  | - |
Common Stock, with $0.001 par value per share - |  |  |  |  |  |  |  |
500,000,000 shares authorized at December 31, 2018 and 2017, respectively; 8,957,550 and 4,350,608 shares issued and outstanding at December 31, 2018 and 2017, respectively |  |  | 9 |  |  |  | 4 |
Additional paid-in capital |  |  | 30,272 |  |  |  | 23,397 |
Accumulated other comprehensive loss |  |  | (73 | ) |  |  | (47 | )
Accumulated deficit |  |  | (29,997 | ) |  |  | (26,452 | )
Total stockholders’ equity (deficit) |  |  | 212 |  |  |  | (3,098 | )
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |  | $ | 3,403 |  |  | $ | 595 |

The accompanying notes are an integral part of the consolidated financial statements.

F-2

WIZE PHARMA INC. AND SUBSDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

U.S. dollars in thousands (except share and per share data)

|  | For the Year Ended December 31, |
|  | 2018 |  |  | 2017 |
Operating expenses: |  |  |  |  |  |  |  |
Research and development expenses |  | $ | 694 |  |  | $ | 450 |
General and administrative expenses (Note 13a) |  |  | 2,936 |  |  |  | 1,031 |
Operating loss |  |  | (3,630 | ) |  |  | (1,481 | )
Financial income (expense), net (Note 13b) |  |  | 351 |  |  |  | (1,485 | )
Net loss |  | $ | (3,279 | ) |  | $ | (2,966 | )
Addition to net loss (for EPS purpose) |  |  |  |  |  |  |  |
Deemed dividend with respect to the repurchase of right for future investment |  |  | (292 | ) |  |  | (3 | )
Net loss applicable to Common stockholders |  | $ | (3,571 | ) |  | $ | (2,969 | )
Other comprehensive income (loss): |  |  |  |  |  |  |  |
Foreign currency translation adjustments |  |  | — |  |  |  | (78 | )
Changes in unrealized gains on marketable equity securities |  |  | — |  |  |  | 26 |
Other comprehensive income (loss) |  |  | — |  |  |  | (52 | )
Comprehensive loss |  | $ | (3,279 | ) |  | $ | (3,018 | )
Basic and diluted net loss per share |  | $ | (0.61 | ) |  | $ | (0.86 | )
Weighted average number of shares of common stock used in computing basic and diluted net loss per share |  |  | 5,649,262 |  |  |  | 3,438,842 |

The accompanying notes are an integral part of the consolidated financial statements.

F-3

WIZE PHARMA INC. AND SUBSDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

U.S. dollars in thousands (except share data)

|  | Common Stock |  |  |  |  |  |  |  |  |  |
|  | Number |  | Amount |  | Additional paid-in capital |  | Treasury shares |  | Accumulated other comprehensive income (loss) |  | Accumulated deficit |  | Total stockholders’ equity (deficit)
Balance as of January 1, 2017 |  |  | 3,023,043 |  |  | $ | 3 |  |  |  |  |  |  | $ | 23,391 |  |  | $ | (747 | ) |  | $ | 5 |  |  | $ | (23,483 | ) |  | $(831)
Beneficial conversion feature in respect to convertible loan |  |  | — |  |  |  | — |  |  |  |  |  |  |  | 811 |  |  |  | — |  |  |  | — |  |  |  | — |  |  | 811
Classification of derivative liability for right to future investment into equity |  |  | — |  |  |  | — |  |  |  |  |  |  |  | 280 |  |  |  | — |  |  |  | — |  |  |  | — |  |  | 280
Issuance of units consisting of common stock and detachable warrants, net of issuance costs |  |  | 860,987 |  |  |  | 1 |  |  |  |  |  |  |  | 965 |  |  |  | — |  |  |  | — |  |  |  | — |  |  | 966
Exercise of options into common stock |  |  | 31,439 |  |  |  |  |  |  |  | *)- |  |  |  | 21 |  |  |  | — |  |  |  | — |  |  |  | — |  |  | 21
Cancellation of treasury shares with respect to reverse recapitalization |  |  | — |  |  |  | — |  |  |  |  |  |  |  | (747 | ) |  |  | 747 |  |  |  | — |  |  |  | — |  |  | —
Shares issued with respect to reverse recapitalization |  |  | 435,139 |  |  |  |  |  |  |  | *)- |  |  |  | 298 |  |  |  | — |  |  |  | — |  |  |  | — |  |  | 298
Amount allocated to the repurchase of beneficial conversion feature in convertible loans |  |  | — |  |  |  | — |  |  |  |  |  |  |  | (2,800 | ) |  |  | — |  |  |  | — |  |  |  | — |  |  | (2,800)
Amount allocated to the right for future investment - loan 2016 upon 2017 modification |  |  | — |  |  |  | — |  |  |  |  |  |  |  | 44 |  |  |  | — |  |  |  | — |  |  |  | — |  |  | 44
Amount allocated to the right for future investment- loan 2017 upon 2017 modification |  |  | — |  |  |  | — |  |  |  |  |  |  |  | 1,115 |  |  |  | — |  |  |  | — |  |  |  | — |  |  | 1,115
Deemed dividend with respect to the repurchase of right for future investment |  |  | — |  |  |  | — |  |  |  |  |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (3 | ) |  | (3)
Stock-based compensation |  |  | — |  |  |  | — |  |  |  |  |  |  |  | 19 |  |  |  | — |  |  |  | — |  |  |  | — |  |  | 19
Foreign currency translation adjustment |  |  | — |  |  |  | — |  |  |  |  |  |  |  | — |  |  |  | — |  |  |  | (78 | ) |  |  | — |  |  | (78)
Changes in unrealized gains on marketable equity securities |  |  | — |  |  |  | — |  |  |  |  |  |  |  | — |  |  |  | — |  |  |  | 26 |  |  |  |  |  |  | 26
Net loss |  |  | — |  |  |  | — |  |  |  |  |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | (2,966 | ) |  | (2,966)
Balance as of December 31, 2017 |  |  | 4,350,608 |  |  | $ | 4 |  |  |  |  |  |  | $ | 23,397 |  |  | $ | — |  |  | $ | (47 | ) |  | $ | (26,452 | ) |  | $(3,098)

*) Representing amount less than $1

The accompanying notes are an integral part of the consolidated financial statements.

F-4

WIZE PHARMA INC. AND SUBSDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

U.S. dollars in thousands (except share data)

(Continued)

|  | Preferred Stock A |  | Common Stock |  | Additional paid-in |  | Accumulated other comprehensive |  | Accumulated |  | Total stockholders’ equity
|  | Number |  | Amount |  | Number |  | Amount |  | capital |  | income (loss) |  | deficit |  | (deficit)
Balance as of December 31, 2017 |  |  | — |  |  | $ | — |  |  |  |  |  |  |  | 4,350,608 |  |  | $ | 4 |  |  |  |  |  |  | $ | 23,397 |  |  | $ | (47 | ) |  | $(26,452) |  | $(3,098)
Cumulative effect adjustment from transition to ASU 2016-01 (see note 2b) |  |  | — |  |  |  | — |  |  |  |  |  |  |  | — |  |  |  | — |  |  |  |  |  |  |  | — |  |  |  | (26 | ) |  | 26 |  | —
Issuance of shares with respect to exercise of PIPE warrants and right for future investment (see note 12d) |  |  | — |  |  |  | — |  |  |  |  |  |  |  | 788,658 |  |  |  | 1 |  |  |  |  |  |  |  | 1,144 |  |  |  | — |  |  | — |  | 1,145
Issuance of units consisting of common stock, preferred stock A and detachable warrants, net of issuance costs (Note 12h) |  |  | 1,350 |  |  |  | 1 |  |  |  |  |  |  |  | 3,100,000 |  |  |  | 3 |  |  |  |  |  |  |  | 3,911 |  |  |  | — |  |  | — |  | 3,915
Conversion of Preferred stock into Common stock (Note 12i) |  |  | (440 | ) |  |  |  |  |  |  | *)- |  |  |  | 440,000 |  |  |  |  |  |  |  | *)- |  |  |  | — |  |  |  | — |  |  | — |  | —
Amount allocated to the repurchase of beneficial conversion feature in convertible loans |  |  | — |  |  |  | — |  |  |  |  |  |  |  | — |  |  |  | — |  |  |  |  |  |  |  | (1,918 | ) |  |  | — |  |  | — |  | (1,918)
Amount allocated to the right for future investment - loan 2016 upon 2018 modification (note 8) |  |  | — |  |  |  | — |  |  |  |  |  |  |  | — |  |  |  | — |  |  |  |  |  |  |  | 952 |  |  |  | — |  |  | — |  | 952
Amount allocated to the right for future investment- loan 2017 upon 2018 modification (note 8) |  |  | — |  |  |  | — |  |  |  |  |  |  |  | — |  |  |  | — |  |  |  |  |  |  |  | 1,444 |  |  |  | — |  |  | — |  | 1,444
Deemed dividend with respect to the repurchase of right for future investment |  |  | — |  |  |  | — |  |  |  |  |  |  |  | — |  |  |  | — |  |  |  |  |  |  |  | — |  |  |  | — |  |  | (292) |  | (292)
Stock-based compensation |  |  | — |  |  |  | — |  |  |  |  |  |  |  | 278,284 |  |  |  | 1 |  |  |  |  |  |  |  | 1,342 |  |  |  | — |  |  | — |  | 1,343
Net loss |  |  | — |  |  |  | — |  |  |  |  |  |  |  | — |  |  |  | — |  |  |  |  |  |  |  | — |  |  |  | — |  |  | (3,279) |  | (3,279)
Balance as of December 31, 2018 |  |  | 910 |  |  | $ | 1 |  |  |  |  |  |  |  | 8,957,550 |  |  |  | 9 |  |  |  |  |  |  | $ | 30,272 |  |  | $ | (73 | ) |  | $(29,997) |  | $212

*) Representing amount less than $1

The accompanying notes are an integral part of the consolidated financial statements.

F-5

WIZE PHARMA INC. AND SUBSDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

|  | For the Year Ended December 31, |
|  | 2018 |  |  | 2017 |
Cash flows from operating activities |  |  |  |  |  |
Net loss |  | $ | (3,279 | ) |  | $ | (2,966 | )
Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |  |  |  |  |
Depreciation |  |  | 2 |  |  |  | 1 |
Stock-based compensation |  |  | 1,289 |  |  |  | 19 |
Unrealized loss on marketable equity securities |  |  | 33 |  |  |  | — |
Amortization of discounts and issuance costs related to convertible loans |  |  | — |  |  |  | 1,122 |
Amortization of premium related to convertible loans (Notes 8 and 13) |  |  | (2,149 | ) |  |  | — |
Accrued interest on convertible loans (Notes 8 and 13) |  |  | 56 |  |  |  | 47 |
Loss from extinguishment of convertible loans (Notes 8 and 13) |  |  | 1,709 |  |  |  | 61 |
Change in the fair value of derivative liability for right to future investment (Notes 8 and 13) |  |  | — |  |  |  | 246 |
Change in the fair value of license purchase obligation (Note 6) |  |  | — |  |  |  | 3 |
Change in: |  |  |  |  |  |  |  |
Other current assets |  |  | (86 | ) |  |  | (33 | )
Trade payables |  |  | (9 | ) |  |  | 30 |
Other accounts payable |  |  | 76 |  |  |  | (40 | )
License purchase obligation |  |  | 150 |  |  |  | 146 |
Net cash used in operating activities |  |  | (2,208 | ) |  |  | (1,364 | )
Cash flows from investing activities |  |  |  |  |  |  |  |
Purchase of property and equipment |  |  | (5 | ) |  |  | (4 | )
Proceeds from sale of marketable equity securities |  |  | 258 |  |  |  | — |
Net cash provided by (used in) investing activities |  |  | 253 |  |  |  | (4 | )
Cash flows from financing activities |  |  |  |  |  |  |  |
Proceeds from loans from controlling stockholder |  |  | — |  |  |  | 82 |
Proceeds from issuance of convertible loans, net of issuance costs (Note 8) |  |  | — |  |  |  | 625 |
Proceeds from issuance of shares with respect to exercise of PIPE warrants and right for future investment |  |  | 1,145 |  |  |  | — |
Proceeds from issuance of units consisting of common stock, preferred stock A and warrants (Note 12c) |  |  | 3,915 |  |  |  | 966 |
Proceeds from exercise of options into common stock |  |  | — |  |  |  | 21 |
Repayment of license purchase obligation |  |  | (150 | ) |  |  | (156 | )
Net cash provided by financing activities |  |  | 4,910 |  |  |  | 1,538 |
Effect of exchange rate change on cash, cash equivalents and restricted cash |  |  | 1 |  |  |  | 17 |
Change in cash, cash equivalents and restricted cash |  |  | 2,956 |  |  |  | 187 |
Cash, cash equivalents and restricted cash at the beginning of the year |  |  | 227 |  |  |  | 40 |
Cash, cash equivalents and restricted cash at the end of the year |  | $ | 3,183 |  |  | $ | 227 |
Supplemental disclosure of non-cash financing activities: |  |  |  |  |  |  |  |
Classification of derivative liability for right to future investment into equity |  | $ | — |  |  | $ | 280 |
Acquisition of marketable equity securities as part of the recapitalization |  | $ | — |  |  | $ | 298 |
Increase in other current assets through equity |  | $ | 54 |  |  | $ | — |
Deemed dividend with respect to the repurchase of right for future investment |  | $ | 292 |  |  | $ | 3 |
Conversion of Preferred stock into Common stock |  | $ |  | *)- |  | $ | — |
Amount allocated to the repurchase of beneficial conversion feature in convertible loans |  | $ | (1,918 | ) |  | $ | (2,800 | )
Amount allocated to the right for future investment - loan 2016 upon 2018 modification |  | $ | 952 |  |  | $ | — |
Amount allocated to the right for future investment- loan 2017 upon 2018 modification |  | $ | 1,444 |  |  | $ | — |

The accompanying notes are an integral part of the consolidated financial statements.

F-6

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

NOTE 1:- | GENERAL

| a. | Wize Pharma, Inc. (the “Company” or “Wize”) was incorporated in the State of Delaware.

On November 16, 2017, the Company completed the acquisition of Wize Pharma Ltd., an Israeli company (“Wize Israel”) by way of a reverse triangular merger.

Wize Israel is a clinical-stage biopharmaceutical company currently focused on the treatment of ophthalmic disorders, including dry eye syndrome (“DES”).

Commencing August 30, 2016, Wize Israel manages most of its activity through OcuWize Ltd., a wholly-owned Israeli subsidiary which manages and develops most of the Company’s activity under the License Agreement (see also Note 5).

In May 2015, Wize Israel entered into an Exclusive Distribution and Licensing Agreement (as amended, the “License Agreement”) with Resdevco Ltd. (“Resdevco”), whereby Resdevco granted to Wize Israel an exclusive license to purchase, market, sell and distribute a formula known as LO2A (“LO2A”) in the United States, Israel, Ukraine and China as well as a contingent right to do the same in other countries. LO2A is a drug developed for the treatment of DES, and other ophthalmological illnesses, including Conjunctivochalasis (“CCH”) and Sjögren’s syndrome (“Sjögren’s”). Pursuant to the LO2A License Agreement, Wize Israel is required to pay Resdevco certain royalties for sales in the licensed territories based on an agreed-upon price per unit of either $0.60, in the United States, Israel and Ukraine, or in the low single digits of US Dollars, in the People’s Republic of China, payable on a semi-annual basis, subject to making certain minimum royalty payments as set forth in the LO2A License Agreement. In July 2018, the Company paid Resdevco royalties in the amount of $185.

Following the Merger (as defined below) transaction as described in Note 1d, the business of Wize Israel became the ongoing business of the Company and the Company is defined as a “smaller reporting company”, according to Item 10(f)(1) of Regulation S-K, as promulgated by the United States Securities and Exchange Commission (the “SEC”).

For discussion of a financing transaction in October 2018, see also Note 12j.

| b. | Going concern uncertainty and management plans:

The Company has not yet generated any material revenues from its current operations, and therefore is dependent upon external sources for financing its operations. As of December 31, 2018, the Company has an accumulated deficit of $29,997.

In addition, in the years ended December 31, 2018, and December 31, 2017, the Company reported losses and negative cash flows from operating activities. Furthermore, unless the Company can extend the maturity date, or obtain additional financing, the convertible loans in the aggregate principal amount of $1,353 will become due in May 2019 (refer to note 15).

Management considered the significance of such conditions in relation to the Company’s ability to meet its current and future obligations and determined that such conditions raise substantial doubt about the Company’s ability to continue as a going concern.

F-7

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

NOTE 1:- | GENERAL (Cont.)

The accompanying Financial Statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

Until such time as the Company generates sufficient revenue to fund its operations (if ever), the Company plans to finance its operations and repay existing indebtedness through the sale of equity or equity-linked securities and/or debt securities and, to the extent available, short-term and long-term loans. There can be no assurance that the Company will succeed in obtaining the necessary financing to continue its operations as a going concern.

| c. | Risk factors:

As of December 31, 2018, the Company had an accumulated deficit of $29,997. The Company has historically incurred net losses and is not able to determine whether or when it will become profitable, if ever. To date, the Company has not commercialized any products or generated any material revenues from product sales and accordingly it does not have a revenue stream to support its cost structure. The Company’s losses have resulted principally from costs incurred in development and discovery activities and general and administrative expenses.

The Company expects to continue to incur losses for the foreseeable future, and these losses will likely increase as it:

■ initiates and manages pre-clinical development and clinical trials for LO2A;

■ seeks regulatory approvals for LO2A;

■ implements internal systems and infrastructures;

■ seeks to license additional technologies to develop;

■ pays royalties related to the License Agreement;

■ hires management and other personnel; and

■ moves towards commercialization.

No certainty exists that the Company will be able to complete the development of LO2A for CCH, Sjögren’s or any other ophthalmic disorder, due to financial, technological or other difficulties. If LO2A fails in clinical trials or does not gain regulatory clearance or approval, or if LO2A does not achieve market acceptance, the Company may never become profitable. Even if the Company does achieve profitability, it may not be able to sustain or increase profitability on a quarterly or annual basis.

F-8

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

NOTE 1:- | GENERAL (Cont.)

The Company’s inability to achieve and then maintain profitability would negatively affect its business, financial condition, results of operations and cash flows. Moreover, the Company’s prospects must be considered in light of the risks and uncertainties encountered by an early-stage company and in highly regulated and competitive markets, such as the biopharmaceutical market, where regulatory approval and market acceptance of its products are uncertain. There can be no assurance that the Company’s efforts will ultimately be successful or result in revenues or profits.

| d. | Merger transaction:

On May 21, 2017, the Company and a wholly-owned private Israeli subsidiary of the Company, Bufiduck Ltd. (“Merger Sub”), and Wize Israel, entered into an Agreement and Plan of Merger (the “Merger Agreement”), pursuant to which, among other things, Merger Sub merged with and into Wize Israel, with Wize Israel becoming a wholly-owned subsidiary of the Company and the surviving corporation of the merger (the “Merger”). On November 16, 2017, the Merger was closed (the “Closing Date”).

Upon the Closing Date of the Merger, each issued and outstanding ordinary share of Wize Israel was automatically converted into 4.1445791236989 shares (the “Exchange Ratio”) (such number not being converted as per the Reverse Stock Split described in Note 12c) of the Company’s common stock, par value $0.001 per share (the “Common Stock”). As a result, an aggregate of 3,915,469 shares, or approximately 90% of the issued and outstanding Common Stock were issued to Wize Israel’s shareholders. The pre-Merger stockholders of the Company retained an aggregate of 435,053 shares, or approximately 10% of the issued and outstanding Common Stock.

Wize Israel’s ordinary shares were delisted from the Tel Aviv Stock Exchange (“TASE”) and there is no longer a public trading market for Wize Israel’s ordinary shares in Israel.

The Merger between the Company and Wize Israel became effective on November 16, 2017, and following such Merger, Wize Israel activities are the sole activities of the Company. The Common Stock is currently quoted in the United States on the over-the-counter (“OTCQB”) under the symbol “WIZP.”

The Merger was accounted for as a reverse recapitalization which is outside the scope of ASC 805, “Business Combinations” (“ASC 805”), as the Company, the legal acquirer, was considered a non-operating public shell, and was therefore not a business as defined in ASC 805. Under reverse capitalization accounting, Wize Israel was considered the acquirer for accounting and financial reporting purposes. The Merger was accounted for in a manner that is substantially the same as a reverse acquisition under ASC 805, except that any excess fair value of the consideration transferred over the net fair value of the monetary assets of the Company was recognized as a reduction of equity.

The annual consolidated financial statements of Wize Israel reflect the operations of the acquirer for accounting purposes together with a deemed issuance of shares, equivalent to the shares held by the former stockholders of the legal acquirer and a recapitalization of the equity of the accounting acquirer. The annual consolidated financial statements include the accounts of the Company since the Closing Date of the reverse capitalization and the accounts of Wize Israel since its inception.

F-9

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”).

| a. | Use of estimate in preparation of financial statements:

The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company evaluates on an ongoing basis its assumptions. The Company’s management believes that the estimates, judgments and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of expenses during the reporting periods. Actual results could differ from those estimates.

As applicable to the consolidated financial statements, the most significant estimates and assumptions relate to the going concern assumptions, determining the fair value of embedded and freestanding financial instruments related to convertible loans and rights to future investment and the determination whether modification of terms of financial instruments is substantial.

| b. | Principles of consolidation:

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. Inter-company balances and transactions have been eliminated upon consolidation.

F-10

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.)

| c. | Functional currency:

Prior to the Merger, as Wize Israel activities were conducted in Israel and most of its financing was denominated and determined in New Israel Shekels (NIS), management has determined that the functional currency of Wize Israel was NIS. Following to the Closing Date of the Merger, the Company aims to direct its main operations in the United States market. In addition, following to the Closing Date of the Merger, the current convertible loans which were previously denominated in NIS, were changed into U.S. dollars terms, including their principal and conversion price. Similarly, the Company issued warrants eligible for exercise for the Company’s shares of common stock at an exercise price denominated in U.S. dollars. Also, the management believes the Company will raise funds through private investment rounds and / or from issuance of equity in dollar amounts by approaching the market in the United States. As a result, it was determined that the U.S dollar is the currency of the primary economic environment in which the Company operates and expects to continue to operate in the foreseeable future. Thus, as of that date, the functional currency of the Company was changed into the U.S. dollar.

The reporting currency of the consolidated financial statements is U.S. dollars. Pre-merger, Wize Israel and OcuWize results were translated into U.S. dollars in accordance with the standards of the Financial Accounting Standards Board (“FASB”). Accordingly, assets and liabilities were translated from NIS to U.S. dollars using year-end exchange rates, and income and expense items were translated at average exchange rates during the year. Gains or losses resulting from translation adjustments (which result from translating an entity’s financial statements into U.S. dollars if its functional currency is different than the U.S. dollar) were reported in other comprehensive income and are reflected in equity, under “accumulated other comprehensive income (loss)”. As a result of adoption of ASU 2016-01, as discussed in note 2v, accumulated other comprehensive income as of December 31, 2018 consists solely of foreign currency translation adjustment.

Balances denominated in, or linked to foreign currency are stated on the basis of the exchange rates prevailing at the balance sheet date. For foreign currency transactions included in the consolidated statement of comprehensive loss, the exchange rates applicable on the relevant transaction dates are used. Transaction gains or losses arising from changes in the exchange rates used in the translation of such balances are carried to financing income or expenses as applicable.

The following table presents data regarding the dollar exchange rate of relevant currencies:

|  | As of December 31, |  |  | % of change |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
USD 1 = NIS |  |  | 3.748 |  |  |  | 3.467 |  |  |  | 8.1 |  |  |  | (9.8 | )

| d. | Cash and cash equivalents:

Cash equivalents are short-term highly liquid investments that are readily convertible to cash with original maturities of three months or less at acquisition.

F-11

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.)

For presentation of statement of cash flows purposes, restrict cash balances are included with cash and cash equivalents, when reconciling the reported period total amounts.

|  | December 31 |
|  | 2017 |
Cash and cash equivalents |  | $ | 215 |
Restricted cash |  |  | 12 |
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows |  | $ | 227 |

There were no restricted cash amounts as of December 31, 2018.

| e. | Restricted bank deposit:

Restricted bank deposit is a deposit with maturities of more than three months and up to one year. The restricted bank deposit was presented at its cost, including accrued interest and represents cash which is used as collateral for Wize Israel’s credit card.

| f. | Marketable equity securities:

Until December 31, 2017, the Company’s investment in marketable equity securities was classified as available-for-sale carried at fair value based on the quoted market price, with unrealized gains and losses reported as a separate component of stockholders’ deficit under accumulated other comprehensive income in the consolidated balance sheets. Realized gains and losses on sales of available-for-sale securities are included as financials income, net in the consolidated statements of comprehensive loss.

The Company accounted for these marketable equity securities as available-for-sale carried at fair value since these marketable equity securities were considered available to be converted into cash to fund Company’s current operations. The Company was required to recognize an impairment charge when a decline in the fair value of its investments in securities was below the cost basis of such securities and was determined to be other than temporary. Factors considered in making such a determination included the duration and severity of the impairment, the reason for the decline in value, the potential recovery period and the Company’s intent to sell. For securities that were deemed other-than-temporarily impaired, an impairment was recognized as the difference between the cost basis of the impaired equity security and the fair value on the measurement date, as part of financial income, net in the statement of comprehensive loss. The fair value on measurement date was considered the equity security’s new cost basis. As of December 2017, the Company has not recorded loss from impairment.

Commencing January 1, 2018, following the effective date of ASU 2016-01, “Financial Instruments—Overall (Topic 825-10): “Recognition and Measurement of Financial Assets and Financial Liabilities.” (ASU 2016-01), the Company’s investment in marketable equity securities which is based on equity securities with readily determinable fair values was classified as financial instruments at fair value with any changes in fair value recognized periodically in net income.

F-12

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.)

| g. | Property and equipment, net:

Property and equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets at the following rates:

|  | % |
Computers and electronic equipment |  |  | 33 |
Furniture and office equipment |  |  | 10 |

| h. | Impairment of long-lived assets:

The Company’s long-lived assets are reviewed for impairment in accordance with ASC Topic 360 “Property, plant and equipment”, whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such asset is considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the asset exceeds its fair value. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell. During the years ended December 31, 2018 and 2017, no impairment losses have been identified.

| i. | Research and development expenses:

Research and development expenses are charged to the statement of comprehensive loss as incurred.

In-Process Research and Development assets (“IPR&D”), acquired in an asset acquisition (i.e. assets acquired outside a business combination transactions) that are to be used in a research and development project which are determined not to have an alternative future use are charged to expense at the acquisition date in accordance with ASC 730, “Research and Development”.

| j. | Severance pay:

Wize Israel has two employee as of December 31, 2018 and 2017. Wize Israel’s liability for severance pay is pursuant to Section 14 of the Severance Compensation Act, 1963 (“Section 14”), pursuant to which all Wize Israel’s employees are included under Section 14, and are entitled only to monthly deposits, at a rate of 8.33% of their monthly salary, made in the employee’s name with insurance companies. Under Israeli employment law, payments in accordance with Section 14 release Wize Israel from any future severance payments in respect of those employees. Wize Israel has made all of the required payments as of December 31, 2018 and 2017.

F-13

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.)

The fund is made available to the employee at the time the employer-employee relationship is terminated, regardless of cause of termination.

The severance pay liabilities and deposits under Section 14 are not reflected in the consolidated balance sheets as the severance pay risks have been irrevocably transferred to the severance funds.

Severance expenses for the years ended December 31, 2018 and 2017 amounted to $10 for both periods.

| k. | Income taxes:

The Company accounts for income taxes in accordance with ASC 740, “Income Taxes”. This topic prescribes the use of the liability method whereby deferred tax assets and liability account balances are determined based on differences between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. Valuation allowances in respect of deferred tax assets are provided for, if necessary, to reduce deferred tax assets to amounts more likely than not to be realized.

The Company implements a two-step approach to recognize and measure uncertain tax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% (cumulative basis) likely to be realized upon ultimate settlement. As of December 31, 2018 and 2017, no liability for unrecognized tax positions has been recognized.

| l. | Concentrations of credit risk:

Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash, cash equivalents and restricted bank deposits. Cash and cash equivalents and restricted bank deposits are invested in major banks in Israel.

Management believes that the financial institutions that hold the Company’s investments are financially sound and, accordingly, minimal credit risk exists with respect to these investments.

The Company has no off-balance-sheet concentration of credit risk such as foreign exchange contracts, option contracts or other foreign hedging arrangements.

F-14

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.)

| m. | Convertible loans:

Allocation of proceeds:

The proceeds received upon the original issuance of the 2016 Loan together with a freestanding derivative financial instrument (derivative liability for right to future investment) were allocated to the financial instruments issued based on the residual value method.

The detachable derivative financial instrument related to the 2016 loan was recognized based on its fair value and the remaining amount of the proceeds was allocated to the 2016 Loan component.

Beneficial Conversion Features (“BCF”):

| a. | Upon initial recognition, the Company has considered the provisions of ASC 815-40, “Derivatives and Hedging - Contracts in Entity’s Own Equity”, and determined that the embedded conversion feature of the 2016 Loan should not be separated from the host instrument because it qualifies for equity classification. Furthermore, the Company applied ASC 470-20, “Debt - Debt with Conversion and Other Options” which clarifies the accounting for instruments with BCF or contingently adjustable conversion ratios, and has applied the BCF guidance to determine whether the conversion feature is beneficial to the investor.

The BCF was calculated by allocating the proceeds received in financing transactions to the 2016 Loan and to any detachable freestanding financial instrument (derivative liability for future investment (see also Note 8)) included in the transaction, and by measuring the intrinsic value of the conversion option based on the effective conversion price as a result of the allocated proceeds.

The intrinsic value of the conversion option with respect to the 2016 Loan was recorded as a discount on the 2016 Loan with a corresponding amount credited directly to equity as additional paid-in capital. After the initial recognition, the discount on the 2016 Loan was amortized as interest expense over the contractual term of the 2016 Loan (before its modification) by using the effective interest method.

F-15

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.)

| b. | Upon initial recognition, the Company has considered the provisions of ASC 815-15, “Derivatives and Hedging - Embedded Derivatives” (“ASC 815-15”), and determined that the embedded conversion feature of the 2017 Loan cannot be considered as clearly and closely related to the host debt instrument, However, it was determined that the embedded conversion feature should not be separated from the host instrument because the embedded conversion option, if freestanding, did not meet the definition of a derivative in accordance with the provisions of ASC 815-10, since its terms do not require or permit net settlement. Thus, it was determined that the conversion feature does not meet the characteristic of being readily convertible to cash.

Furthermore the Company applied ASC 470-20 which clarifies the accounting for instruments with BCF or contingently adjustable conversion ratios.

Pursuant to ASC 470-20-30, the amount of the BCF with respect to the 2017 Loan was calculated at the commitment date, as the difference between the conversion price (i.e. the entire proceeds received for the 2017 Loan) and the aggregate fair value of the common stock and other securities (which consist of the Investment Option) into which the 2017 Loan is convertible.

As such difference was determined to be greater than the amount of the entire proceeds originally received for the 2017 Loan, the amount of the discount assigned to the BCF was limited to the amount of the entire proceeds.

| c. | Following modifications or exchanges of convertible loans that were accounted for as an extinguishment (see below), upon recognition of the convertible loans based on their modified terms, the Company applied ASC 470-20, “Debt – Debt with conversion and other options” to determine whether the conversion feature is considered beneficial to the investors. However, due to the fact that following the extinguishment of the convertible loans, such modified convertible loans were recognized based on their fair value as of the modification date, the conversion terms were not considered beneficial to the investors.

| d. | Modifications or exchanges:

Modifications to, or exchanges of, financial instruments such as convertible loans, are accounted for as a modification or an extinguishment, following to provisions of ASC 470-50, “Debt- Modification and Extinguishments”. Such an assessment is done by management either qualitatively or quantitatively based on the facts and circumstances of each transaction.

F-16

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Under ASC 470-50, modifications or exchanges are generally considered extinguishments with gains or losses recognized in current earnings if the terms of the new debt and original instrument are substantially different. The instruments are considered “substantially different” when the present value of the cash flows under the terms of the new debt instrument is at least 10% different from the present value of the remaining cash flows under the terms of the original instrument.

If the terms of a debt instrument are changed or modified and the present value of the cash flows under the terms of the new debt instrument is less than 10%, the debt instruments are not considered to be substantially different, except in the following two circumstances (i) The transaction significantly affects the terms of an embedded conversion option, such that the change in the fair value of the embedded conversion option (calculated as the difference between the fair value of the embedded conversion option immediately before and after the modification or exchange) is at least 10% of the carrying amount of the original debt instrument immediately before the modification or exchange or (ii) The transaction adds a substantive conversion option or eliminates a conversion option that was substantive at the date of the modification or exchange.

If the original and new debt instruments are considered as “substantially different”, the original debt is derecognized and the new debt is initially recorded at fair value, with the difference recognized as an extinguishment gain or loss under financial expense or income as applicable.

If a convertible debt instrument with a beneficial conversion option that was separately accounted for in equity, is extinguished prior to its conversion or stated maturity date, a portion of the reacquisition price is allocated to the repurchase of the beneficial conversion option. The amount of the reacquisition price allocated to the beneficial conversion option is measured using the intrinsic value of that conversion option at the extinguishment date. The residual amount, if any, is allocated to the convertible debt instrument.

The gain or loss on the extinguishment of the convertible debt instrument is determined based on the difference between the carrying amount and the fair value of the allocated reacquisition price.

Modifications to, or exchanges of equity financial instruments such as right to future investment, are accounted for as a modification or an extinguishment in a similar manner as described above. Such an assessment is done by management either qualitatively or quantitatively based on the facts and circumstances of each transaction. Among others, management considers whether, the fair value of the financial instruments before and after the modification or exchange are substantially different.

F-17

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.)

If the original and new equity instruments are considered as “substantially different”, the excess fair value of the allocated reacquisition price over the fair value of the modified financial instrument before the modification, is recognized directly to retained earnings as a deemed dividend.

Issuance costs of convertible loan:

| a. | Upon initial recognition, costs incurred in respect of obtaining financing through issuance of the 2016 Loan (or costs allocated to such component in a package issuance) are presented as a direct deduction from the amount of the 2016 Loan and in subsequent periods such costs (together with the discount created by BCF if applicable) expensed as financing expenses over the contractual term of the 2016 Loan by using the effective interest method. Any such costs that were allocated to the derivative component were expensed as incurred.

| b. | Upon initial recognition, costs incurred in respect of obtaining financing through issuance of the 2017 Loan also discussed in Note 8 (or costs allocated to such component in a package issuance) were presented as a deferred asset since the 2017 loan was completely discounted at the initial recognition. In subsequent periods, such expenses were amortized ratably over the original term of the 2017 Loan.

| n. | Fair value of financial instruments:

ASC 820, “Fair Value Measurements and Disclosures” (“ASC 820”), defines fair value as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date.

In determining fair value, the Company uses various valuation approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the Company.

Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.

The hierarchy is broken down into three levels based on the inputs as follows:

| Level 1 | - | Valuations based on quoted prices in active markets for identical assets that the Company has the ability to access.
| Level 2 | - | Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly.
| Level 3 | - | Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

F-18

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.)

The availability of observable inputs can vary from investment to investment and is affected by a wide variety of factors, including, for example, the type of investment, the liquidity of markets and other characteristics particular to the transaction. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment and the investments are categorized as Level 3.

The carrying amounts of cash and cash equivalents, short-term bank deposits, other accounts receivable, trade payables and other accounts payable approximate their fair value due to the short-term maturities of such instruments.

Fair value of the marketable equity securities is determined based on a Level 1 input.

Derivative financial instruments are measured at fair value, on a recurring basis. The fair value of derivatives generally reflects the estimated amounts that the Company would receive or pay to terminate the contracts at the reporting dates, based on the prevailing currency or stock prices, as applicable. The fair value measurement of the derivative liability for right to future investment (which were classified to equity during 2017) and the financial instruments included under 2017 Loan and 2016 Loan (see note 8) are classified within Level 3.

Following each of the modifications described in Note 8, Wize Israel’s management engaged an external appraiser that measured the fair value of the financial instruments exchanged or modified, as further described in Note 8 and in the following paragraph.

The following tabular presentation reflects the components of the derivative liability associated with rights to future investment during the year ended December 31, 2017:

|  | Fair value of Right of Future Investment |
Balance at December 31, 2016 |  | $ | 34 |
Change in the fair value of derivative liability |  |  | 246 |
Reclassification of derivative liability into equity (*) |  |  | (280 | )
Balance at December 31, 2017 |  | $ | - |

| (*) | Upon the December 2017 modification, and in accordance with ASC 815-40 “Derivatives and Hedging, Contracts in Entity’s Own Equity”, it was determined that the right to future investment is eligible to be considered as indexed to the Company’s own stock. Accordingly, the fair value of the Right of Future Investment immediately prior to the Modification Date (December 2017) which amounted to NIS 1,042,000 (approximately $280 according to the exchange rate as of the Modification Date) was reclassified from a derivative liability to additional paid-in capital.

F-19

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.)

| o. | Legal and other contingencies:

The Company accounts for its contingent liabilities in accordance with ASC 450 “Contingencies”. A provision is recorded when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. With respect to legal matters, provisions are reviewed and adjusted to reflect the impact of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. As of December 31, 2018, the Company is not a party to any litigation that could have a material adverse effect on the Company’s business, financial position, results of operations or cash flows.

Legal costs incurred in connection with loss contingencies are expensed as incurred.

| p. | Treasury shares:

Shares held by the Company are presented as a reduction of equity, at their cost to the Company as treasury stock, until such shares are retired and removed from the account.

| q. | Derivatives:

The Company applies the provisions of ASC Topic 815, “Derivatives and Hedging” pursuant to which all the derivative financial instruments are recognized as either financial assets or financial liabilities on the balance sheet at fair value. The accounting for changes in the fair value of a derivative financial instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship.

As of December 31, 2016, the balance of derivative instruments consisted of derivative liability for right to future investment in an amount of $34 (see also n. above and r. below), and is stated at fair value.

As of December 31, 2018 and 2017, there were no financial instruments required to be accounted as derivatives (see also n. above and r. below).

During the years ended December 31, 2018 and 2017, the Company did not designate any financial instruments for hedging purposes.

F-20

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.)

| r. | Derivative liability for right to future investment:

Upon initial recognition, the Company reviewed the terms of such obligation and determined that it is not eligible to be classified as a component of permanent equity, as such instrument permitted the holder to receive a variable number of shares of common stock upon exercise, by investment of cash amount that will be determined at the discretion of the holder (up to a pre-determined cap). Accordingly, such financial instrument was accounted for as a derivative liability and as such was measured upon initial recognition and re-measured at subsequent reporting periods at fair value. Changes in the fair value were recorded in the consolidated statement of comprehensive loss within the caption “financial expense, net”.

Upon the December 2017 modification, and in accordance with ASC 815-40 “Derivatives and Hedging, Contracts in Entity’s Own Equity”, it was determined that the right to future investment, eligible to be considered as indexed to the Company’s own stock and as a result the derivative liability for right to future investment was reclassified into additional paid-in capital (see also Note 8).

| s. | Series A Warrants with Down-Round Protection

Commencing January 1, 2018 and following the early adoption of Accounting Standard Update (ASU) No. 2017-11, “I. Accounting for certain financial instruments with Down Round Features” (ASU 2017-11) as described in Note 2.t, the Company disregard certain down-round features when assessing whether a financial instrument is indexed to its own stock, for purposes of determining liability or equity classification.

Based on its evaluation, management has determined that Series A Warrants (the “Warrants”) that were issued on October 2018, as part of a private placement, as described in Note 12J, which include a down-round protection that would adjust the exercise price of the Warrants based on the price at which the Company subsequently issues shares or other equity-linked financial instruments, if that price is less than the original exercise price of the Warrants, are eligible for equity classification.

In accordance with the provisions of ASU 2017-11, upon the occurrence of an event that triggers a down round protection (i.e., when the exercise price of the Warrants is adjusted downward because of the down round feature), the effect is accounted for as a deemed dividend and as a reduction of income available to common shareholders for purposes of basic earnings per share (EPS) calculation.

During the period from issuance of the Warrants and throughout December 31, 2018, there were no events that require a downward adjustment of the current exercise price of the Warrants.

| t. | Basic and diluted loss per share:

Basic loss per share is computed by dividing the loss for the period applicable to Ordinary Shareholders by the weighted average number of shares of common stock outstanding during the period. Securities that may participate in dividends with the common stock (such as the convertible Series A Preferred Stock) are considered in the computation of basic income (loss) per share using the two-class method. In periods of net loss, such participating securities are included in the computation, since the holders of such securities have a contractual obligation to share the losses of the Company (as the convertible Series A Preferred Stock do not have a right to receive any mandatory redemption amount and as they are entitled only to dividends on an as-converted basis together with the common shares).

In computing diluted loss per share, basic loss per share is adjusted to reflect the potential dilution that could occur upon the exercise of options, warrants and rights for future investment issued or granted using the “treasury stock method” and upon the conversion of 2017 Loan and 2016 Loan using the “if-converted method”, if the effect of each of such financial instruments is dilutive.

For the years ended December 31, 2018 and 2017, all outstanding stock options and other convertible instruments have been excluded from the calculation of the diluted net loss per share as all such securities are anti-dilutive for all years presented.

F-21

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.)

The loss and the weighted average number of shares used in computing basic and diluted net loss per share for the years ended December 31, 2018 and 2017, is as follows:

|  | Year ended December 31, |
|  | 2018 |  |  | 2017 |
Numerator: |  |  |  |  |  |
Net loss |  | $ | (3,279 | ) |  | $ | (2,966 | )
Add: Loss attributed to preferred stock (*) |  |  | 147 |  |  |  | - |
Less: Deemed dividend with respect to right for future investment |  | $ | (292 | ) |  | $ | (3 | )
Net loss applicable to stockholders of Common Stock |  | $ | (3,424 | ) |  | $ | (2,969 | )
Denominator: |  |  |  |  |  |  |  |
Shares of common stock used in computing basic and diluted net loss per share |  |  | 5,649,262 |  |  |  | 3,438,842 |
Net loss per share of Common stock, basic and diluted |  | $ | (0.61 | ) |  | $ | (0.86 | )

(*) During the year ended December 31, 2018 the Company issued preferred stock as part of the October 2018 transaction. These preferred shares are participating securities as described in Note 12.j. During the years ended December 31, 2018 and 2017 there were no other potentially dilutive instruments.

| u. | Accumulated other comprehensive loss:

Accumulated other comprehensive loss, presented in stockholders’ deficit, includes (i) gains and losses that were incurred from the translation of the pre-merger results of Wize Israel and OcuWize to the reporting currency (see also Note 2c) and (ii) unrealized gain from the change in the fair value of marketable equity securities that were classified as available-for-sale until December 31, 2017.

The components of accumulated other comprehensive income (loss) as of December 31, 2017 and 2018 were as follows:

|  | Total accumulated other comprehensive income (loss) |
Balance at January 1, 2017 |  | $ | (47 | )
Cumulative effect adjustment as a result from transition to ASU 2016-01 |  |  | (26 | )
Balance at December 31, 2018 |  | $ | (73 | )

| v. | Stock-based compensation:

Stock-based compensation to employees is accounted for in accordance with ASC 718, “Compensation - Stock Compensation” (“ASC 718”), which requires estimation of the fair value of equity - based payment awards on the date of grant using an option pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as an expense over the requisite service period.

F-22

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.)

Stock-based compensation expense is recognized for the value of awards granted based on the accelerated method over the requisite service period of each of the awards, net of estimated forfeitures. ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.

The fair value of stock options granted to Wize Israel employees was estimated using the binominal model, which requires a number of assumptions, of which the most significant are the expected stock price volatility and the expected option term. Expected volatility was calculated based upon historical volatilities of Wize Israel on a weekly basis since the marketability of Wize Israel is less than the expected option term. The expected option term represents the period that Wize Israel’s stock options are expected to be outstanding and is determined based on the simplified method until sufficient historical exercise data will support using expected life assumptions. The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term.

The expected dividend yield assumption is based on Wize Israel’s historical experience and expectation of no future dividend payouts. Wize Israel has historically not paid cash dividends and has no foreseeable plans to pay cash dividends in the future.

Until December 31, 2017, ASC 505-50, “Equity-Based Payments to Non-Employees” (“ASC 505”) provisions were applied with respect to options and warrants issued to non-employees which requires the use of option valuation models to measure the fair value of the options and warrants at the grant date, and at the end of each accounting period between the grant date and the final measurement date.

Following the adoption of ASU2018-07 all equity-classified nonemployee share-based payment awards granted during 2018 were measured at grant-date fair value of the equity instruments that the Company is obligated to issue.

Upon the Closing Date of the Merger (see also Note 1d), all the outstanding options under 2015 Plan of Wize Israel were cancelled.

| w. | Disclosure of new accounting standards

ASU 2016-01, “Financial Instruments—Overall (Topic 825-10): “Recognition and Measurement of Financial Assets and Financial Liabilities.”

Commencing January 2018, the Company applied ASU 2016-01, “Financial Instruments—Overall (Topic 825-10): “Recognition and Measurement of Financial Assets and Financial Liabilities.” (ASU 2016-01).

ASU 2016-01 amends the guidance on the classification and measurement of financial instruments. Among others, ASU 2016-01 requires that equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) will be measured at fair value with changes in fair value recognized in net income. Also, ASU 2016-01 simplifies the impairment assessment of equity investments without readily determinable fair values by requiring a qualitative assessment to identify impairment and requires public business entities to use the exit price notion when measuring the fair value of financial instruments for disclosure purposes.

F-23

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.)

ASU 2016-01 requires an entity to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting from a change in the instrument-specific credit risk when the entity has elected to measure a liability at fair value in accordance with the fair value option for financial instruments. ASU 2016-01 also requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or in the accompanying notes to the financial statements.

For public business entities, the amendments of ASU 2016-01 became effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years.

ASU 2016-01 requires that its amendment will be applied using a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. However, the amendments related to equity securities without readily determinable fair values (including disclosure requirements) should be applied prospectively to equity investments that exist as of the date of adoption of the Update.

Following the adoption of ASU 2016-01, the Company reclassified unrealized gains and losses amounts related to its investment in marketable equity securities that previously were classified as available-for-sale securities from accumulated other comprehensive income to accumulated deficit on January 1, 2018. Following the adoption, such investment is accounted for at fair value and the changes in fair value are recognized in net income or loss.

ASU 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting

In June 2018, the FASB issued Accounting Standards Update 2018-07, Compensation—Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting (ASU 2018-07). ASU 2018-07 aligns the measurement and classification guidance for share-based payments to nonemployees with the guidance for share-based payments to employees, with certain exceptions.

Consistent with the accounting requirement for employee share-based payment awards, nonemployee share-based payment awards within the scope of Topic 718 will be measured at grant-date fair value of the equity instruments that an entity is obligated to issue when the goods has been delivered or the service has been rendered and any other conditions necessary to earn the right to benefit from the instruments have been satisfied.

Equity-classified nonemployee share-based payment awards will be measured at the grant date (the date at which a grantor and a grantee reach a mutual understanding of the key terms and conditions of a share-based payment award). With respect to awards with performance conditions, ASU 2018-07 concludes that, consistent with the accounting for employee share-based payment awards, an entity will consider the probability of satisfying performance conditions when nonemployee share-based payment awards contain such conditions.

F-24

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 2:- | SIGNIFICANT ACCOUNTING POLICIES (Cont.)

ASU 2018-07 also requires that the classification of equity classified nonemployee share-based payment awards will continue to be subject to the requirements of Topic 718 unless the award was modified after the goods has been delivered, the service has been rendered, any other conditions necessary to earn the right to benefit from the instruments have been satisfied, and the nonemployee is no longer providing goods or services. This eliminates the requirement to reassess classification of such awards upon vesting.

ASU 2018-07 is effective for public business entities in annual periods beginning after 15 December 2018, and interim periods within those years. Early adoption is permitted, including in an interim period, but not before an entity adopts the new revenue recognition guidance (which became effective for the Company in its interim financial statements for 2018).

An entity should only remeasure liability-classified awards that have not been settled by the date of adoption and equity-classified awards for which a measurement date has not been established, through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. Upon transition, the entity is required to measure these nonemployee awards at fair value as of the adoption date.

The Company has elected to early apply ASU 2018-07 in its interim financial statements for the interim period ended September 2018. However, as there are no liability-classified awards and as there were no equity-classified awards for which a measurement date has not been established as of January 1, 2018 (the beginning of the fiscal year of adoption), the adoption did not have significant effect on the financial statements.

Also, as a result of the adoption all equity-classified nonemployee share-based payment awards granted during 2018 were measured at grant-date fair value of the equity instruments that the Company is obligated to issue.

| x. | Recent Accounting Pronouncements not adopted yet

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”). ASU 2016-02 requires lessees to recognize their leases contracts as assets and liabilities in the financial statements. Furthermore, the ASU requires the Company to continue recognizing expenses but recognize expenses on their income statements in a manner similar to current lease accounting. The amendments in this ASU are effective January 1, 2019. In July 2018, the FASB issued ASU 2018-11, Leases - Targeted Improvements, to allow a company to elect an optional modified retrospective transition method that applies the new lease requirements through a cumulative-effect adjustment in the period of adoption. Effective January 1, 2019, the Company intends to adopt the new lease accounting standard using the modified retrospective transition option of applying the new standard at the adoption date. The Company intends to elect the package of practical expedients permitted under the transition guidance within the new standard, which among other things, allowed the Company to carry forward the historical lease classification.

The Company has completed an initial assessment of the potential impact on its consolidated financial. The actual impact of applying ASU 2016-02 will not be with a significant effect on Company’s consolidated financial statements

F-25

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 3:- | MARKETABLE EQUITY SECURITIES

The Company owns 52,249 ordinary shares of Can-Fite representing approximately 0.12% of Can-Fite’s issued and outstanding share capital as of December 31, 2018. This is an asset held by the Company as of the Closing Date of the Merger and was initially recorded at fair value (quoted market) on the Closing Date.

Commencing January 1, 2018, such shares with readily determinable fair value are classified at fair value with changes carried to income or loss.

| NOTE 4:- | OTHER CURRENT ASSETS

|  | December 31, |
|  | 2018 |  |  | 2017 |
Prepaid expenses |  | $ | 97 |  |  | $ | 3 |
Receivables from governmental authorities |  |  | 75 |  |  |  | 37 |
Other |  |  | 8 |  |  |  | - |
|  | $ | 180 |  |  | $ | 40 |

| NOTE 5:- | LICENSE AGREEMENT

In May 2015, Wize Israel entered into an Exclusive Distribution and Licensing Agreement (as amended, the “License Agreement”) with Resdevco Ltd. (“Resdevco”), whereby Resdevco granted to Wize Israel an exclusive license to purchase, market, sell and distribute a formula known as LO2A (“LO2A”) in the United States, Israel, Ukraine and China as well as a contingent right to do the same in other countries. LO2A is a drug developed for the treatment of DES, and other ophthalmological illnesses, including Conjunctivochalasis (“CCH”) and Sjögren’s syndrome (“Sjögren’s”). Pursuant to the LO2A License Agreement, Wize Israel is required to pay Resdevco certain royalties for sales in the licensed territories based on an agreed-upon price per unit of either $0.60, in the United States, Israel and Ukraine, or in the low single digits of US Dollars, in the People’s Republic of China, payable on a semi-annual basis, subject to making certain minimum royalty payments as set forth in the LO2A License Agreement. In July 2018, the Company paid Resdevco royalties in the amount of $185.

F-26

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 5:- | LICENSE AGREEMENT (Cont.)

The fair value of the Minimum Commitment to pay royalties as stated as of its initial recognition date was calculated based on an estimate of the fair value of the payments set in the License Agreement in accordance with the dates set in the License Agreement using a discount rate of 21%, which reflected, among other things, Wize Israel’s estimate of its equity rate as of that date. At initial recognition, the fair value of the Minimum Commitment was estimated in an amount of $397. As of December 31, 2018, the current liability to pay future royalties amounts to $250 (see also Note 6).

On February 28, 2019, the Company terminated the distribution agreements in the territory of Ukraine.

| NOTE 6:- | LICENSE PURCHASE OBLIGATION

| a. | As noted in Note 5, as consideration for the License Agreement, Wize Israel undertook to pay a Minimum Commitment of licensing fees and royalties of no less than $500 in the first three years of the agreement. An amount of $100 was paid in May 2015, upon signing the License Agreement and amounts of $150 and $150 were paid in January 2016 and July 2017, respectively.

In July 2017, Wize Israel and Resdevco amended the License Agreement pursuant to which the annual royalties amount of $475 will be reduced to $150 for 2018 and 2019. If Wize Israel obtains an FDA marketing license during 2019, the Company will be required to pay Resdevco the remainder of the payment of 2019. Consequently, during the third quarter of 2017 the Company has recognized an amount of $150 as an additional liability with respect to the 2018 minimum commitment, which was paid during the third quarter of 2018. In addition, during the third quarter of 2018 the Company has recognized an amount of $150 as a liability in respect to the 2019 minimum commitment. Such amount is reflected as an expense under research and development expenses in 2017 and 2018 as applicable. In February 2019, the Company and Resdevco agreed that the Company shall pay Resdevco minimum yearly payments of $150,000 per year through 2021, and then annual payments of $475,000 per year, and shall pay Resdevco $650,000 within two years after receipt of FDA approval for eye drops utilizing the licensed technology.

On December 26, 2017, Wize Israel entered into an amendment to the License Agreement with Resdevco (the “Third Amendment”) which includes (i) China in the list of Licensed Territories, (ii) the size and timing of royalty payments, including the minimum annual royalty payments, payable by Wize Israel to Resdevco in connection with its distribution activities in China, and (iii) an undertaking by Wize Israel to include in the distribution agreement to be entered into with the Chinese Distributor that the Chinese Distributor will transfer the Chinese market license to Resdevco upon termination of the distribution agreement. On May 31, 2018, The Company entered into a distribution agreement with the Chinese distributor. As a result of entering into the agreement above, the term of the Third Amendment did not expire on June 1, 2018.

F-27

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 6:- | LICENSE PURCHASE OBLIGATION (Cont.)

| b. | The following table details the repayment dates of the remaining Minimal Commitment on the financial liability and the balance in the consolidated financial statements:

|  | As of December 31, |
|  | 2018 |  |  | 2017 |
Repayment dates: |  |  |  |  |  |
January 1, 2018 |  | $ | - |  |  | $ | 250 |
January 1, 2019 |  |  | 250 |  |  |  | - |
Remaining balance |  |  | 250 |  |  |  | 250 |
Current liability |  |  | 250 |  |  |  | 250 |
Non-current liability |  |  | - |  |  |  | - |
Total |  | $ | 250 |  |  | $ | 250 |

| c. | On January 21, 2018, Resdevco agreed to postpone the minimum royalty payment obligation amounting to $150 from January 1, 2018 to July 29, 2018 (see also note 5).

| NOTE 7:- | OTHER ACCOUNTS PAYABLE

|  | December 31, |
|  | 2018 |  |  | 2017 |
Employees and payroll accruals (*) |  | $ | 130 |  |  | $ | 101 |
Accrued expenses |  |  | 142 |  |  |  | 95 |
|  | $ | 272 |  |  | $ | 196 |

| (*) | As of December 31, 2018 and 2017, most of the sum refers to a debt to the Company’s Chief Executive Officer, with whom the Company had reached an agreement regarding postponing the payment date. The debt is expected to be paid in the foreseeable future.

| NOTE 8:- | CONVERTIBLE LOANS

| a. | On March 20, 2016, Wize Israel entered into an agreement (as amended on March 30, 2016, the “2016 Loan Agreement”) pursuant to which Rimon Gold Assets Ltd. (“Rimon Gold”) extended a loan in the principal amount of up to NIS 2 million (approximately $531 according to an exchange rate at 2016 loan originate date), which bears interest at an annual rate of 4% (the “2016 Loan”). Pursuant to the 2016 Loan Agreement, as modified by the 2017 Loan Agreement (as defined below) and the 2017 Loan Amendment (as defined below), the 2016 Loan had a maturity date of December 31, 2018. Regarding the modification of the maturity date of the 2016 loan in October 2018, see also Note 8b.

F-28

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 8:- | CONVERTIBLE LOANS (Cont.)

Under the 2016 Loan Agreement, Rimon Gold had the right, at its sole discretion, to convert any outstanding portion of the 2016 Loan, but not less than NIS 100,000 (approximately $26 according to an exchange rate at 2016 loan origination date), into Wize Israel ordinary shares at a conversion price per share of NIS 15.2592 (approximately $3.84), subject to adjustments for stock splits and similar events set forth in the 2016 Loan Agreement. As a result of the Merger and based on the Exchange Ratio, the conversion price per share for the 2016 Loan was adjusted to NIS 3.6 (approximately $0.96). As a result of the 2017 Loan Amendment (as defined below), the aggregate principal amount of the 2016 Loan is $531 and the conversion price per share for the 2016 Loan was adjusted to $0.9768.

In addition, under the 2016 Loan Agreement, as modified by the 2017 Loan Agreement (as defined below) and the 2017 Loan Amendment (as defined below), Rimon Gold had the right (the “2016 Investment Right”), until June 30, 2019, to invest up to $797, in the aggregate, at an agreed price per share, which was adjusted based on the Exchange Ratio from NIS 20.4 (approximately $6.00) to NIS 5.04 (approximately $1.44) and based on the 2017 Loan Amendment (as defined below), from NIS 5.04 to $1.308 (subject to adjustments in case of stock splits or similar events). Regarding modification to extend the term of the 2016 investment right in October 2018, see also Note 8b.

Rimon Gold was entitled, under certain circumstances, to demand repayment of the 2016 Loan, including among others: (i) if Wize Israel breaches or fails to perform or is shown to have made a false statement, under the 2016 Loan Agreement or the Security Agreements; (ii) any failure of Wize Israel to make a timely payment; (iii) upon the appointment of a receiver; (iv) the imposition of a lien on a material asset of Wize Israel (v) if Wize Israel files a motion to stay proceedings; (vi) upon the expiration or termination of the License Agreement or if any party is in material breach of the License Agreement or if any party notifies the other of its intention to terminate the License Agreement; (vii) an adverse material change; or (viii) upon the non-performance of Wize Israel pursuant to the 2017 Loan Agreement, see also Note 8b. The 2016 Loan Agreement and the Security Agreements contain a number of restrictive covenants that limit Wize Israel's operating flexibility. These covenants include, among other things, limitations on the creation of liens; on the incurrence of indebtedness; on dispositions of assets, mergers, acquisitions and other change of control transactions; on changes in the general nature of the Company's business; restrictions on payments to related parties; restrictions on conducting rights offerings, and on the distribution of dividends.

The Company believes it is in compliance with the 2016 loan covenants through the date of the financial statements.

On January 15, 2017, Wize Israel entered into the loan agreement (the “2017 Loan Agreement”) with Ridge Valley Corporation (“Ridge”), and, by way of entering into assignments and assumption agreements following such date, also with Rimon Gold and Shimshon Fisher (“Fisher,” and together with Ridge and Rimon Gold, the “2017 Lenders”), whereby each of the lenders extended a loan in the principal amount of up to NIS 1 million (approximately $274 according to an exchange rate at 2017 loan originate date) and in the aggregate principal amount of up to NIS 3 million (approximately $822 according to an exchange rate at 2017 loan originate date), which bears interest at an annual rate of 4% (the “2017 Loan”, and together with the 2016 Loan, the “Loans”). Pursuant to the 2017 Loan Agreement and the 2017 Loan Amendment (as defined below), the 2017 Loan had a maturity date of December 31, 2018. Regarding the modification of the maturity date of the 2017 loan in October 2018, see also Note 8b.

Under the 2017 Loan Agreement, each of the 2017 Lenders had the right, at its sole discretion, to convert any outstanding portion of the 2017 Loan, but no less than NIS 100,000 (approximately $28 according to an exchange rate at 2017 loan originate date), that the lender provided to Wize Israel (each such portion converted into Wize Israel ordinary shares at a conversion price per share equal to the lower of (1) NIS 24 (approximately $6.72) and (2) the lowest price per share of Wize Israel in any offering made by Wize Israel following the date of the 2017 Loan Agreement and through the date of such requested conversion, subject to adjustments for stock splits and similar events set forth in the 2017 Loan Agreement (the “2017 Loan Conversion Price”). As a result of the 2017 PIPE (see also Note 12b), the 2017 Loan Conversion Price for Rimon Gold, Fisher and Ridge was adjusted to NIS 16.8 (approximately $4.80), and as a result of the Merger, the 2017 Loan Conversion Price of NIS16.8 (approximately $4.8) was adjusted in accordance with the Exchange Ratio to NIS 4.05 (approximately $1.15).

F-29

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 8:- | CONVERTIBLE LOANS (Cont.)

As a result of the 2017 Loan Amendment (as defined below), the aggregate principal amount of the 2017 Loan is $822 and the 2017 Loan Conversion Price was adjusted to $1.1112. See “2017 Loan Amendment” below.

In addition, under the 2017 Loan Agreement, as modified by the 2017 Loan Amendment (as defined below), the 2017 Lenders had the right (the “2017 Investment Right”), until June 30, 2019, to invest up to $1,233, in the aggregate, at an agreed price per share equal to 120% of the applicable 2017 Loan Conversion Price, which was adjusted in December 2017, based on the 2017 Loan Amendment, to a fixed exercise price of $1.332 (subject to adjustments in case of stock splits or similar events). Regarding modification to extend the term of the 2017 investment right in October 2018, see also Note 8b.

Ridge was entitled, under certain circumstances, to demand repayment of the 2017 Loan, including: (i) if Wize Israel breaches or fails to perform or is shown to have made a false statement, under the 2017 Agreement or the Security Agreements; (ii) any failure of Wize Israel to make a timely payment; (iii) upon the appointment of a receiver; (iv) the imposition of a lien on a material asset of Wize Israel; (v) if Wize Israel files a motion to freeze proceedings; or (vi) an adverse material change. The 2017 Loan contains a number of restrictive covenants that limit the Wize Israel's operating flexibility. These covenants include, among other things, limitations on the creation of liens; on the incurrence of indebtedness; on dispositions of assets, mergers, acquisitions and other change of control transactions; on changes in the general nature of Wize Israel's business; restrictions on payments to related parties; and on the distribution of dividends.

The Company believes it is in compliance with the 2017 loan covenants through the date of the financial statements.

The Company has considered the provisions of ASC 815-15, “Derivatives and Hedging – Embedded Derivatives” (“ASC 815-15”), and determined that the embedded conversion feature of the 2017 Loan cannot be considered as clearly and closely related to the host debt instrument, However, it was determined that the embedded conversion feature should not be separated from the host instrument because the embedded conversion option, if freestanding, does not meet the definition of a derivative in accordance with the provisions of ASC 815-10, since its terms do not require or permit net settlement. Thus, the conversion feature does not meet the characteristic of being readily convertible to cash.

Wize Israel applied ASC 470-20, “Debt - Debt with Conversion and Other Options” which clarifies the accounting for instruments with BCF or contingently adjustable conversion ratios. Pursuant to ASC 470-20-30, the amount of the BCF with respect to the 2017 Loan was calculated at the commitment date, as the difference between the conversion price (i.e. the entire proceeds received for the 2017 Loan) and the aggregate fair value of the common stock and other securities (which consist of the Investment Option) into which the 2017 Loan is convertible.

As such difference was determined to be greater than the amount of the entire proceeds received for the 2017 Loan, the amount of the discount assigned to the BCF was limited to the amount of the entire proceeds.

Accordingly, the BCF amounting to NIS 3,000,000 (approximately $811 according to the average exchange rate at the commitment date) was recorded as a discount on the 2017 Loan with a corresponding amount credited directly to equity as additional paid-in capital. As a result, upon initial recognition, the amount related to the 2017 Loan was NIS 0. After the initial recognition, the discount on the 2017 Loan is amortized as interest expense over the term of the 2017 Loan.

F-30

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 8:- | CONVERTIBLE LOANS (Cont.)

2017 loan amendment

On December 21, 2017, the Company entered into an amendment (the “2017 Loan Amendment”) to the 2016 Loan Agreement and the 2017 Loan Agreement. Pursuant to the 2017 Loan Amendment, (i) the maturity date of the Loans was extended from December 31, 2017 to December 31, 2018; (ii) the exercise period of the 2016 Investment Right was amended so that it shall expire on June 30, 2019; (iii) the exercise period of the 2017 Investment Right was amended so that it shall expire, without the need to first convert the 2017 Loan, on June 30, 2019; and (iv) the below terms of the Loans were amended to be denominated in U.S. dollars instead of NIS:

|  | 2017 Loan |  |  | 2016 Loan |
Aggregate principal amount |  | $ | (*) 822 |  |  | $ | 531 |
Conversion price per Company’s share |  | $ | 1.1112 |  |  | $ | 0.9768 |
Aggregate maximum of Right to Future Investment |  | $ | (**) 1,233 |  |  | $ | 797
Exercise Price of Right to Future Investment |  | $ | 1.332 |  |  | $ | 1.308 |

| (*) | Principal loan amount of $274 for each of the three 2017 Lenders.

| (**) | Maximum of Right to Future Investment of $411 for each of the three 2017 Lenders.

Accordingly, each of the modified financial instruments were initially recorded at fair value. Then, the total fair value of the modified financial instruments related to the 2017 Loan and 2016 Loan (the “Reacquisition Price”) was allocated to the original financial instruments included in the 2017 Loan and 2016 Loan, as applicable, based on the relative fair value of such financial instruments as of the date of the extinguishment. As a result, an aggregate amount of $2,104 was allocated to the 2016 Loan and an aggregate amount of $2,985 was allocated to the 2017 Loan.

The difference between the Reacquisition Price that was allocated to the Right to Future Investment amounting to $704 which was included in the 2016 Loan and its fair value as of that date amounting to $701 was recorded directly to additional paid in capital (as a deemed dividend in an amount of $3). In addition, the Reacquisition Price that was allocated to the newly detachable right to future investment related to the 2017 Loan was recognized directly to additional paid-in capital. Such financial instruments amounted to $1,115 as of December 21, 2017. The remaining amount of the Reacquisition Price that was allocated to the 2017 Loan and 2016 Loan which included an embedded BCF was firstly attributed to the repurchase of the BCF based on the intrinsic value of the conversion feature at the extinguishment date and the residual amounts, were allocated to the 2017 Loan and 2016 Loan. The difference between such residual amounts and the carrying value of the 2017 Loan and 2016 Loan was recorded as loss on extinguishment amounting to $61 of the 2017 Loan and 2016 Loan.

| b. | 2018 loan amendment

In connection with the Purchase Agreement, on October 19, 2018 (“2018 modification date”) the Company and its wholly-owned subsidiary Wize Pharma Ltd. (“Wize Israel”) entered into an amendment to the existing convertible loan (the “Amendment”). Pursuant to Amendment, the maturity date under the (i) 2016 Loan Agreement, and (ii) 2017 Loan Agreement, was amended to be the earliest of (a) 90 days following the date that the registration statement the Company will file under the Registration Rights Agreement covering the resale of all common stock, issued pursuant to the Purchase Agreement (see note 12j.), and issuable upon conversion of the Series A Preferred Stock and exercise of the Warrants, are registered for resale for investors who are not a party to the Loan Agreements Amendment, (b) 90 days following the date on which all securities issued to investors under the Purchase Agreement are no longer deemed registrable securities under the Registration Rights Agreement, and (c) one year following the closing under the Purchase Agreement. In addition, pursuant to the Amendment, the expiration date of the investment right under the 2016 Loan Agreement and the 2017 Loan Agreement was amended to be 180 days after the Loan Agreements Maturity Date.

According to ASC 470-50, each of the modified financial instruments were measured at fair value. Then, the total fair value of the modified financial instruments related to the 2017 Loan and 2016 Loan (the “Reacquisition Price”) was allocated to the original financial instruments included in the 2017 Loan and 2016 Loan, as applicable, based on the relative fair value of such financial instruments as of the date of the extinguishment. As a result, an aggregate amount of $2,314 was allocated to the 2016 Loan and an aggregate amount of $3,286 was allocated to the 2017 Loan and the related 2016 and 2017 right to future investment.

F-31

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 8:- | CONVERTIBLE LOANS (Cont.)

The difference between the Reacquisition Price that was allocated to the Right to Future Investment amounting to $874 which was included in the 2016 Loan and its fair value as of that date amounting to $764 was recorded directly to additional paid in capital (as a deemed dividend in an amount of $110). In addition, the Reacquisition Price that was allocated to the Right to Future Investment amounting to $1,336 which was included in the 2017 Loan and its fair value as of that date amounting to $1,154, was recorded directly to additional paid-in capital (as a deemed dividend in an amount of $182). The difference between reacquisition price that was allocated to the 2017 loan and to the 2016 loan, respectively and their respective carrying value of the 2017 Loan and 2016 Loan was recorded as gain on extinguishment amounting to $1,709 of the 2017 Loan and 2016 Loan.

The below table describes the roll forward of 2017 Loan and 2016 Loan for the year ended December 31, 2018 and 2017:

|  | December 31,
|  | 2018 |  | 2017
Opening balance |  | $ | 3,204 |  |  | $ | 289 |
Proceeds from issuance of 2017 loan, net of issuance cost |  |  | — |  |  |  | 811 |
Recognition of BCF as a discount of 2017 Loan |  |  | — |  |  |  | (811 | )
Amortization of premium related to convertible loans prior to 2018 modification |  |  | (1,458 | ) |  |  | — |
Amortization of discounts resulting from BCF and derivative liability and debt issuance costs related to 2017 Loan and 2016 Loan |  |  | — |  |  |  | 1,122 |
Accrued interest on 2017 Loan and 2016 Loan |  |  | 56 |  |  |  | 47 |
Derecognition of carrying amount of 2016 Loan and 2017 Loan upon extinguishments |  |  | (1,680 | ) |  |  | (1,458 | )
Amount allocated to 2016 and 2017 Loan based on modified terms |  |  | 3,204 |  |  |  | 3,204 |
Amortization of premium related to convertible loans following 2018 modification |  |  | (691 | ) |  |  | — |
|  | $ | 2,635 |  |  | $ | 3,204 |

| NOTE 9:- | CONTROLLING SHAREHOLDER

| a. | On November 15, 2016, Wize Israel’s Board of Directors (after receiving the approval of the Audit Committee on November 14, 2016) approved the receipt of a short-term bridge loan (“Loan”) in amount of NIS 250,000 (approximately $65 according to an exchange rate as of November 15, 2016) from Ridge. The Loan was received on November 21, 2016. The Loan was not linked to any index, had no collateral and bears yearly interest at the level of the interest rate of Israel State Bonds (0.1% as of December 31, 2016). The Loan’s repayment date was by the end of the first quarter of 2017 but may be extended from time to time at the Shareholder’s discretion.

F-32

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 9:- | LOANS FROM CONTROLLING SHAREHOLDER (Cont.)

| b. | On December 25, 2016, Wize Israel’s Board of Directors (after receiving the approval of the Audit Committee on November 14, 2016) approved the receipt of an additional short-term bridge loan of NIS 300,000 (approximately $78 according to an exchange rate as of December 25, 2016) from the Shareholder under the same terms to those described above. NIS 200,000 (approximately $52 according to an exchange rate as of December 31, 2016) was received in December 2016 and the remaining amount of NIS 100,000 (approximately $27 according to an exchange rate as of December 31, 2016) was received after December 31, 2016. Accordingly, as of December 31, 2016, the total balance of the short-term bridge loans amounted to NIS 450,000 (approximately $117 according to an exchange rate as of December 31, 2016).

| c. | On February 19, 2017, Wize Israel’s Board of Directors (after receiving the approval of the Audit Committee on February 16, 2017), approved the receipt of an additional short-term bridge loan of NIS 200,000 (approximately $55 according to the exchange rate as of February 19, 2017) from Ridge. The loan was not linked to any index, has no collateral and bears yearly interest at the level of the interest rate of Israel State Bonds.

The loan’s repayment date shall be by the end of the first quarter of 2017 and will serve the Company in its current activity. Ridge may extend the loan’s redemption date from time to time at its discretion.

On March 30, 2017, Wize Israel and Ridge agreed to convert the entire balance of the aforesaid bridge loans referenced above amounting to an aggregate amount of NIS 750,000 (approximately $206 according to the exchange rate as of March 31, 2017) as part of the 2017 Loan, the revised terms and conditions of which are described in Note 8a.

| NOTE 10:- | TAXES ON INCOME

| a. | Tax rates applicable to the Company:

On December 22, 2017, the Tax Cuts and Jobs Act was enacted and made key changes to US tax law which include (i) establish a flat corporate income tax rate of 21% to replace current rates that range from 15% to 35% and eliminates the corporate alternative minimum tax; (ii) create a territorial tax system rather than a worldwide system, which will generally allow companies to repatriate future foreign source earnings without incurring additional US taxes by providing a 100% exemption for the foreign source portion of dividends from certain foreign subsidiaries; (iii) subject certain foreign earnings on which US income tax is currently deferred to a one-time transition tax; (iv) create a “minimum tax” on certain foreign earnings and a new base erosion anti-abuse tax (BEAT) that subjects certain payments made by a US company to a related foreign company to additional taxes; (v) create an incentive for US companies to sell, lease or license goods and services abroad by effectively taxing them at a reduced rate; (vi) reduce the maximum deduction for Net Operating Loss (NOL) carryforwards arising in tax years beginning after 2017 to a percentage of the taxpayer’s taxable income, allows any NOLs generated in tax years beginning after December 31, 2017 to be carried forward indefinitely and generally repeals carrybacks;

F-33

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 10:- | TAXES ON INCOME (Cont.)

(vii) elimination of foreign tax credits or deductions for taxes (including withholding taxes) paid or accrued with respect to any dividend to which the new exemption applies, but foreign tax credits will continue to be allowed to offset tax on foreign income taxed to the US shareholder subject to limitations; (viii) limit the deduction for net interest expense incurred by US corporations, (ix) allow businesses to immediately write off (or expense) the cost of new investments in certain qualified depreciable assets made after September 27, 2017 (but would be phased down starting in 2023); (x) may require certain changes in tax accounting methods for revenue recognition; (xi) repeal the Section 199 domestic production deductions beginning in 2018; (xii) eliminate or reduce certain deductions, exclusions and credits, and adds other provisions that broaden the tax base.

After the enactment of the Tax Act, the SEC issued Staff Accounting Bulletin No. 118 (“SAB 118”) to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Tax Act.

The Company has calculated an estimate of the impact of the Tax Act in our year-end income tax provision in accordance with our understanding of the Tax Act and guidance available as of the date of this filing. The provisional amount related to the re-measurement of our net U.S. deferred tax asset, based on the rate at which they are now expected to reverse in the future, considered immaterial, but which was fully and equally offset by a corresponding reduction in the Company’s valuation allowance. The effect of the change in federal corporate tax rate from 34% to 21% is subject to change based on resolution of estimates used in determining the amounts of deferred tax assets and liabilities that were re-measured.

The change in U.S tax law has no impact on the consolidated financial statements.

| b. | Tax rates applicable to Wize Israel and OcuWize:

| 1. | Taxable income of the Subsidiary is subject to the Israeli Corporate tax rate which was 23% and 24% in 2018 and 2017 respectively.

| 2. | In December 2016, the Israeli Parliament approved the Economic Efficiency Law (Legislative Amendments for Applying the Economic Policy for the 2017 and 2018 Budget Years), a reduction of the corporate tax rate in 2017 from 25% to 24%, and in 2018 and thereafter from 24% to 23%.

The change in Israeli tax law has no impact on the consolidated financial statements.

| c. | Net operating loss carry forward:

As of December 31, 2018, the Company has net operating loss carry forwards for federal income tax purposes of approximately $3,811. The application of the net operating loss carry forwards is limited due to IRC section 382 limitation, the annual net operating loss carry forward (pre merger, approximately $2,734) is limited to $10.965 per year. The balance as of December 31, 2018 of the net operating loss carry forwards of approximately $1,077 is available in full.

F-34

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 10:- | TAXES ON INCOME (Cont.)

The balance as of December 31, 2018 of the net operating loss carry forwards of approximately $1,100 thousands is available in full.

As of December 31, 2018, the Company’s subsidiaries, Wize Israel and OcuWize have accumulated losses for tax purposes in the amount of approximately $7,980 and $1,050 respectively, which may be carried forward and offset against taxable income in the future for an indefinite period in Israel.

| d. | As of December 31, 2018, Wize Israel’s 2012 tax assessment was considered final. OcuWize has not received final tax assessment since its inception.

| e. | Loss before taxes on income consists of the following:

|  | December 31, |
|  | 2018 |  |  | 2017 |
Domestic |  | $ | (1,810) |  |  | $ | (2) |
Foreign (*) |  |  | (1,469) |  |  |  | (2,964) |
|  | $ | (3,279) |  |  | $ | (2,966) |

| (*) | Relates to Wize Israel.

| f. | Deferred income taxes:

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets are as follows:

|  | December 31, |
|  | 2018 |  |  | 2017 |
Deferred tax assets: |  |  |  |  |  |
Operating loss carry forward |  | $ | 2,097 |  |  | $ | 1,688 |
Reserves and allowances |  |  | 6 |  |  |  | 8 |
Research and development |  |  | 136 |  |  |  | 89 |
Net deferred tax asset before valuation allowance |  |  | 2,239 |  |  |  | 1,785 |
Valuation allowance |  |  | (2,239 | ) |  |  | (1,785 | )
Net deferred tax asset |  | $ | - |  |  | $ | - |

In assessing the realization of deferred tax assets, management considers whether it is more likely than not that all or some portion of the deferred tax assets will not be realized.

The ultimate realization of the deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences are deductible and net operating losses are utilized. Based on consideration of these factors, the Company recorded a full valuation allowance at December 31, 2018 and 2017.

F-35

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 10:- | TAXES ON INCOME (Cont.)

| g. | Below is the reconciliation between the “theoretical” income tax expense or benefit, assuming that all the income was taxed at the regular tax rate applicable to companies in Israel and the taxes recorded in the statements of comprehensive loss in the reporting year:

|  | Year ended December 31, |
|  | 2018 |  |  | 2017 |
Loss before taxes on income, as reported in the statements of comprehensive loss |  |  | (3,279 | ) |  |  | (2,966 | )
Theoretical tax benefit on this loss |  |  | 689 |  |  |  | 716 |
Expenses not deductible for tax purposes |  |  | (72 | ) |  |  | (51 | )
Increase in taxes resulting mainly from taxable losses in the reported year for which no net deferred tax assets were recognized |  |  | (617 | ) |  |  | (665 | )
Tax benefit |  |  | - |  |  |  | - |

| NOTE 11:- | COMMITMENTS AND CONTINGENCIES

| a. | Litigation:

From April 2015 to September 2015, Wize Israel and its directors who were also employees of Wize Israel received a number of letters from Go D.M. Investments Ltd (“Go D.M.”), an Israeli public company, engaged at the time in the field of repositioning of drugs, regarding its claims on various issues.

On January 16, 2017, a settlement was signed between Go D.M. and certain parties related to the abovementioned litigation.

On January 19, 2017, the Settlement was submitted to the Tel Aviv District Court for approval. On the same date, the Court ruled that the Settlement would be given the force of a legal ruling subject to meeting the preconditions as per the Settlement, including the Court’s approval of the arrangement in accordance with Section 350 of the Companies Law, 1999, and by February 21, 2017 the parties will update the Court on compliance with these conditions, and in the event that this takes place, the Settlement will be given the force of a legal ruling.

On March 26, 2017, the parties entered into settlement agreement pursuant to which it was agreed on final, full and absolute waiver of any claims, suits and demands by the parties for legal proceedings and/or by anyone operating on their behalf (including subsidiaries, controlling shareholders and interested parties, executives and officers, directors).

F-36

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 11:- | COMMITMENTS AND CONTINGENCIES (Cont.)

| b. | Agreements:

| 1. | Starting November 22, 2018, the Company rents its offices from a third party for a rental monthly fee of $2. The rent period is for a period of 12 months with an option to extend the lease period for additional 12 months.

| 2. | For the Company’s engagement in a License Agreement to market a drug and amendment to such an agreement, see also Note 5 above.

| 3. | On June 19, 2017 (the “Effective Date”), Wize Israel entered into a finder’s fee agreement with a service provider (through his wholly owned company), who is also a director of the Company (the “Vendor”), pursuant to which the Vendor is entitle to receive a royalty rate of 5% on all of Wize Israel’s revenues to the extent such revenues are earned from relationships initiated by the Vendor and agreed to by Wize Israel. The term of the agreement is for 12 months unless earlier terminated. Either party may terminate upon 21 days’ notice. The service provider will be entitled to the finder fee of 5% even if the agreement will be terminated. The Vendor introduced Wize Israel and the Company to the Chinese Distributor (see also Note 5). During the period commencing the Effective Date and ended December 31, 2018, the vendor has not earned any royalties, and the Company has no obligation to pay any royalties.

| NOTE 12:- | STOCKHOLDERS’ EQUITY (DEFICIT)

| 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 June 23, 2017, Wize Israel entered into a Private Placement Agreement (the “2017 PIPE Agreements”) with each of Eliahu Peretz (“Peretz”), Yaacov Zrachia (“Zrachia”), Simcha Sadan (“Sadan”) and Jonathan Brian Rubini (“Rubini”, and together with Peretz, Zrachia and Sadan, the “2017 PIPE Investors”). Pursuant to the 2017 PIPE Agreements, the 2017 PIPE Investors agreed to invest a total of NIS 3,490,000 (approximately $966) in exchange for a total of 860,987 ordinary shares of Wize Israel (the “2017 PIPE”), at a price per share of NIS 4.05 (approximately $1.15), with Peretz undertaking to invest NIS 490,000 (approximately $139 according to the exchange rate as of June 23, 2017) in exchange for the private placement of 120,884 ordinary shares of Wize Israel (the “Peretz Investment”) and each of Zrachia, Sadan and Rubini (the “Other Investors”) undertaking to invest NIS 1,000,000 (approximately $282 according to the exchange rate as of June 23, 2017) in exchange for the private placement of 246,701 ordinary shares of Wize Israel each (together, the “Other Investments”). Subject to the Closing Date of the Merger, Wize Israel also undertook to cause the Company to grant warrants to each of the 2017 PIPE Investors Warrants, with each Warrant being exercisable into one share of the Company’s common stock, par value $0.001 per share (the “Common Stock”), with a term of three years from the date of grant.

F-37

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 12:- | STOCKHOLDERS’ EQUITY (DEFICIT) (Cont.)

| c. | According to the 2017 PIPE Agreements, the number of Warrants and the exercise price thereof will reflect, prior to giving effect to an adjustment based on the Exchange Ratio, (i) 30,625 warrants to Peretz and (ii) 62,500 warrants to each of the Other Investors, each warrant exercisable into one ordinary share of Wize Israel, at an exercise price of NIS 28.8 per share (approximately $8.4 according to the exchange rate as of December 31, 2017). According to the Exchange Ratio, Peretz was granted 126,928 Warrants exercisable into Common Stock and each of the Other Investors was granted 259,036 Warrants exercisable into Common Stock.

Sadan’s commitment to provide his portion of the Other Financing was conditioned upon Wize Israel not raising more than NIS 3,500,000 (approximately $988 according to the exchange rate as of June 23, 2017) and not less than NIS 2,000,000 (approximately $565 according to the exchange rate as of June 23, 2017) in the 2017 PIPE, including the amount to be invested by Sadan.

On June 22, 2017, Ridge provided notice to Wize Israel that it has waived its right to adjust the 2017 Loan Conversion Price in connection with the Peretz Investment. In July 2017, Wize Israel completed the Peretz Investment and Other Investments. However, Ridge did not waive its right to adjust the 2017 Loan Conversion Price in connection with the Other Investments.

As a result of the Peretz Investment and Other Investments, the 2017 Loan Conversion Price for Rimon Gold, Fisher and Ridge was adjusted from NIS 24.00 (approximately $6.72 according to the exchange rate as of June 23, 2017) to NIS 16.8 (approximately $4.8 according to the exchange rate as of June 23, 2017) and as a result of the Merger, the 2017 Loan Conversion Price of NIS16.8 (approximately $4.8) was adjusted in accordance with the Exchange Ratio to NIS 4.05 (approximately $1.15). As a result of the 2017 Loan Amendment (see note 8 above), the aggregate principal amount of the 2017 Loan is $822,144 and the 2017 Loan Conversion Price was adjusted to $1.1112.

During the period ended December 31, 2017, the investment amount of NIS 3,490,000 (approximately $1 million according to the exchange rate as of December 31, 2017) from Peretz Investment and Other Investments has been received and the Company issued a total of 860,987 ordinary shares and the warrants described above.

| d. | On December 11, 2017, the Company announced a notice of special meeting of stockholders, according to which, a special meeting of the stockholders was held on February 19, 2018, for the purpose of considering to grant the Company’s Board of Directors the authority, in its sole direction, to approve an amendment to the Company’s Certificate of Incorporation to effect a reverse stock split of the Company’s issued and outstanding Common Stock by a ratio of not less than 1-for-10 and not more than 1-for-200.

F-38

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 12:- | STOCKHOLDERS’ EQUITY (DEFICIT) (Cont.)

| e. | On February 19, 2018, the stockholders of the Company approved a reverse stock split of the Company’s issued and outstanding Common Stock by a ratio of not less than 1-for-10 and not more than 1-for-200 at any time prior to February 19, 2019, with such ratio to be determined by the Company’s Board of Directors, in its sole discretion. On February 22, 2018, the Company’s Board of Directors approved a reverse stock split of the Company’s issued and outstanding Common Stock by a ratio of 1-for-24 (“Reverse Stock Split”).

For accounting purposes, all share and per share amounts for Common Stock, warrants stock, options stock and loss per share amounts reflect the Reverse Stock Split for all periods presented in these Financial Statements. Any fractional shares that resulted from the Reverse Stock Split were rounded up to the nearest whole share.

| f. | On February 28, 2018, the Company received notices from existing stockholders and lenders to exercise 2016 Investment Right and 2017 Investment Rights and warrants issued in a private placement of Wize Israel that was completed in July and August 2017 (the “PIPE Warrants”) to purchase an aggregate of 788,658 shares of Common Stock. During 2018, the Company received the aggregate exercise price of approximately $1,145 and issued 788,658 shares of Common Stock as follows:

| 1. | 144,168 PIPE warrants were exercised into 144,168 shares of common stock by certain stockholder. The aggregate exercise price amounted to approximately $292 was received in cash. As of December 31, 2018, 759,871 PIPE warrants remain outstanding.

| 2. | Certain holders of the 2016 Investment Right and 2017 Investment Right exercised approximately $853 of their right and invested a total amount of $853 for 217,442 and 427,048 respectively, shares of common stock ($1.308 and $1.332 per share, respectively). As of December 31, 2018, the remaining 2016 Investment Right and 2017 Investment Rights amount to approximately $1,176.

| g. | In April and June 2018, the Company issued 24,306 shares of Common Stock to two of its service providers in exchange for their services provided in 2018. The Company recognized an amount of $126 in 2018.

| h. | On May 10, 2018, the Company filed an amendment to the S-1 Registration Statement, for the purpose of registering (i) 922,330 shares of Common Stock that were outstanding as of that date; and (ii) 338,945 shares of Common Stock which are issuable upon conversion of the 2016 Loan and/or the 2017 Loan. On July 12, 2018, the S-1 Registration Statement was declared effective by the SEC.

| i. | In July 2018, the Company issued 67,778 shares of Common Stock to certain service providers in exchange for their services provided in 2018. The Company recognized an amount of $381 in its financial statements for year ended December 31, 2018.

F-39

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 12:- | STOCKHOLDERS’ EQUITY (DEFICIT) (Cont.)

| j. | On October 22, 2018, The Company entered into a securities purchase agreement (the “Purchase Agreement”). Pursuant to the Purchase Agreement, the Company sold to the investors, and the investors purchased from the Company, in a private placement, an aggregate of (i) 3,100,000 shares of common stock, for a purchase price of $1.00 per share, and (ii) 1,350 shares of newly created Series A Preferred Stock (each convertible into 1,000 shares of common stock), for a purchase price of $1,000 per share, for aggregate gross proceeds under the Purchase Agreement of $4,450.

The Company also issued to the investors Series A warrants (the “Series A Warrants”) to purchase an aggregate of 4,450,000 shares of common stock (equal to 100% of the shares of common stock sold (on an as-converted basis with respect to shares of Series A Preferred Stock)), and Series B warrants (the “Series B Warrants, and together with the Series A Warrants, the “Warrants”), to purchase an aggregate of 4,450,000 shares of common stock (equal to 100% of the shares of common stock sold (on an as-converted basis with respect to shares of Series A Preferred Stock)).

The Series A Warrants have an exercise price of $1.10 per share, and the Series B Warrants have an exercise price of $1.00 per share. The investors under the Purchase Agreement include prior investors in the Company and a lender to the Company.

The Series A Warrants have a term of 5 years from issuance, and the Series B Warrants will have a term that expires 20 days following the later of (i) the public announcement of Phase II clinical data for LO2A and (ii) six months following the issuance date, provided that, for each day after the issuance date that an Equity Conditions Failure (as defined in the Series B Warrants) has occurred, the expiration date of the Series B Warrants will be extended by one day.

In the event that, during the period commencing upon execution of the Purchase Agreement, and expiring on the trading day immediately following the date that the Company has raised, beginning after the issuance date of the Warrants, at least $10 million in gross proceeds from the issuance of the Company’s securities, the Company issues or sells common stock (or securities convertible into or exercisable into common stock) at a purchase price (or conversion or exercise price, as applicable) lower than the exercise price of the Warrants, than the exercise price of the Warrants will be reduced to such lower price, subject to certain exceptions.

Pursuant to the Purchase Agreement, the Company granted to the investors thereunder, for a period of three years from the closing date of the Purchase Agreement, a right of participation of up to an aggregate of 35% in any subsequent offering of the Company, subject to certain exceptions.

The Warrants are exercisable on a cashless basis in the event that, six months after the closing of the Purchase Agreement, there is not an effective registration statement for the resale of the shares underlying the Warrants. The Warrants may not be exercised to the extent such exercise would cause the holder to beneficially own more than 4.99% (or 9.99%, at the election of the investor) of the Company’s outstanding common stock.

F-40

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 12:- | STOCKHOLDERS’ EQUITY (DEFICIT) (Cont.)

Pursuant to the Purchase Agreement, the Company agreed that it will not, for a period commencing upon the closing of the Purchase Agreement, until the earlier of (i) 150 days following the date that all of the common stock, issued pursuant to the Purchase Agreement, and issuable upon conversion of the Series A Preferred Stock and exercise of the Warrants, are registered for resale, (ii) six months after the date that a non-affiliate investor under the Purchase Agreement may first sell securities purchased thereunder under Rule 144, (iii) 120 days following the listing of the common stock on a Qualified Market (as defined below) and (iv) the first trading day that the weighted average price of the common stock exceeds $5.00 per share for 10 consecutive trading days occurring after the date that a registration statement covering the resale of all of the common stock, issued pursuant to the Purchase Agreement, and issuable upon conversion of the Series A Preferred Stock and exercise of the Warrants, are registered for resale, offer or sell any common stock (or securities convertible into or exercisable into common stock), or file any registration statement, other than pursuant to the Registration Rights Agreement or on Form S-8, subject to certain exceptions.

In connection with the Purchase Agreement, on October 22, 2018, the Company filed a Certificate of Designations of Series A Preferred Stock (the “Series A Certificate of Designations”) with the Secretary of State of Delaware. Pursuant to the Series A Certificate of Designations, the Company designated 1,350 shares of preferred stock as Series A Preferred Stock. The Series A Preferred Stock has a stated value of $1,000 per share and is convertible into shares of common stock in an amount determined by dividing the stated value of $1,000 by the conversion price of $1.00, such that each share of Series A Preferred Stock is convertible into 1,000 shares of common stock. The Series A Preferred Stock may not be converted into common stock to the extent such conversion would cause the holder to beneficially own more than 4.99% (or 9.99%, at the election of the investor) of the Company’s outstanding common stock. The Series A Preferred Stock is entitled to dividends on an as-converted basis with the common stock. The Series A Preferred Stock votes with the common stock on an as-converted basis, subject to the beneficial ownership limitation. The Series A Preferred Stock are not entitled to any redemption amount.

The Company will be obligated to pay liquidated damages to the investors if the Company fails to file the resale registration statement when required, fails to cause the Registration Statement to be declared effective by the SEC when required, fails to maintain the Registration Statement and upon the occurrence of certain other events. The Company shall pay to each investor cash equal to 2% of such investor’s total purchase price on the dates of each deficiency and on the 30th day after such deficiencies until such deficiencies are cured, up to a maximum of 10% of the purchase price. The Company received notice of effectiveness on the resale registration statement on December 4, 2018.

F-41

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 12:- | STOCKHOLDERS’ EQUITY (DEFICIT) (Cont.)

The Company engaged ThinkEquity, a division of Fordham Financial Management, Inc. (“ThinkEquity”), as the placement agent for the private placement, pursuant to a placement agency agreement between the Company and ThinkEquity (the “Placement Agency Agreement”). The Company paid ThinkEquity a fee equal to 8% of the gross proceeds, excluding proceeds received from certain investors for its services as placement agent, and issued to ThinkEquity or its designees warrants to purchase 267,000 shares of common stock (equal to 6% of the shares of common stock sold (on an as-converted basis with respect to shares of Series A Preferred Stock)).

Such warrants have an exercise price of $1.00 per share and have the same terms as the Series A Warrants issued to the investors under the purchase agreement. The Company also paid to ThinkEquity a non-accountable expense allowance of $30 and reimbursed ThinkEquity for its legal expenses in connection with the offering in the amount of $50. The Company granted to ThinkEquity a right of first refusal for a period of nine months following the closing of the offering, to act as sole financial advisor, sole investment banker, sole book-runner, and/or sole placement agent, for each and every future public and private equity and debt offering of the Company during such period, on terms and conditions customary to ThinkEquity. The Company also paid Mesodi Consultation & Investments, Ltd. (“Mesodi”) a fee of $89 and issued to Mesodi warrants to purchase 89,000 shares of common stock. Such warrants have the same terms as the Warrants issued to the investors, in connection with the private placement.

In connection with the Purchase Agreement, on October 19, 2018 the Company and its wholly-owned subsidiary Wize Pharma Ltd. (“Wize Israel”) entered into an amendment to the existing convertible loan (the “Amendment”). Pursuant to Amendment, the maturity date under the (i) 2016 Loan Agreement, and (ii) 2017 Loan Agreement, was amended to be the earliest of (a) 90 days following the date that the registration statement the Company will file under the Registration Rights Agreement covering the resale of all common stock, issued pursuant to the Purchase Agreement, and issuable upon conversion of the Series A Preferred Stock and exercise of the Warrants, are registered for resale for investors who are not a party to the Loan Agreements Amendment, (b) 90 days following the date on which all securities issued to investors under the Purchase Agreement are no longer deemed registrable securities under the Registration Rights Agreement, and (c) one year following the closing under the Purchase Agreement. In addition, pursuant to the Amendment, the expiration date of the investment right under the 2016 Loan Agreement and the 2017 Loan Agreement was amended to be 180 days after the Loan Agreements Maturity Date.

In accordance with ASU 2017-11, which was early applied by the Company, the Company concluded that the Series A Convertible Preferred Stock and related Warrants meet the requirements for equity classification since they are considered to be indexed to the Company’s common stock and as they meet all other equity classification criteria described in ASC 815-40-25.

F-42

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 12:- | STOCKHOLDERS’ EQUITY (DEFICIT) (Cont.)

| k. | In December 2018, the Company issued 440,000 shares of Common Stock to certain investors in exchange for conversion of 440 Preferred A stock, which was in accordance with terms of the purchase agreement.

| l. | In December 2018, the Company issued 55,000 shares of Common Stock to certain service providers in exchange for their services to be provided in 2019. The fair value of the stock issued amounts to $54 and was recorded under other current assets.

| m. | Stock based-compensation:

The 2012 Plan

In 2012, the Company’s Board of Directors 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 Restricted Stock Units (“RSUs”) of the Company. Each Stock option granted shall be exercisable at such times and terms and conditions as the Company’s Board of Directors 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, 2018, the Company has 40,474 shares of Common Stock available for future grant under the 2012 Plan. As of December 31, 2018, 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 of Directors approved the adoption of the 2018 Stock Incentive Plan (the “2018 Plan”), including an Israeli annex to comply with Israeli law, in particular the provisions of section 102 of the Israeli Income Tax Ordinance.

Under the 2018 Plan, the Company may grant its employees, directors, consultants and/or contractors’ stock options, shares of Common Stock, restricted stock and restricted stock units of the Company. The Compensation Committee of the Board of Directors 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 of Directors 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.

F-43

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 12:- | STOCKHOLDERS’ EQUITY (DEFICIT) (Cont.)

Upon the adoption of the 2018 Plan, the Company’s Board of Directors reserved for issuance 2,500,000 shares of Common Stock. In addition, the Board of Directors 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.

Through December 31, 2018, the Company has granted 255,000 options to directors, officers and consultants.

Grants under 2018 plan

| n. | On April 4, 2018, the Company granted to its officers, directors and a consultant, 131,200 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 restricted stock units issued was $471, and was recognized during the three months ended June 30, 2018.

| o. | 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 $295 during the year ended December 31, 2018.

| p. | On August 15, 2018, the Company granted to its consultant options exercisable into 25,500 shares of Common Stock with an exercise price of $4.5 per share. The options will vest quarterly over a period of 36 months. The Company recognized $16 during the year ended December 31, 2018.

Transactions related to the grant of options to employees and directors under the 2012 Plan during the year ended December 31, 2018, were as follows:

|  | As of December 31, 2018 and 2017 |
|  | Number of options |  |  | Weighted average exercise price |  |  | Weighted average remaining contractual life |
Options outstanding at beginning of year |  |  | 4,896 |  |  | $ | 190.8 |  |  |  | 4.86 |
Granted |  |  | - |  |  |  | - |  |  |  | - |
Options outstanding and exercisable as of December 31, 2018 |  |  | 4,896 |  |  | $ | 190.8 |  |  |  | 4.11 |

F-44

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 12:- | STOCKHOLDERS’ EQUITY (DEFICIT) (Cont.)

Transactions related to the grant of options to employees and directors under the 2018 Plan during the year ended December 31, 2018, were as follows:

|  | As of December 31, 2018 |
|  | Number of options |  |  | Weighted average exercise price |  |  | Weighted average remaining contractual life |
Options outstanding as of December 31, 2017 |  |  | - |  |  | $ | - |  |  |  | - |
Granted |  |  | 255,000 |  |  | $ | 3.68 |  |  |  | 6.55 |
Options outstanding as of December 31, 2018 |  |  | 255,000 |  |  | $ | 3.68 |  |  |  | 6.55 |
Options exercisable as of December 31, 2018 |  |  | 38,246 |  |  | $ | 3.59 |  |  |  | 6.25 |

At December 31, 2018, there was $295 of total unrecognized compensation cost related to non-vested option grants that is expected to be recognized over a weighted-average period of 2.5 years. The intrinsic value of options outstanding and exercisable at December 31, 2018 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.

| NOTE 13:- | SELECTED STATEMENTS OF OPERATIONS DATA

| a. | General and administrative expenses:

|  | Year ended December 31, |
|  | 2018 |  |  | 2017 |
Overseas travel |  | $ | 118 |  |  | $ | 72 |
Share-based payment |  |  | 783 |  |  |  | - |
Rent and office maintenance |  |  | 46 |  |  |  | 53 |
Payroll and benefits |  |  | 518 |  |  |  | 300 |
Professional services and consultation |  |  | 1,051 |  |  |  | 472 |
Taxes and tolls |  |  | 16 |  |  |  | 46 |
Director salary and insurance |  |  | 191 |  |  |  | 63 |
Others |  |  | 213 |  |  |  | 25 |
|  | $ | 2,936 |  |  | $ | 1,031 |

F-45

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 13:- | SELECTED STATEMENTS OF OPERATIONS DATA (Cont.)

| b. | Financial expenses (income), net:

|  | Year ended December 31, |
|  | 2018 |  |  | 2017 |
Financial income: |  |  |  |  |  |
Amortization of premium related to convertible loans |  | $ | (2,149 | ) |  |  | - |
Total finance income |  |  | (2,149 | ) |  |  | - |
Financial expenses: |  |  |  |  |  |  |  |
Accrued interest on convertible loans |  |  | 56 |  |  |  | 47 |
Change in fair value of marketable equity securities |  |  | 33 |  |  |  | - |
Amortization of BCF, proceeds allocated to the derivative liability and debt issuance costs for 2016 Loan |  |  | - |  |  |  | 1,122 |
Amortization of discount and exchange rate differences on license purchase obligation |  |  | - |  |  |  | 3 |
Bank commissions and exchange rates |  |  | - |  |  |  | 6 |
Change in the fair value of derivative liability for right to future investment |  |  | - |  |  |  | 246 |
Loss from extinguishment of convertible loans (Note 8) |  |  | 1,709 |  |  |  | 61 |
Total financial expenses |  |  | 1,798 |  |  |  | 1,485 |
Total financial expenses (income), net |  | $ | (351 | ) |  | $ | 1,485 |

| NOTE 14:- | RELATED PARTIES BALANCES AND TRANSACTIONS

| a. | Balances with interested and related parties:

|  | December 31, |
|  | 2018 |  |  | 2017 |
Other accounts payable |  | $ | 97 |  |  | $ | 54 |
Convertible Loans |  | $ | 2,590 |  |  | $ | 2,544 |

| b. | Transactions with interested and related parties:

|  | Year ended December 31, |
|  | 2018 |  |  | 2017 |
Amounts charged to: |  |  |  |  |  |
General and administrative expenses |  | $ | 1,209 |  |  | $ | 263 |
Finance expenses, net (income) |  | $ | (306 | ) |  | $ | 1,181 |

F-46

WIZE PHARMA INC. AND SUBSDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. dollars in thousands, except share and per share data

| NOTE 15:- | SUBSEQUENT EVENTS

| 1. | On March 4, 2019, the Company and its wholly-owned subsidiary Wize Pharma Ltd. (“Wize Israel”) entered into an amendment to convertible loan agreements (the “Amendment”) with Rimon Gold Assets Ltd. (“Rimon Gold”), Ridge Valley Corporation (“Ridge Valley”), and Shimshon Fisher (“Fisher” and, together with Rimon Gold and Ridge Valley, the “Lenders”). Pursuant to the Amendment, the maturity date under the (i) convertible loan agreement between Wize Israel and Rimon Gold, dated March 20, 2016 (as amended, the “2016 Loan Agreement”), and (ii) convertible loan agreement, dated January 12, 2017 (as amended, the “2017 Loan Agreement”), among Wize Israel, Rimon Gold, and Ridge Valley, was extended to May 31, 2019 (as previously described under the 2018 Loan Modification) from March 4, 2019. The parties also agreed that the Lenders’ investment rights under the 2016 Loan Agreement to invest up to $512.8, in the aggregate, at $1.308 per share, and the Lender’s investment rights under the 2017 Loan Agreement to invest up to $663.4, in the aggregate, at $1.332 per share, be extended from June 30, 2019 to November 30, 2019.

| 2. | On February 7, 2019, the Company entered into a joint venture agreement with Cannabics Pharmaceuticals, Inc. (“Cannabics”). 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. Promptly following the effective date, the Company and Cannabics will work together to prepare a business plan for the new company. The initial board of directors of the new company will consist of three members, including one each appointed by the Company and Cannabics, and one industry expert recommended by the Company and approved by Cannabics. The initial officers of the Company will be Noam Danenberg (the Company’s chairman) and Eyal Barad (Cannabics’ chief executive officer), who will serve as co-chief executive offices. If the business plan is not approved by the Company and Cannabics by June 30, 2019, the joint venture agreement will then expire. The Company agreed to issue to Cannabics 900,000 shares of the Company’s common stock upon the effective date, and Cannabics agreed to issue to the Company 2,263,944 shares of Cannabics’ common stock, upon the effective date. 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. On March 1, 2019, the Company’s joint venture agreement with Cannabics Pharmaceuticals, Inc. (“Cannabics”) became effective following receipt of an opinion, within 30 days from execution of the agreement, from a mutually selected third party describing the regulatory pathway for eye drops containing cannabinoids or cannabinoid strings. 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.

| 3. | On March 31, 2019, following recommendation of the compensation committee which was held on February 20, 2019, the Company’s board of directors approved the following:

| 1. | To grant to each its directors 100,000 RSU’s. The RSU’s will vest quarterly over a period of 24 months.

| 2. | To grant to each its officers 140,000 RSU’s. The RSU’s will vest quarterly over a period of 24 months.

F-47

(b) Exhibits

Exhibit Number |  | Description
2.1† |  | Agreement and Plan of Merger, dated as of May 21, 2017, by and among the Company, Bufiduck Ltd. and Wize Pharma Ltd. (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on May 22, 2017)
2.2 |  | Amendment No. 1 to Agreement and Plan of Merger, dated as of October 31, 2017, by and among the Company, Bufiduck Ltd. and Wize Pharma Ltd. (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on November 1, 2017)
2.3 |  | Acquisition Agreement, dated November 21, 2011, with Can-Fite Biopharma Ltd. (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on November 23, 2011)
2.4 |  | Agreement and Plan of Merger, dated February 24, 2012 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on April 5, 2012)
2.5 |  | Delaware Certificate of Merger (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on April 5, 2012)
2.6 |  | Nevada Articles of Merger (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on April 5, 2012)
3.1 |  | Certificate of Incorporation (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on April 5, 2012)
3.2 |  | Certificate of Amendment to Certificate of Incorporation (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on July 18, 2013)
3.3 |  | Certificate of Amendment to Certificate of Incorporation dated November 15, 2017 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on November 21, 2017)
3.4 |  | Certificate of Amendment to Certificate of Incorporation dated March 1, 2018 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on March 5, 2018)
3.5 |  | Bylaws (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on May 10, 2013)
4.1 |  | Specimen Common Stock Certificate (Incorporated by reference to Company’s Registration Statement on Form S-1 filed with the SEC on February 6, 2018)
4.2 |  | Form of PIPE Warrant (Incorporated by reference to Company’s Registration Statement on Form S-1 filed with the SEC on February 6, 2018)
10.1 |  | Stock Purchase Agreement, dated November 21, 2011, with Can-Fite Biopharma Ltd. (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on November 23, 2011)
10.2+ |  | 2012 Stock Incentive Plan (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on February 9, 2012)
10.3+ |  | 2012 Stock Incentive Plan, Annex A (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on March 8, 2013)

87

10.4 |  | Agreement dated July 1, 2013, with Michael Belkin (Incorporated by reference to Company’s Registration Statement on Form S-1 filed July 2, 2013)
10.5 |  | Form of Stock Purchase Agreement (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on May 22, 2017)
10.6 |  | Form of Termination of License Agreement (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on May 22, 2017)
10.7 |  | Form of Termination of Services Agreement (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on May 22, 2017)
10.8 |  | Exclusive Distribution and Licensing Agreement dated May 1, 2015 between Resdevco Ltd. and Wize Pharma Ltd. (formerly Star Night Technologies Ltd.) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.9 |  | Amendment to Licensing Agreement dated November 22, 2015 between Resdevco Ltd. and Wize Pharma Ltd. (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.10 |  | Amendment No. 2 to Licensing Agreement dated March 20, 2016 between Resdevco Ltd. and Wize Pharma Ltd. (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.11 |  | Amendment No. 1 to Licensing Agreement – Israeli Market dated May 31, 2016 between Resdevco Ltd. and Wize Pharma Ltd. (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.12 |  | Amendment No. 2 to Licensing Agreement – Ukraine Market dated May 31, 2016 between Resdevco Ltd. and Wize Pharma Ltd. (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.13 |  | Addition to Amendment to Licensing Agreement dated January 6, 2017 between Resdevco Ltd. and Wize Pharma Ltd. (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.14 |  | Second Addition to Amendment to Licensing Agreement dated March 30, 2017 between Resdevco Ltd. and Wize Pharma Ltd. (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.15 |  | Correction to Licensing Agreement dated June 16, 2017 between Resdevco Ltd. and Wize Pharma Ltd. (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.16 |  | Appendix F to Exclusive Distribution and Licensing Agreement between Resdevco Ltd. and Wize Pharma Ltd. signed on May 1, 2015 dated July 20, 2017 (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.17 |  | Appendix G to Exclusive Distribution and Licensing Agreement between Resdevco Ltd. and Wize Pharma Ltd. signed on May 1, 2015 dated July 20, 2017 (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.18 |  | Assumption Agreement dated August 30, 2016 between Resdevco Ltd. and OcuWize Ltd (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)

88

10.19 |  | Convertible Loan Agreement dated March 20, 2016 between Wize Pharma Ltd. and Rimon Gold Assets Ltd. (unofficial English translation from Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.20 |  | Addendum to Convertible Loan Agreement dated March 30, 2016 between Wize Pharma Ltd. and Rimon Gold Assets Ltd. (unofficial English translation from Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.21 |  | Second Convertible Loan Agreement dated January 12, 2017 between Wize Pharma Ltd. Ridge Valley Corporation and Rimon Gold Assets Ltd. (unofficial English translation from Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.22 |  | Debenture Floating Charge dated March 20, 2016 between Wize Pharma Ltd. and Rimon Gold Assets Ltd. (unofficial English translation from Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.23 |  | Debenture - Fixed Charge dated March 20, 2016 between Wize Pharma Ltd. and Rimon Gold Assets Ltd. (unofficial English translation from Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.24 |  | Debenture Floating Charge dated October 26, 2016 between Ocu Wize Ltd. and Rimon Gold Assets Ltd. (unofficial English translation from Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.25 |  | Debenture – Fixed Charge dated October 26, 2016 between Ocu Wize Ltd. and Rimon Gold Assets Ltd. (unofficial English translation from Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.26 |  | Amendment to Debenture – Floating Charge dated March 28, 2017 between Wize Pharma Ltd. and Rimon Gold Assets Ltd. (unofficial English translation from Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.27 |  | Amendment to Debenture – Fixed Charge dated March 28, 2017 between Wize Pharma Ltd. and Rimon Gold Assets Ltd. (unofficial English translation from Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.28 |  | Amendment to Debenture – Floating Charge dated March 28, 2017 between Ocu Wize Ltd. and Rimon Gold Assets Ltd. (unofficial English translation from Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.29 |  | Amendment to Debenture – Fixed Charge dated March 28, 2017 between Ocu Wize Ltd. and Rimon Gold Assets Ltd. (unofficial English translation from Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.30 |  | Form of Irrevocable Guaranty and Undertaking (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.31 |  | Private Placement Agreement dated May 25, 2017 between Wize Pharma Ltd. and Jonathan Brian Rubini (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.32 |  | Addendum to Private Placement Agreement dated June 15, 2017 between Wize Pharma Ltd. and Jonathan Brian Rubini (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.33 |  | Private Placement Agreement dated June 23, 2017 between Wize Pharma Ltd. and Simcha Sadan (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)

89

10.34 |  | Private Placement Agreement dated June 23, 2017 between Wize Pharma Ltd. and Yaakov Zarachia (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.35 |  | Private Placement Agreement dated June 23, 2017 between Wize Pharma Ltd. and Peretz Yosef Eliahu (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.36+ |  | Employment Agreement dated September 30, 2015 between Wize Pharma Ltd. and Or Eisenberg (unofficial English translation from Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.37+ |  | Agreement for Provision of Services Agreement dated September 30, 2015 between Wize Pharma Ltd. and N Danenberg Holdings (2000) Ltd. (unofficial English translation from Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.38+ |  | Agreement for Provision of Services Agreement dated September 30, 2015 between Wize Pharma Ltd. and Ron Mayron (unofficial English translation from Hebrew) (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.39 |  | Finder’s Agreement dated June 19, 2017 between Wize Pharma Ltd. and Harbin Israel (Trading) Ltd. (Incorporated by reference to Company’s Registration Statement on Form S-4 filed with the SEC on July 27, 2017)
10.40 |  | Letter dated September 6, 2017 from Resdevco Ltd. (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on November 21, 2017)
10.41 |  | Agreement dated September 25, 2017 between Resdevco Ltd. and Wize Pharma Ltd. (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on November 21, 2017)
10.42 |  | Letter Amendment to Convertible Loans, dated as of December 21, 2017, by and between Wize Pharma, Inc., Wize Pharma Ltd., Ridge Valley Corporation, Rimon Gold Assets Ltd. and Shimshon Fisher. (unofficial English translation from Hebrew) (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on December 27, 2017)
10.43* |  | Third Amendment to Exclusive Distribution and Licensing Agreement by and between Wize Pharma Ltd. and Resdevco Research and Development Company Ltd., dated December 26, 2017 (Incorporated by reference to Company’s Annual Report on Form 10-K filed with the SEC on March 29, 2018)
10.44* |  | Memorandum of Understanding by and between Wize Pharma Ltd. and Resdevco Research and Development Company Ltd., dated January 8, 2018 (Incorporated by reference to Amendment No. 1 to Company’s Annual Report on Form 10-K filed with the SEC on June 5, 2018)
10.45+ |  | 2018 Equity Incentive Plan (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on February 28, 2018)
10.46* |  | Exclusive Distribution Agreement between Wize Pharma Ltd. and HPGC Medical Co., Ltd. dated May 31, 2018 (Incorporated by reference to Company’s Current Report on Form 8-K filed on June 5, 2018)
10.47+ |  | Amendment to 2018 Equity Incentive Plan (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on August 21, 2018)

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10.48+ |  | Employment Agreement, dated August 21, 2018, between Wize Pharma Ltd. And Or Eisenberg (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on August 22, 2018)
10.49+ |  | Consulting Services Agreement, dated August 20, 2018, between Wize Pharma Ltd., N. Danenberg Holdings (2000) Ltd. and Noam Danenberg (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on August 22, 2018)
10.50 |  | Form of Purchase Agreement dated October 22, 2018 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on October 23, 2018)
10.51 |  | Form of Registration Rights Agreement dated October 22, 2018 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on October 23, 2018)
10.52 |  | Placement Agency Agreement dated October 22, 2018 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on October 23, 2018)
10.53 |  | Convertible Loan Amendment dated October 19, 2018 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on October 23, 2018)
10.54 |  | Amendment No.1 to Consulting Services Agreement dated November 7, 2018 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on November 14, 2018)
10.55+ |  | Consulting Agreement dated November 7, 2018 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on November 14, 2018)
10.56 |  | Joint Venture Agreement between Wize Pharma, Inc. and Cannabics Pharmaceuticals, Inc. dated February 7, 2019 ((Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on February 12, 2019)
10.57#* |  | Memorandum of Understanding between Wize Pharma Ltd. and Resdevco, Research and Development Ltd. dated February 24, 2019
10.58 |  | Amendment to Convertible Loans Agreements dated March 4, 2019 (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on March 4, 2019)
21.1 |  | Subsidiaries of the Company (Incorporated by reference to Company’s Current Report on Form 8-K filed with the SEC on November 21, 2017)
23.1# |  | Consent of Independent Registered Public Accounting Firm

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31.1# |  | Certification of Chief Executive Officer pursuant to Sec. 302 of the Sarbanes-Oxley Act of 2002
31.2# |  | Certification of Chief Financial Officer pursuant to Sec. 302 of the Sarbanes-Oxley Act of 2002
32.1# |  | Certification of Chief Executive Officer pursuant to 18 U.S.C. SECTION 1350
32.2# |  | Certification of Chief Financial Officer pursuant to 18 U.S.C. SECTION 1350
101# |  | The following materials from Wize, Inc.’s Annual Report on Form 10-K for the year ended December 31, 2018 are formatted in XBRL (eXtensible Business Reporting Language): (i) the Balance Sheets, (ii) the Statements of Comprehensive Loss, (iii) Statement of Changes in Shareholders' Equity (Deficiency), (iv) the Statements of Cash Flow, and (iv) Notes to Financial Statements.

# | Filed herewith
† | Exhibits and schedules to this exhibit have been omitted pursuant to Item 601(b)(2) of Regulation S-K. We will furnish the omitted exhibits and schedules to the Securities and Exchange Commission upon request by the Securities and Exchange Commission.
+ | Management compensatory plan.
* | Confidential treatment was requested with respect to certain portions of this exhibit pursuant to 17.C.F.R. §240.24b-2. Omitted portions were filed separately with the SEC.

ITEM 16. FORM 10-K SUMMARY.

None.

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

| Wize Pharma, Inc.
Date: April 1, 2019 | By: | /s/ Or Eisenberg
|  | Or Eisenberg Acting Chief Executive Officer, Chief Financial Officer, Treasurer and Secretary (Principal Executive Officer, Principal Financial and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

NAME |  | TITLE |  | DATE
/s/ Or Eisenberg |  | Acting Chief Executive Officer, Chief Financial Officer, |  |
Or Eisenberg |  | Treasurer and Secretary (Principal Executive Officer, Principal Financial and Accounting Officer) |  | April 1, 2019
/s/ Noam Danenberg |  | Chairman of the Board |  |
Noam Danenberg |  |  |  | April 1, 2019
/s/ Yossi Keret |  | Director |  |
Yossi Keret |  |  |  | April 1, 2019
/s/ Franck Amouyal |  | Director |  |
Franck Amouyal |  |  |  | April 1, 2019
/s/ Joseph Zarzewsky |  | Director |  |
Joseph Zarzewsky |  |  |  | April 1, 2019
/s/ Michael Belkin |  | Director |  |
Michael Belkin |  |  |  | April 1, 2019

93