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Convertible Loans | 12 Months Ended
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Dec. 31, 2020
Debt Disclosure [Abstract] |
CONVERTIBLE LOANS |
NOTE 8:- | CONVERTIBLE LOANS
On March 20, 2016, Wize Israel entered into an agreement (as amended, 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 modifications of the maturity date of the 2016 Loan on October 2018, March 2019 and May 2019, see also Note 8a, 8b, 8c and 8d. Regarding loan extinguishment, refer to Note 8e. 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 of NIS 15.2592 per share (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, the aggregate principal amount of the 2016 Loan was adjusted to $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 and the 2017 Loan Amendment, 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 (as defined in the Agreement and Plan of Merger with Bufiduck Ltd., a company formed under the laws of the State of Israel and our wholly owned subsidiary and Wize Israel) 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 $1.308 (subject to adjustments in case of stock splits or similar events). Rimon Gold was entitled, under certain circumstances, to demand repayment of the 2016 Loan subject to certain conditions. However, as described in note 8e below the convertible loan was extinguished in November 2019. On January 15, 2017, Wize Israel entered into the loan agreement (the "2017 Loan Agreement", and together with the 2016 Loan Agreement the "Loan Agreements") 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 2017 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, 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, March 2019 and May 2019, see also Note 8b, 8c and 8d. Regarding loan extinguishment, refer to Note 8e. 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 private placement agreement, dated June 23, 2017 between Wize Israel, and certain investors (see also Note 12b to the 2018 consolidated Financial Statements), 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). As a result of the 2017 Loan Amendment, the aggregate principal amount of the 2017 Loan was adjusted to $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, the 2017 Lenders had the right (the "2017 Investment Right", and together with the 2016 Investment Right the "Investment Rights"), 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). Ridge was entitled, under certain circumstances, to demand repayment of the 2017 Loan subject to certain conditions. However, as described in note 8e below, the convertible loan was extinguished on November 2019. On April 21, 2019, Ridge transferred the loan and the 2017 Investment Right to Mobigo Inc, a company wholly owned by the Company's CEO, Noam Danenberg ("Mobigo"). Mr. Danenberg waived a debt owed to him directly by Ridge (that did not involve the Company) as consideration for these derivative securities.
| a. | 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 per Company's share 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 was 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 2017 Loan amendment was accounted for as an extinguishment.
| b. | 2018 Loan Amendment
In connection with the Purchase Agreement (as defined below), on October 19, 2018, the Company and Wize Israel entered into an amendment to the convertible loans outstanding as of that date (the "2018 Loan Amendment"). Pursuant to the 2018 Loan 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 dated October 22, 2018 (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 Series A Warrants, are registered for resale for investors who are not a party to the 2018 Loan 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 2018 Loan Amendment, the expiration date of the Investment Rights under the 2016 Loan Agreement and the 2017 Loan Agreement was amended to be 180 days after the Loan Agreements maturity date. The 2018 Loan Amendment was accounted for as an extinguishment on October 19, 2018. According to ASC 470-50, each of the modified financial instruments were measured at fair value. Then, 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 its related right to future investment and an aggregate amount of $3,286 was allocated to the 2017 Loan and its related right to future investment. 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 a loss on extinguishment amounting to $1,709 of the 2017 Loan and 2016 Loan. The 2018 Loan Amendment became effective in the fourth quarter of 2018 and all of the accounting effects were recognized in the fourth quarter of 2018.
| c. | March 2019 Loan Amendment
On March 4, 2019, the Company and Wize Israel entered into another amendment to convertible loan agreements (the "March 2019 Amendment") with Rimon Gold, Ridge and Fisher. Pursuant to the March 2019 Amendment, the maturity date under the (i) 2016 Loan Agreement, and (ii) 2017 Loan Agreement were extended to May 31, 2019 from March 4, 2019. The parties also agreed that Rimon Gold's, Ridge's and Fisher's remaining 2016 Investment Rights (as of that date) under the 2016 Loan Agreement to invest up to $512.8, in the aggregate, at $1.308 per share, and the expiration date of Rimon Gold's, Ridge's and Fisher's remaining 2017 Investment Rights (as of that date) 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. The March 2019 Amendment was accounted for as an extinguishment on March 4, 2019. Until that date, the 2017 Loan and the 2016 Loan were being accounted for under the terms of the 2018 Loan Amendment discussed above. According to ASC 470-50, each of the modified financial instruments were measured at fair value on the extinguishment date. Then, 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 $986 was allocated to the 2016 Loan and its related right to future investment and an aggregate amount of $1,423 was allocated to the 2017 Loan and its right to future investment. The difference between the Reacquisition Price that was allocated to the Right to Future Investment amounting to $237 which was included in the 2016 Loan and its fair value as of that date amounting to $192 was recorded directly to additional paid-in capital (as a deemed dividend in an amount of $45). In addition, the Reacquisition Price that was allocated to the Right to Future Investment amounting to $348 which was included in the 2017 Loan and its fair value as of that date amounting to $289, was recorded directly to additional paid-in capital (as a deemed dividend in an amount of $59). 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 $48 of the 2017 Loan and 2016 Loan.
| d. | May 2019 Amendment
On May 31, 2019, the Company and Wize Israel entered into an additional extension to convertible loan agreements (the "May 2019 Amendment") with Rimon Gold, Noam Danenberg and Fisher. Pursuant to the May 2019 Amendment, the maturity date under the (i) 2016 Loan Agreement, and (ii) 2017 Loan Agreement was extended to November 30, 2019 from May 31, 2019 (as previously described under the March 2019 Amendment). The parties also agreed that the expiration date of Rimon Gold's, Mr. Danenberg's and Fisher's remaining 2016 Investment Rights (as of that date) under the 2016 Loan Agreement to invest up to $512.8, in the aggregate, at $1.308 per share, and Rimon Gold's, Mr. Danenberg's and Fisher's remaining 2017 Investment Rights (as of that date) under the 2017 Loan Agreement to invest up to $663.4, in the aggregate, at $1.332 per share, be extended from November 30, 2019 to May 31, 2021. As consideration for extending the maturity date of the loans, the Company issued to Rimon Gold, Mr. Danenberg (through Mobigo, his wholly owned company), and Fisher two-year warrants to purchase an aggregate of 868,034 shares of Common Stock at a fixed price of $1.10 per share. The May 2019 Amendment was accounted for as an extinguishment on May 31, 2019. Until that date, the 2017 Loan and the 2016 Loan were being accounted for under the terms of the March 2019 Loan Amendment discussed above. According to ASC 470-50, each of the modified financial instruments were measured at fair value on the extinguishment date. Then, 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 $1,015 was allocated to the 2016 Loan and an aggregate amount of $1,498 was allocated to the 2017 Loan and its related right to future investment. The difference between the Reacquisition Price that was allocated to the Right to Future Investment amounting to $94 which was included in the 2016 Loan and its fair value as of that date amounting to $61 was recorded directly to additional paid-in capital (as a deemed dividend in an amount of $33). In addition, the Reacquisition Price that was allocated to the Right to Future Investment amounting to $139 which was included in the 2017 Loan and its fair value as of that date amounting to $91, was recorded directly to additional paid-in capital (as a deemed dividend in an amount of $48). 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 loss on extinguishment amounting to $926 of the 2017 Loan and 2016 Loan.
| e. | November 2019 Amendment
Effective November 29, 2019, the Company and Wize Israel entered into an amendment to convertible loan agreements (the "November 2019 Amendment") with Rimon Gold, Mobigo and Fisher. Pursuant to the November 2019 Amendment, the Company repaid in cash approximately $760 of the $1,520 ($1,353 of principal and $167 accrued interest) outstanding under the loans on November 29, 2019 and Rimon Gold, Mobigo, and Fisher agreed to convert the remaining outstanding amounts of the loans at a later date. On December 13, 2019, the Company issued to Rimon Gold, Mobigo, and Fisher an aggregate of 2,816,196 shares of Common Stock upon conversion of the loans at a reduced conversion price of $0.27 per share and issued the December 2019 Warrants to purchase an aggregate of 5,632,392 shares of Common Stock at an exercise price of $0.27. The December 2019 Warrants have a term of five years and will be exercisable five days following the public announcement of positive clinical data results for LO2A. In addition, the parties agreed that effective December 13, 2019, the exercise price or conversion price of all other convertible securities (rights for future investment) previously issued to Rimon Gold, Mobigo, and Fisher in connection with the loans (the "Existing Convertible Securities") shall be adjusted to $0.27 per share and that the aggregate number of shares of Common Stock issuable upon exercise or conversion of a lender's Existing Convertible Securities shall be reduced in accordance with the percent of such lender's conversion of its outstanding loan. In addition, it was agreed that in any case when the exercise price of the October 2018 Warrants is reduced as a result of dilutive issuance to an exercise price lower than the exercise or conversion price of the Investment Rights granted under the Loan Agreements, than the exercise or conversion price of the Investment Rights shall be reduced to the new October 2018 Warrants exercise price ("New Exercise Price"). As of December 31, 2019, the New Exercise Price of such Investment Rights was $0.16. See Note 13n regarding the modification of the exercise price of such warrants and their exercise into ordinary shares. The difference between the aggregate reacquisition price of the loans (i.e, the cash, the fair value of the shares and the December 2019 Warrants and the incremental fair value related to the existing convertible loans) approximate $1,619 and the carrying amount of the convertible loans (principal and accrued interest) was recognized as a loss from extinguishment in an amount of $99 as part of financial income (expense) Management considered the provisions of ASC 815-40 and has determined that the December 2019 Warrants are considered indexed to the Company's stock and that all other relevant criteria required for equity classifications are met. Accordingly, it was determined that the December 2019 Warrants are eligible for equity classification. The below table describes the roll forward of 2017 Loan and 2016 Loan for the year ended December 31, 2019:
|  | December 31, |
|  | 2019 |
Opening balance (including accrued interest) |  | $ | 2,635 |
Amortization of premium related to convertible loans prior to 2018 modification |  |  | - |
Amortization of premium related to convertible loans following 2018 modification |  |  | (641 | )
Derecognition of carrying amount of 2016 Loan and 2017 Loan upon extinguishments – March 2019 modification |  |  | (1,873 | )
Accrued interest on 2017 Loan and 2016 Loan |  |  | 45 |
Amount allocated to 2016 Loan and 2017 Loan based on modified terms – March 2019 modification |  |  | 1,767 |
Amortization of premium related to convertible loans following March 2019 modifications |  |  | (413 | )
Derecognition of carrying amount of 2016 Loan and 2017 Loan upon extinguishments – May 2019 extension |  |  | (1,353 | )
Amount allocated to 2016 Loan and 2017 Loan based on modified terms – May 2019 extension |  |  | 1,556 |
Amortization of premium related to convertible loans – May 2019 extension |  |  | (203 | )
November 2019 repayment in cash and Common Stock |  |  | (1,520 | )
Ending balance |  | $ | - |

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 470 -URI http://asc.fasb.org/topic&trid=2208564 + Details
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