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Significant Transactions

12 Months Ended

Dec. 31, 2020

NOTE 10:-

SIGNIFICANT TRANSACTIONS

The Bonus/LO2A Transaction:

On January 9, 2020, the Company entered into (i) an Exchange Agreement (the "Bonus Exchange Agreement"), with Bonus and (ii) a Share Purchase Agreement (the "Bonus Purchase Agreement" and, together with the Bonus Exchange Agreement, the "Bonus Agreements") with Bonus.

Pursuant to the Bonus Agreements, the Company agreed to grant Bonus, in consideration for the issuance of 62,370,000 ordinary shares of Bonus to the Company (the "LO2A Shares"), the right to receive 37% of future LO2A Proceeds (if any), which, as more fully defined in the Bonus Exchange Agreement, include proceeds generated by the Company, Wize Israel and OcuWize, as a result of (i) the sale, license or other disposal of products or other rights underlying the LO2A technology licensed to OcuWize under the License Agreement; and (ii) a Sale Transaction, which, as more fully defined in the Bonus Exchange Agreement, includes the sale of shares or assets of Wize Israel and/or OcuWize. In addition, if the Sale Transaction involves a change of control of the Company, Bonus will be entitled to elect, to either remain with its right to 37% of the LO2A Proceeds or receive a one-time payment equal to 37% of the value attributed to Wize Israel out of the total proceeds payable for the Company in such transaction.

In addition, pursuant to the Bonus Purchase Agreement, the Company agreed to purchase 51,282,000 ordinary shares of Bonus (the "PIPE Shares", and together with the LO2A Shares, the "Bonus Shares"), for an aggregate purchase price of $7,400 in cash, which funds were deposited directly into an escrow account (the "Bonus Escrow Account"), of which (i) $500 was paid to Bonus as an advance promptly following execution of the Bonus Purchase Agreement, (ii) $3,200 was released to Bonus concurrently with the closing of the transactions contemplated by the Bonus Agreements in exchange for 50% of the PIPE Shares and (iii) $3,700 was released to Bonus upon the Milestone Closing (as defined in the Bonus Purchase Agreement), in exchange for the remaining 50% of the PIPE Shares that were issued by Bonus and deposited into the escrow at the closing. The Company's obligation to consummate the Milestone Closing is conditioned upon the satisfaction by Bonus of certain conditions, including the listing of its ordinary shares (or, if an ADR Program is to be implemented by Bonus, the American Depositary Shares representing such ordinary shares) on the Nasdaq Capital Market (or another superior tier of the Nasdaq market) (the "Nasdaq Listing").

In addition, pursuant to the Bonus Agreements (as amended as of June 24, 2020), Bonus agreed to cover nearly 50% of the Company's fees and expenses payable by the Company in cash, Bonus shares and/or a combination thereof to H.C. Wainwright & Co., LLC ("HCW") in connection with the transactions contemplated by the Bonus Agreements and the Series B Purchase Agreement (as defined below). In particular, Bonus agreed to reimburse the Company or pay HCW directly $350 in cash, Bonus shares and/or a combination thereof.

Regarding the release of the remaining escrow amount of $3,700 to the Series B investors upon settlement agreement between the parties, see below.

According to the Bonus Agreements, as amended, the total number of Bonus Shares issuable to the Company (including the shares to be released at the Milestone Closing) was computed as the number of ordinary shares of Bonus equal to the quotient obtained by dividing (A) $16,400 expressed in NIS (based on the exchange rate between NIS and the dollar as of January 8, 2020) by (B) NIS 0.50. As of January 9, 2020, such total number of Bonus Shares represented (on a post-issuance basis) approximately 12% of the outstanding share capital of Bonus. The fair value of Bonus shares based on a quote of the share price on January 9, 2020, the date of signing the Bonus Agreements, was $0.12 per share and, as of the date of the closing was $0.11 per share.

The Bonus/LO2A Transaction:

The transactions contemplated by the Bonus Agreements were completed on February 19, 2020.

As of the date of closing of the Bonus Agreements, the Company received 85,239,000 of Bonus Shares. Pursuant to the Bonus Agreements, an additional 28,413,000 Bonus Shares were to be released to the Company upon the Nasdaq Listing and concurrently with the release of the $3,700 from the escrow account to Bonus.

As the Bonus Shares represent marketable securities with readily determinable fair value, Bonus shares issued to the Company were recognized upon initial recognition based on their quoted price (less applicable non-marketability discount) as of the date of the completion of the Bonus Agreements at an aggregate amount of $8,759. The difference between the fair value of Bonus shares and the amount of cash that was transferred directly to Bonus from an escrow account was recognized as financial liability, representing the Company's obligation to Bonus with respect to the LO2A Proceeds in an amount of $5,059 (see Note 2v).

On November 29, 2020, the Company entered into an Addendum (the "Addendum") with Bonus, whereby the parties agreed to amend certain provisions of the Bonus Agreements. Under the Addendum, at the Closing, Bonus will issue to the Company ordinary shares of Bonus (the "Bonus Shares"), the total number of which consists of (i) the Milestone Settlement Shares, which, as defined in the Addendum, means Bonus Shares equal to the quotient obtained by dividing $500 expressed in NIS (based on the exchange rate set in the Addendum) by NIS 0.50, and (ii) the HCW Settlement Shares (together with the Milestone Settlement Shares, the "Settlement Shares"), which, as defined in the Addendum, means Bonus Shares equal to the quotient obtained by dividing $350 expressed in NIS (based on the exchange rate set in the Addendum) by NIS 0.50.

In consideration for the Settlement Shares, the Company agreed to make certain amendments to the Bonus Agreements, including the following key modifications: (i) the Company will waive the requirement that Bonus will effect the Nasdaq Listing and, in relation thereto, conduct the Milestone Closing (as defined in the Bonus Agreements), which means that, at the Closing, $3.7 million will be released from an existing escrow account to Bonus, whereas the 28,413,000 Bonus Shares held in such escrow (the "Nasdaq Milestone Shares") will be released to the Company (20% of the shares) and to the Company's former holders of Series B Preferred Stock (the "Former Series B Holders"); (ii) the Company will waive approximately $120 in liquidated damages that accrued as a result of the delay in effecting the Nasdaq Listing; and (iii) Bonus agreed to extend the period for the Company to create, and cause its Israeli subsidiaries to create, certain first priority liens in favor of Bonus to secure the Company's obligations under the Bonus Exchange Agreement, including certain related negative covenants.

The Closing was subject to customary conditions, including obtaining the approval of the Tel-Aviv Stock Exchange ("TASE"), and occurred on December 30, 2020. It should be noted that, in accordance with the Securities Purchase Agreement, dated January 9, 2020 (as amended), by and among the Company and the Former Series B Holders, the Company was required to transfer 80% of the Milestone Settlement Shares and 80% of the Nasdaq Milestone Shares to such investors.

In addition, during the period from completion of the Bonus Agreements (February 19, 2020) and through December 31, 2020, the Company recognized financial income from both sales of Bonus marketable securities and revaluation of its remaining investment in Bonus marketable securities as of December 31, 2020, in an amount of $1,197 due to the change in the quoted market price of these shares on TASE. Such amount was presented as part of financial expenses, net.

During the year ended December 31, 2020, the Company received cash proceeds of $821 from sales of 5,871,260 of Bonus Shares, which are marketable securities.

The Mandatorily Redeemable Series B Investment:

In order to finance the transactions contemplated by the Bonus Purchase Agreement, on January 9, 2020, the Company entered into a Securities Purchase Agreement (the "Series B Purchase Agreement") with certain accredited investors.

Pursuant to the Series B 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 7,500 shares of newly created Series B Non-Voting Redeemable Preferred Stock, par value $0.001 per share, of the Company ("Series B Preferred Stock") for a purchase price of $1.00 per share, for aggregate gross proceeds under the Series B Purchase Agreement of $7,500, which funds were deposited into an escrow account, of which (i) $500 was to be paid to the Bonus Escrow Account and $100 was paid directly to the Company to cover certain of its transactions expenses, in each case, promptly following the execution of the Series B Purchase Agreement, and (ii) the remaining $6,900 was to be released to the Bonus Escrow Account upon the closing of the transactions contemplated by the Series B Purchase Agreement (of which, as described above, $3,200 was to be released upon the earlier of the Milestone Closing or upon written consent of the holders of at least a majority of the Series B Preferred Stock).

The Series B Purchase Agreement contained customary covenants, representations and warranties of the parties thereto, including, among others, (i) a covenant by the investors not to transfer the Series B Preferred Stock without the approval of the Company; (ii) a covenant by the Company, for as long as any Series B Preferred Stock remain outstanding, not to sell any Bonus Shares for a price per share equal to less than NIS 0.40 (the "Price Restriction"); and (iii) a covenant by the Company, simultaneously with, or promptly after, the redemption of the Series B Preferred Stock, to assign certain rights under the Bonus Purchase Agreement, such as the right to liquidated damages in the event of delayed Nasdaq Listing, and under the Bonus Registration Rights Agreement, to the investors.

In connection with the Series B Purchase Agreement, the Company agreed to file, at the closing, a Certificate of Designations of Series B Non-Voting Redeemable Preferred Stock with the Secretary of State of Delaware (the "Series B Certificate of Designations"). Pursuant to the Series B Certificate of Designations, the Company designated 7,500 shares of preferred stock as Series B Preferred Stock. The Series B Preferred Stock were not convertible into shares of Common Stock of the Company and have no voting powers, except as related to certain rights to protect the rights and preferences of the Series B Preferred Stock and with respect to sales or dispositions of the Series B Preferred Stock at a price per share below the Price Restriction. The Series B Preferred Stock entitled its holders to (i) 80% of the proceeds received by the Company through future sales of the Bonus Shares issued to the Company under the Bonus Agreements and (ii) 80% of any cash dividends received by the Company on such Bonus Shares. Under the Series B Certificate of Designations, the Company had the option to redeem the Series B Preferred Stock at any time by distributing to holders of the Series B Preferred Stock (i) 80% of the Bonus Shares then held by the Company and (ii) 80% of all dividends received by the Company but not yet paid to holders of the Series B Preferred Stock (the "Redemption Payment"). The Company was required to redeem the Series B Preferred Stock through payment of the Redemption Payment upon the earlier of (i) 60 days following the Nasdaq Listing of the Bonus Shares, and (ii) December 28, 2020.

However, until the completion of the Nasdaq Listing, an amount of $3,700 was required to remain in an escrow account and, upon the failure of such listing by Bonus by the Milestone End Date, such amount shall be required to be released in its entirety to the Series B investors. This escrow account of $3,700 was presented as restricted deposit in the Company' consolidated balance sheet commencing upon the closing of the transaction and until December 29, 2020, following the Addendum with Bonus described in Note 10a above, and the same amount was reflected as part of the liability with respect to the mandatorily redeemable series B preferred Stock.

As of the completion date (February 19, 2020), the Company recognized a liability in light of its obligation to redeem the Series B Preferred Stock at its fair value in an amount of $10,707, representing the sum of the remaining escrow amount of $3,700 (which, in case the Milestone Closing will not be met, will be paid to the Series B investors) and 80% of the Company's investment in Bonus marketable shares, see Note 3.

The difference between the amount of the liability recognized with respect to the Series B Preferred Stock ($10,707) and the cash amount actually invested by such preferred stock investors ($7,500), amounting to $3,207 was recognized immediately as financial expense, net upon the completion of the Bonus agreement and the Series B Purchase Agreement, within financial income (loss), net.

In addition, from the date of the completion of the Bonus agreements and until the redemption, the Company recognized a loss in an amount of $597, net due to the revaluation of the mandatorily redeemable Series B Preferred Stock liability.

On July 8, 2020, the Company elected to redeem all of the Series B Preferred Stock. As a result, the Company distributed 68,191,200 Bonus Shares representing an amount of $6,597 to the holders of Series B Preferred Stock representing 80% of the Bonus shares then held by the Company. As a result of such distribution, as of the date of these financial statements, the Company owns the remaining 18,822,533 Bonus Shares, representing approximately 1.61% of the outstanding shares of Bonus.

As discussed above, on November 29, 2020, the Company entered into an Addendum (the "Addendum") with Bonus, whereby, among other things, Bonus agreed to issue to the Company's ordinary shares of Bonus (the "Bonus Shares"), the total number of which consists of (i) the Milestone Settlement Shares, which, as defined in the Addendum, means Bonus Shares equal to the quotient obtained by dividing US$500 expressed in NIS (based on the exchange rate set in the Addendum) by NIS 0.50, and (ii) the HCW Settlement Shares (together with the Milestone Settlement Shares, the "Settlement Shares"), which, as defined in the Addendum, means Bonus Shares equal to the quotient obtained by dividing US$350 expressed in NIS (based on the exchange rate set in the Addendum) by NIS 0.50. In consideration for the Settlement Shares, the Company agreed to make certain amendments to the Bonus Agreements, including the following key modifications: (i) the Company will waive the requirement that Bonus will effect the Nasdaq Listing and, in relation thereto, conduct the Milestone Closing, which means that US$3.7 million were released from an existing escrow account to Bonus, whereas the 28,413,000 Bonus Shares held in such escrow (the "Nasdaq Milestone Shares") were released to the Company and to its former holders of Series B Preferred Stock (the "Former Series B Holders"); (ii) the Company will waive approximately US$120 in liquidated damages that accrued as a result of the delay in effecting the Nasdaq Listing; and (iii) Bonus agreed to extend the period for the Company to create, and cause its Israeli subsidiaries to create, certain first priority liens in favor of Bonus to secure obligations under the Bonus Exchange Agreement, including certain related negative covenants. The closing occurred on December 29, 2020. It should be noted that, in accordance with the obligations of the Company to the Former Series B Holders (see below), the Company has transferred 80% of the Milestone Settlement Shares and 80% of the Nasdaq Milestone Shares to such investors. As a result of the transactions above, the Company redeemed all of the outstanding shares of Series B Preferred Stock, and had satisfied its obligation under the Series B Preferred Stock.

As a result of the Bonus transaction, the company received an aggregate amount of 119,294,300 Bonus shares, out of which a total number of 93,576,800 Bonus shares were distributes to the holders of Series B Preferred Stock.

The below table describes the roll forward of Mandatorily Redeemable Series B liability for the year ended December 31, 2020:

	December 31,
	2020

Opening balance	$	-
Series B Preferred Stock issued		(7,500	)
Loss from initial recognition of mandatorily redeemable Series B Preferred Stock at fair value		(3,207	)
Revaluation of mandatorily redeemable Series B Preferred Stock		(597	)
Redemption of mandatorily redeemable Series B Preferred Stock with Bonus Shares		7,604
Extinguishment of mandatorily redeemable Series B Preferred Stock by release of escrow account		3,700

Ending balance	$	-

The Cosmos Transaction:

On December 30, 2020, the Company or "Wize", entered into a Bid Implementation Agreement (the "Bid Agreement") with Cosmos Capital Limited, a digital infrastructure provider based in Sydney, Australia ("Cosmos"), whereby the parties agreed that the Company would commence an off-market takeover offer under applicable Australian laws (the "Offer") to acquire all of the outstanding shares of Cosmos in exchange for common shares of the Company. For more information, about the Cosmos transaction, CVR agreement and PIPE Agreements, see Note 16 below.