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Stockholders' Equity

3 Months Ended

Mar. 31, 2021

Stockholders' Equity Note [Abstract]

STOCKHOLDERS EQUITY

NOTE 4 – STOCKHOLDERS EQUITY

Common Stock

On December 30, 2020, in connection with the transaction in which Cosmos was acquired (the “Cosmos Transaction”) pursuant to the Bid Implementation Agreement, as amended (the “Bid Agreement”), and as previously disclosed in the Company’s Current Report on Form 8-K filed on January 5 2021, Mawson entered into Securities Purchase Agreements (“PIPE Agreements”) with existing Mawson shareholders to issue 25,000,000 shares in Mawson subject to the Close of the Cosmos Transaction, as well as a further 409,999 shares issued as an acceleration of outstanding RSU’s, which occurred post the closing of the Cosmos Transaction on March 9, 2021.

On March 9 2021, as a part of closing the Cosmos Transaction, Mawson issued a total of 428,270,616 shares to Cosmos shareholders. There remains 50,558,133 shares that are to be issued once the approval of increase in authorized capital has been finalized, taking the total quantity of shares to be issued in the Cosmos Transaction to 478,828,749.

As a result of an adjustment to warrant’s exercise price in December 2020, an aggregate of 115,902 shares of common stock were issued to warrant holders in conjunction with and as a result of the exercise of the warrants, each on a cashless basis.

Restricted Stock

As at May 17 2021, making up the total 428,270,616 in shares issued as a part of the compensation of the Cosmos Transaction, 156,492,928 are restricted in trading under the Restricted Stock Agreement with each shareholder until December 31 2021.

The remaining 50,558,133 shares to be issued post the authorized increase in capital of which 18,474,278 will be restricted.

Contingent Value Rights

Pursuant to the Bid Agreement, prior to the closing of the Cosmos Transaction, Mawson entered into a Contingent Value Rights Agreement (the “CVR Agreement”) with certain of Mawson’s subsidiaries (the “Mawson Subsidiaries”) with a person designated by Mawson prior to the Closing Date as the Holders’ Representative (as defined therein), and the Rights Agent (as defined therein).

Pursuant to the CVR Agreement, at the Closing Date, each Mawson pre-Closing securityholder received one non-transferable CVR for each outstanding share of common stock of Mawson and for each share of common stock of Mawson underlying other convertible securities and warrants, held as of 4:01 p.m. Eastern Time on the day immediately before the Effective Time (as defined in the CVR Agreement).

Each CVR represents the right to receive a pro rata share of any consideration that may be received by Mawson or the Mawson Subsidiaries in connection with the business of Mawon prior to the Cosmos Transaction, which was the treatment of ophthalmic disorders, including dry eye syndrome (“DES”), and which included 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”). In particular, CVR holders will be entitled to any consideration (whether cash, stock, assets or otherwise) that Mawson or the Mawson Subsidiaries (or any of its Affiliates or shareholders) receives in connection with an LO2A Transaction, which, as defined in the CVR Agreement, and which includes (i) a sale of any of the Mawson Subsidiaries to a third party and/or (ii) the partnering, licensing, sublicensing, distribution, reselling or sale of all or any part of the LO2A Technology or LO2A Products to a third party, less transaction expenses and customary deductions as detailed in the CVR agreement, including a deduction of up to $300,000 that the Mawson Subsidiaries undertook to incur in the development of the LO2A Technology at the request of the Holders’ Representative.

The CVRs do not confer to the holders thereof any voting or equity or ownership interest in Mawson. The CVRs are not transferable, except in limited circumstances such as by will or intestacy, and are not and will not be listed on any quotation system or traded on any securities exchange.

The CVR Agreement may be terminated under certain circumstances, including if the Mawson Subsidiaries or Mawson failing to enter into an LO2A Transaction Agreement within two years following the Effective Time.

There can be no assurance that Mawson or the Mawson Subsidiaries will successfully and timely enter into any LO2A Transaction or, if they do, that such LO2A Transaction will ultimately be successful or that any CVR payments will be made.

Series A Preferred Stock

As of May 17, 2021, there are 178,000 shares of Series A Preferred Stock Outstanding.

Common Stock Warrants

A summary of the status of the Company’s outstanding stock warrants and changes during the three months ended March 31, 2021 is as follows:

		Number of Warrants				Weighted Average Exercise Price				Weighted Average Remaining Contractual Life (in years)
Outstanding as of December 31, 2020			142,189
Issued			8,710,982			$	0.001				5.0
Exercised			(115,902	)
Expired			0
Outstanding as of March 31, 2021			8,737,269			$	0.001				5.0
Warrants exercisable as of March 31, 2021			8,737,269			$	0.001				5.0

As of March 16, 2021, the Company received a notice from OTC Markets Group (OTC) that the Company failed to have a public float greater than 10% of the total shares outstanding, pursuant to Section 1.1.1(C) of OTCQB Standards, which, if not rectified within 30 days, may result in the Company ceasing to trade on the OTCQB marketplace. However, we expect, subject to several filings, to be in compliance with the rule in the near future and submitted a plan to cure the deficiency on April 16, 2021, which OTC accepted, giving the Company until June 30, 2021 to rectify the issue. Subject to the registration statement S1 being filed and accepted by the SEC, the Company expects that the Company will be in compliance with the rule by June 30, 2021.