| SHAREHOLDERS’ DEFICIT |
NOTE
4 - SHAREHOLDERS’ DEFICIT
The
Ordinary Shares confer upon the holders thereof all rights accruing to a shareholder of the Company, as provided in these Articles, including,
inter alia, the right to receive notices of, and to attend meetings of shareholders; for each share held, the right to one vote at all
meetings of shareholders; and to share equally, on a per share basis, in such dividend and other distributions to shareholders of the
Company as may be declared by the Board of Directors in accordance with these Articles and the Companies Law, and upon liquidation or
dissolution of the Company, in the distribution of assets of the Company legally available for distribution to shareholders in accordance
with the terms of applicable law and these Articles. All Ordinary Shares rank pari passu in all respects with each other.
| B. |
Issuance
of Ordinary Shares: |
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1. |
In
March 2020, the Company entered into subscription agreements with several investors under which the Company raised gross funds in
total amount of $30 in exchange for the issuance of units consisting of 1,500,000 ordinary shares of the Company and 1,339,284 warrants
to purchase the same number of ordinary shares of the Company at an exercise price of $0.10. These warrants may be eligible for exercise
over a period of four years from the issuance date and are subject to standard anti-dilution provisions. In addition, the Company
may be subject to liquidated damages upon failure to timely deliver shares upon exercise of the warrants. An amount of 1,000,000
and 500,000 ordinary shares of NIS 0.01 par value out of the above have been issued during the year ended December 31, 2020 and the
period of three months ended March 31, 2021, respectively. |
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2. |
On
August 4, 2020, the Company entered into a Purchase Agreement (the “Purchase Agreement”) and a Registration Rights Agreement
(the “Registration Rights Agreement”) with Lincoln Park Capital Fund, LLC (“Lincoln Park”), pursuant to which
Lincoln Park has agreed to purchase from the Company, from time to time, up to $10,275 of its ordinary shares, par value NIS 0.01
per share (the “Ordinary Shares”), subject to certain limitations as set in the Purchase Agreement, during the Purchase
Agreement term (the “Equity Line”). |
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The
Company does not have the right to commence any further sales to Lincoln Park under the Purchase Agreement until all of the conditions
thereto that are set forth in the Purchase Agreement, all of which are outside of Lincoln Park’s control, have been satisfied,
including, among other things, the Registration Statement being declared effective by the SEC (the date on which all such conditions
are satisfied, the “Commencement Date”). From and after the Commencement Date, under the Purchase Agreement, on any business
day selected by the Company on which the closing sale price of the Company’s Ordinary Shares exceeds $0.02, the Company may
direct Lincoln Park to purchase up to 500,000 Ordinary Shares on the applicable purchase date (a “Regular Purchase”),
which maximum number of shares may be increased to certain higher amounts up to a maximum of 1,000,000 Ordinary Shares, if the market
price of our Ordinary Shares at the time of the Regular Purchase equals or exceeds $0.13 (such share and dollar amounts subject to
proportionate adjustments for stock splits, recapitalizations and other similar transactions as set forth in the Purchase Agreement),
provided that Lincoln Park’s purchase obligation under any single Regular Purchase shall not exceed $500. The purchase price
of Ordinary Shares the Company may elect to sell to Lincoln Park under the Purchase Agreement in a Regular Purchase, if any, will
be based on 95% of the lower of: (i) the lowest sale price on the purchase date for such Regular Purchase and (ii) the arithmetic
average of the three lowest closing sale prices for an Ordinary Share during the 15 consecutive business days ending on the business
day immediately preceding such purchase date for such Regular Purchase. |
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In
addition to regular purchases, the Company may also direct Lincoln Park to purchase other amounts of the Company’s Ordinary
Shares in “accelerated purchases” and in “additional accelerated purchases” under the terms set forth in
the Purchase Agreement. |
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In
connection with the Purchase Agreement, the Company issued 5,812,500 Ordinary shares to Lincoln Park as a commitment fee of $482
which is recorded as prepaid expenses which are amortized in accordance with the Equity Line utilization. During the year ended December
31, 2020 and the period of three months ended June 30, 2021, the Company recorded amortization expenses amounted to $110 and $12,
respectively, as part of “Finance Expenses” line in operations in the accompanying consolidated statement of operations.
As of June 31, 2021, the balance of those prepaid expenses was $361. |
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During
the year ended December 31, 2020 and the period of six months ended June 30, 2021, the Company sold 32,747,579 and 5,229,809 Ordinary
Shares to Lincoln Park in an initial purchase out of the Investment Amount under the Purchase Agreement for a total purchase price
of $2,339 and $255, respectively. |
TODOS MEDICAL LTD.
NOTES TO CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS (Cont.)
(U.S. dollars in thousands)
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3. |
During
the period of six months ended June 30, 2021, Principal Amount and unpaid Interest in total amount of $9,445 have been converted
into 189,773,828 ordinary shares. In addition, the Company issued 2,000,000 ordinary shares of NIS 0.01 par value as fulfillment
of commitment related to loan received in 2020. |
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4. |
During
the period of six months ended June 30, 2021, one of the Company’s Secured Convertible Equipment Loan Agreement was entered
into default scenario as result of lapse of the original maturity date, as defined. Consequently, 20,000,000 ordinary shares of NIS
0.01 par value of the Company were issued as collateral shares for purpose of repayment of the principal amount. The issued shares
have been valued at $870 and was deducted from the fair value of the principal amount. |
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5. |
During
the period of six months ended June 30, 2021, the Company entered into several service agreements with certain service providers,
whereby the Company issued 11,921,053 ordinary share of NIS 0.01 par value or the Company is committed to issue fixed number of ordinary
shares in exchange for services that have been rendered. Consequently, the Company recorded related stock-based compensation expense
of $44 and $44 as part of “Sales and Marketing Expenses” and “General and Administrative Expenses” lines
in operations in the accompanying consolidated statement of operations, respectively. |
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