| WARRANTS |
NOTE 9 –
WARRANTS (*):
| | a) | On August 24, 2016, the Company issued warrants to Comerica Bank (“Comerica”) for the purchase of 7,305 shares of the Company’s Series B Redeemable Preferred Stock at an exercise price of $10.2672 per share contemporaneously with obtaining a loan from Comerica which was fully repaid in 2018 (the “Comerica Warrants”). The Comerica Warrants are exercisable at any time during the contract period which ends on August 24, 2026. |
Additionally, in connection with the
consummation of the IPO and the change of the type of the stock from redeemable preferred stock to common stock at conversion, the Company
reassessed the Comerica Warrants. As part of the contractual terms and conditions of Comerica’s Warrants, a portion of the warrants
are exercisable, as of the IPO date, into the Company’s common stock. The Comerica Warrants are still outstanding as of March 31,
2023. The Company has evaluated whether the Comerica Warrants are still classified as liabilities and concluded that due to a change-of-control
provision which may affect the exercise price or entitle Comerica to demand cash, instead of shares, to settle the warrants, Comerica’s
Warrants will continue to be classified as liabilities and will be exercisable into the Company’s common shares.
|
b) |
During the period from February 2018 through November 2020, the Company issued warrants to Mizrahi-Tefahot Bank
(“Mizrahi”) contemporaneously with obtaining a loan and a credit facility. The warrants are convertible into series B convertible
redeemable preferred stock or common stock in a qualified
financing round. The number of series B convertible redeemable preferred stock is determined by the lesser of (1) dividing the warrant
amount (as determined under the contract) by the applicable exercise price which depends on the triggering event as established in the
contract, or (2) the lowest stock purchase price in a qualified financing round. |
| |
c) |
During December 2020 and November 2021,
the Company issued warrants to Migdalor contemporaneously with obtaining a loan. The warrants can either be (1) converted into the
Company’s common stock (the number of which shall be determined based on the warrant amount established in the contract and
the Company’s valuation as defined in the contract, or based on a triggering event), at any time during a period of
96 months), or (2) redeemed for cash based on the lesser of a predetermined amount or a formula as set in the contract, at any
time and in Migdalor’s own discretion, during a period of 96 months from the date of issue. These warrants were
classified as liabilities mainly due to the redemption feature over the options.
|
Upon the consummation of the IPO (as
further described in Note 2 above), the Company converted the outstanding warrants issued to Mizrahi and Migdalor into the Company’s
common stock based on the contractual terms and conditions of the related warrant agreements.
|
d) |
On May 8, 2023, the Company completed a fund-raising round.
Upon the consummation of the Offering and pursuant to an agreement entered into with the Holder and the underwriter, the Company issued
warrants to purchase shares of Common Stock. See note 11(d) and 11(e) for further details. |
The
table below shows the impact on the statement of comprehensive loss related to the warrants for the periods ended:
| |
|
June 30,
2023 |
|
|
December 31,
2022 |
|
| Outstanding as of January 1 |
|
|
8 |
|
|
|
2,149 |
|
| Additions |
|
|
1,972 |
|
|
|
- |
|
| Fair value changes |
|
|
(396 |
) |
|
|
1,049 |
|
| Conversion to the Company’s common stock |
|
|
- |
|
|
|
(3,190 |
) |
| Outstanding at the end of the period |
|
|
1,584 |
|
|
|
8 |
|
The Company recorded other expense (income) during the three
and six months ended June 30, 2023 and June 30, 2022, in the amount of $(396), $(396), $57 and $1,115, respectively, in connection with
these warrants.
|
(*) |
Adjusted to reflect April 2023 reverse stock split, see note
3(f). |
|