Equity

12 Months Ended

Dec. 31, 2019

Disclosure of share capital, reserves and other equity interest [text block] [Abstract]

Disclosure of share capital, reserves and other equity interest [text block]

NOTE 13 - EQUITY:

a. Share capital:

1) Composed as follows:

	Number of shares								Amount
	Authorized				Issued and paid				Authorized				Issued and paid
	December 31,				December 31,				December 31,				December 31,
	2019		2018		2019		2018		2019		2018		2019		2018
	In thousands								NIS in thousands				USD in thousands
Ordinary shares of NIS 1.00 par value		250,000		160,000		82,599		75,932		250,000		160,000		22,802		20,924

2) The ordinary shares confer upon their holders voting rights and the right to participate in shareholders’ meetings, the right to receive dividends and the right to participate in surplus assets in the event of liquidation of the Company.

3) On January 9, 2019 an extraordinary general meeting  of the Company’s shareholders approved an increase of the authorized share capital of the Company by an additional NIS 7,000,000, consisting of 7,000,000 ordinary shares par value NIS 1.00 per share, such that the authorized share capital of the Company following such increase shall be NIS 167,000,000, consisting of 167,000,000 ordinary shares.

4) On July 25, 2019 the Company’s shareholders approved an increase of the authorized share capital of the Company by an additional NIS 83,000,000, such that the authorized share capital increased to NIS 250,000,000 ordinary shares par value NIS 1.00 each. 

b. Share offering to the public and existing shareholders:

1) On March 29, 2017, the Company allotted in a public issue, a total of 4,898,570 ordinary shares of the Company, warrants A for the purchase up to a total 535,730 ADSs representing 10,714,600 shares, with an exercise price of USD 14 per ADS during the 5 years following the allotment and warrants B for the purchase up to a total 290,786 ADSs representing 5,815,720 shares, with an exercise price of USD 0.05 per ADS.

Warrants A and warrants B may, under certain circumstances, also be exercised via a cashless exercise mechanism as defined in the agreement, whereby the number of shares the value of which equals the exercise premium in cash will be deducted from the number of shares to be issued upon exercise of the warrant. In addition, the number of warrants outstanding will be adjusted for certain events specified in the warrant agreement.

In addition, the Company issued to the placement agent on this offering warrants to purchase up to a total 37,501 ADSs representing 750,020 ordinary shares, with an exercise price of USD 17.5 per ADS during the 5 years following the allotment. The warrants may, under certain circumstances, also be exercised via a cashless exercise mechanism as defined in the agreement. The fair value of such warrants as calculated by the Company as of the date of grant amounted to USD 221 thousand.

As the warrants may be net share settled these warrants, other than the warrants issued to the placement, are classified as financial liabilities measured at fair value through profit or loss at each reporting period. The warrants are initially recognized at fair value adjusted to defer the difference between the fair value at initial recognition and the transaction price (“Day 1 loss”), as the Company uses valuation techniques that incorporate data not obtained from observable markets. Transaction costs allocated to the warrants are recognized immediately in profit or loss. As to the fair value of the said warrants as of December 31, 2019 and December 31, 2018 see note 5.

Unrecognized Day 1 loss is amortized over the expected life of the instrument. Any unrecognized Day 1 loss is immediately recognized in income statement if fair value of the financial instrument in question can be determined either by using only market observable model inputs or by reference to a quoted price for the same product in an active market.

Upon exercise, the carrying amount of the warrants (which is presented net of the related unrecognized Day loss, if any) is reclassified to equity with no impact on profit or loss.

Net proceeds from the issuance, net of cash issuance expenses, aggregated to approximately USD 6.5 million. Issuance expenses were attributed to equity and liability in proportion with the allocation of the proceeds.

During 2017 all warrants B were exercised. Accordingly, 5,815,720 ordinary shares of the Company were allotted.

Warrants A are presented within current liabilities.

2) On November 28, 2017, the Company closed a registered direct offering, pursuant to which the Company issued a total of 202,500 ADSs representing a total of 4,050,000 ordinary shares, at a purchase price of USD 8 per ADS, and warrants to purchase up to a total of 101,251 ADSs representing 2,025,020 ordinary shares, with an exercise price of USD 9 per ADS during the 5.5 years following the allotment

The immediate gross and net of issuance expenses proceeds from such securities issuance aggregated to approximately USD 1.6 million and USD 1.4 million, respectively.

As the warrants may be net share settled these warrants are classified as financial liabilities measured at fair value through profit or loss at each reporting period.

As to the fair value of the said warrants as of December 31, 2019 and December 31, 2018 see note 5.

To the placement agent on this offering the Company issued warrants to purchase up to an aggregate 14,177 ADSs representing 283,540 ordinary shares, with an exercise price of USD 10 per ADS during the 5 years following the allotment. The warrants may, under certain circumstances, also be exercised via a cashless exercise mechanism as defined in the agreement. The fair value of such warrants as was calculated by the Company as of the date of grant amounted to USD 46 thousand.

3) On July 23, 2018, the Company completed a public offering with approximately USD 9.9.million gross proceeds, or USD 8.6 million net of issuance costs by issuing (a) 577,529 units at a price of USD 3.50 per unit, each unit consisting of (i) one ADS and (ii) one Warrant C to purchase one ADS for an exercise price of USD 3.50 per ADS for a period of five years (hereinafter - “Warrants C”), and (b) 2,260,145 pre-funded units at a price of USD 3.49 per unit, each unit consisting of (i) one pre-funded warrant to purchase one ADS for an exercise price of USD 0.01 per ADS with no time limitation, and (ii) one Warrant C.   As part of such public offering, the Company provided the underwriters an option exercisable within 30 days to purchase: (a) up to 425,651 additional ADSs for USD 3.50 per ADS and (b) up to 425,651 Warrants C for USD 0.01 per warrant. The underwriters exercised only the latter option.   The Company was also obligated to issue the underwriters 198,637 warrants to purchase 198,637 ADSs for an exercise price of USD 4.375 per ADS for a period of five years once the Company increases its authorized share capital. The fair value of such warrants as calculated by the Company as of the grant date amounted to USD 375 thousand.   During 2018 all pre-funded warrants were exercised. Accordingly, 45,202,900 ordinary shares of the Company were allotted.   Warrants C may, under certain circumstances, be exercised via a cashless exercise mechanism as defined in the warrant agreement. In addition, the number of warrants outstanding will be adjusted for certain events specified in the warrant agreement. As such warrants C are classified as financial liabilities measured at fair value through profit or loss at each reporting period.   Accordingly, warrants C were initially recognized at fair value. The difference between the fair value of warrants at initial recognition and the transaction price (“Day 1 Loss”) at the sum of $149 thousand was immediately recognized in the income statement.   The pre funded warrants are initially recognized at fair value adjusted to defer Day 1 Loss. Unrecognized Day 1 Loss was amortized on a straight line basis over of a period of approximately 30 days. Upon exercise, the carrying amount of the pre funded warrants (which is presented net of the related unrecognized Day 1 Loss, if any) is reclassified to equity. As a result, during the third quarter of 2018 the Company recognized Day 1 Loss related to the pre funded warrants in an amount of $441 thousand. Furthermore, during the third quarter of 2018, all pre funded warrants were exercised.   Issuance cost were attributed to equity and liability components in proportion with the allocation of the proceeds, amounting to USD 319 thousand and USD 1,565 thousand, respectively. Issuance cost attributed to the equity component were charged directly as a reduction to equity while those attributed to liability components were charged directly to profit or loss.   In the event of a fundamental transaction as defined in the warrant C agreement (other than a fundamental transaction not approved by the Company’s board of directors), the Company or any successor entity shall at the option of the holder of warrants C, exercisable at any time concurrently with, or within 30 days after, the consummation of the fundamental transaction, purchase such warrants from their holder by paying an amount of cash equal to the Black Scholes value of the remaining unexercised portion of the warrant Cs on the date of the consummation of such fundamental transaction. The Black Scholes value of the said warrants as of December 31, 2019, amounted to USD 2.3 million. As of December 31, 2018, the Company believes that no event that constitutes a fundamental transaction has occurred.

4) As part of agreement with Algomizer (see Note 4), on September 3, 2019 Company issued to Algomizer 333,334 ADSs representing 6,666,680 ordinary shares and 333,334 warrants to purchase 333,334 ADSs representing 6,666,680 ordinary shares, with an exercise price of USD 4 per ADS during the 3 years following the allotment. As a result, the ordinary shares and warrants were recorded based on their fair value amounting to $630 thousand and $197 thousand, respectively.

5) In December 2019, ScoutCam Inc. allotted in a private issuance, a total of 3,413,312 units at a purchase price of USD $0.968 per unit. Each unit was comprised of two shares of common stock par value US$0.001 per share, one Warrant A and two Warrants B. The immediate proceeds (gross) from the issuance of the units amounted to approximately USD 3.3 million.5) See note 4.

c. Share based payments (not include warrants as described above):

1)

In August 2013, our board of directors approved and adopted our 2013 Share Option and Incentive Plan, or the 2013 Plan, which expires in August 2023. The 2013 Plan provides for the issuance of shares and the granting of options, restricted shares, restricted share units and other share-based awards to employees, directors, officers, consultants, advisors, and service providers of us and our U.S. Subsidiary. The Plan provides for awards to be issued at the determination of our board of directors in accordance with applicable law.

2)

The following are the grants of options to employees and other service providers:

Date of grant	Number of options granted		exercise price per option (NIS)		Fair value on grant date-NIS in thousands		Number of options outstanding- December 31, 2019		Number of options exercisable at 31, December 2019		Expiration date
July 2014 (***)		3,070,000		(**)0.537		554		880,000		880,000	July 17, 2020
December 2015 (****)		664,800		2.05		491		170,800		170,800	December 29, 2021
October 2017 (****)		7,630,000		0.162		942		4,380,000		2,190,000	October 17, 2023
January 2019 (*****)		(*)3,000,000		0.59		947		2,562,500		1,250,000	January 9, 2025
July 2019 (*****)		(*)1,250,000		0.59		325		1,250,000		-	July 25, 2025
Total		15,614,800						9,243,300		4,490,800

(*)	Granted to related parties.
(**)	Linked to the CPI as set out in the option allotment plan.
(***)	Each 100 options are exercisable into 1 ordinary share.
(****)	Each 10 options are exercisable into 1 ordinary share.
(*****)	Each 1 option is exercisable into 1 ordinary share.

On January 10, 2019, the Company entered into a separation agreement with former CEO. According to the agreement all options granted to the former CEO will be deemed vested on February 28, 2019. On May 31, 2019 all options were expired.

The fair value of all of the options was calculated using the Black and Scholes options pricing model, and based on the following assumptions:

Date of grant	Fair value on grant date-NIS in thousands		Share price on date of grant (NIS)		Expected dividend	Expected volatility			Risk free interest			Vesting conditions	Expected term
October 2017		1,109		1.62	None		64	%		1.16	%	four equal batches, following one, two, three and four years from their grant date	6 years
January 2019		947		0.506	None		74	%		1.45	%	will vest in 12 equals quarterly instalments over a three-year period commencing October 1, 2018	6 years
July 2019		325		0.436	None		75	%		1.12	%	25% will vest on the first anniversary of the grant date and 75% will vest on a quarterly basis over a period of three years thereafter	6 years

3) The changes in the number of share options and the weighted averages of their exercise prices are as follows:

	For the year ended December 31,
	2019					2018					2017
	Number of options			Weighted average of exercise price per 1 ordinary share-(NIS)		Number of options			Weighted average of exercise price per 1 ordinary share-(NIS)		Number of options			Weighted average of exercise price per 1 ordinary share-(NIS)
Outstanding at the beginning of year		14,428,800			1.25		18,308,800			5.80		8,722,500			46.92
Granted		1,250,000			0.59		3,000,000			0.59		11,630,000			1.62
Forfeited		(5,151,000	)		3.37					-		(801,064	)		35.16
Expired		(1,284,500	)		0.88		(6,880,000	)		15.16		(1,242,636	)		37.44
Outstanding at year end		9,243,300			0.88		14,428,800			1.25		18,308,800			5.80
Exercisable at year end		4,490,800			1.28		4,541,600			3.83		6,064,400			61.09

4) The amounts of expenses that were recorded for options to employees and other service providers in the reported years are USD 259 thousand, USD 157 thousand and USD 64 thousand for the years ended December 31, 2019, 2018 and 2017, respectively.

5) The plans are intended to be governed by the terms stipulated by Section 102 to the Israeli Income Tax Ordinance (except for the options to controlling shareholders and directors).

In accordance with these general rules and the track chosen by the Company pursuant to the terms thereof, in respect of options granted to employees under the option allotment plan, the Company is not allowed to claim as an expense for tax purposes the amounts credited to employees as a benefit, including amounts recorded as salary benefits in the Company’s books, with the exception of the salary-benefit component, if exists, determined on the grant date.