Replies to post #2336 on Todos Med Ltd (TOMDF)

[leslunier]

Also I have sent the company a request to verify the discrepancy in the filing of the note. Specifically the $ 1,457,142.96 There is no contact info for GC unless you have some way to contact him. Will be interesting to see if I get a response.

[JoeForkeyBolo]

The convertible note and the warrants are separate parts of this agreement. I never posted anything regarding the warrants being converted. The warrants have a one-year holding period before they can be exercised, but the convertible shares do not. The warrants have a fixed price. The conversion shares have a conversion price that may be up to 20% lower than the initial stated price.

I have only included the necessary parts of the filing related to note conversion shares. I can also explain the $1,457,142.86 which seems to be eluding everyone. Perhaps GC hasn't responded to the tweets because it is already explained in the filing for those who read and have their brains engaged. My comments are in RED.

From the 8-K filing - Exhibit 10.2: Promissary Convertible Note
https://www.sec.gov/Archives/edgar/data/1645260/000149315221001831/ex10-2.htm

Todos Medical Ltd.

PROMISSORY CONVERTIBLE NOTE

Issuance Date: January __, 2021
Principal Amount: U.S. $4,857,142.86

FOR VALUE RECEIVED, Todos Medical Ltd., a corporation organized under the laws of Israel (the “Company”), pursuant to this Promissory Convertible Note (the “Note”) hereby promises to pay to Yozma Group Korea Co., Ltd., its designee or registered assigns (the “Holder”) in cash the principal amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion or otherwise, the “Principal”), after giving effect to a 30% original issue discount) and to pay interest at a rate of four percent (4%) per annum (“Interest”) on any outstanding Principal at the applicable Interest Rate from the date hereof) until the same becomes due and payable, whether upon the Maturity Date which is January , 2022, acceleration, conversion, redemption or otherwise (in each case in accordance with the terms hereof). Certain capitalized terms used herein are defined in Section 26. This Note is issued pursuant to that certain Securities Purchase Agreement dated January 22, 2021, by and among the Company and the Purchaser (the “Purchase Agreement”), and capitalized terms not defined herein will have the meanings set forth in the Purchase Agreement.

$4,857,142.86 (principal amount) – $3,400,000 (company funded) = $1,457,142.86 (difference)

30% OID (original issue discount) of $4,857,142.86 principal = $1,457,142.86 (the discount)

The discount amount is part of the loan agreement, and will be used as described later in the Automatic Convesion section.

(3) CONVERSION OF NOTE. Following the Issuance Date, as set out above, this Note shall be convertible into shares of Common Stock on the terms and conditions set forth in this Section 3.

(a) Optional Conversion Right. Subject to the provisions of Section 3(d)(i) and Section 3(d)(ii), at any time or times on or after the Issuance Date of this Note, the Holder shall be entitled to convert any portion of the outstanding and unpaid Conversion Amount into fully paid and non-assessable shares of Common Stock in accordance with Section 3(c), at the Conversion Rate (as defined below) (the “Conversion Date”). The Company shall not issue any fraction of a share of Common Stock upon any conversion. If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer, stamp and similar taxes that may be payable with respect to the issuance and delivery of Common Stock upon conversion of any Conversion Amount. The Holder shall have the right to deliver an effective conversion notice at any time until 11:59 pm on the chosen date and it shall be immediately effective.
The paragraph above clearly defines NO HOLDING PERIOD for the convertible note. Conversion can begin immediately if Yozma wishes to convert.

(b) Conversion Rate. The number of shares of Common Stock issuable upon conversion of any Conversion Amount pursuant to Section 3(a) shall be determined by dividing (x) such Conversion Amount by (y) the Conversion Price (the “Conversion Rate”).

(i) “Conversion Amount” means the sum of (A) the portion of the Principal to be converted, redeemed or otherwise with respect to which this determination is being made and (B) accrued and unpaid Interest with respect to such Principal.

(ii) “Conversion Price” means $0.0599. Subsequent to the effective date of the registration statement registering for resale the Conversions Shares and the Warrant Shares pursuant to the Purchase Agreement, if the closing sale price of the Common Stock averages less than the then Conversion Price over a period of ten (10) consecutive trading days, the Conversion Price shall reset to such average price. If the 10 day volume weighted average price of the Common Stock continues to be less than the Conversion Price then the Conversion Price should reset to such 10-day average price with a maximum of a 20% discount from the initial Conversion Price.
The maximum price for conversion of the note is $0.0599 per share. The minimum conversion price (applying the maximum 20% discount) is $0.04792 per share. These prices establish the minimum and maximum number of shares that can be issued in a full conversion of the note. This does not include the warrant shares that may be converted after a one-year holding period.

Minimum: $4,857,142.86 / $0.0599 = 81,087,527 shares
Maximum: $4,857,142.86 / $0.04792 = 101,357,409 shares

(c) Mechanics of Optional Conversion and Adjustment:

(iii) Optional Repayment. At the Company’s option and upon thirty (30) days’ notice to the Holder, 33% of the outstanding Principal and accrued and unpaid Interest of the Note (the “Repayment Amount”) may be redeemed at any time at an amount equal to one hundred and fifteen percent (115%) of the Repayment Amount. The foregoing notwithstanding, Holder may convert any or all of this Note into shares of Common Stock at any time.
Again, there is no mention of a one-year waiting period for the convertible shares. However, the company does have the right to notify Yozma of their intent to repay up to one-third of the remaining unpaid note amount and this would prevent that portion of the debt from being converted to shares This give the company the ability to use revenue to repay portions of the debt early to minimize conversion shares issued.

(d) Limitations on Conversions.

(f) Automatic Conversion. In the event the Company completes a Fundamental Transaction, or completes a listing of its Common Stock onto a national stock exchange, Holder agrees to convert the OID into Common Stock of the Company at the Conversion Price. The remaining Principal Amount and Interest will remain outstanding, unless the Holder elects to convert such Principal Amount and Interest into Common Stock of the Company.
This would provide the company additional funding of $1,457,142.86 (the OID amount). If the company fails to uplist, Yozma keeps the OID amount.

Minimum shares issued for OID conversion: $1,457,142.86 / $0.0599 = 24,326,259
Maximum shares issued for OID conversion: $1,457,142.86 / $0.04792 = 30,407,823

[JoeForkeyBolo]

Why would they exercise the warrant at .107415 when they can buy on the open market for .05

They wouldn't. The warrants have an expiration date of 5 years. If the share price fails to move higher than the warrant price after the one-year restriction period, the warrants will expire worthless. There is no scenario one comes out ahead exercising a warrant below the exercise price. They cost Yozma nothing and are a "freebie" to entice them into making the investment. They have zero value until the price moves north of the exercise price.