| SHAREHOLDERS’ EQUITY | NOTE 5:- ShareHOLDERS’ EQUITY
a. General: Ordinary shares confer upon their holders
the right to receive notice to participate and vote in general shareholder meetings of the Company and to receive dividends if declared.
On July 8, 2021, the shareholders of the Company approved an increase in the number of authorized ordinary shares from 110,000,000 ordinary
shares of nominal value NIS 0.15 per share to 160,000,000 ordinary shares of nominal value NIS 0.15 per share.
b. Issuance of convertible notes: On December 5, 2018 the Company issued
$10,000 aggregate principal amount of convertible notes in a private offering. The notes are unsecured, unsubordinated obligations of
Cyren and carry a 5.75% interest rate, payable semi-annually in (i) 50% cash and (ii) 50% cash or ordinary shares at Cyren’s election.
The notes have a 3-year term and mature in December 2021, unless converted in accordance with their terms prior to maturity. The notes
were issued with a conversion price of $3.90 per share which was subject to adjustment using a weighted-average ratchet mechanism based
on the size and price of future equity offerings and the total shares outstanding. On November 7, 2019, Cyren announced the closing of
a rights offering that raised gross proceeds of $8,019. As a result of this offering, the conversion price of the convertible notes was
adjusted to $3.73. On February 16, 2021, Cyren announced securities purchase agreements with several institutional investors for the purchase
and sale, in a registered direct offering, of 12,000,000 of the Company’s ordinary shares at a purchase price of $1.15 per share
for net proceeds of $12,588. As a result of this offering, the conversion price of the convertible notes was adjusted to $3.38. On September
17, 2021, we issued to several institutional investors in a private placement 14,152,799 of our ordinary shares at a purchase price of
$0.72 per share and warrants to purchase up to 14,152,779 ordinary shares at an exercise price of $0.60 per share. As a result of this
offering, the conversion price of the convertible notes was adjusted to $3.02. In addition, the notes would be subject to immediate conversion
upon any change in control in the Company (or subject to repayment if the price in the change in control transaction is less than the
conversion price). The Company incurred interest expense
for the three and nine months ended September 30, 2021 of $145 and $430, respectively. The Company incurred interest expense for the three
and nine months ended September 30, 2020 of $153 and $436, respectively. In June 2021, the Company paid semi-annual interest payments
totaling, $287, of which $143 was paid in cash and the remaining portion through the issuance of 233,400 shares. The Company has accrued
interest of $176 as of September 30, 2021. As of September 30, 2021, the principal
balance of the convertible notes is $10,000. As the convertible notes mature in December
2021, the Company is currently negotiating to restructure the convertible notes with the noteholders and at this time is uncertain as
to the outcome. If the restructuring discussions are not successful, the Company intends to use its available cash resources to repay
the principal upon maturity per the terms of the convertible notes.
c. Issuance of Convertible Debentures : In March 2020, the Company entered into
purchase agreements with a select group of accredited investors for the purchase of $10,250 aggregate principal amount of Convertible
Debentures in a private placement. Upon the closing, the Company received approximately $9,400 (net of $800 in issuance expenses). The debentures are unsecured, subordinated
obligations of Cyren and carry a 5.75% interest rate per annum, payable semi-annually in cash or ordinary shares at Cyren’s election.
The debentures have a four-year term and mature in March 2024, unless converted in accordance with their terms prior to maturity. The
debentures have a conversion price of $0.75 per share and are convertible into 1,333 ordinary shares per $1,000 principal amount of debentures.
The conversion price is subject to adjustment based on the price and timing of future equity offerings and other customary adjustments.
Upon the satisfaction of price and other conditions, Cyren has the right to force the conversion of the debentures. In March 2021, the Company paid semi-annual
interest payments totaling, $259, which was paid through the issuance of 291,422 shares. In September 2021, the Company paid semi-annual
interest payments totaling, $259, which was paid through the issuance of 334,512 shares. For the quarter ended March 31, 2021,
two debenture holders converted $909 of principal plus interest of their debentures, which was a portion of their holding. The principal
and interest were paid through the issuance of 1,201,472 shares. There were no conversions for the quarters ended June 30, 2021 or September
30, 2021. On June 11, 2020, one of the debenture
holders converted $48 of principal plus interest of their debentures, which was a portion of their holding. The principal and interest
was paid through the issuance of 64,542 shares. The Company incurred interest expense
for the three and nine months ended September 30, 2021 of $180 and $523, of which $44 and $134 are related to the amortization of debt
issuance costs, respectively. The Company incurred interest expense for the three and nine months ended September 30, 2020 of $188 and
$400, of which $49 and $98 are related to the amortization of debt issuance costs, respectively. The Company has accrued interest of $20
as of September 30, 2021. The principal balance of the Convertible
Debentures as of September 30, 2021 was $9,000. As of September 30, 2021, the total estimated fair value of the Convertible Debentures
was approximately $5,600. The fair value was determined based on the closing trading price of $0.62 per share multiplied by the Convertible
Debentures principal balance as of the last day of trading for the period The fair value of the Convertible Debentures is considered a
Level 2 within the fair value hierarchy and was determined based on inputs that are observable in the market or that could be derived
from, or corroborated with, observable market data, quoted price of the Convertible Debentures in an over-the-counter market.
d. Equity Incentive Plan: On December 22, 2016, the Company’s
shareholders approved a new equity plan - the 2016 Equity Incentive Plan (the “Equity Incentive Plan”). This plan, along with
its respective Israeli appendix, replaced all then-existing employee and consultants stock option plans. The Equity Incentive Plan allows for the
issuance of Restricted Stock Units (“RSUs”), as well as options. The options and RSUs generally vest over a period of four
years. Options granted under the Equity Incentive Plan generally expire after six years from the date of grant. Options and RSUs cease
vesting upon the termination of the optionee’s employment or other relationship with the Company. The per share exercise price for
options shall be no less than 100% of the fair market value per ordinary share on the date of grant. Any options and RSUs that are cancelled
or not exercised within the option term become available for future grant. On July 30, 2019, the shareholders of
the Company approved an increase in the number of ordinary shares reserved for issuance under the 2016 Equity Incentive Plan and its respective
Israeli Appendix to a total of 11,200,000. As of September 30, 2021, an aggregate
of 6,481,815 ordinary shares of the Company are still available for future grant under the Equity Incentive Plan.
e. Non-Employee Directors stock option plan: In 1999, the Company adopted the 1999
Directors Stock Option Plan, and in 2008 shareholders approved an extension of the term of this plan through July 13, 2019. On December
15, 2006, the plan was extended through 2016. On December 22, 2016, the Company’s shareholders approved a new equity plan - the
2016 Non-Employee Director Equity Incentive Plan (the “Non-Employee Director Plan”). This plan, along with its respective
Israeli appendix, replaced all existing Directors stock option plans. The Non-Employee Director Plan allows
for the issuance of Restricted Stock Units (“RSUs”), as well as options. Each option and RSU granted under the Non-Employee
Plan generally vests over a period of four years. Each option has an exercise price equal to the fair market value of the ordinary shares
on the grant date of such option. Options granted under the Non-Employee Director Plan generally expire after six years from the date
of grant. Options and RSUs cease vesting upon the termination of the relationship with the Company. On July 30, 2019, the shareholders of
the Company approved an increase in the number of ordinary shares reserved for issuance under the Non-Employee Director Plan and its respective
Israeli Appendix to a total of 1,150,000 Ordinary Shares. As of September 30, 2021, an aggregate
of 698,050 ordinary shares of the Company are still available for future grant to non-employee directors.
f. A summary of the Company’s employees and directors’ stock option activity under the plans is as follows:
Number of Weighted- Weighted- Aggregate
Outstanding at December 31, 2020 6,205,860 $ 2.09 3.18 $ -
Granted 230,000 0.75
Exercised - -
Expired and forfeited (2,785,270 ) 2.16
Outstanding at September 30, 2021 3,650,590 $ 1.95 2.95 $ 2
Options vested and expected to vest at September 30, 2021 3,558,211 $ 1.96 2.92 $ 2
Exercisable options at September 30, 2021 2,536,407 $ 2.03 2.46 $ -
Weighted-average fair value of options granted during the quarter $ 0.39 The aggregate intrinsic value in the tables
above represents the total intrinsic value (the difference between the fair value of the Company’s ordinary shares as of the last
day of each period and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option
holders had all option holders exercised their options on the last day of each period. The total intrinsic value of options exercised
during the quarters ended September 30, 2021 and 2020 was $0, and $0, respectively. The weighted-average grant date fair value
of options granted to employees and directors during the quarters ended September 30, 2021 and 2020, was $0.39 and $0.66, respectively. As of September 30, 2021, the Company
had $750 of unrecognized compensation expense related to non-vested stock options granted to employees and directors, expected to be recognized
over a remaining weighted-average period of 1.73 years.
g. The employee and director options outstanding as of September 30, 2021, have been separated into ranges of exercise prices, as follows:
Outstanding Exercisable
Weighted- Weighted- Weighted-
Options life in price per Options price per
Exercise price per share outstanding years share exercisable share
$0.54 - $1.64 989,162 3.23 $ 1.37 546,152 $ 1.52
$1.70 - $2.00 705,550 2.05 $ 1.89 621,346 $ 1.91
$2.05 - $2.14 1,133,640 3.51 $ 2.09 679,896 $ 2.09
$2.30 - $2.75 644,912 2.53 $ 2.39 552,705 $ 2.38
$2.90 - $3.20 177,326 2.90 $ 2.90 136,308 $ 2.96
3,650,590 2.95 $ 1.95 2,536,407 $ 2.03
h. Options to non-employees and non-directors:
Issuance date Options Exercise Options Exercisable
February 10, 2016 40,000 $ 1.44 40,000 Feb-22
January 24, 2017 25,000 $ 2.00 25,000 Jan-23
65,000 65,000 The options vest and become exercisable
at a rate of 1/16 of the options every three months. As of September 30, 2021, the Company
did not have any unrecognized compensation expense related to non-employee and non-director non-vested stock options.
i. A summary of the Company’s RSUs activity for employees, directors, and non-employees under the plans is as follows:
Number Weighted- average
Awarded and unvested at December 31, 2020 2,183,500 $ 1.50
Granted 5,233,400 0.83
Vested (878,250 ) 1.49
Forfeited (152,500 ) 1.29
Awarded and unvested at September 30, 2021 6,386,150 $ 0.96 As of September 30, 2021, the Company
had approximately $5,225 of unrecognized compensation expense related to RSUs, expected to be recognized over a weighted-average period
of 2.62 years.
j. The total stock-based compensation expense related to all of the Company’s equity-based awards, recognized for the three and nine months ended September 30, 2021 and 2020 was as follows:
Three months ended Nine months ended
2021 2020 2021 2020
Unaudited Unaudited
Cost of revenues $ 83 $ 21 $ 187 $ 85
Research and development 55 70 150 229
Sales and marketing 100 65 228 204
General and administrative 514 568 1,192 1,358
$ 752 $ 724 $ 1,757 $ 1,876 |
