SHAREHOLDERS’ EQUITY | NOTE 8: 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. b. Issuance of Ordinary Shares and Warrants: On February 16, 2021, the Company issued to several institutional investors in a registered direct offering, 600,000 Ordinary Shares at a purchase price of $23.00 per share for net proceeds of approximately $12.6 million. The Company intends to use the proceeds from this offering for working capital and general corporate purposes. The Company also issued to the placement agent or its designees warrants to purchase up to 36,000 ordinary shares, representing 6% of the aggregate number of ordinary shares sold in the offering. The placement agent warrants have an exercise price equal to $28.75, or 125% of the offering price, per Ordinary Share and became exercisable on August 16, 2021 for five years from the effective date of the offering. On September 17, 2021, the Company issued to several institutional investors in a private placement, 707,639 ordinary shares at a purchase price of $14.40 per share and warrants to purchase up to 707,639 ordinary shares at an exercise price of $12.00 per share. The warrants will be exercisable immediately and terminate on March 17, 2025. The Company also issued to the placement agent or its designees warrants to purchase up to 42,459 ordinary shares, representing 6.0% of the aggregate number of ordinary shares sold in the offering. The placement agent warrants have an exercise price equal to $18.00 per share, or 125% of the offering price per share and were exercisable immediately and terminate on March 17, 2025. c. 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 were unsecured, unsubordinated obligations of Cyren and carried 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. 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. As a result of the February 16, 2021 offering in Note 8(b), the conversion price of the convertible notes was adjusted to $3.38. As a result of the September 17, 2021 offering in Note 8(b), the conversion price of the convertible notes was adjusted to $3.02. In addition, the notes were 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 of $543 and $574 for the years ended December 31, 2021, and 2020, respectively. During the twelve months ending December 31, 2020, the Company paid semi-annual interest payments totaling $575, of which $288 was paid in cash and the remaining portion through the issuance of 13,983 shares. During the twelve months ending December 31, 2021, the Company paid semi-annual interest payments totaling $575, of which $288 was paid in cash and the remaining portion through the issuance of 26,425 shares. The Company has accrued interest of $0 and $32 as of December 31, 2021, and 2020 respectively. The principal balance of $10,000 on the convertible notes was paid off upon maturity on December 5, 2021. No further obligations remain with respect to the convertible notes. d. 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 $15.00 per share and are convertible into 67 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. The Company incurred interest expense of $677 and $601 for the years ended December 31, 2021, and 2020, respectively. During the twelve months ended December 31, 2020, the Company paid semi-annual interest payments totaling, $289, which was paid through the issuance of 14,047 shares. During the twelve months ended December 31, 2021, the Company paid semi-annual interest payments totaling, $518, which was paid through the issuance of 31,298 shares. During the twelve months ending December 31, 2020, three of the debenture holders converted $364 of principal plus interest of their debentures, which was a portion of their holding. The principal and interest were paid through the issuance of 24,150 shares. During the twelve months ending December 31, 2021, three of the 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 60,074 shares. The Company has accrued interest of $137 and $167 as of December 31, 2021, and 2020 respectively. The Convertible Debentures balance, net of debt issuance costs, as of December 31, 2021 was $8.6 million. The principal balance of the Convertible Debentures as of December 31, 2021 was $9.0 million. e. 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 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 560,000 ordinary shares. . As of December 31, 2021, an aggregate of 301,556 ordinary shares of the Company are still available for future grant under the Equity Incentive Plan. f . Non-Employee Directors stock option plan: 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 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 57,500 Ordinary Shares. As of December 31, 2021, an aggregate of 34,903 ordinary shares of the Company are still available for future grant to non-employee directors. g. A summary of the Company’s employees and directors’ stock option activity under the plans is as follows: Number (1) Weighted (1) Weighted Aggregate Outstanding at January 1, 2021 310,293 $ 41.80 3.18 $ - Granted 13,525 14.02 Exercised - - Expired and forfeited (142,532 ) 43.26 Outstanding at December 31, 2021 181,286 $ 38.58 2.74 $ - Options vested and expected to vest at December 31, 2021 177,136 $ 38.80 2.71 $ - Exercisable options at December 31, 2021 131,918 $ 40.69 2.27 $ - Weighted average fair value of options granted during the year $ 7.37 (1) Shares and per share data have been retroactively adjusted to reflect the Company’s 1-for-20 reverse share-split effective February 8, 2022, as described in Note 13(b). 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 years ended December 31, 2021 and 2020 was $0. The weighted average grant date fair value of options granted to employees and directors during the years ended December 31, 2021, and 2020, was $7.40 and $13.20, respectively As of December 31, 2021, the Company had $603 of unrecognized compensation expense related to non-vested stock options, expected to be recognized over a remaining weighted average period of 1.67 years. h. The employee and directors’ options outstanding as of December 31, 2021, have been separated into ranges of exercise prices, as follows: Outstanding Exercisable Exercise price per share (1) Options (1) Weighted Weighted (1) Options (1) Weighted (1) $6.40 - $32.80 50,920 3.09 $ 26.75 28,578 $ 30.49 $34.00 - $40.00 35,002 1.80 $ 37.76 31,165 $ 38.18 $41.80 - $42.80 55,584 3.29 $ 41.82 36,459 $ 41.82 $46.00 - $55.00 31,248 2.27 $ 47.81 28,601 $ 47.62 $58.00 - $64.00 8,532 2.65 $ 59.06 7,115 $ 59.07 181,286 2.74 $ 38.65 131,918 $ 40.69 (1) Shares and per share data have been retroactively adjusted to reflect the Company’s 1-for-20 reverse share-split effective February 8, 2022, as described in Note 13(b). i. Options to non-employees and non-directors: Issuance date Options (1) Exercise price per share (1) Options exercisable (1) Exercisable February 10, 2016 2,000 $ 28.80 2,000 Feb-22 January 24, 2017 1,250 $ 40.00 1,250 Jan-23 3,250 3,250 (1) Shares and per share data have been retroactively adjusted to reflect the Company’s 1-for-20 reverse share-split effective February 8, 2022, as described in Note 13(b). The options vest and become exercisable at a rate of 1/16 of the options every three months. As of December 31, 2021, the Company did not have any unrecognized compensation expense related to non-employee non-vested stock options. j. A summary of the Company’s RSUs activity for employees, directors and non-employees under the plans is as follows: Number (1) Weighted (1) Awarded and unvested at December 31, 2020 109,175 $ 30.00 Granted 286,670 15.67 Vested (43,913 ) 29.76 Forfeited (7,625 ) 25.76 Awarded and unvested at December 31, 2021 344,307 $ 18.20 (1) Shares and per share data have been retroactively adjusted to reflect the Company’s 1-for-20 reverse share-split effective February 8, 2022, as described in Note 8(b). As of December 31, 2021, the Company had approximately $4,849 of unrecognized compensation expense related to RSUs, expected to be recognized over a weighted average period of 2.53 years. k. The total share-based compensation expense related to all of the Company’s equity-based awards, recognized for the years ended December 31, 2021 and 2020, was as follows: Year ended 2021 2020 Cost of revenues $ 269 $ 105 Research and development 224 291 Sales and marketing 324 244 General and administrative 1,638 1,751 $ 2,455 $ 2,391 |