SHARE-BASED COMPENSATION | NOTE 11: SHARE-BASED COMPENSATION a. Option plans: On November 23, 2014, the Company’s Board of Directors approved, subject to the approval of the shareholders, creation of the Company’s ordinary C share class, with nominal value NIS 0.01 per share and classification of 1,500,000 ordinary shares for such class of shares, whereby 1,152,044 of such shares were allocated to the Company’s employees under the amended 2014 Israel Share Option Plan (the “2014 Plan”). The exercise price of the options granted under the 2014 Plan may not be less than the nominal value of the shares into which the options are exercised. The options vest primarily over three years. There are no cash settlement alternatives. On December 29, 2014, the Company’s shareholders ratified and approved the aforesaid actions. On January 23, 2017, the Company’s Board of Directors approved the Company’s 2017 Share Incentive Plan (the “2017 Plan” and together with the 2014 Plan, the “Option Plans”), and the subsequent grant of options to the Company’s employees, officers and directors. Pursuant to the 2017 Plan, the Company initially reserved for issuance 312,867 ordinary shares, nominal value NIS 0.01 each. On February 28, 2017, the Company’s shareholders approved the 2017 Plan. The 2017 Plan provides for the grant of awards, including options, restricted shares and restricted share units to the Company’s directors, employees, officers, consultants and advisors. On June 26, 2017 and on December 28, 2017, the Company’s Board of Directors approved the reservation of 463,384 and 559,764 additional ordinary shares, respectively, for issuance under the 2017 Plan (totaling, including previous plans, an aggregate of 1,338,015 ordinary Shares). On February 25, 2021 and November 17, 2021, the board of directors and shareholders, respectively, approved an amendment and restatement of the 2017 Plan. The 2017 Plan, as amended, also contains an “evergreen” provision, which provides for an automatic allotment of ordinary shares to be added every year to the pool of ordinary shares available for grant under the 2017 Plan. Under the evergreen provision, on January 1 of each year (beginning January 1, 2022), the number of ordinary shares available under the 2017 Plan automatically increases by the lesser of the following: (i) 4% of our outstanding ordinary shares on the last day of the immediately preceding year; and (ii) an amount determined in advance of January 1 by the board of directors. As of December 31, 2021, our 2017 Plan, as amended, has up to 1,520,066 ordinary shares available for issuance. The Company estimates the fair value of stock options granted using the binominal option-pricing model. The option-pricing model requires a number of assumptions, of which the most significant are the expected stock price volatility and the expected option term. Expected volatility was calculated based upon the Company’s historical share price and historical volatilities of similar entities in the related sector index. The expected term of the options granted is derived from output of the option valuation model and represents the period of time that options granted are expected to be outstanding. The risk-free interest rate is based on the yield from U.S. treasury bonds with an equivalent term. The Company has historically not paid dividends and has no foreseeable plans to pay dividends. The following table lists the inputs to the binomial option-pricing model used for the fair value measurement of equity-settled share options for the above Options Plans for the years 2021 and 2020: Year ended 2021 2020 Dividend yield 0% 0% Expected volatility of the share prices 65% 74%-79% Risk-free interest rate 1.4%-1.5% 0.6%-1.38 Expected term (in years) 8 8 Based on the above inputs, the fair value of the options was determined to be $1.52 - $5.64 per option at the grant date. b. The following table summarizes the number of options granted to employees under the Option Plans for the years ended December 31, 2021 and related information: Amount of options Weighted average exercise price Weighted average remaining contractual term (in years) Aggregate intrinsic value Balance as of December 31, 2020 3,892,714 $ 5.15 6.65 $ 608,179 Granted 1,318,351 7.33 - - Exercised (438,759 ) 1.43 - - Forfeited (217,325 ) 7.20 - - Expired (143,557 ) 7.08 - - Balance as of December 31, 2021 4,411,424 6.01 8.19 92,507 Exercisable as of December 31, 2021 2,171,616 $ 5.57 7.11 $ 92,507 As of December 31, 2021, there are $9,739 of total unrecognized costs related to share-based compensation that is expected to be recognized over a period of up to four years. c. The following table summarizes information about the Company’s outstanding and exercisable options granted to employees as of December 31, 2021: Exercise price Options outstanding as of December 31, Weighted average remaining contractual term (years) Options exercisable as of December 31, 2021 Weighted average remaining contractual term $ 0.25-3.80 435,346 9.18 123,494 5.82 $ 4.15- 4.95 2,331,999 7.67 1,578,326 7.09 $ 5.21-7.56 546,150 8.62 210,074 7.41 $ 8.00-11.01 1,097,929 8.70 259,722 7.58 4,411,424 2,171,616 d. A summary of restricted shares activity for the year ended December 31, 2021 is as follows: Amount of restricted shares Weighted average grant date fair value Unvested as of December 31, 2020 - $ - Granted 549,427 5.61 Vested - Forfeited (17,950 ) 9.51 Unvested as of December 31, 2021 531,477 $ 5.48 e. 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 is comprised as follows: Year ended 2021 2020 (in thousands) Research and development expenses, net $ 1,384 $ 1,099 Commercial expenses 947 376 General and administrative expenses 1,902 1,893 Total share-based compensation $ 4,233 $ 3,368 |