| SHARE-BASED COMPENSATION | NOTE
6 - SHARE-BASED COMPENSATION
1)
Share-based compensation plan On
March 17, 2013, the Company's Board of Directors approved a Share Incentive Plan (the “2013 Plan”). Under the 2013 Plan, the
Company reserves specified number of ordinary shares for allocation to stock options (each, an “Option”), restricted share
units, restricted share awards and performance-based awards, that had been awarded to employees and non-employees under the 2013 Plan.
Each Option is exercisable for one ordinary share. Any
Option granted under the 2013 Plan that is not exercised within six years from the date upon which it becomes exercisable will expire.
Since adopting the 2018 Plan (as defined below), the Company has not granted any awards under the 2013 Plan. On
July 2, 2018, the Company's Board of Directors and shareholders of the Company approved a new Share Incentive Plan (the “2018 Plan”)
and reserved 1,371,398
ordinary shares for allocation to stock options (each, a "2018 Plan Option"), restricted share units, restricted share awards and performance-based
awards, to employees and non-employees for issuance under the 2018 Plan. Each 2018 Plan Option is exercisable for one ordinary share. Any
2018 Plan Option that is not exercised within 10 years from the date of grant will expire. The
2018 Plan Options granted to employees are subject to the terms stipulated by section 102(b)(2) of the Israeli Income Tax Ordinance (the
“Ordinance”). According to these provisions, the Company will not be allowed to claim as an expense for tax purposes the amounts
credited to the employees as a capital gain benefit in respect of the options granted. 2018
Plan Options granted to related parties or non-employees of the Company are governed by Section 3(i) of the Ordinance or Non-Qualified
Share Options ("NSO"). The Company will be allowed to claim as an expense for tax purposes in the year in which the related parties or
non-employees exercised the options into shares. As
of December 31, 2022, 922,080
ordinary shares remain available for future grants under the 2018 Plan. On
January 2, 2023, the Company’s Board of Directors approved an increase of 1,440,496
ordinary shares that may be issued under the Company’s 2018 Plan pursuant of the terms of the 2018 Plan,
2)
share-based compensation
grants to employees and directors:
a)
On January 4, 2021, options to purchase 1,314,218
ordinary shares were granted to the Company’s former Chief Executive Officer, Dr. Spiros Jamas with an exercise price of $1.24
per share. Prior to the terms of Dr. Jamas’ separation agreement (as described below), the options were to vest over four years
from the date of grant; 25%
vest on the first anniversary of the date of grant and the remaining 75%
of the option to vest in twelve equal quarterly installments following the first anniversary of the grant date. On
July 15, 2022, the Company entered into a mutual separation agreement with Dr. Jamas. Pursuant to the separation agreement, Dr. Jamas
received the following benefits: (i)
a one-time lump sum payment of his annual base salary for a period of 13 months, for a total gross amount equal to $412;
and (ii) an extension of the exercise period for the vested portion of the options granted on January 4, 2021, based on the award original
terms, representing an aggregate of 492,832
ordinary shares, through the end of a two-year
b)
On April 7, 2021, the Company’s Board of
Directors approved the following option grants:
i.
Option
grants to purchase 213,000
ordinary shares to certain employees and 70,000
options granted to service providers, with an exercise price of $3.61
per share. The options vest over four
years from the date of grant; 25%
vest on the first anniversary of the date of grant and the remaining 75%
of the option will vest in twelve equal quarterly installments following the first anniversary of the grant date. The fair value of the
options at the date of grant was $646.
ii.
Options
grant to purchase 33,368
ordinary shares to a non-executive director of the Company, with an exercise price of $3.61.
The options will vest over three
years in twelve equal quarterly instalments starting on the vesting commencement date. These options were subject to the
approval of the shareholders of the Company, which was approved on October 4, 2021. The fair value of the options at the shareholders'
approval date was $104.
c)
On April 21, 2021, options to purchase 345,000
ordinary shares were granted to several executive officers of the Company, with an exercise price of $3.15.
The options vest over four
years from the date of grant; 25%
vest on the first anniversary of the date of grant and the remaining 75%
of the option will vest in twelve equal quarterly installments following the first anniversary of the grant date. These options were subject
to the approval of the shareholders of the Company, which was approved on October 4, 2021. The fair value of the options at the shareholders'
approval date was $1,140.
d)
On August 23, 2021, the Company’s Board
of Directors approved the following option grants which were approved by the shareholders of the Company on October 4, 2021.
i.
Grants of options to purchase ordinary shares
with a total fair value 0f $195
for each of the seven non-executive board members on January 1, 2022. The options will vest over three
years in twelve equal quarterly instalments starting on January 1, 2022 the vesting commencement date. On January 1, 2022,
which is considered the awards grant date, the Company granted 752,899
ordinary shares to non-executive directors with an exercise price of $2.815
per share.
ii.
Grants of options to purchase ordinary shares
with a total fair value 0f $65
for each of the seven non-executive board members on January 1, 2022. The options will vest over one
year in four equal quarterly instalments starting on January 1, 2022 the vesting commencement date. On January 1, 2022,
which is considered the awards grant date, the Company granted 250,964
ordinary shares to non-executive directors with an exercise price of $2.815
per share.
e)
On March 31, 2022, the Company’s Board of
Directors approved the following option grants:
i.
Options to purchase 80,000
ordinary shares to an executive officer and a service provider, in each case, with an exercise price of $2.86
per share. The fair value of the options was $147.
ii.
Options to purchase
55,000
ordinary shares to certain executive officers with an exercise price of $2.86
per share. This grant was subject to shareholders' approval, which was obtained at a meeting of the Company’s shareholders held
on September 7, 2022. The fair value of the options was $37.
The
options vest over four
years from the date of grant; 25% vest on the first anniversary of the date of grant and the remaining 75% of the option
will vest in twelve equal quarterly installments following the first anniversary of the grant date.
f)
On April 28, 2022, the Company’s Board of
Directors approved option grants to purchase 220,000
ordinary shares to employees with an exercise price of $2.57
per share. The
options vest over four
years from the date of grant; 25% vest on the first anniversary of the date of grant and the remaining 75% of the option
will vest in twelve equal quarterly installments following the first anniversary of the grant date. The fair value of
the options was $364.
g)
On May 11, 2022, the Company’s Board of
Directors approved a grant of options to purchase 500,000
ordinary shares to Ms. Miranda Toledano, who was serving as the Company’s Chief Financial Officer at the time of the grant. Ms.
Toledano has since been appointed the Company’s Chief Executive Officer (as described in Note 6(2)l below). This
grant was subject to shareholders' approval, which was obtained at a meeting of the Company’s shareholders held on September 7,
2022. These options have an exercise price of $2.00
per share and vest over four
years from the date of grant; 25% vest on the first anniversary of the date of grant and the remaining 75% of the option
will vest in twelve equal quarterly installments following the first anniversary of the grant date. The fair value of
the options was $390.
h)
On July 15, 2022, the Company’s Board of
Directors appointed Ms. Miranda Toledano as the Company’s Chief Executive Officer and approved a grant of options to purchase 600,000
ordinary shares at an exercise price of $1.40
per share, which are in addition to the options described in note 6(2)k above. This
grant was subject to shareholders' approval, which was obtained at a meeting of the Company’s shareholders held on September 7,
2022. The options vest over four
years from the date of grant; 25% vest on the first anniversary of the date of grant and the remaining 75% of the option
will vest in twelve equal quarterly installments following the first anniversary of the applicable grant date. The fair
value of the options was $524. In
addition, upon the occurrence of a Triggering Event (as defined below) and subject to the approval of the Board of Directors, Ms. Toledano
will be granted additional options to purchases 200,000
ordinary shares. The exercise price will be determined at the time of the Board of Directors’ approval. "Triggering
Event" means the earlier of the following events: (i) the execution by the Company of a binding strategic or partnership agreement with
a strategic partner to fund the Company's Phase III FDA Trial; or (b) raising sufficient funding to complete the Company's Phase III FDA
Trial, in each case as such event is approved by the Board of Directors.
i)
On June 15, 2022, the Company entered into a separation
agreement with Dr. Phillip Schwartz, the Company’s former President of R&D, under which Dr. Schwartz agreed to continue to provide
services to the Company until July 21, 2022 (the “Separation Date”). Pursuant to the terms of the separation agreement, which
were approved by the Company’s shareholders on September 7, 2022, Dr. Schwartz received a full acceleration of his unvested options,
as of the Separation Date, to purchase 68,750
ordinary shares granted in April 2021 that otherwise would have been forfeited. These options, together with 31,250
already vested options granted in April 2021 and 357,500
already vested options to purchase ordinary shares granted in 2017, will be exercisable for a period of 10
years from their respective initial grant dates .
The
fair value of each option granted is estimated at the date of grant using the Black-Scholes option-pricing model, with the following weighted
average assumptions:
2022
2021
Exercise
price
$1.40-$2.86
$1.24-$3.61
Dividend
yield
-
-
Expected
volatility
69%-70.2%
68%-71%
Risk-free
interest rate
1.35%-3.36%
1.11%-0.94%
Expected
life - in years
5.5-6.5
6.1-5.8
2022
2021
Number
of options
Weighted average exercise price
Number
of options
Weighted average exercise price
Outstanding
at beginning of the year
4,316,859
$
3.63
2,570,109
$
4.85
Granted
2,458,863
2.29
1,975,586
1.95
Exercised
(5,511
)
2.14
(177,710
)
2.37
Forfeited
(902,009
)
1.41
(16,660
)
2.37
Expired
(135,115
)
3.80
(34,466
)
4.00
Outstanding
at end of the year
5,733,087
$
3.30
4,316,859
$
3.63
Exercisable
at end of the year
3,165,677
$
4.06
2,068,067
$
5.39
The
following tables summarizes information concerning outstanding and exercisable options as of December 31, 2022, in terms of ordinary shares:
December
31, 2022
Options
outstanding
Options
exercisable
Number
of
Weighted
Number
of
Weighted
options
Average
options
Average
Exercise
outstanding
Remaining
exercisable
Remaining
prices
per
at
end of
Contractual
at
end of
contractual
share
(USD)
Year
Life
year
Life
-
1,560
0.09
1,560
0.09
1.24
492,831
1.54
492,831
1.54
1.40
600,000
9.54
-
-
2.02
500,000
9.37
-
-
2.14
400,775
7.26
277,994
7.26
2.53
33,638
6.89
33,638
6.89
2.57
205,500
9.33
-
-
2.815
1,003,863
9.01
376,447
9.01
2.86
135,000
9.25
-
-
3.15
345,000
8.30
123,125
8.30
3.61
250,868
8.27
101,059
8.27
3.68
294,580
0.26
294,580
0.26
3.97
247,082
6.05
242,053
6.05
6.31
1,222,390
3.08
1,222,390
3.08
5,733,087
3,165,677
The
aggregate intrinsic value of the total of the outstanding and exercisable options as of December
31, 2022, is $1.
The
following table illustrates the effect of share-based compensation on
the statements of operations:
2022
2021
Cost
of revenues
14
102
Research
and development expenses
708
661
General
and administrative
1,525
1,098
2,247
1,861 |
