| Share Capital | NOTE
6 - SHARE
CAPITAL
Each
share of the Series A Convertible Preferred Stock, par value $0.01 per share, issued by the Company in December 2016 and in
May 2017 (the “Series A Convertible Preferred Stock”), was convertible, at the option of the holder, into 67 shares
of common stock (1,000 shares of common stock before the Reverse Split), and conferred upon the holder dividend rights on
an as converted basis. On December 12, 2018, the Company filed a Certificate of Elimination with respect to its Series A Convertible
Preferred Stock and as of June 30, 2019, the Company did not have any Series A Convertible Preferred Stock issued or outstanding.
See
Note 5 – “Commitments and Contingencies-Agreement with CardioSert Ltd.,” with respect to the issuance of
6,738 shares of the Company’s common stock
Share
Capital Developments:
The
authorized capital stock consists of 221,000,000 shares of capital stock, which consists of 220,000,000 shares of common par
value $0.01 (the “Preferred Stock”). As of June 30, 2019, the Company had 4,307,666 shares of common stock issued
and outstanding.
On
December 27, 2016, the Company exchanged 655,962 shares (9,735,925 shares before the Reverse Split) or rights to acquire shares
of its common stock, for 9,736 shares of a newly designated class of Series A Convertible Preferred Stock.
On
January 5, 2017, the Company entered into a definitive securities purchase agreement with an institutional investor (the “Purchaser”)
for the purchase and sale of an aggregate of 47,163 shares (700,000 shares before the Reverse Split) of common stock in a
registered direct offering for $74.00 per share ($5.00 per share before the Reverse Split) or gross proceeds of $3,500. The
Company paid the placement agent a fee of $210 plus reimbursement of out-of-pocket expenses, as well as other offering-related
expenses.
On
June 5, 2017, the Company entered into a Securities Purchase Agreement with certain institutional investors (the “Investors”)
providing for the issuance and sale by the Company to the Investors of an aggregate of 252,652 shares (3,750,000 shares before
the Reverse Split) of common stock, at a purchase price per share of $40.50 ($2.70 before the Reverse Split). The gross proceeds
to the Company was $10,125 before deducting placement agent fees and offering expenses of $922. See Note 4 – “Commitments
and Contingencies-Litigation” with respect to certain rescission rights awarded to two affiliated Investors.
On
January 14, 2019, the Company entered into a Securities Purchase Agreement with an accredited institutional investor providing
for the issuance and sale by the Company to the purchaser of an aggregate of (i) 330,000 shares of the Company’s common
stock, at a purchase price per share of $6.50 and (ii) 125,323 pre-funded warrants each to purchase one share of common stock,
at a purchase price per Pre-Funded Warrant of $6.49. The gross proceeds to the Company were approximately $3,000. The
closing of the offering took place on January 15, 2019. The pre-funded warrants were exercised in full in January 2019.
On
January 15, 2019, the Company entered into a Securities Purchase Agreement with certain accredited institutional investors
providing for the issuance and sale by the Company to the purchasers of an aggregate of 590,000 shares of the Company’s
common stock, at a purchase price per share of $10.00. The gross proceeds to the Company were approximately $5,900.
The closing of the offering took place on January 17, 2019.
On
January 23, 2019 the Company entered into a Securities Purchase Agreement with accredited institutional investors providing
for the issuance and sale by the Company to the purchasers of an aggregate of 250,000 shares of the Company’s common
stock, at a purchase price per share of $9.875. The gross proceeds to the Company were approximately $2,470. The closing
of the offering took place on January 25, 2019.
Employee
Stock Option Grants:
In
September 2014, Microbot Israel’s board of directors approved a grant of 26,906 stock options (403,592 stock options
before the Reverse Split) (77,846 stock options as retroactively adjusted to reflect the Merger) to its CEO, through MEDX
Venture Group LLC. Each option was exercisable into an ordinary share, at an exercise price of $12.00 ($0.80 before the Reverse
Split) ($4.20 as retroactively adjusted to reflect the Merger). The stock options were fully vested at the date of grant.
On
May 2, 2016, Microbot Israel’s board of directors approved a grant of 33,333 stock options (500,000 stock options before
the Reverse Split) (96,482 as retroactively adjusted to reflect the Merger) to certain of its employees and directors. Each
stock option was exercisable into an ordinary share, NIS 0.001 par value, of Microbot Israel, at an exercise price equal to
the ordinary share’s par value. The stock options were fully vested at the date of grant. As the exercise price of the
stock options is nominal, Microbot Israel estimated the fair value of the options as equal to the Company’s share price
of $20.25 ($1.35 before the Reverse Split) ($7.05 as retroactively adjusted to reflect the Merger) at the date of grant.
On
September 12, 2017, the Company adopted the 2017 Equity Incentive Plan (the “Plan”), which Plan authorizes, among
other things, the grant of options to purchase shares of common stock to directors, officers and employees of the Company
and to other individuals.
On
September 14, 2017, the board of directors approved a grant of stock options to purchase an aggregate of up to 120,848 shares
(1,812,712 shares before the Reverse Split) of common stock to Mr. Harel Gadot, the Company’s Chairman of the Board,
President and CEO, at an exercise price per share of $15.75 ($1.05 before the Reverse Split). The stock options vest over
a period of 3-5 years as outlined in the option agreements. As a result, the Company recognized compensation expenses for
the three months ended June 30, 2019 and 2018 in total amount of $120 and $120 respectively and for the six months
ended June 30, 2019 and 2018 in total amount of $240 and $339 respectively included in general and administrative expenses.
On
September 14, 2017, the board of directors approved a grant of stock options to purchase an aggregate of up to 72,508 shares
(1,087,627 shares before the Reverse Split) of common stock to Mr. Hezi Himelfarb, the Company’s General Manager, COO
and a member of the Board, at an exercise price per share of $19.35 ($1.29 before the Reverse Split). The grant was subject
to the Israeli Tax Authority’s approval of the plan which occurred on October 14, 2017. In accordance with the option
agreement, the options vest for period of 3 years starting from the grand date. As a result, the Company recognized compensation
expenses for the three months ended June 30, 2019 and 2018 in total amount of $107 and $123, respectively and
for the six months ended June 30, 2019 and 2018 in total amount of $214 and $231, respectively included in research
and development.
On
December 6, 2017, the board of directors approved a grant of 12,698 stock options (190,475 stock options before the Reverse
Split) to purchase an aggregate of up to 12,698 shares of common stock to certain of its directors, at an exercise price per
share of $15.75 ($1.05 before the Reverse Split). The stock options vest over a period of 3 years as outlined in the option
agreements. As a result, the Company recognized compensation expenses for the three months ended June 30, 2019 and
2018 in total amount of $13 and $26 respectively and for the six months ended June 30, 2019 and 2018 in total amount
of $27 and $41 respectively included in general and administrative expenses.
On
December 28, 2017, the board of directors approved a grant of 66,036 stock options (990,543 stock options before the Reverse
Split) to purchase an aggregate of up to 66,036 shares of common stock to certain of its employees, at an exercise price per
share of $15.3 ($1.02 before the Reverse Split). The stock options vest over a period of 3 years as outlined in the option
agreements. As a result, the Company recognized compensation expenses for the three months ended June 30, 2019 and
2018 in total amount of $40 and $139, respectively and for the six months ended June 30, 2019 and 2018 in total
amount of $79 and $211, respectively included in research and development expenses
On
November 2017, certain employees and consultant exercised 31,453 options (471,794 options before the Reverse Split) to 31,453
ordinary shares at exercise price of 0.001 NIS.
In
February 2018, an employee exercised options to purchase 2,487 shares (37,300 shares before the Reverse Split) of common stock
at an exercise price of $0.001 per share.
On
August 13, 2018, the board of directors approved a grant of stock options to purchase an aggregate of up to 10,000 shares
(150,000 shares before the Reverse Split) of common stock to a non-executive officer, at an exercise price per share
of $9 ($0.6 before the Reverse Split). The grant was subject to the Israeli Tax Authority’s approval of the plan which
occurred on October 14, 2017. In accordance with the option agreement, the options vest for period of 3 years starting from
the grand date. As a result, the Company recognized compensation expenses for the three months ended June 30, 2019
and 2018 in total amount of $6 and $0 respectively and for the six months ended June 30, 2019 and 2018 in total amount
of $18 and $0 respectively included in research and development expenses
On
January 21, 2019, the board of directors approved a grant of 11,630 stock options to purchase an aggregate of up to 11,630
shares of common stock to certain of its directors, at an exercise price per share of $8.60. The stock options vest over a
period of 3 years as outlined in the option agreements As a result, the Company recognized compensation expenses for the three
months ended June 30, 2019 and 2018 in total amount of $7 and $0 respectively and for the six months ended June 30,
2019 and 2018 in total amount of $30 and $0 respectively included in general and administrative expenses
A
summary of the Company’s option activity related to options to employees and directors, and related information is as
follows:
For the six months
ended June 30, 2019
Number of stock options Weighted average exercise price Aggregate intrinsic value
Outstanding at beginning of period 398,308 $ 11.50 $ 108
Granted 11,630 8.6 -
Exercised - - -
Cancelled - - -
Outstanding at end of period 409,938 $ 11.38 $ 403
Vested at end of period 283,181 $ 9.39 $ 403
For the Year ended December 31, 2018
Number of stock options Weighted average exercise price Aggregate intrinsic value
Outstanding at beginning of period 414,965 $ 11.70 $ 1,859
Granted 10,000 9.00 -
Exercised (2,487 ) - -
Cancelled (24,170 ) - -
Outstanding at end of period 398,308 $ 11.50 $ 108
Vested at end of period 245,010 $ 8.45 $ 108
The
aggregate intrinsic value in the table above represents the total intrinsic value, which is calculated as the difference between
the fair market value of the common stock and the exercise price, multiplied by the number of in-the-money stock options on
those dates that would have been received by the stock option holders had all stock option holders exercised their stock options
on those dates as of June 30, 2019 and December 31, 2018 respectively.
The
stock options outstanding as of June 30, 2019 and December 31, 2018, summarized by exercise prices, are as follows:
Exercise Stock options outstanding as of June 30, 2019 Stock options outstanding as of December 31, 2018 Weighted average remaining contractual life – years as of June 30, 2019 Weighted average remaining contractual life – years as of December 31, 2018 Stock options exercisable as of June 30, 2019 Stock options exercisable as of December 31, 2018
4.20 77,846 77,846 6.50 7.00 77,846 77,846
15.75 133,546 133,546 8.25 8.75 69,022 53,752
8.60 11,630 - 9.50 - 3,775 -
9.00 10,000 10,000 9.25 9.75 3,250 -
19.35 72,508 72,508 8.25 8.75 39,880 29,003
15.30 41,866 41,866 8.50 9.00 26,866 21,867
(*) 62,542 62,542 7.25 7.75 62,542 62,542
409,938 398,308 6.50 7.00 283,181 245,010
(*) Less
than $0.01.
Compensation expense recorded by the Company for its stock-based employee compensation awards in accordance with ASC 718-10 for the six months ended June 30, 2019 and 2018 was $610 and $822, respectively, and for the three months ended June 30, 2019 and 2018 was $295 and $406, respectively.
The
fair value of the stock options is estimated at the date of grant using the Black-Scholes options pricing model with the following
weighted-average assumptions:
Six Months ended June 30, 2019 Year ended
Expected volatility 144.4 % 99.4 %
Risk-free interest 1.64 % 2.39 %
Dividend yield 0 % 0 %
Expected life of up to (years) 6.37 5.24
Shares
issued to service provider
On
May 24, 2018 the Company issued an aggregate of 6,738 nonrefundable shares (100,000 nonrefundable shares before the Reverse
Split) of common stock to CardioSert as part of certain patent acquisition. The Company recorded expenses of approximately
$74 with respect to the issuance of these shares included in research and development expenses.
Warrants
The
remaining outstanding warrants and terms as of June 30, 2019 and December 31, 2018 are as follows:
Issuance date Outstanding as of December 31, 2018 Outstanding as of June 30, 2019 Exercise Price Exercisable as of June 30, 2019 Exercisable Through
Series A (2013) 181 181 $ 2,754 181 April 2023
Series A (2015) 676 676 $ 1,377 676 April 2020
Series B (2016) 2,741 2,741 $ 40.5 2,741 March 2022
Prior
to January 1, 2019, warrants with non-standard anti-dilution provisions (referred to as down round protection) were classified
as liabilities and re-measured each reporting period. On January 1, 2019, the Company adopted the provisions of ASU 2017-11,
which indicates that a down round feature no longer precludes equity classification when assessing whether an investment is
indexed to an entity’s own stock. The Company used a full retrospective approach to adoption and restated its financial
statements as of the earliest period presented. The cumulative effect of adoption of ASU 2017-11 resulted in an adjustment
to accumulated deficit as of January 1, 2018 of $20 with a corresponding adjustment to additional paid-in capital.
Repurchase
of Shares
The
Company had intended to enter into a definitive agreement with up to three Israeli shareholders, some of whom are directors
of the Company, that were former shareholders of Microbot Israel, pursuant to which the Company would repurchase, at a discount
on the fair value of the share at the date of repurchase, up to $500 of common stock held by them, in the aggregate, if and
to the extent such shareholders are unable to sell enough of their shares to cover certain of their Israeli tax liabilities
resulting from the Merger. Such repurchase(s), if any, would occur only after the two-year anniversary of the Merger. The
transaction would have been subject to negotiating final terms and entering into definitive agreements with such shareholders.
The
Company evaluated whether an embedded derivative that requires bifurcation exists within such shares that may be subject to
repurchase. The Company concluded the fair value of such derivative instrument would be nominal and, in any case, would represent
an asset to the Company as (a) the settlement requires acquiring the shares at a discount on the fair market value of the
share at the time of re purchase and in no circumstances the acquisition price will be higher than approximately one dollar
per share (representing 25% discount on the fair market value of the share at the merger closing date) and (b) it is assumed
that the selling shareholders would use such right as last resort as such repurchase at a discount on the fair market value
of such shares results in a loss to be incurred by the selling shareholders.
In
accordance with ASC 480-10-S99-3A (formerly EITF D-98), the Company classified the maximum amount it may be required to pay
in the event the repurchase right is exercised ($500) as temporary equity.
As
of December 31, 2018, the Company determined that no obligation remained to enter into any such definitive agreement as the
two-year anniversary of the Merger was in November 2018 and therefore there was no liability for the Company to repurchase
any shares from the three Israeli shareholders. |
