NOTE 11 - SHAREHOLDERS’ EQUITY:

On June 5, 2024, the Company entered into a warrant inducement agreement with the Holder regarding the Common Warrants to purchase up to an aggregate of 99,967 shares of the Company’s common stock originally issued on May 8, 2023 at an exercise price of $27.5 per share (the “Existing Warrants”).

Pursuant to the inducement agreement, the Holder agreed to exercise for cash the Existing Warrants to purchase an aggregate of 99,967 shares of the Company’s common stock at an exercise price of $27.5 per share in consideration of the Company’s agreement to issue new common stock purchase warrants, to purchase up to an aggregate of 199,934 shares of common stock (the “June Warrants”) for an exercise price of $20 at a 1:1 exchange ratio.

As further consideration, the Holder agrees to pay $1.25 per newly issued warrant outlined above for a total of $249.

The June Warrants will be exercisable immediately upon issuance, half of which with a term of 5.5 years (the “5.5 Years June Warrants”), and the remaining with a term of 2 years (the “2 Years June Warrants”) (physically or upon occurrence of certain events on a cashless basis at the Holder’s discretion). Their exercise price and the number of shares issuable upon exercise is adjustable upon dilutive events (such as subsequent rights offerings, pro-rata distributions and stock dividends and splits). The Holder also possesses a right to receive any additional consideration that holders of common stocks may be entitled to upon a fundamental transaction (as defined in the agreement).

Pursuant to the inducement agreement the Holder exercised the Existing Warrants for a total gross cash amount of approximately $2,999, before deducting offering costs.

As of the issuance date of the June Warrants, the fair value of the warrants was estimated at $1,451. The Company valuation was based using the Black-Scholes valuation model. The significant inputs into the Black-Scholes valuation model at the initial recognition date are as follows:

In accordance with ASC Topic 815 guidance on equity classified warrant modifications, the incremental change in fair value of the induced warrants was accounted for as an additional equity issuance cost for the warrant inducement, which was recorded to additional paid-in capital. These warrants have not been exercised as of 31 December, 2024.

Offering Costs related to warrant inducement agreement June 2024:

Upon the consummation of the warrant inducement agreement and pursuant to an agreement entered into with H.C. Wainwright & Co., LLC (the “Underwriter”), the Company has paid in cash to the Underwriter (and the escrow agent) a total amount of $331 and has paid other related issuance cost amounting to approximately $66. The Company has also granted to the Underwriter upon the consummation of the warrant inducement, warrants to purchase up to 6,998 of the Company’s common stocks which carry the same terms as the June Warrants described above, except for the exercise price which reflect 125% of the reduced exercise price of the Existing Warrants ($34.375). The warrants are classified as mezzanine equity based on the guidance provided under ASC 480-10-S99-3A and SAB Topic 14. E.

As of the issuance date of the underwriter warrants, the fair value of the warrants was estimated at $42. The valuation was based on a Black-Scholes option-pricing model, using an expected volatility of 44.77% a risk-free rate of 3.95% contractual term of 5.5 years, and a stock price at the issuance date of $19.7.

The total offering costs (including the inducement effects) in the amount of approximately $1,890 was recognized in equity.

On June 30, 2024, the Company entered into a warrant inducement agreement with Holder, to purchase up to an aggregate of 99,967 shares of the 2 Years June Warrants, originally issued on June 6, 2024 at an exercise price of $20 per share (the “2 Years June Warrants”). The closing date of the June 30, 2024 Inducement Letter Agreement was on July 2, 2024.

Pursuant to the inducement agreement, the holder agreed to exercise for cash the 2 Years June Warrants to purchase an aggregate of 99,967 shares of the Company’s common stock at an exercise price of $20 per share, in consideration of the Company’s agreement to issue new common stock purchase warrants, to purchase up to an aggregate of 199,934 shares of common stock (the “July Warrants”), for an exercise price of $17.5 at a 1:1 exchange ratio. As further consideration, the Holder agrees to pay $1.25 cents per newly issued warrant outlined above for a total of $250.

The July Warrants are exercisable immediately upon issuance, with a term of 2 years.

Their exercise price and the number of shares issuable upon exercise is adjustable upon dilutive events (such as subsequent rights offerings, pro-rata distributions and stock dividends and splits). The Holder also possesses a right to receive any additional consideration that holders of common stocks may be entitled to upon a fundamental transaction (as defined in the agreement).

Pursuant to the inducement agreement the Holder exercised the 2 Years June Warrants for a total gross cash amount of approximately $2,249, before deducting offering costs.

As of the issuance date of the July Warrants, the fair value of the warrants was estimated at $1,131. The Company valuation was based using the Black-Scholes valuation model. The significant inputs into the Black-Scholes valuation model at the initial recognition date are as follows:

2 year July Warrants:

 In accordance with ASC Topic 815 guidance on equity classified warrant modifications, the incremental change in fair value of the induced warrants was accounted for as an additional equity issuance cost for the warrant inducement, which was recorded to additional paid-in capital.

Offering Costs related to warrant inducement agreement July 2024:

Upon the consummation of the warrant inducement agreement and pursuant to an agreement entered into with H.C. Wainwright & Co., LLC (the “Underwriter”), the Company has paid in cash to the Underwriter (and the escrow agent) a total amount of $271. The Company has also granted to the Underwriter upon the consummation of the warrant inducement, warrants to purchase up to 6,998 of the Company’s common stocks which carry the same terms as the July Warrants described above, except for the exercise price which reflect 125% of the reduced exercise price of the June Warrants ($25). The warrants are classified as mezzanine equity based on the guidance provided under ASC 480-10-S99-3A and SAB Topic 14. E.

As of the issuance date of the underwriter warrants, the fair value of the warrants was estimated at $27. The valuation was based on a Black-Scholes option-pricing model, using an expected volatility of 61.60% a risk-free rate of 3.86% contractual term of 2 years, respectively, and a stock price at the issuance date of 16.5$.

The total offering costs (including the inducement effects) in the amount of approximately $1,429 was recognized in equity.

In July 2025, the Company entered into Stock Purchase Agreement” (“the Offering”) with certain investors (the “Investors”), pursuant to which the company agreed to issue and sell shares and warrants to the Investors in a private placement, for a total aggregate gross proceeds of approximately $1,000. The July 2025 Private Placement closed on July 2, 2025:

In September 2025, the Company entered into a warrant inducement agreement (the “Inducement Letter”) with a holder of existing warrants (the “Existing Warrants”). Pursuant to the Inducement Letter, the holder agreed to exercise for cash the Existing Warrants to purchase an aggregate of 427,020 shares of the Company’s Common Stock at an exercise price of $3.7 per share in consideration of the Company’s issuance new common stock purchase warrants (the “New Warrants”) , to purchase up to an aggregate of 640,530 shares of the Company’s common stock (the “New Warrant Shares”) at an exercise price of $3.7 per share. The Company received aggregate gross proceeds of approximately $1,600 from the exercise of the Existing Warrants by the holder, before deducting financial advisory fees and other offering expenses payable by the Company.

The Existing Warrants were originally issued as follows:

(collectively, the “Existing Warrants”).

The total gross proceeds were $850.

The Pre-Funded Warrants are immediately exercisable at an exercise price of $0.0001 per share of Common Stock and will not expire until exercised in full.

The Company may not effect any exercise of the Pre-Funded Warrants, and White Lion does not have the right to exercise any portion of the Pre-Funded Warrants, if such exercise, aggregated with all other shares then beneficially owned by White Lion (as calculated pursuant to Section 13(d) of the Exchange Act) would result in White Lion beneficially owning more than 4.99% of the outstanding Common Stock. The beneficial ownership limitation may be increased or decreased by White Lion to any other percentage not in excess of 9.99% upon notice to the Company.

The White Lion Private Placement closed on September 29, 2025. The Company had a right to redeem 48,826 of the shares of Common Stock at a redemption price of $0.0001 per share. The Company and White Lion have agreed that, in lieu of such redemption, on October 20, 2025, the Company reduced the number shares issuable pursuant upon exercise of the White Lion Pre-Funded Warrants by 48,826 shares, to 263,997.

In December 2025, holders of 223,627 of the Company’s 263,997 outstanding pre-funded warrants exercised their warrants, resulting in the issuance of 223,627 shares of the Company’s common stock upon payment of the applicable exercise price of $0.0001 per share.

The common stock and pre-funded warrants were classified as equity pursuant to ASC 815-40. The company paid issuance expense of about $60 which are recognized in equity.

The ELOC does not meet the requirement to be classified as equity pursuant to ASC 815-40.

In December 2025, the Company initiated a draw under the Equity Line of Credit Purchase Agreement (the “ELOC”). In connection with this draw, the Company issued 21,000 shares of its Common Stock to White Lion in accordance with the terms of the agreement. 

The aggregate gross proceeds from the Offering is $5,000, before deducting placement agent fees and other offering expenses and excluding any proceeds from the exercise of the Warrants. The Offering is closed on December 19, 2025.

The net proceeds from the offering is approximately $4,300.

The Pre-Funded Warrants are immediately exercisable at an exercise price of $0.0001 per share of Common Stock and will not expire until exercised in full. Each Common Warrant is exercisable immediately upon issuance at an exercise price of $0.80 per share of Common Stock and will expire on the five-year anniversary of the date of issuance. A holder of the Warrants may not exercise any portion of the Warrants to the extent that, after giving effect to such exercise, the holder (together with its affiliates and any persons acting as a group) would beneficially own more than 4.99% (or, at the holder’s election, 9.99%) of the Company’s outstanding shares of Common Stock.

On December 19, 2025, in connection with the closing of the Offering, holders exercised 1,212,500 of the 1,897,500 Pre-Funded Warrants issued in the Offering, resulting in the issuance of 1,212,500 shares of Common Stock upon payment of the applicable exercise price of $0.0001 per share (reflecting the pre-funded purchase price of $0.7999 per warrant paid at issuance).

Subsequently, on December 23, 2025, holders exercised an additional 450,000 Pre-Funded Warrants, resulting in the issuance of 450,000 shares of Common Stock upon payment of the applicable exercise price.

Following these exercises, 235,000 Pre-Funded Warrants remain outstanding as of December 31, 2025.

The common stock, pre-funded warrants and warrants were classified as equity pursuant to ASC 815-40.

Total outstanding warrants as of December 31, 2025, are as follow: 

On September 18, 2024, as a supplement to a shelf offering filed under an S-3 filing, the Company entered into At the Market Offering Agreement (the “ATM Agreement”), with H.C. Wainwright & Co. (“Wainwright”), as sales agent, pursuant to which the Company may issue and sell shares of its common stock, from time to time, through Wainwright.

Under the ATM Agreement, Wainwright may sell shares in transactions that are deemed to be “at the market” offerings as defined in Rule 415 under the Securities Act, as amended, or in any other method permitted by law, including in privately negotiated transactions.

The Company or Wainwright may suspend or terminate the ATM Agreement upon notice to the other party and subject to other conditions.

The Company will pay Wainwright a commission of 3.0% of the gross sales price of any common stock sold under the ATM Agreement and has agreed to provide Wainwright with customary indemnification and contribution rights. The Company will also reimburse Wainwright for certain specified expenses.

During 2025, the company sold 305,120 shares of common stock under the ATM agreement for gross proceeds of approximately $2,637. Total Offering cost related to ATM is $ 262.

2025 Equity Incentive Plan

In August 2025, the Company adopted the 2025 Equity Incentive Plan (“the 2025 Plan”).

Under the 2025 Plan, the Board of Directors approved the granting of Incentive Share Options, Non-statutory shares options, share appreciation rights, restricted share and restricted share units (RSU’s) to employees, directors, and consultants. The exercise price of an option cannot be less than 100% of the fair market value of the underlying share of common stock on the date of grant for incentive share options (not less than 110% of the fair market value for shareholders owning more than 10% of all classes of share) as determined by the Board of Directors. The maximum option term is 10 years (five years for shareholders owning more than 10% of all classes of share).

Following the expiration of the Company’s 2015 Employee Stock Ownership Plan, the Board of Directors approved the adoption of the New ESOP 2025 Plan. Based on the recommendation of the Compensation Committee, the Board also approved reserving 1,800,000 shares of the Company’s common stock (the “New Pool”) for grants to employees, directors and consultants of the Company and its affiliates, together with the related forms of award agreements under the plan.

Pursuant to the current Section 102 of the Israeli Tax Ordinance, which came into effect on January 1, 2003, options and RSUs may be granted through a trustee (i.e., Approved 102 Options) or not through a trustee (i.e., Unapproved 102 Options). The Subsidiary elected to grant its options and RSU’s through a trustee. As a result, the Subsidiary will not be allowed to claim as an expense for tax purposes in Israel the amounts credited to the employee as capital gains to the grantees, although it will generally be entitled to do so in respect of the salary income component (if any) of such awards when the related tax is paid by the employee.

No income tax benefit has been recognized relating to share-based compensation expense and no tax benefits have been realized from exercised share options.

As of December 31, 2025, the unrecognized compensation costs related to those unvested stock options are $6, which are expected to be recognized over a weighted-average period of 6 months.

The aggregate intrinsic value represents the total intrinsic value (the difference between the fair value of the Company’s common shares on December 31, 2025 and the exercise price, multiplied by the number of options that would have been received by the option holders had all option holders exercised their options on such date) as of December 31, 2025, and December 31, 2024, was $0 and $24, respectively. The total intrinsic value of options exercised during the years ended December 31, 2024, was $32.

During 2025, the Company issued RSUs to Directors, officers, consultants and employees.

The RSUs are vested over a three-year period.

The grant-date fair value of the RSUs granted was based on the Company’s common stock price at the time of grant.

A summary of the Company’s RSUs activity under option plans is as follows:

As of December 31, 2025, the unrecognized compensation cost related to unvested RSUs totaled to approximately $615 and is expected to be expensed over a weighted-average recognition period of approximately 2.7 years.

Share-based compensation expense for RSUs in the consolidated statement of comprehensive loss is summarized as follows:

As for the share-based compensation granted to the underwriter in connection with the offerings of common stocks and warrants, see Note 11 above.