Quarterly report pursuant to Section 13 or 15(d)

Shareholders' Equity

v3.23.2
Shareholders' Equity
 6 Months Ended
Jun. 30, 2023
Stockholders' Equity Note [Abstract]  
SHAREHOLDERS’ EQUITY

NOTE 11 – SHAREHOLDERS’ EQUITY (*):

 

a. Change in authorized stock

 

On May 2, 2022, the Company’s Board of Directors approved an amendment to the Company’s Bylaws, stating the number of authorized stock to be increased, as described below:

 

a. Common stock- $0.0001 par value – authorized shares increase to 30,000,000 shares from 11,009, 315 shares.

 

b. Non-voting common stock- $0.0001 par value-authorized shares remain 2,803,774 shares.

 

c. Preferred stock- $0.0001 par value - authorized shares increase to 10,000,000 shares from 7,988,691 shares.

 

b. On May 16, 2022, the Company filed with the Secretary of State of the State of Delaware an amended and restated certificate of incorporation (the “A&R COI”), which became effective immediately. The A&R COI did not change the Company’s authorized shares of common stock and preferred stock of 42,803,774 authorized shares of common stock., 2,803,774 shares of non-voting common stock and 10,000,000 shares of preferred stock.

 

c. During January and February 2023, the Company purchased 7,920 shares of its common stock, for a total price of $50. (Total of 10,690 common stock are held by the company as treasury shares).

 

d. Offering of common stocks and warrants

 

On May 8, 2023, the Company completed a fund-raising round in a total gross amount of $3.5 million pursuant to which the Company agreed to issue and sell to Armistice Capital Master Fund Ltd. (the “Holder”) in a private placement (the “Offering”):

 

1. 190,000 shares of the Company’s common stock, $0.0001 par value;

 

2. 754,670 pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 754,670 shares of Common Stock for an exercise price of $0.0001 which are exercisable (either physically or on net-cash basis at the Holder’s discretion) immediately upon their issuance until their full exercise. Their exercise price is adjustable upon dilutive events (such as subsequent rights offerings, pro-rata distributions and stock dividends and splits). The Holder also has certain rights upon a fundamental transaction (as defined in the agreement) as specified in the agreement. The warrants were classified as equity pursuant to ASC 815-40.; and

 

3. warrants to purchase up to 944,670 shares of Common Stock (“Common Warrants”) for an exercise price of $3.58 which are exercisable (physically or upon occurrence of certain events on net-cash basis at the Holder’s discretion) immediately upon their issuance until November 8 2028. Their exercise price 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).

 

The Company determined that the Common Warrants are not indexed to the Company’s own stock and therefore are precluded from equity classification. The Common Warrants will be measured at fair value at inception and in subsequent reporting periods with changes in fair value recognized as financial income or expense as change in fair value of warrant liabilities in the period of change in the condensed consolidated statements of comprehensive loss.

 

The Common Warrants were recorded at fair value on May 8, 2023, at $1,972 and were remeasured at a fair value of $1,576 on June 30, 2023, and are classified as a long-term liability on the Condensed Consolidated Balance Sheet, and the residual value allocated to the common stock and pre-funded warrants are classified as equity.

 

The valuation was based on a Black-Scholes option-pricing model, using an expected volatility of 54%, a risk-free rate of 3.49%, a contractual term of 5.5 years and a stock price at the issuance date of $3.70.

 

The Company recorded other income (expenses) during the three and six months ended June 30, 2023, in the amount of $396, in connection with the revaluation of these warrants to their fair value.

 

e. Offering Costs related to May 2023 fund-raising round

 

Upon the consummation of the Offering 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 $291. The Company has also granted to the Underwriter upon the consummation of the Offering, warrants to purchase up to 66,127 of the Company’s common stocks which carry the same terms as the common stock warrants described above (Note 11d3.), except for the exercise price which reflect 125% of the share price in the Offering ($4.6313). 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 $104. The valuation was based on a Black-Scholes option-pricing model, using an expected volatility of 56%, a risk-free rate of 3.29%, a contractual term of 5.5 years and a stock price at the issuance date of 3.58.

 

Out of the total offering costs, an amount of $223 related to the issuance of the Common Warrants was recognized as a financial expense in the Condensed Consolidated statement of comprehensive loss, and an amount of $172 related to the issuance of the Common stocks and the prefunded warrants was recognized in equity.

 

The allocation of total offering costs between the warrants, common stocks and prefunded warrants was in the same proportion as the allocation of the total proceed from the offering.

 

During July and August 2023, the Holder elected to exercise 754,670 of the pre-funded warrant. See note 15b.

 

f. Share-based compensation:

 

1) A summary of the Company's share options, granted to employees, directors, under option plans is as follows:

 

    Number of
options		     Weighted
Average
Exercise
Price		     Weighted
Average
Remaining
Contractual
Life		  
Outstanding – January 1, 2023     96,458     $ 4.89       5.34  
Granted    
-
     $
-
          
Exercised     (2,315 )   $ 0.89          
Expired and forfeited     (435 )   $ 40.0          
                         
Outstanding – June 30, 2023     93,708     $ 4.81       4.89  
Exercisable –  June 30, 2023     77,759     $ 2.36       4.02  

 

See also Note 2 above regarding warrants granted to the underwriters upon the consummation of the IPO in consideration for their underwriting services.

 

2) Restricted Stock Units (*):

 

During the six months ended June 30, 2023, the Company issued 32,100 RSUs to officers 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.

 

The following table summarize information as of June 30, 2023, regarding the number of RSUs outstanding:

 

    June 30, 2023  
    Number of RSUs     Weighted-Average
Grant Date
Fair Value		  
RSUs outstanding at the beginning of the year     59,200     $                16.2  
Granted during the period     32,100       3.24  
Exercised during the period     (8,337 )     29.85  
Forfeited during the period     (1,600 )     4.8  
Outstanding as of June 30, 2023     81,363     $ 11.65  

 

(*) Adjusted to reflect April 2023 reverse stock split, see note 3(f).