Annual report pursuant to Section 13 and 15(d)

Shareholders' Equity

v3.23.1
Shareholders' Equity
 12 Months Ended
Dec. 31, 2022
Shareholders' Equity [Abstract]  
SHAREHOLDERS’ EQUITY

NOTE 15 - SHAREHOLDERS’ EQUITY:

 

a. Share capital

 

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

 

Regarding stock repurchase program see note 21b.

 

The Company’s share capital as of December 31, 2022, and 2021, is composed of common stock and Non-voting common stock, of $0.0001 par value, as follows:

 

    December 31 2022  
    Authorized     Issued and outstanding  
    Number of shares  
Common stock     30,000,000       17,379,861  
Non-voting Common stock     2,803,774      
-
  
       
    December 31 2021  
    Authorized     Issued and outstanding  
    Number of shares  
Common stock     11,009,315       2,050,404  
Non-voting Common stock     2,803,774       1,783,773  

 

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 includes the Company’s total authorized shares of 42,803,774, of which 30,000,000 authorized shares of common stock, 10,000,000 authorized preferred shares, 2,803,774 shares of non-voting common stock and 10,000,000 shares of redeemable convertible preferred stock.

 

c. Share-based compensation

 

In February 2015, under and in accordance with the equity restructure, the Company’s Board of Directors terminated the Old Plan. On June 30, 2015, the Company adopted the 2015 Equity Incentive Plan (“the 2015 Plan”).

 

Under the 2015 Plan, the Board of Directors may grant up to 2,804 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). The 2015 Plan grants the Board of Directors the discretion to determine when the options granted become exercisable.

 

In January 2016, the Company’s Board of Directors approved an additional quantity of 216 share options permitted to be granted under the 2015 Plan.

 

1) During the year ended December 31, 2022, the following awards were granted:

 

Award Type (2015 Plan)   Number of Awards     Vesting Conditions   Expiration Date
Options     167,779     Over 4 years from grant date-25% every year   10th anniversary of Grant Date
RSU     592,000     Over 3 years from grant date    

 

Pursuant to the current Section 102 of the Israeli Tax Ordinance, which came into effect on January 1, 2003, options may be granted through a trustee (i.e., Approved 102 Options) or not through a trustee (i.e., Unapproved 102 Options). The Company elected to grant its options and RSU’s through a trustee. As a result, the Company 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.

 

2) A summary of the Company’s share option activity under option plans is as follows:

 

    Number of Options     Weighted- Average Exercise Price     Weighted Average Remaining Contractual Life  
Outstanding – January 1, 2022     890,493     $ 0.1518       5.43  
Granted     167,779     $ 2.1964          
Exercised     (77,749 )   $ 0.0812          
Expired and forfeited     (15,937 )   $ 1.5089          
                         
Outstanding – December 31, 2022     964,586     $ 0.4891       5.34  
                         
Exercisable – December 31, 2022     771,956     $ 0.1476       4.36  

 

    Number of Options     Weighted- Average Exercise Price     Weighted Average Remaining Contractual Life  
Outstanding – January 1, 2021     879,251     $ 0.0874       6.25  
Granted     43,261     $ 1.3616          
Exercised     (2,763 )   $ 0.1058          
Expired and forfeited     (29,256 )   $ 0.0874          
                         
Outstanding – December 31, 2021     890,493     $ 0.1518       5.43  
                         
Exercisable – December 31, 2021     801,562     $ 0.276       5.10  

 

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

 

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

 

3) The following table summarize information as of December 31, 2022, regarding the number of ordinary shares issuable upon outstanding options and exercisable options:

 

Exercise price   Options
outstanding as of
December 31,
2022		     Weighted
average
remaining
contractual
life (years)		     Options
exercisable as of
December 31,
2022		     Weighted
average
remaining
contractual
life (years)		  
0.0644     312,357       2.61       312,357       2.61  
0.1058     449,885       5.43       437,516       5.39  
0.5780     88,431       9.96      
-
      
-
  
1.3616     38,912       8.41       15,472       8.41  
4     75,001       9.2       6,611       9.7  

 

The weighted-average grant-date fair value of options granted during the years ended December 31, 2022, and 2021 was $71 and $54, respectively. The intrinsic value of options exercised in 2022 and 2021 was approximately $0. The aggregate intrinsic value represents the total intrinsic value (the difference between the fair value of the Company’s common shares on December 31 of the respective year 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).

 

Key assumptions used to estimate the fair value of the share options granted during the year ended December 31,2022 and 2021 included:

 

    Year Ended December 31  
    2022     2021  
Expected term of options (years)     10       5.4  
Expected common stock price volatility*     54 %     58 %
Expected dividend rate     0 %     0 %
Risk-free interest rate     3.21%-3.25 %     0.97 %

 

* The expected volatility was based on the historical stock prices of publicly traded comparable companies.

 

4) Share-based compensation expense for share options in the consolidated statement of comprehensive loss is summarized as follows:

 

    Year Ended December 31  
    2022     2021  
Cost of revenues     3       3  
Research and development     26       24  
Sales and marketing     11       16  
General and administrative     12       10  
Total Share-based compensation expense     52       53  

 

5) Restricted Stock Units

 

During December 2022, 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.

 

The following table summarize information as of December 31, 2022, regarding the number of RSUs outstanding:

 

    December 31 2022  
    Number of RSUs     Weighted-
Average Grant
Date Fair Value		  
RSUs outstanding at the beginning of the year    
-
      
         -
  
Granted during the year     592,000     $ 1.62  
Exercised during the year    
-
      
-
  
Forfeited during the year    
-
      
-
  
Outstanding at the end of the year     592,000     $ 1.62  

 

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

 

    Year Ended December 31  
    2022     2021  
    U.S. dollars in thousands  
Research and development     21      
-
  
Sales and marketing     12      
-
  
General and administrative     135      
-
  
Total Share-based compensation expense     168      
-