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Shareholders' Equity | 12 Months Ended
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Dec. 31, 2021
Stockholders' Equity Note [Abstract] |
SHAREHOLDERS’ EQUITY | NOTE 12 - SHAREHOLDERS’ EQUITY:
| a. | Share capital
Each holder of the Company’s ordinary shares is entitled to one vote. The holders of ordinary shares are also entitled to receive dividends whenever funds are legally available and declared by the Company’s Board of Directors (the “Board”). Since inception, the Company has not declared any dividends. The following table presents the number of authorized and issued and outstanding shares as of each reporting date for each class of shares:
|  |  | December 31, 2021 |  |  | December 31, 2020 |
|  |  | Authorized |  |  | Issued and Outstanding |  |  | Authorized |  |  | Issued and Outstanding |
Ordinary shares |  |  |  | 100,000,000 |  |  |  | 51,791,441 |  |  |  | 100,000,000 |  |  |  | 46,100,173 |
Total |  |  |  | 100,000,000 |  |  |  | 51,791,441 |  |  |  | 100,000,000 |  |  |  | 46,100,173 |
| b. | Share based compensation
Share based compensation On September 3, 2019, the Company’s Board resolved to adopt an equity incentive plan (the “Plan”). Based on such Plan, each option will be exercisable for one ordinary share of the Company and will become exercisable at such terms and during such periods, as the Board shall determine. Pursuant to the Plan (and further increase of option pool approved by the Board), 8,041,936 ordinary shares of NIS 0.01 par value of the Company are reserved for issuance upon the exercise of the same amount of awards to be granted to some of the Company’s employees, directors and consultants. As of December 31, 2021, 1,841,838 ordinary shares reserved for the equity incentive plan. The Board also approved the Plan for the purpose of selecting the capital gains tax track, under Section 102 of the Israeli Income Tax Ordinance, for options granted to the Company’s Israeli employees. Share-based compensation to non-employees The following table summarizes share-based awards to non-employees for the period ended December 31, 2021 and December 31, 2020:
|  | Year ended December 31, |  |  | Year ended December 31, |
|  | 2021 |  |  | 2020 |
|  | Number of |  |  | Weighted |  |  | Number of |  |  | Weighted |
|  | share-based |  |  | average |  |  | share-based |  |  | average |
|  | payment |  |  | exercise |  |  | payment |  |  | exercise |
|  | awards |  |  | price |  |  | awards |  |  | price |
Outstanding at beginning of year |  |  | 3,372,626 |  |  | $ | 5.27 |  |  |  | 3,410,406 |  |  | $ | 1.89 |
Changes during the year: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Granted |  |  | 180,319 |  |  |  | 40.12 |  |  |  | 1,327,957 |  |  | $ | 13.70 |
Exercised |  |  | (1,043,142 | ) |  |  | 7.66 |  |  |  | *(1,267,012 | ) |  | $ | 8.94 |
Forfeited |  |  | (118,954 | ) |  |  | 10.18 |  |  |  | - |  |  |  | - |
Expired |  |  | (66,606 | ) |  |  | 16.37 |  |  |  | - |  |  |  | - |
Cancelled |  |  | - |  |  |  | - |  |  |  | (98,725 | ) |  |  | 1.92 |
Outstanding at end of year |  |  | 2,324,243 |  |  |  | 6.17 |  |  |  | 3,372,626 |  |  | $ | 5.27 |
Exercisable at end of year |  |  | 1,618,777 |  |  |  | 3.35 |  |  |  | 2,191,042 |  |  | $ | 5.67 |
| * | Out of which 404,704 and 1,027,151 awards were exercised on a cashless basis in 2021 and 2020, respectively.
The fair value of each granted award is estimated at the date of grant using the Black- Scholes option-pricing model. The assumptions used for the year ended December 31, 2021 and year ended at December 31, 2020 are as follows:
|  | Year ended December 31, 2021 |  |  | Year ended December 31, 2020 |
Dividend yield |  | 0 |  |  | 0 |
Expected volatility |  | 50.27% - 52.71% |  |  | 57.34%-44.40% |
Risk-free interest rate |  | 0.66% - 1.61% |  |  | 0.27%-1.61% |
Contractual term (years) |  | 0–10 |  |  | 5–10 |
The expected volatility is based on the historical volatility of comparable companies. The risk-free interest rate assumption is based on observed interest rates appropriate for the expected term of the awards granted in dollar terms. The Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. Accordingly, as to ordinary course options granted, the expected term was determined using the simplified method, which takes into consideration the option’s contractual life and the vesting periods (for non-employees, the expected term is equal to the option’s contractual life. The following table summarizes information concerning outstanding and exercisable awards as of December 31, 2021 and 2020:
December 31, 2021 |
Awards outstanding |  |  | Awards exercisable |
|  |  | Number of |  |  | Weighted |  |  | Number of |  |  | Weighted |
|  |  | awards |  |  | average |  |  | award |  |  | average |
|  |  | outstanding |  |  | remaining |  |  | exercisable |  |  | remaining |
Exercise |  |  | at end of |  |  | contractual |  |  | at end of |  |  | contractual |
price |  |  | year |  |  | life (years) |  |  | year |  |  | life (years) |
$ | 1.92 |  |  |  | 192,927 |  |  |  | 0.04 |  |  |  | 192,927 |  |  |  | 0.04 |
$ | 2.21 |  |  |  | 1,769,513 |  |  |  | 7.89 |  |  |  | 1,288,236 |  |  |  | 7.89 |
$ | 16.00 |  |  |  | 161,484 |  |  |  | 5.43 |  |  |  | 114,477 |  |  |  | 4.22 |
$ | 23.19 |  |  |  | 21,000 |  |  |  | 9.78 |  |  |  | - |  |  |  | - |
$ | 23.84 |  |  |  | 30,000 |  |  |  | 9.88 |  |  |  | - |  |  |  | - |
$ | 30.93 |  |  |  | 20,000 |  |  |  | 8.81 |  |  |  | 20,000 |  |  |  | 8.81 |
$ | 30.66 |  |  |  | 12,000 |  |  |  | 9.53 |  |  |  | - |  |  |  | - |
$ | 40.21 |  |  |  | 17,319 |  |  |  | 9.19 |  |  |  | 3,137 |  |  |  | 9.19 |
$ | 49.68 |  |  |  | 100,000 |  |  |  | 9.05 |  |  |  | - |  |  |  | - |
December 31, 2020 |
Awards outstanding |  |  | Awards exercisable |
|  |  | Number of |  |  | Weighted |  |  | Number of |  |  | Weighted |
|  |  | awards |  |  | average |  |  | award |  |  | average |
|  |  | outstanding |  |  | remaining |  |  | exercisable |  |  | remaining |
Exercise |  |  | at end of |  |  | contractual |  |  | at end of |  |  | contractual |
price |  |  | year |  |  | life (years) |  |  | year |  |  | life (years) |
$ | 0.01 |  |  |  | 186,815 |  |  |  | 0.33 |  |  |  | 186,815 |  |  |  | 0.33 |
$ | 1.92 |  |  |  | 269,714 |  |  |  | 1.18 |  |  |  | 269,714 |  |  |  | 1.18 |
$ | 2.21 |  |  |  | 2,191,349 |  |  |  | 6.22 |  |  |  | 1,188,914 |  |  |  | 6.22 |
$ | 16.00 |  |  |  | 444,748 |  |  |  | 8.89 |  |  |  | 283,933 |  |  |  | 8.89 |
$ | 18.00 |  |  |  | 260,000 |  |  |  | 3.86 |  |  |  | 260,000 |  |  |  | 3.86 |
$ | 30.93 |  |  |  | 20,000 |  |  |  | 9.81 |  |  |  | 1,666 |  |  |  | 9.81 |
| 2. | Share-based compensation to employees, officers and directors
During 2021, the Company granted to certain employees, officers and directors awards to purchase 1,418,665 of the Company’s ordinary shares for an average exercise price of $27.57. Most of the awards agreement term is 10 years unless the agreement is terminated, 4 years vesting period with a one-year cliff.
|  | Year ended |  |  | Year ended |
|  | December 31, 2021 |  |  | December 31, 2020 |
|  | Number of |  |  | Weighted |  |  | Number of |  |  | Weighted |
|  | share-based |  |  | average |  |  | share-based |  |  | average |
|  | payment awards |  |  | exercise price |  |  | payment awards |  |  | exercise price |
Outstanding at beginning of year |  |  | 2,381,125 |  |  | $ | 4.14 |  |  |  | 1,667,267 |  |  | $ | 2.21 |
Changes during the year: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Granted |  |  | 1,418,665 |  |  | $ | 27.57 |  |  |  | 730,734 |  |  |  | 13.53 |
Issued due to business combination |  |  | 117,536 |  |  |  | 0.00 |  |  |  | - |  |  |  | - |
Exercised |  |  | (837,724 | ) |  |  | 3.11 |  |  |  | - |  |  |  | - |
Forfeited |  |  | (318,672 | ) |  |  | 19.69 |  |  |  | - |  |  |  | - |
Expired |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Cancelled |  |  | - |  |  |  | - |  |  |  | (16,876 | ) |  |  | 2.21 |
Outstanding at end of year |  |  | 2,760,930 |  |  | $ | 15.85 |  |  |  | 2,381,125 |  |  |  | 4.14 |
Exercisable at end of year |  |  | 845,356 |  |  | $ | 3.58 |  |  |  | 1,061,778 |  |  |  | 2.80 |
The fair value of each granted award is estimated at the date of grant using the Black- Scholes option-pricing model. The assumptions used as of December 31, 2021 and 2020 are as follows:
|  | 2021 |  |  | 2020 |
Dividend yield |  |  | 0 |  |  |  | 0 |
Expected volatility |  |  | 50.27%-51.84% |  |  |  | 45.11%-55.97% |
Risk-free interest rate |  |  | 0.66%-1.61% |  |  |  | 0.23%-1.61% |
Contractual term (years) |  |  | 10 |  |  |  | 10 |
The expected volatility is based on the historical volatility of comparable companies. The risk-free interest rate assumption is based on observed interest rates appropriate for the expected term of the awards granted in dollar terms. The Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term. Accordingly, as to ordinary course options granted, the expected term was determined using the simplified method, which takes into consideration the option’s contractual life and the vesting periods. The following table summarizes information concerning outstanding and exercisable awards as of December 31, 2021 and 2020:
December 31, 2021 |
Awards outstanding |  |  | Awards exercisable |
|  |  | Number of |  |  | Weighted |  |  | Number of |  |  | Weighted |
|  |  | awards |  |  | average |  |  | awards |  |  | average |
|  |  | outstanding |  |  | remaining |  |  | exercisable |  |  | remaining |
Exercise |  |  | at end of |  |  | contractual |  |  | at end of |  |  | contractual |
price |  |  | year |  |  | life (years) |  |  | year |  |  | life (years) |
| $0.00-0.01 |  |  |  | 120,757*) |  |  |  | - |  |  |  | 73,679 |  |  |  | - |
| $2.21 |  |  |  | 1,130,143 |  |  |  | 7.95 |  |  |  | 716,448 |  |  |  | 7.95 |
| $16.00 |  |  |  | 88,500 |  |  |  | 7.48 |  |  |  | 35,791 |  |  |  | 6.09 |
| $17.63-$64.61 |  |  |  | 1,421,530 |  |  |  | 9.68 |  |  |  | 19,438 |  |  |  | 8.98 |
| *) | Including 47,793 RSUs that were granted to the employees of Nanox AI at the completion of the merger and 3,221 RSUs that were issued in consideration for services.
December 31, 2020 |
Awards outstanding |  |  | Awards exercisable |
|  |  | Number of |  |  | Weighted |  |  | Number of |  |  | Weighted |
|  |  | awards |  |  | average |  |  | awards |  |  | average |
|  |  | outstanding |  |  | remaining |  |  | exercisable |  |  | remaining |
Exercise |  |  | at end of |  |  | contractual |  |  | at end of |  |  | contractual |
price |  |  | year |  |  | life (years) |  |  | year |  |  | life (years) |
| $2.21 |  |  |  | 1,995,625 |  |  |  | 9.05 |  |  |  | 1,019,695 |  |  |  | 9.05 |
| $16.00 |  |  |  | 205,000 |  |  |  | 9.62 |  |  |  | 37,917 |  |  |  | 9.62 |
| $26.56-$59.20 |  |  |  | 180,500 |  |  |  | 9.93 |  |  |  | 4,167 |  |  |  | 9.93 |
| 3) | Share-based compensation expenses
|  | Year Ended December 31, |
|  | 2021 |  |  | 2020 |  |  | 2019 |
|  | (U.S. dollars in thousands) |
Cost of revenue |  |  | 51 |  |  |  | - |  |  |  | - |
Research and development |  |  | 3,248 |  |  |  | 3,384 |  |  |  | 661 |
Sales and Marketing (*) |  |  | 2,442 |  |  |  | 9,252 |  |  |  | 617 |
General and administrative |  |  | 13,065 |  |  |  | 12,145 |  |  |  | 14,967 |
|  |  | 18,806 |  |  |  | 24,781 |  |  |  | 16,245 |
| (*) | On October 26, 2020, the Company entered into an amendment to a business development agreement (“the Agreement”) dated February 4, 2020 with two service providers pursuant to which the Company paid an aggregate one-time payment of $400 thousand plus VAT and issued to them warrants to purchase an aggregate of 650,000 ordinary shares at an exercise price of $18 per share with a graded vesting ending 10 weeks following the grant date (subject to a standard cashless exercise provision). As a result, the Company recorded an expense of $6.1 million for the warrants granted. The service providers waived any and all past, present and future compensation to which they are or may be entitled pursuant to the Agreement and all activities undertaking on behalf of the Company, including the right to a percentage from future revenues from any of the Company’s systems and the issuance of warrants.

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