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COMMON STOCK AND WARRANTS WITH-DOWN ROUND PROTECTION | 12 Months Ended
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Dec. 31, 2022
Equity [Abstract] |
COMMON STOCK AND WARRANTS WITH-DOWN ROUND PROTECTION | NOTE 7 – COMMON STOCK AND WARRANTS WITH-DOWN ROUND PROTECTION
| A. | Description of the rights attached to the Common Stock
|  | Each share of Common Stock entitles the holder to one vote, either in person or by proxy, on each matter submitted to the approval of the Company’s stockholders. The holders of Common Stock are not permitted to vote their shares cumulatively.
| B. | Stock-based compensation
| 1. | Plan
|  | On January 11, 2010, the Company’s Board of Directors approved and adopted the 2010 Share Incentive Plan (the “Plan”), pursuant to which the Company’s Board of Directors may award share options to purchase the Company’s Ordinary Shares as well as restricted shares, restricted stock units (the “RSU”) and other share-based awards to designated participants. Subject to the terms and conditions of the Plan, the Company’s Board of Directors has full authority in its discretion, from time to time and at any time, to determine (i) the designate participants; (ii) the terms and provisions of the respective award agreements, including, but not limited to, the number of share options to be granted to each optionee, the number of shares to be covered by each share option, provisions concerning the time and the extent to which the share options may be exercised and the nature and duration of restrictions as to the transferability or restrictions constituting substantial risk of forfeiture and to cancel or suspend awards, as necessary; (iii) determine the fair market value of the shares covered by each award; (iv) make an election as to the type of approved 102 Option under Israeli tax law; (v) designate the type of share options; (vi) take any measures, and to take actions, as deemed necessary or advisable for the administration and implementation of the Plan; (vii) interpret the provisions of the Plan and to amend from time to time the terms of the Plan.
| 2. | Grant of equity awards to employees
| A. | On February 8, 2021, The Company granted Mr. Erez Ben-Zvi, the then Vice President of Product of the Company, annual award with fair value of NIS 210 thousand (approximately $ 65 thousand) of RSU effective as of the employee start date and on each one-year anniversary following the employee start date subject to the approval of the board of directors (the “Additional RSU”). Both, the RSU and each of the Additional RSU (if approved by the board of directors), as applicable, shall be based on the stock price at actual the date of grant (and not lower than US$ 5.20 per share). 1/12 of the RSUs shall vest and become nonforfeitable three months following the Start Date, and an additional 1/12 of the RSUs shall vest and become nonforfeitable at the end of every 3-months period thereafter, provided that the employee continues to be employed by the Company at the applicable date of vesting. The vesting schedule shall be also applied to each of the Additional RSUs granted, mutatis mutandis, such that the vesting period of each of the respective Additional RSU shall commence from its actual date of grant. In June 2022, Erez Ben-Zvi resigned from the Company. Thus, his stock-based compensation was terminated in the last vesting date of April 2022. During the years ended December 31, 2022 and 2021, the Company recorded stock-based compensation expenses (income) of $(25) thousand and $76 thousand, respectively, with respect to the above grant.
GLUCOTRACK INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.) NOTE 7 – COMMON STOCK AND WARRANTS WITH-DOWN ROUND PROTECTION (cont.)
| B. | Stock-based compensation (cont.)
| 2. | Grant of equity awards to employees (cont.)
| B. | In November 2020, the Company granted Mr. Shalom Shushan, the then Chief Technology Officer of the Company, annual award with fair value of NIS 90 thousand (approximately $28 thousand) of RSU effective as of the employee start date. Furthermore, on each one-year anniversary following the employee start date subject to the approval of the board of directors, Company shall grant the Employee with fair value of NIS 60 thousand of Additional RSU (the “Additional RSU”). Both, the RSU and each of the Additional RSU (if approved by the board of directors), as applicable, shall be based on the stock price at actual the date of grant (and not lower than US$ 5.20 per share). 1/12 of the RSUs shall vest and become nonforfeitable three months following the Start Date, and an additional 1/12 of the RSUs shall vest and become nonforfeitable at the end of every 3-months period thereafter, provided that the Employee continues to be employed by the Company at the applicable date of vesting. The vesting schedule shall be also applied to each of the Additional RSUs granted to the Employee, mutatis mutandis, such that the vesting period of each of the respective Additional RSU shall commence from its actual date of grant. In May 2022, Shalom Shushan resigned from the Company. Thus, his stock-based compensation was terminated in the last vesting date of May 2022. During the years ended December 31, 2022 and 2021, the Company recorded stock-based compensation expenses (income) of $(6) thousand and $22 thousand, respectively, with respect to the above grant.
| C. | In November 2021, the Company granted Mr. Paul V. Goode, the President and Chief Executive Officer of the Company, options with the fair value of $484 thousand, to purchase up to 1.5% of the fully diluted common stock, par value $0.001 per share of the Company (approximately 328 thousand options), as of the grant date, with a per share exercise price equal to the greater of (A) $5.20 per share or (B) the closing price of a share of Common Stock on the grant date, as reported by Bloomberg L.P., which shall vest in equal monthly installments over a three year period following the grant date.
|  | In May 2022, the Company grated Mr. Paul V. Goode, a one-time grant of restricted stock of 18,000 shares (“RSU”), which be vest during one year, as long as he is employed by the Company. During the years ended December 31, 2022 and 2021, the Company recorded stock-based compensation expenses of $306 thousand and $98 thousand, respectively, with respect to the above grant.
| D. | In December 2021, the Company granted Mr. James p. Thrower, the Vice President Engineering of the Company, options with the fair value of $152 thousand, to purchase up to 1.15% of the fully diluted common stock, par value $0.001 per share of the Company (approximately 262 thousand options), as of the grant date, with a per share exercise price equal to the greater of (A) $5.20 per share or (B) the closing price of a share of Common Stock on the grant date, as reported by Bloomberg L.P., which shall vest in equal monthly installments over a three year period following the grant date. During the years ended December 31, 2022 and 2021, the Company recorded stock-based compensation expenses of $93 thousand and $16 thousand, respectively, with respect to the above grant.
| E. | In October 2022, the Company granted Mr. Mark Tapsak, the Vice President, Sensor Science of the Company, options with the fair value of $22 thousand, to purchase up to 0.75% of the fully diluted common stock, par value $0.001 per share of the Company (approximately 116 thousand options), as of the grant date, with a per share exercise price equal to the greater of (A) $5.20 per share or (B) the closing price of a share of Common Stock on the grant date, as reported by Bloomberg L.P., which shall vest in equal monthly installments over a three year period following the grant date. During the year ended December 31, 2022, the Company recorded stock-based compensation expenses of $5 thousand with respect to the above grant.
GLUCOTRACK INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.) NOTE 7 – COMMON STOCK AND WARRANTS WITH-DOWN ROUND PROTECTION (cont.)
| F. | The following table presents the Company’s share option activity for employees and members of the Board of Directors of the Company under the Plan, for the years ended December 31, 2022 and 2021:
SCHEDULE OF SHARE OPTION ACTIVITY FOR EMPLOYEES AND MEMBERS
|  | Number of Share Options |  |  | Weighted Average Exercise Price |  |  | Weighted average remaining contractual life |  |  | Intrinsic value |
|  |  |  |  | $ |  |  | (years) |  |  | $ |
Outstanding as of December 31, 2020 |  |  | 128,297 |  |  |  | 64.46 |  |  |  | 5.42 |  |  |  | - |
Granted |  |  | 589,933 |  |  |  | 5.2 |  |  |  | 2.88 |  |  |  | - |
Forfeited or expired |  |  | (98,177 | ) |  |  | 64.64 |  |  |  | - |  |  |  | - |
Outstanding as of December 31, 2021 |  |  | 620,053 |  |  |  | 8.05 |  |  |  | 2.99 |  |  |  | - |
Exercisable as of December 31, 2021 |  |  | 39,223 |  |  |  | 50.27 |  |  |  | 4.65 |  |  |  | - |
|  | Number of Share Options |  |  | Weighted Average Exercise Price |  |  | Weighted average remaining contractual life |  |  | Intrinsic value |
|  |  |  |  | $ |  |  | (years) |  |  | $ |
Outstanding as of December 31, 2021 |  |  | 620,053 |  |  |  | 8.05 |  |  |  | 2.99 |  |  |  | - |
Granted |  |  | 115,857 |  |  |  | 5.2 |  |  |  | 2.68 |  |  |  | - |
Forfeited or expired |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Outstanding as of December 31, 2022 |  |  | 735,910 |  |  |  | 7.6 |  |  |  | 2.1 |  |  |  | - |
Exercisable as of December 31, 2022 |  |  | 245,535 |  |  |  | 12.4 |  |  |  | 2.58 |  |  |  | - |
| The aggregate intrinsic value in the table above represents the total intrinsic value (the difference between the deemed fair value of the Company’s Ordinary Shares on the last day of each of the applicable reported period and the exercise price, multiplied by the number of in-the-money share options) that would have been received by the share option holders had all share options holders exercised their share options on December 31 of each of the reported period. This amount is impacted by the changes in the fair market value of the Company’s Ordinary Share.
GLUCOTRACK INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.) NOTE 7 – COMMON STOCK AND WARRANTS WITH-DOWN ROUND PROTECTION (cont.)
| G. | The outstanding and exercisable share options as of December 31, 2022 have been separated into ranges of exercise prices, as follows:
SCHEDULE OF OUTSTANDING AND EXERCISABLE SHARE OPTIONS
Exercise price - $ |  | Share options outstanding as of December 31, 2022 |  |  | Weighted average remaining contractual term |  |  | Share options exercisable as of December 31, 2022 |  |  | Weighted average remaining contractual term |
|  |  |  |  | (years) |  |  |  |  |  | (years) |
100.75 |  |  | 3,846 |  |  |  | 4.26 |  |  |  | 3,846 |  |  |  | 4.26 |
58.5 |  |  | 26,274 |  |  |  | 4.18 |  |  |  | 26,274 |  |  |  | 4.18 |
5.2 |  |  | 705,790 |  |  |  | 2.01 |  |  |  | 215,415 |  |  |  | 1.91 |
|  |  | 735,910 |  |  |  |  |  |  |  | 245,535 |  |  |  |  |
| H. | During the years ended December 31, 2022 and 2021, share options have not been exercised into Ordinary Shares.
| I. | The following table presents the assumptions used to estimate the fair values of the share options granted in the reported periods presented:
SCHEDULE OF ASSUMPTIONS USED TO VALUE OPTIONS
|  | 2022 |  |  | 2021 |
|  | Year ended December 31 |
|  | 2022 |  |  | 2021 |
Volatility (%) |  |  | 72.15 | % |  |  | 49.21 | %
Risk-free interest rate (%) |  |  | 2.5 | % |  |  | 2.5 | %
Dividend yield (%) |  |  | - |  |  |  | - |
Expected life (years) |  |  | 3 |  |  |  | 3 |
Exercise price ($) |  |  | 5.2 |  |  |  | 5.2 |
Share price ($) |  |  | 1.89 |  |  |  | 3.1-4.65 |
| J. | As of December 31, 2022, there was $186 thousand of unrecognized compensation expense related to unvested share options. The Company recognizes compensation expense on a straight-line basis over the requisite service periods, which results in a weighted average period of approximately 0.72 years over which the unrecognized compensation expense is expected to be recognized.
GLUCOTRACK INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.) NOTE 7 – COMMON STOCK AND WARRANTS WITH-DOWN ROUND PROTECTION (cont.)
| 3. | Grant of equity awards to non-employees
|  | A. | In connection with the 2017 Offering, the Company has issued to Andrew Garrett Inc, who served as a placement agent in fundraising transaction (a) 5-year warrants to purchase up to 1,062,717 shares of Common Stock at an exercise price of $3.354 per share, (b) 5-year warrants to purchase up to 108,305 shares of Common Stock at an exercise price of $23.40 per share, (c) 5-year warrants to purchase up to 8,331 shares of Common Stock at an exercise price of $46.80 per share and (d) 5-year warrants to purchase up to 8,331 shares of Common Stock at an exercise price of $70.20 per share. In connection with February 2020 Offering, the Company has issued to the Andrew Garrett Inc, who served as a placement agent a 5-year warrants to purchase up to 288,462 shares of Common Stock at an exercise price of $5.2 per share.
|  | B. | In August 2020, advisory agreement was made between the Company and Malcolm McGuire & Assoc. LLC, under which the advisor is providing strategic advisory services, which include, inter alia, interface with the investment community on behalf of the Company, build a database of appropriate brokers and investors, design and implement a plan for both the short and the long-term encouragement of investor interest in the Company and create a compelling perception of the Company within the investment community. The consideration was set as a monthly fee of $4 thousand cash and a monthly grant of non-qualified three-year options to purchase 461 shares of the Company’s Common Stock, at an exercise price equal to $6.5. During the years ended December 31, 2022 and 2021, the Company recorded stock-based compensation expenses of $9 thousand and $13 thousand, respectively, with respect to the above grant.
|  | C. | On September 12, 2022, the Company signed on Advisory agreement with Andrew Garrett Inc, under which the Company agreed to extend the exercise through July 1, 2026, for all warrants issued pursuant to the Exchange Agreement dated December 31, 2018. The Company accounted for the extension of the warrants exercise period pursuant to ASC 718 as a modification. Accordingly, additional compensation of $56 thousand was calculated as the fair value of the modified award in excess of the fair value of the original award measured immediately before its terms have been modified based on current circumstances and recorded this incremental fair value as an immediate expense in 2022 as the warrants were fully vested at the modification date (See also note 13A).
GLUCOTRACK INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.) NOTE 7 – COMMON STOCK AND WARRANTS WITH-DOWN ROUND PROTECTION (cont.)
|  | D. | The outstanding and exercisable share options as of December 31, 2022 have been separated into ranges of exercise prices, as follows:
SCHEDULE OF OUTSTANDING AND EXERCISABLE SHARE OPTIONS
Exercise price - $ |  | Share options outstanding and exercisable December 31, 2022 |  |  | Weighted average remaining contractual term (years) |
70.2 |  |  | 665,411 |  |  |  | 1.01 |
46.8 |  |  | 665,411 |  |  |  | 1.01 |
23.4 |  |  | 665,411 |  |  |  | 1.01 |
6.5 |  |  | 13,398 |  |  |  | 0.63 |
5.2 |  |  | 290,679 |  |  |  | 2.11 |
3.35 |  |  | 4,068,497 |  |  |  | 1.56 |
|  |  | 6,368,807 |  |  |  |  |
| The total compensation cost related to all of the Company’s equity-based awards recognized during the years ended December 31, 2022 and 2021 was comprised as follows:
SCHEDULE OF TOTAL COMPENSATION COST EQUITY BASED AWARDS
Research and Development |  | December 31, 2022 |  |  | December 31, 2021 |
|  | In thousand of US dollars |
Research and Development |  | December 31, 2022 |  |  | December 31, 2021 |
Research and development |  |  | 92 |  |  |  | 38 |
General and administrative |  |  | 395 |  |  |  | 223 |
Total compensation cost |  |  | 487 |  |  |  | 261 |
GLUCOTRACK INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (cont.)

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