| NOTE 16: | SHARE-BASED PAYMENT |
On August 29, 2011, the Company’s Board of Directors approved the adoption of an employee share option plan for the grant of options exercisable into shares of the Company in accordance with section 102 to the Israeli Tax Ordinance (the “2011 Plan”) which ended after 10 years, and the holding of up to 10,000,000 shares in the framework of the 2011 Plan, for option allocation to Company employees, directors and consultants. The terms of the options which will be granted according to the 2011 Plan, including the option period, exercise price, vesting period and exercise period shall be determined by the Company’s Board of Directors on the date of the actual allocation. As of December 31, 2017, the remaining number of options available for grant under the 2011 Plan is 2,350,000 options.
Movements in the number of share options and their related weighted average exercise prices (in dollars) during the years ended December 31, 2017, 2016 and 2015 are as follows:
| Year ended December 31, | ||||||||||||||||||||||||
| 2017 | 2016 | 2015 | ||||||||||||||||||||||
| Number of options | Weighted average exercise price (USD) | Number of options | Weighted average exercise price | Number of options | Weighted average exercise price | |||||||||||||||||||
| Outstanding at beginning of year | 6,750,000 | 0.17 | 4,870,000 | 0.15 | 6,683,862 | 0.19 | ||||||||||||||||||
| Granted | 1,000,000 | 0.03 | 2,950,000 | 0.16 | 700,000 | 0.10 | ||||||||||||||||||
| Exercised | - | - | - | - | - | - | ||||||||||||||||||
| Expired | (40,000 | ) | 0.21 | (1,070,000 | ) | 0.08 | (2,513,862 | ) | 0.23 | |||||||||||||||
| Forfeited | (354,167 | ) | 0.14 | - | - | - | - | |||||||||||||||||
| Outstanding at end of year | 7,355,833 | 0.16 | 6,750,000 | 0.17 | 4,870,000 | 0.15 | ||||||||||||||||||
| Exercisable at end of year | 5,514,166 | 0.19 | 3,833,333 | 0.18 | 2,939,168 | 0.16 | ||||||||||||||||||
Below is information about the exercise price (in dollars) and the remaining contractual life (in years) for options outstanding at end of year:
| December 31, | ||||||||||||||||||
| 2017 | 2016 | |||||||||||||||||
| Options outstanding at end of year | Range of exercise prices (USD) |
Weighted average remaining contractual life | Options outstanding at end of year | Range of exercise prices (USD) |
Weighted average remaining contractual life | |||||||||||||
| 2,362,500 | 0 - 0.14 | 7.55 | 1,450,000 | 0 - 0.14 | 8.13 | |||||||||||||
| 4,993,333 | 0.15 -1.6 | 5.86 | 5,300,000 | 0.15 -1.6 | 7.93 | |||||||||||||
| 7,355,833 | 6,750,000 | |||||||||||||||||
Net expenses recognized in the Company’s statements of comprehensive loss for the years ended December 31, 2017, 2016 and 2015 for grant of options to employees were $40, $182 and $148 thousand, respectively.
The table below summarizes the outstanding options as of December 31, 2017 that have been granted to the Company’s executives, directors and consultants -
| Options outstanding | Position | Grant date (*) |
Exercise price in NIS | Fair value USD |
Vesting schedule | |||||||||||
| 60,000 | Legal counsel | January 15, 2008 | 1.575 | 12 | 25% on grant date and 25% on each year over a period of 3 years from the grant date | |||||||||||
| 900,000 | Chief Executive Officer | October 15, 2013 | 0.9 | 143 | 12 equal portions each quarter over a period of 3 years from the grant date | |||||||||||
| 600,000 | Chief Executive Officer | October 15, 2013 | 0.6 | 97 | 12 equal portions each quarter over a period of 3 years from the grant date | |||||||||||
| 750,000 | Chief Financial Officer | December 30, 2013 | 0.5328 | 101 | 12 equal portions each quarter over a period of 3 years from the grant date | |||||||||||
| 600,000 | Four Directors | December 30, 2014 | 0.4325 | 46 | 33.33% of the stock options vest following the lapse of 12 months from the grant date, and the remaining 66.67% vest in 8 equal portions each quarter over a period of 2 years from the first | |||||||||||
| 150,000 | Consultant | December 30, 2014 | 0.4915 | 12 | 33.33% of the stock options vest following the lapse of 12 months from the grant date, and the remaining 66.67% vest in 8 equal portions each quarter over a period of 2 years from the first | |||||||||||
| 300,000 | Two Directors | March 25, 2015 | 0.40 | 24 | 33.33% of the stock options vest following the lapse of 12 months from the grant date, and the remaining 66.67% vest in 8 equal portions each quarter over a period of 2 years from the first | |||||||||||
| 100,000 | Chief Financial Officer | March 25, 2015 | 0.4 | 7 | 33.33% of the stock options vest following the lapse of 12 months from the grant date, and the remaining 66.67% vest in 8 equal portions each quarter over a period of 2 years from the first | |||||||||||
| 87,500 | Chief Executive Office | March 25, 2015 | 0.4 | 7 | 100,000 options were granted. 33.33% of the stock options vest following the lapse of 12 months from the grant date, and the remaining 66.67% vest in 8 equal portions each quarter over a period of 2 years from the first 12,500 option were forfeited. | |||||||||||
| 125,000 | Chief Financial Officer | June 1, 2015 | 0.4283 | 14 | 200,000 options were granted 12 equal portions each quarter over a period of 3 years from the grant date. 75,000 options were forfeited. | |||||||||||
| 300,000 | Two Directors | March 25, 2015 | 0.40 | 24 | 33.33% of the stock options vest following the lapse of 12 months from the grant date, and the remaining 66.67% vest in 8 equal portions each quarter over a period of 2 years from the first | |||||||||||
| 100,000 | Chief Financial Officer | March 25, 2015 | 0.4 | 7 | 33.33% of the stock options vest following the lapse of 12 months from the grant date, and the remaining 66.67% vest in 8 equal portions each quarter over a period of 2 years from the first | |||||||||||
| 50,000 | Medical Director | March 4, 2016 | 0.6 | 2 | 12 equal portions each quarter over a period of 3 years from the date of grant | |||||||||||
| 1,500,000 | Chairman of Board | March 31, 2016 | 0.6 | 63 | 12 equal portions each quarter over a period of 3 years from the date of grant | |||||||||||
| 1,000,000 | Chief Executive Officer | March 31, 2016 | 0.6 | 42 | 33.33% of the stock options vest following the lapse of 12 months from the grant date, and the remaining 66.67% vest in 8 equal portions each quarter over a period of 2 years from the first anniversary | |||||||||||
| 133,333 | Chief Financial Officer | May 31, 2016 | 0.6 | 14 | 400,000 options were granted. 33.33% of the stock options vest following the lapse of 12 months from the grant date, and the remaining 66.67% vest in 8 equal portions each quarter over a period of 2 years from the first 266,667 option were forfeited. |
|||||||||||
| 1,000,000 | Chief Executive Officer | August 3, 2017 | 0.11 | 28 | 33.33% of the stock options vest following the lapse of 12 months from the grant date, and the remaining 66.67% vest in 8 equal portions each quarter over a period of 2 years from the first anniversary | |||||||||||
| 7,355,833 | ||||||||||||||||
| (*) | Date of the Company’s Board of Directors’ decision (or shareholders, if required). |
The fair value for options granted in 2017 and 2016 is estimated at the date of grant using a Black-Scholes-Merton Options pricing model with the following weighted average assumptions:
| 2017 | 2016 | |||||||
| Dividend yield | 0 | % | 0 | % | ||||
| Expected volatility | 76.8 | % | 74.4 | % | ||||
| Risk-free interest | 1.87 | % | 1.97 | % | ||||
| Expected life (years) | 10 | 10 | ||||||
We have calculated the volatility based on the company’s historical volatility and comparable companies’ historical volatility. The share price was set according to the Company’s share market value.