Our financial statements are stated in thousands
United States dollars (US$) and are prepared in accordance with U.S. GAAP.
The following audited consolidated financial
statements are filed as part of this Annual Report:
The accompanying notes are an integral part of the consolidated
financial statements.
The accompanying notes are an integral part of the consolidated
financial statements.
The accompanying notes are an integral part of the consolidated
financial statements.
The accompanying notes are an integral part of the consolidated
financial statements.
The accompanying notes are an integral part of the consolidated
financial statements.
The accompanying notes are an integral part of the consolidated
financial statements.
The accompanying notes are an integral part of the consolidated
financial statements.
The accompanying notes are an integral part of the consolidated
financial statements.
The accompanying notes are an integral part of the consolidated
financial statements.
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
Dollars in thousands (except share and per share amounts)
NOTE
1:- GENERAL
|
a.
|
Pluristem
Therapeutics Inc., a Nevada corporation (“Pluristem Therapeutics”), was incorporated on May 11, 2001. Pluristem
Therapeutics has a wholly owned subsidiary, Pluristem Ltd. (the “Subsidiary”), which is incorporated under the
laws of the State of Israel. In January 2020, the Subsidiary established a wholly owned subsidiary, Pluristem GmbH (the
“German Subsidiary”) which is incorporated under the laws of Germany. Pluristem Therapeutics, the Subsidiary and
the German Subsidiary are referred to as the “Company” or “Pluristem”.
|
The Company’s
shares of common stock are traded on the Nasdaq Capital Market and on the Tel-Aviv Stock Exchange under the symbol “PSTI”.
|
b.
|
The
Company is a bio-therapeutics company developing placenta-based cell therapy product candidates for the treatment of multiple
ischemic, inflammatory and hematologic conditions. The Company has also initiated a compassionate use programs in the United States
and Israel and commenced enrollment in its Phase II study of PLX cells for the treatment of severe COVID-19 complicated by Acute
Respiratory Distress Syndrome (“ARDS”).
|
The
Company has incurred an accumulated deficit of approximately $280,156 and incurred recurring operating losses and negative cash
flows from operating activities since inception. As of June 30, 2020, the Company’s total stockholders’ equity amounted
to $56,101. During the year ended June 30, 2020, the Company incurred operating
losses of $29,476 and its negative cash flow from operating activities was $26,369.
As
of June 30, 2020, the Company’s cash position (cash and cash equivalents, short-term bank deposits and restricted cash and
long-term bank deposits) totaled approximately $58,992. The Company plans to continue to finance its operations with the current
resources and potential funds it will obtain from the European Investment Bank (the “EIB”) finance contract (the “Finance
Contract”) (See note 1c) once certain milestones are reached, and also by entering into licensing or other commercial agreements,
grants to support its research and development activities and with sales of equity securities. Management believes that these
funds, together with its existing operating plan, are sufficient for the Company to meet its obligations as they come due at least
for a period of twelve months from the date of the issuance of these consolidated financial statements. There are no assurances,
however, that the Company will be able to obtain an adequate level of financial resources that are required for the long-term
development and commercialization of its product.
On
April 30, 2020, Pluristem entered into a Finance Contract with the EIB, pursuant to which the German Subsidiary can obtain a loan
in the amount of up to €50 million, subject to certain milestones being reached (the “Loan”), payable in three
tranches, with the first tranche consisting of €20 million, second of €18 million and third of €12 million for
a period of 36 months from the signing of the Finance Contract.
The Tranches will be treated
independently, each with its own interest rate and maturity period. The fixed interest rate is 0% per year for the First Tranche
and 1% for each of the Second Tranche and Third Tranche. The deferred interest rate is 4% per year for the First Tranche, 3% for
the Second Tranche and 2% for the Third Tranche.
In
addition to any interest payable on the Loan, EIB is entitled to receive royalties from future revenues, if any, of Pluristem
for a period of seven years starting in 2024, in an amount equal to between 0.2% to 2.3% of the Company’s consolidated revenues,
pro-rated to the amount disbursed from the Loan to Pluristem beginning in the fiscal year 2024 and continuing up to and including
its fiscal year 2030.
As
of June 30, 2020 Pluristem has not yet disbursed any tranche of the Finance Contract.
PLURISTEM
THERAPEUTICS INC. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
Dollars in thousands (except share and per share amounts)
NOTE
1:- GENERAL (CONT.)
CHA
Agreement
On
June 26, 2013, Pluristem entered into an exclusive license and commercialization agreement (the “CHA Agreement”) with
CHA Biotech Co. Ltd. (“CHA”), for conducting clinical trials and commercialization of Pluristem’s PLX-PAD product
in South Korea in connection with two indications: the treatment of Critical Limb Ischemia (“CLI”), and IntermittentClaudication
(collectively with CLI, the “Indications”). Under the terms of the CHA Agreement, CHA will receive exclusive rights
in South Korea for conducting clinical trials with respect to the Indications and the Company will continue to retain rights
to its proprietary manufacturing technology and cell-related intellectual property. CHA participated in the Phase II trial in
Intermittent Claudication.
Upon
the first regulatory approval for a PLX product in South Korea, for the specified Indications, Pluristem and CHA will establish
an equally owned joint venture to commercialize PLX cell products in South Korea. Pluristem will be able to use the data generated
by CHA to pursue the development of PLX product candidates outside of South Korea.
The
CHA Agreement contains customary termination provisions, including in the event the parties do not reach an agreement upon development
plan for conducting the clinical trials. Upon termination of the CHA Agreement, the license granted thereunder will terminate
and all rights included therein will revert to the Company, and the Company will be free to enter into agreements with any other
third parties for the granting of a license in or outside South Korea or to deal in any other manner with such rights as it shall
see fit at its sole discretion.
Chart
Industries Agreement
In
November 2018, the Company entered into a license agreement with a subsidiary of Chart Industries, Inc. (“Chart”),
regarding the Company’s thawing device for cell-based therapies. Pursuant to the terms of the agreement, Chart obtained
the exclusive rights to manufacture and market the thawing device in all territories worldwide, excluding Greater China, and the
Company is entitled to receive royalties from sales of the product and supply of an agreed upon number of thawing devices. Royalties
shall commence on the date of Chart’s first commercial sale of the thawing device. As of June 30, 2020, commercial sale
of the thawing device by Chart has not yet begun.
PLURISTEM
THERAPEUTICS INC. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
Dollars in thousands (except share and per share amounts)
NOTE
2:- SIGNIFICANT ACCOUNTING POLICIES
The
consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles
(“U.S. GAAP”) applied on consistent basis.
The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates,
judgments, and assumptions that are reasonable based upon information available at the time they are made. These estimates, judgments
and assumptions can affect the amounts reported in the financial statements and accompanying notes. Actual results could differ
from those estimates.
Most
of Pluristem Therapeutics’ costs and assets are denominated in United States dollars (“dollar”). The Company’s
management believes that the dollar is the primary currency of the economic environment in which the Company operates. Thus, the
dollar is the Company’s functional and reporting currency. Accordingly, non-dollar denominated transactions and balances
have been re-measured into the functional currency in accordance with Accounting Standards Codification (“ASC”) 830,
“Foreign Currency Matters”. All transaction gains and losses from the re-measured monetary balance sheet items are
reflected in the statements of income as financial income or expenses, as appropriate.
|
c.
|
Principles
of consolidation
|
The
consolidated financial statements include the accounts of Pluristem Therapeutics and the Subsidiaries. Intercompany transactions
and balances have been eliminated upon consolidation.
|
d.
|
Cash
and cash equivalents
|
Cash
equivalents are short-term highly liquid investments that are readily convertible to cash with maturities of three months or less
at the date acquired.
|
e.
|
Short-term
bank deposit
|
Bank
deposits with original maturities of more than three months but less than one year are presented as part of short-term investments.
Deposits are presented at their cost which approximates market values including accrued interest. Interest on deposits is recorded
as financial income.
|
f.
|
Restricted
cash and short-term bank deposits
|
Short-term
restricted bank deposits and restricted cash used to secure derivative and hedging transactions and the Company’s credit
line. The restricted cash and short-term bank deposits are presented at cost which approximates market values including accrued
interest.
|
g.
|
Long-term
restricted bank deposits
|
Long-term
restricted bank deposits with maturities of more than one year used to secure operating lease agreement are presented at cost
which approximates market values including accrued interest.
|
h.
|
Investment
in marketable securities
|
The
Company accounts for its investments in marketable securities in accordance with ASC 320, “Investments – Debt and Equity
Securities”. The Company determines the classification of marketable securities at the time of purchase and re-evaluates
such designations as of each balance sheet date. The Company classifies all of its marketable securities as available-for-sale.
Available-for-sale marketable securities are carried at fair value, with the unrealized gain and loss reported at “accumulated
other comprehensive income (loss)” in the statement of changes in stockholders’ equity.
PLURISTEM
THERAPEUTICS INC. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
Dollars in thousands (except share and per share amounts)
NOTE
2:- SIGNIFICANT ACCOUNTING POLICIES (CONT.)
Realized
gain and loss on sales of marketable securities are included in the Company’s “Financial income, net” and are derived
using the specific identification basis for determining the cost of marketable securities sold. The amortized cost of available
for sale debt marketable securities is adjusted for amortization of premiums and accretion of discount to maturity. Such amortization,
together with coupon interest on available for sale marketable securities, is included in the “Financial income, net”.
The
Company recognizes an impairment charge when a decline in the fair value of its available-for-sale marketable securities below
the cost basis is judged to be other than temporary.
The
Company considers various factors in determining whether to recognize an impairment charge, including the length of time the investment
has been in a loss position, the extent to which the fair value has been less than the Company’s cost basis, the reason for the
decline in value, the potential recovery period and the Company’s intent to sell, including whether it is more likely than not
that the Company will be required to sell the investment before recovery of cost basis. ASC 320-10-35, “Investments - Debt
and Equity Securities”, requires other-than-temporary impairment for debt securities to be separated into (a) the amount
representing the credit loss and (b) the amount related to all other factors (provided that the Company does not intend to
sell the security and it is not more likely than not that it will be required to sell it before recovery). For securities that
are deemed other-than-temporarily impaired, the amount of impairment is recognized in “financial income, net”, in the
statement of operations and is limited to the amount related to credit loss, while impairment related to other factors is recognized
in “other comprehensive income (loss)”.
During
the year ended June 30, 2018, the Company recognized other-than-temporary impairment loss of $850 (see Note 3). During the years
ended June 30, 2020 and 2019, the Company did not recognize any other-than-temporary impairment loss.
On July 1, 2017, the Company
adopted ASC 606, “Revenue from Contracts with Customers” using the modified retrospective method. Results for reporting
periods beginning after July 1, 2017 are presented under ASC 606, while prior period amounts are not adjusted and continue
to be reported in accordance with the Company’s historic accounting under ASC 605.
Revenue Recognition from sales
of products:
Revenues are recognized when
control of the promised goods is transferred to the customer, in an amount that reflects the consideration the Company expects
to be entitled to in exchange for those goods.
The Company determines revenue
recognition through the following steps:
|
●
|
identification of the contract with a customer;
|
|
●
|
identification of the performance obligations in the
contract;
|
|
●
|
determination of the transaction price;
|
|
●
|
allocation of the transaction price to the performance
obligations in the contract; and
|
|
●
|
recognition of revenue when, or as, the Company satisfies
a performance obligation.
|
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES
|
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
U.S. Dollars in thousands (except share and per share amounts)
|
NOTE
2:- SIGNIFICANT ACCOUNTING POLICIES (CONT.)
The Company’s contracts
with its customers are expected to include one type of product and thus have only one performance obligation, which is the transfer
of control of the product. The Company’s PLX cells have an alternative use and, as such, the performance obligation is considered
to be satisfied at a point in time where the customer obtains control over the product.
The Company’s contract
with Chart includes variable consideration for which the Company estimates the most likely amount that should be included in the
transaction price subject to constraints based on the specific facts and circumstances. Pursuant to the terms of the agreement,
the Company is entitled to receive royalties from sales of the product and supply of an agreed upon number of thawing devices.
Royalties shall commence on the date of Chart’s first commercial sale of the thawing device.
As of June 30, 2020, commercial
sales of the thawing device by Chart have not begun. Based on the Company’s assessment, it is not probable that a significant
reversal in the amount of cumulative revenue recognized will not occur, and therefore the Company is unable to recognize revenues
with respect to the Chart agreement before the uncertainty associated with the variable consideration is subsequently resolved.
|
j.
|
Property and equipment
|
Property and
equipment are stated at cost, net of accumulated depreciation. Depreciation is calculated by the straight-line method over the
estimated useful lives of the assets, at the following annual rates:
|
|
%
|
|
Laboratory equipment
|
|
10-40
|
|
Computers and peripheral equipment
|
|
33
|
|
Office furniture and equipment
|
|
15
|
|
Leasehold improvements
|
|
The shorter of the expected useful life or the reasonable assumed term of the lease.
|
|
k.
|
Impairment of long-lived assets
|
The Company’s
long-lived assets are reviewed for impairment in accordance with ASC 360, “Property, Plant and Equipment”, whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets
to be held and used is measured by a comparison of the carrying amount of the assets to the future undiscounted cash flows expected
to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the
amount by which the carrying amount of the assets exceeds the fair value of the assets. During fiscal years 2020, 2019 and 2018,
no impairment losses have been identified.
|
l.
|
Accounting for stock-based compensation
|
The Company
accounts for stock-based compensation in accordance with ASC 718, “Compensation-Stock Compensation” (“ASC 718”).
ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of grant using an option-pricing
model. The Company estimates the fair value of stock options granted using the Black-Scholes-Merton option-pricing model. The Company
accounts for employee’s share-based payment awards classified as equity awards (restricted stock (“RS”) or restricted
stock units (“RSUs”)) using the grant-date fair value method. The fair value of share-based payment transactions is
recognized as an expense over the requisite service period, net of estimated forfeitures. The Company estimates forfeitures based
on historical experience and anticipated future conditions. The Company recognized compensation cost for an award with service
conditions and goals achievement that has a graded vesting schedule using the accelerated method based on the multiple-option award
approach.
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES
|
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
U.S. Dollars in thousands (except share and per share amounts)
|
NOTE
2:- SIGNIFICANT ACCOUNTING POLICIES (CONT.)
The assumptions below are relevant
to RS and RSUs granted in 2020, 2019 and 2018:
In accordance with ASC 718,
RS and RSUs are measured at their fair value. All RS and RSUs to employees and directors granted in 2020, 2019 and 2018, were granted
for no consideration; therefore, their fair value was equal to the share price at the date of grant.
The fair
value of all RS and RSUs was determined based on the close trading price of the Company’s shares known at the grant date.
The weighted average grant date fair value of shares granted during 2020, 2019 and 2018, was $3.65, $8.70 and $14.00 per share,
respectively.
During fiscal
years 2020, 2019 and 2018, there were no options granted to employees or directors.
|
m.
|
Research and Development expenses and royalty bearing
grants
|
Research
and development expenses, net of participations grants, are charged to the statement of operations as incurred. Pluristem receives
grants from the Israel Innovation Authority (“IIA”) in the Ministry of Economy and Industry for the purpose of partially
funding approved research and development projects. The grants are not to be repaid, but instead Pluristem is obliged to pay royalties
as a percentage of future sales if and when sales from the funded projects are generated. These grants are recognized as a deduction
from research and development costs at the time the Company is entitled to such grants on the basis of the research and development
costs incurred. Since the payment of royalties is not probable when the grants are received, the Company records a liability in
the amount of the estimated royalties for each individual contract, when the related revenues are recognized, as part of Cost of
revenues. For more information regarding such royalties commitments and regarding grants and participation received, see Note 8.
|
n.
|
Non-royalty bearing grant
|
The Company
participates in European Union research and development consortiums under Horizon 2020. In August 2016, the CLI program consortium
was awarded a Euro 7,600 thousands (approximately $8,500) non-royalty bearing grant, of which, an amount of Euro 1,900 thousands
(approximately $2,100) is a direct grant allocated to the Company. In July 2017, the consortium amended the consortium agreement,
pursuant to which the original grant allocation was amended such that the Company received an additional direct grant of Euro 1,000
thousands (approximately $1,100). The additional direct grant was allocated to the Company from the total amount of the original
grant. In September 2017, the Company’s Phase III study of PLX-PAD cell therapy in the treatment of muscle injury following
surgery for hip fracture was awarded a Euro 7,400 thousands (approximately $8,300) grant, of which, an amount of Euro 2,550 thousands
(approximately $2,900) is a direct grant allocated to the Company. In October 2017, the “nTRACK”, a collaborative project
carried out by an international consortium led by LEITAT, was awarded a Euro 6,800 thousands (approximately $7,600) non-royalty
bearing grant, of which, an amount of Euro 500 thousands (approximately $560) is a direct grant allocated to the Company.
In May 2020, the Company was
selected as a member of the CRISPR-IL consortium, a group funded by the IIA. CRISPR-IL brings together the leading experts in life
science and computer science from academia, medicine, and industry, to develop artificial intelligence (AI) based end-to-end genome-editing
solutions. CRISPR-IL is funded by the IIA with a total budget of approximately $10,000, of which, an amount of approximately $480
is a direct grant allocated to the Company, for a period of 18 months, with a potential for extension of an additional 18 months
and additional budget from the IIA.
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES
|
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
U.S. Dollars in thousands (except share and per share amounts)
|
NOTE
2:- SIGNIFICANT ACCOUNTING POLICIES (CONT.)
The non-royalty
bearing grants for funding the projects are recognized at the time the Company is entitled to each such grant on the basis of the
related costs incurred and recorded as a deduction from research and development expenses.
Basic and diluted net loss
per share is computed based on the weighted average number of shares of common stock outstanding during each year. All outstanding
stock options and unvested RSUs have been excluded from the calculation of the diluted loss per common share because all such
securities are anti-dilutive for each of the periods presented. The total weighted average number of shares related to the outstanding
options, warrants and RSU’s excluded from the calculations of diluted net earnings per share due to their anti-dilutive effect
was 3,708,807, 4,942,491 and 1,900,905 for the years ended June 30, 2020, 2019 and 2018, respectively.
The Company
accounts for income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”). This Topic prescribes
the use of the liability method, whereby deferred tax assets and liability account balances are determined based on differences
between financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that
will be in effect when the differences are expected to reverse.
The Company provides a valuation
allowance, if necessary, to reduce deferred tax assets to their estimated realizable value. ASC 740 establishes a single model
to address accounting for uncertain tax positions. ASC 740 clarified the accounting for income taxes by prescribing the minimum
recognition threshold a tax position is required to meet before being recognized in the financial statements.
|
q.
|
Concentration of credit risk
|
Financial
instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents,
restricted cash, short-term deposits, long-term deposits and restricted deposits.
The majority of the Company’s
cash and cash equivalents, restricted cash and short-term and long-term deposits are mainly invested in dollar instruments of
major banks in Israel and in the United States. Deposits in the United States may be in excess of insured limits and are not insured
in other jurisdictions. Generally, these deposits may be redeemed upon demand and therefore bear minimal risk. The Company invests
its surplus cash in cash deposits in financial institutions and has established guidelines, approved by the Company’s Investment
Committee, relating to diversification and maturities to maintain safety and liquidity of the investments. The Company utilizes
options and forward contracts to protect against the risk of overall changes in exchange rates. The derivative instruments hedge
a portion of the Company’s non-dollar currency exposure. Counterparties to the Company’s derivative instruments are
all major financial institutions.
A majority
of the Company’s agreements with employees in Israel are subject to Section 14 of the Israeli Severance Pay Law, 1963 (“Severance
Pay Law”). The Company’s contributions for severance pay have replaced its severance obligation. Upon contribution
of the full amount of the employee’s monthly salary for each year of employment, no additional calculations are conducted
between the parties regarding the matter of severance pay and no additional payments are made by the Company to the employee. Further,
the related obligation and amounts deposited on behalf of the employee for such obligation are not stated on the balance sheet,
as the Company is legally released from the obligation to employees once the deposit amounts have been paid.
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES
|
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
U.S. Dollars in thousands (except share and per share amounts)
|
NOTE
2:- SIGNIFICANT ACCOUNTING POLICIES (CONT.)
For some
employees, which their agreement is not subject to Section 14 of the Severance Pay Law, the Subsidiary’s liability for severance
pay is calculated pursuant to Israeli Severance Pay Law, based on the most recent salary of the employees multiplied by the number
of years of employment, as of the balance sheet date. Employees are entitled to one month’s salary for each year of employment
or a portion thereof. The Company’s liability for all of its employees is fully provided by monthly deposits with insurance
policies and by an accrual. The value of these policies is recorded as an asset in the Company’s balance sheet. The deposited funds
include profits or losses accumulated up to the balance sheet date. The deposited funds may be withdrawn only upon the fulfillment
of the obligation pursuant to the Severance Pay Law or labor agreements. The value of the deposited funds is based on the cash
surrendered value of these policies, and includes immaterial profits or losses.
Severance expenses for the years
ended June 30, 2020, 2019 and 2018 were $604, $632 and $822, respectively.
|
s.
|
Fair value of financial instruments
|
The carrying
amounts of the Company’s financial instruments, including cash and cash equivalents, restricted cash, short-term and restricted
bank deposits, accounts receivable and other current assets, trade payable and other accounts payable and accrued liabilities,
approximate fair value because of their generally short term maturities.
The Company
measures its investments in marketable securities and derivative instruments at fair value under ASC 820. Fair value is an exit
price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants.
As such,
fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing
an asset or a liability. As a basis for considering such assumptions, ASC 820 establishes a three-tier value hierarchy, which prioritizes
the inputs used in the valuation methodologies in measuring fair value:
Level
1 - Quoted prices (unadjusted) in active markets for identical assets or liabilities;
Level
2 - Inputs other than Level 1 that are observable for the asset or liability, either directly or indirectly; and
Level
3 - Unobservable inputs for the asset or liability.
The fair
value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when
measuring fair value. The Company categorized each of its fair value measurements in one of these three levels of hierarchy (see
Note 4).
|
t.
|
Derivative financial instruments
|
The Company
accounts for derivatives and hedging based on ASC 815, “Derivatives and hedging”, as amended and related interpretations.
ASC 815 requires the Company to recognize all derivatives on the balance sheet at fair value. If a derivative meets the definition
of a hedge and is so designated, depending on the nature of the hedge, changes in the fair value of the derivative will either
be offset against the change in fair value of the hedged assets, liabilities, or firm commitments through earnings (for fair value
hedge transactions) or recognized in other comprehensive income (loss) until the hedged item is recognized in earnings (for cash
flow hedge transactions).
If a derivative
does not meet the definition of a hedge, the changes in the fair value are included in earnings. Cash flows related to such hedges
are classified as operating activities. The Company enters into option contracts in order to limit the exposure to exchange rate
fluctuation associated with expenses mainly incurred in New Israeli Shekels (“NIS”). Since the derivative instruments
that the Company holds do not meet the definition of hedging instruments under ASC 815, any gain or loss derived from such instruments
is recognized immediately as “financial income, net”.
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES
|
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
U.S. Dollars in thousands (except share and per share amounts)
|
NOTE 2:- SIGNIFICANT ACCOUNTING
POLICIES (CONT.)
The Company
measured the fair value of the contracts in accordance with ASC 820. Foreign currency derivative contracts are classified within
Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments. As of June 30, 2020,
the fair value of the options contracts was approximately $67 and is presented in “other current assets” (see Note
4). The net gains (losses) recognized in “Financial income, net” during the years ended June 30, 2020, 2019 and 2018,
were $13, $(105) and $(264), respectively.
The Company accounts for comprehensive
income (loss) in accordance with ASC 220, “Comprehensive Income”. Comprehensive income generally represents all changes
in stockholders’ equity during the period except those resulting from investments by, or distributions to, stockholders’.
The Company determined that its items of other comprehensive income (loss) relate to unrealized gains and losses on available for
sale marketable securities.
Certain financial statement
data for prior years have been reclassified to conform to current year financial statement presentation.
|
w.
|
Recently Adopted Accounting Pronouncement
|
Accounting
Standards Update (“ASU”) No. 2016-02 - “Leases” (“Topic 842”) and ASU No. 2018-11, “Targeted
Improvements - Leases” (Topic 842):
In February 2016 and July 2018, the Financial Accounting
Standards Board (“FASB”) issued guidance on the recognition, measurement, presentation and disclosure of leases for
both parties to a contract (i.e., lessees and lessors). The new standard requires lessees to apply a dual approach, classifying
leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase
by the lessee. This classification will determine whether a lease expense is recognized based on an effective interest method or
on a straight-line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and
a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of
12 months or less will be accounted for in a manner similar to the accounting treatment requirements under existing guidance for
operating leases today. The new standard requires lessors to account for leases using an approach that is substantially equivalent
to existing guidance for sales-type leases, direct financing leases and operating leases. Topic 842 supersedes the previous leases
standard, ASC 840, “Leases”. The guidance is effective for annual periods beginning on or after December 15, 2018,
or July 1, 2019 for the Company, and interim periods within those fiscal years with early adoption permitted. The provisions of
ASU 2016-02 are to be applied using a modified retrospective approach.
The Company adopted the
new standard as of July 1, 2019, using the modified retrospective approach. Consequently, prior period balances and
disclosures have not been restated. The Company has elected to utilize the available package of practical expedients
permitted under the transition guidance within the new standard which does not require it to reassess the prior conclusions
about lease identification, lease classification and initial direct costs. The adoption of Topic 842 resulted in the
elimination of deferred participation payments of $240 and $381 in current and long-term liabilities in the Company’s
consolidated balance sheets, respectively. Additionally, the Company included in its balance sheet, at adoption, operating
right-of-use assets, short-term operating lease liabilities and long-term operating lease liabilities of $1,631, $964 and
$1,261, respectively. The standard had no material impact on the Company’s net loss or its cash flows. For additional
information regarding the Company’s accounting for leases, please refer to Note 7.
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES
|
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
U.S. Dollars in thousands (except share and per share amounts)
|
NOTE 2:- SIGNIFICANT ACCOUNTING
POLICIES (CONT.)
ASU
No. 2018-07 - “Compensation—Stock Compensation” (Topic 718) (“ASU No. 2018-07”):
In June 2018, the FASB issued
ASU No. 2018-07. The ASU expands the scope of ASU No. 2018-07 to include share-based payment transactions for acquiring goods and
services from nonemployees. An entity should apply ASU No. 2018-07 to nonemployee awards except with respect to option pricing
models and the attribution of cost (that is, the period of time over which share-based payment awards vest and the pattern of cost
recognition over that period). The amendments specify that ASU No. 2018-07 applies to all share-based payment transactions in which
a grantor acquires goods or services to be used or consumed in a grantor’s own operations by issuing share-based payment
awards. ASU No. 2018-07 is effective for fiscal years beginning after December 15, 2018, or July 1, 2019 for the Company, and interim
periods within those fiscal years with early adoption permitted. The Company adopted the new standard as of July 1, 2019, and the
new standard had no material impact on its consolidated financial statements.
ASU
No. 2017-12 - “Derivatives and Hedging - Targeted Improvements to Accounting for Hedging Activities” (“ASU No.
2017-12”):
In August 2017, the FASB issued
ASU No. 2017-12, which is intended to simplify and amend the application of hedge accounting to more clearly portray the economics
of an entity’s risk management strategies in its financial statements. The ASU will make more financial and nonfinancial
hedging strategies eligible for hedge accounting, reduce complexity in fair value hedges of interest rate risk and ease certain
documentation and assessment requirements of hedge effectiveness. It also changes how companies assess effectiveness of the hedge
and amends the presentation and disclosure requirements relating to hedging activities.
ASU 2017-12 is effective for
fiscal years beginning after December 15, 2018, or July 1, 2019, for the Company. The Company adopted the new standard as of July
1, 2019 and the standard had no impact on the Company’s consolidated financial statements.
|
x.
|
Recently Issued Accounting Pronouncements
|
ASU
No. 2018-18 - “Collaborative Arrangements (Topic 808) - Clarifying the Interaction between Topic 808 and Topic 606”
(“ASU No. 2018-18”):
In November 2018, the FASB
issued ASU No. 2018-18, which clarifies the interaction between Topic 808 and Topic 606 by (1) clarifying that certain transactions
between collaborative arrangement participants should be accounted for under Topic 606, (2) adding unit-of-account guidance in
Topic 808 to align with the guidance in Topic 606, and (3) clarifying presentation guidance for transactions with a collaborative
arrangement participant that are not accounted for under Topic 606. ASU 2018-18 is effective for fiscal years beginning after December
15, 2019, or July 1, 2020 for the Company. The Company is currently evaluating the impact of adopting the ASU on its consolidated
financial statements.
ASU No.
2016-13 -, “Financial Instruments - Credit Losses (Topic 326)
In September 2016, the FASB
issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”
(“ASU 2016-13”). ASU 2016-13 changes the impairment model for most financial assets and certain other instruments.
For trade and other receivables, held-to-maturity debt securities, loans, and other instruments, entities will be required to use
a new forward-looking “expected loss” model that generally will result in the earlier recognition of allowances for
losses. The guidance also requires increased disclosures.
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES
|
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
U.S. Dollars in thousands (except share and per share amounts)
|
NOTE 2:- SIGNIFICANT ACCOUNTING
POLICIES (CONT.)
For the Company, the amendments
in the update were originally effective for fiscal years beginning after December 15, 2019, including interim periods within those
fiscal years. The Company is currently evaluating the impact of adopting the ASU on its consolidated financial statements.
ASU No.
2019-10 -, “Financial Instruments - Credit Losses (Topic 326), Derivatives and Hedging (Topic 815), and Leases (Topic 842)
In November 2019, the FASB issued ASU No. 2019-10 which delayed
the effective date of ASU 2016-13 for smaller reporting companies (as defined by the U.S. Securities and Exchange Commission (the
“SEC”)) and other non-SEC reporting entities to fiscal years beginning after December 15, 2022, or July 1, 2023 for
the Company, including interim periods within those fiscal periods. Early adoption is permitted. The Company is currently evaluating
the impact of adopting the ASU on its consolidated financial statements.
NOTE 3:- MARKETABLE SECURITIES
The Company has invested in highly-rated
securities. When evaluating the investments for other-than-temporary impairment, the Company has reviewed factors such as the length
of time and extent to which fair value has been below cost basis, the financial condition of the issuer and any changes thereto,
and the Company’s intent to sell, or whether it is more likely than not it will be required to sell the investment before
recovery of the investment’s amortized cost basis.
The Company recognized other-than-temporary
impairment loss on outstanding securities during the year ended June 30, 2018 of $850. The Company did not recognize any other-than-temporary
impairment loss on outstanding securities during the year ended June 30, 2020 and 2019.
During the year ended June 30, 2018, the Company sold marketable
securities for aggregate net proceeds (including redemptions) of approximately $21,890, representing a net gain of $8,440. The
proceeds from the sale of such marketable securities are included in “Financial income, net”, for the year ended June
30, 2018.
NOTE 4:- OTHER CURRENT ASSETS
|
|
June 30,
|
|
|
|
2020
|
|
|
2019
|
|
Accounts receivable from the Horizon 2020 grants
|
|
$
|
1,071
|
|
|
$
|
991
|
|
Prepaid expenses
|
|
|
445
|
|
|
|
532
|
|
Accounts receivable from the IIA
|
|
|
142
|
|
|
|
179
|
|
Value Added Tax (VAT) receivables
|
|
|
336
|
|
|
|
125
|
|
Accounts receivable from the Ministry of Economy and Industry
|
|
|
35
|
|
|
|
73
|
|
Derivatives not designated as hedge instruments
|
|
|
67
|
|
|
|
21
|
|
Other receivables
|
|
|
26
|
|
|
|
53
|
|
Total
|
|
$
|
2,122
|
|
|
$
|
1,974
|
|
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES
|
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
U.S. Dollars in thousands (except share and per share amounts)
|
NOTE 5:- PROPERTY AND EQUIPMENT,
NET
|
|
June 30,
|
|
|
|
2020
|
|
|
2019
|
|
Cost:
|
|
|
|
|
|
|
Laboratory equipment
|
|
$
|
6,514
|
|
|
$
|
6,435
|
|
Computers and peripheral equipment
|
|
|
1,322
|
|
|
|
1,274
|
|
Office furniture and equipment
|
|
|
681
|
|
|
|
681
|
|
Leasehold improvements
|
|
|
8,661
|
|
|
|
8,614
|
|
Total Cost
|
|
|
17,178
|
|
|
|
17,004
|
|
Accumulated depreciation:
|
|
|
|
|
|
|
|
|
Laboratory equipment
|
|
|
5,955
|
|
|
|
5,634
|
|
Computers and peripheral equipment
|
|
|
1,221
|
|
|
|
1,147
|
|
Office furniture and equipment
|
|
|
646
|
|
|
|
600
|
|
Leasehold improvements
|
|
|
6,840
|
|
|
|
5,785
|
|
Total accumulated depreciation
|
|
|
14,662
|
|
|
|
13,166
|
|
Property and equipment, net
|
|
$
|
2,516
|
|
|
$
|
3,838
|
|
Depreciation expenses amounted to $1,570, $1,962 and
$2,018, for the years ended June 30, 2020, 2019 and 2018, respectively.
During the fiscal years ended
June 30, 2020 and 2019, the Company recorded a reduction of $ 74 and $9, respectively, to the cost accumulated depreciation of
fully depreciated equipment no longer in use.
NOTE 6:- OTHER ACCOUNTS
PAYABLE
|
|
June 30,
|
|
|
|
2020
|
|
|
2019
|
|
Accrued vacation
|
|
|
928
|
|
|
|
974
|
|
Deferred income from the nTRACK Horizon 2020 grant
|
|
|
126
|
|
|
|
-
|
|
Accrued payroll
|
|
|
489
|
|
|
|
486
|
|
Payroll institutions
|
|
|
438
|
|
|
|
433
|
|
Other payables
|
|
|
-
|
|
|
|
240
|
|
Total
|
|
$
|
1,981
|
|
|
$
|
2,133
|
|
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES
|
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
U.S. Dollars in thousands (except share and per share amounts)
|
NOTE 7:- LEASES
The right-of-use asset and
lease liability are initially measured at the present value of the lease payments, discounted using the interest rate implicit
in the lease or, if that rate cannot be readily determined, the Company’s incremental borrowing rate based on the information
available at the date of adoption in determining the present value of the lease payments. The Company’s incremental borrowing
rate is estimated to approximate the interest rate on similar terms and payments and in economic environments where the leased
asset is located.
The Company has various operating leases for office
space and vehicles that expire through 2023. Below is a summary of our operating right-of-use assets and operating lease liabilities
as of June 30, 2020:
|
|
June 30,
2020
|
|
Operating right-of-use assets
|
|
$
|
1,259
|
|
|
|
|
|
|
Operating lease liabilities, current
|
|
|
1,020
|
|
Operating lease liabilities long-term
|
|
|
565
|
|
Total operating lease liabilities
|
|
$
|
1,585
|
|
The operating lease right-of-use assets are presented
in long term assets net after elimination of deferred participation payments from Matam High-Tech and Business Park of $240 and
$381 in current and long-term liabilities in the Company’s consolidated balance sheets, respectively.
Minimum lease payments for the Company’s right-of-use
(“ROU”) assets over the remaining lease periods as of June 30, 2020 are as follows:
|
|
June 30,
2020
|
|
2021
|
|
|
1,123
|
|
2022
|
|
|
563
|
|
2023
|
|
|
20
|
|
Total undiscounted lease payments
|
|
$
|
1,706
|
|
Less: Interest
|
|
|
121
|
|
Present value of lease liabilities
|
|
$
|
1,585
|
|
The components of lease expense and supplemental cash
flow information related to leases for the year ended June 30, 2020 were as follows:
|
|
Year ended June 30,
2020
|
|
Components of lease expense
|
|
|
|
Operating lease cost
|
|
$
|
1,167
|
|
Sublease income
|
|
$
|
51
|
|
Supplemental cash flow information
|
|
|
|
|
Cash paid for amounts included in the measurement of lease liabilities
|
|
$
|
1,152
|
|
Supplemental non-cash information related to lease liabilities arising from obtaining ROU assets
|
|
$
|
83
|
|
|
|
|
|
|
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES
|
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
U.S. Dollars in thousands (except share and per share amounts)
|
NOTE 7:- LEASES (CONT.)
As of June 30, 2020, the weighted average
remaining lease term is 1.7 years, and the weighted average discount rate is 10 percent. The discount rate was determined based
on the estimated collateralized borrowing rate of the Company, adjusted to the specific lease term and location of each lease.
As of June 30, 2020, the aggregate minimum
lease commitments under the active operating lease agreements are $ 1,706.
As of June 30, 2019, the aggregate minimum
lease commitments under the active operating lease agreements are $2,641.
NOTE 8:- COMMITMENTS AND
CONTINGENCIES
|
a.
|
An amount of $555 of cash and deposits was pledged by the
Subsidiary to secure certain derivatives and hedging transactions, a credit line and bank guarantees as of June 30, 2020.
|
|
b.
|
Under the Law for the Encouragement of Industrial Research
and Development, 1984, (the “Research Law”), research and development programs that meet specified criteria and are
approved by the IIA are eligible for grants of up to 50% of the project’s expenditures, as determined by the research committee,
in exchange for the payment of royalties from the sale of products developed under the program. Regulations under the Research
Law generally provide for the payment of royalties to the IIA of 3% on sales of products and services derived from a technology
developed using these grants until 100% of the dollar-linked grant is repaid. The Company’s obligation to pay these royalties
is contingent on its actual sale of such products and services. In the absence of such sales, no payment is required. Outstanding
balance of the grants will be subject to interest at a rate equal to the 12 month LIBOR applicable to dollar deposits that is
published on the first business day of each calendar year. Following the full repayment of the grant, there is no further liability
for royalties.
|
Through June 30, 2020, total
grants obtained aggregated to approximately $27,685 and total royalties paid and accrued amounted to $169. As of June 30, 2020,
the Company’s liability in respect to royalties to the IIA amounted to $27,516, not including LIBOR interest as described
above.
|
c.
|
The Company has been awarded a marketing grant under the
“Smart Money” program of the Israeli Ministry of Economy and Industry. The program’s aim is to assist companies
to extend their activities in international markets. The goal market that was chosen was Japan. The Israeli government granted
the Company budget resources that are intended to be used to advance the Company’s product candidate towards marketing in
Japan and for regulatory activities there. As part of the program, the Company will repay royalties of 5% from the Company’s
income in Japan during five years, starting the year in which the Company will not be entitled to reimbursement of expenses under
the program and will be spread for a period of up to 5 years or until the amount of the grant is fully paid.
|
As of June 30, 2020, total
grants obtained under this Smart Money program amounted to approximately $112. As of June 30, 2020, the Company’s contingent
liability with respect to royalties for this “Smart Money” program was $112 and no royalties were paid or accrued.
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES
|
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
U.S. Dollars in thousands (except share and per share amounts)
|
NOTE 8:- COMMITMENTS AND
CONTINGENCIES (CONT.)
|
d.
|
The Company was awarded an additional Smart Money grant
of approximately $229 from Israel’s Ministry of Economy and Industry to facilitate certain marketing and business development
activities with respect to its advanced cell therapy products in the Chinese market, including Hong Kong. The Israeli government
granted the Company budget resources that are intended to be used to advance the Company’s product candidate towards marketing
in the China-Hong Kong markets. The Company will also receive close support from Israel’s trade representatives stationed
in China, including Hong Kong, along with experts appointed by the Smart Money program. As part of the program, the Company will
repay royalties of 5% from the Company’s revenues in the region for a five year period, beginning the year in which the
Company will not be entitled to reimbursement of expenses under the program and will be spread for a period of up to 5 years or
until the amount of the grant is fully paid.
|
As of June 30, 2020, the aggregate
amount of grant obtained from this Smart Money program was approximately $129. As of June 30, 2020, the Company’s contingent
liability with respect to royalties for this “Smart Money” program is $129 and no royalties were paid or accrued.
|
e.
|
In September 2017, the Company
signed an agreement with the Tel-Aviv Sourasky Medical Center (Ichilov Hospital) to conduct a Phase I/II trial of PLX-PAD cell
therapy for the treatment of Steroid-Refractory Chronic Graft-Versus-Host-Disease (“cGVHD”).
|
As part of the agreement
with the Tel-Aviv Sourasky Medical Center (Ichilov Hospital), the Company will pay royalties of 1% from its net sales of the PLX-PAD
product relating to cGVHD, with a maximum aggregate royalty amount of approximately $250.
|
f.
|
In July 2018, the Company was awarded a marketing grant
of approximately $52 under the “Shalav” program of the Israeli Ministry of Economy and Industry. The grant is intended
to facilitate certain marketing and business development activities with respect to the Company’s advanced cell therapy
products in the U.S. market. As part of the program, the Company will repay royalties of 3%, but only with respect to the Company’s
revenues in the U.S. market in excess of $250 of its revenues in fiscal year 2018, upon the earlier of the five year period beginning
the year in which the Company will not be entitled to reimbursement of expenses under the program and/or until the amount of the
grant, which is linked to the Consumer Price Index, is fully paid.
|
As of June 30, 2020, total
grants obtained under the “Shalav” program amounted to approximately $49. As of June 30, 2020, the Company’s
contingent liability with respect to royalties for the “Shalav” program was $49 and no royalties were paid or accrued.
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES
|
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
U.S. Dollars in thousands (except share and per share amounts)
|
NOTE 9:- STOCKHOLDERS’ EQUITY
The Company’s authorized
common stock consists of 60,000,000 shares with a par value of $0.00001 per share. All shares have equal voting rights and are
entitled to one vote per share in all matters to be voted upon by stockholders. The shares have no pre-emptive, subscription, conversion
or redemption rights and may be issued only as fully paid and non-assessable shares. Holders of the common stock are entitled to
equal ratable rights to dividends and distributions with respect to the common stock, as may be declared by the Board of Directors
out of funds legally available. The Company’s authorized preferred stock consists of 1,000,000 shares of preferred stock,
par value $0.00001 per share, with series, rights, preferences, privileges and restrictions as may be designated from time to time
by the Company’s Board of Directors. No shares of preferred stock have been issued.
In July 2019, the Board of Directors
approved a 1-for-10 reverse stock split of the Company’s (a) authorized shares of common stock; (b) issued and outstanding
shares of common stock and (c) authorized shares of preferred stock. The reverse split became effective on July 25, 2019. The reverse
stock split will not have any effect on the stated par value of the common stock. All shares of common stock, options, warrants
and securities convertible or exercisable into shares of common stock, as well as loss per share, have been adjusted to give retroactive
effect to this reverse stock split for all periods presented.
|
b.
|
In the year ended June 30, 2018, a total of 828,703 warrants from a January 2017 offering were
exercised by investors at an exercise price of $14.00 per share, resulting in the issuance of 82,871 shares of common stock for
net proceeds of approximately $1,160.
|
|
c.
|
In July 2017, pursuant to a shelf registration statement on Form S-3, declared effective by the
SEC on June 23, 2017, the Company entered into an At Market Issuance Sales Agreement (the “ATM Agreement”) with FBR
Capital Markets & Co., MLV & Co. LLC and Oppenheimer & Co. Inc. (collectively, the “Agents”), which provides
that, upon the terms and subject to the conditions and limitations in the ATM Agreement, the Company may elect, from time to time,
to offer and sell shares of common stock having an aggregate offering price of up to $80,000 through the Agents acting as sales
agent. During the year ended June 30, 2018, the Company sold 359,941 shares of common stock under the ATM Agreement at an average
price of $14.30 per share for aggregate proceeds of approximately $4,985, net of issuance expenses of $174. During the year ended
June 30, 2019, the Company sold 170,600 shares of common stock under the ATM Agreement at an average price of $12.30 per share
for aggregate proceeds of approximately $1,952, net of issuance expenses of $148.
|
On February 4, 2019, the Company
notified the Agents of the termination of the ATM Agreement.
|
d.
|
On October 31, 2017, the Company completed a public offering in Israel, pursuant to the Company’s
existing shelf registration statement on Form S-3 in the United States and a shelf registration statement filed in Israel, pursuant
to which the Company raised aggregate gross proceeds of $15,051 through the sale of 900,000 shares of the Company’s common
stock at a purchase price of NIS 59 (approximately $16.70) per share. The net proceeds, after deducting fees and expenses related
to the offering, were approximately $13,646.
|
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES
|
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
U.S. Dollars in thousands (except share and per share amounts)
|
NOTE 9:- STOCKHOLDERS’ EQUITY (CONT.)
|
e.
|
Pursuant to a shelf registration on Form S-3 declared effective by the SEC on June 23, 2017, on
February 6, 2019, the Company entered into the Open Market Sale AgreementSM (the “Sales Agreement”) with
Jefferies LLC (“Jefferies”) which provides that, upon the terms and subject to the conditions and limitations in the
sales agreement, the Company may elect, from time to time, to offer and sell shares of common stock having an aggregate offering
price of up to $50,000 through Jefferies acting as sales agent. During the year ended June 30, 2019, the Company sold 236,800 shares
of common stock under the Sales Agreement at an average price of $9.70 per share for aggregate net proceeds of approximately $2,051,
net of issuance expenses of $255.
|
During the year ended June 30,
2020, the Company sold 8,060,950 shares of common stock under the Sales Agreement at an average price of $5.81 per share for aggregate
net proceeds of approximately $43,262, net of issuance expenses of $3,573.
On June 30, 2020, the shelf registration
statement on Form S-3 declared effective by the SEC on June 23, 2017expired , and as a result thereof, the Sales Agreement was
terminated.
|
f.
|
On April 8, 2019, the Company sold, pursuant to an underwriting agreement relating to a firm commitment
public offering (the “Public Offering”), an aggregate of 2,857,143 shares of common stock and warrants to purchase
2,857,143 shares of common stock, inclusive of the underwriter’s over-allotment option which was exercised in full, for aggregate
gross proceeds of $20,000.
|
The warrants issued in the Public
Offering are exercisable for a period of five years from issuance and have an exercise price of $7.00 per share. In addition, on
April 8, 2019, the Company sold, pursuant to a subscription agreement with a certain investor in a registered direct offering (the
“Registered Direct Offering”), 142,857 shares of common stock, for aggregate gross proceeds of $1,000. The net proceeds
from the Public Offering and the Registered Direct Offering, after deducting underwriting commissions and discounts and other expenses
related to the offerings, were $19,464.
As of June 30, 2020, 2,470,465
warrants to purchase share of our common stock are outstanding.
|
g.
|
In the year ended June 30, 2020, a total of 386,678 warrants to purchase shares from the April
2019 offering were exercised by investors at an exercise price of $7.00 per share, resulting in the issuance of 386,678 shares
of common stock for net proceeds of approximately $2,707.
|
|
h.
|
On May 5, 2020, the Company entered into a securities purchase agreement with two institutional
investors (the “Investors”) pursuant to which the Company sold, in a registered public offering directly to the Investors,
1,587,302 shares of common stock for net proceeds of approximately $14,901.
|
|
i.
|
Stock options, RS and RSUs to employees, directors and consultants:
|
The Company adopted, after
receiving stockholder approval, the 2005 Stock Option Plan in 2005 (the “2005 Plan”). Under the 2005 Plan, stock options,
RS and RSUs were granted to the Company’s officers, directors, employees and consultants. The 2005 Plan expired on December
31, 2018. The Company adopted, after receiving stockholder approval, the 2016 Equity Incentive Plan in 2016 (the “2016 Plan”).
Under the 2016 Plan, stock options, RS and RSUs may be granted to the Company’s officers, directors, employees and consultants
or the officers, directors, employees and consultants of our Subsidiaries. In addition, at the Company’s annual meeting of
its stockholders, held on June 13, 2019, the Company’s stockholders approved the 2019 Equity Compensation Plan (the “2019
Plan”).
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES
|
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
U.S. Dollars in thousands (except share and per share amounts)
|
NOTE 9:- STOCKHOLDERS’ EQUITY (CONT.)
Under the 2019 Plan, stock
options, RS and RSUs may be granted to the Company’s officers, directors, employees and consultants or the officers, directors,
employees and consultants of the Subsidiary.
As of June 30, 2020, the number
of shares of common stock authorized for issuance under the 2016 Plan amounted to 595,694 for calendar year 2020, of which 584,144
are available for future grant during calendar year 2020 under the 2016 Plan. As of June 30, 2020, the number of shares of common
stock authorized for issuance under the 2019 Plan amounted to 4,672,243, all of which are available for future grant under the
2019 Plan.
(2)
Options to non-employees:
A summary of the stock options to
non-employee consultants under the 2005 Plan and 2016 Plan is as follows:
|
|
Year ended June 30, 2020
|
|
|
|
Number
|
|
|
Weighted Average Exercise Price
|
|
|
Weighted Average Remaining Contractual Terms
(in years)
|
|
|
Aggregate Intrinsic Value Price
|
|
Stock options outstanding at beginning of period
|
|
|
89,580
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Stock options granted
|
|
|
1,050
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Stock options exercised
|
|
|
(15,884
|
)
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Stock options forfeited
|
|
|
(19,875
|
)
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Stock options outstanding at end of the period
|
|
|
54,871
|
|
|
$
|
-
|
|
|
|
7.89
|
|
|
$
|
485
|
|
Stock options exercisable at the end of the period
|
|
|
48,621
|
|
|
$
|
-
|
|
|
|
7.81
|
|
|
$
|
430
|
|
Stock options vested and expected to vest at the end of the period
|
|
|
54,871
|
|
|
$
|
-
|
|
|
|
7.89
|
|
|
$
|
485
|
|
Compensation
expenses related to stock options granted to consultants were recorded as follows:
|
|
Year ended June 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
Research and development expenses
|
|
$
|
(35
|
)
|
|
$
|
117
|
|
|
$
|
107
|
|
General and administrative expenses
|
|
|
64
|
|
|
|
167
|
|
|
|
61
|
|
|
|
$
|
29
|
|
|
$
|
284
|
|
|
$
|
168
|
|
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES
|
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
U.S. Dollars in thousands (except share and per share amounts)
|
NOTE 9:- STOCKHOLDERS’ EQUITY (CONT.)
(3)
RS and RSUs to employees and directors:
The following
table summarizes the activity related to unvested RS and RSUs granted to employees and directors under the 2005 Plan and 2016 Plan
for the year ended June 30, 2020:
|
|
Number
|
|
Unvested at the beginning of period
|
|
|
795,633
|
|
Granted
|
|
|
19,500
|
|
Forfeited
|
|
|
(101,256
|
)
|
Vested
|
|
|
(298,683
|
)
|
Unvested at the end of the period
|
|
|
415,194
|
|
Expected to vest after June 30, 2020
|
|
|
402,491
|
|
Compensation
expenses related to RS and RSUs granted to employees and directors were recorded as follows:
|
|
Year ended June 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
Research and development expenses
|
|
$
|
578
|
|
|
$
|
1,401
|
|
|
$
|
1,273
|
|
General and administrative expenses
|
|
|
1,786
|
|
|
|
3,003
|
|
|
|
4,577
|
|
|
|
$
|
2,364
|
|
|
$
|
4,404
|
|
|
$
|
5,850
|
|
Unamortized compensation expenses
related to RS and RSUs granted to employees and directors to be recognized over an average time of approximately 2.75 years are
approximately $1,194.
(4)
RS and RSUs to consultants:
The following
table summarizes the activity related to unvested RS and RSUs granted to consultants for the year ended June 30, 2020:
|
|
Number
|
|
Unvested at the beginning of period
|
|
|
30,107
|
|
Granted
|
|
|
42,000
|
|
Forfeited
|
|
|
(6,785
|
)
|
Vested
|
|
|
(59,072
|
)
|
Unvested at the end of the period
|
|
|
6,250
|
|
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES
|
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
U.S. Dollars in thousands (except share and per share amounts)
|
NOTE
9:- STOCKHOLDERS’ EQUITY (CONT.)
Compensation
expenses related to RS and RSUs granted to consultants were recorded as follows:
|
|
Year ended June 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
Research and development expenses
|
|
$
|
14
|
|
|
$
|
48
|
|
|
$
|
43
|
|
General and administrative expenses
|
|
|
155
|
|
|
|
410
|
|
|
|
487
|
|
|
|
$
|
169
|
|
|
$
|
458
|
|
|
$
|
530
|
|
|
j.
|
Summary of warrants and options:
|
Warrants
/ Options
|
|
Exercise Price per Share
|
|
|
Options and Warrants for Common Stock
|
|
|
Options and Warrants Exercisable for Common Stock
|
|
|
Weighted Average Remaining Contractual Terms
(in years)
|
|
Warrants:
|
|
$
|
7.00
|
|
|
|
2,470,465
|
|
|
|
2,470,465
|
|
|
|
3.77
|
|
|
|
$
|
14.00
|
|
|
|
762,028
|
|
|
|
762,028
|
|
|
|
2.06
|
|
Total warrants
|
|
|
|
|
|
|
3,232,493
|
|
|
|
3,232,493
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options:
|
|
$
|
0.00
|
|
|
|
54,870
|
|
|
|
48,621
|
|
|
|
7.62
|
|
Total options
|
|
|
|
|
|
|
54,870
|
|
|
|
48,621
|
|
|
|
|
|
Total warrants and options
|
|
|
|
|
|
|
3,287,363
|
|
|
|
3,281,114
|
|
|
|
|
|
This summary does not include 421,444 RS and
RSUs that are not vested as of June 30, 2020.
NOTE 10:- OTHER INCOME
In December 2017, the Subsidiary
was awarded approximately $43 (NIS 150 thousand) by the Israeli Ministry of Labor, Social Affairs and Social Services related to
its “Equal Employment” program which aims to reward and honor Israeli employers who demonstrate and promote gender
equality in employment.
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES
|
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
U.S. Dollars in thousands (except share and per share amounts)
|
NOTE 11:- FINANCIAL
INCOME, NET
|
|
Year ended June 30,
|
|
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
Foreign currency translation differences, net
|
|
$
|
155
|
|
|
$
|
(26
|
)
|
|
$
|
52
|
|
Bank and broker commissions
|
|
|
(32
|
)
|
|
|
(27
|
)
|
|
|
(62
|
)
|
Interest income on deposits
|
|
|
384
|
|
|
|
385
|
|
|
|
276
|
|
Interest expenses due to implementation of new accounting standards “Leases” (Topic 842)
|
|
|
(196
|
)
|
|
|
-
|
|
|
|
-
|
|
Gain related to marketable securities, net
|
|
|
-
|
|
|
|
-
|
|
|
|
8,478
|
|
Other than temporary impairment loss
|
|
|
-
|
|
|
|
-
|
|
|
|
(850
|
)
|
Gain (loss) from derivatives and fair value hedge derivatives
|
|
|
13
|
|
|
|
(105
|
)
|
|
|
(264
|
)
|
Other financial expense
|
|
|
-
|
|
|
|
(2
|
)
|
|
|
(25
|
)
|
|
|
$
|
324
|
|
|
$
|
225
|
|
|
$
|
7,605
|
|
NOTE 12:- TAXES ON INCOME
|
A.
|
Tax rates applicable to the Company:
|
|
1.
|
Pluristem Therapeutics:
|
The U.S.
federal tax rate applicable to Pluristem Therapeutics is the corporate federal tax rate of 21%, which is the result of the Tax
Cuts and Jobs Act of 2017 (the “Tax Act”). Such corporate tax rate excludes state tax and local tax, if any, which
rates depend on the state and city in which Pluristem Therapeutics conducts its business.
On December 22, 2017, the Tax
Act was signed into law in the United States, lowering the corporate federal income tax rate from 35% to 21%, effective January
1, 2018.
The Tax Act provided for a
one-time transition tax on certain foreign earnings for the tax year 2017, and taxation of Global Intangible Low-Taxed Income (“GILTI”)
earned by foreign subsidiaries beginning after December 31, 2017. The GILTI tax imposes a tax on foreign income in excess of a
deemed return on tangible assets of foreign corporations. The Tax Act also makes certain changes to the depreciation rules and
implements new limits on the deductibility of certain executive compensation paid by Pluristem Therapeutics. Finally, while the
Tax Act removes the 20 year limitation on net operating losses generated after December 31, 2017, all losses generated after December
31, 2017 can only be used to offset 80% of net income in the year they will be utilized.
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES
|
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
U.S. Dollars in thousands (except share and per share amounts)
|
NOTE 12:- TAXES ON INCOME
(CONT.)
This
re-measurement was fully offset by a valuation allowance, resulting in no impact to the Company’s income tax expense for
the fiscal year ended June 30, 2020. As a result, the Company’s financial results reflect in the income tax effects of the
Tax Act, for which the accounting under ASC 740 is complete.
There was no one-time transition
tax for the Company under the Tax Act, nor will there be GILTI tax due for the current year, since the Subsidiary had losses for
every year to date.
In January 2018, Pluristem
Therapeutics registered as an Israeli resident with the Israel Tax Authority (the “ITA”) and the Israeli Value Added
Tax Authorities. As a result, as of such date, Pluristem Therapeutics is classified as a dual resident for tax purposes, as a resident
in both Israel and the United States.
In June 2018, Pluristem Therapeutics
and the Subsidiary submitted an election notice to the ITA to file a consolidated tax return in Israel commencing with the 2018
tax year.
Taxable income of Israeli companies
is subject to tax at the rate of 23% in 2020, 2019 and 2018.
The Subsidiary is filing its
tax reports in dollars based on specific regulations of the ITA which allow, in specific circumstances, filing tax reports in dollars
(“Dollar Regulations”). Under the Dollar Regulations, the Subsidiary calculates its tax liability in dollars according
to certain orders. The tax liability, as calculated in dollars, is translated into NIS according to the exchange rate as of June
30 of each year.
The Subsidiary has not received
final tax assessments since its incorporation, however the assessments of the Subsidiary are deemed final through 2014.
The Law
for the Encouragement of Capital Investments, 1959 (the “Law”):
The Subsidiary
has programs which meet the criteria of a “Beneficiary Enterprise”, in accordance with the Law, under the Alternative
Benefit Track starting with 2007 as the election year (the “2007 Program”) and 2012 as an election year to the expansion
of its “Beneficiary Enterprise” program (the “2012 Program”).
Under the
2012 Program, the Subsidiary, which was located in the “Other National Priority Zone” with respect to the year 2012,
would be tax exempt in the first two years of the benefit period and subject to tax at the reduced rate of 10%-25% for a period
of five to eight years for the remaining benefit period (dependent on the level of foreign investments).
In respect
of expansion programs pursuant to Amendment No. 60 to the Law, the duration of the benefit period has been amended, such that it
starts at the later of the election year and the first year the Company earns taxable income provided that 12 years have not passed
since the beginning of the election year and for companies in National Priority Zone A - 14 years have not passed since the beginning
of the election year.
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES
|
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
U.S. Dollars in thousands (except share and per share amounts)
|
NOTE 12:- TAXES
ON INCOME (CONT.)
The benefit
period for the Subsidiary’s 2007 Program expired in 2018 (12 years since the beginning of the election year– 2007)
and the benefit period for the Subsidiary’s 2012 Program is expected to expire in 2023 (12 years since the beginning of the
election year - 2012).
If a dividend
is distributed out of tax exempt profits, as detailed above, the Subsidiary will become liable for taxes at the rate applicable
to its profits from the Beneficiary Enterprise in the year in which the income was earned (tax at the rate of 10-25%, dependent
on the level of foreign investments) and to a withholding tax rate of 15% (or lower, under an applicable tax treaty).
Accelerated
depreciation:
The Subsidiary
is eligible for deduction of accelerated depreciation on buildings, machinery and equipment used by the “Beneficiary Enterprise”
at a rate of 200% (or 400% for buildings but not more than 20% depreciation per year) from the first year of the assets operation.
Conditions
for the entitlement to the benefits:
The above
mentioned benefits are conditional upon the fulfillment of the conditions stipulated by the Law, regulations promulgated thereunder,
and the Ruling with respect to the beneficiary enterprise. Non-compliance with the conditions may cancel all or part of the benefits
and refund of the amount of the benefits, including interest. The management believes that the Subsidiary is meeting the aforementioned
conditions.
Amendments
to the Law:
In December
2010, the “Knesset” (Israeli Parliament) passed the Law for Economic Policy for 2011 and 2012 (Amended Legislation),
2011, which prescribes, among others, amendments in the Law ( “Amendment No. 68”). Amendment No. 68 became effective
as of January 1, 2011. According to Amendment No. 68, the benefit tracks in the Law were modified and a flat tax rate became applicable
to a company for all preferred income under its status as a preferred company with a preferred enterprise.
On August
5, 2013, the Knesset issued the Law for Changing National Priorities (Legislative Amendments for Achieving Budget Targets for 2013
and 2014), 2013 which consists of Amendment No. 71 to the Law ( “Amendment No. 71”). According to Amendment No. 71,
the tax rate on preferred income form a preferred enterprise in 2014 and thereafter will be 16% (in development area A it will
be 9%).
Amendment
No. 71 also prescribes that any dividends distributed to individuals or foreign residents from the preferred enterprise’s
earnings as above will be subject to tax at a rate of 20%.
The Subsidiary
did not apply Amendment No. 71 with respect to the preferred enterprise status, but may choose to apply Amendment No. 71 in the
future.
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES
|
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
U.S. Dollars in thousands (except share and per share amounts)
|
NOTE 12:- TAXES
ON INCOME (CONT.)
Innovation
Box Regime “Technological Preferred Enterprise”:
In December
2016, the Knesset approved amendments to the Law that introduce an innovation box regime (the “Innovation Box Regime”)
for intellectual property (IP)-based companies, enhance tax incentives for certain industrial companies and reduce the standard
corporate tax rate and certain withholding rates starting in 2017.
The Innovation
Box Regime was tailored by the Israeli government to a post-base erosion and profit shifting world, encouraging multinationals
to consolidate IP ownership and profits in Israel along with existing Israeli research and development (“R&D”)
functions. Tax benefits created to achieve this goal include a reduced corporate income tax rate of 6% on IP-based income and on
capital gains from future sale of IP.
The 6% rate
would apply to qualifying Israeli companies that are part of a group with global consolidated revenue of over NIS 10 billion (approximately
$2.9 billion). Other qualifying companies with global consolidated revenue below NIS 10 billion, would be subject to a 12% tax
rate. However, if the Israeli company is located in Jerusalem or in certain northern or southern parts of Israel, the tax rate
is further reduced to 7.5%. Additionally, withholding tax on dividends for foreign investors would be subject to a reduced rate
of 4% for all qualifying companies (unless further reduced by a treaty).
Entering
the regime is not conditioned on making additional investments in Israel, and a company could qualify if it invested at least 7%
of the last three years’ revenue in R&D (or incurred at least NIS 75 million in R&D expenses per year) and met one
of the following three conditions:
|
1.
|
At least 20% of its employees are R&D employees engaged
in R&D (or employs, in total, more than 200 R&D employees);
|
|
2.
|
Venture capital investments in the aggregate of NIS 8 million
were previously made in the company; or
|
|
3.
|
Average annual growth over three years of 25% in sales
or employees.
|
Companies
not meeting the above conditions may still be considered as a qualified company at the discretion of the IIA. Companies wishing
to exit from the regime in the future will not be subject to claw back of tax benefits. The Knesset also approved a stability clause
in order to encourage multinationals to invest in Israel. Accordingly, companies will be able to confirm the applicability of tax
incentives for a 10-year period under a pre-ruling process. Further, in line with the new Organization for Economic Co-operation
and Development Nexus Approach, the Israeli Finance Minister will promulgate regulations to ensure companies are benefiting from
the regime to the extent qualifying research and development expenditures are incurred. The regulations were set to be finalized
by March 31, 2017, with new amendments to the Law coming into effect after the regulations have been finalized.
Taxable income
which is not produced as part of “Preferred Enterprise” income will be taxed at the regular tax rate (23% in 2020).
As of June
30, 2020, the Company’s management believes that the Company meets the conditions mentioned above to be considered as a Technological
Preferred Enterprise.
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES
|
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
U.S. Dollars in thousands (except share and per share amounts)
|
NOTE 12:- TAXES
ON INCOME (CONT.)
The tax rate applicable to the
German Subsidiary is the corporate tax rate of 15%, which is derived from the German Corporation Tax Act and Solidarity surcharge
of 5.5% from the 15% corporate tax rate. This corporate tax rate excludes trade tax, which rate depends on the municipality in
which the German Subsidiary conducts its business. Trade tax is calculated on the basis of the trade income, to which the tax rate
of 3.5% is applied. The measured amount is then multiplied by the applicable rate of assessment, the registered office of the German
Subsidiary is in Potsdam, and in Potsdam, the applicable rate of assessment is 455%.
|
B.
|
Carryforward losses for tax purposes
|
As of June
30, 2020, Pluristem Therapeutics had a U.S. federal net operating loss carryforward for income tax purposes in the amount of approximately
$34,836. Net operating loss carryforward arising in taxable years, can be carried forward
and offset against taxable income for 20 years and expiring between 2023 and 2038.
Utilization
of U.S. net operating losses may be subject to substantial annual limitations due to the “change in ownership” provisions
of the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of net operating
losses before utilization.
In January 2018, Pluristem
Therapeutics registered as an Israeli resident with the ITA and the Israeli Value Added Tax Authorities. As of June 30, 2020, Pluristem
Therapeutics and the Subsidiary consolidated accumulated losses, for tax purposes, are approximately $51,888, which may be carried
forward and offset against taxable business income and business capital gain in the future for an indefinite period.
The Subsidiary
has accumulated losses, for tax purposes, as of June 30, 2020, in the amount of approximately $129,286, which may be carried forward
and offset against taxable business income and business capital gain in the future for an indefinite period.
The German
Subsidiary has accumulated losses, for tax purposes, as of June 30, 2020, in the amount of approximately $151, which may be carried
forward and offset against taxable business income and business capital gain in the future for an indefinite period.
PLURISTEM THERAPEUTICS INC. AND ITS SUBSIDIARIES
|
NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS
|
U.S. Dollars in thousands (except share and per share amounts)
|
NOTE 12:- TAXES
ON INCOME (CONT.)
Deferred
income taxes:
Deferred
income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets
are as follows:
|
|
June 30,
|
|
|
|
2020
|
|
|
2019
|
|
Deferred tax assets:
|
|
|
|
|
|
|
U.S. net operating loss carryforward
|
|
$
|
7,316
|
|
|
$
|
7,316
|
|
Israeli net operating loss and research and development expenses carryforward
|
|
|
35,168
|
|
|
|
40,866
|
|
Consolidated net operating loss carryforward
|
|
|
11,934
|
|
|
|
-
|
|
German subsidiary net operating loss carryforward
|
|
|
48
|
|
|
|
-
|
|
Allowances and reserves
|
|
|
271
|
|
|
|
283
|
|
|
|
|
|
|
|
|
|
|
Total deferred tax assets before valuation allowance
|
|
|
54,737
|
|
|
|
48,465
|
|
Valuation allowance
|
|
|
(54,737
|
)
|
|
|
(48,465
|
)
|
|
|
|
|
|
|
|
|
|
Net deferred tax asset
|
|
$
|
-
|
|
|
$
|
-
|
|
As of June
30, 2020 and 2019, the Company has provided full valuation allowances in respect of deferred tax assets resulting from tax loss
carryforward and other temporary differences, since it has a history of operating losses and current uncertainty concerning its
ability to realize these deferred tax assets in the future.
The Company
accounts for its income tax uncertainties in accordance with ASC 740 which clarifies the accounting for uncertainties in income
taxes recognized in a Company’s financial statements and prescribes a recognition threshold and measurement attribute for
the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.
As of June
30, 2020 and 2019, there were no unrecognized tax benefits that if recognized would affect the annual effective tax rate.
Reconciliation
of the theoretical tax expense (benefit) to the actual tax expense (benefit):
In 2020,
2019 and 2018, the main reconciling item of the statutory tax rate of the Company (21% to 35% in 2020, 2019 and 2018) to the effective
tax rate (0%) is tax loss carryforwards, stock-based compensation and other deferred tax assets for which a full valuation allowance
was provided.
NOTE 13:- SUBSEQUENT EVENTS
|
a.
|
Pursuant to a shelf registration on Form S-3 declared effective
by the SEC on July 23, 2020, in July 2020 the Company entered into a new Open Market Sale AgreementSM (“New ATM
Agreement”) with Jefferies, which provides that, upon the terms and subject to the conditions and limitations in the New
ATM Agreement, the Company may elect, from time to time, to offer and sell shares of common stock having an aggregate offering
price of up to $75,000 through Jefferies acting as sales agent. As of September 5, 2020, no shares had been sold pursuant to the
New ATM Agreement.
|
|
b.
|
Subsequent to year-end,
warrants to purchase shares of common stock were exercised by investors at an exercise price of $7.00 per share, resulting in
the issuance of 35,000 shares of common stock for net proceeds of approximately $245.
|
|
c.
|
Subsequent to year-end, the Board of Directors approved (i) a grant of
1,000,000 RSUs to each of Mr. Yanay, and Mr. Aberman of which 500,000 shares vest over a term of 4 years from the date of the grant
and 500,000 shares shall vest pursuant to certain performance metrics, (ii) a grant of 100,000 RSUs to Mrs. Franco-Yehuda, which
vest over a term of 4 years from the date of grant; and (iii) 20,000 RSUs to each of the Company’s non-executive directors,
which vest over a term of 4 years from the date of the grant.
|