| STOCKHOLDERS’ EQUITY AND ADDITIONAL PAID-IN CAPITAL | 12.
STOCKHOLDERS’ EQUITY AND ADDITIONAL PAID-IN CAPITAL Authorized We
have an unlimited number of common shares authorized without par value. Common
shares issuances 2019
common share issuances were as follows:
i. On
February 20, 2019, the Company issued 143,110
stock awards pursuant to the 2016
Plan. Pursuant to Israeli tax requirements, the common shares were issued to a trustee on behalf of SciVac employees.
ii. On
February 20, 2019, the Company issued 35,000
stock awards to service providers
pursuant to the 2016 Plan.
iii. On
February 20, 2019, the Company issued 140,000
stock awards pursuant to the 2016
Plan.
iv. On
June 17, 2019, 25 %
of the stock awards granted on June 24, 2016 vested and the Company issued 95,312
shares of the Company’s common
shares.
v. In
September 2019, the Company closed an underwritten public offering of 80,500,000
common shares at a price of $ 0.50
per share for total gross proceeds
of $ 40,250 .
The Company incurred $ 2,835 of share issuance costs. 2020
common shares issuances were as follows:
i. On
March 6, 2020, the Company issued 118,471
stock awards pursuant to the 2016
Plan. Pursuant to Israeli tax requirements, the common shares were issued to a trustee on behalf of SciVac employees.
ii. On
April 24, 2020, the Company closed an underwritten public offering of 52,272,726
common shares at a price of $ 1.10
per share for total gross proceeds
of $ 57,500 .
The Company incurred $ 3,606
of share issuance costs.
iii. On
July 21, 2020, the Company issued 550,000
common shares upon exercise of warrants
at an exercise price of $ 3.34
for gross proceeds of $ 1,837 .
iv. On
August 11, 2020, the Company issued 750
common shares upon exercise of stock
options at an exercise price of $ 1.64
for gross proceeds of $ 1 .
v. During
the second half of the year ended December 31, 2020, as part of the Open Market Sale Agreement with Jefferies, the Company
issued 15,638,706
common shares for total gross proceeds
of $ 64,685
at an average price of $ 4.14 .
The Company incurred $ 2,101
of share issuance costs.
vi. During
the fourth quarter of the year ended December 31, 2020, the Company issued 201,158
common shares upon exercise of National
Warrants at an exercise price of $ 1.50
for gross proceeds of $ 302 . Stock
option plans The
Company’s stock option plans are approved by and administered by the Board and its Compensation Committee. The Board designates,
in connection with recommendations from the Compensation Committee, eligible participants to be included under the plan, and designates
the number of options, exercise price and vesting period of the new options. 2006
VBI US Stock Option Plan The
2006 VBI US Stock Option Plan (the “2006 Plan”), was approved by and was previously administered by the VBI US board
of directors which designated eligible participants to be included under the 2006 Plan, and designated the number of options,
exercise price and vesting period of the new options. The 2006 Plan was not approved by the stockholders of VBI US. The 2006 Plan
was superseded by the 2014 Plan (as defined below) following the PLCC Merger and no further options will be issued under the 2006
Plan. As of December 31, 2020, there were 990,449
options outstanding under the 2006 Plan. 2013
Stock Incentive Plan The
2013 Equity Incentive Plan (the “2013 Plan”) was approved by and was previously administered by the VBI DE board of
directors which designated eligible participants to be included under the 2013 Plan, and designated the number of options, exercise
price and vesting period of the new options. The 2013 Plan was approved by the VBI DE shareholders on November 8, 2013. No further
options will be issued under the 2013 Plan. As of December 31, 2020, there are no
options outstanding under the 2013 Plan. 2014
Equity Incentive Plan On
May 1, 2014, the VBI DE board of directors adopted the VBI Vaccines Inc. 2014 Equity Incentive Plan (the “2014 Plan”).
The 2014 Plan was approved by the VBI DE’s shareholders on July 14, 2014. No further options will be issued under the 2014
Plan. As of December 31, 2020, there were 521,242
options outstanding under the 2014 Plan. 2016
VBI Equity Incentive Plan The
2016 Plan is a rolling incentive plan that sets the number of common shares issuable under the 2016 Plan, together with any other
security-based compensation arrangement of the Company, at a maximum of 10% of the aggregate common shares issued and outstanding
on a non-diluted basis at the time of any grant under the 2016 Plan. The 2016 Plan is an omnibus equity incentive plan pursuant
to which the Company may grant equity and equity-linked awards to eligible participants in order to promote the success of the
Company by providing a means to offer incentives and to attract, motivate, retain and reward persons eligible to participate in
the 2016 Plan. Grants under the 2016 Plan include a grant or right consisting of one or more options, stock appreciation rights
(“SARs”), restricted share units (“RSUs”), performance share units (“PSUs”), shares of restricted
stock or other such award as may be permitted under the 2016 Plan. As of December 31, 2020, there were 10,995,850
options outstanding and 129,356
RSUs unvested under the 2016 Plan. The
principal features of the 2016 Plan are as follows: Eligible
Participants Eligible
participants include individuals employed (including services as a director) by the Company or its affiliates, including a service
provider, who, by the nature of his or her position or job is, in the opinion of the Board, in a position to contribute to the
success of the Company (“Eligible Persons”). Reservation
of Shares The
aggregate number of common Shares reserved for issuance to any one participant under the 2016 Plan, together with all other security-based
compensation arrangements must not exceed 5 %
of the total number of issued and outstanding common shares on a non-diluted basis. The
maximum number of common shares (a) issued to insiders within any one year period; and (b) issuable to insiders at any time, under
the 2016 Plan, when combined with all of the Company’s other security-based compensation arrangements, must not exceed 10 %
of the total number of issued and outstanding common shares. The
aggregate number of common shares remaining available for issuance for awards under the 2016 Plan totaled 10,731,577
at December 31, 2020. The
source of common shares issued under the various stock option plans are new common shares. Options
and Stock Appreciation Rights The
Company may grant options to Eligible Persons on such terms and conditions consistent with the 2016 Plan. The exercise price for
an option must not be less than 100 %
of the “market price,” as that term is defined in the 2016 Plan, based on the trading price per common share, on the
date of grant of such option. With
respect to SARs attached to an option, which allows the holder, upon vesting of the option and Tandem SAR, to choose to exercise
the stock appreciation right or to exercise the option, the exercise price is the exercise price applicable to the option (as
explained above) to which the Tandem SAR relates, subject to adjustment provisions under the 2016 Plan. For stand-alone SARs,
a SAR that is granted without reference to any related Company options, the base price must not be less than 100% of the market
price on the date of grant of such Stand-Alone SAR. Stock appreciation rights (and in the case of Tandem SARs, the related options)
will be settled by payment in cash or common shares or a combination thereof, with an aggregate value equal to the product of
(a) the excess of the market price on the date of exercise over the exercise price or base price under the applicable stock appreciation
right, multiplied by (b) the number of stock appreciation rights exercised or settled. The Company has not issued any SARs under
the 2016 Plan at December 31, 2020 and 2019. Under
the 2016 Plan unless otherwise designated by the Board of Directors, 25 %
of the options will vest on each of the first four anniversaries of the grant date. The term of options will be for a maximum
of 10
years, unless exercised or terminated
earlier in accordance with the terms of the 2016 VBI Plan or the applicable grant agreement. Upon
a participant’s termination of employment due to death, or in the case of disability: (a) the outstanding options that were
granted prior to the year that includes the participant’s death or disability that have not become vested prior to such
date will continue to vest and, upon vesting, be exercisable during the 36-month period following such date; and (b) the outstanding
options that have become vested prior to the participant’s death or disability will continue to be exercisable during the
36-month period following such date. In
the case of a participant’s termination of employment or contract for services without cause: (a) the outstanding options
that have not become vested prior to the participant’s termination will continue to vest and, upon vesting, be exercisable
during the 120-day period following such date; and (b) the outstanding options that have become vested prior to the participant’s
termination will continue to be exercisable during the 120-day period following such date. In
the case of a participant’s termination due to resignation (including voluntary withdrawal of services by a non-employee
participant): (a) the outstanding options that have not become vested prior to the date of notice of resignation will be forfeited
and cancelled as of such date; and (b) the outstanding options that have become vested prior to the date of notice of resignation
will continue to be exercisable during the 90-day period following such date. In
the case of a participant’s termination of employment or contract for services for cause, any and all then outstanding unvested
options granted to such participant will be immediately forfeited and cancelled, without any consideration therefor, as of the
date such notice of termination is given. Share
Units The
Board of Directors may grant share units, which include RSUs and PSUs, to Eligible Persons on such terms and conditions consistent
with the 2016 Plan. The
Board will determine the grant value and the valuation date for each grant of share units. The number of share units to be covered
by each grant will be determined by dividing the grant value for such grant by the market value of a common share as of the valuation
date, rounded up to the next whole number. Share
units subject to a grant will vest as specified in the grant agreement governing such grant, provided that the participant is
employed on the relevant vesting date. RSUs and PSUs will be settled upon, or as soon as reasonably practicable following the
vesting thereof, subject to the terms of the grant agreement. In all events, RSUs and PSUs will be settled on or before the earlier
of the 90 th th If
and when cash dividends are paid with respect to common shares to shareholders of record during the period from the grant date
to the date of settlement of the RSUs or PSUs, a number of dividend equivalent RSUs or PSUs, as applicable, will be credited to
the share unit account of such participant. In
the event a participant’s employment is terminated due to resignation, share units that have not vested prior to the date
of resignation will not vest and all such common shares will be forfeited immediately. In
the case of a participant’s termination due to death, or in the case of disability, all share units granted prior to the
year that includes the participant’s death or disability, that have not vested prior to the participant’s death or
disability will vest at the end of the vesting period and in the case of PSUs, subject to the achievement of applicable performance
conditions and the adjustment of the number of PSUs that vest to reflect the extent to which such performance conditions were
achieved. In
the event a participant’s employment or contract for services is terminated without cause, prior to the end of a vesting
period relating to such participant’s grant, the number of RSUs or PSUs, respectively, as determined by their respective
formula set out in the 2016 Plan will become vested at the end of the vesting period. In
the event a participant’s employment is terminated for cause, share units that have not vested prior to the date of the
termination for cause will not vest and all such share units will be forfeited immediately. Restricted
Stock Restricted
stock means common shares that are subject to restrictions on such participant’s free enjoyment of the common shares granted,
as determined by the Board. Notwithstanding the restrictions, the participant will receive dividends paid on the restricted stock,
will receive proceeds of the restricted stock in the event of any change in the common shares and will be entitled to vote the
restricted stock during the restriction period. The
participant will not have rights to sell, transfer or assign, or otherwise dispose of the shares of restricted stock or any interest
therein while the restrictions remain in effect. Grants of restricted stock will be forfeited if the applicable restriction does
not lapse prior to such date or occurrence of such event or the satisfaction of such other criteria as is specified in the grant
agreement. No
restricted stock has been issued through December 31, 2020. Stock-based
compensation expense The
table below provides information, as of December 31, 2020, regarding the 2006 Plan, the 2013 Plan, the 2014 Plan and the 2016
Plan under which our equity securities are authorized for issuance to officers, directors, employees, consultants, independent
contractors and advisors. SCHEDULE
OF STOCK OPTIONS OUTSTANDING UNDER DIFFERENT PLANS
Plan
Category Number
of Weighted
2006
Plan 990,449 $ 4.02
2014
Plan 521,242 $ 5.09
2016
Plan 11,125,206 $ 2.10
Total 12,636,897 $ 2.37 Activity
related to stock options is as follows: SCHEDULE
OF STOCK OPTIONS ACTIVITY
Number
of Weighted
Balance
outstanding at December 31, 2018 3,479,676 $ 4.14
Granted 3,870,000 $ 1.69
Exercised - $ -
Forfeited (877,968 ) $ 3.40
Balance
outstanding at December 31, 2019 6,471,708 $ 2.79
Balance outstanding
at December 31, 2019 6,471,708 2.79
Granted 6,075,900 $ 1.95
Exercised (750 ) $ 1.64
Forfeited (39,317 ) $ 2.59
Balance
outstanding at December 31, 2020 12,507,541 $ 2.38
Exercisable
at December 31, 2020 6,289,230 $ 2.76 SCHEDULE
OF EXERCISE PRICE RANGE STOCK OPTIONS OUTSTANDING AND EXERCISABLE
Outstanding Exercisable
Exercise Price Number Of Weighted Average Remaining Contractual Life (Years) Number Of Options Weighted
$ 0.00 3.49 9,882,286 8.65 3,817,956 $ 1.70
$ 3.50 4.49 1,934,266 5.88 1,780,285 $ 4.15
$ 4.50 5.49 668,101 4.32 668,101 $ 4.90
$ 5.50 22,888 3.57 22,888 $ 8.17
12,507,541 7.93 6,289,230 $ 2.76 The
weighted average remaining contractual life of exercisable options was 6.98
years and 6.81
years at December 31, 2020 and 2019, respectively. Information
relating to restricted stock units is as follow: SCHEDULE
OF RESTRICTED STOCK UNITS
Number
of Weighted
Unvested
shares outstanding at January 1, 2019 and December 31, 2018 268,570 4.13
Granted 330,000 $ 1.65
Vested (421,544 ) $ 2.73
Forfeited (19,029 ) $ 3.43
Unvested shares
outstanding at December 31, 2019 157,997 $ 2.77
Unvested shares
outstanding at December 31, 2019 157,997 2.77
Granted 125,000 $ 1.46
Vested (140,167 ) $ 2.79
Forfeited (13,474 ) $ 1.53
Unvested shares
outstanding at December 31, 2020 129,356 $ 1.62 The
intrinsic value of outstanding options at December 31, 2020 was $ 9,314
(the intrinsic value of vested options
was $ 4,085
and the intrinsic value of those expected
to vest was $ 5,229 ).
The fair value of the vested RSU’s was $ 389
for the year ended December 31, 2020.
There were 750
options exercised for the year ended December
31, 2020 and the intrinsic value of exercised options was $ 2
for the year ended December 31, 2020.
There were no options exercised for the year ended December 31, 2019. In
determining the amount of stock-based compensation the Company used the Black-Scholes option pricing model to establish the fair
value of options granted by applying the following weighted average assumptions: SCHEDULE
OF FAIR VALUE OF OPTIONS GRANTED BY USING BLACK-SCHOLES OPTION PRICING ASSUMPTIONS
2020 2019
Volatility 91.59 % 118.62 %
Risk
free interest rate 1.19 % 2.46 %
Expected
term in years 5.81 5.78
Expected
dividend yield 0.00 % 0.00 %
Weighted average
fair value per option $ 1.42 $ 1.45 The
volatility was based on the Company’s recent historic volatility since May 6, 2016. The
risk-free rate was based on rates provided by the United States Treasury with a term equal to the expected life of the option. The
Company does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate expected term due
to the limited period of time its equity shares have been publicly traded. As a result, the Company uses the simplified method
to determine the expected term of stock options whereby the expected term equals the average between the vesting period and the
contractual life. The
fair value of the options is recognized as an expense on a straight-line basis over the vesting period, forfeitures are accounted
for when they occur. The
total stock-based compensation expense recorded in the years ended December 31, was as follows: SCHEDULE
OF STOCK-BASED COMPENSATION EXPENSE
2020 2019
Research
and development $ 1,088 $ 796
General
and administration 4,143 3,080
Cost
of revenue 56 59
Total
stock-based compensation expense $ 5,287 $ 3,935 There
is $ 8,847
of unrecognized compensation from all
equity awards as of December 31, 2020. This expense will be recognized over a weighted average period of 2.01
years. Warrants In
April 2020, the Company engaged National to provide financial advisory services in connection with the April 2020 underwritten
public offering, discussed above. As consideration for such services, the Company issued to National or its designees
warrants to purchase up to an aggregate of 705,000
common shares, subject to the terms and
conditions set forth in the form of warrant agreement. The National Warrants are exercisable immediately upon issuance and terminate
three years following issuance and have an exercise price of $ 1.50
per share. On
May 22, 2020, in connection with the Loan Agreement, as described in Note 10, the Company issued a warrant, the K2 Warrant, to
purchase up to an aggregate of 625,000
common shares, subject to terms and conditions
set forth in the form of warrant agreement. The K2 Warrant expires on May
22, 2030 and has an exercise price of $ 1.12
per share. On
July 21, 2020, the Company issued 550,000
common shares upon exercise of warrants
at an exercise price of $ 3.34
for gross proceeds of $ 1,837 . During
the fourth quarter of the year ended December 31, 2020, the Company issued 201,158
common shares upon exercise of National
Warrants at an exercise price of $ 1.50
for gross proceeds of $ 302 . During
the year ended December 31, 2019, the Company amended the exercise price of certain warrants issued on July 25, 2014 and December
6, 2016, as described in Note 10. The
value attributed to the National Warrants and the K2 Warrant were based on the Black-Scholes option pricing model by applying
the following assumptions: SCHEDULE
OF FAIR VALUE OF WARRANTS GRANTED BY USING BLACK-SCHOLES OPTION PRICING ASSUMPTIONS
National K2
Warrant
Volatility 103.13 % 95.00 %
Risk
free interest rate 0.26 % 0.66 %
Expected
term in years 3 10
Expected
dividend yield 0.00 % 0.00 %
Fair value
per warrant $ 0.64 $ 2.25 Activity
related to the warrants is as follows: SCHEDULE
OF WARRANT ACTIVITY
Number
of Warrants Weighted
Average Exercise
Price
Balance
outstanding at January 1, 2019 2,618,824 $ 3.57
Issued - -
Balance outstanding
at December 31, 2019 2,618,824 $ 2.87
Issued 1,330,000 $ 1.32
Exercised (751,158 ) $ 2.85
Balance outstanding
at December 31, 2020 3,197,666 $ 2.23 |
