Annual and transition report of foreign private issuers pursuant to Section 13 or 15(d)

Share Capital

v3.22.1
Share Capital
12 Months Ended
Dec. 31, 2021
Stockholders' Equity Note [Abstract]  
SHARE CAPITAL

NOTE 9 - SHARE CAPITAL

 

A. Ordinary shares

 

  1) Rights of the Company’s ordinary shares

 

Each ordinary share is entitled to one vote. The holder of the ordinary shares is also entitled to receive dividends whenever funds are legally available, when and if declared by the Board of Directors. Since its inception, the Company has not declared any dividends.

 

On January 31, 2018 the Company’s ADSs commenced trading on the Nasdaq Capital Market, under the symbol CLGN. On May 25, 2021, The Company’s ordinary shares were approved for trading on the Nasdaq Global Market, and began trading at the open of market on June 4, 2021. At such time, the Company’s ADSs were mandatorily cancelled and exchanged for ordinary shares at a one-for-one ratio. 

 

 On October 27 2019, the Company’s shareholders approved the increase of the authorized share capital of the Company by 15,000,000 ordinary shares to 30,000,000 ordinary shares NIS 1.50 par value.

 

On June 6, 2019, at a general meeting of shareholders, the Company’s shareholders approved a reverse share split of the Company’s ordinary shares at a ratio of 1-for-50, such that each fifty (50) ordinary shares, par value NIS 0.03 per share, consolidated into one (1) ordinary share, par value NIS 1.50.

 

Additionally, according to the share option plan of the Company, every 50 options, or 150 options if granted before the November 2016 reverse split, that were allocated to directors, employees, consultants and officers under the option plan are exercisable into one ordinary share of the Company of NIS 1.50 par value. No change took place in the exercise price of the options; however, for options that were granted between November 2016 to date, the total exercise price for one share of NIS 1.50 par value will be the former exercise price for one share of NIS 0.03 par value multiplied by 50 and, for options that were granted before the November 2016 reverse split, the total exercise price for one share of NIS 1.50 par value will be the former exercise price for one share of NIS 0.01 par value multiplied by 150.

 

Further, according to the terms and conditions of the warrants of the Company, each 50 warrants that the Company issued are exercisable into one ordinary share of the Company of NIS 1.50 par value. There will be no change in the exercise price of those warrants; however, the total exercise price for one share of NIS 1.50 par value will be the former exercise price for one share of NIS 0.03 par value multiplied by 50.  

 

Following the reverse split, the Company retrospectively reflected the change in the share capital of the Company for all periods presented. Unless otherwise indicated, all of the share and ADS numbers, losses per share, share prices, options and warrants in these financial statements have been adjusted, on a retroactive basis, to reflect this 1-for-50 reverse share split.

 

  2) Changes in share capital:

 

  a)

On September 6, 2017, the Company signed a securities purchase agreement (the “Alpha Purchase Agreement”) with Alpha Capital Anstalt (“Alpha”), pursuant to which the Company agreed, upon the terms and subject to the conditions of the Alpha Purchase Agreement, to issue to Alpha, in a private placement, certain securities, in three tranches, as follows: (i) at the first closing, which was completed on October 26, 2017, ordinary shares and a Convertible Debenture (“Debenture”), for a purchase price of $2,000 (ii) at the second closing, which was completed on December 31, 2017 and which was subject, among other things, to approval of the private placement by the Company’s shareholders, a Debenture for a purchase price of $2,000, and (iii) at the third closing, which was completed on April 30, 2018, which was subject, among other things, to the listing of the Company’s ADSs for trading on the NASDAQ and to the receipt of shareholder and option holder approval to adopt the provisions of Chapter E3 of the Israeli Securities Law of 1968 (which allows the Company to report in Israel in accordance with U.S. reporting requirements) (“Dual Reporting Approval”), ordinary shares and/or a Debenture for a purchase price of $1,000, and a warrant (the “Alpha Warrant”) to purchase 992,149 ordinary shares represented by 992,149 ADSs exercisable for a period of five years from the date of issuance at an exercise price of approximately $10.15 per ADS (calculated in accordance with the known representative rate of exchange on the date of the notice of exercise).

 

On October 26, 2017, upon the completion of the first closing, the Company issued to Alpha 145,600 ordinary shares and a Debenture in the principal amount of $1,375, for gross proceeds of $2,000. On December 31, 2017, upon completion of the second closing, the Company issued a Debenture in the principal amount of $2,000 for gross proceeds of $2,000. The Debentures were convertible at any time at the option of the holder into ADSs at a conversion price of $4.29 per ADS. In addition, the Debenture was mandatorily convertible at the then effective conversion price without regard to any beneficial ownership limitation if (i) the ADSs or the Company’s ordinary shares are approved for listing on the Nasdaq stock market, and (ii) certain equity conditions are met, and provided that the holder may elect to convert the Debenture in whole or in part to a pre-paid warrant to purchase such number of ADSs otherwise issuable upon mandatory conversion of the Debenture. On January 31, 2018, Debentures in the aggregate principal amount of $3,375 were automatically converted into a pre-paid warrant to purchase 786,455 ordinary shares represented by 786,455 ADSs.

 

On April 30, 2018, the Company completed the third closing of the Alpha Purchase Agreement, which resulted in the issuance to Alpha of a pre-paid warrant to purchase 198,430 ordinary shares represented by 198,430 ADSs and the Alpha Warrant to purchase up to 992,149 ordinary shares represented by 992,149 ADSs, at an exercise price of $10.28 per ADS, for gross proceeds of $1,000. In 2018, Alpha converted a pre-paid warrant to purchase 165,000 ordinary shares into 165,000 ordinary shares, in 2019 Alpha converted a pre-paid warrant to purchase 50,000 ordinary shares into 50,000 ordinary shares and in 2020 Alpha converted the remaining of the prepaid warrants and converted a pre-paid warrant to purchase 811,085 ordinary shares into 811,085 ordinary shares.

 

    Under the Alpha Purchase Agreement, Alpha was also granted certain rights, including, among other things, anti-dilution protection until October 26, 2019 in the event of certain subsequent equity issuances at a price that is lower than the then applicable per ordinary share purchase price.
     
    On October 27, 2019, as a result of a share issuance to certain private investors, the warrant exercise price was reduced to $4.00 per share. In addition, the reduction in exercise price to become denominated in USD, resulted in the instrument being reclassified from a financial liability to equity.
     
    During January-April 2021, Alpha exercised 992,149 warrants into 992,149 ADS in return of $3,969.

 

  b)

On November 8, 2017, the Company signed a securities purchase agreement (the “Meitav Dash Purchase Agreement”) with Meitav Dash, a company held by Meitav Dash Ltd., one of the Company’s shareholders pursuant to which the Company agreed, upon the terms and subject to the conditions of the Meitav Dash Purchase Agreement, to issue to Meitav Dash in a private placement certain securities in three tranches as follows: (i) at the first closing, which was completed on December 26, 2017, 190,000 ordinary shares, for a purchase price of $1,089, (ii) at the second closing, which was completed on the same day, 48,000 ordinary shares for a purchase price of $275 provided that Meitav Dash shall not be obligated to buy or hold, immediately following the second closing, 20% or more of the Company’s share capital, and (iii) at the third closing, which was completed on March 7, 2018 and which was subject, among other things, to the listing of the Company’s ADSs for trading on the Nasdaq and Dual Reporting Approval, for no additional consideration, warrants exercisable into 238,000 ordinary shares.

 

The Company completed the first and second closings on December 26, 2017 which resulted in the issuance to Meitav Dash of an aggregate of 238,000 ordinary shares for gross proceeds of $1,364 and on March 7, 2018, the Company completed the third closing which resulted in the issuance to Meitav Dash of a warrant to purchase 238,000 ordinary shares.

     
   

The warrant may be exercised for a period of five years from issuance at an initial exercise price of approximately $11.57 per ADS, subject to adjustment as further described below.

 

Under the Meitav Dash Purchase Agreement, Meitav Dash was also granted certain rights, including, among others, anti-dilution protection in the event of certain subsequent equity issuances at a price that is lower than the then applicable per ordinary share purchase price.

 

On October 27, 2019, as a result of a share issuance to certain private investors, the warrant exercise price was reduced to $4.00 per share. In addition, the reduction in exercise price to become denominated in USD, resulted in the instrument being reclassified from a financial liability to equity.

 

  c) On November 9, 2017, the Company signed a securities purchase agreement (the “Sagy Purchase Agreement”) with Ami Sagy, one of the Company’s shareholders, pursuant to which the Company agreed, upon the terms and subject to the conditions of the Sagy Purchase Agreement, to issue to Ami Sagy in a private placement certain securities in two tranches as follows: (i) at the first closing, which closed on December 26, 2017, 186,000 ordinary shares, for gross proceeds of $1,066, and (ii) at the second closing, which closed on March 7, 2018 and which was subject, among other things, to the listing of the Company’s ADSs for trading on the Nasdaq and to Dual Reporting Approval, for no additional consideration, the Company will issue warrants exercisable into 186,000 of its ordinary shares.
     
   

The Company completed the first closing on December 26, 2017 which resulted in the issuance to Ami Sagy of an aggregate of 186,000 ordinary shares for gross proceeds of $1,066 and on March 7, 2018, the Company completed the second closing which resulted in the issuance to Ami Sagy of a warrant to purchase 186,000 ordinary shares.

 

The warrant may be exercised for a period of five years from issuance at an initial exercise price of approximately $11.57 per ADS, subject to adjustment as further described below.

 

    Under the Sagy Purchase Agreement, Ami Sagy was also granted certain rights, including, among other things, anti-dilution protection in the event of certain subsequent equity issuances at a price that is lower than the then applicable per ordinary share purchase price, see Note 3.
     
    On October 27, 2019, as a result of a share issuance to certain private investors, the warrant exercise price was reduced to $4.00 per share. In addition, the reduction in exercise price to become denominated in USD, resulted in the instrument being reclassified from a financial liability to equity.  

 

  d) On September 10, 2018, the Company signed a one year service agreement with a service provider according to which in return to its services the Company will pay a monthly retainer and issue a total of 12,000 restricted ADSs (12,000 ordinary shares) in 3 tranches of 4,000 ADSs (4,000 ordinary shares) each: (i) following the execution of the agreement, (ii) February 1, 2019, and (iii) June 1, 2019. If the agreement was cancelled prior to the issuance date the share balance would not be owed. The first tranche was completed on December 19, 2018. The second and third tranches were completed on January 10, 2020.

 

  e) On August 30, 2019, the Company entered into an agreement with Ami Sagy and certain U.S. investors for the issuance of shares and warrants in a form of a convertible loan agreements in the total amount of $6,500, as follows: (i) a convertible loan agreement with Ami Sagy, its largest shareholder (the “Sagy Agreement”), pursuant to which Mr. Sagy will provide a convertible loan to the Company in an amount of $3,000 in two tranches, and (ii) a convertible loan agreement with certain U.S. investors (the “U.S. Agreement”, and, together with the Sagy Agreement, the “Agreements”), pursuant to which such U.S. investors (the “U.S. Investors”) provided a loan to the Company in an amount of $3,500 in one tranche.

 

    The Sagy Agreement provided that the transactions contemplated by the Sagy Agreement shall occur in three separate closings. On the first closing date, which occurred on September 3, 2019, Ami Sagy transferred to the Company the principal amount of $2,000. This amount was invested on account of the issuance in a form of convertible loan and was automatically converted into 500,000 ADSs at a conversion price of $4.00 per ADS on October 27, 2019. On the second closing date, which occurred on February 28, 2021, after the Company executed the Development, Exclusivity and Option Products Agreement (see note 8), the following occurred: (i) Ami Sagy transferred the Company an amount of $1,000 by way of an equity investment, and (ii) the Company issued to Ami Sagy 250,000 ADSs representing 250,000 ordinary shares and a warrants to purchase up to 250,000 ADSs representing 250,000 ordinary shares. On the third closing date, which was subject to shareholder approval and occurred on October 27, 2019, the Company issued to Ami Sagy a warrant to purchase up to 500,000 ADSs representing 500,000 ordinary shares. The consideration of the third closing is included in the principal amount received in the first closing.

 

    The U.S. Agreement provided that the transactions contemplated by the U.S. Agreement shall occur in two separate closings. On the first closing date, which occurred on September 6, 2019, the U.S. Investors transferred to the Company the principal amount of $3,500. On the second closing date, which occurred on October 27, 2019, the following occurred: (i) the principal amount invested on account of the issuance in a form of convertible loan, was automatically converted into 875,000 ADSs at a conversion price equal to $4.00 per ADS, and (ii) the Company issued to the U.S. Investors warrants to purchase up to 875,000 ADSs representing 875,000 ordinary shares.

 

   

In addition, the Company agreed to enter into Price Protection Agreements pursuant to which, until the three-year anniversary of the first closing date, the Company shall issue additional ADSs in the event of certain subsequent equity issuances at a price that is lower than $4.00 (subject to certain adjustments) on a “full-ratchet” basis with respect to their holdings in the Company. The “full-ratchet” instruments are classified as financial liability on the balance sheets and measures at fair value through profit or loss (see note 3).

 

The warrants issuable under the Agreements are exercisable at $4.00 per ADS and have a term of three years from the issuance date. The warrants are subject to adjustments upon certain events, including share splits, share dividends, subsequent rights offerings, and fundamental transactions. In addition, until the three-year anniversary of the first closing date, in the event of certain subsequent equity issuances at a price that is lower than the then applicable exercise price, the exercise price shall adjust to such lower price

 

    Concurrently with the execution of the Agreements, the Company entered into Registration Rights Agreements with each of Ami Sagy and the U.S. Investors, pursuant to which the Company granted certain demand and piggyback registration rights with respect to the ordinary shares represented by the ADSs underlying the convertible loans and warrants.

 

On October 27, 2019, an extraordinary general meeting was held and the Company received the “shareholders’ approval” and subsequently issued the ADSs and warrants as mentioned above.

 

The Company also issued an aggregate of 175,039 ADSs to Mr. Sagy, and Meitav Dash, and 250,000 ADSs and 20,000 prepaid warrant to purchase up to 20,000 ADSs to Alpha in satisfaction of the price protection undertakings under the Alpha Purchase Agreement, the Meitav Dash Purchase Agreement and the Sagy Purchase Agreement.

 

In 2021, the U.S investors exercised 450,000 warrants into 450,000 ordinary shares ADS in return of $1,800. In March 2022, the U.S investors exercised 250,000 warrants into 250,000 ordinary shares in return of $1,000.

 

  f) On February 14, 2020, the Company entered into a Securities Purchase Agreement with several accredited U.S. investors, pursuant to which the Company issued on March 6, 2020, in a private placement, 445,000 ordinary shares for an aggregate purchase price of $4,450.

 

  g) On February 17, 2021, the Company completed a registered direct offering providing for the sale and issuance of an aggregate of 2,000,000 ADSs at a purchase price of $17.50 per ADS, for aggregate gross proceeds of $35,000. The total issuance costs accumulated to $3,200.

 

B. Share-based compensation:

 

  1)

Option plan

 

In accordance with an option plan for employees and consultants (the “Option Plan”), as amended from time to time, employees and consultants of the Company will be granted options, each exercisable into one ordinary share of the Company of NIS 1.50. The ordinary shares that will be issued in accordance with the Option Plan will have the same rights as the other ordinary shares of the Company, immediately subsequent to their issue. An option that is not exercised within 10 years from the allotment date will expire, unless the board of directors extends its validity.

 

Grants to employees are made in accordance with the Option Plan, and are carried out within the provisions of Section 102 of the Israel Income Tax Ordinance. In accordance with the track selected by the Company and these provisions, the Company is not entitled to claim a tax deduction for the employee benefits.

 

For those who are not employees of the Company, and for the Company’s controlling shareholders (as defined in the Income Tax Ordinance) options are granted in accordance with section 3(I) of the Income Tax Ordinance. 

 

  2) Options grants

 

  a. Option granted to employees and directors

 

In the years ended December 31, 2021, 2020 and 2019, the Company granted options as follows (amounts presented reflect the number of shares issued if the options will be exercised):

 

    Year ended December 31, 2021  
    Award
amount
    Exercise
price range
    Vesting
period
    Expiration  
Employees     96,500     $ 12.78-20.7       4 years       10 years  
Directors     23,000     $ 15.2       4 years       10 years  

 

    Year ended December 31, 2020  
    Award
amount
    Exercise
price range
    Vesting
period
    Expiration  
Employees     317,909     $ 10.08       4 years       10 years  
Directors     194,713     $ 9.12-11.06       4 years       10 years  

 

    Year ended December 31, 2019  
    Award
amount
    Exercise
price Range
    Vesting
period
    Expiration  
Employees     230,000     $ 5.07       4 years       7 years  
Directors     301,390     $ 4.02-5.07       4 years       7 years  

 

The fair value of options granted to employees on the date of grant was computed using the Black-Scholes model. The underlying data used for computing the fair value of the options are as follows:  

  

    Year ended December 31,  
    2021     2020     2019  
Value of one ordinary share   $ 11.9-20.37     $ 7.86-10.5      $ 5.7-5.93  
Dividend yield     0 %     0 %     0 %
Expected volatility     65.36-66.49 %     66.12-66.41 %     61.31-62.56 %
Risk-free interest rate     0.64-1.37 %     0.45-0.52 %     2 %
Expected term     6.11 years       6.11 years       4-5.5 years  

 

The fair value of options granted during 2021, 2020 and 2019 was $1,094, 2,952 and $1,602, respectively.

 

The total unrecognized compensation cost of employee options at December 31, 2021 is $1,339, which is expected to be recognized over a weighted average period of 1.71 year.

 

Modification of share-based compensation

 

On October 27, 2019, the Company’s board of directors approved the reduction of the exercise price of 305,342 outstanding options previously granted to employees to a price of $4.02 per share.

 

On December 31, 2019 an extraordinary general meeting of the shareholders of the Company, approved a reduction of the exercise price of 171,287 options held by the Company’s directors and the Chief Executive Officer to a price of $4.02 per share.

 

The reduction of exercise price of the options was considered a Type I modification for share-based compensation, and, as a result, during the year ended December 31, 2019, the Company recorded additional compensation expense in the amount of $365.

 

The total incremental fair value of these options amounted to $478 and was determined based on the Black-Scholes pricing options model using the following assumptions: risk free interest rate of 1.6%, expected volatility of 49% - 74%, expected term of 0.4-5.9 years and dividend yield of 0%. The incremental fair value of the fully vested options as of October 27, 2019 in the amount of $341 was recognized immediately. The remaining incremental fair value will be recognized over the remaining vesting period and until March 2022.

 

The following table summarizes the number of options granted to employees and directors   under the Option Plan for the years ended December 31, 2021, 2020 and 2019, and related information:

 

    2021   2020   2019  
    Number of
options
  Weighted
average
exercise
price
  Number of
options
  Weighted
average
exercise
price
  Number of
options
  Weighted
average
exercise
price*
 
Options outstanding at the beginning of the year     1,198,777   $ 6.88     721,361   $ 4.38     512,615   $ 15.09  
Granted     119,500     14.69     512,622     10.33     531,390     5.09  
Exercised     (66,037 )   4.54     (20,245 )   4.13     (6,076     1.30  
Expired    
-
   
-
   
-
   
-
    (11,891 )   23.83  
Forfeited     (31,546 )   9.47     (14,961 )   7.93     (304,677 )   5.84  
Options outstanding at the end of the year     1,220,694     7.71     1,198,777   $ 6.88     721,361   $ 4.38 *
Options exercisable at the end of the year     737,079   $ 5.9     477,611   $ 4.25     310,093   $ 4.02 *

 

* After repricing- see Note 9 - (B)(2)(a).

 

  b. Option granted to non-employees

 

The fair value of options granted to non-employees in 2019 were $16. The underlying data used for computing the fair value of the options are as follows:

 

    2019  
Value of one ordinary share   $ 5.93  
Dividend yield     0 %
Expected volatility     62 %
Risk-free interest rate     2 %
Expected term     4 years  

 

*During the years ended December 31, 2020 and 2021, no options were granted to non-employess.

 

    The following table summarizes the number of options granted to non-employees under the Option Plan for the years ended December 31, 2021, 2020 and 2019, and related information. Amounts presented reflect the number of shares issued if the options will be exercised:

 

    2021   2020   2019  
    Number of
options
  Weighted
average
exercise
price
  Number of
options
  Weighted
average
exercise
price
  Number of
options
  Weighted
average
exercise
price
 
Options outstanding at the beginning of the year     18,082   $ 17.97     23,664   $ 27.44     18,664   $ 33.44  
Granted    
-
   
-
   
-
   
-
    5,000     5.07  
Exercised    
-
   
-
    (1,250 )   5.07    
-
   
-
 
Expired     (2,666 )   64.61     (4,332 )   61.85    
-
   
-
 
Options outstanding at the end of the year     15,416   $ 16.04     18,082   $ 17.97     23,664   $ 27.44  
Options exercisable at the end of the year     7,891   $ 10.2     8,057   $ 18.42     10,202   $ 46.03  

 

The following tables summarize information concerning outstanding and exercisable options as of December 31, 2021:

 

December 31, 2021  
Options outstanding     Options exercisable  
Exercise prices *     Number of
options
outstanding
at end of year
    Weighted
average
remaining
contractual Life
    Number of
options
exercisable
at end of year
    Weighted
average
remaining
contractual life
 
$        28.94                   6,666                    3.38                         1,329                 3.38  
  7.07       5,000       3.33       4,375       3.33  
  20.7       20,000       9.88       -       -  
  15.2       23,000       9.41       -       -  
  13.08       40,500       9.04       -       -  
  12.78       30,000       9.24       -       -  
  11.06       162,713       8.11       71,186       8.11  
  10.08       290,186       8.19       114,072       7.86  
  9.12       32,000       8.66       10,000       8.66  
  5.07       205,125       3.86       137,151       3.74  
$ 4.02       420,920       3.12       406,857       3.08  
          1,236,110               744,970          

 

* In U.S. dollars per Ordinary Share.

 

  c. The aggregate intrinsic value of the total exercisable options as of December 31, 2021, 2020 and 2019 is approximately   $7,759, $2,882 and $521, respectively. The aggregate intrinsic value of the options exercised in 2021, 2020 and 2019 is approximately $1,023, $114 and $25, respectively.

 

  d. The following table illustrates the effect of share-based compensation on the statements of operations:

 

    Year ended December 31  
    2021     2020     2019  
Cost of revenues   $ 78     $ 66     $
-
 
Research and development expenses     525       464       549  
General, administrative and marketing expenses     1,017       1,075       576  
    $ 1,620     $ 1,605     $ 1,125