The Company’s wholly owned subsidiaries include a subsidiary in the United States (the “US Subsidiary”) and a subsidiary in Romania. The US Subsidiary’s operation focuses on marketing and business development of the Company’s operation in the United States.

There can be no assurance that the Company will be successful in obtaining additional financing on favorable terms, or at all, or will succeed in achieving the clinical, scientific and commercial milestones as detailed above.

As of June 30, 2022, the Company’s cash, cash equivalents and short-term deposits amounted to a total of $23,779. During the six-month period ended June 30, 2022, the Company incurred a loss of $23,719 and had negative cash flows from operating activities of $20,342. In addition, the Company had an accumulated deficit of $198,606 as of June 30, 2022.

Management plans to seek additional equity financing through private and public offerings or strategic partnerships and, in the longer term, by generating revenues from product sales.

Based on the abovementioned, as of the approval date of these interim condensed consolidated financial statements, the Company has not raised the necessary funding in order to continue its activity for a period of at least one year. Therefore, these factors raise a substantial doubt about the Company’s ability to continue as a going concern. The interim condensed consolidated financial statements do not include any adjustments to the carrying amounts and classifications of assets and liabilities that might result should the Company be unable to continue as a going concern.

As of June 30, 2022, the Company made advance payments on account of car leases in the amount of $84 (unaudited). Lease expenses for the six-month ended June 30, 2022, were $699 (unaudited).

On April 5, 2022, the Company entered into a secured line of credit agreement for up to $15,000 with Kreos Capital VI (Expert Fund) LP (“Kreos”) (the “Credit Line”). The Credit Line is comprised of three tranches in the amount of $10,000, $2,500 and $2,500, respectively, in which the first tranche in the amount of $10,000 (the “First Tranche”) was drawn on April 26, 2022. In addition, in accordance with the Credit Line agreement, the Company will issue to Kreos warrants to purchase the Company’s Ordinary shares equal to 8% of the amount of each tranche, when and if borrowed, with an exercise price of $5.14 per share. The expiration date for each warrant issued will be seven years from the issuance date. Accordingly, as a result of the First Tranche withdrawal, the Company issued to Kreos a warrant in the total amount of $800. The total number of shares issuable upon exercise is equal to the total amount divided by the exercise price.

The Credit Line is denominated in USD and bears interest at an annual rate equal to 9.25%. The interest paid due to the Credit Line for the six-month period ended June 30, 2022, amounted to $77.

On each drawdown date, the Company shall pay to Kreos on the drawdown date the last month payment for each tranche. For the First Tranche the amount the Company paid was $317.

On May 19, 2022, the second tranche milestone was met following the independent data safety monitoring board review of interim analysis of SHEILD I, which recommended to end the trial at the lower end of the patient recruitment target as agreed in the Credit Line agreement (the “Second Tranche”). As of June 30, 2022, the Company has yet to draw the Second Tranche (for further information see Note 7).

Drawdown of the third and final tranche of $2,500 will be available subject to obtaining positive top-line results from the SHIELD I trial of the Company or if other conditions are met as agreed in the Credit Line agreement (the “Third Tranche”). Drawdown of the Third Tranche can be made by December 31, 2022.

The Company has concluded that the Credit Line Arrangement include several legally detachable and separately exercisable freestanding financial instruments: The first tranche term loan, the warrants, and the right to receive additional loan tranches (the “Financial Commitment Asset” or “FCA”).

The Company has concluded that the warrants should be classified as equity since the warrants are not an ASC No. 480 liability, are indexed to the Company’s own share and meet all the equity classification conditions pursuant to ASC No. 815-40. The Company has also concluded that the FCA is not indexed to the Company’s own share and should be measured at fair value, with changes in fair value recognized in earnings. In addition, the First Tranche term loan was accounted for using the effective interest method.

The Company allocated the proceeds received under the Credit Line between the warrants and the First Tranche term loan using the relative fair value method. The proceeds allocation resulted in $9,532 (unaudited) allocated to the First Tranche and $468 (unaudited) allocated to the warrants, net of issuance costs.

During the six-month period ended on June 30, 2022, the Company recognized $223 of interest expenses related to the First Tranche, which were included as part of financial expenses in the Company’s statements of operation.

the FCA was measured at its fair value (hierarchy level 3) and presented under prepaid expenses and other current assets in the interim condensed consolidated balance sheets.

The fair value of the underlying asset for the FCA calculation was calculated based on the Monte-Carlo option pricing model using the following inputs:

The fair value of the FCA was calculated based on the Black-Scholes option pricing model using the following inputs:

The following table sets forth the changes in the FCA’s fair value (unaudited):

Through June 30, 2022, the Company authorized through its 2012 Share Option Plan the grant of 4,672,094 options to Ordinary shares to its officers, directors, advisors, management and other employees. The options granted generally have a four-year or three-year vesting period and expire ten years after the date of grant. Options granted under the Company’s option plan that are cancelled or forfeited before expiration become available for future grant.

As of June 30, 2022, 397,030 of the Company’s options were available for future grants.

On May 9, 2022, the Board of Directors approved to increase the Company’s options pool by additional one million options from 3,672,094 to 4,672,094.

A summary of the status of options to employees under the Company’s option plan as of and for the six-month period ended June 30, 2022, and changes during the period then ended is presented below (unaudited):

The Black-Scholes option pricing model assumptions used to value the employee share options at the grant dates are presented in the following table for the six-month period ended June 30, 2022:

The total share-based compensation expense recognized by the Company’s departments:

As of June 30, 2022, there were unrecognized compensation costs of $9,738, which are expected to be recognized over a weighted average period of approximately 2.9 years.

On May 3, 2022, the annual and extraordinary general meeting of shareholders of the Company approved a new grant of 76,120 options to the then current Chief Executive Officer of the Company, Mr. Amir Weisberg. In addition, it was approved to accelerate the vesting of 12,906 options from an outstanding grant, in which in both cases the vesting of all options will occur on June 30, 2022. As a result, the Company recognized a total share-based compensation expense in the amount of $76.

Outstanding options granted to non-employees as of June 30, 2022, were as follows (unaudited):

No options were exercised by non-employees during the six-month period ended June 30, 2022.

Further to the discussed in Note 4, as of April 26, 2022, the Company measured the fair value of the warrants to purchase Ordinary shares (a Level 3 valuation) using the Black-Scholes option pricing model.

As of April 26, 2022, the relative fair value of the Warrant to purchase Ordinary shares issued to Kreos was $468, which was calculated using the following assumptions:

As of June 30, 2022, all warrants exercisable into Ordinary Shares as of June 30, 2022, were as follows (unaudited):

The following table sets forth the computation of the Company’s basic and diluted net loss per Ordinary Share:

The potential Ordinary Shares that were excluded from the computation of diluted loss per share attributable to Ordinary shareholders for the periods presented because including them would have been anti-dilutive are as follows:

Under the terms of the License Agreement, the Company is entitled to receive an upfront payment immediately upon signing and additional development-related milestones for a total of up to €23 million (approximately $23,500) as follows: upfront payment of €2.5 million (approximately $2,600), up to €12.25 million (approximately $12,500) contingent upon positive top-line results of the Company’s SHIELD I Phase 3 study and additional development-related milestones of up to €8.25 million (approximately $8,400). Upon commercialization, the Company will receive up to €87 million (approximately $89,000) in sales-related milestones. In addition, the Company will also supply D-PLEX100 to Advanz for a transfer price and will be entitled to royalties on net sales in double-digit percentages of up to mid-twenties.