NOTE 7 - SHARE-BASED COMPENSATION

Share-based compensation plan

On March 17, 2013, the Company's Board of Directors approved a Share Incentive Plan (the “2013 Plan”). Under the 2013 Plan, the Company reserves specified number of ordinary shares for allocation to stock options (each, an “Option”), RSUs, restricted share awards and performance-based awards, that are awarded to employees and non-employees under the 2013 Plan. Each Option is exercisable for one ordinary share.

Any Option granted under the 2013 Plan that is not exercised within six years from the date upon which it becomes exercisable will expire. Since adopting the 2018 Plan (as defined below), the Company has not granted any awards under the 2013 Plan.

On July 2, 2018, the Company's Board of Directors and shareholders of the Company approved a new Share Incentive Plan (the “2018 Plan”) and reserved 1,371,398 ordinary shares for allocation to stock options (each, a "2018 Plan Option"), RSUs, restricted share awards and performance-based awards, to employees and non-employees for issuance under the 2018 Plan. Each 2018 Plan Option is exercisable for one ordinary share.

Any 2018 Plan Option that is not exercised within 10 years from the date of grant will expire.

The 2018 Plan Options granted to employees are subject to the terms stipulated by section 102(b)(2) of the Israeli Income Tax Ordinance (the “Ordinance”). According to these provisions, the Company will not be allowed to claim as an expense for tax purposes the amounts credited to the employees as a capital gain benefit in respect of the options granted.

The 2018 Plan Options granted to related parties or non-employees of the Company are governed by Section 3(i) of the Ordinance or Non-Qualified Share Options ("NSO"). The Company will be allowed to claim as an expense for tax purposes in the year in which the related parties or non-employees exercised the options into shares.

As of December 31, 2025, 2,052,375 ordinary shares remained available for future grants under the 2018 Plan.

On January 1, 2026, the Company’s Board of Directors approved an increase of 2,308,931 ordinary shares that may be issued under the Company’s 2018 Plan pursuant of the evergreen provision contained in f the 2018 Plan.

Options grants to employees, directors and consultants:

The following tables summarizes information concerning outstanding and exercisable options as of December 31, 2025, in terms of ordinary shares for which the options may be exercised:

	2025
	Number of options			Weighted average exercise price
Outstanding at beginning of the year		7,652,654		$	2.32
Granted		1,926,545			2.28
Exercised		(26,449	)		0.80
Forfeited		(170,250	)		2.07
Expired		(99,228	)		2.91
Outstanding at end of the year		9,283,272		$	2.32
Exercisable at end of the year		6,294,226		$	2.47

	1.	As of December 31, 2025, the weighted-average remaining contractual life of exercisable options was 6.82 years.

	2.	The total intrinsic value of options exercised during 2025 and 2024 was approximately $35 thousand and $651 thousand, respectively.

As of December 31, 2025, the Company had 2,989,046 unvested options outstanding. The total unrecognized compensation cost of employee options as of December 31, 2025 is $1,735 thousand which is expected to be recognized over a weighted average period of 0.9 years.

The fair value of each option granted is estimated at the date of grant using the Black-Scholes option-pricing model, with the following assumptions:

	2025			2024
Exercise price	$	2.28		$	0.60-$1.99
share price	$	2.28		$	0.60-$1.99
Dividend yield		-			-
Expected volatility		81.2%-82.2	%		74.28%-84.5	%
Risk-free interest rate		3.9%-4.45	%		3.93%-4.66	%
Expected life - in years		5.3-5.87			5.3-5.9

The total fair value of options granted during the year ended December 31, 2025 and 2024 was $2,943 and $2,059, respectively.

December 31, 2025
Options outstanding						Options exercisable
		Number of		Weighted		Number of		Weighted
		options		Average		options		Average
Exercise		outstanding		Remaining		exercisable		Remaining
prices per		at end of		Contractual		at end of		contractual
share (USD)		Year		Life		year		Life

	0.6-0.89		2,103,342		7.45		1,669,422		7.80
	1.4-1.99		1,913,000		7.75		1,189,000		7.58
	2.02-2.86		3,719,828		7.49		1,957,452		6.01
	3.15-3.97		736,552		4.63		667,802		4.56
	6.31		810,550		1.95		810,550		1.95
			9,283,272				6,294,226

The aggregate intrinsic value of the outstanding and exercisable options as of December 31, 2025 was $3,121 and $3,632, respectively.

a)	Restricted shares units grants to employees and consultants:

The following tables summarize information concerning RSUs as of December 31, 2025:

	Year ended December 31
	2025
				Weighted
	Number			Average
	of			Grant Date
	RSUs			Fair Value
Outstanding at beginning of year		194,472			1.75
Changes during the year:
Granted		300,643			2.09
Vested		(352,134	)		1.92
Outstanding at end of year		142,981			2.06

As of December 31, 2025, the Company had 142,981 unvested RSUs. The total unrecognized compensation cost of employee RSUs as of December 31, 2025 was $57, which is expected to be recognized over a weighted average period of 0.33 years.

The total vesting-date value of equity classified RSUs that vested during 2025 was $676.

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

	Year ended December 31, 2025		Year ended December 31, 2024
Cost of revenues	$	-	$	7
Research and development expenses		1,144		839
General and administrative		1,606		1,710
	$	2,750	$	2,556