EX-99.1 2 ea169526ex99-1_enlivex.htm UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR ENLIVEX AS OF SEPTEMBER 30, 2022 AND DECEMBER 31, 2021 AND FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2022 AND 2021

Exhibit 99.1

 

 

 

 

 

 

 

 

 

 

ENLIVEX THERAPEUTICS LTD.

 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

AS OF SEPTEMBER 30, 2022 AND DECEMBER 31, 2021

AND FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2022 AND 2021

 

 

 

 

 

 

 

 

 

 

 

 

 

ENLIVEX THERAPEUTICS LTD.

 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

AS OF SEPTEMBER 30, 2022 AND DECEMBER 31, 2021

AND FOR THE THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 2022 AND 2021

 

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

 

   Page
Condensed Consolidated Balance Sheets  F-2
Condensed Consolidated Statements of Operations and Comprehensive Loss  F-3
Condensed Consolidated Statements of Changes in Shareholders’ Equity  F-4
Condensed Consolidated Cash Flow Statements  F-6
Notes to the Condensed Consolidated Financial Statements  F-7

 

F-1

 

 

ENLIVEX THERAPEUTICS LTD.

 

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

U.S. dollars in thousands (except share data)

 

   September 30,   December 31, 
   2022   2021 
         
ASSETS        
Current Assets        
Cash and cash equivalents  $57,655   $11,202 
Short term deposits   -    10,004 
Marketable securities   -    62,924 
Prepaid expenses and other receivables   1,463    2,199 
Cash held with respect to CVR Agreement   113    113 
Total Current Assets   59,231    86,442 
           
Non-Current Assets          
Property and equipment, net   7,515    2,530 
Other assets   5,668    6,174 
Total Non-Current Assets   13,183    8,704 
TOTAL ASSETS  $72,414   $95,146 
           
LIABILITIES AND SHAREHOLDERS’ EQUITY          
Current Liabilities          
Accounts payable trade  $1,056   $878 
Accrued expenses and other liabilities   3,360    3,727 
CVR holders   113    113 
Total Current Liabilities   4,529    4,718 
           
Non-Current Liabilities          
Other long-term Liabilities   4,611    5,389 
Total Non-Current Liabilities   4,611    5,389 
           
Commitments and Contingent Liabilities          
           
TOTAL LIABILITIES   9,140    10,107 
           
SHAREHOLDERS’ EQUITY          
Ordinary shares of NIS 0.4 par value: Authorized: 45,000,000 shares as of September 30, 2022 and December 31, 2021; Issued and outstanding: 18,411,728 and 18,331,507 as of September 30 and December 31, 2021;   2,116    2,107 
Additional paid in capital   135,893    133,796 
Foreign currency translation adjustments   1,101    1,101 
Accumulated deficit   (75,836)   (51,965)
TOTAL SHAREHOLDERS’ EQUITY    63,274    85,039 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY   $72,414   $95,146 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

F-2

 

 

ENLIVEX THERAPEUTICS LTD.

 

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (UNAUDITED)

U.S. dollars in thousands (except share and per share data) 

 

   For the three months ended   For the nine months ended 
   September 30,   September 30, 
   2022   2021   2022   2021 
                 
Revenues  $-   $-   $-   $- 
                     
Operating expenses:                    
Research and development expenses   4,201    2,679    12,993    7,715 
General and administrative expenses   1,476    1,185    4,959    3,759 
    5,677    3,864    17,952    11,474 
                     
Operating loss   (5,677)   (3,864)   (17,952)   (11,474)
                     
Other income/(expense), net   (56)   440    (5,919)   1,742 
                     
Net (loss)   (5,733)   (3,424)   (23,871)   (9,732)
                     
Other comprehensive income (loss)                    
Exchange differences arising from translating financial statements from functional to presentation currency   -    857    -    124 
Total other comprehensive income (loss)   -    857    -    124 
Total comprehensive (loss)  $(5,733)  $(2,567)  $(23,871)  $(9,608)
                     
Basic & diluted (loss) per share  $(0.31)  $(0.19)  $(1.30)  $(0.54)
Weighted average number of shares outstanding   18,391,929    18,312,418    18,379,062    17,705,913 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

F-3

 

 

ENLIVEX THERAPEUTICS LTD.

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

U.S. dollars in thousands (except share data)

 

       Additional   Currency         
   Ordinary Shares   paid in   translation   Accumulated     
   Shares   Amount   capital   reserve   deficit   Total 
                         
Balance as of December 31, 2021   18,331,507   $2,107   $133,796   $1,101   $(51,965)  $85,039 
                               
Changes during the three months period ended March 31, 2022:                              
Restricted stock units vested   34,295    4    (4)   -    -    - 
Exercise of options   7,625    1    49    -    -    50 
Stock based compensation   -    -    788    -    -    788 
Net loss   -    -    -    -    (8,225)   (8,225)
Balance as of March 31, 2022 (unaudited)   18,373,427    2,112    134,629    1,101    (60,190)   77,652 
                               
Changes during the three months period ended June 30, 2022:                              
Exercise of options   7,625    1    49    -    -    50 
Stock based compensation   -    -    697    -    -    697 
Net loss   -    -    -    -    (9,913)   (9,913)
Balance as of June 30, 2022 (unaudited)   18,381,052    2,113    135,375    1,101    (70,103)   68,486 
                               
Changes during the three months period ended September 30, 2022:                              
Restricted stock units vested   23,051    2    (2)   -    -    - 
Exercise of options   7,625    1    49    -    -    50 
Stock based compensation   -    -    471    -    -    471 
Net loss   -    -    -    -    (5,733)   (5,733)
Balance as of September 30, 2022 (unaudited)   18,411,728   $2,116   $135,893   $1,101   $(75,836)  $63,274 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

F-4

 

 

ENLIVEX THERAPEUTICS LTD.

 

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

U.S. dollars in thousands (except share data)

 

       Additional   Currency         
   Ordinary Shares   paid in   translation   Accumulated     
   Shares   Amount   capital   reserve   deficit   Total 
                         
Balance as of December 31, 2020   14,587,934   $1,646   $70,361   $977   $(37,497)  $35,487 
                               
Changes during the three months period ended March 31, 2021:                              
Issuance of shares and warrants for cash consideration of $57,629 net of $4,455 issuance costs   2,848,629    352    52,822    -    -    53,174 
Exercise of options   13,435    2    38    -    -    40 
Exercise of warrants   855,813    104    7,598    -    -    7,702 
Stock based compensation   -    -    190    -    -    190 
Other comprehensive loss   -    -    -    (2,788)   -    (2,788)
Net loss   -    -    -    -    (3,200)   (3,200)
Balance as of March 31, 2021 (unaudited)   18,305,811    2,104    131,009    (1,811)   (40,697)   90,605 
                               
Changes during the three months period ended June 30, 2021:                              
Exercise of options   375    *    2    -    -    2 
Stock based compensation   -    -    652    -    -    652 
Other comprehensive loss   -    -    -    2,055    -    2,055 
Net loss   -    -    -    -    (3,108)   (3,108)
Balance as of June 30, 2021 (unaudited)   18,306,186    2,104    131,663    244    (43,805)   90,206 
                               
Changes during the three months period ended September 30, 2021:                              
Exercise of options   24,321    3    64              67 
Stock based compensation             377              377 
Other comprehensive loss                  857         857 
Net loss   -    -    -    -    (3,424)   (3,424)
Balance as of September 30, 2021 (unaudited)   18,330,507   $2,107   $132,104   $1,101   $(47,229)  $88,083 

 

*Less than $1

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

F-5

 

 

ENLIVEX THERAPEUTICS LTD.

 

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

U.S. dollars in thousands

 

   For the nine months ended
September 30,		 
   2022   2021 
Cash flows from operating activities        
Net (loss)  $(23,871)  $(9,732)
Adjustments required to reflect net cash used in operating activities:          
Income and expenses not involving cash flows:          
Depreciation   556    396 
Non-cash operating lease expenses   625    194 
Share-based compensation   1,955    1,219 
Loss (income) on marketable securities and short-term bank deposits   1,987    (2,212)
Changes in operating asset and liability items:          
Increase (decrease) in prepaid expenses and other receivables   762    (611)
Increase (decrease) in accounts payable trade   179    596 
Increase in accrued expenses and other liabilities   (400)   (651)
Operating lease liabilities   (928)   (150)
Net cash (used in) operating activities   (19,135)   (10,951)
           
Cash flows from investing activities          
Purchase of property and equipment   (5,541)   (592)
Release (investment) in short-term bank deposits   10,000    29,666 
Purchases of marketable securities   (1,608)   (90,337)
Proceeds from sales of marketable securities   62,549    28,201 
Net cash provided by (used in) investing activities   65,400    (33,062)
           
Cash flows from financing activities          
Proceeds from issuance of shares and warrants net of $4,455 issuance expenses   -    53,174 
Proceeds from exercise of warrants   -    7,702 
Proceeds from exercise of options   150    109 
Net cash provided by financing activities   150    60,985 
           
Increase in cash and cash equivalents   46,415    16,972 
Cash and cash equivalents - beginning of period   11,636    7,012 
Exchange rate differences on cash and cash equivalents   -    (657)
Cash and cash equivalents - end of period  $58,051   $23,327 
Non-cash transactions:          
Warrants issued in settlement of issuance costs to a placement agent  $-   $2,095 
Supplemental disclosures of cash flow information:          
Cash paid for taxes  $-   $- 
Cash paid (received) for interest, net  $(258)  $51 

 

The accompanying notes are an integral part of the condensed consolidated financial statements.

 

F-6

 

 

ENLIVEX THERAPEUTICS LTD.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2022 (UNAUDITED)

 

 

NOTE 1 – GENERAL

 

a.Enlivex Therapeutics Ltd. (the “Parent” and, including its consolidated subsidiaries, “we”, “us”, “our” or the “Company”) is a clinical-stage macrophage reprogramming immunotherapy company originally incorporated on January 22, 2012 under the laws of the State of Israel.

 

Enlivex Therapeutics R&D Ltd. (“Enlivex R&D”) was incorporated in September 2005 under the laws of the State of Israel. On March 26, 2019, upon consummation of a merger transaction between the Parent and Enlivex R&D, Enlivex R&D became a wholly owned subsidiary of the Company.

 

In January 2015, Enlivex Therapeutics Inc. was incorporated in the State of Delaware as a wholly owned subsidiary of the Parent.

 

On June 21, 2021 Enlivex Therapeutics RDO Ltd. was incorporated in Israel as a wholly owned subsidiary of the Parent.

 

The Company is a clinical stage macrophage reprogramming immunotherapy company, developing AllocetraTM, a universal, off-the-shelf cell therapy designed to reprogram macrophages into their homeostatic state. Resetting non-homeostatic macrophages into their homeostatic state is critical for immune system rebalancing and resolution of life-threatening conditions. Non-homeostatic macrophages contribute significantly to the severity of certain diseases, which include solid tumors, sepsis and others.

 

AllocetraTM is based on the discoveries of Professor Dror Mevorach, an expert on immune activity, macrophage activation and clearance of dying (apoptotic) cells, in his laboratory in the Hadassah University Hospital located in the State of Israel.

 

The Company’s ordinary shares, NIS 0.40 per share (“Ordinary Shares”), are traded under the symbol “ENLV” on both the Nasdaq Capital Market and on the Tel Aviv Stock Exchange.

 

b.Financial Resources

 

The Company devotes substantially all of its efforts toward research and development activities and raising capital to support such activities. The Company’s activities are subject to significant risks and uncertainties, including failing to secure additional funding before the Company achieves sustainable revenues and profit from operations.

 

Research and development activities have required significant capital investment since the Company’s inception. The Company expects that its operations will require additional cash investment to pursue the Company’s research and development activities, including preclinical studies, formulation development, clinical trials and related drug manufacturing. The Company has not generated any revenues or product sales and has not achieved profitable operations or positive cash flow from operations. The Company has incurred net losses since its inception, and, as of September 30, 2022, had an accumulated deficit of $75,836 thousand.

 

The Company expects to continue to incur losses for at least the next several years, and the Company will need to raise additional debt or equity financing or enter into partnerships to fund its development. If the Company is not able to achieve its funding requirements, it may be required to reduce discretionary spending, may not be able to continue the development of its product candidates or may be required to delay its development programs, which could have a material adverse effect on the Company’s ability to achieve its intended business objectives. There can be no assurances that additional financing will be secured or, if secured, will be on favorable terms. The ability of the Company to transition to profitability in the longer term is dependent on developing products and product revenues to support its expenses.

 

The Company’s management and board of directors (the “Board”) are of the opinion that the Company’s current financial resources will be sufficient to continue the development of the Company’s product candidates for at least twelve months from the filing of these financial statements on Form 6-K. The Company may determine, however, to raise additional capital during such period as the Board deems prudent. The Company’s management plans to finance its operations with issuances of the Company’s equity securities and, in the longer term, revenues. There are no assurances, however, that the Company will be successful in obtaining the financing necessary for its long-term development. The Company’s ability to continue to operate in the long term is dependent upon additional financial support.

 

F-7

 

 

ENLIVEX THERAPEUTICS LTD.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2022 (UNAUDITED)

 

 

NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

These unaudited condensed consolidated financial statements include the accounts of the Company and have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary for a fair presentation have been made.

 

These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s audited annual financial statements and notes thereto included in the Company’s 2021 Annual Report on Form 20-F, as filed with the SEC on April 29, 2022. The results of operations for these interim periods are not necessarily indicative of the operating results for any future period. The December 31, 2021 financial information has been derived from the Company’s audited financial statements.

 

Use of Estimates

 

The preparation of interim financial statements in conformity with U.S. GAAP requires management to make certain estimates, judgments and assumptions that affect the reported amounts in the consolidated balance sheets and statements of operations, it also requires that management exercise its judgment in applying the Company’s accounting policies. On an ongoing basis, management evaluates its estimates, including estimates related to its stock-based compensation expense and implicit interest rate on new lease liabilities. Significant estimates in these interim financial statements include estimates made for accrued research and development expenses and stock-based compensation expenses.

 

Functional Currency and Translation to The Reporting Currency

 

The functional currency of the Company is the U.S. dollar because the U.S. dollar is the currency of the primary economic environment in which the Company operates and expects to continue to operate in the foreseeable future.

 

Until September 30, 2021, the functional currency of Enlivex R&D was the New Israeli Shekel (“NIS”).

 

Balances related to non-monetary assets and liabilities are based on translated amounts as of the date of the change, and non-monetary assets acquired and liabilities incurred after September 30, 2021 were translated at the approximate exchange rate prevailing at the date of the transaction. Transactions included in the statement of income for the three and nine month periods ended September 30, 2022 were translated at the approximate exchange rate in effect at the time of the applicable transaction. Transactions included in the statement of income for the three and nine month periods ended September 30, 2021 were translated at average exchange rates during the applicable period. Gains or losses resulting from translation adjustments for the three and nine month periods ended September 30, 2021 are reported in other comprehensive income (loss).

 

One U.S. dollar = 3.543 NIS and 3.11 NIS as of September 30, 2022 and December 31, 2021, respectively.

 

The U.S. dollar increased (decreased) against the NIS: 1.23%, 13.92%, (0.95%) and 0.44% in the three and nine month periods ended September 30, 2022 and 2021, respectively.

 

Reclassification of Prior Year Presentation

 

Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations.

 

Recently Adopted Accounting Standards

 

In August 2020, the FASB issued ASU 2020-06, Debt - Debt with Conversion and other Options (Subtopic 470-20) and Derivatives and Hedging: Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU 2020-06”). ASU 2020-06 simplifies the complexity associated with applying GAAP for certain financial instruments with characteristics of liabilities and equity by removing certain accounting models which separate the embedded conversion features from the host contract for convertible instruments. The standard also enhances the consistency of earnings-per-share calculations by requiring that an entity use the if-converted method and that the effect of potential share settlement be included in diluted earnings-per-share calculations. ASU 2020-06 became effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2021. The Company evaluated ASU 2020-06 and determined that its adoption did not have an impact on the Company’s condensed consolidated financial statements and related disclosures.

 

F-8

 

 

ENLIVEX THERAPEUTICS LTD.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2022 (UNAUDITED)

 

 

Recently Issued Accounting Pronouncements Not Yet Adopted

 

The Company has evaluated other recently issued accounting pronouncements and does not currently believe that any of these pronouncements will have a material impact on its condensed consolidated financial statements and related disclosures.

 

Significant Accounting Policies

 

There have been no material changes to the significant accounting policies previously disclosed in the Company’s Annual Report on Form 20-F for the year ended December 31, 2021.

 

Marketable Securities.

 

The Company has an investment policy that includes guidelines on acceptable investment securities, minimum credit quality, maturity parameters, and concentration and diversification. The Company invests its excess cash primarily in mutual funds that are classified based on the nature of their underlying securities and their availability for use in current operations. The Company’s marketable equity securities are measured at fair value with gains and losses recognized in other income/(expense), net.

 

Net (loss) income recognized on equity securities for the three and nine month periods ended September 30, 2022 and 2021 was $0, ($1,982), $639 and $2,212 thousand of which $0, $0, $610 and $1,952 thousand, respectively, were not realized.

 

NOTE 3 – CASH, CASH EQUIVALENTS AND RESTRICTED CASH

 

   September 30,   December 31, 
(in thousands)  2022   2021 
         
Cash held in banks  $19,103   $1,199 
Bank deposits in U.S.$  (annual average interest rates 3.02% and 0.1%)   38,552    10,003 
Total cash and cash equivalents   57,655    11,202 
Cash held with respect to CVR Agreement   113    113 
Restricted cash – noncurrent – Other assets   283    321 
Total cash, cash equivalents and restricted cash shown in the statement of cash flows  $58,051   $11,636 

 

NOTE 4 – SHORT TERM DEPOSITS

 

   September 30,   December 31, 
(in thousands)  2022   2021 
         
Bank deposits in U.S.$ and NIS (annual average interest rate of 0.6%)  $                 -   $       10,004 
Total short-term deposits  $-   $10,004 

 

F-9

 

 

ENLIVEX THERAPEUTICS LTD.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2022 (UNAUDITED)

 

 

NOTE 5 – PROPERTY AND EQUIPMENT

 

Property and equipment, net consists of the following:

 

   September 30,   December 31, 
(in thousands)  2022   2021 
         
Cost:          
Laboratory equipment  $            2,679   $          1,891 
Computers   276    256 
Office furniture & equipment   225    192 
Leasehold improvements   6,221    1,521 
    9,401    3,860 
Accumulated depreciation:          
Laboratory equipment   1,291    960 
Computers   187    138 
Office furniture & equipment   24    15 
Leasehold improvements   384    217 
    1,886    1,330 
Depreciated cost  $7,515   $2,530 

 

Depreciation expenses for the three and nine month periods ended September 30, 2022 and 2021 were $192, $556, $157 and $396 thousand, respectively.

 

NOTE 6 – OTHER ASSETS

 

   September 30,   December 31, 
(in thousands)  2022   2021 
         
Restricted cash  $             283   $         321 
Long-term prepaid expenses   139    164 
Right-of-Use assets, net   5,246    5,689 
   $5,668   $6,174 

 

NOTE 7 – ACCRUED EXPENSES AND OTHER LIABILITIES

 

   September 30,   December 31, 
(in thousands)  2022   2021 
         
Vacation, convalescence and bonus accruals  $507   $1,068 
Employees and payroll related   561    519 
Short term operating lease liabilities   649    617 
Accrued expenses and other   1,643    1,523 
           3,360   $       3,727 

 

F-10

 

 

ENLIVEX THERAPEUTICS LTD.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2022 (UNAUDITED)

 

 

NOTE 8 – LEASES

 

The Company is a party to operating leases for its corporate offices, laboratory space and vehicles. The Company’s real property operating leases have remaining lease terms of up to 3.25 years, some of which include options to extend the leases for up to five years.

 

   Nine months ended
September 30,		 
(in thousands)  2022   2021 
         
The components of lease expense were as follows:        
Operating leases expenses  $773   $245 
Supplemental consolidated cash flow information related to operating leases follows:          
Cash used in operating activities  $624   $210 
Non-cash activity:          
Right of use assets obtained in exchange for new operating lease liabilities  $182   $5,444 

 

   September 30,   December 31, 
   2022   2021 
Supplemental information related to operating leases, including location of amounts reported in the accompanying consolidated balance sheets, follows:          
Other assets - Right-of-Use assets  $6,459   $6,329 
Accumulated amortization   1,213    640 
Operating lease Right-of-Use assets, net  $5,246   $5,689 
Lease liabilities – current - Accounts payable and accrued liabilities  $649   $617 
Lease liabilities – noncurrent   4,611    5,389 
Total operating lease liabilities  $5,260   $6,006 
Weighted average remaining lease term in years   7.85    8.6 
Weighted average annual discount rate   3.6%   3.6%

 

Maturities of operating lease liabilities as of September 30, 2022, were as follows:    
     
2022 (after September 30)  $251 
2023   816 
2024   710 
2025   732 
2026 and following   3,499 
Total undiscounted lease liability  $6,008 
Less: Imputed interest  $(748)
Present value of lease liabilities  $5,260 

 

NOTE 9 – COMMITMENTS AND CONTINGENT LIABILITIES

 

The Company is required to pay royalties to the State of Israel (represented by the Israeli Innovation Authority (the “IIA”)), computed on the basis of proceeds from the sale or license of products for which development was supported by IIA grants. These royalties are generally 3% - 5% of sales until repayment of 100% of the grants (linked to the dollar) received by the Company plus annual interest at a LIBOR-based rate.

 

F-11

 

 

ENLIVEX THERAPEUTICS LTD.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2022 (UNAUDITED)

 

 

The gross amount of grants received by the Company from the IIA, including accrued interest as of September 30, 2022, was approximately $9.1 million. As of September 30, 2022, the Company had not paid any royalties to the IIA.

 

In January 2022, the Company submitted a new grant application to the IIA to approve an expenditure of $4.8 million for its clinical development program for the prevention of cytokine storms and organ dysfunction associated with sepsis for a period that commenced January 1, 2022 and ended December 31, 2022, the Company received a grant of approximately $960 thousand for expenses associated with the Company’s ongoing sepsis clinical Phase II trial.

 

NOTE 10 – EQUITY

 

All Company warrants are classified as a component of shareholders’ equity because such warrants are free standing financial instruments that are legally detachable, separately exercisable, do not embody an obligation for the Company to repurchase its own shares, and permit the holders to receive a fixed number of Ordinary Shares upon exercise, requires physical settlement and do not provide any guarantee of value or return.

 

  

Number of
Warrants

  

Weighted

average

exercise price

 
Outstanding January 1, 2022   704,355   $13.18 
Forfeited and expired   (502,104)  $9.50 
Outstanding and exercisable September 30, 2022   202,251   $23.31 

 

Comprised as follows:

 

Number of
Warrants		   Exercise Price
Per Share		   Issuance date  Expiration date
 22,750   $      10   February 26, 2020  February 24, 2025
 160,727   $25   February 12, 2021  February 9, 2026
 18,774   $25   February 17, 2021  February 9, 2026
 202,251            

 

NOTE 11 – SHARE-BASED COMPENSATION

 

a)As of September 30, 2022, 4,150,704 Ordinary Shares were authorized for issuance to employees, directors and consultants under the Company’s Global Share Incentive Plan (2019), of which 1,193,656 shares were available for future grant.

 

b)The following table contains information concerning options granted under the existing equity incentive plans:

 

   Three months ended September 30, 
   2022   2021 
  

Number of
options

  

Weighted

average

exercise price

  

Number of
options

  

Weighted

average

exercise price

 
Outstanding at beginning of period  2,388,997   $       5.95   2,177,925   $       6.54 
Granted   -   $-    15,000   $8.30 
Forfeited and expired   (3,750)  $5.21    (19,395)  $72.00 
Exercised   (7,625)  $6.49    (24,321)  $2.76 
Outstanding at end of period   2,377,622   $5.95    2,149,209   $6.01 
Exercisable at end of period   1,787,448   $5.14    1,421,418   $4.67 
                     
Non-vested at beginning of period   660,374   $7.59    773,116   $8.19 
Granted   -   $-    15,000   $8.30 
Vested   (66,638)  $7.55    (56,075)  $7.81 
Forfeited   (3,562)  $5.24    (4,250)  $9.74 
Non-vested at the end of period   590,174   $7.60    727,791   $8.21 

 

F-12

 

 

ENLIVEX THERAPEUTICS LTD.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2022 (UNAUDITED)

 

 

   Nine months ended September 30, 
   2022   2021 
  

Number of
options

  

Weighted

average

exercise price

  

Number of
options

  

Weighted

average

exercise price

 
Outstanding at beginning of period  2,142,547   $         6.02   1,884,420   $        5.52 
Granted   264,700   $5.48    325,500   $12.38 
Forfeited and expired   (6,750)  $5.27    (22,580)  $62.83 
Exercised   (22,875)  $6.49    (38,131)  $    2.84 
Outstanding at end of period   2,377,622   $5.95    2,149,209   $6.01 
Exercisable at end of period   1,787,448   $5.14    1,421,418   $4.67 
                     
Non vested at beginning of period   529,082   $8.69    601,227   $5.93 
Granted   264,700   $5.48    325,500   $12.38 
Forfeited and expired   (6,562)  $5.28    (191,501)  $8.10 
vested   (197,046)  $7.73    (7,435)  $8.47 
Outstanding at end of period   590,174   $7.60    727,791   $8.21 

 

During the three and nine month periods ended September 30, 2022 and 2021, the Company recognized $313, $1,385, $336 and $1,114 thousand, respectively, of share-based compensation expenses related to stock options. As of September 30, 2022, the total unrecognized estimated compensation cost related to outstanding non-vested stock options was $1,482 thousand, which is expected to be recognized over a weighted average period of 1.25 years.

 

c)Set forth below is data regarding the range of exercise prices and remaining contractual life for all options outstanding at September 30, 2022:

 

Exercise
price		  

Number of
options
outstanding

  

Remaining
contractual

Life (in years)

   Intrinsic Value of
Options
Outstanding		   No. of options
exercisable		 
            (in thousands)     
$2.69    649,883    2.67    1,014    649,883 
$3.66    250,000    7.59    147    201,389 
$4.68    54,750    7.50    -    27,375 
$5.35    228,200    9.50    -    - 
$6.22    634,177    4.75    -    634,177 
$6.49    7,625    0.03    -    - 
$8.19    150,000    7.13    -    75,000 
$8.23    20,000    9.13    -    - 
$8.30    15,000    8.85    -    3,750 
$9.02    40,500    8.13    -    10,125 
$10.12    12,126    6.18    -    9,700 
$12.21    2,421    6.49    -    1,816 
$12.23    250,000    8.66    -    131,945 
$14.00    60,500    8.57    -    40,333 
$21.40    1,940    6.82    -    1,455 
$90.16    500    2.17    -    500 
      2,377,622        $1,161    1,787,448 

 

F-13

 

 

ENLIVEX THERAPEUTICS LTD.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2022 (UNAUDITED)

 

 

d)The following table contains information concerning restricted stock units granted under the existing equity incentive plans:

 

   Three months ended September 30, 
   2022   2021 
   Number of
shares		   Weighted
average
grant date
fair value		   Number of
shares		   Weighted
average
grant date
fair value		 
Nonvested at beginning of period   181,350   $10.02    60,125   $      14.67 
Granted   -   $-    -   $- 
Vested   (9,352)  $8.98    -   $- 
Forfeited   (563)  $14.67    (5,000)  $14.67 
Nonvested at end of period   171,435   $9.71    55,125   $13.67 

 

   Nine months ended September 30, 
   2022   2021 
   Number of
shares		   Weighted
average
grant date
fair value		   Number of
shares		   Weighted
average
grant date
fair value		 
Nonvested at beginning of period   229,331   $10.08    -   $     - 
Granted   -   $-    62,125   $13.7 
Vested   (57,333)  $10.19    -   $- 
Forfeited   (563)  $14.67    (7,000)  $14.67 
Nonvested at end of period   171,435   $9.71    55,125   $13.67 

 

The Company estimates the fair value of restricted stock units based on the closing sales price of the Ordinary Shares on the date of grant (or the closing bid price, if no sales were reported). For the three and nine month periods ended September 30, 2022 and 2021, the Company recognized $158, $570, $41 and $105 thousand, respectively, of share-based compensation expense related to restricted stock units. Total share-based compensation expense related to restricted stock units not yet recognized as of September 30, 2022 was $725 thousand, which is expected to be recognized over a weighted average period of 1.25 years.

 

e)The following table summarizes share-based compensation expenses related to grants under the existing equity incentive plans included in the statements of operations:

 

   Three months ended
September 30,		   Nine months ended
September 30,		 
(in thousands)  2022   2021   2022   2021 
Research & development  $208   $130   $717   $576 
General & administrative   263    247    1,238    643 
Total  $471   $377   $1,955   $1,219 

 

F-14

 

 

ENLIVEX THERAPEUTICS LTD.

 

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS SEPTEMBER 30, 2022 (UNAUDITED)

 

 

NOTE 12 – FAIR VALUE MEASUREMENT

 

The Company’s financial assets and liabilities measured at fair value on a recurring basis consisted of the following types of instruments as of September 30, 2022 and December 31, 2021:

 

(in thousands)  September 30, 2022 
   Total   Level 1   Level 2   Level 3 
Cash and cash equivalents  $57,655   $57,655   $      -   $    - 
Cash held with respect to CVR Agreement   113    113    -    - 
Restricted cash   283    283    -    - 
Total financial assets  $58,051   $58,051   $-   $- 

 

(in thousands)  December 31, 2021 
   Total   Level 1   Level 2   Level 3 
Cash and cash equivalents  $11,202   $11,202   $     -   $      - 
Short term deposits   10,004    10,004    -    - 
Cash held with respect to CVR Agreement   113    113    -    - 
Marketable securities   62,924    62,924    -    - 
Restricted cash   321    321    -    - 
Total financial assets  $84,564   $84,564   $-   $- 

 

NOTE 13 – EVENTS SUBSEQUENT TO THE BALANCE SHEET DATE

 

The Company evaluated all events and transactions that occurred subsequent to the balance sheet date and prior to the date on which these unaudited condensed consolidated financial statements were issued and determined that there were no events that necessitated disclosure.

 

 

F-15