Stock options plan

6 Months Ended

Jun. 30, 2023

Share-Based Payment Arrangement [Abstract]

Stock options plan

Note 4 - Stock options plan

On December 23, 2020, the Company’s board of directors approved, and the shareholders adopted, a share-based compensation plan (the “2020 Incentive Stock Plan”) for future grants by the Company to officers, directors, employees and consultants.

As of June 30, 2023, the Company awarded to its employees and service providers options to purchase up to 13,513,176 shares of common stock, of which options for 7,821,176 shares were at an exercise price of US$ 0.32 per share, options for 5,012,000 shares were at an exercise price of US$ 0.58 per share, options for 480,000 shares were at an exercise price of US$ 0.01 per share and options for 200,000 shares were at an exercise price of $0.64 per share.

As of June 30, 2023, options for 10,128,530 shares were vested and the remaining balance has a vesting period ranging between one to three years. The options are exercisable for periods ranging between three to ten years from the vesting date.

The aforementioned grants were approved following the adoption of the 2020 Incentive Stock Plan and the adoption of the sub plan (the “Israeli appendix”) on April 29, 2021. The Company recorded in the statement of operations a non-cash expense of $ 875 thousands and $102 thousands during the six months ended June 30, 2023 and 2022, respectively.

IR-Med, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

Note 4 - Stock options plan (cont’d)

The stock-based compensation expenses for the three and six months ended June 30, 2023 and 2022 were recognized in the statements of operations as follows:

	For the three-months period ended June 30				For the six-months period ended June 30
	2023		2022		2023		2022
	U.S dollars (in thousands)
Research and development expenses		38		26		83		47
Marketing expenses		154		-		313		-
General and administrative expenses		205		23		479		55
		397		49		875		102

The following table sets forth information about the weighted-average fair value of options granted to employees and service providers during the six month periods ended June 30, 2023 and 2022, using the Black- Scholes-Merton option-pricing model and the weighted-average assumptions used for such grants:

	For the six-month period ended
	June 30, 2023			June 30, 2022
Dividend yields (see (I) below)		0.0	%		0.0	%
Share price (in U.S. dollar) (see (II) below)		0.53			0.26-0.53
Expected volatility (see (III) below)		114.29% - 95.37	%		82.77% - 142.57	%
Risk-free interest rates (see (IV) below)		3.61% - 4	%		0.17% - 2.63	%
Expected life (in years) (see (V) below)		5 - 14.79			1.5 - 14.79

I. The Company used 0% as its expected dividend yield, based on historic policies and future plans.

II. The Company’s common stocks are quoted on the OTCQB. However, the Company considers its share price as it is traded on OTCQB to not be an appropriate representation of fair value, since it is not traded on an active market. The Company determined that the market is inactive due to low level of activity of the Company’s common stock, stale or non-current price quotes and price quotes that vary substantially either over time or among market makers. Consequently, the price of the Company’s common stock has been determined based on private placement equity offerings conducted in April 2021 and July 2022, consisting of units comprised of shares of common stock and warrants, at a per unit purchase price of $0.64 and $0.88, respectively. In order to evaluate the price per share, the warrant value has been deducted from the total unit price.

IR-Med, Inc.

Notes to the Interim Unaudited Condensed Consolidated Financial Statements

III. As the Company is at its early stage of operation, there is not sufficient historical volatility for the expected term of the stock options. Therefore, the Company uses an average historical share price volatility based on an analysis of reported data for a peer group of comparable publicly traded companies which were selected based upon industry similarities.

IV. The Company determined the risk-free interest rate by using a weighted-average equivalent to the expected term based on the U.S. Treasury yield curve in effect as of the date of the grant.

V. The expected life of the granted options was determined based on the estimated behavior of the grantees; since most of the grantees are executives, the Company assumed that the large majority of the options will be exercised prior to their expiration.