Scinai Immunotherapeutics Ltd. 10-Q

Item 1. Financial Statements BIONDVAX PHARMACEUTICALS LTD. CONDENSED BALANCE SHEETS (Unaudited) U.S. dollars in thousands (except share and per share data) March 31, December 31, 2023 2022 Unaudited Audited ASSETS CURRENT ASSETS: Cash and cash equivalents $ 10,799 $ 14,075 Restricted cash 127 140 Prepaid expenses and other receivables 119 155 Total current assets 11,045 14,370 NON-CURRENT ASSETS: Property, plant and equipment, net 10,817 11,245 Operating lease right-of-use assets 1,430 1,452 Total non-current assets 12,247 12,697 Total assets $ 23,292 $ 27,067 The accompanying notes are an integral part of the unaudited condensed financial statements. 1 BIONDVAX PHARMACEUTICALS LTD. CONDENSED BALANCE SHEETS (Unaudited) U.S. dollars in thousands (except share and per share data) March 31, December 31, 2023 2022 Unaudited Audited LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Trade payables $ 1,313 $ 716 Operating lease liabilities 420 382 Other payables 846 1,240 Total current liabilities 2,579 2,338 NON-CURRENT LIABILITIES: Warrants liability 2,664 5,329 Loan from others 21,851 20,082 Non-current operating lease liabilities 1,008 1,078 Total non-current liabilities 25,523 26,489 CONTINGENT LIABILITIES AND COMMITMENTS SHAREHOLDERS’ EQUITY (DEFICIT): Ordinary shares of no par value: Authorized: 20,000,000,000 shares at March 31, 2023 and at December 31, 2022; Issued and outstanding 1,313,623,184 shares at March 31, 2023 and 989,290,784 shares at December 31, 2022 - - Additional paid-in capital 116,431 116,082 Accumulated deficit ( 119,350 ) ( 115,835 ) Accumulated other comprehensive loss ( 1,891 ) ( 2,007 ) Total shareholders’ deficit ( 4,810 ) ( 1,760 ) Total liabilities and shareholders’ deficit $ 23,292 $ 27,067 The accompanying notes are an integral part of the unaudited condensed financial statements. 2 BIONDVAX PHARMACEUTICALS LTD. CONDENSED STATEMENTS OF OPERATIONS (Unaudited) U.S. dollars in thousands (except share and per share data) Three months ended March 31, 2023 2022 Unaudited Unaudited Research and development $ 1,995 $ 1,163 Marketing, general and administrative 1,191 1,452 Total operating loss 3,186 2,615 Financial loss (income), net 329 ( 140 ) Net loss $ 3,515 $ 2,475 Basic and diluted net loss per share ( 0.003 ) ( 0.003 ) Weighted average number of shares used for computing basic and diluted net loss per share 1,295,256,604 744,711,465 The accompanying notes are an integral part of the unaudited condensed financial statements. 3 BIONDVAX PHARMACEUTICALS LTD. CONDENSED STATEMENTS OF COMPREHENSIVE LOSS ( Unaudited ) U.S. dollars in thousands (except share and per share data) Three months ended March 31, 2023 2022 Unaudited Unaudited Net loss $ 3,515 $ 2,475 Other comprehensive (income) loss: Foreign currency translation adjustments ( 116 ) 34 Total comprehensive loss $ 3,399 $ 2,509 The accompanying notes are an integral part of the unaudited condensed financial statements. 4 BIONDVAX PHARMACEUTICALS LTD. CONDENSED STATEMENTS OF CHANGES I N SHAREHOLDERS’ EQUITY (Unaudited) U.S. dollars in thousands (except share and per share data) Ordinary shares Additional paid-in Accumulated comprehensive Accumulated Total shareholders’ Number Amount capital loss deficit equity Balance as of January 1, 2023 989,290,784 $ - $ 116,082 $ ( 2,007 ) $ ( 115,835 ) $ ( 1,760 ) Exercise of warrants 324,000,000 - 97 - - 97 Vested RSU’s 332,400 - - - -- - Share-based compensation - - 252 - - 252 Other comprehensive income - - - 116 - 116 Net loss - - - - ( 3,515 ) ( 3,515 ) Balance as of March 31, 2023 1,313,623,184 $ - $ 116,431 $ ( 1,891 ) $ ( 119,350 ) ( 4,810 ) Ordinary shares Additional paid-in Accumulated comprehensive Accumulated Total shareholders’ Number Amount capital loss deficit equity Balance as of January 1, 2022 739,048,544 - 113,076 ( 2,055 ) ( 110,039 ) 982 Issuance of shares, net of issuance costs of $ 6 6,000,000 - 216 - - 216 Share-based compensation - 485 - - 485 Other comprehensive loss - - - ( 34 ) - ( 34 ) Net loss - - - - ( 2,475 ) ( 2,475 ) Balance as of March 31, 2022 745,048,544 $ - $ 113,777 $ ( 2,089 ) $ ( 112,514 ) $ ( 862 ) The accompanying notes are an integral part of the unaudited condensed financial statements. 5 BIONDVAX PHARMACEUTICALS LTD. CONDENSED STATEMENTS OF CASH FLOWS (Unaudited) U.S. dollars in thousands (except share and per share data) Three months ended March 31, 2023 2022 Unaudited Unaudited Cash flows from operating activities: Net loss $ ( 3,515 ) $ ( 2,475 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation of property, plant and equipment 138 134 Expense of in-process research and development - 209 Financial expenses related to loan from others 2,354 28 Share-based compensation 252 485 Decrease in other receivables 31 123 Warrants revaluation ( 2,568 ) - Changes in operating lease right-of-use assets ( 18 ) 63 Increase in trade payables 629 311 Changes in operating lease liabilities 7 ( 62 ) (Decrease) increase in other payables ( 369 ) 79 Net cash used in operating activities ( 3,059 ) ( 1,105 ) Cash flows from investing activities: Purchase of property, plant and equipment ( 6 ) ( 521 ) Net cash used in investing activities $ ( 6 ) $ ( 521 ) The accompanying notes are an integral part of the unaudited condensed financial statements. 6 BIONDVAX PHARMACEUTICALS LTD. CONDENSED STATEMENTS OF CASH FLOWS U.S. dollars in thousands (except share and per share data) Three months ended March 31, 2023 2022 Unaudited Unaudited Cash flows from financing activities: $ - $ - Net cash provided by financing activities - - Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 224 ) ( 359 ) Decrease in cash, cash equivalents and restricted cash ( 3,289 ) ( 1,985 ) Cash, cash equivalents and restricted cash at the beginning of the period 14,215 17,517 Cash, cash equivalents and restricted cash at the end of the period $ 10,926 $ 15,532 Supplementary disclosure of cash flows activities: (1) Cash paid during the year for: Interest $ 725 $ - (2) Non-cash transactions: Exercise of warrants liability to equity $ 97 $ - Reconciliation of cash, cash equivalents and restricted cash: Cash and cash equivalents $ 10,799 $ 15,392 Restricted cash 127 140 Cash, cash equivalents and restricted cash $ 10,926 $ 15,532 The accompanying notes are an integral part of the unaudited condensed financial statements. 7 BIONDVAX PHARMACEUTICALS LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) U.S. dollars in thousands (except share and per share data and unless otherwise indicated) NOTE 1:- GENERAL a. Biondvax Pharmaceuticals Ltd. (the “Company”), is a biotechnology company focused on developing, manufacturing, and commercializing innovative immunotherapeutic products primarily for the treatment of infectious and autoimmune diseases. The Company was incorporated on July 21, 2003 in Israel, and started its activity on March 31, 2005. The Company’s principal executive offices, manufacturing site and R&D laboratories are located at Jerusalem, Israel. b. On December 22, 2021, the Company signed an exclusive, worldwide, license agreement with the Max Planck Society (“MPG”), the parent organization of the Max Planck Institute for Multidisciplinary Sciences, and the University Medical Center Göttingen (“UMG”), both in Germany, for the development and commercialization of an innovative Covid-19 NanoAb therapy and an accompanying research collaboration agreement with MPG and UPG in support of the abovementioned development of a COVID-19 NanoAb. The agreements became effective January 1, 2022 and provide for an upfront payment, development and sales milestones and royalties based on sales and sharing of sublicense revenues. c. On March 23, 2022, the Company executed an additional research collaboration agreement (RCA) with MPG and UMG covering discovery, selection and characterization of NanoAbs for several other disease indications with large and growing markets that leverage their unique and strong binding affinity, stability at high temperatures, and potential for more effective and convenient routes of administration. These targets are the basis for validated and currently marketed monoclonal antibodies, including for conditions such as psoriasis, asthma, macular degeneration, and psoriatic arthritis. According to the contract, BiondVax will have an exclusive option for exclusive license agreement for the development and commercialization of each of the NanoAbs covered by the agreement with MPG and UMG. On February 7, 2022 the Company issued 15,000 ADSs ( 6,000,000 shares) to Max-Planck-Gesellschaft zur Förderung der Wissenschaften e.V. under our exclusive, worldwide, License Agreement with MPG and UMG pursuant to Regulation S under the Securities Act; d. As of March 31, 2023, the Company’s cash and cash equivalents totaled $ 10,799 . In the three months ended March 31, 2023, the Company had an operating loss of $ 3,186 and negative cash flows from operating activities of $ 3,059 . The Company’s current operating budget includes various assumptions concerning the level and timing of cash receipts and cash outlays for operating expenses and capital expenditures, including a cost saving plan. The Company is planning to finance its operations from its existing working capital resources and additional sources of capital and financing. However, there is no assurance that additional capital and/or financing will be available to the Company, and even if available, whether it will be on terms acceptable to the Company or in amounts required. Accordingly, the Company’s board of directors approved a cost saving plan, to be implemented if and as required, in whole or in part, at its discretion, to allow the Company to continue its operations and meet its cash obligations. The cost saving plan consists of cutting expenditures by means of further efficiencies and synergies, which include mainly the following steps: reduction in headcount and postponing or cancelling capital expenditures that would not be required for the implementation of the revised business plan. Nevertheless, the Company and the board of directors believe that its existing financial resources and its operating plans, including the effects of the costs saving plan, will be adequate to satisfy its expected liquidity requirements for a period of at least twelve months from the end of the filing date. 8 BIONDVAX PHARMACEUTICALS LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) U.S. dollars in thousands (except share and per share data and unless otherwise indicated) NOTE 1:- GENERAL (Cont.) e. Basis of presentation of the financial statements: The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X promulgated by the U.S Securities and Exchange Commission (the “SEC”). Certain information or footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. The accompanying unaudited condensed financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K as of December 31, 2022 filed with the SEC on April 17, 2023. The interim period results do not necessarily indicate the results that may be expected for any other interim period or for the full fiscal year. f. Use of estimates: The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the financial statements and accompanying notes. The Company’s management believes that the estimates, judgment and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities at the dates of the financial statements, and the reported amount of expenses during the reporting periods. Actual results could differ from those estimates. g. Cash equivalents: Cash equivalents are short-term highly liquid deposits that are readily convertible to cash with original maturities of three months or less, at the date acquired. h. Restricted cash: Restricted cash are deposits with original maturities of three months or less and are used as security for the Company’s credit cards and rent. Restricted cash amounted to $ 127 and $ 140 as of March 31, 2023 and December 31, 2022 respectively. i. Warrants: The Company accounts for warrants as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable authoritative guidance. The assessment considers whether the warrants are freestanding financial instruments, meet the definition of a liability under ASC 480, and meet all of the requirements for equity classification, including whether the warrants are indexed to the Company’s own common stock. Warrants that determined to be classified as equity, are recorded as a component of additional paid-in capital. Warrants that determined to be classified as liabilities are recorded at their initial fair value on the date of issuance and remeasured to fair value at each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized in financial expenses, net in the statements of operations. j. Recently adopted accounting pronouncements: In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). ASU 2016-13 requires the measurement of all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. ASU 2016-13 requires enhanced qualitative and quantitative disclosures to help investors and other financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an organization’s portfolio. ASU 2016-13 is effective for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The adoption of this ASU did not have a significant impact on the Company’s financial statements and disclosures. 9 BIONDVAX PHARMACEUTICALS LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) U.S. dollars in thousands (except share and per share data and unless otherwise indicated) NOTE 2:- FAIR VALUE MEASUREMENTS In accordance with ASC No. 820, the Company measures warrants liability at fair value classified within Level 2 as the valuation inputs are based on quoted prices and market observable data of similar instruments. The following table presents assets measured at fair value on a recurring basis as of March 31, 2023: March 31, December 31, 2023 2022 Unaudited Audited Fair value measurement using input Level 2 Non-current liabilities: Warrants liability $ 2,664 $ 5,329 Total liabilities $ 2,664 $ 5,329 The carrying amounts of cash and cash equivalents, restricted cash, prepaid expenses and other receivables, trade payables and other current payables approximate their fair value due to the short-term maturity of such instruments. NOTE 3:- LOAN FROM OTHERS a. On June 19, 2017, the Company entered into a Finance Contract with the European Investment bank (EIB) for a total amount of approximately $22,422 (€ 20,000) and up to 50% of the Company’s expected cost of developing and marketing the Company’s product candidate, M-001. In addition, as a repayment features, EIB was entitled to receive the higher between 3% of any M-001 sales revenues for a period of ten years, or realizing a cash-on-cash multiple of 2.8 times During 2018, the Company received approximately $ 23,599 (€ 20,000 ) in two tranches of approximately $ 7,080 (€ 6,000 ) and the third tranche of approximately $ 9,439 (€ 8,000 ). On October 7, 2019, the Company received the remaining approximately $ 4,390 (€ 4,000 ). In the event the Company elects to prepay the EIB financing, or in the event the EIB shall demand prepayment following certain events, including a change of control, senior management changes or merger events, the Company shall be required to pay EIB the principal amount of the tranches already paid, or the Prepayment Amount, plus the greater of: (i) the amount, as determined by EIB required in order for the EIB to realize an internal rate of return on the relevant amount prepaid of 20 %; and (ii) the Prepayment Amount. The Finance Contract also stipulates that in the event the EIB demands prepayment of the loan due to any prepayment event to non-EIB lenders, the Company shall be obligated to pay the Prepayment Amount plus an additional reduced amount. In addition, and as consideration for the EIB financing, the EIB shall be entitled to 3 % of any annual M-001 sales revenues. b. On April 22, 2019, the Committee of EIB Bank agreed to expand the 2017 financing agreement to the Company by an additional approximately $4,502 (€ 4,000) to a total of approximately $27,013 (€ 4,000). An amendment to that effect was signed in June 2019 (the “Amendment”). Those funds were received in October 2019 and will be used in support of the ongoing pivotal, clinical efficacy, Phase 3 trial of BiondVax’s M-001 Universal Flu Vaccine candidate in Europe. According to the Amendment, as repayment features, EIB is entitled to receive the higher between 3% of any M-001 sales revenues for a period of twelve years or realizing a cash-on-cash multiple of 2.8 times 10 BIONDVAX PHARMACEUTICALS LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) U.S. dollars in thousands (except share and per share data and unless otherwise indicated) NOTE 3:- LOAN FROM OTHERS (Cont.) c. On October 23, 2020, the Company announced Phase 3 clinical trial results of the M-001 universal vaccine product. The results did not demonstrate a statistically significant difference between the vaccinated group and the placebo group in reduction of flu illness and severity. Therefore, the study failed to meet both the primary and secondary efficacy endpoints. However, the study’s primary safety endpoint was met. As a result of the Phase 3 clinical trial failure, Company’s management estimates that there will be no future revenues from the M-001 product. Therefore, most likely, there will be no future royalty payments to EIB. Under the Finance Contract, the EIB may accelerate all loans extended thereunder if an event of default has occurred, which includes, amongst other things, an event of default arising from the occurrence of a material adverse change, defined as any event or change of condition, which in the opinion of the EIB, has a material adverse effect on: our ability to perform our obligations under the Finance Documents; our business, operations, property, condition (financial or otherwise) or prospects; or the rights or remedies of the EIB under the Finance Contract, amongst other things. If the EIB determines that an event of default has occurred, it could accelerate the amounts outstanding under the Finance Contract, making those amounts immediately due and payable. In accordance with the EIB loan agreement, and due to the above, the Company was required to pay EIB the principal amount of the tranches already loaned by the EIB to the Company, within five years of the date of each tranche of the loan. On December 31, 2020, the Company re-evaluated the loan in the sum of $ 29,443 . As a result, the Company recorded an amount of $ 6,162 as revaluation income of the EIB loan. On January 26, 2021, the EIB notified the Company that they welcome the Company’s efforts to secure future equity financing in an amount not less than $ 2,000 in order to enable the Company to pursue new business opportunities, strengthen the Company balance sheet and invest in growth. Thus, within that context, the EIB wrote in their letter that they will not consider the failure of the Company’s pivotal phase 3 trial for M-001 to meet the primary and secondary efficacy endpoints as a trigger for prepayment of a loan extended under the Finance Contract. However, EIB cautioned the Company that their letter is not a consent, agreement, amendment or waiver in respect of the terms of the Finance Contract, reserving any other right or remedy the EIB may have now or subsequently. d. On August 9, 2022, the Company signed a loan restructuring agreement with the European Investment Bank (EIB) for the new terms of its outstanding approximately $ 24,554 (€ 24,000 ) loan to the Company. The new terms include: 1. An extension of the maturity dates from 2023 (approximately $20,462) and 2024 (approximately $4,092) until December 31, 2027. 2. Interest on the Loan will begin to accrue starting January 1, 2022, at an annual rate of 7%. The interest payments will be deferred until the new maturity date and will be added to the principal balance at the end of each year during the loan period. 11 BIONDVAX PHARMACEUTICALS LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) U.S. dollars in thousands (except share and per share data and unless otherwise indicated) NOTE 3:- LOAN FROM OTHERS (Cont.) 3. An amount of $ 900 (approximately € 880) were paid by BiondVax on August 15, 2022, shortly after the execution of the relevant amendment letter with the EIB and was applied to reduce the outstanding loan. Going forward 10% of any capital raises until maturity will be used to further repay the Loan principal including any outstanding accrued interest. 4. If the Company sales exceed approximately $5,332 (€ 5,000), 3% of the revenues will be paid to the EIB as royalties until the EIB receives (from the Loan repayment, inter alia the interest and the royalties) the higher of (i) a total of 2.8 times the original approximately $25,596 (€ 24,000) principal (as provided in the original Loan agreement) and (ii) 20% IRR on the principal. 5. In case the Company decides to discharge all liabilities under the finance contract, inter alia payments of the variable remuneration, the Company would need to repay to the EIB an indemnity amount in addition to the Loan principal and the accrued interest. The indemnity amount will be calculated such that the EIB receives an additional payment equal to the greater of (i) the prepayment amount (i.e. twice the prepayment amount in the aggregate) and (ii) the amount required to realize 20% IRR on the prepayment amount at the time of prepayment. The Company recorded the cash received in each tranche and a corresponding liability to repay the cash. The Company evaluates the estimated cash flows from the EIB loan at each reporting period. When the estimated cash flows change from the estimates used as of the date on which the EIB loan was issued, the EIB loan’s carrying amount is adjusted to an amount equal to the present value of the estimated remaining future payments, discounted by using the original effective interest rate. The adjustment to the carrying amount is recognized in earnings as an adjustment to interest expenses, in the period in which the change in estimate occurred. On December 31, 2022 as a result of the loan restructure, the Company recorded an amount of $ 7,168 under finance income. Interest expense related to the EIB loan were to $ 87 On February 16, 2023, $ 725 was paid to the EIB as part of the loan restructure agreement. For the three month ended at March 31, 2023 the company recorded $ 1,769 under finance expenses due to the loan revaluation. As of March 31, 2022, the outstanding principal amount related to the EIB loan in nominal terms is $ 26,105 . NOTE 4:- CONTINGENT LIABILITIES AND COMMITMENTS Since 2006, the Company received approximately $ 5,830 in grants from the Israeli Innovation Authority (IIA), formerly known as the Office of the Chief Scientist. The grants were for research and development of M-001. In return to those grants, the Company undertook to pay royalties amounting to 3 %- 5 % on the revenues derived from sales of products or services developed in whole or in part using these grants. The maximum aggregate royalties paid generally cannot exceed 100 % of the grants received by the Company, plus annual interest generally equal to the 12-month LIBOR applicable to dollar deposits, as published on the first business day of each calendar year. The maximum royalty amounts payable by the Company as of March 31, 2023 is approximately $ 5,830 which represents the total gross amount of grants actually received by the Company from the IIA including accrued interest. As of March 31, 2023, the Company had not paid any royalties to the IIA. In light of the Phase 3 clinical trial results (see also Note 3.c above), the Company does not currently expect any future revenues from M-001 and therefore do not currently expect to make any royalty payments to the IIA and the Company does not record a liability for amounts received from IIA until the related revenues are recognized. In the event of failure of a project that was partly financed by the IIA, the Company will not be obligated to pay any royalties or repay the amounts received. The Company also subject to various other restrictions pursuant to the grant, including limitations on transferring IP developed with grant funds. In light of the Company’s new strategy, it does not expect these restrictions to be material to its ongoing operations. 12 BIONDVAX PHARMACEUTICALS LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) U.S. dollars in thousands (except share and per share data and unless otherwise indicated) NOTE 5:- SHAREHOLDERS’ EQUITY a. Rights attached to shares: An Ordinary share confers upon its holder(s) a right to vote at the general meeting, a right to participate in distribution of dividends, and a right to participate in the distribution of surplus assets upon liquidation of the Company. b. On December 22, 2021, the Company signed definitive agreements with the Max Planck Society (“MPG”), the parent organization of the Max Planck Institute for Biophysical Chemistry, and the University Medical Center Göttingen (“UMG”), both in Germany, to enter into a strategic collaboration for the development and commercialization of innovative Covid-19 NanoAbs, effective from January 1, 2022. The agreements provide for an upfront payment, development and sales milestones and royalties based on sales and sharing of sublicense revenues . In accordance with the agreement the company issued 150,000 restricted ADS share at no cost to Max planck as an upfront payment for the license, the shares are blocked for a period of three years. The company evaluate the fair value of the license at $ 153 . The fair value was calculated by an independent valuation, at a discount rate of 31 % under the following principles: Stock price 1.48 Variance 150 % Risk free interest 1 % c. On November 10, 2022, the Company announced that it plans to affect a ratio change of the Company’s American Depositary Shares (ADSs) to its non-traded ordinary shares from the current ratio of one (1) ADS representing forty (40) ordinary shares to a new ratio of one (1) ADS representing four hundred (400) ordinary shares. The ratio change will have the same effect as a reverse split of the existing ADSs of one (1) new ADS for every ten (10) old ADSs. The effective date for the ratio change was November 25, 2022. d. On December 13 2022, an amendment to the Company’s Articles of Association increasing the registered share capital of the Company by an additional 18,200,000,000 Ordinary Shares (the equivalent of 45,500,000 ADSs) such that the total registered share capital of the Company would consist of 20,000,000,000 Ordinary Shares, no par value (the equivalent of 50,000,000 ADSs). 13 BIONDVAX PHARMACEUTICALS LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) U.S. dollars in thousands (except share and per share data and unless otherwise indicated) NOTE 5:- SHAREHOLDERS’ EQUITY (Cont.) e. On December 20, 2022, the Company closed an underwritten public offering with gross proceeds to the Company of $ 8,000,000 , before deducting underwriting discounts and other expenses payable by the Company. The offering consisted of 1,600,000 units and pre-funded units. Each unit consisted of one American Depositary Share (“ADS”) and two warrants, each to purchase one ADS, and each pre-funded unit consists of one pre-funded warrant to purchase one ADS and two warrants each to purchase one ADS. One of the warrants will expire three years from the date of issuance, and the other warrant will expire one year from the date of issuance and may be exercised for half an ADS on or prior to six (6) months following the original issuance for no additional consideration. Each ADS (or pre-funded warrant) was sold together with two warrants at a combined purchase price of $ 5.00 per unit (or $ 4.99 per pre-funded unit after reducing $ 0.01 attributable to the exercise price of the pre-funded warrants). Each ADS represents 400 of our ordinary shares, no par value per share. The Company received a net sum of $ 7,231 after deduction of underwriter discount and issuance expenses of $ 769 . The warrants were classified as liabilities, initially and subsequently measured at fair value through earnings pursuant to ASC 480 as the warrants are not considered indexed to the Company’s own shares. f. On January 5, 2023, the Company issued 810,000 ADSs ( 324,000,000 shares) as a result of exercise of warrants in consideration of NOTE 6:- SHARE-BASED COMPENSATION a. Option plans: Options granted under the Company’s 2005 Israeli Share Option Plan (“Plan”) were exercisable in accordance with the terms of the Plan, within 10 years from the date of grant, against payment of an exercise price. The options generally vest over a period of three or four years. In March 2018, the Company’s Board of Directors approved the adoption of the Company’s 2018 Israeli Share Option Plan (“2018 Plan”) for the grant of options and restricted shares (“RSU”) to employees, directors and service providers. The options are exercisable within 10 years from the date of grant, against payment of the exercise price, in accordance with the terms of the 2018 Plan. The options generally vest over a period of three or four years. There were no grants during the three-month ended March 31, 2023. b. The total share-based compensation expense related to all of the Company’s equity-based awards, recognized for the years ended March 31, 2023 and 2022 is comprised as follows: Three months ended March 31, 2023 2022 Unaudited Unaudited Research and development expenses $ 31 $ 19 Marketing, general and administrative expenses 221 466 Total share-based compensation $ 252 $ 485 14 BIONDVAX PHARMACEUTICALS LTD. NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) U.S. dollars in thousands (except share and per share data and unless otherwise indicated) NOTE 6:- SHARE-BASED COMPENSATION (Cont.) c. A summary of restricted shares and restricted share activity as of March 31, 2023 is as follows: Number of restricted share units Weighted average grant date fair value Unvested as of December 31, 2022 107,768 $ 6.49 Granted 125,607 2.22 Vested ( 1,083 ) 9.76 Forfeited - - Unvested as of March 31, 2023 (Unaudited) 232,292 $ 4.17 During the three-month ended March 31, 2023, the company granted 125,607 RSU’s ADS to employees and officers, the RSU’s shall be vested in three years and the fair value of the said grant was $ 278 . As of March 31, 2023, there are $ 514 of total unrecognized costs related to share-based compensation that is expected to be recognized over a period of up to four years . The fair value of the granted RSUs was determent according to the market stock price at the day of grant. NOTE 7:- BASIC AND DILUTED NET LOSS PER SHARE The following table sets forth the computation of basic and diluted net loss per share: Three months ended March 31, 2023 2022 Unaudited Unaudited Numerator for basic and diluted net loss per share: Net loss $ ( 3,515 ) $ ( 2,475 ) Denominator for basic and diluted net loss per share: Weighted average shares outstanding 1,295,256,604 744,711,465 All outstanding employees options, employees restricted shares and warrants for the three months ended March 31, 2023 and 2022 have been excluded from the calculation of the diluted net loss per share, because all such securities are anti-dilutive for all periods presented. The total number of potential shares excluded from the calculation of diluted net loss per share are as follows: Three months ended March 31, 2023 2022 Unaudited Unaudited Employees RSUs and options 121,285,269 64,507,360 Warrants 1,040,940,000 - Total 1,162,225,269 64,507,360 15