Shareholders' Equity

6 Months Ended

Jun. 30, 2020

Equity [Abstract]

SHAREHOLDERS' EQUITY

NOTE 5:- ShareHOLDERS’ EQUITY

a. General:

Ordinary shares confer upon their holders the right to receive notice to participate and vote in general shareholder meetings of the Company and to receive dividends, if declared.

b. Issuance of convertible notes:

On December 5, 2018 the Company issued $10,000 aggregate principal amount of convertible notes in a private offering. The notes are unsecured, unsubordinated obligations of Cyren and carry a 5.75% interest rate, payable semi-annually in (i) 50% cash and (ii) 50% cash or ordinary shares at Cyren’s election. The notes have a 3-year term and are expected to mature in December 2021, unless converted in accordance with their terms prior to maturity. The notes were issued with a conversion price of $3.90 per share which was subject to adjustment using a weighted average ratchet mechanism based on the size and price of future equity offerings and the total shares outstanding. On November 7, 2019 Cyren announced the closing of a rights offering that raised gross proceeds of $8,019. As a result of this offering, the conversion price of the convertible notes was adjusted to $3.73. In addition, the notes would be subject to immediate conversion upon any change in control in the Company (or subject to repayment if the price in the change in control transaction is less than the conversion price). The Company incurred interest expense for the three and six months ended June 30, 2020 of $142 and $283, respectively. In June 2020, the Company paid semi-annual interest payments totaling, $288, of which $144 was paid in cash and the remaining portion through the issuance of 129,376 shares.

The Company has accrued interest of $28 as of June 30, 2020.

c. Issuance of Convertible Debentures :

In March 2020, the Company entered into purchase agreements with a select group of accredited investors for the purchase of $10.25 million aggregate principal amount of Convertible Debentures in a private placement. Upon the closing, the Company received approximately $9.4 million (net of $0.8 million in issuance expenses).

The debentures are unsecured, subordinated obligations of Cyren and carry a 5.75% interest rate per annum, payable semi-annually in cash or ordinary shares at Cyren’s election. The debentures have a four-year term and mature in March 2024, unless converted in accordance with their terms prior to maturity. The debentures have a conversion price of $0.75 per share and are convertible into 1,333 ordinary shares per $1,000 principal amount of debentures. The conversion price is subject to adjustment based on the price and timing of future equity offerings and other customary adjustments. Upon the satisfaction of price and other conditions, Cyren has the right to force the conversion of the debentures.

On June 11, 2020, one of the debenture holders converted $48 of principal plus interest of their debentures, which was a portion of their holding. The principal and interest was paid through the issuance of 64,542 shares.

The Company incurred interest expense for the three and six months ended June 30, 2020 of $187 and $211, of which $44 and $49 are related to the amortization of debt issuance costs, respectively.

The Company has accrued interest of $163 as of June 30, 2020.

d. Equity Incentive Plan:

On December 22, 2016, the Company’s shareholders approved a new equity plan - the 2016 Equity Incentive Plan (the “Equity Incentive Plan”). This plan, along with its respective Israeli appendix, replaced all then-existing employee and consultants stock option plans.

The Equity Incentive Plan allows for the issuance of Restricted Stock Units (“RSUs”), as well as options. The options and RSUs generally vest over a period of four years. Options granted under the Equity Incentive Plan generally expire after six years from the date of grant. Options and RSUs cease vesting upon termination of the optionee’s employment or other relationship with the Company. The per share exercise price for options shall be no less than 100% of the fair market value per ordinary share on the date of grant. Any options and RSUs that are cancelled or not exercised within the option term become available for future grant.

On July 30, 2019, the shareholders of the Company approved an increase in the number of Ordinary Shares reserved for issuance under the 2016 Equity Incentive Plan and its respective Israeli Appendix to a total of 11,200,000.

As of June 30, 2020, an aggregate of 9,233,414 ordinary shares of the Company are still available for future grant under the Equity Incentive Plan.

e. Non-Employee Directors stock option plan:

On December 22, 2016, the Company’s shareholders approved a new equity plan - the 2016 Non-Employee Director Equity Incentive Plan (the “Non-Employee Director Plan”). This plan, along with its respective Israeli appendix, replaced all existing Directors stock option plans.

The Non-Employee Director Plan allows for the issuance of Restricted Stock Units (“RSUs”), as well as options. Each option and RSU granted under the Non-Employee Plan generally vests over a period of four years. Each option has an exercise price equal to the fair market value of the ordinary shares on the grant date of such option. Options granted under the Non-Employee Director Plan generally expire after six years from the date of grant. Options and RSUs cease vesting upon termination of the relationship with the Company.

On July 30, 2019 the shareholders of the Company approved an increase in the number of Ordinary Shares reserved for issuance under the Non-Employee Director Plan and its respective Israeli Appendix to a total of 1,150,000 Ordinary Shares.

As of June 30, 2020, an aggregate of 842,882 ordinary shares of the Company are still available for future grant to non-employee directors. 

f. A summary of the Company’s employees and directors’ stock option activity under the plans is as follows:

	Number of options			Weighted average exercise price		Weighted average remaining contractual term (years)		Aggregate intrinsic value
Outstanding at December 31, 2019		7,299,667		$	2.16		3.81	$	-
Granted		96,500			1.18
Exercised		-			-
Expired and forfeited		(729,108	)		2.64
Outstanding at June 30, 2020		6,667,059		$	2.10		3.53	$	4
Options vested and expected to vest at June 30, 2020		6,434,586		$	2.10		3.48	$	4
Exercisable options at June 30, 2020		3,871,797		$	2.23		2.54	$	-
Weighted average fair value of options granted during the quarter				$	0.47

As of June 30, 2020, the Company had $2,046 of unrecognized compensation expense related to non-vested stock options granted to employees and directors, expected to be recognized over a remaining weighted average period of 2.61 years.

g. The employee and director options outstanding as of June 30, 2020, have been separated into ranges of exercise prices, as follows:

Outstanding							Exercisable
			Weighted average remaining contractual		Weighted average exercise				Weighted average exercise
	Options		life in		price per		Options		price per
Exercise price per share	outstanding		years		share		exercisable		share
$1.06 - $1.64		1,599,721		4.01	$	1.56		500,221	$	1.46
$1.70 - $2.00		1,599,860		3.31	$	1.87		1,180,775	$	1.93
$2.05 - $2.29		1,447,490		4.22	$	2.10		641,840	$	2.10
$2.30 - $2.75		898,662		3.74	$	2.39		529,200	$	2.37
$2.90 - $3.20		1,121,326		2.09	$	2.97		1,019,761	$	2.97
		6,667,059		3.53	$	2.10		3,871,797	$	2.23

h. Options to non-employees and non-directors:

Issuance date	Options outstanding		Exercise price per share		Options exercisable		Exercisable through
February 18, 2015		3,000	$	3.00		3,000	Feb-21
February 10, 2016		40,000	$	1.44		40,000	Feb-22
January 24, 2017		25,000	$	2.00		25,000	Jan-23
		68,000				68,000

The options vest and become exercisable at a rate of 1/16 of the options every three months.

As of June 30, 2020, the Company did not have any unrecognized compensation expense related to non-employee and non-director non-vested stock options.

i. A summary of the Company’s RSUs activity for employees, directors and non-employees under the plans is as follows:

	Number of RSUs			Weighted average grant date fair value
Awarded and unvested at December 31, 2019		1,733,132		$	2.09
Granted		514,000			1.30
Vested		(631,132	)		2.49
Forfeited		(42,500	)		2.30
Awarded and unvested at June 30, 2020		1,573,500		$	1.66

As of June 30, 2020, the Company had approximately $2,087 of unrecognized compensation expense related to RSUs, expected to be recognized over a weighted average period of 2.53 years.

j. The total stock-based compensation expense related to all of the Company’s equity-based awards, recognized for the three and six months ended June 30, 2020 and 2019 was as follows:

	Three months ended June 30,				Six months ended June 30
	2020		2019		2020		2019
	Unaudited				Unaudited
Cost of revenues	$	20	$	33	$	64		62
Research and development		64		58		159		125
Sales and marketing		43		48		139		97
General and administrative		380		175		790		299
	$	507	$	314	$	1,152	$	583