SHARE CAPITAL

12 Months Ended

Dec. 31, 2024

SHARE CAPITAL

SHARE CAPITAL

NOTE 8 - SHARE CAPITAL

a.    Authorized Capital

Under the Company’s Certificate of Incorporation, as amended, the Company is authorized to issue 185,000,000 shares of Common Stock and 100,000,000 shares of preferred stock, par value $0.0001 per share.

b.Rights of the Company’s Common Stock

The Company’s Common Stock is listed on the NYSE American. The Company voluntarily delisted its Common Stock from the Tel Aviv Stock Exchange effective March 22, 2023. Each share of Common Stock is entitled to one vote. The holders of shares of Common Stock are also entitled to receive dividends whenever funds are legally available, when and if declared by the Board of Directors. Since its inception, the Company has not declared any dividends.

c.    Stock based compensation

On December 14, 2006, the Board of Directors adopted the Protalix BioTherapeutics, Inc. 2006 Stock Incentive Plan, as amended (the “Plan”). The Plan has since been amended to, among other things, increase the number of shares of Common Stock available under the Plan to 17,475,171 shares. The grant of options to Israeli employees under the Plan is subject to the terms stipulated by Sections 102 and 102A of the Israeli Income Tax Ordinance (the “Ordinance”). Each option grant made to an Israeli citizen is subject to the track chosen by the Company, either Section 102 or Section 102A of the Ordinance, and pursuant to the terms thereof, the Company is not allowed to claim, as an expense for tax purposes, the amounts credited to employees as a benefit, including amounts recorded as salary benefits in the Company’s accounts, in respect of options granted to employees under the Plan, with the exception of the work-income benefit component, if any, determined on the grant date. For Israeli non-employees, the share option plan is subject to Section 3(i) of the Ordinance.

As of December 31, 2024, 4,139,412 shares of Common Stock remain available for grant under the Plan.

The vesting period of the outstanding options and restricted shares is generally three or four years from the date of grant. The rights of common stock obtained from the exercise of options (once vested) and the restricted stock are identical to those of other common stock of the Company. The contractual term of these options is primarily for ten years.

For purposes of determining the fair value of restricted stock granted to employees and non-employees, the Company’s management uses the fair value of the Common Stock. The fair value of options granted for both employees and directors is estimated at the date of grant using the Black-Scholes option-pricing model.

1.    Options and restricted stock granted to employees and directors:

A summary of share option plans, and related information, under all of the Company’s equity incentive plans for the year ended December 31, 2024, and the effect of share-based compensation on the statement of operations for the year ended December 31, 2024, is as follows:

a) Options granted to employees and directors:

	Year ended December 31, 2024
		Weighted
	Number	average
	of	exercise
	options	price
Outstanding at beginning of year	6,965,601	$	2.13
Changes during the year:
Granted	1,015,725		1.10
Forfeited	(326,969)		1.36
Expired	(252,062)		3.60
Outstanding at end of year	7,402,295	$	1.98
Exercisable at end of year	4,247,896	$	2.49

b) Restricted stock granted to employees:

	Year Ended December 31, 2024
			Weighted
	Number of		average
	Restricted		of fair value
	Stock		at grant date
Outstanding at beginning of year	1,173,670	$	2.16
Changes during the year:
Granted	704,869		1.24
Forfeited	(23,410)		1.99
Vested	(992,313)	$	1.91
Non vested at end of year	862,816	$	1.70

c) The following table summarizes information concerning outstanding and exercisable options as of December 31, 2024:

	December 31, 2024
	Options outstanding		Options exercisable
	Number of	Weighted		Weighted
	options	average		average
	outstanding	remaining	Number of	remaining
Exercise	at end of	contractual	options	contractual
prices	year	life	exercisable	life
$1.03-$2.00	5,899,166	7.94	2,744,767	6.95
$3.55-$3.73	994,679	4.61	994,679	4.61
$4.69-$5.60	435,500	3.88	435,500	3.88
$17.20	72,950	0.21	72,950	0.21
	7,402,295		4,247,896

As of December 31, 2024, the aggregate intrinsic value of all the outstanding options and exercisable options was approximately $1.0 million and $0.5 million, respectively.

d) The weighted average grants date fair value of restricted stock granted in 2022, 2023 and 2024 was $0.82, $1.99 and $1.24, respectively.

e) The fair value of each option granted during 2022, 2023 and 2024 for both employees and directors is estimated at the date of grant using the Black-Scholes option-pricing model. The following weighted average assumptions were applied in determining the options’ fair value on their grant date:

	Year Ended December 31,
	2022		2023		2024
Weighted average grants date fair value (USD)	1.03		1.84		1.10
Exercise price (USD)	1.03		1.84		1.10
Risk free rate	3.32	%	4.44	%	3.55	%
Volatility	85.94	%	79.41	%	79.29	%
Dividend yield	0	%	0	%	0	%
Expected life (Years)	6		5.75		5.75

f) The total unrecognized compensation cost of employee stock options at December 31, 2024 is approximately $1.3 million. The unrecognized compensation cost of employee stock options is expected to be recognized over a weighted average period of 0.8 years.

During the three years ended December 31, 2024, there were no exercises of stock options, and the Company did not realize any tax benefit in connection with any exercises.

The total vesting-date value of equity classified restricted stock vested during the year ended December 31, 2024 was $1.2 million. As of December 31, 2024, the unrecognized compensation cost related to all unvested equity classified restricted stock of $0.6 million is expected to be recognized as an expense over a weighted-average period of 0.7 years.

g) The following table illustrates the effect of share-based compensation on the statement of operations:

	Year ended December 31,
(U.S. dollars in thousands)	2022		2023		2024
Cost of goods sold	$	135	$	596	$	631
Research and development expenses		518		777		589
Selling, general and administrative expenses		1,432		2,075		2,033
	$	2,085	$	3,448	$	3,253

d.    Private and 144A Offerings

During the year ended December 31, 2022, the Company issued 1,000 shares of Common Stock in connection with the cash exercise of a warrant issued in 2020 and generated proceeds equal to $2,360 from such exercise.

During the year ended December 31, 2023, the Company issued (i) 301,810 shares of Common Stock in connection with the cash exercise of a warrant issued in 2020 and generated proceeds equal to $0.7 million from such exercise and (ii) 237,012 shares of Common Stock in connection with the cashless exercise of a

warrant to purchase 845,000 shares of Common Stock issued in 2020. The Company did not generate any proceeds from the cashless exercise.

During the year ended December 31, 2023, the Company issued, in the aggregate, 4,691,623 shares of Common Stock in connection with the conversions of 2024 Notes. In connection with such conversions, during the year ended December 31, 2023, the Company paid to the converting holders $0.9 million representing cash payments due to accrued but unpaid interest, make-whole interest payments and payments in lieu of fractional shares.

e.    At-the-Market (ATM) Offering

On July 2, 2021, the Company entered into an At The Market Offering Agreement (the “2021 Sales Agreement”) with H.C. Wainwright & Co., LLC, as the Company’s sales agent (the “Agent”) which was amended on May 2, 2022. Pursuant to the terms of the 2021 Sales Agreement, the Company was able to sell from time to time through the Agent, shares of Common Stock having an aggregate offering price of up to $20.0 million (the “ATM Shares”). During the term of the 2021 Sales Agreement which ended during the quarter ended March 31, 2023, the Company sold a total of 13,980,060 ATM Shares for total gross proceeds of approximately $20.0 million, thereby completing the ATM program under said agreement.

On February 27, 2023, the Company entered into an At The Market Offering Agreement (the “2023 Sales Agreement”) with the Agent. Pursuant to the terms of the 2023 Sales Agreement, the Company may sell, from time to time through the Agent, ATM Shares having an aggregate offering price of up to $20.0 million.

The Company has no obligation to sell any shares of Common Stock under the 2023 Sales Agreement, and may at any time suspend sales under the 2023 Sales Agreement or terminate the 2023 Sales Agreement in accordance with its terms. The Agent is entitled to a commission of up to 3.0% of the aggregate gross proceeds from the shares of Common Stock sold under the 2023 Sales Agreement.

During the year ended December 31, 2022, the Company sold, in the aggregate, 7,473,038 shares of Common Stock under the 2021 Sales Agreement. The Company generated gross proceeds equal to approximately $8.7 million in connection with such sales.

During the year ended December 31, 2023, the Company sold, in the aggregate, 12,560,150 shares of Common Stock under the 2021 Sales Agreement and 2023 Sales Agreement. The Company generated gross proceeds equal to approximately $24.9 million in connection with such sales. All such sales were completed during the quarters ended March 31, 2023 and June 30, 2023. No sales were completed during the six months ended December 31, 2023.

During the year ended December 31, 2024, the Company sold, in the aggregate 2,216,692 shares of Common Stock under the 2023 Sales Agreement. The Company generated gross proceeds equal to approximately $3.8 million in connection with such sales (issuance cost was approximately $0.1 million). All such sales were completed during the quarter ended December 31, 2024. Subsequent to December 31, 2024, the Company sold the remaining amount of shares of Common Stock available for sale under the 2023 Sales Agreement thereby completing the ATM program thereunder.