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SHARE CAPITAL | 12 Months Ended
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Dec. 31, 2022
SHARE CAPITAL |
SHARE CAPITAL | NOTE 9 - SHARE CAPITAL a. Authorized Capital On June 30, 2022, the Company held its 2022 Annual Meeting of Stockholders (the “Annual Meeting”). At the Annual Meeting, the Company’s stockholders, among other matters, approved an amendment to the Company’s Certificate of Incorporation, as amended, to increase the number of shares of Common Stock authorized for issuance from 120,000,000 to 144,000,000. b.Rights of the Company’s Common Stock The Company’s Common Stock is listed on the NYSE American and on the Tel Aviv Stock Exchange (the “TASE”); however, the Company has decided to voluntarily delist its common stock from the TASE. The Company’s common stock will be delisted from the TASE on March 22, 2023 and the last trading date on the TASE will be March 20, 2023. The Company’s common stock will continue to be listed for trade on the NYSE American. 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 8,475,171 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, 2022, 136,738 shares of Common Stock remain available for grant under the Plan. The vesting period of the outstanding options and restricted shares is generally four years from the date of grant. The rights of common stock obtained from the exercise of options and the restricted stock (once vested) 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 the options and 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, 2022, and the effect of share-based compensation on the statement of operations for the year ended December 31, 2022, is as follows:
| a) | Options granted to employees and directors:
​
​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended December 31, 2022
​ |  | ​ |  | Weighted
​ | ​ | Number | ​ | average
​ | ​ | of | ​ | exercise
​ | ​ | options | ​ | price
Outstanding at beginning of year |  | 2,259,020 | ​ | $ | 4.42
Changes during the year: |  |  | ​ |  |
Granted |  | 3,480,000 | ​ |  | 1.03
Forfeited and expired |  | 219,705 | ​ |  | 4.62
Outstanding at end of year |  | 5,519,315 | ​ | $ | 2.28
Exercisable at end of year |  | 1,731,434 | ​ | $ | 4.25
​
| b) | Restricted stock granted to employees:
​
​ | ​ | ​ | ​
​ | ​ | Year Ended December 31, 2022 | ​
​ | ​ | Number of Restricted Stock | ​
Outstanding at beginning of year | ​ | 458,027 | ​
Changes during the year: | ​ | ​ | ​
Granted | ​ | 759,482 | ​
Vested | ​ | 926,035 | ​
Non vested at end of year | ​ | 291,474 | ​
​ ​
| c) | The following tables summarize information concerning outstanding and exercisable options as of December 31, 2022:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | December 31, 2022
​ | ​ | 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 | ​ | 3,610,000 | ​ | 9.60 | ​ | 300,625 | ​ | 8.99
$3.55-$3.73 | ​ | 1,361,965 | ​ | 6.78 | ​ | 903,459 | ​ | 6.48
$4.69-$5.60 |  | 466,000 |  | 5.71 |  | 446,000 |  | 5.67
$17.20 |  | 81,350 |  | 2.10 |  | 81,350 |  | 2.10
​ |  | 5,519,315 | ​ | ​ |  | 1,731,434 | ​ | ​
​ * As of December 31, 2022, the aggregate intrinsic value of all the outstanding options and exercisable options was approximately $1.2 million and $74,000, respectively. ​
| d) | The fair value of each option granted during 2020, 2021 and 2022 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, | ​
​ | ​ | 2020 | ​ | 2021 | ​ | 2022 | ​
Stock price (USD) | ​ | 3.64 | ​ | 1.57 | ​ | 1.03 | ​
Exercise price (USD) | ​ | 3.64 | ​ | 1.57 |  | 1.03 | ​
Risk free rate | ​ | 0.74 | % | 0.88 | % | 3.32 | %
Volatility | ​ | 79.50 | % | 84.30 | % | 85.94 | %
Dividend yield | ​ | 0 | % | 0 | % | 0 | %
Expected life (Years) | ​ | 6 | ​ | 6 | ​ | 6 | ​
​
| e) | The total unrecognized compensation cost of employee stock options at December 31, 2022 is approximately $2.2 million. The unrecognized compensation cost of employee stock options is expected to be recognized over a weighted average period of 1.12 years.
During the three years ended December 31, 2022, 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 2022 was $0.8 million. As of December 31, 2022, the unrecognized compensation cost related to all unvested equity classified restricted stock of $0.2 million is expected to be recognized as an expense over a weighted-average period of 0.64 years.
| f) | The following table illustrates the effect of share-based compensation on the statement of operations:
​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​ | ​
​ | ​ | Year Ended December 31,
(U.S. dollars in thousands) |  | 2020 |  | 2021 |  | 2022
Cost of goods sold | ​ | ​ | ​ | ​ | $ | 269 | ​ | $ | 135
Research and development expenses | ​ | $ | 1,036 | ​ | ​ | 648 | ​ | ​ | 518
Selling, general and administrative expenses | ​ |  | 2,090 | ​ |  | 1,458 | ​ |  | 1,432
​ | ​ | $ | 3,126 | ​ | $ | 2,375 | ​ | $ | 2,085
​ d. Private and 144A Offerings On March 18, 2020, the Company completed a private placement (the “2020 Offering”) to certain existing and new institutional and other accredited investors in reliance on the exemption from registration set forth in Section 4(2) of the U.S. Securities Act of 1933, as amended (the “Securities Act”). The Company sold approximately 17.6 million unregistered shares of Common Stock in the 2020 Offering at a price per share of $2.485. The Company generated gross proceeds equal to approximately $43.7 million in the Private Placement; net proceeds generated from the private placement were approximately $41.3 million, after deducting advisory fees and other estimated offering expenses. Each share of Common Stock issued was accompanied by a warrant to purchase one share of Common Stock at an exercise price equal to $2.36. The warrants were exercisable commencing six months following their issuance for a period of five years from the date of issuance. For accounting purposes, the warrants are classified as equity considering the warrants’ terms. During the year ended December 31, 2020, the Company issued 200,000 shares of Common Stock in connection with the cash exercise of a warrant issued in the 2020 Offering and generated proceeds equal to $472,000 from such exercise. On June 7, 2021, the Company issued 173,816 shares of Common Stock in connection with the cashless exercise of a warrant to purchase 2,816,901 shares of Common Stock issued in the 2020 Offering. The Company did not generate any proceeds from the cashless exercise. 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 the 2020 Offering and generated proceeds equal to $2,360 from such exercise. e. At-the-Market (ATM) Offering On July 2, 2021, the Company entered into the Sales Agreement with the Agent. Pursuant to the terms of the 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 of the Shares, and may at any time suspend sales under the Sales Agreement or terminate the 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 ATM Shares sold. During the year ended December 31, 2020, the Company sold 1,428,571 shares of Common Stock under the BofA Agreement. The Company generated gross proceeds equal to approximately $5.0 million in connection with such sales. During the year ended December 31, 2021, but prior to the termination of the BofA Agreement, the Company sold 1,867,552 shares of Common Stock under the BofA Agreement. The Company generated gross proceeds equal to approximately $8.8 million in connection with such sales. During the year ended December 31, 2022, the Company sold 7,473,038 ATM Shares under the Sales Agreement. The Company generated gross proceeds equal to approximately $8.7 million in connection with such sales. f. Public Offering On February 17, 2021, the Company issued and sold 8,749,999 shares of Common Stock in an underwritten public offering at a price to the public of $4.60 per share for gross proceeds of approximately $40.2 million before deducting the underwriting discount and estimated expenses of the offering. The above included the exercise of the underwriters’ over-allotment option to purchase 1,141,304 shares of Common Stock. BofA Securities acted as book-running manager for the offering with Oppenheimer & Co. acting as co-manager.

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