Evogene (NASDAQ: EVGN) posts 2025 loss and warns on going-concern risk
Filing Impact
Filing Sentiment
Form Type
20-F
Rhea-AI Filing Summary
Evogene Ltd. files its annual report for the year ended December 31, 2025, highlighting an early‑stage, loss‑making profile with significant risk. The company reported operating losses from continuing operations of approximately $14.0 million in 2025, $18.8 million in 2024 and $22.2 million in 2023 and has a history of negative cash flow.
Management states that conditions raise substantial doubt about Evogene’s ability to continue as a going concern over the 12‑month period from the report date and has prepared a plan focused on liquidity improvements and cost preservation. In 2025 Evogene undertook major streamlining: it sold most of Lavie Bio’s assets to ICL, scaled down Biomica, Casterra and AgPlenus, and implemented a significant reduction in workforce.
The business is now more concentrated around fewer subsidiaries, technological platforms and revenue sources, increasing exposure if remaining programs underperform. Evogene discloses it and its subsidiaries may need substantial additional capital, warns of potential future equity dilution, and notes 5,076,924 outstanding warrants exercisable at $1.25 per share that, if exercised, would dilute existing shareholders.
Positive
- None.
Negative
- Going-concern uncertainty: Management states there are conditions raising substantial doubt about Evogene’s ability to continue as a going concern over the 12‑month period from the report date.
- Persistent operating losses: The company incurred operating losses from continuing operations of approximately $14.0 million, $18.8 million and $22.2 million for 2025, 2024 and 2023, respectively, with ongoing negative cash flow.
- Heavy restructuring and workforce reduction: 2025 actions included a significant reduction in workforce and the disposition or scaling down of multiple subsidiaries (Lavie Bio, Biomica, Casterra, AgPlenus), which may create execution risk and morale issues.
- Increased concentration risk: Strategic streamlining leaves Evogene with fewer active subsidiaries, platforms and revenue sources, heightening the impact if remaining programs or collaborations underperform.
- Need for additional capital and dilution risk: Evogene and its subsidiaries may require substantial future funding, and the company highlights potential dilution from future offerings plus 5,076,924 outstanding warrants exercisable at $1.25 per share.
Insights
Persistent losses, going-concern warning and heavy restructuring dominate Evogene’s 2025 profile.
Evogene reports recurring operating losses of $14.0 million, $18.8 million and $22.2 million for 2025–2023, underscoring an early‑stage, cash‑consuming model. Management explicitly identifies conditions that raise substantial doubt about its ability to continue as a going concern over the year following the report date.
To address liquidity, the company implemented cost‑cutting, including a structural change and significant workforce reduction, disposed of Lavie Bio’s assets to ICL, and scaled down Biomica, Casterra and AgPlenus. These steps lower expense run‑rate but also reduce diversification and future optionality, concentrating risk in fewer platforms and programs.
Evogene and its subsidiaries expect they may need substantial additional capital, via equity or other instruments, which could dilute current holders. The presence of 5,076,924 outstanding warrants at $1.25 per share adds further potential dilution. Overall, the combination of going‑concern risk, dependence on external funding and portfolio concentration is materially negative for the risk–return profile.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM
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REGISTRATION STATEMENT
PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
OR
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ANNUAL REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December
31 , 2025
OR
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TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
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SHELL COMPANY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number 001-36187
(Exact name of Registrant as specified in its charter)
N/A
(Translation of Registrant’s name into English)
(Jurisdiction of incorporation or organization)
(Address of principal executive offices)
President and Chief Executive Officer
Telephone: +
Facsimile: +972-8-946-6724
Email: legal@evogene.com
(Name, Telephone, E-mail and/or Facsimile number and
Address of Company Contact Person)
Securities registered or to be registered pursuant
to Section 12(b) of the Act:
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Title of each class |
Trading
symbol(s) |
Name
of each exchange on which registered | ||
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Securities registered or to be registered pursuant
to Section 12(g) of the Act: None.
Securities for which there is a reporting obligation
pursuant to Section 15(d) of the Act: None.
Indicate the number of outstanding
shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: As
of December 31, 2025, the registrant had outstanding 8,718,193
ordinary shares, par value NIS 0.2 per share.
Indicate by check mark if the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
Yes ☐ No
☒
If this report is an annual or
transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934.
Yes ☐ No
☒
Indicate by check mark whether
the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Indicate by check mark whether
the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T
(§229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files).
Indicate by check mark whether
the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions
of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of
the Exchange Act.
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Large accelerated filer ☐
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Accelerated filer ☐
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Emerging Growth Company
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If an emerging growth company that
prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the
Exchange Act. ☐
† The term “new or
revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting
Standards Codification after April 5, 2012.
Indicate by check mark whether
the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control
over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report. ☐
If securities are registered pursuant
to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect
the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any
of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s
executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark which basis
of accounting the registrant has used to prepare the financial statements included in this filing:
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U.S. GAAP ☐ |
International Accounting Standards Board ☒ |
Other ☐
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If “Other” has been
checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
Item 17 ☐
Item 18 ☐
If this is an annual report, indicate
by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ☐ No
☒
EVOGENE LTD.
FORM 20-F
ANNUAL REPORT FOR THE FISCAL YEAR ENDED DECEMBER 31, 2025
TABLE OF CONTENTS
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Certain Terms and Conventions |
3 | |
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Special Note Regarding Forward-Looking Statements |
4 | |
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Summary Risk Factors |
6 | |
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PART I |
8 | |
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ITEM 1. |
Identity of Directors, Senior Management and Advisers |
8 |
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ITEM 2. |
Offer Statistics and Expected Timetable |
8 |
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ITEM 3. |
Key Information |
8 |
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ITEM 4. |
Information on The Company |
36 |
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ITEM 4A. |
Unresolved Staff Comments |
49 |
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ITEM 5. |
Operating and Financial Review and Prospects |
49 |
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ITEM 6. |
Directors, Senior Management and Employees |
67 |
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ITEM 7. |
Major Shareholders and Related Party Transactions |
82 |
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ITEM 8. |
Financial Information |
85 |
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ITEM 9. |
The Offer and Listing |
85 |
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ITEM 10. |
Additional Information |
86 |
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ITEM 11. |
Quantitative and Qualitative Disclosures About Market Risk
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97 |
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ITEM 12. |
Description of Securities other than Equity Securities
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98 |
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PART II |
98 | |
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ITEM 13. |
Defaults, Dividend Arrearages and Delinquencies |
98 |
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ITEM 14. |
Material Modifications to the Rights of Security Holders and Use
of Proceeds |
98 |
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ITEM 15. |
Controls and Procedures |
98 |
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ITEM 16. |
[Reserved] |
99 |
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ITEM 16A. |
Audit Committee Financial Expert |
99 |
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ITEM 16B. |
Code of Ethics |
99 |
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ITEM 16C. |
Principal Accountant Fees and Services |
99 |
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ITEM 16D. |
Exemptions from the Listing Standards for Audit Committees
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100 |
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ITEM 16E. |
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
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100 |
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ITEM 16F. |
Change in Registrant’s Certifying Accountant |
100 |
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ITEM 16G. |
Corporate Governance |
100 |
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ITEM 16H. |
Mine Safety Disclosure |
101 |
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ITEM 16I. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 101 |
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ITEM 16J. |
Insider Trading Policies | 102 |
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ITEM 16K. |
Cybersecurity | 101 |
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PART III |
103 | |
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ITEM 17. |
Financial Statements |
103 |
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ITEM 18. |
Financial Statements |
103 |
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ITEM 19. |
Exhibits |
103 |
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Signatures |
104 | |
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Index to Consolidated Financial Statements |
F-1 | |
2
CERTAIN TERMS AND CONVENTIONS
In this Annual Report, unless otherwise specifically stated or
the context otherwise requires:
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references to “Evogene,” “we,” “us,” “our,” “our company” and “the
company” refer to Evogene Ltd. and its consolidated subsidiaries, consisting of AgPlenus Ltd., or AgPlenus, Biomica Ltd., or Biomica,
Casterra Ag Ltd., or Casterra, Lavie Bio Ltd., or Lavie Bio, and their consolidated subsidiaries; |
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references to “U.S. dollars,” “USD,” “$” or “dollars” are to United States dollars;
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references to “NIS” or “shekels” are to New Israeli Shekels; |
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references to the “U.S.” are to the United States; |
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references to “ordinary shares,” “our shares” and similar expressions refer to our Ordinary Shares, par value
NIS 0.2 per share; |
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references to the “articles of association” are to our Amended and Restated Articles of Association, as amended;
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references to the “Companies Law” are to the Israeli Companies Law, 5759-1999, as amended; |
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references to the “Securities Act” are to the Securities Act of 1933, as amended; |
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references to the “Exchange Act” are to the Securities Exchange Act of 1934, as amended; |
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references to the “Nasdaq” are to the Nasdaq Stock Market LLC or the Nasdaq Capital Market; |
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references to the “TASE” are to the Tel Aviv Stock Exchange; and |
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references to the “SEC” are to the United States Securities and Exchange Commission. |
On July 24, 2024, we effected a reverse share split of our issued
and outstanding ordinary shares, at a ratio of 1-for-10, or the Reverse Split, such that each ten (10) ordinary shares, par value NIS
0.02 per share, were consolidated into one (1) ordinary share, par value NIS 0.2 per share. Unless the context expressly indicates otherwise,
all references to share and per share amounts referred to in this Annual Report on Form 20-F reflect the amounts after giving effect to
the Reverse Split.
Unless derived from our financial statements or otherwise noted,
amounts presented in this Annual Report are translated at the rate of NIS 3.19 = USD 1.00, the exchange rate between the NIS and the U.S.
dollar reported by the Bank of Israel as of December 31, 2025.
This Annual Report includes other statistical, market and industry
data and forecasts which we obtained from publicly available information and independent industry publications and reports that we believe
to be reliable sources. Some data is also based on our good faith estimates, which are derived from management’s knowledge of the
industry and independent sources. These publicly available industry publications and reports generally state that they obtain their information
from sources that they believe to be reliable, but they do not guarantee the accuracy or completeness of the information. Although we
believe that these sources are reliable and are not aware of any misstatements regarding the industry data presented in this Annual Report,
we have not independently verified the information contained in such publications. Certain estimates and forecasts involve uncertainties
and risks and are subject to change based on various factors, including those discussed under the headings “—Special Note
Regarding Forward-Looking Statements” and “Item 3. Risk Factors—D. Risk Factors” in this Annual Report. For the
avoidance of doubt, no material on our website forms any part of this Annual Report. References in this Annual Report to documents on
our website or any other website are included as an aid to the location of such documents and such documents are not incorporated by reference
herein.
Throughout this Annual Report, we refer to various trademarks,
service marks and trade names that we use in our business. The “Evogene” design logo, “Evogene” and other trademarks
or service marks of Evogene Ltd. and its subsidiaries appearing in this Annual Report are the property of Evogene Ltd. or of its subsidiaries,
as applicable. We have several other registered trademarks, service marks and pending applications relating to our computational technologies.
Other trademarks and service marks appearing in this Annual Report are the property of their respective holders. Solely for convenience,
the trademarks and trade names in this Annual Report are referred to without the ® and ™ symbols, but such references should
not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights
thereto. We do not intend the use or display of other companies’ trademarks and trade names to imply a relationship with, or endorsement
or sponsorship of us by, any other companies.
3
SPECIAL NOTE REGARDING
FORWARD-LOOKING STATEMENTS
In addition to historical facts, this Annual Report contains forward-looking
statements within the meaning of Section 27A of the Securities Act, Section 21E of the Exchange Act, and the safe harbor provisions of
the U.S. Private Securities Litigation Reform Act of 1995. We have based these forward-looking statements on our current expectations
and projections about future events. Forward-looking statements include information concerning our possible or assumed future results
of our business, financial condition, results of operations, liquidity, anticipated growth strategies, anticipated trends in our industry,
market size, our potential growth opportunities, plans and objectives. Forward-looking statements include all statements that are not
historical facts and can be identified by terms such as “anticipates,” “believes,” “could,” “seeks,”
“estimates,” “expects,” “intends,” “may,” “plans,” “potential,”
“predicts,” “projects,” “should,” “will,” “would” or similar expressions that
convey uncertainty of future events or outcomes and the negatives of those terms.
These forward-looking statements may include, but are not limited
to, statements relating to our objectives, plans and strategies, statements that contain projections of results of operations or of financial
condition and all statements (other than statements of historical facts) that address activities, events or developments that we expect,
project, believe, anticipate, intend or project will or may occur in the future. The statements that we make regarding the following matters
are forward-looking by their nature:
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our expectations regarding our revenue, expenses and other operating results; |
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whether we or our subsidiaries are able to raise capital on commercially reasonable terms to sustain the financial condition of each
respective entity; |
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the extent to which we continue to maintain our holdings in our subsidiary companies; |
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the extent to which our discoveries and product candidates will have the desired effect so as to reach the stage of commercialization;
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whether we are able to achieve commercialization of our product candidates; |
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whether we and our collaborators are able to allocate the resources needed to develop commercial products from our discoveries and
product candidates; |
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the length and degree of complexity of the process of our developing commercial products based on our discoveries and product candidates
and the probability of our success, and the success of our collaborators, in developing such products; |
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whether we are able to efficiently produce and scale up the production of our products, whether ourselves or through third party
contractors, to achieve our commercialization targets; |
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the degree of success of third parties whom we rely on to conduct certain activities, such as field-trials and pre-clinical studies;
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whether we can mitigate risks associated with disruptions to our information technology and systems, including cybersecurity threats
and reliance on cloud computing services; |
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whether we can maintain and expand our collaboration agreements in a consolidating industry with limited major players; |
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whether we and our subsidiaries are able to comply with applicable law and the associated regulatory requirements that currently
apply or become applicable to each respective business; |
4
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the extent of the future growth of the agriculture, human health and industrial application industries in which we operate;
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whether we can maintain our current business models; |
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the actual commercial value of our key product candidates; |
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whether we or our collaborators receive regulatory approvals for the product candidates developed by us or our collaborators;
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whether milestones are met by us or by our collaborators with respect to our product candidates that generate revenues and whether
products containing or based on our discoveries are commercialized and generate revenues or royalties; |
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whether we are able to recruit, retain and develop knowledgeable or specialized personnel to perform our research and development
work; |
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the degree of our success at adapting to the continuous technological changes in our industries; |
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whether we can maintain our collaboration agreements with our current collaborators or enter into new collaboration agreements and
expand our research and development to new fields; |
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whether we can improve our existing, or develop and launch new, computational technologies and screening and validation systems;
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whether we can patent our discoveries and protect our trade secrets and proprietary know-how; |
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whether we can mitigate risks associated with potential product liability, environmental hazards, and regulatory compliance in handling
toxic materials; and |
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conditions in Israel, including Israel’s conflicts with Hamas and Iran and other parties in the region, as well as political
and economic instability. |
The preceding list is not intended to be an exhaustive list of
all of our forward-looking statements. The forward-looking statements are based on our beliefs, assumptions and expectations of future
performance, taking into account the information currently available to us. These statements are only predictions based upon our current
expectations and projections about future events. There are important factors that could cause our actual results, levels of activity,
performance or achievements to differ materially from the results, levels of activity, performance or achievements expressed or implied
by the forward-looking statements. In particular, you should consider the risks described in “Item 3.D. Risk Factors”
and the additional information contained in “Item 4. Information on the Company” and “Item 5. Operating and Financial
Review and Prospects.”
The forward-looking statements made in this Annual Report relate
only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made
in this Annual Report to reflect events or circumstances after the date of this Annual Report or to reflect new information or the occurrence
of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our
forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements
do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.
5
SUMMARY RISK FACTORS
The risk factors described
below are a summary of the principal risk factors associated with an investment in us. These disclosures reflect our
beliefs and opinions as to factors that could materially and adversely affect us and our securities in the future. References to past
events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such
factors have occurred in the past or their likelihood of occurring in the future. These are not the only risks we face. You
should carefully consider these risk factors, together with the risk factors set forth in Item 3.D of this Annual Report
and the other reports and documents filed by us with the SEC.
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We have a history of operating losses and negative cash flow, and may never achieve or maintain profitability. Our management has
identified conditions that raise substantial doubt about our ability to continue as a going concern for a period of one year from the
date of this Annual Report. We may continue to incur operating losses and/or implement cost-cutting measures in the future. Various factors
may delay, hinder, or prevent achievement of research and development, or R&D, milestones and commercialization of our product candidates.
Moreover, we may experience difficulties in collecting royalties or never receive them, potentially resulting in costly litigation and
loss of reputation. |
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We may need substantial additional capital in the future which may dilute our shareholders. Additionally, subsidiary financings have
diluted, and may continue to dilute, our equity holdings in our subsidiary companies, which will likely negatively impact and/or decrease
our results of operations, including revenues, and the benefits of the value that may be created in such subsidiary companies. Additionally,
we may need to finance the cost of the development of our independent product candidates ourselves. |
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Our recent strategic streamlining and reduction of active subsidiaries increases our operational concentration risk and reduces diversification,
which may amplify the impact of setbacks in our remaining core activities. |
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Our discoveries and product candidates may not result in commercially viable products. In addition, our product development cycle
is lengthy and uncertain and various factors may delay or prevent commercialization of our product candidates. We may never sell or earn
royalties on the sale of commercial products based on our discoveries. |
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If we are unable to maintain our ChemPass AI technological engine, our and our subsidiaries’ research and development activities
may be substantially reduced. |
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Failure to efficiently produce and scale our products, whether in-house or through contractors, could hinder our commercialization
goals. Furthermore, we or our collaborators may fail to meet obligations under the collaboration agreements. |
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We depend on a few collaborators to develop and commercialize product candidates. For example, our subsidiary, Biomica’s future
prospects with respect to BMC 128 are substantially dependent on a third-party licensee for further development and commercialization.
A reduction in research spending by key companies in our target markets could threaten our collaborations, affecting their continuation
or expansion and hindering our ability to form new collaborations. |
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We are operating in multiple industries, each of which consists of multiple companies with much greater resources than us. If we
are unable to compete effectively, our financial resources will be diluted and our financial results will suffer. |
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Our efforts to develop and commercialize any of our products, including AI-driven small molecule therapeutics developed through
our ChemPass AI platform, may be unsuccessful. |
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We may fail to attract, recruit, retain and develop qualified employees, which could materially and adversely impact our business,
financial condition and results of operations. |
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Our business is regulated by government agencies. Failure to obtain necessary approvals could halt our operations. Changes in laws
and regulations may raise costs, reduce revenues, and disrupt operations. Dual reporting requirements in Israel and the U.S. may increase
compliance costs and distract management. |
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Disruption to our information technology and systems, including our increased dependency on cloud-based infrastructure and third-party
cloud providers, including risks associated with cloud computing, ransomware attacks, and evolving cybersecurity threats, could adversely
affect our reputation and future demand for our products or collaborative relationships. |
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We currently need, and in the future we may need, to obtain licenses for third-party technology that may not be available to us or
are available only on commercially unreasonable terms. |
6
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Our licenses granted to our collaborators may limit our opportunities to enter into additional licensing or other arrangements.
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We might face significant liabilities from product liability, warrant liability or personal injury claims and litigation. Our operations
involve health and environmental hazards due to handling toxic materials. |
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Ending leases, altering terms, or being locked into long-term leases may threaten our operations and significantly impact our financial
status or performance. |
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Our contracts with foreign businesses and our operations in South America expose us to additional market and operational risks.
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Growing cycles and adverse weather conditions may decrease our results from operations. |
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Our success depends on our ability to protect our intellectual property and our proprietary technologies. Any change to the patent
laws in applicable jurisdictions may impair our ability to protect our product candidates. |
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If we or one of our collaborators are sued for infringing the intellectual property rights of a third party, such litigation could
be costly and time consuming and could prevent us or our collaborators from developing or commercializing our product candidates.
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We may be required to pay royalties to employees who develop inventions that have been or will be commercialized by us. |
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Our agreements with our employees and with third parties may not adequately prevent disclosure of trade secrets, know-how and other
proprietary information. In addition, we may not be able to fully enforce covenants not to compete with our key employees. |
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Conditions in Israel, including recent unrest and actual or potential armed conflict and regional instability, as well as global
catastrophic events, pandemics or other widespread health emergencies, could adversely impact our business and operations. |
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U.S. shareholders owning at least 10% of our ordinary shares may face adverse federal income tax consequences. We were a passive
foreign investment company, or PFIC, for U.S. tax purposes in 2025, and there is a risk of being classified as a PFIC in 2026, potentially
leading to adverse tax consequences for U.S. shareholders. |
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Exchange rate fluctuations between the U.S. dollar and the NIS may negatively affect our financial results and interest rate fluctuations
may negatively affect our financial results, financial condition, or investments. |
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The terms of our Israeli government grants may require us to satisfy specified conditions in order to manufacture products and transfer
technologies supported by such grants outside of Israel. |
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Your rights and responsibilities as a shareholder are under Israeli law, potentially differing from those of U.S. corporations. Israeli
law might hinder or discourage acquisitions of our shares or assets. |
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The price of our ordinary shares may fluctuate significantly. Further, there is no guarantee of a continuing public market to resell
our ordinary shares. In addition, our ordinary shares are traded on more than one market and this may result in price variations.
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The requirements of being a public company in the U.S. and Israel may strain our resources and distract our management, which could
make it difficult to manage our business. |
| ▪ |
Any inability to meet the Nasdaq listing requirements may have an adverse effect on our share price and lead to our delisting from
Nasdaq. |
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If we fail to maintain effective internal control over financial reporting, the price of our ordinary shares may be adversely affected.
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7
PART I
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ITEM 1. |
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS |
Not applicable.
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ITEM 2. |
OFFER STATISTICS AND EXPECTED TIMETABLE |
Not applicable.
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ITEM 3. |
KEY INFORMATION |
A. [Reserved]
B. Capitalization
and Indebtedness
Not applicable.
C. Reasons
for the Offer and Use of Proceeds
Not applicable.
D. Risk
Factors
Our
business faces significant risks. You should carefully consider all of the information set forth in this Annual Report and in our other
filings with the SEC, including the following risk factors which we face and which are faced by the industries in which we operate. Our
business, financial condition or results of operations could be materially adversely affected by any of these risks. These disclosures
reflect the Company’s beliefs and opinions as to factors that could materially and adversely affect the Company and its securities
in the future. References to past events are provided by way of example only and are not intended to be a complete listing or a representation
as to whether or not such factors have occurred in the past or their likelihood of occurring in the future. This report also contains
forward-looking statements that involve risks and uncertainties. Our results could materially differ from those anticipated in those forward-looking
statements, as a result of certain factors, including the risks described below and elsewhere in this report and our other SEC filings.
See “Special Note Regarding Forward-Looking Statements” on page 5.
Risks Related to Our Business and Industry
We have a history of operating losses and negative
cash flow, and we may never achieve or maintain profitability.
We have a history of losses, and incurred operating losses from
continuing operations of approximately $14.0 million, $18.8 million and $22.2 million for the years ended December 31, 2025, 2024
and 2023, respectively. There is no assurance that our efforts in developing our product candidates will result in commercially successful
products. We expect to continue to incur losses in future periods, until we begin earning significant revenues or royalties on our products,
the product candidates we are currently developing or any new product candidates we develop in the future, if at all. Because we will
incur significant costs and expenses for these efforts before we obtain any incremental revenues from them, our losses in future periods
could be significant. In addition, we may find that these efforts are more expensive than we anticipate or that they do not result in
profitability in the time period we anticipate, which would further increase our losses. For example, if we are unable to adequately control
the costs associated with operating our business, including our costs of development and sales, we may deplete our cash resources and
may be unable to continue to finance our business from our existing cash resources, and, our business, financial condition, operating
results and prospects will suffer. For more information concerning our cash resources, please see “Liquidity and Capital Resources”
in Item 5.B below.
Our management identified there were conditions that raised substantial
doubt about our ability to continue as a going concern for a period of one-year from the date this Annual Report. We have prepared a plan
to improve our available cash balances, liquidity and cash flows generated from operations. We have identified several potential actions,
including cost preservation measures that would be initiated in a timely manner to address our liquidity needs over the twelve-month period
from the date of this Annual Report. For more information concerning management’s plan, please see “Liquidity and Capital
Resources” and “Critical Accounting Estimates” in Items 5.B and 5.E, respectively, below.
8
Additionally, due to market conditions over the course of 2025,
and as part of an overall review of our organizational structure and its associated costs and expenses, we have implemented certain cost-cutting
measures, including a structural change and a significant reduction in work force during the year ended December 31, 2025, and may implement
additional cost-cutting measures in the future. During 2025, we streamlined activities outside our focus areas. We completed the
disposition of Lavie Bio’s assets to ICL (as defined below), where we sold the majority of Lavie Bio’s activity. Accordingly,
no further activity is expected at Lavie Bio. In addition, we scaled down Biomica’s operations by reducing staff and management
overhead. Biomica has licensed the BMC128 to Lishan (as defined below) and is now focused on completing its clinical trial for BMC128,
its immuno-oncology program by mid 2026. Accordingly, no further activity is expected at Biomica following the completion of the clinical
trial. Similar strategic dispositions and reductions in workforce were applied to the activities conducted by Casterra and AgPlenus.
Reductions in force may yield unintended consequences and costs, including additional attrition beyond the amount of force reduction,
distraction to our employees, reduced employee morale and adverse effects on our reputation as an employer. Such reductions in force may
also make it more difficult for us to hire new employees in the future and may limit the anticipated benefits from the reduction in force.
We, and our subsidiaries, may need substantial
additional capital in the future, which may cause dilution to our existing shareholders, restrict our operations or require us to relinquish
rights to our product candidates or intellectual property. If additional capital is not available, we may have to delay, reduce or cease
operations.
We and our subsidiaries may seek additional funding in the future,
which may consist of equity offerings, collaborations, licensing arrangements or any other means to develop our product candidates (including
through our subsidiaries and collaborators), fund research and data surveys, or other general corporate purposes. To the extent that we
raise additional capital through, for example, the sale of equity or convertible debt securities, our existing shareholders’ ownership
interest will be further diluted, and the terms may include liquidation or other preferences that adversely affect our shareholders’
rights. The incurrence of indebtedness or the issuance of certain equity securities could result in increased fixed payment obligations
and could also result in certain restrictive covenants, such as limitations on our ability to incur additional debt or to issue additional
equity, limitations on our ability to acquire or license intellectual property rights and other operating restrictions that could adversely
impact our ability to conduct our business. In addition, the issuance of additional equity securities by us, or the possibility of such
issuance, may cause the market price of our ordinary shares to decline. Securing additional financing may also divert our management’s
attention from our day-to-day activities, which may adversely affect our ability to develop and commercialize our product candidates.
Additional funding may not be available to us on acceptable terms,
or at all. In the event that we enter into collaborations or licensing arrangements in order to raise capital, we may be required to accept
unfavorable terms, including relinquishing or licensing to a third party on unfavorable terms our rights to product candidates or intellectual
property that we otherwise would seek to develop or commercialize ourselves or reserve for future potential arrangements when we might
be able to achieve more favorable terms.
If we, or our subsidiaries, are unable to raise additional capital
when required or on acceptable terms, we may be required to:
| • |
further delay, scale back or discontinue the development, manufacturing scale-up or commercialization of our or our subsidiaries’
product candidates; |
| • |
accept for one or more of our or our subsidiaries’ product candidates terms that are less favorable than might otherwise be
available; or |
| • |
relinquish or license to additional parties, on unfavorable terms, our rights to our or our subsidiaries’ product candidates
that we or our subsidiaries otherwise would seek to develop or commercialize ourselves. |
Any such consequence will have a material adverse effect on our business, operating
results and prospects and on our ability to develop our or our subsidiaries’ product candidates ourselves or through collaborators.
9
Our shareholders may experience dilution in the future.
From time to time in the future, we may issue additional ordinary
shares or offer debt or other equity securities, including additional ordinary shares, warrants to purchase ordinary shares, or senior
or subordinated notes or other debt securities convertible into equity. Issuing additional ordinary shares, other equity securities or
securities convertible into equity may dilute the economic and voting rights of our existing shareholders, reduce the market price of
our ordinary shares or both. Debt securities convertible into equity could be subject to adjustments in the conversion rate pursuant to
which certain events may increase the number of equity securities issuable upon conversion. Our decision to issue securities in any future
offering will depend on market conditions and other factors, which may adversely affect the amount, timing or nature of our future offerings.
As a result, holders of our ordinary shares bear the risk that our future offerings may reduce the market price of our ordinary shares
and dilute their percentage ownership.
We currently have outstanding ordinary warrants to purchase up
to 5,076,924 ordinary shares. Any exercise, in whole or in part, of these warrants would dilute the holders of our ordinary shares. The
current exercise price of ordinary warrants is $1.25 per share. Whether or not the warrants are exercised will depend on the price of
our ordinary shares, and any exercise is at the discretion of the holders of the warrants. We may issue other warrants, options and derivative
securities in the future, which would also dilute the holders of our ordinary shares. See “Item 5. Operating and Financial Review
and Prospects— B. Liquidity and Capital Resources— Recent Public Offerings of Ordinary Shares.”
Our recent strategic streamlining and the reduction
of active subsidiaries and business lines increases our operational concentration risk and may reduce diversification benefits.
During 2025, we streamlined our operations, including the disposition
of certain assets and a reduction of activities in our subsidiaries. As a result, we are currently operating with a more limited number
of active subsidiaries and our business is now focused on fewer technological platforms, product candidates and revenue sources.
This increased concentration heightens our exposure to risks associated
with the remaining business activities. If our ChemPass tech engine, any of our subsidiaries, product candidates, collaborations or commercialization
efforts experience delays, technical setbacks, regulatory challenges, funding constraints, market resistance or other adverse developments,
the impact on our business, financial condition and results of operations may be more significant than in prior periods when our activities
were more diversified.
Our strategic focus may also reduce optionality for future growth
opportunities and may increase volatility in our operating results. If our remaining core activities do not achieve anticipated milestones
or commercialization objectives, we may have fewer alternative business lines to mitigate such setbacks, which could materially adversely
affect our long-term growth strategy and shareholder value.
The dilution of our equity holdings in our
subsidiary companies will likely negatively impact and/or decrease our results of operations, including revenues, and the benefits recognized
by our shareholders from value that may be created in such subsidiary companies.
Our corporate strategy and structure is intended to make product
development and go-to-market efficient and to reflect the individual value of each of our market focused business units. Under our corporate
structure, we operate as a developer of novel small molecule based therapeutics with Evogene acting as a technology hub and, below it,
divisions and subsidiaries that benefit from the unique capabilities of Evogene’s Computational Predictive Biology, or CPB, platform
and its technological engines, ChemPass AI and GeneRator AI. Each such subsidiary is responsible for advancing its product development
and pipeline, establishing its “go-to-market” strategy via direct sales or through existing and new collaborations, and securing
additional financial resources, if and when required. Due to our limited financial resources and other investment considerations, our
subsidiaries are permitted to obtain financing from external sources and have therefore raised additional capital and may continue to
raise capital in the future. Such financings can have a dilutive impact on our ownership interest in the particular subsidiary. For more
information see “Item 4.B. Information on the Company—Business Overview—Market Segments—Agriculture—Lavie
Bio Ltd.—Overview” and “Item 4.B. Information on the Company—Business Overview—Market Segments—Human
Health—Biomica Ltd.—Overview”. Such external financings have therefore resulted, and may continue to result, in the
decrease of our ownership percentage in one or more of our subsidiaries, which, in turn, will likely negatively impact and/or reduce our
operational results (including revenues), financial condition, long-term growth strategy, the value of our shares, and the benefits we
(and, indirectly, our shareholders) recognize from value established in any such subsidiary.
10
Our discoveries and product candidates may
not achieve the desired effect required in order to create commercially-viable products.
Our success depends on our ability to develop products that have
the desired effects: in our agriculture activity, on plants, in our human health activity, on humans, and in our industrial applications
activity, on the relevant industrial inputs. Research and development in these industries entails considerable uncertainty. We may spend
many years developing product candidates that will never be commercialized. The science underlying the development of our product candidates
is highly complex and, although we use innovative approaches, there is no certainty that our discoveries will result in product candidates
that satisfy market requirements. Except for our products in our castor oil activity, none of our discoveries and product candidates have
completed the development process and become commercially available so far and such anticipated products may never reach commercialization.
If our discoveries and product candidates will not have the desired effects, we and our collaborators may not develop commercial products
that are based on them, which could materially and adversely affect our results of operations and our long-term growth strategy.
If we are unable to maintain our CPB platform
and its technological engines, ChemPass AI and GeneRator AI, our research and development activities and those of our subsidiary companies
may be substantially reduced.
We and our subsidiary companies depend significantly on our CPB
platform and its technological engines in research and development activities. In particular, Evogene relies on CPB and its technological
engines to provide computational biology and computational chemistry services to our subsidiaries and to support our internal research
and development activities. If we are unable to maintain our CPB and technological engines, due to cost, technical failure or otherwise,
we could experience adverse consequences, including but not limited to loss of data, interruptions in research and development activities,
loss of business and revenues.
Our subsidiary companies rely on our CPB and its technological
engines to, among others, capture laboratory data, maintain clinical, greenhouse and field trial data and perform data analysis.
Therefore, if we are unable to maintain our CPB and technological engines, due to cost, technical failure or otherwise, our subsidiaries
could experience adverse consequences, including but not limited to loss of data (including clinical trial data) or damage to the integrity
of that data, interruptions in their research and development activities and other similar harms. Such surrounding circumstances may interrupt
our subsidiaries’ clinical trials, reduce demand for our subsidiaries’ product candidates, and delay or negatively impact
the development and commercialization of our subsidiaries’ product candidates and ability to grow and operate their business.
We completed the transition of technological engine, ChemPass AI,
from on-premises platform to Google Cloud Platform (GCP) services in June 2025. As a result, this exposes us to ongoing operational and
security risks that could materially affect our business operations and financial performance. While the initial migration has been completed,
we face continuing risks related to our increased dependency on third-party cloud service providers for critical business operations,
potential service interruptions outside our direct control, and cybersecurity threats inherent in cloud computing environments. The complexity
of our cloud infrastructure may result in technical issues that could cause system disruptions, data security incidents or unexpected
performance problems. We may experience challenges in maintaining compliance with evolving data privacy regulations across different jurisdictions
where our data is now stored and processed. Our operating costs may fluctuate based on cloud service consumption patterns and pricing
changes by our service providers. Additionally, while our workforce has been trained on cloud operations, any significant updates or changes
to the cloud platforms may require additional training and could temporarily impact operational efficiency. The concentration of our operations
in cloud environments may also limit our ability to quickly modify our infrastructure choices or service providers in response to future
business needs or cost considerations.
Various factors may delay, hinder, or prevent achievement of research
and development milestones and the commercialization of our product candidates.
Our success depends in part on our ability to identify discoveries
that will improve crop performance, in our agriculture activity, obtain clinical benefits, in our human health activity, or improve industrial
inputs, in our industrial applications activity. To develop these discoveries and product candidates into commercial products, we either
license them to collaborators or develop them independently through our subsidiaries or our Ag-Seeds division. Certain of our agreements
with our collaborators in our agriculture activity entitle us to upfront fees, research and development payments and milestone payments
once certain specified milestones are met. If we or our collaborators are not successful in reaching the established milestones in our
agreements, we may not receive the referenced research and development payments and milestone payments.
11
In addition, pursuant to our collaboration agreements in our agriculture
activity, we are usually entitled, subject to certain conditions, to receive royalties on products that are based on, or integrate, these
discoveries. Except for Casterra’s castor seed varieties, none of our current product candidates has completed the development process
and become commercially available. Therefore, we currently do not earn royalties and we do not derive significant sales revenues from
the sale of products based on our discoveries and product candidates. Thus, while our long-term growth strategy is based in large part
on the expectation that such royalties and revenues from product sales will comprise a significant portion of our revenues in the future,
we can provide no guarantee that any of our current or future product candidates will ever reach commercialization that would result in
royalty payments to us.
The manner in which we and our collaborators develop our product
candidates in our various fields of activity affects the period that will pass until such products are commercialized, if ever. Product
candidates based on our discoveries may never become commercialized for any of the following reasons:
| ▪ |
our discoveries and product candidates may not be successfully validated or may not have the desired effect required in order to
become, or to be incorporated into, commercial products; |
| ▪ |
the process of developing product candidates based on our discoveries is lengthy and expensive, and we or our collaborators may not
be able to allocate the resources needed to complete such development within the desired timeline; |
| ▪ |
we or our collaborators may decide to discontinue, pause, reduce, or alter the scope of the development efforts for our product candidates;
|
| ▪ |
we may fail to satisfy, in a timely manner or at all, relevant milestones under our agreements with our collaborators; |
| ▪ |
regulatory conditions related to our product candidates may change in different territories, thus negatively affecting the relevant
development processes and extending their length or limiting the commercialization of such product candidates; |
| ▪ |
we or our collaborators may be unable to obtain the requisite regulatory approvals for product candidates based on our discoveries;
|
| ▪ |
our competitors may launch competing or more effective products; |
| ▪ |
we or our collaborators may be unable to fully develop and commercialize product candidates containing our discoveries or may decide,
for whatever reason, not to commercialize, or to delay the commercialization of, such product candidates; |
| ▪ |
a market may not exist for products containing our discoveries or such products may not be commercially successful or relevant;
|
| ▪ |
we may be unable to protect the intellectual property underlying our discoveries in the necessary jurisdictions; and |
| ▪ |
we may encounter production and scale-up challenges with respect to our product candidates that hinder their commercialization.
|
Thus, if our collaborators are not successful in reaching the established milestones
in our agreements or if we or our collaborators are not successful in commercializing products based on our discoveries, we will not realize
revenues from such products and we may not earn a profit on our discoveries, which could materially and adversely affect the results of
operations, financial condition and our long-term growth strategy, which may ultimately cause us to cease operations.
12
Our product development cycle is lengthy and
uncertain, and we may never sell or earn royalties on the sale of commercial products based on our discoveries.
Research and development in our fields of activity is expensive
and prolonged and entails considerable uncertainty. We may spend many years and dedicate significant financial and other resources developing
product candidates that will never be commercialized. The process of discovering, developing and commercializing ag-chemicals, small molecule
drugs, human microbiome-based therapeutics or castor varieties involves several phases and a long development period. The timelines
for development of product candidates by us or by our collaborators may extend beyond our expectations for many reasons, such as:
| ▪ |
we or our collaborators may not be able to allocate the resources needed to develop product candidates based on our discoveries;
|
| ▪ |
we or our collaborators may revise the process of product development or make other decisions regarding the product development pipelines
that may extend the development period; |
| ▪ |
we or our collaborators may prioritize other development activities ahead of development activities with respect to the product candidates
on which we collaborate; |
| ▪ |
our discoveries may not be successfully validated or may not have the desired effect sought by us or by our collaborators; and
|
| ▪ |
we or our collaborators may be unable to obtain the requisite regulatory approvals for the product candidates based on our discoveries
within expected timelines or at all. |
Most of the product candidates we or our collaborators are developing
are in early development stages. We have little to no certainty as to which and when, if any, any of these product candidates will eventually
reach commercialization. Because of the long product development cycle and the complexities and uncertainties associated with research
in our fields of activity, there is significant uncertainty as to whether we will ever generate significant revenues or royalties, if
any, from the product candidates that we or our collaborators are developing. Due to our limited financial and personnel resources, we
must focus on a limited number of research programs, drug candidates and specific indications. Our resource allocation decisions may cause
us to fail to capitalize on viable commercial products or profitable market opportunities. For more information on the product development
cycle of the product candidates we develop and a description of the phases of development, see the ‘Product Development Cycle’
paragraph under the description of each of our activity divisions and subsidiaries in “Item 4. Information on the Company—B.
Business Overview”.
If we are unable to efficiently produce and
scale up the production of our products, whether ourselves or through third party contractors, we may be unable to achieve our commercialization
targets.
When we introduce a product to the market, and in certain cases
even in later stages of product development, we need to establish efficient production capabilities for our products. In most cases, our
products are, or are expected to be, produced by third party producers with whom we contract for such purpose. The production of our products,
and the scale up of such production, are complicated processes that require expertise. The production of all of our subsidiaries’
current commercial products (mainly being castor beans of Casterra) relies, in all or in part, on third-party contractors. Failure to
establish a long-term relationship with a manufacturer with sufficient capacity, relevant cost of goods sold and sufficient quality, will
affect our subsidiaries’ ability to meet demand for their products. If we or our third-party contractors are unable to efficiently
produce and scale up production as needed to meet the demand for our products, we may be unable to achieve our commercialization targets,
which may, in turn, materially and adversely affect our future results of operations.
Due to mergers and consolidations, there is
a reduced number of companies in the agriculture industry with which we might establish strategic partnerships, and we rely on a limited
number of collaborators to develop and commercialize product candidates containing our seed trait and ag-chemical product candidates.
The agriculture markets are highly consolidated and dominated by
a relatively small number of large companies. In our agriculture operations, we are currently undertaking collaborations with several
of these companies to develop improved seed traits and ag-chemical product candidates. Due to the small number of major companies in this
industry, there are limited opportunities for us to grow our business with new collaborators. In addition, if we fail to develop or maintain
our relationships with any of our current collaborators, we could not only lose our opportunity to work with that collaborator, but we
could also suffer a reputational risk that could impact our relationships with other collaborators in what is a relatively small industry
community.
In our agriculture operations, we are currently working either
with collaborators or on independent projects to research and develop our different seed trait and ag-chemical product candidates. While
we seek to expand our portfolio of product candidates in the future, the research and development required to discover and develop new
product candidates is costly, time-intensive and requires significant infrastructure resources. If we are unable to enter into new collaborations,
or if we do not have the resources to develop the capabilities or resources necessary to discover and develop such product candidates
independently, we may not be able to expand our portfolio of these product candidates, which could have a material adverse effect on our
business prospects.
13
A decrease in research expenditures
by the major companies in our target markets may jeopardize the continuation, or scope, of our collaborations with such companies and
adversely impact our ability to continue or extend existing collaborations or enter into new collaborations on favorable financial terms.
The research and development expenditures of our existing and potential
collaborators in the agriculture, human health, and industrial applications markets we operate in may be reduced for reasons beyond our
control. For example, a global crisis or economic recession, a decrease in the prices of agricultural commodities, or the consolidation
trend in the seeds and ag-chemicals industries may result in decreased research and development expenditures in the markets relevant for
our pharmaceutical and ag-chemical product candidates. Such developments may, in turn, adversely impact our ability to maintain or extend
our existing collaborations or enter into new collaborations on favorable financial terms. For example, we may not be able to enter into
new collaborations under which our collaborators cover our expenses through research and development payments.
We or our collaborators may fail to perform
obligations under the collaboration agreements.
We are obligated under our collaboration agreements (including
grant agreements) to perform research activities over a particular period of time. If we fail to perform our obligations under these agreements,
in some cases our collaborators may terminate our agreements with them and in other cases our collaborators’ obligations may be
reduced, which may decrease our overall revenues. More specifically, in the event that a collaborator terminates our agreement (or reduces
its obligations thereunder), the research and development costs from the particular project, which were previously covered by such collaborator,
may be borne by us. Our overall revenues will therefore be reduced by the addition of such R&D costs. In addition, any of our collaborators
may fail to perform their obligations, which may hinder development and commercialization of products containing the product candidates
we develop and materially and adversely affect our future results of operations. Furthermore, the various payments we receive from our
collaborators are currently our primary source of revenues. If our collaborators do not make these payments, either due to financial hardship,
disagreement under the relevant collaboration agreement or for any other reason, our results of operations and business would be materially
and adversely affected. If disagreements with a collaborator arise, any dispute with such collaborator may negatively affect our relationship
with one or more of our other collaborators and may hinder our ability to enter into future collaboration agreements, each of which could
negatively impact our business and results of operations.
We are operating in multiple industries, each
of which consists of multiple companies with much greater resources than us. Competition in our industries is intense and requires continuous
technological development. If we are unable to compete effectively, our financial resources will be diluted and our financial results
will suffer.
We currently face significant competition in the markets in which
we operate. The agriculture, human health and industrial applications markets in which we operate are intensely competitive and rapidly
changing. Many companies engage in research and development of products in such markets, and being efficient in getting a new product
candidate to market can be a significant competitive advantage. In most segments of our operations, the number of products available to
the consumer is steadily increasing as new products are introduced by our competitors. We may be unable to compete successfully against
our current and future competitors, which may result in lower prices and margins than previously anticipated and the inability to achieve
market acceptance for our products. In addition, many of our competitors have substantially greater financial, marketing, sales, distribution
and technical resources than us. While the current market is centralized and tight, we anticipate that there may be increased competition
in the future as new companies enter these markets and new technologies become available. Our technologies may be rendered obsolete or
uneconomical by technological advances or entirely different approaches developed by one or more of our competitors or collaborators,
which will prevent or limit our ability to receive any associated research and development payments or generate revenues from the commercialization
of our product candidates.
14
We are working to develop and commercialize
novel small molecule-based therapeutics, and our efforts may be unsuccessful.
Evogene is actively leveraging AI-driven approaches to develop
its ChemPass AI platform to enable partnerships that will co-develop novel small molecule-based therapeutics, and our efforts may face
challenges and risks. Despite the potential of these innovative methods, our AI-driven drug discovery efforts may fail for various reasons,
including:
| ▪ |
Limitations of Predictive Models: Failure of Evogene’s AI model to accurately predict effective molecules or inability to identify
molecules with the desired therapeutic profiles. |
| ▪ |
Preclinical Failure: Failure of drug candidates to demonstrate efficacy or safety in preclinical studies despite promising computational
predictions. |
| ▪ |
Intellectual Property Risks: Failure to secure or maintain intellectual property protections for discovered molecules. |
| ▪ |
Competition: Risk of being outcompeted by other organizations with similar or superior technologies. |
| ▪ |
Regulatory Hurdles: Difficulty in navigating complex regulatory pathways, including obtaining necessary approvals for drug candidates
or AI-related methodologies. |
| ▪ |
Funding Constraints: Inability to secure adequate funding for drug development programs. |
| ▪ |
Evolution of AI Regulations: Unanticipated changes in the regulatory landscape regarding AI in healthcare, which could impose additional
compliance burdens or limit the application of certain technologies. |
| ▪ |
Data Quality and Availability: Dependence on high-quality, diverse chemical and biological datasets to train models. Insufficient
or biased data may lead to suboptimal or incorrect predictions. |
| ▪ |
Integration with Experimentation: Difficulties in aligning computational outputs with laboratory validation workflows, lack of seamless
integration between virtual predictions and experimental feedback loops for iterative learning. |
| ▪ |
Infrastructure and Compute Constraints: |
| o |
High computational costs and infrastructure requirements for training and deploying advanced models. |
| o |
Dependence on cloud computing platforms or proprietary hardware, which may pose logistical or financial challenges. |
| ▪ |
Algorithmic Limitations: |
| o |
Failure to enhance model accuracy in predicting molecular interactions, particularly for highly complex or novel targets. |
| o |
Difficulty in balancing generative AI design with constraints required for drug-likeness and manufacturability. |
| ▪ |
Securing Strategic Partnerships: |
| o |
Challenges in forming partnerships with pharmaceutical or biotechnology and research organizations. |
| o |
Risk of over-reliance on external partners for critical workflows, leading to delays or disruptions if partnerships fail. |
| o |
Since we do not currently possess the resources necessary to independently develop and commercialize the majority of our drug candidates,
we may seek to enter into collaborative agreements to assist in the development and potential future commercialization of some or all
of these assets as a component of our strategic plan. However, our discussions with potential collaborators may not lead to the establishment
of collaborations on acceptable terms, if at all, or it may take longer than expected to establish new collaborations, leading to development
and potential commercialization delays, which would adversely affect our business, financial condition and results of operations.
|
| ▪ |
External Funding Challenges: |
| o |
Difficulty in securing sufficient funding to scale and continue development of ChemPass AI tools. |
| o |
Risk of reduced investor confidence if technological milestones are not achieved or if computational predictions fail to translate
into successful experimental outcomes. |
| ▪ |
Dependence on Collaborative Models: |
| o |
Reluctance from potential partners to adopt novel AI-based approaches due to skepticism or lack of familiarity with predictive tools.
|
| o |
Challenges in demonstrating the commercial value of ChemPass AI tools
to potential stakeholders without extensive validation data. |
Success in early development does not indicate or guarantee that
later development will be successful. For example, drug candidates in later-stage clinical trials may fail to demonstrate sufficient safety
and efficacy despite having progressed through initial clinical trials and such candidates may never progress through later-stage trials.
15
We are working to develop and commercialize
novel ag-chemical products, and our efforts may be unsuccessful.
Our subsidiary, AgPlenus, is currently developing solutions for
crop protection through chemistry, or ag-chemistry. AgPlenus is developing these product candidates through a novel approach, focused
on biologically significant proteins called “targets”. AgPlenus’ efforts to develop novel ag-chemical product candidates
may fail for a variety of reasons, including:
| ▪ |
failure of its relatively novel target-based approach to lead to an effective product candidate or failure to identify chemical compounds
that will display required level of performance; |
| ▪ |
failure to establish cost-effective production of AgPlenus’ product candidates; |
| ▪ |
failure to obtain and maintain patent and trade secret protection for its product candidates; |
| ▪ |
failure to operate without infringing or violating the valid and enforceable patents or other intellectual property rights of third
parties; |
| ▪ |
inability to obtain sufficient funding to fully execute its ag-chemical business plan; |
| ▪ |
one of our main research molecules suppliers is located in Ukraine, and has had, and may have in the future, limitations in access
to molecules since the war in Ukraine, although such supplier has an alternative production site, and it is not our only supplier for
research molecules; |
| ▪ |
failure to meet regulatory requirements; and |
| ▪ |
increase in regulatory requirements and limitations of use in various geographies on the use of ag-chemicals might decrease the potential
market size for AgPlenus’ ag-chemical product candidates. |
If AgPlenus’ efforts to develop ag-chemical product candidates
are unsuccessful, our results of operations could be negatively impacted.
We are working to develop and commercialize
seed-trait products, and our efforts may be unsuccessful.
We are developing seed-trait product candidates in our internal
Ag-Seeds division. Our efforts to develop novel product candidates may fail for a variety of reasons, including:
| ▪ |
failure to identify and develop candidate genomic elements having the desired effect on the target trait in the plant of interest;
|
| ▪ |
failure to obtain and maintain patent and trade secret protection for our product candidates; |
| ▪ |
failure to operate without infringing or violating the valid and enforceable patents or other intellectual property rights of third
parties; |
| ▪ |
inability to obtain sufficient funding to fully execute the business plan; |
| ▪ |
failure to successfully complete development of our seed trait product candidates; and |
| ▪ |
our failure to meet regulatory requirements for seed trait product candidates. |
Furthermore, even if we are able to discover and begin to develop
effective product candidates, we may not be successful if we are unable to find collaborators for further development and commercialization
of the product candidates. If our efforts to develop seed trait product candidates are unsuccessful, our results of operations could be
negatively impacted.
Biomica’s future prospects are substantially
dependent on a third-party licensee for the successful development and commercialization of its microbiome-based product candidate, BMC
128.
Biomica has licensed its microbiome-based product candidate,
BMC 128, to a third-party licensee and is expected to cease active operations following the completion of its Phase 1 clinical trials.
Any future value that Biomica may realize from this license agreement is substantially dependent on the licensee's efforts, resources,
and ability to advance BMC 128 through further development and commercialization, which remains highly uncertain. There can be no assurance
that the licensee will successfully develop or commercialize BMC 128 or that Biomica will realize any meaningful value from this arrangement
in the foreseeable future, if at all.
16
We are working to develop and commercialize
castor seeds for industrial applications, and our efforts may be unsuccessful in achieving a commercial presence in this market.
Our subsidiary, Casterra, is developing improved, high-yield castor
bean seeds for use as a source of non-edible feedstock for industrial uses of castor oil. The supply chain in the market of castor oil
for industrial uses is not well established and is evolving. In order for Casterra’s castor bean seeds to be an attractive feedstock
for oil for industrial uses, it will need to demonstrate on a commercial scale that its castor beans can reliably be used as a cost-efficient
feedstock for castor oil production. Casterra’s efforts to develop and commercialize castor been seeds for industrial uses may fail
for a variety of reasons, including:
| ▪ |
failure to reach desired yields of its castor seed varieties on a commercial scale to secure economic viability as bio-based oil
feedstock; |
| ▪ |
failure to establish efficient mechanical harvest and grain processing solutions; |
| ▪ |
failure to establish a cost-effective production of castor bean grains, allowing grower profitability; |
| ▪ |
failure to reach large scale adoption of castor by growers, including the successful management of diseases and pests; |
| ▪ |
failure to address the health and environmental risks posed by castor bean seeds, which contain ricin, a naturally occurring poison;
|
| ▪ |
failure to comply with any regulatory requirement related to sales of castor beans, and in particular those related to the import
of such beans and the potential effects of ricin; |
| ▪ |
Our cultivation and agro-technical support activities in South America may be materially and adversely affected by an economic slowdown,
uncertainties with respect to the legal system and violent crime or terrorism in these regions; |
| ▪ |
failure to establish efficient and reliable production and scale up capabilities of castor seeds, independently or through third
party contractors; and |
| ▪ |
failure to engage new buyers for our seeds, increase the amounts of seeds we sell, or maintain the price paid for our seeds.
|
Casterra is operating in a new industry, with limited understanding
of the dynamics involved in producing and selling castor seeds. Casterra has made initial commercial sales of castor seeds; however, we
are unable to project the scope of additional sales and whether we will be able to increase or maintain our customer base. If Casterra
is unable to adequately address any of these challenges, we may not find a market for our castor bean seeds and our results of operations
could be materially and adversely affected.
Even if we are entitled to royalties from our
collaborators, we may not actually receive these royalties, or we may experience difficulties in collecting the royalties that we believe
we are entitled to, potentially resulting in costly litigation and loss of reputation.
If and when our collaborators launch commercial products containing
our licensed discoveries, we will rely on our collaborators to report to us the sales they earn from these products and to accurately
calculate the royalties we are entitled to, a process that will involve complicated calculations. Although we seek to address these concerns
in our collaboration agreements, such provisions may not be effective. Additionally, we may not be able to achieve our long-term goal
of generating revenues from royalties, and in the coming years our revenues will be entirely dependent on fees we earn for our research
and development services and milestone payments from our collaborators.
17
In addition, our ability to generate royalty payments from our
collaboration agreements depends on our ability to clearly delineate our intellectual property rights under those agreements. We often
license patented discoveries and product candidates to our collaborators, who use them to develop and commercialize products. However,
a collaborator may use our intellectual property without our permission, dispute our ownership of certain intellectual property rights
or argue that our intellectual property does not cover their marketed product. If a dispute arises, it may result in costly litigation,
and our collaborator may refuse to pay us royalty payments while the dispute is ongoing. Furthermore, regardless of any resort to legal
action, a dispute with a collaborator over intellectual property rights may damage our relationship with that collaborator, and may also
harm our reputation in the industry.
Competition for highly skilled scientific, technical and other personnel
is intense, and as a result we may fail to attract, recruit, retain and develop qualified employees, which could materially and adversely
impact our business, financial condition and results of operations.
We compete for personnel in a research and development market characterized
by rapidly changing technologies and an evolving competitive landscape. In order for us to successfully compete and grow, we must attract,
recruit, retain and develop personnel with requisite qualifications to provide expertise across a range of disciplines, including biology,
chemistry, computer science and other fields relevant to our operations.
The number of qualified and highly educated personnel in the fields
upon which our business focuses in Israel, is limited and competition for the services of such persons is intense. Although we have employment
agreements with all of our employees, most of these agreements may be terminated on short notice by such employees, which may create an
immediate strain on our activities.
Historically and as of the date hereof, there has been intense
competition for qualified human resources in the Israeli high-tech and bio-tech industries. Although during 2025 there was a slight shift
in the attrition level and we were able to attract more candidates to each open position (mainly due to the financial slowdown in Israel),
we are still facing significant and intense competition in recruiting for our research and development positions.
Many of the companies with which we compete for qualified personnel
have significant resources, and we may not succeed in recruiting additional experienced or professional personnel, retaining personnel
or effectively replacing current personnel who may depart with qualified or effective successors. In addition, our employees may be increasingly
targeted for recruitment by competitors and other companies in the bio-tech and the high tech industry, which may make it more difficult
for us to retain employees and may increase retention costs. Training new employees with limited or no prior relevant experience could
be time-consuming, expensive and require significant resources.
In addition, as a result of the competition for qualified human
resources, the high-tech and bio-tech markets have also experienced and may continue to experience significant wage inflation. Accordingly,
our efforts to attract, retain and develop personnel may also result in significant additional expenses, which could adversely affect
our profitability. Furthermore, in making employment decisions, particularly in the high-tech and bio-tech industries, job candidates
often consider the value of the equity they are to receive in connection with their employment, which may force us to increase the amount
of equity awards we grant in order to recruit and retain talent.
In light of the foregoing, there can be no assurance that qualified
employees will remain in our employment or that we will be able to attract and retain qualified personnel in the future. Failure to retain
or attract qualified personnel could have a material adverse effect on our business, financial condition and results of operations.
We develop certain discoveries independent
of our collaborators, and we may need to finance the cost of the development of such product candidates ourselves.
We develop certain discoveries and product candidates independent
of our collaborators, with a goal of making such discoveries available to collaborators in later phases or developing and commercializing
end products. While we believe this will allow us to obtain more favorable license or commercialization terms with respect to such discoveries,
product candidates and products, the up-front cost to us of developing programs without a collaborator (and therefore without external
funding for the research and development expenditures we incur) in these early phases involves higher risks, since we need to fund the
research and development of such programs ourselves. If we are unsuccessful in discovering promising product candidates after having invested
significant funds, or if we are unable to find collaborators who are interested in such results and willing to fund subsequent phases
of development and commercialization, such failures could have a material and adverse effect on our business, financial condition and
results of operations. Regardless of the outcome of our research and development efforts, traditional financing sources such as bank financing
or public debt or equity financing, if available to us, could carry with them certain drawbacks, such as imposition of covenants restricting
our ability to operate, or substantial dilution to our existing shareholders.
18
Our business (including each of the businesses
of our respective subsidiaries) and those of our collaborators are subject to various government regulations and, if we or our collaborators
are unable to comply with the relevant respective law and regulations and/or obtain the necessary regulatory approvals, we may not be
able to continue our operations.
Our business is generally subject to two types of regulations:
regulations that apply to our operations and regulations that apply to our product candidates and products. We and/or our collaborators
may fail to comply with all currently applicable regulations, and we and/or our collaborators may become subject to new or revised regulations
or approvals in the future. Furthermore, any violation of these regulations by us and/or our collaborators may expose us to civil and
criminal penalties.
Specifically, our operations are carried out mainly in Israel and
accordingly we are regulated by the Israeli Ministry of Agriculture and Rural Development, or ISARD, and more specifically by the ISARD’s
Plants Protection and Inspection Services and the National Committee for Transgenic Plants. The regulation by ISARD addresses, among other
things, the import of agricultural materials into Israel, environmental protection requirements for our experiments and working with transgenic
plants.
Additionally, our research and development activities use chemicals
and produce waste materials, which require us to hold business licenses that may include conditions set by the Israeli Ministry of Environmental
Protection for the operations of such facilities.
Our operations in the human health sector, namely the clinical
trial by our subsidiary Biomica, are regulated by various laws, regulations, orders and procedures by the Israeli Ministry of Health.
In particular, our clinical trials require a permit for a research plan (protocol) by the Helsinki Committee, operating under the Public
Health Regulations (Clinical Trials in Humans), 1980 and are also regulated by the Israeli Public Health Ordinance, 1940.
If we fail to comply with any of the above-mentioned laws and/or
regulations, we may be subject to fines and other civil, administrative or criminal sanctions (i.e., imprisonment), including the revocation
of our toxin permits, business permits, or other permits and licenses necessary to continue our business activities.
If we develop a commercialized product(s), we further anticipate
that we, our subsidiaries, and/or our collaborators, will need to apply for regulatory approval of certain products and may also become
subject to additional regulatory regimes in the sale of such products. Such laws may include laws that govern which product(s) may be
sold in a particular jurisdiction along with the manner of sales and marketing permitted in that particular jurisdiction. Such laws may
be onerous to comply with and may vary from jurisdiction to jurisdiction. For example, in the United States, the regulation of biotechnology
is divided among the United States Environmental Protection Agency, or EPA, which regulates activity related to the invention of plant
pesticides and herbicides, the United States Department of Agriculture, which regulates the import, field testing and interstate movement
of specific technologies that may be used in the creation of transgenic plants, and the United States Food and Drug Administration, or
the FDA, which regulates foods derived from new plant varieties. As a result, certain of our products may have to be approved for sale
by separate agencies that may regulate a different aspect of one or more of our future products.
In addition, with respect to our product candidates in the human
health sector, the time required to obtain approval by the FDA and comparable foreign regulatory authorities is unpredictable but typically
takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion
of the regulatory authorities. In addition, approval policies, laws or regulations, or the type and amount of clinical data necessary
to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions. It
is possible that none of our existing product candidates or any product candidates that we may seek to develop in the future will ever
obtain regulatory approval. This lengthy approval process as well as the unpredictability of future clinical trial results may result
in the failure to obtain regulatory approval to market any of our product candidates as part of our collaborator products, which would
significantly harm our underlying businesses, financial condition and results of operations. The FDA and comparable foreign regulatory
authorities have substantial discretion in the approval process, and determining when or whether regulatory approval will be obtained
for any of our product candidates. Prior to obtaining approval to commercialize a product candidate in the United States or elsewhere,
we or our collaborators must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction of the
FDA or comparable foreign regulatory agencies, that such product candidates are safe and effective for their intended uses. Results from
nonclinical studies and clinical trials can be interpreted in different ways. Even if we believe the data collected from clinical trials
of our product candidates is promising, such data may not be sufficient to support approval by the FDA or comparable foreign regulatory
authorities.
19
If we, our subsidiaries, or our collaborators are unable to obtain
the requisite regulatory approvals or there is a delay in obtaining such approvals as a result of negative market perception or heightened
regulatory standards, such product candidates will not be commercialized, which would negatively impact our business and results of operations.
Disruption to our information technology and
systems, or those of our subsidiaries, including a security breach or unauthorized access to our data, our customer’s data, or our
platform, could adversely affect our reputation and future demand for our products or collaborative relationships, which may have a material
adverse effect on our business and results of operations.
Our computational technologies rely on our information technology,
or IT, system to collect and analyze the biological and chemical data, which includes several petabytes of data that we produce,
review, and store. Our IT is also involved with the collection, storage, processing, transmission and other use of data, including certain
confidential, sensitive, and personal information, including those relating to our research, studies, and participants. More generally,
in the ordinary course of our business, we collect, store, transmit and otherwise process large amounts of sensitive corporate, personal
and other information, including intellectual property, proprietary business information, and other confidential information. Any security
breach, data loss, or other compromise, including those resulting from a cybersecurity attack, phishing attack, or any unauthorized access,
unauthorized usage, virus or similar breach or disruption could result in the loss or destruction of or unauthorized access to, or use,
alteration, disclosure, or acquisition of, data, damage to our reputation, loss of intellectual property protection, claims and litigation,
regulatory investigations, or other liabilities. For example, we may become the target of cyber-attacks by third parties seeking unauthorized
access to our or our customers’ data or to disrupt our ability to provide our services. These attacks may come from individual hackers,
criminal groups, and state-sponsored organizations. Ransomware attacks, including those from organized criminal threat actors, nation-states,
and nation-state supported actors, are becoming increasingly prevalent and severe, and can lead to significant interruptions in our operations,
loss of data and income, reputational loss, diversion of funds, and may result in fines, litigation and unwanted media attention. Extortion
payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for
example, applicable laws or regulations prohibiting payments. Additionally, companies have, in general, experienced an increase in phishing,
social engineering and other attacks from third parties, and the increase in remote working further increases these and other security
threats. While we are constantly subject to common cyber-attacks including phishing, hacking, encryption, viruses, man/monkey in the middle,
etc. from time-to-time, as of the date of this Annual Report, we have not reasonably identified any confirmed breach of our systems and
therefore do not believe that any such attacks have individually or in the aggregate led to costs or consequences which have materially
impacted our operations or business.
If our security measures are breached as a result of third-party
action, employee error or negligence, a defect or bug in our offerings or those of our third-party service providers, malfeasance or otherwise
and, as a result, someone obtains unauthorized access to any data, including our confidential, sensitive, or personal information or the
confidential, sensitive, or personal information of our customers, or other persons, or any of these types of information is lost, destroyed,
or used, altered, disclosed, or acquired without authorization, or if any of the foregoing is perceived to have occurred, our reputation
may be damaged, our business may suffer, and we could incur significant liability, including under applicable data privacy and security
laws and regulations.
Even the perception of inadequate security may damage our reputation
and market position, negatively impacting our ability to win new customers and retain and receive timely payments from existing customers.
Further, we could be required to expend significant capital and other resources to protect against and address any data security incident
or breach, which may not be covered or fully covered by our insurance, and which may involve payments for investigations, forensic analyses,
regulatory compliance, breach notification, legal advice, public relations advice, system repair or replacement, or other services. We
and our collaborators, subsidiaries, and service providers also may face difficulties or delays in identifying or responding to, and remediating
and otherwise responding to, cyberattacks and other security breaches and incidents. We have made significant efforts to protect against
and address potential impacts of security breaches and incidents (such as applying fire walls and segregation of networks), and anticipate
doing so in the future. Additionally, we may be required to notify such breaches to regulators and/or individuals and operate to mitigate
damages, which may result in us incurring additional costs.
20
Our subsidiaries, collaborators, and other service providers store
and otherwise process our data, including personal, confidential, sensitive, and other information about individuals and ongoing research
projects. Such entities may also be the targets of cyberattacks, malicious software, phishing schemes, and fraud. Our ability to monitor
the data security of such entities is limited, and, in any event, bad actors may be able to circumvent such security measures, resulting
in the unauthorized access to, misuse, acquisition, disclosure, loss, alteration, or destruction of our data, including confidential,
sensitive, and other information about individuals and our ongoing research.
Techniques used to sabotage or obtain unauthorized access to systems
or networks are constantly evolving and, in some instances, are not identified until after they have been launched against a target. We,
our subsidiaries, collaborators, and our service providers may be unable to anticipate these techniques, react in a timely manner, or
implement adequate preventative and mitigating measures. If we are unable to efficiently and effectively maintain and upgrade our system
safeguards, we may incur unexpected costs and certain of our systems may become more vulnerable to unauthorized access or disruption.
Any of the foregoing could have a material adverse effect on our business, financial condition, results of operations, market position,
and reputation.
We have established an internal information security committee,
that meets from time to time to provide guidelines and address security issues, but we can provide no assurance that our current IT system
is fully protected against third-party intrusions, viruses, hacker attacks, information or data theft or other similar threats. Disruption
or failure of our IT system due to technical reasons, cyberattacks, natural disasters or other unanticipated catastrophic events, including
power interruptions, storms, fires, floods, earthquakes, terrorist attacks and wars could significantly impair our internal development
efforts. We maintain an off-site data recovery system that is used for the retention of critical data to enable a potential recovery
in case of any of the described disasters (however, this system is not designated to create seamless continuity operation).
As we continue to develop our computational technologies and expand
our datasets, we may need to update our IT system and storage capabilities. However, if our existing or future IT system does not function
properly, or if the IT system proves incompatible with our new technologies, we could experience interruptions in data transmissions and
slow response times, preventing us from completing routine research and business activities, which could adversely affect our business
and results of operations.
Development of our product candidates, particularly
during our validation and testing activities, may be adversely affected by circumstances caused by us or those beyond our control.
The industries we are engaged in are subject to various factors
that make our operations relatively unpredictable from period to period. For example, the testing of our product candidates may be adversely
affected by circumstances both caused by us and those that are beyond our control. Factors caused by us include any failure by us or our
collaborators to follow proper agronomic practice or suggested protocols for conducting our experiments, and failure to successfully complete
such experiments. Factors beyond our control include weather and climatic variations, such as droughts or heat stress, or other factors
we are unable to identify. For example, if there was prolonged or permanent disruption to the electricity, climate control or water supply
operating systems in our greenhouses or laboratories, the plants and pests on which we test our discoveries and product candidates and
the samples we store in freezers, both of which are essential to our research and development activities, would be severely damaged or
destroyed, adversely affecting our research and development activities and thereby our business and results of operations. We have experienced
these kinds of failures in the past for unknown reasons, causing delays in our achievement of milestones and delivery of results, and
necessitating that we re-start the trials. Any test failure we may experience is not covered by our insurance policy, and therefore could
result in increased cost of the trials and development of our product candidates, which may negatively impact our business and results
of operations.
Our business could be disrupted
by catastrophic events.
The occurrence of unforeseen or catastrophic events such as terrorist
attacks and war (as further detailed below in the section titled “Risks Relating to Our Incorporation and Location in Israel”),
extreme terrestrial or solar weather events or other natural disasters, emergence of a pandemic, or other widespread health emergencies
(or concerns over the possibility of such an emergency), could create economic and financial disruptions, and could lead to operational
difficulties that could impair our ability to manage our business.
21
Consumer and government resistance to genetically
modified organisms, or GMOs, may negatively affect our public image and reduce potential sales of plants containing our traits.
A certain part of our seed traits activity includes research and
development of genetically modified, or GM, seeds. Foods made from such seeds are not accepted by many consumers and in certain countries
production of certain GM crops is effectively prohibited, including throughout the European Union, or EU, due to concerns over such products’
effects on food safety and the environment. Other jurisdictions and governmental authorities, including in South America and Asia, are
increasingly taking an interest in regulating agricultural products of biotechnology. Regulatory approaches vary by jurisdiction as a
result of the existing public health frameworks and phytosanitary laws, as well as other less tangible factors such as cultural and religious
norms that may have an impact on individual country risk assessments and decision-making. Each jurisdiction may have its own regulatory
framework, which may include restrictions and regulations on planting and growing genetically engineered plants, import of grain and other
plant products, and in the consumption and labeling of feed and foods derived from such novel plants, and which may apply to future products
containing our traits. The high public profile of biotechnology agriculture, especially in food production, and lack of consumer acceptance
of products to which we have devoted substantial resources could negatively affect our public image and results of operations. For example,
the prohibition on the production of certain GM crops in select countries and the current resistance from consumer groups, particularly
in Europe, to GM crops not only limits our access to such markets but also has the potential to spread to and influence the acceptance
of products developed through biotechnology in other regions of the world and may also influence regulators in other countries to limit
or ban production of GM crops, which could limit the commercial opportunities to exploit biotechnology. Moreover, regulation of all genetically
engineered plants in the EU is far more stringent than in the U.S. and Canada. U.S. and Canadian regulators have determined that genome
edited plants pose fewer risks than traditional biotechnology-derived plants subjected to modification through the insertion of recombinant
DNA. In contrast, a recent EU legal ruling indicated that the existing EU regulations for genetically engineered plants modified by the
insertion of recombinant DNA, which were already more stringent than corresponding U.S. and Canadian regulations, should be strictly applied
to genome edited plants as well. As a result, there is a sharp distinction between how EU and U.S. and Canadian regulatory agencies oversee
novel seed traits, and in particular those that are generated using the more modern techniques of genome editing.
Although we are not currently targeting EU markets for the development
or commercialization of future products containing our traits, emerging oversight regimes for genetically engineered products in other
jurisdictions may follow the EU approach and impose similarly strict requirements for the release of such products into the environment
and their incorporation into human food or other consumer products. Such jurisdictions may also elect to regulate genetically engineered
plants without distinguishing between traditional biotechnology-derived plants modified with recombinant DNA and genome edited plants.
There is no guarantee that countries for which we may have or may develop future marketing plans would not take a stricter legal and regulatory
approach to controlling genetically engineered plants similar to that of the EU, which could increase regulatory costs and delay, prevent
or limit our or our future collaborators’ ability to market our traits in such jurisdictions.
GM crops are grown principally in the United States, Brazil and
Argentina where there are fewer restrictions on the production of GM crops. If these or other countries where GM crops are grown enact
laws or regulations that ban the production of such crops or make regulations more stringent, we could experience a longer product development
cycle for our product candidates and may even have to abandon projects related to certain crops or geographies, both of which would negatively
affect our business and results of operations and could cause us to have to cease operations. Furthermore, any changes in such laws and
regulations or consumer acceptance of GM crops could negatively impact our collaborators, who in turn might terminate or reduce the scope
of their collaborations with us or seek to alter the financial terms of our agreements with them.
We currently need, and in the future we may
need to obtain licenses of third-party technology that may not be available to us or are available only on commercially unreasonable terms,
and which may cause us to operate our business in a more costly or otherwise adverse manner that was not anticipated.
We currently need, and in the future we may be required to license
technology from third parties to further develop or commercialize our investigational products. Should we be required to obtain licenses
for any third-party technology, such licenses may not be available to us on commercially reasonable terms, or at all. The inability to
obtain any third-party license required to develop or commercialize any of our products could cause us to abandon any related efforts,
which could seriously harm our business and operations.
22
The licenses we grant to our collaborators
to use our discoveries are in most cases exclusive with respect to a specified discovery, product type or market area. This may limit
our opportunities to enter into additional licensing or other arrangements with respect to such discoveries, product types or market areas.
Most of the licenses we grant our collaborators to our product
candidates or to use specific discoveries we have made are exclusive in the market area of the license. That means that once these discoveries
are licensed to a collaborator, we are generally prohibited from licensing those discoveries to any third party for use in such area.
The limitations imposed by these exclusive licenses could prevent us from expanding our business and increasing our exposure to new licensees,
both of which could adversely affect our business and results of operations.
We may be required to pay substantial damages
as a result of product liability, warranty liability, or personal injury claims and litigation.
Once products integrating our discoveries and product candidates
reach commercialization, if ever, product liability, warranty liability, personal injury, or other litigation claims may become a commercial
risk to our business, particularly as some of the products that we develop may be harmful to humans or to the environment. Moreover, as
our portfolio of available products expands, we may experience increases in product liability claims asserted against us. Courts have
awarded substantial damages in the United States and elsewhere against a number of companies in the agriculture and human health industries
in past years based upon claims for injuries allegedly caused by the use of their products. Product liability claims against us and/or
our collaborators selling products that contain our product(s) or allegations of product liability relating to products containing our
discoveries may damage our reputation, harm our relationships with our collaborators, and materially and adversely affect our business,
results of operations, financial condition and prospects. Currently, we and/or our subsidiaries maintain an insurance policy according
to the specific needs of each company, which may include commercial insurance, self-insurance (including direct risk retention), or a
combination of both approaches, in amounts and on terms that we believe are reasonable and prudent in light of our business and related
risks. We currently carry specific product liability insurance coverage for Casterra. Any such insurance we obtain on these operations
may be expensive and may not cover our potential liability in full. In addition, we may be subject to claims for which insurance coverage
that we do carry is denied, as well as claims that exceed our policy limits. As a result, we may not be able to obtain the type and
amount of insurance we desire, or any insurance on reasonable terms, in the markets in which we operate. Furthermore, while our collaboration
agreements typically require that our collaborators indemnify us for the cost of product liability claims brought against us, such indemnification
provisions may not be enforceable, and we may receive no indemnification if our own misconduct led to the claims.
Any litigation could force us to incur significant expenses,
divert management’s time and attention, subject us to adverse publicity, and damage our reputation and competitive position. A successful
assertion of a claim against us may result in potentially significant monetary damages, penalties, or fines and adversely affect sales
of our products. Costs or payments made in connection with warranty and product liability claims and recalls could adversely affect our
financial condition and results of operations in a material manner.
Our facilities in Israel are located on leased
properties. Termination of any of the leases, changes in lease terms, and long-term leases that may not be terminated at will, may jeopardize
our activity and materially affect our financial condition or results of operations.
Our office spaces, labs, facilities, and farm are all situated
on properties that we lease pursuant to lease agreements in Israel. Once a lease agreement ends, we may not be able to renew it on favorable
terms, or not at all, which may require us to increase our lease payments or take a new lease on another property, adversely affecting
our business and results of operations. In addition, a long-term lease may mean no or limited possibility to terminate the lease at will
before the completion of the lease period, which may lead to continued holding of an un-needed space or entry into a sub-lease, which
may adversely affect our results of operations. For more information regarding our facilities, please see “Item 4. Information on
the Company—D. Property, Plants and Equipment.”
Our operations are subject to various health
and environmental risks associated with our use, handling and disposal of potentially toxic materials.
Our operations involve various health and environmental risks.
For example, as part of our seed traits operations, we assist in the development of GM crops by inserting new genes into the genomes of
certain plants. Though we introduce these genes in order to improve plant traits, we cannot always predict the effect that these genes
may have on the plant. In some cases, the genes may render the plant poisonous or toxic, or they may cause the plant to develop other
dangerous characteristics that could harm the plant’s surrounding environment. Furthermore, while we comply with relevant environmental
laws and regulations, there is a risk that, when testing genetically modified plants, the seeds of these plants may escape the greenhouse
in which they are being tested and contaminate nearby fields. Poisonous or toxic plants may therefore be inadvertently introduced into
the wild, or possibly enter the food production system, harming the people and animals who come in contact with them. Furthermore, GM
crops may be a source for the transfer of antibiotic-resistant genes to the environment or the exposed organisms.
23
In addition, as part of Casterra’s operations, we handle
castor seeds, which contain ricin, a naturally occurring poison, and hence are unsuitable for human or animal consumption. Ricin is a
naturally occurring carbohydrate-binding protein produced in the seeds of ricinus communis, the plant that produces castor oil. It is
toxic when inhaled, ingested, or injected. As few as five to ten micrograms per kilogram can be lethal. The risk may occur when practicing
a crop rotation scheme that involves growing an edible crop after castor. There is a risk that the harvesting machinery will not properly
harvest seeds; and if the harvesting machinery fails to remove the castor seeds properly, there is a risk the seeds could germinate and
develop into a plant, which may be collected during the second crop harvest and contaminate the edible yield with a toxic substance.
Similar risks are relevant to our Ag-Seeds division operations,
especially with respect to GM seeds and AgPlenus’ ag-chemicals operations.
Changes in laws and regulations to which we
are subject, or to which we may become subject in the future, may materially increase our costs of operation, decrease our operating revenues
and disrupt our business.
Laws and regulatory standards and procedures that impact our business
are continuously changing. Responding to these changes and meeting existing and new requirements may be costly and burdensome. Changes
in laws and regulations may occur that could:
| ▪ |
impair or eliminate our ability to research and develop our product candidates, including validating our product candidates through
lab, greenhouse, field or clinical trials; |
| ▪ |
increase our compliance and other costs of doing business through increases in the cost to patent or otherwise protect our intellectual
property or increases in the cost to our collaborators to obtain the necessary regulatory approvals to commercialize and market the product
candidates we develop with them; |
| ▪ |
require significant product redesign or systems redevelopment; |
| ▪ |
render our product candidates less profitable, obsolete or less attractive compared to competing products; |
| ▪ |
affect our collaborators’ willingness to do business with us; |
| ▪ |
jeopardize import or export of raw material or end products, such as with respect to seedlings and products; |
| ▪ |
reduce the amount of revenues we receive from our collaborators through milestone payments or royalties; and |
| ▪ |
discourage our collaborators from offering, and consumers from purchasing, products that incorporate our discoveries. |
Any of these events could have a material adverse effect on our
business, results of operations and financial condition. For example, legislators and regulators have increased their focus on plant biotechnology
in recent years, with particular attention paid to GM crops as well as on ag-chemicals.
While none of our product candidates are currently available for
sale, other than Casterra’s castor seeds, our future growth relies on our ability and the ability of our collaborators to commercialize
and market our product candidates, and any restrictions on such activities could materially and adversely impact our business and results
of operations. Any changes in regulations in countries where our product candidates are used could result in our collaborators being unable
or unwilling to develop, commercialize or sell products that incorporate our discoveries. In addition, we rely on patents and other forms
of intellectual property protection. Legislation and jurisprudence on patent protection in the key target markets where we seek patent
protection, such as the United States and the EU, is evolving and changes in laws could affect our ability to obtain or maintain patent
protection for our product candidates. Any changes to these existing laws and regulations may materially increase our costs of operation,
decrease our operating revenues and disrupt our business. For more information, please see ‘Government Regulation of our Operations’
and ‘Government Regulation of Product Candidates’ paragraphs under the description of each of our activity divisions and subsidiaries
under “Item 4. Information on the Company—B. Business Overview.”
24
We are subject to evolving corporate governance
and public disclosure regulations and expectations, including with respect to environmental, social and governance matters that could
expose us to numerous risks.
We are subject to changing rules and regulations promulgated by
a number of governmental and self-regulatory organizations, including the SEC and Nasdaq. These rules and regulations continue to evolve
in scope and complexity and many new requirements have been created in response to laws enacted by Congress, making compliance difficult
and uncertain, including the recent change to require directors and officers of foreign private issuers like us to the reporting obligations
of Section 16 of the Exchange Act. The SEC is also currently reviewing additional possible rule changes for foreign private issuers. In
addition, increasingly regulators, customers, investors, employees and other stakeholders are focusing on environmental, social and governance,
or ESG, matters and related disclosures. These changing rules, regulations and stakeholder expectations could result in increased general
and administrative expenses and increased management time and attention spent complying with or meeting such regulations and expectations.
For example, developing and acting on ESG initiatives, and collecting, measuring, and reporting ESG information and metrics, can be costly,
difficult and time consuming and is subject to evolving reporting standards. We may also communicate certain initiatives and goals regarding
environmental matters, diversity, responsible sourcing, social investments and other ESG matters in public disclosures. These initiatives
and goals could be difficult and expensive to implement, the technologies needed to implement them may not be cost effective and may not
advance at a sufficient pace, and ensuring the accuracy, adequacy, or completeness of the disclosure of our ESG initiatives can be costly,
difficult and time-consuming. We may be affected by market or regulatory responses to climate change.
Growing public concern about climate change has resulted in the
increased focus of local, state, regional, national and international regulatory bodies on greenhouse gas, or GHG, emissions and climate
change issues.
We may also incur additional expenses as a result of regulators
requiring additional disclosures regarding GHG emissions. Compliance with such regulations and the associated potential cost is complicated
by the fact that various countries and regions are following different approaches to the regulation of climate change.
Growing cycles and adverse weather conditions may decrease our
results from operations.
Our operations are affected by the growing cycles of the crops,
including castor beans, that we plant, test and manufacture for our and our subsidiaries’ products. We set our planting schedules
without knowing the effect of the weather on the crops or on the entire industry’s production. Weather conditions during the course
of each crop’s growing season will affect the volume and growing time of that crop.
Risks Related to Our Intellectual Property Rights
Our success depends on our ability to protect
our intellectual property and our proprietary technologies.
Our commercial success depends in part on our ability to obtain
and maintain patent protection and trade secret protection for our proprietary computational and experimental technologies, our discoveries
and their uses, as well as our ability to operate without infringing upon the proprietary rights of others. If we do not adequately protect
our intellectual property, competitors may be able to use our technologies and erode or negate any competitive advantage we may have,
which could harm our business and ability to achieve profitability.
While we expect our patent applications to receive approval, we
cannot be certain that we will obtain such results. Despite our efforts to protect our proprietary rights, unauthorized third parties
may attempt to use, copy or otherwise obtain and market or distribute our intellectual property rights or technology or otherwise develop
products or solutions with the same functionality as our solutions. For example, the castor varieties of our subsidiary Casterra
can be easily reproduced by any third party with access to its castor seeds. In addition, the laws of some foreign countries provide less
protection for proprietary rights than U.S. law. We face the occasional risk, moreover, that third parties may assert copyright, trademark
and other intellectual property rights against us. Such claims may result in direct or indirect liability as we have contractually agreed
to indemnify certain parties for any damages suffered as a result of infringement by us of any third-party intellectual property rights.
Policing unauthorized use of technologies, trade secrets and intellectual property may be difficult, expensive and time-consuming. If
we fail to meaningfully establish, maintain, protect and enforce our intellectual property and proprietary rights, our business, operating
results and financial condition could be adversely affected.
25
If we are unable to protect the confidentiality
of our trade secrets, the value of our technology could be materially adversely affected and our business would be harmed.
We treat our proprietary computational and experimental technologies,
including unpatented know-how and other proprietary information, as trade secrets. We seek to protect these trade secrets, in part, by
entering into non-disclosure and confidentiality agreements with any third parties who have access to them, such as our consultants, independent
contractors, advisors, corporate collaborators and outside scientific collaborators. We also enter into confidentiality and invention
or patent assignment agreements with employees and certain consultants. Any party with whom we have executed such an agreement may breach
that agreement and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies
for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming,
and the outcome is unpredictable. In addition, if any of our trade secrets were to be lawfully obtained or independently developed by
a competitor, we would have no right to prevent such third party, or those to whom it communicates that technology or information, from
using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed
by a competitor, or if we otherwise lose protection for our trade secrets or proprietary know-how, the value of this information may be
greatly reduced and our business and competitive position could be harmed.
We may not be able to protect our intellectual
property rights throughout the world.
Filing, prosecuting, maintaining and defending patents on product
candidates in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries
outside the United States are less extensive than those in the United States. In addition, the laws of some foreign countries do not protect
intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we are unable to prevent
third parties from using our inventions in all countries outside the United States, or from selling or importing products made using our
inventions in and into the jurisdictions in which we do not have patent protection. Competitors may use our technologies in jurisdictions
where we have not obtained patent protection to develop their own products, and we may be unable to prevent such competitors from importing
those infringing products into territories where we have patent protection but enforcement is not as strong as in the United States. These
products may compete with our product candidates and our patents and other intellectual property rights may not be effective or sufficient
to prevent them from competing in those jurisdictions. Moreover, farmers or others in the chain of commerce may raise legal challenges
against our intellectual property rights or may infringe upon our intellectual property rights, including through means that may be difficult
to prevent or detect. For example, the practice by some farmers of saving seeds from non-hybrid crops (such as soybeans, canola and cotton)
containing biotechnological traits may prevent us from realizing the full value of our intellectual property in countries outside of the
United States.
Many companies have encountered significant problems in protecting
and defending intellectual property rights in foreign jurisdictions, including China. The legal systems of certain countries, including
China, have not historically favored the enforcement of patents or other intellectual property rights, which could hinder us from preventing
the infringement of our patents or other intellectual property rights and result in substantial risks to us. Proceedings to enforce our
patent rights in the United States or foreign jurisdictions could result in substantial costs and divert our efforts and attention from
other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly and our patent applications
at risk of not issuing and could provoke third parties to assert patent infringement or other claims against us. We may not prevail in
any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our
efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from
the intellectual property that we develop or license from third parties.
If we or one of our collaborators are sued for infringing the intellectual
property rights of a third party, such litigation could be costly and time consuming and could prevent us or our collaborators from developing
or commercializing our product candidates.
Our ability to generate significant revenues from our product candidates
depends on our and our collaborators’ ability to develop, market and sell our product candidates and utilize our proprietary technology
without infringing the intellectual property and other rights of any third parties. In the United States and abroad there are numerous
third-party patents and patent applications that may be applied toward our proprietary technology, business processes or product candidates,
some of which may be construed as containing claims that cover the subject matter of our product candidates or intellectual property.
Because of the rapid pace of technological change, the confidentiality of patent applications in some jurisdictions, and the fact that
patent applications can take many years to issue, there may be currently pending applications that are unknown to us that may later result
in issued patents upon which our product candidates or proprietary technologies infringe. Similarly, there may be issued patents relevant
to our product candidates of which we are not aware. These patents could reduce the value of the product candidates we develop or, to
the extent they cover key technologies on which we have unknowingly relied, require that we seek to obtain licenses or cease using the
technology, no matter how valuable to our business. We may not be able to obtain such a license on commercially reasonable terms. There
is a substantial amount of litigation involving patent and other intellectual property rights in the biotechnology industry generally.
If any third party patent or patent application covers our intellectual property or proprietary rights and we are not able to obtain a
license to it, we and our collaborators may be prevented from commercializing products containing our discoveries.
26
As the biotechnology industry continues to develop, we may become
party to, or threatened with, litigation or other adverse proceedings regarding intellectual property or proprietary rights in our technology,
processes or product candidates. Third parties may assert claims based on existing or future intellectual property rights and the outcome
of any proceedings is subject to uncertainties that cannot be adequately quantified in advance. Any litigation proceedings could be costly
and time consuming and negative outcomes could result in liability for monetary damages, including treble damages and attorneys’
fees if we are found to have willfully infringed a patent. There is also no guarantee that we would be able to obtain a license under
such infringed intellectual property on commercially reasonable terms or at all. A finding of infringement could prevent us or our collaborators
from developing, marketing or selling a product candidate or force us to cease some or all of our business operations. Even if we are
successful in these proceedings, we may incur substantial costs and the time and attention of our management and scientific personnel
may be diverted as a result of these proceedings, which could have a material adverse effect on us. Claims that we have misappropriated
the confidential information or trade secrets of third parties could similarly have a negative impact on our business.
We may be required to pay royalties to employees
who develop inventions that have been or will be commercialized by us, even if the rights to such inventions have been assigned to us
and the employees have waived their rights to royalties or other additional compensation.
A significant portion of our intellectual property has been developed
by our employees in the course of their employment for us. Under the Israeli Patent Law, 5727-1967, or the Patent Law, inventions conceived
by an employee in the course and as a result of or arising from his or her employment with a company are regarded as “service inventions,”
which belong to the employer, absent a specific agreement between the employee and employer giving the employee proprietary rights. The
Patent Law also provides under Section 134 that if there is no agreement between an employer and an employee as to whether the employee
is entitled to consideration for service inventions, and to what extent and under which conditions, the Israeli Compensation and Royalties
Committee, or the Committee, a body constituted under the Patent Law, shall determine these issues. Section 135 of the Patent Law provides
criteria for assisting the Committee in making its decisions. According to the decisions of the Committee, an employee’s right to
receive consideration for service inventions is a personal right and is entirely separate from the proprietary rights in such invention.
Therefore, this right must be explicitly waived by the employee. A decision handed down in May 2014 by the Committee clarifies that the
right to receive consideration under Section 134 can be waived and that such waiver can be made orally, in writing or by behavior like
any other contract. The Committee will examine, on a case by case basis, the general contractual framework between the parties, using
interpretation rules of the general Israeli contract laws. Further, the Committee has not yet determined one specific formula for calculating
this remuneration, nor the criteria or circumstances under which an employee’s waiver of his right to remuneration will be disregarded.
Similarly, it remains unclear whether waivers by employees in their employment agreements of the alleged right to receive consideration
for service inventions should be declared as void being a depriving provision in a standard contract. All of our employees execute invention
assignment agreements upon commencement of employment, in which they assign their rights to potential inventions and acknowledge that
they will not be entitled to additional compensation or royalties from commercialization of inventions. Although our employees have agreed
to assign to us service invention rights and have specifically waived their right to receive any special remuneration for such service
inventions beyond their regular salary and benefits, we may face claims demanding remuneration in consideration for assigned inventions.
Changes in U.S. patent law could diminish the
value of patents in general, thereby impairing our ability to protect our product candidates.
As is the case with other biotechnology companies, our success
is heavily dependent on intellectual property, particularly patents. Obtaining and enforcing biotechnology patents involves technological
and legal complexity, and is costly, time consuming, and inherently uncertain. In addition, the U.S. Supreme Court has ruled on several
patent cases, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners
in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination
of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the
federal courts, and the U.S. Patent and Trademark Office, the laws and regulations governing patents could change in unpredictable ways
that may weaken or undermine our ability to obtain new patents or to enforce our existing patents and patents we might obtain in the future.
27
Our employment agreements with our employees
and other agreements with our collaborators and third parties may not adequately prevent disclosure of trade secrets, know-how and other
proprietary information.
A substantial portion of our technologies and intellectual property
is protected by trade secret laws. We rely on a combination of patent and other intellectual property laws as well as our employment agreements
with our employees and other agreements with our collaborators and third parties to protect and otherwise seek to control access to, and
distribution of, our proprietary information. These measures may not prevent disclosure, infringement or misappropriation of our confidential
information. Our confidentiality, nondisclosure and assignment agreements or covenants may be breached, and we may not have adequate remedies
for such a breach that would effectively prevent the further dissemination of our confidential information. We have limited control over
the protection of trade secrets used by our collaborators and unauthorized disclosure might occur. In addition, others may independently
discover our trade secrets and proprietary information, and in such cases we could not assert any trade secret rights against such parties.
Laws regarding trade secret rights in certain markets where we operate may afford little or no protection of our trade secrets. Failure
to obtain or maintain trade secret protection could adversely affect our business, sales and competitive position.
We may not be able to fully enforce covenants
not to compete with our key employees, and therefore we may be unable to prevent our competitors from benefiting from the expertise of
such employees.
Our employment agreements with key employees, which include executive
officers, contain non-compete provisions. These provisions prohibit our key employees, if they cease working for us, from competing directly
with us or working for our competitors for one year. Under applicable U.S. and Israeli laws, we may be unable to enforce these provisions.
If we cannot enforce the non-compete provisions with our key employees, we may be unable to prevent our competitors from benefiting from
the expertise of such employees. Even if these provisions are enforceable, they may not adequately protect our interests. The defection
of one or more of our employees to a competitor could materially adversely affect our business, results of operations and ability to capitalize
on our proprietary information.
Risks Relating to Our Incorporation and Location in Israel
Conditions in Israel, including Israel’s
conflicts with Hamas and other parties in the region, as well as political and economic instability, may adversely affect our operations
and limit our ability to market our products, which would lead to a decrease in revenues.
We are incorporated under Israeli law, and our employees, including
our Chief Executive Officer, our Chief Financial Officer, and other senior members of our management team, operate from our headquarters
located in Israel. In addition, the majority of our directors are residents of Israel. Accordingly, our business and operations are directly
affected by economic, political, geopolitical, and military conditions in Israel.
Since the establishment of the State of Israel in 1948 and in recent
years, armed conflicts between Israel and its neighboring countries and terrorist organizations active in the region have involved missile
strikes, hostile infiltrations, abduction of soldiers and citizens, and terrorism against civilian targets in various parts of Israel.
Israel was engaged in a war with Hamas, a terrorist organization
based in the Gaza Strip on Israel’s southern border, from October 7, 2023 until October 2025, when a U.S.-brokered ceasefire took
effect. Israeli forces remain deployed in parts of the Gaza Strip, and the situation remains volatile. Similarly, Israel was engaged in
a military conflict with Hezbollah, a terrorist organization based in Lebanon on Israel’s northern border, which ended with a ceasefire
in November 2024. Each such terrorist group has been sponsored by Iran. Iran itself directly entered the conflict, launching ballistic
missile attacks against Israel in April 2024 and October 2024. In June 2025, following intelligence assessments indicating imminent attacks,
Israel conducted strikes against Iranian military and nuclear infrastructure, which led to Iranian counterattacks before a ceasefire was
reached after 12 days of hostilities. On February 28, 2026, Israel and the United States launched a second, larger-scale offensive against
Iran. Iran has retaliated with sustained attacks across the Middle East and was joined by renewed Hezbollah attacks on Israel. As of the
date of this filing, the conflict is ongoing with no ceasefire in place and the situation remains volatile, with the potential for escalation
into a broader regional conflict involving additional terrorist organizations and possibly other countries. Other Iranian-sponsored
terrorist organizations in the Middle East, including the Houthi terrorist militia in Yemen, also launched aerial strikes against Israel
during the two-year war period.
28
While our facilities have not been damaged during the current war,
the hostilities with Hamas, Hezbollah, Iran and its proxies and others have caused and may continue to cause damage to private and public
facilities, infrastructure, utilities, and telecommunication networks, and potentially disrupting our operations. In addition, Israeli
organizations, government agencies and companies have been subject to extensive cyber-attacks. This could lead to increased costs, risks
to employee safety, and challenges to business continuity, with potential financial losses.
The continuation of the war has also led to a deterioration of
certain indicators of Israel’s economic standing, for instance, a downgrade in Israel’s credit rating by rating agencies (such
as by Moody’s, S&P Global, and Fitch). As of the date of this Annual Report, Moody’s and S&P Global have revised their
respective credit outlooks on Israel from “negative” to “stable.”
In connection with the ongoing war, several hundred thousand Israeli
military reservists were drafted to perform immediate military service, and military reservists are expected to perform long reserve duty
service in the coming years. As of the date of this Annual Report, only several of our employees have been called to active military duty.
The absence of our employees due to their military service in the current or future wars or other armed conflicts may materially and adversely
affect our ability to conduct our operations.
Our commercial insurance does not cover losses that may occur as
a result of events associated with war and terrorism. Although the Israeli government currently covers the reinstatement value of certain
direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that such government coverage will be maintained
or that it will sufficiently cover our potential damages. Any losses or damages incurred by us could have a material adverse effect on
our business.
The global perception of Israel and Israeli companies, influenced
by actions by international judicial bodies, may lead to increased sanctions and other negative measures against Israel, as well as Israeli
companies and academic institutions. There is also a growing movement among countries, activists, and organizations to boycott Israeli
goods, services and academic research or restrict business with Israel, which could affect business operations. If these efforts become
widespread, along with any future rulings from international tribunals against Israel, they could significantly and negatively impact
business operations.
Exchange rate fluctuations between the U.S.
dollar and the NIS may negatively affect our financial results.
The Company’s reporting currency is U.S. dollars. In view
of the fact that a substantial part of our expenses is in NIS, any appreciation of the NIS relative to the U.S. dollar would adversely
impact our financial results. The appreciation (devaluation) of the NIS in relation to the U.S. dollar amounted to 12.5%, (0.6%) and (3.1%)
as of December 31, 2025, 2024 and 2023, respectively. These fluctuations could cause our results of operations to differ from our expectations
or the expectations of our investors. Additionally, such foreign currency exchange rate fluctuations could make it more difficult to detect
underlying trends in our business and results of operations. As of the data of this Annual Report, we do not maintain a program to
hedge transactional exposures in certain foreign currencies. If we enter into hedging contracts in the future, we may be unsuccessful
in protecting against currency exchange rate fluctuations. See “Item 11. Quantitative and Qualitative Disclosure About Market Risk—Foreign
Currency Risk.”
We also cannot predict any future trends in the rate of inflation
or deflation in Israel. The Israeli annual rate of inflation amounted to 3.0%, 3.2% and 2.6% for the years ended December 31, 2023, 2024
and 2025, respectively.
Interest rate fluctuations may devalue our
investments and could have an adverse impact on our financial condition.
From time to time we hold corporate bonds and government treasury
notes denominated in NIS and in U.S. dollars. These investments expose us to the risk of interest rate fluctuations. A decrease in Israeli
or in U.S. interest rates could cause the fair value of these investments to decrease.
29
We received Israeli government grants for certain
of our research and development activities as detailed below. The terms of those grants require us to satisfy specified conditions in
order to transfer outside of Israel the manufacture of products based on know-how funded by the Israeli Innovation Authority or to transfer
outside of Israel the know-how itself. If we fail to comply with the requirements of Israeli Law in this regard, we may be required to
pay penalties, and it may impair our ability to sell our technology outside of Israel.
Our research and development operations have been partly financed
through certain governmental grants. Certain of these grants are royalty-bearing grants under the terms of which we are committed
to pay royalties at a rate of 3.0% - 4.0% on sales proceeds from our products that were developed under Israeli Innovation Authority,
or the IIA, programs up to the total amount of grants received, plus accrued interest, linked to the U.S. dollar. Pursuant to the latest
IIA regulations, grants received from the IIA before June 20, 2017, bear an annual interest rate that applied at the time of the approval
of the applicable file and such interest will apply to all funding received under that approval. Grants received from the IIA after June
30, 2017, bear an annual interest rate based on the 12-month London Interbank Offered Rate, until December 31, 2023, and as of January
1, 2024, bear an annual interest rate based on the 12-month Secured Overnight Financing Rate, or SOFR, or at an alternative rate published
by the Bank of Israel plus 0.71513%. Grants approved after January 1, 2024, bear the higher of 12 months SOFR interest plus 1% or a fixed
annual interest rate of 4%.
In addition, these IIA grants impose certain restrictions on the
transfer outside of Israel of the underlying know-how and the manufacturing or manufacturing rights of the underlying products and technologies.
As of December 31, 2025, we had received from the IIA approximately $9.6 million (including accrued interest) of royalty-bearing grants,
and repaid approximately $4.4 million in royalties and an additional approximately $4.9 million from the IIA in respect of several non-
royalty-bearing projects. We may not receive the required approvals should we wish to transfer the know-how, technology or manufacturing
rights related to such government grants outside of Israel in the future or, if we receive such required approvals, they may be subject
to certain conditions and payment obligations. See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and
Capital Resources—Government Grants.”
If we incorporate new subsidiaries, the IIA may deem that any such
new subsidiary is a co-beneficiary of the Company, such that the new subsidiary is liable to the IIA, severally and jointly with the Company,
for all amounts which may be due to the IIA in connection with previously received grants. Such a perception might be burdensome with
respect to incorporation of new subsidiaries and new projects.
It may be difficult to enforce a U.S. judgment
against us, our officers and directors and the Israeli experts named in this Annual Report in Israel or the United States, or to assert
U.S. securities laws claims in Israel or serve process on our officers and directors and these experts.
We are incorporated in Israel. The majority of our directors and
executive officers reside outside the United States and the majority of our assets are located outside the United States. Therefore, it
may be difficult for an investor, or any other person or entity, to enforce a U.S. court judgment based upon the civil liability provisions
of the U.S. federal securities laws against us or any of these persons in a U.S. or Israeli court, or to effect service of process upon
these persons in the United States. Additionally, it may be difficult for an investor, or any other person or entity, to assert U.S. securities
law claims in original actions instituted in Israel. Israeli courts may refuse to hear a claim based on a violation of U.S. securities
laws on the grounds that Israel is not the most appropriate forum in which to bring such a claim. Even if an Israeli court agrees to hear
a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content
of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process. Certain matters of procedure will also
be governed by Israeli law. There is little binding case law in Israel addressing the matters described above.
Your rights and responsibilities as our shareholder
will be governed by Israeli law, which may differ in some respects from the rights and responsibilities of shareholders of U.S. corporations.
Since we are incorporated under Israeli law, the rights and responsibilities
of our shareholders are governed by Israeli law and by our articles of association. These rights and responsibilities differ in some respects
from the rights and responsibilities of shareholders of U.S.-based corporations. In particular, a shareholder of an Israeli company has
a duty to act in good faith and in a customary manner in exercising its rights and performing its obligations towards the company and
other shareholders and to refrain from abusing its power in the company, including, among other things, in voting at the general meeting
of shareholders on certain matters, such as an amendment to the company’s articles of association, an increase of the company’s
authorized share capital, a merger of the company and approval of related party transactions that require shareholder approval. A shareholder
also has a general duty to refrain from discriminating against other shareholders. In addition, a controlling shareholder or a shareholder
who knows that it possesses the power to determine the outcome of a shareholders’ vote or to appoint or prevent the appointment
of an office holder in the company has a duty to act in fairness towards the company. However, Israeli law does not define the substance
of this duty of fairness. There is limited case law available to assist us in understanding the nature of this duty or the implications
of these provisions. These provisions may be interpreted to impose additional obligations and liabilities on holders of our ordinary shares
that are not typically imposed on shareholders of U.S. corporations. See “Item 6. Directors, Senior Management and Employees—C.
Board Practices—Shareholder Duties.”
30
Provisions of Israeli law may delay, prevent
or make undesirable an acquisition of all or a significant portion of our shares or assets.
Certain provisions of Israeli law and our articles of association
could have the effect of delaying or preventing a change in control and may make it more difficult for a third party to acquire us or
for our shareholders to elect different individuals to our board of directors, even if doing so would be beneficial to our shareholders,
and may limit the price that investors may be willing to pay in the future for our ordinary shares. For example, Israeli corporate law
regulates mergers and requires that a tender offer be effected when certain thresholds of percentage ownership of voting power in a company
are exceeded (subject to certain conditions). Further, Israeli tax considerations may make potential transactions undesirable to us or
to some of our shareholders whose country of residence does not have a tax treaty with Israel granting tax relief to such shareholders
from Israeli tax. With respect to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent
on the fulfillment of numerous conditions, including a holding period of two years from the date of the transaction during which certain
sales and dispositions of shares of the participating companies are restricted. Moreover, with respect to certain share swap transactions,
the tax deferral is limited in time, and when such time expires, the tax becomes payable even if no actual disposition of the shares has
occurred. See Exhibit 2.1 to this Annual Report.
Furthermore, under the Israeli Encouragement of Research, Development
and Technological Innovation in the Industry Law, 5744-1984 (formerly known as the Law for the Encouragement of Research and Development
in Industry 5744-1984), and the regulations, guidelines, rules, procedures and benefit tracks thereunder, collectively, the Innovation
Law, to which we are subject due to our receipt of grants from the IIA, a recipient of IIA grants such as our company must report to the
IIA regarding any change in the holding of any means of control of our company. If following such change any non-Israeli citizen or resident
becomes an “interested party”, as defined in the Israeli Securities Law 5728-1968, such non-Israeli citizen or resident shall
execute an undertaking in favor of IIA, in a form prescribed by IIA.
Risks Related to Our Ordinary Shares and the Ownership and Trading
of Our Ordinary Shares
The price of our ordinary shares may fluctuate
significantly. Further, there is no guarantee of a continuing public market to resell our ordinary shares.
The market price of our ordinary shares could be highly volatile
and may fluctuate substantially as a result of many factors, including:
| ▪ |
our inability to obtain additional funding; |
| ▪ |
any delay in filing a regulatory submission for any of our product or product candidates and any adverse development or perceived
adverse development with respect to the review of that regulatory submission by the applicable regulatory body; |
| ▪ |
actual or anticipated fluctuations in our results of operations; |
| ▪ |
variance in our financial performance from the expectations of market analysts; |
| ▪ |
announcements by us or our competitors of significant business developments, changes in relationships with our collaborators, acquisitions
or expansion plans; |
| ▪ |
our involvement in litigation; |
| ▪ |
our sale, or the sale by our significant shareholders, of ordinary shares or other securities in the future; |
| ▪ |
failure to publish research or the publishing of inaccurate or unfavorable research; |
| ▪ |
market conditions in our industry and changes in estimates of the future size and growth rate of our markets; |
| ▪ |
changes in key personnel; |
| ▪ |
the trading volume of our ordinary shares; and |
| ▪ |
general economic and market conditions, including as a result of the scope and duration of the war in Israel. |
31
Although our ordinary shares are listed on Nasdaq, an active trading
market on Nasdaq for our ordinary shares may not be sustained. If an active market for our ordinary shares is not sustained, it may be
difficult to sell ordinary shares in the U.S.
In addition, the stock market in general, and the Nasdaq and the
market for biotechnology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated
or disproportionate to the operating performance of companies like ours. Broad market and industry factors may materially harm the market
price of our ordinary shares, regardless of our operating performance. Further, a systemic decline in the financial markets and related
factors beyond our control may cause our share price to decline rapidly and unexpectedly. Price volatility of our ordinary shares might
be worse if the trading volume of our ordinary shares is low. In the past, following periods of volatility in the market price of a company’s
securities, securities class action litigation has often been instituted against that company. If we were involved in any similar litigation,
we could incur substantial costs and our management’s attention and resources could be diverted.
Any inability to meet the Nasdaq listing requirements
may have an adverse effect on our share price and lead to our delisting from Nasdaq.
We are required to meet the continued listing requirements of Nasdaq,
including those regarding minimum share price. In particular, we are required to maintain a minimum bid price for our listed ordinary
shares of $1.00 per share. On October 31, 2022, we received a written notification from Nasdaq, which stated that because the closing
bid price of our ordinary shares for 31 consecutive business days was below the minimum $1.00 per share bid price requirement for continued
listing on the Nasdaq Capital Market, we were not in compliance with Nasdaq Listing Rule 5550(a)(2). Pursuant to Nasdaq Listing Rule 5810(c)(3)(A),
the applicable grace period to regain compliance was 180 days, or until May 1, 2023. On July 17, 2023, we announced that Nasdaq confirmed
that we had regained compliance with Nasdaq Listing Rule 5550(a)(2) concerning the minimum bid price of our ordinary shares.
On September 18, 2023, we received another written notification
from Nasdaq, which stated that because the closing bid price of our ordinary shares for 30 consecutive business days was below the minimum
$1.00 per share bid price requirement for continued listing on the Nasdaq Capital Market, we were not in compliance with Nasdaq Listing
Rule 5550(a)(2).
In an effort to regain compliance with these rules, on July 24,
2024, we effected a reverse share split of our ordinary shares at the ratio of 1-for-10, such that each ten (10) ordinary shares, par
value NIS 0.02 per share, have been consolidated into one (1) ordinary share, par value NIS 0.2 per share. While this action temporarily
brought us into compliance, there is no guarantee that we will be able to sustain the minimum bid price or other listing standards in
the future. Reverse share splits do not necessarily result in sustained market price improvements and can lead to a decrease in our overall
market capitalization if the trading price of our shares declines. As of March 12, 2026, the trading price for our ordinary shares was
again below $1.00 per share, with a closing price of $0.94 as of such date.
On January 17, 2025, the SEC approved an amendment to Nasdaq Listing
Rule 5810(c)(3)(A)(iv), according to which, if a company fails to meet the minimum bid price requirement and the company has effected
a reverse share split over the prior one-year period, the company would not be eligible for any compliance period and the Listing Qualifications
Department will issue a Delisting Determination under Nasdaq Listing Rule 5810 with respect to that company’s securities. This change
will apply to a company even if the company was in compliance with the bid price requirement at the time of its prior reverse share split.
In addition, if a company’s security fails to meet the bid price requirement and the company has effected one or more reverse stock
splits over the prior two-year period with a cumulative ratio of 250 shares or more to one, then the company is not eligible for any compliance
periods and Nasdaq must issue a Delisting Determination with respect to that security. Accordingly, there is a risk that if we effect
reverse share splits, and our ordinary shares continue to trade below $1.00 per share for 30 consecutive business days, we will not be
eligible for any compliance period and the Listing Qualifications Department will issue a Delisting Determination for our ordinary shares
by Nasdaq.
There are numerous factors and contingencies that have affected
our price following the reverse split, including the status of the market for our ordinary shares, our reported results of operations
and general economic, market and industry conditions. The market price of our ordinary shares has decline since the reverse split and
may not return to the direct arithmetic result of the reverse split. If the market price of our ordinary shares continues to decline,
our total market capitalization (the aggregate value of all of our outstanding ordinary shares at the then existing market price) after
the reverse split will remain lower than before the reverse split. In addition, the reverse split resulted
in some shareholders owning “odd lots” of less than 100 ordinary shares on a post-split basis. Odd lots may be more difficult
to sell, or require greater transaction costs per share to sell, than shares in “round lots” of even multiples of 100 shares.
32
In the event that our ordinary shares are delisted from Nasdaq
due to our failure to continue to comply with the requirements for continued listing on Nasdaq, and are not eligible for listing on another national
securities exchange, trading in our ordinary shares could be conducted in the over-the-counter market or on an electronic bulletin board
established for unlisted securities such as the Pink Sheets or the OTC Bulletin Board. In such event, it could become more difficult to
dispose of, or obtain accurate price quotations for, our Ordinary Shares, and it would likely be more difficult to obtain coverage by
securities analysts and the news media, which could cause the price of our ordinary shares to decline further. Also, it may be difficult
for us to raise additional capital if we are not listed on a national exchange and we could suffer reputational damage and diminished
investor, supplier and employee confidence.
Our ordinary shares are traded on more than
one market and this may result in price variations.
Our ordinary shares are listed on both the TASE and Nasdaq. Trading
in our ordinary shares on these markets takes place in different currencies (U.S. dollars on Nasdaq and NIS on the TASE), and at different
times (resulting from different time zones, trading days and public holidays in the United States and Israel). The trading prices of our
ordinary shares on these two markets may differ due to these and other factors. Any decrease in the price of our ordinary shares on the
TASE could cause a decrease in the trading price of our ordinary shares on Nasdaq or vice versa.
We could become subject to parallel reporting
obligations in Israel and the United States, which could increase compliance costs and divert management attention.
We currently solely utilize U.S. reporting standards under the
rules and regulations of the SEC. However, should this change in the future, we may become subject to parallel reporting obligations in
Israel and the United States. While similar in many respects, certain differences between Israeli and U.S. reporting schemes may impose
on us disclosure obligations that are more stringent than those generally applied to foreign private issuers whose securities are listed
only in the United States. In addition, a requirement to comply with the separate reporting obligations under U.S. and Israeli securities
laws would require additional management attention and could burden us with additional costs.
The requirements of being a public company
in the United States and Israel may strain our resources and distract our management, which could make it difficult to manage our business.
Changing laws, regulations and standards, in the United States
or Israel, relating to corporate governance and public disclosure and other matters, may be implemented in the future, which may increase
our legal and financial compliance costs, make some activities more time consuming and divert management’s time and attention from
revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ
from the activities intended by regulatory or governing bodies due to ambiguities related to practice, regulatory authorities may initiate
legal proceedings against us and our business may be harmed. Being a publicly traded company in the United States and Israel and being
subject to U.S. and Israeli rules and regulations make it more expensive for us to obtain D&O insurance, and we may be required to
accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us
to attract and retain qualified members of our board of directors, particularly to serve on our audit committee, and qualified executive
officers.
As a public company whose ordinary shares are listed in the United
States, we will continue to incur significant accounting, legal and other expenses, including costs associated with our reporting requirements
under the Exchange Act. We also incur additional costs associated with corporate governance requirements, including requirements under
Section 404 and other provisions of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, rules implemented by the SEC and the Nasdaq,
and provisions of Israeli corporate and securities laws applicable to public companies. The Exchange Act requires that we file annual
and certain other reports with respect to our business and financial condition. The Sarbanes-Oxley Act requires, among other things, that
we maintain effective disclosure controls and procedures and internal control over financial reporting. These rules and regulations could
continue to increase our legal and financial compliance costs, such as the cost of hiring consultants or testing compliance processes,
and make some activities more time-consuming and costly. These activities may divert management’s attention from other business
concerns, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
33
As a foreign private issuer we are not subject
to the provisions of Regulation FD or U.S. proxy rules and are exempt from filing certain Exchange Act reports.
As a foreign private issuer, we are exempt from compliance with
the rules and regulations under the Exchange Act related to the furnishing and content of proxy statements. Our principal shareholders
continue to remain exempt from the reporting under Section 16(a) of the Exchange Act and our directors, officers and principal shareholders
continue to remain exempt from the short-swing profit recovery provisions contained in Section 16(b) of the Exchange Act. In addition,
we are not required under the Exchange Act to file annual and certain other reports and financial statements with the SEC as frequently
or as promptly as U.S. domestic companies whose securities are registered under the Exchange Act, we are permitted to disclose limited
compensation information for our executive officers on an individual basis and we are generally exempt from filing quarterly reports with
the SEC under the Exchange Act. Moreover, we are not required to comply with Regulation FD, which restricts the selective disclosure of
material nonpublic information to, among others, broker-dealers and holders of a company’s securities under circumstances in which
it is reasonably foreseeable that the holder will trade in the company’s securities on the basis of the information. These
exemptions and leniencies will reduce the frequency and scope of information and protections to which you may otherwise have been eligible
in relation to a U.S. domestic issuer.
As a foreign private issuer, we have elected
to follow home country corporate governance practices instead of certain Nasdaq corporate governance requirements, which may result in
less protection than is accorded to investors under rules applicable to domestic U.S. issuers.
As a foreign private issuer whose shares are listed on the Nasdaq
Capital Market, we are permitted to follow certain home country corporate governance practices instead of those otherwise required under
the corporate governance standards for U.S. domestic issuers listed on Nasdaq. We currently follow Israeli home country practices, rather
than the requirements under the Nasdaq corporate governance rules, with regard to the (i) quorum requirement for shareholder meetings,
(ii) executive sessions for independent directors and non-management directors and (iii) the requirements to obtain shareholder approval
for certain dilutive events (such as for the establishment or amendment of certain equity-based compensation plans, issuances that will
result in a change of control of the company, certain transactions other than a public offering involving issuances of a 20% or more interest
in the company and certain acquisitions of the stock or assets of another company). See “Item 16G. Corporate Governance.”
Furthermore, we may in the future elect to follow Israeli home country practices with regard to other matters such as the requirement
to have a majority independent board of directors, have a compensation committee and have a nominating committee. Accordingly, our shareholders
may not be afforded the same protection as provided under Nasdaq corporate governance rules. Following our home country governance practices
as opposed to the requirements that would otherwise apply to a United States company listed on Nasdaq may provide less protection than
is accorded to investors of domestic issuers. For further discussion, see “Item 16G. Corporate Governance.”
We may lose our status as a foreign private
issuer, which would increase our compliance costs and could thereby negatively impact our results of operations.
We would lose our foreign private issuer status if (a) a majority
of our outstanding voting securities were either directly or indirectly owned of record by residents of the United States and (b)(i) a
majority of our executive officers or directors were United States citizens or residents, (ii) more than 50 percent of our assets were
located in the United States, or (iii) our business were administered principally outside the United States. Our loss of foreign private
issuer status would make U.S. regulatory provisions mandatory. The regulatory and compliance costs to us under U.S. securities laws as
a U.S. domestic issuer may be significantly higher. If we are not a foreign private issuer, we will be required to file periodic reports
and registration statements on U.S. domestic issuer forms with the SEC, which are more detailed and extensive than the forms available
to a foreign private issuer. We would also be required to follow U.S. proxy disclosure requirements, including the requirement to disclose,
under U.S. law, more detailed information about the compensation of our senior executive officers on an individual basis. We may also
be required to modify certain of our policies to comply with accepted governance practices associated with U.S. domestic issuers. Such
conversion and modifications will involve additional costs. In addition, we would lose our ability to rely upon exemptions from certain
corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers, as described in the previous
risk factor above.
If a United States person is treated as owning
at least 10% of our ordinary shares, such holder may be subject to adverse U.S. federal income tax consequences.
If a United States person is treated as owning (directly, indirectly
or constructively) at least 10% of the value or voting power of our ordinary shares, such person may be treated as a “United States
shareholder” with respect to each “controlled foreign corporation” in our group (if any). If our group includes one
or more U.S. subsidiaries, certain of our non-U.S. subsidiaries could be treated as controlled foreign corporations (regardless of whether
we are or are not treated as a controlled foreign corporation). A United States shareholder of a controlled foreign corporation may be
required to annually report and include in its U.S. taxable income its pro rata share of “Subpart F income”, “global
intangible low-taxed income” and investments in U.S. property by controlled foreign corporations, whether or not we make any distributions.
An individual that is a United States shareholder with respect to a controlled foreign corporation generally would not be allowed certain
tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a U.S. corporation. A failure to comply
with these reporting obligations may subject you to significant monetary penalties and may prevent the statute of limitations with respect
to your U.S. federal income tax return for the year for which reporting was due from starting. We cannot provide any assurances that we
will assist investors in determining whether any of our non-U.S. subsidiaries are treated as a controlled foreign corporation or whether
such investor is treated as a United States shareholder with respect to any of such controlled foreign corporations or furnish to any
United States shareholders information that may be necessary to comply with the aforementioned reporting and tax paying obligations. A
United States investor should consult their own advisors regarding the potential application of these rules to its investment in the ordinary
shares.
34
We believe we were a PFIC for U.S. federal
income tax purposes in 2025, and there is risk we will be a PFIC in 2026. U.S. shareholders who held our ordinary shares at any
time during a taxable year in which we are a PFIC may suffer adverse tax consequences.
Generally, if for any taxable year 75% or more of our gross income
is passive income, or at least 50% of the average quarterly value of our assets (which may be determined in part by the market value of
our ordinary shares, which is subject to change) are held for the production of, or produce, passive income, we would be characterized
as a PFIC for United States federal income tax purposes. According to these rules, a publicly traded non-U.S. corporation may treat the
aggregate fair market value of its assets as being equal to the sum of the aggregate value of its outstanding shares, or Market Capitalization,
and the total amount of its liabilities. We intend to take the position that the excess of our Market Capitalization plus liabilities
over the book value of all of our assets may generally be treated as attributable to non-passive assets. Based on the book value of our
assets and liabilities and our Market Capitalization in 2025, we believe that we met the PFIC asset test described above for 2025. Because
we currently hold, and expect to continue to hold, a substantial amount of cash and cash equivalents and other passive assets used in
our business, there is risk we will be classified as a PFIC for the 2026 taxable year. However, because PFIC status is determined after
the close of each taxable year, we will not be able to determine whether we will be a PFIC for the 2026 taxable year or for any future
taxable year until after the close of such year.
U.S. shareholders who held our ordinary shares during any other
taxable year in which we were a PFIC may suffer adverse tax consequences, including having gains realized on the sale of our ordinary
shares treated as ordinary income, rather than capital gain, the loss of the preferential rate applicable to dividends received on our
ordinary shares by individuals who are U.S. Holders (as defined in “Item 10. Additional Information—E. Taxation—United
States Federal Income Taxation”), and having interest charges apply to distributions by us and the proceeds of share sales. Certain
elections may be available that would alleviate some of the adverse consequences of PFIC status and result in an alternative treatment
(such as mark-to-market treatment) of our ordinary shares; however, we do not intend to provide the information necessary for U.S. holders
to make qualified electing fund elections. See “Item 10. Additional Information—E. Taxation—United States Federal Income
Taxation—Passive Foreign Investment Company Considerations.”
General Risk Factors
If we fail to maintain effective
internal control over financial reporting, the price of our ordinary shares may be adversely affected.
Our internal control over financial reporting may have weaknesses
and conditions that could require correction or remediation, the disclosure of which may have an adverse impact on the price of our ordinary
shares. We are required to establish and maintain appropriate internal control over financial reporting. Failure to establish
those controls, or any failure of those controls once established, could adversely affect our public disclosures regarding our business,
prospects, financial condition or results of operations. In addition, management’s assessment of internal control over financial
reporting may identify weaknesses and conditions that need to be addressed in our internal control over financial reporting or other matters
that may raise concerns for investors. In addition, as a “non-accelerated filer,” we are exempt from the provisions
of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report
on the effectiveness of internal control over financial reporting. Decreased disclosures in our SEC filings due to our status
as a “non-accelerated filer” may make it harder for investors to analyze our results of operations and financial prospects
and may make our ordinary shares a less attractive investment. Any actual or perceived weaknesses and conditions that need to be addressed
in our internal control over financial reporting or disclosure of management’s assessment of our internal control over financial
reporting may have an adverse impact on the price of our ordinary shares.
35
ITEM 4.
INFORMATION OF THE COMPANY
A. History
and Development of the Company
Our History
We develop a pioneering computational chemistry platform specializing
in the generative design of small molecules for the pharmaceutical and agricultural industries.
Our Company was founded on October 10, 1999 as Agro Leads Ltd.,
a subsidiary of Compugen Ltd. In 2002, our Company spun-off as an independent corporation under the laws of the State of Israel, and changed
its name to Evogene Ltd.
In 2018 and 2019, we reorganized certain parts of our divisions
into wholly owned subsidiaries of the Company, as described in this Annual Report.
Our shares have been listed for trading on the TASE since 2007
and were listed for trading on the NYSE commencing with our U.S. initial public offering in November 2013, until December 2016, when we
transferred the listing to Nasdaq.
We are registered with the Israeli Registrar of Companies in Jerusalem.
Our registration number is 51-283872-3. Our purpose as set forth in our articles of association is to engage in any lawful business. Our
principal executive offices are located at 13 Gad Feinstein Street, Park Rehovot, Rehovot 7638517, Israel, and our telephone number is
+972-8-931-1900.
Our authorized representative in the United States and agent for
service of process in the United States, Puglisi & Associates, is located at 850 Library Avenue, Suite 204, Newark, Delaware 19711.
Information contained on, or that can be accessed through, our website does not constitute a part of this Annual Report and is not incorporated
by reference herein.
The SEC maintains an internet site, http://www.sec.gov that contains
reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Our internet
address is www.evogene.com. The information on that website is not part of this Annual Report and is not incorporated by reference herein.
Principal Capital Expenditures
Our capital expenditures in continuing activities for 2025, 2024
and 2023 amounted to approximately $0.1 million, $0.6 million and $0.6 million, respectively. Our capital expenditures during those years
consisted of investments in property, plant and equipment. We anticipate our capital expenditures in 2026 to include payments for maintenance
and improvements of our facilities in Israel in order to support our activities, which we anticipate we will finance with our currently
available cash. For a description of our principal capital expenditures and divestitures for the three years ended December 31, 2025 and
for those currently in progress, see “Item 5. Operating and Financial Review and Prospects—Liquidity and Capital Resources.”
B. Business
Overview
Overview
We design novel, highly potent, small molecules, optimized across
multiple-parameters, for drug development and ag-chemicals, by utilizing ChemPass AI, our computational generative AI engine.
36
Products based on small molecules development in the life sciences
industries entails the identification of successful candidates from among a large number of potential prospects. A major barrier
in small molecule discovery is the limited exploration of chemical space. Most candidates come from a narrow, well-charted domain, restricting
diversity, limiting innovation and reducing the chances of breakthrough discoveries.
At the same time, commercialization requires the simultaneous optimization
of multiple, often conflicting, parameters - such as potency, selectivity, safety and synthesizability. These challenges are interconnected
and create a significant development bottleneck.
The computational tech-engine that we have developed, ChemPass
AI, is intended to address this challenge by prioritizing promising candidates, generating entirely novel molecular candidates, with the
objective of increasing probability of success and reducing time and cost.
As of the beginning of 2025, the Company operated three tech-engines
based on big data analytics and artificial intelligence, supported by multidisciplinary expertise in life sciences:
| • |
ChemPass AI, for discovery and optimization of small molecules; |
| • |
MicroBoost AI, for discovery and optimization of microbial-based products; and |
| • |
GeneRator AI, for discovery and optimization of genetic elements. |
During 2025, we commenced the implementation of a strategic shift,
to focus our efforts on developing products only based on small molecules. This new strategy resulted in two important changes: (i) we
have focused our activities only on ChemPass AI, and stopped investing and developing the other two tech-engines and (ii) we have deployed
ChemPass AI across two principal industries – pharmaceutical and agricultural.
In addition, we discontinued non-core activities, divested mis-aligned
assets, resized the organization and established a business development team aligned with our refined strategy.
Following this strategic shift, we operate through three main organizational
structure units:
(i) Computational unit - which develops and operates the core technological
platform, ChemPass AI;
(ii) Pharmaceutical unit – which advances the development
of novel small-molecule candidates with potential for commercial development; and
(iii) Agricultural unit - which focuses on ongoing development
programs and collaborations with leading global agricultural-chemical companies through our subsidiary, AgPlenus.
During late 2025 and early 2026 we entered into the following collaborations,
which demonstrate our new strategy:
A scientific collaboration with the research group of Professor
Ehud Gazit from Tel Aviv University. This collaboration agreement was facilitated by Ramot, Tel Aviv University’s tech transfer
company. This partnership aims to accelerate the discovery and optimization of novel small molecules as potential drug candidates for
a range of diseases caused by the ordered self-assembly of small metabolites.
Collaboration with Unravel Biosciences, Inc., a clinical-stage
therapeutics company established to advance drugs for complex diseases through its Predictable Medicine™ platform. This partnership
aims to accelerate the discovery and optimization of a first-in-class small-molecule therapeutic capable of restoring myelin and reversing
neurological damage in demyelinating diseases.
Collaboration with Systasy Bioscience GmbH, a biotechnology company
leveraging proprietary DNA barcoding technology for hyper-multiplexed pathway profiling in patient-derived iPSC models to accelerate drug
discovery for complex disorders, and LMU University Hospital Munich, aiming to accelerate the development of novel therapies for hyper-inflammatory
diseases driven by dysregulated neutrophil activity, including inflammatory bowel disease (IBD). The collaboration brings together Evogene,
Systasy, and Prof. Christoph Klein (LMU University Hospital in collaboration with the German Center for Child and Adolescent Health),
with additional participation from the Weizmann Institute of Science in Rehovot, Israel. The program is supported by a prestigious pan-European
EUREKA grant, which was awarded to advance this international drug discovery effort.
37
Collaboration with the research group of Dr. Mark Adams, a leading
cancer genomics expert in the School of Biomedical Sciences and Faculty of Health at the Queensland University of Technology (QUT), Australia.
This partnership aims to accelerate the discovery and optimization of novel small molecules as potential drug candidates for the treatment
of chemotherapy and targeted therapy-resistant non-small cell lung cancer (NSCLC), as well as other cancers.
Business Model
We capitalize on the value of our platform through collaborations
with industry partners, pooling resources to drive joint product development. Typically, our collaborators take the lead in experimental
development, leveraging ChemPass AI to identify the product candidate and optimize it towards a commercial product.
Typically, the potential revenue stream from this business model
contemplates:
| • |
Upfront payments; |
| • |
R&D fees; and |
| • |
Royalties from sales of end-products. |
Fields of Activity
The ChemPass AI engine
is used for the discovery and optimization of small molecules for two types of products: (i) drugs based on small molecules, in the field
of human health and (ii) ag-chemicals, such as herbicides, insecticides and fungicides, in the field of agriculture.
Technology highlights
ChemPass AI
ChemPass AI is the Company’s proprietary computational engine for small-molecule
discovery pipeline, supporting hit screening, hit-to-lead optimization and de novo molecule generation. It operates on
ultra-large, curated chemical spaces of approximately 38 billion compounds and enables multi-parameter, constraint-based molecular
design.
ChemPass AI combines proprietary algorithms with advanced
artificial intelligence models to accelerate the identification and refinement of chemical leads. The platform incorporates a suite of
internally developed tools, including:
| • |
PointHit, a virtual screening module designed to identify promising hit compounds
from large chemical spaces; |
| • |
ActiveSearch, an advanced analogue-searching engine intended to expand and refine chemical
series; and |
| • |
LeadOp GPT- a generative small molecule design engine that simultaneously optimizes multiple project
specific parameters using generative AI. |
These integrated capabilities are designed to streamline decision-making,
reduce experimental iteration cycles and improve overall research outcomes.
The Company believes that ChemPass AI provides a differentiated
approach to small-molecule discovery by enabling the design of compounds that simultaneously address three principal criteria:
| • |
Novelty – leveraging an approximate 38 billion-molecule training library, the platform
is designed to generate novel, synthetically accessible and biologically active compounds, including candidates that explore previously
underexploited regions of chemical space and may create new intellectual property opportunities. |
38
| • |
Multi-Parameter Optimization – the platform is designed to optimize multiple chemical,
biological and physicochemical parameters simultaneously, tailored to defined project constraints, with the objective of
increasing the probability of technical and commercial success. |
| • |
High Potency – AI-designed molecules are prioritized and refined through targeted
experimental validation workflows to enhance potency and overall performance characteristics. |
Our technological differentiation is supported by proprietary advancements
developed by our internal research team, guided by scientific advisors, and strengthened through significant collaborations
with leading technology providers, including Google Cloud.
We completed our first collaboration with Google Cloud in mid-2025
and focused on the development of a “first-in-class” foundation model for the generation of novel molecular product candidates
optimized across multiple parameters. Utilizing a training dataset of approximately 38 billion molecular structures, the collaboration
resulted in reported design precision levels of approximately 90%, which we believe exceeded prevailing industry benchmarks at the time.
In February 2026, we initiated a second collaboration
with Google Cloud. This collaboration is focused on the integration of advanced AI agents into ChemPass AI using Vertex AI to
automate complex scientific workflows, reduce manual errors, and enhance operational scalability. The objective of
this collaboration is to improve the probability of technical and commercial success of novel small-molecule candidates generated by the
platform.
We believe that this transition toward increasingly autonomous
discovery capabilities is expected to support the expansion and scalability of ChemPass AI and to enhance its value proposition
in future strategic partnerships within the pharmaceutical and agricultural industries.
Validation and screening
systems
Our validation and screening systems are now focused on only supporting
the ChemPass AI engine.
These capabilities include a comprehensive set of bioassays integrated
into structured validation pipelines. The capabilities encompass diverse scientific disciplines, including biochemistry, molecular biology,
microbiology and plant pathology, conducted primarily in laboratories and controlled greenhouse environments. All processes are accompanied
by precise data gathering and are coordinated by pipeline management.
This infrastructure supports three core functions of our discovery
platform: first, generating high-quality experimental datasets to enable the proof-of-concept and iterative refinement of our computational
models; second, translating computational designs into synthesized compounds; and third, screening these novel molecules to confirm their
biological activity.
Subsidiaries
Since 2015 and until the beginning of 2025, Evogene has utilized
its technology to develop various product types through dedicated divisions and subsidiaries. In human health, we formed Biomica for microbiome-based
therapeutics. In agriculture, we established Lavie Bio for ag-biologicals and AgPlenus for ag-chemicals. In other industries, we established
Casterra to develop agricultural solutions for castor oil production. In alternative food, we established Finally, together with TKH.
During 2025, as a result of the Company’s strategic realignment,
the following actions were taken with respect to some of our subsidiaries:
|
1. |
Lavie Bio’s activity (including the MircoBoost AI for ag tech-engine) was sold
to ICL. No further activities are planned for 2026. |
|
2. |
Biomica’s activity is expected to cease by the end of the second quarter of
2026, following the execution of its license agreement with Lishan Biotech. |
|
3. |
Casterra’s activity has been streamlined due to a reduction in the level of
activity of Casterra’s principal customer in Africa, and it is currently focused on the Brazilian market. We expect to continue
Casterra’s operation during 2026. Effective as of April 1st,
2026, Mr. Yoash Zohar will cease serving as Casterra’s Chief Executive Officer and will be replaced with Mr. Ofer Haviv, Evogene’s
President and Chief Executive Officer. Mr. Zohar will continue to serve as Casterra Chief Operating Officer. |
|
4.
|
AgPlenus’s agricultural activities include ongoing development programs and
collaborations with leading global agricultural-chemical companies. This subsidiary has also reduced its workforce. We expect to continue
AgPlenus’s operation during 2026. |
39
As part of our legacy activities, we are engaged in the following projects:
Finally Foods
In April 2024, we jointly established Finally Foods Ltd., or Finally,
with The Kitchen FoodTech Hub, or TKH, a foodtech incubator and investment arm of Israeli food giant’s Strauss Group. Finally
is an AI-driven company specializing in molecular farming for the food sector, committed to providing sustainable alternative sources
to animal-based proteins using our GeneRator AI technology. We hold an approximately 32%
of Finally’s issued and outstanding share capital, with the remaining ownership held by TKH, other investors and the founding team,
consisting of Finally’s Chief Executive Officer and Chief Technology Officer.
TMG
In December 2018, we entered into a multi-year collaboration and
license agreement with Tropical Melhoramento & Genética S/A, or TMG, a major Brazilian developer and marketer of soybean varieties,
for the development of nematode-resistant soybean varieties using genome editing technologies. Under the collaboration and license agreement,
we agreed to identify genomic elements for editing to attribute nematode resistance in soybean and then perform such edits on TMG’s
commercial soybean germplasm. In turn, TMG has agreed to validate the efficacy of the edited soybean varieties in greenhouse assays and
field trials in Brazil and for incorporation in its breeding pipeline.
Throughout 2025, the TMG team performed several phenotyping cycles
on seeds engineered by Evogene to test for Nematode resistance. The data presented to be positive. The results are currently under
analysis.
Under the collaboration and license agreement, TMG obtained a worldwide,
royalty-bearing license to incorporate genome edits originating from the collaboration in its soybean varieties. Evogene, on the other
hand, obtained a non-exclusive, royalty-bearing license to commercialize such genome edits and soybean lines, subject to certain exclusivity
restrictions. According to the collaboration and license agreement, each party is entitled to receive royalty payments from the other
party when the products of the collaboration are commercialized, in accordance with the terms set forth therein. In addition, Evogene
is entitled to success-based payments upon achievement of pre-defined development milestones.
Crop4Clima
In May 2023, we were awarded a grant as part of the Crop4Clima
consortium funded by the EU Horizon’s EIC Transition program.
The project’s goal was to develop crops, focusing first on
canola and rapeseed seeds, with the ability to increase assimilation of CO2
from the air while requiring less water intake when compared to crops grown under standard agricultural practices, in order to support
sustainability goals. Such outcome would support efforts to reduce global warming by using plants with a higher uptake of carbon dioxide
accumulation from the atmosphere while enabling the saving of scarce water resources and improved plant tolerance against drought conditions.
Furthermore, it is expected that biomass yield per hectare would improve while the plants maintain a high oil content, as demanded by
canola-derived products and the biofuel industry.
Other collaborators in this project included the Max Planck Society,
Germany’s leading basic research institution, IN Society, an Italian not-for-profit that supports small and medium-sized enterprises,
or SMEs, that and analyzes the impact of emerging technologies on society, and AgroBioInstitute, a Bulgarian Agricultural Academy institution.
Evogene is functioning as the coordinator of the consortium. The first proof of concept of the program took place in April 2025, followed
by complex validation trials on two different rapeseed varieties. During these trials, genetically modified plants were confirmed to significantly
increase the ability of CO2 fixation while improving response
to drought stress and maintaining their yield as well as nutritional values. The Crop4Clima project was completed on December 31, 2025,
with an overall budget of €2.5 million, of which Evogene was awarded approximately €1.52 million to cover our estimated costs
in this project.
40
Revenues
During 2025, except for sales of castor seeds by Casterra, our
revenues consisted primarily of revenues generated under a licensing and collaboration agreement between AgPlenus and Bayer AG for the
development of a new sustainable weed control solution and our on-farm cultivation services. A breakdown of our revenues by business activity
and geographic markets for each of the last three financial years is provided in “Item 5. Operating and Financial Review and Prospects—Key
Performance Indicators—Revenues.”
In 2026, we expect to continue to develop our product pipelines
and initiate new collaborations with an increased focus on strategic relationships for joint product development. We also hope to continue
to evolve our organization and to continue to examine new areas in which ChemPass AI can serve as a competitive advantage and additional
value can be created in a relatively short period of time.
Major Occurrences and Developments
The following are major occurrences and developments in the Company
throughout 2025 and through the date of this Annual Report, reflecting advancement in all areas of activity:
Evogene
| • |
Change in the Composition of the Board of Directors (March 2025) – Mr. Nir Nimrodi was appointed as our chairman of the board
of directors. In addition, the Company's President and CEO, Mr. Ofer Haviv, joined as a member of the board of directors. |
| • |
Completion Foundation Model (June 2025) - Evogene completed a first-in-class foundation model for generative molecule design, developed
in collaboration with Google Cloud. |
| • |
Collaboration (August 2025) - Evogene and Professor Ehud Gazit of Tel Aviv University announced a collaboration to develop new therapeutics
for metabolic diseases. This collaboration aims to accelerate the discovery and optimization of novel small molecules as potential drug
candidates for a range of diseases caused by the ordered self-assembly of small metabolites. |
| • |
Change in Management (December 2025) – Evogene appointed Ms. Olga Nissan to serve as Vice President of Business Development
of Evogene, effective as of January 1, 2026. |
Collaboration (January 2026) - Evogene and Unravel Biosciences,
Inc. announced a collaboration to develop a first-in-class therapy to reverse neurological damage in demyelinating disorders.
Lavie Bio
| • |
Acquisition (April 2025) – Lavie Bio signed a definitive agreement under which Dead Sea Works Ltd. (an affiliate of ICL Group
Ltd.), or ICL, acquired the majority of its activity. As part of the definitive agreement, ICL also acquired Evogene’s MicroBoost
AI for AG platform. In July 2025, Lavie Bio completed the transaction for the sale of its activity to ICL. |
Biomica
| • |
Change in management and reduction of scope (June 2025) – Biomica’s chief executive officer, Dr. Elran Haber, stepped
down as Biomica’s Chief Executive Officer due to a medical condition and Mr. Ofer Haviv, Evogene’s President and Chief Executive
Officer, replaced him. In addition, Biomica announced a significant reduction of its internal R&D activity, including a reduction
of its headcount. Biomica maintained the trials of its clinical phase I product BMC128, and in February 2026, |
Evogene and Shanghai Lishan Biopharmaceuticals Co., or Lishan,
entered into an exclusive licensing agreement related to the development, manufacturing and commercialization of BMC128.
Casterra
| • |
Collaboration (November 2025) - Casterra and Fantini Italia S.R.L. announced a strategic collaboration to advance agricultural mechanization
for scalable commercial castor farming. |
AgPlenus
| • |
New Mode of Action (February 2025) - AgPlenus announced discovery of a new mode of action for fungicides against wheat disease - Zymoseptoria
tritici, the fungal pathogen responsible for Septoria tritici blotch, or STB, one of the most devastating diseases affecting wheat crops
globally. |
41
Market Segments
Agriculture
Lavie Bio Ltd.
Overview
In 2015, we initiated our activity for developing ag-biological
products as a division within Evogene and early in 2019, it was organized under Lavie Bio Ltd., an independent company that upon establishment
was wholly-owned by Evogene.
Lavie Bio’s aim was to improve food quality, sustainability
and agricultural productivity through the introduction of microbiome-based AI-driven ag-biologicals. Ag-biologicals are externally-applied
products from biological sources, such as microbial (micro-organisms) and naturally derived biochemistries, designed to improve crop productivity.
A sub-segment within the microbial biologicals is the “microbiome”, the microbial population living close or within the plant
or other organisms, such as pests.
In April 2025, Lavie Bio entered into a definitive agreement pursuant
to which Dead Sea Works Ltd. (an affiliate of ICL Group Ltd., or ICL) agreed to acquire the majority of its activity for $15.25 million.
As part of the definitive agreement, ICL also agreed to acquire Evogene’s MicroBoost AI
tech engine for Agriculture platform for approximately $3.5 million. Pursuant to the definitive agreement, ICL also acquired Lavie Bio’s
proprietary Biology Driven Design, or BDD, technology platform, microbial bank, pipeline of advanced development programs and current
commercial product offerings. In addition, Lavie Bio’s core personnel transferred to ICL. In July 2025, Lavie Bio completed the
disposition to ICL.
As of the date of this Annual Report, no additional activity is expected for Lavie Bio
in the future. Lavie Bio has distributed and anticipates distributing the majority of its remaining cash to its shareholders, including
Evogene, during 2026 and 2027.
AgPlenus Ltd.
Overview
In 2015, we initiated our activity for developing ag-chemical products
as a division within Evogene, and in 2018, it was organized under AgPlenus Ltd., an independent company that upon establishment, was wholly-owned
by Evogene. AgPlenus aims to design effective and sustainable crop protection products by leveraging computational predictive biology
and chemistry. Crop protection refers to the science and practice of managing risks of weeds, plant diseases, and insects that damage
agricultural crops and forestry. AgPlenus’ activities focus on discovery and development of new mode of action, or MoA, for crop
protection products.
Market
According to an August 2024 article published by Global Market
Insight, the global crop protection chemicals market was estimated at approximately $91.4 billion in 2023 and is expected to grow
to over $132 billion by 2032.1 Lack of available solutions
for pest control and increasing resistance to existing crop protection solutions lead to a pressing need for novel crop protection products.
However, due to current technological limitations and increasing regulatory requirements, the development of crop protection products
is lengthy, complicated and expensive.
Competition
The ag-chemical R&D market, as described above, can be classified
into four key groups of companies: (i) major seed and ag-chemical companies, such as BASF, Bayer, Syngenta Group, FMC and Corteva, with
internal research and development units dedicated to development of ag-chemical products, (ii) mid-size ag-chemical companies, mainly
Japanese companies focused on the Japanese market, that develop crop protection products, (iii) small to mid-size biotech companies that
undertake new approaches to research and develop novel crop protection products, and (iv) academic and agricultural research institutions,
which focus on early stage activities.
1 https://www.gminsights.com/industry-analysis/crop-protection-chemicals-market#:~:text=Crop%20Protection%20Chemicals%20Market%20was,impact%20crop%20yields%20and%20quality
42
Business Model
AgPlenus’ business model is based on two commercialization
avenues:
Licensing of product candidates
– when product candidates advance towards what is referred to in the industry as a Lead,
at the end of the discovery stage, or further along the development pipeline, these product candidates gain increased value and can be
candidates for licensing to ag-chemical companies. A typical licensing agreement can include
upfront payments, payments upon achievement of pre-defined development milestones, and royalties from product sales.
R&D collaborations
– by providing a tailored product offering per partner and product type, we seek to build long-term research and development
relationships, mitigating the risk associated with building an independent pipeline. A typical collaboration agreement may include upfront
payments, R&D payments, payments upon achievement of pre-defined development milestones, and royalties from product sales, which would
typically be lower than the royalties under licensing agreements. AgPlenus may use collaboration partners for certain aspects along
the development pathway.
Currently, AgPlenus’ revenues are derived from research and
development payments under early-stage collaborations with Bayer. In the long term, we expect that: (i) as AgPlenus’ product candidates
advance through development in our partners’ pipelines, and to the extent that they are commercialized by AgPlenus’ collaboration
partners, revenues are expected to include milestone payments and royalty payments; and (ii) as AgPlenus’ internal pipeline product
candidates further advance, AgPlenus will license its product candidates.
Product Development Programs
Scientific Approach
AgPlenus’ approach is based on the disruption of the traditional
methods of ag-chemical discovery and optimization by implementing a target-based approach for identifying and developing new MoA crop
protection products to address the growing resistance of pests (such as weeds, insects, and fungi) to existing commercial products. AgPlenus
utilizes mainly Evogene’s ChemPass AI tech engine, as well as other advanced computational technologies and know-how, to drive its
ag-chemical discovery.
AgPlenus’ approach typically begins with the computational
and research-driven identification of protein ‘targets’, which are proteins that are essential to the performance of
the relevant weed, insect or fungi. Following the identification and validation of such targets, AgPlenus identifies candidate Hits, which
are chemical compounds (small molecules) that potentially inhibit these targets. AgPlenus screens candidate Hits to identify those that
demonstrate an effect on the pest of focus. Hits displaying confirmed activity in the initial validation screens, enter the Hit-to-Lead
process, which includes computational optimization and additional, more advanced, validation experiments.
In addition, these capabilities can also be used independently
of each other to discover new Hits for known targets, to optimize an existing Hit to Lead and to optimize a commercial molecule.
Product Development Cycle
The product development cycle for ag-chemical products is generally
comprised of several stages, described as follows:
Discovery stage
| ▪ |
Identification of Targets – identification and validation of vital targets or proteins that when inhibited (for instance, by
a chemical), lead to weed, insect or fungi death. |
| ▪ |
Identification of Hits – screening of chemical compounds for the identification of candidate Hits that potentially inhibit
identified vital targets and are capable of achieving the desired impact on the weeds, insects or fungi of interest. The discovery process
includes in-silico as well as biological screening and validation activities. |
| ▪ |
Hit-to-Lead process – Hits displaying confirmed activity in the initial validation screens will enter the Hit-to-Lead process,
including several optimization cycles, each constructed of compound design (in our case, focusing on computational optimization), synthesis
of compounds and validation experiments. This stage ends with a ‘Lead’ compound, which is a validated Hit that has confirmed
activity in advanced validation screens proving field translation in initial trials. |
43
Lead optimization stage
| ▪ |
In this stage, multiple field trials are conducted in diverse geographies, as well as greenhouse experiments on resistant weed biotypes
and on commercial crops, and the compound structure and formulation are finalized. Lead optimization also entails initial toxicology tests,
process engineering on the molecule and a significantly detailed cost of goods analysis. |
Pre-development stage
| ▪ |
In this stage, field trials to validate all commercial cases are conducted, including testing product mixtures, as well as additional
safety trials. This stage ends with a ‘Pre-Development’ compound. |
Development, regulation and registration stage
| ▪ |
In the final development phases, new chemical products are registered with the proper regulatory authorities in relevant territories
and then launched for commercialization. We expect that these last stages of development will be conducted by our collaboration partners
or licensees of our product candidates. |
Product Development Pipeline
The following table sets forth AgPlenus’ main internal product
development programs:
In 2024, AgPlenus partnered APTH1 with Bayer and continued to develop
fungicides for the fungus, Zymoseptoria tritici, responsible for Septoria Blotch in wheat. In 2025, AgPlenus focused on developing its
Zymoseptoria Tritici program, and despite a reduction in the number of employees, AgPlenus advanced its development candidates through
the development process.
44
Key Collaborations
Corteva – Herbicides
In March 2020, AgPlenus entered into a multi-year collaboration
with Corteva for the discovery and development of novel herbicides. Under the terms of the collaboration agreement, AgPlenus and Corteva
work together to optimize herbicide product candidates originating from AgPlenus’ pipeline. The joint research period under this
agreement has been concluded. Successful candidates from this collaboration are expected to be further developed by Corteva.
Pursuant to the collaboration agreement, Corteva obtained a worldwide,
royalty-bearing, exclusive license to use and modify chemical compounds identified under the collaboration to develop and commercialize
weed control products containing such compounds. Moreover, AgPlenus was entitled to research and development payments and is entitled
to milestone payments upon achievement of certain development milestones as well as royalty payments from future sales of products developed
under the collaboration.
Bayer AG – Herbicides
In February 2024, AgPlenus entered into licensing and collaboration
agreements with Bayer AG, or Bayer, for the development of a new sustainable weed control solution. This agreement grants Bayer an exclusive
license for the development and commercialization of products developed within the collaboration. AgPlenus will be entitled to receive
an upfront payment, ongoing research funding, milestone payments, and royalties based on future product sales, subject to certain conditions
set forth therein.
Intellectual Property
AgPlenus is seeking patent protection for intellectual property
rights covering its leading product candidates in main target markets. Currently, AgPlenus has three granted patents in Israel and
one granted patent in Europe, and 37 patent applications for these three product candidates pending across various jurisdictions.
Government Regulation of our Operations
AgPlenus’ research & development activities in Israel
(such as laboratory work, greenhouse and field experiments) and are regulated by the provisions of several Israeli governmental agencies.
Violation of these regulations may expose us to criminal or civil actions and may impose liability on us. For more information please
see “Item 3.D. Risk Factors—Our business (including each of the businesses of our respective subsidiaries) and that of our
collaborators’ are subject to various government regulations and, if we or our collaborators are unable to comply with the relevant
respective law and regulations and/or obtain the necessary regulatory approvals, we may not be able to continue our operations.”
Government Regulation of Product Candidates
Regulatory approvals are required prior to the commercialization
and importation of ag-chemical products in most countries. While we work toward the development of each of the particular products, the
regulatory approval is typically effectuated through our collaborators, per the terms of our collaboration agreements. AgPlenus believes
that its collaborators would likely sell products containing its compounds in the U.S., the EU, Brazil and Argentina, and would therefore
require such regulatory approvals prior to the commercialization and sale of such products in those jurisdictions.
Raw Materials
AgPlenus does not significantly rely upon any sources of raw materials
for its operations. However, a large supplier of research molecules is Enamine, which is based in Ukraine and has had some limitations
in access to molecules since the war in Ukraine. We actively identify multiple contract research organization to minimize this risk.
Seasonality
The field testing of AgPlenus’ leading product candidates,
which have reached advanced stages of product development, are highly dependent on crop seasonality.
Currently, AgPlenus does not have any commercialized products
and therefore, its revenues are not subject to variations based on seasonality. However, our expectation is that, in the future, sales
cycle of the products AgPlenus develops will be dependent on crop seasonality.
45
Human Health
Biomica Ltd.
Overview
In 2017, we established Biomica, a subsidiary focused on the discovery
and development of innovative human microbiome-based therapeutics. The human microbiome is an array of more than 100 trillion microorganisms
that live on and in our bodies, creating a community of symbiotic, commensal and pathogenic bacteria, all of which call the human
body home. These microbes have numerous beneficial functions relevant to supporting life, such as digesting food, preventing disease-causing
pathogens from invading the body, and synthesizing essential nutrients and vitamins. Numerous studies have shown the connection between
the human microbiome and various medical disorders, and the search for microbiome therapies and treatments is a rapidly growing focus
for biotherapeutics research and development.
In June 2025, Biomica’s Chief Executive Officer Dr. Elran
Haber, stepped down from his role due to a medical condition and was replaced by Mr. Ofer Haviv, Evogene’s President and Chief Executive
Officer. In addition, Biomica announced it would significantly reduce its internal R&D activity, including a reduction in its headcount.
During 2025, as a result of a reduction in its activities, Biomica
ceased development of its Inflammatory Bowel Diseases and Irritable Bowel Syndrome programs, which were both previously in the pre-clinical
development phase.
As of the date of this Annual Report, Biomica employs 1.5 full-time
employees. Biomica will maintain its clinical phase I trial with its product, BMC128, which is designed primarily to evaluate the safety
and tolerability of BMC128, in combination with nivolumab, an anti-PD1 immune checkpoint inhibitor, in patients with non-small cell lung
cancer (NSCLC), melanoma, or renal cell carcinoma (RCC), and is expected to be completed by June 2026.
On February 4, 2026, Biomica, entered into an exclusive worldwide
licensing agreement with Shanghai Lishan Biopharmaceuticals Co., Ltd., or Lishan Biotech, for BMC128 (designated as LS-LBP-002 by Lishan
Biotech), a microbiome-based therapeutic designed to enhance anti-tumor immune activity. This agreement grants Lishan Biotech exclusive
rights (subject to reaching certain commercial milestones) to further develop, manufacture and commercialize the BMC128, which was developed
by Biomica. Pursuant to the terms of the licensing agreement, Biomica is eligible to receive development milestones payments upon progress
of Lishan Biotech’s clinical trials and receipt of regulatory approvals, sales milestones payments, and royalties from Lishan Biotech’s
sales of future products, subject to certain conditions set forth therein.
Following the execution of the agreement with Lishan Biotech and
the completion of phase-I of the clinical trial for BMC 128, no further activity is expected for Biomica. Biomica anticipates distributing
the majority of its remaining cash to its shareholders, including Evogene.
Industrial Applications
Casterra Ag Ltd.
Overview
Our activities related to castor seeds were initiated in 2007 and
in 2012 were organized under a wholly owned subsidiary, currently named Casterra Ag Ltd. Casterra focuses on the development of an integrated
solution for castor cultivation, including advanced non-GMO high-yielding castor seed varieties, compatible agricultural machinery, and
agronomic protocols. Casterra’s main target markets are Africa and Brazil, where large scale castor agriculture and industry are
well established. During 2025, Casterra’s sales of seeds reached $2,168 thousand, and it increased its production capabilities by
signing agreements with seed producers in Kenya and Brazil.
Due to a reduction in the level of activity of Casterra’s
principal customer in Africa in the field of castor oil production, Casterra is currently focusing most of its efforts on the Brazilian
market. Brazil is an established market for castor cultivation on a significant commercial scale, characterized by multiple players and
an emerging sector of mechanized castor farming, for which Casterra’s varieties are well suited. In commercial fields and field
trials conducted in Brazil during 2025, the results obtained for Casterra’s three commercial castor seed varieties – 701,
712 and 716 – demonstrated high commercial potential and attractive economic viability. As a result of the change in operational
focus, Casterra has reduced its workforce that was designated for activities in Africa and plans to sell its seed inventory in Africa
as grains rather than as seeds.
46
Market
Castor beans are grown for their high-quality oil, which is used
for the production of bio-based products for various industrial applications such as cosmetics, pharmaceuticals, paints, lubricants, plastics,
coats, films and others. The global castor oil market is projected to grow from an estimated value of $1.36 billion in 2025 to reach $1.83
billion by 2035, at a CAGR of 3.2%.2
Castor is primarily cultivated as a “low-tech” crop
in its primary production regions globally, employing traditional methods such as manual sowing and harvesting. Castor oil possesses a
distinct chemical composition among plant oils, exhibits a smaller market share, and is priced substantially higher compared to other
plant-based oils (e.g., palm oil, soybean oil, rapeseed oil, and sunflower oil).34
Due to its unique chemical properties, castor oil is suitable as
a substitute for fossil fuels in numerous significant industrial applications and holds the potential to transform into a crucial lower
carbon, biodegradable feedstock for industrial markets.5
For this transformation to occur on a largescale, production volumes
must increase, and prices must decrease, transforming castor oil into a commodity rather than a specialized premium market.6
Casterra estimates that employing its proprietary castor seeds, coupled with tailored mechanized solutions and agronomic expertise, can
significantly reduce these costs and support scalable, dependable, and cost-effective castor farming.
Competition
Casterra’s competition in its target markets mainly includes
a few companies that supply castor seeds to growers worldwide, such as Kaiima Seeds (Brazil, Africa) and Terasol (Brazil).
Business Model
Casterra’s business model is to sell its proprietary castor
seed varieties to castor growers, together with targeted agro-technical support. Casterra’s offering includes high yielding varieties
with plant structure suitable for mechanized harvest, best practices for large-scale castor growing, and advanced compatible mechanical
harvesting and dehulling solutions.
Key agreements
Casterra Agreements with
ENI and its Affiliate
On June 21, 2023, Casterra announced that it entered into a framework
agreement to sell seeds of its proprietary castor varieties to ENI Kenya B.V., or ENI, for cultivation in specific African territories
at a commercial scale for biofuel production. During the first quarter of 2025, Casterra delivered orders (which were backlog from the
prior year) valued at approximately $2,168 thousand. As of the date of this Annual Report, the Company has not received any additional
seed orders from ENI.
Intellectual Property
Casterra’s policy is to register 'breeders rights' over its
commercial castor varieties, in target territories. As of the date of this Annual Report, Casterra is in the process of filing breeders
rights in Europe and Africa. To date, Casterra has registered its commercial varieties in Brazil.
2 https://www.futuremarketinsights.com/reports/castor-oil-market
3 https://www.researchgate.net/publication/345766202_Castor_oil_Ricinus_communis_a_review_on_the_chemical_composition_and_physicochemical_properties
4 Commodity
Prices - Price Charts, Data, and News - IndexMundi
5
https://link.springer.com/article/10.1186/s40508-016-0055-8#Fig2
6 https://www.24chemicalresearch.com/reports/293992/castor-oil-its-derivatives-forecast-market?utm_source=chatgpt.com
47
Government Regulation of our R&D Operations
Casterra’s activities in Israel in the field of seeds are
regulated by the Israeli Ministry of Environmental Protection. Pursuant to these regulations, Casterra is required, among other things,
to obtain toxins permits, which allow it to conduct experiments using “hazardous materials,” as such term is defined in the
applicable regulations, and to follow specific rules regarding waste disposal. Violation of these regulations may expose Casterra to criminal
penalties, administrative sanctions and responsibility to compensate those injured for any environmental damages.
Government Regulation of Seed Import
Seed import is subject to field and warehouse inspection by the
regulator in the country of destination for compliance with the local regulations. These regulations typically include, among others,
phytosanitary inspection for pests and diseases.
Raw Materials
Casterra does not significantly rely upon any sources of raw materials
for its operations.
Seasonality
Casterra’s castor seed business in general, and revenues
in particular, generated from sales of castor seeds and related agro-technical services to local castor growers, are subject to variations
based on crop seasonality. The timing of Casterra’s seed production, as well as the delivery of castor seeds to its partners and
revenue recognition with respect to such seed sales, derive substantially from the seasonality of castor growing in the seed production
locations and in the target markets.
C. Organizational
Structure
The legal name of our company is Evogene Ltd. and we are organized
under the laws of the State of Israel. As of the date of this Annual Report, we hold directly and indirectly the percentage indicated
of the issued and outstanding capital stock of the following significant subsidiaries:
|
Name
of Subsidiary |
Jurisdiction
|
Ownership
Interest | ||
|
AgPlenus Ltd. |
Israel |
98.3% (1)
| ||
|
Biomica Ltd. |
Israel |
75.8% (2)
| ||
|
Casterra Ag Ltd. (formerly
known as Evofuel Ltd.). |
Israel |
99.5% (3)
| ||
|
Lavie Bio Ltd. |
Israel |
68.9% (4)
|
| (1) |
The remaining 1.7% of AgPlenus Ltd.’s issued and outstanding share capital is held by AgPlenus’ former Chief Executive
Officer and current director as a result of exercise of options. |
| (2) |
The remaining 24.2% of Biomica Ltd.’s issued and outstanding share capital is held by: (i) SHC, who holds 22.7%, and (ii) Biomica's
Chief Technology Officer, who holds 1.5%. For more information see “Item 4.B. Information on the Company—Business Overview—Market
Segments—Human Health—Biomica Ltd.—Overview”. |
| (3) |
The remaining 0.5% of Casterra Ag Ltd.’s issued and outstanding share capital is held by Casterra’s former employee as
a result of exercise of options. |
| (4) |
The remaining 31.1% of Lavie Bio Ltd.’s issued and outstanding share capital is held by (i) Pioneer Hi-Bred International,
Inc. (also known by the name Corteva), who holds 26.6%, and (ii) Lavie Bio’s former employees, who hold 4.5% as a result of exercise
of options. |
D. Property, Plants and Equipment
Our principal facility is located in Rehovot, Israel and consists
of 1,870 square meters (approximately 20,129 square feet) of leased office space accommodating our corporate offices and our molecular,
microbial and crop protection labs. The lease for this facility will expire December 31, 2027; however, we have an option to extend it
until December 31, 2030.
48
We perform most of our testing in plants, or in-planta
testing, at our “Greenhouse Research Center”, located on two adjacent lots that we lease outside Rehovot. The first lease
covers approximately 13,500 square meters (approximately 145,000 square feet) of land, and expires on July 21, 2028. The second lease
covers approximately 10,000 square meters (approximately 108,000 square feet) of land and expires on May 10, 2028, and we hold an option
to renew such lease for an additional 24-month period.
The Greenhouse Research Center contains greenhouses, which are
used for various in-planta experiments of the company, its subsidiaries and other third parties.
In addition, the Greenhouse Research Center contains warehouses, office facilities and seed banks.
Our office space facilities are 80% utilized, while our lab space
and farm facilities are 50% utilized. We have no material tangible fixed assets apart from the leased properties described above. We believe
that our currently leased facilities meet our needs for the short and mid-terms.
Item 4A.
Unresolved Staff Comments
None.
ITEM 5. OPERATING
AND FINANCIAL REVIEW AND PROSPECTS
The information contained in this section should
be read in conjunction with our consolidated financial statements as of, and for the year ended, December 31, 2025 and related notes and
the information contained elsewhere in this Annual Report. Our financial statements have been prepared in accordance with IFRS as issued
by the IASB. This discussion contains forward-looking statements that are subject to known and unknown risks and uncertainties. As a result
of many factors, such as those set forth under “Item 3. Key Information—D. Risk Factors” and “Special Note Regarding
Forward-Looking Statements,” our actual results may differ materially from those anticipated in these forward-looking statements.
Summary
Evogene has four main subsidiaries, each focused on a different
type of product and target market. Each subsidiary has its own board of directors, management team, research and development, or R&D,
and business development teams that focus on developing its own pipeline and go-to-market activities. At the same time, each subsidiary
benefits from using Evogene’s technology under an exclusive license from Evogene to use the tech-engines’ discovery and development
that are relevant to the subsidiary’s field of activity. The terms of these licenses provide that the subsidiary owns the discoveries
and product candidates that result from the utilization of the respective tech engine, while Evogene retains all rights to the tech-engines
themselves. According to the characteristics of the end-market, the subsidiaries can decide to commercialize their products independently
or in collaboration with partners. During 2025 and early 2026, as part of our new business strategy, most of Lavie Bio’s assets
were sold, Biomica licensed its BMC128 to Lishan Technologies and Casterra ceased its activity in Africa, AgPlenus was integrated into
our core activity. Information on our new strategy is set forth in this Annual Report under “Item 4. INFORMATION OF
THE COMPANY —B. Business Overview.
Another business model is product development. This can be done
either independently or through collaborations. In this business model Evogene either initiates internally or engages with partners for
joint development of defined products, in alignment with the partners. In the case of a collaborative engagement, Evogene typically conducts
the computational discovery activity, while the partner performs the experimental parts of the discovery process. Later stage development
and commercialization are carried out by the partner. Under this model, Evogene’s potential revenues include R&D funding for
activities that Evogene conducts in the collaboration, milestone payments for when the candidates advance in our partners’ pipelines
and revenue sharing from the end-product.
Today, Evogene has a number of small scale collaborations, and
we aim to engage in additional collaborations in the future.
49
Key Performance Indicators
Revenues
Our revenues are principally derived from research and development
payments under our collaboration and licensing agreements and related arrangements with our collaborators. Some of our agreements with
collaborators also provide for success-based payments, such as milestone payments paid by our collaborators upon the occurrence of certain
specified events and royalty revenues based on the sales or transfer of products our collaborators develop that contain, or are based
on, our discoveries, which we license to them. We have not yet generated revenues from royalty payments. In June 2023, Casterra, our subsidiary
that focuses on the development and sale of proprietary improved castor seed varieties, announced that it signed a framework agreement
with ENI for the sale of castor varieties at a commercial scale for biofuel production. Under this agreement, Casterra received an order
totaling $9.1 million. In addition, during June 2023 Casterra received an additional order totaling approximately $2.2 million to supply
castor seeds. During the second quarter of 2024, Casterra received an additional purchase order totaling approximately $440 thousand to
supply castor seeds to a new African country in 2024. Under the framework of these agreements, during 2025 Casterra supplied castor seeds
in an amount of approximately $2.2 million. By the end of 2025, due to a significant decline in demand for castor seeds, Casterra ceased
its operations in Kenya, reduced its headcount and overall expense level, and is currently focusing its activities on the Brazilian market.
During July 2023, Lavie Bio entered a licensing agreement with
Corteva and granted it exclusive rights to advance and commercialize Lavie Bio's lead bio-fungicides, LAV311 and LAV312. Lavie Bio received
an initial payment of $5 million, in two installments: an initial payment of $2.5 million in September 2023 and a second payment of $2.5
million in March 2024. In addition, Lavie Bio Ltd. was also eligible for additional future milestone payments and royalties from Corteva's
sales of the products. In November 2024, Lavie Bio terminated its licensing agreement with Corteva. Lavie Bio regained full rights and
freedom to operate the licensed technology and the lead bio-fungicide candidates.
On April 21, 2025, we announced the acquisition of most of the
activities of Lavie to ICL for a total consideration of $15,250. In addition, ICL acquired our MicroBoost AI TechEngine for the agriculture
field for a total consideration of $3,464. In connection with the transaction, Lavie Bio redeemed a SAFE which was entered into with an
ICL affiliate in August 2022.
On February 16, 2024, AgPlenus entered into a licensing and
collaboration agreement with Bayer for the development of a new sustainable weed control solution. This licensing and collaboration agreement
grants Bayer an exclusive license for the development and commercialization of products developed within the collaboration. According
to this licensing and collaboration agreement, AgPlenus was entitled to receive a license payment, ongoing research funding, milestone
payments, and royalties based on future product sales, subject to certain conditions as stipulated in the agreement.
Breakdown of Revenues by Operating Segment:
The following table presents a breakdown of net revenues by operating
segment for the periods indicated.
|
Operating Segment: |
2025 |
2024 (*) |
|
2023 (*) |
| |||||||
|
(U.S. dollars, in thousands) |
||||||||||||
|
Agriculture |
$ |
1,374 |
$ |
2,955 |
$ |
1,133 |
||||||
|
Industrial application |
2,168 |
2,219 |
1,075 |
|||||||||
|
Human health |
- |
80 |
487 |
|||||||||
|
Unallocated |
311 |
323 |
287 |
|||||||||
|
Total |
$ |
3,853 |
$ |
5,577 |
$ |
2,982 |
||||||
(*) Reclassified to conform to the current period presentation,
following the classification of certain operations as discontinued operations.
50
Geographical Breakdown of Net Revenues
The following table presents net revenues by geographic breakdown
of customers as a percentage of our total net revenues for the periods indicated. This data refers to the location of the customer and
does not take into consideration the location of the end-user (to the extent it is different).
|
Geographical Region: |
2025 |
2024 (*) |
2023 (*) |
|||||||||
|
United States |
9 |
% |
17 |
% |
33 |
% | ||||||
|
Israel |
12 |
% |
11 |
% |
31 |
% | ||||||
|
Europe |
26 |
% |
41 |
% |
1 |
% | ||||||
|
Africa |
53 |
% |
31 |
% |
35 |
% | ||||||
|
Total |
100 |
% |
100 |
% |
100 |
% | ||||||
(*) Reclassified to conform to the current
period presentation, following the classification of certain operations as discontinued operations
Cost of Revenues
Cost of revenues primarily consists of development costs incurred
in conjunction with our collaborations, which include: salaries and related personnel costs for our research and development employees
working on the collaborations; payments to third party suppliers and producers; and the cost of disposable materials (such as seeds, laboratory
supplies, fertilizer, water and soil), and expenses related to retaining advisors, who primarily consist of biological advisors.
Operating Expenses
Research and Development Expenses,
net: Research and development expenses primarily consist of costs related to our internal or independent research and development
activities, as opposed to development costs incurred in connection with our collaborations (which are included in cost of revenues). These
independent activities of ours include the further development of our product pipeline, enhancement and expansion of our CPB platform
and improvement of our computational, scientific and validation technologies, know-how and capabilities used by our subsidiaries and product
divisions. Research and development costs include: salaries and related personnel costs (including share-based compensation); payments
to third party suppliers and subcontractors, field-trials and pre-clinical studies carried out by third parties; cost of disposable materials;
expenses associated with participation in professional conferences; operational overhead costs, which include costs related to leasing
and operating our office, laboratory facilities and greenhouses; depreciation of property, plant and equipment; and amortization of intangible
assets. Expenses related to our intellectual property, such as legal and other costs associated with patent applications, are also included
as research and development expenses. We expect that our research and developments expenses will decrease during 2026 due to our intention
to focus our efforts on the use of our ChemPass AI tech-engine in the field of AI powered drug
discovery in the pharma market segment, and due to the implementation of certain expense reduction measures on our and our subsidiaries’
levels.
Sales and Marketing Expenses:
Sales and marketing expenses consist of costs primarily related to commercialization activities of our subsidiaries for product launch
and maintaining our relationships with our collaborators and establishing new collaborations. These costs include salaries and related
personnel costs (including share-based compensation), travel expenses and expenses related to legal and professional services. We expect
that our sales and marketing expenses will be decreased during 2026 due to the implementation of certain expense reduction measures
on our and our subsidiaries’ levels.
General and Administrative Expenses:
General and administrative expenses mainly consist of salaries and related personnel costs (including share-based compensation) for our
general and administrative employees; legal, D&O liability insurance, and professional services; expenses related to HR activities
and employee benefits and welfare; expenses for consulting; and other expenses associated with being a U.S. publicly listed company. We
expect that our general and administrative expenses will be decreased during 2026 due to the implementation of certain expense reduction
measures on our and our subsidiaries’ level.
Financing Income and Expenses
Financing income primarily consists of interest income on our cash
bank deposits, income related to a remeasurement of warrants and pre-funded warrants, income related to a revaluation of outstanding convertible
amount of $10.0 million invested in our subsidiary Lavie Bio under a SAFE agreement with ICL and foreign currency exchange income.
Financing expenses primarily consist of expenses related to excess
of initial fair value of pre-funded warrants over transaction proceeds; expenses related to amortization of deferred expenses related
to issuance of warrants; foreign currency exchange expense; interest expense for our operating lease liability; expenses related to a
revaluation of outstanding convertible amount of $10.0 million invested in our subsidiary Lavie Bio under a SAFE agreement with ICL; and
expenses related to bank charges and commissions. The interest due on government grants is also considered a financial expense and is
recognized beginning on the date on which we receive the grant until the date on which the grant is expected to be repaid.
51
Taxes on Income
We do not generate taxable income in Israel, as we have historically
incurred operating losses resulting in carryforward tax losses totaling approximately $226 million as of December 31, 2025, to be
carried forward indefinitely to future tax years. Accordingly, we do not expect to pay taxes in Israel for the foreseeable future, until
we have taxable income after the full utilization of our carryforward tax losses.
Our U.S. subsidiaries, Evogene Inc., Lavie Bio Inc., Lavie Bio
Tech Inc., Taxon Biosciences Inc. and AgPlenus Inc. are subject to U.S. income taxes. In 2025, the tax rates applicable to those companies
were approximately 21% and 3.41% (federal tax and state tax, respectively, where those companies operate).
Segment Data
We divide our operations into three operating segments –
agriculture, human health and industrial applications, as follows:
| ▪ |
Agriculture: our agriculture segment includes our division and subsidiary engaged in agricultural
activities, including seed traits activity and ag-chemicals activity (through our subsidiary AgPlenus). |
| ▪ |
Human Health: our human health segment focuses mainly on discovery and development of human
microbiome-based therapeutics (through our subsidiary Biomica) and Canonic (which ceased its operations in 2024). In addition, we design
novel, highly potent, small molecules, optimized across multiple-parameters, for drug development, by utilizing ChemPass AI, our computational
generative AI engine. |
| ▪ |
Industrial Applications: our industrial applications segment focuses on the development and
commercialization of improved castor bean seeds for industrial uses (through our subsidiary Casterra). |
The following table presents our revenues, cost of revenues, depreciation
expenses and operating loss from continued operations, by segment, for the periods presented:
|
Agriculture (*) |
Industrial Applications |
Human Health |
Unallocated (*) |
Total |
||||||||||||||||
|
(U.S. dollars, in thousands) |
||||||||||||||||||||
|
Year ended December 31, 2025 |
||||||||||||||||||||
|
Revenues |
$ |
1,374 |
$ |
2,168 |
$ |
- |
$ |
311 |
$ |
3,853 |
||||||||||
|
Cost of revenues |
$ |
(428 |
) |
$ |
(3,553 |
) |
$ |
- |
$ |
(113 |
) |
$ |
(4,094 |
) | ||||||
|
Depreciation expenses |
$ |
(124 |
) |
$ |
(94 |
) |
$ |
(101 |
) |
$ |
(203 |
) |
$ |
(522 |
) | |||||
|
Operating loss |
$ |
(4,097 |
) |
$ |
(3,540 |
) |
$ |
(2,653 |
) |
$ |
(3,744 |
) |
$ |
(14,034 |
) | |||||
|
Year ended December 31, 2024 |
||||||||||||||||||||
|
Revenues |
$ |
2,955 |
$ |
2,219 |
$ |
80 |
$ |
323 |
$ |
5,577 |
||||||||||
|
Cost of revenues |
$ |
(952 |
) |
$ |
(1,290 |
) |
$ |
(98 |
) |
$ |
(40 |
) |
$ |
(2,380 |
) | |||||
|
Depreciation expenses |
$ |
(201 |
) |
$ |
(32 |
) |
$ |
(141 |
) |
$ |
(205 |
) |
$ |
(579 |
) | |||||
|
Operating loss |
$ |
(6,120 |
) |
$ |
(2,411 |
) |
$ |
(7,240 |
) |
$ |
(3,033 |
) |
$ |
(18,804 |
) | |||||
|
Year ended December 31, 2023 |
||||||||||||||||||||
|
Revenues |
$ |
1,133 |
$ |
1,075 |
$ |
487 |
$ |
287 |
$ |
2,982 |
||||||||||
|
Cost of revenues |
$ |
(370 |
) |
$ |
(460 |
) |
$ |
(620 |
) |
$ |
(40 |
) |
$ |
(1,490 |
) | |||||
|
Depreciation expenses |
$ |
(147 |
) |
$ |
(31 |
) |
$ |
(213 |
) |
$ |
(267 |
) |
$ |
(658 |
) | |||||
|
Operating loss |
$ |
(7,074 |
) |
$ |
(39 |
) |
$ |
(10,349 |
) |
$ |
(4,769 |
) |
$ |
(22,231 |
) | |||||
(*) Reclassified to conform to the current
period presentation, following the classification of certain operations as discontinued operations.
52
A. Operating
Results
The following table sets forth our overall results of operations
(on an unsegmented basis) for the years ended December 31, 2023, 2024 and 2025. The below discussion of our results of operations
omits a comparison of our results for the years ended December 31, 2023 and 2024. In order to view that discussion, please see “Item
5. Operating and Financial Review and Prospects—A. Operating Results—Comparison of Period-to-Period Results of Operations”
in our Annual Report on Form 20-F for the year ended December 31, 2024, which we filed with the SEC on March 27, 2025.
|
2025 |
2024 (*) |
|
2023 (*) |
| ||||||||
|
Consolidated Statements of Comprehensive loss: |
||||||||||||
|
(U.S. dollars, in thousands) |
||||||||||||
|
Revenues |
$ |
3,853 |
$ |
5,577 |
$ |
2,982 |
||||||
|
Cost of revenues: |
||||||||||||
|
Inventory impairment |
2,180 |
- |
||||||||||
|
Other cost of revenues |
1,914 |
2,380 |
1,490 |
|||||||||
|
Total Cost of Revenues |
4,094 |
2,380 |
1,490 |
|||||||||
|
Gross profit (loss) |
(241 |
) |
3,197 |
1,492 |
||||||||
|
Operating expenses (income): |
||||||||||||
|
Research and development, net
|
7,994 |
12,511 |
16,196 |
|||||||||
|
Sales and marketing
|
1,476 |
1,983 |
2,152 |
|||||||||
|
General and administrative
|
4,286 |
6,993 |
5,375 |
|||||||||
|
Other expenses |
37 |
514 |
- |
|||||||||
|
Total operating expenses, net |
13,793 |
22,001 |
23,723 |
|||||||||
|
Operating loss |
(14,034 |
) |
(18,804 |
) |
(22,231 |
) | ||||||
|
Financing income |
2,508 |
7,393 |
1,213 |
|||||||||
|
Financing expenses |
(1,933 |
) |
(3,358 |
) |
(928 |
) | ||||||
|
Share of loss of an associate |
39 |
39 |
- |
|||||||||
|
Loss before taxes on income |
(13,498 |
) |
(14,808 |
) |
(21,946 |
) | ||||||
|
Taxes on income |
1 |
9 |
19 |
|||||||||
|
Loss from continuing operations |
(13,499 |
) |
(14,817 |
) |
(21,965 |
) | ||||||
|
Income (loss) from discontinued operations, net |
5,672 |
(3,237 |
) |
(3,989 |
) | |||||||
|
Loss |
$ |
(7,827 |
) |
$ |
(18,054 |
) |
$ |
(25,954 |
) | |||
(*) Reclassified to conform to the current period presentation, following the classification of certain
operations as discontinued operations.
Year Ended December 31, 2025 Compared
to Year Ended December 31, 2024
Preliminary Note Re: Lavie Bio and MicroBoost AI for Ag
The financial results for the year ended December 31, 2025 of Lavie Bio and the MicroBoost
AI for Ag operations, are presented as a single-line item in Evogene’s consolidated statements of profit and loss and in this Operating
and Financial Review and Prospects under the caption – “Income (loss) from discontinued operations, net”. This accounting
treatment follows our sale of the majority of Lavie Bio’s activities and the MicroBoost AI for Ag. As a result, all prior period
amounts presented were reclassified to conform to this presentation.
53
Revenues
Our total revenues decreased by approximately $1.7 million, or
30.4%, to approximately $3.9 million for the year ended December 31, 2025 from $5.6 million for the year ended December 31,
2024. The decrease was primarily driven by lower revenue recognized from AgPlenus’ activity, which included one-time payment during
the first quarter of 2024 and revenues recognized from the collaboration agreement with Corteva, which was completed during 2024.
Cost of Revenues
Cost of revenues increased by approximately $1.7 million, or 70.8%,
to approximately $4.1 million for the year ended December 31, 2025 from $2.4 million for the year ended December 31, 2024. The
increase was primarily attributable to an inventory impairment of approximately $2.2 million recorded by Casterra during the fourth quarter
of 2025 mainly due to its decision to cease its operations in Kenya as noted above.
Gross Profit
Gross profit decreased by approximately $3.4 million, or 106.3%,
to a loss of approximately $0.2 million for the year ended December 31, 2025 from a profit of approximately $3.2 million for the
year ended December 31, 2024, due to the combined impact of changes in our revenues and cost of revenues, as described above.
Operating Expenses
Research and Development Expenses, Net. Research and development
expenses decreased by approximately $4.5 million, or 36.0%, to approximately $8.0 million for the year ended December 31, 2025 from
approximately $12.5 million for the year ended December 31, 2024. The decrease was primarily due to reduced expenses in Biomica,
Casterra and AgPlenus as compared to the same period the previous year.
Sales and Marketing Expenses.
Sales and marketing expenses decreased by approximately $0.5 million, or 25.0%, to approximately $1.5 million for the year ended
December 31, 2025 from approximately $2.0 million for the year ended December 31, 2024. The decrease was mainly due to reductions
in Evogene and Biomica personnel costs.
General and Administrative Expenses.
General and administrative expenses decreased by approximately $2.7 million, or 38.6%, to approximately $4.3 million for the year
ended December 31, 2025 from approximately $7.0 million for the year ended December 31, 2024. This decrease was mainly attributable
to expenses recorded during the year 2024 related to a provision for doubtful debt for one of Casterra’s seed suppliers as well
as transaction costs associated with Evogene’s fundraising in August 2024. Additional decrease is attributable to a reduction in
Biomica’s activities and personnel costs during 2025.
Other Expenses, net. Other
expenses, net of approximately $37 thousand were recorded in 2025, which was mainly due to the impairment of fixed assets associated
with the reduction in Biomica’s activities, and partially offset by income recognized in the first quarter of 2025 related to the
accounting treatment of Evogene’s sub-lease agreement. The decision to cease Canonic’s operations in the first half of 2024
resulted in other expenses of approximately $0.5 million, primarily due to the impairment of fixed assets.
Financing Income and Expenses
Foreign currency and exchange
risk
A significant portion of our expenses is denominated in currencies
other than the U.S. dollar. The Company is therefore subject to non-U.S. currency risks and non-U.S. exchange exposure, especially the
NIS. A significant portion of our operating costs are in Israel, consisting principally of salaries and related personnel expenses, and
facility expenses, which are denominated in NIS. This foreign currency exposure gives rise to market risk associated with exchange rate
movements of the U.S. dollar against the NIS and other currencies. Furthermore, we anticipate that a significant portion of our expenses
will continue to be denominated in NIS. We do not hedge against currency risk through the use of forward currency contracts or other financial
instruments. See “Item 3D. Risk factors—Risks Relating to Our Incorporation and
Location in Israel between the U.S. dollar and the NIS may negatively affect our financial results.” Exchange rates can be volatile
and a substantial change of foreign currencies against the U.S. dollar could increase or reduce the Company’s expenses and net loss
and impact the comparability of results from period to period. The appreciation (devaluation) of the NIS in relation to the U.S. dollar
amounted to (0.6%) and 12.5% as of December 31, 2024, and 2025, respectively.
54
Financing Income. Financing
income decreased by approximately $4.9 million, or 66.2%, to approximately $2.5 million for the year ended December 31, 2025 from
approximately $7.4 million for the year ended December 31, 2024. This decrease was mainly associated with accounting treatment of
pre-funded warrants and warrants issued in August 2024. Pre-funded warrants and warrants were classified as a liability on the consolidated
statements of financial position, were initially recorded at fair value and subsequently remeasured at each reporting period using the
Black-Scholes option pricing model. As a result, during 2025 we recorded financial income related to the remeasurement of warrants and
pre-funded warrants of approximately $1.8 million as compared to financial income of approximately $6.5 million in same period of
2024.
Financing Expenses. Financing
expenses decreased by approximately $1.5 million, or 44.1%, to approximately $1.9 million for the year ended December 31, 2025 from
$3.4 million for the year ended December 31, 2024. The decrease was mainly associated with accounting treatment of pre-funded warrants
and warrants issued in August 2024. As of the date of the offering in August 2024, the excess of the initial fair value of pre-funded
warrants over the transaction proceeds was recorded as financial expenses. The excess of initial fair value over the transaction proceeds
of Series A ordinary warrants and Series B ordinary warrants was deferred and amortized to financial expenses over the term of the warrants.
As a result of this treatment, we recorded financial expenses of approximately $1.3 million, during 2025 as compared to financial expenses
of approximately $3.2 million recorded during 2024. This decrease was partially offset by increased financing expenses related to revaluation
of liabilities in respect of government grants of approximately $0.2 million we recorded during 2025.
Taxes on Income
For the years ended December 31, 2025 and 2024, we recorded
insignificant amounts for taxes on income in Israel and an insignificant amount of taxes with respect to U.S. subsidiaries.
Income (loss) from Discontinued Operations, net
Income from discontinued operations, net for the year ended December
31, 2025 increased by approximately $8.9 million or 278.1% to approximately $5.7 million, compared to a loss from discontinued operations,
net of approximately $3.2 million in the same period of 2024. These amounts primarily reflect the financial results of Lavie Bio’s
operations as well as expenses related to the development and maintenance of MicroBoost AI for Ag. Following the sale of the majority
of Lavie Bio’s assets as well as our MicroBoost AI for Ag to ICL during 2025, we recognized a gain on sale of approximately $6.4
million which is also included in the Income (loss) from Discontinued Operations, net, for the
year of 2025.
Loss
The amount of our overall loss decreased by approximately $10.3
million, or 56.9%, to approximately $7.8 million for the year ended December 31, 2025, from $18.1 million for the year ended December
31, 2024. This decrease reflected the cumulative effect of all of the above-described line items from our consolidated statements of profit
or loss.
B. Liquidity
and Capital Resources
Our working capital requirements generally reflect the growth in
our business and have historically been provided by cash raised from our investors, payments from our collaborators and government grants.
As of December 31, 2025, we had cash and cash equivalents of approximately $13.0 million, and working capital of approximately $12.2 million,
which is calculated by subtracting our current liabilities from our current assets. As of December 31, 2025, we had approximately $3.1
million of outstanding long-term indebtedness related to government grants.
Capital Resources
In 2025, our primary sources of liquidity were cash on hand, proceeds
from the issuance of ordinary shares, proceeds the sale of majority of Lavie Bio’s assets as well as our MicroBoost AI for Ag to
ICL, from collaboration and licensing agreements and revenues from the selling of castor seeds.
55
Recent Public Offerings of Ordinary Shares
Sales Agreement
On March 28, 2024 we entered into a Sales Agreement, or the Lake
Street Sales Agreement, with Lake Street Capital Markets, LLC, or Lake Street, pursuant to which we may offer and sell, from time
to time, our ordinary shares, through Lake Street in an “at the market offering”, as defined in Rule 415(a)(4) promulgated
under the Securities Act of 1933, as amended, for an aggregate offering price of up to $7.3 million. In August 2024 we reduced the maximum
aggregate gross sales price of our ordinary shares that may be offered, issued and sold under the Lake Street Sales Agreement, including
ordinary shares previously sold, to $4,500,000. As of December 31, 2024 we had sold 10,000 ordinary shares with a weighted average
selling price of $8.50 per share, resulting in gross proceeds of approximately $85,000. During June 2025, we issued 1,913,650 ordinary
shares with a selling price of $2.31 per share, resulting in gross proceeds of approximately $4.41 million. As of December 31, 2025, we
had sold the full amount available under the Lake Street Sales Agreement, which was terminated on September 4, 2025.
Shelf Registration Statement
We have an effective shelf registration statement that registered
on Form F-3 up to $200 million of our ordinary shares, debt securities, rights, warrants and units. Because the public float of our ordinary
shares is currently less than $75.0 million, we are limited in the amount we can raise during any 12-month period to 1/3 of our public
float on the date of sale, which was approximately $3.51 million as of March 19, 2026. This amount may vary according to changes in our
share price. We may seek additional capital or strategic considerations, even if we believe we have sufficient funds for our current or
future operating plans. Following the effectiveness of our new shelf registration statement, we entered into a new sales agreement with
Lake Street, as described above.
2023 Registered Direct Offering
On July 17, 2023, we entered into a definitive securities purchase
agreement, or the Securities Purchase Agreement, with certain institutional investors (including SilverArc Capital Management, Altium
Capital Management, LP and CVI Investments, Inc.), pursuant to which we issued and sold to such investors in a registered direct offering,
or the 2023 Offering, 850,000 ordinary shares, at a purchase price of $10.00 per share. Total gross proceeds to us from the offering were
$8.5 million. The total net proceeds after deducting placement agent fees and other offering expenses payable by us were approximately
$7.855 million.
We also entered into a letter agreement, or the Placement Agency
Agreement, with A.G.P./Alliance Global Partners, as sole placement agent, or the Placement Agent, dated July 17, 2023, pursuant to which
the Placement Agent agreed to serve as our placement agent in connection with the Offering. We paid the Placement Agent a cash placement
fee equal to 7.0% of the gross proceeds received for the ordinary shares sold in the 2023 Offering.
2024 Registered Direct Offering and Private Placement
On August 23, 2024, we entered into a definitive securities purchase
agreement, or the Securities Purchase Agreement, with an institutional investor, or the Investor, pursuant to which we issued and sold
to the Investor in a registered direct offering, or the 2024 Offering, (i) 265,000 ordinary shares, and (ii) pre-funded warrants, or the
Pre-Funded Warrants, to purchase up to 1,427,308 ordinary shares. The Pre-Funded Warrants have an exercise price of $0.0001 per ordinary
share, are immediately exercisable and may be exercised at any time until exercised in full.
In a concurrent private placement, or the Private Placement, we
also agreed to sell to the Investor unregistered Series A ordinary warrants to purchase up to 1,692,308 ordinary shares, or the Series
A Warrants, and unregistered Series B ordinary warrants to purchase up to 1,692,308 ordinary shares, or the Series B Warrants. Each ordinary
share (or Pre-Funded Warrant) is being sold with one Series A Warrant to purchase one ordinary share and one Series B Warrant to purchase
one ordinary share at a combined purchase price of $3.25. The Series A Warrants have an exercise price of $3.55 per share, are immediately
exercisable upon issuance and will expire five years from issuance. The Series B Warrants have an exercise price of $3.55 per share, are
immediately exercisable upon issuance and will expire eighteen months from issuance. Our total gross proceeds from the 2024 Offering and
the Private Placement were approximately $5.5 million.
We also entered into a letter agreement dated August 23, 2024,
or the Placement Agency Agreement, with A.G.P./Alliance Global Partners, or AGP, as sole placement agent, pursuant to which AGP agreed
to serve as the placement agent for us in connection with the 2024 Offering. We paid AGP a cash placement fee equal to 7.0% of the gross
proceeds received from the sale of the securities sold in the 2024 Offering.
56
2026 Warrant Inducement
Transaction
On February 10, 2026, we entered into an inducement offer letter
agreement with the Investor, or the Inducement Transaction. Pursuant to the Inducement Transaction, in order to induce the Investor to
exercise the Series A Warrants and Series B Warrants, the Company issued to the Investor an aggregate of 5,076,924 ordinary warrants,
consisting of 2,538,462 Series A-1 ordinary warrants to purchase up to 2,538,462 ordinary shares, or the Series A-1 warrants, and 2,538,462
Series B-1 ordinary warrants to purchase up to 2,538,462 ordinary shares, or the Series B-1 warrants. The Series A-1 warrants have an
exercise price of $1.25 per share, were immediately exercisable upon issuance and will expire five years from issuance. The Series B-1
warrants have an exercise price of $1.25 per share, were immediately exercisable upon issuance and will expire 18 months from issuance.
We also engaged AGP to act as our exclusive advisor in connection
with the Inducement Transaction and have agreed to pay AGP a cash fee equal to 7.0% of the aggregate gross proceeds received from the
Investor’s exercise of the Series A Warrants and Series B Warrants.
Lavie Bio Asset Purchase Agreement with ICL
In April 2025, Lavie Bio announced the signing of a definitive
agreement under which ICL, would acquire the majority of its activity. As part of the agreement, ICL also acquired Evogene’s MicroBoost
AI for AG platform. In July 2025, Lavie Bio completed of the transaction for the sale of the majority of its activity and the Evogene’s
MicroBoost AI for AG platform to ICL for a total consideration of $18,714.
Information on that transaction is set forth in this Annual
Report under “Item 4. Information on the Company— B. Business Overview— Market Segments— Agriculture— Lavie
Bio Ltd.— Overview” and is incorporated by reference herein.
Biomica License Agreement with Shanghai Lishan
Biopharmaceuticals Co., Ltd., or Lishan Biotech
On February 4, 2026, we announced the signing of an exclusive worldwide
licensing agreement for BMC128 (designated as LS-LBP-002 by Lishan Biotech), a microbiome-based therapeutic designed to enhance anti-tumor
immune activity. This agreement grants Lishan Biotech exclusive rights (subject to reaching certain commercial milestones) to further
develop, manufacture and commercialize the BMC128, which was developed by Biomica. Pursuant to the terms of the agreement, Biomica will
be eligible to receive development milestone payments upon progress of Lishan Biotech’s clinical trials and receipt of regulatory
approvals, sales milestones payments and royalties from Lishan Biotech’s sales of future products, subject to certain conditions
set forth therein. Information on that transaction is set forth in this Annual Report under “Item 4. Information on the Company—
B. Business Overview— Market Segments— Human Health— Biomica Ltd.— Overview” and is incorporated by reference
herein.
Collaboration Agreements
Under our R&D collaboration agreements, our revenues typically
include R&D funding for activities that we conduct in the collaboration, as well as milestone payments for when the candidates advance
in our partners’ pipelines and revenue sharing from the end-product.
Casterra Agreements with
ENI and its Affiliate
On June 21, 2023, Casterra announced that it entered into a framework
agreement to sell seeds of its proprietary castor varieties to ENI Kenya B.V., or ENI, for cultivation in specific African territories
at a commercial scale for biofuel production. During the first quarter of 2025, Casterra delivered orders (which were backlog from the
prior year) valued at $2,168 thousand. As of the date of this Annual Report, the Company has not received any additional seed orders from
ENI.
Information on that transaction is set forth in this Annual Report
under “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources— Casterra Agreement with
ENI” and is incorporated by reference herein.
57
Lavie Bio Licensing Agreement for Bio-Fungicides
with Corteva Agriscience
On July 14, 2023, Lavie Bio entered into a licensing agreement
with Corteva Inc. This agreement grants Corteva perpetual, exclusive rights (subject to reaching certain commercial milestones) to
further develop and commercialize the lead bio-fungicide candidates targeting fruit rots and powdery mildew, which were discovered and
developed by Lavie Bio. Pursuant to the terms of the agreement, Lavie Bio received an initial payment worth approximately $5 million in
two installments (a first payment of $2.5 million was received in September 2023 and a second payment of $2.5 million was received in
March 2024). In November 2024, Lavie Bio terminated the licensing agreement with Corteva. Lavie Bio regained full rights and freedom to
operate to the licensed technology and the lead bio-fungicide candidates.
Evogene Ag-Seed Division Awarded €1.5M
Horizon Grant
On May 9, 2023, Evogene announced that it has been granted an EU
Horizon grant of €1.2 million, that was increased to approximately €1.5 during 2025, to support the creation of oil-seed crops
that have high carbon-dioxide assimilation and enhanced drought tolerance. The project, Crop4Clima, has an overall budget of €2.5
million and is expected to be executed over 32 months. As of December 2025, Evogene received payments totaling approximately €1.3
million from the grant mentioned above. This grant follows the successful completion of the Future Agriculture Consortium's proof-of-concept
in 2021, which demonstrated the potential for increased agricultural productivity and environmental sustainability.
Outlook
We expect that our sources of liquidity for 2026 will mainly include
cash held in our bank accounts, including bank deposits, proceeds from collaboration and licensing agreements, proceeds from grants
and other financing transactions, including by our subsidiaries.
In the future, cash may serve us in effecting M&A transactions
for achieving inorganic growth in our different segments of operations.
We concluded that the following conditions raised substantial doubt about our ability
to continue as a going concern:
| - |
History of reporting operating losses from continuing operations of $14,034 and $18,804 for the years ended December 31, 2025, and
2024, respectively; |
| - |
Net operating cash outflows of $13,502 and $19,700 in 2025 and 2024, respectively; |
| - |
The Company's Accumulated Deficit balance as of December 31, 2025, is $282,556 |
Management prepared a plan to improve our available cash balances,
liquidity and cash flows generated from operations. We have identified several potential actions, including cost preservation measures
that would be initiated in a timely manner to address our liquidity needs over the twelve-month period from the date of this Annual Report,
as follows:
| • |
In case projected revenues do not materialize in a timely manner, reducing related expenses, including through headcount reductions,
to conserve cash and improve our liquidity position; and |
| • |
Deferring and reprioritizing certain research and development programs, resulting in reduced expenditures on programs and headcount.
|
We have a history of operating losses and negative cash flows from
operations. However, despite these conditions, we believe management’s plans, as described more fully above, will provide sufficient
liquidity to meet our financial obligations and maintain levels of liquidity over the twelve-month period from the date of this Annual
Report. Therefore, management concluded this plan alleviates the substantial doubt that was raised about our ability to continue as a
going concern for at least twelve months from the date this Annual Report.
Although not considered for purposes of our assessment of whether
substantial doubt was alleviated, we have plans to improve operating cash flows by entering other collaborations, strategic alliances
or licensing arrangements with third parties. We are also exploring exit opportunities for certain subsidiaries. We may seek to raise
additional funds through public or private equity or debt financings or other sources.
Our plans are subject to inherent risks and uncertainties. Accordingly,
there can be no assurance that our plans can be effectively implemented and, therefore, that the conditions can be effectively mitigated.
Until such time, if ever, we expect to finance our operations through
equity or debt financings, which may not be available to us on the timing needed or on terms that we deem to be favorable. To the extent
that we raise additional capital through the sale of equity or debt securities, the ownership interest of our shareholders will be diluted.
If we are unable to maintain sufficient financial resources, our business, financial condition and results of operations will be materially
and adversely affected.
58
Cash Flows
The following table presents the major components of net cash flows
used in or provided by (as applicable) operating, investing and financing activities for the periods presented. For a discussion of our
net cash flows for the year ended December 31, 2023, please see “Item 5. Operating and Financial Review and Prospects— B.
Liquidity and Capital Resources— Cash Flows” in our Annual Report on Form 20-F for the year ended December 31, 2024, which
we filed with the SEC on March 27, 2025:
|
2025 |
2024 |
2023 |
||||||||||
|
(U.S. dollars, in thousands) |
||||||||||||
|
Net cash used in operating activities |
(13,502 |
) |
$ |
(19,700 |
) |
$ |
(21,577 |
) | ||||
|
Net cash provided by (used in) investing activities |
17,738 |
9,622 |
(4,538 |
) | ||||||||
|
Net cash provided by financing activities |
(6,602 |
) |
4,656 |
18,152 |
||||||||
|
Exchange rate differences - cash and cash equivalents balances |
21 |
(49 |
) |
(245 |
) | |||||||
|
Decrease in cash and cash equivalents |
(2,345 |
) |
$ |
(5,471 |
) |
$ |
(8,208 |
) | ||||
Cash Used in Operating Activities
Cash used in operating activities for the year ended December 31,
2025 was approximately $13.5 million and reflects our cash used in continuing operating activities of approximately $11.4 million and
net cash used in operating activities of discontinued operations of approximately $2.1 million. Cash used in continuing operating activities
primarily reflects our loss from continuing operations of approximately $13.5 million, as adjusted downwards to eliminate certain non-cash
items that were taken into account in calculating, and that increased our loss from continuing operations, including approximately $2.1
million of non-cash expenses related to an inventory impairment, approximately $1.3 million of amortization of deferred expenses
related to issuance of warrants, approximately $1.1 million of depreciation of property, plant and equipment and right-of-use-assets and
approximately $0.7 million of share-based compensation expenses. These downwards adjustments to cash used were partially offset by non-cash
financial income of approximately $1.8 million related to remeasurement of pre-funded warrants and warrants and approximately $1.3 million
of changes in asset and liability items mainly due to an increase in inventories, decrease in trade payables, payroll accrual balances,
other payables and deferred revenues and other advances, partially offset by a decrease in trade receivables, other receivables and prepaid
expenses balances.
Cash used in operating activities for the year ended December 31,
2024 was approximately $19.7 million and reflects our cash used in continuing operating activities of approximately $17.5 million and
net cash used in operating activities of discontinued operations of approximately $2.2 million. Cash used in continuing operating activities
primarily reflects our loss from continuing operations of approximately $14.8 million, as adjusted upwards to eliminate certain non-cash
items that were taken into account in calculating, and that decreased, our loss, including approximately $6.5 million of non-cash financial
income related to remeasurement of pre-funded warrants and warrants, approximately $0.8 million of non-cash net financing income and approximately
$2.6 million of changes in asset and liability items, mainly due to an increase in inventories and trade receivables and a decrease in
trade payables, payroll accrual balances, deferred revenues and other advances, partially offset by a decrease in other receivables and
prepaid expenses. These upwards adjustments to cash used were partially offset by approximately $2.7 million of non-cash expenses related
to an excess of initial fair value of pre-funded warrants over the transaction proceeds, approximately $1.4 million of depreciation of
property, plant and equipment and right-of-use-assets, approximately $1.2 million of share-based compensation expenses, approximately
$0.9 million of interest received on short bank deposits, approximately $0.5 million related to amortization of deferred expenses related
to issuance of warrants and $0.5 million loss from sale of property, plant and equipment.
59
Cash Provided by (Used In) Investing Activities
Cash provided by investing activities was approximately $17.7 million
for the year ended December 31, 2025, and reflects cash used in continuing investing activities of approximately $0.01 million and cash
provided by discontinued operations of approximately $17.7 million. Cash used in continuing investing activities primarily reflects cash
used for the purchase of property, plant and equipment of approximately $0.1 million, partially offset by cash provided from proceeds
from sale of property, plant and equipment and proceeds from finance sub-lease asset. Cash provided by discontinued operations of
approximately $17.7 million primarily resulted from cash proceeds related to the acquisition of most of the activities of Lavie Bio and
Evogene’s MicroBoost AI Tech-Engine for the agriculture field by ICL.
Cash provided by investing activities was approximately $9.6 million
for the year ended December 31, 2024, and reflects cash provided by continuing investing activities of approximately $9.6 million and
cash provided by discontinued operations of approximately $0.05 million. Cash provided by continuing investing activities primarily reflects
cash proceeds from short-term bank deposits, net of investment in short-term bank deposits of approximately $10.2 million, partially offset
by cash used for the purchase of property, plant and equipment of approximately $0.6 million.
Cash Provided by Financing Activities
Cash used in financing activities was approximately $6.6 million
for the year ended December 31, 2025 and reflects cash used in continuing financing activities of approximately $6.5 million and
cash used in financing activities of discontinued operations of approximately $0.1 million. Cash used in continuing financing activities
was primarily attributable to repayment of convertible SAFE in the amount of $10.0 million, repayment of lease liability of approximately
$0.5 million and repayment of government grants of approximately $0.2 million, partially offset by proceeds from issuance of ordinary
shares, net of issuance expenses, of approximately $4.3 million.
Cash provided by financing activities was approximately $4.7 million
for the year ended December 31, 2024 and reflects cash provided by continuing financing activities of approximately $4.6 million
and cash provided by financing activities of discontinued operations of approximately $0.1 million. Cash provided by continuing financing
activities was primarily attributable to proceeds from issuance of ordinary shares, pre-funded warrants and warrants of approximately
$5.5 million, proceeds from government grants of approximately $0.1 million and proceeds from issuance of ordinary shares, net of
issuance expenses, of approximately $0.1 million, partially offset by approximately $0.9 million for the repayment of lease liabilities
and by approximately $0.3 million for the repayment of government grants.
Government Grants
Our research and development efforts, including by our subsidiaries,
have been financed, in part, through grants from IIA, BIRD, CIIRDF and the EU. From our inception through December 31, 2025, we received
grants of approximately $14.5 million (including accrued interest), of which approximately $9.6 million (including accrued interest) are
royalty-bearing grants from the IIA and repaid approximately $4.4 million in royalties and an additional approximately $4.9 million in
respect of several royalty-bearing projects. In addition, we have received grants totaling approximately $1.0 million (linked to the U.S.
Consumer Price Index) from BIRD and have repaid approximately $0.5 million, whereas the amount of approximately $0.4 million of grants
from BIRD have been cancelled, as we decided to withdraw from the relevant project. We have received grants totaling $2.2 million from
the EU, which are not required to be repaid. As of December 31, 2025, we did not have any active research grants under which we were receiving
funding from the IIA or the EU. In 2026, we obtained IIA approval to receive a grant for its program related to precision therapeutics
to rare disease. The total approved budget was NIS 1.5 million (approximately $485 thousand).
See “Item 3. Key Information—D. Risk Factors—Risks
Relating to Our Incorporation and Location in Israel—We have received Israeli government grants for certain of our research and
development activities. The terms of these grants may require us to satisfy specified conditions in order to manufacture products and
transfer technologies supported by such grants outside of Israel. We may be required to pay penalties in addition to repayment of the
grants.”
60
Israeli Grants
Under the Innovation Law, research and development programs that
meet specified criteria and are approved by a committee of the IIA are eligible for grants. The grants awarded are typically up to 50%
of a project’s expenditures, as determined by the IIA committee and subject to the benefit track under which the grant was awarded.
A company that receives a grant from the IIA is typically required to pay 3% royalties to the IIA on income generated from products incorporating
know-how developed using that grant (including income derived from services associated with such products), until 100% of the U.S. dollar-linked
grant, plus interest, is repaid. Certain benefit tracks do not require payment of royalties.
The obligation to pay royalties is contingent on actual income
generated from such products and services. In the absence of such income, no payment of royalties is required. It should be noted that
the restrictions under the Innovation Law, including restrictions on the sale, transfer or assignment outside of Israel of know-how developed
as part of the programs under which the grants were given will continue to apply even after the repayment of such royalties in full.
The terms of the grants under the Innovation Law also require that
the products developed as part of the programs under which the grants were given be manufactured in Israel and that the know-how developed
thereunder may not be transferred outside of Israel, unless prior written approval is received from the IIA (such approval is not required
for the transfer of a portion of the manufacturing capacity which does not exceed, in the aggregate, 10% of the manufacturing (in which
case only notification is required)), and additional payments are required to be made to the IIA, as described below. It should be noted
that this does not restrict the marketing of products that incorporate the funded know-how.
Ordinarily, as a condition to obtaining approval to manufacture
outside Israel, we may be required to pay royalties at an increased rate, which usually amounts to an additional 1% on top of the standard
royalties rate, and also the total amount of our liability to IIA will be increased to between 120% and 300% of the grants we received
from IIA, depending on the manufacturing volume to be performed outside of Israel.
The Innovation Law restricts the ability to transfer know-how funded
by the IIA. Transfer of IIA-funded know-how outside of Israel requires prior approval and is subject to payment of a redemption fee to
the IIA calculated according to a formula provided under the Innovation Law. A transfer for the purpose of the Innovation Law is generally
interpreted very broadly and includes, inter alia, any actual sale of the IIA-funded know-how, any license to develop the IIA-funded know-how
or the products resulting from such IIA-funded know-how or any other transaction, which, in essence, constitutes a transfer of the IIA-funded
know-how.
The IIA approval to transfer know-how created, in whole or in part,
in connection with an IIA-funded project outside Israel is subject to payment of a redemption fee to the IIA calculated according to a
formula provided under the Innovation Law that is based, in general, on the value of the transferred know-how, multiplied by the amount
of grants received from the IIA, divided by the total amounts expended by the grant recipient on R&D. To the extent any royalties
were paid on account of the grants, such royalties will be deducted from the calculation. The redemption fee is subject to a cap of six
times the total amount of the IIA grants, plus interest accrued thereon. If the transferee undertakes that for a period of not less than
three years, at least 75% of its relevant R&D positions will remain in Israel, then the cap will be reduced to three times (rather
than six times) the total liability to the IIA, calculated as set out above.
Subject to prior approval of the IIA, we may transfer the IIA-funded
know-how to another Israeli entity. If the IIA-funded know-how is transferred to another Israeli entity, the transfer would still require
IIA approval but will not be subject to the payment of the redemption fee (although there will be an obligation to pay royalties to the
IIA from the income of such sale transaction as part of the royalties payment obligation). In such case, the acquiring entity would have
to assume all of the restrictions and obligations associated with the grants under the Innovation Law towards the IIA (including the restrictions
on the transfer of know-how and manufacturing capacity outside of Israel) as a condition to IIA approval.
61
We are required to pay up to 100% of the amount of grants received
by us from the IIA, plus interest (see Risk Factors section above for additional information).
In addition to paying any royalties due, we must abide by other restrictions associated with receiving such grants under the Innovation
Law. Those restrictions may impair our ability to outsource development of products containing our traits, engage in change of control
transactions or otherwise transfer our know-how outside of Israel and may require us to obtain the approval from the IIA for certain actions
and transactions and pay additional royalties and other amounts to the IIA. We cannot be certain that any approval of the IIA will be
obtained on terms that are acceptable to us, or at all. We may not receive the required approvals should we wish to transfer IIA-funded
know-how, manufacturing and/or development outside of Israel in the future. Furthermore, in the event that we undertake a transaction
involving the transfer to a non-Israeli entity of know-how developed with IIA-funding pursuant to a merger or similar transaction, the
consideration available to our shareholders may be reduced by the amounts we are required to pay to IIA. Any approval, if given, will
generally be subject to additional financial obligations. Failure to comply with the requirements under the Innovation Law may subject
us to mandatory repayment of grants received by us (together with interest and penalties), as well as expose us to criminal proceedings.
In addition, the IIA may from time to time conduct royalties audits and such audits may lead to additional royalties being payable.
In January 2018, we announced participation in a three-year IIA-sponsored
Phenomics Consortium to develop tools and systems for precision agriculture and innovative development of agriculture products. In addition
to Evogene, the Phenomics Consortium consists of several Israeli industrial companies and academic institutions. The goal of the consortium
is to develop plant phenotyping technologies, including the generation of comprehensive agricultural ‘Big-Data’ and the development
of artificial intelligence algorithms for real time analysis of phenotypic data. The grant for the consortium was originally approved
for calendar year 2018 in an amount of approximately $5.0 million, of which approximately $1.4 million was granted to Evogene. By the
end of 2018, the grant was extended by an additional six months to a total period of 18 months until mid-2019, and the grant amount was
updated to approximately $7.6 million total, of which approximately $2.5 million was granted to Evogene. In June 2019, the IIA approved
the continuation of the consortium following such 18-month period, until the end of 2020, which would complete a three-year workplan,
and granted an additional amount of approximately $7.5 million, of which approximately $1.9 million was granted to Evogene.
In June 2020, we announced participation in a three-year workplan,
IIA-sponsored CRISPR-IL Consortium to develop an artificial intelligence based, end-to-end system for genome-editing to be used in multi-species
including human, plant, and certain animal DNA, applicable to market segments in pharma, agriculture and aquaculture. In addition to Evogene,
the CRISPR-IL Consortium consists of several Israeli industrial companies and academic institutions. The goal of the consortium is to
develop an artificial intelligence-based system, “Go-Genome”, providing users improved genome-editing workflows. The system
aims to provide end-to-end solutions, from user interface to an accurate measurement tool. The total budget for the consortium was approved
for the first 18 months in an amount of approximately $10.2 million, of which approximately $1.3 million was allocated to us and for the
additional 18 months was approved an amount of approximately $15.4 million, of which approximately $1.9 million was allocated to us. Participation
in the IIA-sponsored consortium programs as described above does not obligate us to pay royalties to the IIA; however, the know-how developed
in such consortium programs is subject to the provisions and restrictions under the Innovation Law.
In March 2020 and March 2021, Lavie Bio obtained an IIA
approval to receive a grant for its third and fourth year programs, respectively, for bio fungicides for mildew in fruit and vegetables.
The total approved budgets for each of the third and fourth year programs were NIS 3.9 million (approximately $1.1 million for the
third year and approximately $1.2 million for the fourth year). In addition, during October 2022 Lavie Bio obtained an IIA approval to
receive a grant for the development of bio fungicide against soil diseases, seed rot, root and stem rot. The total approved budget was
approximately NIS 1.9 million (approximately $0.6 million). In September 2024 Lavie Bio obtained an IIA approval to receive a grant for
mechanism of delivery of biological products for agriculture. The total approved budget was approximately NIS 1.9 million (approximately
$0.5 million). In July 2025 Lavie Bio returned this grant as part of the Lavie Bio – ICL transaction.
In July 2022, Canonic received the Israeli Ministry of Economy
approval to be included in “Smart money” grants program for marketing operations in Germany. The maximum grant amount from
this program is approximately $85 thousand. Canonic undertook to pay royalties of 3% of yearly revenues above approximately $284 thousand
derived from the operation in Germany, up to 100% of the grants received. As of December 31, 2024, Canonic received approximately $42
thousand for marketing expenses in Germany. Since Canonic has ceased its activities during the first half of 2024 and no economic benefits
are expected from the marketing operations in Germany, the grant receipts were recognized as a reduction of the related marketing expenses
during 2024.
62
In February 2024, Lavie Bio received the Israeli Ministry of Economy
approval to be included in the “Smart money” grant program for initial exporting in Canada. The maximum grant amount from
this program is approximately $83 thousand. Lavie Bio undertook to pay royalties of 3% of yearly revenues above approximately $276 thousand
derived from the operation in Canada, up to 100% of the grants received (linked to The Consumer Price Index) and can choose to apply the
program retroactively from August 2023. As of December 31, 2024, Lavie Bio received approximately $78 thousand for marketing expenses
in Canada incurred until December 31, 2024. In April 2025, Lavie Bio entered into a definitive agreement pursuant to which ICL agreed
to acquire the majority of its activity and as of the date of this Annual Report, no additional activity is expected for Lavie Bio in
the future. Since no economic benefits are expected from the marketing operations in Canada, the grant receipts were recognized as a reduction
of the related marketing expenses during 2025.
In 2020, AgPlenus obtained IIA approval to receive a grant
for its first-year program for development of novel herbicides. The total approved budget was NIS 3.1 million (approximately $1.0
million).
In 2026, we obtained IIA approval to receive a grant for its program
related to precision therapeutics to rare disease. The total approved budget was NIS 1.5 million (approximately $485 thousand).
We entered into agreements with certain of our Israeli subsidiaries
in the framework of which they were granted permission to use our technology and related know how, which was funded by the IIA. Evogene
remains responsible to the IIA for the obligations regarding such IIA funding.
BIRD Grants
We have received two BIRD grants, covering the following programs:
(i) a joint development program with DuPont-Pioneer (now Corteva) of research and development improvements to soybean rust resistance,
which the Company has repaid in full; and (ii) a joint research and development program with Marrone Bio Innovations, or MBI, for discovery
of novel modes of biological action for insect control, which the Company has decided to withdraw from.
Under the MBI BIRD program, the grant for the joint development
will be repaid: (a) from revenues received for the licensing of products developed under the project; (b) from revenues generated from
sales of products developed under the project; (c) from proceeds received from the outright sale of the technology developed under the
project; (d) if we and our partner have concluded the development of a product within the period of development defined under each of
the programs; or (e) if within 60 months from the original grant date we and MBI did not conclude the development of a product but nevertheless
decide to continue the project. In each such case, the repayment will be in an amount of up to 150% of the total grant received, depending
on the timing of the repayment.
CIIRDF Grant
The CIIRDF grant that we have received was also provided to us
as part of a previous joint project of ours with Saskatchewan Wheat Pool Inc., operating under the name of Viterra, to develop canola
with improved yield and abiotic stress tolerance. This grant will be repaid from income resulting from the commercialization of a product
developed pursuant to the grant project, at a rate of 2.5% of royalties on sales of such product, in an amount up to 100% of the total
grant received. Alternatively, we may repay the grant as royalties of 2.5% of the income we receive from licensing the product developed
pursuant to the grant. Payment of such royalties is not required if commercial revenues are not generated as a result of the project.
EU Grant
In early 2016, a grant application for a consortium for research
in photosynthesis in which we participate within the EU Horizon 2020 Program for Research and Innovation was confirmed. The consortium’s
research program is focused on an innovative approach to modulate photosynthesis related pathways aiming to improve photosynthetic efficiency.
Beyond us, the consortium includes academic institutions such as the Max Planck Institute of Molecular Plant Physiology and the Institute
of Terrestrial Microbiology, the Weizmann Institute of Science, and the Imperial College of Science, Technology and Medicine. Overall,
we received a total amount of €0.9 million for our participation in the consortium during the five-year project. In March 2023,
a follow up grant of a €1.5 million was confirmed by the Horizon EIC 2022 program to support the creation of oil-seed crops that
have high carbon-dioxide assimilation and enhanced drought tolerance. The overall budget under the program is €2.5 million and Evogene’s
other partners in the project include the Max Planck Institute. As of December 2025, Evogene had received payments totaling approximately
€1.3 million from the grant mentioned above. The Crop4Clima project was completed on December 31, 2025.
63
C. Research
and Development, Patents and Licenses, etc.
We continuously invest and have for at least the last three years
historically invested, in maintaining the technological capabilities of our CPB platform, which includes tailored ‘big-data’
databases, interconnected data hubs and proprietary analysis and prediction algorithms. We also maintain laboratories and greenhouses
for conducting biological validation activities for our computational predictions.
Our ongoing research and development activities are funded mainly
by internal resources, collaboration research and development payments and governmental grants. As of December 31, 2025, 31 of our employees,
representing approximately 59.6% of our entire work force, were engaged in research and development on a full-time basis. For more information
regarding our research and development activities, intellectual property and licenses, please see “Item 4.B. Information on the
Company—Business Overview.”
D. Trend
Information
Market Risk
We are exposed to market risk from changes in exchange rates, interest
rates and inflation. We therefore continue to closely monitor the macro-economic conditions that result therefrom. We regularly assess
the implications of these local and global conditions on our operations, liquidity, cash flow and product candidates and seek to act to
mitigate any adverse consequences, to the extent possible, in a commercially reasonable manner, if and when applicable. All of these market
risks arise in the ordinary course of business, as we do not engage in speculative trading activities. Except as otherwise addressed herein,
such market risks are further discussed in Item 11 of this Annual Report under the section titled “Quantitative and Qualitative
Disclosures about Market Risk”.
Other than as disclosed elsewhere in this Annual Report, we are
not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2025 to December 31, 2025 that are
reasonably likely to have a material adverse effect on our revenues, profitability, liquidity or capital resources, or that caused the
disclosed financial information to be not necessarily indicative of future operating results or financial condition.
E. Critical
Accounting Estimates
We have provided a summary of our significant accounting policies,
estimates and judgments in Note 3 to our consolidated financial statements, which are included elsewhere in this Annual Report. The following
critical accounting discussion pertains to accounting policies management believes are most critical to the portrayal of our historical
financial condition and results of operations and that require significant, difficult, subjective or complex judgments. Other companies
in similar businesses may use different estimation policies and methodologies, which may impact the comparability of our financial condition,
results of operations and cash flows to those of other companies.
Application of Critical Accounting Policies and Estimates
Our consolidated financial statements are prepared in conformity
with IFRS. Our accounting policies affecting our financial condition and results of operations are more fully described in our consolidated
financial statements included elsewhere in this Annual Report. The preparation of our financial statements requires management to make
judgments, estimates and assumptions that affect the amounts reflected in the consolidated financial statements and accompanying notes,
and related disclosure of contingent assets and liabilities. We base our estimates upon various factors, including past experience, where
applicable, external sources and on other assumptions that we believe are reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual
results may differ from these estimates under different assumptions or conditions and could have a material adverse effect on our reported
results.
In many cases, the accounting treatment of a particular transaction,
event or activity is specifically dictated by accounting principles and does not require management’s judgment in its application,
while in other cases, management’s judgment is required in the selection of the most appropriate alternative among the available
accounting principles, that allow different accounting treatment for similar transactions.
We believe that the accounting policies discussed below are
critical to our financial results and to the understanding of our past and future performance as these policies relate to the more significant
areas involving management’s estimates and assumptions. We consider an accounting estimate to be critical if: (1) it requires
us to make assumptions because information was not available at the time or it included matters that were highly uncertain at the time
we were making our estimate; and (2) changes in the estimate or different estimates that we could have selected may have had a material
impact on our financial condition or results of operations.
64
Going Concern Assessment
We concluded that the following conditions raised substantial
doubt about its ability to continue as a going concern:
| - |
History of reporting operating losses from continuing operations of $14,034 and $18,804 for the years ended December 31, 2025, and
2024, respectively; |
| - |
Net operating cash outflows of $13,502 and $19,700 in 2025 and 2024, respectively; |
| - |
The Company's Accumulated Deficit balance as of December 31, 2025, is $282,556. |
We have prepared a plan to improve our available cash balances,
liquidity and cash flows generated from operations. We have identified several potential actions, including cost preservation measures
that would be initiated in a timely manner to address our liquidity needs over the twelve-month period from the date of this Annual Report,
as follows:
| • |
In case projected revenues do not materialize in a timely manner, reducing related expenses, including through headcount reductions,
to conserve cash and improve our liquidity position; and |
| • |
Deferring and reprioritizing certain research and development programs, resulting in reduced expenditures on programs and headcount.
|
We have a history of operating losses and negative cash flows
from operations. However, despite these conditions, we believe that the management’s plans, as described more fully above, will
provide sufficient liquidity to meet our financial obligations and maintain levels of liquidity over the twelve-month period from the
date of this Annual Report. Therefore, management concluded this plan alleviate the substantial doubt that was raised about our ability
to continue as a going concern for at least twelve months from the date of this Annual Report.
Revenue Recognition
We recognize revenues when the control over the goods or services
is transferred to the customer. The transaction price is the amount of consideration that is expected to be received based on the contract
terms, excluding amounts collected on behalf of third parties (such as taxes). We don’t grant a right of return to our customers.
If the contract contains a single performance obligation, the entire
transaction price is allocated to the single performance obligation. Contracts that contain multiple performance obligations such as licenses,
services and milestone events require an allocation of the transaction price to each performance obligation based on a relative standalone
selling price, or SSP. To determine SSP, we maximize the use of observable standalone sales and observable data, where available. In instances
where performance obligations do not have observable standalone sales, we utilize available information that may include market conditions,
pricing strategies, the economic life of the software, and other observable inputs or use the expected cost-plus margin approach to estimate
the price we would charge if the products and services were sold separately. Revenue is recognized at the time the related performance
obligation is satisfied by transferring the promised product or delivery of service to the customer. Revenue is recognized in an amount
that reflects the consideration we expect to receive in exchange for those products or services.
Revenues from research and development services as part of our
collaboration agreements are recognized over time, during the period the customer simultaneously receives and consumes the benefits provided.
Recognition of the service is throughout the services period using the input method in order to measure the progress of the services,
based on the actual internal and external costs incurred, relative to total internal and external costs expected to be incurred to satisfy
the performance obligation. We determined that the input method is the best measure of progress towards satisfying the performance obligation
as incurred labor effort represents work performed that corresponds with, and thereby best depicts the transfer of goods and services.
Revenues from the sale of castor seeds and license agreements are recognized when the control of our product is transferred to the customer,
generally upon delivery of the goods or products to the customer, according to the shipment or delivery terms.
Future milestone payments are considered variable consideration
and are subject to the variable consideration constraint (i.e. will be recognized once concluded that it is “probable” that
a significant reversal of the cumulative revenues recognized under the contract will not occur in future periods when the uncertainty
related to the variable consideration is resolved). Therefore, as the milestone payments are not probable, revenue was not recognized
in respect to such milestone payments prior to achievement of such milestone.
In instances of contracts where revenue recognition differs from
timing of invoicing, we generally determined that those contracts do not include a significant financing component. We use the practical
expedient and do not assess the existence of a significant financing component when the difference between payment and revenue recognition
is a year or less.
65
Impact of Israeli Tax Policies and Government Programs on Our Operating
Results
Tax regulations have a material impact on our business, particularly
in Israel where we have our headquarters. The following summary describes the current tax structure applicable to companies in Israel,
with special reference to its effect on us.
General Corporate Tax Structure in Israel
Israeli companies are generally subject to corporate tax on their
taxable income. In 2025, the corporate tax rate was 23%. Capital gains derived by an Israeli company are generally subject to tax at the
prevailing regular corporate tax rate.
Law for the Encouragement of Industry (Taxes),
5729-1969
The Law for the Encouragement of Industry (Taxes), 5729-1969, generally
referred to as the Industry Encouragement Law, provides several tax benefits for an “Industrial Company”.
The Industry Encouragement Law defines an “Industrial Company”
as an Israeli resident company which was incorporated in Israel, of which 90% or more of its income in any tax year, other than income
from certain government loans, is derived from an “Industrial Enterprise” owned by it and located in Israel. An “Industrial
Enterprise” is defined as an enterprise that is held by an Industrial Company whose principal activity in a given tax year is industrial
production.
The following tax benefits, among others, are available to Industrial
Companies:
| • |
amortization over an eight-year period of the cost of purchased know-how and patents and rights to use a patent and know-how which
were purchased in good faith and are used for the development or advancement of the Industrial Enterprise, commencing in the year in which
such rights were first exercised; |
| • |
under limited conditions, an election to file consolidated tax returns together with Israeli Industrial Companies controlled by it;
and |
| • |
expenses related to a public offering are deductible in equal amounts over a three-year period, commencing in the year of the offering.
|
Eligibility for benefits under the Industry Encouragement Law is
not contingent upon the approval of any governmental authority. We believe that we currently qualify as an Industrial Company within the
meaning of the Industry Encouragement Law. There can be no assurance that we will continue to qualify as an Industrial Company or that
the benefits described above will be available in the future.
Law for the Encouragement of Capital Investments,
5719-1959
The Law for the Encouragement of Capital Investments, 5719-1959,
generally referred to as the Investment Law, provides certain incentives for capital investments in production facilities (or other eligible
assets) by “Industrial Enterprises” (as defined under the Investment Law).
66
The Investment Law was significantly amended effective April 1,
2005 (which we refer to as the 2005 Amendment), further amended as of January 1, 2011 (which we refer to as the 2011 Amendment) and
further amended as of January 1, 2017 (which we refer to as the 2017 Amendment). Pursuant to the 2005 Amendment, tax benefits granted
in accordance with the provisions of the Investment Law prior to its revision by the 2005 Amendment remain in force but any benefits granted
subsequently are subject to the provisions of the 2005 Amendment. Similarly, the 2011 Amendment introduced new benefits to replace those
granted in accordance with the provisions of the Investment Law in effect prior to the 2011 Amendment. However, companies entitled to
benefits under the Investment Law as in effect prior to January 1, 2011 were entitled to choose to continue to enjoy such benefits,
provided that certain conditions are met, or elect instead irrevocably to forego such benefits and have the benefits of the 2011 Amendment
apply. The 2017 Amendment introduced new benefits for Technological Enterprises, alongside the existing tax benefits.
On October 24, 2010, we received a tax ruling from the Israel
Tax Authority, according to which, among other things, our activity has been qualified as an “industrial activity”, as defined
in the Investment Law and is also eligible to tax benefits as a Beneficiary Enterprise, which will apply to the turnover attributed to
such enterprise. The benefit period under this tax ruling ended in 2018, and since we did not generate any taxable income until tax year
2018, we were not entitled to any tax benefits under this tax regime.
We have reviewed and evaluated the implications and effect of the
benefits under the 2011 and 2017 Amendments, and, while potentially eligible for such benefits, we have not yet chosen to be subject to
the tax benefits introduced by the 2011 or the 2017 Amendments.
| ITEM 6. |
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEESs |
A. Directors
and Senior Management
The following table sets forth the name, age and position of each
of our executive officers and directors as of the date of this Annual Report.
|
Name |
Age |
Position | ||
|
Executive officers |
||||
|
Mr. Ofer Haviv |
59 |
President and Chief Executive Officer and Director | ||
|
Mr. Yaron Eldad |
60 |
Chief Financial Officer | ||
|
Ms. Polina Ravzin* |
44 |
VP Finance | ||
|
Dr. Gabi Tarcic |
46 |
Vice President Product | ||
|
Dr. Ilia Zhidkov |
49 |
Vice President Computational Platform | ||
|
Directors |
||||
|
Mr. Nir Nimrodi(3)(4)
|
57 |
Chairperson of the Board | ||
|
Ms. Sarit Firon(3)(4)
|
59 |
Director | ||
|
Mr. Dan Falk(1)(2)(4)
|
80 |
Director | ||
|
Dr. Adrian Percy(1)(2)(
(4) |
60 |
Director | ||
|
Mr. Leon Y. Recanati(1)(2)(3)(4)
|
77 |
Director |
|
* |
Ms. Ravzin will assume the responsibilities of the Chief Financial Officer, in replacement of Mr. Eldad,
as of April 1, 2026. |
____________________________
| (1) |
Member of our Audit Committee. |
| (2) |
Member of our Compensation and Nominating Committee. |
| (3) |
Member of our Pricing/Investment Committee. |
| (4) |
Independent director under the Nasdaq Listing Rules. |
Executive Officers
Mr. Ofer Haviv has served
as Evogene's President and Chief Executive Officer since December 2004 after having joined the company in January 2002 as Chief Financial
Officer. Mr. Haviv serves as Chairperson of the Board of Directors of our subsidiaries. Mr. Haviv serves as the Chief Executive Officer
of our subsidiaries, Lavie Bio, Biomica and is expected to serve as Casterra’s Chief Executive Officer commencing April 1st,
2026. Mr. Haviv served as a director of the company from 2006 to 2007, and from March 2025. Mr. Haviv is a Certified Public
Accountant and holds a B.A. in Accounting and Economics from Tel-Aviv University, Israel.
Mr. Yaron Eldad has
served as Chief Financial Officer of Evogene since April 2022. Mr. Eldad will conclude his employment at the Company at the end of March
2026. Mr. Eldad has held various chief financial officer positions over the last 25 years in public and private technology and biotechnology
companies, including Yamba Group Int. Ltd. from 2011 to 2021, Recoly NV from 2008 to 2010, and e-Sim Ltd. from 1998 to 2007. Mr. Eldad
also serves on the board of directors and as chairman of the audit and compensation committees of B.O.S. Better Online Solutions Ltd.
Mr. Eldad holds a B.A. in Economics and Accounting from the Ben-Gurion University of the Negev, Israel, an Executive MBA in Strategic
Management from the Hebrew University of Jerusalem, Israel, and an M.A. in law from the Bar-Ilan University, Israel.
67
Ms. Polina
Ravzin has served as VP Finance of Evogene since February 2022. Upon Mr. Eldad’s conclusion of employment, Ms. Ravzin shall
assume his responsibilities as Chief Financial Officer. Prior to joining the Company, Ms. Ravzin served as controller and assistant to
the CFO at DSIT Solutions Ltd. and Acorn Energy Inc. (Nasdaq/OTCQB: ACFN). Ms. Ravzin holds a B.A. in Accounting and Economics from Tel
Aviv University, and is a Certified Public Accountant in Israel.
Dr. Gabi Tarcic
was appointed as Evogene’s Chief Development Officer in January 2026. Dr. Tarcic has extensive experience in research and development
projects and as a senior executive in the biotech industry. Prior to joining Evogene, Dr. Tarcic has served in various positions at Fore
Biotherapeutics (formerly NovellusDx Israel), most recently as its Chief Technology Officer from January 2019 to December 2024. He also
served as the Chief Technology Officer at Baobab Therapeutics IL Ltd. from January 2024 to September 2024. Dr. Tarcic holds a Ph.D. in
biology and a M.Sc. in biology from The Weizmann Institute of Science, Israel.
Dr. Ilia Zhidkov
was appointed as Evogene’s Chief Technology Officer in January 2026. Dr. Zhidkov joined Evogene in 2011 as a Bioinformatician in
the Computational Genomics Department and has held various managerial positions in the company over the years. Dr. Zhidkov holds a Ph.D.
in Genetics from Ben Gurion University.
Directors
Mr. Nir Nimrodi
has served as a director of our Company since September 2022 and as chairperson since March 2025. Prior to his appointment to the
Board, he was a consultant to the Board from April 2020 to September 2022. Since June 2025, Mr. Nimrodi has served as an Operating
Partner at ARCHIMED, a leading Life Science Private Equity fund. From May 2019 to October 2024, Mr. Nimrodi served as the Chairman and
Chief Executive Officer of Accellix Inc., a leading cell therapy analytical company. In addition, since August 2023, Mr. Nimrodi
has served as a director of OdysightAI. Mr. Nimrodi has served as a director in a number of private companies, including Rapid Medical
Ltd. since September 2025, MNDL Bio since June 2025, and Scopio Labs since October 2023. Prior to joining Accellix, Mr. Nimrodi served
as the Chief Business Officer of Intrexon Corporation, a leader in synthetic biology from March 2014 to April 2019. Mr. Nimrodi holds
a B.A. in Economics and MBA from the Tel Aviv University, Israel.
Ms. Sarit Firon has
served as a director of our Company since August 2016, and as chairperson from August 2021 to March 2025. Ms. Firon is a managing partner
of Team8 Group and a co-founder and managing partner of Team8 Capital, the investment arm of Team8 Group, which invests in early-stage
technology startups. Ms. Firon serves on several boards of directors of Team8 Capital portfolio. Ms. Firon has served as a director for
several public and private companies, including Ivix since 2021, Classiq Technologies since 2020, FundGuard since 2020, Spiral since 2019,
and Perion Network Ltd. (Nasdaq: PERI) from November 2016 until June 2022. Ms. Firon previously served as a director of SetSail Technologies
from 2019 to 2024. Since August 2020, she has served as a board member of Friends of the
Weizmann Institute. Ms. Firon holds a B.A. in Accounting and Economics from Tel-Aviv University, Israel.
Mr. Dan Falk
has served as a director of our Company since he was appointed by the Board in November 2021. Mr. Falk has extensive experience
of more than 20 years in serving as a financial expert on public and private company boards, most recently on the boards of Nice Ltd.
(Nasdaq: NICE), Ormat Technologies Inc. (NYSE: ORA) and Innoviz Technologies Ltd. (Nasdaq: INVZ). Additionally, in the past Mr. Falk held
various executive positions in Orbotech Ltd. between 1985 and 1999, and Sapiens International Corporation (Nasdaq: SPNS) between 1999-2001.
Mr. Falk holds a B.A. in Economics and Political Sciences, and an M.A. in Business Administration both from the Hebrew University of Jerusalem,
Israel.
Dr. Adrian
Percy has served as a director of our Company since February 2019. Dr. Percy has served on the board of directors of
AgPlenus Ltd. since April 2023, BioLumic Ltd. since April 2019, Nufarm Ltd. since June 2023, and FungiAlert Inc. since March
2022. He is a member of the science and technology boards of Harpe BioHerbicide Solutions Inc., and Biotalys NV. Dr. Percy is serving
as the Executive Director of the N.C. Plant Sciences Initiative and is a Professor in the Department of Plant and Microbial Biology
at North Carolina State University since 2021. Dr. Percy is currently a venture partner with DYDX Capital and frequently acts as
an advisor to companies through his own consultancy company, Nomad Technology Consulting. From 2019-2021, Dr. Percy served as Chief Technology
Officer at UPL Ltd. From 2014-2018, he served as the head of research and development for the Crop Science division of Bayer as part of
its executive committee. During his 16-year tenure at Bayer, he also led regulatory affairs activities across the entire division of Crop
Science between 2013 and 2014 and crop protection development activities for Bayer in North America between 2011 and 2013. Dr. Percy has
held positions in the research and development departments of Aventis CropScience SA between 2000 and 2002, Rhone Poulenc SA between 1996
and 2000, and Bayer in France, Germany and the United States. Dr. Percy holds a bachelor’s degree in pharmacology from the
University of Liverpool, England, as well as a master’s degree in toxicology and a doctorate in biochemistry from the University
of Birmingham, England.
68
Mr. Leon Y.
Recanati has served as a director of our Company since May 2005. Mr. Recanati has served as chairperson and chief executive
officer of GlenRock Israel Ltd. since 2003. Previously, Mr. Recanati was chief executive officer or chairperson positions at IDB
Holding Corporation, Clal Industries, Azorim Investment Development and Construction Co., Delek Israel Fuel Corporation, and Super-Sol.
He also founded Clal Biotechnologies Industries, a biotechnology investment company operating in Israel. Mr. Recanati has served as a
member of the board of directors of Kamada Ltd. since 2005, and as an observer to the board of directors of Mivtach-Shamir Holdings Ltd.
since 2002. Mr. Recanati holds an MBA from The Hebrew University of Jerusalem, Israel, and Honorary Doctorates from the Technion
Institute of Technology, Israel, and Tel-Aviv University, Israel.
Arrangements for Election of Directors and Members of Management;
Family Relationships
There are no arrangements or understandings with major shareholders,
customers, suppliers or others related to the election of our board of directors or the appointment of members of our senior management.
There are furthermore no family relationships among any directors or members of our senior management.
B. Compensation
Aggregate and Individual Compensation of Officers and Directors
The aggregate compensation, including non-cash share-based compensation
(consisting of expenses related to option grants), accrued by us in respect of the year ended December 31, 2025 to all persons who served
as directors and/or executive officers during that year, was approximately $1.53 million.
That amount includes approximately $0.02 million of gross compensation set aside or accrued for executive officers for purposes of pension,
severance, retirement, car, phone or similar benefits or expenses, but does not include business travel, relocation, professional and
business association dues and expenses reimbursed to executive officers, and other expenses commonly reimbursed by companies in Israel.
These amounts include the partial-year compensation paid to 7 executive officers, who served in their positions over the course of 2025
and whose employment as executive officers either was terminated or has commenced during 2025.
During 2025, we granted our executive officers and directors an
aggregate amount of 180,000 options. Of the options granted 20,000 were granted with an exercise price of NIS 4.36 ($1.37) and 160,000
were granted with an exercise price of NIS 6.06 per share ($1.90).
The following table presents information regarding compensation
accrued in our financial statements for the year ended December 31, 2025 for our five most highly compensated officers, as required under
Israeli Securities Law 5728-1968 and the regulations promulgated thereunder.
|
(in thousands, US$)(1) |
||||||||||||||||
|
Name and Position |
Salary and related benefits |
Bonus(2) |
Value of Options Granted(3) |
Total |
||||||||||||
|
Ofer Haviv President and Chief Executive Officer |
393 |
- |
75 |
468 |
||||||||||||
|
Yaron Eldad Chief Financial Officer
|
246 |
- |
46 |
292 |
||||||||||||
|
Dan Gelvan CEO of AgPlenus |
242 |
- |
95 |
337 |
||||||||||||
|
Yoash Zohar CEO of Casterra |
233 |
- |
174 |
407 |
||||||||||||
|
Gabi Tarcic Vice President Product |
226 |
- |
15 |
241 |
||||||||||||
| (1) |
All amounts reported in the table are in terms of cost to the Company, as recorded in our financial statements. |
| (2) |
Bonus amounts shown in this table reflect bonuses that were paid in 2025 relating to the office holders’ service in our Company
in 2024, as approved by our Compensation and Nominating Committee and Board of Directors, and, to the extent required, also by our shareholders.
|
| (3) |
Consists of amounts recognized as non-cash expenses in our statement of profit or loss for the year ended December 31, 2025 in respect
of option grants. |
69
Compensation Policy
As required by the Companies Law, we have adopted a policy regarding
the terms of engagement of office holders, or a compensation policy. Under the Companies Law, the term “office holders” includes
directors and certain officers, including the general manager (i.e., chief executive officer, or CEO), chief business manager, deputy
CEO, vice CEO, any other person assuming the responsibilities of any of the foregoing positions without regard to such person’s
title, and any director or manager who reports directly to the CEO. The compensation policy serves as the basis for determining the financial
terms of employment or engagement of office holders, including exculpation, insurance, indemnification or any monetary payment or obligation
of payment in respect of employment or engagement. The compensation policy must relate to certain factors specified in the Companies Law,
including advancement of the company’s objectives, the company’s business and its long-term strategy, and creation of appropriate
incentives for executives. It must also consider, among other things, the company’s risk management, size and the nature of its
operations. The Companies Law describes what factors have to be considered by, and what principles must be included in, the compensation
policy.
Our current compensation policy was adopted in June 2024, at
an annual general meeting of our shareholders, following the recommendation of our compensation committee and our board of directors,
and will remain in effect for a period of three years unless restated prior, in accordance with the Companies Law. In accordance with
Nasdaq listing standards, under Rule 10D-1, we have adopted on August 16, 2023, a clawback policy.
Approvals Required for Compensation of Directors and Officers
Under the Companies Law, the compensation of each of our directors
and our CEO requires the approval of our compensation committee, the subsequent approval of the board of directors and, unless exempted
under the regulations promulgated under the Companies Law, the approval of our shareholders at a general meeting (in the case of our CEO,
the shareholder approval must include the special majority described under “Item 6. Directors, Senior Management and Employees—C.
Board Practices—Approval of Related Party Transactions under Israeli Law— Disclosure of Personal Interests of an Office
Holder and Approval of Certain Transactions”). The compensation of any other office holder (who is neither a director nor our Chief
Executive Officer), if consistent with our compensation policy, requires the approval of our compensation committee, followed by our board
of directors. Compensation of any such office holder that deviates from our compensation policy also requires shareholders’ approval,
including by the special majority described under “Item 6. Directors, Senor Management and Employees—C. Board Practices—
Approval of Related Party Transactions under Israeli Law— Disclosure of Personal Interests of an Office Holder and Approval of Certain
Transactions.”
Compensation of Executive Officers
Our compensation for our executive officers is paid pursuant to
written employment agreements that we have entered with each of our executive officers and is based, in part, on each executive officer’s
personal contribution to our management, operations and success. Such compensation is determined consistent with our compensation policy.
For more information on our compensation policy, please see “—Compensation Policy” above.
Each executive officer’s entitlement to an annual bonus is
determined according to a formula that links financial and qualitative target-based goals and metrics related to the specific objectives
within the responsibility of the relevant executive officer. In the case of executive officers who are also office holders, their annual
bonus is also required to be consistent with our compensation policy. The goals and objectives of Evogene’s office holders are determined
by the compensation and nominating committee and our board of directors. For each fiscal year, our compensation and nominating committee
and board of directors determine the maximum target bonus for each of our office holders, including our CEO. Further, for our CEO, all
terms of employment, including bonus terms, require, in general, approval by a majority of our shareholders present and voting (in person
or by proxy) at a meeting of shareholders, subject to fulfillment of one of the two additional conditions described in “Item 6.
Directors, Senior Management and Employees—C. Board Practices—Approval of Related Party Transactions under Israeli Law—Disclosure
of Personal Interests of an Office Holder and Approval of Certain Transactions.” As approved by our annual general meeting of shareholders
on August 10, 2021, the annual cash bonus measurable performance objectives of our CEO, Mr. Ofer Haviv may be determined annually by the
Compensation Committee and the Board.
Each of the employment agreements with our executive officers contains
provisions regarding non-competition, confidentiality of information and assignment of inventions. The non-competition provision applies
for a period that is generally 12 months following termination of employment. The enforceability of covenants not to compete in Israel
and in the United States is subject to limitations. The employment agreement of each executive officer is terminable upon between 60 to
90 days’ written notice by either party to the agreement.
70
Director Compensation
Our directors are entitled to cash compensation and equity compensation
as follows:
Cash Compensation of
Directors
All of our directors receive annual fees and per-meeting fees
for their service on our board and its committees, in the following amounts:
| • |
Annual fees in an amount of approximately $20,600 for directors classified as experts; and |
| • |
Per-meeting fees in an amount of approximately $1,100 for directors classified as experts; 60% of such amounts for participation
in meetings via telecommunication and 50% of such amounts for resolutions adopted in writing. |
Such amounts are within the range for cash compensation for
external and unaffiliated directors of a company of our size (based on level of shareholders’ equity) under the Companies Law.
Cash Compensation of
Chairperson of the Board
In accordance with shareholders’ approval from August
2021, a chairperson of the board who is determined by the Board to be an “active chairperson” in light of increased involvement
in our activities and increased time investment in the performance of the duties accompanying the chairperson’s position compared
to the other directors, shall be entitled to increased compensation relative to our other directors of approximately $6,600 per month.
Our Board has determined that Mr. Nir Nimrodi, our chairperson of the board, is an active chairperson, and accordingly his fees as active
chairperson is as aforesaid.
Equity Compensation of
Directors
In accordance with our shareholders’ approval from August
2025, and in compliance with our compensation policy, each non-employee director is granted options to purchase 2,500 ordinary shares
of the Company on the date of our annual general shareholders meeting at which such director is elected or re-elected to the board. The
chairperson of our board is granted options to purchase 5,000 ordinary shares and options to purchase 10,000 ordinary shares for the chairperson
who will be defined by the Board as an “active chairperson”. These options vest over a period of one year, with 25% of the
options vesting at the end of each successive three-month period following the director’s re-appointment by the general meeting
of shareholders, subject to continued service through each vesting date. In the case of a director who is elected to the Board for
the first time, all of the options to purchase 2,500 or 5,000 or 10,000 ordinary shares (as applicable) shall vest following a one year
“cliff”— i.e., on the anniversary of the initial date of election.
All option grants to directors following the approval of our 2021
Share Incentive Plan by our shareholders (i.e., as of August 10, 2021), are subject to the terms of our 2021 Share Incentive Plan and
are granted at an exercise price equal to the average closing sales price per ordinary share on the TASE over the thirty trading day period
preceding the subject date (but not less than “fair market value” with respect to grantees subject to U.S. tax). All option
grants to directors prior to August 10, 2021, are subject to the terms of our 2013 Share Option Plan and were granted at an exercise price
equal to the higher of (i) the average closing price of our ordinary shares on the TASE during the 30 trading days prior to the date of
option allocation, plus 5% and (ii) the closing price of our ordinary shares on the TASE on the date of option allocation. All such options
expire 10 years following the date of grant thereof.
Information regarding the options to purchase our ordinary shares
(including number of options, exercise price and expiration date of all such options) held by each of our directors and executive officers
who beneficially owns our ordinary shares, after including ordinary shares underlying options held by them, which, as of March 17, 2025,
were exercisable or exercisable within 60 days, appears in the beneficial ownership table in Item 7.A below and in the footnotes thereto.
71
Share Option and Incentive Plans
Company Option and Incentive
Plans
We maintain two share option and incentive plans, the Evogene
Ltd. 2013 Share Option Plan, or the 2013 Plan, and the Evogene Ltd. 2021 Share Incentive Plan, or the 2021 Plan. Both incentive plans
provide for the grant of options to purchase our ordinary shares, and the 2021 Plan additionally provides for the issuance of restricted
share units, or RSUs, the grant of RSUs and the issuance or grant of other equity-based awards.
On March 4, 2026, the Board approved an increase of 582,407 ordinary shares issuable
pursuant to the 2021 Plan. As of March 15, 2026, options to purchase 944,325 ordinary shares, having a weighted average exercise price
of $5.97 per share, and 4,675 RSUs, having no exercise price, were outstanding under our option and incentive plans, and options to purchase
315,074 ordinary shares were exercisable and 40,010 RSUs were vested. An additional 503,452 ordinary shares remained available for future
grant under our 2021 Plan as of that date.
Among other types of equity-based awards, our share option and
incentive plans provide for granting awards in compliance with Section 102 of the Israeli Income Tax Ordinance [New Version], 5721-1961,
or the Tax Ordinance, which provides to employees, directors and officers, who are not controlling shareholders (i.e.,
who hold less than 10% of our share capital) and are Israeli residents, favorable tax treatment for compensation in the form of shares,
options, RSUs or other types of equity awards issued or granted, as applicable, to a trustee under the “capital gains track”
for the benefit of the relevant employee, director or officer and are held by the trustee for at least two years after the date of grant
or issuance. Under the “capital gains track”, we are not allowed to deduct an expense with respect to the grant or issuance
of the relevant equity-based awards.
The 2021 Plan also permits us to grant equity-based awards to
U.S. residents, in accordance with the applicable provisions of the U.S. Internal Revenue Code of 1986, as amended, or the Code.
Awards granted under our plans may be subject to vesting schedules.
Options to purchase our ordinary shares granted under our plans expire 10 years from the grant date. The plans address the treatment of
vested and unvested awards upon the termination of employment of the award holder as well as upon consummation of a merger or consolidation
of our company, or sale of all or substantially all of our shares or assets.
Subsidiary Equity Incentive
Plans
In addition to the share option and incentive plans at our parent
company level, each of our subsidiaries has adopted its own equity incentive plan. The following table presents information regarding
our subsidiaries’ equity incentive plans, including the percentage of the equity of those companies that may be issued or granted
as equity incentives to employees, directors or service providers of those companies and the percentage of that equity that has been issued
or granted as of March 15, 2026 (in both cases, after including shares underlying options).
|
Subsidiary |
Percentage of Subsidiary's Equity Issuable as Equity Incentives
|
Percentage of Equity Granted as of March 15, 2025
as Equity Incentives |
||||||
|
AgPlenus |
13.84 |
% |
7.79 |
% | ||||
|
Biomica |
12.0 |
% |
0.69 |
% | ||||
|
Casterra |
7.54 |
% |
6.58 |
% | ||||
|
Lavie Bio |
8.21 |
% |
0.22 |
% | ||||
Grants under our subsidiaries’ equity incentive plans may
qualify for favorable treatment under the tax law provisions of the United States or Israel.
Share-based payments under our subsidiary equity incentive plans are presented as non-controlling
interests in the financial statements and were valued as a reversal of expenses of approximately $0.01 million in 2025, as detailed in
Note 17h to the financial statements included in this Annual Report under Item 18.
72
C. Board
Practices
Board of Directors
Under the Companies Law and our articles of association, the supervision
of the management of our business is vested in our board of directors. Our board of directors may exercise all powers and may take all
actions that are not specifically granted to our shareholders or to executive management. Our Chief Executive Officer (referred to as
a “general manager” under the Companies Law) is responsible for our day-to-day management. Our Chief Executive Officer is
appointed by, and serves at the discretion of, our board of directors, subject to the employment agreement that we have entered into with
him. All other executive officers are appointed by the Chief Executive Officer and are subject to the terms of any applicable employment
agreements that we may enter into with them.
Under our articles of association and the Companies Law, our board
of directors must consist of not less than three and no more than seven directors. Currently our board of directors consists of six directors.
Our directors are elected annually, by a simple majority vote of
holders of our voting shares participating and voting at the annual meeting of our shareholders, for a one-year term, from the annual
general meeting of our shareholders at which they are elected until the next annual general meeting and until their respective successors
are elected and qualified or until their earlier removal by our shareholders at a general meeting, or upon the occurrence of certain events,
in accordance with the Companies Law and our articles of association. The duration of service of each of our current directors can be
found in their respective biographies in Item 6.A. above.
In addition, under our articles of association, our board of directors
may appoint directors to fill vacancies or as new directors for a term of office that lasts until the next annual meeting of our shareholders.
In the event of a vacancy resulting in the board consisting of less than the minimum number of directors required by our articles of association,
our board of directors may only act in order to convene a general meeting of our shareholders for the purpose of electing such additional
number of directors.
Pursuant to the terms of a put option agreement we entered into
with Monsanto (now Bayer) in October 2013, Monsanto has the right to nominate a non-voting observer to our board of directors so long
as Monsanto holds at least 5% of our voting rights. In addition, pursuant to a share purchase agreement we entered into with Bayer in
December 2010 and as amended in June 2013, Bayer also has the right to appoint one observer to our board of directors so long as Bayer
holds at least 3% of our issued and outstanding shares. In each case, the observer is entitled to be advised reasonably in advance of
board meetings and is to receive copies of all material distributed in connection with such meetings. The observer would not have any
voting rights. To our knowledge, as of the date of this report, Monsanto and Bayer hold less than the percentage required for the purpose
of appointing an observer, and as of the date of this Annual Report, neither Monsanto nor Bayer has appointed an observer.
Chairperson of the Board
Our articles of association provide that the chairperson of the
board is appointed by the members of the board of directors and serves as chairperson of the board throughout his term as a director,
unless resolved otherwise by the board of directors. Under the Companies Law, the general manager (i.e., the Chief Executive Officer)
or a relative of the general manager may not serve as the chairperson of the board of directors, and the chairperson or a relative of
the chairperson may not be vested with authorities of the general manager, in each case without shareholder approval consisting of a majority
vote of the shares present and voting at a shareholders meeting, provided that either:
| • |
such majority includes at least 2/3 of the shares held by all shareholders who are not controlling shareholders and do not have a
personal interest in such appointment, present and voting at such meeting; or |
| • |
the total number of shares of non-controlling shareholders who do not have a personal interest in such appointment voting against
such appointment does not exceed two percent of the aggregate voting rights in the company. |
73
In addition, a person subordinated, directly or indirectly, to
the general manager may not serve as the chairperson of the board of directors; the chairperson of the board may not be vested with authorities
that are granted to those subordinated to the general manager; and the chairperson of the board may not serve in any other position in
the company or a controlled company, except that he may serve as a director or chairperson of a subsidiary.
External Directors
In general, under the Companies Law, the board of directors of
an Israeli public company (such as ours) is required to include at least two external directors. According to regulations promulgated
under the Companies Law, a person may be appointed as an external director if such person has either professional qualifications or accounting
and financial expertise. In addition, at least one of the external directors must be determined by our board of directors to have accounting
and financial expertise.
However, pursuant to regulations enacted under the Companies Law
in 2016, the board of directors of a company whose shares are listed on certain non-Israeli stock exchanges (including the Nasdaq Capital
Market), which company does not have a controlling shareholder (as such term is defined in the Companies Law), may elect not to comply
with the requirements of the Companies Law relating to the election of external directors and to the composition of the audit committee
and compensation committee. Such an election may be made by the board of directors, and is contingent upon the company’s satisfaction,
in an ongoing manner, of the applicable foreign country stock exchange rules that apply to companies organized in that country relating
to the appointment of independent directors and the composition of the audit and compensation committees.
Because our company did not have, in May 2016, and still does not
have, a controlling shareholder, and as we comply with the Nasdaq Listing Rules applicable to domestic U.S. companies with respect to
a majority of our directors being independent and with respect to the composition of our audit committee and compensation committee, our
board of directors determined, in May 2016, to opt-out of the requirement to elect external directors. If in the future we were to have
a controlling shareholder, we would likely again be required to comply with the Companies Law requirements relating to external directors
and composition of the audit committee and compensation committee.
The term controlling shareholder, as used in the Companies Law
for purposes of all matters related to external directors and for certain other purposes, means a shareholder that has the ability to
direct the activities of the company, other than by virtue of being an office holder. For purposes of all matters related to external
directors, a shareholder is presumed to be a controlling shareholder if the shareholder holds 50% or more of the voting rights in the
company or has the right to appoint the majority of the directors of the company or its general manager (chief executive officer).
Directors’ Service Contracts
There are no arrangements or understandings between us, on the
one hand, and any of our directors, on the other hand, providing for benefits upon termination of their service as directors of our company.
Financial Statements Review and Audit Committee
Our financial statements review and audit committee, or audit committee,
consists of Mr. Dan Falk, Dr. Adrian Percy and Mr. Leon Recanati. Mr. Falk serves as the Chairperson of the audit committee.
Requirements as to Composition
Companies Law Requirements
Under the Companies Law, the board of directors of a public company
must appoint an audit committee. The audit committee must be comprised of at least three directors.
Following the promulgation of the regulations described above,
we may comply with the requirements of the Companies Law by appointing an audit committee whose composition complies with the Nasdaq Listing
Rules. Under the Nasdaq Listing Rules, we are required to maintain an audit committee consisting of at least three independent directors,
each of whom is financially literate and at least one of whom has accounting or related financial management expertise.
74
All members of our audit committee meet the requirements for independence
and financial literacy under the Nasdaq Listing Rules. Our board of directors has determined that each of Mr. Dan Falk and Mr. Leon Recanati
is furthermore an audit committee financial expert, as defined by the SEC rules, and has the requisite financial experience required under
the Nasdaq Listing Rules.
Each of the members of the audit committee is also “independent”
as required by, and as such term is defined in, Rule 10A-3(b)(1) under the Exchange Act, which is different from the general test for
independence of board and committee members under the Nasdaq Listing Rules.
Audit Committee Role
Our board of directors (following the approval by our audit committee)
has adopted an audit committee charter setting forth the required composition, meeting procedures and other matters related to the terms
of operation of the committee. The charter also describes the responsibilities of the audit committee consistent with the rules of the
SEC and the Nasdaq Listing Rules, which include, among others:
| • |
retaining and terminating the services of our independent auditors, subject to the approval of the board of directors and shareholders;
|
| • |
pre-approval of audit and non-audit services to be provided by the independent auditors; |
| • |
reviewing with management and our independent directors our financial reports prior to their submission to the SEC; and |
| • |
approval of certain transactions with office holders and other related-party transactions. |
The charter of the audit committee is available on our website.
The contents of that website do not constitute a part of this Annual Report.
Our audit committee provides assistance to our board of directors
in fulfilling its legal and fiduciary obligations in matters involving our accounting, auditing, financial reporting, internal control
and legal compliance functions by pre-approving the services performed by our independent accountants and reviewing their reports regarding
our accounting practices and systems of internal control over financial reporting. Our audit committee also oversees the audit efforts
of our independent accountants and takes those actions that it deems necessary to satisfy itself that the accountants are independent
of management.
Additionally, under the Companies Law, an audit committee is required,
among other things, to (i) identify deficiencies in the administration of the company (including by consulting with the internal auditor),
and recommend remedial actions with respect to such deficiencies, (ii) review and approve certain related party transactions, including
determining whether or not such transactions are extraordinary transactions or insignificant transactions, and (iii) adopt procedures
with respect to processing employee complaints in connection with deficiencies in the administration of the company, and the appropriate
means of protection afforded to such employees. In addition, the audit committee is responsible for overseeing the internal control procedures
of the company. Under the Companies Law, the approval of the audit committee is required for specified actions and transactions with office
holders and controlling shareholders. See “—Approval of Related Party Transactions under Israeli Law.”
In addition, the audit committee is required to supervise the manner
pursuant to which the Company implements the requirements of the Privacy Protection Law, 1981 and the Privacy Protection Regulations (Data
Security), 2017.
Compensation and Nominating Committee
Our compensation and nominating committee, or compensation committee,
consists of Mr. Dan Falk, Mr. Leon Recanati and Dr. Adrian Percy. Mr. Falk serves as the Chairperson of the committee.
Requirements as to Composition
Following the promulgation of the regulations described above,
we may comply with the requirements of the Companies Law by appointing a compensation committee whose composition complies with the Nasdaq
Listing Rules. Under the Nasdaq Listing Rules, we are required to maintain a compensation committee consisting of at least two members,
each of whom qualifies as an independent director (as defined under the Nasdaq Listing Rules). Each compensation committee member must
furthermore be deemed by our board of directors to meet the enhanced independence requirements for members of the compensation committee
under the Nasdaq Listing Rules, which require that our board of directors consider (among other things) the source of each such committee
member’s compensation in determining whether he or she is independent.
75
Our board of directors has determined that each of the members
of our compensation committee is considered “independent” under the Nasdaq Listing Rules and meets the enhanced independence
requirements for members of the compensation committee under the Nasdaq Listing Rules and Rule 10C-1 under the Exchange Act.
Compensation and Nominating
Committee Role
Our board of directors (following approval by our compensation
committee) has adopted a compensation and nominating committee charter setting forth the required composition, meeting procedures and
other matters related to the terms of operation of the committee. The charter also describes the responsibilities of the compensation
committee consistent with the Nasdaq Listing Rules and the Companies Law, which include, among others:
| • |
reviewing and recommending an overall compensation policy with respect to our Chief Executive Officer and other executive officers,
as described above under “Item 6. Directors, Senior Management and Employees—B. Compensation—Compensation Policy”;
|
| • |
reviewing and approving corporate goals and objectives relevant to the compensation of our Chief Executive Officer and other executive
officers, including evaluating their performance in light of such goals and objectives; |
| • |
reviewing and recommending to our board of directors to approve the granting of options and other incentive awards; |
| • |
overseeing our company’s policy for recovery of erroneously awarded compensation; |
| • |
reviewing, evaluating and making recommendations regarding the compensation and benefits for our non-employee directors; and
|
| • |
advising our board of directors in selecting individuals who are best able to fulfill the responsibilities of a director or executive
officer of our company. |
The charter of the compensation and nominating committee is available
on our website. The contents of that website do not constitute a part of this Annual Report.
Compensation Policy under the Companies Law
In general, under the Companies Law, a public company must have
a compensation policy approved by the board of directors after receiving and considering the recommendations of the compensation committee.
In addition, our compensation policy must be approved at least once every three years, first, by our board of directors, upon recommendation
of our compensation committee, and second, by a simple majority of the ordinary shares present, in person or by proxy, and voting (excluding
abstentions) at a general meeting of shareholders, provided that either:
| • |
such majority includes at least a majority of the shares held by shareholders who are not controlling shareholders and shareholders
who do not have a personal interest in such compensation policy; or |
| • |
the total number of shares of non-controlling shareholders and shareholders who do not have a personal interest in the compensation
policy and who vote against the policy, does not exceed two percent (2%) of the aggregate voting rights in the Company. |
Under special circumstances, the board of directors may approve
the compensation policy despite the objection of the shareholders on the condition that the compensation committee and then the board
of directors decide, on the basis of detailed grounds and after discussing again the compensation policy, that, despite the objection
of shareholders, approval of the compensation policy is for the benefit of the company.
76
The compensation policy must be based on certain considerations,
include provisions and matters specifically set forth in the Companies Law.
The compensation policy must serve as the basis for decisions concerning
the financial terms of employment or engagement of office holders, including exculpation, insurance, indemnification or any monetary payment
or obligation of payment in respect of employment or engagement. The compensation policy must be determined and later reevaluated according
to certain factors, including: the advancement of the company’s objectives, business plan and long-term strategy; the creation of
appropriate incentives for office holders, while considering, among other things, the company’s risk management policy; the size
and the nature of the company’s operations; and with respect to variable compensation, the contribution of the office holder towards
the achievement of the company’s long-term goals and the maximization of its profits, all with a long-term objective and according
to the position of the office holder. The compensation policy must furthermore consider the following additional factors:
| • |
the education, skills, experience, expertise and accomplishments of the relevant office holder; |
| • |
the office holder’s position and responsibilities; |
| • |
prior compensation agreements with the office holder; |
| • |
the ratio between the cost of the terms of employment of an office holder and the cost of the employment of other employees of the
company, including employees employed through contractors who provide services to the company, in particular the ratio between such cost
to the average and median salary of such employees of the company, as well as the impact of disparities between them on the work;
|
| • |
relationships in the company; |
| • |
if the terms of employment include variable components — the possibility of reducing variable components at the discretion
of the board of directors and the possibility of setting a limit on the value of non-cash variable equity-based components; and
|
| • |
if the terms of employment include severance compensation — the term of employment or office of the office holder, the terms
of the office holder’s compensation during such period, the company’s performance during such period, the office holder’s
individual contribution to the achievement of the company’s goals and the maximization of its profits and the circumstances under
which he or she is leaving the company. |
The compensation policy must also include, among other things:
| • |
with regard to variable components: |
| o |
with the exception of office holders who report to the chief executive officer, a means of determining the variable components on
the basis of long-term performance and measurable criteria; provided that the company may determine that an immaterial part of the variable
components of the compensation package of an office holder shall be awarded based on non-measurable criteria, or if such amount is not
higher than three months’ salary per annum, taking into account such office holder’s contribution to the company; and
|
| o |
the ratio between variable and fixed components, as well as the limit of the values of variable components at the time of their payment,
or in the case of equity-based compensation, at the time of grant; |
| • |
a condition under which the office holder will return to the company, according to conditions to be set forth in the compensation
policy, any amounts paid as part of the office holder’s terms of employment, if such amounts were paid based on information later
to be discovered to be wrong, and such information was restated in the company’s financial statements; |
| • |
the minimum holding or vesting period of variable equity-based components, while taking into consideration long-term incentives;
and |
| • |
a limit to retirement grants. |
Internal Auditor
Under the Companies Law, the board of directors of an Israeli public
company must appoint an internal auditor recommended by the audit committee. Under the Companies Law, the internal auditor may be an employee
of the company but not an office holder, an affiliate, or a relative of an office holder or affiliate, and may not be the company’s
independent accountant or its representative.
The role of the internal auditor is to examine, among other things,
our compliance with applicable law and orderly business procedures. The audit committee is required to oversee the activities and to assess
the performance of the internal auditor as well as to review the internal auditor’s work plan. Mr. Yisrael Gewirtz, CPA, has been
appointed as our internal auditor. Mr. Gewirtz is a certified internal auditor and a partner of Fahn Kanne Control Management Ltd., an
affiliate of Grant Thornton LLP.
Our internal auditor also provides management and the audit committee
ongoing assessments of our risk management processes and our internal controls.
77
Approval of Related Party Transactions under Israeli Law
Fiduciary Duties of Directors and Executive
Officers
The Companies Law codifies the fiduciary duties that office holders
owe to a company. Many of the executive officers listed in the table under “Item 6. Directors, Senior Management and Employees—
A. Directors and Senior Management” are also office holders under the Companies Law. An office holder’s fiduciary duties consist
of a duty of care and a duty of loyalty. The duty of care requires an office holder to act with the level of care with which a reasonable
office holder in the same position would have acted under the same circumstances. The duty of loyalty requires that an office holder act
in good faith and in the best interests of the company. The duty of care includes a duty to use reasonable means to obtain (i) information
on the appropriateness of a given action submitted for his or her approval or performed by virtue of his or her position; and (ii) all
other important information pertaining to these actions. The duty of loyalty includes a duty to (i) refrain from any conflict of interest
between the performance of his or her duties in the company and his or her personal affairs; (ii) refrain from any activity that is competitive
with the business of the company; (iii) refrain from exploiting any business opportunity of the company in order to receive a personal
gain for himself or herself or others; and (iv) disclose to the company any information or documents relating to the company’s affairs
which the office holder received as a result of his or her position as an office holder.
Disclosure of Personal Interests of an Office
Holder and Approval of Certain Transactions
The Companies Law requires that an office holder promptly disclose
to the board of directors any conflict of interest (referred to under the Companies Law as a “personal interest”) that he
or she may have and all related material information known to him or her concerning any existing or proposed transaction with the company.
If it is determined that an office holder has a personal interest in a transaction, approval by the board of directors is required for
the transaction, unless the company’s articles of association provide for a different method of approval. Our articles of association
provide that for non-extraordinary interested party transactions, the board of directors may delegate its approval, or may provide a general
approval to certain types of non-extraordinary interested party transactions. Every interested party transaction requires that our board
of directors determine affirmatively that the transaction is favorable to the company. Approval first by the company’s audit committee
and subsequently by the board of directors is required for an extraordinary transaction, meaning any transaction that is not in the ordinary
course of business, not on market terms or that is likely to have a material impact on the company’s profitability, assets or liabilities.
A director and any other office holder who has a personal interest in a transaction which is considered at a meeting of the board of directors
or the audit committee may generally (unless it is with respect to a transaction which is not an extraordinary transaction) not be present
at such a meeting or vote on that matter unless a majority of the directors or members of the audit committee, as applicable, have a personal
interest in the matter. If a majority of the members of the audit committee or the board of directors has a personal interest in the approval
of such a transaction then all of the directors may participate in deliberations of the audit committee or board of directors, as applicable,
with respect to such transaction and vote on the approval thereof and, in such case, shareholder approval is also required.
Pursuant to the Companies Law, extraordinary transactions with
our office holders who are not directors require audit committee approval and subsequent approval by our board of directors. Compensation,
insurance, indemnification or exculpation arrangements for office holders who are not directors require approval by our compensation committee,
followed by our board of directors and, if deviating from our compensation policy, our shareholders as well, via a special majority. Compensation
arrangements with directors, including in their capacities as executive officers, or with our Chief Executive Officer, as well as insurance
(unless exempted under the applicable regulations), indemnification or exculpation of directors or our Chief Executive Officer, require
the approval of the compensation committee, the board of directors and our shareholders, in that order. In the case of our Chief Executive
Officer, the shareholder approval must fulfill, in addition to an ordinary majority, one of the following two special majority requirements:
| • |
at least a majority of the voting rights in the company held by non-controlling shareholders who have no conflict of interest (referred
to under the Companies Law as a “personal interest”) in the transaction or arrangement and who are present and voting (in
person or by proxy) at the general meeting, must be voted in favor of approving the transaction or arrangement (for this purpose, abstentions
are disregarded); or |
| • |
the voting rights held by non-controlling, non-conflicted shareholders (as described in the previous bullet point) who are present
and voting (in person or by proxy) at the general meeting, and who vote against the transaction, do not exceed two percent of the voting
rights in the company. |
78
As described above (concerning votes related to external directors),
a shareholder is presumed to be a controlling shareholder if the shareholder holds 50% or more of the voting rights in the company or
has the right to appoint the majority of the directors of the company or its general manager (chief executive officer). In addition, as
it relates to the approval of related party transactions, a controlling shareholder is furthermore deemed to include any shareholder possessing
25% or more of the voting rights if no other shareholder possesses more than 50% of the voting rights.
If the transaction or compensation arrangement of the office holder
brought for approval amends an existing arrangement, then only the approval of the audit committee or compensation committee (as appropriate)
is required if that committee determines that the amendment is not material in relation to the existing arrangement.
Disclosure of Personal Interests of Controlling
Shareholders and Approval of Certain Transactions
Pursuant to the Companies Law, the disclosure requirements regarding
personal interests that apply to directors and executive officers also apply to a controlling shareholder of a public company. In the
case of an extraordinary transaction between a public company and a controlling shareholder, or in which a controlling shareholder has
a personal interest, the shareholder approval requirement—by a special majority—that applies to a compensation arrangement
for the chief executive officer (as described above) also applies to the extraordinary transaction (except that a controlling shareholder’s
vote is not excluded from the special majority determination, unless the controlling shareholder possesses a conflict of interest/ personal
interest). We currently do not have a controlling shareholder.
Shareholder Duties
Pursuant to the Companies Law, a shareholder has a duty to act
in good faith and in a customary manner toward the company and other shareholders and to refrain from abusing his, her or its power with
respect to the company, including, among other things, in voting at a general meeting and at shareholder class meetings with respect to
the following matters: (i) an amendment to the company’s articles of association; (ii) an increase of the company’s authorized
share capital; (iii) a merger; or (iv) an interested party transaction that requires shareholder approval.
In addition, a shareholder has a general duty to refrain from discriminating
against other shareholders. Certain shareholders also have a duty of fairness toward the company. These shareholders include any controlling
shareholder, any shareholder who knows that it has the power to determine the outcome of a shareholder vote and any shareholder who has
the power to appoint or to prevent the appointment of an office holder of the company or exercise any other rights available to it under
the company’s articles of association with respect to the company. The Companies Law does not define the substance of this duty
of fairness, except to state that the remedies generally available upon a breach of contract will also apply in the event of a breach
of the duty of fairness. Israeli courts have not yet interpreted the scope or nature of any of these duties.
Approval of Private Placements
Under the Companies Law, a significant private placement of securities
requires approval by the board of directors and the shareholders by a simple majority. A private placement is considered a significant
private placement if it results in a person becoming a controlling shareholder, or if all of the following conditions are met: (i) the
securities issued amount to 20% or more of the company’s outstanding voting rights before the issuance; (ii) some or all of the
consideration is other than cash or listed securities or the transaction is not on market terms; and (iii) the transaction will increase
the relative holdings of a shareholder who holds 5% or more of the company’s outstanding share capital or voting rights, or will
cause any person to become, as a result of the issuance, a holder of more than 5% of the company’s outstanding share capital or
voting rights.
79
Exculpation, Insurance and Indemnification
of Office Holders
Under the Companies Law, a company may not exculpate an office
holder from liability for a breach of the duty of loyalty. An Israeli company may exculpate an office holder in advance from liability
to the company, in whole or in part, for damages caused to the company as a result of a breach of duty of care but only if a provision
authorizing such exculpation is included in its articles of association. Our articles of association include such a provision. An Israeli
company may not exculpate a director from liability arising out of a prohibited dividend or distribution to shareholders.
An Israeli company may indemnify an office holder in respect of
the following liabilities and expenses incurred for acts performed as an office holder, either in advance of an event or following an
event, provided a provision authorizing such indemnification is contained in its articles of association:
| • |
financial liability imposed on him or her in favor of another person pursuant to a judgment, settlement or arbitrator’s award
approved by a court. However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, then
such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on the company’s
activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors
as reasonable under the circumstances, and such undertaking shall detail the abovementioned events and amount or criteria; |
| • |
reasonable litigation expenses, including attorneys’ fees, incurred by the office holder as a result of an investigation or
proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (i) no
indictment was filed against such office holder as a result of such investigation or proceeding; and (ii) no financial liability,
such as a criminal penalty, was imposed upon him or her as a substitute for the criminal proceeding as a result of such investigation
or proceeding or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal
intent; and |
| • |
reasonable litigation expenses, including attorneys’ fees, incurred by the office holder or imposed by a court in proceedings
instituted against him or her by the company, on its behalf or by a third party or in connection with criminal proceedings in which the
office holder was acquitted or as a result of a conviction for an offense that does not require proof of criminal intent. |
An Israeli company may insure an office holder against the following
liabilities incurred for acts performed as an office holder if and to the extent provided in the company’s articles of association:
(i) a breach of the duty of loyalty to the company, to the extent that the office holder acted in good faith and had a reasonable basis
to believe that the act would not prejudice the company; (ii) a breach of the duty of care to the company or to a third party, including
a breach arising out of the negligent conduct of the office holder; (iii) a financial liability imposed on the office holder in favor
of a third party; (iv) a financial liability imposed on the office holder in favor of a third party harmed by a breach in an administrative
proceeding; and (v) reasonable litigation expenses, including attorneys’ fees, incurred by the office holder as a result of an administrative
proceeding instituted against him or her.
An Israeli company may not indemnify or insure an office holder
against any of the following: (i) a breach of the duty of loyalty, except to the extent that the office holder acted in good faith and
had a reasonable basis to believe that the act would not prejudice the company; (ii) a breach of the duty of care committed intentionally
or recklessly, excluding a breach arising out of the negligent conduct of the office holder; (iii) an act or omission committed with intent
to derive illegal personal benefit; or (iv) a fine or forfeit levied against the office holder.
Under the Companies Law, exculpation, indemnification and insurance
of office holders must be approved by the compensation and nominating committee and the board of directors and, with respect to directors
and our Chief Executive Officer, also by our shareholders (in the case of our Chief Executive Officer, by a special majority, as described
above under “—Approval of Related Party Transactions under Israeli Law—Disclosure of Personal Interests of an Officer
Holder and Approval of Certain Transactions”, unless an applicable exemption applies).
Our articles of association allow us to indemnify and insure our
office holders for any liability imposed on them as a consequence of an act which was performed by virtue of being an office holder. Our
shareholders have approved an amendment to our articles of association that extends such indemnification and insurance to cover omissions
by our office holders (in their role as such) as well. Our office holders are currently covered by a directors’ and officers’
insurance policy.
We have entered into agreements with each of our directors and
executive officers. Each such agreement exculpates our director or officer, to the fullest extent permitted by law, from liability to
us for damages caused to us as a result of a breach of duty of care and undertaking to indemnify them to the fullest extent permitted
by law. This indemnification is limited to events determined as foreseeable by the board of directors based on our activities, and to
an amount or according to criteria determined by the board of directors as reasonable under the circumstances.
80
The maximum indemnification amount set forth in such agreements
is limited to an amount equal to 25% of our shareholders’ equity as reflected in our most recent consolidated financial statements
prior to the date on which the indemnity payment is made. If the amount equal to 25% of our shareholders’ equity is insufficient
to cover all indemnity amounts payable with respect to all indemnifiable directors and executive officers, such amount will be allocated
among our directors and executive officers pro rata, in accordance with their relative culpabilities, as finally determined by a court
with respect to a particular claim. The maximum amount set forth in such agreements is in addition to any amount paid (if paid) under
insurance and/or by a third party pursuant to an indemnification arrangement. In the opinion of the SEC, indemnification of directors
and office holders for liabilities arising under the Securities Act is against public policy and therefore unenforceable.
D. Employees
The total number of employees in Evogene and its subsidiaries as
of December 31, 2023, 2024 and 2025 was 142, 117 and 52 respectively. As of December 31, 2025, our research and development activities
involved 30 employees amounting to approximately 58% of our total full-time workforce, of which 21 were employed by Evogene and 9 were
employed by our subsidiaries. In 2025, our employees included individuals with degrees in biology, chemistry, plant genetics, agronomics,
computer and data science and other related fields and 16 of our employees hold a Ph.D. As of March 23, 2026, the total number of employees
in Evogene and its subsidiaries was 46.
The rate of male v. female in our company and our main subsidiaries
as of December 31, 2025, was as follows:
|
Company |
Female |
Male |
Total |
|||||||||
|
Evogene |
62 |
% |
38 |
% |
37 |
|||||||
|
AgPlenus |
50 |
% |
50 |
% |
6 |
|||||||
|
Lavie Bio |
0 |
% |
0 |
% |
0 |
|||||||
|
Biomica |
100 |
% |
0 |
% |
2 |
|||||||
|
Casterra |
29 |
% |
71 |
% |
7 |
|||||||
|
Total |
60 |
% |
40 |
% |
52 |
|||||||
The rate of male v. female in a managing position (i.e., any such
person that oversees and supervises other employees) in our company and our subsidiaries as of December 31, 2025, was as follows:
|
Company |
Female |
Male |
||||||
|
Evogene |
46 |
% |
54 |
% | ||||
|
AgPlenus |
67 |
% |
33 |
% | ||||
|
Lavie Bio |
0 |
% |
0 |
% | ||||
|
Biomica |
0 |
% |
0 |
% | ||||
|
Casterra |
0 |
% |
100 |
% | ||||
As of December 31, 2025, all of our employees are based in Israel. In
addition, during 2025, we had on average, approximately three hourly employees who are based in Israel. The following table shows the
breakdown of our employees by division/category of activity and by location as of December 31, 2023, 2024 and 2025, excluding hourly employees:
|
As of December 31, 2023 |
As of December 31, 2024 |
As of December 31, 2025 |
||||||||||||||||||||||||||||||||||
|
Israel |
U.S. |
Total |
Israel |
U.S. |
Total |
Israel |
U.S. |
Total |
||||||||||||||||||||||||||||
|
Executive management |
5 |
- |
5 |
5 |
- |
5 |
4 |
- |
4 |
|||||||||||||||||||||||||||
|
General and administrative |
31 |
- |
31 |
23 |
- |
23 |
14 |
- |
14 |
|||||||||||||||||||||||||||
|
Technology platform and Experimental Unit |
39 |
- |
39 |
38 |
- |
38 |
19 |
- |
19 |
|||||||||||||||||||||||||||
|
Lavie Bio Ltd. |
21 |
5 |
26 |
15 |
2 |
17 |
0 |
- |
0 |
|||||||||||||||||||||||||||
|
AgPlenus Ltd. |
11 |
1 |
12 |
11 |
- |
11 |
6 |
- |
6 |
|||||||||||||||||||||||||||
|
Casterra Ag Ltd. |
4 |
- |
4 |
5 |
- |
5 |
7 |
- |
7 |
|||||||||||||||||||||||||||
|
Biomica Ltd. |
18 |
- |
18 |
18 |
- |
18 |
2 |
- |
2 |
|||||||||||||||||||||||||||
|
Canonic Ltd. |
7 |
- |
7 |
- |
- |
- |
0 |
- |
0 |
|||||||||||||||||||||||||||
|
Total |
136 |
6 |
142 |
115 |
2 |
117 |
52 |
- |
52 |
|||||||||||||||||||||||||||
Israeli labor laws govern the length of the workday, minimum wages
for employees, procedures for hiring and dismissing employees, determination of severance pay, annual leave, sick days, advance notice
of termination of employment, equal opportunity and anti-discrimination laws and other conditions of employment. Subject to certain exceptions,
Israeli law generally requires severance pay upon the retirement, death or dismissal of an employee, and requires us and our employees
to make payments to the National Insurance Institute, which is similar to the U.S. Social Security Administration. Our employees have
pension plans that comply with the applicable Israeli legal requirements.
81
While none of our employees is party to any collective bargaining
agreements, certain provisions of the collective bargaining agreements between the “Histadrut”
(the General Union of Workers in Israel) and the Coordination Bureau of Economic Organizations (including the Industrialists’ Associations)
are applicable to our employees in Israel by order of the Israeli Ministry of the Economy and Industry. These provisions primarily concern
pension fund benefits for all employees, insurance for work-related accidents, recuperation pay and travel expenses.
None of our employees is represented by a labor union or covered
under a collective bargaining agreement. We have never experienced any employment-related work stoppages and believe our relationships
with our employees are good.
E. Share
Ownership
For information regarding the share ownership of our directors
and executive officers, please refer to the table in “Item 7. Major Shareholders and Related Party Transactions—A. Major
Shareholders.” For information regarding our equity incentive plans, see “Item 6.B. Director, Senior Management and Employees—Compensation—Equity
Incentive Plans.”
|
F.
Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation |
None.
| ITEM 7. |
MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS |
A. Major
Shareholders
The following table sets forth information with respect to the
beneficial ownership of our shares as of March 22, 2026 (unless otherwise indicated) by: (i) each of our directors and executive officers,
individually; and (ii) all of our executive officers and directors, as a group. There is no person or entity known by us to own beneficially
more than 5% of our outstanding shares.
The beneficial ownership of ordinary shares is determined in accordance
with the rules of the SEC, and generally includes any ordinary shares over which a person exercises sole or shared voting or investment
power, or the right to receive the economic benefit of ownership. For purposes of the table below, we deem shares subject to warrants
and options that are currently exercisable or exercisable within 60 days of March 22, 2026, and RSUs that are currently vested or
will become vested within 60 days of March 22, 2026, to be outstanding and to be beneficially owned by the person holding the warrants
or options for the purposes of computing the percentage ownership of that person, but we do not treat them as outstanding for the purpose
of computing the percentage ownership of any other person.
The percentage of shares beneficially owned by any shareholder
has been calculated based on 9,893,764 ordinary shares outstanding as of March 19, 2026. Unless otherwise indicated below, to our
knowledge, all persons named in the table have sole voting and investment power with respect to their shares, except to the extent that
authority is shared by spouses under community property laws.
82
Unless otherwise noted below, each shareholder’s address
is c/o Evogene Ltd., 13 Gad Feinstein Street, Park Rehovot, Rehovot 7638517, Israel. The shareholders listed below (including our directors
and executive officers) do not have any different voting rights than any of our other shareholders. We know of no arrangements that would,
at a subsequent date, result in a change of control of our company. A description of any material relationship that our principal shareholders
have had with us or any of our predecessors or affiliates within the past year is included under “Item 7. Major Shareholders and
Related Party Transactions—B. Related Party Transactions.”
|
Shares Beneficially Held
|
||||||||
|
Name of Beneficial Owner |
Number
|
Percentage of Class
|
||||||
|
Executive Officers and Directors |
||||||||
|
Mr. Ofer Haviv |
89,000 |
(1) |
0.90 |
% | ||||
|
Mr. Yaron Eldad |
36,569 |
(2) |
0.37 |
% | ||||
|
Dr. Gabi Tarcic |
15,000 |
(3) |
0.15 |
% | ||||
|
Mr. Ilia Zhidkov |
31,250 |
(4) |
0.32 |
% | ||||
|
Ms. Sarit Firon |
18,275 |
(5) |
0.18 |
% | ||||
|
Mr. Dan Falk |
7,275 |
(6) |
0.07 |
% | ||||
|
Mr. Nir Nimrodi |
18,525 |
(7) |
0.19 |
% | ||||
|
Dr. Adrian Percy |
10,575 |
(8) |
0.11 |
% | ||||
|
Mr. Leon Y. Recanati |
94,211 |
(9) |
0.95 |
% | ||||
|
All directors and executive officers as a group (9 persons) |
320,680 |
3.24 |
% | |||||
_______________________________
| (1) |
Consists of 89,000 ordinary shares issuable upon exercise of options that are currently exercisable or exercisable within 60 days
of March 22, 2026, of which options to purchase the following number of shares expire on the following dates, respectively: 22,500 on
August 8, 2027, 50,000 on April 21, 2030 and 16,500 on December 23, 2034. The weighted average exercise price of these options is NIS
69.38 per ordinary share. |
| (2) |
Consists of 33,750 ordinary shares issuable upon exercise of options that are currently exercisable or exercisable within 60 days
of March 22, 2026, of which options to purchase the following number of shares expire on the following dates, respectively: 15,000 on
March 30, 2032 and 18,750 on November 20, 2034. The weighted average exercise price of these options is NIS 22.97 per ordinary share.
Also includes 2,819 shares issuable upon vesting of RSUs that are currently vested or will become vested within 60 days of March 22, 2025,
with no exercise price. |
| (3) |
Consists of 15,000 ordinary shares issuable upon exercise of options that are currently exercisable or exercisable within 60 days
of March 22, 2026, all of which options shall expire on November 20, 2034. The weighted average exercise price of these options is NIS
8.62 per ordinary share. |
| (4) |
Consists of 31,250 ordinary shares issuable upon exercise of options that are currently exercisable or exercisable within 60 days
of March 22, 2026, of which options to purchase the following number of shares expire on the following dates, respectively: 3,000 on August
8, 2027, 750 on July 30, 2029, 8,000 on September 1, 2031, 4,500 on March 8, 2033 and 15,000 on November 20, 2034. The weighted average
exercise price of these options is NIS 50.02 per ordinary share. |
| (5) |
Consists of 18,275 ordinary shares issuable upon exercise of options that are currently exercisable or exercisable within 60 days
of March 22, 2026, of which options to purchase the following number of shares expire on the following dates, respectively: 1,000 on August
10, 2026, 250 on August 8, 2027, 250 on August 6, 2028, 250 on September 23, 2029, 250 on September 22, 2030, 3,600 on September 1, 2031,
3,600 on September 15, 2032, 3,600 on May 11, 2033, 3,600 on June 13, 2034 and 1,875 on August 18, 2035. The weighted average exercise
price of these options is NIS 55.30 per ordinary share. |
| (6) |
Consists of 7,275 ordinary shares issuable upon exercise of options that are currently exercisable or exercisable within 60 days
of March 22, 2026, of which options to purchase the following number of shares expire on the following dates, respectively: 1,800 on September
15, 2032, 1,800 on May 11, 2033, 1,800 on June 13, 2034 and 1,875 on August 18, 2035. The weighted average exercise price of these options
is NIS 22.11 per ordinary share. |
| (7) |
Consists of 18,525 ordinary shares issuable upon exercise of options that are currently exercisable or exercisable within 60 days
of March 22, 2026, of which options to purchase the following number of shares expire on the following dates, respectively: 5,625 on April
20, 2030, 1,800 on September 15, 2032, 1,800 on May 11, 2033, 1,800 on June 13, 2034 and 7,500 on August 18, 2035. The weighted average
exercise price of these options is $6.16 per ordinary share. |
| (8) |
Consists of 10,575 ordinary shares issuable upon exercise of options that are currently exercisable or exercisable within 60 days
of March 22, 2026, of which options to purchase the following number of shares expire on the following dates, respectively: 1,000 on December
23, 2028, 250 on February 1, 2030, 250 on February 1, 2031, 1,800 on August 10, 2031, 1,800 on September 15, 2032, 1,800 on May 11, 2033,
1,800 on June 13, 2034 and 1,875 on August 18, 2035. The weighted average exercise price of these options is $13.38 per ordinary share.
|
| (9) |
Includes 83,886 ordinary shares held by Mr. Recanati. Also includes 10,325 ordinary shares issuable upon exercise of options that
are currently exercisable or exercisable within 60 days of March 22, 2026, of which options to purchase the following number of shares
expire on the following dates, respectively: 250 on May 16, 2027, 250 on June 25, 2028, 250 on July 30, 2029, 250 on November 17, 2030,
250 on June 11, 2031, 1,800 on September 1, 2031, 1,800 on September 15, 2032, 1,800 on May 11, 2033, 1,800 on June 13, 2034 and
1,875 on August 18, 2035. The weighted average exercise price of these options is NIS 44.68 per ordinary share. |
83
Changes in Percentage Ownership by Major Shareholders
Over the course of 2024, there was a decrease in the percentage
ownership of SilverArc Capital Management, LLC, which later decreased to below 5%, based on its Schedule 13G filed on October 15, 2024.
Over the course of 2023, there were increases in the percentage
ownership of SilverArc (from below 5% to 6.1%), based on its Schedule 13G filed on February 14, 2024.
The information above regarding changes in percentage ownership
by major shareholders during the years ended December 31, 2023 through 2025 is based solely on information contained in Schedule 13Gs
(as may be amended) as filed by such persons with the SEC.
Record Holders
As of March 22, 2026, there are three shareholders of record of
our ordinary shares, two of which are located in the United States and one that is located in Israel. The majority of our issued and outstanding
ordinary shares were held of record in the United States, in the name of a single record shareholder — Cede & Co., as nominee
for the Depository Trust Company. The number of record holders is not representative of the number of beneficial holders of our ordinary
shares, nor is it representative of where such beneficial holders reside, since the shares held in the name of Cede & Co. are listed
for trading on Nasdaq and the TASE and are beneficially owned by a wide range of underlying beneficial shareholders who hold their shares
in “street name,” including Israeli and other non-U.S. shareholders.
B. Related
Party Transactions
Except as described below or elsewhere in this Annual Report, since
January 1, 2025, we have had no transaction, nor do we have any presently proposed transaction, and neither we nor our subsidiaries have
had any loan, nor do we or our subsidiaries have any presently proposed loan, involving any related party described in Item 7.B. of this
Annual Report.
Agreements with Directors and Officers
Employment Agreements
We have entered into written employment agreements with all of
our executive officers. Each of these agreements contains provisions regarding non-competition, confidentiality of information and assignment
of inventions. The non-competition provision applies for a period that is generally 12 months following termination of employment. The
enforceability of covenants not to compete in Israel and in the United States is subject to limitations.
Equity Awards
See “Item 6. Directors, Senior Management and Employee—B. Compensation—Share
Option and Incentive Plans.”
Indemnification Agreements
Our articles of association allow us to indemnify and insure our
office holders for any liability imposed on them as a consequence of an act which was performed by virtue of being an office holder. They
also allow us to exculpate an office holder in advance from liability to the company, in whole or in part, for damages caused to the company
as a result of a breach of duty of care. In furtherance of such allowance, we have entered into agreements with each of our directors
and executive officers exculpating them, to the fullest extent permitted by law, from liability to us for damages caused to us as a result
of a breach of duty of care, and undertaking to indemnify them to the fullest extent permitted by law. See “Item 6. Directors, Senior
Management and Employees—C. Board Practices—Exculpation, Insurance and Indemnification of Office Holders.”
84
C. Interests
of Experts and Counsel
Not applicable.
ITEM 8. FINANCIAL
INFORMATION
A. Consolidated
Statements and Other Financial Information
Consolidated financial statements
We have appended our consolidated financial statements at the end
of this Annual Report, together with the report of our independent auditor on those financial statements, beginning on page F-2, as part
of this Annual Report.
Legal Proceedings
From time to time, we may be subject to legal proceedings and claims
in the ordinary course of business. We are currently not involved in any pending or contemplated legal proceedings that could reasonably
be expected to have a significant effect on our financial position, profitability or cash flows, except as set forth below. We may become
involved in material legal proceedings in the future. Regardless of the outcome, litigation can have an adverse impact on us because of
defense and settlement costs, diversion of management resources and other factors.
Titan Castor Farms Limited
On June 27, 2023, Casterra entered into a Growing Services Agreement
with Titan Castor Farms Limited, or Titan, a Zambia-based company, pursuant to which Titan will provide to Casterra the following services,
on a statement of work basis: planning, growing, data collections, harvesting, dehulling, packaging and will serve as exporter. Casterra
has initiated legal proceedings in Zambia against Titan for the recovery of approximately one million dollars, paid as pre-payment for
castor seeds, which were not provided to date. On March 4, 2025, Casterra and Titan entered into a consent judgment, pursuant to which
Titan will repay its debt to Casterra in several installments by way of cash and in kind. To date only $250,000 has been repaid by Titan
(out of $1.076 million) and it is currently in breach of the Consent Judgement.
Dividend Policy
Since our inception, we have not declared or paid any cash or other
form of dividends on our ordinary shares. We currently intend to retain any earnings for use in our business and do not currently intend
to pay cash dividends on our ordinary shares. Dividends, if any, on our outstanding ordinary shares will be declared by and subject to
the discretion of our board of directors. Even if our board of directors decides to distribute dividends, the form, frequency and amount
of such dividends will depend upon our future operations and earnings, capital requirements and surplus, general financial condition,
contractual restrictions and other factors our board of directors may deem relevant.
In addition, the distribution of dividends may be limited by Israeli
law, which permits the distribution of dividends only out of distributable profits. See “Dividend and Liquidation Rights”
in Exhibit 2.1 to this Annual Report.
B. Significant
Changes
No significant changes have occurred since December 31, 2025, except
as otherwise disclosed in this Annual Report.
ITEM 9. THE
OFFER AND LISTING
|
A. Offer and Listing Details |
Our ordinary shares are listed for trading on both
the TASE and Nasdaq, in each case under the symbol “EVGN”.
85
|
B. Plan of Distribution
|
Not applicable.
|
C. Markets
|
See “-Offer and Listing Details” above.
|
D. Selling Shareholders
|
Not applicable.
|
E. Dilution |
Not applicable.
|
F. Expenses of the Issue
|
Not applicable.
ITEM 10. ADDITIONAL
INFORMATION
A. Share
Capital
Not applicable.
B. Memorandum
and Articles of Association
For a discussion of the provisions of the company’s articles
of association with respect to the powers of directors, see “Item 6. Directors, Senior Management and Employees—C. Board Practices.”
A copy of our articles of association is attached as Exhibit 1.1 to this Annual Report. The information called for by this Item 10.B is
set forth in Exhibit 2.1 to this Annual Report and is incorporated by reference into this Annual Report.
C. Material
Contracts
We have not entered into any material contracts within the two
years prior to the date of this Annual Report, other than contracts entered into in the ordinary course of business, or as otherwise described
herein in Item 4.A “History and Development of the Company”, Item 4.B “Business Overview”, Item 5.B “Operating
and Financial Review and Prospects-Liquidity and Capital Resources”, Item 6.C “Board Practices” and Item 7.B “Related
Party Transactions”.
The following is a summary of each material contract, other than
material contracts entered into in the ordinary course of business, to which we are or have been a party, for the two years immediately
preceding the date of this Annual Report:
Sales Agreement
On March 28, 2024, we entered into the Lake Street Sales Agreement
with Lake Street, pursuant to which we may offer and sell, from time to time, our ordinary shares, through Lake Street in an “at
the market offering”, as defined in Rule 415(a)(4) promulgated under the Securities Act, for an aggregate offering price of up to
$7.3 million. In August 2024, we reduced the maximum aggregate gross sales price of our ordinary shares that may be offered, issued and
sold under the Lake Street Sales Agreement, including ordinary shares previously sold, to $4,500,000. During 2024, we issued 10,000 ordinary
shares for gross proceeds of approximately $85,000 under the Lake Street Sales Agreement. During 2025, we issued 1,913,650 ordinary shares
for gross proceeds of approximately $4,415,000. This agreement was terminated as of September 4, 2025.
Information on that transaction is set forth in this Annual Report
under “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources— Recent Public Offerings
of Ordinary Shares— Lake Street Sales Agreement” and is incorporated by reference herein.
86
2024 Registered Direct Offering and Private
Placement
On August 23, 2024, we entered into the Securities Purchase Agreement,
with the Investor, pursuant to which we agreed to issue and sell to the Investor in a registered direct offering, or the 2024 Offering,
(i) 265,000 ordinary shares, and (ii) pre-funded warrants, or the Pre-Funded Warrants, to purchase up to 1,427,308 ordinary shares. The
Pre-Funded Warrants have an exercise price of $0.0001 per ordinary share, are immediately exercisable and may be exercised at any time
until exercised in full. As of the date of this Annual Report, all Pre-Funded Warrants have been exercised.
In a concurrent private placement, or the Private Placement, we
also agreed to sell to the Investor unregistered Series A ordinary warrants to purchase up to 1,692,308 ordinary shares, or the Series
A Warrants, and unregistered Series B ordinary warrants to purchase up to 1,692,308 ordinary shares, or the Series B Warrants. Each ordinary
share (or Pre-Funded Warrant) was sold with one Series A Warrant to purchase one ordinary share and one Series B Warrant to purchase one
ordinary share at a combined purchase price of $3.25. The Series A Warrants have an exercise price of $3.55 per share, are immediately
exercisable upon issuance and will expire five years from issuance. The Series B Warrants have an exercise price of $3.55 per share, are
immediately exercisable upon issuance and will expire eighteen months from issuance. Our total gross proceeds from the 2024 Offering and
the Private Placement were approximately $5.5 million.
We also entered into a letter agreement, or the Placement Agency
Agreement, with A.G.P./Alliance Global Partners, as sole placement agent, or AGP, dated August 23, 2024, pursuant to which AGP agreed
to serve as the placement agent for Evogene in connection with the 2024 Offering. We agreed to pay AGP a cash placement fee equal to 7.0%
of the gross proceeds received from the sale of the securities sold in the 2024 Offering.
2026
Warrant Inducement Transaction
On February 10, 2026, we entered into the Inducement Transaction
with the Investor. Pursuant to the Inducement Transaction, in order to induce the Investor to exercise the Series A Warrants and Series
B Warrants, the Company issued to the Investor an aggregate of 5,076,924 ordinary warrants, consisting of 2,538,462 Series A-1 warrants,
and 2,538,462 Series B-1 warrants. The Series A-1 warrants have an exercise price of $1.25 per share, were immediately exercisable upon
issuance and will expire five years from issuance. The Series B-1 warrants have an exercise price of $1.25 per share, were immediately
exercisable upon issuance and will expire 18 months from issuance.
We also engaged AGP to act as our exclusive advisor in connection
with the Inducement Transaction and have agreed to pay AGP a cash fee equal to 7.0% of the aggregate gross proceeds received from the
Investor’s exercise of the Series A Warrants and Series B Warrants.
Lavie Bio Asset Purchase Agreement with ICL
In April 2025, Lavie Bio signed a definitive agreement under which
ICL will acquire the majority of its activities including, Lavie Bio’s core team, the BDD technology platform, the company’s
microbial bank and data assets, the majority of the company’s development programs, and its commercial products. As part of the
agreement, ICL also acquired Evogene’s MicroBoost AI for AG platform. In July 2025, Lavie Bio completed the transaction for the
sale of the majority of its activity to ICL. Information on that transaction is set forth in this Annual Report under “Item 4. Information
on the Company—B. Business Overview— Market Segments— Agriculture— Lavie Bio Ltd-Overview” and is incorporated
by reference herein.
Biomica License Agreement with Shanghai Lishan
Biopharmaceuticals Co., Ltd., or Lishan Biotech
On February 4, 2026, we announced the signing of an exclusive worldwide
licensing agreement for BMC128 (designated as LS-LBP-002 by Lishan Biotech), a microbiome-based therapeutic designed to enhance anti-tumor
immune activity. This agreement grants Lishan Biotech exclusive rights (subject to reaching certain commercial milestones) to further
develop, manufacture and commercialize the BMC128, which was developed by Biomica. According to the agreement, Biomica will be eligible
to receive development milestone payments upon progress of Lishan Biotech’s clinical trials and receipt of regulatory approvals,
sales milestones payments and royalties from Lishan Biotech’s sales of future products, subject to certain conditions set forth
therein. Information on that transaction is set forth in this Annual Report under “Item 4. Information on the Company— B.
Business Overview— Market Segments— Human Health— Biomica Ltd.— Overview” and is incorporated by reference
herein.
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Casterra Agreements with ENI and its Affiliate
On June 21, 2023, Casterra announced that it entered into a framework
agreement to sell seeds of its proprietary castor varieties to ENI, for cultivation in specific African territories at a commercial scale
for biofuel production. During the first quarter of 2025, Casterra delivered orders (which were backlog from the prior year) valued at
approximately $2,168 thousand. As of the date of this Annual Report, the Company has not received any additional seed orders from ENI.
Information on that transaction is set forth in this Annual Report
under “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources— Casterra Agreement with
ENI” and is incorporated by reference herein.
Lavie Bio Licensing Agreement for Bio-Fungicides
with Corteva Agriscience
On July 14, 2023, Lavie Bio entered into a licensing agreement
with Corteva Inc. This agreement grants Corteva perpetual, exclusive rights (subject to reaching certain commercial milestones) to
further develop and commercialize the lead bio-fungicide candidates targeting fruit rots and powdery mildew, which were discovered and
developed by Lavie Bio.
In November 2024, Lavie Bio received notice of termination of this
agreement. Pursuant to the terms of the agreement, Lavie Bio received an initial payment of $ 5.0 million from Corteva, which will not
be repaid to Corteva because of the termination. Lavie Bio has regained all rights to the licensed technology and the lead bio-fungicide
candidates.
Information on that transaction is set forth in this Annual
Report under “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources— Lavie Bio Licensing
Agreement for Bio-Fungicides with Corteva Agriscience” and is incorporated by reference herein.
Indemnification Agreements
We have entered into indemnification agreements with our office
holders. Information on the indemnification agreements may be found in this Annual Report under “Item 7. Major Shareholders and
Related Party Transactions—B. Related Party Transactions—Agreements with Directors and Officers—Indemnification Agreements,”
and is incorporated herein by reference.
Other Compensation Agreements
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Evogene Ltd. Officers Compensation Policy. See “Item 6. Directors, Senior Management and Employees” for more information
about this document. |
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Evogene Ltd. Officers Clawback Policy. See “Item 6. Directors, Senior Management and Employees” for more information
about this document. |
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Evogene Ltd. 2013 Share Option Plan. See “Item 6. Directors, Senior Management and Employees” for more information about
this document. |
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Evogene 2021 Share Incentive Plan. See “Item 6. Directors, Senior Management and Employees” for more information about
this document. |
D. Exchange
Controls
Other than general anti-money laundering regulations, there are
currently no Israeli currency control regulations in effect that restrict our import or export of capital to or from the State of Israel,
or the availability of cash and cash equivalents for use by our affiliated companies. Under the Bank of Israel Law, 5770-2010, the Governor
of the Bank of Israel, with the approval of the monetary policy committee of the Bank of Israel, is authorized to issue an administrative
order restricting the transfer of funds to or from Israel. However, such an order is only likely to be issued under emergency circumstances
and only for a temporary period, if necessary for the achievement of the goals of the Bank of Israel or the carrying out of its responsibilities
under Israeli law. Furthermore, Israel has agreed, pursuant to international agreements to which it is a party (including incident to
Israel’s having joined the International Monetary Fund) to allow for the free flow of capital to and from within its borders. Certain
transactions nevertheless require the filing of reports with the Bank of Israel.
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Similarly, there are no currently effective Israeli governmental
laws, decrees, regulations or other legislation that restrict the payment of dividends or other distributions with respect to our ordinary
shares or the proceeds from the sale of the shares, except for the obligation of Israeli residents to file reports with the Bank of Israel
regarding some transactions. However, legislation remains in effect under which currency controls can be imposed by administrative action
at any time.
E. Taxation
Israel Income Tax Consequences
This section discusses the material Israeli income tax consequences concerning the ownership
and disposition of our ordinary shares by our non-Israeli shareholders. This summary does not discuss all the aspects of Israeli tax law
that may be relevant to a particular investor in light of his or her personal investment circumstances or to some types of investors subject
to special treatment under Israeli law. Examples of such investors include traders in securities who are subject to special tax regimes
not covered in this discussion. Because parts of this discussion are based on new tax legislation that has not yet been subject to judicial
or administrative interpretation, we cannot assure you that the appropriate tax authorities or the courts will accept the views expressed
in this discussion. The discussion below is subject to change, including due to amendments under Israeli law or changes to the applicable
judicial or administrative interpretations of Israeli law, which change could affect the tax consequences described below. The discussion
should not be construed as legal or professional tax advice and does not cover all possible tax considerations.
SHAREHOLDERS AND POTENTIAL INVESTORS ARE URGED TO CONSULT THEIR OWN TAX ADVISORS AS TO THE ISRAELI OR OTHER
TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND DISPOSITION OF OUR ORDINARY SHARES, INCLUDING, IN PARTICULAR, THE EFFECT OF ANY FOREIGN,
STATE OR LOCAL TAXES.
Taxation of Our Non-Israeli Shareholders
Capital Gains Taxes Applicable to Non-Israeli Resident
Shareholders. A non-Israeli resident (whether individual or corporation) who derives capital gains from the sale of shares in an
Israeli resident company that were purchased after the company was listed for trading on a stock exchange outside of Israel should generally
be exempt from Israeli tax so long as the shares were not held through a permanent establishment that the non-resident maintains in Israel
and that such shareholder is not subject to the Israeli Income Tax Law (Inflationary Adjustments) 5745-1985. However, non-Israeli entities
(including corporations) will not be entitled to the foregoing exemption if Israeli residents: (i) have a controlling interest of
more than 25% in such non-Israeli entity or (ii) are the beneficiaries of, or are entitled to, 25% or more of the revenues or profits
of such non-Israeli entity, whether directly or indirectly. Additionally, such exemption is not applicable to a person whose gains from
selling or otherwise disposing of the shares are deemed to be business income.
If not exempt, a non-Israeli resident shareholder would generally be subject to tax
on capital gain at the ordinary corporate tax rate (23% in 2025) if generated by a company, or at the rate of 25%, if generated by an
individual, or 30%, if generated by an individual who is a “substantial shareholder” (as defined under the Israeli Tax Ordinance),
at the time of sale or at any time during the preceding 12-month period (or if the shareholder claims a deduction for interest and linkage
differences expenses in connection with the purchase and holding of such shares). A “substantial shareholder” is generally
a person who alone or together with such person’s relative or another person who collaborates with such person on a permanent basis
based on a contract, holds, directly or indirectly, at least 10% of any of the “means of control” of the corporation. “Means
of control” generally include, among others, the right to vote, receive profits, nominate a director or an executive officer, receive
assets upon liquidation, or order someone who holds any of the aforesaid rights how to act, regardless of the source of such right. Individual
and corporate shareholders dealing in securities in Israel are taxed at the tax rates applicable to business income (a corporate tax rate
for a corporation (23% in 2025) and a marginal tax rate of up to 47% for an individual in 2025 (excluding excess tax as discussed below))
unless contrary provisions in a relevant tax treaty apply (subject to the receipt in advance of a valid certificate from the Israel Tax
Authority allowing for a reduced tax rate).
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Additionally, a sale of shares by a non-Israeli resident may be exempt from Israeli
capital gains tax under the provisions of an applicable tax treaty (subject to the receipt in advance of a valid certificate from the
Israel Tax Authority allowing for an exemption). For example, under the United States-Israel Tax Treaty, the disposition of shares by
a shareholder who is a United States resident (for purposes of the United States-Israel Tax Treaty) holding the shares as a capital asset
and is entitled to claim the benefits afforded to such person by the treaty, is generally exempt from Israeli capital gains tax unless,
among other things, (i) the capital gain arising from the disposition can be attributed to a permanent establishment of the shareholder
which is maintained in Israel; (ii) the shareholder holds, directly or indirectly, shares representing 10% or more of the voting
capital during any part of the 12-month period preceding such sale, exchange or disposition, subject to certain conditions; (iii) such
U.S. resident if an individual, was present in Israel for a period or periods aggregating to 183 days or more during the relevant taxable
year; (iv) the capital gain arising from such sale, exchange or disposition is attributed to real estate located in Israel; or (v)
the capital gains arising from such sale, exchange or disposition is attributed to royalties. In each case, the sale, exchange or disposition
of such shares would be subject to Israeli tax, to the extent applicable; however, under the United States-Israel Tax Treaty, the United
States resident would be permitted to claim a credit for the Israeli tax against the United States federal income tax imposed with respect
to the sale, exchange or disposition, subject to the limitations in United States laws applicable to foreign tax credits. The United States-Israel
Tax Treaty does not relate to U.S. state or local taxes.
In some instances, where our shareholders may be liable for Israeli tax on the sale
of their ordinary shares, the payment of the consideration may be subject to the withholding of Israeli tax at source. Shareholders may
be required to demonstrate that they are exempt from tax on their capital gains in order to avoid withholding at source at the time of
sale. Specifically, in transactions involving a sale of all of the shares of an Israeli resident company, in the form of a merger or otherwise,
the Israel Tax Authority may require from shareholders who are not liable for Israeli tax to sign declarations in forms specified by this
authority or obtain a specific exemption from the Israel Tax Authority to confirm their status as non-Israeli resident, and, in the absence
of such declarations or exemptions, may require the purchaser of the shares to withhold taxes at source.
Upon the sale of securities traded on a stock exchange, a detailed return, including
a computation of the tax due, must be filed and an advance payment must be paid on January 31 and July 30 of each tax year for sales of
securities traded on a stock exchange made within the previous six months. However, if all tax due was withheld at the source according
to applicable provisions of the Israeli Tax Ordinance and the regulations promulgated thereunder, the return does not need to be filed
provided that (i) such income was not generated from business conducted in Israel by the taxpayer, (ii) the taxpayer has no other taxable
sources of income in Israel with respect to which a tax return is required to be filed and an advance payment does not need to be made,
and (iii) the taxpayer is not obligated to pay excess tax (as further explained below). Capital gains are also reportable on an annual
income tax return.
Taxation of Non-Israeli Shareholders on Receipt of
Dividends. Non-Israeli residents (whether individuals or corporations) are generally subject to Israeli income tax on the receipt
of dividends paid on our ordinary shares at the rate of 25%. With respect to a person who is a “substantial shareholder” (as
defined above) at the time of receiving the dividend or on any time during the preceding twelve months, the applicable tax rate is 30%.
Dividends paid on publicly traded shares, which are registered with and held by a nominee company, to non-Israeli residents are generally
subject to Israeli withholding tax at a rate of 25% (whether the recipient is a “substantial shareholder” or not), unless
a lower rate is provided under an applicable tax treaty between Israel and the shareholder’s country of residence and provided that
a certificate from the Israel Tax Authority allowing for a reduced withholding tax rate is obtained in advance.
In this regard, under the United States-Israel Tax Treaty and subject to the eligibility
to the benefits under this treaty, the maximum rate of tax withheld at source in Israel on dividends paid to a holder of our ordinary
shares who is a United States resident (for purposes of the United States-Israel Tax Treaty) is 25%. However, generally, the maximum rate
of withholding tax on dividends, not generated by an Approved Enterprise or a Beneficiary Enterprise (as such terms are defined in the
Law for Encouragement of Capital Investments -1959), that are paid to a United States corporation holding at least 10% or more of our
outstanding voting capital throughout the tax year in which the dividend is distributed as well as during the previous tax year, is 12.5%,
provided that no more than 25% of our gross income for such preceding year consists of certain types of dividends and interest. Notwithstanding
the foregoing, dividends distributed from income attributed to an Approved Enterprise, or a Beneficiary Enterprise are not entitled to
such reduction under such tax treaty but are subject to withholding tax at the rate of 15% for such a United States corporate shareholder,
provided that the conditions related to the holding of 10% of our voting capital and to our gross income for the previous year (as set
forth in the previous sentence) are met. The aforementioned rates under the United States-Israel Tax Treaty would not apply if the
dividend income is derived through a permanent establishment of the U.S. resident which is maintained in Israel. We cannot assure you
that we will designate the profits that we may distribute in a way that will reduce shareholders’ tax liability. United States residents
who are subject to Israeli withholding tax on a dividend may be entitled to a credit or deduction for Untied States federal income tax
purposes in the amount of the taxes withheld, subject to detailed rules contained in United States tax legislation.
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A non-Israeli resident who receives dividends from which tax was withheld is generally
exempt from the obligation to file tax returns in Israel with respect to such income, provided, inter
alia, that (i) such income was not derived from a business conducted in Israel by the taxpayer, (ii) the taxpayer has
no other taxable sources of income in Israel with respect to which a tax return is required to be filed, and (iii) in the case of individuals,
the taxpayer is not obliged to pay excess tax (as further explained below).
Excess Tax
Subject to the provisions of an applicable tax treaty, individuals who are subject to
tax in Israel (whether any such individual is an Israeli resident or non-Israeli resident) are also subject to an additional tax at a
rate of 3% on annual taxable income (including, but not limited to, dividends, interest and capital gain) exceeding a certain threshold
(NIS 721,560 for 2024), which amount is generally linked to the annual change in the Israeli consumer price index and therefore is usually
adjusted on an annual basis (with the exception that based on Israeli new legislation such amount, and certain other statutory amounts
will not be linked to the Israeli consumer price index for the years 2025-2027). According to new legislation, in effect as of January
1, 2025, an additional 2% excess tax is imposed on Capital-Sourced Income (defined
as income from any source other than employment income, business income or income from “personal effort”), to the extent that
the Individual’s Capital Sourced Income exceeds the specified threshold of NIS 721,560 (and regardless of the employment/business
income amount of such individual). This new excess tax applies, among other things, to income from capital gains, dividends, interest,
rental income, or the sale of real property.
United States Federal Income Taxation
The following is a description of the material United States federal income tax consequences
to U.S. Holders (as defined below) of the acquisition, ownership and disposition of our ordinary shares. This description addresses only
the United States federal income tax consequences to holders of our ordinary shares that hold such ordinary shares as capital assets.
This description does not address tax considerations applicable to holders that may be subject to special tax rules, including, without
limitation:
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banks, financial institutions or insurance companies; |
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real estate investment trusts, regulated investment companies or grantor trusts; |
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dealers or traders in securities, commodities or currencies; |
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tax-exempt entities; |
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certain former citizens or long-term residents of the United States; |
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persons that received our shares as compensation for the performance of services; |
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persons that will hold our shares as part of a “hedging,” “integrated” or “conversion”
transaction or as a position in a “straddle” for United States federal income tax purposes; |
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partnerships (including entities classified as partnerships for United States federal income tax purposes)
or other pass-through entities, or holders that will hold our shares through such an entity; |
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persons subject to special tax accounting rules as a result of any item of gross income with respect to
the ordinary shares being taken into account in an “applicable financial statement” pursuant to Section 451(b) of the Code;
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U.S. Holders (as defined below) whose “functional currency” is not the U.S. dollar; or
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holders that own directly, indirectly or through attribution 10.0% or more of the voting power or value
of our shares. |
Moreover, this description does not address the United States federal estate, gift or
alternative minimum tax consequences, or any state, local or foreign tax consequences, of the acquisition, ownership and disposition of
our ordinary shares.
This description is based on the Code, existing, proposed and temporary United States
Treasury Regulations and judicial and administrative interpretations thereof, in each case as in effect and available on the date hereof.
Each of the foregoing is subject to change, which change could apply retroactively and could affect the tax consequences described below.
There can be no assurances that the U.S. Internal Revenue Service will not take a different position concerning the tax consequences of
the acquisition, ownership and disposition of our ordinary shares or that such a position would not be sustained.
For purposes of this description, a “U.S. Holder” is a beneficial owner
of our ordinary shares that, for United States federal income tax purposes, is:
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a citizen or resident of the United States; |
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a corporation (or other entity treated as a corporation for United States federal income tax purposes)
created or organized in or under the laws of the United States or any state thereof, including the District of Columbia; |
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an estate the income of which is subject to United States federal income taxation regardless of its source;
or |
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a trust if such trust has validly elected to be treated as a United States person for United States federal
income tax purposes or if (1) a court within the United States is able to exercise primary supervision over its administration and
(2) one or more United States persons have the authority to control all of the substantial decisions of such trust. |
A “Non-U.S. Holder” is a beneficial owner of our ordinary shares that is
neither a U.S. Holder nor a partnership (or other entity treated as a partnership for United States federal income tax purposes).
If a partnership (or any other entity treated as a partnership for United States federal
income tax purposes) holds our ordinary shares, the tax treatment of a partner in such partnership will generally depend on the status
of the partner and the activities of the partnership. Such a partner or partnership is encouraged to consult its tax advisor as to its
tax consequences.
You are encouraged to consult your advisor with respect to the United
States federal, state, local and foreign tax consequences of acquiring, owning and disposing of our ordinary shares.
Distributions
Subject to the discussion below under “Passive Foreign Investment Company Considerations,”
if you are a U.S. Holder, the gross amount of any distribution that we pay you with respect to our ordinary shares before reduction for
any Israeli taxes withheld therefrom generally will be includible in your income as dividend income to the extent such distribution is
paid out of our current or accumulated earnings and profits as determined under United States federal income tax principles. To the extent
that the amount of any cash distribution exceeds our current and accumulated earnings and profits as determined under United States federal
income tax principles, it will be treated first as a tax-free return of your adjusted tax basis in our ordinary shares and thereafter
as capital gain. We do not expect to maintain calculations of our earnings and profits under United States federal income tax principles.
Therefore, if you are a U.S. Holder you should expect that the entire amount of any cash distribution generally will be reported as dividend
income to you; provided, however, that distributions of ordinary shares to U.S. Holders that are part of a pro rata distribution to all
of our shareholders generally will not be subject to United States federal income tax. Subject to the PFIC rules discussed below, non-corporate
U.S. Holders may qualify for the lower rates of taxation with respect to dividends on ordinary shares applicable to long-term capital
gains (i.e., gains from the sale of capital assets held for more than one year), provided that
certain conditions are met, including certain holding period requirements and the absence of certain risk reduction transactions. However,
such reduced rate shall not apply if we are a PFIC for the taxable year in which we pay a dividend, or were a PFIC for the preceding taxable
year. Dividends will not be eligible for the dividends received deduction generally allowed to corporate U.S. Holders.
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If you are a U.S. Holder, dividends that we pay you with respect to our ordinary shares
will be treated as foreign source income, which may be relevant in calculating your foreign tax credit limitation. Subject to certain
conditions and limitations, Israeli tax withheld on dividends may be deducted from your taxable income or credited against your United
States federal income tax liability. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific
classes of income. For this purpose, dividends that we distribute generally should constitute “passive category income.” A
foreign tax credit for foreign taxes imposed on distributions may be denied if you do not satisfy certain minimum holding period requirements.
The rules relating to the determination of the foreign tax credit are complex, and you are encouraged to consult your tax advisor to determine
whether and to what extent you will be entitled to this credit.
Sale, Exchange or Other Disposition of Ordinary
Shares
Subject to the discussion below under “Passive Foreign Investment Company Considerations,”
if you are a U.S. Holder, you generally will recognize an amount of gain or loss on the sale, exchange or other disposition of our ordinary
shares equal to the difference between the amount realized on such sale, exchange or other disposition and your tax basis in our ordinary
shares, and such gain or loss will be capital gain or loss. The tax basis in an ordinary share generally will equal the cost of such ordinary
share. If you are a non-corporate U.S. Holder, capital gain from the sale, exchange or other disposition of ordinary shares generally
will be eligible for a preferential rate of taxation applicable to capital gains, if your holding period for such ordinary shares exceeds
one year. The deductibility of capital losses for United States federal income tax purposes is subject to limitations under the Code.
However, as discussed below, we believe we were not classified as a PFIC for the year ended December 31, 2024. In case we are classified
as PFIC special rules may apply as explained below. Any such gain or loss that a U.S. Holder recognizes generally will be treated as U.S.
source income or loss for foreign tax credit limitation purposes.
Passive Foreign Investment Company Considerations
Based on certain estimates of our gross income and gross assets and the nature of our
business, we believe that we should be classified as a PFIC for the taxable year ending December 31, 2025.
A non-U.S. corporation will be classified as a PFIC for federal income tax purposes
in any taxable year in which, after applying certain look-through rules, either:
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at least 75% of its gross income is “passive income”; or |
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at least 50% of the average quarterly value of its gross assets (which may be determined in part by the
market value of our ordinary shares, which is subject to change) is attributable to assets that produce “passive income” or
are held for the production of passive income. |
Passive income for this purpose generally includes dividends, interest, royalties, rents,
gains from commodities and securities transactions, the excess of gains over losses from the disposition of assets which produce passive
income, and includes amounts derived by reason of the temporary investment of funds raised in offerings of our ordinary shares. If a non-U.S.
corporation owns at least 25% by value of the stock of another corporation, the non-U.S. corporation is treated for purposes of the PFIC
tests as owning its proportionate share of the assets of the other corporation and as receiving directly its proportionate share of the
other corporation’s income. For publicly traded corporations, the PFIC asset test described above is applied using the fair market
value of the non-U.S. corporation’s assets. For purposes of a the PFIC asset test, a publicly traded non-U.S. corporation may treat
the aggregate fair market value of its assets as being equal to the sum of its Market Capitalization and the total amount of its liabilities.
We intend to take the position that the excess of our Market Capitalization plus liabilities over the book value of all of our assets
may generally be treated as attributable to non-passive assets. If we are classified as a PFIC in any year with respect to which a U.S.
Holder owns our ordinary shares, we will continue to be treated as a PFIC with respect to such U.S. Holder in all succeeding years during
which the U.S. Holder owns our ordinary shares, regardless of whether we continue to meet the tests described above.
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Based on the book value of our assets and liabilities and our Market Capitalization
in 2025, we believe that we met the PFIC asset test described above for 2025 and, as a result, we were classified as a PFIC in 2025. Because
we currently hold, and expect to continue to hold, a substantial amount of cash and cash equivalents and other passive assets used in
our business, there is substantial risk we will be classified as a PFIC for the 2026 taxable year as well. However, because PFIC status
is based on our income, assets and activities for the entire taxable year, and our Market Capitalization, it is not possible to determine
whether we will be characterized as a PFIC for the 2026 taxable year until after the close of the year. Moreover, we must determine our
PFIC status annually after the close of each taxable year based on tests which are factual in nature, and our status in future years will
depend on our income, assets, activities and Market Capitalization in those years. Thus, there can be no assurance that we will not be
considered a PFIC for the current taxable year or any future taxable year.
If we are a PFIC for any taxable year during which a U.S. Holder owns ordinary shares,
we will generally continue to be treated as a PFIC with respect to such U.S. Holder for all succeeding years during which such U.S. Holder
owns such ordinary shares, unless we cease to be a PFIC and the U.S. Holder makes a “deemed sale” election with respect to
such ordinary shares. If such election is made, the U.S. Holder will be deemed to have sold the ordinary shares it holds at their fair
market value and any gain from the deemed sale would be subject to the rules described in the following paragraph. After the deemed sale
election, so long as we do not become a PFIC in a subsequent taxable year, the ordinary shares with respect to which such election was
made will not be treated as shares in a PFIC and will not be subject to the rules described below with respect to any “excess distribution”
the U.S. Holder receives from us or any gain from an actual sale or other disposition of such ordinary shares. U.S. Holders are strongly
urged to consult their tax advisors as to the possibility and consequences of making a deemed sale election if we were to become and then
cease to be a PFIC, and such election becomes available.
If you are a U.S. Holder that owns our ordinary shares during any taxable year for which
we are a PFIC, then unless you make one of the elections described below, a special tax regime will apply to both (a) any “excess
distribution” by us to you (generally, your ratable portion of distributions in any year which are greater than 125% of the average
annual distribution received by you in the shorter of the three preceding years or your holding period for our ordinary shares) and (b) any
gain realized on the sale or other disposition of the ordinary shares. Under this regime, any excess distribution and realized gain will
be treated as ordinary income (even if you hold the ordinary shares as capital assets) and will be subject to tax as if (a) the excess
distribution or gain had been realized ratably over your holding period, (b) the amount deemed realized in each year had been subject
to tax in each year of that holding period at the highest marginal rate for such year (other than income allocated to the current period
or any taxable period before we became a PFIC, which would be subject to tax at the U.S. Holder’s regular ordinary income rate for
the current year and would not be subject to the interest change discussed below), and (c) the interest charge generally applicable
to underpayments of tax had been imposed on the taxes deemed to have been payable in those years. The tax liability for amounts allocated
to years prior to the year of disposition or excess distribution cannot be offset by any net operating losses for such years.
If we are a PFIC for any taxable year during which a U.S. Holder holds our ordinary
shares, then in lieu of being subject to the tax and interest charge rules discussed above, a U.S. Holder may make an election to include
gain on the stock of a PFIC as ordinary income under a mark-to-market method, provided that such ordinary shares are “regularly
traded” on a “qualified exchange.” In general, our ordinary shares will be treated as “regularly traded”
for a given calendar year if more than a de minimis quantity of our ordinary shares are traded
on a qualified exchange on at least 15 days during each calendar quarter of such calendar year. Our ordinary shares are listed, and we
expect them to continue to be listed for the foreseeable future, on the New York Stock Exchange, which is a qualifying exchange for this
purpose. However, no assurance can be given that our ordinary shares will continue to be regularly traded on a “qualified exchange”
for purposes of the mark-to-market election. In addition, because a mark-to-market election cannot be made for any lower-tier PFICs that
we may own, a U.S. Holder may continue to be subject to the PFIC rules discussed above with respect to such holder’s indirect interest
in any investments we hold that are treated as an equity interest in a PFIC for United States federal income tax purposes.
If a U.S. Holder makes an effective mark-to-market election, in each year that we are
a PFIC, such U.S. Holder will include in each year that we are a PFIC as ordinary income the excess of the fair market value of such U.S.
Holder’s ordinary shares at the end of the year over such U.S. Holder’s adjusted tax basis in the shares. Such U.S. Holder
will be entitled to deduct as an ordinary loss in each such year the excess of such U.S. Holder’s adjusted tax basis in the ordinary
shares over their fair market value at the end of the year, but only to the extent of the net amount previously included in income as
a result of the mark-to-market election. If a U.S. Holder makes an effective mark-to-market election, in each year that we are a PFIC,
any gain such U.S. Holder recognizes upon the sale or other disposition of such U.S. Holder’s ordinary shares will be treated as
ordinary income and any loss will be treated as ordinary loss, but only to the extent of the net amount of previously included income
as a result of the mark-to-market election.
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A U.S. Holder’s adjusted tax basis in the ordinary shares will be increased by
the amount of any income inclusion and decreased by the amount of any deductions under the mark-to-market rules discussed above. If a
U.S. Holder makes an effective mark-to-market election, it will be effective for the taxable year for which the election is made and all
subsequent taxable years unless the ordinary shares are no longer regularly traded on a qualified exchange or the IRS consents to the
revocation of the election. U.S. Holders are encouraged to consult their tax advisers about the availability of the mark-to-market election,
and whether making the election would be advisable in their particular circumstances.
In certain circumstances, a U.S. equity holder in a PFIC may avoid the adverse tax and
interest-charge regime described above by making a “qualified electing fund” election to include in income its share of the
corporation’s income on a current basis. However, a U.S. Holder may make a qualified electing fund election with respect to the
ordinary shares only if we agree to furnish the Holder annually with a PFIC annual information statement as specified in the applicable
Treasury regulations.
We do not intend to provide the information necessary for U.S. Holders to make qualified
electing fund elections if we are classified as a PFIC. U.S. Holders are encouraged to consult their tax advisors to determine whether
any of these elections would be available and if so, what the consequences of the alternative treatments would be in their particular
circumstances.
If we are determined to be a PFIC for any year in which a U.S. Holder holds our ordinary
shares, the general tax treatment for the U.S. Holder described in this paragraph would apply to indirect distributions and gains deemed
to be realized by the U.S. Holders in respect of any of our subsidiaries that also may be determined to be PFICs.
If a U.S. Holder owns ordinary shares during any year in which we are a PFIC and the
U.S. Holder recognizes gain on a disposition of our ordinary shares or receives distributions with respect to our ordinary shares, the
U.S. Holder generally will be required to file an IRS Form 8621 with respect to the company, generally with the U.S. Holder’s federal
income tax return for that year. If our company were a PFIC for a given taxable year, then you are encouraged to consult your tax advisor
concerning your annual filing requirements.
U.S. Holders are strongly encouraged to consult their tax advisors
regarding the consequences of our classification as a PFIC for our 2025 taxable year, our potential classification as a PFIC in 2026 and
future taxable years, and the application of the PFIC rules on their investment.
Backup Withholding Tax and Information Reporting
Requirements
United States backup withholding tax and information reporting requirements may apply
to certain payments to certain holders of stock. Information reporting generally will apply to payments of dividends on, and to proceeds
from the sale or redemption of, our ordinary shares made within the United States, or by a United States payor or United States middleman,
to a holder of our ordinary shares, other than an exempt recipient (including a payee that is not a United States person that provides
an appropriate certification and certain other persons). A payor will be required to withhold backup withholding tax from any payments
of dividends on, or the proceeds from the sale or redemption of, ordinary shares within the United States, or by a United States payor
or United States middleman, to a holder, other than an exempt recipient, if such holder fails to furnish its correct taxpayer identification
number or otherwise fails to comply with, or establish an exemption from, such backup withholding tax requirements. Any amounts withheld
under the backup withholding rules will be allowed as a credit against the beneficial owner’s United States federal income tax liability,
if any, and any excess amounts withheld under the backup withholding rules may be refunded, provided that the required information is
timely furnished to the Internal Revenue Service.
95
Foreign Asset Reporting
Certain U.S. Holders who are individuals are required to report information relating
to an interest in our ordinary shares, subject to certain exceptions (including an exception for shares held in accounts maintained by
financial institutions). U.S. Holders are encouraged to consult their tax advisors regarding their information reporting obligations,
if any, with respect to their ownership and disposition of our ordinary shares.
Medicare Tax
Certain U.S. Holders that are individuals, estates or trusts are subject to a 3.8% tax
on all or a portion of their “net investment income,” which may include all or a portion of their dividend income and net
gains from the disposition of ordinary shares. Each U.S. Holder that is an individual, estate or trust is encouraged to consult its tax
advisors regarding the applicability of the Medicare tax to its income and gains in respect of its investment in the ordinary shares.
The above description is not intended to constitute a complete analysis
of all tax consequences relating to acquisition, ownership and disposition of our ordinary shares. You are encouraged to consult your
tax advisor concerning the tax consequences of your particular situation.
Dividends and Paying Agents
Not applicable.
G. Statement
by Experts
Not applicable.
H. Documents
on Display
We are currently subject to the informational requirements of the
Exchange Act applicable to foreign private issuers and fulfill the obligations of these requirements by filing reports with the SEC. As
a foreign private issuer, we are exempt from the rules under the Exchange Act relating to the furnishing and content of proxy statements.
Further, our officers, directors and principal shareholders are currently exempt from short-swing profit recovery provisions contained
in Section 16 of the Exchange Act and our principal shareholders are, and, until March 18, 2026, our officers and directors were exempt
from the reporting provisions thereunder. In addition, we are not required under the Exchange Act to file periodic reports and financial
statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. However,
we intend to file with the SEC, within 120 days after the end of each subsequent fiscal year, an annual report on Form 20-F containing
financial statements which will be examined and reported on, with an opinion expressed, by an independent public accounting firm. We also
intend to furnish to the SEC reports of foreign private issuer on Form 6-K containing unaudited quarterly financial information.
The SEC maintains an Internet website at http://www.sec.gov that
contains reports, including this Annual Report and the documents referred to herein, proxy statements, information statements and other
material that are filed through the SEC’s Electronic Data Gathering, Analysis and Retrieval, or “EDGAR” system.
We also file annual and special reports and other information with
the Israeli Securities Authority through its fair disclosure electronic system called MAGNA. You may review these filings on the website
of the MAGNA system operated by the Israeli Securities Authority at www.magna.isa.gov.il or on the website of the TASE at www.tase.co.il.
Our ordinary shares are quoted on the TASE and, since December
2016, on Nasdaq (after being listed on the NYSE from November 2013 until December 2016). Information about us is also available on our
website at http://www.evogene.com. Our website and the information contained therein or connected thereto will not be deemed to be incorporated
into this Annual Report and you should not rely on any such information in making your decision whether to purchase our ordinary shares.
I. Subsidiary
Information
Not applicable.
96
J. Annual
Report to Security Holders
Not applicable.
|
ITEM 11. |
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
We are exposed to market risk from changes in exchange rates, interest
rates and inflation. We therefore continue to closely monitor the macro-economic conditions that result therefrom. We regularly assess
the implications of these global conditions on our operations, liquidity, cash flow and product candidates and seek to act to mitigate
any adverse consequences, to the extent possible, in a commercially reasonable manner, if and when applicable. For a sensitivity analysis
of our exposure to foreign currency exchange fluctuations, see Note 13c to our consolidated financial statements as of, and for the year
ended, December 31, 2025 included elsewhere in this Annual Report.
Foreign Currency Risk
A significant portion of our expenses is denominated in currencies
other than the U.S. dollar. We are therefore subject to non-U.S. currency risks and non-U.S. exchange exposure, especially the NIS. A
significant portion of our operating costs are in Israel, consisting principally of salaries and related personnel expenses, and facility
expenses, which are denominated in NIS. This foreign currency exposure gives rise to market risk associated with exchange rate movements
of the U.S. dollar against the NIS and other currencies. Furthermore, we anticipate that a significant portion of our expenses will continue
to be denominated in NIS. We do not hedge against currency risk through the use of forward currency contracts or other financial instruments.
See “Risk factors— Risks Relating to Our Incorporation and Location in Israel-Exchange
rate fluctuations between the U.S. dollar and the NIS may negatively affect our financial results.” Exchange rates can be volatile
and a substantial change of foreign currencies against the U.S. dollar could increase or reduce the Company’s expenses and net loss
and impact the comparability of results from period to period.
Most of our revenues are denominated in U.S. dollars. By contrast,
we incur expenses primarily denominated in NIS. As a result, any appreciation of the NIS relative to the U.S. dollar adversely impacts
our profitability due to the portion of our expenses that are incurred in NIS. The appreciation of the NIS relative to the U.S. dollar,
based on average exchange rates throughout the year, was 6.7% during 2025 as compared to a depreciation of 0.4% during 2024. In the future
we may enter into hedging transactions in order to decrease our foreign currency risk; however, these transactions may not fully protect
us from such risk.
Our exposure related to exchange rate changes on our net asset
position denominated in currencies other than U.S. dollars varies with changes in our net asset position. Net asset position refers to
financial assets, such as trade receivables and cash and cash deposits, less financial liabilities, such as trade payable and other payables.
The impact of any such transaction gains or losses is reflected in financing expenses or income. Our most significant exposure relates
to a potential change in the U.S. dollar-NIS exchange rates. Assuming a 10% decrease in the U.S. dollar relative to the NIS, and assuming
no other change, our financing expenses would have increased by approximately $0.6 million, $0.9 million and $0.8 million due to
our negative net asset position denominated in NIS as of December 31, 2025, 2024 and 2023, respectively.
Interest rate risk
From time to time, we hold corporate bonds and government treasury
notes denominated in NIS and in U.S. dollars. These investments expose us to the risk of interest rate fluctuations. A decrease in Israeli
or in U.S. interest rates could cause the fair value of these investments to decrease.
Impact of inflation
While it is difficult to accurately measure the impact of inflation
due to the imprecise nature of the estimates required, we do not believe inflation has had a material effect on our historical results
of operations and financial condition. However, if our costs were to become subject to significant inflationary pressures, we will not
be able to fully offset higher costs through price increases or other corrective measures due to our limited amount of commercialized
products in the market, and it could adversely affect our business, financial condition and results of operations.
97
ITEM 12.
DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.
PART II
ITEM 13. DEFAULTS,
DIVIDEND ARREARAGES AND DELINQUENCIES
None.
ITEM 14. MATERIAL
MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
None.
|
ITEM 15. CONTROLS AND PROCEDURES |
| (a) |
Disclosure Controls and Procedures |
Our management, including our Chief Executive Officer and Chief
Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act) as of December 31, 2025. Our management recognizes that any controls and procedures, no matter how
well designed and operated, can provide only reasonable assurance of achieving their objectives and our management necessarily applies
its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our Chief Executive
Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2025, to provide
reasonable assurance that the information required to be disclosed in filings and submissions under the Exchange Act, is recorded, processed,
summarized and reported within the time periods specified by the SEC’s rules and forms, and that such information related to us
and our consolidated subsidiaries is accumulated and communicated to management, including the Chief Executive Officer and Chief Financial
Officer, as appropriate to allow timely decisions about required disclosure.
| (b) |
Management’s Annual Report on Internal Control Over Financial Reporting |
Our management is responsible for establishing and maintaining
adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control
over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
Our management recognizes that there are inherent limitations in
the effectiveness of any system of internal control over financial reporting, including the possibility of human error and the circumvention
or override of internal control. Accordingly, even effective internal control over financial reporting can provide only reasonable assurance
with respect to financial statement preparation and may not prevent or detect all misstatements. Further, because of changes in conditions,
the effectiveness of internal control over financial reporting may vary over time.
Our management assessed the effectiveness of our internal control
over financial reporting as of December 31, 2025. In conducting its assessment of internal control over financial reporting, management
used the framework and criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) as of the end of the period covered by this report. Based on that evaluation, our management
has concluded that our internal control over financial reporting was effective as of December 31, 2025.
| (c) |
Attestation Report of Registered Public Accounting Firm |
We are neither an accelerated filer nor a large accelerated filer
as defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended. Therefore, we are not required under Section 202 of
the Sarbanes-Oxley Act (and the SEC rules and regulations thereunder) to provide an attestation report on management’s assessment
of our internal control over financial reporting from a registered public accounting firm in this Annual Report.
98
| (d) |
Changes in internal control over financial reporting |
During the period covered by this Annual Report, no changes in
our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange
Act), have occurred that have materially affected, or are reasonably likely to materially affect, our internal control over financial
reporting.
ITEM 16.
[RESERVED]
ITEM 16A. AUDIT
COMMITTEE FINANCIAL EXPERT
Our board of directors has determined that each of Mr. Dan Falk
and Mr. Leon Recanati qualifies as an audit committee financial expert, as defined by the rules of the SEC, and has the requisite financial
experience required by the Nasdaq Listing Rules. In addition, each of Mr. Falk and Mr. Recanati is independent, as such term is defined
in Rule 10A-3(b)(1) under the Exchange Act and under the Nasdaq Listing Rules.
ITEM 16B. CODE
OF ETHICS
We have adopted a Code of Ethics and Proper Business Conduct applicable
to our executive officers, directors and all other employees, which is a “code of ethics” as defined in this Item 16B of Form
20-F promulgated by the SEC. We have also implemented a training program for new and existing employees concerning our Code of Ethics
and Proper Business Conduct. A copy of the code is delivered to every employee of Evogene Ltd. and all of its subsidiaries, and is available
to investors and others, without charge, on our website at http://www.evogene.com/investor-relations/corporate-governance/ or by contacting
our finance department. Information contained on, or that can be accessed through, our website does not constitute a part of this Form
20-F and is not incorporated by reference herein. Under Item 16B of Form 20-F, if a waiver or amendment of the Code of Business
Conduct and Ethics applies to our principal executive officer, principal financial officer, principal accounting officer, controller or
other persons performing similar functions and relates to standards promoting any of the values described in Item 16B(b) of Form 20-F,
we will disclose such waiver or amendment on our website within four business days following the date of amendment or waiver in accordance
with the requirements of the Nasdaq listing rules and Instruction 4 to such Item 16B. We granted no waivers under our Code of
Ethics and Proper Business Conduct in 2025. We also intend to disclose any amendments to, or waivers of, the Code of Ethics and Proper
Business Conduct applicable to our directors or executive officers on our website.
ITEM 16C. PRINCIPAL
ACCOUNTANT FEES AND SERVICES
Principal Accountant Fees and Services.
We paid or accrued the following fees for professional services
rendered by Kost, Forer, Gabbay & Kasierer, a member of Ernst & Young, A Member of EY Global, and an independent registered public
accounting firm, for the fiscal years ended December 31, 2024 and 2025:
|
2024 |
2025 |
|||||||
|
Audit Fees |
$ |
190,000 |
$ |
165,000 |
||||
|
Audit Related Fees |
25,000 |
35,000 |
||||||
|
Tax Fees |
20,000 |
20,000 |
||||||
|
All other fees |
- |
13,057 |
||||||
|
Total |
$ |
235,000 |
233,057 |
|||||
“Audit Fees” are the aggregate fees billed for the
audit of our annual financial statements.
“Audit Related Fees” are the aggregate fees billed
for services that generally the independent accountant provides, such as consents, comfort letters and assistance with and review of documents
filed with the SEC.
“Tax Fees” include fees for professional services rendered
by our auditors for tax compliance and tax consulting in connection with international transfer pricing.
99
“All Other Fees” include fees for professional services
rendered by our auditors for VAT consulting to one of our subsidiaries.
Our audit committee has adopted a pre-approval policy for the engagement
of our independent accountant to perform certain audit and non-audit services. Pursuant to this policy, which is designed to assure that
such engagements do not impair the independence of our auditors, the audit committee pre-approves annually any specific audit and non-audit
services, audit-related services and tax services that may be performed by our independent accountants. Pursuant to that policy, our audit
committee pre-approved all fees paid to our auditors for the year ended December 31, 2025.
ITEM 16D.
EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E. PURCHASES
OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Not applicable.
ITEM 16F. CHANGE
IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.
ITEM 16G. CORPORATE
GOVERNANCE
Except as otherwise indicated, we are in compliance with corporate
governance standards as currently applicable to us under Israeli, U.S., SEC and Nasdaq laws, rules and/or regulations, as applicable.
Under the Nasdaq Listing Rules, as a foreign private issuer (as such term is defined in Rule 3b-4 under the Securities Exchange Act of
1934, as amended), we may elect to follow certain corporate governance practices permitted under the Companies Law in lieu of compliance
with corresponding corporate governance requirements otherwise imposed by the Nasdaq Listing Rules for U.S. domestic issuers. We currently
follow the provisions of the Companies Law, rather than the Nasdaq Listing Rules, solely with respect to the following requirements:
| ▪ |
Quorum. As permitted under the Companies Law, pursuant to our articles of association, the
quorum required for an ordinary meeting of shareholders consists of at least two shareholders present in person, by proxy or by other
voting instrument in accordance with the Companies Law, who hold at least 25% of the voting power of our shares (and in an adjourned meeting,
with some exceptions, at least two shareholders), instead of 33 1/3% of the issued share capital, as required under the Nasdaq Listing
Rules. |
| ▪ |
Executive sessions of independent directors. Israeli law does not require executive sessions
of independent directors. Although all of our current directors are “independent directors” under the applicable Nasdaq criteria,
we do not intend to comply with this requirement if we have directors who are not independent. |
100
| ▪ |
Shareholder approval. We seek shareholder approval for all corporate actions requiring such
approval under the Companies Law, which include (i) transactions with directors concerning the terms of their service or indemnification,
exemption and insurance for their service (or for any other position that they may hold at our company), (ii) transactions concerning
the compensation, indemnification, exculpation and insurance of the chief executive officer; (iii) the compensation policy recommended
by the compensation committee of our board of directors and approved by our board of directors (and any amendments thereto); (iv) extraordinary
transactions with, and the terms of employment or other engagement of, a controlling shareholder (if and when this becomes relevant to
our company), (v) amendments to our articles of association, and (vi) certain non-public issuances of securities. In addition,
under the Companies Law, a merger requires approval of the shareholders of each of the merging companies. We are not required, however,
to seek shareholder approval for any of the following events described in the Nasdaq Listing Rules: |
| ▪ |
certain issuances of shares in excess of 20% of the outstanding shares of the Company; |
| ▪ |
an issuance that will result in a change of control of our company; and |
| ▪ |
adoption of, or material changes to, our equity compensation plans. |
ITEM 16H. MINE
SAFETY DISCLOSURE
Not applicable.
ITEM 16I. DISCLOSURE
REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable
101
ITEM
16J. INSIDER TRADING POLICIES
We
have adopted
an insider trading policy governing the purchase, sale, and other dispositions of our securities by directors, senior
management, and employees that is reasonably designed to promote compliance with applicable insider trading laws, rules and regulations,
and any listing standards applicable to us. A copy of our insider trading policy is attached as Exhibit 11.1 to this Annual Report.
ITEM
16K. CYBERSECURITY
Cybersecurity
Risk Management and Strategy
The
Committee is designed to help identify material cybersecurity risks to our critical systems, information, products, services, and our
broader enterprise IT environment. An IT team is principally responsible for the assessment of our cybersecurity risks, our security controls,
and our response to cybersecurity incidents. We
use external
service providers , where appropriate, to assess, test or otherwise assist with aspects of our security controls.
Material
Cybersecurity Incidents
For
the fiscal year ended December 31, 2025, we believe that the Company have not
experienced any material cybersecurity incidents , nor do we face any current risk from cybersecurity threats, including
from any previous cybersecurity incidents, that are reasonably likely to materially affect the Company, our business strategy, results
of operations, or financial condition.
Cybersecurity
Governance
Our
audit committee oversees our cybersecurity risk management. The
audit committee receives a yearly report from management on our cybersecurity status. In addition, management updates the Audit Committee,
as necessary, regarding any material cybersecurity incidents.
102
PART
III
ITEM
17. FINANCIAL STATEMENTS
We have
provided financial statements pursuant to Item 18.
ITEM
18. FINANCIAL STATEMENTS
The
audited consolidated financial statements as required under Item 18 are attached hereto starting on page F-2 of this annual report. The
audit report of Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global, an independent registered public accounting firm,
is included herein preceding the audited consolidated financial statements.
ITEM
19. EXHIBITS
|
ANNUAL
REPORT ON FORM 20-F
INDEX
OF EXHIBITS
| ||
|
Exhibit
No. |
Description
| |
|
1.1
|
Third
Amended and Restated Articles of Association of the Registrant (incorporated by reference to Exhibit 3.1 to Evogene’s Post-Effective
Amendment No. 2 to Form F-1, filed with the SEC on September 30, 2025) | |
|
2.1
|
Description
of ordinary shares of Evogene Ltd. † | |
|
2.2
|
Inducement
Letter between Evogene and the Holder, dated February 10, 2026 (incorporated by reference to Exhibit 10.1 to Evogene’s Report of
Foreign Private Issuer on Form 6-K, furnished to the SEC on February 11, 2026). | |
|
2.3
|
Form
of Series A-1 Warrant (incorporated by reference to Exhibit 10.2 to Evogene’s Report of Foreign Private Issuer on Form 6-K, furnished
to the SEC on February 11, 2026). | |
|
2.4
|
Form
of Series B-1 Warrant (incorporated by reference to Exhibit 10.3 to Evogene’s Report of Foreign Private Issuer on Form 6-K, furnished
to the SEC on February 11, 2026). | |
|
4.1
|
Form
of Indemnification Agreement (incorporated by reference to Exhibit 10.9 to Evogene’s Registration Statement on Form F-1, as amended
(Registration No. 333-191315)) | |
|
4.2
|
Evogene
Ltd. 2021 Share Incentive Plan (incorporated by reference to Appendix B of Exhibit 99.2 to Evogene’s Report of Foreign Private Issuer
on Form 6-K, furnished to the SEC on June 23, 2021) | |
|
4.3
|
Evogene
Ltd. Officers Compensation Policy (incorporated by reference to Appendix A of Exhibit 99.2 to Evogene’s Report of Foreign Private
Issuer on Form 6-K, furnished to the SEC on April 30, 2024). | |
|
4.4
|
Asset
Purchase Agreement among Evogene Ltd., Lavie Bio Ltd., Taxon Biosciences, Inc. and Dead Sea Works Ltd. dated April 17, 2025*
| |
|
4.5
|
License
Agreement between Biomica Ltd. and Shanghai Lishan Biopharmaceuticals Co., Ltd dated February 4, 2026* | |
|
4.6
|
Master
Supply Agreement for Supply of Castor Planting Seeds between Casterra Ag Ltd. and ENI dated June 2, 2023. (incorporated by reference to
Exhibit 4.12 to Evogene’s Annual Report on Form 20-F for the year ended December 31, 2023, filed with the SEC on March 28, 2024)
* | |
|
4.7
|
Securities
Purchase Agreement dated as of July 17, 2023, by and between Evogene Ltd. and the purchasers therein. (incorporated by reference to Exhibit
10.1 to Evogene’s Report of Foreign Private Issuer on Form 6-K, furnished to the SEC on July 17, 2023).
| |
|
4.8
|
Placement
Agency Agreement, dated July 17, 2023, by and between Evogene Ltd. and A.G.P./Alliance Global Partners (incorporated by reference to Exhibit
10.2 to Evogene’s Report of Foreign Private Issuer on Form 6-K, furnished to the SEC on July 17, 2023).
| |
|
4.10
|
Securities
Purchase Agreement dated August 23, 2024 by and between Evogene Ltd. and the purchaser therein. (incorporated by reference to Exhibit
10.1 to Evogene’s Report of Foreign Private Issuer on Form 6-K, furnished to the SEC on August 23, 2024)
| |
|
4.11
|
Placement
Agency Agreement, dated August 23, 2024, by and between Evogene Ltd. and A.G.P./Alliance Global Partners (incorporated by reference to
Exhibit 10.2 to Evogene’s Report of Foreign Private Issuer on Form 6-K, furnished to the SEC on August 23, 2024)
| |
|
8.1
|
List
of subsidiaries of the Registrant† | |
|
11.1 |
Insider Trading Compliance Policy † | |
|
12.1
|
Certificate
of Chief Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a)† | |
|
12.2
|
Certificate
of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a)† | |
|
13.1
|
Certificate
of Chief Executive Officer pursuant to 18 U.S.C. §1350^ | |
|
13.2
|
Certificate
of Chief Financial Officer pursuant to 18 U.S.C. §1350^ | |
|
15.1
|
Consent
of Kost Forer Gabbay and Kasierer, a member of Ernst & Young Global, independent registered public accounting firm†
| |
|
97.1
|
Policy
for Recovery of Erroneously Awarded Compensation (incorporated by reference to Exhibit 97.1 to Evogene’s Annual Report on Form 20-F
for the year ended December 31, 2023, filed with the SEC on March 28, 2024). | |
|
101
|
The
following financial information from Evogene Ltd.’s Annual Report on Form 20-F for the year ended December 31, 2025 formatted in
inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Financial Position at December 31, 2025 and 2024;
(ii) Consolidated Statements of Profit or Loss for the years ended December 31, 2025, 2024 and 2023; (iii) Consolidated Statements of
Changes in Equity for the years ended December 31, 2025, 2024 and 2023; (iv) Consolidated Statements of Cash Flows for the years ended
December 31, 2025, 2024 and 2023; and (v) Notes to Consolidated Financial Statements, tagged as blocks of text.†
| |
|
104
|
Cover
Page Interactive Data File 101 | |
| † |
Filed
herewith. |
| ^ |
Furnished
herewith. |
| * |
In accordance with the rules of the SEC certain confidential information
contained in this exhibit, has been omitted because it (i) is not material and (ii) is the type that the Company treats as private or
confidential. |
103
SIGNATURES
The
registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the
undersigned to sign this Annual Report on its behalf.
|
Evogene
Ltd. |
|||
|
Date: March 26, 2026
|
By:
|
/s/ Ofer Haviv | |
| Name: Ofer Haviv | |||
| Title: President and Chief Executive Officer | |||
104
EVOGENE
LTD. AND ITS SUBSIDIARIES
CONSOLIDATED
FINANCIAL STATEMENTS
AS
OF DECEMBER 31, 2025
U.S.
DOLLARS IN THOUSANDS
INDEX
|
Page
| |
|
Report
of Independent Registered Public Accounting Firm (PCAOB ID:
|
F-2
- F-3 |
|
Consolidated
Statements of Financial Position |
F-4 -
F-5 |
|
Consolidated
Statements of Profit or Loss |
F-6
|
|
Consolidated
Statements of Changes in Equity |
F-7 -
F-8 |
|
Consolidated
Statements of Cash Flows |
F-9 -
F-10 |
|
Notes
to Consolidated Financial Statements |
F-11 -
F-64 |
-
- - - - - - - - - - - - - - - - -
 |
Kost
Forer Gabbay & Kasierer
144 Menachem Begin Road,
Building A
Tel-Aviv 6492102, Israel
|
Tel: +972-3-6232525
Fax: +972-3-5622555
ey.com
|
Report
of Independent Registered Public Accounting Firm
To
the Shareholders and Board of Directors of
EVOGENE
LTD.
Opinion
on the Financial Statements
We
have audited the accompanying consolidated statements of financial position of Evogene Ltd. and its subsidiaries (the Company) as of December
31, 2025, and 2024, the related consolidated statements of profit or loss, changes in equity and cash flows for each of the three years
in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company
at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December
31, 2025, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.
Basis
for Opinion
These
financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s
financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board
(United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities
laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company
is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits
we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion
on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.
Our
audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or
fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding
the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant
estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide
a reasonable basis for our opinion.
Critical
Audit Matter
The
critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated
or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial
statements, and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter
does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the
critical audit matter below, providing separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
F
- 2
Going
concern assessment
|
Description
of the Matter |
As
discussed in Note 1 to the consolidated financial statements, management identified there were conditions that raised substantial doubt
about the Company’s ability to continue as a going concern for a period of twelve-month period from the date the financial statements
were issued. The conditions that resulted in the substantial doubt being raised included a history of operating losses, net operating
cash outflows and an accumulated deficit.
However,
based on management’s plans and resulting available liquidity, management believes the Company’s liquidity is sufficient to
fund operations and satisfy their financial obligations as they become due for at least twelve-month period from the financial statements
issuance date. Therefore, the Company concluded these plans alleviate the substantial doubt that was raised about the Company’s
ability to continue as a going concern for at least twelve-month period from the date that the consolidated financial statements were
issued.
We
identified the assessment of the Company’s ability to continue as a going concern as a critical audit matter. This determination
involved significant auditor judgment in evaluating management’s forecasted cash flows and the resulting projected liquidity over
the twelve‑month period from the issuance date of the consolidated financial statements. Our considerations focused on key components
of the forecast, including projected revenues, operating expense estimates, and other anticipated sources of cash underlying management’s
analysis.
| |
|
How
We Addressed the Matter in Our Audit |
We
evaluated the reasonableness of management’s forecasts, including projected revenues, operating expenses, and other anticipated
sources of cash, in assessing whether the Company has sufficient liquidity to fund operations for at least the twelve‑month period
following the issuance of the consolidated financial statements. In addition, we performed sensitivity analyses over projected revenues
and operating expenses to assess the impact of potential changes in those assumptions on management’s liquidity forecast model.
Our
audit procedures also included, among others, evaluating the completeness and accuracy of the data and factors used in management’s
assessment of whether the company has sufficient liquidity to fund operations for at least the twelve-month period from the consolidated
financial statements issuance date.
We
also assessed the probability and timing of forecasted cash outflows related to the management’s assessment and evaluated the reasonableness
of management's cost reduction initiatives. In addition, we assessed the adequacy of the company’s going concern disclosures included
in Note 1 to the consolidated financial statements. |
/s/ KOST
FORER GABBAY & KASIERER
A
Member of EY Global
We
have served as the Company's auditor since 2002.
March 26, 2026
F
- 3
EVOGENE
LTD. AND ITS SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
U.S.
dollars in thousands
|
December
31, |
|||||||||||
|
Note
|
2025
|
2024
|
|||||||||
|
ASSETS
|
|||||||||||
|
CURRENT
ASSETS: |
|||||||||||
|
Cash
and cash equivalents |
6
|
$
|
|
$
|
|
||||||
|
Restricted
cash |
|
|
|||||||||
|
Trade
receivables |
|
|
|||||||||
|
Other
receivables and prepaid expenses |
7
|
|
|
||||||||
|
Deferred
expenses related to issuance of warrants |
17c
|
|
|
||||||||
|
Inventories
|
2d
|
|
|
||||||||
|
|
|
||||||||||
|
LONG-TERM
ASSETS: |
|||||||||||
|
Long-term
deposits and other receivables |
|
|
|||||||||
|
Investment
accounted for using the equity method |
|
|
|||||||||
|
Deferred
expenses related to issuance of warrants |
17c
|
|
|
||||||||
|
Right-of-use-assets
|
8
|
|
|
||||||||
|
Property,
plant and equipment, net |
9
|
|
|
||||||||
|
Intangible
assets, net |
10
|
|
|
||||||||
|
|
|
||||||||||
|
TOTAL
ASSETS |
$
|
|
$
|
|
|||||||
|
LIABILITIES
AND EQUITY |
|||||||||||
|
CURRENT
LIABILITIES: |
|||||||||||
|
Trade
payables |
$
|
|
$
|
|
|||||||
|
Employees
and payroll accruals |
|
|
|||||||||
|
Lease
liability |
8
|
|
|
||||||||
|
Liabilities
in respect of government grants |
11
|
|
|
||||||||
|
Deferred
revenues and other advances |
|
|
|||||||||
|
Warrants
and pre-funded warrants liability |
17c
|
|
|
||||||||
|
Convertible
SAFE |
12
|
|
|
||||||||
|
Other
payables |
|
|
|||||||||
|
|
|
||||||||||
|
LONG-TERM
LIABILITIES: |
|||||||||||
|
Lease
liability |
8
|
|
|
||||||||
|
Liabilities
in respect of government grants |
11
|
|
|
||||||||
|
Deferred
revenues and other advances |
|
|
|||||||||
|
|
|
||||||||||
|
TOTAL
LIABILITIES |
|
|
|||||||||
F - 4
EVOGENE
LTD. AND ITS SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION
U.S.
dollars in thousands
|
December
31, |
|||||||||||
|
Note
|
2025
|
2024
|
|||||||||
|
SHAREHOLDERS’
EQUITY: |
17
|
||||||||||
|
Ordinary
shares of NIS
Authorized
–
December
31, 2024 Issued and outstanding –
December 31,
2025 and |
|
|
|||||||||
|
Share
premium and other capital reserves |
|
|
|||||||||
|
Accumulated
deficit |
(
|
)
|
(
|
)
| |||||||
|
Equity
attributable to equity holders of the Company |
(
|
)
|
(
|
)
| |||||||
|
Non-controlling
interests |
|
|
|||||||||
|
TOTAL EQUITY
|
|
|
|||||||||
|
TOTAL
LIABILITIES AND EQUITY |
$
|
|
$
|
|
|||||||
The
accompanying notes are an integral part of the consolidated financial statements.
F - 5
EVOGENE
LTD. AND ITS SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF PROFIT OR LOSS
U.S.
dollars in thousands (except share and per share amounts)
|
Year
ended December 31, |
|||||||||||||||
|
Note
|
2025
|
2024(*)
|
2023(*)
|
| |||||||||||
|
Revenues
|
21b
|
$
|
|
$
|
|
$
|
|
||||||||
|
Cost of revenues:
|
19a
|
||||||||||||||
|
Inventory
impairment |
|
|
|
||||||||||||
|
Other
cost of revenues |
|
|
|
||||||||||||
|
Total Cost of Revenues
|
|
|
|
||||||||||||
|
Gross profit (loss)
|
(
|
)
|
|
|
|||||||||||
|
Operating expenses:
|
|||||||||||||||
|
Research
and development, net |
19b
|
|
|
|
|||||||||||
|
Sales
and marketing |
19c
|
|
|
|
|||||||||||
|
General
and administrative |
19d
|
|
|
|
|||||||||||
|
Other
expenses |
19e
|
|
|
|
|||||||||||
|
Total operating expenses,
net |
|
|
|
||||||||||||
|
Operating loss
|
(
|
)
|
(
|
)
|
(
|
)
| |||||||||
|
Financing income
|
19f
|
|
|
|
|||||||||||
|
Financing expenses
|
19f
|
(
|
)
|
(
|
)
|
(
|
)
| ||||||||
|
Financing
income (expenses), net |
|
|
|
||||||||||||
|
Share of loss of an associate
|
|
|
|
||||||||||||
|
Loss before taxes on
income |
(
|
)
|
(
|
)
|
(
|
)
| |||||||||
|
Taxes on income
|
16
|
|
|
|
|||||||||||
|
Loss from continuing
operations |
$
|
(
|
)
|
(
|
) $
|
$
|
(
|
)
| |||||||
|
Income (loss) from discontinued
operations, net |
23
|
|
(
|
)
|
(
|
)
| |||||||||
|
Loss
|
(
|
)
|
(
|
)
|
(
|
)
| |||||||||
|
Attributable
to: |
|||||||||||||||
|
Equity
holders of the Company |
(
|
)
|
(
|
)
|
(
|
)
| |||||||||
|
Non-controlling
interests |
|
(
|
)
|
(
|
)
| ||||||||||
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||||||
|
Basic
and diluted loss per share from continuing operations, attributable to equity holders of the Company |
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| ||||||
|
Basic
and diluted gain (loss) per share from discontinued operations, attributable to equity holders of the Company |
20
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
| ||||||
|
Basic and diluted loss per share, attributable to equity holders of the Company |
$ | $ | ( |
) | $ | ( |
) | ||||||||
|
Weighted
average number of shares used in computing basic and diluted gain (loss) per share (**) |
|
|
|
||||||||||||
(*) Reclassified to conform
to the current period presentation, following the classification of certain operations as discontinued operations.
(**) Number of shares
and NIS par value amounts have been retroactively adjusted to reflect the reverse share split at a ratio of 1-for-10 for 2023 amounts.
The accompanying notes
are an integral part of the consolidated financial statements.
F - 6
EVOGENE
LTD. AND ITS SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY
U.S.
dollars in thousands
|
Attributable
to equity holders of the Company |
||||||||||||||||||||||||
|
Share
capital
|
Share
premium
and
other
capital
reserves
|
Accumulated
deficit
|
Total
|
Non-
controlling
interests
|
Total
equity
|
|||||||||||||||||||
|
Balance
as of January 01, 2023 |
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
|||||||||||
|
Loss
|
|
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
| ||||||||||||||
|
Issuance
of ordinary shares, net |
|
|
|
|
|
|
||||||||||||||||||
|
Forfeiture
of non-controlling interests regarding share-based compensation |
|
|
|
|
(
|
)
|
|
|||||||||||||||||
|
Benefit
to non-controlling interests regarding share-based compensation |
|
|
|
|
(
|
)
|
|
|||||||||||||||||
|
Issuance
of a subsidiary’s ordinary shares to the Company |
|
(
|
)
|
|
(
|
)
|
|
|
||||||||||||||||
|
Issuance
of a subsidiary’s preferred shares to non-controlling interests |
|
(
|
)
|
|
(
|
)
|
|
|
||||||||||||||||
|
RSUs
vested |
|
)
|
|
)
|
|
|
)
|
|
|
)
| ||||||||||||||
|
Share-based
compensation |
|
|
|
|
|
|
||||||||||||||||||
|
Balance
as of December 31, 2023 |
$
|
|
$
|
|
$
|
(
|
)
|
$
|
|
$
|
|
$
|
|
|||||||||||
|
Loss
|
|
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
| ||||||||||||||
|
Issuance
of ordinary shares, net |
|
|
|
|
|
|
||||||||||||||||||
|
Forfeiture
of non-controlling interests regarding share-based compensation |
|
|
|
|
(
|
)
|
|
|||||||||||||||||
|
Exercise
of pre-funded warrants |
|
|
|
|
|
|
||||||||||||||||||
|
RSUs
vested |
|
)
|
|
)
|
|
|
)
|
|
|
)
| ||||||||||||||
|
Share-based
compensation |
|
|
|
|
|
|
||||||||||||||||||
|
Balance
as of December 31, 2024 |
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
*)
Represents an amount lower than $1
The
accompanying notes are an integral part of the consolidated financial statements.
F - 7
EVOGENE
LTD. AND ITS SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY
U.S.
dollars in thousands
|
Attributable
to equity holders of the Company |
||||||||||||||||||||||||
|
Share
capital
|
Share
premium
and
other
capital
reserves
|
Accumulated
deficit
|
Total
|
Non-
controlling
interests
|
Total
equity
|
|||||||||||||||||||
|
Balance
as of December 31, 2024 |
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
||||||||||
|
Loss
|
|
|
(
|
)
|
(
|
)
|
|
(
|
)
| |||||||||||||||
|
Issuance
of ordinary shares, net |
|
|
|
|
|
|
||||||||||||||||||
| Exercise of subsidiary options |
|
|
(
|
)
|
|
|||||||||||||||||||
|
Forfeiture
of non-controlling interests regarding share-based compensation |
|
|
|
|
(
|
)
|
|
|||||||||||||||||
|
Exercise
of pre-funded warrants |
|
|
|
|
|
|
||||||||||||||||||
| RSUs vested |
|
)
|
|
)
|
|
|
)
|
|
|
)
| ||||||||||||||
|
Share-based
compensation |
|
|
|
|
(
|
)
|
|
|||||||||||||||||
|
Balance
as of December 31, 2025 |
$
|
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
|
||||||||||
*)
Represents an amount lower than $1
The
accompanying notes are an integral part of the consolidated financial statements.
F - 8
EVOGENE
LTD. AND ITS SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
U.S.
dollars in thousands
|
Year
ended
December
31, |
||||||||||||
|
2025
|
2024
(*) |
2023
(*) |
||||||||||
|
Cash
flows from operating activities: |
||||||||||||
|
Loss
from continuing operations |
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||
|
Adjustments
to reconcile loss to net cash used in operating activities: |
||||||||||||
|
Adjustments
to the profit or loss items: |
||||||||||||
|
Depreciation
and amortization of property, plant and equipment and right-of-use-assets |
|
|
|
|||||||||
|
Share-based
compensation |
|
|
|
|||||||||
|
Remeasurement
of Convertible SAFE |
(
|
)
|
|
|
||||||||
|
Net
financing income |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Loss
(gain) from sale of property, plant and equipment |
(
|
)
|
|
(
|
)
| |||||||
|
Impairment
of property, plant and equipment |
|
|
|
|||||||||
|
Inventory
impairment |
|
|
|
|||||||||
|
Revaluation
of government grants |
|
|
|
|||||||||
|
Excess
of initial fair value of pre-funded warrants over transaction proceeds |
|
|
|
|||||||||
|
Amortization
of deferred expenses related to issuance of warrants |
|
|
|
|||||||||
|
Remeasurement
of pre-funded warrants and warrants |
(
|
)
|
(
|
)
|
|
|||||||
|
Share
of loss of an associate |
|
|
|
|||||||||
|
Taxes
on income (tax benefit) |
(
|
)
|
|
(
|
)
| |||||||
|
|
(
|
)
|
|
|||||||||
|
Changes
in asset and liability items: |
||||||||||||
|
Decrease
(increase) in trade receivables |
|
(
|
)
|
(
|
)
| |||||||
|
Decrease
(increase) in other receivables and prepaid expenses |
|
|
(
|
)
| ||||||||
|
Decrease
(increase) in inventories |
(
|
)
|
(
|
)
|
|
|||||||
|
Increase
(decrease) in trade payables |
(
|
)
|
(
|
)
|
|
|||||||
|
Increase
(decrease) in employees and payroll accruals |
(
|
)
|
(
|
)
|
|
|||||||
|
Increase
(decrease) in other payables |
(
|
)
|
|
(
|
)
| |||||||
|
Decrease
in deferred revenues and other advances |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
(
|
)
|
(
|
)
|
(
|
)
| |||||||
|
Cash
received (paid) during the year for: |
||||||||||||
|
Interest
received |
|
|
|
|||||||||
|
Interest
paid |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Taxes
paid |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Net
cash used in continuing operating activities |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Net
cash used in operating activities of discontinued operations |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Net
cash used in operating activities |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
(*) Reclassified to conform
to the current period presentation, following the classification of certain operations as discontinued operations.
F - 9
EVOGENE
LTD. AND ITS SUBSIDIARIES
CONSOLIDATED
STATEMENTS OF CASH FLOWS
U.S.
dollars in thousands
|
Year
ended
December
31, |
||||||||||||
|
2025
|
2024 (*)
|
2023 (*)
|
||||||||||
|
Cash
flows from investing activities: |
||||||||||||
|
Purchase
of property, plant and equipment |
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||
|
Proceeds from sale of
marketable securities |
|
|
|
|||||||||
|
Purchase
of marketable securities |
|
|
(
|
)
| ||||||||
|
Proceeds
from sale of property, plant and equipment |
|
|
|
|||||||||
|
Proceeds
from finance sub-lease asset |
|
|
||||||||||
|
Proceeds
from short-term bank deposits |
|
|
||||||||||
|
Investment in short-term
bank deposits |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Net
cash provided by (used in) continuing investing activities |
(
|
)
|
|
(
|
)
| |||||||
|
Net
cash provided by investing activities of discontinued operations |
|
|
(
|
)
| ||||||||
|
Net
cash provided by investing activities |
|
|
(
|
)
| ||||||||
|
Cash
flows from financing activities: |
||||||||||||
|
Issuance
of a subsidiary’s preferred shares to non-controlling interests |
|
|
|
|||||||||
|
Proceeds
from issuance of ordinary shares, pre-funded warrants and warrants |
|
|
|
|||||||||
|
Proceeds
from issuance of ordinary shares, net of issuance expenses |
|
|
|
|||||||||
|
Repayment
of lease liabilities |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Proceeds
from government grants |
|
|
|
|||||||||
|
Repayment
of convertible SAFE |
(
|
)
|
|
|||||||||
|
Repayment
of government grants |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Net
cash provided by (used in) continuing financing activities |
(
|
)
|
|
|
||||||||
|
Net
cash provided by (used in) financing activities of discontinued operations |
(
|
)
|
|
(
|
)
| |||||||
|
Net
cash provided by (used in) financing activities |
(
|
)
|
|
|
||||||||
|
Exchange
rate differences on balances of cash and cash equivalent balances |
|
(
|
)
|
(
|
)
| |||||||
|
Decrease
in cash and cash equivalents |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Cash
and cash equivalents beginning of the year |
|
|
|
|||||||||
|
Cash
and cash equivalents end of the year |
$
|
|
$
|
|
$
|
|
||||||
|
Significant
non-cash activities: |
||||||||||||
|
Acquisition
of property, plant and equipment |
$
|
|
$
|
|
$
|
|
||||||
|
Increase
of right-of-use-asset recognized with corresponding lease liability |
$
|
|
$
|
|
$
|
|
||||||
|
Exercise
of pre-funded warrants |
$
|
|
$
|
|
$
|
|
||||||
|
Derecognition
of property, plant and equipment under a finance lease |
$
|
|
|
|
||||||||
|
Investment
in affiliated company with corresponding deferred revenues |
$
|
|
$
|
|
$
|
|
||||||
(*) Reclassified to conform to the current period presentation, following the classification of certain operations as discontinued operations.
The
accompanying notes are an integral part of the consolidated financial statements.
F - 10
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 1: - |
GENERAL |
Evogene
Ltd. (“Evogene” and together with its subsidiaries, the “Company”) was founded on October 10, 1999, as Agro Leads
Ltd., a division of Compugen Ltd. In 2002, the Company was spun-off as an independent corporation under the laws of the State of Israel,
and changed its name to Evogene Ltd.
The
Company’s shares have been listed for trading on the Tel Aviv Stock Exchange (“TASE”) since 2007, on the New York Stock
Exchange (“NYSE”) from November 2013 until December 2016, and on the Nasdaq Stock Market (“NASDAQ”) since
December 2016.
Evogene
is a computational biology and chemistry company aiming to revolutionize the development of life-science based products by utilizing cutting
edge technologies to increase probability of success while reducing development time and cost. The main challenge in product development
in the life science industry is finding the winning candidates out of a vast number of possible prospects that address a complex myriad
of criteria to reach successful products. The Company believes that by utilizing an advanced computational biology and chemistry platform
to identify the most promising candidates addressing multiple development challenges toward successful life-science products, the Company
can increase the probability of success while reducing time and cost.
To
achieve this mission, the Company has established three unique technological engines – MicroBoost AI, ChemPass AI and GeneRator
AI – leveraging Big Data and Artificial Intelligence and incorporating deep multidisciplinary understanding in life sciences. Each
technological engine is focused on the discovery and development of products based on one of the following core components: microbes (MicroBoost
AI), small molecules (ChemPass AI), and genetic elements (GeneRator AI). The Company uses its technological engines to develop products
through subsidiaries and with strategic partners. See also Note 1d regarding the sale of Evogene’s MicroBoost AI tech engine for
agriculture platform to ICL.
During
2025, the Company commenced the implementation of a strategic shift, to focus its efforts on developing products based on small molecules.
As a result, the Company has focused its activities mainly on ChemPass AI and have deployed ChemPass AI across two principal industries
– pharmaceutical and agricultural. During 2025, the Company streamlined activities outside it’s focus areas. In July 2025,
the Company completed the disposition of Lavie Bio Ltd.’s assets to ICL. In addition, the Company scaled down Biomica Ltd.’s
operations by reducing staff and management overhead. Biomica Ltd. has licensed the BMC128 (a microbiome-based therapeutic designed to
enhance anti-tumor immune activity) to Lishan Biotech (see Note 24 – Subsequent events) and is currently focused on completing its
clinical trial. Similar strategic dispositions and reductions in workforce were applied to the activities conducted by Casterra Ag Ltd.
and AgPlenus Ltd.
Liquidity,
Capital Resources and Management's Plans
Under
IFRS Accounting Standard IAS1, Presentation of Financial Statements, management shall assess an entity's ability to continue as a
going concern. When management is aware, in making its assessment, of material uncertainties related to events or conditions
that may cast significant doubt upon the entity's ability to continue as a going concern, the entity shall disclose those uncertainties.
In assessing whether the going concern assumption is appropriate, management considers all available information about the future, which
is at least, but is not limited to, twelve months from the date that the Consolidated Financial Statements were issued.
F - 11
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 1: - |
GENERAL (Cont.) |
The
Company concluded that the following conditions raised substantial doubt about its ability to continue as a going concern:
| - |
History of reporting operating
losses from continuing operations of $ |
| - |
Net operating cash outflows
of $ |
| - |
The Company's Accumulated
Deficit balance as of December 31, 2025, is $
|
Management
prepared a plan to improve our available cash balances, liquidity and cash flows generated from operations. We have identified several
potential actions, including cost preservation measures that would be initiated in a timely manner to address our liquidity needs over
the twelve-month period from the date of this Annual Report, as follows:
| • |
In case projected revenues
do not materialize in a timely manner, reducing related expenses, including through headcount reductions, to conserve cash and improve
our liquidity position; and |
| • |
Deferring and reprioritizing
certain research and development programs, resulting in reduced expenditures on programs and headcount.
|
The
Company has a history of operating losses and negative cash flows from operations. However, despite these conditions, the Company believes
management’s plans, as described more fully above, will provide sufficient liquidity to meet its financial obligations and maintain
levels of liquidity over the twelve-month period from the date the Consolidated Financial Statements are issued. Therefore, management
concluded this plan alleviate the substantial doubt that was raised about the Company’s ability to continue as a going concern for
at least twelve months from the date that the Consolidated Financial Statements were issued.
The
accompanying Consolidated Financial Statements have been prepared assuming the Company will continue to operate as a going concern, which
contemplates the realization of assets and the settlement of liabilities in the normal course of business.
Although
not considered for purposes of the Company’s assessment of whether substantial doubt was alleviated, the Company has plans to improve
operating cash flows by entering other collaborations, strategic alliances or licensing arrangements with third parties. The Company also
exploring exit opportunities for certain subsidiaries. The Company may seek to raise additional funds through public or private equity
or debt financings or other sources.
F - 12
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 1: - |
GENERAL (Cont.) |
The
Company’s plans are subject to inherent risks and uncertainties. Accordingly, there can be no assurance that the Company’s
plans can be effectively implemented and, therefore, that the conditions can be effectively mitigated. Until such time, if ever, the Company
expects to finance its operations through equity or debt financings, which may not be available to the Company on the timing needed or
on terms that the Company deems to be favorable.
| a. |
The Company principally
derives its revenues from collaboration and licensing agreements, sales from castor seeds and sales of medical cannabis products in Israel
(until the cessation of Canonic Ltd.’s activities during the first half of 2024) (see Note 5). As to major customers, see Note 21c.
|
| b. |
The Company has the following
direct and indirect subsidiaries: Casterra Ag Ltd. (formerly Evofuel Ltd.), Evogene Inc., Biomica Ltd., AgPlenus Ltd., AgPlenus Inc.,
Lavie Bio Ltd., Lavie Bio Inc., Lavie Tech Inc., Taxon Biosciences, Inc. and Canonic Ltd.
|
Casterra
Ag Ltd. was incorporated on December 29, 2011 and is currently focusing on the development and sales of improved castor seeds for industrial
uses. On March 13, 2025, Casterra Ag Ltd. incorporated a Kenyan wholly own subsidiary, Casterra Kenya Limited, which is expected to conduct
a production, sales and marketing activities in Kenya.
Evogene
Inc. was incorporated in Delaware, United States on September 22, 2006. From 2015 to 2019, Evogene Inc. was engaged in research and
development in the field of insect control and located in the Bio-Research and Development Growth (BRDG) Park, in St.
Louis, Missouri, United States. As of December 31, 2025, the company is inactive.
Biomica
Ltd. was incorporated on March 2, 2017, with the mission of discovering and developing human microbiome-based therapeutics.
AgPlenus
Ltd. was incorporated on June 10, 2018, with the mission to design effective and sustainable crop protection ag-chemicals products by
leveraging predictive biology.
On
August 27, 2020, AgPlenus Ltd. incorporated a wholly owned U.S. subsidiary, AgPlenus Inc.
Lavie
Bio Ltd. was incorporated on January 21, 2019, with the mission to improve food quality and sustainability through the introduction of
microbiome-based ag-biological products. In 2019, Lavie Bio Ltd. incorporated two wholly owned subsidiaries, Lavie Bio Inc., located in
the City Foundry STL Project, in St. Louis, Missouri, United States, and Lavie Tech Inc. Lavie Tech Inc. wholly owns as a subsidiary Taxon
Biosciences, Inc. See also Note 1d.
F - 13
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 1: - |
GENERAL (Cont.) |
Canonic
Ltd. was incorporated on March 25, 2019, with the mission to develop next-generation medical cannabis products. During 2024, Canonic Ltd.
ceased its activities.
| c. |
On April 2, 2024, the
Company and The Kitchen Food Tech Hub (TKH), the food tech incubator and investment arm of Strauss Group, jointly announced the establishment
of Finally Foods Ltd., an AI-driven company specializing in molecular farming for the food sector, committed to providing sustainable
alternative sources to animal-based proteins (“Finally Foods”). Finally Foods will leverage the Company’s AI technology
to modify plants for efficient protein production. Evogene holds approximately 40% of the share capital of Finally Foods, on a fully diluted
basis and accounts for this investment using the equity method. See also Note 24 – Subsequent events.
|
| d. |
On August 6, 2019, Corteva
Inc. (“Corteva”), through its subsidiary Pioneer Hi-Bred International, Inc., made an investment in the Company’s agriculture
biologicals subsidiary, Lavie Bio Ltd., which included a cash investment of $ |
In
August 2022, an affiliate company of ICL and Lavie Bio Ltd. entered a multi-year collaboration agreement for developing novel bio-stimulant
products to enrich fertilizer efficiency. As part of the collaboration, ICL invested through an affiliate company in Lavie Bio Ltd. $10,000
under a SAFE agreement (simple agreement for future equity) (see also Note 12).
In
April 2025, Lavie Bio Ltd. entered into a definitive agreement pursuant to which Dead Sea Works Ltd. (an affiliate of ICL Group Ltd.,
or ICL) agreed to acquire the majority of its activity for $15,250 .
As part of the definitive agreement, ICL also agreed to acquire Evogene’s MicroBoost AI tech engine for agriculture platform for
$3,464 .
Pursuant to the definitive agreement, ICL also acquired Lavie Bio Ltd.’s proprietary Biology Driven Design, or BDD, technology platform,
microbial bank (or, the Taxon Database), pipeline of advanced development programs and current commercial product offerings. In addition,
Lavie Bio Ltd.’s core personnel transferred to ICL. As part of the transaction Lavie Bio Ltd. redeemed the SAFE which was made by
an ICL affiliate. In July 2025, Lavie Bio Ltd. completed the disposition to ICL.
As
part of the definitive agreement, Lavie Bio Ltd. and Evogene undertook that for a period of four years following the closing, they will
not compete with the business of Lavie Bio Ltd. as conducted prior to the closing (i.e. development and/or commercialization of microbe-based
products for use as bio-stimulants or bio-control in agriculture), and/or the MicroBoost AI for AG and/or the Taxon Database.
| e. |
On December 21, 2022,
Biomica Ltd., signed a definitive agreement for a $ |
F - 14
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 1: - |
GENERAL (Cont.) |
| f. |
The Company operates in
three segments, Agriculture, Industry and Human. The Agriculture segment mainly consists of the legacy activity of parent company, Evogene
and Evogene’s subsidiary - AgPlenus Ltd. The Human segment consists of Evogene’s subsidiaries, Biomica Ltd. and Canonic Ltd.
The Industry segment consists of Evogene’s subsidiary Casterra Ag Ltd. |
| g. |
Definitions
|
In
these Financial Statements -
| Subsidiary |
- A company that
is controlled by the Company (as defined in International Financial Reporting Standards (“IFRS”) 10- Consolidated Financial
Statements) and whose accounts are consolidated with those of the Company. |
| Related parties |
- As defined in
International Accounting Standard (“IAS”) 24 Related Party Disclosures. |
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES |
The
following accounting policies have been applied consistently in the financial statements for all periods presented, unless otherwise stated.
| a. |
Basis of presentation of the financial statements:
|
These
financial statements have been prepared in accordance with IFRS as issued by the International Accounting Standards Board (“IASB”).
The
Company’s financial statements have been prepared on a cost basis, except for financial assets and liabilities (including derivatives)
which are presented at fair value through profit or loss.
The
Company has elected to present profit or loss items using the function of expense method.
F - 15
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| b. |
Functional currency, presentation currency and
foreign currency: |
| 1. |
Functional currency and presentation currency:
|
The
presentation currency of the financial statements is the U.S. dollar.
The
Company and its subsidiaries determine the functional currency of each entity, and this currency is used to separately measure each entity's
financial position and operating results. The Company's functional currency is the U.S. dollar.
| 2. |
Transactions, assets and liabilities in foreign
currency: |
Transactions
denominated in foreign currency are recorded upon initial recognition at the exchange rate at the date of the transaction. After initial
recognition, monetary assets and liabilities denominated in foreign currency are translated at each reporting date into the functional
currency at the exchange rate at that date. Exchange rate differences are recognized in profit or loss. Non-monetary assets and liabilities
denominated in foreign currency and measured at cost are translated at the exchange rate at the date of the transaction. Non-monetary
assets and liabilities denominated in foreign currency and measured at fair value are translated into the functional currency using the
exchange rate prevailing at the date when the fair value was determined.
| c. |
Cash equivalents: |
Cash
equivalents are considered as highly liquid investments, consisting of unrestricted short-term bank deposits with an original maturity
of three months or less from the date of investment or with a maturity of more than three months, but which are redeemable on demand without
penalty to a set cash amount and subject to an insignificant risk of changes in value, and which are considered an integral part of the
Company's cash management.
| d. |
Inventories: |
Inventories
are measured at the lower of cost and net realizable value. The cost of inventories comprises costs of purchase of raw and other materials
and costs incurred in bringing the inventories to their present location and condition. Net realizable value is the estimated selling
price in the ordinary course of business, net of selling expenses. The Company periodically evaluates the condition and age of inventories
and makes provisions for slow moving inventories accordingly.
Cost
of inventories is determined as follows:
Raw
materials - at cost of purchase using the "first-in, first-out" method.
Work
in progress and finished goods - on the basis of average costs including materials, labor and other direct and indirect manufacturing
costs based on normal capacity.
F - 16
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
Provision
for impairment of inventories:
The
Company reviews its inventories periodically to determine whether the carrying amount is recoverable. A write-down is recognized when
the net realizable value (“NRV”) of inventories is lower than their carrying amount. Net realizable value represents the estimated
selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the
sale.
In
determining NRV, the Company considers factors such as expected future demand, market conditions, product life cycles, technological changes,
and inventory aging. If circumstances that previously caused inventories to be written down no longer exist, the amount of the write-down
may be reversed, limited to the amount of the original write-down.
As
of December 31, 2025, the Company recorded an inventory impairment of approximately $2,180
related to the inventory of castor seeds held by Casterra Ag Ltd. in Kenya which is included in the cost of revenues in the consolidated
statement of profit or loss.
The
following table summarizes information about the inventory balance as of December 31:
|
December
31, |
||||||||
|
2025
|
2024
|
|||||||
|
Raw materials
|
$
|
|
$
|
|
||||
|
Work in progress
|
|
|
||||||
|
Finished goods
|
|
|
||||||
|
$
|
|
$
|
|
|||||
| e. |
Government grants: |
Government
grants received from the Israel Innovation Authority (“IIA”) and Israeli Ministry of Economy as part of “Smart money”
grant program are recognized upon receipt as a liability if future economic benefits are expected from the research project that will
result in royalty-bearing sales. Government grants are recognized when there is reasonable assurance that the grants will be received,
and the Company will comply with the precedent conditions.
A
liability for the loan is first measured at fair value using a discount rate that reflects a market rate of interest. The difference between
the amount of the grant received and the fair value of the liability is accounted for as a government grant and recognized as a reduction
of research and development expenses. After initial recognition, the liability is measured at amortized cost using the effective interest
method. Royalty payments are treated as a reduction of the liability. If no economic benefits are expected from the research activity,
the grant receipts are recognized as a reduction of the related research and development expenses or marketing expenses (in case of “Smart
money” program). In that event, the royalty obligation is treated as a contingent liability in accordance with IAS 37- Provisions,
Contingent Liabilities and Contingent Assets (“IAS 37”).
F - 17
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
In
each reporting date, the Company evaluates whether there is reasonable assurance that the liability recognized, in whole or in part, will
not be repaid (since the Company will not be required to pay royalties) based on the best estimate of future sales and using the original
effective interest method, and if so, the appropriate amount of the liability is derecognized against a corresponding reduction in research
and development or marketing expenses.
Amounts
paid as royalties are recognized as settlement of the liability.
Non-refundable
grants from the IIA and the European Union Horizon for funding research and development projects are recognized at the time the Company
is entitled to such grants on the basis of the related costs incurred and recorded as a deduction from research and development expenses.
| f. |
Leases: |
The
company assesses at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control
the use of an identified asset for a period of time in exchange for consideration.
For
leases in which the Company is the lessee, the Company recognizes on the commencement date of the lease a right-of-use asset and a lease
liability, excluding leases whose term is up to 12 months and leases for which the underlying asset is of low value. For these excluded
leases, the Company has elected to recognize the lease payments as an expense in profit or loss on a straight-line basis over the lease
term.
| 1. |
Right-of-use assets |
The
Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use).
Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement
of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred,
and lease payments made at or before the commencement date less any lease incentives received. The right-of-use assets are depreciated
over the shorter of their useful life and the lease term.
Following
are the amortization periods of the right-of-use assets by class of underlying asset:
|
Years
|
Mainly
|
|||||
|
Office
space |
|
|
||||
|
Laboratory
space |
|
|
||||
|
Motor
vehicles |
|
|
The
Company tests for impairment of the right-of-use asset whenever there are indications of impairment pursuant to the provisions of IAS
36.
F - 18
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| 2. |
Lease liabilities |
At
the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made
over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable,
variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease
payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties
for terminating the lease, if the lease term reflects the Company exercising the option to terminate.
In
calculating the present value of lease payments, the Company uses its incremental borrowing rate (“IBR”) at the lease commencement
date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities
is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities
is remeasured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments
resulting from a change in the consumer price index (“CPI”) or rate used to determine such lease payments) or a change in
the assessment of an option to purchase the underlying asset.
| 3. |
Short-term leases and leases of low-value assets
|
The
Company applies the short-term lease recognition exemption to its short-term leases of motor vehicles (i.e., those leases that have a
lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value
assets recognition exemption to leases of office equipment that are considered to be low value. Lease payments on short-term leases and
leases of low value assets are recognized as expense on a straight-line basis over the lease term.
| 4. |
Subleases |
In
a transaction in which the Company is a lessee of an underlying asset (head lease) and the asset is subleased to a third party, the Company
assesses whether the risks and rewards incidental to ownership of the right-of-use asset have been transferred to the sub-lessee, among
others, by evaluating the sublease term by reference to the useful life of the right-of-use asset arising from the head lease.
When
substantially all the risks and rewards incidental to ownership of the right-of-use asset have been transferred to the sub-lessee, the
Company accounts for the sublease as a finance lease, otherwise it is accounted for as an operating lease.
If
the sublease is classified as a finance lease, the leased asset is derecognized on the commencement date and a new asset, "finance lease
receivable" is recognized at an amount equivalent to the present value of the lease payments, discounted at the interest rate implicit
in the lease. Any difference between the carrying amount of ths leased asset before the derecognition and the carrying amount of the finance
lease receivable is recognized in profit or loss.
F - 19
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| g. |
Property, plant and equipment:
|
Property,
plant and equipment are measured at cost, including directly attributable costs, less accumulated depreciation, accumulated impairment
losses and any related investment grants and excluding day-to-day servicing expenses.
Depreciation
begins when the asset is available for use, that is, when it is in the location and condition necessary for it to be capable of operating
in the manner intended by management.
Depreciation
is calculated on a straight-line basis over the useful life of the assets at annual rates as follows:
|
%
|
Mainly
% |
|||||
|
Laboratory
equipment |
|
|
||||
|
Computers
and peripheral equipment |
|
|
||||
|
Office
equipment and furniture |
|
|
||||
|
Leasehold
improvements |
see
below |
The
useful life, depreciation method and residual value of an asset are reviewed at least each year-end and any changes are accounted for
prospectively as a change in accounting estimate. Depreciation of an asset ceases at the earlier of the date that the asset is classified
as held for sale and the date that the asset is derecognized.
| h. |
Intangible assets: |
Intangible
assets acquired separately are measured on initial recognition at cost. Following initial recognition, intangible assets are carried at
cost less any accumulated amortization and accumulated impairment losses.
Intangible
assets with finite lives are amortized over the useful economic life and assessed for impairment whenever there is an indication that
the intangible asset may be impaired. The amortization period and the amortization method for intangible assets with a finite useful life
are reviewed at least at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption
of future economic benefits embodied in the asset are considered to modify the amortization period or method, as appropriate, and are
treated as changes in accounting estimates.
The
amortization expense on intangible assets with finite lives is recognized in the statement of profit or loss in the expense category that
is consistent with the function of the intangible assets.
F - 20
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
An
intangible asset is derecognized upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are
expected from its use or disposal. Any gain or loss arising upon derecognition of the asset (calculated as the difference between the
net disposal proceeds and the carrying amount of the asset) is included in the statement of profit or loss (see Note 10).
A
summary of the useful economic lives of the intangible assets purchased by the Company is as follows:
|
Years
|
||||
|
Pipeline
Products |
|
|||
|
Potential
Products |
|
|||
|
Microorganisms
Collection |
|
|||
In
April 2025, Lavie Bio Ltd. entered into a definitive agreement pursuant to which Dead Sea Works Ltd., an affiliate of ICL Group Ltd. (“ICL”),
agreed to acquire the majority of Lavie Bio Ltd.’s activities. Pursuant to the definitive agreement, Lavie Bio Ltd. transferred
certain assets to ICL, including its intangible assets (see also Note 1d).
| i. |
Impairment of non-financial assets:
|
The
Company evaluates the need to record an impairment of non-financial assets whenever events or changes in circumstances indicate that the
carrying amount is not recoverable. If the carrying amount of non-financial assets exceeds their recoverable amount, the assets are reduced
to their recoverable amount. The recoverable amount is the higher of fair value less costs of sale and value in use. In measuring value
in use, the expected future cash flows are discounted using a pre-tax discount rate that reflects the risks specific to the asset and
the time value of money. The recoverable amount of an asset that does not generate independent cash flows is determined for the cash-generating
unit to which the asset belongs. Impairment losses are recognized in profit or loss.
| j. |
Revenue recognition: |
Revenue
from contracts with customers is recognized when the control over the goods or services is transferred to the customer. The transaction
price is the amount of consideration that is expected to be received based on the contract terms, excluding amounts collected on behalf
of third parties (such as taxes). The Company does not grant a right of return to its customers.
If
the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation.
Contracts that contain multiple performance obligations such as licenses, services and milestone events require an allocation of the transaction
price to each performance obligation based on a relative standalone selling price (“SSP”). To determine SSP, the Company maximizes
the use of observable standalone sales and observable data, where available. In instances where performance obligations do not have observable
standalone sales, the Company utilizes available information that may include market conditions, pricing strategies, the economic life
of the software, and other observable inputs or uses the expected cost-plus margin approach to estimate the price the Company would charge
if the products and services were sold separately. Revenue is recognized at the time the related performance obligation is satisfied by
transferring the promised product or delivery of service to the customer. Revenue is recognized in an amount that reflects the consideration
that the Company expects to receive in exchange for those products or services.
F - 21
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
Revenues
from research and development services as part of the Company's collaboration agreements are recognized over time, during the period the
customer simultaneously receives and consumes the benefits provided by the Company's performance. Recognition of the service is throughout
the services period using the input method in order to measure the progress of the services, based on the actual internal and external
costs incurred, relative to total internal and external costs expected to be incurred to satisfy the performance obligation. The Company
determined that the input method is the best measure of progress towards satisfying the performance obligation as incurred labor effort
represents work performed that corresponds with, and thereby best depicts the transfer of goods and services. Payment terms between the
Company and its customers are typically up to twelve months, and vary by the type of the customer, country of sale and the products or
services delivered.
Revenues
from the sale of castor seeds, medical cannabis products and license agreements are recognized when the control of the Company’s
product is transferred to the customer, generally upon delivery of the goods or products to the customer, according to the shipment or
delivery terms.
Future
milestone payments are considered variable consideration and are subject to the variable consideration constraint (i.e. will be recognized
once concluded that it is “probable” that a significant reversal of the cumulative revenues recognized under the contract
will not occur in future periods when the uncertainty related to the variable consideration is resolved). Therefore, as the milestone
payments are not probable, revenue was not recognized in respect to such milestone payments prior to achievement of such milestone.
In
instances of contracts where revenue recognition differs from timing of invoicing, the Company generally determined that those contracts
do not include a significant financing component. The company uses the practical expedient and does not assess the existence of a significant
financing component when the difference between payment and revenue recognition is a year or less.
The
Company’s remaining performance obligations represent contracted revenue that has not yet been recognized. As of December 31, 2025
and 2024, the aggregate amount of the transaction price allocated to remaining performance obligations that the Company expects to recognize
as revenue over the next 12 months was approximately $880
and $947 ,
respectively.
F - 22
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
Disaggregation
of revenue
The
following table disaggregates the Company’s revenues from continuing operations by timing of revenue recognition:
|
Year
ended December 31, |
||||||||||||
|
2025
|
2024
(*) |
2023
(*) |
||||||||||
|
Revenue recognized at
a point in time |
$
|
|
$
|
|
$
|
|
||||||
|
Revenue
recognized over time |
|
|
|
|||||||||
|
$
|
|
$
|
|
$
|
|
|||||||
(*)
Reclassified to conform to the current period presentation, following the classification of certain operations as discontinued operations.
| k. |
Taxes on income: |
Current
or deferred taxes are recognized in profit or loss, except to the extent that they relate to items which are recognized in other comprehensive
income (loss) or equity.
| 1. |
Current taxes: |
The
current tax liability is measured using the tax rates and tax laws that have been enacted or substantively enacted by the reporting date
as well as adjustments required in connection with the tax liability in respect of previous years.
| 2. |
Deferred taxes: |
Deferred
taxes are computed in respect of temporary differences between the carrying amounts in the financial statements and the amounts attributed
for tax purposes.
Deferred
taxes are measured at the tax rate that is expected to apply when the asset is realized, or the liability is settled, based on tax laws
that have been enacted or substantively enacted by the reporting date.
Deferred
tax assets are reviewed at each reporting date and reduced to the extent that it is not probable that they will be utilized. Temporary
differences for which deferred tax assets had not been recognized are reviewed at each reporting date and a respective deferred tax asset
is recognized to the extent that their utilization is probable.
| l. |
Financial instruments: |
The
accounting for financial instruments is in accordance with IFRS 9, “Financial Instruments” (“IFRS 9”).
F - 23
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| 1. |
Financial assets: |
Financial
assets are measured upon initial recognition at fair value plus transaction costs that are directly attributable to the acquisition of
the financial assets, except for financial assets measured at fair value through profit or loss in respect of which transaction costs
are recorded in profit or loss.
Impairment
of financial assets:
The
Company evaluates at the end of each reporting period the loss allowance for financial debt instruments which are not measured at fair
value through profit or loss.
The
Company has short-term financial assets such as trade receivables in respect of which the Company applies a simplified approach and measures
the loss allowance in an amount equal to the lifetime expected credit losses.
| 2. |
Financial liabilities: |
| a) |
Financial liabilities measured at amortized cost:
|
Financial
liabilities are initially recognized at fair value less transaction costs that are directly attributable to the issue of financial liability.
After
initial recognition, the accounting treatment of financial liabilities is based on their classification as follows:
After
initial recognition, the Company measures all financial liabilities at amortized cost using the effective interest rate method, except
for financial liabilities at fair value through profit or loss.
| b) |
Financial liabilities measured at fair value through
profit or loss: |
At
initial recognition, the Company measures financial liabilities that are not measured at amortized cost at fair value. Transaction costs
are recognized in profit or loss. After initial recognition, changes in fair value are recognized in profit or loss. See also Note 13b.
Any
difference between the fair value estimated by the entity and the transaction price (“day one gain or loss”) is recognized:
| • |
In the income statement if the fair value is evidenced
by quoted price in an active market for identical asset or liability or based on a valuation technique that uses only data from observable
markets; and |
| • |
Deferred as an adjustment to the carrying amount
of the financial instrument in all other cases and recognized in the income statement until maturity. |
F - 24
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| 3. |
De-recognition of financial instruments:
|
| a. |
Financial assets: |
A
financial asset is derecognized when the contractual rights to the cash flows from the financial asset expire or the Company has transferred
its contractual rights to receive cash flows from the financial asset or assumes an obligation to pay the cash flows in full without material
delay to a third party and has transferred substantially all the risks and rewards of the asset or has neither transferred nor retained
substantially all the risks and rewards of the asset, but has transferred control of the asset.
| b. |
Financial liabilities: |
A
financial liability is derecognized when it is extinguished, that is when the obligation is discharged or cancelled or expires. A financial
liability is extinguished when the debtor (the Company) discharges the liability by paying in cash, other financial assets, goods or services;
or is legally released from the liability.
| m. |
Fair value measurement:
|
Fair
value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants
at the measurement date.
Fair
value measurement is based on the assumption that the transaction will take place in the asset's or the liability's principal market,
or in the absence of a principal market, in the most advantageous market.
The
fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability,
assuming that market participants act in their best economic interest.
Fair
value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the
asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.
The
Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair
value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.
All
assets and liabilities measured at fair value or for which fair value is disclosed are categorized into levels within the fair value hierarchy
based on the lowest level input that is significant to the fair value measurement:
|
Level
1 |
-
|
Quoted
prices (unadjusted) in active markets for identical assets or liabilities. | |
|
Level
2 |
-
|
Inputs
other than quoted prices included within Level 1 that are observable directly or indirectly. | |
|
Level
3 |
-
|
Inputs
that are not based on observable market data (valuation techniques which use inputs that are not based on observable market data).
|
F - 25
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| n. |
Employee benefit liabilities:
|
The
Company has several employee benefits plans:
| 1. |
Short-term employee benefits:
|
Short-term
employee benefits are benefits that are expected to be settled wholly before twelve months after the end of the annual reporting period
in which the employees render the related services. These benefits include salaries, paid annual leave, paid sick leave, recreation and
social security contributions and are recognized as expenses as the services are rendered. A liability in respect of a cash bonus or a
profit-sharing plan is recognized when the Company has a legal or constructive obligation to make such payment as a result of past service
rendered by an employee and a reliable estimate of the amount can be made. The short-term employee benefit liability in the statement
of financial position is measured on an undiscounted basis.
| 2. |
Post-employment benefits:
|
The
plans are normally financed by contributions to insurance companies and classified as defined contribution plans or as defined benefit
plans.
Defined
contribution plans:
The
Company has defined contribution plans pursuant to section 14 of the Israeli Severance Pay Law (the “Severance Law”) under
which the Company pays fixed contributions and will have no legal or constructive obligation to pay further contributions if the fund
does not hold sufficient amounts to pay all employee benefits relating to employee service in the current and prior periods.
Contributions
to the defined contribution plan in respect of severance or retirement pay are recognized as an expense when contributed concurrently
with the performance of the employee's services.
In
respect of its severance pay obligation to certain of its employees, the Company makes current deposits in pension funds and insurance
companies (“the plan assets”). Plan assets comprise assets held by a long-term employee benefit fund or qualifying insurance
policies. Plan assets are not available to the Company's own creditors and cannot be returned directly to the Company.
F - 26
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| o. |
Share-based payment transactions:
|
The
Company's employees and consultants are entitled to remuneration in the form of equity-settled share-based payment transactions.
Equity-settled
transactions:
The
cost of equity-settled transactions with employees is measured at the fair value of the equity instruments granted at the grant date.
The fair value is determined using an acceptable option pricing model.
As
for consultants, the cost of the transactions is measured at the fair value of the services received as consideration for equity instruments
granted.
The
cost of equity-settled transactions is recognized in profit or loss together with a corresponding increase in equity during the period
which the performance and/or service conditions are to be satisfied ending on the date on which the relevant employees become entitled
to the award (“the vesting period”). The cumulative expense recognized for equity-settled transactions at the end of each
reporting period until the vesting date reflects the extent to which the vesting period has expired and the Company's best estimate of
the number of equity instruments that will ultimately vest. No expense is recognized for awards that do not ultimately vest. If the Company
modifies the conditions on which equity-instruments were granted, an additional expense is recognized for any modification that increases
the total fair value of the share-based payment arrangement or is otherwise beneficial to the employee or other service provider at the
modification date.
| p. |
Non-controlling interests measurement:
|
The
profits or losses attributed to regular shares are adjusted for the dividends of non-cumulative preference shares classified as equity
held by non-controlling interests. The Company allocates profit or loss and each component of other comprehensive income to the owners
of the Company and to ordinary non-controlling interests in proportion to their ownership interests in the subsidiary, even if this results
in the non‑controlling interests having a deficit balance.
| q. |
Investment in an associate:
|
An
associate is an entity over which the Company has significant influence. Significant influence is the power to participate in the financial
and operating policy decisions of the investee, but is not control or joint control over those policies. The financial statements of an
associate are prepared for the same reporting period as the Company’s. The accounting policies of an associate are aligned with
those of the Company. Therefore, no adjustments were made when measuring and recognizing the Company’s share of the profit or loss
of the investee after the date of acquisition. Under the equity method, the investment in an associate is initially recognized at cost.
The carrying amount of the investment is adjusted to recognize changes in the Company’s share of net assets of the associate since
the acquisition date. The Company’s exposure to losses from its associate is limited to the carrying amount of its investment, and
the Company has no contractual or constructive obligation to provide additional financial support or to absorb losses in excess thereof.
F - 27
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 2: - |
SIGNIFICANT ACCOUNTING POLICIES (Cont.) |
| r. |
Discontinued operations: |
A
discontinued operation is a component of the Company, that represents a separate major line of business operation or geographical area
of operations that either has been disposed of or is classified as a discontinued operation. Income from discontinued operations, net,
for the periods ended December 31, 2025 was $5,672
and loss from discontinued operations, net, for the periods ended December 31, 2024 and 2023 was $3,237
and 3,989 ,
respectively.
|
NOTE 3: - |
SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS USED IN THE PREPARATION OF THE FINANCIAL STATEMENTS |
In
the process of applying the significant accounting policies, the Company has made the following judgments which have the most significant
effect on the amounts recognized in the financial statements:
| a. |
Judgments: |
| - |
Determining the timing of satisfaction of performance
obligations: |
In
order to determine the timing of recognizing revenues from contracts with customers at a point in time or over time, the Company evaluates
the date of transfer of control over the assets or services promised in the contracts. Among others, the Company evaluates whether the
customer obtains control of the asset at a specific point in time or consumes the economic benefits associated with the contract simultaneously
with the Company's performance. In determining the timing of revenue recognition, the Company also considers the provisions of applicable
laws and regulations.
| - |
Discount rate for a lease liability:
|
When
the Company is unable to readily determine the discount rate implicit in the lease for calculating the lease liability, it uses an IBR
that represents the rate of interest that a lessee would have to pay to borrow over a similar term and with similar security, the funds
necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment. When the Company cannot rely
on borrowing transactions, it determines the IBR based on its financing risk, the lease period and other economic variables dictated by
the lease contract's existing conditions and restrictions.
F - 28
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 3: - |
SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS USED IN THE PREPARATION OF THE FINANCIAL STATEMENTS (Cont.) |
| b. |
Estimates and assumptions:
|
The
preparation of the financial statements requires management to make estimates and assumptions that have an effect on the application of
the accounting policies and on the reported amounts of assets, liabilities, revenues and expenses. Changes in accounting estimates are
reported in the period of the change in estimate.
The
key assumptions made in the financial statements concerning uncertainties at the reporting date and the critical estimates computed by
the Company that may result in a material adjustment to the carrying amounts of assets and liabilities within the next financial year
are discussed below.
| - |
Government grants: |
Government
grants received from the IIA and from Israeli Ministry of Economy (as part of “Smart money” grant programs) are recognized
as liabilities if future economic benefits are expected from the research and development or marketing activity that will result
in royalty-bearing sales. There is uncertainty regarding the estimated future cash flows used to measure the amount of the liability.
| - |
Legal claims: |
In
estimating the likelihood of outcome of legal claims filed against the Company and its investees, the Company relies on the opinion of
its legal counsel. These estimates are based on the legal counsel's best professional judgment, taking into account the stage of proceedings
and legal precedents in respect of the different issues. Since the outcome of the claims will be determined in courts, the results could
differ from these estimates.
| - |
Determining the fair value of share-based payment
transactions: |
The
fair value of share-based payment transactions is determined upon initial recognition by an acceptable option pricing model. The inputs
to the model include share price (as the Company’s subsidiaries’ shares are not publicly traded, the fair value of the subsidiaries’
shares was estimated by valuation reports prepared by third-party valuation specialists), exercise price and assumptions regarding expected
volatility, expected life of share option and expected dividend yield.
F - 29
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 3: - |
SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS USED IN THE PREPARATION OF THE FINANCIAL STATEMENTS (Cont.) |
| - |
Determining the fair value of convertible SAFE:
|
The
fair value of the SAFE issued to ICL (see Note 12) is based on the weighted average value of various scenarios assuming Lavie Bio Ltd.’s
estimated enterprise value at the valuation date. The enterprise value is calculated using the income approach, whereby the cash flows
expected to be generated are discounted to their present value equivalent using a rate of return that reflects the relative risk of the
investment, as well as the time value of money. The value of the SAFE assumes the probability of various possible scenarios to which an
acceptable option pricing model is applied. The inputs to the model include the enterprise value described above, the conversion price
and assumptions regarding the expected volatility and the expected life of each scenario.
| - |
Determining the fair value warrants and pre-funded
warrants liability: |
The
fair value of warrants and pre-funded warrants liability (see Note 17(c)) was initially estimated using the Black Scholes option pricing
model, with the following assumptions:
Dividend
yield (%) - 0 %
Expected
volatility of the share prices (%) – 81.76 %-87.43 %
Risk-free
interest rate (%) – 4.17 %-4.36 %
| - |
Leases - Estimating the IBR:
|
The
Company cannot readily determine the interest rate implicit in the lease; therefore, it uses its IBR to measure lease liabilities. The
IBR is the rate of interest that the Company would have to pay to borrow over a similar term, and with a similar security, the funds necessary
to obtain an asset of a similar value to the right-of-use asset in a similar economic environment. The IBR therefore reflects what the
Company ‘would have to pay’, which requires estimation when no observable rates are available or when they need to be adjusted
to reflect the terms and conditions of the lease.
The
Company estimates the IBR using observable inputs (such as market interest rates) when available and is required to make certain entity-specific
estimates (such as the Company's stand-alone credit rating).
| - |
Lease extension and/or termination options:
|
In
evaluating whether it is reasonably certain that the Company will exercise an option to extend a lease or not exercise an option to terminate
a lease, the Company considers all relevant facts and circumstances that create an economic incentive for the Company to exercise the
option to extend or not exercise the option to terminate such as, but not limited to: significant amounts invested in leasehold improvements,
the significance of the underlying asset to the Company's operation and whether it is a specialized asset and the Company's past experience
with similar leases.
F - 30
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 3: - |
SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS USED IN THE PREPARATION OF THE FINANCIAL STATEMENTS (Cont.) |
After
the commencement date, the Company reassesses the term of the lease upon the occurrence of a significant event or a significant change
in circumstances that affects whether the Company is reasonably certain to exercise an option to extend or not exercise an option to terminate
previously included in the determination of the lease term, such as significant leasehold improvements that had not been anticipated on
the lease commencement date, sublease of the underlying asset for a period that exceeds the end of the previously determined lease period,
etc.
| - |
Inventories: |
The
Company reviews its inventories periodically to determine whether the carrying amount is recoverable. A write-down is recognized when
the net realizable value (“NRV”) of inventories is lower than their carrying amount. Net realizable value represents the estimated
selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the
sale. In determining NRV, the Company considers factors such as expected future demand, market conditions, product life cycles, technological
changes, and inventory aging. If circumstances that previously caused inventories to be written down no longer exist, the amount of the
write-down may be reversed, limited to the amount of the original write-down. As of December 31, 2025, the Company
recorded an inventory impairment of approximately $2,180
related to the inventory of castor seeds held by Casterra Ag Ltd. in Kenya which is included in the cost of revenues in the consolidated
statement of profit or loss.
|
NOTE 4: - |
DISCLOSURE OF NEW STANDARDS IN THE PERIOD PRIOR TO THEIR ADOPTION |
IFRS
18, "Presentation and Disclosure in Financial Statements":
In
April 2024, the International Accounting Standards Board ("the IASB") issued IFRS 18, "Presentation and Disclosure in Financial Statements"
("IFRS 18") which replaces IAS 1, "Presentation of Financial Statements". IFRS 18 is aimed at improving comparability and transparency
of communication in financial statements. IFRS 18 retains certain existing requirements of IAS 1 and introduces new requirements on presentation
within the statement of profit or loss, including specified totals and subtotals. It also requires disclosure of management-defined performance
measures and includes new requirements for aggregation and disaggregation of financial information. IFRS 18 does not modify the recognition
and measurement provisions of items in the financial statements. However, since items within the statement of profit or loss must be classified
into one of five categories (operating, investing, financing, taxes on income and discontinued operations), it may change the entity's
operating profit. Moreover, the publication of IFRS 18 resulted in consequential narrow scope amendments to other accounting standards,
including IAS 7, "Statement of Cash Flows" and IAS 34, "Interim Financial Reporting".
IFRS
18 is effective for annual reporting periods beginning on or after January 1, 2027, and is to be applied retrospectively. Early adoption
is permitted, subject to disclosure.
The
Company is evaluating the effects of IFRS 18, including the effects of the consequential amendments to other accounting standards, on
its consolidated financial statements.
F - 31
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 5: - |
COLLABORATION, RESEARCH AND DISTRIBUTION AND SALES AGREEMENTS |
Each
of the following agreements amounted to 10% or more of the Company’s total revenues in 2025, 2024 and 2023:
| a. |
In March 2020, AgPlenus Ltd. entered into a multi-year
collaboration with Corteva for the discovery and development of novel herbicides. Under the terms of the collaboration agreement, AgPlenus
Ltd. and Corteva work together to optimize herbicide product candidates originating from the Company’s pipeline. Successful candidates
from this collaboration are expected to be further developed by Corteva (see Customer A in Note 21c). |
| b. |
On June 21, 2023, Casterra entered into a framework
agreement to sell seeds of its proprietary castor varieties to ENI Kenya B.V. (Customer C, see Note 21c) for cultivation in specific African
territories at a commercial scale for biofuel production. During the first quarter of 2025, Casterra delivered orders (which were backlog
from the prior year) valued at approximately $ |
| c. |
On February 16, 2024, AgPlenus Ltd. entered into
a Licensing and Collaboration Agreement (the ”Agreement”) with Bayer AG (“Bayer”) for the development of a new
sustainable weed control solution. This Agreement grants Bayer an exclusive license for the development and commercialization of products
developed within the collaboration. According to the Agreement, AgPlenus Ltd. is entitled to receive a license payment, ongoing research
funding, milestone payments, and royalties based on future product sales, subject to certain conditions as stipulated in the Agreement.
(Customer B, see Note 21c). |
|
NOTE 6: - |
CASH AND CASH EQUIVALENTS |
|
December
31, |
||||||||
|
2025
|
2024
|
|||||||
|
Cash for
immediate withdrawal in USD |
$
|
|
$
|
|
||||
|
Cash for
immediate withdrawal in New Israeli Shekels (“NIS”) |
|
|
||||||
|
Cash for
immediate withdrawal in Euro and other currencies |
|
|
||||||
|
$
|
|
$
|
|
|||||
F - 32
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 7: - |
OTHER RECEIVABLES AND PREPAID EXPENSES |
|
December
31, |
||||||||
|
2025
|
2024
|
|||||||
|
Government
authorities |
$
|
|
$
|
|
||||
|
Grant receivables
|
|
|
||||||
|
Prepaid expenses
|
|
|
||||||
|
Suppliers’
advances |
|
|
||||||
|
Other
|
|
|
||||||
|
$
|
|
$
|
|
|||||
|
NOTE 8: - |
LEASES |
The
Company has entered into various lease agreements with respect to the following items:
| 1. |
Office and Laboratory spaces:
|
In
December 2018, the Company entered into a lease agreement for office space and a laboratory facility in Rehovot, Israel, for a period
of 6 years (which included a three-years extension through December 2024) . In December 2024 the lease agreement was extended
for an additional
period of 6 years (which included a three-years extension through December 2030) .
In
August 2017, the Company entered into a lease agreement for office space and greenhouses in Naan, Israel. The lease term commenced in
July 2018 for a period of 10
years (which
included a three-years extension through July 2028 ).
In
March 2025, the Company entered into a sub-lease agreement for greenhouses in Naan, Israel, for a period of 3
years.
| 2. |
Vehicles: |
The
Company leases vehicles for the use of certain of its employees in Israel. The
lease terms are typically for three-year periods.
F - 33
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 8: - |
LEASES (Cont.) |
The
Company does not assume renewals in determination of the lease term unless the renewals are deemed to be reasonably certain at lease commencement.
| a. |
Information on leases in which the Company is
a lessee (*): |
|
Year
ended December 31 |
||||||||
|
2025
|
2024
|
|||||||
|
Interest
expense on lease liabilities |
$
|
|
$
|
|
||||
|
Exchange
rate differences |
|
|
||||||
|
Adjustments
for indexation |
|
|
||||||
|
Depreciation
expenses on right-of-use assets |
|
|
||||||
|
Expense
due to removal of lease liabilities and right-of-use assets |
|
|
||||||
|
Income
from subleasing right-of-use assets |
|
|
||||||
(*)
Financial information related to Lavie Bio Ltd.’s discontinued operations is presented as part of discontinued operations in the
consolidated statement of profit or loss.
| b. |
Lease extension and cancelation options:
|
The
Company has leases that include both extension and cancelation options. These are used to maximize operational flexibility in terms of
managing the assets used in the Company's operations. The Company exercises significant judgements in deciding whether it is reasonably
certain that the extension and cancelation options will be exercised.
In
leaseholds for periods of 5 -7
years, the Company recognizes any extension options exercised as per lease agreements in the lease period. In these leases, the Company
usually exercises the lease extension option to avoid critical impairment to its operating activities
in the event that an alternative asset is not available immediately upon termination of the noncancelable lease period.
In
leases of motor vehicles, the Company does not include in the lease term the exercise of extension options since the Company does not
ordinarily exercise options that extend the lease period beyond 3
years .
Moreover,
the lease period subject to the termination option is accounted for as part of the lease period when it is reasonably certain that the
termination option will not be exercised.
F - 34
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 8: - |
LEASES (Cont.) |
| c. |
Disclosures of right-of-use assets:
|
|
Leasehold
|
Motor
vehicles |
Total
|
||||||||||
|
Cost:
|
||||||||||||
|
Balance
as of January 1, 2025 |
$
|
|
$
|
|
$
|
|
||||||
|
Additions
during the year: |
||||||||||||
|
Additions
to right-of-use assets for new leases in the period |
|
|
|
|||||||||
|
Adjustments
for indexation |
|
|
|
|||||||||
|
Disposals
during the year: |
||||||||||||
|
Reassessment
of lease terms of right-of-use assets in the period |
(
|
)
|
|
(
|
)
| |||||||
|
Disposals
of right-of-use assets for leases terminated in the period |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Balance
as of December 31, 2025 |
|
|
|
|||||||||
|
Accumulated
depreciation: |
||||||||||||
|
Balance
as of January 1, 2025 |
|
|
|
|||||||||
|
Additions
during the year: |
||||||||||||
|
Depreciation
|
|
|
|
|||||||||
|
Disposals
during the year: |
||||||||||||
|
Disposals
of right-of-use assets |
|
(
|
)
|
(
|
)
| |||||||
|
Balance
as of December 31, 2025 |
|
|
|
|||||||||
|
Depreciated
cost on December 31, 2025 |
$
|
|
$
|
|
$
|
|
||||||
F - 35
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 8: - |
LEASES (Cont.) |
|
Leasehold
|
Motor
vehicles |
Total
|
||||||||||
|
Cost:
|
||||||||||||
|
Balance
as of January 1, 2024 |
$
|
|
$
|
|
$
|
|
||||||
|
Additions
during the year: |
||||||||||||
|
Additions
to right-of-use assets for new leases in the period |
|
|
|
|||||||||
|
Adjustments
for indexation |
|
|
|
|||||||||
|
Disposals
during the year: |
||||||||||||
|
Disposals
of right-of-use assets for leases terminated in the period |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Balance
as of December 31, 2024 |
|
|
|
|||||||||
|
Accumulated
depreciation: |
||||||||||||
|
Balance
as of January 1, 2024 |
|
|
|
|||||||||
|
Additions
during the year: |
||||||||||||
|
Depreciation
|
|
|
|
|||||||||
|
Disposals
during the year: |
||||||||||||
|
Disposals
of right-of-use assets |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Balance
as of December 31, 2024 |
|
|
|
|||||||||
|
Depreciated
cost on December 31, 2024 |
$
|
|
$
|
|
$
|
|
||||||
F - 36
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 8: - |
LEASES (Cont.) |
| d. |
Disclosures of lease liability:
|
|
Leasehold
|
Motor
vehicles |
Total
|
||||||||||
|
Balance
as of January 1, 2025 |
$
|
|
$
|
|
$
|
|
||||||
|
Lease
payments |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Lease
deposits |
|
(
|
)
|
(
|
)
| |||||||
|
Interest
expense |
|
|
|
|||||||||
|
Exchange
rate differences |
|
|
|
|||||||||
|
Additions
to lease liability for new leases in the period |
|
|
|
|||||||||
|
Reduction
of lease liability for leases terminated in the period |
|
(
|
)
|
(
|
)
| |||||||
|
Reduction
of lease liability for leases updates in the period |
(
|
)
|
|
(
|
)
| |||||||
|
Adjustments
for indexation |
|
|
|
|||||||||
|
Balance
as of December 31, 2025 |
$
|
|
$
|
|
$
|
|
||||||
The
weighted average incremental borrowing rate used to discount future lease payments in the calculation of the lease liabilities was 7.17 %. During
2025, the total cash outflow for leases was approximately $715 .
|
Leasehold
|
Motor
vehicles |
Total
|
||||||||||
|
Balance
as of January 1, 2024 |
$
|
|
$
|
|
$
|
|
||||||
|
Lease
payments |
(
|
)
|
(
|
)
|
(
|
)
| ||||||
|
Lease
deposits |
|
(
|
)
|
(
|
)
| |||||||
|
Interest
expense |
|
|
|
|||||||||
|
Exchange
rate differences |
(
|
)
|
|
|
||||||||
|
Additions
to lease liability for new leases in the period |
|
|
|
|||||||||
|
Reduction
of lease liability for leases terminated in the period |
|
(
|
)
|
(
|
)
| |||||||
|
Adjustments
for indexation |
|
|
|
|||||||||
|
Balance
as of December 31, 2024 |
$
|
|
$
|
|
$
|
|
||||||
The
weighted average incremental borrowing rate used to discount future lease payments in the calculation of the lease liabilities was 8.35 %. During
2024, the total cash outflow for leases was approximately $968 .
F - 37
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 8: - |
LEASES (Cont.) |
The
Company leases facilities for its offices and research and development activities, as well as motor vehicles under leases. As of December
31, 2025, the future minimum lease payments under non-cancelable leases for the years ending December 31, are as follows (see also Note
13a):
|
Leasehold
|
Motor
vehicles |
Total
|
||||||||||
|
2026
|
$
|
|
$
|
|
$
|
|
||||||
|
2027
|
|
|
|
|||||||||
|
2028
|
|
|
|
|||||||||
|
2029
|
|
|
|
|||||||||
|
2030
|
|
|
|
|||||||||
|
Total lease
payments |
$
|
|
$
|
|
$
|
|
||||||
|
Less: imputed
interest |
(
|
)
|
(
|
) |
(
|
)
| ||||||
|
Present value
of lease liabilities |
$
|
|
$
|
|
$
|
|
||||||
|
NOTE 9: - |
PROPERTY, PLANT AND EQUIPMENT, NET |
|
|
Laboratory equipment |
Computers and peripheral equipment |
Office equipment and furniture |
Leasehold improvements |
Total |
|||||||||||||||
|
Cost:
|
||||||||||||||||||||
|
Balance on January 1,
2025 |
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
Additions
|
|
|
|
|
|
|||||||||||||||
|
Impairment loss (*)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
| ||||||||||
|
Deductions
|
(
|
)
|
(
|
)
|
|
(
|
)
|
(
|
)
| |||||||||||
|
Balance on December 31,
2025 |
|
|
|
|
|
|||||||||||||||
|
Accumulated
Depreciation: |
||||||||||||||||||||
|
Balance on January 1,
2025 |
|
|
|
|
|
|||||||||||||||
|
Depreciation
|
|
|
|
|
|
|||||||||||||||
|
Impairment loss (*)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
| ||||||||||
|
Deductions
|
(
|
)
|
(
|
)
|
|
(
|
)
|
(
|
)
| |||||||||||
|
Balance on December 31,
2025 |
|
|
|
|
|
|||||||||||||||
|
Depreciated cost on December
31, 2025 |
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
(*) As
of December 31, 2025 an impairment loss was recognized to write down the property, plant and equipment, net, in Biomica Ltd. and Lavie
Bio Ltd. to their recoverable amount, as the assets are not expected to generate future economic benefits.
F - 38
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 9: - |
PROPERTY, PLANT AND EQUIPMENT, NET (Cont.) |
|
Laboratory
equipment
|
Computers
and peripheral equipment |
Office
equipment
and
furniture |
Leasehold
improvements
|
Total
|
||||||||||||||||
|
Cost:
|
||||||||||||||||||||
|
Balance on January 1,
2024 |
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
Additions
|
|
|
|
|
|
|||||||||||||||
|
Deductions
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
| ||||||||||
|
Balance on December 31,
2024 |
|
|
|
|
|
|||||||||||||||
|
Accumulated
Depreciation: |
||||||||||||||||||||
|
Balance on January 1,
2024 |
|
|
|
|
|
|||||||||||||||
|
Depreciation
|
|
|
|
|
|
|||||||||||||||
|
Deductions
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
|
(
|
)
| ||||||||||
|
Balance on December 31,
2024 |
|
|
|
|
|
|||||||||||||||
|
Depreciated cost on December
31, 2024 |
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
Depreciation
expenses for the years ended December 31, 2025, 2024 and 2023 were approximately $591 ,
$713
and $842 ,
respectively. Depreciation expenses attributable to Lavie Bio Ltd.’s discontinued operations for those periods are presented within
income (loss) from discontinued operations, net, in the consolidated statements of profit or loss.
|
NOTE 10: - |
INTANGIBLE ASSETS, NET |
On
August 6, 2019, Corteva, through its subsidiary Pioneer Hi-Bred International, Inc., made an investment in the Company’s agricultural
biologicals subsidiary, Lavie Bio Ltd. The investment included the contribution of all of Corteva’s holdings in its wholly owned
subsidiary, Taxon Biosciences, Inc., together with $10,000
in cash, in consideration for shares of Lavie Bio Ltd. This transaction included the intangible assets listed below . In April 2025, Lavie
Bio Ltd. entered into a definitive agreement pursuant to which Dead Sea Works Ltd., an affiliate of ICL Group Ltd. (“ICL”),
agreed to acquire the majority of Lavie Bio Ltd.’s activities. Pursuant to the definitive agreement, Lavie Bio Ltd. transferred
certain of its assets to ICL, including its intangible assets (see also Note 1d). The transaction was completed in July 2025 and, as a
result, Lavie Bio Ltd. derecognized these intangible assets as of that date.
|
Pipeline
Products |
Potential
Products |
Microorganisms
Collection |
Total
|
|||||||||||||
|
Cost:
|
||||||||||||||||
|
Balance on January 1,
2025 |
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Deductions
|
|
|
|
|
||||||||||||
|
Balance on December 31,
2025 |
|
|
|
|
||||||||||||
|
Accumulated
Amortization: |
||||||||||||||||
|
Balance on January 1,
2025 |
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Amortization
|
|
|
|
|
||||||||||||
|
Deductions
|
|
|
|
|
||||||||||||
|
Balance on December 31,
2025 |
|
|
|
|
||||||||||||
|
Amortized cost on December
31, 2025 |
|
|
|
|
||||||||||||
F - 39
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 10: - |
INTANGIBLE ASSETS, NET (Cont.) |
|
Pipeline
Products |
Potential
Products |
Microorganisms
Collection |
Total
|
|||||||||||||
|
Cost:
|
||||||||||||||||
|
Balance on January 1,
2024 |
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Balance on December 31,
2024 |
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Accumulated
Amortization: |
||||||||||||||||
|
Balance on January 1,
2024 |
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
|
Amortization
|
|
|
|
|
||||||||||||
|
Balance on December 31,
2024 |
|
|
|
|
||||||||||||
|
Amortized cost on December
31, 2024 |
$
|
|
$
|
|
$
|
|
$
|
|
||||||||
Amortization
expenses of intangible assets are included within income (loss) from discontinued operations, net, in the consolidated statements of profit
or loss.
|
NOTE 11: - |
LIABILITIES IN RESPECT OF GOVERNMENT GRANTS |
|
2025
|
2024
|
|||||||
|
Balance on January 1,
|
$
|
|
$
|
|
||||
|
Grants received (*)
|
|
|
||||||
|
Royalties paid
|
(
|
)
|
(
|
)
| ||||
|
Amounts recorded in profit
or loss |
(
|
)
|
(
|
)
| ||||
|
Balance on December 31,
|
$
|
|
$
|
|
||||
(*)
Excludes amounts received under the EU Horizon grant programs, totaling $209
in 2024 and $215
thousand in 2025.
The
Company received research and development grants from the IIA and undertook to pay royalties of 3%-4%
of revenues derived from research and development projects that were financed by the IIA, of up to 100 %
of the grants received (including accrued interest). As of December 31, 2025, the Company received grants amounting to $9,571
(including accrued interest), of which $4,354
were repaid to date.
In
July 2022, Canonic Ltd. received the Israeli Ministry of Economy approval to be included in “Smart money” grants program for
marketing operations in Germany. The maximum grant amount from this program is approximately $85 .
Canonic Ltd. undertook to pay royalties of 3%
of yearly revenues above approximately $284
derived from the operation in Germany, up to 100 %
of the grants received. As of December 31, 2024, Canonic Ltd. received approximately $42
for marketing expenses in Germany. Since Canonic has ceased its activities during the first half of 2024 and no economic benefits are
expected from the marketing operations in Germany, the grant receipts were recognized as a reduction of the related marketing expenses
during 2024.
F - 40
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 11: - |
LIABILITIES IN RESPECT OF GOVERNMENT GRANTS (Cont.) |
On
May 9, 2023, the Company announced that it had been awarded an EU Horizon grant of approximately €1,200
thousand, which was subsequently increased to approximately €1,525
thousand during 2025, to support the development of oil-seed crops with high carbon-dioxide assimilation and enhanced drought tolerance.
The project, Crop4Clima, has an overall budget of €2,500
thousand and is expected to be executed over 32 months. As of December 31, 2025, the Company had received payments totaling approximately
€1,300
thousand under this grant. The grant follows the successful completion of the Future Agriculture Consortium’s proof-of-concept in
2021, which demonstrated the potential for increased agricultural productivity and environmental sustainability. The Company recognizes
grant income to the extent that related research and development costs have been incurred, and such amounts are recorded as a reduction
of research and development expenses.
In
February 2024, Lavie Bio Ltd. received the Israeli Ministry of Economy approval to be included in “Smart money” grant program
to begin exporting in Canada. The maximum amount of grants from this program is approximately $83 .
Lavie Bio Ltd. undertook to pay royalties of 3%
of yearly revenues above approximately $276
derived from the operations in Canada, up to 100 %
of the grants received (linked to CPI). As of December 31, 2024, Lavie Bio Ltd. received approximately $78
for marketing expenses in Canada incurred until December 31, 2024. In April 2025, Lavie Bio entered into a definitive agreement pursuant
to which Dead Sea Works Ltd. (an affiliate of ICL Group Ltd., or ICL) agreed to acquire the majority of its activity (see Note 1d). Since
no economic benefits are expected from the marketing operations in Canada, the grant receipts were recognized as a reduction of the related
marketing expenses during 2025.
|
NOTE 12: - |
CONVERTIBLE SAFE |
In
August 2022, ICL and Lavie Bio Ltd. (“Lavie”) entered a multi-year collaboration agreement for developing novel bio-stimulant
products to enrich fertilizer efficiency. As part of the collaboration, ICL (through its affiliate company) invested $
According
to the terms of the SAFE, ICL was entitled to appoint one director until the consummation of a earlier of (i) consummation of a Liquidity
Event or a Dissolution Event (as such terms are defined therein), (ii) in the event of conversion of this Safe, upon such time as ICL
holds less than
F - 41
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 12: - |
CONVERTIBLE SAFE (Cont.) |
According
to the terms of the SAFE, agreed between Lavie Bio Ltd. and ICL affiliated company, the transaction with ICL constituted a Liquidity Event
(as such term is defined therein). On April 17, 2025 and concurrently with their execution of the purchase agreement, the parties amended
the terms of the SAFE such that the Liquidity Event will not result in the conversion of the SAFE into shares of Lavie Bio Ltd., but rather
Lavie Bio Ltd. will pay ICL a portion of the proceeds equal to the amount it invested under the SAFE - $10,000 .
The amendment did not result in a material change in the fair value of SAFE.
On
April 21, 2025, the Company announced the acquisition of most of the activity of Lavie Bio Ltd., by Dead Sea Works Ltd., an affiliate
of ICL (see Note 1d). As part of the transaction Lavie Bio Ltd. redeemed the SAFE which was made by an ICL affiliate at the amount of
$10,000 .
|
NOTE 13: - |
FINANCIAL INSTRUMENTS |
| a. |
Financial
risk factors: |
The
Company's operations are exposed to various financial risks, such as market risk (foreign currency risk, price risk), credit risk and
liquidity risk. The Company's comprehensive risk management plan focuses on measures to minimize possible negative effects on the financial
performance of the Company.
The
Company's Board of Directors has provided guidelines for risk management, and specific policies for various risk exposures, such as foreign
currency risk, interest-rate risk, credit risk, and the use of derivative financial instruments, non-derivative financial instruments,
and excess-liquidity investments.
| 1. |
Market Risk: |
Foreign
currency risk:
The
Company operates primarily in Israel and has an exchange rate risk as it incurs operating costs in Israel, consisting principally of salaries
and related personnel expenses, lease and facility expenses which are denominated in NIS, which differs from its functional currency.
F - 42
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 13: - |
FINANCIAL INSTRUMENTS (Cont.) |
| 2. |
Credit Risk: |
The
Company holds cash and cash equivalents and other financial instruments with various financial institutions. Its policy is to spread its
investments among various institutions. In accordance with this policy, the Company invests its funds with stable financial institutions.
As
of December 31, 2024, the Company recorded a provision for doubtful accounts of approximately $819
related to advances paid to one of Casterra Ag Ltd.’s castor seed service providers, due to a delay in the delivery of services
as stipulated in the underlying agreement. As of December 31, 2025, the Company recorded a provision for doubtful accounts of $50
in respect of certain customer receivables of Lavie Bio Inc.
| 3. |
Liquidity Risk: |
The
following table presents the repayment dates of the Company's financial liabilities, by contractual terms, in nominal amounts (including
interest payments):
Balance
on December 31, 2025:
|
Up
to 1 year |
1
year to 2 years |
2
years to 3 years |
3
years to 4 years |
4
years to 5 years |
Over
5 years |
Total
|
||||||||||||||||||||||
|
Trade
payables (*) |
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
Employees
and payroll accruals |
|
|
|
|
|
|
||||||||||||||||||||||
|
Other
payables |
|
|
|
|
|
|
||||||||||||||||||||||
|
Leases
liability |
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Liabilities
in respect of government grants |
|
|
|
|
|
|
|
|||||||||||||||||||||
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||||||
(*)
The Company’s trade payables are settled under the customary payment terms applicable in the relevant markets.
Balance
on December 31, 2024:
|
Up
to 1 year |
1
year to 2 years |
2
years to 3 years |
3
years to 4 years |
4
years to 5 years |
Over
5 years |
Total
|
||||||||||||||||||||||
|
Trade
payables (*) |
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||||||
|
Employees
and payroll accruals |
|
|
|
|
|
|
||||||||||||||||||||||
|
Other
payables |
|
|
|
|
|
|
||||||||||||||||||||||
|
Leases
liability |
|
|
|
|
|
|
|
|||||||||||||||||||||
|
Liabilities
in respect of government grants |
|
|
|
|
|
|
|
|||||||||||||||||||||
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
|||||||||||||||
(*)
The Company’s trade payables are settled under the customary payment terms applicable in the relevant markets.
F - 43
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 13: - |
FINANCIAL INSTRUMENTS (Cont.) |
| b. |
Fair Value: |
The
carrying amounts of cash and cash equivalents, other receivables and prepaid expenses, trade payables and other payables approximate their
fair values due to the short-term maturities of such instruments.
The
fair value of the liabilities in respect of government grants is measured using a discount rate that reflects the applicable market rate
of interest at the date the grants are received, which approximates the fair value at the respective balance sheet date.
The
fair value of lease liability is measured using a discount rate that reflects the IBR of interest at the date of the contract.
The
fair value measurement of the Convertible SAFE as described in Note 12 is based on the weighted average value of various scenarios regarding
Lavie Bio Ltd.’s estimated enterprise value at the valuation date. The fair value of the ordinary shares of Lavie Bio Ltd. is measured
using the income approach, whereby the expected cash flows generated by Lavie Bio Ltd. are discounted to their present value equivalent
using a rate of return that reflects its relative risk, as well as the time value of the money, and is considered to be Level 3 fair value
hierarchy (see Note 2m). As of December 31, 2024 the cash flow projections were discounted using the weighted average cost of capital
rates of 24.2 %,
and long-term growth rates of 3 %.
In April 2025, Lavie Bio Ltd. entered into a definitive agreement pursuant to which Dead Sea Works Ltd. (an affiliate of ICL Group Ltd.,
or ICL) agreed to acquire the majority of its activities. As part of the transaction Lavie Bio Ltd. redeemed the SAFE which was made by
an ICL affiliate in the amount of $10,000 .
See also Note 1d.
The
fair value of warrants and pre-funded warrants liabilities as described in Note 17(c) is initially measured as of the transaction
date and then subsequently remeasured at each reporting period using the Black Scholes option pricing model.
The
following table presents the fair value of financial liabilities as of December 31, 2025 and 2024:
|
December
31, |
||||||||
|
2025
|
2024
|
|||||||
|
Convertible
SAFE |
$
|
|
$
|
|
||||
|
Warrants
and pre-funded warrants liabilities |
$
|
|
$
|
|
||||
| c. |
Sensitivity tests relating to changes in market
factors: |
|
December
31, |
||||||||
|
2025
|
2024
|
|||||||
|
Sensitivity
test to changes in the USD /NIS exchange rate: |
||||||||
|
Gain
(loss) from the change: |
||||||||
|
Decrease
of 5% in the U.S. dollar relative to the NIS |
$
|
(
|
)
|
$
|
(
|
)
| ||
|
Increase
of 5% in the U.S. dollar relative to the NIS |
$
|
|
$
|
|
||||
F - 44
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 14: - |
COMMITMENTS AND CONTINGENT LIABILITIES |
Sensitivity tests and principal work assumptions:
The
selected changes in the relevant risk variables were determined based on management's estimate as to reasonable possible changes in these
risk variables.
Government
grants:
The
Company received research and development grants from the IIA. See also Note 11. If no economic benefits are expected from the research
activity, the royalty obligation is not recorded as a liability and instead is treated as a contingent liability in accordance with IAS
37. The grants from the IIA impose certain restrictions on the transfer outside of Israel of the underlying know-how and the manufacturing
or manufacturing rights of the underlying products and technologies.
|
NOTE 15: - |
SEVERANCE PAY LIABILITY |
Labor laws and the Severance Law require the Company to pay compensation to employees upon dismissal or retirement, or to make routine contributions in defined contribution plans pursuant to Section 14 of the Severance Law, as described below. The Company's liability is accounted for as a post-employment benefit. The Company's employee benefit liability is based on a valid labor agreement, the employee's salary, and the applicable terms of employment, which together generate a right to severance compensation.
Post-employment
employee benefits are financed by deposits with defined deposit plans, as detailed below.
Contributions
in accordance with Section 14 to the Severance Law release the Company from any additional liability to employees for whom said contributions
were made. These contributions represent defined contribution plans.
|
Year
ended December 31, |
||||||||||||
|
2025
|
2024
(*) |
2023
(*) |
||||||||||
|
Expenses
– in respect to defined contribution plan |
$
|
|
$
|
|
$
|
|
||||||
(*) Reclassified to conform to the current period presentation, following the classification of certain operations as discontinued operations.
|
NOTE 16: - |
TAXES ON INCOME |
| a. |
Tax rates applicable to the Company and its subsidiaries:
|
| 1. |
The Israeli corporate income tax rate was |
| 2. |
The Company’s U.S. subsidiaries, Evogene
Inc., Lavie Bio Inc., Lavie Tech Inc., Taxon Biosciences, Inc., and AgPlenus Inc., are subject to U.S. income taxes.
During the years 2023 through 2025, the tax rates
applicable to those companies, based on the main state where the companies had the most presence, were |
F - 45
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 16: - |
TAXES ON INCOME (Cont.) |
| b. |
Tax assessments: |
Evogene
Ltd., Lavie Bio Ltd., AgPlenus Ltd., Biomica Ltd., Canonic Ltd. and Casterra Ag Ltd. received final tax assessments, through the 2019
tax year.
| d. |
Carryforward losses for tax purposes and other
temporary differences: |
As
of December 31, 2025 and 2024, Evogene Ltd. and its Israeli subsidiaries had carryforward operating tax losses of approximately $140,000
and approximately $86,000 ,
respectively, which are available to offset taxable income in future periods indefinitely.
| e. |
Deferred taxes: |
The
Company did not record deferred tax assets with respect to net operating losses incurred by the Company and the subsidiaries
since it is not probable that they will generate a taxable income in future years.
| f. |
Theoretical tax: |
The
Company has incurred operating losses during the years ended December 31, 2025, 2024 and 2023 for which deferred taxes were not recorded,
as mentioned in Note 16b. The reconciliation between the tax expense, assuming that all the income and expenses, gains and losses in the
statement of income were taxed at the statutory tax rate, and the taxes on income recorded in profit or loss, does not provide significant
information and is therefore not presented.
| g. | In April
2025, the Trump administration announced a government plan which imposes reciprocal tariffs on the import of goods from numerous countries
into the U.S. The overall tariff on the import of goods from Israel to the U.S. is |
|
NOTE 17: - |
SHAREHOLDERS' EQUITY |
| a. |
Share capital: |
|
December
31, |
||||||||||||||||
|
2025
|
2024
|
|||||||||||||||
|
Authorized
|
Issued
and Outstanding |
Authorized
|
Issued
and Outstanding |
|||||||||||||
|
Number
of shares |
||||||||||||||||
|
Ordinary
shares of NIS 0.2 par value each |
|
|
|
|
||||||||||||
| b. |
In its annual general meeting of the shareholders
which was held on August 18, 2025 it was resolved to approve an amendment to the Company’s amended and restated articles of association,
to increase the registered share capital of the Company by NIS |
F - 46
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 17: - |
SHAREHOLDERS' EQUITY (Cont.) |
| c. |
Changes in share capital:
|
Share
capital issued and outstanding:
|
Number
of shares |
NIS
par value |
|||||||
|
Outstanding
on January 1, 2024 |
|
|
||||||
|
Issuance
of ordinary shares |
|
|
||||||
|
Exercise
of options and vesting of restricted share units (“RSUs”) |
|
|
||||||
|
Exercise
of pre-funded warrants |
|
|
||||||
|
Outstanding
on December 31, 2024 |
|
|
||||||
|
Issuance
of ordinary shares |
|
|
||||||
|
Exercise
of options and vesting of RSUs |
|
|
||||||
|
Exercise
of pre-funded warrants |
|
|
||||||
|
Outstanding
on December 31, 2025 |
|
|
||||||
On
July 23, 2024 Evogene announced a reverse share split of its issued and outstanding ordinary shares, at a ratio of 1-for-10 ,
which was implemented after market close on July 24, 2024. Evogene’s ordinary shares began trading on the Nasdaq Capital Market
on a post-reverse split basis at the market open on July 25, 2024, and on the Tel Aviv Stock Exchange at the market open on July 28, 2024.
The reverse share split was approved by Evogene’s shareholders at the Company’s Annual Meeting of Shareholders held on June
13, 2024, to be effected at the board of directors’ discretion within approved parameters. In addition, proportionate adjustments
were made to the number of shares issuable upon the exercise of all outstanding options entitling the holders to purchase ordinary shares
(with a reciprocal increase in the per share exercise price) and to the number of ordinary shares underlying outstanding RSUs. As part
of the reverse share split, all fractional shares were rounded to the nearest whole ordinary share, such that only shareholders holding
fractional consolidated shares of more than half of the number of shares which consolidation constitutes one whole share, were entitled
to receive one consolidated share. As a result of the abovementioned mechanism the Company recorded an adjustment of approximately 21,000
ordinary shares to the amount of issued and outstanding shares to all previous periods presented and that have been adjusted to reflect
this reverse split.
All
shares, per share amounts, and weighted average selling prices for periods prior to the reverse share split have been retroactively adjusted
to reflect the reverse share split.
| d. |
Issuance of ordinary shares:
|
| 1. |
In January 2021, the Company entered into a Controlled
Equity Offering Sales Agreement, pursuant to which the Company issued
|
On
February 19, 2021, the Company entered into a new Controlled Equity Offering Sales Agreement, having an aggregate offering price of up
to $50,000
(subsequently reduced to approximately $19,500 ),
pursuant to which the Company issued 72,683
ordinary shares from April through September 2021, in an ATM offering, with a weighted average selling price of $36.35
per share, resulting in gross proceeds of approximately $$2,642 .
During December 2022, 2,851
ordinary shares were issued through the ATM offering, with a weighted selling price of $7.68
per share, resulting in gross proceeds of approximately $22 .
During 2023, 72,022
ordinary shares were issued through the ATM offering, with a weighted selling price of $9.64
per share, resulting in gross proceeds of approximately $695 .
During January 2024, 320
ordinary shares were issued through the ATM offering, with a selling price of $10.00
per share, resulting in gross proceeds of approximately $3 .
In March 2024, the Company terminated the ATM offering pursuant to the terms of the Controlled Equity Offering Sales Agreement.
F - 47
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 17: - |
SHAREHOLDERS' EQUITY (Cont.) |
| 2. |
On July 17, 2023, the Company entered into securities
purchase agreements with certain institutional investors for the sale of |
| 3. |
On March 1, 2024, the Company filed a shelf registration
statement on Form F-3 with the Securities and Exchange Commission under which the Company may offer and sell from time to time in one
or more offerings, the Company’s ordinary shares, rights, warrants and units having an aggregate offering price of up to $
|
| 4. |
On March 28, 2024, the Company entered a new At-The-Market
Issuance Sales Agreement (the “Sales Agreement”), with Lake Street Capital Markets, LLC as selling agent. In accordance with
the terms of the Sales Agreement, from time to time the Company may offer and sell its ordinary shares in an ATM offering having an aggregate
offering price of up to $ |
| 5. |
On August 23, 2024, Evogene entered into a definitive
securities purchase agreement, or the Securities Purchase Agreement, with an institutional investor (the “Investor”), pursuant
to which Evogene agreed to issue and sell to such Investor in a registered direct offering, (i) |
F - 48
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 17: - |
SHAREHOLDERS' EQUITY (Cont.) |
| e. |
Rights attached to shares:
|
The
Company’s ordinary shares have voting rights at the general meeting, rights to dividends, rights upon liquidation of the Company
and the right to nominate directors in the Company.
| f. |
Rights attached to pre-funded warrants:
|
Until
the pre-funded warrants are exercised into ordinary shares, there are no rights with respect to the ordinary shares underlying such pre-funded
warrants. Upon exercise of the pre-funded warrants into ordinary shares, the holder is entitled to exercise the rights attached to shares
only as to matters for which the record date occurs after the exercise date.
| g. |
Capital management in the Company:
|
The
Company's objectives in managing capital are as follows:
To
maintain its ability to ensure the continuity of the business, and thus to generate a return to equity holders, investors and other parties.
The Company manages its capital structure and makes adjustments following changes in economic conditions and the risk-nature of its operations.
In order to maintain or to adjust the necessary capital structure, the Company takes various steps, such as raising funds by capital issues.
F - 49
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 17: - |
SHAREHOLDERS' EQUITY (Cont.) |
| h. |
Composition of non-controlling interests in the
statement of financial position: |
|
2025
|
2024
|
|||||||
|
Balance
as of January 1, |
$
|
|
$
|
|
||||
|
Forfeiture
of non-controlling interests regarding share-based compensation |
(
|
)
|
(
|
)
| ||||
|
Share-based
compensation |
(
|
)
|
|
|||||
|
Exercise
of subsidiary options |
(
|
)
|
|
|||||
|
Income
(loss) attributed to non-controlling interests |
|
(
|
)
| |||||
|
Balance
as of December 31, |
$
|
|
$
|
|
||||
| i. |
Issuance of shares by subsidiary:
|
| 1. |
During July 2025,
|
| 2. |
On December 21, 2022, Biomica Ltd. signed a definitive
agreement for a $ |
| 3. |
On June 27, 2024,
|
F - 50
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 18: - |
SHARE- BASED COMPENSATION |
| a. |
Expenses recognized in the financial statements:
|
The
expense recognized in the Company's financial statements for services provided by employees and service providers is as follows:
|
Year ended
December 31, |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Share-based
compensation – Attributable to equity holders of the Company |
$
|
|
$
|
|
$
|
|
||||||
|
Share-based
compensation – Attributable to non-controlling interests (see Note 17h) |
(
|
)
|
|
|
||||||||
|
$
|
|
$
|
|
$
|
|
|||||||
| b. |
The Company maintains two share option and
incentive plans:
|
| c. |
Evogene Ltd. Share-based payment plan for employees,
directors and consultants: |
During
2025, 2024 and 2023, the board of directors of the Company approved to grant its employees, directors and consultants 233,500 ,
217,300
and 62,600
options, respectively. The fair value of the options granted in 2025, 2024 and 2023 determined at their grant date using the binomial
model, was approximately $188 ,
$208
and $204 ,
respectively.
| d. |
Evogene
Ltd. Share options activity: |
The
following table summarizes the number of share options, the weighted average exercise price, and the changes that were made in the option
plans to employees, consultants and directors of the Company:
|
2025
|
2024
|
2023
(*) |
||||||||||||||||||||||
|
Number
of
options
|
Weighted
average exercise prices ($) |
Number
of
options
|
Weighted
average exercise prices ($) |
Number
of
options
|
Weighted
average exercise prices ($) |
|||||||||||||||||||
|
Outstanding
at the beginning of year |
|
|
|
|
|
|
||||||||||||||||||
|
Granted
|
|
|
|
|
|
|
||||||||||||||||||
|
Exercised
|
|
|
|
|
|
|
||||||||||||||||||
|
Forfeited
|
(
|
)
|
|
(
|
)
|
|
(
|
)
|
|
|||||||||||||||
|
Outstanding
at end of year |
|
|
|
|
|
|
||||||||||||||||||
|
Exercisable
at end of year |
|
|
|
|
|
|
||||||||||||||||||
(*)
Number of options and weighted average exercise prices have been retroactively adjusted to reflect the reverse stock split. See Note 17(b).
F - 51
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 18: - |
SHARE- BASED COMPENSATION (Cont.) |
The
following table summarizes information about share options outstanding at December 31, 2025:
|
Options
outstanding |
||||||||||||
|
Range
of exercise prices ($) |
Number
outstanding
|
Average
remaining
contractual
life
|
Weighted
average
exercise
price
|
|||||||||
|
1.37-9.22
|
|
|
|
|||||||||
|
10.20 - 20
|
|
|
|
|||||||||
|
20.41-39.97
|
|
|
|
|||||||||
|
55.83-64.61
|
|
|
|
|||||||||
|
84.29-87.12
|
|
|
|
|||||||||
|
Total
|
|
|
|
|||||||||
The
weighted average outstanding remaining life contractual term of the options as of December 31, 2025 is 7.48
years (as of December 31, 2024, it was 6.83
years).
The
weighted average fair value of options granted during 2025 was $0.81
(for options granted during 2024, the weighted average fair value was $0.96 ).
The
fair value of Company share options granted to employees, directors and consultants for the years ended December 31, 2025, 2024 and 2023
was estimated using the binomial model with the following assumptions:
|
2025
|
2024
|
2023
|
||||||||||
|
Dividend
yield (%) |
|
|
|
|||||||||
|
Expected
volatility of the share prices (%) |
|
|
|
|||||||||
|
Risk-free
interest rate (%) |
|
|
|
|||||||||
|
Suboptimal
factor |
|
|
|
|||||||||
|
Post-vesting
forfeiture rate (%) |
|
|
|
|||||||||
The
expected volatility of the share prices reflects the assumption that the historical volatility of the share prices is reasonably indicative
of expected future trends.
| e. |
Evogene
Ltd. RSUs activity: |
The
2021 Plan also provides for the grant of restricted shares and RSUs. During 2024 and 2023, the board of directors of the Company approved
to grant its employees, directors and consultants 1,300
and 35,260
RSUs, respectively. The fair value of the RSUs granted in 2024 and 2023, was approximately $12.5
and $265 ,
respectively, determined at their grant date according to the Company's share price at the time of their grant since the RSUs were granted
at a zero exercise price and no dividends were expected to be distributed during their vesting period. During 2025 no RSU were granted.
F - 52
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 18: - |
SHARE- BASED COMPENSATION (Cont.) |
The
following table summarizes the number of RSUs, and the changes that were made under the 2021 Plan to employees, consultants and directors
of the Company during 2025 and 2024:
|
2025
|
2024
|
|||||||||||||||
|
Number
of RSUs |
Weighted
average grant date fair value |
Number
of RSUs |
Weighted
average grant date fair value |
|||||||||||||
|
Outstanding
at beginning of year |
|
|
|
|
||||||||||||
|
Granted
|
|
|
|
|
||||||||||||
|
Vested
|
(
|
)
|
|
(
|
)
|
|
||||||||||
|
Forfeited
|
(
|
)
|
|
(
|
)
|
|
||||||||||
|
Outstanding
at end of year |
|
|
|
|
||||||||||||
The
Company's subsidiaries maintain share option and incentive plans with similar terms and conditions.
During
the years ended December 31, 2025 and 2024, the Company's subsidiaries approved to grant their employees, directors and consultants 31,500
and 151,013
options, respectively. The fair value of the options determined at their grant date using the binomial model was approximately $89
and $1,084
respectively. The fair value was estimated using the binominal model.
The
following table summarizes the number of share options, the weighted average exercise price, and the changes that were made in the option
plans to employees, consultants and directors of the Company's subsidiaries:
|
2025
|
2024
|
|||||||||||||||
|
Number
of
options
|
Weighted
average
exercise
prices
($) |
Number
of
options
|
Weighted
average
exercise
prices
($) |
|||||||||||||
|
Outstanding
at beginning of year |
|
|
|
|
||||||||||||
|
Granted
|
|
|
|
|
||||||||||||
|
Exercised
|
(
|
)
|
|
(
|
)
|
|
||||||||||
|
Forfeited
|
(
|
)
|
|
(
|
)
|
|
||||||||||
|
Outstanding
at end of year |
|
|
|
|
||||||||||||
|
Exercisable
at end of year |
|
|
|
|
||||||||||||
F - 53
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 18: - |
SHARE- BASED COMPENSATION (Cont.) |
| f. |
The fair value of Company's subsidiaries’
share options granted to employees, directors and consultants for the years ended December 31, 2025 and 2024 was estimated using the binomial
model with the following assumptions: |
|
2025
|
2024
|
||||
|
Dividend
yield (%) |
|
|
|||
|
Expected
volatility of the share prices (%) |
|
|
|||
|
Risk-free
interest rate (%) |
|
|
|||
|
Suboptimal
factor |
|
|
|||
|
Post-vesting
forfeiture rate (%) |
|
|
|
NOTE 19: - |
STATEMENTS OF PROFIT OR LOSS – ADDITIONAL INFORMATION |
| a. |
Cost of
revenues: |
|
Year
ended December 31, |
||||||||||||
|
2025
|
2024
(*) |
2023
(*) |
||||||||||
|
Salaries
and benefits |
$
|
|
$
|
|
$
|
|
||||||
|
Inventory
impairment |
|
|
|
|||||||||
|
Materials
and sub-contractors |
|
|
|
|||||||||
|
$
|
|
$
|
|
$
|
|
|||||||
(*)
Reclassified to conform to the current period presentation, following the classification of certain operations as discontinued operations.
| b. |
Research
and development, net: |
|
Year
ended December 31, |
||||||||||||
|
2025
|
2024
(*) |
2023
(*) |
||||||||||
|
Salaries
and benefits |
$
|
|
$
|
|
$
|
|
||||||
|
Share-based
compensation |
|
|
|
|||||||||
|
Materials
and sub-contractors |
|
|
|
|||||||||
|
Plant
growth and greenhouse maintenance |
|
|
|
|||||||||
|
Office
maintenance |
|
|
|
|||||||||
|
Depreciation
and amortization |
|
|
|
|||||||||
|
Gain
from derecognition of property, plant and equipment |
|
|
(
|
)
| ||||||||
|
Amounts
recorded with respect to government grants (**) |
|
|
(
|
)
| ||||||||
|
Other
|
|
|
|
|||||||||
|
$
|
|
$
|
|
$
|
|
|||||||
(*)
Reclassified to conform to the current period presentation, following the classification of certain operations as discontinued operations.
(**)
Excludes EU Horizon participation amounts of approximately $557 ,
$561
and $265
for the years 2025, 2024 and 2023, respectively, that were deducted mainly from salaries and benefits costs and materials and sub-contractors
costs as mentioned above.
F - 54
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 19: - |
STATEMENTS OF PROFIT OR LOSS – ADDITIONAL INFORMATION (Cont.) |
| c. |
Sales
and marketing: |
|
Year
ended December 31, |
||||||||||||
|
2025
|
2024
(*) |
2023
(*) |
||||||||||
|
Salaries
and benefits |
$
|
|
$
|
|
$
|
|
||||||
|
Share-based
compensation |
|
|
|
|||||||||
|
Subcontractors
and professional fees |
|
|
|
|||||||||
|
Travel
|
|
|
|
|||||||||
|
Legal
|
|
|
|
|||||||||
|
Other
|
|
|
|
|||||||||
|
$
|
|
$
|
|
$
|
|
|||||||
(*)
Reclassified to conform to the current period presentation, following the classification of certain operations as discontinued operations.
| d. |
General
and administrative: |
|
Year
ended December 31, |
||||||||||||
|
2025
|
2024
(*) |
2023
(*) |
||||||||||
|
Salaries
and benefits |
$
|
|
$
|
|
$
|
|
||||||
|
Share-based
compensation |
|
|
|
|||||||||
|
Professional
fees |
|
|
|
|||||||||
|
Other
|
|
|
|
|||||||||
|
$
|
|
$
|
|
$
|
|
|||||||
(*)
Reclassified to conform to the current period presentation, following the classification of certain operations as discontinued operations.
| e. |
Other
expenses (income): |
| 1. |
Other expenses, net, of approximately $
|
| 2. |
The decision to cease Canonic Ltd.’s operations
in the first half of 2024 resulted in other expenses of approximately $ |
F - 55
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 19: - |
STATEMENTS OF PROFIT OR LOSS – ADDITIONAL INFORMATION (Cont.) |
| f. |
Financing
income and expenses: |
Financing
income:
|
Year
ended December 31, |
||||||||||||
|
2025
|
2024
(*) |
2023
(*) |
||||||||||
|
Exchange
differences |
$
|
|
$
|
|
$
|
|
||||||
|
Interest
income |
|
|
|
|||||||||
|
Financial
income in respect of government grants |
|
|
|
|||||||||
|
Revaluation
of Convertible SAFE |
|
|
|
|||||||||
|
Change in
the fair value of marketable Securities |
|
|
|
|||||||||
|
Remeasurement
of warrants and pre-funded warrants |
|
|
|
|||||||||
|
$
|
|
$
|
|
$
|
|
|||||||
Financing
expenses:
|
Year
ended December 31, |
||||||||||||
|
2025
|
2024
(*) |
2023
(*) |
||||||||||
|
Bank expenses
and commissions |
$
|
|
$
|
|
$
|
|
||||||
|
Exchange
differences |
|
|
|
|||||||||
|
Excess of
initial fair value of pre-funded warrants over transaction proceeds |
|
|
|
|||||||||
|
Amortization
of deferred expenses related to issuance of warrants |
|
|
|
|||||||||
|
Lease liability
interest |
|
|
|
|||||||||
|
Revaluation
of Convertible SAFE |
|
|
|
|||||||||
|
Financial
expenses in respect of government grants |
|
|
|
|||||||||
|
$
|
|
$
|
|
$
|
|
|||||||
(*) Reclassified to conform to the current period presentation, following the classification of certain operations as discontinued operations.
F - 56
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
NOTE
20: - LOSS PER SHARE
Details
of the number of shares and income (loss) used in the computation of loss per share:
|
Year
ended December 31, |
||||||||||||||||
|
2025
|
||||||||||||||||
|
Weighted
number of shares |
Loss
from continuing operations, attributable to equity holders of the Company |
Income
from discontinued operations, attributable to equity holders of the Company - Basic |
Income
from discontinued operations, attributable to equity holders of the Company - Diluted |
|||||||||||||
|
Number
of shares and income (loss ) |
|
(
|
)
|
|
|
|||||||||||
Since
the income from discontinued operations attributable to equity holders of the Company under the basic calculation does not differ materially
from that under the diluted calculation, there was no material impact on earnings per share, and both basic and diluted earnings per share
from discontinued operations amounted to approximately $0.62
|
Year
ended December 31, |
||||||||||||
|
2024
|
||||||||||||
|
Weighted
number of shares |
Loss
from continuing operations, attributable to equity holders of the Company |
Loss
from discontinued operations, attributable to equity holders of the Company |
||||||||||
|
Number
of shares and loss |
|
(
|
)
|
(
|
)
| |||||||
|
Year
ended December 31, |
||||||||||||
|
2023
|
||||||||||||
|
Weighted
number of shares *) |
Loss
from continuing operations, attributable to equity holders of the Company |
Loss
from discontinued operations, attributable to equity holders of the Company |
||||||||||
|
Number
of shares and loss |
|
(
|
)
|
(
|
)
| |||||||
*)
To compute diluted loss per share, potential ordinary shares have not been taken into account due to their anti-dilutive effect. See Notes
18(d) and Note 18(e) for number of outstanding options and RSUs. In addition, weighed number of shares for 2023 have been retroactively
adjusted to reflect the reverse stock split. See Note 17(c).
NOTE
21: - OPERATING SEGMENTS
| a. |
General:
|
The
Company operates in three segments, Agriculture, Industry and Human. The Agriculture segment mainly consists of the legacy activity of
parent company, Evogene and Evogene’s subsidiary - AgPlenus Ltd. The Human segment consists of Evogene’s subsidiaries, Biomica
Ltd. and Canonic Ltd. which ceased its operations in 2024. The Industry segment consists of Evogene’s subsidiary Casterra Ag Ltd.
F - 57
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 21: - |
OPERATING SEGMENTS (Cont.) |
The
segments were determined on the basis of information considered by the Chief Operating Decision-Maker (“CODM”) for purposes
of decision-making on the allocation of resources and evaluation of performance. The following Company's segments are engaged in business
activities for which they earn revenues and incur expenses, their results are reviewed by the CODM and discrete financial information
is available:
|
Agriculture
segment |
-
|
Develops
seed traits and ag-chemical products products to improve plant performance. | |
|
Industrial
applications segment |
-
|
Develops
improved castor bean seeds to serve as a feedstock source for other industrial uses. | |
|
Human health segment
|
-
|
Discovers and develops
human microbiome-based therapeutics and cannabis activity. | |
|
Unallocated
|
-
|
Other corporate expenses
and general development of enabling technologies discovery and optimization. |
Each
segment’s performance is determined based on operating loss reported in the financial statements. The results of a segment reported
to the CODM include items attributed directly to a segment, as well as other items, which are indirectly attributed using reasonable assumptions
and exclude share-based compensation charges as they are not considered in the internal operating plans and measurement of the segment’s
financial performance.
| b. |
The following
table presents our revenues and operating loss for
continuing operations by segments:
|
|
Agriculture
(*) |
Industrial
application
|
Human
health
|
Unallocated
(*) |
Total
|
||||||||||||||||
|
For
the Year Ended December 31, 2025 |
||||||||||||||||||||
|
Revenues
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
Cost
of revenues |
$
|
(
|
)
|
$
|
(
|
)
|
$
|
|
$
|
(
|
)
|
$
|
(
|
)
| ||||||
|
Depreciation expenses
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||||
|
Operating
loss |
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||||
|
Net
financing income |
$
|
|
||||||||||||||||||
|
Loss
before taxes on income |
$
|
(
|
)
| |||||||||||||||||
F - 58
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 21: - |
OPERATING SEGMENTS (Cont.) |
|
Agriculture
(*) |
Industrial
application
|
Human
health
|
Unallocated
(*) |
Total
|
||||||||||||||||
|
For
the Year Ended December 31, 2024 |
||||||||||||||||||||
|
Revenues
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
Cost
of revenues |
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||||
|
Depreciation expenses
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||||
|
Operating
loss |
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||||
|
Net
financing income |
$
|
|
||||||||||||||||||
|
Loss
before taxes on income |
$
|
(
|
)
| |||||||||||||||||
|
Agriculture
(*) |
Industrial
application
|
Human
health
|
Unallocated
(*) |
Total
|
||||||||||||||||
|
For
the Year Ended December 31, 2023 |
||||||||||||||||||||
|
Revenues
|
$
|
|
$
|
|
$
|
|
$
|
|
$
|
|
||||||||||
|
Cost
of revenues |
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||||
|
Depreciation expenses
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||||
|
Operating
loss |
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
|
$
|
(
|
)
| |||||
|
Net
financing expenses |
$
|
|
||||||||||||||||||
|
Loss
before taxes on income |
$
|
(
|
)
| |||||||||||||||||
(*)
Reclassified to conform to the current period presentation, following the classification of certain operations as discontinued operations.
See Note 23.
| c. |
Major
customers: |
Revenues
from major customers, each of whom amounts to 10% or more of total revenues. The revenues from major customers detailed below were recorded
in the Agriculture and Industrial application segment:
|
Year
ended December 31, |
||||||||||||
|
2025
|
2024(*)
|
2023(*)
|
||||||||||
|
Customer
A (subsidiary shareholder) |
|
|
|
|||||||||
|
Customer
B |
|
|
|
|||||||||
|
Customer
C |
|
|
|
|||||||||
(*)
Reclassified to conform to the current period presentation, following the classification of certain operations as discontinued operations.
F - 59
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
NOTE
21: - OPERATING SEGMENTS (Cont.)
| d. |
Geographical
information: |
Revenues
based on the location of the customers, are as follows:
|
2025
|
2024
(*) |
2023
(*) |
||||||||||
|
United
States |
|
%
|
|
%
|
|
%
| ||||||
|
Israel
|
|
%
|
|
%
|
|
%
| ||||||
|
Europe
|
|
%
|
|
%
|
|
%
| ||||||
|
Africa
|
|
%
|
|
%
|
|
%
| ||||||
|
|
%
|
|
%
|
|
%
| |||||||
(*)
Reclassified to conform to the current period presentation, following the classification of certain operations as discontinued operations.
The
carrying amounts of non-current assets (right-of-use-assets, property, plant and equipment property and intangible assets) in the Company's
country of domicile (Israel) and in the United States based on the location of the assets, are as follows:
|
December
31, |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
United
States |
|
%
|
|
%
|
|
%
| ||||||
|
Israel
|
|
%
|
|
%
|
|
%
| ||||||
|
|
%
|
|
%
|
|
%
| |||||||
|
NOTE 22: - |
BALANCES AND TRANSACTIONS WITH OFFICERS AND CERTAIN SHAREHOLDERS |
| a. |
As reported by the shareholders, and
based on publicly available information, as of December 31, 2025, Corteva (through its subsidiary Pioneer Hi-Bred International, Inc.)
holds
|
| b. |
Balances:
|
Balance
at December 31, 2025:
|
Officers
|
Certain
shareholders |
|||||||
|
Receivables
|
$
|
|
$
|
|
||||
|
Other
payables |
$
|
|
$
|
|
||||
F - 60
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 22: - |
BALANCES AND TRANSACTIONS WITH OFFICERS AND CERTAIN SHAREHOLDERS (Cont.) |
Balance
at December 31, 2024:
|
Officers
|
Certain
shareholders |
|||||||
|
Receivables
|
$
|
|
$
|
|
||||
|
Other
payables |
$
|
|
$
|
|
||||
| c. |
Benefits
to directors: |
|
Year
ended December 31, |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Compensation
to directors not employed by the Company or on its behalf |
$
|
|
$
|
|
$
|
|
||||||
|
Share-based
compensation to directors not employed by the Company or on its behalf |
|
|
|
|||||||||
|
$
|
|
$
|
|
$
|
|
|||||||
|
Number of
directors that received the above compensation by the Company |
|
|
|
|||||||||
| d. |
Salary
and Benefits to Officers: |
|
Year
ended December 31, |
||||||||||||
|
2025
|
2024
(*) |
2023
(*) |
| |||||||||
|
Salary and
related benefits |
$
|
|
$
|
|
$
|
|
||||||
|
Share-based
compensation |
|
|
|
|||||||||
|
$
|
|
$
|
|
$
|
|
|||||||
|
Number of
people that received salary and benefits |
|
|
|
|||||||||
(*)
Reclassified to conform to the current period presentation, following the classification of certain operations as discontinued operations.
F - 61
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 22: - |
BALANCES AND TRANSACTIONS WITH OFFICERS AND CERTAIN SHAREHOLDERS (Cont.) |
| e. |
Transactions
with related parties: |
For
the year ended December 31, 2024:
|
Officers
|
Certain
shareholders |
|||||||
|
Revenues
(see Note 5) |
$
|
|
$
|
|
||||
|
Research
and development expenses |
|
|
||||||
|
Sales
and marketing expenses |
|
|
||||||
|
General
and administrative expenses |
$
|
|
$
|
|
||||
For
the year ended December 31, 2024 (*):
|
Officers
|
Certain
shareholders |
|||||||
|
Revenues
(see Note 5) |
$
|
|
$
|
|
||||
|
Research
and development expenses |
|
|
||||||
|
Sales
and marketing expenses |
|
|
||||||
|
General
and administrative expenses |
$
|
|
$
|
|
||||
For
the year ended December 31, 2023 (*):
|
Officers
|
Certain
shareholders |
|||||||
|
Revenues
(see Note 5) |
$
|
|
$
|
|
||||
|
Research
and development expenses |
|
|
||||||
|
Sales
and marketing expenses |
|
|
||||||
|
General
and administrative expenses |
$
|
|
$
|
|
||||
(*)
Reclassified to conform to the current period presentation, following the classification of certain operations as discontinued operations.
NOTE
23:- DISCONTINUED OPERATIONS
| a. |
On April 17, 2025, the
Company's board of directors approved the execution of an Asset Purchase Agreement between the Company, Lavie Bio Ltd., Taxon Biosciences
Inc., and Dead Sea Works Ltd. (“purchase agreement”). As part of the purchase agreement, it was also decided to sell the MicroBoost
AI for Agriculture operations. On July 8, 2025, the Company announced the closing of the transaction, for cash consideration of approximately
$
|
F - 62
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 23:- |
DISCONTINUED OPERATIONS (Cont.) |
The
following data represents the operating results attributed to the discontinued operations:
|
December
31, |
||||||||||||
|
2025
|
2024
|
2023
|
||||||||||
|
Revenues
|
$
|
|
$
|
|
$
|
|
||||||
|
Cost
of sales |
|
|
|
|||||||||
|
Gross
profit |
|
|
|
|||||||||
|
Other
income |
|
|
|
|||||||||
|
Research and development,
Selling, general and administrative expenses, net |
|
|
|
|||||||||
|
Operating
income (loss) |
|
(
|
)
|
(
|
)
| |||||||
|
Finance
income (expenses), net |
|
|
|
|||||||||
|
Income
(loss) before taxes on income |
|
(
|
)
|
(
|
)
| |||||||
|
Taxes
on income |
|
|
|
|||||||||
|
Income
(loss) after taxes on income |
|
(
|
)
|
(
|
)
| |||||||
|
Income
(loss) from discontinued operations, net |
|
(
|
)
|
(
|
)
| |||||||
|
Attributable
to: |
||||||||||||
|
Equity
holders of the Company |
|
(
|
)
|
(
|
)
| |||||||
|
Non-controlling
interests |
|
(
|
)
|
(
|
)
| |||||||
|
|
(
|
)
|
(
|
)
| ||||||||
F - 63
EVOGENE LTD. AND ITS SUBSIDIARIES
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
U.S.
dollars in thousands (except share and per share data)
|
NOTE 24: - |
SUBSEQUENT EVENTS |
| 1. |
On February 4, 2026,
Biomica, entered into an exclusive worldwide licensing agreement with Shanghai Lishan Biopharmaceuticals Co., Ltd., or Lishan Biotech,
for BMC128 (designated as LS-LBP-002 by Lishan Biotech), a microbiome-based therapeutic designed to enhance anti-tumor immune activity.
This agreement grants Lishan Biotech exclusive rights (subject to reaching certain commercial milestones) to further develop, manufacture
and commercialize the BMC128, which was developed by Biomica. Pursuant to the terms of the licensing agreement, Biomica is eligible to
receive development milestones payments upon progress of Lishan Biotech’s clinical trials and receipt of regulatory approvals, sales
milestones payments, and royalties from Lishan Biotech’s sales of future products, subject to certain conditions set forth therein.
|
| 2. |
On February 10, 2026, Evogene entered into an
inducement offer letter agreement (the “Inducement Letter”) with an existing institutional investor of the Company (the “Holder”)
of |
| 3. |
On February 2026, Finally Foods entered into an amendment to Series Pre-Seed A1 Preferred Share Purchase
Agreement with certain investors for an aggregate investment of $
|
| 4. |
On November 27, 2025
the board of directors of Lavie Bio Ltd. approved the distribution of a dividend in the aggregate amount of $ |
| 5. |
On February 25,
2026 the board of directors of Biomica Ltd. approved the distribution of a dividend in the aggregate amount of up to $ |
F
- 64
FAQ
What were Evogene (EVGN) operating losses for 2025, 2024 and 2023?
Evogene reported operating losses from continuing operations of approximately $14.0 million for 2025, $18.8 million for 2024 and $22.2 million for 2023. These figures underscore that the company remains in a development phase with ongoing negative profitability.
Does Evogene (EVGN) face going-concern risks according to its 2025 Form 20-F?
Yes. Management states that conditions raised substantial doubt about Evogene’s ability to continue as a going concern for one year from the report date. The company prepared a liquidity plan focused on cost preservation and other actions to support operations over that period.
What major restructuring actions did Evogene (EVGN) take in 2025?
In 2025 Evogene implemented cost-cutting and streamlining, including a significant workforce reduction. It completed the disposition of Lavie Bio’s assets to ICL, scaled down Biomica’s operations, and applied similar reductions at Casterra and AgPlenus, concentrating activity into fewer core areas.
How many Evogene (EVGN) ordinary shares were outstanding at December 31, 2025?
As of December 31, 2025, Evogene had 8,718,193 ordinary shares outstanding, each with a par value of NIS 0.2. This figure is presented after a 1‑for‑10 reverse share split the company effected in July 2024.
What dilution overhang exists from Evogene (EVGN) warrants?
Evogene discloses 5,076,924 ordinary warrants outstanding, each currently exercisable at $1.25 per share. Any exercise of these warrants, in whole or in part, would dilute existing ordinary shareholders and could affect the market price of the shares.
How did Evogene’s 2024 reverse share split affect reported share data?
On July 24, 2024, Evogene effected a 1‑for‑10 reverse share split, consolidating each ten ordinary shares into one. Unless the context indicates otherwise, all share and per‑share figures in the report are presented after giving effect to this reverse split.
What is Evogene (EVGN) focusing on after its 2025 streamlining?
Following the 2025 streamlining, Evogene operates with a more limited number of active subsidiaries and focuses on fewer technological platforms, product candidates and revenue sources. This strategic concentration may increase sensitivity to setbacks in the remaining core activities.
Evogene
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