Financial Performance and Market Conditions - The appreciation of the NIS against the U.S. dollar was (0.6%), (3.1%), and (13.2%) for the years ended December 31, 2024, 2023, and 2022, respectively, which may negatively affect financial results [154]. - The Israeli annual rate of inflation was 5.3%, 3.0%, and 3.2% for the years ended December 31, 2022, 2023, and 2024, respectively [154]. - The market price of the company's ordinary shares has declined since the reverse split, affecting total market capitalization [171]. Grants and Royalties - The company received approximately 3.9 million in royalties [158]. - The company is committed to pay royalties at a rate of 3.0% - 4.0% on sales proceeds from products developed under IIA programs [157]. Nasdaq Compliance and Corporate Governance - On October 31, 2022, the company received a notification from Nasdaq for non-compliance with the minimum bid price requirement of $1.00 per share [166]. - The company was granted an additional 180-day grace period until October 30, 2023, to regain compliance with Nasdaq listing requirements [167]. - A reverse share split of 1-for-10 was executed on July 24, 2024, to temporarily regain compliance with Nasdaq listing standards [169]. - Being a public company in both the U.S. and Israel may strain resources and distract management, increasing legal and financial compliance costs [175]. - The company follows Israeli corporate governance practices instead of Nasdaq requirements, potentially providing less protection to investors [178]. - Loss of foreign private issuer status could significantly increase compliance costs and regulatory burdens [179]. Legal and Regulatory Challenges - The company may face challenges in transferring know-how and manufacturing rights outside of Israel due to restrictions from IIA grants [158]. - The company may encounter difficulties in enforcing U.S. judgments in Israel or asserting U.S. securities law claims due to its incorporation in Israel [159]. - The company currently utilizes U.S. reporting standards but may face increased compliance costs if parallel reporting obligations in Israel and the U.S. are imposed [174]. - The company incurs significant accounting, legal, and other expenses related to reporting requirements under the Exchange Act and Sarbanes-Oxley Act, which may divert management's attention from business operations [176]. - As a foreign private issuer, the company is exempt from certain U.S. regulations, which may reduce the frequency and scope of information available to investors [177]. Tax Implications - U.S. shareholders owning at least 10% of the company's ordinary shares may face adverse federal income tax consequences [180]. - The company believes it was not a Passive Foreign Investment Company (PFIC) for 2024, but there is a risk of being classified as such in 2025, which could lead to adverse tax consequences for U.S. shareholders [182]. Internal Control and Reporting - Failure to maintain effective internal control over financial reporting could adversely affect the price of the company's ordinary shares [184].
Evogene(EVGN) - 2024 Q4 - Annual Report