Equity | 21. Equity Stock Option and Stock Issuance Plan 2021 Plan The Company’s board of directors and shareholders approved and adopted on October 7, 2021 the 2021 Equity Incentive Plan (“2021 Plan”) under which stock options and restricted stock may be granted to officers, directors, employees and consultants in the form of non-qualified stock options, incentive stock-options, stock appreciation rights, restricted stock awards, restricted stock units, stock bonus awards, performance compensation awards (including cash bonus awards) or any combination of the foregoing. Under the 2021 Plan, the Company reserved 150,000 shares of common stock for issuance. As of December 31, 2024, 65,643 shares have been issued and 74,357 options to purchase shares have been awarded under the 2021 Plan. 2023 Plan The Company’s board of directors and shareholders approved and adopted on February 28, 2023 the 2023 Equity Incentive Plan (“2023 Plan”) under which stock options and restricted stock may be granted to officers, directors, employees and consultants in the form of non-qualified stock options, incentive stock-options, stock appreciation rights, restricted stock awards, restricted stock units, stock bonus awards, performance compensation awards (including cash bonus awards) or any combination of the foregoing. Under the 2023 Plan, the Company reserved 250,000 shares of common stock for issuance. As of December 31, 2024, 242,404 shares have been issued and 6,893 option to purchase shares have been awarded under the 2023 Plan. 2024 Plan The Company’s board of directors and shareholders approved and adopted on October 27, 2023 the 2024 Equity Incentive Plan (“2024 Plan”) under which stock options and restricted stock may be granted to officers, directors, employees and consultants in the form of non-qualified stock options, incentive stock-options, stock appreciation rights, restricted stock awards, restricted stock units, stock bonus awards, performance compensation awards (including cash bonus awards) or any combination of the foregoing. Under the 2024 Plan, the Company reserved 750,000 shares of common stock for issuance. As of December 31, 2024, 401,936 shares have been issued under the 2024 Plan and nil option to purchase shares have been awarded under the 2024 Plan. Common Stock Issuances On January 5, 2023, the Company authorized the issuance of an aggregate of 3,131 shares of common stock to the members of the board of directors as compensation earned during the fourth quarter of 2022. On March 27, 2023, the Company authorized the issuance of 284,881 shares of common stock to a Aggia for services rendered. On April 5, 2023 the Company authorized the issuance of 2,974 shares of common stock to the members of the board of directors as compensation earned during the first quarter of 2023. On May 10, 2023 the Company authorized the issuance of 13,965 shares of common stock to a consultant for services rendered. On May 25, 2023, the Company authorized the issuance of 272,002 shares of common stock to Aggia for services rendered. On June 30, 2023, the Company vested 85,472 shares of common stock to a consultant for services rendered. On July 11, 2023, the Company authorized the issuance of an aggregate of 3,298 shares of common stock to the members of the board of directors as compensation earned during the second quarter of 2023. On July 14, 2023, the Company issued 885,545 Restricted Share Awards to Aggia, with an effective issuance date of April 1, 2023. On July 27, 2023, the Company authorized the issuance of 215,331 shares of common stock to Altium in exchange for the exercise of warrants. On August 15, 2023, the Company authorized the issuance of 5,000 shares of common stock to a consultant for services rendered. On September 25, 2023, the Company authorized the issuance of 22,727 shares of common stock in fees to a consultant for services rendered related to the SEPA. On September 30, 2023, the Company vested 53,831 shares of common stock to to a consultant for services rendered. On October 2, 2023, the Company authorized the issuance of an aggregate of 6,365 shares of common stock to the members of the board of directors as compensation earned during the third quarter of 2023. On October 20, 2023, the Company authorized the issuance of 8,550 shares of common stock to consultants for services rendered. On November 6, 2023, the Company authorized the issuance of 8,043 shares of common stock in connection with the conversion of notes payables. On November 14, 2023, the Company authorized the issuance of 15,911 shares of common stock in connection with the conversion of notes payables. On November 29, 2023, the Company authorized the issuance of 23,732 shares of common stock in connection with the conversion of notes payables. On December 13, 2023, the Company authorized the issuance of 27,132 shares of common stock in connection with the conversion of notes payables. On December 19, 2023, the Company authorized the issuance of 26,791 shares of common stock in connection with the conversion of notes payables. On December 19, 2023, the Company issued 202,260 RSA's to certain members of the board of directors, consultants and employees. Total RSA vested as a result of the departure of certain members of the board of directors were 17,640 shares for 2023. The remaining RSA vest ratably over 12 quarters with the first vesting starting on March 31, 2024. On December 31, 2023, the Company vested 20,986 shares of common stock to Aggia as consulting fees earned during the fourth quarter of 2023. On January 4, 2024 the Company authorized the issuance of 10,564 shares of common stock to the members of the board of directors as compensation earned during the fourth quarter of 2023. The Company accrued for the liability as of December 31, 2023. On January 8, 2024, the Company authorized the issuance of 27,694 shares of common stock in connection with the conversion of notes payable. On January 11, 2024, the Company authorized the issuance of 27,891 shares of common stock in connection with the conversion of notes payable. On January 22, 2024, the Company authorized the issuance of 30,577 shares of common stock in connection with the conversion of notes payable. On January 29, 2024, the Company authorized the issuance of 30,443 shares of common stock in connection with the conversion of notes payable. On February 16, 2024 the Company authorized the issuance of 300 shares of common stock to a consultant for services rendered. On February 16, 2024, the Company authorized the issuance of 30,572 shares of common stock in connection with the conversion of notes payable. On March 15, 2024, the Company authorized the issuance of 60,885 shares of common stock in connection with the conversion of notes payable. On March 20, 2024, the Company authorized the issuance of 76,077 shares of common stock in connection with the conversion of notes payable. On March 28, 2024 the Company authorized the issuance of 7,950 shares of common stock to a consultant for services rendered. On March 31, 2024, the Company vested 50,094 shares of common stock to Aggia as consulting fees earned during the first quarter of 2024. On June 30, 2024, the Company vested 139,899 shares of common stock to Aggia as consulting fees earned during the second quarter of 2024. On August 14, 2024, the Company authorized the issuance of 54,981 shares of common stock in connection with the conversion of notes payable. On August 19, 2024, the Company authorized the issuance of 104,249 shares of common stock in connection with the conversion of notes payable. On August 26, 2024 the Company authorized the issuance of 47,500 shares of common stock to a consultant for services rendered. On September 27, 2024, the Company authorized the issuance of 62,549 shares of common stock in connection with the conversion of notes payable. On September 30, 2024, the Company vested 121,149 shares of common stock to Aggia as consulting fees earned during the third quarter of 2024. On December 3, 2024, the Company entered into a Purchase Agreement (the “Purchase Agreement”) and Registration Rights Agreement (the “Registration Rights Agreement”) with institutional investors (“Purchasers”) and issued an aggregate of $3.75 million aggregate principal amount of convertible senior notes due in 2025 (the “Notes”) for aggregate gross proceeds of approximately $3.0 million, before deducting fees to the placement agent and other expenses payable by the Company (the “Offering”). RBW Capital Partners LLC, offering all securities through Dominari Securities LLC, served as the exclusive placement agent for the Offering. The Offering closed on December 4, 2024. Pursuant to the Purchase Agreement, the Notes were issued with an original issue discount of 20%. The Notes will mature on December 4, 2025, unless earlier converted upon the satisfaction of certain conditions. The conversion price of the Notes is $4.10 per share of common stock. The Notes include a “Most Favored Nation” clause which grants to the Purchasers the right to claim better conversion terms should the Company provide such to any as long as the Notes are outstanding. The Purchasers will be prohibited from effecting a conversion of the Notes to the extent that, as a result of such conversion, a Purchaser would beneficially own more than 9.99% of the shares of common stock outstanding immediately after giving effect to such conversion. The Company agreed to register the shares of common stock underlying the Notes for resale under a Registration Statement on Form S-3, pursuant the Securities Act of 1933. The Notes contain a covenant prohibiting the Company to incur, guarantee or assume any indebtedness, other than certain permitted indebtedness, create or allow or suffer any mortgage, lien, security interest or other encumbrance on its property or assets , other than permitted liens, redeem, defease, repurchase, repay or make any payments in respect of any indebtedness if at the time such payment is due or is otherwise made or, after giving effect to such payment, an event of default under the Notes has occurred and is continuing, declare or pay any cash dividend or distribution on any stock or other equity interest of the Company, or make, any change in the nature of its business or modify its corporate structure or purpose. The Notes contain customary events of default and customary penalties for the Company’s failure to issue conversion shares on a timely basis. The Registration Rights Agreement contains customary penalties for our failure to file the registration statement or cause it to become effective on a timely basis and for certain other events. On December 31, 2024, the Company vested 160,413 shares of common stock to Aggia as consulting fees earned during the fourth quarter of 2024. Preferred Stock Our authorized preferred stock consists of 10,000,000 shares of preferred stock, $0.0001 par value per share. As of December 31, 2024 there are no shares of preferred stock currently issued and outstanding. Restricted Share Awards Per Addendum 2, on July 14, 2023, the Company issued Restricted Share Awards ("RSA's") to Aggia. These RSA are considered issued as of the effective date on April 1, 2023. Pursuant to the Services Agreement these RSA's vest on a progressive schedule, at a rate equal to the Net Income of Sadot Agri-Foods, calculated quarterly divided by $3.125, which for accounting purposes shall equal 40% of the net income of Sadot Agri-Foods, calculated quarterly divided by $1.25. Shares shall be considered issued and outstanding as of the Addendum Date and Aggia shall hold rights associated with such Shares; provided, however, Shares not earned or purchased may not be transferred, offered, pledged, sold, subject to a contract to sell, granted any options for the sale of or otherwise disposed of, directly or indirectly. The total RSA's vested for Aggia in 2024 were 471,555. At December 31, 2024, there were 640,329 restricted share awards outstanding awarded to employees, consultants and the board of directors. A summary of the activity related to the restricted share awards is presented below: Total Weighted-average $ Unvested, December 31, 2022 — — Granted 1,087,806 12.50 Forfeited — — Vested (177,929) 12.50 Unvested at December 31, 2023 909,877 10.85 Granted 335,622 1.88 Forfeited — — Vested (605,170) 10.49 Unvested at December 31, 2024 640,329 6.49 Change in fair value of stock-based compensation on the Consolidated Statement of Operations and Other Comprehensive Loss is made up of the difference between the agreed upon issuance price, per the servicing agreement with Aggia and the market price on the day of issuance. For the year ended December 31, 2024, Change in fair value of stock-based compensation was a gain of $4.1 million. For the year ended December 31, 2023, Change in fair value of stock-based compensation was a gain of $1.3 million. See Note 17 – Commitments and contingencies for further details on Restricted Share Awards. Warrant and Option Valuation The Company has computed the fair value of warrants and options granted using the Black-Scholes option pricing model. The expected term used for warrants and options issued to non-employees is the contractual life. The Company is utilizing an expected volatility figure based on a review of the historical volatilities, over a period of time, equivalent to the expected term of the instrument being valued, of similarly positioned public companies within its industry. The risk-free interest rate was determined from the implied yields from U.S. Treasury zero-coupon bonds with a remaining term consistent with the expected term of the instrument being valued. Options On February 27, 2023, we issued options to purchase an aggregate of 53,107 shares of our common stock. The options had an exercise price of $15.05 per share and vest ratably over 20 quarters with the first vesting occurring on March 31, 2023. On March 15, 2023, we issued options to purchase 6,893 shares of our common stock. The options had an exercise price of $15.05 per share and vest ratably over 20 quarters with the first vesting occurring on March 31, 2023. On November 27, 2023, there were 10,000 shares forfeited upon the expiration of the options. On December 21, 2023, there were 8,500 shares forfeited upon the departure of board members. On January 21, 2024 there were 1,500 shares forfeited upon the expiration of the options. A summary of option activity is presented below: Weighted-average Number of Weighted-average Aggregate intrinsic value $ $’000 Outstanding, December 31, 2022 15.23 41,250 3.53 156 Granted 15.05 60,000 5.42 — Exercised — — N/A — Forfeited 33.94 (18,500) N/A — Outstanding, December 31, 2023 10.91 82,750 4.26 — Exercisable and vested, December 31, 2023 9.97 22,190 4.34 — Granted — — N/A — Exercised — — N/A — Forfeited 15.05 (1,500) N/A — Outstanding, December 31, 2024 10.84 81,250 3.17 — Exercisable and vested, December 31, 2024 10.03 36,926 3.07 — The Company has estimated the fair value of the options using the Black-Scholes model using the following assumptions: For the Year Ended December 31, 2024 Risk free interest rate 1.53-4.33% Expected term (years) 5.00 Expected volatility 59.10-156.87% Expected dividends — Warrant Exercise Agreement On July 27, 2023 (the “Closing Date”), the Company entered into a Warrant Exercise Agreement (the “Exercise Agreement”) with Altium Growth Fund Ltd. (the “Exercising Holder”), the holder of outstanding warrants to purchase 215,331 shares of common stock of the Company issued in November 2021 (collectively, the “Original Warrants”), whereby the Exercising Holder exercised the Original Warrants in consideration of 215,331 shares of common stock (the “Shares”). The Company received aggregate gross proceeds before expenses of approximately $2.2 million. In order to induce the Exercising Holder to exercise the Original Warrants, the Company reduced the exercise price on the Original Warrants from $13.85 to $10.00 per share. In connection with the exercise of the Original Warrants, we issued an additional warrant to Altium that is exercisable to acquire 215,331 shares of common stock (the “Additional Warrant”) exercisable at a per share price of $24.00. Additional Warrants Issued In connection with the exercise of the Original Warrants, the Company issued an additional warrant to the Exercising Holder that is exercisable for the number of shares of common stock equal to one hundred percent of the Shares purchased by the Exercising Holder (the “Additional Warrant”). The Additional Warrant is substantially identical to the Original Warrants, except that the exercise price of the Additional Warrant is $24.00. The Company is obligated to file a registration statement covering the shares of common stock underlying the warrants within 30 days and to have the registration statement declared effective within 90 days after filing with the Commission. A summary of warrants activity is presented below: Weighted-average Number of Weighted-average Aggregate intrinsic value $ $’000 Outstanding, December 31, 2022 19.30 1,803,364 3.51 — Granted 24.00 215,331 2.88 — Exercised 10.00 (215,331) 2.90 215 Forfeited 43.60 (65,362) N/A — Outstanding, December 31, 2023 19.69 1,738,002 2.61 — Exercisable, December 31, 2023 19.69 1,738,002 2.61 — Granted — — N/A — Exercised — — N/A — Forfeited 31.47 (144,982) N/A — Outstanding, December 31, 2024 18.62 1,593,020 1.82 — Exercisable, December 31, 2024 18.62 1,593,020 1.82 — Stock-Based Compensation Expense Stock-based compensation related to restricted stock issued to employees, directors and consultants, warrants and warrants to consultants amounted to $6.7 million and $6.2 million, respectively for the years ended December 31, 2024 and 2023, of which $5.9 million and $5.4 million were stock-based consulting expenses paid to related party, $0.4 million and $0.5 million were given to consultants for services rendered, $0.1 million and $0.3 million were given to the board of directors and $0.3 million and $0.1 million were executive compensation. |