UNITED STATES

SECURITIES
AND EXCHANGE COMMISSION

WASHINGTON,
D.C. 20549

____________________________________________________________________________________________________



FORM
20-F

____________________________________________________________________________________________________



(Mark One)



|o |  | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ------------------------------------------------------------------------------------------------



or



|☒ |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ------------------------------------------------------------------------------------

For the fiscal year ended December 31,
2019



or



|o |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | ----------------------------------------------------------------------------------------

or



|o |  | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
|- |  | --------------------------------------------------------------------------------------------



For the transition period from _____________________
to _____________________.



Commission file number: 001-39115



____________________________________________________________________________________________________



WISEKEY INTERNATIONAL HOLDING AG

(Exact name of Registrant as specified in
its charter)



____________________________________________________________________________________________________



WISEKEY INTERNATIONAL HOLDING LTD

(Translation of Registrant's name into English)



____________________________________________________________________________________________________



|Canton of Zug, Switzerland                     
|-----------------------------------------------
|(Jurisdiction of incorporation or organization)

General-Guisan-Strasse 6

CH-6300 Zug, Switzerland

(Address of principal executive offices)
____________________________________________________________________________________________________



Peter Ward
Chief Financial Officer

WISeKey International Holding AG

General-Guisan-Strasse 6

CH-6300 Zug, Switzerland

Tel: +41-22-594-3000

Fax: +41-22-594-3001

(Name, Telephone, E-mail and/or Facsimile
number and Address of Company Contact Person)



Copies to:



Herman H. Raspé, Esq.
Patterson Belknap Webb & Tyler LLP

1133 Avenue of the Americas
New York, New York 10036
Tel: (212) 336-2000

____________________________________________________________________________________________________



Securities registered or to be registered
pursuant to Section 12(b) of the Act.



|Title of each class                                                                                                                                   |  | Trading Symbols |  | Name of each exchange and on which registered
|----------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------- |  | ---------------------------------------------
|American Depositary Shares,
each representing five
Class B Shares, par value CHF 0.05 per share
        Class B Shares, par value CHF
0.05 per share* |  | WKEY            |  | The Nasdaq Stock Market LLC                  
|                                                                                                                                                      |  |                 |  |                                              

____________________
* Not for trading, but only in connection with the registration of the American Depositary Shares.



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: 40,021,988 Class A Shares and 27,621,895 Class B Shares.



Indicate by check mark
if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes oNo ☒



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 o 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. Yes ☒ No o



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 (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant
was required to submit such files). Yes ☒ No o



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 definition of "accelerated filer," "large accelerated filer" and "emerging growth company" in
Rule 12b-2 of the Exchange Act. (Check one):



|                          |  |                     |  |                          
|------------------------- |  | ------------------- |  | -------------------------
|Large Accelerated Filer o |  | Accelerated Filer o |  | Non-Accelerated Filer o  
|                          |  |                     |  | Emerging Growth Company ☒

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. o



† 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
which basis of accounting the registrant has used to prepare the financial statements included in this filing:



|            |  |                                                                                                                 |  |        
|----------- |  | --------------------------------------------------------------------------------------------------------------- |  | -------
|U.S. GAAP ☒ |  | International Financial Reporting
Standards as issued
        by the International Accounting
Standards Board o |  | Other o



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 o Item 18 o



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 oNo ☒



(APPLICABLE ONLY TO
ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)



Indicate by check mark
whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange
Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes o
No o













TABLE OF CONTENTS



|INTRODUCTION AND USE OF CERTAIN TERMS                                  | 1  
|---------------------------------------------------------------------- | ---
|SPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS                      | 2  
|Item 1.   Identity of Directors, Senior Management and Advisers        | 3  
|Item 2.   Offer Statistics and Expected Timetable                      | 3  
|Item 3.   Key Information                                              | 3  
|A.   Selected Financial Data                                           | 3  
|B.   Capitalization and Indebtedness                                   | 5  
|Not
    applicable.                                                    | 5  
|C.   Reasons for the Offer and Use of Proceeds                         | 5  
|Not
    applicable.                                                    | 5  
|D.   Risk Factors                                                      | 5  
|Item 4.   Information on the Company                                   | 28 
|A.   History and Development of the Company                            | 28 
|B.   Business Overview                                                 | 28 
|C.   Organizational Structure                                          | 39 
|D.   Property, Plants, and Equipment                                   | 39 
|Item 4A.   Unresolved Staff Comments                                   | 40 
|Item 5.   Operating and Financial Review and Prospects                 | 40 
|A.   Operating Results                                                 | 40 
|B.   Liquidity and Capital Resources                                   | 55 
|C.   Research and Development, Patents and Licenses, Etc.              | 64 
|D.   Trend Information                                                 | 64 
|E.   Off-Balance Sheet Arrangements                                    | 65 
|F.   Tabular Disclosure of Contractual Obligations                     | 65 
|Item 6.   Directors, Senior Management and Employees                   | 65 
|A.   Directors and Senior Management                                   | 65 
|B.   Compensation                                                      | 69 
|C.   Board Practices                                                   | 71 
|D.   Employees                                                         | 75 
|E.   Share Ownership                                                   | 75 
|Item 7.   Major Shareholders and Related Party Transactions            | 77 
|A.   Major Shareholders                                                | 77 
|B.   Related Party Transactions                                        | 79 
|C.   Interests of experts and counsel                                  | 86 
|Item 8.   Financial Information                                        | 86 
|A.   Consolidated Financial Statements and Other Financial Information | 86 
|B.   Significant Changes                                               | 86 
|Item 9.   The Listing                                                  | 87 
|A.   Listing Details                                                   | 87 
|B.   Plan of Distribution                                              | 87 
|C.   Markets                                                           | 87 
|D.   Selling Shareholders                                              | 87 
|E.   Dilution                                                          | 87 
|F.   Expenses of the Issue                                             | 87 
|Item 10.   Additional Information                                      | 87 
|A.   Share Capital                                                     | 87 
|B.   Memorandum and Articles of Association                            | 87 
|C.   Material Contracts                                                | 107
|D.   Exchange Controls                                                 | 112
|E.   Taxation                                                          | 112
|F.   Dividends and Paying Agents                                       | 117
|G.   Statement by Experts                                              | 117
|H.   Documents on Display                                              | 118
|I.   Subsidiary Information                                            | 118
|Item 11.   Quantitative and Qualitative Disclosures about Market Risk  | 118
|Item 12.   Description of Securities Other than Equity Securities      | 119





i







|A.   Debt Securities                                                                    | 119
|--------------------------------------------------------------------------------------- | ---
|B.   Warrants and Rights                                                                | 119
|C.   Other Securities                                                                   | 119
|D.   American Depositary Shares                                                         | 119
|Item 13.   Defaults, Dividend Arrearages and Delinquencies                              | 121
|Item 14.   Material Modifications to The Rights of Security Holders and Use of Proceeds | 121
|Item 15.   Controls and Procedures                                                      | 121
|Item 16.   [RESERVED]                                                                   | 121
|A.   Audit Committee Financial Expert                                                   | 121
|B.   Code of Ethics                                                                     | 121
|C.   Principal Accounting Fees and Services                                             | 122
|D.   Exemptions from the Listing Standards for Audit Committees                         | 122
|E.   Purchases of Equity Securities by the Issuer and Affiliated Purchasers             | 122
|F.   Change in Registrant's Certifying Accountant                                       | 123
|G.   Corporate Governance                                                               | 123
|H.   Mine Safety Disclosure                                                             | 123
|Item 17.   Financial Statements                                                         | 124
|Item 18.   Financial Statements                                                         | 124
|Item 19.   Exhibits                                                                     | 124
|Index to Exhibits                                                                       | 124
|SIGNATURES                                                                              | 127





ii







INTRODUCTION
AND USE OF CERTAIN TERMS



We were formed in 2015
as a holding company to incorporate, acquire, hold, and dispose of interests in national and international entities, in particular
entities active in the area of security technology and related areas. Our Class B Shares, as defined below, have been listed on
the Swiss Exchange (SIX) since 2016 and our American Depositary Shares ("ADSs") have been listed on the Nasdaq Stock
Market LLC under the symbol "WKEY" since December 4, 2019. The Bank of New York Mellon, acting as depositary, registers
and delivers our ADSs, each of which represents five of our Class B Shares.



We have prepared this
annual report using a number of conventions, which you should consider when reading the information contained herein. In this annual
report, "we," "us," "our Company," "the Group," "WISeKey," "WISeKey International
Holding Ltd" and "our" shall refer to WISeKey International Holding AG and its subsidiaries, affiliates, and predecessor
entities. Additionally, this annual report uses the following conventions:



| | · | "CHF" and "Swiss francs" refer to the legal currency of Switzerland
| | - | -------------------------------------------------------------------



| | · | "Class A Shares" refers to our Class A Shares, par value CHF 0.01 per share
| | - | ---------------------------------------------------------------------------



| | · | "Class B Shares" refers to our Class B Shares, par value CHF 0.05 per share
| | - | ---------------------------------------------------------------------------



| | · | "NASDAQ" refers to the Nasdaq Stock Market LLC
| | - | ----------------------------------------------



| | · | "PKI" refers to Public Key Infrastructure
| | - | -----------------------------------------



| | · | "$," "US $," "USD" and "U.S. dollars" refer to the legal
currency of the United States
| | - | --------------------------------------------------------------------------------------



| | · | "SIX" refers to the Swiss Exchange (SIX)
| | - | ----------------------------------------



| | · | "Switzerland" refers to the Swiss Confederation
| | - | -----------------------------------------------



| | · | "IoT" refers to Internet of Things
| | - | ----------------------------------





1







SPECIAL
NOTE REGARDINGFORWARD LOOKING STATEMENTS



This annual report
contains forward-looking statements. Some of these forward-looking statements can be identified by terms and phrases such as "anticipate,"
"should," "likely," "foresee," "believe," "estimate," "expect," "intend,"
"continue," "could," "may," "plan," "project," "predict," "will,"
and similar expressions. Forward-looking statements appear in a number of places in this annual report and include, but are not
limited to, statements contained in the sections entitled "Item 3. Key Information," "Item 4. Information
on the Company" and "Item 5. Operating and Financial Review and Prospects."



These forward-looking
statements include, but are not limited to, statements relating to:



| | · | Our anticipated goals, growth strategies and profitability;
| | - | -----------------------------------------------------------



| | · | Our ability to attract new customers and retain existing customer base;
| | - | -----------------------------------------------------------------------



| | · | Our ability to attract and retain qualified employees and key personnel;
| | - | ------------------------------------------------------------------------



| | · | Our ability to develop new products and enhancements to our existing products;
| | - | ------------------------------------------------------------------------------



| | · | Our ability to anticipate market needs and opportunities;
| | - | ---------------------------------------------------------



| | · | Our ability to prevent security breaches and unauthorized access to confidential customer information;
| | - | ------------------------------------------------------------------------------------------------------



| | · | Our ability to maintain, protect and enhance our intellectual property;
| | - | -----------------------------------------------------------------------



| | · | The sufficiency of our cash and cash equivalents to meet our liquidity needs;
| | - | -----------------------------------------------------------------------------



| | · | Our ability to comply with modified or new laws and regulations relating to our industries;
| | - | -------------------------------------------------------------------------------------------



| | · | The activities of our competitors and the introduction of competing products by our competitors;
| | - | ------------------------------------------------------------------------------------------------



| | · | How long we will qualify as an emerging growth company or a foreign private issuer;
| | - | -----------------------------------------------------------------------------------



| | · | The future growth of the information technology and cybersecurity industry;
| | - | ---------------------------------------------------------------------------



| | · | Assumptions underlying or related to any of the foregoing;
| | - | ----------------------------------------------------------



| | · | Other risks and uncertainties, including those listed in this section of this Form 20-F titled
"Item 3.D—Risk Factors."
| | - | -----------------------------------------------------------------------------------------------------------------------



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
and 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 these forward-looking statements which are set forth in "Item
3D. Risk Factors." Given these risks and uncertainties, you should not place undue reliance on forward-looking statements
as a prediction of actual results.



Except as required
by law, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information,
future events or otherwise. The foregoing factors that could cause our actual results to differ materially from those contemplated
in any forward-looking statement included in this annual report should not be construed as exhaustive. You should read this annual
report, and each of the documents filed as exhibits to the annual report, completely, with this cautionary note in mind, and with
the understanding that our actual future results may be materially different from what we expect.





2







| | Item 1. | Identity of Directors, Senior Management
and Advisers
| | ------- | -----------------------------------------------------



Not applicable.



| | Item 2. | Offer Statistics and Expected Timetable
| | ------- | ---------------------------------------



Not applicable.



| | Item 3. | Key Information
| | ------- | ---------------



| | A. | Selected Financial Data
| | -- | -----------------------



The following tables
set forth our selected consolidated financial and other data for the fiscal years ended December 31, 2019, December 31, 2018 and
December 31, 2017 and are derived from our audited consolidated financial statements included elsewhere in this annual report.
This information should be read in conjunction with our consolidated financial statements and related notes included elsewhere
in this annual report, and the information contained in "Item 5. Operating and Financial Review and Prospects" and "Item
3D. Risk Factors." The historical financial and other data included here and elsewhere in this annual report should not be
assumed to be indicative of our future financial condition or results of operations.



We note that, in 2019,
the Group adopted Accounting Standards Update ("ASU") 2016-02, Leases (Topic 842), which, under its core principle, requires
a lessee to recognize lease assets and liabilities on the balance sheet for all arrangements with terms longer than 12 months.
The Group also adopted ASU 2018-11, Leases (Topic 842), and ASU 2018-10, Codification improvements to Topic 842 ("ASC 842"),
which provides a new transition method and a practical expedient for separating components of a contract intended to reduce costs
and ease implementation of the lease standard for financial statement preparers. There have also been some practical expedients
provided with the aim of simplifying adoption and the Group has elected to apply these. The practical expedients allow that an
entity need not reassess any expired or existing contracts, nor reassess the lease classification for expired or existing leases,
nor reassess initial direct costs for existing leases. They must all be applied as a package. Following on from ASU 2018-11, entities
are permitted to elect not to restate comparative periods in the period of adoption. The Group has elected to follow this guidance.



As a result of the
adoption of ASU 2016-02, the Group, as a lessee, recognized right-of-use assets and related lease liabilities on its balance sheet
for all arrangements with terms longer than twelve months from January 01, 2019. In line with the practical expedients, WISeKey
did not reassess any expired or existing contracts, nor reassess the lease classification for expired or existing leases, nor reassess
initial direct costs for existing leases. The majority of leases held as at January 01, 2019 (the application date) were classified
as operating leases in prior periods and should continue to be treated as such. There was no material impact on the Group’s
results of operations in 2019 upon adoption of the new standard.



We adopted ASC 842
as of January 01, 2019 using the cumulative effect adjustment approach. Accordingly, previously reported financial statements,
including footnote disclosures, have not been recast to reflect the application of the new standard to all comparative periods
presented. Financial statements for the years ended December 31, 2018 and 2017 have not been restated.



Therefore, our selected
consolidated financial and other data for the fiscal year ended December 31, 2019 reflect the requirements of the new leasing standard
ASC 842 and the related ASUs, whilst our selected consolidated financial and other data for the fiscal years ended December 31,
2018 and December 31, 2017 reflect the old leasing standard ASC 840. Accordingly, our selected consolidated financial and other
data related to leasing for the fiscal year ended December 31, 2019 are not directly comparable to those presented for earlier
periods.





3







Consolidated Statement of Comprehensive
Income/(Loss)



|                                                                               | 12 months ended December 31,
|------------------------------------------------------------------------------ | ----------------------------
|USD'000 (except earnings per share)                                            | 2019                        
|Net sales                                                                      | 22,652                      
|Cost of sales                                                                  | (13,196)                    
|Gross profit                                                                   | 9,456                       
|Total operating expenses                                                       | (29,960)                    
|Operating income / (loss)                                                      | (20,504)                    
|Non-operating expenses                                                         | (2,513)                     
|Income / (loss) from continuing operations before income tax expense           | (23,017)                    
|Income tax (expense)/recovery                                                  | (13)                        
|Income/ (loss) from continuing operations, net                                 | (23,030)                    
|Income / (loss) on discontinued operations                                     | 30,484                      
|Net income / (loss)                                                            | 7,454                       
|                                                                               |                             
|Less: Net income / (loss) attributable to noncontrolling interests             | (733)                       
|Net income / (loss) attributable to WISeKey International Holding AG           | 8,187                       
|                                                                               |                             
|Earnings per share (USD)                                                       |                             
|Earnings from continuing operations per share - Basic                          | (0.64)                      
|Earnings from continuing operations per share - Diluted                        | (0.64)                      
|Earnings from discontinued operations per share - Basic                        | 0.84                        
|Earnings from discontinued operations per share - Diluted                      | 0.81                        
|Earning per share attributable to WISeKey International Holding AG             |                             
|Basic                                                                          | 0.23                        
|Diluted                                                                        | 0.23                        
|                                                                               |                             
|Other comprehensive income / (loss)                                            | (1,683)                     
|Comprehensive income / (loss)                                                  | 5,771                       
|                                                                               |                             
|Comprehensive income / (loss) attributable to noncontrolling interests         | (860)                       
|Comprehensive income / (loss) attributable to WISeKey International Holding AG | 6,631                       





4







Consolidated Balance Sheet



|                                                                                                                                                                                                                                | As at December 31,
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ------------------
|USD'000 (except share amounts)                                                                                                                                                                                                  | 2019              
|Cash and cash equivalents                                                                                                                                                                                                       | 12,121            
|Restricted cash, current                                                                                                                                                                                                        | 2,525             
|Other current assets                                                                                                                                                                                                            | 8,938             
|Total current assets                                                                                                                                                                                                            | 23,584            
|Total noncurrent assets                                                                                                                                                                                                         | 26,320            
|TOTAL ASSETS                                                                                                                                                                                                                    | 49,904            
|                                                                                                                                                                                                                                |                   
|Total current liabilities                                                                                                                                                                                                       | 20,150            
|Total noncurrent liabilities                                                                                                                                                                                                    | 9,310             
|TOTAL LIABILITIES                                                                                                                                                                                                               | 29,460            
|Redeemable preferred stock                                                                                                                                                                                                      | -                 
|Common
stock - Class A
        CHF
0.01 par value
        Authorized
- 40,021,988, 40,021,988 and 40,021,988 shares
        Issued
and outstanding - 40,021,988, 40,021,988 and 40,021,988 shares                               | 400               
|Common stock
- Class B
        CHF 0.05
par value
        Authorized
- 41,066,298, 41,063,901 and 35,517,168
        Issued -
28,824,086, 28,769,797 and 24,590,918
        Outstanding
- 27,621,895, 26,681,736 and 24,590,918 | 1,475             
|Total shareholders' equity (deficit) attributable to WISeKey shareholders                                                                                                                                                       | 22,015            
|Noncontrolling interests in consolidated subsidiaries                                                                                                                                                                           | (1,571)           
|Total shareholders' equity                                                                                                                                                                                                      | 20,444            
|TOTAL LIABILITIES AND EQUITY AND REDEEMABLE PREFERRED SHARES                                                                                                                                                                    | 49,904            



| | B. | Capitalization and Indebtedness
| | -- | -------------------------------



Not applicable.



| | C. | Reasons for the Offer and Use of Proceeds
| | -- | -----------------------------------------



Not applicable.



| | D. | Risk Factors
| | -- | ------------



Risks Related to Our Business and
Industry



Prolonged economic
uncertainties or downturns could materially adversely affect our business.



Our business depends
on our current and prospective customers' ability and willingness to spend money in security applications, which in turn is dependent
upon the overall economic health. Negative economic conditions in the global economy, including conditions resulting from financial
and credit market fluctuations, could cause a decrease in corporate spending on information security software. Continuing economic
challenges may cause our customers to re-evaluate decisions to purchase our solution or to delay their purchasing decisions, which
could adversely impact our results of operations.





5







The future growth
of the information technology and cybersecurity industry is uncertain.



Information (including
cybersecurity) technology companies are generally subject to the following risks: rapidly changing technologies; short product
life cycles; fierce competition; aggressive pricing and narrow profit margins; the loss of patent, copyright and trademark protections;
cyclical market patterns; evolving industry standards; and frequent new product introductions. Technology companies may be smaller
and less experienced companies, with limited product lines, markets or financial resources and fewer experienced management or
marketing personnel. Information technology company stocks, especially those which are Internet related, have experienced extreme
price and volume fluctuations that are often unrelated to their operating performance.



Technological
Change



WISeKey needs to keep
pace with changing technologies in order to provide effective identification and authentication solutions. In order to be successful,
WISeKey needs to anticipate, and quickly react to, rapid changes occurring in communications technologies and to the development
of new and improved devices and services that result from these changes. If WISeKey is unable to respond quickly and cost-effectively
to changing communications technologies and devices and evolving industry standards, the existing service offering could become
non-competitive and WISeKey may lose market share. For example, if the Internet is rendered obsolete or less important by faster,
more efficient technologies, WISeKey will have to offer non-Internet-based solutions or it will risk losing current and potential
clients. In addition, to the extent that mobile phones, pagers, personal digital assistants or other devices become important aspects
of digital communications solutions, WISeKey needs to have the technological expertise to incorporate them into its security solutions.
Therefore, WISeKey's success will depend, in part, on its ability to effectively use leading technologies critical to the business,
enhance its existing solutions, find appropriate technology partners, and continue to develop new solutions and technology that
address the increasingly sophisticated and varied needs of its current and prospective clients and their customers and its ability
to influence and respond to technological advances, emerging industry and regulatory standards and practices and competitive service
offerings. WISeKey's ability to remain technologically competitive may require substantial expenditures and lead-time. If WISeKey
is unable to adapt in a timely manner to changing market conditions or customer requirements, its business, financial condition
and results of operations could be seriously harmed.



WISeKey faces
intense competition from companies that are larger and better known than we are, and we may lack sufficient financial or other
resources to maintain or improve our competitive position.



The digital security
market in which we operate faces intense competition, constant innovation and evolving security threats. There are several global
security companies with strong presence in this market, including VeriSign, Inc., DigiCert Inc., Entrust Datacard, Let's Encrypt,
Symantec Corporation, FireEye, Inc., Red Hat Software, VASCO Data Security International, Inc., Zix Corp, NXP Semiconductors, Infineon
Technologies, STMicroelectronics and Samsung Electronics.



Some of our competitors
are large companies that have the technical and financial resources and broad customer bases needed to bring competitive solutions
to the market and already have existing relationships as a trusted vendor for other products. Such companies may use these advantages
to offer products and services that are perceived to be as effective as ours at a lower price or for free as part of a larger product
package or solely in consideration for maintenance and services fees. They may also develop different products to compete with
our current security solutions and respond more quickly and effectively than we do to new or changing opportunities, technologies,
standards or client requirements. Additionally, we may compete with smaller regional vendors that offer products with a more limited
range of capabilities that purport to perform functions similar to our security solutions. Such companies may enjoy stronger sales
and service capabilities in their particular regions.



WISeKey's competitors
may have competitive advantages, such as:



| | · | greater name recognition, a longer operating history and a larger customer base;
| | - | --------------------------------------------------------------------------------



| | · | larger sales and marketing budgets and resources;
| | - | -------------------------------------------------





6







| | · | broader distribution and established relationships with distribution partners and customers;
| | - | --------------------------------------------------------------------------------------------



| | · | greater customer support resources;
| | - | -----------------------------------



| | · | greater resources to make acquisitions;
| | - | ---------------------------------------



| | · | larger intellectual property portfolios; and
| | - | --------------------------------------------



| | · | greater financial, technical and other resources.
| | - | -------------------------------------------------



Our current and potential
competitors may also establish cooperative relationships among themselves or with third parties that may further enhance their
resources. Current or potential competitors may be acquired by third parties with access to greater available resources. As a result
of such acquisitions, our current or potential competitors may be able to adapt more quickly to new technologies and customer needs,
devote greater resources to the promotion or sale of their products and services, initiate or withstand substantial price competition,
take advantage of other opportunities more readily or develop and expand their product and service offerings more quickly than
we do. Larger competitors with more diverse product offerings may reduce the price of products that compete with ours in order
to promote the sale of other products or may bundle them with other products, which would lead to increased pricing pressure on
our products and could cause the average sales prices for our products to decline.



If WISeKey does
not successfully anticipate market needs and enhance existing products or develop new products that meet those needs on a timely
basis, WISeKey may not be able to compete effectively and WISeKey's ability to generate revenues will suffer.



Many of our customers
operate in markets characterized by rapidly changing technologies and business plans, which require them to adapt to increasingly
complex digital security infrastructures to protect internal and external corporate communications. As our customers' technologies
and business plans grow more complex, we expect them to face new and increasingly sophisticated threats of security breach or counterfeiting.
WISeKey faces significant challenges in ensuring that our security solutions effectively protect identities of individual customers,
company information and their brands. As a result, we must continually modify and improve our products in response to changes in
our customers' technology infrastructures.



WISeKey may not be
able to successfully anticipate or adapt to changing technology or customer requirements on a timely basis or at all. If we fail
to keep up with technological changes or to convince our customers and potential customers of the value of our security solutions
even in light of new technologies, our business, results of operations and financial condition could be materially and adversely
affected.



WISeKey cannot guarantee
that it will be able to anticipate future market needs and opportunities or be able to develop product enhancements or new products
to meet such needs or opportunities in a timely manner, if at all. Even if we are able to anticipate, develop and commercially
introduce enhancements and new products, there can be no assurance that enhancements or new products will achieve widespread market
acceptance.



Our product enhancements
or new products could fail to attain sufficient market acceptance for many reasons, including:



| | · | delays in releasing product enhancements or new products;
| | - | ---------------------------------------------------------



| | · | failure to accurately predict market demand and to supply products that meet this demand in a timely
fashion;
| | - | -------------------------------------------------------------------------------------------------------------



| | · | inability to interoperate effectively with the existing or newly introduced technologies, systems
or applications of our existing and prospective customers;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | defects in our products;
| | - | ------------------------



| | · | negative publicity about the performance or effectiveness of our products;
| | - | --------------------------------------------------------------------------





7







| | · | introduction or anticipated introduction of competing products by our competitors; and
| | - | --------------------------------------------------------------------------------------



| | · | installation, configuration or usage errors by our customers.
| | - | -------------------------------------------------------------



If WISeKey fails to
anticipate market requirements or fails to develop and introduce product enhancements or new products to meet those needs in a
timely manner, that could cause us to lose existing customers and prevent us from gaining new customers, which would significantly
harm our business, financial condition and results of operations.



Sometimes it
will be necessary to make a product or product line obsolete and there may be negative impacts to sales or disruption to the customer
base during the ramp down of that product.



All products have a
natural lifecycle that includes the inevitable end-of-life ("EOL") process. During the ramping down of a product, or
product family, there are many ways that our business operations can be challenged. Last time buys are a typical way for customers
to deal with the EOL of a product that is still critical to one of their end products. These kinds of orders show an increase in
short term sales but result in the abrupt drop off of revenue from that customer, for that product, after the last time buy is
delivered. Discontinuing a product also comes with the risk that we may lose that customer for good if we do not have a replacement
for the product or if they decide to look at alternative suppliers because of the change in supply.



WISeKey is subject
to a number of risks associated with global sales and operations.



Business practices
in the global markets that we serve may differ and may require us to include non-standard terms in customer contracts, such as
extended payment or warranty terms. To the extent that we enter into customer contracts that include non-standard terms related
to payment, warranties or performance obligations, our results of operations may be adversely impacted.



Additionally, our global
sales and operations are subject to a number of risks, including the following:



| | · | difficulty in enforcing contracts and managing collections, as well as long collection periods;
| | - | -----------------------------------------------------------------------------------------------



| | · | costs of doing business globally, including costs incurred in maintaining office space, securing
adequate staffing and localizing our contracts;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------



| | · | management communication and integration problems resulting from cultural and geographic dispersion;
| | - | ----------------------------------------------------------------------------------------------------



| | · | risks associated with trade restrictions and foreign legal requirements;
| | - | ------------------------------------------------------------------------



| | · | risk of unexpected changes in regulatory practices, tariffs, tax laws and treaties;
| | - | -----------------------------------------------------------------------------------



| | · | compliance with anti-bribery laws;
| | - | ----------------------------------



| | · | heightened risk of unfair or corrupt business practices in certain geographies and of improper
or fraudulent sales arrangements that may impact financial results and result in restatements of, or irregularities in, financial
statements;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | social, economic and political instability, terrorist attacks and security concerns in general;
| | - | -----------------------------------------------------------------------------------------------



| | · | reduced or uncertain protection of intellectual property rights in some countries; and
| | - | --------------------------------------------------------------------------------------



| | · | potentially adverse tax consequences.
| | - | -------------------------------------



These factors could
harm our ability to generate future global revenues and, consequently, materially impact our business, results of operations and
financial condition.





8







Some of our larger
opportunities depend on our customers’ ability to be awarded significant regional or national contracts in order to fulfil
the volume predictions that were used in the pricing negotiations and forecasts.



The design of many
industrial device comes with the risk that the product may not see the demand that was expected in that market, or the high-volume
contracts may be awarded to competing suppliers. Our customers may be bidding against several other suppliers to win a government
contract and if they lose the bid, we will not see the results that were originally expected during the forecasting of the opportunity
size and profitability.



Our research
and development efforts may not produce successful products or enhancements to our security solutions that result in significant
revenue or other benefits in the near future, if at all.



Investing in research
and development personnel, developing new products and enhancing existing products is expensive and time consuming, and there is
no assurance that such activities will result in significant new marketable products or enhancements to our products, design improvements,
cost savings, revenues or other expected benefits. If we spend significant time and effort on research and development and are
unable to generate an adequate return on our investment, our business and results of operations may be adversely affected.



If WISeKey is
unable to attract new customers, our future revenues and operating results will be harmed.



Our success depends
in large part on our ability to attract new customers. The number of customers that WISeKey adds in a given period impacts both
our short-term and long-term revenues. If WISeKey is unable to successfully attract a sufficient number of new customers, we may
be unable to generate revenue growth.



A large amount of investment
in sales and marketing and support personnel is required to attract new customers. If we are unable to convince these potential
new customers of a need for our products or if we are unable to persuade them of our products' efficacy, we may be unable to achieve
growth and there may be a meaningful negative impact on future revenues and operating results.



Software errors
and non-compliance may affect our reputation and our financial results.



WISeKey's software
applications are complex and there is a risk that defects or errors could arise, particularly where new versions or enhancements
are released. Similarly, regulatory and industry requirements are continuously evolving and we may not be able to keep up with
them. This could result in adverse consequences for us, such as lost revenue, a delay in market acceptance or customer claims.



If we experience
security breaches, we could be exposed to liability and our reputation and business could suffer.



We operate sensitive
public key infrastructure ("PKI") platforms, retain certain confidential customer information in our secure data centers
and registration systems, and our digital certificates and electronic signatures may be used by customers in mission critical applications.
It is critical to our business strategy that our facilities and infrastructure remain secure and are perceived by the marketplace
to be secure. We may have to expend significant time and money to maintain or increase the security of our facilities and infrastructure.
Despite our security measures, our infrastructure may be vulnerable to physical break-ins, computer viruses, attacks by hackers
or similar disruptive problems. It is possible that we may have to expend additional financial and other resources to address such
problems. In the event of a security breach, we could face significant liability, customers could be reluctant to use our services
and we could be at risk for loss of various compliance certifications needed for the operation of our businesses.



WISeKey's reputation
and business could be harmed based on real or perceived shortcomings, defects or vulnerabilities in our security solutions or the
failure of our security solutions to meet customers' expectations.



Organizations are facing
increasingly sophisticated digital security threats and threats of counterfeiting. If WISeKey fails to identify and respond to
new and increasingly complex methods of counterfeiting products or hacking personal and corporate digital accounts, our business
and reputation will suffer. In particular, WISeKey may suffer significant adverse publicity and reputational harm if any of our
products fail to perform as advertised. An actual or perceived breach of our customers' sensitive business data, regardless of
whether the breach is attributable to the failure of our products, could adversely affect the market's perception of the efficacy
of our security solutions and current or potential customers may look to our competitors for alternatives to our security solutions.
Similarly, an actual or perceived failure of our product to prevent counterfeit products from being detected, regardless of whether
such failure is attributable to our products, could adversely affect the market's perception of the efficacy of our authentication
solutions and could encourage current or potential customers to look to our competitors for an alternative to our products. The
failure of our products may also subject us to product liability lawsuits and financial losses stemming from indemnification of
our partners and other third parties, as well as the expenditure of significant financial resources to analyze, correct or eliminate
any vulnerability. It could also cause us to suffer reputational harm, lose existing customers or deter them from purchasing additional
products and services and prevent new customers from purchasing our security solutions.





9







International
Expansion



WISeKey's strategy
includes the international expansion of its business. The expansion into international markets may cause difficulties because of
distance, as well as language and cultural differences. Other risks related to international operations include fluctuations in
currency exchange rates, difficulties arising from staffing and managing foreign operations, legal and regulatory requirements
of different countries, potential political and economic instability, and overlapping or differing tax laws. Management cannot
assure that it will be able to market and operate WISeKey's services successfully in foreign markets, select appropriate markets
to enter, open new offices efficiently or manage new offices profitably. If WISeKey is not successful in accessing new markets,
its results of operations and financial condition could be materially and adversely affected.



If WISeKey is
unable to hire, retain and motivate qualified personnel, our business will suffer.



Our future success
depends, in part, on our ability to continue to attract and retain highly skilled personnel. Any of our employees may terminate
their employment at any time. Competition for highly skilled personnel is frequently intense. In addition, to the extent we hire
personnel from competitors, we may be subject to allegations that they have been improperly solicited or have divulged proprietary
or other confidential information. Further, the training and integration of new employees requires allocation of a significant
amount of internal resources and, even if we make this investment, there is no guarantee that existing or new personnel will remain
or become productive members of our team. Our inability to attract or retain qualified personnel, or delays in hiring required
personnel, particularly in sales & marketing and research & development, may seriously harm our business, financial condition
and results of operations.



Furthermore, WISeKey's
performance depends on favorable labor relations with our employees and compliance with labor laws in the countries where we have
employees and plans to hire new employees. Any deterioration of current relations or increase in labor costs due to our compliance
with labor laws could adversely affect our business.



Dependence on
key personnel and loss of such key personnel may have a negative impact on the operations and profitability of WISeKey.



Our future success
depends in part on the continued service of our key personnel, particularly, the members of our senior management. We have employment
agreements with our key personnel, but these do not prevent such personnel from choosing to leave the Company.



One of the cryptographic
rootkeys used by WISeKey is owned by the Organisation Internationale pour la Sécurité des Transactions Electroniques
OISTE. The Organisation Internationale pour la Sécurité des Transactions Electroniques OISTE has granted us a perpetual
license to exclusively use the cryptographic rootkey. A termination of the license agreement would present a threat to WISeKey's
existing business model.



The cryptographic rootkey
used by WISeKey is owned by the Organisation Internationale pour la Sécurité des Transactions Electroniques OISTE
("OISTE") acting as a trusted third party and not-for-profit entity in charge of ensuring that the Root of Trust (the
"RoT") remains neutral and trusted. The name of the RoT is OISTE/WISeKey, as shown in all major current browsers that
embed the rootkey. Three members of the three-member foundation board of OISTE are WISeKey board members. Members of the foundation
board of OISTE are appointed by a policy authorizing authority (the "Policy Authorizing Authority" or "PAA"),
whose members are international organizations, governments and large corporations that use the OISTE/WISeKey RoT. OISTE has granted
us a perpetual license to exclusively use the cryptographic rootkey and develop technologies and processes based on OISTE's trust
model. The perpetual license agreement can only be terminated under limited circumstances, including if WISeKey were to move from
the trust model developed by OISTE and/or changing the location of the RoT from Switzerland to another country. A termination of
the license agreement would present a threat to WISeKey's current trust model.





10







Services offered
by our PKI business rely on the continued integrity of public key cryptography technology and algorithms that may be compromised
or proven obsolete over time.



Services offered by
our PKI business are based on public key cryptography technology. With public key cryptography technology, a user possesses a public
key and a private key, both of which are required to perform encryption and decryption operations. The security afforded by this
technology depends on the integrity of a user's private key and ensuring that it is not lost, stolen or otherwise compromised.
Advances in attacks on cryptographic algorithms and technology may weaken their effectiveness, and significant new technology requirements
may be imposed by root distribution programs that require us to make significant modifications to our systems or to reissue digital
certificates to some or all of our customers, which could damage our reputation or otherwise harm our business. Severe attacks
on public key cryptography could render PKI services in general obsolete or unmarketable.



We are dependent
on the timely supply of equipment and materials from various sub-contractors and if any one of these suppliers fail to meet, or
delays, their committed delivery schedules, we can suffer with lower or lost revenues.



We use various suppliers
for silicon manufacturing and testing our parts. Any one of these suppliers could not meet their commitments for on-time delivery
of our products. These kinds of supply disruptions can happen due to global shortages of silicon wafers or chemicals used in the
processing of the silicon packaging or shortages in the labor force due to unrest or sicknesses. Our business and operating conditions
can be at risk if we cannot deliver on our product demand as committed in our customer contracts.



Failure of our
third-party suppliers to handle increased volume for their services could impact our ability to take advantage of upside business
opportunities.



We outsource several
critical functions in our supply chain to third-party suppliers, such as the manufacture of our semiconductors. They all have a
number of risks that are present in their businesses that could limit their ability to meet increased demands if we see increased
orders from our customers. If our suppliers cannot satisfy our demand, we may not be able to meet our customer demands. Also, if
our suppliers add higher costs to cover their increased volume, we may see drops in our gross profit margins. Many of these costs
are not fixed, even though there may be contracts in place, and may be at the discretion of the third-party vendor.



Financial Risks



WISeKey has entered,
and expects to continue to enter, into joint venture agreements and these activities involve risks and uncertainties.



WISeKey has entered,
and expects to continue to enter, into joint venture agreements in order to effectively grow its revenue and penetrate certain
geographic regions. Entering into joint venture agreements or other similar forms of partnership involves risks and uncertainties,
including the risk that the partners that we enter into joint ventures with will not have the market connections that we expect
them to bring to the joint venture. Additionally, there is a risk that a given joint venture could fail to satisfy its obligations,
which may result in certain liabilities to us for guarantees and other commitments. Further, since we may not exercise control
over our current or future joint ventures, we may not be able to require our joint ventures to take the actions that we believe
are necessary to implement our business strategy. Additionally, differences in views among joint venture participants may result
in delayed decisions or failures to agree on major issues. If any of these difficulties cause any of our joint ventures to deviate
from our business strategy, or if this leads any of our joint ventures to fail to attract the customer base that we project it
to attract, our results of operations could be materially adversely affected.





11







WISeKey is exposed
to risks associated with acquisitions and investments.



We may in the future
make acquisitions of, or investments in, existing companies or existing or new businesses. Acquisitions and investments involve
numerous risks that vary depending on their scale and nature, including, but not limited to:



| | · | diversion of management's attention from other operational matters;
| | - | -------------------------------------------------------------------



| | · | inability to complete proposed transactions as anticipated or at all (and any ensuing obligation
to pay a termination fee or other costs and expenses);
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the possibility that the acquired business will not be successfully integrated or that anticipated
cost savings, synergies or other benefits will not be realized;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the acquired business or strategic partnership may lose market acceptance or profitability;
| | - | -------------------------------------------------------------------------------------------



| | · | a decrease in our cash or an increase in our indebtedness, including security interests that may
have to be constituted as part of the acquisition indebtedness, may limit our ability to access additional capital when needed;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | failure to commercialize purchased technologies, intellectual property rights or partnered solutions;
| | - | -----------------------------------------------------------------------------------------------------



| | · | initial dependence on unfamiliar supply chains or relatively small supply partners;
| | - | -----------------------------------------------------------------------------------



| | · | inability to obtain and protect intellectual property rights in key technologies;
| | - | ---------------------------------------------------------------------------------



| | · | incurrence of unexpected liabilities; and
| | - | -----------------------------------------



| | · | loss of key personnel and clients or customers of acquired businesses.
| | - | ----------------------------------------------------------------------



In addition, if WISeKey
is unsuccessful at integrating such acquisitions or the technologies associated with such acquisitions, our revenues and results
of operations could be adversely affected. Any integration process may require significant time and resources, and WISeKey may
not be able to manage the process successfully. WISeKey may not successfully evaluate or utilize the acquired technology or personnel,
or accurately forecast the financial impact of an acquisition transaction, including accounting charges. WISeKey may have to pay
cash, incur debt or issue equity securities to pay for any such acquisition, each of which could adversely affect our financial
condition. The sale of equity or incurrence of debt to finance any such acquisitions could result in dilution to our shareholders.
The incurrence of indebtedness would result in increased fixed obligations and could also include covenants or other restrictions
that would impede our ability to manage our operations.



WISeKey has a
history of losses and may not achieve profitability in the future.



WISeKey has invested
substantial amounts of financial resources so far on its acquisitions, brand technology and market position. 2019 is our first
profitable year since our inception with a gain on disposal of a business of USD 31.1 million and we had, on a consolidated
level, an accumulated cumulative loss of USD 197,348,528 as at December 31, 2018 and USD 189,161,455 as at December 31,
2019. In the past, we made significant investments in our operations which have not resulted in corresponding revenue growth and,
as a result, increased our losses. WISeKey expects to make significant future investments to support the further development and
expansion of our business and these investments may not result in increased revenue or growth on a timely basis or at all.



WISeKey may also incur
significant losses in the future for a number of reasons, including slowing demand for our products and services, increasing competition,
weakness in the software and security industries generally, as well as other risks described herein, and we may encounter unforeseen
expenses, difficulties, complications and delays, and other unknown factors. If WISeKey incurs losses in the future, we may not
be able to reduce costs effectively because many of our costs are fixed. In addition, to the extent that we reduce variable costs
to respond to losses, this may affect our ability to attract customers and grow our revenues. Accordingly, WISeKey may not be able
to achieve or maintain profitability and we may continue to incur significant losses in the future.





12







Certain of the
Company's large shareholders, including if acting in concert, may be able to exert significant influence on the Company and their
interests may conflict with the interests of its other shareholders.



Our founder, Carlos
Moreira, holds more than 50% of the Company's voting rights. Further, all holders of the Class A Shares represent approximately
57% of the Company's voting rights. Our founder, or if the holders of Class A Shares were to act in concert with each other, the
holders of the Class A Shares would be able to exert significant influence over certain matters, including matters that must be
resolved by the general meeting of shareholders, such as the election of members to the board of directors or the declaration of
dividends or other distributions. To the extent that the interests of these shareholders may differ from the interests of the Company's
other shareholders, the Company's other shareholders may be disadvantaged by any actions that these shareholders may seek to pursue.



The market for
and price of Class B Shares and our ADSs may be highly volatile.



There has not been
a public market in the United States for our Class B Shares, and an active market has not developed for the ADS since the listing
of ADSs on NASDAQ on December 04, 2019. You may not be able to sell your ADSs quickly or at the market price if trading in the
ADSs is not active.



The market price of
Class B Shares and our ADSs may be highly volatile and may be affected negatively by events involving us, our competitors, the
software and security industry, or the financial markets in general. Furthermore, investors might not be able to resell their Class
B Shares and our ADSs at the price at which they were purchased or at a higher price or at all. Factors that could cause this volatility
in the market price of Class B Shares and our ADSs include, but are not limited to:



| | · | our operating and financial results;
| | - | ------------------------------------



| | · | future announcements concerning our business;
| | - | ---------------------------------------------



| | · | changes in revenue or earnings estimates and recommendations by securities analysts;
| | - | ------------------------------------------------------------------------------------



| | · | changes in our business strategy and operations;
| | - | ------------------------------------------------



| | · | changes in our senior management or board of directors;
| | - | -------------------------------------------------------



| | · | speculation of the press or the investment community;
| | - | -----------------------------------------------------



| | · | disposals of Class B Shares by shareholders;
| | - | --------------------------------------------



| | · | actions of competitors;
| | - | -----------------------



| | · | our involvement in acquisitions, strategic alliances or joint ventures;
| | - | -----------------------------------------------------------------------



| | · | regulatory factors;
| | - | -------------------



| | · | arrival and departure of key personnel;
| | - | ---------------------------------------



| | · | investment community views on technology stock;
| | - | -----------------------------------------------



| | · | liquidity of the Class B Shares and our ADSs; and
| | - | -------------------------------------------------



| | · | general market, economic and political conditions.
| | - | --------------------------------------------------





13







In addition, securities
markets in general have from time to time, experienced significant price and volume fluctuations. Such fluctuations, as well as
the economic environment as a whole, can have a substantial negative effect on the market price of our securities, regardless of
our operating results or our financial position. Any such broad market fluctuations may adversely affect the trading price of our
securities.



Our securities will be traded on
more than one market or exchange and this may result in price variations.



Our Class B Shares
have been trading on the SIX since March 2016. The ADSs have been listed on NASDAQ since December 2019. Trading in Class B Shares
and ADSs, as applicable, on these markets will take place in different currencies (U.S. dollars on NASDAQ and Swiss francs on the
SIX), and at different times (resulting from different time zones, trading days, and public holidays in the United States and Switzerland).
The trading prices of our Class B Shares and ADSs on these two markets may differ due to these and other factors. Any decrease
in the price of our Class B Shares on the SIX could cause a decrease in the trading price of the ADSs on NASDAQ, and vice versa.



Future sales
or issuances, or the possibility or perception of future sales or issuances, of a substantial number of Shares could cause the
market price of our Class B Shares or the ADSs to fall.



The market price of
our Class B Shares or ADSs could decline as a result of sales of a large number of Class B Shares in the public market in the future
or the possibility or perception that such sales could occur. These sales, or the possibility that these sales may occur, also
might make it more difficult for the Company to issue equity securities in the future at a time and price that it deems appropriate.



Further, the Company
may choose to raise additional capital by issuing additional Class B Shares, depending on market conditions or strategic considerations.
In particular, under our Articles of Association, the board of directors is authorized to issue up to 8,503,041 new Class B Shares
at any time until May 25, 2020 and thereby increase the Company's share capital without further shareholder approval. After May
25, 2020 (and each subsequent two-year period), the shareholders may re-approve this authorization. Further, our Articles of Association
provide for a conditional share capital based on which the Company is authorized to issue up to 11,840,090 new Class B Shares,
corresponding to CHF 592,004.50 in par value. Since May 14, 2019, the date of reference for the last formal recording in the
Articles and the commercial register of the Canton of Zug, Switzerland, an aggregate number of 1,228,838 Class B Shares has been
issued out of the Company's conditional share capital as at December 31, 2019. As a result, the available conditional share capital
of the Company, as at December 31, 2019, amounted to CHF 530,562.60, corresponding to the issuance of 10,611,252 Class
B Shares. Among other things, the Company's conditional share capital could be used in connection with the issuance of securities
that are convertible into Class B Shares. To the extent that additional capital is raised through the issuance of Class B Shares
or other securities that are convertible into Class B Shares, the issuance of such securities could dilute the Company's shareholders'
interest in the Company.



On January 19, 2016,
the Company entered into a share subscription facility agreement (the "SFF") with GEM Global Yield Fund LLC SCS and GEM
Investments America, LLC (collectively referred to as "GEM"), according to which the Company has the right, at any date
after the date on which the Class B Shares are listed on the SIX, during the period expiring on the earlier of (i) January
19, 2021 and (ii) the date on which GEM has subscribed for Class B Shares with an aggregate subscription price of CHF 60,000,000,
to request GEM, in one or several steps, to subscribe for Class B Shares up to an aggregate subscription amount of CHF 60,000,000.
After drawdowns made under this facility in June, August and December 2017 in the aggregate amount of CHF 3,905,355, the remaining
amount available for drawdown is CHF 56,094,645 as at December 31, 2019. The subscription price for each subscription
request of the Company corresponds to 90% of the average of the closing bid prices for Class B Shares on the SIX (as adjusted for
variations) as reported by Bloomberg during the respective pricing period. If the Company elects to exercise its rights under the
SFF, the issuance of Class B Shares would dilute the Company's shareholders' interest in the Company. As at December 31, 2019,
the remaining amount available for drawdown by the Company under the SFF is CHF 56,094,645 and the estimated maximum number
of Class B Shares deliverable under the SFF is 28,855,270 Class B Shares at CHF 1.944 per Class B Share (calculated
based on the closing price of a Class B Share on December 30, 2019 of CHF 2.16 per Class B Share, discounted by 10%).
The actual price, at which the Company may drawdown under the SFF is subject to change, and, therefore, the number of Class B Shares
deliverable to GEM may vary.





14







In connection with
the SFF, on May 06, 2016, the Company granted to GEM 1,459,127 options (the "GEM Options") for the acquisition of an
equal number of Class B Shares. As a result, the maximum total number of Class B Shares that are issuable under the GEM Options
at December 31, 2019 is 1,459,127 Class B Shares. The GEM Options may be exercised by GEM at any time on or before May 6,
2021, at an exercise price per GEM Option initially set to CHF 8.85432 per Class B Share (the "GEM Initial Exercise Price").
The GEM Initial Exercise Price may be adjusted using certain agreed-upon formulae more fully described in Item 10.C -- Material
Contracts – Options Issued to GEM. In application of adjustment provisions under the relevant warrant, the exercise price
of the warrant has been adjusted from CHF 8.85342 to CHF 8.8264 and the number of Class B Shares that GEM is entitled to purchase
upon exercise of the warrant has been increased by 4,612 Class B Shares to 1,463,739 as at December 31, 2019. The Class B
Shares issued to GEM in connection with the GEM Options would be issued out of the Company's conditional share capital or authorized
share capital without triggering the pre-emptive rights of the existing shareholders of the Company. The exercise of GEM Options
will dilute the Company's shareholders' interests in the Company.



On February 8, 2018
the Company entered into a Standby Equity Distribution Agreement, as amended on September 28, 2018 (the "SEDA") with
YA II PN, Ltd., a fund managed by Yorkville Advisors Global, LLC (collectively referred to as "Yorkville"). Pursuant
to the SEDA, the Company has the right, at any time during a three-year period, to request Yorkville, in one or several steps,
to subscribe for Class B Shares up to an aggregate subscription amount of CHF 50,000,000. After drawdowns made by WISeKey
under the SEDA in June, November and December 2018, and January, August, September, October and November 2019, in the aggregate
amount of CHF 2,857,922.71, the remaining amount available for drawdown is CHF 47,142,077 as at December 31, 2019.
As long as a sufficient number of Class B Shares is provided through share lending, WISeKey has the right to make drawdowns under
the SEDA at its discretion by requesting Yorkville to subscribe for (if the Class B Shares are issued out of authorized share capital)
or purchase (if the Class B Shares are delivered out of treasury) Class B Shares worth up to CHF 5,000,000 each, subject to
certain exceptions and limitations (including the exception that a drawdown request by WISeKey shall in no event cause the aggregate
number of Class B Shares held by Yorkville to meet or exceed 4.99% of the total number of shares registered with the commercial
register of the Canton of Zug). The subscription price for each subscription request of the Company corresponds to 93% of the lowest
daily volume-weighted average share price (the "VWAP") of a Class B Share, as traded and quoted on the SIX, over the
five trading days following the drawdown request by WISeKey. If the Company elects to exercise its rights under the SEDA, the issuance
of Class B Shares would dilute the Company's shareholders' interest in the Company. As at December 31, 2019, the remaining
amount available for drawdown by the Company under the SEDA is CHF 47,142,077 (USD 48,709,692 at closing rate) and, as
at December 31, 2019, the estimated maximum number of Class B Shares deliverable under the SEDA is 23,467,780 Class B
Shares at CHF 2.0088 per Class B Share (calculated based on the closing price of a Class B Share on December 30, 2019
of CHF 2.16 per Class B Share, discounted by 7%). The actual price, at which the Company may drawdown under the SEDA is subject
to change, and, therefore, the number of Class B Shares deliverable to Yorkville may vary.



On September 28, 2018,
WISeKey entered into a convertible loan agreement ("Crede Convertible Loan Agreement") with Crede CG III, Ltd., Hamilton,
Bermuda ("Crede"), pursuant to which Crede committed to grant a loan to WISeKey in the amount of USD 3,000,000 (the "Crede
Principal Amount"). The Crede Principal Amount will mature on October 30, 2020 ("Crede Maturity"). The Crede Principal
Amount is to be repaid through the delivery of such number of Class B Shares, as corresponds to the quotient of the Crede Principal
Amount then outstanding and a conversion price corresponding to 93% of the average of the two lowest daily VWAPs of a Class B Share,
as traded and quoted on the SIX during the ten trading days immediately preceding the relevant conversion date, converted into
USD at the relevant exchange rate. Crede may request a conversion of the Crede Principal Amount, in parts or in full, at any time
before the Crede Maturity. The loan granted in accordance with the Crede Convertible Loan Agreement bears interest at a yearly
rate of 10% (the "Crede Interest"). WISeKey has the right, at its discretion, to pay Crede Interest accrued on the outstanding
Crede Principal Amount in cash or by delivery of such number of Class B Shares as corresponds to the quotient of the respective
Crede Interest payment amount and a conversion price corresponding to 93% of the average of the two lowest daily VWAPs of a Class
B Share, as traded and quoted on the SIX during the ten trading days immediately preceding the relevant conversion date, converted
into USD at the relevant exchange rate. After conversions in January, February, July, September and December 2019, as requested
by Crede, representing an aggregate repayment amount of USD 1,771,101, the remaining Crede convertible loan amount outstanding
is USD 1,228,899 as at December 31, 2019. The conversion of the Crede Principal Amount and, if applicable, the Crede
Interest, into Class B Shares will dilute the Company's shareholders' interest in the Company. The number of Class B Shares deliverable
by the Company to Crede in connection with conversions of the Crede Principal Amount and the Crede Interest will depend on the
applicable conversion price. As at December 31, 2019, the estimated maximum number of Class B Shares deliverable by the
Company under the Crede Convertible Loan Agreement (for payment of Crede Principal Amount and maximum Crede Interest until maturity)
is 636,803 Class B Shares (calculated based on the closing price of a Class B Share on the SIX on December 30, 2019 of
CHF 2.16 per Class B Share discounted by 7% and converted into USD at the relevant exchange rate). Note that the actual price
at which Crede may convert the Crede Principal Amount and at which the Company may convert the Crede Interest into Class B Shares
is subject to change, and, as a consequence, the number of Class B Shares deliverable to Crede may vary. As at December 31,
2019, the Company holds 1,202,191 Class B Shares in treasury, either directly or through a subsidiary, in order to be able to comply
with its obligations under the Crede Convertible Loan Agreement (including the conversion of the Crede Principal Amount and the
Crede Interest into Class B Shares).





15







In connection with
the Crede Convertible Loan Agreement, on September 28, 2018, the Company granted to Crede 408,247 options (the "Crede Options")
for the acquisition of an equal number of Class B Shares. As a result, the maximum total number of Class B Shares that are issuable
under the Crede Options as at December 31, 2019 is 408,247 Class B Shares. The Crede Options may be exercised by Crede at
any time on or before October 29, 2021, at an exercise price per Crede Option equal to CHF 3.84 per Class B Share. The Class
B Shares issued to Crede in connection with the Crede Options would be issued out of the Company's conditional share capital or
authorized share capital without triggering the pre-emptive rights of the existing shareholders of the Company. The exercise of
Crede Options will dilute the Company's shareholders' interests in the Company.



On June 27, 2019, WISeKey
entered into a convertible loan agreement ("Yorkville Convertible Loan ") with YA II PN, Ltd., a fund managed by Yorkville,
pursuant to which Yorkville committed to grant a loan to WISeKey in the amount of USD 3,500,000 (the "Yorkville Principal
Amount"). The Yorkville Convertible Loan is repayable in monthly cash instalments starting August 01, 2019 up until its maturity
on August 01, 2020. The loan granted in accordance with the Yorkville Convertible Loan bears interest at a yearly rate of 6% (the
"Yorkville Interest"). Yorkville, at its sole discretion, may elect to request that any amount due and outstanding, be
it principal or interests, be paid in Class B Shares using a conversion price of CHF 3.00 per Class B Share (the "Initial
Conversion Price") and, as exchange rate, any publicly available spot rate of exchange selected by Yorkville in the New York
foreign exchange market at the applicable date. The Initial Conversion Price may be adjusted using certain agreed-upon formulae
in case of (a) an increase of capital by means of capitalization of reserves, profits or premiums by distribution of WISeKey shares,
or division or consolidation of WISeKey shares; (b) an issue of WISeKey shares or other securities by way of conferring subscription
or purchase rights; (c) spin-offs and capital distributions other than dividends; and (d) dividends. As at December 31,
2019, and as agreed with Yorkville, WISeKey has repaid an aggregate amount of USD 1,162,607, therefore the remaining Yorkville
Convertible Loan amount outstanding is USD 2,337,393. The conversion of the Yorkville Principal Amount and, if applicable,
the related interest, into Class B Shares will dilute the Company's shareholders' interest in the Company. The number of Class
B Shares deliverable by the Company to Yorkville in connection with conversions of the Yorkville Principal Amount and the Yorkville
Interest will depend on the applicable conversion price. Based on the Initial Yorkville Conversion Price on the date of execution
of the Yorkville Convertible Loan (CHF 3.00) converted into USD at the relevant exchange rate, the estimated maximum number
of Class B Shares deliverable under the Yorkville Convertible Loan (for the payment of Yorkville Principal Amount outstanding as
at December 31, 2019 and Yorkville Interest until maturity) is 772,968 Class B Shares. Note that the actual price at
which Yorkville may convert the Yorkville Principal Amount and Yorkville Interest into Class B Shares is subject to change, and,
as a consequence, the number of Class B Shares deliverable to Yorkville may vary.



In connection with
the Yorkville Convertible Loan, on June 27, 2019, the Company granted to Yorkville 500,000 options (the "Yorkville Options")
for the acquisition of an equal number of Class B Shares. As a result, the maximum total number of Class B Shares that are issuable
under the Yorkville Options as at December 31, 2019 is 500,000 Class B Shares. The Yorkville Options may be exercised
by Yorkville at any time on or before June 27, 2022, at an exercise price per Yorkville Option initially set to CHF 3.00 per
Class B Share (the "Yorkville Initial Exercise Price"). The Yorkville Initial Exercise Price may be adjusted using certain
agreed-upon formulae more fully described in Item 10C – Contracts – Options Issued to Yorkville. The Class B
Shares issued to Yorkville in connection with the Yorkville Options would be issued out of the Company's conditional share capital
or authorized share capital without triggering the pre-emptive rights of the existing shareholders of the Company. The exercise
of Yorkville Options will dilute the Company's shareholders' interests in the Company.



On December 16, 2019,
WISeKey entered into a Convertible Term Loan Facility Agreement (the "LSI Convertible Facility") with Long State Investment
Limited ("LSI"), a Hong Kong-based investment company, to borrow up to CHF 30,000,000 (the "LSI Principal Amount").
Under the terms of the LSI Convertible Facility, WISeKey is able to drawdown individual term loans of up to CHF 500,000 or, if
so agreed between the parties, up to CHF 2,500,000 at an interest rate of 1.5% per annum (the "LSI Interest"), up
to an aggregate amount of CHF 30,000,000 over a commitment period of 24 months. LSI have the right to convert a drawdown tranche
into Class B Shares or, if so agreed among the parties and permitted by law, into ADSs, within a period of 21 SIX trading days
after each individual drawdown at 95% of the higher of (i) the then prevailing market rate and (ii) the minimum conversion price
of CHF 1.80. Any term loan not converted by LSI initially will automatically convert into Class B Shares, or ADSs, 20 SIX
trading days before the expiration of the commitment period at the applicable conversion price. Under certain circumstances, interest
payments may be “paid in kind” by capitalizing such interest and adding to it the aggregate principal balance of the
loan outstanding. As at December 31, 2019, WISeKey has not made any drawdown under the LSI Convertible Facility, therefore
the remaining amount available for drawdown is CHF 30,000,000. The conversion of the LSI Principal Amount and, if applicable,
the LSI Interest, into Class B Shares will dilute the Company's shareholders' interest in the Company. The number of Class B Shares
deliverable by the Company to LSI in connection with conversions of the LSI Principal Amount and the LSI Interest will depend on
the applicable conversion price. As at December 31, 2019, the remaining amount available for drawdown by the Company under
the LSI Convertible Facility is CHF 30,000,000 (USD 30,997,590 at closing rate) and, as at December 31, 2019, the
estimated maximum number of Class B Shares deliverable under the LSI Convertible Facility is 14,619,883 Class B Shares at
CHF 2.052 per Class B Share (calculated based on the closing price of a Class B Share on the SIX on December 30, 2019 of CHF
2.16 per Class B Share discounted by 5%). Note that the actual price at which LSI may convert each tranche under the LSI Convertible
Facility is subject to change, and, therefore, the number of Class B Shares deliverable to LSI may vary.





16







Our financial
results may be affected by fluctuations in exchange rates.



Due to the broad scope
of our international operations, a portion of our revenue and our expenses are denominated in currencies other than USD, our reporting
currency. As a result, our business is exposed to transactional and translational currency exchange risks caused by fluctuations
in exchange rates among those different currencies.



The functional currency
of most of our operating subsidiaries is the applicable local currency. The translation from the applicable functional currencies
into our reporting currency is performed for balance sheet accounts using exchange rates in effect at the balance sheet date, and,
for the statement of operations accounts, using average exchange rates prevailing during the relevant period. Functional currency
exchange rates for our operating subsidiaries have in the past, and may in the future, fluctuate significantly against the USD.
Because we prepare our consolidated financial statements in USD, these fluctuations may have an effect both on our results of operations
and on the reported value of our assets, liabilities, revenue and expenses as measured in USD, which in turn may significantly
affect reported earnings, either positively or negatively, and the comparability of period-to-period results of operations.



In addition to currency
translation risks, we are exposed to currency transaction risks. Currency transaction risk is the risk that the domestic currency
value of a future foreign currency denominated cash flow (payments or receipts from a committed or uncommitted contract or credit
facility) varies as a direct result of changes in exchange rates. Fluctuations in currencies may adversely impact our ability to
compete on a global basis and our results of operations and our financial condition.



Our operating
results can vary significantly due to the impairment of goodwill and other tangible and intangible assets due to changes in the
business environment.



Our operating results
can also vary significantly due to impairments of intangible assets, including goodwill, and other fixed assets. As of December
31, 2019, the value of our goodwill as recorded on our balance sheet was USD 8,316,892 and the value of acquired technologies
and other intangible assets was USD 600,123, net of impairment and amortization. Because the market for our products is characterized
by rapidly changing technologies, our future cash flows may not support the value of goodwill and other intangibles recorded in
our consolidated financial statements. According to U.S. GAAP, we are required to annually test our recorded goodwill and indefinite-lived
intangible assets, if any, and to assess the carrying values of other intangible assets when impairment indicators exist. As a
result of such tests, we could be required to book impairment charges in our statement of operations if the carrying value is greater
than the fair value. The amount of any potential impairment is not predictable.



Factors that could
trigger an impairment of such assets include, but are not limited to, the following:



| | · | underperformance relative to projected future operating results;
| | - | ----------------------------------------------------------------



| | · | negative industry or economic trends, including changes in borrowing rates or weighted average
cost of capital;
| | - | ---------------------------------------------------------------------------------------------------------------





17







| | · | applicable tax rates;
| | - | ---------------------



| | · | changes in working capital;
| | - | ---------------------------



| | · | the market multiples utilized in our fair value calculations;
| | - | -------------------------------------------------------------



| | · | changes in the manner or use of the acquired assets or the strategy for our overall business; and
| | - | -------------------------------------------------------------------------------------------------



| | · | changes in our organization or management reporting structure, which could require greater aggregation
or disaggregation in our analysis by reporting unit and potentially alternative methods/ assumptions of estimating fair values.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Any potential future
impairment, if required, could have a material adverse effect on our business, financial condition and results of operations.



We may need additional
capital in the future and it may not be available on terms favorable to us or at all.



We may require additional
capital in the future to do, among other things, the following:



| | · | fund our operations;
| | - | --------------------



| | · | finance investments in equipment and infrastructure needed to maintain our manufacturing capabilities;
| | - | ------------------------------------------------------------------------------------------------------



| | · | enhance and expand the range of products and services we offer;
| | - | ---------------------------------------------------------------



| | · | respond to potential strategic opportunities, such as investments, acquisitions and expansions;
and
| | - | ---------------------------------------------------------------------------------------------------



| | · | service or refinance other indebtedness.
| | - | ----------------------------------------



Our ability to obtain
external financing in the future is subject to a variety of uncertainties, including: (i) our financial condition, results of operations
and cash flows, and (ii) general market conditions for financing activities.



The terms of available
financing may also restrict our financial and operating flexibility. If adequate funds are not available on acceptable terms, we
may be forced to reduce our operations or delay, limit or abandon expansion opportunities. Moreover, even if we are able to continue
our operations, the failure to obtain additional financing could have a material adverse effect on our business, financial condition
and results of operations.



The Company is
a holding company with no direct cash generating operations and relies on its subsidiaries to provide it with funds necessary to
pay dividends to shareholders.



The Company is a holding
company with no significant assets other than the equity interests in its subsidiaries. The Company's subsidiaries own substantially
all the rights to its revenue streams. The Company has no legal obligation to, and may not, declare dividends or other distributions
on its shares. The Company's ability to pay dividends to its shareholders depends on the availability of sufficient legally distributable
profits from previous years, which depends on the performance of its subsidiaries and their ability to distribute funds to the
Company, and/or on the availability of distributable reserves from capital contributions at the Company level, and on the need
for shareholder approval.



The ability of a subsidiary
to make distributions to the Company could be affected by a claim or other action by a third party, including a creditor, or by
laws which regulate the payment of dividends by companies. In addition, the subsidiaries' ability to distribute funds to the Company
depends on, among other things, the availability of sufficient legally distributable profit of such subsidiaries. The Company cannot
offer any assurance that legally distributable profit or reserves from capital contributions will be available in any given financial
year.





18







Even if there is sufficient
legally distributable profit or reserves from capital contributions available, the Company may not be able to pay a dividend or
distribution of reserves from capital contributions for a variety of reasons. Payment of future dividends and other distributions
will depend on our liquidity and cash flow generation, financial condition and other factors, including regulatory and liquidity
requirements, as well as tax and other legal considerations.



Legal Risks



We are subject
to anti-takeover provisions.



Our Articles and Swiss
law contain provisions that could prevent or delay an acquisition of the Company by means of a tender offer, a proxy contest or
otherwise. These provisions may also adversely affect prevailing market prices for our Class B Shares and our ADSs. These provisions
provide, among other things:



| | · | an opting-out from the obligation of an acquirer of Shares to make a public offer pursuant to article 135
and 163 of the Swiss Financial Market Infrastructure Act, including its implementing directives, circulars and other regulations
(the "FMIA");
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | that the share capital is divided into different classes of shares, of which only Class B Shares
are listed on the SIX, whereas Class A Shares are not listed and tradable;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | that the Board is currently authorized, at any time until May 25, 2020, to issue up to 8,881,829
new Class B Shares and to limit or withdraw the pre-emptive rights of existing shareholders in various circumstances;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | that any shareholder who is entitled to propose any business or to nominate a person or persons
for election as member of the Board at an annual meeting may only do so if advance notice is given to the Company;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | that a merger or demerger transaction requires the affirmative vote of the holders of at least
two-thirds of voting rights and an absolute majority of the par value of the shares, each as represented (in person or by proxy)
at the general meeting of shareholders and the possibility of a so-called "cash-out" or "squeeze-out" merger
if the acquirer controls 90% of the outstanding shares entitled to vote at a general meeting of shareholders; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | that any action required or permitted to be taken by the holders of shares must be taken at a duly
called annual or extraordinary general meeting of shareholders of the Company.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Each Class A
Share and each Class B Share has one vote despite the difference in par value



Each Class A Share
and each Class B Share carries one vote per share but our Class A Shares have a lower par value (CHF 0.01 per share) than our Class
B Shares (CHF 0.05 per share). This means that, relative to their respective per share contribution to the Company’s capital,
the holders of our Class A Shares have a greater relative per share voting power than the holders of our Class B Shares for matters
that require approval on the basis of a specified majority of shares present at the shareholders meeting.



However, to the extent
shareholder resolutions require as the relevant majority standard a majority of the par value of the shares present at the meeting,
Class A Shares as a class have less votes than Class B Shares as a class (as the Class B Shares have a par value of CH 0.05 per
Class B Share as compared to CH 0.01 per Class A Share). The majority of par value standard for approval of resolutions applies
(i) to shareholder resolutions on certain specific matters (see Item 10B -Memorandum and Articles of Association - Dual Voting
Rights) and (ii) to the extent that Swiss corporate law requires that a shareholder resolution be adopted with a majority
of (A) two-thirds of the voting rights attached to, and (B) the absolute majority of the par value of, the shares, each as
represented at the relevant meeting (see also Item 10B-Memorandum and Articles of Association - Voting Requirements).





19







Assuming a total of
approximately 68 million of our shares are outstanding, of which approximately 40 million are Class A Shares and approximately
28 million are Class B Shares, the Class A Shares as a class contribute 22% of the aggregate par value of the Company, have 58%
of the total votes for matters that require approval on the basis of a specified majority of the number of shares present at the
shareholders meeting, but 22% of the total votes for matters that require approval on the basis of a specified majority of the
par value of the shares present at the shareholders meeting. Assuming the same total of approximately 68 million of our shares
are outstanding, of which approximately 40 million are Class A Shares and approximately 28 million are Class B Shares, Class B
Shares as a class contribute 78% of the aggregate par value of the Company, have 42% of the total votes for matters that require
approval on the basis of a specified majority of the number of shares present at the shareholders meeting, but 78% of the total
votes for matters that require approval on the basis of a specified majority of the par value of the shares present at the shareholders
meeting.



A change in tax
laws, treaties or regulations, or their interpretation, of any country in which we operate, including tax rules limiting the deductibility
of interest expense, could result in a higher tax rate on our earnings, which could result in a significant negative impact on
our earnings and cash flows from operations.



We operate in various
jurisdictions. Consequently, we are subject to changes in applicable tax laws, treaties or regulations in the jurisdictions in
which we operate, which could include laws or policies directed toward companies organized in jurisdictions with low tax rates.
A material change in the tax laws or policies, or their interpretation, of any country in which we have significant operations,
or in which we are incorporated or resident, including the limitation of deductibility of interest expense, could result in a higher
effective tax rate on our worldwide earnings and such change could be significant to our financial results.



We may become
exposed to costly and damaging intellectual property or liability claims, and our product liability may not cover all damages from
such claims.



We are exposed to potential
intellectual property or product liability claims. We currently have not been involved in any such legal proceedings. However,
the current and future use of our products may expose us to such claims. Any claims made against us, regardless of their merit,
could be difficult and costly to defend, and could compromise the market acceptance of our products and any prospects for future
products. Such legal proceedings could have a material adverse effect on our business, financial condition, or results of operations.



If WISeKey is
unable to adequately protect its proprietary technology and intellectual property rights, its business could suffer substantial
harm.



Our intellectual property
rights are important to our business. We rely on a combination of confidentiality clauses, trade secrets, copyrights and trademarks
to protect our intellectual property and know-how. In addition, we have filed a number of applications for patents to protect our
technologies and have been granted two patents in Switzerland for the company's verification and authentication of valuable objects
on the Internet in connection with technology involving the internet of things ("IoT") when connecting to each other
or to the cloud. Further, in connection with the acquisition of WISeKey Semiconductors SAS from Inside Secure SA, we have acquired
39 patent families.



The steps we take to
protect our intellectual property may be inadequate. We will not be able to protect our intellectual property if we are unable
to enforce our rights or if we do not detect unauthorized use of our intellectual property. Despite our precautions, it may be
possible for unauthorized third parties to copy our products and use information that we regard as proprietary to create solutions
and services that compete with ours. Some license provisions protecting against unauthorized use, copying, transfer and disclosure
of our solutions may be unenforceable under the laws of certain jurisdictions.



We enter into confidentiality
and invention assignment agreements with our employees and consultants and enter into confidentiality agreements with the parties
with whom we have strategic relationships and business alliances. No assurance can be given that these agreements will be effective
in controlling access to our proprietary information. Further, these agreements do not prevent our competitors from independently
developing technologies that are substantially equivalent or superior to our solutions. Additionally, we may from time to time
be subject to opposition or similar proceedings with respect to applications for registrations of our intellectual property, including
but not limited to our trademarks and patent applications. While we aim to acquire adequate protection of our brand through registrations
in key markets, occasionally third parties may have already registered or otherwise acquired rights to identical or similar brands
for solutions that also address the cybersecurity, authentication or mobile application markets. Additionally, the process of seeking
patent protection can be lengthy and expensive. Any of our pending or future patent or trademark applications, whether challenged
or not, may not be issued with the scope of the claims we seek, if at all.





20







From time to time,
we may discover that third parties are infringing, misappropriating or otherwise violating our intellectual property rights. However,
policing unauthorized use of our intellectual property and misappropriation of our technology is difficult and we may therefore
not always be aware of such unauthorized use or misappropriation. Despite our efforts to protect our intellectual property 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 solutions with the same or similar functionality as our solutions. If competitors infringe,
misappropriate or otherwise misuse our intellectual property rights and we are not adequately protected, or if such competitors
are able to develop solutions with the same or similar functionality as ours without infringing our intellectual property, our
competitive position and results of operations could be harmed and our legal costs could increase.



WISeKey may incur
fines or penalties, damage to its reputation or other adverse consequences if its employees, agents or business partners violate,
or are alleged to have violated, anti-bribery, competition or other laws.



WISeKey's internal
controls may not always protect us from reckless or criminal acts committed by our employees, agents or business partners that
would violate Swiss, U.S. or other laws, including anti-bribery, competition, trade sanctions and regulations and other related
laws. Any such improper actions could subject WISeKey to administrative, civil or criminal investigations in the competent jurisdictions,
could lead to substantial civil or criminal monetary and non-monetary penalties against WISeKey or our subsidiaries, and could
damage our reputation. Even the allegation or appearance of WISeKey's employees, agents or business partners acting improperly
or illegally could damage our reputation and result in significant expenditures in investigating and responding to such actions.



We could be subject
to litigation that, if not resolved in our favor and not sufficiently insured against, could have a material adverse effect on
us.



As WISeKey continues
to expand products, partnerships, sales and distribution, the risk of being involved in legal proceedings will invariably increase.
While WISeKey has successfully avoided being involved in legal proceedings in the past, it may not be able to do so in the future.
Legal proceedings, especially when involving intellectual property rights and product liability, may have material adverse effects
on WISeKey's financial condition, results of operations and cash flows.



We process and
store personal information, which subjects us to data protection laws and contractual commitments, and our actual or perceived
failure to comply with such laws and commitments could harm our business.



The personal information
we process is subject to an increasing number of laws regarding privacy and data protection, as well as contractual commitments.
Any failure or perceived failure by us to comply with such obligations may result in governmental enforcement actions, fines, or
cause our customers to lose trust in us, which could have an adverse effect on our reputation and business.



Risks Related to Our Shares and ADSs



As a foreign
private issuer, we are permitted to rely on exemptions from certain corporate governance standards.



As a foreign private
issuer, we are permitted to, and we are relying on exemptions from certain NASDAQ corporate governance standards applicable to
domestic U.S. issuers. This may afford less protection to holders of our ordinary shares and the ADSs.



We are exempted from
certain corporate governance requirements of NASDAQ by virtue of being a foreign private issuer. We are required to provide a brief
description of the significant differences between our corporate governance practices and the corporate governance practices required
to be followed by domestic U.S. companies listed on NASDAQ. The standards applicable to us are considerably different than the
standards applied to domestic U.S. issuers. For instance, we are not required to:



| | · | have a majority of the board be independent (although all of the members of the audit committee
must be independent under the U.S. Securities Exchange Act of 1934, as amended, or the "Exchange Act");
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





21







| | · | have a compensation committee or a nominating or corporate governance committee consisting entirely
of independent directors; or
| | - | --------------------------------------------------------------------------------------------------------------------------------



| | · | have regularly scheduled executive sessions with only independent directors.
| | - | ----------------------------------------------------------------------------



We have relied on and
intend to continue to rely on some of these exemptions. As a result, you may not be provided with the benefits of certain corporate
governance requirements of NASDAQ.



As a foreign
private issuer, we are exempt from certain disclosure requirements under the Exchange Act, which may afford less protection to
our shareholders and ADS holders than they would enjoy if we were a domestic U.S. company.



As a foreign private
issuer, we are exempt from, among other things, the rules prescribing the furnishing and content of proxy statements under the
Exchange Act. In addition, our executive officers, directors and principal shareholders are exempt from the reporting and short-swing
profit and recovery provisions contained in Section 16 of the Exchange Act. We are also not required under the Exchange Act to
file periodic reports and financial statements with the SEC as frequently or as promptly as domestic U.S. companies with securities
registered under the Exchange Act. As a result, our shareholders and ADS holders may be afforded less protection than they would
under the Exchange Act rules applicable to domestic U.S. companies.



We may lose our
foreign private issuer status, which would then require us to comply with the Exchange Act’s domestic reporting regime and
cause us to incur significant legal, accounting and other expenses.



As a foreign private
issuer, we are not required to comply with all of the periodic disclosure and current reporting requirements of the Exchange Act
applicable to U.S. domestic issuers. In order to maintain our current status as a foreign private issuer, either (a) a majority
of our common shares must be either directly or indirectly owned of record by non-residents of the United States or (b)(i) a majority
of our executive officers or directors may not be United States citizens or residents, (ii) more than 50 percent of our assets
cannot be located in the United States and (iii) our business must be administered principally outside the United States. These
criteria are tested annually. If we lost this status, we would be required to comply with the Exchange Act reporting and other
requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private
issuers. We may also be required to make changes in our corporate governance practices in accordance with various SEC and stock
exchange rules. The regulatory and compliance costs to us under U.S. securities laws if we are required to comply with the reporting
requirements applicable to a U.S. domestic issuer may be significantly higher than the cost we would incur as a foreign private
issuer. As a result, we expect that a loss of foreign private issuer status would increase our legal and financial compliance costs
and would make some activities highly time-consuming and costly. We also expect that if we were required to comply with the rules
and regulations applicable to U.S. domestic issuers, it would make it more difficult and expensive for us to obtain director and
officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage.
These rules and regulations could also make it more difficult for us to attract and retain qualified members of our board of directors.



We are an "emerging
growth company", and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies may
make the ADSs less attractive to investors and, as a result, adversely affect the price of the ADSs and result in a less active
trading market for the ADSs.



We are an "emerging
growth company" as defined in the U.S. Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and we may take advantage
of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth
companies. For example, we have elected to rely on an exemption from the auditor attestation requirements of Section 404 of the
Sarbanes-Oxley Act relating to internal control over financial reporting, and we will not provide such an attestation from our
auditors. We may avail ourselves of these disclosure exemptions until we are no longer an emerging growth company. We cannot predict
whether investors will find the ADSs less attractive because of our reliance on some or all of these exemptions. If investors find
the ADSs less attractive, it may adversely affect the price of the ADSs and there may be a less active trading market for the ADSs.



We will cease to be
an emerging growth company upon the earliest of:



| | · | the last day of the fiscal year during which we have total annual gross revenues of USD 1,070,000,000
(as such amount is indexed for inflation every five years by the United States Securities and Exchange Commission, or SEC) or more;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





22







| | · | the last day of our fiscal year following the fifth anniversary of the completion of our first
sale of common equity securities pursuant to an effective registration statement under the Securities Act;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the date on which we have, during the previous three-year period, issued more than USD 1,070,000,000
in non-convertible debt; or
| | - | --------------------------------------------------------------------------------------------------------------------------------



| | · | the date on which we are deemed to be a "large accelerated filer", as defined in Rule
12b-2 of the Exchange Act, which would occur if the market value of our ordinary shares and ADSs that are held by non-affiliates
exceeds USD700,000,000 as of the last day of our most recently-completed second fiscal quarter.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In addition, under
the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment
of the JOBS Act until such time as those standards apply to private companies. Depending on the circumstances, we may or may not take advantage of the extended transition period under Section 7(a)(2)(B) of the Securities Act for complying with new
or revised accounting standards and therefore our financial statements may not be comparable to companies that comply with public
company effective dates.



The requirements
of being a public company may strain our resources and distract our management.



Following the listing
of the ADSs on NASDAQ, we are required to comply with various regulatory and reporting requirements, including those required by
the SEC. Complying with these reporting and other regulatory requirements will be time-consuming and will result in increased costs
to us, either or both of which could have a negative effect on our business, financial condition and results of operations.



As a public company,
we are (subject to certain exceptions) subject to the reporting requirements of the Exchange Act and the other rules and regulations
of the SEC, including the Sarbanes-Oxley Act and the listing and other requirements of NASDAQ. These requirements may place a strain
on our systems and resources. The Exchange Act requires that we file annual and current reports with respect to our business and
financial performance. The Sarbanes-Oxley Act requires that we maintain disclosure controls and procedures and internal control
over financial reporting. To improve the effectiveness of our disclosure controls and procedures and our internal control over
financing reporting, we need to commit significant resources and provide additional management oversight. We are implementing additional
procedures and processes for the purpose of addressing the U.S. standards and requirements applicable to public companies. These
activities may divert management's attention from other business concerns and we will incur significant legal, accounting and other
expenses that we did not have prior to the listing on NASDAQ, which could have a material adverse effect on our business, financial
condition and results of operations.



We have never
paid dividends on our share capital, and we do not anticipate paying cash dividends in the foreseeable future.



We have never declared
or paid cash dividends on our share capital. We do not anticipate paying cash dividends on our shares in the foreseeable future.
We currently intend to retain all available funds and any future earnings to fund the development and growth of our business. Any
future determination to declare cash dividends will be made at the discretion of our board of directors, subject to compliance
with applicable laws and covenants under current or future credit facilities, which may restrict or limit our ability to pay dividends
and will depend on our financial condition, operating results, capital requirements, distributable profits and/or distributable
reserves from capital contributions, general business conditions and other factors that our board of directors may deem relevant.
As a result, capital appreciation, if any, of our securities will be your sold source of gain for the foreseeable future.



ADS holders may
not be entitled to a jury trial with respect to claims arising under the deposit agreement, which could result in less favorable
outcomes to the plaintiffs in any such action.



The deposit agreement
governing the ADSs representing our Class B Shares provides that, to the fullest extent permitted by applicable law, ADSs holders
waive the right to a jury trial of any claim they may have against us or the depositary arising out of or relating to our Class
B Shares, the ADSs or the deposit agreement, including any claim under the U.S. federal securities laws. The waiver to right to
a jury trial of the deposit agreement is not intended to be deemed a waiver by any holder or beneficial owner of ADSs of our or
the depositary's compliance with the U.S. federal securities laws and the rules and regulations promulgated thereunder.





23







If we or the depositary
oppose a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable based on the facts
and circumstances of that case in accordance with the applicable state and federal law. The enforceability of a contractual pre-dispute
jury trial waiver in connection with claims arising under the federal securities laws has not been finally adjudicated by the United
States Supreme Court. However, we believe that a contractual pre-dispute jury trial waiver provision is generally enforceable,
including under the laws of the State of New York, which govern the deposit agreement. In determining whether to enforce a contractual
pre-dispute jury trial waiver provision, courts will generally consider whether a party knowingly, intelligently and voluntarily
waived the right to a jury trial. We believe that this is the case with respect to the deposit agreement and the ADSs. It is advisable
that you consult legal counsel regarding the jury waiver provision before investing in the ADSs.



If you or any other
holders or beneficial owners of ADSs bring a claim against us or the depositary in connection with matters arising under the deposit
agreement or the ADSs, including claims under federal securities laws, you or such other holder or beneficial owner may not be
entitled to a jury trial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against us
and/or the depositary. If a lawsuit is brought against us and/or the depositary under the deposit agreement, it may be heard only
by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result
in different outcome than a trial by jury would have had, including results that could be less favorable to the plaintiffs in any
such action.



Nevertheless, if this
jury trial waiver is not permitted by applicable law, an action could proceed under the terms of the deposit agreement with a jury
trial. No condition, stipulation or provision of the deposit agreement or our ADSs serves as a waiver by any holder or beneficial
owner of ADSs or by us or the depositary of compliance with any provision of the U.S. federal securities laws and the rules and
regulations promulgated thereunder.



Your voting rights
as a holder of our ADSs are limited by the terms of the deposit agreement.



You may exercise your
voting rights with respect to the ordinary shares underlying your ADSs only in accordance with the provisions of the deposit agreement.
Upon receipt of voting instructions from you in the manner set forth in the deposit agreement, the depositary for our ADSs will
endeavor to vote your underlying ordinary shares in accordance with these instructions. When a general meeting is convened, you
may not receive sufficient notice of a shareholders' meeting to permit you to withdraw your ordinary shares to allow you to cast
your vote with respect to any specific matter at the meeting. In addition, the depositary and its agents may not be able to send
voting instructions to you or carry out your voting instructions in a timely manner. We will make all reasonable efforts to cause
the depositary to extend voting rights to you in a timely manner, but you may not receive the voting materials in time to ensure
that you can instruct the depositary to vote your shares. As a result, you may not be able to exercise your right to vote.



The depositary
for our ADSs will give a discretionary proxy to vote the ordinary shares underlying your ADSs if you do not give timely voting
instructions, except in limited circumstances, which could adversely affect your interests.



Under the deposit agreement
for our ADSs, the depositary will, to the extent permitted under applicable law, give a discretionary proxy to the independent
proxy holder elected by the Company's shareholders to exercise the voting rights of the ordinary shares underlying your ADSs at
shareholders' meetings if you do not give voting instructions to the depositary, unless:



| | · | we have instructed the depositary that we do not wish a discretionary proxy to be given;
| | - | ----------------------------------------------------------------------------------------



| | · | we have informed the depositary that there is substantial opposition as to a matter to be voted
on at the meeting; or
| | - | ---------------------------------------------------------------------------------------------------------------------



| | · | a matter to be voted on at the meeting would have a material adverse impact on shareholders.
| | - | --------------------------------------------------------------------------------------------





24







The effect of this discretionary proxy
is that, if you fail to give voting instructions to the depositary, you cannot prevent the ordinary shares underlying your ADSs
from being voted, absent the situations described above, and it may make it more difficult for shareholders to influence our management.



You may be subject
to limitations on transfer of your ADSs.



Your ADSs are transferable
on the books of the depositary. However, the depositary may close its transfer books at any time or from time to time when it deems
expedient in connection with the performance of its duties. In addition, the depositary may refuse to deliver, transfer or register
transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we or the depositary deems
it advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the
deposit agreement, or for any other reason.



You may not receive
distributions on our Class B Shares or any value for them if it is illegal or impractical to make them available to you as an ADS
holder.



The depositary of our
ADSs has agreed to pay you the cash dividends or other distributions it or the custodian for the Class B Shares represented by
ADSs after deducting its fees and expenses. You will receive these distributions in proportion to the number of our Class B Shares
that your ADSs represent. However, the depositary is not responsible for making such payments or distributions if it is unlawful
or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution
to a holder of ADSs if it consists of securities that require registration under the Securities Act but that are not properly registered
or distributed pursuant to an applicable exemption from registration. The depositary is not responsible for making a distribution
available to any holders of ADSs if any government approval or registration required for such distribution cannot be obtained after
reasonable efforts made by the depositary. We have no obligation to take any other action to permit the distribution of our ADSs,
Class B Shares, rights or anything else to holders of our ADSs. This means that you may not receive the distributions we make on
our Class B Shares or any value for them if it is illegal or impractical for us to make them available to you as an ADS holder.
These restrictions may reduce the value of your ADSs.



The rights accruing
to holders of our shares may differ from the rights typically accruing to shareholders of a U.S. corporation.



We are organized under
the laws of Switzerland. The rights of holders of Class B Shares and, therefore, certain of the rights of ADSs, are governed by
the laws of Switzerland and by our Articles of Association. These rights differ in certain respects from the rights of shareholders
in typical U.S. corporations. See the sections entitled "Description of Share Capital and Articles of Association –
Differences in Corporate Law" and "Description of Share Capital and Articles of Association – Articles of Association
– Other Swiss Law Considerations" for a description of the principal differences between the provisions of Swiss law
applicable to us and, for example, the Delaware General Corporation Law relating to shareholders' rights and protections.



Claims of U.S.
civil liabilities may not be enforceable against us.



We are incorporated
under the laws of Switzerland. Certain of directors reside outside the United States. As a result, it may not be possible for investors
to effect service of process within the United States upon such persons or to enforce judgments obtained in U.S. courts against
them or us, including judgments predicated upon the civil liability provisions of the U.S. federal securities laws. The United
States and Switzerland do not currently have a treaty providing for recognition and enforcement of judgments (other than arbitration
awards) in civil and commercial matters. Consequently, a final judgment for payment given by a court in the United States, whether
or not predicated solely upon U.S. securities laws, would not automatically be recognized or enforceable in Switzerland. In addition,
uncertainty exists as to whether Swiss courts would entertain original actions brought in Switzerland against us or our directors
predicated upon the securities laws of the United States or any state in the United States. Any final and conclusive monetary judgment
for a definite sum obtained against us in U.S. courts would be reviewed by the courts of Switzerland. Whether these requirements
are met in respect of a judgment based upon the civil liability provisions of the U.S. securities laws, including whether the award
of monetary damages under such laws would constitute a penalty, is an issue for the court making such decision. If a Swiss court
gives judgment for the sum payable under a U.S. judgment, the Swiss judgment will be enforceable by methods generally available
for this purpose. These methods generally permit the Swiss court discretion to prescribe the manner of enforcement. As a result,
U.S. investors may not be able to enforce against us or certain of our directors, or certain experts named herein who are residents
of Switzerland or countries other than the United States, any judgments obtained in U.S.





25







If we fail to
maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial
results or prevent fraud. As a result, shareholders could lose confidence in our financial and other public reporting, which would
harm our business and the trading price of ADSs or our Class B Shares.



Effective internal
controls over financial reporting are necessary for us to provide reliable financial reports and, together with adequate disclosure
controls and procedures, are designed to prevent fraud. Any failure to implement required new or improved controls, or difficulties
encountered in their implementation could cause us to fail to meet our reporting obligations. Inadequate internal controls could
cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price
of our ADSs or our Class B Shares.



Management will be
required to assess the effectiveness of our internal controls annually. However, for as long as we are an "emerging growth
company", our independent registered public accounting firm will not be required to attest to the effectiveness of our internal
controls over financial reporting. An independent assessment of the effectiveness of our internal controls could detect problems
that our management's assessment might not. Undetected material weaknesses in our internal controls could lead to financial statement
restatements requiring us to incur the expense of remediation and could also result in an adverse reaction in the financial markets
due to a loss of confidence in the reliability of our financial statements.



If securities
or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, the price of our
ADSs or our Class B Shares and their respective trading volumes could decline.



The trading market
for our ADSs and our Class B Shares depends in part on the research and reports that securities or industry analysts publish about
us or our business. Since we have not undertaken an initial public offering of ADSs in connection with the listing of our ADSs
on NASDAQ, we do not anticipate that many or any industry analysts in the United States will publish such research and reports
in the United States about our Class B Shares or our ADSs. If no or too few securities or industry analysts commence or continue
coverage on us, the trading price for our ADSs and our Class B Shares could be affected. If one or more of the analysts who may
eventually cover us downgrade our ADSs or our Class B Shares or publish inaccurate or unfavorable research about our business,
the trading price of our ADSs or our Class B Shares would likely decline. If one or more of these analysts cease coverage of us
or fail to publish reports on us regularly, demand for our ADSs or Class B Shares could decrease, which might cause the price of
such securities and their respective trading volumes to decline.



Although we believe
that we were not a "passive foreign investment company," or PFIC, for U.S. federal income tax purposes in 2019, there
can be no assurance in this regard, and if we are a PFIC in any year, U.S. holders of our ADSs may be subject to adverse U.S. federal
income tax consequences.



Under the Internal
Revenue Code of 1986, as amended, or the Code, we will be a PFIC for any taxable year in which, after the application of certain
look-through rules with respect to subsidiaries, either (i) 75% or more of our gross income consists of passive income or
(ii) 50% or more of the average quarterly value of our assets consists of assets that produce, or are held for the production
of, passive income. Based on our financial statements, business plan and certain estimates and projections, including as to the
relative values of our assets, we do not believe that we were a PFIC for our 2019 taxable year and do not expect to be a PFIC in
the foreseeable future. However, there can be no assurance that the Internal Revenue Service (the "IRS") will agree with
our conclusion regarding our PFIC status, and whether we are or will be classified as a PFIC in any particular year is uncertain
because we currently own a substantial amount of passive assets, including cash, and the valuation of certain of our assets is
uncertain and may vary substantially over time. Accordingly, there can be no assurance that we will not be a PFIC for any taxable
year.



If we are a PFIC for
any taxable year during which a U.S. investor holds ADSs, we generally would continue to be treated as a PFIC with respect to that
U.S. investor for all succeeding years during which the U.S. investor holds ADSs, even if we ceased to meet the threshold requirements
for PFIC status. Such a U.S. investor may be subject to adverse U.S. federal income tax consequences, including (i) the treatment
of all or a portion of any gain on disposition as ordinary income, (ii) the application of a deferred interest charge on such
gain and the receipt of certain dividends and (iii) compliance with certain reporting requirements. We do not intend to provide
the information that would enable investors to make a qualified electing fund election that could mitigate the adverse U.S. federal
income tax consequences should we be classified as a PFIC.





26







For further discussion,
see "Taxation—Material U.S. Federal Income Tax Considerations for U.S. Holders."



If a United States
person is treated as owning at least 10% of our shares or ADSs, such holder may be subject to adverse U.S. federal income tax consequences.



If a U.S. investor
owns or is treated as owning (indirectly or constructively) at least 10% of the value or voting power of our shares or ADSs, such
investor may be treated as a "United States shareholder" with respect to each "controlled foreign corporation"
in our group (if any). Because our group includes a U.S. subsidiary, certain of our non-U.S. subsidiaries could be treated as controlled
foreign corporations (regardless of whether or not we are treated as a controlled foreign corporation). A United States shareholder
of a controlled foreign corporation may be required to report annually 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, regardless of whether we make any distributions. Failure to comply with these reporting obligations may subject
a United States shareholder to significant monetary penalties and may prevent the statute of limitations with respect to such shareholder's
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 is treated as a controlled foreign corporation or
whether any investor is treated as a United States shareholder with respect to any such controlled foreign corporation 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 its advisors regarding the potential application of these rules to an investment
in our ADSs.





27







| | Item 4. | Information on the Company
| | ------- | --------------------------



| | A. | History and Development of the Company
| | -- | --------------------------------------



We are a Swiss stock
corporation (Aktiengesellschaft) of unlimited duration with limited liability under the laws of Switzerland and registered
in the Commercial Register of the Canton of Zug, Switzerland, on December 3, 2015 under the register number CHE-143.782.707. We
are registered under the company name "WISeKey International Holding AG" and have our registered office and principal
executive offices at General-Guisan-Strasse 6, 6300 Zug, Switzerland. WISeKey International Holding AG is the parent company of
WISeKey SA, which was established in 1999. Our address on the Internet is http://www.wisekey.com. The information on our
website is not incorporated by reference in this annual report.



In the first quarter
of 2019, we completed the sale of the QuoVadis Group to DigiCert Inc, a leading global provider of TLS/SSL, IoT and other PKI solutions,
for USD 45 million cash. The products and solutions of the QuoVadis Group sold to DigiCert Inc. consisted of QuoVadis Trust/Link
which provides managed Public Key Infrastructure (PKI) including Digital Certificates for authentication, encryption, and digital
signature; TLS/SSL Certificates for websites; QuoVadis sealsign which provides software and cloud solutions for Electronic Signatures
and time-stamping. We retained ownership of the ISTANA Platform used to secure, among other things, the connected car industry,
as part of its offerings for the Internet of Things (IoT) market, together with its latest Blockchain technology. The ISTANA Platform
complements our core products and solutions which are based on our Cybersecurity SaaS business, also known as managed PKI services,
and on our Semiconductor chips, and focus on securing the IoT market and using Artificial Intelligence (AI) to analyze data, with
products and services using public key encryption and hardware encryption, digital identity protection services, anti-illicit trade
products and services, and Blockchain services.



The SEC maintains
an internet site at http://www.sec.gov that contains reports, information statements, and other information regarding issuers
that file electronically with the SEC.



| | B. | Business Overview
| | -- | -----------------



Overview



We are a Swiss cybersecurity
company, publicly listed in Switzerland on the SIX since 2016 (Class B Shares) and NASDAQ, since 2019 (American Depositary Shares),
focused on delivering integrated security solutions for the Internet of Things (IoT) and digital identity ecosystems. With over
two decades of experience in the digital security market, we integrate our secure semiconductors, cybersecurity software, and a
globally recognized Root of Trust (RoT) into leading-edge products and services that protect users, devices, data and transactions
in the internet-connected world.



The rapid proliferation
of internet-connected devices and individuals' increasing dependence on them for personal and business purposes have exposed shortcomings
in traditional security solutions. Legacy IT networks are easy targets for attackers that leverage the vulnerabilities of the outdated
perimeter-based security methods that can't keep up with the sheer number of devices that are being added every day. According
to an Ernst and Young survey of 200 global CEOs in 2019, Cybersecurity is listed as the biggest threat to the world economy over
the next decade, above and beyond income inequality and job losses from technological change. Our cybersecurity platform is the
first of its kind to be intentionally designed to provide organizations with a holistic cybersecurity solution to safeguard their
connected device ecosystem from the evolving cyber threats that lurk around every corner of the burgeoning Internet of Things (IoT)
landscape.



Cyber-attacks are
becoming increasingly sophisticated, posing significant and persistent threats to international organizations and the sensitive
data that they are responsible to protect under government regulations such as GDPR. According to Symantec's 2017 Internet Security
Threat Report, there were more than 1,200 security breaches in 2016, resulting in 1.1 billion exposed identities. The report also
noted that it takes only 2 minutes for an IoT device to be attacked. Attackers deploy clandestine, advanced, and targeted attacks
on less secure bring-your-own-devices (BYOD) to infiltrate broader networks. These attacks can remain inside a network for extended
periods of time undetected, most often to steal valuable data, spread malicious malware, or sabotage critical infrastructure.
The World Economic Forum said, in an article published in November of 2019, that Cybercrime will
remain a large-scale concern for years to come. From 2019 to 2023E, approximately $5.2 trillion in global value will
be at risk from cyberattacks, creating an ongoing challenge for corporations and investors alike1.



___________________________



1Ghosh, I, ‘This is the crippling cost of cybercrime on corporations’,
World Economic Forum, November 7, 2019.





28







In the context of cybersecurity,
a major concern is not just the risk of exposing data to bad actors, but also the actions and decisions that are made based on
the data and that cannot take place if the data cannot be trusted. As a result, conceptually in terms of data classes, some data
can be trusted to take a particular action and other data cannot. If data is categorized as "Untrusted Data", where the
identity of a device is not known, the network security is low or the data integrity cannot be validated, that data is flagged
as unusable. So called "Smart Data" on the other hand stems from devices with trusted identities and data validation
processes, inherently part of a Public Key Infrastructure (PKI), generating "Trusted Data" that can trigger reliable
actions, transactions and processes. As more and more applications rely on immediate actions at the edge, like the decision for
an autonomous car to proceed to take over another car on a freeway, the need for Smart Data becomes critical for safety and security
and it can only derive from secure, trusted IoT ecosystems.



We are one among very
few companies in our market combining secure IoT microchips with proven cybersecurity software and services. Simply put, devices
that are deployed without the security provided by our platform are exposed and lack the mission-critical on-device security systems
to defend themselves and the networks they are connected to. Our security solutions are therefore at the forefront of cybersecurity
innovation, driving the future of IoT security as the most comprehensive way to fill all gaps in identity and data protection,
giving organizations the confidence that they are protected from device-to-cloud and beyond.



Our cybersecurity platform
is comprised of our proprietary software and hardware products that have been designed from the ground up to address the unique
attack parameters that threaten the IoT ecosystem:



| | · | Hardware -Our unique position as one of only six companies worldwide capable of designing
and deploying secure microchips that have been certified by globally recognized security certification boards like Common Criteria,
Cybersecurity and Infrastructure Security Agency and FIPS (Federal Information Processing Standards) gives us the advantage of
being able to provide our clients with the highest level of digital security available on the market at this time. Our secure microchips,
typically referred to as Secure Elements, have been embedded into billions of devices and are trusted to secure banking, enterprise,
government, and medical-grade applications.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Software - Our software solutions are driven by proprietary technologies based on widely
adopted standards such as Root of Trust (RoT) and Public Key Infrastructure (PKI), that enable our clients to effectively manage
their digital identities, information, and communications through a single integrated platform. RoT enables us to secure electronic
information through our PKI digital certificate technology. These digital certificates are deployed for mutual authentication and
encryption, creating tamperproof electronic "fingerprints", allowing our clients to adapt to an always changing device
landscape without compromising their digital security and integrity.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Market Opportunities



Our security solutions
address the complex needs of global enterprises and organizations. As of December 2019, more than 3,500 customers across a wide
variety of industries were using our products to enable secure digital authentication across the globe. Our customers include leading
organizations in a diverse set of industries, including energy and utilities, financial services, healthcare, manufacturing, retail,
technology and telecommunications, as well as the public and academic sectors. In addition, we have an extensive network of channel
partners, including software providers, integrators, IT outsourcing providers and leading cybersecurity consulting firms.



While our focus is
on integrated solutions, we market and sell our products as both standalone products and integrated product suites. We derive
revenue from the sales of microchips, software subscriptions, maintenance and licenses across our product portfolio.





29







Our core business addresses
primarily two large and growing markets – Cybersecurity and IoT. According to industry research, worldwide information security
spending will exceed $124 billion in 2019 (Aitken 2018)2
and steady commercial and consumer adoption will drive worldwide spending on the Internet of Things to $1.1 Trillion by 2023 (IDC
2019)3 with an estimated 7 billion
IoT devices deployed (IoT Analytics 2018)4.
Some notable sub-categories of IoT where we have a significant track record include:



| | · | Industry 4.0
| | - | ------------



| | · | Anti-illicit trade
| | - | ------------------



| | · | Consumer Engagement
| | - | -------------------



| | · | Data Privacy
| | - | ------------



| | · | Autonomous Safety
| | - | -----------------



As at December 31,
2019, we had 84 employees located across 6 countries. We also have 18 independent contractors located in Vietnam. For the fiscal
year ended December 31, 2019, we generated revenues of USD 22.7 million with cash reserves (restricted and unrestricted) of USD
16.6 million.



Security is our DNA
and we are committed to continuing to develop and deliver solutions that keep our clients ahead of the unique cybersecurity threats
that they face within their markets, enabling them to adapt to an evolving device landscape. Trustworthiness is also demonstrated
by means of independent audits and accreditations. WISeKey products and services are recognized for their superior quality and
maximum-security levels through accreditations such as WebTrust for the PKI solutions and Common Criteria for the semiconductor
products, meeting or exceeding the highest standards required by the industry.



Industry Background



Broad rollout
and adoption of internet connected devices creates increased exposure



The Internet of Things
(IoT) is the network of physical devices, vehicles, home appliances, and other things embedded with electronics, software, sensors,
actuators and network connectivity that create an ecosystem of connected devices exchanging and making decisions on data that is
being broadcast across the Internet.



According to Gartner's
2017 Strategic Roadmap for IoT Network Technology, 63 million IoT devices will be attempting to connect to the enterprise network
each second by 2020, driven by the constantly growing use cases that are dependent on IoT applications (Gartner 2017)5.
The amount of data transmitted from these devices will continue to grow, largely originating beyond the enterprise network edge
and traditional IT security perimeters.



Organizations face
persistent threats from advanced attackers who are increasingly aware of existing vulnerabilities in existing security solutions
and target the weakest link in the chain of security. Attackers can penetrate unsecured devices and subsequently connect to and
cause harm to networks, manipulate data or use this data to gain competitive advantages. These devices include employees' personal
devices (e.g., smartphones, laptops, and tablets), non-employee personal devices, (e.g., devices owned by third parties and others
within enterprises), as well as IoT devices used for corporate purposes (e.g., lights, security cameras, printers, point-of-sale
machines, thermostats, and medical devices). This landscape is growing rapidly and securing these devices and the data they provide
has become an overwhelming priority for almost every single company in business today.



Most devices today
lack encryption, authentication and other forms of protection from malicious attacks. Once the security parameters are penetrated,
attackers can infiltrate and further spread malicious software to a range of devices. This can ultimately lead to interruption
of business operations, slowdown of internet functionality, potential disruptions to critical infrastructure, and in some cases
even the loss of sensitive consumer information. Based on a report that INC.com conducted with collaboration from Cisco and the
National Center for Middle Market, 60% of small businesses would fold within 6 months of a cyber-attack (Galvin 2018)6.



___________________________



2Aitken, R, ‘Global Information Security Spending To Exceed $124B in 2019, Privacy Concerns Driving Demand’,
Forbes, August 19, 2018.

3IDC Spending Guides, ‘Steady Commercial and Consumer Adoption Will Drive Worldwide Spending on the Internet
of Things to $1.1 Trillion in 2023, According to a New IDC Spending Guide’, Business Wire, June 13, 2019.

4Lueth, KL,‘State of the IoT 2018: Number of IoT devices now at 7B – Market accelerating’, IoT
Analytics, August 8, 2018.

5 Harris, S, et al., ‘2017 Strategic Roadmap
for Storage’, Gartner Research, March 8, 2017.



6Galvin, J, ‘60 Percent of Small Businesses Fold Within 6 Months of a Cyber Attack. Here’s How to Protect
Yourself’, Inc., May 7, 2018





30







Existing security
solutions were not built for today's connected world



Traditional IT security
consists of software security solutions that were developed decades ago and focus primarily on legacy closed networks where the
security landscape and challenges are less fractured and firewalls are used to protect a well-defined network perimeter.



Unlike personal computers,
IoT devices rely on cloud computing for much of their operations. This has driven a paradigm shift to device-level security, as
smart devices lack the critical security infrastructure to prevent infiltration. Attackers carry out DDoS (Distributed Denial of
Service) attacks by taking advantage of vulnerabilities in these devices, which enables them to command a much greater and more
widely distributed IP address base than other attacks.



In today's environment,
security for IoT relies on various vendors and solutions. According to Symantec Corporation, the average enterprise uses 75 distinct
and different security products (Symantec 2015)7.
These products can be effective at preventing an attack if it falls within the scope of their specific capability and the enterprises
have the necessary security knowledge of how to implement the different elements. Enterprises increasingly require a vendor such
as WISeKey that can provide a fully integrated offering designed specifically to address the unique challenges of IoT security.



Enterprises need
security solutions that address today's complexities and dynamic threat environment



Enterprises must address
the IoT security problem and bridge the gap between device proliferation and device security. It is imperative for devices to be
manufactured with immutable digital identities that can be secured inside embedded microchips, giving the devices the ability to
securely authenticate themselves within the network. This device-level authentication creates an end-to-end secure connection,
extending all of the way from the device through the cloud platforms and ultimately to the end applications, eliminating potential
security gaps that are inevitably generated during integration of various technologies.



Cyber-attackers often
target identities as they provide access to valuable systems and data while concealing their activity within networks. More than
ever, enterprises must focus on digital identities as the primary constant in an ever-evolving technology and threat landscape.
PKI and digital certificates are two tools in the security chain that leverage the device's digital identity to implement strong
authentication, encryption and digital signatures, which are the building blocks of cybersecurity solutions. Digital certificates
provide identifying information, are forgery resistant, and can be verified because they are issued by official, trusted agencies.
As digital identities have effectively become the new network perimeter, securing these identities has become paramount.



Our Technology



After reviewing the
market conditions listed in the Industry Background section above, it's easy to see that there is a clear and present need for
a unified platform that can address the broad range of unique security and trust challenges facing the IoT market today. Even with
a host of large corporations operating in the semiconductor or cybersecurity software markets, they have not succeeded in building
- in the way WISeKey did - comprehensive solutions that integrate hardware and software into a single, easy to implement, platform
that gives organizations the peace of mind that their products, networks, private data, and reputations are holistically protected.



Connected Trust
Essentials -The future of the connected world relies on trust and our mission at WISeKey is to build trust through the
delivery of integrated security solutions. There are three core technologies that we believe are necessary to deliver on this mission:
Digital Identities (Digital IDs), Public Key Infrastructure (PKI), and a globally recognized Root of Trust (RoT). Below is a brief
overview of each component:



___________________________



7Symantec,
‘Symantec Introduces New Era of Advanced Threat Protection’, Symantec Press Release, October 27, 2015





31







Digital
IDs -A digital identity is the virtual representation of the real identity of a person, application or object. This identity
must be:



| | · | Based on standards that are commonly adopted and implemented by default by most common software
applications and operating systems, in order to reduce the implementation effort;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Trustworthy by all parties involved in its use or validation, by means of trusting the entity that
issued the digital identity;
| | - | -------------------------------------------------------------------------------------------------------------------------------



| | · | Multifunctional, so the same technology can be used for as many purposes as possible, like strong
authentication, digital signature and encryption;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Revocable, in case of security compromise, cease of operation or other causes, in such a way that
all participants can verify at any moment if an identity is valid.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



WISeKey leverages
the standards around Public Key Cryptography and Digital Certificates to build its concept of Digital ID and electronic transaction
security.



Public
Key Infrastructure (PKI)- A Public Key Infrastructure (PKI) is commonly defined as "a set of IT systems, people, policies,
and procedures needed to create, manage, distribute, use, store, and revoke digital certificates". PKI is WISeKey's base technology
to manage Digital Identities. WISeKey's PKI is built fully compatible with the ITU X.509 standard (International Telecommunication
Union 2016 ITU-T X-Series Recommendations) for personal certificates, and is built around a proprietary software solution for certificate
management, that allows issuing millions of certificates and provide a multi-tenant interface that can be accessed by our corporate
customers to manage the certificates of their employees or customers.



Root of Trust (RoT)
-The concept of "Root of Trust" has a dual approach and interpretation:



| | · | Software-approach: Transactional RoT - This approach to the RoT is the one related
to PKI technology and Digital Certificates. Typically the PKI is built as a hierarchy of Certification Authorities, in such a way
that the CA that issues the Digital Certificate of an entity is itself endorsed by a higher level Certification Authority (CA).
Typically this chain has two or three levels and at the top level we'll find what is called the "Root Certification Authority"
(Root CA). This brings a key concept around Trust in PKI: We can trust a Digital Certificate if we trust the Root CA. WISeKey's
Root CA is endorsed by the OISTE Foundation.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Device-approach: Hardware RoT - Encryption techniques in general and Public Key Cryptography
in particular requires an adequate protection of these encryption keys. Keys must be protected against physical and logistical
attacks, ensuring that only the authorized owner can use it. The highest protection for these keys can be achieved by incorporating
in the device a specific chip that assumes the role to protect the encryption keys and perform the cryptographic operations in
a protected environment. These chips, or secure microcontrollers, are commonly known as the "Secure Element". For IoT
devices it is also important to ensure that the software running in the device can't be corrupted or modified. This can also be
achieved by encrypting and digitally signing the device firmware with a key protected in the secure element.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The WISeKey Unique
RoT – WISeKey at present is the only company in the world with a value proposition for Root of Trust that covers
both the requirements for the Transactional RoT and the Hardware RoT:



| | · | WISeKey provides worldwide trusted Digital Certificates thanks to its PKI and the WISeKey/OISTE
Root Certification Authorities.
| | - | -------------------------------------------------------------------------------------------------------------------------------



| | · | WISeKey provides extremely secure elements that can protect the cryptographic keys in IoT devices.
| | - | --------------------------------------------------------------------------------------------------



OISTE Root of
Trust - Founded in 1998, Transactions Electroniques OISTE was created with the objectives of promoting the use and adoption
of international standards to secure electronic transactions, expand the use of digital certification and ensure the interoperability
of certification authorities' e-transaction systems. OISTE holds special consultative status with the Economic and Social Council
of the UN (ECOSOC) and is an accredited member of the Non-commercial Users Stakeholders Group (NCSG) of ICANN as part of the Not-for-Profit
Operational Concerns (NPOC) constituency. The OISTE foundation is regulated by article 80 of the Swiss Civil Code. The OISTE Foundation
owns and regulates the OISTE Global Trust Model, which includes as "Root of Trust" a number of Root Certification Authorities
that are globally recognized. OISTE delegated to WISeKey SA the operation of the systems and infrastructures supporting the Global
Trust Model. The OISTE foundation does not itself issue certificates to end subscribers or operate as data center, instead, it
granted WISeKey SA an exclusive license as Subordinate Certification Authority, allowing the delivery of Trust Services for Persons,
Applications and Objects.





32







WISeKey acts as the
operator chosen by the foundation for the management of the OISTE Cryptographic Root Key. The OISTE RoT serves as a common trust
anchor, recognized by operating systems and IoT applications to ensure the authenticity, confidentiality, and integrity of online
identities and transactions. We believe these features are important in creating business opportunities with governments, international
bodies, and corporations that are wary of foreign government oversight intervention and centralization of data on servers outside
of their respective jurisdictions.



Our Products & Services



Secure Microchips
and Secure Software Products - We offer a large range of secure microcontrollers that share consistent secure 8-/16-/32-bit
RISC CPU performance, with strong security mechanisms, and enhanced crypto engines to optimize performance and power consumption.
The products also provide high-density, low-power EEPROM and FLASH memory storage technologies. We design our chips to meet the
most stringent security requirements, many of them are EAL5+ Common Criteria security-certified, or VISA and MasterCard certified.
Common Criteria is a world standard, government driven design for assessing the level of resistance of systems or devices to all
known attacks. It is constantly updated with all new attacks, and the chips' resistance is reassessed annually. EAL5+ is currently
the highest level of resistance in the secure chip industry. We offer over 50 versions of secure microcontrollers and various supporting
secure software solutions:



| | · | VaultIC - Family of secure microcontrollers delivered with our own embedded firmware, which
we designed to give an unforgeable identity to any connected device, and to provide system integrators with a set of cryptographic
APIs (Application Programming Interface) to protect devices against cyber-attacks, counterfeiting and forgery. VaultIC chips are
bundled together with our software and services platform to serve the IoT market.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Nanoseal - New family of secure memory chips specifically designed for digital brand protection
applications.
| | - | -------------------------------------------------------------------------------------------------------------



| | · | MicroXsafe - Secure microcontrollers delivered with an SDK (Software Development Kit) that
allows our customers to develop their own embedded firmware (also called OS – Operating System). They are designed to protect
smart cards, USB tokens, and electronic systems against cyber-attacks, counterfeiting and forgery.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | MicroPass - Family of secure microcontrollers certified by VISA and MasterCard. They have
been designed and certified to be integrated into payment cards as well as into wearable devices such as watches, bracelets, and
jerseys. They are compatible with NFC (Near Field Communication) standards, thus capable to interact with NFC enabled devices such
as Android or iOS smartphones.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | PicoPass - Family of secure memory chips specifically designed for NFC (Near Field Communication)
access control badges.
| | - | ------------------------------------------------------------------------------------------------------------------------



| | · | VaultiTrust- WISeKey’s VaultiTrust offers two modules: trusted data generation and
secure elements provisioning. VaultiTrust takes advantage of WISeKey’s government grade security certified offerings and
end-to-end digital security management to generate identity keys and efficiently install them into chips. VaultiTrust’s web
portal complements the service by offering an easy way to configure, manage and track production. WISeKey operates FIPS 140-2 Level
3 certified Hardware Security Modules (HSM) to efficiently generate secure data. These HSM are located in a WISeKey Common Criteria
EAL5+ and ISO27001 certified backed up data center and the HSM can be shared only upon customer’s request. WISeKey also offers
a cryptography customization service whenever needed.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | WISeTrustBoot - WISeKey's WISeTrustBoot solution, is the first platform-independent "Secure
Boot" and "Secure Firmware Update" solution that combines the strength of a tamper resistant secure elements- VaultIC,
state-of-the-art crypto libraries and strong digital signatures. By storing critical boot information in a VaultIC chip, and cryptographically
embedding this chip into the device's main processor, the carefully designed boot loader of the main processor becomes a stronghold
able to verify the authenticity of the firmware prior to starting up or receive firmware updates. WISeTrustBoot is delivered to
our customers with a powerful toolbox providing application developers the flexibility to tailor it to their specific needs.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





33







| | · | CertifyID PKI Suite – WISeKey's PKI Suite is branded with the "CertifyID"
trademark. This suite comprises all the products required to: 1) build an enterprise-grade PKI platform that can be used to serve
the most vital needs, and 2) leverage the use of the digital certificates due to software applications to implement digital signatures,
authentication and encryption. The CertifyID Suite is composed of these Products:
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | o | Universal Registration Authority (URA) - The URA is WISeKey's main application for certificate
management and can be used to build a multi-tenant, multi-purpose certificate management Solution
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | o | WISignDoc - This product provides a "Document Signature Server" that can be integrated
into the corporate business processes to manage legally-binding digital signatures
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | o | CertifyID Suite for Microsoft CAS - WISeKey provides series of modules that can enhance
the Microsoft Active Directory Certificate Services to build enterprise-grade PKI systems. WISeKey uses the CertifyID Suite to
build its own PKI platform and operate it from our Secure Datacenter in Switzerland and other locations to provide "Trust
Services" like mPKI (managed PKI).
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | WISeID - WISeKey's WISeID offers secured storage to protect Personally Identifiable Information
(PII). Protecting your PII is important to avoid impersonation and identity theft. The personal data that you save in WISeID always
stays under your control, is encrypted with strong keys, and is never communicated to third parties. WISeID users have the freedom
to choose where their data resides and who is allowed to access it. By decoupling content from the application and digital identity
itself, users are able to use their data as currency and develop digital data dividends-based solutions in the spirit that consumers
have a right to know and control how their data is being used and should be able to monetize their data.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | WISeID self-sovereign identity - A self-sovereign identity typically starts with a number,
unique to an individual, that is associated with a public key for which the user has the private key issued by the OISTE/WISeKey
Cryptographic RootKey. The WISeID Network is a fully deployed standard for digital identity operating since 1998 by OISTE –
designed to bring the neutrality, trust, consent, personal control, and ease-of-use of Digital IDs to the Internet.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | WISeID the Human Browser- WISeID Human Browser allows consumers to take full control of
their own digital identities —based on a decentralized Blockchain and using the central aspect of what we call Web
3.0. Instead of logging into an application like twitter, Google Chrome, Safari, or Facebook, consumers will log into a personal,
WISeID cryptographically authenticated browser they themselves own. The Human Browser is an open source software, audited by network
participants and enabled by several types of biometrics creating a decentralized digital identity that acts as a birth certificate
that will be embedded into browsers. Users control their ID and have the equivalent of a digital passport, able to build reputations
across Web3 and interact with economies without sacrificing privacy, value, or security.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | WISeAuthentic - WISeKey has been a pioneer in digital luxury product authentication since
2007. WISeKey's expertise in the design of NFC (Near Field Communication) secure chips combined with its WISeAuthentic platform
for the identification, authentication, tracking and direct marketing of goods, provides customer-tailored solutions for brand
protection. WISeAuthentic provides the link between a physical product and a digital identity to effectively protect them against
counterfeiting and create new, unprecedented channels between brands and their distributors and customers. WISeAuthentic is both
an enterprise solution as well as mobile applications that provide a variety of services and information specifically designed
to a particular a stakeholder group. WISeKey has successfully deployed its WISeAuthentic platform to luxury brands including Bulgari
and LVMH's Hublot watches, and believes the WISeAuthentic platform can successfully be deployed for a large variety of sectors.
Our most recent developments enhance our security solution through secure Blockchain layers.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | WISePrint – The WISeAuthentic portfolio has been expanded to reduce the risk of fraud
and help printer manufacturers to protect their legitimate cartridges. This solution called WISePrint includes cryptographic hardware
modules and a turnkey high security infrastructure as well as services that help deployment from the manufacturer to the end-user.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





34







| | · | Trust Services, Managed PKI - WISeKey operates, under the WISeKey/OISTE Root, a worldwide-recognized
PKI platform from its secure datacenter in Switzerland. This platform is based in the Certificate Management Solution CertifyID
URA (Universal Registration Authority), and enables WISeKey to provide a full portfolio of "Trust Services", delivering
digital certificates to protect persons, applications and objects. One of the advantages of the URA platform is the capability
to build a multi-tenant service with delegated administrators. This service allow WISeKey to provide a "Managed PKI"
service to our customers, that can access the URA to manage their digital certificates without requiring to deploy any on-premises
architecture, as the MPKI service is securely accessed from the cloud using a web portal or advanced API, that enables certificate
management automation. MPKI customers have the ability to manage multiple certificate types, as for example:
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Personal Digital Certificates for employees or customers, that enable secure email, document signatures
and others;
| | - | -------------------------------------------------------------------------------------------------------------------



| | · | SSL Certificates, to protect the corporate web and application servers;
| | - | -----------------------------------------------------------------------



| | · | Device Certificates, to protect IoT applications.
| | - | -------------------------------------------------



Market Verticals



Internet of Things
(IoT) –IoT is an "umbrella" term that has been adopted as the universal way of describing every digital device
that is connecting itself to the internet with the goal of becoming more valuable to its user through new controls and features,
the original manufacturer through the ability to remotely monitor their devices, or the providers of cloud-based services who are
creating entire companies around the data that they are collecting from these devices. Many of these devices have never had internet
connectivity, and the original manufacturers of these devices have never had to worry about the security challenges that come along
with making their devices accessible to the connected ecosystem. The IoT market, and the security challenges that come along with
it, is an ideal market vertical for WISeKey and our portfolio of hardware and cybersecurity software solutions. With billions of
devices already shipping with our solutions embedded in them, we have created one of the largest IoT centric revenue streams inside
of our market segment where other companies that claim to serve the IoT market are still struggling to show any true revenue from
this space.



Industry 4.0
- Industry 4.0 is based on the concept of smart factories where machines are augmented with internet connectivity and connected
to a system that can visualize the entire production chain and make decisions on its own. The trend is towards automation and data
exchange in manufacturing technologies which include Cyber-Physical Systems (CPS), the Industrial IoT (IIOT), cloud computing and
cognitive computing. Industry 4.0 is also referred to as the fourth industrial revolution. Our cybersecurity platform is ideally
suited to meet the needs of the Industry 4.0 market, where connected devices and cloud platforms merge with the goal of improving
manufacturing processes and introducing predictive analytics that can submit a repair request before a manufacturing line breaks
down, saving valuable down-time that costs manufacturers millions in lost production. Industry 4.0 reaches beyond manufacturing
though, and is fast becoming synonymous for the connectivity trend that is happening inside of smart cities, smart electricity
grids, smart buildings, and any network that connects industrial applications.



Anti-Illicit-Trade
and Counterfeiting - Governments, enterprises and citizens across the globe continue to be adversely affected by the sales
of counterfeit products and the distribution of illicit goods. In 2017 it was projected that the global economic impact of counterfeit
goods alone was as high as $ 1.2 Trillion per year (R Strategic Global 2017)8
– about the equivalent of all defense budgets of the world combined. By 2022 the ICC projects that counterfeiting and privacy
will drain US $4.2 trillion from the global economy and put 5.4 million legitimate jobs at risk (ICC 2017)9.
The astounding and consistent growth rate of counterfeiting and illicit trade persists despite increased efforts by the private
sector, governments, international government organizations and NGOs clearly highlights that there is room for improvement and
that new approaches are required through the adoption of innovative technologies. Efficiently combating illicit trade will require
products and the people that handle them to have a digital identity that can be verified at any time and point of the supply chain.



___________________________



8R Strategic Global, ‘Global Brand Counterfeiting Report 2018: Value of Counterfeited Goods in 2017 Amounted
to $1.2 Trillion - Research and Markets’, ResearchAndMarkets, December 2017.

9Frontier Economics, ‘Global impacts of counterfeiting and piracy to reach US$4.2 trillion by 2022’, International
Chamber of Commerce, June 2, 2017.





35







Consumer Connectivity
(KYC)- Know Your Customer (KYC) is a contemporary way of describing the age-old need to understand who your customers are
and through predictive algorithms estimate what they want to buy, and most importantly, when they might buy it. This is considered
the "Holy Grail" of marketing data and companies pay billions in advertising dollars to attract customers and extract
this information from them. With the increase in mobile devices as the primary search platform for consumer research on companies
and products, brands are looking to find new and captivating ways to get their marketing messages on the screens of their customers
and build lasting online "relationships" with them. One new exciting avenue for brands to connect with consumers is through
the use of Near Field Communication (NFC) enabled tags that are embedded inside of clothing, sportswear, handbags, watches, and
even spirit bottles. These tags use the same technology that is used by smart phone manufactures to allow consumers to pay for
a cup of coffee with a simple tap of their phone. With the single-tap of an embedded NFC tag, consumers can authenticate products,
gain access to VIP product offerings, and connect to the social media platform of the brand, creating a new sense of brand loyalty.
WISeKey has partnered with several key players in the clothing and spirit authentication markets to deploy secure tag technologies
and backend systems that can leverage device identities and PKI services to enable Blockchain driven traceability solutions and
KYC platforms.



Data Privacy
- The protection of the information in general, and the protection of the private personal information of people in particular,
is based on two major paradigms:



| | · | Information can only be accessed by the authorized parties, as decided by the owner at any moment.
This includes the capability to authenticate who is trying to access the information, and also to avoid eavesdropping during storage
or transmission;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Information must be authentic, so it can't be manipulated while stored or transmitted, and there
must be a mechanism to detect if any tampering occurred.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------



WISeKey uses advanced
technologies that ensure the privacy of personal data thanks to the adoption of PKI technology, including:



| | · | Digital Identity, in the form of a Digital Certificate, to implement strong authentication mechanism,
being able to ensure who can access the information
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Strong encryption to protect the data while stored in servers or transmitted over the internet
| | - | ----------------------------------------------------------------------------------------------



| | · | Legally-binding digital signatures to ensure that the authenticity and integrity of the information
| | - | ---------------------------------------------------------------------------------------------------



WISeKey's suite of
products and services, including CertifyID and WISeID products enable such capabilities on all environments, including enterprise
applications, desktop solutions, and mobile applications.



Autonomous Safety
- The growing addition of complex technologies in the automotive industry had always as a goal to elevate the levels of safety
and comfort for drivers and passengers. Self-driving cars, intelligent collision detection, advanced entertainment systems, connected
to the Internet are just a few to mention. The potential risk of security flaws or errors in these technologies is enormous. Latest
reports go as far as to consider a self-driving vehicle as a weapon if a malicious attacker takes controls of it (Campbell 2018)10.
The only possibility to adopt these technologies with a reasonable control of the inherent risks is to adopt and embed security
as a fundamental principle of the design and manufacturing process. Intelligent cars must embed security technologies in all layers
where a potential attack vector exists. All sensors in the cars must interact with the controlling units in a way that both parts
can be sure that there's no room for tampering in the data and commands. One must also control who can access the car components,
from the driver to the personnel at the service shops. WISeKey offers a suite of technologies to enable such levels of security,
including:



| | · | VaultiTrust - WISeKey’s VaultiTrust can be used for trusted data generation and secure
elements provisioning inside of secure automotive manufacturing applications.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | ISTANA PKI solution: Solution to manage all components in an intelligent car, by means of
providing strong digital identities, based on PKI technology
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------



___________________________

10Campbell, P, ‘Hackers have self-driving cars in their headlights’, Financial Times, March 15,
2018.





36







Our Competitive Strengths



We believe we have
several competitive advantages that will enable us to defend and extend our market position in digital identification and IoT security.
Our key competitive strengths include:



| | · | Unified Cybersecurity Platform - On the surface it may seem easy to look at WISeKey's
secure semiconductor offerings and to compare us to other traditional semiconductor companies like NXP, Microchip, or ST Microelectronics
or, or considering our experience in Root of Trust and PKI services, compare us to Certificate Authorities (CA) like Digicert,
Comodo, or Globalsign. The key to our success is the fact that we are the first company of our scale to combine both offerings
into a single platform.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The term "one-stop-shop"
may seem a bit cliché but in this case it's a perfect description of our capabilities. In the end, your security ecosystem
must be solid across the full spectrum. There are three distinct advantages to building a connected security scheme from the products
delivered by one vendor: First, one does not have to hire or pay for the security expertise to make sure that each different component
will work with the next element; second, time to market is critical in the IoT space and qualifying multiple vendors and negotiating
contracts takes up time where a manufacturer's product could be selling instead of waiting to be built; third, if a security issue
needs to be addressed only one vendor needs to be engaged to resolve the issues as quickly as possible.



| | · | Security in our DNA - Our management team has extensive security domain expertise
and a proven track record. Our Chief Executive Officer, Carlos Moreira, founded WISeKey in 1999 after spending 17 years as a United
Nations Expert on Cybersecurity and Trust Models. He is recognized as an internet security pioneer. Bernard Vian led the Semiconductor
and IoT security practice with over 25 years of industry experience. We have a deep bench of talent at the executive level, with
years of industry experience (See Item 6.A. Directors and Senior Management).
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Trusted products are the result
of the people who build them. Their strengths come from the collective experiences and successful track record of seeing projects
through from research and development, to large scale production deployments, and even on to the end of life of long running programs.
When selecting a security vendor one should expect for them to have been through some battles, defended billions of devices, and
to have the respect of their peer community. Having a team of high-caliber, market leading contributors, that have been together
for years, some even for decades, makes WISeKey uniquely qualified to provide the next generation of cybersecurity solutions and
gives us a distinct advantage over our competition.



| | · | Swiss-based RoT - Swiss neutrality, security and privacy laws allow us to operate
as the trusted operator of the OISTE Global RoT and without geo-political or governmental constraints. The OISTE RoT is located
in Switzerland and is managed by a not-for-profit entity, OISTE. The OISTE RoT serves as a common trust anchor, recognized by operating
systems and IoT applications to ensure the authenticity, confidentiality, and integrity of online identities and transactions.
We believe these features are important in creating business opportunities with various governments, international bodies, and
industrial companies that are wary of foreign government oversight intervention and centralization of data on servers outside of
their respective jurisdictions.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Global Interoperability - We offer solutions on a global scale that are capable of
adapting to complex and country-specific rules and regulations. We operate our RoT within the EU and India, and expect to operate
RoT in the United States and China. Our RoT satisfies national cybersecurity requirements and is backed by globally recognized
security credentials, allowing us to deploy our trusted platforms on a global scale while adapting to country-specific security
regulatory bodies.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Strong Partnership Ecosystem: We have strong network of strategic, technology and
channel partnerships. Current partnerships include agreements with industry leaders such as SAP, to integrate our RoT with devices
leveraging the SAP HANA Cloud Platform for IoT, IBM, to integrate with IBM Watson to enhance the security of the data exchanged
with IoT devices, and MasterCard, to deliver payment for luxury watches, accessories or wearable devices using our biometric authentication.
One of our most recent partnerships is with ORACLE whereby WISeKey became ORACLE's first external digital identity providers, integrating
WISeKey's RoT and CertifyID CMS solutions onto the ORACLE Blockchain platform.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





37







Our Growth Strategies



Our mission is to build
trust through the delivery of integrated security solutions. This is a broad reaching goal that requires a well-thought-out strategy
to accomplish it. The key elements of our growth strategy include:



| | · | Expansion within our Existing Customer Base with our Integrated Security Platforms-
Our existing customer base of over 3,500 customers provides a significant opportunity to drive incremental sales. We plan to increasingly
market our cybersecurity software and ROT offerings to our IoT and semiconductor customers and vice – versa. We currently
have growing number of customers using both our semiconductor and cybersecurity software offerings and believe helping our current
customers identify gaps in their cybersecurity defense strategies will drive significant cross selling opportunities and increase
our product deployment.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Acquiring New Customers within Existing Geographic Coverage -We plan to continue
broadening and growing our customer base across industry verticals, including energy and utilities, financial services, healthcare,
manufacturing and retail, further expanding our market reach. To drive the acquisition of new customers, we plan to invest in our
direct sales team, enhance our marketing efforts, and expand our channel partnerships. We are also focused on the education of
existing partners in order to further expand our market reach through our channel partner network.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Expand our Geographic Coverage -We operate in a large, growing markets and there
are substantial opportunities to expand our geographic coverage and client base. We plan to expand our global footprint outside
of the areas where we currently operate. Our Swiss affiliation allows us to penetrate markets that have been traditionally difficult
for our competitors and other security vendors, including China. In recent years we entered into the Indian market and expanded
our operations in France, Taiwan, Japan and the United States. We specifically want to focus on continued expansion in the United
States, which is a very underpenetrated foreign market for the Company.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Expand the Integrated Security Platforms into New Technology Applications - We have
begun to develop applications that integrate our platform into Blockchain and Artificial Intelligence. We aim to enhance the security
of the data exchanged with IoT devices and leverage a digital identity that a device can use to authenticate itself in the IoT
network, using a dual-factor authentication at the device level, and encrypt the communications.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Selectively Pursue Strategic Transactions - We will continue to proactively explore
and pursue selective acquisitions to help drive our growth and complement our product offerings, expand the functionality of our
security solutions, acquire technology or talent, or bolster our leadership position by gaining access to new customers or markets.
Acquisitions remain core to our strategy and we continue to monitor an active pipeline of opportunities.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





38







| | C. | Organizational Structure
| | -- | ------------------------



We are the holding
company of the WISeKey Group.



The chart below contains
a summary of our organizational structure and sets out our subsidiaries, associated companies and joint ventures as at December
31, 2019. Although not all of our subsidiaries are wholly-owned, all of them are assessed as being under our control.







As at December 31,
2019, our main operating subsidiaries were WISeKey Semiconductors SAS, domiciled in France, and WISeKey SA, domiciled in Switzerland:



|Company Name               |  | Country of incorporation |  | Percentage ownership
as at December 31, 2019
|-------------------------- |  | ------------------------ |  | --------------------------------------------
|WISeKey SA                 |  | Switzerland              |  | 95.58%                                      
|WISeKey Semiconductors SAS |  | France                   |  | 100.00%                                     



| | D. | Property, Plants, and Equipment
| | -- | -------------------------------



Our corporate headquarters
are located in Geneva, Switzerland. The principal office for our Swiss and international operations, which is also our registered
office, is located in Zug, Switzerland.



As of December 31,
2019, the net book values of tangible fixed assets were as follows:



|                                |  | As at December 31, 2019              
|------------------------------- |  | -------------------------------------
|Asset category                  |  | Net book value
        (USD millions)
|Machinery & equipment           |  | 1.5                                  
|Office equipment and furniture  |  | 0.2                                  
|Computer equipment and licenses |  | 0.1                                  
|Total tangible fixed assets     |  | 1.8                                  





39







We do not own any facility
and our group companies have entered into lease arrangements for the premises in which they operate. The following table sets forth
our most significant facilities as at December 31, 2019:



|Location            |  | Size of site
        (in m2) |  | Use of the property                                           
|------------------- |  | ---------------------------- |  | --------------------------------------------------------------
|Meyreuil, France    |  | 1,498*                       |  | Research & development, sales & marketing, administration.    
|Geneva, Switzerland |  | 693*                         |  | Head office administration, sales & marketing and data center.

* excluding parking
spaces



| | Item 4A. | Unresolved Staff Comments
| | -------- | -------------------------



Not applicable.



| | Item 5. | Operating and Financial Review and
Prospects
| | ------- | --------------------------------------------



The following discussion
of our financial condition and results of operations is based upon and should be read in conjunction with our consolidated financial
statements and their related notes included in this annual report on Form 20-F.



Certain information
included in this discussion and analysis includes forward-looking statements that are subject to risks and uncertainties, and which
may cause actual results to differ materially from those expressed or implied by such forward-looking statements. For further information
on important factors that could cause our actual results to differ materially from the results described in the forward-looking
statements contained in this discussion and analysis, see "Special Note Regarding Forward-Looking Statements" and "Item
3D. Risk Factors."



| | A. | Operating Results
| | -- | -----------------



Company Overview



We are a Swiss cybersecurity
company focused on delivering integrated security solutions for the Internet of Things ("IoT") and digital identity ecosystems.
With over two decades of experience in the digital security market, we integrate our secure semiconductors, cybersecurity software,
and a globally recognized Root of Trust (Rot) into leading-edge products and services that protect users, devices, data and transactions
in the connected world.



The rapid proliferation
of internet-connected devices and individuals' increasing dependence on them for personal and business purposes, and the need to
protect them against cyberattacks and data theft, has prompted WISeKey to take steps to refocus its product offering on the IoT
market by divesting WISeKey (Bermuda) Holding Ltd (formerly named QV Holdings Ltd) and its affiliates (together "QuoVadis"
or the "QuoVadis Group").



Basis of presentation



We prepare our financial
statements in accordance with US GAAP. Our reporting currency is the U.S. Dollar ("USD").



Our critical accounting
policies are described in Note 4.



Discontinued Operations relating
to WISeKey (Bermuda) Holding Ltd and affiliates (QuoVadis Group)



On December 21, 2018
the Group signed a sale and purchase agreement (the "SPA") to sell WISeKey (Bermuda) Holding Ltd, a Bermuda based company,
and its affiliates to Digicert Inc. The sale was completed in the first quarter of 2019. The group subsidiaries making up the QuoVadis
Group in scope for the sale were WISeKey (Bermuda) Holding Ltd, QuoVadis Trustlink Schweiz AG, WISeKey (UK) Ltd, QuoVadis Trustlink
BVBA, QuoVadis Trustlink BV, QV BE BV, QuoVadis Trustlink GmbH, QuoVadis Services Ltd, and QuoVadis Ltd.





40







WISeKey Consolidated
Financial Statements for the Year Ended December 31, 2018



We assessed the SPA
under ASC 205 and concluded that, although the sale had not been completed as at December 31, 2018, the operation met the requirement
to be classified as held for sale and as such qualifies as a discontinued operation.



In line with ASC 205-20-45-3A,
we reported the results of the discontinued operations as a separate component of income, and classified their assets and liabilities
separately as held for sale in the balance sheet for all periods presented. Long lived assets classified as held for sale were
recorded at the lower of (i) their carrying value, and (ii) their fair value less costs to sell. No gain or loss on classification
as held for sale was recorded in 2018. The Group elected to allocate interest to discontinued operations in accordance with ASC
205-20-45-6 to 205-20-45-8.



WISeKey Consolidated
Financial Statements for the Year Ended December 31, 2019



The sale of WISeKey
(Bermuda) Holding Ltd and its affiliates was completed on January 16, 2019, when all entities except QuoVadis Services Ltd were
transferred to Digicert Inc. The transfer of ownership of QuoVadis Services Ltd was conditional on receiving the consent from the
Regulatory Authority in Bermuda (the "RAB") (the "RAB Consent") to the change in ultimate beneficial ownership
of QuoVadis Services Ltd, being the entity holding the Communications Operating Licence in Bermuda. The RAB Consent was obtained
in February 2019 and the transfer of ownership of QuoVadis Services Ltd from WISeKey to Digicert Inc. was effective on February
28, 2019. We assessed the SPA under ASC 810-10-40-6 and concluded that the terms and conditions of the SPA met the definition to
account for the sale as a single transaction effective on January 16, 2019.



We assessed the SPA
under ASC 205 and concluded that, for the period January 01, 2019 to January 16, 2019, the operation met the requirement to be
classified as held for sale and as such qualifies as a discontinued operation. The Group elected to allocate interest to discontinued
operations in accordance with ASC 205-20-45-6 to 205-20-45-8. The allocation method is detailed in Note 28.



In line with ASC 205-20-45-3A,
we reported the results of the discontinued operations as a separate component of income. The divested assets and liabilities were
deconsolidated from February 28, 2019 for QuoVadis Services Ltd, and from January 16, 2019 for all other entities.



The gain from divestiture
recorded in the year to December 31, 2019 is shown as a separate line within discontinued operations in the income statement.



Factors affecting our results of operations



Although most of our
IoT segment customers are recurring customers, it is not industry practice to work with long-term contracts. Therefore most of
our IoT customers have signed a framework agreement with us but are not committed to certain volumes over a period of time. This
introduces a level of uncertainty on the level of revenue generated from recurring customers.



In our IoT segment,
as microelectronics technology evolves, customers look for added functionalities, and competitors in the semiconductors industry
develop new products, sales of a given product typically decrease over time as the next-generation semiconductors are introduced.
In order to sustain revenue, IoT companies must be able to develop or otherwise acquire the rights to develop or market new products
with additional or innovative security and application features. See "Item 4. Information on the Company – B. Business
Overview" for information regarding our technology and product developments.





41







Operating Segments



Since the acquisition
of WISeKey Semiconductors SAS in 2016, we organized our business into two operating segments: the IoT segment, which is centered
on our family of secure microcontrollers designed to give an unforgeable identity to any connected device, and the mPKI segment,
for managed Public Key Infrastructure, which encompasses our digital identity, certificate management and signing solutions, and
trust services.



Geographic Information



Our operations are
global in scope and we generate revenue from selling our products and services across various regions. While our operations in
Europe have historically contributed the largest portion of our revenues, our efforts to expand in the United States have increased
the revenue generated from North America since 2017. We are also building a strategy to expand into new territories in Asia, although
at this stage the results have not yet materialized in our revenue.



Our total revenue by
geographic region for the fiscal years ended December 31, 2019, December 31, 2018 and December 31, 2017 is set forth in the following
table:



|                    |  | 12 months ended December 31,
|------------------- |  | ----------------------------
|                    |  | 2019                        
|Net Sales by region |  | USD'000                     
|Switzerland         |  | 2,137                       
|Rest of EMEA        |  | 8,046                       
|North America       |  | 9,691                       
|Asia Pacific        |  | 2,504                       
|Latin America       |  | 274                         
|Total Net sales     |  | 22,652                      





42







Financial year ended December 31,
2019 compared with financial year ended December 31, 2018



|                                                                        |  | 12 months ended December 31, |         | 12 months ended December 31, |  | Year-on-Year Variance
|----------------------------------------------------------------------- |  | ---------------------------- | ------- | ---------------------------- |  | ---------------------
|USD'000                                                                 |  | 2019                         |         | 2018                         |  |                      
|                                                                        |  |                              |         |                              |  |                      
|Net sales                                                               |  |                              | 22,652  |                              |  |                      
|Cost of sales                                                           |  |                              | (13,196 | )                            |  |                      
|Gross profit                                                            |  |                              | 9,456   |                              |  |                      
|                                                                        |  |                              |         |                              |  |                      
|Other operating income                                                  |  |                              | 180     |                              |  |                      
|Research & development expenses                                         |  |                              | (6,422  | )                            |  |                      
|Selling & marketing expenses                                            |  |                              | (7,929  | )                            |  |                      
|General & administrative expenses                                       |  |                              | (15,789 | )                            |  |                      
|Total operating expenses                                                |  |                              | (29,960 | )                            |  |                      
|Operating income / (loss)                                               |  |                              | (20,504 | )                            |  |                      
|                                                                        |  |                              |         |                              |  |                      
|Non-operating income                                                    |  |                              | 1,918   |                              |  |                      
|Gain / (loss) on derivative liability                                   |  |                              | 214     |                              |  |                      
|Gain / (loss) on debt extinguishment                                    |  |                              | (233    | )                            |  |                      
|Interest and amortization of debt discount                              |  |                              | (742    | )                            |  |                      
|Non-operating expenses                                                  |  |                              | (3,670  | )                            |  |                      
|Income / (loss) from continuing operations before income tax expense    |  |                              | (23,017 | )                            |  |                      
|                                                                        |  |                              |         |                              |  |                      
|Income tax (expense)/recovery                                           |  |                              | (13     | )                            |  |                      
|Income/ (loss) from continuing operations, net                          |  |                              | (23,030 | )                            |  |                      
|                                                                        |  |                              |         |                              |  |                      
|Discontinued operations:                                                |  |                              |         |                              |  |                      
|Net sales from discontinued operations                                  |  |                              | 1,934   |                              |  |                      
|Cost of sales from discontinued operations                              |  |                              | (791    | )                            |  |                      
|Total operating and non-operating expenses from discontinued operations |  |                              | (1,801  | )                            |  |                      
|Income tax (expense)/recovery from discontinued operations              |  |                              | 42      |                              |  |                      
|Gain on disposal of a business, net of tax on disposal                  |  |                              | 31,100  |                              |  |                      
|Income / (loss) on discontinued operations                              |  |                              | 30,484  |                              |  |                      
|                                                                        |  |                              |         |                              |  |                      
|Net income / (loss)                                                     |  |                              | 7,454   |                              |  |                      
|                                                                        |  |                              |         |                              |  |                      
|Less: Net income / (loss) attributable to noncontrolling interests      |  |                              | (733    | )                            |  |                      
|Net income / (loss) attributable to WISeKey International Holding AG    |  |                              | 8,187   |                              |  |                      





43







Revenue



Our total revenue for
the year ended December 31, 2019 decreased by USD 11.6 million or 34% from prior period. This is mostly attributable to three
factors:



| | · | The impact of the sale of WISeKey (Bermuda) Holding Ltd and its affiliates on our continuing operations
with the absence of cross-selling opportunities, i.e. opportunities to sell other products and services of the group to existing
customers of the divested entities, and the reduction of our sales team.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | Our IoT activity was adversely affected by the overall downturn in the semiconductor industry worldwide.
This downturn, linked to the political and trading tensions between the U.S. and China, and the rising threat of protectionism
and vulnerabilities in emerging markets, has affected all IoT and microprocessors companies (according to the Semiconductors Industry
Association, 2019 mid-year global semiconductor sales were down 14.5% as compared to 201811).
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | One of our products, the old-generation of MicroPass used in the past for electronic payments in
the U.S. market, is reaching the end of its life.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------



With the introduction
of the Nanoseal family, the next-generation family of secure memory chips, we are positioning our product offering for the next
technological evolutions. However, the performance of our IoT segment will remain dependent on the macro-economic factors impacting
the semiconductors industry, particularly the evolution of the tensions between the United States and China.



The table below shows
the breakdown of our revenue by operating segment for the years ended December 31, 2019 and December 31, 2018.



|                                             | 12 months ended December 31, | 12 months ended December 31, | Year-on-Year
|-------------------------------------------- | ---------------------------- | ---------------------------- | ------------
|USD'000                                      | 2019                         | 2018                         | Variance    
|IoT segment revenue from external customers  | 20,504                       | 29,404                       | -30%        
|mPKI segment revenue from external customers | 2,148                        | 4,876                        | -56%        
|Total IoT segment revenue                    | 22,652                       | 34,280                       | -34%        



Gross Profit



Our gross profit decreased
by USD 6.5 million to USD 9.4 million (gross margin of 42%) in the year ended December 31, 2019 in comparison with
a gross profit of USD 16.0 million (gross margin of 47%) in the year ended December 31, 2018. Due to the long manufacturing
cycle of our IoT activity, and in order to reduce the lead time to our customers, we start the manufacturing cycle early. However,
with the downturn in the semiconductor industry, some customers were left with excess stock at the end of 2018 thus reduced their
order volumes in 2019 on a very short notice, which did not allow us to adapt our manufacturing cycle. The gross margin improved
significantly between the first half of 2019 (39%) and the second half of 2019 (45%), however this was not enough to reach a gross
margin consistent with 2018 because of the decrease on the higher-margin mPKI revenue between 2018 and 2019.



To a lesser extent,
our gross profit was also adversely impacted by the new product introduction costs in our IoT segment.



Other operating income



In 2019 our other operating
income consisted of recharges for the use of our premises by OISTE (see Note 39 of our consolidated financial statement as at December
31, 2019) for USD 140,000 and a gain on the liquidation of our subsidiaries WISeKey Italia s.r.l and WISeKey Singapore Pte
Ltd. for USD 40,000. In the year ended December 31, 2018 the Group had recorded a USD 289,000 gain on the liquidation
of its subsidiary WISeKey BRBV classified as other operating income.



We do not have recurring
other operating income that contributes to our profit.



___________________________

11Semiconductors Industry Association, ‘Mid-Year Global Semiconductor Sales Down 14.5 Compared to 2018’, SIA
Latest News, August 5, 2019.





44







Research & development expenses



Our research and development
("R&D") expenses includes expenses related to the research of new technology, products and applications, as well
as their development and proof of concept, and the development of further application for our existing products and technology.
They include salaries, bonuses, pension costs, stock-based compensation, depreciation and amortization of capitalized assets, costs
of material and equipment that do not meet the criteria for capitalization, as well as any tax credit relating to R&D activities,
among others.



Our R&D expenses
represented respectively 21% of total operating expenses in 2019 and 2018. Our Group being technology-driven, this reflects our
engagement to act as a leader on new cybersecurity developments and future applications. In addition to the expected growth in
our R&D expenses linked to our technology leadership position, in 2019, the increase by USD 1.1 million or 21% from prior
period was partly due to an increase by USD 0.7 million in R&D-related stock-based compensation.



Research tax credits
are provided by the French government to give incentives for companies to perform technical and scientific research. Our subsidiary
WISeKey Semiconductors SAS is eligible to receive such tax credits. The credit is deductible from the entity's income tax charge
for the year or payable in cash the following year, whichever event occurs first.



Selling & marketing expenses



Our selling & marketing
("S&M") expenses include advertising and sales promotion expenses such as salaries, bonuses, pension costs, stock-based
compensation, business development consultancy services, and costs of supporting material and equipment that do not meet the criteria
for capitalization, among others.



Our S&M expenses
increased by 37% or USD 2.2 million in 2019 compared with 2018. This is explained by the expansion of our sales force in Europe
and North America and our efforts to rebuild our sales team following the divestiture of WISeKey (Bermuda) Holding Ltd and its
affiliates in addition to an increase in our stock-based compensation by USD 0.7 million.



General & administrative expenses



Our general & administrative
("G&A") expenses covers all other charges necessary to run our operations and supporting functions, and include salaries,
bonuses, pension costs, stock-based compensation, lease and building costs, insurance, legal, professional, accounting and auditing
fees, depreciation and amortization of capitalized assets, and costs of supporting material and equipment that do not meet the
criteria for capitalization, among others.



Our G&A expenses
increased by 11% or USD 1.6 million in 2019 compared with 2018. This increase is due to an increase in stock-based compensation
by USD 2.4 million year-on-year following the grant of ESOP options to our employees in recognition for past services
to our Company. If we exclude the impact of our stock-based compensation, our G&A expenses actually decreased by USD 0.8 million,
which reflects the efforts that we made to reduce our cost basis.



Operating loss



Our operating loss
for the year ended December 31, 2019 increased by USD 11.4 million compared with 2018, primarily. The key factors behind this
results are to the decrease in gross profit by USD 6.5 million as detailed above, and the increase of our stock-based
compensation expense by a total of USD 3.8 million year on year, following the grant of ESOP options to our employees
in recognition for past services to our Company.





45







Non-operating income and expenses



Income and
expenditure resulting from non-operating activities increased by USD 1.7 million in 2019 compared with 2018.
This was primarily due to our financing facilities. As at December 31, 2018, we had three interest-bearing instruments: the
ExWorks Line of Credit, the Crede Convertible Loan Agreement from September 28, 2018, and the Yorkville Convertible Loan
Agreement from September 28, 2018. In line with ASC 205, part of the interest expense relating to the ExWorks Line of
Credit was classified under the results from discontinued operations, whilst the interest expense in connection with both the
Crede Convertible Loan Agreement and the Yorkville Convertible Loan Agreement only related to one quarter. In 2019, the
ExWorks Line of Credit was repaid in full on January 16, 2019, but our Company entered into a new loan with ExWorks from
April 2019, and the Group paid interest expense for the full year on both the Crede Convertible Loan Agreement and the
Yorkville Convertible Loan Agreement, hence an increase in interest expense of USD 0.4 million and in interest and
amortization of debt discount by USD 0.6million from prior year. See Note 24 of our consolidated financial statements
for the year ended December 31, 2018 and 2019 for details on these financial instruments.



Additionally, for the
year ended December 31, 2019, our non-operating income decreased by USD 0.3 million from prior period because of
a non-recurring credit for the fair value measurement of our investment in OpenLimit booked in the income statement in 2018, and
our foreign exchange losses increased by USD 0.4 million from prior period due to unfavorable currency fluctuations (see
Impact of foreign currency fluctuation below).



Our Company regularly
enters into loan and convertible loan agreements to finance its operations.





46







Net loss from continuing operations



As a result of the
above factors, the net loss from continuing operations increased by 132%, or USD 13.1 million, from USD 9.9 million in
the year ended December 31, 2018 to USD 23.0 million in the year ended December 31, 2019.



Income from discontinued operations



As detailed in the
above Basis of presentation subsection, the SPA to sell WISeKey (Bermuda) Holding Ltd and its affiliates met the requirement to
be classified as held for sale and as such qualified as a discontinued operation. In line with ASC 205-20-45-3A, we reported the
results of the discontinued operations, WISeKey (Bermuda) Holding Ltd and its affiliates, as a separate component of income.



The USD 31.1 million
gain from the divestiture of WISeKey (Bermuda) Holding Ltd and its affiliates was also reported in the results of the discontinued
operations in the year ended December 31, 2019.



Net income



With the USD 31.1
million gain from divestiture included in the income on discontinued operations in the income statement in the year ended December
31, 2019, we reached a net income position of USD 7.5 million, compared with a net loss of USD 16.3 million in the year
ended December 31, 2018.



Non-GAAP Performance Measures



In addition to our
reported financial results prepared under US GAAP, we also prepare and disclose EBITDA and Adjusted EBITDA, which are measures
not prepared in accordance with US GAAP. We present EBITDA and Adjusted EBITDA because we believe that these measures are useful
to investors as they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies
in our industry. We further believe that Adjusted EBITDA is helpful to investors in identifying trends in our business that could
otherwise be obscured by certain items unrelated to ongoing operations because they are highly variable, difficult to predict,
may substantially impact our results of operations and may limit the ability to evaluate our performance from one period to another
on a consistent basis.



The usefulness of EBITDA
and Adjusted EBITDA to investors has limitations including, but not limited to, (i) they may not be comparable to similarly titled
measures used by other companies, including those in our industry, (ii) they exclude financial information and events, such as
the effects of an acquisition or amortization of intangible assets, or of stock-based compensation, that some may consider important
in evaluating our performance, value or prospects for the future, (iii) they exclude items or types of items that may continue
to occur from period to period in the future and (iv) they may not exclude all items, which could increase or decrease these measures,
which investors may consider to be unrelated to our long-term operations, such as the results of businesses divested during a period.
These non-GAAP measures should not be considered in isolation and are not, and should not be viewed as, substitutes for income,
net profit for the year or any other measure of performances presented in accordance with US GAAP. We encourage investors to review
our historical financial statements in their entirety and caution investors to use US GAAP measures as the primary means of evaluating
our performance, value and prospects for the future, and EBITDA and Adjusted EBITDA as supplemental measures.



EBITDA and Adjusted EBITDA



We define EBITDA as
net profit before income tax expenses, depreciation and amortization including purchase accounting ("PPA") effects, and
net interest expense.



We define Adjusted
EBITDA as EBITDA further adjusted to exclude non-cash expenses such as stock-based compensation and equity settlements, and other
items that management believes are unrelated to our core operations such as non-recurring legal and professional expenses related
to our merger and acquisition activities.





47







The following table
provides a reconciliation from operating loss to EBITDA and Adjusted EBITDA for the years ended December 31, 2019 and December
31, 2018.



|                                                               | 12 months ended December 31,
|-------------------------------------------------------------- | ----------------------------
|(Million USD)                                                  | 2019                        
|Operating loss as reported                                     | (20.5)                      
|Non-GAAP adjustments from continuing operations:               |                             
|Depreciation expense from continuing operations                | 0.8                         
|Amortization expense on intangibles from continuing operations | 0.5                         
|EBITDA                                                         | (19.2)                      
|Non-GAAP adjustments from continuing operations:               |                             
|Stock-based compensation                                       | 5.4                         
|Expenses settled in equity                                     | -                           
|M&A-related legal fees                                         | 1.0                         
|M&A-related professional fees                                  | -                           
|NASDAQ listing-related professional fees                       | 0.2                         
|Adjusted EBITDA                                                | (12.6)                      





48







Financial year ended December 31,
2018 compared with financial year ended December 31, 2017



|                                                                     |                              |  |              |  |         
|-------------------------------------------------------------------- | ---------------------------- |  | ------------ |  | --------
|                                                                     | 12 months ended December 31, |  | Year-on-Year
|USD'000                                                              | 2018                         |  | 2017         |  | Variance
|                                                                    
|Net sales                                                            | 34,280                       |  | 33,674       |  | 2%      
|Cost of sales                                                        | (18,319)                     |  | (17,870)     |  | 3%      
|Gross profit                                                         | 15,961                       |  | 15,804       |  | 1%      
|                                                                     |                              |  |              |  |         
|Other operating income                                               | 289                          |  | 1,526        |  | -81%    
|Research & development expenses                                      | (5,306)                      |  | (5,339)      |  | -1%     
|Selling & marketing expenses                                         | (5,772)                      |  | (4,459)      |  | 29%     
|General & administrative expenses                                    | (14,232)                     |  | (15,401)     |  | -8%     
|Total operating expenses                                             | (25,021)                     |  | (23,673)     |  | 6%      
|Operating income / (loss)                                            | (9,060)                      |  | (7,869)      |  | 15%     
|                                                                     |                              |  |              |  |         
|Non-operating income                                                 | 2,181                        |  | 762          |  | 186%    
|Gain / (loss) on derivative liability                                | -                            |  | (98)         |  | -100%   
|Gain / (loss) on debt extinguishment                                 | -                            |  | (556)        |  | -100%   
|Interest and amortization of debt discount                           | (150)                        |  | (543)        |  | -72%    
|Non-operating expenses                                               | (2,826)                      |  | (1,751)      |  | 61%     
|Income / (loss) from continuing operations before income tax         |                              |  |              |  |         
|expense                                                              | (9,855)                      |  | (10,055)     |  | -2%     
|                                                                     |                              |  |              |  |         
|Income tax (expense)/recovery                                        | (53)                         |  | (71)         |  | -25%    
|Income/ (loss) from continuing operations, net                       | (9,908)                      |  | (10,126)     |  | -2%     
|                                                                     |                              |  |              |  |         
|Income / (loss) on discontinued operations                           | (6,357)                      |  | (14,624)     |  | -57%    
|Net income / (loss)                                                  | (16,265)                     |  | (24,750)     |  | -34%    
|                                                                     |                              |  |              |  |         
|Less: Net income / (loss) attributable to noncontrolling interests   | 13                           |  | (483)        |  | -103%   
|Net income / (loss) attributable to WISeKey International Holding AG | (16,278)                     |  | (24,267)     |  | -33%    



Revenue



Our 2018 total revenue
grew by USD 0.6 million or 2% from 2017, mainly due to higher revenues generated from the development of the ISTANA platform
and the subsequent license and rights sale to Daimler. This was the first sizeable application of our ISTANA PKI solution, a solution
to manage all components in an intelligent car, by means of providing strong digital identities, based on PKI technology.



This success allowed
us to offset the decrease in external revenue in our IoT segment by USD1.0 million between 2017 and 2018, from USD 30.4 million
to USD 29.4 million. This decrease is mainly due to two factors: the fact that one of our products is reaching the end of
its life, and the negative trend in the semiconductors industry. With the introduction of the Nanoseal family, the next-generation
family of secure memory chips, we are positioning our product offering for the next technological evolutions. However, the performance
of our IoT segment will remain dependent on the macro-economic factors impacting the semiconductors industry, particularly in 2018
and 2019 the tensions between the United States and China.





49







The table below shows
the breakdown of our revenue by operating segment for the financial years ended December 31, 2018 and December 31, 2017.





|                                             | 12 months ended December 31, |  | Year-on-Year
|-------------------------------------------- | ---------------------------- |  | ------------
|USD'000                                      | 2018                         |  | 2017        
|IoT segment revenue from external customers  | 29,404                       |  | 30,435      
|mPKI segment revenue from external customers | 4,876                        |  | 3,239       
|Total Revenue                                | 34,280                       |  | 33,674      



Gross Profit



Our activities generated
an improved gross profit of USD 16.0 million in 2018 at a slightly lower margin of 46.6% against 46.9% in the prior year.
The margin was impacted by the new product introduction costs in our IoT segment. However, this rise was offset by an improved
sales blend with the Secure Access business moving away from end of line products that carry a lower gross profit margin, and increased
sales of our new products at higher margins.



Other operating income



In the year ended December
31, 2018 the Group recorded a USD 0.3 million gain on the liquidation of its subsidiary WISeKey BRBV classified as other operating
income.



Other operating income
reduced by USD 1.2 million from 2017 to 2018. This is due to a significant one-off credit of USD 1.4 million in 2017,
being the release of a provision resulting from the renegotiation of an unfavorable contract. In prior financial periods, a provision
had been made on a supplier contracts deemed onerous, i.e. a contract in which the unavoidable costs of meeting the obligations
under the contract exceed the economic benefits expected to be received under it. The renegotiation changed the terms of the contract
which no longer qualified as onerous, and, as such, the provision for onerous contract previously recorded was released back to
the income statement leading to a one-off upside.



We do not have recurring
other operating income that contributed to our profit.



Research & development expenses



Our research and development
("R&D") expenses includes expenses related to the research of new technology, products and applications, as well
as their development and proof of concept, and the development of further application for our existing products and technology.
They include salaries, bonuses, pension costs, stock-based compensation, depreciation and amortization of capitalized assets, costs
of material and equipment that do not meet the criteria for capitalization, as well as any tax credit relating to R&D activities,
among others.



Our R&D expenses
represented respectively 21% and 23% of total operating expenses in the years 2018 and 2017. Our group being technology-driven,
this reflects our engagement to act as a leader on new cybersecurity developments and future applications.



Research tax credits
are provided by the French government to give incentives for companies to perform technical and scientific research. Our subsidiary
WISeKey Semiconductors SAS is eligible to receive such tax credits. The credit is deductible from the entity's income tax charge
for the year or payable in cash the following year, whichever event occurs first.



Selling & marketing expenses



Our selling & marketing
("S&M") expenses include advertising and sales promotion expenses such as salaries, bonuses, pension costs, stock-based
compensation, business development consultancy services, and costs of supporting material and equipment that do not meet the criteria
for capitalization, among others.





50







Our 2018 S&M expenses
increased by 29%, or USD 1.3 million from 2017. This is explained by the expansion of our sales force in Europe and North
America on the one side, and, on the other side, by our USD 0.6 million investment in several critical ventures including
the Blockchain Research Initiative and Blockchain Davos Round Table events, both designed to raise awareness on the benefits of
the Blockchain technology which is one of the security layers in our core service offering.



General & administrative expenses



Our general & administrative
("G&A") expenses covers all other charges necessary to run our operations and supporting functions, and include salaries,
bonuses, pension costs, stock-based compensation, lease and building costs, insurance, legal, professional, accounting and auditing
fees, depreciation and amortization of capitalized assets, and costs of supporting material and equipment that do not meet the
criteria for capitalization, among others.



Our G&A expenses
decreased by 8% or USD 1.2 million between 2017 and 2018, which reflects the efforts that we made to reduce our cost basis.



Operating loss



Our operating loss
has increased by 15% or USD 1.2 million primarily due to the increase in our S&M expenses as detailed above.



Non-operating income and expenses



Income and expenditure
resulting from non-operating activities was reduced by USD 1.4 million between 2017 and 2018. This was primarily due to non-recurring
financial charges incurred in 2017 in relation to the financial instruments held by our Company, including a USD 0.6 million
loss on debt extinguishment, a USD 0.1 million loss on derivative liability, as well as a reduction in interest and amortization
of debt discount by USD 0.4 million between 2017 and 2018.



Our company regularly
enters into loan and convertible loan agreements to finance its operations.



Net loss from continuing operations



As a result of the
above factors, the net loss from continuing operations decreased by 2% or USD 0.2 million, from USD 10.1 million for
the financial year ended December 31, 2017 to USD 9.9 million in the financial year ended December 31, 2018.



Loss from discontinued operations



As detailed in the
above Basis of presentation subsection, the SPA to sell QuoVadis Group met the requirement to be classified as held for sale and
as such qualified as a discontinued operation. In line with ASC 205-20-45-3A, we reported the results of the discontinued operations,
QuoVadis group, as a separate component of income.



Non-GAAP Performance Measures



In addition to our
reported financial results prepared under US GAAP, we also prepare and disclose EBITDA and Adjusted EBITDA, which are measures
not prepared in accordance with US GAAP. We present EBITDA and Adjusted EBITDA because we believe that these measures are useful
to investors as they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies
in our industry. We further believe that Adjusted EBITDA is helpful to investors in identifying trends in our business that could
otherwise be obscured by certain items unrelated to ongoing operations because they are highly variable, difficult to predict,
may substantially impact our results of operations and may limit the ability to evaluate our performance from one period to another
on a consistent basis.





51







The usefulness of EBITDA
and Adjusted EBITDA to investors has limitations including, but not limited to, (i) they may not be comparable to similarly titled
measures used by other companies, including those in our industry, (ii) they exclude financial information and events, such as
the effects of an acquisition or amortization of intangible assets, or of stock-based compensation, that some may consider important
in evaluating our performance, value or prospects for the future, (iii) they exclude items or types of items that may continue
to occur from period to period in the future and (iv) they may not exclude all items, which could increase or decrease these measures,
which investors may consider to be unrelated to our long-term operations, such as the results of businesses divested during a period.
These non-GAAP measures should not be considered in isolation and are not, and should not be viewed as, substitutes for income,
net profit for the year or any other measure of performances presented in accordance with US GAAP. We encourage investors to review
our historical financial statements in their entirety and caution investors to use US GAAP measures as the primary means of evaluating
our performance, value and prospects for the future, and EBITDA and Adjusted EBITDA as supplemental measures.



EBITDA and Adjusted EBITDA



We define EBITDA as
net profit before income tax expenses, depreciation and amortization including purchase accounting ("PPA") effects, and
net interest expense.



We define Adjusted
EBITDA as EBITDA further adjusted to exclude non-cash expenses such as stock-based compensation and equity settlements, and other
items that management believes are unrelated to our core operations such as non-recurring legal and professional expenses related
to our merger and acquisition activities.



The following table
provides a reconciliation from operating loss to EBITDA and Adjusted EBITDA for the financial years ended December 31, 2018 and
2017.



|                                    | 12 months ended December 31,
|----------------------------------- | ----------------------------
|(Million USD)                       | 2018                        
|Operating loss as reported          | (9.1)                       
|Non-GAAP adjustments:               |                             
|Depreciation expense                | 1.4                         
|Amortization expense on intangibles | 0.5                         
|PPA amortization expense            | 1.6                         
|EBITDA                              | (5.6)                       
|Non-GAAP adjustments:               |                             
|Stock-based compensation            | 1.7                         
|Expenses settled in equity          | 1.7                         
|M&A-related legal fees              | 1.3                         
|M&A-related professional fees       | 0.3                         
|Adjusted EBITDA                     | (0.6)                       





52







Factors affecting our income tax expenses
and recovery



For the financial years
2019, 2018 and 2017, income tax at the Swiss statutory rate compared to the Group's income tax expenses as reported is as per table
below.



|Income tax at the Swiss statutory rate
USD'000                 | As at December 31,
2019 |  | As at December 31,
2018 |  | As at December 31,
2017
|-------------------------------------------------------------- | ----------------------- |  | ----------------------- |  | -----------------------
|Net income/(loss) from continuing operations before income tax | (23,017)                |  | (9,855)                 |  | (10,055)               
|Statutory tax rate                                             | 24%                     |  | 24%                     |  | 24%                    
|Expected income tax (expense)/recovery                         | 5,524                   |  | 2,365                   |  | 2433                   
|Income tax (expense)/recovery                                  | (13)                    |  | (53)                    |  | (71)                   
|Change in valuation allowance                                  | (2,129)                 |  | 4,228                   |  | (4,487)                
|Permanent Difference                                           | -                       |  | (9)                     |  | (344)                  
|Change in expiration of tax loss carryforwards                 | (3,395)                 |  | (6,584)                 |  | 2,397                  
|Income tax (expense) / recovery from continuing operations     | (13)                    |  | (53)                    |  | (71)                   



Our change in expiration
of tax loss carryforwards is made up of several elements:



| | i. | In some of the countries where we have subsidiaries, losses carried forward can be used for a limited
number of years after the fiscal year in which the loss was incurred. If the entity continues to make losses after that limited
period has ended, then unused losses that have expired are no longer available as carryforwards. For our group, this concerns entities
located in the U.S.A., Switzerland, Spain, Taiwan and India.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ii. | When entities are liquidated, their losses carried forward which were reflected in the group's
deferred tax calculations are no longer available from the date of the liquidation. For instance, in both financial years 2019
and 2018 respectively, two group subsidiaries were liquidated, representing a reduction in losses carried forward of circa USD 533,000
and USD 200,000.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iii. | When our consolidated financial statements are issued prior to the finalization of our subsidiaries'
statutory financial statements, there may be subsequent adjustments to the amounts disclosed as losses carried forward in our consolidated
financial statements which would be included in the change in expiration of tax loss carryforwards in the following financial year.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Between 2019 and 2018,
the aggregate impact of the above factors affecting losses carried forward generated an adjustment of USD 3.4 million from
the expected income tax at the Swiss statutory rate. Between 2017 and 2018, the aggregate impact of the above factors affecting
losses carried forward generated an adjustment of USD 6.6 million from the expected income tax at the Swiss statutory rate.



As at December 31,
2019 and 2018, our net deferred tax balance was reconciled as follows:



|Deferred tax assets and liabilities
USD'000 | As at December 31,
2019 |  | As at December 31,
2018 |  | As at December 31,
2017
|------------------------------------------- | ----------------------- |  | ----------------------- |  | -----------------------
|Stock-based compensation                    | -                       |  | 9                       |  | 344                    
|Defined benefit accrual                     | 1,100                   |  | 1,272                   |  | 1,289                  
|Tax loss carry-forwards                     | 11,264                  |  | 10,606                  |  | 14,888                 
|Deferred Income tax liability               | -                       |  | (1,356)                 |  | (1,476)                
|Deferred tax asset from acquisition         | -                       |  | 477                     |  | 477                    
|Other temporary adjustments                 | -                       |  | 2,426                   |  | 1,396                  
|Less discontinued Operations                | -                       |  | (3,196)                 |  | (2,418)                
|Valuation allowance                         | (12,358)                |  | (10,230)                |  | (14,458)               
|Deferred tax assets / (liabilities)         | 6                       |  | 8                       |  | 42                     





53







The valuation allowance
corresponds to the amount of deferred tax that, based on our accounting assessment under applicable standards, should not be recognized
as assets in our balance sheet. For the calculation of the valuation allowance, management has considered the extent to which realization
of the tax assets is probable for group entities that are or have been in a loss-making position during the last three financial
years.



In 2019, the valuation
allowance increased by USD 2.2 million, mainly due to the increase in tax loss carry-forwards by USD 0.7 million and
the impact of the divestiture of QuoVadis in 2018, the valuation allowance decreased by USD 4.2 million, mainly due to the
decrease in tax loss carry-forwards by USD 4.3 million excluding the impact of discontinued operations.



Impact of foreign currency fluctuation



We operate worldwide
and as such are exposed to currency fluctuation risks. Although the majority of our sales, purchase and financial operations are
denominated in our reporting currency, the U.S. Dollar, some sales and financing contracts are denominated in other currency, and
especially in the currency of our head office in Switzerland, the Swiss Franc.



Fluctuations in the
exchange rates between the U.S. Dollar and other currencies may have a significant effect on both the Company's results of operations,
including reported sales and earnings, and the Company's assets, liabilities and cash flows. This, in turn, may affect the comparability
of period-to-period results of operations.



We do not currently
hedge against foreign currency fluctuation.





54







The table below shows
the variation in foreign exchange rates used to prepare our financial statements for the financial years ended December 31, 2019,
December 31, 2018 and December 31, 2017.



|                                |         |  | 12 months ended December 31, |                       |      |             
|------------------------------- | ------- |  | ---------------------------- | --------------------- | ---- | ------------
|                                |         |  | 2019                         |                       | 2018 |             
|Foreign currency to U.S. Dollar |         |  | Closing rate                 | 12-month Average rate |      | Closing rate
|Swiss Franc                     | CHF:USD |  | 1.033253                     | 1.006467              |      | 1.016946    
|Euro                            | EUR:USD |  | 1.122701                     | 1.119921              |      | 1.145548    
|Indian Rupee                    | INR:USD |  | 0.014027                     | 0.014200              |      | 0.014367    
|Japanese Yen                    | JPY:USD |  | 0.009201                     | 0.009174              |      | 0.009115    
|Singapore Dollar                | SGD:USD |  | 0.743657                     | 0.732963              |      | 0.734040    
|U.K. Pound Sterling             | GBP:USD |  | 1.326752                     | 1.276954              |      | 1.276021    
|Taiwanese Dollar                | TWD:USD |  | 0.033396                     | 0.032374              |      | 0.032663    



|                                |         |  | 12 months ended December 31, |                       |      |             
|------------------------------- | ------- |  | ---------------------------- | --------------------- | ---- | ------------
|                                |         |  | 2018                         |                       | 2017 |             
|Foreign currency to U.S. Dollar |         |  | Closing rate                 | 12-month Average rate |      | Closing rate
|Swiss Franc                     | CHF:USD |  | 1.016946                     | 1.022876              |      | 1.025927    
|Euro                            | EUR:USD |  | 1.145548                     | 1.181497              |      | 1.199861    
|Indian Rupee                    | INR:USD |  | 0.014367                     | 0.014654              |      | 0.015662    
|Japanese Yen                    | JPY:USD |  | 0.009115                     | 0.009061              |      | 0.008876    
|Singapore Dollar                | SGD:USD |  | 0.734040                     | 0.741450              |      | 0.747760    
|U.K. Pound Sterling             | GBP:USD |  | 1.276021                     | 1.335429              |      | 1.350291    
|Taiwanese Dollar                | TWD:USD |  | 0.032663                     | 0.033194              |      | 0.033662    

* 12-month average not used in the preparation of the financial statements



We do not operate in
countries experiencing hyperinflation and assessed the impact of inflation as immaterial to our financial statements.



| | B. | Liquidity and Capital Resources
| | -- | -------------------------------



Company liquidity



Our cash and capital
requirement relate mainly to our operating cash requirement, capital expenditures, contractual obligations, repayment of indebtedness
and payment of interest and financing fees.



Sources of liquidity



Our usual sources of
liquidity are cash generated from customers, cash from financing instruments such as debt and convertible debt, cash from share
subscription facilities, and cash from private investors in exchange for our Class B Shares. As a non-recurring source of liquidity,
the sale of the QuoVadis Group in the first quarter of 2019 provided a material cash inflow. Historically, the Group has been
dependent on equity financing to augment the operating cash flow to cover its cash requirements.





55







We had positive adjusted
working capital of USD 3.5 million as at December 31, 2019. We calculate adjusted working capital as our current assets, less
our current liabilities excluding deferred revenue, because our deferred revenue is made up of non-refundable customer advances.
Although our adjusted working capital is positive, based on the Group’s cash projections for the next 12 months to March
31, 2021, the Group will need approximately USD 2.1 million to fund operations and financial commitments. Note 24 of our consolidated
financial statement as at December 31, 2019 describes the sources of funding that the Group can turn to whenever needed. In addition
to two separate equity facilities (the SFF and SEDA), the loans contracted by WISeKey in 2018 and 2019 demonstrate the availability
of lenders to support the Group in its activities and development.



As at December 31,
2019, we hold cash and cash equivalent in an amount of USD 12.1 million following from the cash injection from the sale of the
QuoVadis Group. We expect to use this liquidity to fund our operations, develop our sales team, and form part of the consideration
for future potential merger and acquisition transactions.



Consolidated cash flows



The following table
shows information about our cash flows during the financial years ended December 31, 2019, 2018 and 2017 respectively.



|                                                             | 12 months ended December 31, |  | 12 months ended December 31, |  | 12 months ended December 31,
|------------------------------------------------------------ | ---------------------------- |  | ---------------------------- |  | ----------------------------
|USD'000                                                      | 2019                         |  | 2018                         |  | 2017                        
|                                                             |                              |  |                              |  |                             
|Cash Flows from operating activities:                        |                              |  |                              |  |                             
|Net cash provided by (used in) operating activities          | (13,891)                     |  | (8,492)                      |  | (4,931)                     
|Net cash provided by (used in) investing activities          | 36,626                       |  | (4,244)                      |  | (12,852)                    
|Net cash provided by (used in) financing activities          | (17,284)                     |  | 11,876                       |  | 25,509                      
|                                                             |                              |  |                              |  |                             
|Effect of exchange rate changes on cash and cash equivalents | 41                           |  | (200)                        |  | (733)                       
|                                                             |                              |  |                              |  |                             
|Cash and cash equivalents                                    |                              |  |                              |  |                             
|Net increase (decrease) during the period                    | 5,492                        |  | (1,060)                      |  | 6,993                       
|Balance, beginning of period                                 | 11,154                       |  | 12,214                       |  | 5,221                       
|Balance, end of period                                       | 16,646                       |  | 11,154                       |  | 12,214                      
|                                                             |                              |  |                              |  |                             
|Reconciliation to balance sheet                              |                              |  |                              |  |                             
|Cash and cash equivalents from continuing operations         | 12,121                       |  | 9,146                        |  | 9,583                       
|Restricted cash, current from continuing operations          | 2,525                        |  | 618                          |  | -                           
|Restricted cash, noncurrent from continuing operations       | 2,000                        |  | -                            |  | -                           
|Cash and cash equivalents from discontinued operations       | -                            |  | 1,390                        |  | 2,631                       
|Balance, end of period                                       | 16,646                       |  | 11,154                       |  | 12,214                      





56







The following tables
provide the details of the cash flows separated between continuing and discontinued activities following the divestiture of QuoVadis.



|Continuing operations                               | 12 months ended December 31, |  | 12 months ended December 31, |  | 12 months ended December 31,
|--------------------------------------------------- | ---------------------------- |  | ---------------------------- |  | ----------------------------
|USD'000                                             | 2019                         |  | 2018                         |  | 2017                        
|Net cash provided by (used in) operating activities | (14,674)                     |  | (2,328)                      |  | 1,595                       
|Net cash provided by (used in) investing activities | 36,626                       |  | (5,489)                      |  | (12,412)                    
|Net cash provided by (used in) financing activities | (17,284)                     |  | 8,198                        |  | 6,917                       



|Discontinued operations                             | 12 months ended December 31, |  | 12 months ended December 31, |  | 12 months ended December 31,
|--------------------------------------------------- | ---------------------------- |  | ---------------------------- |  | ----------------------------
|USD'000                                             | 2019                         |  | 2018                         |  | 2017                        
|Net cash provided by (used in) operating activities | 783                          |  | (6,164)                      |  | (6,526)                     
|Net cash provided by (used in) investing activities | -                            |  | 1,245                        |  | (440)                       
|Net cash provided by (used in) financing activities | -                            |  | 3,678                        |  | 18,592                      



We have not experienced
any legal or economic restrictions on the ability of subsidiaries to transfer funds to the Company in the form of loans.



Impact of discontinued operations



The Company has assessed
the anticipated impact on our cash flows following the sale of the QuoVadis Group. As shown in the table above, the QuoVadis Group
was cash flow negative on operating activities, largely as a result of ongoing losses. The sale of the QuoVadis Group has enabled
the Company to repay the ExWorks Line of Credit in full during 2019, a facility that carried interest at 12% per annum. In addition
to this, the sale of the QuoVadis Group has left the Company with an improved net cash and cash equivalents balance that will enable
us to fund our activities as set out above.



We believe that the
sale of the QuoVadis Group has benefitted the Company significantly as it has provided us with sufficient working capital to be
able to focus on the future whilst, at the same time, removing a part of the business that was a drain on our liquidity.



Level of borrowing



As at December 31,
2019, we held short-term notes payable in an amount of USD 4,103,740, and no long–term notes payable. The section below
gives the detail of the financial instruments used by the company.





57







Financial instruments



The following financial
instruments are those that were in use, and disclosed in our balance sheet and notes as at December 31, 2019.



Share Subscription Facility with
GEM LLC



On January 19,
2016 the Group closed a Share Subscription Facility ("the GEM Facility") with GEM Global Yield Fund LLC SCS and GEM
Investments America, LLC (collectively referred to as "GEM") (Global Equity Markets, "GEM"), which is a
CHF 60 million facility over 5 years and allows the Group to draw down funds at its option in exchange for our Class B
shares. The mechanics of the GEM Facility allow for a drawdown essentially 18 times in a year, the amount being in a range
related to the trading volume and price of our Class B share trading on the SIX. The drawdown amount is based on 90% of the
average closing price of the last 15 trading days multiplied by 1,000% of the average volume of the last 15 trading days. GEM
can then elect to purchase between 50% and 200% of this figure.



In 2017, WISeKey made
three drawdowns for a total of CHF 3,905,355 in exchange for a total of 825,000 WIHN Class B shares issued out of authorized share
capital.



There were no drawdowns
made in 2018 nor in 2019. Therefore, as at December 31, 2019 the outstanding facility available remains CHF 56,094,645 (USD 57,959,960
at December 31, 2019 closing rate).



Acquisition Line of Credit Agreement
with ExWorks Capital Fund I, L.P



On January 16, 2017
the Group signed an acquisition line of credit agreement with ExWorks Capital Fund I, L.P. ("ExWorks") (the "ExWorks
Line of Credit") headquartered in the USA, is an international, import and export finance company that offers financing solutions
to businesses utilizing its own capital as well as by leveraging its Delegated Authority granted by both the SBA and ExIm Bank.
A first amendment was subsequently signed on February 06, 2017, a second amendment on March 31, 2017, a third amendment on July
21, 2017, a fourth amendment on August 10, 2017, a fifth amendment on September 19, 2017, a sixth amendment on February 5, 2018,
a seventh amendment on March 30, 2018, an eighth amendment on June 20, 2018, a ninth amendment on July 24, 2018, a tenth amendment
on August 17, 2018, and an eleventh amendment on September 27, 2018.



As of December 31,
2018, under the ExWorks Line of Credit as amended, the Group may borrow up to USD 22,646,437, including a loan of up to USD 4,000,000
to support the launch of WISeKey's WISeCoin setup. Borrowings under the ExWorks Line of Credit bear interest payable monthly at
1%. The maturity date of the arrangement is January 16, 2020 with an option to extend maturity to January 16, 2021 for a fee equal
to 12% of the outstanding loan at the time WISeKey exercises the extension option. Under current terms, ExWorks can elect to have
part of or all of the principal loan amount and interests paid either in cash or in WIHN class B shares at a conversion price of
USD 4.74 per share.



Under the terms of
the ExWorks Line of Credit, the Group is required to not enter into agreements that would result in restriction on liens, reserved
restriction on indebtedness, mergers, consolidations, organizational changes except with an affiliate, contingent and third party
liabilities, any substantial change in the nature of its business, restricted payments, insider transactions, certain debt payments,
certain agreements, negative pledge or asset transfer other than sale of assets in the ordinary course of business. Furthermore,
the Group is required to maintain its existence and pay all taxes and other liabilities, provide ExWorks with periodical accounting
reports and the detail of any material litigation, comply with applicable laws, meet the financial covenants set in the line of
credit agreement in terms of average cash on hand and minimum ending cash on hand. The Group has complied with the line of credit
covenants in the 12 months to December 31, 2018.



As at December 31,
2018, borrowings under the ExWorks Line of Credit are secured by (i) the grant of options to ExWorks exercisable for up to 1,075,000
WIHN class B registered shares, par value CHF 0.05, at an exercise price of CHF 3.15; (ii) 100% of the shares in QuoVadis Trustlink
Schweiz AG; (iii) any cash bank account of the Group held in Switzerland; (iv) 100% of the shares in WISeKey USA; (v) 100% of the
shares in WISeKey Singapore; (vi) 100% of the shares held by the Group in WISeKey SAARC Ltd; and (vii) all shares owned by WISeKey
(Bermuda) Holding Ltd in each of its subsidiaries.





58







The ExWorks Line of
Credit can be up-sized / syndicated at the same terms for up to an additional USD 10,000,000 by way of adding co-lender(s) or selling
a participation interest.



The line of credit
was initially recognized as a revolving credit falling under ASC 480, and, in line with ASU 2015-15 the commitment fee and debt
issuance costs totalling USD 3,165,880 were capitalized as deferred charges to be amortized over the duration of the contract.
These deferred charges included the fair value of an option agreement signed by both parties on February 06, 2017, granting ExWorks
the option to acquire up to 1,075,000 WIHN class B shares at an exercise price of CHF 3.15, exercisable in a maximum of four separate
exercises, between June 28, 2017 and February 06, 2020. The option agreement exercisable for up to 1,075,000 WIHN class B shares
was fair valued at grant for an amount of USD 2,173,395 using the Black-Scholes model and the market price of WIHN class B shares
on the date of grant, February 06, 2017, of CHF 4.04. The option agreement was assessed as equity instrument. The credit entry
from the recognition of the option agreement fair value was booked in Additional Paid-In Capital ("APIC").



However, the fifth
amendment on September 19, 2017 introduced an option to convert payments of the full or partial amounts of principal loan, interests
and fees in WIHN class B shares. The introduction of the conversion option was assessed to be a substantial modification of terms
for the existing contract and therefore, in line with ASC 470-50-40-6, was accounted for like an extinguishment. As a result, all
fees and debt issuance costs, including the option agreement, previously capitalized were fully amortized into the income statement
in 2017, the old debt was written off, and the new debt was accounted for. This gave rise to a USD 6,511,421 loss on extinguishment
in 2017 made up of total amendment fees of USD 700,000, the unamortized portion of the commitment fee and debt issuance costs totalling
USD 2,199,502 (of which USD 1,467,746 related to the option agreement), and the fair value of the conversion option introduced
for USD 4,087,519 calculated using the Black-Scholes model and the market price of WIHN class B shares as at the date of the fifth
amendment of CHF 4.10 (USD 4.26 at historical rate).



As at December 31,
2017, there were no unamortized debt discount/premium or debt issuance costs. We note that the conversion option was assessed as
an equity instrument which did not require bifurcation from its debt host. The credit entry from the recognition of the conversion
option fair value was booked in APIC.



The sixth amendment
signed on February 05, 2018 extended maturity of the loans to January 16, 2020 (instead of January 15, 2019), reduced the monthly
interest rate to 1% (instead of 1.5%), and introduced a clause whereby cash repayments are restricted in time. The amendment fee
was USD 1,890,000.



The seventh amendment
signed on March 30, 2018, granted an extension of USD 4m to the maximum loan amount to be used for "Other Approved Business
Purpose". The amendment fee was USD 400,000. As at December 31, 2018 WISeKey has drawn USD 3,995,575 from this extended facility
to fund the creation of WISeCoin AG.



Both the sixth and
seventh amendments were analysed as debt modification and accounted for under ASC 470-50-40-14. Total debt issue costs of USD 2,290,000
were recorded as debt discounts and amortized over the duration of the credit line.



The eighth, ninth and
tenth amendments were assessed and did not give rise to any debt modification or debt extinguishment accounting.



With the eleventh amendment
on September 27, 2018 ExWorks removed liens on some intellectual property of the Group in exchange for WISeKey purchasing from
ExWorks a 22% warrant in Tarmin (see note 19) for a total purchase price of USD 7,000,000 made up of a USD 3,000,000 cash payment
made on October 05, 2018 and a USD 4,000,000 promissory note payable on March 31, 2019. The amendment fee was USD 250,000. The
Tarmin Warrant was assessed as an equity investment without a readily determinable fair value and we elected the measurement at
cost less impairment, adjusted for observable price changes for identical or similar investments of the same issuer as permitted
by ASU 2016-01. As such, the Tarmin Warrant was initially recognized on the balance sheet at USD 7,000,000.



In line with ASC 470-50,
we compared the present value of the new debt per the eleventh amendment to the present value of the old debt under the tenth amendment
and concluded that the difference was below the 10% threshold. The eleventh amendment was analysed as a debt modification and accounted
for under ASC 470-50-40-14. Total debt issue costs of USD 2,540,000 were recorded as debt discounts and amortized over the duration
of the credit line.





59







As at December 31,
2018, outstanding borrowings were USD 22,642,012.48 and unamortized debt discount USD 1,375,374.



On January 16, 2019,
WISeKey repaid in cash all outstanding amounts: USD 22,618,226 of principal, USD 120,654 of accrued interests, and USD 2,595,000
of accrued fees.



For the period starting
January 01, 2019 to January 16, 2019, WISeKey recorded a total debt amortization charge of USD 49,822. Therefore the unamortized
debt discount as at January 16, 2019 amounted to USD 1,325,552.



The repayment of the
loan was assessed as a debt extinguishment in line with ASC 405-20-40-1. As a result, the unamortized debt discount of USD 1,325,552
was expensed as loss on debt extinguishment in the income statement. Because most of the principal loan balance related to the
acquisition credit line for the purchase of QuoVadis in 2017, and in application of ASC 205-20-45-6 to 205-20-45-8 after the signature
of the SPA to sell QuoVadis, WISeKey further elected to apply ASC 205-20-45-8 and to allocate interest to the discontinued operations
based on the debt that can be identified as specifically attributed to the operations of QuoVadis. As a result, USD 1,092,783 out
of the USD 1,325,552 total loss on debt extinguishment was recorded under discontinued operations and presented as a separate line
item in the income / (loss) on discontinued operations presented in Note 37. The remaining USD 232,769 loss on debt extinguishment
attributable to continuing operations is showing as a separate line item on the face of the income statement.



Standby Equity Distribution Agreement
with YA II PN, Ltd.



On February 08, 2018
WISeKey entered into a Standby Equity Distribution Agreement with a fund managed by Yorkville Advisors Global LLC. Under the terms
of the SEDA as amended, Yorkville has committed to provide WISeKey, upon a drawdown request by WISeKey, up to CHF 50,000,000 in
equity financing over a three-year period ending March 01, 2021. Provided that a sufficient number of Class B Shares is provided
through share lending, WISeKey has the right to make drawdowns under the SEDA, at its discretion, by requesting Yorkville to subscribe
for (if the Class B Shares are issued out of authorized share capital) or purchase (if the Class B Shares are delivered out of
treasury) Class B Shares worth up to CHF 5,000,000 by drawdown, subject to certain exceptions and limitations (including the exception
that a drawdown request by WISeKey shall in no event cause the aggregate number of Class B Shares held by Yorkville to meet or
exceed 4.99% of the total number of shares registered with the commercial register of the Canton of Zug). The purchase price will
be 93% of the relevant market price at the time of the drawdown, determined by reference to a five-day trading period following
the draw down request by WISeKey.



The instrument was
assessed under ASC 815 as an equity instrument. WISeKey paid a one-time commitment fee of CHF 500,000 (USD 524,231 at historical
rate) on April 24, 2018 in 100,000 WIHN Class B Shares. In line with ASU 2015-15 the commitment fee was capitalized as deferred
charges to be amortized over the duration of the contract as a reduction of equity.



In 2018, WISeKey made
4 drawdowns for a total of CHF 1,749,992 (USD 1,755,378 at historical rate) in exchange for a total of 540,539 WIHN class B shares
issued out of authorized share capital or treasury share capital.



In 2019, WISeKey made
the following drawdowns:



On January 08, 2019
WISeKey made one drawdown for CHF 250,000 (USD 245,125 at historical rate) in exchange for 97,125 WIHN class B shares issued out
of treasury share capital.



On August 15, 2019
one drawdown for CHF 250,000 (USD 256,187 at historical rate) in exchange for 120,250 WIHN class B shares issued out
of treasury share capital.



On September 17, 2019
one drawdown for CHF 199,999 (USD 202,520 at historical rate) in exchange for 84,281 WIHN class B shares issued out of
treasury share capital.



On October 10, 2019
one drawdown for CHF 249,999 (USD 249,999 at historical rate) in exchange for 111,012 WIHN class B shares issued
out of treasury share capital.





60







On November 07, 2019
one drawdown for CHF 157,933 (USD 157,933 at historical rate) in exchange for 78,146 WIHN class B shares issued
out of treasury share capital.



The amortization charge
for the capitalized fee recognized in APIC amounted to USD 183,631 for the year to December 31, 2019 and the remaining deferred
charge balance was USD 214,322 made up of USD 184,134 current and USD 30,188 noncurrent.



As at December 31,
2019 the outstanding equity financing available was CHF 47,142,077.



Facility Agreement and Convertible
Loan Agreement with YA II PN, Ltd.



On September 28, 2018
WISeKey entered into the Yorkville Loan, a Facility Agreement with Yorkville to borrow USD 3,500,000 repayable by May 01, 2019
in monthly cash instalments starting in November 2018. The loan bears an interest rate of 4% per annum payable monthly in arrears.
A fee of USD 140,000 and debt issuance costs of USD 20,000 paid at inception.



The debt instrument
was assessed as a term debt. A discount of USD 160,000 was recorded at inception and will be amortized using the effective interest
method over the life of the debt.



The remaining loan
balance at December 31, 2018 was USD 2,717,773 including unamortized debt discount of USD 57,007. The discount amortization
expense recorded for the period to December 31, 2018 was USD 102,993. In the period to December 31, 2018, WISeKey repaid USD 725,220
of the principal loan amount in cash.



On June 27, 2019, WISeKey
entered into the Yorkville Convertible Loan, a Convertible Loan Agreement with Yorkville to borrow USD 3,500,000 repayable by August
01, 2020 in monthly instalments starting in August 01, 2019 either in cash or in WIHN class B Shares. The loan bears an interest
rate of 6% per annum payable monthly in arrears. Total fees of USD 160,000 were paid at inception.



The conversion option
into WIHN Class B shares is exercisable at the election of Yorkville and may be exercised at each monthly repayment date, covering
any amount outstanding, be it principal and/or accrued interests. The initial exercise price is set at CHF 3.00 per WIHN class
B Share but may be adjusted as a result of specific events so as to prevent any dissolution effect. The events triggering anti-dissolution
adjustments are: (a) increase of capital by means of capitalization of reserves, profits or premiums by distribution of WIHN Shares,
or division or consolidation of WIHN Shares, (b) issue of WIHN shares or other securities by way of conferring subscription or
purchase rights, (c) spin-offs and capital distributions other than dividends, and (d) dividends.



At the date of inception
of the Yorkville Convertible Loan, on June 27, 2019, an unpaid balance of USD 500,000 remained on the Yorkville Loan. There was
no unamortized debt discount on the Yorkville Loan as it was amortized in accordance with the planned repayment schedule, i.e.
by May 01, 2019.



In line with ASC 470-50,
we compared the present value of the new debt (the Yorkville Convertible Loan) to the present value of the old debt (the Yorkville
Loan) using the net method and concluded that the difference was below the 10% threshold. Therefore, the Yorkville Convertible
Loan was analyzed as a debt modification and accounted for under ASC 470-50-40-14.



In line with ASU 2014-16,
the convertible note was assessed as a hybrid instrument, being a debt instrument with an equity-linked component (the conversion
option). Per ASC 815-10, the embedded conversion option met the definition of a derivative and was accounted for separately, thereby
creating a debt discount.



The derivative liability
component (the conversion option) was fair valued using a binomial lattice model, building in quoted market prices of WIHN class
B shares, and inputs such as time value of money, volatility, and risk-free interest rates. It was valued at inception at USD 257,435,
and was allocated between current and noncurrent on a pro rata temporis basis according to the monthly repayment schedule. The
derivative component will be revalued at fair value at each reporting date in line with ASC 815-15-30-1.





61







On the date of the
agreement, WISeKey signed an option agreement granting Yorkville the option to acquire up to 500,000 WIHN class B shares at an
exercise price of CHF 3.00, exercisable between June 27, 2019 and June 27, 2022. In order to prevent any dissolution effect, the
exercise price may be adjusted as a result of the same specific events listed above as adjustments to the conversion price of the
principal amount. In line with ASC 470-20-25-2, the proceeds from the convertible debt with a detachable warrant was allocated
to the two elements based on the relative fair values of the debt instrument net of the warrant and the embedded conversion separated
out on the one side, and the warrant at time of issuance on the other side. The option agreement was assessed as an equity instrument
and was fair valued at grant for an amount of USD 373,574 using the Black-Scholes model and the market price of WIHN class B shares
on the date of grant, June 27, 2019, of CH 2.35. The fair value of the debt was calculated using the discounted cash flow method
as USD 3,635,638. Applying the relative fair value method per ASC 470-20-25-2, the recognition of the option agreement created
a debt discount on the debt host in the amount of USD 326,126, and the credit entry was booked in APIC.



As a result of the
above accounting entries, the total debt discount recorded at inception was USD 743,561, made up of USD 160,000 fees to Yorkville,
USD 257,435 from the bifurcation of the embedded conversion option into derivative liabilities, and USD 326,126 from the recognition
of the warrant agreement.



As at December 31, 2019, WISeKey had repaid
USD 1,162,607 and the principal amount outstanding was USD 2,337,393 with an unamortized debt discount of USD 275,296.



For the year 2019, the Group recorded in
the income statement a net debt discount amortization expense of USD 468,265.



Convertible Loan with Crede CG III,
Ltd



On September 28, 2018
the Group closed a Convertible Loan Agreement with Crede CG III, Ltd for an amount of USD 3,000,000. The funds were made available
on October 31, 2018. The loan bears a 10% p.a. interest rate, payable in arrears on a quarterly basis starting December 31, 2018,
and is repayable in WIHN class B Shares any time between November 30, 2018 and the maturity date of September 28, 2020, at Crede's
election. Accrued interests are payable, at WISeKey's sole election, either in cash or in WIHN class B Shares. The conversion price
applicable to the prepayment of the principal amount or accrued interest is calculated as 93% of the average of the 2 lowest daily
volume-weighted average prices quoted on the SIX Stock Exchange during the 10 Trading Days immediately preceding the relevant conversion
date or interest payment date respectively, disregarding any day on which Crede (or its Affiliates or related party) has effected
any trade, converted into USD at the exchange rate reported by Bloomberg at 9 a.m. Swiss time on the relevant conversion date or
interest payment date. As at December 31, 2018 the full amount of USD 3 million remained outstanding and accrued interest of USD
50,833 were recognized in the income statement.



Due to Crede's option
to convert the loan in part or in full at any time before maturity, the Crede Convertible Loan was assessed as a share-settled
debt instrument with an embedded put option. Because the value that Crede will receive at settlement does not vary with the value
of the shares, the settlement provision is not considered a conversion option. We assessed the put option under ASC 815 and concluded
that it is clearly and closely related to its debt host and therefore did not require bifurcation. Per ASC 480-10-25, the Crede
Convertible Loan was accounted for as a liability measured at fair value using the discounted cash flow method at inception.



On the date of the
agreement, WISeKey signed an option agreement granting Crede the option to acquire up to 408,247 WIHN class B shares at an exercise
price of CHF 3.84, exercisable between October 31, 2018 and October 29, 2021. Per the option agreement's term, the date of grant
under US GAAP is October 29, 2018 upon issuance of a Tax Ruling from the Swiss Federal Tax Administration and the Zug tax authority.
In line with ASC 470-20-25-2, the proceeds from the convertible debt with a detachable warrant was allocated to the two elements
based on the relative fair values of the debt instrument without the warrant and of the warrant at time of issuance. The option
agreement was assessed as an equity instrument and was fair valued at grant for an amount of USD 408,056 using the Black-Scholes
model and the market price of WIHN class B shares on the date of grant, October 29, 2018, of CH 3.06. The fair value of the debt
was calculated using the discounted cash flow method as USD 2,920,556. Applying the relative fair value method per ASC 470-20-25-2,
the recognition of the option agreement created a debt discount on the debt host in the amount of USD 367,771, and the credit entry
was booked in APIC.





62







In 2019, Crede issued
six exercise notices, resulting in the following conversions:



On January 03, 2019
for 30,000 WHIN class B shares delivered on January 08, 2019 for a conversion of USD 73,559.



On January 15, 2019
for 100,000 WHIN class B shares delivered on January 17, 2019 for a conversion of USD 265,099.



On February 19, 2019
for 100,000 WHIN class B shares delivered on February 26, 2019 for a conversion of USD 279,525.



On June 24, 2019
for 100,000 WHIN class B shares delivered on July 01, 2019 for a conversion of USD 208,755.



On September 03,
2019 for 300,000 WHIN class B shares delivered on September 09, 2019 for a conversion of USD 640,934.



On December 03, 2019
for 150,000 WHIN class B shares delivered on December 09, 2019 for a conversion of USD 303,228.



As at December 31, 2019, the principal
amount outstanding was USD 1,228,899, and the unamortized debt discount USD 64,971.



For the year 2019, the Group recorded in
the income statement a net debt discount amortization expense of USD 155,389. In line with ASC 470-20-50-5, as at December 31,
2019, the amount by which the instrument’s if-converted value exceeds its principal amount is USD 318,270.



Credit Agreement with ExWorks Capital
Fund I, L.P.



On April 04, 2019 WISeCoin
AG ("WISeCoin"), an affiliate of the Company, signed a credit agreement with ExWorks. Under this credit agreement, WISeCoin
was granted a USD 4,000,000 term loan and may add up to USD 80,000 accrued interest to the loan principal, hence a maximum loan
amount of USD 4,080,000. The loan bears an interest rate of 10% p.a. payable monthly in arrears. The maturity date of the arrangement
is April 04, 2020 therefore all outstanding balances are classified as current liabilities in the balance sheet. ExWorks can elect
to have part of or all of the principal loan amount and interests paid either in cash or in WISeCoin Security Tokens (the "WCN
Token") as may be issued by WISeCoin from time to time. As at December 31, 2019, the conversion price is set at CHF 12.42
per WCN Token based on a non-legally binding term sheet.



Under the terms of
the credit agreement, WISeCoin is required to not enter into agreements that would result in liens on property, assets or controlled
subsidiaries, in indebtedness other than the exceptions listed in the credit agreement, in mergers, consolidations, organizational
changes except with an affiliate, contingent and third party liabilities, any substantial change in the nature of its business,
restricted payments, insider transactions, certain debt payments, certain agreements, negative pledge, asset transfer other than
sale of assets in the ordinary course of business, or holding or acquiring shares and/or quotas in another person other than WISeCoin
R&D. Furthermore, WISeCoin is required to maintain its existence, pay all taxes and other liabilities.



Borrowings under the
line of credit are secured by first ranking security interests on all material assets and personal property of WISeCoin, and a
pledge over the shares in WISeCoin representing 90% of the capital held by the Company. Under certain circumstances, additional
security may be granted over the intellectual property rights of WISeCoin and WISeCoin R&D, and the shares held by WISeCoin
in WISeCoin R&D.



Total debt issue costs
of USD 160,000 were recorded as debt discount and amortized over the duration of the loan.



In the year 2019, WISeKey
recorded a total debt amortization charge of USD 151,343 and an unamortized debt discount of USD 8,657 remained as at December
31, 2019.



As at December 31,
2019, outstanding borrowings were USD 4,030,129.





63







Credit Agreement with Long State
Investment Limited



On December 16, 2019,
WISeKey entered into a Convertible Term Loan Facility Agreement (the “LSI Convertible Facility”) with Long State
Investment Limited (“LSI”), a Hong Kong-based investment company, to borrow up to CHF 30 million.
Under the terms of the LSI Convertible Facility, WISeKey will be able to drawdown individual term loans of up to CHF 500,000
or, if so agreed between the parties, up to CHF 2.5 million at an interest rate of 1.5% p.a., up to an aggregate amount of
CHF 30 million over a commitment period of 24 months.



LSI will have the right
to convert a drawdown tranche into WIHN Class B Shares or, if so agreed among the parties and permitted by law, into American Depositary
Shares (“ADSs”) representing WIHN Class B Shares, within a period of 21 SIX trading days after each individual drawdown
at 95% of the higher of (i) the then prevailing market rate and (ii) the minimum conversion price of CHF 1.80. Any term loan not
converted by LSI initially will automatically convert into WIHN Class B Shares, or ADSs, 20 SIX trading days before the expiration
of the commitment period at the applicable conversion price. Under certain circumstances, interest payments may be “paid
in kind” by capitalizing such interest and adding to it the aggregate principal balance of the loan outstanding.



Under the arrangement,
WISeKey and LSI plan to establish a Joint Venture in Hong Kong in the first quarter of 2020 to focus on business opportunities
in Asia. A memorandum of understanding has been executed between WISeKey and LSI to that effect.



Due to LSI’s
option to convert the loan in part at each drawdown before maturity, the LSI Convertible Facility was assessed as a debt instrument
with an embedded put option. We assessed the put option under ASC 815 and concluded that it is clearly and closely related to its
debt host and therefore did not require bifurcation. Per ASC 480-10-25, the LSI Convertible Facility will be accounted for as a
liability measured at fair value using the discounted cash flow method for each term loan (corresponding to each drawdown).



As at December 31,
2019, debt issue costs corresponding to CHF 22,230 in legal fees were recorded in the income statement by WISeKey to execute
the LSI Convertible Facility. Also, per the terms of the LSI Convertible Facility, WISeKey owes LSI a CHF 10,000 expense allowance
and a commitment fee payable in 400,000 WIHN class B shares, which were not yet settled as at December 31, 2019 and are expected
to be settled in January 2020. The debt issue costs and commitment fee will be recorded as a debt discount proportionately
to each drawdown. However, as at December 31, 2019, WISeKey had not yet drawn down on the LSI Convertible Facility, therefore,
in application of ASC 340-10-S99-1, WISeKey accounted for the debt issue costs of CHF 22,230 as a deferred asset to be
amortized on a straight-line basis over the access period of the LSI Convertible Facility.



As at December 31,
2019 the outstanding LSI Convertible Facility available was CHF 30 million.



| | C. | Research and Development, Patents and Licenses, Etc.
| | -- | ----------------------------------------------------



WISeKey's research
and development spending totaled USD 6.4 million in the year ended December 31, 2019, and USD 5.3 million in each year ended
December 31, 2018 and 2017. As mentioned in Item 3. Key Information – D. Risk Factors, we need to keep pace with changing
technologies in order to maintain and grow our revenue. We currently own 88 individual patents which preserve our technology. Our
spending in research and development include the development of future technologies that we will register legally in the future
to develop our patent portfolio and ensure that competitors cannot replicate our technology easily.



| | D. | Trend Information
| | -- | -----------------



Our growth strategy
and industry trends are detailed in Item 3. Key Information – B. Business Overview. The uncertainties and material commitments
such as financial instruments that are likely to have a material effect on the companies' financial condition are described in
Item 3. Key Information – D. Risk Factors and Item 5. Operating and Financial Review and Prospects – B. Liquidity and
Capital resources.





64







| | E. | Off-Balance Sheet Arrangements
| | -- | ------------------------------



We have no special
purpose financing or partnership entities, or other off-balance sheet arrangements that have or are reasonably likely to have a
current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations,
liquidity, capital expenditures or capital resources, that is material to investors.



| | F. | Tabular Disclosure of Contractual Obligations
| | -- | ---------------------------------------------



The following table
sets forth our contractual obligations as at December 31, 2019 in USD'000s:



|                                           | Payments due by period
|------------------------------------------ | ----------------------
|Contractual obligations                    | Total                 
|Operating and short-term lease obligations | 3,132                 
|Finance lease obligations                  | 285                   
|Debt and convertible note obligations      | 7,596                 
|Total contractual obligations              | 11,013                



| | Item 6. | Directors, Senior Management and Employees
| | ------- | ------------------------------------------



| | A. | Directors and Senior Management
| | -- | -------------------------------



The following table
sets forth the name, date of birth and functions of our non-executive and executive directors, and our senior management as at
the date of this annual report. Unless otherwise indicated, the current business addresses for our executive officers and directors
is General-Guisan-Strasse 6, 6300 Zug, Switzerland. Our non-executive and executive directors are elected annually and individually
as a matter of law by the shareholders at each Annual General Meeting of the shareholders for a term extending up until the following
Annual General Meeting of the shareholders. The last Annual General Meeting of the shareholders was on May 21, 2019.



|Name                    |  | Date of birth      |  | Functions in WISeKey                                                                                      |  | Date first appointed          
|----------------------- |  | ------------------ |  | --------------------------------------------------------------------------------------------------------- |  | ------------------------------
|Non-Executive Directors |  |                    |  |                                                                                                           |  |                               
|Philippe Doubre         |  | March 24, 1935     |  | Board Member, Member of the Nomination and Compensation Committee                                         |  | March 21, 2016
        (1999*)
|                        |  |                    |  |                                                                                                           |  |                               
|David Fergusson         |  | August 15, 1960    |  | Board Member, Chairman of the Nomination and Compensation Committee, Member of the Audit Committee        |  | May 31, 2017                  
|                        |  |                    |  |                                                                                                           |  |                               
|Juan Hernández Zayas    |  | May 07, 1962       |  | Board Member, Chairman of the Audit Committee, Member of the strategy committee                           |  | March 21, 2016
        (2007*)
|Executive Directors     |  |                    |  |                                                                                                           |  |                               
|Carlos Moreira          |  | September 01, 1958 |  | Chairman of the Board of Directors, Member of the Strategy Committee, Founder and Chief Executive Officer |  | March 21, 2016
        (1999*)
|                        |  |                    |  |                                                                                                           |  |                               
|Dourgam Kummer          |  | May 08, 1965       |  | Vice-Chairman of the Board of Directors, Head of M&A                                                      |  | March 21, 2016
        (2005*)
|                        |  |                    |  |                                                                                                           |  |                               
|Peter Ward              |  | January 05, 1952   |  | Board Member, Member of the Strategy Committee                                                            |  | March 21, 2016
        (2012*)





65







|Name |  | Date of birth |  | Functions in WISeKey |  | Date first appointed
|---- |  | ------------- |  | -------------------- |  | --------------------

|Senior Management |  |                   |  |                                                              |  |                     
|----------------- |  | ----------------- |  | ------------------------------------------------------------ |  | --------------------
|Pedro Fuentes     |  | November 12, 1969 |  | Chief Security Officer                                       |  | August 01, 2016     
|                  |  |                   |  |                                                              |  |                     
|Carlos Moreno     |  | March, 09, 1964   |  | Vice President of Strategic Partnerships                     |  | July 15, 2006*      
|                  |  |                   |  |                                                              |  |                     
|Jean-Yves Le Saux |  | June 02, 1958     |  | Vice President of Sales and Business Development             |  | September 21, 2016**
|                  |  |                   |  |                                                              |  |                     
|Nathalie Verjus   |  | February 19, 1975 |  | Company Secretary and Financial Planning & Reporting Manager |  | November 01, 2016   
|                  |  |                   |  |                                                              |  |                     
|Bernard Vian      |  | March 22, 1967    |  | General Manager of WISeKey Semiconductors                    |  | September 21, 2016**
|                  |  |                   |  |                                                              |  |                     
|Alexander Zinser  |  | July 17, 1969     |  | Chief Legal Officer                                          |  | April 09, 2018      



* Includes board membership and employment
at the Company's predecessor holding company of the WISeKey Group, WISeKey SA.

** Joined the WISeKey Group on the acquisition
of WISeKey Semiconductors SAS on September 21, 2016.



Biographies



Directors



Carlos Moreira,
Founder, Chairman of the Board of Directors and CEO of WISeKey, UN Expert on CyberSecurity and Trust Models for ILO, UN, UNCTAD,
ITC/WTO, World Bank, UNDP, ESCAP (83-99). Author, Internet Pioneer; Founder OISTE.org. Founding Member of the "Comité
de Pilotage Project E-Voting" of the Geneva Government, Member of the UN Global Compact, Member of the WEF Global Agenda Council.
Founding Member WEF Global Growth Companies 2007. WEF New Champion 2007 to 2016, Vice Chair WEF Agenda Council on Illicit Trade
12/15, Member of the Selection Committee for the WEF Growth Companies. Founder of the Geneva Security Forum. Member the WEF Global
Agenda Council on the Future of IT Software & Services 2014-16. Member of the New York Forum. Selected as one of the WEF, Trailblazers,
Shapers and Innovators, Member of Blockchain Advisory Board of the Government of Mexico. Nominated by Bilan.CH among the 300 most
influential persons in Switzerland 2011 and 2013, top 100 of Who's Who of the Net Economy, Most Exciting EU Company at Microsoft
MERID 2005, Man of the Year AGEFI 2007, Selected by Bilanz among the 100 most important 2016 digital heads in Switzerland 2017.
Award Holder CGI. Adjunct Professor of the Graduate School of Engineering RMIT Australia (95/99). Head of the Trade Efficiency
Lab at the Graduate School of Engineering at RMIT.  M&A Award 2017 Best EU acquisition. 2018 Blockchain Davos Award of
Excellence by the Global Blockchain Business Council. Member of The Blockchain Research Institute. Founder Blockchain Center of
Excellence 2019.  Entrepreneur and investor in disruptive cryptotechnology AI, Blockchain, IoT and Cybersecurity. Keynote
speaker at the UN, WEF, CGI, ITU, Bloomberg, Oracle, SAP, Zermatt Summit, Microsoft, IMD, INSEAD, MIT Sloan, HEC, UBS, CEO Summit.
Coauthor of "The transHuman Code: How to Program Your Future" (2019).



Peter Ward has
served our Chief Financial Officer and a director since 2012. Mr. Ward began his tenure with our Company in 2008 as Finance Director.
From 2005 to 2008, Mr. Ward served as a director and International Finance Director at Isotis International Inc., a manufacturer
and distributor of bone and skin transplants. From 1996 to 2004, Mr. Ward served as a director and International Finance Director,
then Director Administration and Taxes of Iomega International, a manufacturer and distributor of external computer drives and
disks. From 1986 to 1996, Mr. Ward served as Finance Director for Germany, Austria & Switzerland Finance for GE Information
Services (GEISCO), based in Cologne, Germany, then Commercial Finance Manager for GE Plastics BV, based in Bergen op Zoom, The
Netherlands and Finance Director for Germany, Austria & Switzerland for GE Medical Services AG, based in Frankfurt am Main,
Germany at General Electric. From 1973 to 1985, Mr. Ward served as Cost Analyst at Standard Telephones & Cables Ltd, a manufacturer
and installer of submarine telephone cables, based in Southampton, United Kingdom, then Finance Accountant for Payot Cosmetics
Ltd and Mavala Cosmetics Ltd, manufacturers of cosmetics and nail products respectively, based in Ashford, Kent, United Kingdom,
then Financial Controller for Rimmel Cosmetics Germany and ITT Photoproducts, Germany, distributors of cosmetics and photographic
equipment respectively, based in Frankfurt am Main, Germany, then Financial Analyst for the Automotive and Sanitary Products Division,
based in ITTE HQ in Brussels, Belgium, then Manager Financial Controls for the Telecommunications Division based in ITTE HQ Brussels,
Belgium, at ITTE. He holds a B.A. with honors in Business Administration from Wolverhampton University, in Wolverhampton, U.K.
and is a qualified Chartered Management Accountant.





66







Philippe Doubreis a co-founder of our company and has served as a member of our board since 1999. Mr. Doubre is also the co-founder and Président
du Conseil de Fondation of the Organisation Internationale pour la Sécurité des Transactions Electroniques (OISTE),
a not-for-profit organization founded in 1998 that promotes digital security and certification of persons and objects. Mr. Doubre
serves as vice president and treasurer of the World Trade Point Federation (WTPF), an international non-governmental organization
founded in 2000 in partnership with the United Nations Conference on Trade and Development (UNCTAD), which assists small and medium
enterprises (SMEs) in over 70 countries worldwide to trade internationally through the use of electronic commerce technologies.
Additionally, Mr. Doubre serves as president of the China Hub in Geneva, Switzerland, and a permanent representative of the WTCA
organization to the U.N. in Geneva, Switzerland. From 1979 to 2015, Mr. Doubre served as secretary general and then president of
the World Trade Centre Geneva, Switzerland, a member of the World Trade Center Association (WTCA). Mr. Doubre served as the co-chairman
of the WTCA Committee on Information and Communication, and as a member of the WTCA New York board of directors since 1999. Prior
to his role with the WTCA, Mr. Doubre held several senior positions in the banking and finance industry, including vice president
and general cashier of American Express Paris, and general manager of the Overseas Development Bank between 1967 and 1970. Mr.
Doubre graduated in mathematics from the Collège Saint Barbe in Paris, France.



David Fergussonhas served as a member of our board since 2017. Since 2010, Mr. Fergusson serves as president and CEO of "The M&A
Advisor", the world's premier think tank for corporate finance, mergers & acquisition and restructuring professionals.
From London and New York, M. Fergusson leads the company's market intelligence, media, event, and consulting services for a global
constituency of over 350,000 finance industry professionals. M. Fergusson is a sought-after speaker and contributor on the subjects
of finance, technology and operational innovation with international media, educational institutions and leadership assemblies.
A market expert on the impact of technological innovation on corporations, M. Fergusson is also the editor of 5 annual editions
of "The Best Practices of the Best Dealmakers" with over 500,000 readers and distribution in over 60 countries. In 2013,
Mr. Fergusson founded the global Corporate Finance Emerging Leaders program, which engages future global business stalwarts to
affect significant change through social innovation. A pioneer in cross border M&A between the United States and China, he
was recognized with the 2017 M&A Leadership Award from the China Mergers & Acquisitions Association and is Chairman of
the US Chapter of the Asia M&A Association. Additionally, Mr. Fergusson serves as president-elect of Hugh O'Brien Youth Leadership
(HOBY), the world's largest social leadership philanthropic foundation for high school students. He received the 2015 Albert Schweitzer
Leadership Award for his work in youth leadership development. Mr. Fergusson is also a founding member of the City of London's
Guild of Entrepreneurs, a member of British American Business, and of the Association for Corporate Growth (ACG). Mr. Fergusson
is a graduate of Kings College School and the University of Guelph where he earned a Bachelor of Arts in Political Studies.



Juan Hernández
Zayas has served as a member of our board since 2007. Since 2001, Mr. Hernández Zayas serves as chief executive officer
of the Cosimet-Velasco Group, playing a major role in the company's diversification strategy and in the consolidation of a large
industrial holding, with companies involved in several sectors, including steel, real estate, construction and services. Mr. Hernández
Zayas also serves as a member of the board of Grupo TDG CLAMPING SOLUTIONS SL, a manufacturing company in the machinery and tool
industry, since 2018. Prior to joining Cosimet-Velasco Group, Mr. Hernández Zayas served as director of affiliates for the
Eguizabal-Paternina Group, one of Spain's leading wine producers, from 1995 until its IPO in 1998. From 1989 to 1995, Mr. Hernández
Zayas joined the audit and corporate division of PricewaterhouseCoopers (PwC), specializing in corporate finance, mergers and takeovers,
working with large corporates and multinationals as well as important family groups. Mr. Hernández Zayas currently serves
as a member of the board of directors of Welzia Management SA, Igurco SL., SaltX Technology Holding AB. Mr. Hernández Zayas
is a member of the ROAC, the official Spanish College of Chartered Accountants. Mr. Hernández Zayas holds a B.A. in Economics
and Business Administration from UPV, Universidad del Pais Vasco, in Bilbao, Spain, and an M.B.A. in Foreign Trade from the LSFT,
London School of Foreign Trade, in London, U.K.



Dourgam Kummer
has served as a member of our board of directors since 2005. From 1992 to 2001, Mr. Kummer worked for André & Cie SA,
a structured finance, trade finance, and project finance/M&A specialist, where he served in several management positions in
the former USSR and Austria representation offices between 1993 and 1997, before becoming their deputy director at the headquarter
in Switzerland. From 2001 to 2004, Mr. Kummer served as a member of the board of directors and managing director for Bisange SA,
a private family office active in equity financing. Mr. Kummer joined our board of directors in 2005. Mr. Kummer served as our
chief financial officer from 2005 until 2011, and our chief operations officer from 2011 to 2015. From 2016 to 2018, Mr. Kummer
served as a senior partner at FRACTAL-SWISS AG and a member of their board of directors. Since January 2019, Dourgam Kummer serves
as our Head of M&A and has therefore become an executive member of our board of directors. He graduated in company management
and finance at "l'école de Cadre" in Lausanne, Switzerland, and obtained a certificate in structured finance and
strategic finance from the IMD Business School in Lausanne, Switzerland.





67







Senior Management



Pedro Fuentes
serves as our Chief Security Officer. Mr. Fuentes is responsible for the PKI platforms and compliance, ensuring the worldwide accreditation
of WISeKey's certification services, our product strategy, leading projects and customer support worldwide. He is a senior specialist
in information security and PKI in particular with more than 20 years of active work in these areas as a certified professional
(CISM, ISO27000, MSCP and others). Mr. Fuentes joined WISeKey in 2009 to reinforce the eSecurity Business Unit. Prior to joining
WISeKey, he worked at Siemens as responsible for the cybersecurity product line for southern Europe, managing key projects for
national identity and leveraging eGovernance services through the integration of eSecurity techniques in business processes. Mr.
Fuentes obtained a high degree in Computer Science from the Polytechnic University of Valencia, Spain.



Carlos Moreno
is our Vice President of Strategic Partnerships. Mr. Moreno has more than 30 years of experience in Sales Engineering, Sales Management
and Business Development. He has worked extensively on strategic projects for both national and multinational companies in the
public, financial and industrial sectors throughout his career at Banque Worms, Infogestion, Sopra Steria Informatique, Deutsche
Bank, Uniface, Compuware and BMC Software. He has held management and executive roles in the areas of people management, sales
coaching, market analysis, establishment and implementation of account plans. He joined WISeKey in 2006 as sales director for Switzerland
and held several operational positions before being appointed Vice President of Strategic Partnerships to oversee commercial relationships
with strategic customers and helm market analysis and go-to-market strategies. He qualified in Business and administration with
the Commercial School Nicolas Bouvier in Geneva, Switzerland, and obtained a qualification as Programmer Analyst with the IEPIGE
Institute in Geneva, Switzerland.



Jean-Yves Le Saux
serves as our Vice President of Sales and Business Development. Prior to joining WISeKey, he served as Vice President of Sales
and Business Development for EMEA at INSIDE Secure from 2013 to 2016. Mr. Le Saux joined INSIDE Secure in 2010 from Atmel Corporation
where he was the Sales Director for Southern Europe and the Sales Director for Secure Products. Prior to joining Atmel Corporation
in 1995, he spent nine years as Sales Director Southern Europe at ES2. Mr. Le Saux holds an MBA from the ESSEC Business School
in Paris, France.



Nathalie Verjus
serves as our Company Secretary and Financial Planning & Reporting Manager. A qualified chartered accountant, Ms. Verjus has
a solid background in compliance and finance, combined with project management and operational experience. Prior to joining WISeKey,
Ms. Verjus worked for Tyco International, where she served as EMEA Controllership Senior Manager, then Finance Transformation Senior
Project Manager, before becoming Operational Excellence Lead and Head of a Business Unit. Prior to joining Tyco International,
Ms. Verjus spent four years with PricewaterhouseCoopers UK in Audit and Risk Assurance. Prior to joining PricewaterhouseCoopers,
Ms. Verjus served as Project Manager and Export Administration Manager for NACCO Industries. In addition to her chartered accountant
qualification (ACA) with the Institute of Chartered Accountants in England and Wales (ICAEW), UK, Ms Verjus holds an MA in International
Business Administration for Bournemouth University, UK, and a Master in International Business from the EDC Paris Business School
in Paris, France.



Bernard Vianserves
as General Manager of WISeKey Semiconductors. Prior to our acquisition of WISeKey Semiconductors SAS, Mr. Vian served as the Executive
Vice President of the Secure Transaction Business Division, Vice President of Business Development and Executive Vice President
for Secure Payments at INSIDE Secure SA. He came to INSIDE Secure from Gemplus (now renamed GEMALTO) where he served in several
positions in Sales Support and Marketing, in Europe and lately in California where he opened the Gemplus North America headquarter
and served as Technical Support Director for 5 years. Mr. Vian joined INSIDE Secure's team in 2002 as Business Development Vice
President. He is a graduate of the University of Aix-Marseille, France, with an engineering degree in Electronic Systems.



Alexander Zinser
serves as Chief Legal Officer. Prior to joining WISeKey, Mr. Zinser served ad-interim at the General Counsel Office for Ernst &
Young Switzerland. Prior to joining Ernst & Young Switzerland, Mr. Zinser served as Managing Counsel for SFR Tobacco International
GmbH (formerly Reynolds American Group) in Switzerland. Prior to working for SFR Tobacco International GmbH, Mr. Zinser served
as Assistant General Counsel Europe at the EMEA headquarter of Guardian Industries Europe S.à.r.l. in Luxembourg. Prior
to working for Guardian Industries Europe S.à.r.l., Mr. Zinser served as senior attorney for Agilent Technologies International
S.à.r.l., initially in Germany before transferring to the European headquarter in Switzerland. Prior to working for Agilent
Technologies International S.à.r.l., Mr. Zinser served as Attorney-at-law for Graf von Westphalen Fritze & Modest in
Germany. Mr. Zinser is a qualified Doctor of Laws from the University of Kiel, Germany. He also holds a post-graduate degree in
Comparative Law from the University of Strasbourg, France, a diploma in English Law from the University of Birmingham, U.K., a
Master of Laws from the University of Huddersfield, U.K., and an Executive MBA from the University of Saint Gallen, Switzerland.





68







Family Relationship



There are no family
relationships among any of our executive and non-executive officers or directors.



Potential arrangements



There are no arrangements
or understandings with major shareholders, customers, suppliers or others, pursuant to which any person referred to above was selected
as a director or member of senior management. However, Carlos Moreira has a significant shareholding in our company as disclosed
in "Item 7A. Major Shareholders".



| | B. | Compensation
| | -- | ------------



Compensation of
Directors and Executive Officers



We are subject to the
Ordinance against Excessive Compensation with respect to Listed Companies issued by the Swiss Federal Council (the "Compensation
Ordinance") and the Directive on Information Relating to the Corporate Governance issued by the SIX (the "Corporate Governance
Directive"). The Compensation Ordinance requires a "say on pay" approval mechanism for the compensation of the board
of directors and the executive management pursuant to which the shareholders must vote on the compensation of the board of directors
and the executive management on an annual basis. Accordingly, our Articles provide that the general meeting of shareholders must,
each year, vote separately on the proposals by the board of directors regarding the maximum aggregate amounts of:



| | · | the total compensation of the board of directors for the next term of office; and
| | - | ---------------------------------------------------------------------------------



| | · | the total compensation of the executive management for the period of the next fiscal year.
| | - | ------------------------------------------------------------------------------------------



If the general meeting
of shareholders does not approve a proposal of the board of directors, the board of directors determines the maximum aggregate
amount or maximum partial amounts taking into account all relevant factors and submits such amounts for approval to the same general
meeting of shareholders, to an extraordinary general meeting of shareholders or to the next ordinary general meeting of shareholders
for retrospective approval. If the maximum aggregate amount of compensation already approved by the general meeting of shareholders
is not sufficient to also cover the compensation of persons newly appointed to or promoted within the executive management, such
persons may be paid for each of the following purposes an aggregate of up to 40% in excess of the total annual compensation of
the respective predecessor or for a similar pre-existing position: (i) as compensation for the relevant compensation period; and,
in addition, (ii) as compensation for any prejudice incurred in connection with the change of employment.



For the year ended
December 31, 2019, the aggregate compensation paid to the members of our board of directors and our executive officers for services
in all capacities was CHF 7,865,000 (USD 7,915,863 at annual average rate). For the year ended December 31, 2019, the
compensation of Carlos Moreira, as the company's highest paid executive, was CHF 3,588,000 (USD 3,611,204 at annual average
rate).



The tables below show
the amount of compensation paid and benefits in kind granted to our executive and non-executive directors for the year ended December
31, 2019 as disclosed in our 2019 annual report. We note that Mr. Thomas Hürlimann was a member of our board of directors
as at December 31, 2018 but he resigned at the general meeting of shareholders held on May 21, 2019 and was therefore not re-elected
for the board term starting May 22, 2019. We also note that Ms. Maryla Shingler Bobbio was a member of our board of directors as
at December 31, 2018, but she resigned on November 21, 2019.





69







Compensation
of the Board of Directors of WISeKey International Holdings AG

for
the 12 months ending December 31, 2019





|                       |                                                                   |       |  |            |  | Other Stock   |  |             
|---------------------- | ----------------------------------------------------------------- | ----- |  | ---------- |  | ------------- |  | ------------
|                       |                                                                   | Board |  | Additional |  | Based         |  | Total       
|CHF'000 1              | Function                                                          | Fee2  |  | Fees3      |  | Compensation4 |  | Compensation
|Philippe Doubre        | Board Member, NCC5Member                                          | 113   |  | -          |  | -             |  | 113         
|David Fergusson        | Board Member, NCC Chairman, Audit Committee Member                | 160   |  | -          |  | -             |  | 160         
|Juan Hernandez Zayas   | Board Member, Audit Committee Chairman, Strategy Committee Member | 164   |  | -          |  | -             |  | 164         
|Thomas Hürlimann       | Former Board Member                                               | 63    |  | -          |  | -             |  | 63          
|Dourgam Kummer6        | Board Member                                                      | 52    |  | 308        |  | 274           |  | 634         
|Maryla Shingler Bobbio | Former Board Member, NCC Member, Audit Committee Member           | 122   |  | -          |  | -             |  | 122         
|Total Board Members    |                                                                   | 674   |  | 308        |  | 274           |  | 1,256       



| | 1 | Board members are remunerated
in Swiss Francs (CHF).
| | - | ----------------------------------------------------



| | 2 | Board fees can be paid in
a mix of cash and options.
| | - | ----------------------------------------------------



| |  | Compensation
in options on WIHN Class B Shares is disclosed in the period it was granted, regardless of whether it relates to Board fees from
prior financial periods. The amount shown reflects the fair value of options granted in line with US GAAP standards. The options
granted were valued using the Black-Scholes method, using the market price of WIHN shares at the relevant date. In 2019, Board
members received the options relating to the following Board Term: 2017/2018, 2018/2019, and 2019/2020 up until December 31, 2019.
                                                                               The amount of Board fees includes employer social charges paid by the Company.
| |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 3 | Additional fees relate to
services other than Board duties rendered to the Company.
| | - | -----------------------------------------------------------------------------------



| | 4 | Other stock based compensation
refers to stock based compensation for services other than Board services.
| | - | ---------------------------------------------------------------------------------------------------------



| |  | The amount shown reflects
the fair value of options granted in line with US GAAP standards. The options granted were valued using the Black-Scholes method,
using the market price of WIHN shares at the relevant date.
| |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5 | Nomination & Compensation
Committee
| | - | -----------------------------------



| | 6 | The Board Fee for Mr. Kummer
is made up of the compensation for his Board services up until December 31, 2018, prior to his employment by WISeKey. The amounts
disclosed under Additional Fees and other Stock Based Compensation relate to his compensation as employee of WISeKey from January
2019.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





|Peter Ward                     | Board Member, Chief
    Financial Officer | 520 |       | 923 |   | - |       | 1,390 |     | 188 |       | 3,021
|------------------------------ | ----------------------------------------- | --- | ----- | --- | - | - | ----- | ----- | --- | --- | ----- | -----
|Total Executive
    Management | 1,170                                     |     | 2,061 |     | - |   | 2,956 |       | 423 |     | 6,609



| | 1 | The executive management
members are remunerated in Swiss Francs (CHF).
| | - | -----------------------------------------------------------------------

| | 2 | Base salary includes employee
social security costs.
| | - | ----------------------------------------------------



| | 3 | Additional Fees include fees
paid for special services rendered to the Company.
| | - | -------------------------------------------------------------------------------



| | 4 | The
                                         amount shown reflects the fair value of options granted in line with US GAAP standards.
                                         The options granted are valued using the Black-Scholes method, using the market price
                                         of WIHN shares at the relevant date.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 5 | Other compensation includes
pension contributions and employer social charges paid by the Company.
| | - | --------------------------------------------------------------------------------------------------



Disclosure of the amount
set aside by us to provide pension, retirement or similar benefits to members of our board of directors or executive officers is
not required in Switzerland and is not otherwise disclosed by the Company.



Disclosure of compensation
to our senior management is not required in Switzerland and is not otherwise publicly disclosed by the Company.



Annual Incentive
Plan



Compensation for our
executive directors and senior management includes a bonus. Our annual incentive plan is designed to encourage management to achieve
pre-established performance goals, both short-term and long-term.



The annual incentive
plan for our executive directors is approved by our nomination and compensation committee which then submits it for approval by
our board of directors. It is included in the total compensation that the shareholders must vote on, on an annual basis, as described
above.





70







Share-based Compensation



We maintain an Employee
Stock Option Plan ("ESOP") which was transferred from WISeKey SA for the benefit of our directors, employees and consultants.
Options issued under the ESOP to our directors for compensation entitle the participant to WISeKey Class B shares at the ratio
of 1:1, at an exercise price equal to the nominal value of WISeKey Class B shares of CHF 0.05, with immediate vesting and
expiring on the seventh anniversary of the grant date. Each grant is subject to the approval of the board of directors who may,
in line with the terms and conditions of the ESOP, amend the terms of the grant.



| | C. | Board Practices
| | -- | ---------------



Our articles of association
provide that our board of directors consists of a minimum of three and a maximum of 12 directors. Our board of directors currently
consists of six members. Each director is elected for a one-year term. The current members of our board of directors were elected
at an annual shareholders' meeting held on May 21, 2019 to serve until our next annual general shareholders meeting and until their
successors are elected at such next annual general meeting. Please also refer to Item 6.A. Directors and Senior Managementabove
for further details regarding the periods of service of each of our current directors and senior managers.



Other than with respect
to our directors that are also executive officers, we do not have written agreements with any director providing for benefits upon
the termination of his or her engagement with our company.



As a foreign private
issuer, we are permitted to follow certain home country corporate governance practices instead of those otherwise required under
NASDAQ’s rules for domestic U.S. issuers, provided that we disclose which requirements we are not following and describe
the equivalent home country requirement.



Board Independence



Currently, 3 of our
6 directors, Juan Hernández Zayas, David Fergusson and Philippe Doubre, are considered "independent" under the
NASDAQ rules, therefore we do not comply with NASDAQ Listing Rule 5605 (b)(1) which requires an issuer to maintain a majority of
independent directors. Under the Swiss Code of Best Practice for Corporate Governance (the "Swiss Code"), which is a
non-binding set of corporate governance recommendations issued by economiessuisse and addressed to Swiss public companies,
the majority of the board of directors is recommended to be independent. Members of the board of directors are considered independent
under the Swiss Code if they are non-executive members of the Board of Directors who have never been a member of the company's
executive management, or who were not members of the company's executive management during the preceding three years, and who have
no or only comparatively minor business relations with the company. The Swiss Code is not binding and follows a "comply or
explain" principle. In addition, we are not subject to NASDAQ Listing Rule 5605 (b)(2) that requires that independent directors
must have regularly scheduled meetings at which only independent directors are present.



Board Committees



Our board of directors
has established an audit committee, a nomination and compensation committee, and a strategy committee.



Audit Committee



The audit committee
consists of Juan Hernández Zayas (Chairman) and David Fergusson. The Audit Committee currently consists of only two members.
Swiss statutory law does not require a specific number of Audit Committee members and therefore our practice varies from NASDAQ
Listing Rule 5605(c)(2) which requires an Audit Committee of at least three members. The audit committee consists exclusively of
members of our board of directors who are financially literate. Our board of directors has determined that all members of the audit
committee satisfy the "independence" requirements set forth in Rule 10A-3 under the Exchange Act and under the rules
of NASDAQ. The members of the audit committee are appointed by our board of directors. The Audit Committee has a charter that complies
with Swiss law, but does not fully comply with the requirements of NASDAQ Listing Rule 5605(c)(1).





71







The audit committee
is responsible for, among other things:



| | · | overseeing our accounting and financial reporting processes and the audits of our financial statements;
| | - | -------------------------------------------------------------------------------------------------------



| | · | the compensation, retention and oversight of the work of our independent registered public accounting
firm and statutory auditors who are appointed by the shareholders pursuant to Swiss corporate law;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | our accounting policies, financial reporting and disclosure controls and procedures;
| | - | ------------------------------------------------------------------------------------



| | · | the quality, adequacy and scope of external audit;
| | - | --------------------------------------------------



| | · | our accounting compliance with financial reporting requirements; and
| | - | --------------------------------------------------------------------



| | · | the management's approach to internal controls with respect to the production and integrity of
the financial statements and disclosure of our financial performance.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



Nomination and
Compensation Committee



Our nomination and
compensation committee consists of David Fergusson (Chairman) and Philippe Doubre. Our board of directors has determined that each
of the members of the nomination and compensation committee is independent under NASDAQ’s listing standards. We follow our
home country standards with respect to the responsibilities of our Nomination and Compensation Committee. Our board of directors
has adopted a charter for the Nomination and Compensation Committee that complies with Swiss law but, which does not, however,
fully comply with the requirements of NASDAQ Listing Rules 5605(d)(1) and (d)(3). Thus, the Nomination and Compensation Committee
practice varies from the requirements of NASDAQ Listing Rules 5605(d)(1) and (d)(3).



The primary purpose
of our nomination and compensation committee is to discharge our board of directors' responsibilities to oversee our compensation
policies, plans and programs, and to review and determine the compensation to be paid to our executive officers, directors and
other senior management, as appropriate. We are subject to the Swiss Ordinance against Excessive Compensation in Listed Companies
(the "Compensation Ordinance") issued by the Swiss Federal Council, known as the "say-on-pay" rule. As a result
of the say-on-pay rule, the members of the nomination and compensation committee must be elected by our shareholders at the annual
general meeting for a one-year term and the aggregate compensation of our board of directors and executive officers must also be
approved by our shareholders. Pursuant to the Swiss Code, all members of a nomination committee must be independent.



The nomination and
compensation committee is responsible, among other things to:



| | · | review and recommend to our board of directors the compensation of our directors based on the aggregate
compensation approved by our shareholders;
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------



| | · | review and approve, or recommend that our board of directors approve, the terms of compensatory
arrangements with our executive officers;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------



| | · | review and approve, or recommend that our board of directors approve, incentive compensation and
equity plans, and any other compensatory arrangements for our executive officers and other senior management, as appropriate;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | identify, evaluate and select, or recommend that our board of directors approve, nominees for election
to our board of directors and new members of the executive management and their terms of employment; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | consider and make recommendations to our board of directors regarding the composition of the committees
of the board of directors.
| | - | ----------------------------------------------------------------------------------------------------------------------------------





72







Strategy Committee



Our strategy committee
currently consists of three members of the board of directors: Carlos Moreira (Chairman), Juan Hernández Zayas and Peter
Ward. The strategy committee advises the board of directors on all strategic matters, including acquisitions, divestments, joint
ventures, restructurings and similar matters. The strategy committee continuously reviews our strategic direction and assesses
the impact of changes in the environment on us. The members of the Strategy Committee are appointed by our board of directors.



Quorum requirements



In accordance with
Swiss law and generally accepted business practices, our Articles of Association do not provide for quorum requirements generally
applicable to general meeting of shareholders. Our practice varies from NASDAQ Listing Rule 5620(c), which requires an issuer to
provide in its bylaws for a generally applicable quorum, and that such quorum may not be less than one-third of the outstanding
voting stock.



Solicitation of proxies



Our Articles of Association
provide for an independent proxy holder elected by the shareholders at a general meeting of shareholders and prohibit, in accordance
with Swiss law, the institutional representation of shareholders by our corporate representatives at a general meeting of shareholders.
We must further submit to shareholders an invitation to the general meeting twenty calendar days prior to the general meeting date,
indicate in such invitation the items on the agenda of the general meeting and provide together therewith other relevant documents
for the general meeting, such as our annual report, the meeting admission card and the proxy card. However, Swiss law does not
have a regulatory regime for the solicitation of proxies and thus, our practice varies from NASDAQ Listing Rule 5620(b) that sets
forth certain requirements regarding the solicitation of proxies.



Shareholder approval



Under Swiss law, we
are not generally required to obtain shareholder approval for the issuance of securities in connection with certain events such
as the acquisition of stock or assets of another company, the establishment of or amendments to equity-based compensation plans
for employees, a change of control and certain private placements. While Swiss law does broadly require us to obtain shareholder
approval for any issuance of new shares, irrespective of the relevant event, Swiss law permits us to rely in certain circumstances
on a share issuance pre-authorization of shareholders granted to our board of directors prior to the occurrence of events of the
aforementioned nature. Further, we have, in accordance with Swiss law, opted out from the statutory requirement that an acquirer
of voting rights attached to our shares exceeding 33 1/3% - the relevant "change of control" threshold under Swiss
law for public companies – submit a mandatory public takeover offer to our shareholders. To some extent, our practice therefore
varies from the requirements of NASDAQ Listing Rule 5635, which generally requires an issuer to obtain shareholder approval for
the issuance of securities in connection with such events.



Third party compensation



Swiss
law does not require that we disclose information regarding third party compensation of our directors or director nominees, except
where, in each case with respect to serving directors, such compensation directly or indirectly affects (potential) assets of the
Company or one of its subsidiaries, or where because of the third party compensation a risk of conflicts of interest or dependency
of the director on such third party exists. As a result, our practice varies from the third party compensation requirements of
NASDAQ Listing Rule 5250(b)(3).



Related party transactions



Our board of directors,
or a committee of our board of directors composed of directors not subject to the potential conflict, is required to conduct an
appropriate review and oversight of all related party transactions for potential conflict of interest situations on an ongoing
basis.





73







Voting Rights



We do not have the
authority to disparately reduce or restrict the voting rights of existing stockholders of our listed common stock (Class B), including
by issuing (a) stock with voting rights that are superior to those of outstanding listed common stock or (b) stock with voting
rights that are inferior to those of outstanding listed common stock through an exchange offer, except where the general meeting
of shareholders resolves, with a majority of two-thirds of voting rights associated with the shares, and the absolute majority
of the par value of the shares, in each case as represented at the general meeting of shareholders, on the issuance of privileged
voting rights stock, including as part of a separate class of stock.



Code of Conduct



We have followed Swiss
law which does not require a company to have a Code of Conduct applicable to all directors, officers and employees. As a result,
our practice varies from NASDAQ Listing Rule 5610 which requires a publicly available Code of Conduct. We do, however, expect ethical
behavior from all of our directors, officers and employees.





74







| | D. | Employees
| | -- | ---------



As at December 31,
2019, date of our last audited financial statements, we had 84 employees, of which 19 were located in Switzerland and 58 were located
in France. The following table shows the breakdown of our workforce of employees and contractors by category of activity as at
the dates indicated:



|Headcount breakdown        | As
at December 31,
|-------------------------- | ------------------
|Area of Activity           | 2019              
|Cost of sales              | 4                 
|Research and development   | 29                
|Selling and marketing      | 23                
|General and administrative | 28                
|Total                      | 84                



With respect to French
employees, French labor laws govern the length of the workday and workweek, 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. French labor laws also impose the creation of
a worker's council for a companies employing more than 50 people. Two employees of WISeKey Semiconductors SAS represent labor unions
at the workers' council.



As at December 31,
2019, we also have 18 independent contractors in Vietnam. We maintain close cooperation with each of these independent contractors.



We have never experienced
any labor-related work stoppages or strikes and believe our relationships with our employees and independent contractors are
agreeable.



| | E. | Share Ownership
| | -- | ---------------



See Item 7.A. Major
Shareholders for a list of beneficial ownership of our shares as at December 31, 2019.



The table below shows
the beneficial share ownership of the persons listed in above subsection 6.B, including any shareholding by their related parties.



|                        | As
at December 31, 2019      
|----------------------- | -----------------------------
|Name                    | Number of Class A Shares held
|Non-Executive Directors |                              
|Philippe Doubre         | 701,695                      
|David Fergusson         | -                            
|Juan Hernández Zayas    | -                            
|                        |                              
|Executive Directors     |                              
|Carlos Moreira          | 38,508,733                   
|Dourgam Kummer          | 626,085                      
|Peter Ward              | *                            
|                        |                              
|Senior Management       |                              
|Pedro Fuentes           | -                            
|Carlos Moreno           | -                            





75







|     | As
at December 31, 2019      
|---- | -----------------------------
|Name | Number of Class A Shares held

|Jean-Yves Le Saux | - | - | - | - | -     
|----------------- | - | - | - | - | ------
|Nathalie Verjus   | - | - | - | - | 84,000
|Bernard Vian      | - | - | - | - | -     
|Alexander Zinser  | - | - | - | - | 40,000



*
	      Shareholding less than one percent of the class of shares and that has not been disclosed to shareholders or otherwise made
public.

**   	  Based on the total number of fully paid-in outstanding shares, in line with our share capital registered with the commercial
register of the Canton of Zug as at December 31, 2019.

***  
	Each option giving right to one Class B Share upon exercise.

****  Includes
66,000 options held by immediate family members.



The terms of the options
held by directors and senior management are described in the following table:



|Name                    | Number of options held*** | Exercise price of option | Expiration date of options
|----------------------- | ------------------------- | ------------------------ | --------------------------
|Non-Executive Directors |                           |                          |                           
|Philippe Doubre         | 17,317                    | CHF 0.05                 | February 11, 2026         
|Philippe Doubre         | 18,996                    | CHF 0.05                 | December 23, 2026         
|David Fergusson         | 11,052                    | CHF 0.05                 | February 11, 2026         
|David Fergusson         | 18,214                    | CHF 0.05                 | December 23, 2026         
|Juan Hernández Zayas    | 240                       | CHF 0.05                 | February 11, 2026         
|Juan Hernández Zayas    | 18,228                    | CHF 0.05                 | December 23, 2026         
|                        |                           |                          |                           
|Executive Directors     |                           |                          |                           
|Carlos Moreira          | 759,184****               | CHF 0.05                 | September 26, 2026        
|Dourgam Kummer          | 112,000                   | CHF 0.05                 | September 26, 2026        
|Peter Ward              | 573,400                   | CHF 0.05                 | September 26, 2026        
|                        |                           |                          |                           
|Senior Management       |                           |                          |                           
|Pedro Fuentes           | 123,495                   | CHF 0.05                 | September 26, 2026        
|Nathalie Verjus         | 84,000                    | CHF 0.05                 | September 26, 2026        
|Alexander Zinser        | 40,000                    | CHF 0.05                 | September 26, 2026        
|                        |                           |                          |                           

***         Each
option giving right to one Class B Share upon exercise.



****       Includes
66,000 options held by immediate family members.



Each Class A Share
and each Class B Share give their respective owner one voting right.



Summary of Stock
Plans



Employee Share Option
Plan



We have the WISeKey
Employee Share Option Plan in place, last amended on September 29, 2016 (the "WISeKey Share Ownership Plan"). The WISeKey
Share Ownership Plan was originally adopted by WISeKey SA on January 1, 2012 as a continuation of the existing Stock Option Plans
approved on December 31, 2007 and December 31, 2011, respectively, and, upon the listing of the Class B Shares on the SIX, amended
to reflect the fact that WISeKey International Holding Ltd is the ultimate parent of the Group.





76







Administration



Our board of directors
administers the WISeKey Share Ownership Plan and has full power to construe and interpret the WISeKey Share Ownership Plan, establish
and amend rules and regulations for the administration thereof, and perform all other actions relating thereto. Under the WISeKey
Share Ownership Plan, the members of the board of directors and executive management as well as other employees, advisors, consultants
and other persons providing services to us (the "Participants") may be granted options that entitle the respective Participant
to receive a certain number of Class B Shares.



Subject in particular
to the limitations which may be determined from time to time by the board of directors, options granted to Participants shall vest
gradually on a straight line basis over a period of three years from the grant date, provided, however, that the Participant may
not exercise any options during the first year of employment or contractual relationship. Our board of directors may set shorter
vesting periods for any Participant. The exercise period shall be seven years. Subject to certain exceptions, upon termination
of the employment or contractual relationship between us or any of its subsidiaries or by the Participant, all options that are
not vested held by the Participant shall be immediately forfeited without value, while vested options may be exercised by the Participant
pursuant to the WISeKey Share Ownership Plan during a period of thirty days after the end of the employment or contractual relationship.
The board of directors may grant options to employees, members of management and consultants, whose terms and conditions deviate
from the WISeKey Share Ownership Plan.



Authorized Shares



As at December 31,
2019, the maximum number of our Class B Shares that may be issued out of our conditional capital under our WISeKey Share Ownership
Plan is 11,840,090 Class B Shares based on the share capital of the Company registered with the commercial register of the Canton
of Zug as at December 31, 2019.



Under the current plan,
as at December 31, 2019, we had a total number of 2,727,594 options outstanding, vested and nonvested, each of which entitles the
respective Participant to receive an equal number of Class B Shares. Of these options, 510,000 have been granted to our advisors
and 2,217,594 to our employees, contractors or Board members. As of December 31, 2019, 1,228,838 options had been exercised out
of our conditional capital under our WISeKey Share Ownership Plan but not yet registered with the commercial register of the Canton
of Zug as at December 31, 2019.



Plan Amendment or
Termination



Our board of directors
has the authority to amend, suspend, or terminate our WISeKey Share Ownership Plan, provided that such action does not materially
impair the existing rights of any Participant without such Participant's written consent.



For further information
on the compensation of our directors and executive officers, see "Item 6B. Compensation" and for further information
on our shareholders and related party transactions policy, see "Item 7. Major Shareholders and Related Party Transactions."



| | 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 Class A and Class B Shares as at December 31, 2019 for each
beneficial owner of 3% or more of our Class A and Class B Shares in line with the Swiss Financial Market Infrastructure Act ("FMIA")
and the rules and regulations promulgated thereunder.



Beneficial ownership
is determined in accordance with the rules of the SEC. These rules generally attribute beneficial ownership of securities to persons
who possess sole or shared voting power or investment power with respect to those securities and include shares issuable upon the
exercise of options that are immediately exercisable or exercisable within 60 days of December 31, 2019. Percentage ownership calculations
are based on 40,021,988 fully-paid and outstanding Class A Shares and 28,824,086 fully-paid and outstanding Class B Shares, as
reflected in our share capital registered with the commercial register of the Canton of Zug as at December 31, 2019.





77







|Name of beneficial owner | Total
Class A Shares |  | Total
Class B Shares |  | Total
% of Outstanding Class A Shares* |  | Total % of Outstanding Class
B Shares* |  | % Voting Power**
|------------------------ | -------------------- |  | -------------------- |  | -------------------------------------- |  | -------------------------------------- |  | ----------------
|Carlos Moreira           | 38,508,733           |  | 1,019,179***         |  | 96.2                                   |  | 3.5                                    |  | 58.4            



*        Based
on the total number of fully paid-in outstanding Class A Shares and Class B Shares, as reflected in our share capital registered
with the commercial register of the Canton of Zug as at December 31, 2019.



**       Based
on the total number of fully paid-in outstanding Class A Shares and Class B Shares, as reflected in our share capital registered
with the commercial register of the Canton of Zug as at December 31, 2019, less 1,202,191 Class B shares held as treasury shares
as at December 31, 2019.



***       This
total includes 693,184 options held directly by Carlos Moreira and 66,000 options held by Mr. Moreira’s immediate family
members. These options are immediately exercisable, subject to the holder not being in a restricted period. Each option gives the
holder the right to acquire one Class B share.



Regarding significant
changes in the percentage ownership held by any major shareholders during the past three years, on incorporation in November 2015,
our Chairman and CEO, Carlos Moreira contributed the full capital amount and was therefore the sole owner of the 10,000,000 Class
A shares created in our company. On March 02, 2016, Mr. Moreira contributed his shares in WiseTrust SA to us in consideration for
our issuance to him of 30,021,988 Class A Shares, which brought his total shareholding in our company to 40,021,988 Class A Shares
(see below Item 7. Major Shareholders and Related Party Transactions – B. Related Party Transactions). As a result, prior
to the reverse acquisition on March 22, 2016 whereby WISeKey International Holding AG acquired the operations of WISeKey
SA, Carlos Moreira held 100% of the share capital and voting rights of the 'empty shell' company WISeKey International Holding
Ltd consisting of 40,021,988 Class A Shares. With the reverse acquisition, Carlos Moreira converted his shareholding in WISeKey
SA into WISeKey International Holding Ltd Class B Shares at the same terms and conditions of exchange offered to all WISeKey SA
shareholders, which increased his shareholding in our company by 160,700 Class B Shares representing 1.2% of outstanding Class
B Shares and bringing his voting rights to 74.3% as at March 22, 2016. Then upon the listing of our company on March 31, 2016,
Carlos Moreira entered into a lock-up agreement with several shareholders of Class B Shares whereby Mr. Moreira exchanged 11,421,320
of his Class A Shares for 2,284,264 Class B Shares corresponding to a ratio of 5:1. This brought Mr. Moreira's holding respectively
to 71.5% of outstanding Class A Shares and 16.6% of outstanding Class B Shares, and his voting right to 56.8%, after the listing,
as at March 31, 2016. Simultaneously, each of the holders of Class A Shares entered into an agreement with the Company, according
to which such shareholder had given an undertaking not to sell or otherwise dispose of the Class A Shares. During the year 2017,
Mr. Moreira carried out another exchange of 1,956,602 Class B Shares for 9,783,015 Class A Shares, bringing his ownership to 95.9%
of outstanding Class A Shares and 2.0% of outstanding Class B Shares, and his voting right to 60.2% as at December 31, 2017. In
2018, a combination of exchange of Class B Shares for Class A Shares and sale of Class B shares to the company as debt repayment
changed Mr. Moreira's shareholding to 38,508,733 Class A Shares and 259,995 Class B Shares, respectively 96.2% of
outstanding Class A Shares and 0.9% of outstanding Class B Shares. In 2019, a grant of 693,184 options under the
company’s ESOP brought Mr. Moreira's shareholding to the position disclosed in the above table as at December 31, 2019.



Our major shareholder
does not have different voting rights than other shareholders of the same class of shares.



As at December 31,
2019, based on the list of registered shareholders, there were 5 record holders of our Class B shares showing as residing in the
U.S., holding 1,572,663 of our Class B Shares, representing approximately 5.5% of our outstanding Class B Shares. This includes
1,002,075 Class B Shares held under the name of The Bank of New York Mellon, the U.S. depositary bank for our ADSs, for which we
have no information on the country of residency of the beneficial owners of such ADSs.



We are not aware of
any arrangement that may, at a subsequent date, result in a change of our control.





78







| | B. | Related Party Transactions
| | -- | --------------------------



Our Formation



WISeKey International
Holdings Ltd. was constituted as our parent company through a series of transactions commencing in March 2016.



Contribution of
Shares of WiseTrust SA



On incorporation in
November 2015, our Chairman and CEO, Carlos Moreira contributed the full capital amount and was therefore the sole owner of the
10,000,000 Class A Shares created in our Company.



As of March 01, 2016,
Carlos Moreira held 100% of the equity interests in WISeTrust SA, a company that held the following assets:



| | · | a 19.4% interest in WISeKey SA, our predecessor;
| | - | ------------------------------------------------



| | · | the U.S. distribution rights to technology offered by WISeKey SA; and
| | - | ---------------------------------------------------------------------



| | · | a 50% equity interest in WISeKey USA, Inc., an operating company incorporated in Delaware, with
a focus on business opportunities in the United States, with the other 50% interest being held by WISeKey SA.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



On March 02, 2016,
Mr. Moreira contributed his shares in WiseTrust SA to us in consideration for our issuance to him of 30,021,988 Class A Shares,
which brought his total shareholding in our company to 40,021,988 Class A Shares. The valuation of WiseTrust SA was based on its
net assets as at December 31, 2015.



In March 2016, WISeKey
International Holding Ltd acquired the entire equity interest of WISe Trust SA against the issuance of 40,021,988 new shares, which,
under the Articles, are now Class A Shares. As a result, the Company acquired:



| | · | the U.S. distribution rights pertaining to the technology offered by WISeKey;
| | - | -----------------------------------------------------------------------------



| | · | WISeTrust SA's 50% equity interest in WISeKey USA, Inc., an operating company incorporated in Delaware,
with a focus on business opportunities in the United States; the other 50% interest in WISeKey USA, Inc., is held by WISeKey SA;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | WISeTrust SA's entire equity interest in WISeKey SA, which at the time of the contribution represented
approximately 19.4% of WISeKey SA's issued share capital.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



WISeTrust SA was originally
the founders company incorporated before WISeKey SA and majority shareholders of WISeKey SA. When the founders incorporated WISeKey,
they transferred the international distribution rights pertaining to the technology to WISeKey SA with the exclusion of the US
territory. Now WISeKey International Holding Ltd owns 100% of all distributions rights.





79







Structure of the
company pre-contribution of the WiseTrust SA shares:









80







Structure of the
company post-contribution of the WiseTrust SA shares:







Contribution of
Shares of WISeKey SA



In March 2016, immediately
following the contribution of shares of WiseTrust SA by Carlos Moreira described above, the holders of 90.9% of the remaining outstanding
shares of WISeKey SA, with a nominal value of CHF 0.01 per share, contributed their shares to us in exchange for 13,234,027
of our Class B Shares with a nominal value of CHF 0.05 per share. This represented an exchange ratio of one of our Class B
Shares for each five shares of WISeKey SA contributed, corresponding to the ratio of the nominal value of one WISeKey SA share
to the nominal value of one of our Class B Shares.





81







The structure of our
company after the March 2016 share exchange described above was as follows:







In September 2017,
following bilateral negotiations, the holders of 4.51% of the shares of WISeKey SA that had not previously exchanged their shares
contributed their shares to us in exchange for 841,069 of our Class B Shares. This represented an exchange ratio of one of our
Class B Shares for each five shares of WISeKey SA. This ratio was determined based on a fairness opinion established by an independent
financial advisor by applying the "Praktikermethode". According to this methodology, (i) the valuation of our
assets and (ii) the revenues of each of our subsidiaries were valued relative to our total market capitalization as at September
20, 2017, and our total revenues for the six months ended June 30, 2017, respectively. The asset and revenues value have been weighted
appropriately, and based on this relative value, the total equity value of WISeKey SA has been determined. The total equity value
of WISeKey SA amounted to 22.4% of our market capitalization, which supported the exchange ratio of 1:5. Nearly all of these shareholders
committed not to transfer, sell, or otherwise dispose of the Class B Shares obtained as a result of the share exchange until June
30, 2018.



In the year to December
31, 2019, the holders of 0.23% of the shares of WISeKey SA that had not previously exchanged their shares contributed their shares
to us in exchange for 60,394 of our Class B Shares. The exchange ratio of our Class B Shares for WISeKey SA shares was calculated
based on the company’s capitalization at the time of the transaction.





82







The structure of our
company after the 2019 share exchange described above was as follows:





We do not currently
hold the remaining 4.42% of the outstanding equity interest in WISeKey SA which is held by approximately 30 shareholders. We may
elect to acquire these shares in the future through further bilateral negotiations or through a squeeze-out merger pursuant to
the Swiss Merger Act. The exchange ratio in connection with either such transaction would be determined at the time.



The table below includes
a brief description of our group subsidiaries:







|Group Company
    Name                      |  | Country of    |  | Year of       |  | Share Capital |  | %
                                   ownership
                                   as
                                   of December |  | %
                                   ownership
                                   as
                                   of December |  | Nature of business
|------------------------------------------- |  | ------------- |  | ------------- |  | ------------- |  | ----------------------------------------------------------------------------------------------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------------------------- |  | ------------------
|                                            |  | incorporation |  | incorporation |  |               |  |                                                                                                                                     |  | 31, 2019                                                                                                                            |  | 31, 2018          
|                                            |  |               |  |               |  |               |  |                                                                                                                                     |  |                                                                                                                                     |  |                   
|WISeKey SA                                  |  | Switzerland   |  | 1999          |  | CHF           |  | 933,436                                                                                                                             |  | 95.58%                                                                                                                              |  | 95.35%            
|WISeKey Semiconductors SAS                  |  | France        |  | 2010          |  | EUR           |  | 1,298,162                                                                                                                           |  | 100.0%                                                                                                                              |  | 100.0%            
|WiseTrust SA                                |  | Switzerland   |  | 1999          |  | CHF           |  | 680,000                                                                                                                             |  | 100.0%                                                                                                                              |  | 100.0%            
|WISeKey (Suisse) SA**                       |  | Switzerland   |  | 2002          |  | CHF           |  | 100,000                                                                                                                             |  | 100.0%                                                                                                                              |  | 100.0%            
|WISeKey ELA SL                              |  | Spain         |  | 2006          |  | EUR           |  | 4,000,000                                                                                                                           |  | 100.0%                                                                                                                              |  | 100.0%            
|WISeKey SAARC Ltd                           |  | U. K.         |  | 2016          |  | GBP           |  | 100,000                                                                                                                             |  | 51.0%                                                                                                                               |  | 51.0%             
|WISeKey USA Inc*                            |  | U.S.A         |  | 2006          |  | USD           |  | 6,500                                                                                                                               |  | 100% *                                                                                                                              |  | 100% *            
|WISeKey India Private Ltd***                |  | India         |  | 2016          |  | INR           |  | 1,000,000                                                                                                                           |  | 45.9%                                                                                                                               |  | 45.9%             
|WISeKey KK                                  |  | Japan         |  | 2017          |  | JPY           |  | 1,000,000                                                                                                                           |  | 100.0%                                                                                                                              |  | 100.0%            
|WISeKey Taiwan                              |  | Taiwan        |  | 2017          |  | TWD           |  | 100,000                                                                                                                             |  | 100.0%                                                                                                                              |  | 100.0%            
|WISeCoin AG                                 |  | Switzerland   |  | 2018          |  | CHF           |  | 100,000                                                                                                                             |  | 90.0%                                                                                                                               |  | 90.0%             
|WISeKey Equities AG                         |  | Switzerland   |  | 2018          |  | CHF           |  | 100,000                                                                                                                             |  | 100.0%                                                                                                                              |  | 100.0%            
|WISeCoin France R&D Lab SAS                 |  | France        |  | 2019          |  | EUR           |  | 10,000                                                                                                                              |  | 90.0%                                                                                                                               |  | not incorporated  
|WISeKey Semiconductors GmbH                 |  | Germany       |  | 2019          |  | EUR           |  | 25,000                                                                                                                              |  | 100.0%                                                                                                                              |  | not incorporated  
|WISeKey Arabia - Information Technology Ltd |  | Saudi Arabia  |  | 2019          |  | SAR           |  | 200,000.00                                                                                                                          |  | 51.0%                                                                                                                               |  | not incorporated  



* 50% ow ned by WISeKey SA and 50% owned by WiseTrust SA

** dormant or in the process of being liquidated

*** 88% owned by WISeKey SAARC which is controlled by WISeKey International Holding AG





Sale of Class A
Shares



In September 2017 and
February 2018, the board of directors released previous holders of Class A Shares from the contractual transfer restrictions existing
pursuant to shareholders agreement to enable such holders to enter into private transactions with Carlos Moreira to exchange their
Class A Shares for Class B Shares held by Carlos Moreira. The table below shows the composition of the holders of Class A Shares
on the basis of the execution of these private share exchange transactions.





83







|Name of Shareholder | Number
of Class A Shares Held |  | %
of Share Capital Registered in the Commercial Register* |  | % Voting Rights**
|------------------- | ----------------------------- |  | --------------------------------------------------------- |  | -----------------
|Philippe Doubre     | 701,695                       |  | 0.38%                                                     |  | 1.1%             
|Dourgam Kummer      | 626,085                       |  | 0.34%                                                     |  | 0.9%             
|Carlos Moreira      | 38,508,733                    |  | 20.91%                                                    |  | 57.0%            
|Peter Ward          | 185,475                       |  | 0.10%                                                     |  | 0.3%             
|Total as a Group    | 40,021,988                    |  | 21.73%                                                    |  | 59.2%            
|                    |                               |  |                                                           |  |                  

*        Based
on the total number of fully paid-in outstanding Class A Shares and Class B Shares, as reflected in our share capital registered
with the commercial register of the Canton of Zug as at December 31, 2019.



**       Based
on the total number of fully paid-in outstanding Class A Shares and Class B Shares, as reflected in our share capital registered
with the commercial register of the Canton of Zug as at December 31, 2019, less 1,202,191 Class B shares held as treasury shares
as at December 31, 2019.



Each of the above holders
of Class A Shares is bound by an agreement with us, according to which such shareholder has made the undertaking not to sell or
otherwise dispose of Class A Shares. However, each of the above shareholders has the right to request that at an item be included
on the agenda of our annual general meeting of shareholders, according to which Class A Shares will be, at the discretion of each
holder of Class A Shares, converted into Class B Shares, which are not subject to the agreed transfer restrictions.



Relationship with
the International Organization for Secure Electronic Transactions



The Organisation Internationale
pour la Sécurité des Transactions Electroniques, or OISTE, is a Swiss non-profit foundation that owns the cryptographic
rootkey we use. OISTE is acting as a trusted third party and not-for-profit entity in charge of ensuring that the Root of Trust
remains neutral and trusted. The members of the foundation board of OISTE are also board members of our company: Carlos Moreira,
Philippe Doubre and Dourgam Kummer. The board of the OISTE foundation acts as a supervisory authority to ensure that the foundation
acts in accordance with its purpose, and complies with its articles of association and Swiss law. It also reviews the audited annual
accounts and the annual report of the foundation. Under Swiss law, the members of the board of a Swiss non-profit foundation are
required to ensure that OISTE, as a Swiss non-profit foundation, is independent of control by any third party.



The OISTE foundation's
board members are elected by a majority of the current active board members and, once elected, the member serves for an indeterminate
period of time. The OISTE foundation has a full General Corporate Governance Manual which covers the distribution of responsibilities
within the management structure, executive representation inclusive of the foundation Board Members and Policy Approval Authority
Board Members, and the signing authorities of the foundation.



The OISTE foundation
has no commercial activities and it uses its funding to organize events and launch Internet security projects with the UN, the
World Economic Forum and other NGOs. The OISTE foundation board members do not make any decisions on behalf of the OISTE foundation
and serve as guardians to ensure the foundation complies with its articles of association and carries out activities towards its
stated purpose. We believe that this ensures that no conflicts of interest may arise for the three board members of WISeKey who
serve as board members of the OISTE foundation.



The OISTE foundation
has a seond boards, the “Policy Approval Authority Board”. The Policy Approval Authority Board is nominated by the
foundation’s board or directors and serves as the policy approval and enforcement entity for a specific domain within the
OISTE RootKey. The Policy Approval Authority Board is represented by members of the network of organizations using OISTE RootKey
to secure their Certifications Authorities (“CAs”) and create interoperability between other PKI Domains and CAs external
to the network. This policy represents Medium Assurance and Medium-Hardware Assurance Levels for public key digital certificates
to ensure that the participating relying party can be certain of the identity binding between the public key and the individual
whose subject name is cited in the certificate. In addition, it also reflects how well the relying party can be certain that the
individual whose subject name is cited in the certificate is controlling the use of the private key that corresponds to the public
key in the certificate, and how securely the system which was used to produce the certificate and (if appropriate) deliver the
private key to the subscriber performs its task. This OISTE Policy Approval Authority Board is consistent with the Internet Engineering
Task Force (IETF) Public Key Infrastructure X.509 (IETF PKIX) RFC 3647, Certificate Policy and Certification Practices Statement
Framework. The Policy Approval Authority Board does not have any involvement in the appointment of members of the OISTE foundation’s
board of directors. The following members of the Policy Approval Authority Board are related parties of the Company: Dourgam Kummer
and Pedro Fuentes, who are respectively a board member and a member of senior management of the Company.





84







In 2001, OISTE granted
us a perpetual license to exclusively use the cryptographic rootkey and develop technologies and processes based on OISTE's trust
model. The perpetual license agreement can only be terminated under limited circumstances, including if we were to move from the
trust model developed by OISTE and/or changing the location of the Root of Trust from Switzerland to another country. We have to
pay royalties to OISTE for the use of the cryptographic rootkey on the basis of the amount of certificates issued to end users.
Certain annual minimum payments apply.



The Collaboration Agreement
signed between the OISTE and WISeKey SA on June 20, 2018 provides that:



| | a. | WISeKey shall be the preferred service provider of OISTE for the fulfilment of the OISTE objectives.
WISeKey shall benefit from the right to commercially exploit the Root Cryptographic Key Pairs and the associated Root Certification
Authorities held by OISTE, subject to the terms and conditions set forth in the Collaboration Agreement.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b. | WISeKey is the technical manager of the OISTE foundation for Global Cryptographic ROOTS Key, the
global certification authorities as well as the digital certificates for people, servers and objects as well as the storage of
the four Global Cryptographic ROOTS Key in WISeKey's Data Centre Bunker.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Those professional
services and storage facilities are against a payment of a "Management Fee" specified in the Collaboration Agreement
dated June 20, 2018.



| | c. | WISeKey is appointed as operator with an exclusive for the duration of this Collaboration Agreement.
| | -- | ----------------------------------------------------------------------------------------------------



| | d. | WISeKey is granted a non-sublicensable worldwide license to commercially exploit the Root Cryptographic
Key Pair(s) by providing certification services in conformity with the OISTE objectives.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | e. | OISTE is entitled to the following yearly fees (excl taxes):
| | -- | ------------------------------------------------------------



| | i. | Management Fee: CHF 120,000 in 4 equal instalments of
CHF 30'000, due and payable at the beginning of each quarter.
| | -- | -------------------------------------------------------------------------------------------------------------------



| | ii. | License Fee: CHF 96,000 in 4 equal instalments of CHF
24'000, due and payable at the beginning of each quarter.
| | --- | ---------------------------------------------------------------------------------------------------------------



| | iii. | Royalty Fee: a certain percentage (the “Percentage”)
of any certificate fees collected by WISeKey for the issuance of certificates to end users (the “Certificate Fees”)
on any given year since the signature of this collaboration agreement (each, a “Contract Year”). The Percentage shall
be 2.50%, to be reduced by 0.25% for each tranche of Certificate Fees of CHF 1'000'000 in any given Contract Year, until it reaches
1.50%;
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | 1. | CHF 1'000'000 at 2.50% = CHF 25'000.00
| | -- | --------------------------------------



| | 2. | CHF 2'000'000 at 2.25% = CHF 45'000.00
| | -- | --------------------------------------



| | 3. | CHF 3'000'000 at 2.00% = CHF 60'000.00
| | -- | --------------------------------------



| | 4. | CHF 4'000'000 at 1.75% = CHF 70'000.00
| | -- | --------------------------------------



| | 5. | CHF 5'000'000 at 1.50% = CHF 75'000.00
| | -- | --------------------------------------





85







In the years
ended December 31, 2019 and December 31, 2018, OISTE invoiced WISeKey respectively CHF 217,923 (USD 219,332) and CHF 216,000
(USD 221,000).



In 2019, WISeKey
charged OISTE fees of CHF 138,610 (USD 139,506) for the facilities and personnel hosted by WISeKey SA on behalf of OISTE.
During the year ended December 31, 2018, WISeKey waived the fees for these hosting services.



Indemnification
Agreements



We intend to enter
into indemnification agreements with our directors and executive officers. The indemnification agreements and our Articles require
us to indemnify our directors and executive officers to the fullest extent permitted by law.



Related-Party Transactions
Policy



Swiss law does not
have a specific provision regarding conflicts of interest. However, the Swiss Code of Obligations (“CO”)contains a
provision that requires our directors and executive management to safeguard the company's interests and imposes a duty of loyalty
and duty of care on our directors and executive management. This rule is generally understood to disqualify directors and executive
management from participation in decisions that directly affect them. Our directors and executive officers are personally liable
to us for breach of these provisions. In addition, Swiss law contains provisions under which directors and all persons engaged
in the company's management are liable to the company, each shareholder and the company's creditors for damages caused by an intentional
or negligent violation of their duties. Furthermore, Swiss law contains a provision under which payments made to any of the company's
shareholders or directors or any person associated with any such shareholder or director, other than payments made at arm's length,
must be repaid to the company if such shareholder, director or associated person acted in bad faith.



| | C. | Interests of experts and counsel
| | -- | --------------------------------



Not applicable.



| | Item | 8.Financial Information
| | ---- | -----------------------



| | A. | Consolidated Financial Statements and Other Financial Information
| | -- | -----------------------------------------------------------------



For a list of all financial
statements filed as part of the annual report, see "Item 17. Financial Statements". For information on our dividend
policy, see "Item 10B. Memorandum and Articles of Association".



Legal Proceedings



In the third quarter
2019, the Company received a claim for breach of contract from a former employee. The Company does not expect this claim to have
significant effects on the Company's financial position or profitability.



We are not aware of
any other legal or arbitration proceedings against our company or any of its affiliates.



| | B. | Significant Changes
| | -- | -------------------



For information on
any significant changes that may have occurred since the date of our annual financial statements, see "Item 5. Operating
and Financial Review and Prospects."





86







| | Item 9. | The Listing
| | ------- | -----------



| | A. | Listing Details
| | -- | ---------------



A discussion of the
offering and listing details can be found under “Markets” below.



| | B. | Plan of Distribution
| | -- | --------------------



Not applicable.



| | C. | Markets
| | -- | -------



Our Class B Shares
have been trading under the symbol "WIHN" on the SIX since March 2016. Our ADSs were quoted on the OTCQX under the symbol
"WIKYY" from May 2018 until December 2018 and have been traded on the NASDAQ Capital Market since December 2019 under
the symbol "WKEY."



Our Class B Shares,
par value CHF 0.05 per share issued and outstanding, have been trading under the symbol "WIHN" on the SIX since March
2016. Our ADSs were quoted on the Over-the-Counter market under the symbol "WIKYY" from May 2018 until December 2018
and have been traded on the NASDAQ Capital Market since December 2019 under the symbol "WKEY."



On March 06, 2020
the closing price of our Class B Shares on the SIX was CHF 1.244 per ordinary share. The closing price of the ADS on the
NASDAQ Capital Market on March 06, was USD 5.95 per ADS.



| | 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
| | -- | --------------------------------------



Ordinary Capital
Increase, Authorized Share Capital and Conditional Share Capital



Under Swiss law, we
may increase our share capital (Aktienkapital) with a resolution of the general meeting of shareholders (ordinary capital
increase) that must be carried out by the board of directors within three months in order to become effective. Under our Articles
of Association (the "Articles"), in the case of subscription and increase against payment of contributions in cash, when
shareholders' statutory pre-emptive rights are safeguarded, a resolution passed by an absolute majority of the votes represented
at the general meeting of shareholders is required. In the case of subscription and increase against contributions in kind or to
fund acquisitions in kind, when shareholders' statutory pre-emptive rights are withdrawn or where transformation of reserves into
share capital is involved, a resolution passed by two-thirds of the shares represented at a general meeting of shareholders and
the absolute majority of the par value of the shares represented is required.





87







Furthermore, under
the Swiss Code of Obligations (the "CO"), our shareholders, by a resolution passed by two-thirds of the shares present
or represented at a general meeting of shareholders and the absolute majority of the par value of the shares present or represented,
may authorize our board of directors to issue shares of a specific aggregate par value up to a maximum of 50% of the share capital
registered in the commercial register in the form of:



| | · | conditional share capital (bedingtes Aktienkapital) for the purpose of issuing shares in
connection with, among other things, (1) option and conversion rights granted in connection with warrants and convertible bonds
of ours or one of our subsidiaries or (2) grants of rights to employees, members of our board of directors or consultants or our
subsidiaries to subscribe for new shares (conversion or option rights); or
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | authorized share capital (genehmigtes Kapital) to be utilized by our board of directors
within a period determined by the shareholders but not exceeding two years from the date of the shareholder approval.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Pre-emptive Rights



Pursuant to the CO,
shareholders have pre-emptive rights (Bezugsrechte) to subscribe for new issuances of shares in proportion to the respective
par values of their holdings. With respect to conditional capital in connection with the issuance of conversion rights, convertible
bonds or similar debt instruments, shareholders have advance subscription rights (Vorwegzeichnungsrechte) for the subscription
of conversion rights, convertible bonds or similar debt instruments in proportion to the respective par values of their holdings.



A resolution passed
at a general meeting of shareholders by two-thirds of the shares represented and the absolute majority of the par value of the
shares represented may authorize our board of directors to withdraw or limit pre-emptive rights or advance subscription rights
in certain circumstances for valid reasons.



If pre-emptive rights
are granted, but not exercised, our board of directors may allocate the pre-emptive rights as it elects, subject to the particulars
of the relevant shareholders' resolution or board resolution.



With respect to our
authorized share capital, our board of directors is authorized by our Articles to withdraw or to limit the pre-emptive rights of
shareholders, and to allocate them to third parties or to us, in the event that the newly issued shares are used for the purpose
of:



| | · | issuing new shares if the issue price of the new shares is determined by reference to the market
price;
| | - | -------------------------------------------------------------------------------------------------------



| | · | the acquisition of an enterprise, parts of an enterprise or participations or for new investment
projects or for purposes of financing or refinancing any such transactions;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | broadening the shareholder constituency in certain financial or investor markets or in connection
with the listing of new shares on domestic or foreign stock exchanges;
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | national and international offerings of shares for the purpose of increasing the free float or
to meet applicable listing requirements;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------



| | · | the participation of strategic partners;
| | - | ----------------------------------------



| | · | an over-allotment option ("greenshoe") being granted to one or more financial
institutions in connection with an offering of shares;
| | - | ------------------------------------------------------------------------------------------------------------------------------------



| | · | the participation of directors, officers, employees, contractors, consultants of, or other persons
providing services to the Company or a group company; or
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------





88







| | · | raising capital in a fast and flexible manner which could only be achieved with great difficulty
without exclusion of the pre-emptive rights of the existing shareholders.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Our Authorized Share
Capital



Under our Articles
in effect as of December 31, 2019, our board of directors is authorized at any time until May 25, 2020, to increase our share capital
by a maximum aggregate amount of CHF 444,091.45 through the issuance of not more than 8,881,829 shares, which would have to be
fully paid-in, with a par value of CHF 0.05 each.



Increases in partial
amounts are permitted. Our board of directors has the power to determine the type of contributions, the issue price and the date
on which the dividend entitlement starts.



Our board of directors
is also authorized to withdraw or limit pre-emptive rights as described above. This authorization is exclusively linked to the
particular available authorized share capital set out in the respective article. If the period to increase the share capital lapses
without having been used by our board of directors, the authorization to withdraw or to limit the pre-emptive rights lapses simultaneously
with such capital.



Our Conditional
Share Capital



Our conditional share
capital as registered with the commercial register of the Canton of Zug as at June 30, 2019 amounts to CHF 592,004.50,
corresponding to 11,840,090 new Class B Shares, whereby CHF 352,692 of the conditional share capital is available for the
issuance of up to 7,053,840 Class B Shares in connection with rights granted to third parties or shareholders in connection with
Rights Bearing Obligations (as defined in art. 4b para. 1(a) of the Articles) and CHF 239,312.50, corresponding to 4,786,250
Class B Shares, is available for the issuance of Class B Shares in connection with the issuance of Class B Shares or Rights-Bearing
Obligations granted to the members of the board of directors, members of the executive management, employees, consultants or other
persons providing services to us or another company of the Group (art. 4b para. 1 (b) of the Articles).



General Meeting
of Shareholders



The general meeting
of shareholders is our supreme corporate body. Under Swiss law, ordinary and extraordinary general meetings of shareholders may
be held. Under Swiss law, an ordinary general meeting of shareholders must be held annually within six months after the end of
a corporation's financial year. In our case, this means on or before June 30 of any calendar year.



The following powers
are vested exclusively in the general meeting of shareholders:



| | · | adopting and amending our Articles;
| | - | -----------------------------------



| | · | electing the members of the board of directors, the chairman of the board of directors, the members
of the nomination and compensation committee, the auditors and the independent proxy;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | approving the management report (annual report), the annual statutory financial statements and
consolidated financial statements;
| | - | ---------------------------------------------------------------------------------------------------------------------------------



| | · | approving the appropriation of earnings, including the payments of dividends and any other distributions
of capital to shareholders;
| | - | ------------------------------------------------------------------------------------------------------------------------------------



| | · | discharge of the members of the board of directors and the members of the executive management
from liability for their business conduct during the previous fiscal year; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the adoption of resolutions that are reserved to the general meeting of shareholders by law or
the Articles or that are submitted to the general meeting of the shareholders by the Board (unless the relevant matter is within
the exclusive competence of the board of directors pursuant to Swiss law).
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





89







An extraordinary general
meeting of shareholders may be called by a resolution of the board of directors or, under certain circumstances, by our auditor.
In addition, the board of directors is required to convene an extraordinary general meeting of shareholders if shareholders representing
at least 10% of the share capital or, according to the views expressed in legal writing which is a persuasive authority in Switzerland,
holding shares with an aggregate par value of CHF 1 million, request such general meeting of shareholders in writing. Such request
must set forth the items to be discussed and the proposals to be acted upon. The board of directors must convene an extraordinary
general meeting of shareholders and propose financial restructuring measures if, based on our stand-alone annual statutory balance
sheet, half of our share capital and reserves are not covered by our assets.



Voting and Quorum
Requirements



Dual Class Voting
Rights



Each share carries
one vote at a general meeting of shareholders, irrespective of the difference in par value of Class A Shares (CHF 0.01 per share)
and Class B Shares (CHF 0.05 per share). Our Class A Shares have a lower par value (CHF 0.01) than our Class B Shares (CHF 0.05)
but have same voting right as the higher par value Class B Shares, namely one (1) vote per share. This means that, relative to
their respective per share contribution to the Company’s capital, the holders of our Class A Shares have a greater relative
per share voting power than the holders of our Class B Shares for matters that require approval on the basis of a specified majority
of shares present at the shareholders meeting.



Some matters however,
as further described below under “Voting Requirements,” require a vote on the basis of par value associated with the
shares present at the meeting. To the extent shareholder resolutions require, as the relevant majority standard, a majority of
the par value of the shares present at the meeting, Class A Shares have less voting power than Class B Shares.



Voting rights may be
exercised by registered shareholders or by a duly appointed proxy of a registered shareholder or nominee, which proxy need not
be a shareholder up to a specific qualifying day before the relevant general meeting (the "Record Date") designated by
the board of directors.



The Articles do not
limit the number of shares that may be voted by a single shareholder. Holders of treasury shares, whether ours or one of our majority-owned
subsidiaries, will not be entitled to vote at general meetings of the shareholders.



Voting Requirements



Shareholder resolutions
and elections (including elections of members of the board of directors) require the affirmative vote of an absolute majority of
the votes represented (in person or by proxy) at a general meeting of shareholders (each Class A Share and each Class B Share having
one vote), unless otherwise stipulated by law or our Articles. The following matters require approval by a majority of the par
value of the shares present or represented at the general meeting (each Class A Share having a par value of CHF 0.01 per share
and each Class B Share having a par value of CHF 0.05 per share):



| | · | electing our auditor;
| | - | ---------------------



| | · | appointing an expert to audit our business management or parts thereof;
| | - | -----------------------------------------------------------------------



| | · | adopting any resolution regarding the instigation of a special investigation; and
| | - | ---------------------------------------------------------------------------------



| | · | adopting any resolution regarding the initiation of a derivative liability action.
| | - | ----------------------------------------------------------------------------------



Under Swiss corporate
law and our Articles, approval by two-thirds of the shares present or represented at the meeting, and by the absolute majority
of the par value of the shares present or represented is required for:



| | · | amending our corporate purpose;
| | - | -------------------------------



| | · | creating or cancelling shares with preference rights;
| | - | -----------------------------------------------------



| | · | restricting the transferability of registered shares;
| | - | -----------------------------------------------------



| | · | restricting the exercise of the right to vote or the cancellation thereof;
| | - | --------------------------------------------------------------------------



| | · | creating authorized or conditional share capital;
| | - | -------------------------------------------------





90







| | · | increasing the share capital out of equity, against contributions in kind or for the purpose of
acquiring specific assets and granting specific benefits;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | limiting or withdrawing shareholder's pre-emptive rights;
| | - | ---------------------------------------------------------



| | · | relocating our registered office;
| | - | ---------------------------------



| | · | our dissolution or liquidation; and
| | - | -----------------------------------



| | · | transactions among corporations based on Switzerland's Federal Act on Mergers, Demergers, Transformations
and the Transfer of Assets of 2003, as amended (the "Swiss Merger Act") including a merger, demerger or conversion of
a corporation.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In accordance with
Swiss law and generally accepted business practices, our Articles do not provide attendance quorum requirements generally applicable
to general meetings of shareholders.



Notice



General meetings of
shareholders must be convened by the board of directors at least 20 calendar days before the date of the meeting. The general meeting
of shareholders is convened by way of a notice appearing in our official publication medium, the Swiss Official Gazette of Commerce.
Registered shareholders may also be informed by mail. The notice of a general meeting of shareholders must state the items on the
agenda, the proposals to be acted upon and, in case of elections, the names of the nominated candidates. No resolutions may be
passed at a shareholders meeting concerning agenda items for which proper notice was not given. This does not apply, however, to
proposals made during a shareholders meeting to convene an extraordinary shareholders meeting or to initiate a special investigation.
No previous notification will be required for proposals concerning items included on the agenda or for debates as to which no vote
is taken. Under the CO, a general meeting of shareholders for which a notice of meeting has been duly published may not be adjourned
without publishing a new notice of meeting.



Agenda Requests



Pursuant to Swiss law,
one or more shareholders whose combined shareholdings represent the lower of (1) one tenth of the share capital or (2) an aggregate
par value of at least CHF 1,000,000, may request that an item be included in the agenda for a general meeting of shareholders.
To be timely, the shareholder's request must be received by us at least forty-five (45) calendar days in advance of the meeting.
No previous notification will be required for proposals concerning items included on the agenda or for debates as to which no vote
is taken.



Our business report,
including the Company's financial information, the compensation report and the auditor's reports thereon must be made available
for inspection by the shareholders at our registered office no later than 20 calendar days prior to the ordinary general meeting.
Shareholders of record must be notified of this in writing.



Dividends and Other
Distributions



We have never declared
or paid cash dividends to our shareholders and we do not intend to pay cash dividends in the foreseeable future. However, on July
9, 2019, we commenced a public share repurchase program, whereby repurchase shares will be used for potential acquisitions and/or
other future M&A transactions. On February 3, 2020, we expanded our share repurchase program to include our ADSs. Shares and
ADSs repurchased under our repurchase program may be used as consideration in future potential M&A transactions and for (1) our
existing employee share incentive program, (2) convertible loans entered into by us, and (3) on demand equity lines available to
us. Otherwise, we currently intend to reinvest any earnings in developing and expanding our business. Any future determination
relating to our dividend policy will be at the discretion of our board of directors.





91







Our board of directors
may propose to shareholders that a dividend or other distribution be paid but cannot itself authorize the distribution. Under our
Articles, dividend payments require a resolution passed by an absolute majority of the votes present or represented at a general
meeting of shareholders. In addition, our auditor must confirm that the dividend proposal of our board of directors conforms to
Swiss statutory law and our Articles.



Under Swiss law, we
may pay dividends only if we have sufficient distributable profits brought forward from the previous business years, or if we have
distributable reserves, each as evidenced by our audited stand-alone statutory balance sheet prepared pursuant to Swiss law, and
after allocations to reserves required by Swiss law and the Articles have been deducted. We are not permitted to pay interim dividends
out of profit of the current business year. Dividends and other distributions are made relative to nominal value of the shares.



Dividends paid on our
shares out of available earnings are subject to Swiss withholding tax. See Item 10.E. Taxation.



Distributions out of
issued share capital (i.e. the aggregate par value of our issued shares) may be made only by way of a share capital reduction.
Such a capital reduction requires a resolution passed by an absolute majority of the shares present or represented at a general
meeting of shareholders. The resolution of the shareholders must be recorded in a public deed and a special audit report must confirm
that claims of our creditors remain fully covered despite the reduction in the share capital recorded in the commercial register.
The share capital may be reduced below CHF 100,000 only if and to the extent that at the same time the statutory minimum share
capital of CHF 100,000 is reestablished by sufficient new fully paid-up capital. Upon approval by the general meeting of shareholders
of the capital reduction, the board of directors must give public notice of the capital reduction resolution in the Swiss Official
Gazette of Commerce three times and notify creditors that they may request, within two months of the third publication, satisfaction
of or security for their claims. The reduction of the share capital may be implemented only after expiration of this time limit.



Distributable reserves
are booked either as "retained earnings" (Bilanzgewinn; Gewinnvortrag) or as reserves from capital contributions
(Kapitaleinlagereserven). Under the CO, if our general reserves (réserve générale) amount to
less than 20% of our share capital recorded in the commercial register (i.e., 20% of the aggregate par value of our issued capital),
then at least 5% of our annual profit must be retained as general reserves. In addition, if our general reserves amount to less
than 50% of our share capital, 10% of the amounts distributed beyond payment of a dividend of 5% must be retained as general reserves.
The CO permits us to accrue additional general reserves. Further, a purchase of our own shares (whether by us or a subsidiary)
reduces the equity and thus the distributable dividends in an amount corresponding to the purchase price of such own shares. Finally,
the CO under certain circumstances requires the creation of revaluation reserves which are not distributable.



Dividends are usually
due and payable shortly after the shareholders have passed a resolution approving the payment, but shareholders may also resolve
at the annual general meeting of shareholders to pay dividends in quarterly or other instalments. The Articles provide that dividends
that have not been claimed within five years after the due date become our property and are allocated to the general reserves.
Dividends paid are subject to Swiss withholding tax, all or part of which can potentially be reclaimed under the relevant tax rules
in Switzerland or double taxation treaties concluded between Switzerland and foreign countries. Distributions of cash or property
that are based upon a capital reduction or that are made out of statutory capital reserves (Kapitaleinlage) are not subject
to Swiss withholding tax.



Transfer of Shares



Our shares constitute
intermediated securities (Bucheffekten) based on uncertificated securities (Wertrechte) and entered into the main
register of SIS or such other custodian as the case may be. Any transfer of Shares is effected by a corresponding entry in the
securities deposit account of a bank or a depository institution. Shares cannot be transferred by way of assignment, nor can a
security interest in any Shares be granted by way of assignment.



Voting rights may be
exercised only after a shareholder has been entered in our share register (Aktienregister) with his, her or its name and
address (in the case of legal entities, the registered office) as a shareholder with voting rights.





92







We maintain, through
Computershare Switzerland Ltd., a share register, in which the full name, address and nationality (in the case of legal entities,
the company name and registered office) of the shareholders and usufructuaries are recorded. A person entered into the share register
must notify the share registrar of any change in address. Until such notification occurs, all written communication from us to
persons entered in the share register is deemed to have been validly made if sent to the relevant address recorded in the share
register.



Share Repurchase
Program



On July 9, 2019, the
Company commenced a public repurchase program with respect to our shares, which on February 3, 2020 was expanded to also include
ADSs. Shares and ADSs repurchased under our repurchase program may be used as consideration in potential future M&A transactions
and for (1) our existing employee share incentive program, (2) convertible loans entered into by us and (3) on demand equity
lines available to us. Our share repurchase was approved by the Swiss Takeover Board under its notification procedure, will last
up to 3 years, and allows us to repurchase up to 3,682,848 Ordinary Class B shares equivalent to 10% of the registered share capital
of the Company at the relevant time.



Activity under the
program is monitored on a daily basis, with all transactions being published on our website in line with Swiss Law.



Inspection of Books
and Records



Under the CO, a shareholder
has a right to inspect our share register with respect to his, her or its own shares and otherwise to the extent necessary to exercise
his, her or its shareholder rights. No other person has a right to inspect our share register. Our books and correspondence may
be inspected with the express authorization of the general meeting of shareholders or by resolution of the board of directors and
subject to the safeguarding of our business secrets.



Special Investigation



If the shareholder
inspection rights as outlined above prove to be insufficient in the judgment of the shareholder, any shareholder may propose to
the general meeting of shareholders that specific facts be examined by a special auditor in a special investigation. If the general
meeting of shareholders approves the proposal, we or any shareholder may, within 30 calendar days after the general meeting of
shareholders, request a court sitting at our registered office in Zug, Switzerland to appoint a special auditor. If the general
meeting of shareholders rejects the request, one or more shareholders representing at least 10% of the share capital or holders
of shares in an aggregate par value of at least CHF 2,000,000 may request that the court appoint a special auditor. The court will
issue such an order if the petitioners can demonstrate that the board of directors, any member of the board of directors or our
executive management infringed the law or our Articles and thereby caused damages to us or the shareholders. The costs of the investigation
would generally be allocated to us and only in exceptional cases to the petitioners.



Compulsory Acquisitions;
Appraisal Rights



Business combinations
and other transactions that are governed by the Swiss Merger Act, are binding on all shareholders. A statutory merger or demerger
requires approval of two-thirds of the shares represented at a general meeting of shareholders and the absolute majority of the
par value of the shares represented.



If a transaction under
the Swiss Merger Act receives all of the necessary consents, all shareholders are compelled to participate in such transaction.



Swiss corporations
may be acquired by an acquirer through the direct acquisition of shares. The Swiss Merger Act provides for the possibility of a
so-called "cash-out" or "squeeze-out" merger if the acquirer controls 90% of the outstanding shares. In these
limited circumstances, minority shareholders of the corporation being acquired may be compensated in a form other than through
shares of the acquiring corporation (for instance, through cash or securities of a parent corporation of the acquiring corporation
or of another corporation).





93







For business combinations
effected in the form of a statutory merger or demerger and subject to Swiss law, the Swiss Merger Act provides that if equity rights
have not been adequately preserved or compensation payments in the transaction are unreasonable, a shareholder may request the
competent court to determine a reasonable amount of compensation. A decision issued by a competent court in this respect can be
acted upon by any person who has the same legal status as the claimant.



In addition, under
Swiss law, the sale of all or substantially all of our assets may be construed as a de facto dissolution of our company,
and consequently require the approval of two-thirds of the shares present or represented at a general meeting of shareholders and
the absolute majority of the par value of the shares present or represented. Whether a shareholder resolution is required depends
on the particular transaction, whereas the following circumstances are generally deemed relevant in this respect:



| | · | a core part of the company's business is sold without which it is economically impracticable or
unreasonable to continue to operate the remaining business;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the company's assets, after the divestment, are not invested in accordance with the company's statutory
business purpose; and
| | - | -----------------------------------------------------------------------------------------------------------------------------



| | · | the proceeds of the divestment are not earmarked for reinvestment in accordance with the company's
business purpose but, instead, are intended for distribution to the company's shareholders or for financial investments unrelated
to the company's business.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



A shareholder of a
Swiss corporation participating in certain corporate transactions governed by the Swiss Merger Act may, under certain circumstances,
be entitled to appraisal rights. As a result, such shareholder may, in addition to the consideration (be it in shares or in cash)
receive an additional amount to ensure that the shareholder receives the fair value of the shares held by the shareholder. Following
a statutory merger or demerger, pursuant to the Swiss Merger Act, shareholders can file an appraisal action against the surviving
company. If the consideration is deemed inadequate, the court will determine an adequate compensation payment.



Board of Directors



Our Articles provide
that our Board of Directors (the "Board") shall consist of a minimum of three directors and a maximum of twelve directors.



The members of our
Board and the chairman are elected annually by the general meeting of shareholders for a period until the completion of the subsequent
ordinary general meeting of shareholders and are eligible for re-election. Each member of the Board must be elected individually.



Powers



The Board has the following
non-delegable and inalienable powers and duties:



| | · | the ultimate direction of the business of the company and issuing of the relevant directives;
| | - | ---------------------------------------------------------------------------------------------



| | · | laying down the organization of the Company;
| | - | --------------------------------------------



| | · | formulating accounting procedures, financial controls and financial planning;
| | - | -----------------------------------------------------------------------------



| | · | appointing and removing persons entrusted with the management and representation of the Company
and regulating the power to sign for the Company;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------



| | · | the ultimate supervision of those persons entrusted with management of the Company, with particular
regard to adherence to law, our Articles as well as our regulations and directives;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | issuing the business report (including the financial statements) and the compensation report, and
preparing for the general meeting of shareholders and carrying out its resolutions;
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





94







| | · | all duties of the board of directors pursuant to the Swiss Merger Act;
| | - | ----------------------------------------------------------------------



| | · | informing the court in case of over-indebtedness; and
| | - | -----------------------------------------------------



| | · | passing resolutions regarding the increase of the share capital, provided that it has the authority
to do so and attesting to such capital increase, preparing of the capital increase report and the executing corresponding amendment
to our Articles.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Board may, while
retaining such non-delegable and inalienable powers and duties, delegate some of its powers, in particular direct management, to
a single or to several of its members, managing directors, committees or to third parties who need be neither members of the board
of directors nor shareholders. Pursuant to Swiss law, details of the delegation must be set in the organizational rules issued
by the Board. The organizational rules may also contain other procedural rules such as quorum requirements.



According to our organizational
rules, resolutions of the Board are adopted upon the absolute majority of the votes cast. In the event of a tie of votes, the chairman
has, in addition to his vote, the casting vote. To validly pass a resolution, more than half of the members of the Board have to
attend the meeting in person, by telephone or similar communications equipment. Pursuant to the CO, no attendance quorum is required
for confirmation resolutions and adaptations of our Articles in connection with capital increases.



Indemnification
of Executive Management and Directors



Subject to Swiss law,
our Articles provide for indemnification of the existing and former members of the Board, executive management and their heirs,
executors and administrators, against liabilities arising in connection with the performance of their duties in such capacity,
and permits us to advance the expenses of defending any act, suit or proceeding to our directors and executive management.



In addition, under
general principles of Swiss employment law, an employer may be required to indemnify an employee against losses and expenses incurred
by such employee in the proper execution of his or her duties under the employment agreement with the employer.



We have entered or
will enter into indemnification agreements with each of the members of our board of directors and executive management.



Conflict of Interest,
Management Transactions



Swiss law does not
have a specific provision regarding conflicts of interest. However, the CO contains a provision that requires our directors and
executive management to safeguard the company's interests and imposes a duty of loyalty and duty of care on our directors and executive
management. This rule is generally understood to disqualify directors and executive management from participation in decisions
that directly affect them. Our directors and executive officers are personally liable to us for breach of these provisions. In
addition, Swiss law contains provisions under which directors and all persons engaged in the company's management are liable to
the company, each shareholder and the company's creditors for damages caused by an intentional or negligent violation of their
duties. Furthermore, Swiss law contains a provision under which payments made to any of the company's shareholders or directors
or any person associated with any such shareholder or director, other than payments made at arm's length, must be repaid to the
company if such shareholder, director or associated person acted in bad faith.



Principles of the
Compensation of the Board of Directors and the Executive Management



We are subject to the
Compensation Ordinance (the "Compensation Ordinance") and the Directive on Information Relating to the Corporate Governance
issued by the SIX (the "Corporate Governance Directive"). The Compensation Ordinance requires a "say on pay"
approval mechanism for the compensation of the Board and the Executive Management pursuant to which the shareholders must vote
on the compensation of the Board and the Executive Management on an annual basis. In accordance therewith, the Articles provide
that the general meeting of shareholders must, each year, vote separately on the proposals by the Board regarding the maximum aggregate
amounts of:





95







| | · | the total compensation of the Board for the next term of office; and
| | - | --------------------------------------------------------------------



| | · | the total compensation of the Executive Management for the period of the next fiscal year.
| | - | ------------------------------------------------------------------------------------------



If the general meeting
of shareholders does not approve a proposal of the Board, the Board determines the maximum aggregate amount or maximum partial
amounts taking into account all relevant factors and submits such amounts for approval to the same general meeting of shareholders,
to an extraordinary general meeting of shareholders or to the next ordinary general meeting of shareholders for retrospective approval.
If the maximum aggregate amount of compensation already approved by the general meeting of shareholders is not sufficient to also
cover the compensation of persons newly appointed to or promoted within the Executive Management, such persons may be paid for
each of the following purposes an aggregate of up to 40% in excess of the total annual compensation of the respective predecessor
or for a similar pre-existing position: (i) as compensation for the relevant compensation period; and, in addition, (ii) as compensation
for any prejudice incurred in connection with the change of employment.



The Compensation Ordinance
further requires us to set forth in its Articles the principles for the determination of the compensation of the Board and the
Executive Management. These principles have been included in the Articles as described further below.



The Compensation Ordinance
also contains compensation disclosure rules. Pursuant to these rules, we are required to prepare an annual compensation report.
The compensation report will, among other things, include the compensation of the members of the Board on an aggregate and on an
individual basis and of the members of the Executive Management on an aggregate basis as well as the amount for the highest paid
member of the Executive Management.



Pursuant to the Corporate
Governance Directive, we are required to disclose basic principles and elements of compensation and shareholding programs for both
acting and former members of the Board and the Executive Management as well as the authority and procedures for determining such
compensation.



In accordance with
the Compensation Ordinance, the Articles provide that loans may be granted to members of the Board and the Executive Management,
provided such loans are granted at arm's length terms. In addition, the Articles provide that we may grant to members of the Executive
Management post-retirement benefits beyond the occupational benefit scheme only if such post-retirement benefits do not exceed
50% of the base salary in the fiscal year immediately preceding the retirement.



The Compensation Ordinance
generally prohibits certain types of compensation payments to the members of the board of directors, the Executive Management and
the advisory board of listed companies, taking the form of severance pay, advance compensation (e.g. advance salary payments),
incentive payments for certain acquisition transactions, loans, credits and pension benefits not based on occupational pension
schemes, and performance-based compensation not provided for in the articles of association as well as equity securities and conversion
and option rights awards not provided for in the articles of association.



Board of Directors



The Articles set out
the principles for the elements of the compensation of the members of the Board. The compensation of non-executive members of the
Board consists of a fixed compensation and may consist of additional compensation elements and benefits. The compensation of the
executive members of the Board may consist of fixed and variable compensation. The total compensation shall take into account the
position and level of responsibility of the respective member of the Board. The general meeting of shareholders approves the proposals
of the Board in relation to the maximum aggregate amount of the compensation of the Board for the term of office until the next
annual general meeting of shareholders. Members of the Board who are our employees do not receive compensation for Board service.
Consequently, Carlos Moreira, Peter Ward and Dourgam Kummer (since the start of his employment by the Group), the only members
of the Board who are also members of the executive management and/or employees of the Group, do not receive compensation for their
Board service.





96







Executive Management



The Articles set out
the principles for the elements of the compensation of the members of the Executive Management. The compensation of the members
of the Executive Management may consist of fixed and variable compensation elements. Fixed compensation may comprise the base salary
and other non-variable compensation elements. Variable compensation may comprise short-term and long-term variable compensation
elements. Short-term variable compensation elements may be governed by performance metrics that take into account the achievement
of operational, strategic, financial or other objectives, our results, the WISeKey group or parts thereof and/or individual targets,
and the achievement of which is generally measured during a one-year period. Depending on achieved performance, the compensation
may amount to a multiplier of target level. Long-term variable compensation elements may be governed by performance metrics that
take into account the development of the share price or share performance in absolute terms or in relation to peer groups or indices
and/or our results, the group or parts thereof and/or the achievement of operational, strategic, financial or other objectives
in absolute terms or in relation to the market, other companies or comparable benchmarks and/or retention elements. An achievement
of the objectives will generally be measured over a period of several years. Depending on achieved performance, the compensation
may amount to a multiplier of target level. The Board or, to the extent delegated to it, the Nomination and Compensation Committee
will determine the performance metrics and target levels of the short- and long-term variable compensation elements, as well as
their achievement. Compensation may be paid in the form of cash, shares, in the form of share-based instruments or units or in
the form of other types of benefits. The general meeting of shareholders approves the proposals of the Board in relation to the
maximum aggregate amounts of fixed and variable compensation, respectively, of the Executive Management.



Borrowing Powers



Neither Swiss law nor
our Articles restrict in any way our power to borrow and raise funds. The decision to borrow funds is made by or under the direction
of our Board, and no approval by the shareholders is required in relation to any such borrowing.



Repurchases of Shares
and Purchases of Own Shares



The CO limits our right
to purchase and hold our own shares. We and our subsidiaries may purchase shares only if and to the extent that (1) we have freely
distributable reserves in the amount of the purchase price; and (2) the aggregate par value of all shares held by us does not exceed
10% of our share capital. Pursuant to Swiss law, where shares are acquired in connection with a transfer restriction set out in
the articles of association of a company, the foregoing upper limit is 20%. We currently do not have any transfer restriction in
our Articles. If we own shares that exceed the threshold of 10% of our share capital, the excess must be sold or cancelled by means
of a capital reduction.



Shares held by us or
our subsidiaries are not entitled to vote at the general meeting of shareholders but are entitled to the economic benefits applicable
to the shares generally, including dividends and pre-emptive rights in the case of share capital increases.



In addition, selective
share repurchases are only permitted under certain circumstances. Within these limitations, as is customary for Swiss corporations,
we may purchase and sell our own shares from time to time in order to meet our obligations under our equity plans, to meet imbalances
of supply and demand, to provide liquidity and to even out variances in the market price of shares.



Notification and
Disclosure of Substantial Share Interests



Under the applicable
provisions of the Swiss Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives Trading
of 2015, or the Financial Market Infrastructure Act ("FMIA"), persons who directly, indirectly or in concert with other
parties acquire or dispose of our shares, purchase rights or obligations relating to our shares (the "Purchase Positions")
or sale rights or obligations relating to our shares (the "Sale Positions"), and thereby, directly, indirectly or in
concert with other parties reach, exceed or fall below a threshold of 3%, 5%, 10%, 15%, 20%, 25%, 331⁄3%, 50% or 662⁄3%
of our voting rights (whether exercisable or not) must notify us and the Disclosure Office of the SIX of such acquisition or disposal
in writing within four trading days. Within two trading days of the receipt of such notification, we must publish such information
via the SIX's electronic publishing platform. For purposes of calculating whether a threshold has been reached or crossed, shares
and Purchase Positions, on the one hand, and Sale Positions, on the other hand, may not be netted. Rather, the shares and Purchase
Positions and the Sale Positions must be accounted for separately and may each trigger disclosure obligations if the respective
positions reach, exceed or fall below one of the thresholds. In addition, actual share ownership must be reported separately if
it reaches, exceeds or falls below one of the thresholds.





97







Pursuant to Article
663c of the CO, Swiss corporations whose shares are listed on a stock exchange must disclose their significant shareholders and
their shareholdings in the notes to their balance sheet, where this information is known or ought to be known. Significant shareholders
are defined as shareholders and groups of shareholders linked through voting rights who hold more than 5% of all voting rights.



Mandatory Bid Rules



Pursuant to the applicable
provisions of the FMIA, any person that acquires shares of a listed Swiss company, whether directly or indirectly or acting in
concert with third parties, which shares, when taken together with any other shares of such company held by such person (or such
third parties), exceed the threshold of 33 1/3% of the voting rights (whether exercisable or not) of such company, must make
a takeover bid to acquire all the other newly issued shares of such company. A company's articles of association may either eliminate
this provision of the FMIA or may raise the relevant threshold to 49% ("opting-out" or "opting-up", respectively).



We have an opting-out
provision in Article 6 para. 9 of our Articles. Accordingly, an acquirer of Shares is not obliged to make a public offer pursuant
to article 135 and 163 of the Federal Act on Financial Market Infrastructures and Market Conduct in Securities and Derivatives
Trading.



The Swiss laws applicable
to Swiss corporations and their shareholders differ from laws applicable to U.S. corporations and their shareholders. The following
table summarizes significant differences in shareholder rights between the provisions of the Swiss Code of Obligations (Schweizerisches
Obligationenrecht) and the Compensation Ordinance and the Delaware General Corporation Law applicable to companies incorporated
in Delaware and their shareholders. Please note that this is only a general summary of certain provisions applicable to companies
in Delaware. Certain Delaware companies may be permitted to exclude certain of the provisions summarized below in their charter
documents.



Comparison of Shareholder
Rights





|DELAWARE CORPORATE LAW                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  | SWISS CORPORATE LAW                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Mergers and similar arrangements                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        | 
|Under the Delaware General Corporation Law, with certain exceptions, a merger, consolidation, sale, lease or transfer of all or substantially all of the assets of a corporation must be approved by the board of directors and a majority of the outstanding shares entitled to vote thereon. A shareholder of a Delaware corporation participating in certain major corporate transactions may, under certain circumstances, be entitled to appraisal rights pursuant to which such shareholder may receive cash in the amount of the fair value of the shares held by such shareholder (as determined by a court) in lieu of the consideration such shareholder would otherwise receive in the transaction. The Delaware General Corporation Law also provides that a parent corporation, by resolution of its board of directors, may merge with any subsidiary, of which it owns at least 90.0% of each class of capital stock without a vote by the shareholders of such subsidiary. Upon any such merger, dissenting shareholders of the subsidiary would have appraisal rights. |  | Under Swiss law, with certain exceptions, a merger or a division of the corporation or a sale of all or substantially all of the assets of a corporation must be approved by two-thirds of the shares represented at the relevant general meeting of shareholders as well as the absolute majority of the par value of the shares represented at such shareholders' meeting. A shareholder of a Swiss corporation participating in a statutory merger or demerger pursuant to the Swiss Merger Act can file an appraisal right lawsuit against the surviving company. As a result, if the consideration is deemed "inadequate," such shareholder may, in addition to the consideration (be it in shares or in cash) receive an additional amount to ensure that such shareholder receives the fair value of the shares held by such shareholder. Swiss law also provides that a parent corporation, by resolution of its board of directors, may merge with any subsidiary, of which it owns at least 90.0% of the voting rights without a vote by shareholders of such subsidiary, if the shareholders of the subsidiary are offered the payment of the fair value in cash as an alternative to shares.





98







|Shareholders' suits                                                                                                                                                                                                                                                                                                                                                         
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                            
|Class actions and derivative actions generally are available to shareholders of a Delaware corporation for, among other things, breach of fiduciary duty, corporate waste and actions not taken in accordance with applicable law. In such actions, the court has discretion to permit the winning party to recover attorneys' fees incurred in connection with such action.
|                                                                                                                                                                                                                                                                                                                                                                            
|Shareholder vote on board and management compensation                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                            
|Under the Delaware General Corporation Law, the board of directors has the authority to fix the compensation of directors, unless otherwise restricted by the certificate of incorporation or bylaws.                                                                                                                                                                       





99







|Annual vote on board renewal                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Unless directors are
        elected by written consent in lieu of an annual meeting, directors are elected in an annual meeting of stockholders on a date and
        at a time designated by or in the manner provided in the bylaws. Re-election is possible.
        
        Classified boards are
        permitted.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Indemnification of directors and executive management and limitation of liability                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|The Delaware General
        Corporation Law provides that a certificate of incorporation may contain a provision eliminating or limiting the personal liability
        of directors (but not other controlling persons) of the corporation for monetary damages for breach of a fiduciary duty as a director,
        except no provision in the certificate of incorporation may eliminate or limit the liability of a director for:
        
        ·any breach of a director's duty of loyalty to the corporation or its shareholders;
        
        ·acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law;
        
        ·statutory liability for unlawful payment of dividends or unlawful stock purchase or redemption; or
        
        ·any transaction from which the director derived an improper personal benefit.
        
        A Delaware
corporation may indemnify any person who was or is a party or is threatened to be made a party to any proceeding, other than an
action by or on behalf of the corporation, because the person is or was a director or officer, against liability incurred in connection
with the proceeding if the director or officer acted in good faith and in a manner reasonably believed to be in, or not opposed
to, the best interests of the corporation; and the director or officer, with respect to any criminal action or proceeding, had
no reasonable cause to believe his or her conduct was unlawful.





100







|Unless
ordered by a court, any foregoing indemnification is subject to a determination that the director or officer has met the applicable
standard of conduct:
        
        ·by a majority vote of the directors who are not parties to the proceeding, even though less than a quorum;
        
        ·by a committee of directors designated by a majority vote of the eligible directors, even though less than a quorum;
        
        ·by independent legal counsel in a written opinion if there are no eligible directors, or if the eligible directors so direct;
or
        
        ·by the shareholders.
        
        Moreover,
a Delaware corporation may not indemnify a director or officer in connection with any proceeding in which the director or officer
has been adjudged to be liable to the corporation unless and only to the extent that the court determines that, despite the adjudication
of liability but in view of all the circumstances of the case, the director or officer is fairly and reasonably entitled to indemnity
for those expenses which the court deems proper. |  | 
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | 





101







|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Directors' fiduciary duties                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|A director of a Delaware
        corporation has a fiduciary duty to the corporation and its shareholders. This duty has two components:
        
        ·the
duty of care; and
        
        ·the duty of loyalty.
        
        The duty of care requires
        that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar circumstances.
        Under this duty, a director must inform himself of, and disclose to shareholders, all material information reasonably available
        regarding a significant transaction. The duty of loyalty requires that a director act in a manner he reasonably believes to be
        in the best interests of the corporation. He must not use his corporate position for personal gain or advantage. This duty prohibits
        self-dealing by a director and mandates that the best interest of the corporation and its shareholders take precedence over any
        interest possessed by a director, officer or controlling shareholder and not shared by the shareholders generally. In general,
        actions of a director are presumed to have been made on an informed basis, in good faith and in the honest belief that the action
        taken was in the best interests of the corporation. However, this presumption may be rebutted by evidence of a breach of one of
        the fiduciary duties. Should such evidence be presented concerning a transaction by a director, a director must prove the procedural
        fairness of the transaction, and that the transaction was of fair value to the corporation.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|Shareholder action by written consent                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|A Delaware corporation may, in its certificate of incorporation, eliminate the right of shareholders to act by written consent.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        





102







|                                                                                                                                                                                                                                                                                                                                                                                               
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Shareholder proposals                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                               
|A shareholder of a Delaware corporation has the right to put any proposal before the annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. A special meeting may be called by the board of directors or any other person authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.





103







|Cumulative voting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Under the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation's certificate of incorporation provides for it.                                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Removal of directors                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|A Delaware corporation with a classified board may be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise.                                                                                                                                                                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Transactions with interested shareholders                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|The Delaware General Corporation Law generally prohibits a Delaware corporation from engaging in certain business combinations with an "interested shareholder" for three years following the date that such person becomes an interested shareholder. An interested shareholder generally is a person or group who or which owns or owned 15.0% or more of the corporation's outstanding voting stock within the past three years.                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Dissolution; Winding up                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|Unless the board
        of directors of a Delaware corporation approves the proposal to dissolve, dissolution must be approved by shareholders
        holding 100.0% of the total voting power of the corporation. Only if the dissolution is initiated by the board of directors
        may it be approved by a simple majority of the corporation's outstanding shares. Delaware law allows a Delaware corporation
        to include in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated
        by the board.





104







|Variation of rights of shares                                                                                                                                                                                                                                                                                                                                                                                    
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                 
|A Delaware corporation may vary the rights of a class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation provides otherwise.                                                                                                                                                                                                             
|                                                                                                                                                                                                                                                                                                                                                                                                                 
|Amendment of governing documents                                                                                                                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                                                                 
|A Delaware corporation's governing documents may be amended with the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise.                                                                                                                                                                                                              
|                                                                                                                                                                                                                                                                                                                                                                                                                 
|Inspection of books and records                                                                                                                                                                                                                                                                                                                                                                                  
|                                                                                                                                                                                                                                                                                                                                                                                                                 
|Shareholders of a Delaware corporation, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose, and to obtain copies of list(s) of shareholders and other books and records of the corporation and its subsidiaries, if any, to the extent the books and records of such subsidiaries are available to the corporation.





105







|Payment of dividends                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|The board of directors
        may approve a dividend without shareholder approval. Subject to any restrictions contained in its certificate of incorporation,
        the board may declare and pay dividends upon the shares of its capital stock either:
        
        ·out of its surplus; or
        
        ·in case there is no such surplus, out of its net profits for the fiscal year in which the dividend is declared or the preceding
fiscal year.
        
        Stockholder approval
        is required to authorize capital stock in excess of that provided in the charter. Directors may issue authorized shares without
        stockholder approval.
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|Creation and issuance of new shares                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|All creation of shares requires the board of directors to adopt a resolution or resolutions, pursuant to authority expressly vested in the board of directors by the provisions of the company's certificate of incorporation.                                                                                                                                                                                                                                                                                                                                                                                                                                                 





106







|Rights plans / poison pills
|---------------------------
|                           
|                           



| | C. | Material Contracts
| | -- | ------------------



Yorkville Standby Equity Distribution
Agreement



The Company entered
into the SEDA, dated February 8, 2018 and amended on September 28, 2018, with Yorkville. Pursuant to the SEDA,
the Company has the right, at any time during a three-year period, to request Yorkville, in one or several transactions, to subscribe
for Class B Shares up to an aggregate subscription amount of CHF 50,000,000. Provided that a sufficient number of Class B
Shares is provided by the Company to Yorkville as security through a share lending arrangement, the Company has the right to make
drawdowns under the SEDA at its discretion by requesting Yorkville to subscribe for (if the Class B Shares are issued out of authorized
share capital) or purchase (if the Class B Shares are delivered out of treasury) Class B Shares worth up to CHF 5,000,000
per drawdown, subject to certain exceptions and limitations (including the exception that a drawdown request by the Company shall
in no event cause the aggregate number of Class B Shares held by Yorkville to meet or exceed 4.99% of the total number of shares
registered with the commercial register of the Canton of Zug). The subscription price for each drawdown request of the Company
corresponds to 93% of the lowest daily VWAP of a Class B Share, as traded and quoted on the SIX, over the five trading days following
the drawdown request by the Company.



As at December 31,
2019, the remaining amount available for drawdown by the Company under the SEDA is CHF 47,142,077 (USD 48,709,692 at
closing rate) and, as at December 31, 2019, the estimated maximum number of Class B Shares deliverable under the SEDA is 23,467,780
Class B Shares at CHF 2.0088 per Class B Share (calculated based on the closing price of a Class B Share on December 30,
2019 of CHF 2.16 per Class B Share, discounted by 7%). The actual price, at which the Company may drawdown under the SEDA
is subject to change, and, therefore, the number of Class B Shares deliverable to Yorkville may vary.





107







As at December 31,
2019, the Company held 1,202,191 Class B Shares as treasury shares available for delivery under the SEDA, either directly or through
a subsidiary. Depending on WISeKey's capital requirements, this amount of Class B Shares may not be sufficient and the Company
may issue Class B Shares out of its authorized share capital for further drawdowns under the SEDA and delivery to Yorkville. If
such number of Class B Shares is not sufficient for delivery to Yorkville in connection with drawdowns under the SEDA, the Company
may, instead of issuing the required additional number of Class B Shares to Yorkville directly, issue additional Class B Shares
for delivery under the SEDA as follows. The additional Class B Shares would be subscribed for by WISeKey Equities AG (WISeKey Equities),
a direct, wholly-owned subsidiary of the Company. WISeKey Equities would subscribe for the Class B Shares at nominal value and
upon issuance of such Class B Shares, on-sell the Class B Shares back to the Company at nominal value plus a fee as consideration
for providing the subscription service. The Company would hold the new Class B Shares in treasury and deliver them to Yorkville
in accordance with the terms of the SEDA.



Crede Convertible Loan Agreement



The Company entered
into the Crede Convertible Loan Agreement, dated September 28, 2018, with Crede, pursuant to which Crede committed to grant a loan
to the Company in the amount of USD 3,000,000.00. The Crede Principal Amount will mature on October 30, 2020. The Crede Principal
Amount is to be repaid through the delivery of such number of Class B Shares, as corresponds to the quotient of the Crede Principal
Amount then outstanding and a conversion price corresponding to 93% of the average of the two lowest daily VWAPs of a Class B Share,
as traded and quoted on the SIX during the ten trading days immediately preceding the relevant conversion date, converted into
USD at the relevant exchange rate. Crede may request a conversion of the Crede Principal Amount, in part or in full, at any time
before the Maturity Date. The loan granted in accordance with the Crede Convertible Loan Agreement bears interest at a rate of
10% per annum. The Company has the right, at its discretion, to pay Crede Interest accrued on the outstanding Crede Principal Amount
in cash or by delivery of such number of Class B Shares as corresponds to the quotient of the respective Crede Interest payment
amount and a conversion price corresponding to 93% of the average of the two lowest daily VWAPs of a Class B Share, as traded and
quoted on the SIX during the ten trading days immediately preceding the relevant conversion date, converted into USD at the relevant
exchange rate.



After conversions in
January, February, July, September and December 2019, as requested by Crede, representing an aggregate repayment amount of
USD 1,771,101, the remaining Crede convertible loan amount outstanding is USD 1,228,899 as at December 31, 2019.
The conversion of the Crede Principal Amount and, if applicable, the Crede Interest, into Class B Shares will dilute the Company's
shareholders' interest in the Company. The number of Class B Shares deliverable by the Company to Crede in connection with conversions
of the Crede Principal Amount and the Crede Interest will depend on the applicable conversion price. As at December 31, 2019,
the estimated maximum number of Class B Shares deliverable by the Company under the Crede Convertible Loan Agreement (for payment
of Crede Principal Amount and maximum Crede Interest until maturity) is 636,803 Class B Shares (calculated based on the closing
price of a Class B Share on the SIX on December 30, 2019 of CHF 2.16 per Class B Share discounted by 7% and converted
into USD at the relevant exchange rate). Note that the actual price at which Crede may convert the Crede Principal Amount and at
which the Company may convert the Crede Interest into Class B Shares is subject to change, and, as a consequence, the number of
Class B Shares deliverable to Crede may vary.



As at December 31,
2019, the Company held 1,202,191 Class B Shares in treasury, either directly or through a subsidiary, in order to be able to comply
with its obligations under the Crede Convertible Loan Agreement (including the conversion of the Crede Principal Amount and the
Crede Interest into Class B Shares). If such number of Class B Shares is not sufficient in connection with the conversion of the
Crede Principal Amount and the Crede Interest under the Crede Convertible Loan Agreement, the Company may, instead of issuing the
required additional number of Class B Shares directly to Crede, issue additional Class B Shares for delivery to Crede as follows.
The additional Class B Shares would be subscribed for by WISeKey Equities at nominal value and upon issuance of such Class B Shares,
WISeKey Equities would on-sell the Class B Shares back to the Company at nominal value plus a fee as consideration for providing
the subscription service. The Company would hold the new Class B Shares in treasury and deliver them to Crede in accordance with
the terms of the Crede Convertible Loan Agreement.





108









On March 04, 2020,
WISeKey executed with Yorkville a new convertible loan agreement for a total amount of USD 4 million repayable in monthly instalments
starting March 30, 2020. This new USD 4 million agreement replaces the existing Yorkville Convertible Loan signed on June 27, 2019
and the USD 2,337,393 remaining balance under the Yorkville Convertible Loan was rolled over into the new agreement. The new convertible
loan agreement bears an interest rate of 6% per annum payable monthly in arrears and matures on April 30, 2021. Yorkville has the
right to convert the outstanding loan amount or any portion thereof, and any accrued interest, into Class B Shares at an initial
conversion price of CHF 3.00 applying as exchange rate any publicly available spot rate of exchange selected by Yorkville in the
New York foreign exchange market at the applicable date.  The Initial Yorkville Conversion Price may be adjusted using certain
agreed-upon formulae in case of (a) an increase in capital by means of capitalization of reserves, profits or premiums by distribution
of Class B Shares, or division or consolidation of Class B Shares; (b) an issue of Class B Shares or other securities by way of
conferring subscription or purchase rights; (c) spin-offs and capital distributions other than dividends; and (d) dividends.



Options Issued to Crede



In connection with
the Crede Convertible Loan Agreement, on September 28, 2018, the Company granted to Crede, 408,247 options for the acquisition
of an equal number of Class B Shares. The options may be exercised by Crede at any time on or before October 29, 2021, at an exercise
price per option equal to CHF 3.84 per Class B Share. Shares issued to Crede in connection with the options would be issued
out of the Company's conditional share capital or authorized share capital without triggering the pre-emptive rights of the existing
shareholders of the Company.



Yorkville Convertible Loan Agreement



The Company entered
into a Yorkville Convertible Loan Agreement, dated June 27, 2019, with Yorkville, pursuant to which Yorkville committed to grant
a loan to the Company in the amount of USD 3,500,000.00. The Yorkville Convertible Loan is repayable in monthly cash installments
starting August 1, 2019 up until its maturity on August 1, 2020. The Yorkville Convertible Loan bears interest at a yearly rate
of 6% (Yorkville Interest). Yorkville, at its sole discretion, may elect to request that any amount due and outstanding, be it
Yorkville Principal Amount or Yorkville Interest, be paid in Class B Shares using a conversion price of CHF 3.00 per Class B Share
(Initial Yorkville Conversion Price) and, as exchange rate, any available spot rate of exchange selected by Yorkville in the New
York foreign exchange market at the applicable date. The Initial Yorkville Conversion Price may be adjusted using certain agreed-upon
formulae in case of (a) an increase in capital by means of capitalization of reserves, profits or premiums by distribution of Class B
Shares, or division or consolidation of Class B Shares; (b) an issue of Class B Shares or other securities by way of
conferring subscription or purchase rights; (c) spin-offs and capital distributions other than dividends; and (d) dividends.



As at December 31,
2019, and as agreed with Yorkville, WISeKey has repaid an aggregate amount of USD 1,162,607, therefore the remaining Yorkville
Convertible Loan amount outstanding is USD 2,337,393. The conversion of the Yorkville Principal Amount and, if applicable,
the related interest, into Class B Shares will dilute the Company's shareholders' interest in the Company. The number of Class
B Shares deliverable by the Company to Yorkville in connection with conversions of the Yorkville Principal Amount and the Yorkville
Interest will depend on the applicable conversion price. Based on the Initial Yorkville Conversion Price on the date of execution
of the Yorkville Convertible Loan (CHF 3.00) converted into USD at the relevant exchange rate, the estimated maximum number
of Class B Shares deliverable under the Yorkville Convertible Loan (for the payment of Yorkville Principal Amount outstanding as
at December 31, 2019 and Yorkville Interest until maturity) is 772,968 Class B Shares. Note that the actual price at
which Yorkville may convert the Yorkville Principal Amount and Yorkville Interest into Class B Shares is subject to change, and,
as a consequence, the number of Class B Shares deliverable to Yorkville may vary.



As at December 31,
2019, the Company held 1,202,191 Class B Shares in treasury, either directly or through a subsidiary, in order to be able to comply
with its obligations under the Yorkville Convertible Loan (including the conversion of the Yorkville Principal Amount and the Yorkville
Interest into Class B Shares). If such number of Class B Shares is not sufficient in connection with the conversion of the Yorkville
Principal Amount and the Yorkville Interest under the Yorkville Convertible Loan, the Company may, instead of issuing the required
additional number of Class B Shares directly to Yorkville, issue additional Class B Shares for delivery to Yorkville as follows.
The additional Class B Shares would be subscribed for by WISeKey Equities at nominal value and upon issuance of such Class B Shares,
WISeKey Equities would on-sell the Class B Shares back to the Company at nominal value plus a fee as consideration for providing
the subscription service. The Company would hold the new Class B Shares in treasury and deliver them to Yorkville in accordance
with the terms of the Yorkville Convertible Loan.



Options Issued to Yorkville



In connection with
the Yorkville Convertible Loan, on June 27, 2019, the Company granted to Yorkville 500,000 options for the acquisition of an equal
number of Class B Shares. The options may be exercised by Yorkville at any time on or before June 27, 2022, at an exercise price
per option initially set to CHF 3.00 per Class B Share (Initial Exercise Price). The Initial Exercise Price may be adjusted
using certain agreed-upon formulae in case of (a) an increase of capital by means of capitalization of reserves, profits or premiums
by distribution of Class B Shares, or division or consolidation of Class B Shares; (b) an issue of Class B Shares
or other securities by way of conferring subscription or purchase rights; (c) spin-offs and capital distributions other than dividends;
and (d) dividends. The Class B Shares issued to Yorkville in connection with the options would be issued out of the Company's conditional
share capital or authorized share capital without triggering he pre-emptive rights of the existing shareholders of the Company.





109







Share Subscription Facility with GEM
LLC



On January 19, 2016
the Company entered into SFF with GEM, which is a CHF 60 million facility over 5 years and allows the Group to draw down funds
at its option in exchange for Class B Shares. Under the SFF, the Company may drawdown funds essentially 18 times in a year, the
amount being in a range related to the trading volume and price of the Class B Shares on the SIX. The drawdown amount is based
on 90% of the average closing price for Class B Shares of the last 15 trading days multiplied by 1,000% of the average volume of
the last 15 trading days. GEM can then elect to purchase between 50% and 200% of this figure.



As at December 31,
2019, the remaining amount available for drawdown by the Company under the SFF is CHF 56,094,645 and the estimated maximum
number of Class B Shares deliverable under the SFF is 28,855,270 Class B Shares at CHF 1.944 per Class B Share (calculated
based on the closing price of a Class B Share on December 30, 2019 of CHF 2.16 per Class B Share, discounted by 10%).
The actual price, at which the Company may drawdown under the SFF is subject to change, and, therefore, the number of Class B Shares
deliverable to GEM may vary.



Options Issued to GEM



In connection with
the SFF, the Company granted to GEM 1,459,127 options for the acquisition of an equal number of Class B Shares on May 06, 2016.
The options may be exercised by GEM at any time on or before May 06, 2021, at an exercise price per option initially set to CHF 8.85432
per Class B Share (Initial Exercise Price). The Initial Exercise Price may be adjusted using certain agreed-upon formulae in case
of (a) an alteration to the nominal value of the Class B Shares as a result of the consolidation or subdivision thereof; (b) an
issue of any securities (other than Class B Shares or options, warrants or other rights to subscribe for or purchase or otherwise
acquire any Class B Shares) to shareholders by way of rights, or a grant to shareholders by way of rights of any options, warrants
or other rights to subscribe for or purchase or otherwise acquire any securities (other than Class B Shares or options, warrants
or other rights to subscribe for or purchase or otherwise acquire any Class B Shares); (c) an issue of Class B shares to shareholders
by way of rights, or an issue or grant to shareholders by way of rights of options, warrants or other rights to subscribe for or
purchase any Class B Shares at less than the relevant price; (d) an issue of Class B Shares to shareholders by way of rights, by
way of capitalization of profits or reserves other than as part of a cash dividend; (e) any capital distribution to shareholders
by way of rights; (f) an issue (other than per above item c) wholly for cash or for no consideration of Class B Shares, or an issue
or grant (other than per above item c) wholly for cash or for no consideration of any options, warrants or other rights to subscribe
for or purchase any Class B Shares at less than the relevant price; (g) the company or any subsidiary or any other person shall
issue wholly for cash or for no consideration any securities (or enter into any contractual arrangements which would have an equivalent
economic effect to issuing securities) which by their terms of issue carry (directly or indirectly) rights of conversion into,
or exchange or subscription for, Class B shares (other than Class B Shares already in issue at the time of the issue of the said
securities) (or shall grant any such rights in respect of existing securities so issued) or securities which by their terms might
be redesignated as Class B Shares, and the consideration per Class B Share receivable upon conversion, exchange, subscription or
redesignation is less than the relevant price; (h) any modification of the rights of conversion, exchange or subscription of some
securities; and (i) the company or any subsidiary or any other person shall offer any securities in connection with which offer,
shareholders as a class are entitled to participate in arrangements whereby such securities may be acquired by them.



In application of adjustment
provisions under the relevant warrant, the exercise price of the warrant has been adjusted from CHF 8.85342 to CHF 8.8264 and the
number of Class B Shares that GEM is entitled to purchase upon exercise of the warrant has been increased by 4,612 Class B Shares
to 1,463,739 as at December 31, 2019. The Class B Shares issued to GEM in connection with the GEM Options would be issued
out of the Company's conditional share capital or authorized share capital without triggering the pre-emptive rights of the existing
shareholders of the Company. The exercise of GEM Options will dilute the Company's shareholders' interests in the Company.





110







Credit Agreement with Long State Investment
Limited



On December 16, 2019,
WISeKey entered into the LSI Convertible Facility with LSI to borrow up to CHF 30,000,000. Under the terms of the LSI Convertible
Facility, WISeKey is able to drawdown individual term loans of up to CHF 500,000 or, if so agreed between the parties, up
to CHF 2,500,000 at an interest rate of 1.5% per annum, up to an aggregate amount of CHF 30,000,000 over a commitment
period of 24 months. LSI have the right to convert a drawdown tranche into Class B Shares or, if so agreed among the parties and
permitted by law, into ADSs, within a period of 21 SIX trading days after each individual drawdown at 95% of the higher of (i)
the then prevailing market rate and (ii) the minimum conversion price of CHF 1.80. Any term loan not converted by LSI initially
will automatically convert into Class B Shares, or ADSs, 20 SIX trading days before the expiration of the commitment period
at the applicable conversion price. Under certain circumstances, interest payments may be “paid in kind” by capitalizing
such interest and adding to it the aggregate principal balance of the loan outstanding.



As at December 31, 2019,
WISeKey has not made any drawdown under the LSI Convertible Facility, therefore the remaining amount available for drawdown is
CHF 30,000,000. The conversion of the LSI Principal Amount and, if applicable, the LSI Interest, into Class B Shares will
dilute the Company's shareholders' interest in the Company. The number of Class B Shares deliverable by the Company to LSI in connection
with conversions of the LSI Principal Amount and the LSI Interest will depend on the applicable conversion price. As at December 31,
2019, the remaining amount available for drawdown by the Company under the LSI Convertible Facility is CHF 30,000,000 (USD 30,997,590
at closing rate) and, as at December 31, 2019, the estimated maximum number of Class B Shares deliverable under the LSI Convertible
Facility is 14,619,883 Class B Shares at CHF 2.052 per Class B Share (calculated based on the closing price of a Class
B Share on the SIX on December 30, 2019 of CHF 2.16 per Class B Share discounted by 5%). Note that the actual price at which LSI
may convert each tranche under the LSI Convertible Facility is subject to change, and, therefore, the number of Class B Shares
deliverable to LSI may vary.



OISTE Collaboration Agreement



Our subsidiary, WISeKey
SA and the Organisation Internationale pour la Sécurité de Transactions Electroniques (OISTE), a foundation created
under Swiss law, entered into a cooperation agreement, dated June 20, 2018 (OISTE Collaboration Agreement), which amended and restated
prior agreements between us and OISTE.  Under the terms of the OISTE Collaboration Agreement, we are granted a worldwide license
to commercialize its Root Global Cryptographic Key Pairs or Root of Trust. Roots of Trust (RoT) is a set of functions in the trusted
computing module of a computer's operating system (OS). The RoT serves as separate computing engine controlling the trusted computing
platform cryptographic processor on the PC or mobile device it is embedded in. The OISTE RoT was created in 1999 as part of a partnership
with the International Telecommunication Union which is the International UN organization in charge of standards used on the Internet,
IoT and mobile networks.



WISeKeys uses the OISTE
RoT to provide trust to its digital identity technology used to authenticate users, and encrypt and decrypt messages among users.
It is also used for WISeKey's Certify ID and WISeID technology to provide Digital Certificates for people, servers and IoT objects
by providing certification technology and services in conformity with OISTE directives and standards.  The OISTE RoT is audited
annually by webtrust.org. The OISTE Foundation owns and regulates the "OISTE Global Trust Model", which includes as "Root
of Trust" a number of Root Certification Authorities|, globally recognized. OISTE delegates to the Swiss company, WISeKey
SA, the operation of the systems and infrastructures supporting the Trust Model. The OISTE Foundation doesn't issue certificates
to end subscribers, but grants to WISeKey a license as subordinate certification authority, allowing the delivery of Trust Services
for Persons, Applications and Objects. In return for this license, we agree to pay a license fee and a royalty fee to OISTE. 
In addition, the OISTE Collaboration Agreement delegates to us the technical management of the OISTE Root Global Cryptographic
Key pairs, the OISTE global Root Certification Authority as well as its Digital Certificates, including the safekeeping of the
OISTE Root Global Cryptographic Key Pairs in our data center bunker.  In return for this management service, we are paid a
management fee by OISTE.



WebTrust is an assurance
service jointly developed by the American Institute of Certified Public Accountants (AICPA). WebTrust relies on a series of
principles and criteria designed to promote confidence and trust between consumers and companies conducting business on the Internet.
Public accounting firms and practitioners, who obtain a WebTrust business license from the AICPA or the Canadian
Institute of Chartered Accountants (CICA), can provide assurance services to evaluate and test whether a particular web site meets
any one of the Trust Services principles and criteria.





111







| | D. | Exchange Controls
| | -- | -----------------



There are currently
no exchange controls restrictions in effect in Switzerland.



| | E. | Taxation
| | -- | --------



Material U.S. Federal Income Tax Considerations
for U.S. Holders



The following is a
description of the material U.S. federal income tax consequences to U.S. Holders, as defined below, of owning and disposing of
our ADSs. It does not describe all tax considerations that may be relevant to a particular person's decision to acquire, hold or
dispose of ADSs. This discussion is based on the Internal Revenue Code of 1986, as amended (the "Code"), administrative
pronouncements, judicial decisions, final, temporary and proposed Treasury regulations, and the income tax treaty between Switzerland
and the United States (the "Treaty"), all as of the date hereof, any of which is subject to change or differing interpretations,
possibly with retroactive effect.



This discussion applies
only to a U.S. Holder that holds ADSs as capital assets for U.S. federal income tax purposes. Furthermore, it does not describe
all of the U.S. federal income tax consequences that may be relevant in light of a U.S. Holder's particular circumstances, including
consequences for purposes of the alternative minimum tax and the potential application of the Medicare contribution tax. Furthermore,
it does not address classes of U.S. holders that may be subject to special rules, such as:



| | · | banks, insurance companies, and certain other financial institutions;
| | - | ---------------------------------------------------------------------



| | · | dealers or traders in securities who use a mark-to-market method of tax accounting;
| | - | -----------------------------------------------------------------------------------



| | · | persons holding ADSs as part of a hedging transaction, straddle, wash sale, conversion transaction
or other integrated transaction or persons entering into a constructive sale with respect to the ADSs;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | regulated investment companies or real estate investment trusts;
| | - | ----------------------------------------------------------------



| | · | U.S. expatriates and certain former citizens or long-term residents of the United States;
| | - | -----------------------------------------------------------------------------------------



| | · | U.S. Holders whose functional currency for U.S. federal income tax purposes is not the U.S. dollar;
| | - | ---------------------------------------------------------------------------------------------------



| | · | entities or arrangements classified as partnerships for U.S. federal income tax purposes;
| | - | -----------------------------------------------------------------------------------------



| | · | tax-exempt entities, including an "individual retirement account" or "Roth IRA";
| | - | --------------------------------------------------------------------------------



| | · | persons that own or are deemed to own ten percent or more of our shares by vote or value; or
| | - | --------------------------------------------------------------------------------------------



| | · | persons holding ADSs in connection with a trade or business conducted outside of the United States.
| | - | ---------------------------------------------------------------------------------------------------



If an entity or arrangement
that is classified as a partnership for U.S. federal income tax purposes holds ADSs, the U.S. federal income tax treatment of a
partner will generally depend on the status of the partner and the activities of the partnership. Partnerships holding ADSs and
partners in such partnerships should consult their tax advisers as to the particular U.S. federal income tax consequences of owning
and disposing of the ADSs.



A "U.S. Holder"
is a holder who, for U.S. federal income tax purposes, is a beneficial owner of ADSs, who is eligible for the benefits of the Treaty
and who is:



| | · | a citizen or individual resident of the United States;
| | - | ------------------------------------------------------



| | · | a corporation, or other entity taxable as a corporation, created or organized in or under the laws
of the United States, any state therein or the District of Columbia; or
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------





112







| | · | an estate or trust the income of which is subject to U.S. federal income taxation regardless of
its source.
| | - | -----------------------------------------------------------------------------------------------------------



Generally, a U.S. Holder
of an ADS should be treated for U.S. federal income tax purposes as holding the Class B Shares represented by the ADS. Accordingly,
no gain or loss will be recognized upon an exchange of ADSs for Class B Shares.



U.S. Holders should
consult their tax advisers concerning the U.S. federal, state, local and non-U.S. tax consequences of owning and disposing of ADSs
in their particular circumstances.



Taxation of Distributions



As stated above under
"Item 10B. Memorandum and Articles of Association," we do not intend to pay cash dividends in the foreseeable
future. If we do make distributions of cash or property with respect to ADSs, subject to the passive foreign investment company
rules described below, any such distributions (before reduction for any amounts withheld in respect of Swiss withholding tax),
other than certain pro rata distributions of ADSs, will generally be treated as dividends to the extent paid out of our current
or accumulated earnings and profits (as determined under U.S. federal income tax principles). Because we do not maintain calculations
of our earnings and profits under U.S. federal income tax principles, we expect that distributions generally will be reported to
U.S. Holders as dividends.



For so long as our
ADSs are listed on NASDAQ or we are eligible for benefits under the Treaty, dividends paid to certain non-corporate U.S. Holders
will be eligible for taxation as "qualified dividend income" and therefore, subject to applicable limitations, will be
taxable at rates not in excess of the long-term capital gain rate applicable to such U.S. Holder. U.S. Holders should consult their
tax advisers regarding the availability of the reduced tax rate on dividends in their particular circumstances.



The amount of a dividend
will include any amounts withheld by us in respect of Swiss income taxes. The amount of the dividend will be treated as foreign-source
dividend income to U.S. Holders and will not be eligible for the dividends-received deduction generally available to U.S. corporations
under the Code. Dividends will be included in a U.S. Holder's income on the date of the depositary's receipt of the dividend. The
amount of any dividend income paid in foreign currency will be the U.S. dollar amount calculated by reference to the exchange rate
in effect on the date of actual or constructive receipt, regardless of whether the payment is in fact converted into U.S. dollars
at that time. If the dividend is converted into U.S. dollars on the date of receipt, a U.S. Holder should not be required to recognize
foreign currency gain or loss in respect of the dividend income. A U.S. Holder may have foreign currency gain or loss if the dividend
is converted into U.S. dollars after the date of receipt.



Subject to applicable
limitations, some of which vary depending upon the U.S. Holder's particular circumstances, Swiss income taxes withheld from dividends
on ADSs at a rate not exceeding the rate provided by the Treaty will be creditable against the U.S. Holder's U.S. federal income
tax liability. The rules governing foreign tax credits are complex and U.S. Holders should consult their tax advisers regarding
the creditability of foreign taxes in their particular circumstances. In lieu of claiming a foreign tax credit, U.S. Holders may,
at their election, deduct foreign taxes, including any Swiss income tax, in computing their taxable income, subject to generally
applicable limitations under U.S. law. An election to deduct foreign taxes instead of claiming foreign tax credits applies to all
foreign taxes paid or accrued in the taxable year.



Sale or Other Disposition
of ADSs



Subject to the passive
foreign investment company rules described below, gain or loss realized on the sale or other disposition of ADSs will be capital
gain or loss, and will be long-term capital gain or loss if the U.S. Holder held the ADSs for more than one year. The amount of
the gain or loss will equal the difference between the U.S. Holder's tax basis in the ADSs disposed of and the amount realized
on the disposition, in each case as determined in U.S. dollars. This gain or loss will generally be U.S.-source gain or loss for
foreign tax credit purposes. The deductibility of capital losses is subject to various limitations.





113







Passive Foreign
Investment Company Rules



We will be a PFIC for
any taxable year in which, after the application of certain "look-through" rules with respect to subsidiaries, either
(i) 75% or more of our gross income consists of "passive income," or (ii) 50% or more of the average quarterly
value of our assets consist of assets that produce, or are held for the production of, "passive income." For purposes
of the above calculations, we will be treated as if we hold our proportionate share of the assets of, and receive directly our
proportionate share of the income of, any other corporation in which we directly or indirectly own at least 25%, by value, of the
shares of such corporation. Passive income generally includes interest, dividends, rents, certain non-active royalties and capital
gains.



Based on our financial
statements, business plan and certain estimates and projections, including as to the relative values of our assets, we do not believe
that we were a PFIC for our 2019 taxable year and do not expect to be a PFIC in the foreseeable future. However, there can be no
assurance that the IRS will agree with our conclusion regarding our PFIC status, and whether we are or will be classified as a
PFIC in any particular year is uncertain because, among other things, we currently own a substantial amount of passive assets,
including cash, and the valuation of certain of our assets is uncertain and may vary substantially over time. Accordingly, there
can be no assurance that we will not be a PFIC for any taxable year. If a U.S. Holder holds ADSs in any year in which we are treated
as a PFIC, we generally will continue to be treated as a PFIC with respect to that U.S. Holder for all succeeding years during
which the U.S. Holder holds ADSs, even if we cease to meet the threshold requirements for PFIC status.



If we are a PFIC in
any taxable year during which a U.S. Holder holds ADSs (assuming such U.S. Holder had not made a timely mark-to-market election,
as described below), gain recognized by such U.S. Holder on a sale or other disposition (including certain pledges) of the ADSs
will be allocated ratably over the U.S. Holder's holding period for the ADSs. The amounts allocated to the taxable year of the
disposition and to any year before we become a PFIC will be taxed as ordinary income. The amount allocated to each other taxable
year will be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, for that taxable year,
and an interest charge will be imposed on such amount. Further, to the extent that any distribution received by the U.S. Holder
on its ADSs exceeds 125% of the average of the annual distributions on the ADSs received during the preceding three years or the
U.S. Holder's holding period, whichever is shorter, that distribution would be subject to taxation in the same manner as gain recognized
on the disposition of the ADSs (as described earlier in this paragraph).



A U.S. Holder can avoid
certain of the adverse rules described above by making a mark-to-market election with respect to its ADSs, provided that the ADSs
are "marketable." ADSs will be marketable if they are "regularly traded" on a "qualified exchange"
or other market within the meaning of applicable Treasury regulations. If a U.S. Holder makes the mark-to-market election, it generally
will recognize as ordinary income any excess of the fair market value of the ADSs at the end of each taxable year over their adjusted
tax basis, and will recognize an ordinary loss in respect of any excess of the adjusted tax basis of the ADSs over their fair market
value at the end of the taxable year (but only to the extent of the net amount of income previously included as a result of the
mark-to-market election). If a U.S. Holder makes the election, the holder's tax basis in the ADSs will be adjusted to reflect the
income or loss amounts recognized. Any gain recognized on the sale or other disposition of ADSs in a year when we are a PFIC will
be treated as ordinary income and any loss will be treated as an ordinary loss (but only to the extent of the net amount of income
previously included as a result of the mark-to-market election).



In addition, in order
to avoid the application of the foregoing rules, a United States person that owns stock in a PFIC for U.S. federal income tax purposes
may make a "qualified electing fund" election (a "QEF Election") with respect to such PFIC if the PFIC provides
the information necessary for such election to be made. If a United States person makes a QEF Election with respect to a PFIC,
the United States person will be currently taxable on its pro rata share of the PFIC's ordinary earnings and net capital gain (at
ordinary income and capital gain rates, respectively) for each taxable year that the entity is classified as a PFIC and will not
be required to include such amounts in income when actually distributed by the PFIC. We do not intend to provide information necessary
for U.S. Holders to make qualified electing fund elections.



In addition, if we
pay a dividend to a U.S. Holder with respect to which we are treated as a PFIC, the preferential dividend rates discussed above
with respect to dividends paid to certain non-corporate U.S. Holders will not apply.



If a U.S. Holder owns
ADSs during any year in which we are a PFIC, the holder generally must file annual reports containing such information as the U.S.
Treasury may require on IRS Form 8621 (or any successor form) with respect to us, generally with the holder's federal income tax
return for that year.



U.S. Holders should
consult their tax advisers concerning our potential PFIC status and the potential application of the PFIC rules.





114







Information Reporting
and Backup Withholding



Payments of dividends
and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries generally are
subject to information reporting, and may be subject to backup withholding, unless (i) the U.S. Holder is a corporation or
other exempt recipient or (ii) in the case of backup withholding, the U.S. Holder provides a correct taxpayer identification
number and certifies that it is not subject to backup withholding.



The amount of any backup
withholding from a payment to a U.S. Holder will be allowed as a credit against the holder's U.S. federal income tax liability
and may entitle it to a refund, provided that the required information is timely furnished to the IRS.



Information with
Respect to Foreign Financial Assets



A U.S. Holder who is
an individual and, in certain cases, an entity, and who holds certain specified foreign financial assets (which may include the
ADSs) with an aggregate value in excess of certain thresholds, is generally required to report information related to such interests
by attaching a completed IRS Form 8938 (Statement of Specified Foreign Financial Assets) with such U.S. Holder's tax return
for each year in which such U.S. Holder held an interest in the specified foreign financial assets, subject to certain exceptions
(including an exception for ADSs held in accounts maintained by U.S. financial institutions). Persons who are required to report
foreign financial assets and fail to do so may be subject to substantial penalties. U.S. Holders should consult their tax advisors
regarding these information reporting requirements.



SWISS TAX CONSIDERATIONS



Swiss Federal, Cantonal and Communal
Individual Income Tax and Corporate Income Tax



Non-Resident Shareholders



Holders of or shares
or ADSs representing our shares who are not resident in Switzerland for tax purposes, and who, during the relevant taxation year,
have not engaged in a trade or business carried on through a permanent establishment or fixed place of business situated in Switzerland
for tax purposes (all such shareholders are hereinafter referred to as the "Non-Resident Shareholders"), will
not be subject to any Swiss federal, cantonal and communal income tax on dividends and similar cash or in-kind distributions on
ADSs representing our shares (including dividends on liquidation proceeds and stock dividends) (hereinafter referred to as the
"Dividends"), distributions based upon a capital reduction (Nennwertrückzahlungen) or paid out of
reserves from capital contributions (Reserven aus Kapitaleinlagen) on shares underlying the ADSs, or capital gains realized
on the sale or other disposition of ADSs (see, however, paragraph 1.3 "Swiss Federal Withholding Tax" for a summary
of Swiss federal withholding tax on Dividends).



Resident Private Shareholders



Swiss resident individuals
who hold their ADSs as private assets all such shareholders are hereinafter referred to as the "Resident Private Shareholders")
are required to include Dividends, but not distributions based upon a capital reduction (Nennwertrückzahlungen) or
paid out of reserves from capital contributions (Reserven aus Kapitaleinlagen) of the shares underlying the ADSs, in their
personal income tax return and are subject to Swiss federal, cantonal and communal income tax on any net taxable income for the
relevant taxation period, including the Dividends, but not the distributions based upon a capital reduction (Nennwertrückzahlungen)
or paid out of reserves from capital contributions (Reserven aus Kapitaleinlagen). Capital gains resulting from the sale
or other dispositions of ADSs are not subject to Swiss federal, cantonal and communal income tax, and conversely, capital losses
are not tax-deductible for Resident Private Shareholders. See paragraph 1.1(C) "Domestic Commercial Shareholders"
for a summary of the taxation treatment applicable to Swiss resident individuals, who, for income tax purposes, are classified
as "professional securities dealers."





115







Domestic Commercial Shareholders



Corporate and individual
shareholders who are resident in Switzerland for tax purposes and corporate and individual shareholder who are not resident in
Switzerland, and who, in each case, hold their ADSs as part of a trade or business carried on in Switzerland, in the case of corporate
and individual shareholders not resident in Switzerland, through a permanent establishment or fixed place of business situated,
for tax purposes, in Switzerland, are required to recognize Dividends, distributions based upon a capital reduction (Nennwertrückzahlungen)
or paid out of reserves from capital contributions (Reserven aus Kapitaleinlagen) received on shares underlying the ADSs
and capital gains or losses realized on the sale or other disposition of ADSs in their income statement for the relevant taxation
period and are subject to Swiss federal, cantonal and communal individual or corporate income tax, as the case may be, on any net
taxable earnings for such taxation period. The same taxation treatment also applies to Swiss-resident private individuals who,
for income tax purposes, are classified as "professional securities dealers" for reasons of, inter alia, frequent
dealing, or leveraged investments in ADSs and other securities (the shareholders referred to in this paragraph 1.1.(C), hereinafter
for the purposes of this section, as the "Domestic Commercial Shareholders"). Domestic Commercial Shareholders
who are corporate taxpayers may be eligible for dividend relief (Beteiligungsabzug) in respect of Dividends and distributions
based upon a capital reduction (Nennwertrückzahlungen) or paid out of reserves from capital contributions (Reserven
aus Kapitaleinlagen) if the shares underlying the ADSs held by them as part of a Swiss business have an aggregate market value
of at least CHF 1 million.



Swiss Cantonal and Communal Private
Wealth Tax and Capital Tax



Non-Resident Shareholders



Non-Resident Shareholders
are not subject to Swiss cantonal and communal private wealth tax or capital tax.



Resident Private Shareholders and
Domestic Commercial Shareholders



Resident Private Shareholders
and Domestic Commercial Shareholders who are individuals are required to report their ADSs as part of private wealth or their Swiss
business assets, as the case may be, and will be subject to Swiss cantonal and communal private wealth tax on any net taxable wealth
(including the ADSs), in the case of Domestic Commercial Shareholders to the extent the aggregate taxable wealth is allocated in
Switzerland. Domestic Commercial Shareholders who are corporate taxpayers are subject to Swiss cantonal and communal capital tax
on taxable capital to the extent the aggregate taxable capital is allocated to Switzerland.



Swiss Federal Withholding Tax



Dividends that the
Company pays on the shares underlying the ADSs are subject to Swiss Federal withholding tax (Verrechnungssteuer) at a rate
of 35% on the gross amount of the Dividend. The Company is required to withhold the Swiss federal withholding tax from the Dividend
and remit it to the Swiss Federal Tax Administration. Distributions based upon a capital reduction (Nennwertrückzahlungen)
or paid out of reserves from capital contributions (Reserven aus Kapitaleinlagen) are not subject to Swiss federal withholding
tax.



The Swiss federal withholding
tax on a Dividend will be refundable in full to a Resident Private Shareholder and to a Domestic Commercial Shareholder, who, in
each case, inter alia, as a condition to refund, duly reports the Dividend in his or her individual income tax return as
income or recognizes the Dividends in its income statement as earnings, as applicable.



A Non-Resident Shareholder
may be entitled to a partial refund of the Swiss federal withholding tax on Dividend if the country of his or her residence for
tax purposes has entered into a bilateral treaty for the avoidance of double taxation with Switzerland and the conditions of such
treaty are met. Such shareholders should be aware that the procedures for claiming tax treaty benefits (and the time required for
obtaining a refund) might be different from country to country. For example, a shareholder who is resident of the U.S. for the
purposes of the bilateral treaty between the U.S. and Switzerland is eligible for a refund of the amount of the withholding tax
in excess of the 15% treaty rate, provided such shareholder: (i) qualifies for benefits under this treaty and qualifies as beneficial
owner of the Dividends; (ii) hold, directly or indirectly, less than 10% of the voting stock of the Company; (iii) does not qualify
as a pension scheme or retirement arrangement for the purpose of the bilateral treaty; and (iv) does not conduct business through
a permanent establishment or fixed base in Switzerland to which the ADSs are attributable. Such an eligible U.S. shareholder may
apply for a refund of the amount of the withholding tax in excess of the 15% treaty rate. The applicable refund request form may
be filed with the Swiss Federal Tax Administration following receipt of the dividend and the relevant deduction certificate, however
no later than December 31 of the third year following the calendar year in which the dividend was payable.





116







Swiss Federal Stamp Taxes



Any dealings in the
ADSs, where a bank or another securities dealer in Switzerland, as defined in the Swiss Federal Stamp Tax Act, acts as intermediary
or is a party to the transaction, are, subject to certain exemptions provided for in the Swiss Federal Stamp Tax Act, subject to
Swiss securities turnover tax at an aggregate tax rate of up to 0.15% of the consideration paid for such ADSs.



International Automatic Exchange of
Information in Tax Matters



On November 19, 2014,
Switzerland signed the Multilateral Competent Authority Agreement, which is based on article 6 of the OECD/Council of Europe administrative
assistance convention and is intended to ensure the uniform implementation of automatic exchange of information (the "AEOI").
The Federal Act on the International Automatic Exchange of Information in Tax Matters (the "AEOI Act") entered
into force on January 1, 2017. The AEOI Act is the legal basis for the implementation of the AEOI standard in Switzerland.



The AEOI is being introduced
in Switzerland through bilateral agreements or multilateral agreements. The agreements have, and will be, concluded on the basis
of guaranteed reciprocity, compliance with the principle of specialty (i.e., the information exchanged may only be used to assess
and levy taxes (and for criminal tax proceedings)) and adequate data protection.



Based on such multilateral
agreements and bilateral agreements and the implementing laws of Switzerland, Switzerland exchanges data in respect of financial
assets, including the Shares, held in, and income derived thereon and credited to, accounts or deposits with a paying agent in
Switzerland for the benefit of individuals resident in a EU member state or in a treaty state.



Swiss Facilitation of the Implementation
of the U.S. Foreign Account Tax Compliance Act



Switzerland has concluded
an intergovernmental agreement with the U.S. to facilitate the implementation of FATCA. The agreement ensures that the accounts
held by U.S. persons with Swiss financial institutions are disclosed to the U.S. tax authorities either with the consent of the
account holder or by means of group requests within the scope of administrative assistance. Information will not be transferred
automatically in the absence of consent, and instead will be exchanged only within the scope of administrative assistance on the
basis of the double taxation agreement between the U.S. and Switzerland. On 8 October 2014, the Swiss Federal Council approved
a mandate for negotiations with the U.S. on changing the current direct-notification-based regime to a regime where the relevant
information is sent to the Swiss Federal Tax Administration, which in turn provides the information to the U.S. tax authorities.



| | F. | Dividends and Paying Agents
| | -- | ---------------------------



Not applicable.



| | G. | Statement by Experts
| | -- | --------------------



Not applicable.





117







| | H. | Documents on Display
| | -- | --------------------



Under the Exchange
Act, we are required to file reports and other information with the SEC. Specifically, we are required to file annually a Form
20-F within 120 days of each fiscal year. Copies of reports and other information, when so filed, may be inspected without charge
and may be obtained at prescribed rates at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington,
D.C. 20549. You can request copies of these documents upon payment of a duplicating fee, by writing to the SEC. Please call the
SEC at 1-800-SEC-0330 for further information on the operation of the public reference rooms. The SEC also maintains a website
at www.sec.gov that contains reports, proxy and information statements, and other information regarding registrants that make electronic
filings with the SEC using its EDGAR system. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing
the furnishing and content of quarterly reports and proxy statements, and officers, directors and principal shareholders are exempt
from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. Our financial statements
have been prepared in accordance with U.S. GAAP.



We will make available
to our shareholders annual reports, which will include a review of operations and annual audited consolidated financial statements
prepared in conformity with U.S. GAAP. Our documents may be available at our corporate headquarters at General-Guisan-Strasse 6,
6300 Zug, Switzerland.



| | I. | Subsidiary Information
| | -- | ----------------------



Not applicable.



| | Item 11. | Quantitative and Qualitative Disclosures about Market Risk
| | -------- | ----------------------------------------------------------



The Company is exposed
to market risks primarily related to foreign currency exchange rates, commodity prices, and changes in the value of investment
securities. The Company is not exposed to interest rate risks because all its financial instruments have fixed interest rate terms.



The table below shows
the balances of our market risk sensitive instruments, which are financial instruments, as at the end of the latest fiscal year
grouped by functional currency, and the expected cash flows from these instruments for each of the next five years. The contractual
cash flows are presented on an undiscounted cash flow basis, including interest expense. For those instruments where the lender
has the choice to settle the repayment of principal and interests in cash or in shares, we have assumed that all amounts would
be repaid in cash; this table therefore shows the maximum expected cash flows. Additional details on the financial instruments
considered are available in Note 24. Loans and line of credit of our consolidated financial statements for the years ended December
31, 2018 and 2019.



|                                                    |                         |                                                                                                                                                                                                                                                                    |           |                                                        | Expected
    cash flows by period
|--------------------------------------------------- | ----------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | --------- | ------------------------------------------------------ | ---------------------------------
|Market
    risk sensitive instruments (USD'000)     | Net
    carrying amount | Principal
                                                                            amount
                                                                            and
                                                                            interests | Interests | Weighted
    average effective interest rate per annum | Total                            
|Debt and convertible
    note obligations:          |                         |                                                                                                                                                                                                                                                                    |           |                                                        |                                  
|-
    held by entities with CHF functional currency | 6,083                   | 6,532                                                                                                                                                                                                                                                              |           | 19%                                                    | 6,532                            
|-
    held by entities with GBP functional currency | 82                      | 82                                                                                                                                                                                                                                                                 |           | 0%                                                     | 82                               
|Total
    contractual obligations                   | 6,165                   | 6,614                                                                                                                                                                                                                                                              |           | -                                                      | 6,614                            



Foreign currency exchange rate risk



For information about
the foreign currency exchange rate risk see Item 5. Operating and Financial Review and Prospects – A. Operating Results.





118







Commodity price risk



The Company has only
a very limited exposure to price risk related to anticipated purchases of certain commodities used as raw material. Our raw material
inventory was USD 636,000 as at December 31, 2019. A change in those prices may affect our gross margin, however because the
inventory balance is relatively small in comparison with our total assets, the Company does not enter into commodity futures, forwards
or any other hedge instrument to manage fluctuations in prices of anticipated purchases.



Risk of changes in the value of investment
securities



As at December 31,
2019, the Company had two investment securities apart from the investments in consolidated subsidiaries: an investment in equity
securities at fair value of USD 755,803, and an investment in equity securities at cost of USD 7,000,000. The Company
has not entered into any instrument to hedge against the fluctuation in value of these equity instruments.



For the equity instrument
held at fair value, the Company manages the risk of fluctuation of its market price by regularly reviewing the share prices and
financial position of the issuer. Changes in the fair value of the equity are recorded in the income statement in the period in
which they occur.



For the equity instrument
held at cost, the Company is in regular contact with the management of the issuer to review its financial position, so as to manage
the risk of fluctuation.



| | Item 12. | Description of Securities Other than Equity Securities
| | -------- | ------------------------------------------------------



| | A. | Debt Securities
| | -- | ---------------



Not applicable.



| | B. | Warrants and Rights
| | -- | -------------------



Not applicable.



| | C. | Other Securities
| | -- | ----------------



Not applicable.



| | D. | American Depositary Shares
| | -- | --------------------------



Fees and Expenses



|Persons depositing or withdrawing Class B Shares or ADS holders must pay: |  | For:                                                                                                                                                                                                                                            
|------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                          |  |                                                                                                                                                                                                                                                 
|USD5.00 (or less) per 100 ADSs (or portion of 100 ADSs)                   |  | • Issuance of ADSs, including issuances
        resulting from a distribution of Class B Shares or rights or other property
        
        • Cancellation of ADSs for the
purpose of withdrawal, including if the deposit agreement terminates
|                                                                          |  |                                                                                                                                                                                                                                                 
|USD0.05 (or less) per ADS                                                 |  | • Any cash distribution to ADS holders                                                                                                                                                                                                          





119







|Persons depositing or withdrawing Class B Shares or ADS holders must pay:                                                                                                                  |  | For:                                                                                                                                                                
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                                                                                           |  |                                                                                                                                                                     
|A fee equivalent to the fee that would be payable if securities distributed to you had been Class B Shares and the Class B Shares had been deposited for issuance of ADSs                  |  | • Distribution of securities distributed to holders of deposited securities which are distributed by the depositary to ADS holders                                  
|                                                                                                                                                                                           |  |                                                                                                                                                                     
|USD0.05 (or less) per ADSs per calendar year                                                                                                                                               |  | • Depositary services                                                                                                                                               
|                                                                                                                                                                                           |  |                                                                                                                                                                     
|Registration or transfer fees                                                                                                                                                              |  | • Transfer and registration of Class B Shares on our share register to or from the name of the depositary or its agent when you deposit or withdraw Class B Shares  
|                                                                                                                                                                                           |  |                                                                                                                                                                     
|Expenses of the depositary                                                                                                                                                                 |  | • Cable, telex and facsimile transmissions
        (when expressly provided in the deposit agreement)
        
        • Converting foreign currency
to U.S. dollars
|                                                                                                                                                                                           |  |                                                                                                                                                                     
|Taxes and other governmental charges the depositary or the custodian have to pay on any ADS or share underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes |  | • As necessary                                                                                                                                                      
|                                                                                                                                                                                           |  |                                                                                                                                                                     
|Any charges incurred by the depositary or its agents for servicing the deposited securities                                                                                                |  | • As necessary                                                                                                                                                      



The depositary collects
its fees for delivery and surrender of ADSs directly from investors depositing Class B Shares or surrendering ADSs for the purpose
of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting
those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect
its annual fee for depositary services by deduction from cash distributions or by directly billing investors or by charging the
book-entry system accounts of participants acting for them. The depositary may generally refuse to provide fee-based services until
its fees for these services are paid.



From time to time,
the depositary may make payments to us to reimburse and/or class B share revenue from the fees collected from ADS holders, or waive
fees and expenses for services provided, generally relating to costs and expenses arising out of establishment and maintenance
of the ADS program. In performing its duties under the deposit agreement, the depositary may use brokers, dealers or other service
providers that are affiliates of the depositary and that may earn or share fees or commissions.



Depositary Payments



In 2019, we did not
receive any payments or reimbursements from The Bank of New York Mellon, the depositary bank of our ADS program.





120







| | 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) Our Chief Executive
Officer and Chief Financial Officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in
Exchange Act Rule 13a-15(e)) as of the end of the period covered by this annual report, have concluded that, as of such date, our
disclosure controls and procedures were effective.



(b) Management’s
annual report on internal control over financial reporting: Our Board of Directors and management are responsible for establishing
and maintaining adequate internal control over financial reporting. Our internal control over financial reporting was designed
to provide reasonable assurance to our management and Board of Directors regarding the reliability of financial reporting and the
preparation and fair presentation of its published consolidated financial statements.



Internal controls over
financial reporting, no matter how well designed, have inherent limitations. Therefore, even those internal controls over financial
reporting determined to be effective may not prevent or detect misstatements and can provide only reasonable assurance with respect
to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.



Management assessed
the effectiveness of our internal control over financial reporting as of December 31, 2019. In making this assessment, it used the criteria established in Internal Control—Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on our assessment, management
concluded that, as of December 31, 2019, our internal control over financial reporting is effective based on those criteria.



(c) Not applicable.



(d) There were no changes
to our internal control over financial reporting that occurred during the period covered by this annual report 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



The Company does not
have an audit committee financial expert serving on its audit committee. Each of the Company’s directors serving on the audit
committee is financially literate and is able to professionally discharge the duties incumbent upon audit committee members. However,
none of the audit committee members are “financial experts.” We are working to identify candidates to our Board of
Directors who would qualify as an “audit committee financial expert.”



Item
16B. Code of Ethics



We have followed Swiss
law which does not require a company to have a code of ethics applicable to all directors, officers and employees. We do, however,
expect ethical behavior from all our directors, officers and employees.





121







Item
16C. Principal Accounting Fees and Services



(a) Audit Fees:
The aggregate fees billed for professional services rendered by the principal accountant for the audit of our annual financial
statements or services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements
amounted to CHF 698,946 (USD 703,466) and CHF 663,387 (USD 663,714) respectively for the years ended December 31,
2019 and 2018.



(b) Audit-Related
Fees: None.



(c) Tax Fees:
None.



(d) All Other Fees:
None.



(e) Audit committee’s
pre-approval policies and procedures: Our audit committee is responsible for overseeing the activities of BDO, our principal
accountant. The audit committee regularly evaluates the performance of BDO and, based on this, once a year determines whether BDO
should be proposed to the shareholders for election. To assess the performance of BDO, the audit committee holds meetings with
the CFO. Criteria applied for the performance assessment of BDO include an evaluation of its technical and operational competence;
its independence and objectivity; the sufficiency of the resources it has employed; its focus on areas of significant risk; its
willingness to probe and challenge; its ability to provide effective, practical recommendations; and the openness and effectiveness
of its communications and coordination with the audit committee.



In the years ended
December 31, 2019 and 2018, BDO has not provided services other that those rendered for the audit of our annual financial statements
or in connection with statutory and regulatory filings or engagements.



(f) Not applicable.



Item
16D. Exemptions from the Listing Standards for Audit Committees



None.



Item
16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers



In the year ended December
31, 2019, the Company purchased its own Class B Shares as per detail below:



|Period                             | (a) Total Number of Shares Purchased1 |  | (b) Average Price Paid per Share |  | (c) Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs2 |  | (d) Maximum Number of Shares that may Yet Be Purchased Under the Plans or Program
|---------------------------------- | ------------------------------------- |  | -------------------------------- |  | ------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------
|January 01 to January 31, 2019     | 22,442                                |  | USD 3.32                         |  | -                                                                                     |  | n/a                                                                              
|February 01 to February 28, 2019   | 7,346                                 |  | USD 2.84                         |  | -                                                                                     |  | n/a                                                                              
|March 01 to March 31, 2019         | 4,434                                 |  | USD 2.76                         |  | -                                                                                     |  | n/a                                                                              
|April 01 to April 30, 2019         | 28,634                                |  | USD 2.89                         |  | -                                                                                     |  | n/a                                                                              
|May 01 to May 31, 2019             | 68,485                                |  | USD 2.71                         |  | -                                                                                     |  | n/a                                                                              
|June 01 to June 30, 2019           | 63,103                                |  | USD 2.53                         |  | -                                                                                     |  | n/a                                                                              
|July 01 to July 31, 2019           | 68,000                                |  | USD 2.53                         |  | 68,000                                                                                |  | 3,614,848                                                                        
|August 01 to August 31, 2019       | 58,000                                |  | USD 2.39                         |  | 58,000                                                                                |  | 3,556,848                                                                        
|September 01 to September 30, 2019 | 18,000                                |  | USD 2.97                         |  | 18,000                                                                                |  | 3,538,848                                                                        
|October 01 to October 31, 2019     | 11,500                                |  | USD 2.44                         |  | 11,500                                                                                |  | 3,527,348                                                                        
|November 01 to November 30, 2019   | 10,500                                |  | USD 2.22                         |  | 10,500                                                                                |  | 3,516,848                                                                        
|December 01 to December 31, 2019   | 36,000                                |  | USD 2.05                         |  | 36,000                                                                                |  | 3,480,848                                                                        
|Total                              | 396,444                               |  | USD 2.64                         |  | 202,000                                                                               |  | 3,480,848                                                                        





|1  Column (a) shows shares we purchased as part of our share buyback program, as well as the share purchased outside of our publicly announced share buyback program using the services of a market maker.                                                                                                                                                                                                                                                                                                                                                                           
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2  Column (c) shows shares purchased as part of our share buyback  program which was approved by the Board of directors on June 18, 2019 and publicly announced on July 08, 2019. WISeKey has received approval from the Swiss Takeover Board to purchase up to 3,682,848 of its class B shares. This maximum amount of shares is equivalent to 10% of the registered share capital of the Company. The shares will be purchased in the open market starting July 09, 2019 for a period of 3 years until July 07, 2022. WISeKey has the right to terminate the buyback program early.





122







Item
16F. Change in Registrant's Certifying Accountant



None.



Item
16G. Corporate Governance



See “Item
6.C. Board Practices” for significant ways in which our corporate governance practices differ from NASDAQ’s standards.



Item
16H. Mine Safety Disclosure



Not applicable.





123







| | Item 17. | Financial Statements
| | -------- | --------------------



The Company has elected
to furnish the financial statements and related information specified in Item 18.



| | Item 18. | Financial Statements
| | -------- | --------------------



The consolidated financial
statements and related notes required by this Item 18 are included in this annual report beginning on page F-1.



| | Item 19. | Exhibits
| | -------- | --------



Index to
Exhibits



|Exhibit No. | Description                                                                                                                                                                                                                                                                                                                                                                      
|----------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|            |                                                                                                                                                                                                                                                                                                                                                                                  
|1.1*        | Amended and Restated Articles of Association of the Registrant (incorporated by reference to exhibit 1.1 of Amendment No.1 to WISeKey International Holding AG’s registration statement on Form 20-F (File No. 333-39115) as filed with the SEC on November 8, 2019).                                                                                                            
|            |                                                                                                                                                                                                                                                                                                                                                                                  
|2.1*        | Form of Specimen Certificate for Class B Shares of the Registrant (incorporated by reference to exhibit 2.1 of Amendment No.1 to WISeKey International Holding AG’s registration statement on Form 20-F (File No. 333-39115) as filed with the SEC on November 8, 2019).                                                                                                         
|            |                                                                                                                                                                                                                                                                                                                                                                                  
|2.2*        | Form of Registrant's American Depositary Receipt -  Previously filed and incorporated by reference to form of ADR filed pursuant to Rule 424(b)(3) on November 13, 2019 under the F-6 Registration Statement for the Registrant’s American Depositary Shares (Reg No. 333-224780).                                                                                               
|            |                                                                                                                                                                                                                                                                                                                                                                                  
|2.4*        | Deposit Agreement, dated as of May 16, 2018, among the Registrant, the Depositary and the Owners and Beneficial Owners of the American Depositary Shares issued thereunder (incorporated by reference to exhibit 2.4 of Amendment No.1 to WISeKey International Holding AG’s registration statement on Form 20-F (File No. 333-39115) as filed with the SEC on November 8, 2019).
|            |                                                                                                                                                                                                                                                                                                                                                                                  
|2.5         | Description of Securities registered under Section 12 of the Exchange Act.                                                                                                                                                                                                                                                                                                       
|            |                                                                                                                                                                                                                                                                                                                                                                                  
|4.1*        | WISeKey Employee Share Option Plan, dated September 29, 2016 (incorporated by reference to exhibit 4.1 of Amendment No.1 to WISeKey International Holding AG’s registration statement on Form 20-F (File No. 333-39115) as filed with the SEC on November 8, 2019).                                                                                                              
|            |                                                                                                                                                                                                                                                                                                                                                                                  
|4.2*        | Form of indemnification agreement by and between Registrant and each of its directors and executive officers  (incorporated by reference to exhibit 4.2 of Amendment No.1 to WISeKey International Holding AG’s registration statement on the Form 20-F (File No. 333-39115) as filed with the SEC on November 8, 2019).                                                         
|            |                                                                                                                                                                                                                                                                                                                                                                                  
|4.3*        | Convertible Loan Agreement by and between Registrant and Crede CG III, Ltd., dated as of September 28, 2018 (incorporated by reference to exhibit 4.3 of Amendment No.1 to WISeKey International Holding AG’s registration statement on Form 20-F (File No. 333-39115) as filed with the SEC on November 8, 2019).                                                               
|            |                                                                                                                                                                                                                                                                                                                                                                                  
|4.4*        | Warrant Agreement by and between Registrant and Crede CG III, Ltd., dated as of September 28, 2018 (incorporated by reference to exhibit 4.4 of Amendment No.1 to WISeKey International Holding AG’s registration statement on Form 20-F (File No. 333-39115) as filed with the SEC on November 8, 2019).                                                                        
|            |                                                                                                                                                                                                                                                                                                                                                                                  
|4.5*        | Convertible Loan Agreement by and between Registrant and YA II PN, Ltd., dated as of June 27, 2019 (incorporated by reference to exhibit 4.5 of Amendment No.1 to WISeKey International Holding AG’s registration statement on Form 20-F (File No. 333-39115) as filed with the SEC on November 8, 2019).                                                                        
|            |                                                                                                                                                                                                                                                                                                                                                                                  
|4.6*        | Warrant Agreement by and between Registrant and YA II PN, Ltd., dated as of June 27, 2019 (incorporated by reference to exhibit 4.6 of Amendment No.1 to WISeKey International Holding AG’s registration statement on Form 20-F (File No. 333-39115) as filed with the SEC on November 8, 2019).                                                                                 





124







|4.7*  | Standby Equity Distribution Agreement by and between Registrant and YA II PN, Ltd., dated as of February 8, 2018 (incorporated by reference to exhibit 4.7 of Amendment No.1 to WISeKey International Holding AG’s registration statement on Form 20-F (File No. 333-39115) as filed with the SEC on November 8, 2019).                                                      
|----- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                              
|4.8*  | Share Subscription Facility Agreement by and among Registrant, GEM Global Yield Fund LLC SCS and GEM Investments America, LLC, dated as of January 19, 2016 (incorporated by reference to exhibit 4.8 of WISeKey International Holding AG’s registration statement on Form 20-F (File No. 333-39115) as filed with the SEC on October 30, 2019).                             
|      |                                                                                                                                                                                                                                                                                                                                                                              
|4.9*  | Warrant to Purchase Ordinary Shares by and between Registrant and GEM Global Yield Fund LLC SCS, dated as of May 6, 2016 (incorporated by reference to exhibit 4.9 of WISeKey International Holding AG’s registration statement on Form 20-F (File No. 333-39115) as filed with the SEC on October 30, 2019).                                                                
|      |                                                                                                                                                                                                                                                                                                                                                                              
|4.10* | Master Purchase Agreement by and between Cisco Systems International B.V. and INSIDE Secure, dated as of August 25, 2014 (incorporated by reference to exhibit 4.10 of Amendment No.1 to WISeKey International Holding AG’s registration statement on Form 20-F (File No. 333-39115) as filed with the SEC on November 8, 2019).                                             
|      |                                                                                                                                                                                                                                                                                                                                                                              
|4.11* | Buffer Stock Agreement by and between WISeKey Semiconductors and Key Tronic Corporation, dated as of June 9, 2017 (incorporated by reference to exhibit 4.11 of Amendment No.1 to WISeKey International Holding AG’s registration statement on Form 20-F (File No. 333-39115) as filed with the SEC on November 8, 2019).                                                    
|      |                                                                                                                                                                                                                                                                                                                                                                              
|4.12* | Supplier Agreement by and between Vault-IC France and UTAC Headquarters Pte. Ltd, dated as of September 19, 2016 (incorporated by reference to exhibit 4.12 of WISeKey International Holding AG’s registration statement on Form 20-F (File No. 333-39115) as filed with the SEC on October 30, 2019).                                                                       
|      |                                                                                                                                                                                                                                                                                                                                                                              
|4.13* | Service Level Agreement by and among Inside Secure, Presto Engineering HVM and Presto Engineering, Inc., dated as of June 30, 2015 (incorporated by reference to exhibit 4.13 of Amendment No.1 to WISeKey International Holding AG’s registration statement on Form 20-F (File No. 333-39115) as filed with the SEC on November 8, 2019). (1)                               
|      |                                                                                                                                                                                                                                                                                                                                                                              
|4.14* | First Amendment to Service Level Agreement, by and among Inside Secure, Presto Engineering HVM and Presto Engineering, Inc., dated as of May 26, 2016 (incorporated by reference to exhibit 4.14 of Amendment No.1 to WISeKey International Holding AG’s registration statement on Form 20-F (File No. 333-39115) as filed with the SEC on November 8, 2019).  (1)           
|      |                                                                                                                                                                                                                                                                                                                                                                              
|4.15* | Second Amendment to Service Level Agreement, by and among WISeKey Semiconductors, Presto Engineering HVM and Presto Engineering, Inc., dated as of June 25, 2018 (incorporated by reference to exhibit 4.15 of Amendment No.1 to WISeKey International Holding AG’s registration statement on Form 20-F (File No. 333-39115) as filed with the SEC on November 8, 2019).  (1)
|      |                                                                                                                                                                                                                                                                                                                                                                              
|4.16* | SafeNet Supplier Agreement by and between SafeNet, Inc. and Inside Secure SA, dated as of March 26, 2012 (incorporated by reference to exhibit 4.16 of Amendment No.1 to WISeKey International Holding AG’s registration statement on Form 20-F (File No. 333-39115) as filed with the SEC on November 8, 2019).                                                             
|      |                                                                                                                                                                                                                                                                                                                                                                              
|4.17* | PicoPass License Agreement by and between Inside Secure and HID Global Corporation, dated as of December 8, 2014 (incorporated by reference to exhibit 4.17 of Amendment No.1 to WISeKey International Holding AG’s registration statement on Form 20-F (File No. 333-39115) as filed with the SEC on November 8, 2019).  (1)                                                
|      |                                                                                                                                                                                                                                                                                                                                                                              
|4.18* | Collaboration Agreement by and between Organisation Internationale pour la Sécurité de Transactions Electroniques OISTE and WISeKey SA, dated as of June 20, 2018 (incorporated by reference to exhibit 4.18 of WISeKey International Holding AG’s registration statement on Form 20-F (File No. 333-39115) as filed with the SEC on October 30, 2019).                      
|      |                                                                                                                                                                                                                                                                                                                                                                              
|4.19  | Credit
    Agreement, dated as of April 4, 2019, by and between ExWorks Capital Fund I, L.P. and WISeCoin AG. (1)                                                                                                                                                                                                                                                            
|      |                                                                                                                                                                                                                                                                                                                                                                              
|4.20  | Convertible
    Term Loan Facility Agreement, dated as of December 16, 2019, by and between Long State Investment Limited and WISeKey
    International Holding AG. (1)                                                                                                                                                                                                      





125







|4.21 | Convertible
    Loan Agreement, dated as of March 4, 2020, between WISeKey International Holding AG and YA II PN, LTD. (1)                                                                                     
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                
|8.1  | List of significant subsidiaries of the Registrant.                                                                                                                                                            
|     |                                                                                                                                                                                                                
|12.1 | Certification of Carlos Moreira, Chief Executive Officer of WISeKey International Holding AG, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                       
|     |                                                                                                                                                                                                                
|12.2 | Certification of Peter Ward, Chief Financial Officer of WISeKey International Holding AG, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                           
|     |                                                                                                                                                                                                                
|13.1 | Certification of Carlos Moreira, Chief Executive Officer of WISeKey International Holding AG, pursuant to Section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|     |                                                                                                                                                                                                                
|13.2 | Certification of Peter Ward, Chief Financial Officer of WISeKey International Holding AG, pursuant to Section 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.    



| | * | Previously filed
| | - | ----------------

| | (1) | Portions of this exhibit have been omitted.
| | --- | -------------------------------------------





126







SIGNATURES



The registrant hereby
certifies that it meets all of the requirements for filing of Form 20-F and that it has duly caused and authorized the undersigned
to sign this annual report on its behalf.



| |                                  |                         |                        
| | -------------------------------- | ----------------------- | -----------------------
| | WISEKEY INTERNATIONAL HOLDING AG |                        
| | By:                              | /s/ Carlos Moreira      | /s/ Peter Ward         
| |                                  | Carlos Moreira          | Peter Ward             
| |                                  | Chief Executive Officer | Chief Financial Officer
| |                                  |                         |                        
| | Date: March 12, 2020             |                        





127









|Index to Financial Statements                                                      |    
|---------------------------------------------------------------------------------- | ---
|                                                                                   |    
|Consolidated Financial Statements for Years Ended December 31, 2017, 2018 and 2019 | F-1
|                                                                                   |    
|Report of Independent Registered Public Accounting Firm                            | F-2
|                                                                                   |    
|Consolidated Statement of Comprehensive Income / (Loss)                            | F-3
|                                                                                   |    
|Consolidated Balance Sheet                                                         | F-4
|                                                                                   |    
|Consolidated Statements of Changes on Shareholders' Equity (Deficit)               | F-5
|                                                                                   |    
|Consolidated Statements of Cash Flows                                              | F-6
|                                                                                   |    
|Notes to Consolidated Financial Statements                                         | F-7





128







WISeKey Consolidated Financial Statements

for Years Ended December 31, 2017,
2018 and 2019





F-1







| | 1. | Report of Independent Registered Public Accounting Firm
| | -- | -------------------------------------------------------



To
the Board of Directors of

WISeKey
International Holding AG

6300
Zug

Switzerland



Opinion
on the Consolidated Financial Statements



We
have audited the accompanying consolidated balance sheets of WISeKey International Holding AG (the “Group”) as of
December 31, 2019 and 2018, the related consolidated statements of comprehensive income / loss, consolidated statements of changes
in shareholders’ equity (deficit), and consolidated statements of cash flows for each of the three years in the period ended
December 31, 2019, 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 Group
at December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period
ended December 31, 2019, in conformity with accounting principles generally accepted in the United States of America.



Basis
for Opinion



These
consolidated financial statements are the responsibility of the Group’s management. Our responsibility is to express an
opinion on the Group’s consolidated 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 Group 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 consolidated 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 consolidated 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 consolidated 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 consolidated
financial statements. We believe that our audits provide a reasonable basis for our opinion.
Zurich, March 12, 2020



BDO
AG



|/s/
Christoph Tschumi | /s/ Philipp Kegele | 
|--------------------- | ------------------ | 
|Christoph Tschumi     | Philipp Kegele     | 



We have served as the Group's auditor since
2015.





F-2







| | 2. | Consolidated Statement of Comprehensive Income/(Loss)
| | -- | -----------------------------------------------------



|                                                                                     |  | 12 months ended December 31, |         | 12 months ended December 31, |  | 12 months ended December 31, |         | Note ref.
|------------------------------------------------------------------------------------ |  | ---------------------------- | ------- | ---------------------------- |  | ---------------------------- | ------- | ---------
|USD'000                                                                              |  | 2019                         |         | 2018                         |  | 2017                         |         |          
|                                                                                     |  |                              |         |                              |  |                              |         |          
|Net sales                                                                            |  |                              | 22,652  |                              |  |                              | 34,280  |          
|Cost of sales                                                                        |  |                              | (13,196 | )                            |  |                              | (18,319 | )        
|Gross profit                                                                         |  |                              | 9,456   |                              |  |                              | 15,961  |          
|                                                                                     |  |                              |         |                              |  |                              |         |          
|Other operating income                                                               |  |                              | 180     |                              |  |                              | 289     |          
|Research & development expenses                                                      |  |                              | (6,422  | )                            |  |                              | (5,306  | )        
|Selling & marketing expenses                                                         |  |                              | (7,929  | )                            |  |                              | (5,772  | )        
|General & administrative expenses                                                    |  |                              | (15,789 | )                            |  |                              | (14,232 | )        
|Total operating expenses                                                             |  |                              | (29,960 | )                            |  |                              | (25,021 | )        
|Operating income / (loss)                                                            |  |                              | (20,504 | )                            |  |                              | (9,060  | )        
|                                                                                     |  |                              |         |                              |  |                              |         |          
|Non-operating income                                                                 |  |                              | 1,918   |                              |  |                              | 2,181   |          
|Gain / (loss) on derivative liability                                                |  |                              | 214     |                              |  |                              | -       |          
|Gain / (loss) on debt extinguishment                                                 |  |                              | (233    | )                            |  |                              | -       |          
|Interest and amortization of debt discount                                           |  |                              | (742    | )                            |  |                              | (150    | )        
|Non-operating expenses                                                               |  |                              | (3,670  | )                            |  |                              | (2,826  | )        
|Income / (loss) from continuing operations before income tax expense                 |  |                              | (23,017 | )                            |  |                              | (9,855  | )        
|                                                                                     |  |                              |         |                              |  |                              |         |          
|Income tax (expense)/recovery                                                        |  |                              | (13     | )                            |  |                              | (53     | )        
|Income/ (loss) from continuing operations, net                                       |  |                              | (23,030 | )                            |  |                              | (9,908  | )        
|                                                                                     |  |                              |         |                              |  |                              |         |          
|Discontinued operations:                                                             |  |                              |         |                              |  |                              |         |          
|Net sales from discontinued operations                                               |  |                              | 1,934   |                              |  |                              | 19,412  |          
|Cost of sales from discontinued operations                                           |  |                              | (791    | )                            |  |                              | (6,196  | )        
|Total operating and non-operating expenses from discontinued operations              |  |                              | (1,801  | )                            |  |                              | (19,778 | )        
|Income tax (expense)/recovery from discontinued operations                           |  |                              | 42      |                              |  |                              | 205     |          
|Gain on disposal of a business, net of tax on disposal                               |  |                              | 31,100  |                              |  |                              | -       |          
|Income / (loss) on discontinued operations                                           |  |                              | 30,484  |                              |  |                              | (6,357  | )        
|                                                                                     |  |                              |         |                              |  |                              |         |          
|Net income / (loss)                                                                  |  |                              | 7,454   |                              |  |                              | (16,265 | )        
|                                                                                     |  |                              |         |                              |  |                              |         |          
|Less: Net income / (loss) attributable to noncontrolling interests                   |  |                              | (733    | )                            |  |                              | 13      |          
|Net income / (loss) attributable to WISeKey International Holding AG                 |  |                              | 8,187   |                              |  |                              | (16,278 | )        
|                                                                                     |  |                              |         |                              |  |                              |         |          
|Earnings per share                                                                   |  |                              |         |                              |  |                              |         |          
|Earnings from continuing operations per share - Basic                                |  |                              | (0.64   | )                            |  |                              | (0.29   | )        
|Earnings from continuing operations per share - Diluted                              |  |                              | (0.64   | )                            |  |                              | (0.29   | )        
|                                                                                     |  |                              |         |                              |  |                              |         |          
|Earnings from discontinued operations per share - Basic                              |  |                              | 0.84    |                              |  |                              | (0.19   | )        
|Earnings from discontinued operations per share - Diluted                            |  |                              | 0.81    |                              |  |                              | (0.19   | )        
|                                                                                     |  |                              |         |                              |  |                              |         |          
|Earning per share attributable to WISeKey International Holding AG                   |  |                              |         |                              |  |                              |         |          
|Basic                                                                                |  |                              | 0.23    |                              |  |                              | (0.48   | )        
|Diluted                                                                              |  |                              | 0.23    |                              |  |                              | (0.48   | )        
|                                                                                     |  |                              |         |                              |  |                              |         |          
|Other comprehensive income / (loss), net of tax:                                     |  |                              |         |                              |  |                              |         |          
|Foreign currency translation adjustments                                             |  |                              | 516     |                              |  |                              | 108     |          
|Unrealized holding loss arising during period                                        |  |                              | -       |                              |  |                              | -       |          
|Net loss arising during period                                                       |  |                              | (2,199  | )                            |  |                              | 287     |          
|Other comprehensive income / (loss)                                                  |  |                              | (1,683  | )                            |  |                              | 395     |          
|Comprehensive income / (loss)                                                        |  |                              | 5,771   |                              |  |                              | (15,870 | )        
|                                                                                     |  |                              |         |                              |  |                              |         |          
|Other comprehensive income / (loss) attributable to noncontrolling interests         |  |                              | (127    | )                            |  |                              | (23     | )        
|Other comprehensive income / (loss) attributable to WISeKey International Holding AG |  |                              | (1,556  | )                            |  |                              | 418     |          
|                                                                                     |  |                              |         |                              |  |                              |         |          
|Comprehensive income / (loss) attributable to noncontrolling interests               |  |                              | (860    | )                            |  |                              | (10     | )        
|Comprehensive income / (loss) attributable  to WISeKey International Holding AG      |  |                              | 6,631   |                              |  |                              | (15,860 | )        



The accompanying notes are an integral
part of these consolidated financial statements.





F-3







| | 3. | Consolidated Balance Sheet
| | -- | --------------------------



|                                                                         |  | As at December 31, |          | As at December 31, |  | Note
|------------------------------------------------------------------------ |  | ------------------ | -------- | ------------------ |  | ----
|USD'000                                                                  |  | 2019               |          | 2018               |  | ref.
|ASSETS                                                                   |  |                    |          |                    |  |     
|Current assets                                                           |  |                    |          |                    |  |     
|Cash and cash equivalents                                                |  |                    | 12,121   |                    |  |     
|Restricted cash, current                                                 |  |                    | 2,525    |                    |  |     
|Accounts receivable, net of allowance for doubtful accounts              |  |                    | 3,770    |                    |  |     
|Notes receivable from related parties                                    |  |                    | -        |                    |  |     
|Inventories                                                              |  |                    | 2,787    |                    |  |     
|Contract assets                                                          |  |                    | 15       |                    |  |     
|Prepaid expenses                                                         |  |                    | 690      |                    |  |     
|Deferred charges, current                                                |  |                    | 207      |                    |  |     
|Current assets held for sale                                             |  |                    | -        |                    |  |     
|Other current assets                                                     |  |                    | 1,469    |                    |  |     
|Total current assets                                                     |  |                    | 23,584   |                    |  |     
|                                                                         |  |                    |          |                    |  |     
|Noncurrent assets                                                        |  |                    |          |                    |  |     
|Restricted cash, noncurrent                                              |  |                    | 2,000    |                    |  |     
|Notes receivable, noncurrent                                             |  |                    | 23       |                    |  |     
|Equity securities, at fair value                                         |  |                    | 756      |                    |  |     
|Deferred income tax assets                                               |  |                    | 6        |                    |  |     
|Deferred tax credits                                                     |  |                    | 2,488    |                    |  |     
|Property, plant and equipment net of accumulated depreciation            |  |                    | 1,801    |                    |  |     
|Intangible assets, net of accumulated amortization                       |  |                    | 600      |                    |  |     
|Finance lease right-of-use assets                                        |  |                    | 289      |                    |  |     
|Operating lease right-of-use assets                                      |  |                    | 2,780    |                    |  |     
|Goodwill                                                                 |  |                    | 8,317    |                    |  |     
|Deferred charges, noncurrent                                             |  |                    | 30       |                    |  |     
|Equity securities, at cost                                               |  |                    | 7,000    |                    |  |     
|Noncurrent assets held for sale                                          |  |                    | -        |                    |  |     
|Other noncurrent assets                                                  |  |                    | 230      |                    |  |     
|Total noncurrent assets                                                  |  |                    | 26,320   |                    |  |     
|TOTAL ASSETS                                                             |  |                    | 49,904   |                    |  |     
|                                                                         |  |                    |          |                    |  |     
|LIABILITIES                                                              |  |                    |          |                    |  |     
|Current Liabilities                                                      |  |                    |          |                    |  |     
|Accounts payable                                                         |  |                    | 10,713   |                    |  |     
|Notes payable                                                            |  |                    | 4,104    |                    |  |     
|Convertible note payable, current                                        |  |                    | 3,226    |                    |  |     
|Deferred revenue, current                                                |  |                    | 89       |                    |  |     
|Current portion of obligations under finance lease liabilities           |  |                    | 103      |                    |  |     
|Current portion of obligations under operating lease liabilities         |  |                    | 556      |                    |  |     
|Income tax payable                                                       |  |                    | 11       |                    |  |     
|Derivative liabilities                                                   |  |                    | 44       |                    |  |     
|Current liabilities held for sale                                        |  |                    | -        |                    |  |     
|Other current liabilities                                                |  |                    | 1,304    |                    |  |     
|Total current liabilities                                                |  |                    | 20,150   |                    |  |     
|                                                                         |  |                    |          |                    |  |     
|Noncurrent liabilities                                                   |  |                    |          |                    |  |     
|Convertible note payable, noncurrent                                     |  |                    | -        |                    |  |     
|Deferred revenue, noncurrent                                             |  |                    | 10       |                    |  |     
|Finance lease liabilities, noncurrent                                    |  |                    | 169      |                    |  |     
|Operating lease liabilities, noncurrent                                  |  |                    | 2,223    |                    |  |     
|Employee benefit plan obligation                                         |  |                    | 6,880    |                    |  |     
|Other deferred tax liabilities                                           |  |                    | 25       |                    |  |     
|Noncurrent liabilities held for sale                                     |  |                    | -        |                    |  |     
|Other noncurrent liabilities                                             |  |                    | 3        |                    |  |     
|Total noncurrent liabilities                                             |  |                    | 9,310    |                    |  |     
|TOTAL LIABILITIES                                                        |  |                    | 29,460   |                    |  |     
|                                                                         |  |                    |          |                    |  |     
|Commitments and contingent liabilities                                   |  |                    |          |                    |  |     
|                                                                         |  |                    |          |                    |  |     
|SHAREHOLDERS' EQUITY                                                     |  |                    |          |                    |  |     
|Common stock - Class A                                                   |  |                    | 400      |                    |  |     
|CHF 0.01 par value                                                       |  |                    |          |                    |  |     
|Authorized - 40,021,988 and 40,021,988 shares                            |  |                    |          |                    |  |     
|Issued and outstanding - 40,021,988 and 40,021,988 shares                |  |                    |          |                    |  |     
|Common stock - Class B                                                   |  |                    | 1,475    |                    |  |     
|CHF 0.05 par value                                                       |  |                    |          |                    |  |     
|Authorized - 41,066,298 and 41,063,901                                   |  |                    |          |                    |  |     
|Issued - 28,824,086 and 28,769,797                                       |  |                    |          |                    |  |     
|Outstanding - 27,621,895 and 26,681,736                                  |  |                    |          |                    |  |     
|Share subscription in progress                                           |  |                    | 6        |                    |  |     
|Treasury stock, at cost (1,202,191 and 2,088,061 shares held)            |  |                    | (1,288   | )                  |  |     
|Additional paid-in capital                                               |  |                    | 212,036  |                    |  |     
|Accumulated other comprehensive income / (loss)                          |  |                    | (1,453   | )                  |  |     
|Accumulated deficit                                                      |  |                    | (189,161 | )                  |  |     
|Total shareholders'equity (deficit) attributable to WISeKey shareholders |  |                    | 22,015   |                    |  |     
|Noncontrolling interests in consolidated subsidiaries                    |  |                    | (1,571   | )                  |  |     
|Total shareholders'equity                                                |  |                    | 20,444   |                    |  |     
|TOTAL LIABILITIES AND EQUITY                                             |  |                    | 49,904   |                    |  |     



The accompanying notes are an integral
part of these consolidated financial statements.





F-4







| | 4. | Consolidated Statements of Changes in Shareholders’ Equity/(Deficit)
| | -- | --------------------------------------------------------------------



|                                    | Number of common shares |  | Common Share Capital |  |         |  |         |  |                                                                                           |  |                                                                                      |  |                                                                                                 |  |                                                                                                     |  |                                                                                          |  |                                                                                                                                                                                                                                                                |  |                                                                                  
|----------------------------------- | ----------------------- |  | -------------------- |  | ------- |  | ------- |  | ----------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------ |  | ----------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------
|USD'000                             | Class A                 |  | Class B              |  | Class A |  | Class B |  | Total share
                                                                      capital |  | Treasury
                                                                     Shares |  | Additional
                                                                     paid-in capital |  | Share
                                                                     subscription in progress |  | Accumulated
                                                                     deficit |  | Accumulated
                                                                     other
                                                                     comprehensive
                                                                     income / (loss) |  | Total
                                                                     equity
|As at December 31, 2017             | 40,021,988              |  | 24,590,918           |  | 400     |  | 1,261   |  | 1,661                                                                                     |  | -                                                                                    |  | 189,152                                                                                         |  | -                                                                                                   |  | (180,554)                                                                                |  | (650)                                                                                                                                                                                                                                                          |  | 9,608                                                                            
|Common stock issued1                | -                       |  | 1,761,021            |  | -       |  | 90      |  | 90                                                                                        |  | -                                                                                    |  | 7,663                                                                                           |  | -                                                                                                   |  | -                                                                                        |  | -                                                                                                                                                                                                                                                              |  | 7,753                                                                            
|Options exercised                   | -                       |  | 159,461              |  | -       |  | 8       |  | 8                                                                                         |  | -                                                                                    |  | 205                                                                                             |  | -                                                                                                   |  | -                                                                                        |  | -                                                                                                                                                                                                                                                              |  | 213                                                                              
|Stock-based compensation            | -                       |  | -                    |  | -       |  | -       |  | -                                                                                         |  | -                                                                                    |  | 1,660                                                                                           |  | -                                                                                                   |  | -                                                                                        |  | -                                                                                                                                                                                                                                                              |  | 1,660                                                                            
|Changes in treasury shares          | -                       |  | 2,000,000            |  | -       |  | 100     |  | 100                                                                                       |  | (2,177)                                                                              |  | 619                                                                                             |  | -                                                                                                   |  | -                                                                                        |  | -                                                                                                                                                                                                                                                              |  | (1,458)                                                                          
|Impact of ASU2016-01 on marketable  |                         |  |                      |  |         |  |         |  |                                                                                           |  |                                                                                      |  |                                                                                                 |  |                                                                                                     |  |                                                                                          |  |                                                                                                                                                                                                                                                                |  |                                                                                  
|securities                          | -                       |  | -                    |  | -       |  | -       |  | -                                                                                         |  | -                                                                                    |  | -                                                                                               |  | -                                                                                                   |  | (375)                                                                                    |  | 375                                                                                                                                                                                                                                                            |  | -                                                                                
|Liquidation of subsidiaries         | -                       |  | -                    |  | -       |  | -       |  | -                                                                                         |  | -                                                                                    |  | -                                                                                               |  | -                                                                                                   |  | -                                                                                        |  | (43)                                                                                                                                                                                                                                                           |  | (43)                                                                             
|Yorkville SEDA                      | -                       |  | 258,397              |  | -       |  | 13      |  | 13                                                                                        |  | 1,038                                                                                |  | 606                                                                                             |  | -                                                                                                   |  | -                                                                                        |  | -                                                                                                                                                                                                                                                              |  | 1,657                                                                            
|Acquisition of QuoVadis Group       |                         |  |                      |  |         |  |         |  |                                                                                           |  |                                                                                      |  |                                                                                                 |  |                                                                                                     |  |                                                                                          |  |                                                                                                                                                                                                                                                                |  |                                                                                  
|noncontrolling interest             | -                       |  | -                    |  | -       |  | -       |  | -                                                                                         |  | -                                                                                    |  | 1,101                                                                                           |  | -                                                                                                   |  | -                                                                                        |  | -                                                                                                                                                                                                                                                              |  | 1,101                                                                            
|Creation of WISeCoin AG             | -                       |  | -                    |  | -       |  | -       |  | -                                                                                         |  | -                                                                                    |  | -                                                                                               |  | -                                                                                                   |  | -                                                                                        |  | -                                                                                                                                                                                                                                                              |  | -                                                                                
|Crede convertible loan              | -                       |  | -                    |  | -       |  | -       |  | -                                                                                         |  | -                                                                                    |  | 368                                                                                             |  | -                                                                                                   |  | -                                                                                        |  | -                                                                                                                                                                                                                                                              |  | 368                                                                              
|Net loss                            | -                       |  | -                    |  | -       |  | -       |  | -                                                                                         |  | -                                                                                    |  | -                                                                                               |  | -                                                                                                   |  | (16,278)                                                                                 |  | -                                                                                                                                                                                                                                                              |  | (16,278)                                                                         
|Other comprehensive income / (loss) | -                       |  | -                    |  | -       |  | -       |  | -                                                                                         |  | -                                                                                    |  | -                                                                                               |  | -                                                                                                   |  | -                                                                                        |  | 418                                                                                                                                                                                                                                                            |  | 418                                                                              
|Deemed dividend                     | -                       |  | -                    |  | -       |  | -       |  | -                                                                                         |  | -                                                                                    |  | -                                                                                               |  | -                                                                                                   |  | (141)                                                                                    |  | -                                                                                                                                                                                                                                                              |  | (141)                                                                            
|As at December 31, 2018             | 40,021,988              |  | 28,769,797           |  | 400     |  | 1,472   |  | 1,872                                                                                     |  | (1,139)                                                                              |  | 201,373                                                                                         |  | -                                                                                                   |  | (197,348)                                                                                |  | 100                                                                                                                                                                                                                                                            |  | 4,858                                                                            
|Common stock issued1                | -                       |  | -                    |  | -       |  | -       |  | -                                                                                         |  | -                                                                                    |  | -                                                                                               |  | -                                                                                                   |  | -                                                                                        |  | -                                                                                                                                                                                                                                                              |  | -                                                                                
|Options exercised                   | -                       |  | 54,289               |  | -       |  | 3       |  | 3                                                                                         |  | -                                                                                    |  | 3,375                                                                                           |  | -                                                                                                   |  | -                                                                                        |  | -                                                                                                                                                                                                                                                              |  | 3,378                                                                            
|Stock-based compensation            | -                       |  | -                    |  | -       |  | -       |  | -                                                                                         |  | -                                                                                    |  | 5,414                                                                                           |  | 6                                                                                                   |  | -                                                                                        |  | -                                                                                                                                                                                                                                                              |  | 5,420                                                                            
|Changes in treasury shares          | -                       |  | -                    |  | -       |  | -       |  | -                                                                                         |  | (534)                                                                                |  | -                                                                                               |  | -                                                                                                   |  | -                                                                                        |  | -                                                                                                                                                                                                                                                              |  | (534)                                                                            
|Sale of QuoVadis Group              | -                       |  | -                    |  | -       |  | -       |  | -                                                                                         |  | -                                                                                    |  | -                                                                                               |  | -                                                                                                   |  | -                                                                                        |  | 34                                                                                                                                                                                                                                                             |  | 34                                                                               
|                                   
|Change in Ownership in WISeKey SA   | -                       |  | -                    |  | -       |  | -       |  | -                                                                                         |  | 29                                                                                   |  | (159)                                                                                           |  | -                                                                                                   |  | -                                                                                        |  | (10)                                                                                                                                                                                                                                                           |  | (140)                                                                            
|Liquidation of subsidiaries         | -                       |  | -                    |  | -       |  | -       |  | -                                                                                         |  | -                                                                                    |  | -                                                                                               |  | -                                                                                                   |  | -                                                                                        |  | (21)                                                                                                                                                                                                                                                           |  | (21)                                                                             
|Yorkville SEDA                      | -                       |  | -                    |  | -       |  | -       |  | -                                                                                         |  | 296                                                                                  |  | 632                                                                                             |  | -                                                                                                   |  | -                                                                                        |  | -                                                                                                                                                                                                                                                              |  | 928                                                                              
|Crede convertible loan              | -                       |  | -                    |  | -       |  | -       |  | -                                                                                         |  | 549                                                                                  |  | 1,075                                                                                           |  | -                                                                                                   |  | -                                                                                        |  | -                                                                                                                                                                                                                                                              |  | 1,624                                                                            
|Yorkville convertible loan          | -                       |  | -                    |  | -       |  | -       |  | -                                                                                         |  | -                                                                                    |  | 326                                                                                             |  | -                                                                                                   |  | -                                                                                        |  | -                                                                                                                                                                                                                                                              |  | 326                                                                              
|Share buyback program               | -                       |  | -                    |  | -       |  | -       |  | -                                                                                         |  | (489)                                                                                |  | -                                                                                               |  | -                                                                                                   |  | -                                                                                        |  | -                                                                                                                                                                                                                                                              |  | (489)                                                                            
|Net loss                            | -                       |  | -                    |  | -       |  | -       |  | -                                                                                         |  | -                                                                                    |  | -                                                                                               |  | -                                                                                                   |  | 8,187                                                                                    |  | -                                                                                                                                                                                                                                                              |  | 8,187                                                                            
|Other comprehensive income / (loss) | -                       |  | -                    |  | -       |  | -       |  | -                                                                                         |  | -                                                                                    |  | -                                                                                               |  | -                                                                                                   |  | -                                                                                        |  | (1,556)                                                                                                                                                                                                                                                        |  | (1,556)                                                                          
|As at December 31, 2019             | 40,021,988              |  | 28,824,086           |  | 400     |  | 1,475   |  | 1,875                                                                                     |  | (1,288)                                                                              |  | 212,036                                                                                         |  | 6                                                                                                   |  | (189,161)                                                                                |  | (1,453)                                                                                                                                                                                                                                                        |  | 22,015                                                                           



| | 1. | The articles of association
of the Company had not been fully updated as of December 31, 2019 with the shares issued out of conditional capital.
| | -- | ------------------------------------------------------------------------------------------------------------------------------------------------



The accompanying notes are an integral
part of these consolidated financial statements.





F-5







| | 5. | Consolidated Statements of Cash Flows
| | -- | -------------------------------------



|                                                                                            |  | 12 months ended December 31, |         | 12 months ended December 31, |  | 12 months ended December 31,
|------------------------------------------------------------------------------------------- |  | ---------------------------- | ------- | ---------------------------- |  | ----------------------------
|USD'000                                                                                     |  | 2019                         |         | 2018                         |  | 2017                        
|                                                                                            |  |                              |         |                              |  |                             
|Cash Flows from operating activities:                                                       |  |                              |         |                              |  |                             
|Net Income (loss)                                                                           |  |                              | 7,454   |                              |  |                             
|Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |                              |         |                              |  |                             
|Depreciation of property, plant & equipment                                                 |  |                              | 821     |                              |  |                             
|Amortization of intangible assets                                                           |  |                              | 534     |                              |  |                             
|Interest and amortization of debt discount                                                  |  |                              | 783     |                              |  |                             
|Loss / (gain) on derivative liability                                                       |  |                              | (214    | )                            |  |                             
|Loss on debt extinguishment                                                                 |  |                              | 1,326   |                              |  |                             
|Stock-based compensation                                                                    |  |                              | 5,414   |                              |  |                             
|Bad debt expense                                                                            |  |                              | 99      |                              |  |                             
|Inventory obsolescence impairment                                                           |  |                              | 535     |                              |  |                             
|Deferred tax asset write-off                                                                |  |                              | -       |                              |  |                             
|Loss /(gain) on disposal of property and equipment                                          |  |                              | -       |                              |  |                             
|Income tax expense / (recovery) net of cash paid                                            |  |                              | (17     | )                            |  |                             
|Release of provision                                                                        |  |                              | -       |                              |  |                             
|Other non cash expenses /(income)                                                           |  |                              |         |                              |  |                             
|Expenses settled in equity                                                                  |  |                              | 40      |                              |  |                             
|Gain on disposal of a business                                                              |  |                              | (31,100 | )                            |  |                             
|Other                                                                                       |  |                              | 80      |                              |  |                             
|Unrealized and non cash foreign currency transactions                                       |  |                              | 157     |                              |  |                             
|                                                                                            |  |                              |         |                              |  |                             
|Changes in operating assets and liabilities, net of effects of businesses acquired          |  |                              |         |                              |  |                             
|Decrease (increase) in accounts receivables                                                 |  |                              | 1,346   |                              |  |                             
|Decrease (increase) in inventories                                                          |  |                              | 1,399   |                              |  |                             
|Decrease (increase) in other current assets, net                                            |  |                              | (84     | )                            |  |                             
|Decrease (increase) in deferred research & development tax credits, net                     |  |                              | 19      |                              |  |                             
|Decrease (increase) in other noncurrent assets, net                                         |  |                              | (77     | )                            |  |                             
|Increase (decrease) in accounts payable                                                     |  |                              | (1,765  | )                            |  |                             
|Increase (decrease) in deferred revenue, current                                            |  |                              | 25      |                              |  |                             
|Increase (decrease) in income taxes payable                                                 |  |                              | (362    | )                            |  |                             
|Increase (decrease) in other current liabilities                                            |  |                              | (217    | )                            |  |                             
|Increase (decrease) in deferred revenue, noncurrent                                         |  |                              | 2,247   |                              |  |                             
|Increase (decrease) in defined benefit pension liability                                    |  |                              | 258     |                              |  |                             
|Increase (decrease) in other noncurrent liabilities                                         |  |                              | (2,592  | )                            |  |                             
|Net cash provided by (used in) operating activities                                         |  |                              | (13,891 | )                            |  |                             
|                                                                                            |  |                              |         |                              |  |                             
|Cash Flows from investing activities:                                                       |  |                              |         |                              |  |                             
|Sale / (acquisition) of equity securities                                                   |  |                              | (4,000  | )                            |  |                             
|Sale / (acquisition) of property, plant and equipment                                       |  |                              | (293    | )                            |  |                             
|Decrease / (increase) in notes receivables                                                  |  |                              | -       |                              |  |                             
|Sale / (acquisition) of a business, net of cash and cash equivalents divested               |  |                              | 40,919  |                              |  |                             
|Net cash provided by (used in) investing activities                                         |  |                              | 36,626  |                              |  |                             
|                                                                                            |  |                              |         |                              |  |                             
|Cash Flows from financing activities:                                                       |  |                              |         |                              |  |                             
|Proceeds from options exercises                                                             |  |                              | 3,412   |                              |  |                             
|Proceeds from issuance of Common Stock                                                      |  |                              | 1,112   |                              |  |                             
|Proceeds from convertible loan issuance                                                     |  |                              | 2,860   |                              |  |                             
|Proceeds from debt                                                                          |  |                              | 4,030   |                              |  |                             
|Repayments of debt                                                                          |  |                              | (27,631 | )                            |  |                             
|Payments of debt issue costs                                                                |  |                              | (42     | )                            |  |                             
|Repurchase of treasury shares                                                               |  |                              | (1,025  | )                            |  |                             
|Net cash provided by (used in) financing activities                                         |  |                              | (17,284 | )                            |  |                             
|                                                                                            |  |                              |         |                              |  |                             
|Effect of exchange rate changes on cash and cash equivalents                                |  |                              | 41      |                              |  |                             
|                                                                                            |  |                              |         |                              |  |                             
|Cash and cash equivalents                                                                   |  |                              |         |                              |  |                             
|Net increase (decrease) during the period                                                   |  |                              | 5,492   |                              |  |                             
|Balance, beginning of period                                                                |  |                              | 11,154  |                              |  |                             
|Balance, end of period                                                                      |  |                              | 16,646  |                              |  |                             
|                                                                                            |  |                              |         |                              |  |                             
|Reconciliation to balance sheet                                                             |  |                              |         |                              |  |                             
|Cash and cash equivalents from continuing operations                                        |  |                              | 12,121  |                              |  |                             
|Restricted cash, current from continuing operations                                         |  |                              | 2,525   |                              |  |                             
|Restricted cash, noncurrent from continuing operations                                      |  |                              | 2,000   |                              |  |                             
|Cash and cash equivalents from discontinued operations                                      |  |                              | -       |                              |  |                             
|Balance, end of period                                                                      |  |                              | 16,646  |                              |  |                             
|                                                                                            |  |                              |         |                              |  |                             
|Supplemental cash flow information                                                          |  |                              |         |                              |  |                             
|Cash paid for interest, net of amounts capitalized                                          |  |                              | 756     |                              |  |                             
|Cash paid for incomes taxes                                                                 |  |                              | 12      |                              |  |                             
|Noncash conversion of convertible loans into common stock                                   |  |                              | 1,771   |                              |  |                             
|Restricted cash received for share subscription in progress                                 |  |                              | 5       |                              |  |                             
|Issuance of shares in relation to the acquisition of QuoVadis                               |  |                              | -       |                              |  |                             
|Issuance / (redemption) of redeemable preferred stock                                       |  |                              | -       |                              |  |                             
|Issuance of common stock to purchase non-controlling interest                               |  |                              | -       |                              |  |                             
|Deemed dividend                                                                             |  |                              | -       |                              |  |                             
|Settlement of Carlos Moreira's loan in shares                                               |  |                              | -       |                              |  |                             
|Payment of SEDA fees in shares                                                              |  |                              | -       |                              |  |                             
|Conversion of loan receivable into equity securities                                        |  |                              | -       |                              |  |                             
|ROU assets obtained from finance lease                                                      |  |                              | 321     |                              |  |                             
|ROU assets obtained from operating lease                                                    |  |                              | 3,768   |                              |  |                             



The accompanying notes are an integral part
of these consolidated financial statements.





F-6







| | 6. | Notes to the Consolidated Financial Statements
| | -- | ----------------------------------------------



| | Note 1. | The WISeKey Group
| | ------- | -----------------



WISeKey International Holding AG, together
with its consolidated subsidiaries (“WISeKey” or the “Group” or the “WISeKey Group”),
has its headquarters in Switzerland. WISeKey International Holding AG, the ultimate parent of the WISeKey Group, was incorporated
in December 2015 and is listed on the Swiss Stock Exchange, SIX SAG with the valor symbol “WIHN” since March 2016 and
on the NASDAQ Capital Market exchange with the valor symbol “WKEY” since December 2019.



The Group develops, markets, hosts and
supports a range of solutions that enable the secure digital identification of people, content and objects, by generating digital
identities that enable its clients to monetize their existing user bases and at the same time, expand its own eco-system. WISeKey
generates digital identities from its current products and services in Cybersecurity Services, IoT (internet of Things), Digital
Brand Management and Mobile Security.



The Group leads a carefully planned vertical
integration strategy through acquisitions of companies in the industry. The strategic objective is to provide integrated services
to its customers and also achieve cross-selling and synergies across WISeKey. Through this vertical integration strategy, WISeKey
anticipates being able to generate profits in the near future.



| | Note 2. | Future operations and going concern
| | ------- | -----------------------------------



The Group experienced a loss from operations
in this reporting period but a net income of USD 7.5 million following the divestiture of WISeKey (Bermuda) Holding Ltd (formerly
named QV Holdings Ltd) and its affiliates (together “QuoVadis” or the “QuoVadis Group”) to
Digicert Inc, which generated a net cash inflow of USD 37.7 million and allowed WISeKey to repay in full the line of Credit it
had contracted with ExWorks Capital Fund I, L.P. (“ExWorks”) in an amount of USD 25.4 million (see Note 24).



The accompanying consolidated financial
statements have been prepared assuming that the Group will continue as a going concern.



The Group incurred a net operating loss
from continuing operations of USD 20.5 million and had positive adjusted working capital of USD 3.5 million
as at December 31, 2019, calculated as the difference between current assets and current liabilities net of current deferred revenue.
Based on the Group’s cash projections for the next 12 months to March 31, 2021, it will need approximately USD 2.1 million
to fund operations and financial commitments. Historically, the Group has been dependent on equity financing to augment the operating
cash flow to cover its cash requirements. Any additional equity financing may be dilutive to shareholders.



In the year 2019, the Group secured two
loans: (a) a Convertible Loan Agreement (the “Yorkville Convertible Loan”) with YA II PN, Ltd. a fund managed
by Yorkville Advisors Global, LLC (“Yorkville”) for an amount of USD 3.5 million, with
an interest rate of 6% per annum, repayable by August 01, 2020 in monthly instalments starting August 01 2019 either in cash or
in WIHN class B Shares, and (b) a credit agreement between WISeCoin AG and ExWorks in an amount of USD 4 million, repayable
by April 04, 2020, with an annual interest rate of 10%, secured on the shares of WISeCoin AG with the option to convert principal
repayment, interest charges and fees into WISeSecurity Tokens issued by WISeCoin AG.



In 2020 prior to the release of this annual report, WISeKey
signed a new convertible loan agreement for a total amount of USD 4 million repayable in monthly instalments starting March 30,
2020 in cash or, at Yorkville’s election, in class B shares (see Note 40). The new convertible loan agreement bears an interest
rate of 6% per annum payable monthly in arrears and matures on April 30, 2021. This new agreement replaces the existing Yorkville
Convertible Loan signed on June 27, 2019. The remaining balance of USD 2.3 million under the Yorkville Convertible Loan was rolled
over into the new agreement, which means that the loan generated a net cash inflow of USD 1.7 million. The amount of USD 2.1 million
required to fund operations and financial commitments until March 31, 2021 takes into account the net cash inflow of USD 1.7 million
from this new convertible loan agreement.



These loans demonstrate the availability
of lenders to support the WISeKey Group in its activities and development. See Note 24 for detail on these loans.



On January 19, 2016, the Group had closed
a Share Subscription Facility (the “Share Subscription Facility”, the “GEM Facility”) with
GEM LLC (Global Equity Markets, “GEM”) which is a CHF 60.0 million facility over 5 years and allows the
Group to draw down funds at its option in exchange for WIHN class B shares (see Note 24 for detail). The mechanics of the deal
allow for a drawdown essentially 18 times in a year, the amount being in a range related to the trading volume and price of the
WIHN class B share trading on the SIX Swiss Stock Exchange. The drawdown amount is based on 90% of the average closing price of
the last 15 trading days multiplied by 1,000% of the average volume of the last 15 trading days. GEM can then elect to purchase
between 50% and 200% of this figure. In year 2019, WISeKey made no drawdowns under the GEM Facility. Therefore, as at December
31, 2019, the outstanding facility available remained CHF 56.1 million.



On February 08, 2018 the Group entered into
a Standby Equity Distribution Agreement (“SEDA”) with Yorkville (see Note 24 for detail). Pursuant to the SEDA,
Yorkville commits to provide equity financing to WISeKey in the aggregate amount of up to CHF 50.0 million in exchange for Class
B Shares over a three-year period. Provided that a sufficient number of Class B Shares is provided through share lending, WISeKey
has the right to make drawdowns under the SEDA, at its discretion, by requesting Yorkville to subscribe for (if the Class B Shares
are issued out of authorized share capital) or purchase (if the Class B Shares are delivered out of treasury) Class B Shares worth
up to CHF 5.0 million by drawdown, subject to certain exceptions and limitations. In the year 2018, WISeKey made four
drawdowns under the SEDA Facility, for a total amount of CHF 1.7 million. In the year 2019, WISeKey made five drawdowns
for CHF 1.1 million. As at December 31, 2019, the outstanding equity financing available was CHF 47.1 million.
On March 04, 2020, the SEDA was extended by 24 months to March 31, 2023.





F-7







Both the GEM Facility and the SEDA will
be used as a safeguard should there be any difficulties in raising the necessary funds to cover the USD 2.1 million projected
cash outflow noted above.



Based on the foregoing, Management believe
it is correct to present these figures on a going concern basis.



| | Note 3. | Basis of presentation
| | ------- | ---------------------



The consolidated financial statements are
prepared in accordance with the Generally Accepted Accounting Principles in the United States of America (“US GAAP”)
as set forth in the Financial Accounting Standards Board’s (FASB) Accounting Standards Codification (ASC). All amounts are
in United States dollars (“USD”) unless otherwise stated.



| | Note 4. | Summary of significant accounting policies
| | ------- | ------------------------------------------



Fiscal Year



The Group’s fiscal year ends on December
31.



Principles of Consolidation



The consolidated financial statements include
the accounts of WISeKey and its wholly-owned or majority-owned subsidiaries over which the Group has control.



The consolidated comprehensive loss and
net loss of non-wholly owned subsidiaries is attributed to owners of the Group and to the noncontrolling interests in proportion
to their relative ownership interests.



Intercompany income and expenses, including
unrealized gross profits from internal group transactions and intercompany receivables, payables and loans have been eliminated.



Use of Estimates



The preparation of consolidated financial
statements in conformity with US GAAP requires management to make certain estimates, judgments and assumptions. We believe these
estimates, judgements and assumptions are reasonable, based upon information available at the time they were made. These estimates,
judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements
as well as the reported amounts of revenues and expenses during the periods presented. To the extent there are differences between
these estimates, judgments or assumptions and the actual results, our consolidated financial statements will be affected. In many
cases, the accounting treatment of a particular transaction is specifically dictated by US GAAP and does not require management’s
judgment in its application. There are also areas in which management’s judgment in selecting from available alternatives
would not produce a materially different result.



Foreign Currency



In general, the functional currency of
a foreign operation is the local currency. Assets and liabilities recorded in foreign currencies are translated at the exchange
rate on the balance sheet date. Revenue and expenses are translated at average rates of exchange prevailing during the year. The
effects of foreign currency translation adjustments are included in stockholders’ equity as a component of accumulated other
comprehensive income/loss. The Group's reporting currency is USD.



Cash and Cash Equivalents



Cash consists of deposits held at major
banks that are readily available. Cash equivalents consist of highly liquid investments that are readily convertible to cash and
that mature within three months or less from the date of purchase. The carrying amounts approximate fair value due to the short
maturities of these instruments.



Accounts Receivable



Receivables represent rights to consideration
that are unconditional and consist of amounts billed and currently due from customers, and revenues that have been recognized for
accounting purposes but not yet billed to customers. The Group extends credit to customers in the normal course of business and
in line with industry practices.



Allowance for Doubtful Accounts



We record allowance for doubtful accounts
based upon a specific review of all outstanding invoices. We write off a receivable and charge it against its recorded allowance
when we have exhausted our collection efforts without success.





F-8







Inventories



Inventories are stated at the lower of
cost or net realizable value. Costs are calculated using standard costs, approximating average costs. Finished goods and work-in-progress
inventories include material, labor and manufacturing overhead costs. The Group records write-downs on inventory based on an analysis
of obsolescence or a comparison to the anticipated demand or market value based on a consideration of marketability and product
maturity, demand forecasts, historical trends and assumptions about future demand and market conditions.



Property, Plant and Equipment



Property, plant and equipment are stated
at cost, net of accumulated depreciation. Depreciation is computed using the straight-line method based on estimated useful lives
which range from 1 to 8 years. Leasehold improvements are amortized over the lesser of the estimated useful lives of the improvements
or the lease terms, as appropriate. Property, plant and equipment are periodically reviewed for impairment whenever events or changes
in circumstances indicate that the carrying amount of an asset may not be recoverable.



Intangible Assets



Those intangible assets that are considered
to have a finite useful life are amortized over their useful lives, which generally range from 1 to 14 years. Each period we evaluate
the estimated remaining useful lives of intangible assets and whether events or changes in circumstances require a revision to
the remaining periods of amortization or that an impairment review be carried out. As at December 31, 2018 and 2017, all intangible
assets held by the Group have been determined to have a finite life.



Leases



In line with ASC 842, the Group, as a lessee,
recognizes right-of-use assets and related lease liabilities on its balance sheet for all arrangements with terms longer than twelve
months, and reviews its leases for classification between operating and finance leases. Obligations recorded under operating and
finance leases are identified separately on the balance sheet. Assets under finance leases and their accumulated amortization are
disclosed separately in the notes. Operating and finance lease assets and operating and finance lease liabilities are measured
initially at an amount equal to the present value of minimum lease payments during the lease term, as at the beginning of the lease
term.



We have elected the short-term lease practical
expedient whereby we do not present short-term leases on the consolidated balance sheet as these leases have a lease term of 12
months or less at lease inception and do not contain purchase options or renewal terms that we are reasonably certain to exercise.



We have also elected the practical expedients
related to lease classification of leases that commenced before the effective date of ASC 842.



We adopted ASC 842 as of January 01, 2019
using the cumulative effect adjustment approach. Accordingly, previously reported financial statements, including footnote disclosures,
have not been restated to reflect the application of the new standard to all comparative periods presented.



Goodwill and Other Indefinite-Lived
Intangible Assets:



Goodwill and other indefinite-lived intangible
assets are not amortized, but are subject to impairment analysis at least once annually.



Goodwill is allocated to the reporting
unit in which the business that created the goodwill resides. A reporting unit is an operating segment, or a business unit one
level below that operating segment, for which discrete financial information is prepared and regularly reviewed by segment management.
We review our goodwill and indefinite lived intangible assets annually for impairment, or sooner if events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. We use October 1st as our annual impairment test
measurement date.



Equity Securities



Equity securities are any security representing
an ownership interest in an entity or the right to acquire or dispose of an ownership interest in an entity at fixed or determinable
prices, in accordance with ASC 321, i.e. investments that do not qualify for accounting as a derivative instrument, an investment
in consolidated subsidiaries, or an investment accounted for under the equity method.



We account for these investments in equity
securities at fair value at the reporting date, except for those investments without a readily determinable fair value where we
have elected the measurement at cost minus impairment, if any, plus or minus changes resulting from observable price changes in
orderly transactions for the identical or a similar investment of the same issuer, in line with ASC 321. Changes in fair value
are accounted for in the income statement as a non-operating income/expense.



Provision for Onerous Contracts



The Group recognizes a provision where
the Group has a present legal or constructive obligation as a result of past events, and it is probable that an outflow of resources
will be required to settle the obligation and when the amount can be reliably estimated. It is recorded in Other Liabilities.



Revenue Recognition



WISeKey’s policy is to recognize
revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which
the entity expects to be entitled in exchange for those goods or services. To achieve that core principle, WISeKey applies the
following steps:





| | - | Step 1: Identify the contract(s) with a customer.
| | - | -------------------------------------------------



| | - | Step 2: Identify the performance obligations in the contract.
| | - | -------------------------------------------------------------



| | - | Step 3: Determine the transaction price.
| | - | ----------------------------------------



| | - | Step 4: Allocate the transaction price to the performance obligations in the contract.
| | - | --------------------------------------------------------------------------------------



| | - | Step 5: Recognize revenue when (or as) the entity satisfies a performance obligation
| | - | ------------------------------------------------------------------------------------





F-9







Revenue is measured based on the consideration
specified in a contract with a customer and excludes amounts collected on behalf of third parties. We typically allocate the transaction
price to each performance obligation on the basis of the relative standalone selling prices of each distinct good or service promised
in the contract. If a standalone price is not observable, we use estimates.



The Group recognizes revenue when it satisfies
a performance obligation by transferring control over goods or services to a customer. The transfer may be done at a point in time
(typically for goods) or over time (typically for services). The amount of revenue recognized is the amount allocated to the satisfied
performance obligation. For performance obligations satisfied over time, the revenue is recognized over time, most frequently on
a prorata temporis basis as most of the services provided by the Group relate to a set performance period.



If the Group determines that the performance
obligation is not satisfied, it will defer recognition of revenue until it is satisfied.



We present revenue net of sales taxes and
any similar assessments.



The Group delivers products and records
revenue pursuant to commercial agreements with its customers, generally in the form of an approved purchase order or sales contract.



Where products are sold under warranty,
the customer is granted a right of return which, when exercised, may result in either a full or partial refund of any consideration
received, or a credit that can be applied against amounts owed, or that will be owed, to WISeKey. For any amount received or receivable
for which we do not expect to be entitled to because the customer has exercised its right of return, we recognize those amounts
as a refund liability.



Contract Assets



Contract assets consists of accrued revenue
where WISeKey has fulfilled its performance obligation towards the customer but the corresponding invoice has not yet been issued.
Upon invoicing, the asset is reclassified to trade accounts receivable until payment.



Deferred Revenue



Deferred revenue consists of amounts that
have been invoiced and paid but have not been recognized as revenue. Deferred revenue that will be realized during the succeeding
12-month period is recorded as current and the remaining deferred revenue recorded as non-current. This would relate to multi-year
certificates or licenses.



Contract Liability



Contract liability consists of either:



| | - | amounts that have been invoiced and not yet paid, nor recognized as revenue. Upon payment, the
liability is reclassified to deferred revenue if the amounts still have not been recognized as revenue. Contract liability that
will be realized during the succeeding 12-month period is recorded as current and the remaining contract liability recorded as
non-current. This would relate to multi-year certificates or licenses.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | advances from customers not supported by invoices.
| | - | --------------------------------------------------



Sales Commissions



Sales commission expenses where revenue
is recognized are recorded in the period of revenue recognition.



Cost of Sales



Our cost of sales consists primarily of
expenses associated with the delivery and distribution of our services and products. These include expenses related to the license
to the Global Cryptographic ROOT Key, the global Certification authorities as well as the digital certificates for people, servers
and objects, expenses related to the preparation of our secure elements and the technical support provided on the Group's ongoing
production and on the ramp-up phase, including materials, labor, test and assembly suppliers, and subcontractors, freights costs,
as well as the amortization of probes, wafers and other items that are used in the production process.



Research and Development and Software
Development Costs



All research and development costs and
software development costs are expensed as incurred.



Advertising Costs



All advertising costs are expensed as incurred.



Pension Plan



The Group maintains two defined benefit
post retirement plans:



| | - | one that covers all employees working for WISeKey SA in Switzerland, and
| | - | ------------------------------------------------------------------------



| | - | one for the French employees of WISeKey Semiconductors SAS.
| | - | -----------------------------------------------------------



In accordance with ASC 715-30, Defined
Benefit Plans – Pension,the Group recognizes the funded status of the plan in the balance sheet. Actuarial gains and
losses are recorded in accumulated other comprehensive income / (loss).



Stock-based Compensation



Stock-based compensation costs are recognized
in earnings using the fair-value based method for all awards granted. Fair values of options and awards granted are estimated using
a Black-Scholes option pricing model. The model’s input assumptions are determined based on available internal and external
data sources. The risk-free rate used in the model is based on the Swiss treasury rate for the expected contractual term. Expected
volatility is based on historical volatility of WIHN class B shares.





F-10







Compensation costs for unvested stock options
and awards are recognized in earnings over the requisite service period based on the fair value of those options and awards at
the grant date.



In accordance with the Group’s adoption
of ASU 2018-07 from January 01, 2019, the treatment of nonemployee share-based payments, previously subject to ASC 505, was
aligned with existing guidance on employee share-based payments in ASC 718. As a result, nonemployee share-based payment transactions
are measured by estimating the fair value of the equity instruments that an entity is obligated to issue and the measurement date
will be consistent with the measurement date for employee share-based payment awards (i.e., grant date for equity-classified awards).



Income Taxes



Taxes on income are accrued in the same
period as the revenues and expenses to which they relate.



Deferred taxes are calculated on the temporary
differences that arise between the tax base of an asset or liability and its carrying value in the balance sheet of our companies
prepared for consolidation purposes, with the exception of temporary differences arising on investments in foreign subsidiaries
where WISeKey has plans to permanently reinvest profits into the foreign subsidiaries.



Deferred tax assets on tax loss carry-forwards
are only recognized to the extent that it is “more likely than not” that future profits will be available and the tax
loss carry-forward can be utilized.



Changes to tax laws or tax rates enacted
at the balance sheet date are taken into account in the determination of the applicable tax rate provided that they are likely
to be applicable in the period when the deferred tax assets or tax liabilities are realized.



WISeKey is required to pay income taxes
in a number of countries. WISeKey recognizes the benefit of uncertain tax positions in the financial statements when it is more
likely than not that the position will be sustained on examination by the tax authorities. The benefit recognized is the largest
amount of tax benefit that is greater than 50 percent likely of being realized on settlement with the tax authority, assuming full
knowledge of the position and all relevant facts. WISeKey adjusts its recognition of these uncertain tax benefits in the period
in which new information is available impacting either the recognition or measurement of its uncertain tax positions.



Research Tax Credits



Research tax credits are provided by the
French government to give incentives for companies to perform technical and scientific research. Our subsidiary WISeKey Semiconductors
SAS is eligible to receive such tax credits.



These research tax credits are presented
as a reduction of Research & development expenses in the income statement when companies that have qualifying expenses can
receive such grants in the form of a tax credit irrespective of taxes ever paid or ever to be paid, the corresponding research
and development efforts have been completed and the supporting documentation is available. The credit is deductible from the entity’s
income tax charge for the year or payable in cash the following year, whichever event occurs first. The tax credits are included
in noncurrent deferred tax credits in the balance sheet in line with ASU 2015-17.



Earnings per Share



Basic earnings per share are calculated
using WISeKey International Holding AG’s weighted-average outstanding common shares. When the effects are not antidilutive,
diluted earnings per share is calculated using the weighted-average outstanding common shares and the dilutive effect of stock
options as determined under the treasury stock method.



Segment Reporting



Our chief operating decision maker, who
is also our Chief Executive Officer, regularly reviews information collated into two segments for purposes of allocating resources
and assessing budgets and performance. We report our financial performance based on this segment structure described in Note 35.



Recent Accounting Pronouncements



Adoption of new FASB Accounting Standard
in the current year – Prior-Year Financial Statements not restated:



In 2019, the Group adopted ASU 2016-02,
Leases (Topic 842), which, under its core principle, requires a lessee to recognize lease assets and liabilities on the balance
sheet for all arrangements with terms longer than 12 months. The Group also adopted ASU 2018-11, Leases (Topic 842), and ASU 2018-10,
Codification improvements to Topic 842, which provides a new transition method and a practical expedient for separating components
of a contract intended to reduce costs and ease implementation of the lease standard for financial statement preparers. There have
also been some practical expedients provided with the aim of simplifying adoption and the Group has elected to apply these. The
practical expedients allow that an entity need not reassess any expired or existing contracts, nor reassess the lease classification
for expired or existing leases, nor reassess initial direct costs for existing leases. They must all be applied as a package. Following
on from ASU 2018-11, entities are permitted to elect not to restate comparative periods in the period of adoption. The Group has
elected to follow this guidance.



As a result of the adoption of ASU 2016-02,
the Group, as a lessee, recognized right-of-use assets and related lease liabilities on its balance sheet for all arrangements
with terms longer than twelve months from January 01, 2019. In line with the practical expedients, WISeKey did not reassess any
expired or existing contracts, nor reassess the lease classification for expired or existing leases, nor reassess initial direct
costs for existing leases. The majority of leases held as at January 01, 2019 (the application date) were classified as operating
leases in prior periods and should continue to be treated as such. There was no material impact on the Group’s results of
operations in 2019 upon adoption of the new standard.



We adopted ASC 842 as of January 01,
2019 using the cumulative effect adjustment approach. Accordingly, previously reported financial statements, including footnote
disclosures, have not been recast to reflect the application of the new standard to all comparative periods presented. Financial
statements for the year ended December 31, 2018 have not been restated.





F-11







The Group's disclosures regarding its leasing
activities have been expanded to enable users of our consolidated financial statements to better understand the impact from leasing.
Information regarding our adoption of ASU 2016-02 and its impact on the Group's consolidated financial statements and related disclosures
is provided in Note 4 in the Leases subsection and in Note 17.



In 2019, the Group adopted ASU 2018-07,
Compensation-Stock Compensation, which supersedes most of the prior accounting guidance on nonemployee share-based payments, and
instead aligns it with existing guidance on employee share-based payments in ASC 718. As a result, nonemployee share-based
payment transactions were measured by estimating the fair value of the equity instruments that an entity is obligated to issue
and the measurement date is consistent with the measurement date for employee share-based payment awards. WISeKey was required
to measure these nonemployee awards at fair value as of the beginning of the fiscal year of adoption. Because all costs were recognized
in 2018, there was no impact on the Group results of operations or financial condition in 2019 upon adoption of the new standard.



New FASB Accounting Standard to be adopted
in the future:



In August 2018, The FASB issued ASU 2018-13,
Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement.



Summary: ASU 2018-13 modifies the disclosure
requirements on fair value measurements in Topic 820 as follows:



The following disclosure requirements were
removed from Topic 820:



| | · | The amount of and reasons for transfers between
Level 1 and Level 2 of the fair value hierarchy; The policy for timing of transfers between levels;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------



| | · | The valuation processes for Level 3 fair
value measurements; and for non-public entities, the changes in unrealized gains and losses for the period included in earnings
for recurring Level 3 fair value measurements held at the end of the reporting period.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The following disclosure requirements were
modified in Topic 820:



| | · | In lieu of a rollforward for Level 3 fair
value measurements, a non-public entity is required to disclose transfers into and out of Level 3 of the fair value hierarchy and
purchases and issues of Level 3 assets and liabilities; for investments in certain entities that calculate net asset value, an
entity is required to disclose the timing of liquidation of an investee’s assets and the date when restrictions from redemption
might lapse only if the investee has communicated the timing to the entity or announced the timing publicly; and the amendments
clarify that the measurement uncertainty disclosure is to communicate information about the uncertainty in measurement as of the
reporting date.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The following disclosure requirements were
added to Topic 820:



| | · | The changes in unrealized gains and losses
for the period included in other comprehensive income for recurring Level 3 fair value measurements held at the end of the reporting
period; and the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.
For certain unobservable inputs, an entity may disclose other quantitative information (such as the median or arithmetic average)
in lieu of the weighted average if the entity determines that other quantitative information would be a more reasonable and rational
method to reflect the distribution of unobservable inputs used to develop Level 3 fair value measurements. In addition, the amendments
eliminate at a minimum from the phrase “an entity shall disclose at a minimum” to promote the appropriate exercise
of discretion by entities when considering fair value measurement disclosures and to clarify that materiality is an appropriate
consideration of entities and their auditors when evaluating disclosure requirements.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



Effective Date: The amendments are effective
for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The amendments
on changes in unrealized gains and losses, the range and weighted average of significant unobservable inputs used to develop Level
3 fair value measurements, and the narrative description of measurement uncertainty should be applied prospectively for only the
most recent interim or annual period presented in the initial fiscal year of adoption. All other amendments should be applied retrospectively
to all periods presented upon their effective date. Early adoption is permitted. An entity is permitted to early adopt any removed
or modified disclosures upon issuance of ASU No. 2018-13 and delay adoption of the additional disclosures until their effective
date.



The Group expects to adopt all of the aforementioned
guidance when effective. Management is assessing the impact of the aforementioned guidance on its consolidated financial statements
but does not expect it to have a material impact.



In August 2018, The FASB issued ASU 2018-14,
Compensation—Retirement Benefits—Defined Benefit Plans—General (Subtopic 715-20): Disclosure Framework—Changes
to the Disclosure Requirements for Defined Benefit Plans.



Summary: ASU 2018-14 applies to all employers
that sponsor defined benefit pension or other postretirement plans. The amendments modify the disclosure requirements for employers
that sponsor defined benefit pension or other postretirement plans.



ASU 2018-14 deletes the following disclosure
requirements:



The amounts in accumulated other comprehensive
income expected to be recognized as components of net periodic benefit cost over the next fiscal year; the amount and timing of
plan assets expected to be returned to the employer; related party disclosures about the amount of future annual benefits covered
by insurance and annuity contracts and significant transactions between the employer or related parties and the plan.



For public entities, the effects of a one-percentage-point
change in assumed health care cost trend rates on the (a) aggregate of the service and interest cost components of net periodic
benefit costs and (b) benefit obligation for postretirement health care benefits.



ASU 2018-14 adds/clarifies disclosure requirements
related to the following:



The weighted-average interest crediting
rates for cash balance plans and other plans with promised interest crediting rates; An explanation of the reasons for significant
gains and losses related to changes in the benefit obligation for the period; The projected benefit obligation (PBO) and fair value
of plan assets for plans with PBOs in excess of plan assets; The accumulated benefit obligation (ABO) and fair value of plan assets
for plans with ABOs in excess of plan assets.





F-12







Effective Date: The amendments are effective
for fiscal years ending after December 15, 2020 for public business entities. Early adoption is permitted. The Group expects to
adopt all of the aforementioned guidance when effective. Management does not expect the aforementioned guidance to have an impact
on its consolidated financial statements, other than the required changes in disclosures.



In April 2019,The FASB issued Accounting
Standards Update (ASU) No. 2019-04, Codification Improvements to Topic 326, Financial Instruments—Credit Losses, Topic
815, Derivatives and Hedging, and Topic 825, Financial Instruments, Codification improvements:



Summary: ASU 2019-04 clarifies and improves
areas of guidance related to the recently issued standards on credit losses, hedging, and recognition and measurement of financial
instruments to ASU 2016-01, 2016-13 & 2017-12. Since issuance of these standards, the FASB has identified areas that need clarification
and correction, resulting in changes similar to those issues under its ongoing Codification improvements.



Effective Date: The amendments related
to ASU 2016-01 are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal
years. Early adoption is generally permitted.



The Company expects to adopt all of the
aforementioned guidance when effective. Management is assessing the impact of the aforementioned guidance on its consolidated financial
statements but does not expect it to have a material impact.



In December 2019, The FASB issued Accounting
Standards Update (ASU) no 2019-12, ​Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes ​(the ASU),
as part as part of its overall simplification initiative to reduce costs and complexity of applying accounting standards while
maintaining or improving the usefulness of the information provided to users of financial statements. The FASB’s amendments
primarily impact ASC 740, ​Income Taxes, ​ and may impact both interim and annual reporting periods.



It eliminates the need for an organization
to analyze whether the following apply in a given period:



| | · | Exception to the incremental approach for
intraperiod tax allocation;
| | - | ---------------------------------------------------------------------



| | · | Exceptions to accounting for basis differences
when there are ownership changes in foreign investments; and
| | - | -----------------------------------------------------------------------------------------------------------



| | · | Exception in interim period income tax accounting
for year-to-date losses that exceed anticipated losses.
| | - | ---------------------------------------------------------------------------------------------------------



The ASU also improves financial statement
preparers’ application of income tax-related guidance and simplifies GAAP for:



| | · | Franchise taxes that are partially based
on income;
| | - | ---------------------------------------------------



| | · | Transactions with a government that result
in a step up in the tax basis of goodwill;
| | - | -------------------------------------------------------------------------------------



| | · | Separate financial statements of legal entities
that are not subject to tax; and
| | - | --------------------------------------------------------------------------------



| | · | Enacted changes in tax laws in interim periods.
| | - | -----------------------------------------------



Effective Date: The amendments related
to ASU 2019-12 are effective for public business entities for annual reporting periods beginning after December 15, 2020, and interim
periods within those reporting periods. Early adoption is permitted in any interim or annual period, with any adjustments reflected
as of the beginning of the fiscal year of adoption.



The Company expects to adopt all of the
aforementioned guidance when effective. Management is assessing the impact of the aforementioned guidance on its consolidated financial
statements but does not expect it to have a material impact.



| | Note 5. | Concentration of credit risks
| | ------- | -----------------------------



Financial instruments that are potentially
subject to credit risk consist primarily of cash and cash equivalents and trade accounts receivable. Our cash is held with large
financial institutions. Management believes that the financial institutions that hold our investments are financially sound and
accordingly, are subject to minimal credit risk. Deposits held with banks may exceed the amount of insurance provided on such deposits.



The Group sells to large, international
customers and, as a result, may maintain individually significant trade accounts receivable balances with such customers during
the year. We generally do not require collateral on trade accounts receivable. Summarized below are the clients whose revenue were
10% or higher than the respective total consolidated net sales for fiscal years 2019, 2018 and 2017, and the clients whose trade
accounts receivable balances were 10% or higher than the respective total consolidated trade accounts receivable balance for fiscal
years 2019 and 2018:







|                                                                | Revenue
    concentration
    (% of total net sales) |                               | Receivables
    concentration
     (% of total accounts receivable)
|--------------------------------------------------------------- | ---------------------------------------------------- | ----------------------------- | -------------------------------------------------------------------
|                                                                | Year
    to December 31, 2019                        | Year
    to December 31, 2018 | Year
    to December 31, 2017                                      
|IoT
    operating segment                                       |                                                      |                               |                                                                    
|Multinational
    electronics contract manufacturing company    | 12%                                                  | 8%                            | 7%                                                                 
|International
    luxury watch company                          | 6%                                                   | 2%                            | 3%                                                                 
|International
    packaging solutions, technology and chips     | 11%                                                  | 3%                            | 3%                                                                 
|International
    aduio software and hardware solutions company | 2%                                                   | 0%                            | 0%                                                                 





F-13







| | Note 6. | Fair value measurements
| | ------- | -----------------------



ASC 820 establishes a three-tier fair value
hierarchy for measuring financial instruments, which prioritizes the inputs used in measuring fair value. These tiers include:



·Level 1, defined as observable inputs such as quoted prices in active markets;

·Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and

·Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its
own assumptions.



|                                        | As at December 31, 2019 |            | As at December 31, 2018 |                 | Fair value level | 
|--------------------------------------- | ----------------------- | ---------- | ----------------------- | --------------- | ---------------- | 
|USD'000                                 | Carrying amount         | Fair value |                         | Carrying amount | Fair value       | 
|Amortized costs fair value measurements |                         |            |                         |                 |                  | 
|Accounts receivable                     | 3,770                   | 3,770      |                         | 7,620           | 7,620            | 
|Notes receivable from related parties   | -                       | -          |                         | 8               | 8                | 
|Notes receivable, noncurrent            | 23                      | 23         |                         | -               | -                | 
|Equity securities, at cost              | 7,000                   | 7,000      |                         | 7,000           | 7,000            | 
|Accounts payable                        | 10,713                  | 10,713     |                         | 12,917          | 12,917           | 
|Notes payable                           | 4,104                   | 4,104      |                         | 6,797           | 6,797            | 
|Convertible note payable, current       | 3,226                   | 3,226      |                         | -               | -                | 
|Convertible note payable, noncurrent    | -                       | -          |                         | 23,940          | 23,940           | 
|Recurring fair value measurements       |                         |            |                         |                 |                  | 
|Equity securities, at fair value        | 756                     | 756        |                         | 857             | 857              | 
|Derivative liabilities, current         | 44                      | 44         |                         | -               | -                | 



In addition to the methods and assumptions
we use to record the fair value of financial instruments as discussed in the Fair Value Measurements section above, we used the
following methods and assumptions to estimate the fair value of our financial instruments:



| | - | Accounts receivable – carrying amount approximated fair value due to their short-term nature.
| | - | ---------------------------------------------------------------------------------------------



| | - | Notes receivable from related parties – carrying amount approximated fair value due to their
short-term nature.
| | - | ---------------------------------------------------------------------------------------------------------------



| | - | Notes receivable, noncurrent- carrying amount approximated fair value.
| | - | ----------------------------------------------------------------------



| | - | Equity securities, at cost - no readily determinable fair value, measured at cost minus impairment
| | - | --------------------------------------------------------------------------------------------------



| | - | Accounts payable – carrying amount approximated fair value due to their short-term nature.
| | - | ------------------------------------------------------------------------------------------



| | - | Notes payable – carrying amount approximated fair value.
| | - | --------------------------------------------------------



| | - | Convertible note payable current and noncurrent- carrying amount approximated fair value.
| | - | -----------------------------------------------------------------------------------------



| | - | Equity securities, at fair value - fair value remeasured as at reporting period.
| | - | --------------------------------------------------------------------------------



Derivative liabilities, current - fair
value remeasured as at reporting.



Derivative liabilities



In 2019, the Group held one derivative
instrument which was measured at estimated fair value on a recurring basis and linked to embedded conversion option in the Yorkville
Convertible Loan signed on June 27, 2019 (see Note 24).



The convertible note has a maturity date
of August 01, 2020. It contains a conversion option into WIHN Class B shares at the election of the holder, which may be exercised
at each monthly repayment date, covering any amount outstanding (principal and/or interests) that may be settled. The exercise
price is set at CHF 3.00 with antidilution provision adjustments as further described in Note 24.



In line with ASU 2014-16, the convertible
note was assessed as a hybrid instrument, being a debt instrument with an equity-linked component (the conversion option). Per
ASC 815-10, the embedded conversion option met the definition of a derivative and was accounted for separately.



The hosting debt instrument was recorded
using the residual method.



The derivative component (the conversion
option) was fair valued using a binomial lattice model, building in quoted market prices of WIHN class B shares, and inputs such
as time value of money, volatility, and risk-free interest rates. It was valued at inception at USD 257,435, and was allocated
between current and noncurrent on a prorata temporis basis according to the monthly repayment schedule. The derivative component
will be revalued at fair value at each reporting date in line with ASC 815-15-30-1.



In 2019, WISeKey made five repayments in
cash of the Yorkville Convertible Loan, resulting in the following gain or loss on derivative:





| | - | On August 15, 2019, WISeKey repaid USD 237,392 of the principal.
| | - | ----------------------------------------------------------------



| | - | On September 01, 2019, WISeKey repaid USD 69,847 of the principal.
| | - | ------------------------------------------------------------------



| | - | On September 17, 2019, WISeKey repaid USD 195,173 of the principal.
| | - | -------------------------------------------------------------------



| | - | On October 10, 2019, WISeKey repaid USD 249,999 of the principal.
| | - | -----------------------------------------------------------------



| | - | On November 07, 2019, WISeKey repaid USD 410,196 of the principal.
| | - | ------------------------------------------------------------------





F-14







The derivative component was measured at
fair value at the reporting date at USD 43,655, all in current derivative liabilities. Therefore, for the year ended December
31, 2019, WISeKey recorded in the income statement, a net gain on derivative of USD 213,780 and a net debt discount amortization
expense of USD 468,265.



|Derivative liabilities                                                    | USD'000
|------------------------------------------------------------------------- | -------
|Balance as at December 31, 2017                                           | -      
|Balance as at December 31, 2018                                           | -      
|Fair value of the derivative instrument (conversion option)               | 258    
|Gain on derivative recognized as a separate line in the statement of loss | (214)  
|Balance as at December 31, 2019                                           | 44     



| | Note 7. | Cash and cash equivalents
| | ------- | -------------------------



Cash consists of deposits held at major
banks.



| | Note 8. | Restricted cash
| | ------- | ---------------



Restricted cash as at December 31, 2019
is made up of:



| | - | USD 4.5 million of the consideration for the sale of QuoVadis which is held in an escrow account,
and to be released in an amount of up to USD 2.5 million on January 16, 2020 and the remaining amount on January 16, 2021 (see
Note 37 for further details and Note 40 Subsequent events), and
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | A balance of CHF 24,073 (USD 24,874) on the liquidity account funded by WISeKey in relation to
the services provided by a market maker from August 10, 2018 until June 25, 2019.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



As at December 31, 2018, the liquidity
account had a balance of CHF 607,502, i.e. USD 617,796 at the reporting exchange rate. The carrying amounts approximate
fair value due to the short maturities of these instruments. As part of the contract, WISeKey funded a liquidity account with CHF 1,000,000
on August 24, 2018.



| | Note 9. | Accounts receivable
| | ------- | -------------------



The breakdown of the accounts receivable
balance is detailed below:



|                                                                 | As at December 31, |  | As at December 31,
|---------------------------------------------------------------- | ------------------ |  | ------------------
|USD'000                                                          | 2019               |  | 2018              
|Trade accounts receivable                                        | 3,643              |  | 7,607             
|Allowance for doubtful accounts                                  | (25)               |  | (4)               
|Accounts receivable from other related parties                   | 119                |  | 1                 
|Other accounts receivable                                        | 33                 |  | 16                
|Total accounts receivable net of allowance for doubtful accounts | 3,770              |  | 7,620             



| | Note 10. | Inventories
| | -------- | -----------



Inventories consisted of the following:



|                  | As at December 31, |  | As at December 31,
|----------------- | ------------------ |  | ------------------
|USD'000           | 2019               |  | 2018              
|Raw materials     | 636                |  | 1,342             
|Work in progress  | 2,151              |  | 2,844             
|Total inventories | 2,787              |  | 4,186             



In the years ended December 31, 2019, 2018
and 2017, the Group recorded inventory obsolescence charges in the income statement of respectively USD 26,249, USD 90,567
and USD 2,537 on raw materials, and USD 508,938, USD 193,213 and USD 2,274,710 on work in progress.





F-15







| | Note 11. | Other current assets
| | -------- | --------------------



Other current assets consisted of the following:



|                              | As at December 31, |  | As at December 31,
|----------------------------- | ------------------ |  | ------------------
|USD'000                       | 2019               |  | 2018              
|Value-Added Tax Receivable    | 1,449              |  | 858               
|Advanced payment to suppliers | 7                  |  | 53                
|Deposits, current             | 9                  |  | 4                 
|Other currrent assets         | 4                  |  | 4                 
|Total other current assets    | 1,469              |  | 919               



| | Note 12. | Notes receivable, noncurrent
| | -------- | ----------------------------



As at December 31, 2019, the noncurrent
notes receivable consisted of a loan to an employee for CHF 21,780 (USD 22,504). From April 01, 2019, WISeKey has agreed
to lend CHF 2,420 per month to an employee over a period of 24 months, at an interest rate of 0.5% per annum. The loan and
accrued interest are to be repaid in full on or before December 31, 2021. In exchange for the loan, the employee has pledged the
60,000 ESOP options that he holds on WIHN class B shares.



As at December 31, 2018, the noncurrent
notes receivable balance was nil.



| | Note 13. | Equity securities, at fair value
| | -------- | --------------------------------



On March 29, 2017, the Group announced
that the respective boards of directors of WISeKey and OpenLimit Holding AG (DE: O5H) (“OpenLimit“) had decided that
discussions in relation to a possible merger transaction between WISeKey and OpenLimit as previously announced on July 25, 2016
were not being further pursued. The interim financing provided by WISeKey to OpenLimit in a principal amount of EUR 750,000
was, in accordance with applicable terms of a convertible loan agreement, converted into OpenLimit Shares issued by OpenLimit out
of its existing authorized share capital. The conversion price was set at 95% of the volume weighted average price (“VWAP”)
of the OpenLimit shares traded on the Frankfurt stock exchange as reported by the Frankfurt stock exchange for the ten trading
days immediately preceding and including March 29, 2017. WISeKey received 2,200,000 newly issued fully fungible listed OpenLimit
Shares representing – post issuance of these new shares – an 8.4% stake in OpenLimit on an issued share basis. The
effective conversion ratio was EUR 0.3409 per share. The equity securities were fair valued at market price on the date of
the transaction to USD 846,561.



As at December 31, 2019, the fair value
was recalculated using the closing market price on the XETRA of EUR 0.306 (USD 0.3435) and amounted to USD 755,802.
The difference of USD 101,068 from the fair value at December 31, 2018 was accounted for in the income statement as a non-operational
expense.



| | Note 14. | Deferred tax credits
| | -------- | --------------------



Deferred tax credits consisted of the following:



|                                            | As at December 31, |  | As at December 31,
|------------------------------------------- | ------------------ |  | ------------------
|USD'000                                     | 2019               |  | 2018              
|Deferred research & development tax credits | 2,487              |  | 2,505             
|Deferred other tax credits                  | 1                  |  | 36                
|Total deferred tax credits                  | 2,488              |  | 2,541             



WISeKey Semiconductors SAS and WISeCoin
France R&D Lab SAS are eligible for Research tax credits provided by the French government (see Note 4 Summary of significant
accounting policies). As at December 31, 2019, and 2018, the receivable balance in respect of these Research tax credits was respectively
of USD 1,934,539 and USD 2,505,264 for WISeKey Semiconductors SAS, and USD 552,067 and USD nil for WISeCoin
France R&D Lab SAS. The credit is deductible from the entity’s income tax charge for the year or payable in cash the
following year, whichever event occurs first and is shown under noncurrent deferred tax assets in line with ASU 2015-17.





F-16







| | Note 15. | Property, plant and equipment
| | -------- | -----------------------------



Property, plant and equipment, net consisted
of the following.



|                                                                    | As at December 31, |  | As at December 31,
|------------------------------------------------------------------- | ------------------ |  | ------------------
|USD'000                                                             | 2019               |  | 2018              
|Machinery & equipment                                               | 4,029              |  | 3,815             
|Office equipment and furniture                                      | 2,505              |  | 2,469             
|Computer equipment and licences                                     | 1,069              |  | 1,056             
|Total property, plant and equipment gross                           | 7,603              |  | 7,340             
|                                                                    |                    |  |                   
|Accumulated depreciation for:                                       |                    |  |                   
|Machinery & equipment                                               | (2,508)            |  | (1,828)           
|Office equipment and furniture                                      | (2,270)            |  | (2,169)           
|Computer equipment and licences                                     | (1,024)            |  | (973)             
|Total accumulated depreciation                                      | (5,802)            |  | (4,970)           
|Total property, plant and equipment from continuing operations, net | 1,801              |  | 2,370             
|Depreciation charge from continuing operations for the year         | 821                |  | 855               



No depreciation expense was recorded in
cost of sales on the face of the income statement for the years 2019, 2018 and 2017.



The depreciation charge from continuing
operations for the year 2017 was USD 894,328.



The useful economic life of property plant
and equipment is as follow:



| | · | Office equipment and furniture: | 2 to 5 years
| | - | ------------------------------- | ------------



| | · | Production masks | 5 years
| | - | ---------------- | -------



| | · | Production tools | 3 years
| | - | ---------------- | -------



| | · | Licenses | 3 years
| | - | -------- | -------



| | · | Software | 1 year
| | - | -------- | ------



| | Note 16. | Intangible assets
| | -------- | -----------------



Intangible assets and future amortization
expenses consisted of the following:



|                                                            | As at December 31, |  | As at December 31,
|----------------------------------------------------------- | ------------------ |  | ------------------
|USD'000                                                     | 2019               |  | 2018              
|Trademarks                                                  | 130                |  | 128               
|Patents                                                     | 2,281              |  | 2,281             
|License agreements                                          | 10,758             |  | 10,615            
|Other intangibles                                           | 6,152              |  | 6,070             
|Total intangible assets gross                               | 19,321             |  | 19,094            
|Accumulated amortization for:                               |                    |  |                   
|Trademarks                                                  | (129)              |  | (126)             
|Patents                                                     | (1,683)            |  | (1,175)           
|License agreements                                          | (10,757)           |  | (10,591)          
|Other intangibles                                           | (6,152)            |  | (6,070)           
|Total accumulated amortization                              | (18,721)           |  | (17,962)          
|Total intangible assets from continuing operations, net     | 600                |  | 1,132             
|Amortization charge from continuing operations for the year | 534                |  | 460               

The amortization charge from continuing operations for the year 2017 was USD 1,690,931.



The useful economic life of intangible
assets is as follow:



| | · | Trademarks: | 5 to 10 years
| | - | ----------- | -------------



| | · | Patents | 5 to 10 years
| | - | ------- | -------------



| | · | License agreements: | 3 to 5 years
| | - | ------------------- | ------------



| | · | Other intangibles: | 5 to 10 years
| | - | ------------------ | -------------



Future amortization charges are detailed
below:



|Year                         | USD'000
|---------------------------- | -------
|2020                         | 600    
|Total intangible assets, net | 600    





F-17







| | Note 17. | Leases
| | -------- | ------



WISeKey has historically entered into a
number of lease arrangements under which it is the lessee. As at December 31, 2019, WISeKey holds one finance lease for IT equipment
in our datacenter, 6 operating leases, and 9 short-term leases. One of its short-term leases is for a vehicle, whilst all other
short-term and operating leases relate to premises. We do not sublease. All of our operating leases include multiple optional renewal
periods which are not reasonably certain to be exercised. The finance lease contains an option to purchase the assets at the end
of the lease which we have assumed will be exercised and so has been included in the calculation of the right of use asset and
lease liability.



We have elected the short-term lease practical
expedient related to leases of various premises and equipment. We have elected the practical expedients related to lease classification
of leases that commenced before the effective date of ASC 842.



In the years 2019, 2018, and 2017 we recognized
rent expenses associated with our leases as follows:



|                                               | 12 months ended December 31, |  | 12 months ended December 31, |  | 12 months ended December 31,
|---------------------------------------------- | ---------------------------- |  | ---------------------------- |  | ----------------------------
|USD'000                                        | 2019                         |  | 2018                         |  | 2017                        
|Finance lease cost:                            |                              |  |                              |  |                             
|Amortization of right-of-use assets            | 31                           |  | -                            |  | -                           
|Interest on lease liabilities                  | 8                            |  | -                            |  | -                           
|Operating lease cost:                          |                              |  |                              |  |                             
|Fixed rent expense                             | 567                          |  | 561                          |  | 481                         
|Short-term lease cost                          | 63                           |  | 61                           |  | 54                          
|Net lease cost                                 | 669                          |  | 622                          |  | 535                         
|Lease cost - Cost of sales                     | -                            |  | -                            |  | -                           
|Lease cost - General & administrative expenses | 669                          |  | 622                          |  | 535                         
|Net lease cost                                 | 669                          |  | 622                          |  | 535                         



In the year 2019, we had the following
cash and non-cash activities associated with our leases:



|                                                                        | As at December 31,
|----------------------------------------------------------------------- | ------------------
|USD'000                                                                 | 2019              
|Cash paid for amounts included in the measurement of lease liabilities: |                   
|Operating cash flows from finance leases                                | 47                
|Operating cash flows from operating leases                              | 550               
|Financing cash flows from finance leases                                | 8                 
|Non-cash investing and financing activities :                           |                   
|Net lease cost                                                          | 669               
|Additions to ROU assets obtained from:                                  |                   
|New finance lease liabilities*                                          | 321               
|New operating lease liabilities*                                        | 3,768             



*In line with the new standard ASC 842 “Leases” and its transition guidance, we considered all leases as new leases in 2019.





F-18







As at December 31, 2019, future minimum
annual lease payments were as follows:



|                                                             |  | USD'000   |       | USD'000    |  | USD'000 |  | USD'000
|------------------------------------------------------------ |  | --------- | ----- | ---------- |  | ------- |  | -------
|Year                                                         |  | Operating |       | Short-term |  | Finance |  | Total  
|2020                                                         |  |           | 578   |            |  | 13      |  |        
|2021                                                         |  |           | 540   |            |  | -       |  |        
|2022                                                         |  |           | 370   |            |  | -       |  |        
|2023                                                         |  |           | 294   |            |  | -       |  |        
|2024 and beyond                                              |  |           | 1,337 |            |  | -       |  |        
|Total future minimum operating and short-term lease payments |  |           | 3,119 |            |  | 13      |  |        
|Less effects of discounting                                  |  |           | (340) |            |  | -       |  |        
|Less effects of practical expedient                          |  |           | -     |            |  | (13)    |  |        
|Lease liabilities recognized                                 |  |           | 2,779 |            |  | -       |  |        



In line with ASU 2018-11, future minimum
lease payments under legacy ASC 840 are disclosed in the table below:



|Year                                                         | USD'000
|------------------------------------------------------------ | -------
|2020                                                         | 705    
|2021                                                         | 654    
|2022                                                         | 427    
|2023                                                         | 294    
|2024 and beyond                                              | 1,337  
|Total future minimum operating and short-term lease payments | 3,417  



As of December 31, 2019, the weighted-average
remaining lease term was 2.5 years for our finance lease and 6.83 years for operating leases.



For our finance lease, the implicit rate
was calculated as 5.17%. For our operating leases and because we generally do not have access to the implicit rate in the lease,
we calculated an estimate rate based upon the estimated incremental borrowing rate of the entity holding the lease. The weighted
average discount rate associated with operating leases as of December 31, 2019 was 3.82%.



| | Note 18. | Goodwill
| | -------- | --------



We test goodwill for impairment annually
on October 1st, or as and when indicators of impairment arise. As at October 01, 2019, the fair value of the net assets of the
reporting unit concerned by goodwill was superior to the carrying value of the net assets and goodwill allocated. After October
01, 2019, there were no impairment indicators identified triggering a new impairment test. Therefore, no impairment loss was recorded
in 2019.



An impairment review has been conducted
for the item of goodwill allocated to the reporting unit (“RU”) relating to the acquisition of WISeKey Semiconductors
SAS in 2016. Fair value has been determined based on the income approach. Cash flows have been projected over 5 years from the
date of the assessment and have been discounted at the pre-tax weighted average cost of capital of the RU. The fair value is higher
than its carrying value.



|USD'000                                  | IoT Segment |  | mPKI Segment |  | Total
|---------------------------------------- | ----------- |  | ------------ |  | -----
|Goodwill balance as at December 31, 2017 | 8,317       |  | -            |  | 8,317
|Goodwill acquired during the year        | -           |  | -            |  | -    
|Impairment losses                        | -           |  | -            |  | -    
|As at December 31, 2018                  |             |  |              |  |      
|Goodwill                                 | 8,317       |  | -            |  | 8,317
|Accumulated impairment losses            | -           |  | -            |  | -    
|Goodwill balance as at December 31, 2018 | 8,317       |  | -            |  | 8,317
|Goodwill acquired during the year        | -           |  | -            |  | -    
|Impairment losses                        | -           |  | -            |  | -    
|As at December 31, 2019                  |             |  |              |  |      
|Goodwill                                 | 8,317       |  | -            |  | 8,317
|Accumulated impairment losses            | -           |  | -            |  | -    
|Goodwill balance as at December 31,2019  | 8,317       |  | -            |  | 8,317





F-19







The assumptions included in the impairment
tests require judgment, and changes to these inputs could impact the results of the calculations. Other than management's projections
of future cash flows, the primary assumptions used in the impairment tests were the weighted-average cost of capital and long-term
growth rates. Although the Group's cash flow forecasts are based on assumptions that are considered reasonable by management and
consistent with the plans and estimates management is using to operate the underlying businesses, there are significant judgments
in determining the expected future cash flows attributable to a reporting unit.



| | Note 19. | Equity securities, at cost
| | -------- | --------------------------



On September 27, 2018 WISeKey purchased
a warrant agreement in Tarmin Inc. from ExWorks as part of the eleventh amendment of the ExWorks Credit Agreement (see Note 24).
As a result, WISeKey entered into a warrant agreement with Tarmin Inc (“Tarmin”) (the “Tarmin Warrant”),
a private Delaware company, leader in data & software defined infrastructure to acquire 22% of common stock deemed outstanding
at the time of exercise. The warrant may be exercised in parts or in full, at an exercise price of USD 0.01 per share at nominal
value USD 0.0001. The purchase price of the Tarmin Warrant was USD 7,000,000, of which USD 3,000,000 was paid in cash on October
05, 2018 and the remaining USD 4,000,000 was paid on April 08, 2019.



The Tarmin Warrant was assessed as an equity
investment without a readily determinable fair value and we elected the measurement at cost less impairment, adjusted for observable
price changes for identical or similar investments of the same issuer as permitted by ASU 2016-01. As such, the Tarmin Warrant
was initially recognized on the balance sheet at USD 7,000,000.



As at December 31, 2019, we performed a
qualitative assessment to consider potential impairment indicators and did not identify impairment indicators. Therefore, no impairment
loss was recorded in 2019. We also made reasonable efforts to identify any observable transactions of identical or similar investments
of Tarmin, but did not identify any transaction requiring an adjustment to the carrying value of the Tarmin Warrant as at December
31, 2019. Therefore, the carrying value of the Tarmin Warrant as at December 31, 2019 was USD 7,000,000.



| | Note 20. | Other noncurrent assets
| | -------- | -----------------------



Other noncurrent assets consisted of noncurrent
deposits. Deposits are primarily made up of rental deposits on the premises rented by the Group.



| | Note 21. | Accounts payable
| | -------- | ----------------



The accounts payable balance consisted
of the following:



|                                                           | As at December 31, |  | As at December 31,
|---------------------------------------------------------- | ------------------ |  | ------------------
|USD'000                                                    | 2019               |  | 2018              
|Trade creditors                                            | 5,482              |  | 6,995             
|Factors or other financial institutions for borrowings     | 888                |  | 934               
|Accounts payable to Board Members                          | 117                |  | 239               
|Accounts payable to other related parties                  | 2                  |  | 292               
|Accounts payable to underwriters, promoters, and employees | 2,229              |  | 2,185             
|Other accounts payable                                     | 1,995              |  | 2,272             
|Total accounts payable                                     | 10,713             |  | 12,917            



Accounts payable to Board Members are made
up of accrued board fees and a payable balance of CHF 2,245 (USD 2,320) to Dourgam Kummer relating to unpaid business
expenses (see note 40 for detail).



Accounts payable to other related parties
are made up of a CHF 2,196 (USD 2,269) payable to a related party of Carlos Moreira (see note 40 for detail).



Accounts payable to employees consist primarily
of holiday, bonus and 13th month accruals across WISeKey.



Other accounts payable are mostly amounts
due or accrued for professional services (e.g. legal, accountancy, and audit services) and accruals of social charges in relation
to the accrued liability to employees.





F-20







| | Note 22. | Notes payable
| | -------- | -------------



Notes payable consisted of the following:



|                                  | As at December 31, |  | As at December 31,
|--------------------------------- | ------------------ |  | ------------------
|USD'000                           | 2019               |  | 2018              
|Short-term loan                   | 4,021              |  | 6,718             
|Short-term loan from shareholders | 82                 |  | 79                
|Total notes payable               | 4,103              |  | 6,797             



As at December 31, 2019, the current notes
payable balance was made up of:





| | - | a USD 4,021,472 short-term loan with ExWorks. See detail in Note 24.
| | - | --------------------------------------------------------------------



| | - | short-term loans from the noncontrolling shareholders of WISeKey SAARC for a total amount of USD 82,268
at closing rate (USD 79,122 as at December 31, 2018). These loans do not bear interests.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The weighted–average interest rate
on current notes payable, excluding loans from shareholders at 0%, was respectively 10% and 1.62% per annum as at December 31,
2019 and 2018.



| | Note 23. | Other current liabilities
| | -------- | -------------------------



Other current liabilities consisted of
the following:



|                                     | As at December 31, |  | As at December 31,
|------------------------------------ | ------------------ |  | ------------------
|USD'000                              | 2019               |  | 2018              
|Value-Added Tax Payable              | 706                |  | 422               
|Other tax payable                    | 65                 |  | 91                
|Customer contract liability, current | 255                |  | 142               
|Other current liabilities            | 278                |  | 321               
|Total other current liabilities      | 1,304              |  | 976               



| | Note 24. | Loans and line of credit
| | -------- | ------------------------



Share Subscription Facility with
GEM LLC



On January 19, 2016 the Group closed a
Share Subscription Facility (“the GEM Facility”) with GEM LLC, (Global Equity Markets, “GEM”), which is a CHF 60 million facility over 5 years and allows the Group to draw down funds at its option in exchange for WIHN class
B shares. The mechanics of the deal allow for a drawdown essentially 18 times in a year, the amount being in a range related to
the trading volume and price of the WIHN class B share trading on the Swiss SIX Stock Exchange. The drawdown amount is based on
90% of the average closing price of the last 15 trading days multiplied by 1,000% of the average volume of the last 15 trading
days. GEM can then elect to purchase between 50% and 200% of this figure.



The instrument was assessed under ASC 815
as an equity instrument. The drawdowns were reflected as increases in Common Share Capital with an increase in the value of common
stock issued and the difference between the nominal value of the shares and the funds received being recorded against Additional
Paid-In Capital ("APIC").



In 2017, WISeKey made three drawdowns for
a total of CHF 3,905,355 in exchange for a total of 825,000 WIHN class B shares issued out of authorized share capital.



There were no drawdowns made in 2018, nor
in 2019.



Therefore, as at December 31, 2019 the
outstanding facility available is CHF 56,094,645.



Acquisition line of credit agreement
with ExWorks Capital Fund I, L.P



On January 16, 2017 the Group signed an
acquisition line of credit agreement with ExWorks Capital Fund I, L.P. (the “ExWorks Line of Credit”) headquartered
in the USA, is an international, import and export finance company that offers financing solutions to businesses utilizing its
own capital as well as by leveraging its Delegated Authority granted by both the SBA and ExIm Bank. A first amendment was subsequently
signed on February 06, 2017, a second amendment on March 31, 2017, a third amendment on July 21, 2017, a fourth amendment on August
10, 2017, a fifth amendment on September 19, 2017, a sixth amendment on February 5, 2018, a seventh amendment on March 30, 2018,
an eighth amendment on June 20, 2018, a ninth amendment on July 24, 2018, a tenth amendment on August 17, 2018, and an eleventh
amendment on September 27, 2018.





F-21







As of December 31, 2018, under the ExWorks
Line of Credit as amended, the Group may borrow up to USD 22,646,437, including a loan of up to USD 4,000,000 to support
the launch of WISeKey's WISeCoin setup. Borrowings under the ExWorks Line of Credit bear interest payable monthly at 1%. The maturity
date of the arrangement is January 16, 2020 with an option to extend maturity to January 16, 2021 for a fee equal to 12% of the
outstanding loan at the time WISeKey exercises the extension option. Under current terms, ExWorks can elect to have part of or
all of the principal loan amount and interests paid either in cash or in WIHN class B shares at a conversion price of USD 4.74
per share.



Under the terms of the ExWorks Line of
Credit, the Group is required to not enter into agreements that would result in restriction on liens, reserved restriction on indebtedness,
mergers, consolidations, organizational changes except with an affiliate, contingent and third party liabilities, any substantial
change in the nature of its business, restricted payments, insider transactions, certain debt payments, certain agreements, negative
pledge or asset transfer other than sale of assets in the ordinary course of business. Furthermore, the Group is required to maintain
its existence and pay all taxes and other liabilities, provide ExWorks with periodical accounting reports and the detail of any
material litigation, comply with applicable laws, meet the financial covenants set in the line of credit agreement in terms of
average cash on hand and minimum ending cash on hand. The Group has complied with the line of credit covenants in the 12 months
to December 31, 2018.



As at December 31, 2018, borrowings under
the ExWorks Line of Credit are secured by (i) the grant of options to ExWorks exercisable for up to 1,075,000 WIHN class B registered
shares, par value CHF 0.05, at an exercise price of CHF 3.15; (ii) 100% of the shares in QuoVadis Trustlink Schweiz AG; (iii)
any cash bank account of the Group held in Switzerland; (iv) 100% of the shares in WISeKey USA; (v) 100% of the shares in WISeKey
Singapore; (vi) 100% of the shares held by the Group in WISeKey SAARC Ltd; and (vii) all shares owned by WISeKey (Bermuda) Holding
Ltd in each of its subsidiaries.



The ExWorks Line of Credit can be up-sized
/ syndicated at the same terms for up to an additional USD 10,000,000 by way of adding co-lender(s) or selling a participation
interest.



The line of credit was initially recognized
as a revolving credit falling under ASC 480, and, in line with ASU 2015-15 the commitment fee and debt issuance costs
totaling USD 3,165,880 were capitalized as deferred charges to be amortized over the duration of the contract. These deferred
charges included the fair value of an option agreement signed by both parties on February 06, 2017, granting ExWorks the option
to acquire up to 1,075,000 WIHN class B shares at an exercise price of CHF 3.15, exercisable in a maximum of four separate
exercises, between June 28, 2017 and February 06, 2020. The option agreement exercisable for up to 1,075,000 WIHN class B shares
was fair valued at grant for an amount of USD 2,173,395 using the Black-Scholes model and the market price of WIHN class B
shares on the date of grant, February 06, 2017, of CHF 4.04. The option agreement was assessed as equity instrument. The credit
entry from the recognition of the option agreement fair value was booked in APIC.



However, the fifth amendment on September
19, 2017 introduced an option to convert payments of the full or partial amounts of principal loan, interests and fees in WIHN
class B shares. The introduction of the conversion option was assessed to be a substantial modification of terms for the existing
contract and therefore, in line with ASC 470-50-40-6, was accounted for like an extinguishment. As a result, all fees and debt
issuance costs, including the option agreement, previously capitalized were fully amortized into the income statement in 2017,
the old debt was written off, and the new debt was accounted for at fair value. This gave rise to a USD 6,511,421 loss on extinguishment
in 2017 made up of total amendment fees of USD 700,000, the unamortized portion of the commitment fee and debt issuance costs totaling
USD 2,199,502 (of which USD 1,467,746 related to the option agreement), and the fair value of the conversion option introduced
for USD 4,087,519 calculated using the Black-Scholes model and the market price of WIHN class B shares as at the date of the fifth
amendment of CHF 4.10 (USD 4.26 at historical rate).



As at December 31, 2017, there were no
unamortized debt discount/premium or debt issuance costs. The conversion option was assessed as an equity instrument which did
not require bifurcation from its debt host. The credit entry from the recognition of the conversion option fair value was booked
in APIC.



The sixth amendment signed on February
05, 2018 extended maturity of the loans to January 16, 2020 (instead of January 15, 2019), reduced the monthly interest rate to
1% (instead of 1.5%), and introduced a clause whereby cash repayments are restricted in time. The amendment fee was USD 1,890,000.



The seventh amendment signed on March 30,
2018, granted an extension of USD 4m to the maximum loan amount to be used for “Other Approved Business Purpose”.
The amendment fee was USD 400,000. As at December 31, 2018 WISeKey has drawn USD 3,995,575 from this extended facility
to fund the creation of WISeCoin AG.



Both the sixth and seventh amendments were
analyzed as debt modification and accounted for under ASC 470-50-40-14. Total debt issue costs of USD 2,290,000 were
recorded as debt discounts and amortized over the duration of the credit line.



The eighth, ninth and tenth amendments
did not give rise to any debt modification or debt extinguishment accounting.



With the eleventh amendment on September
27, 2018 ExWorks removed liens on some intellectual property of the Group in exchange for WISeKey purchasing from ExWorks a 22%
warrant in Tarmin (see note 19) for a total purchase price of USD 7,000,000 made up of a USD 3,000,000 cash payment made
on October 05, 2018 and a USD 4,000,000 promissory note payable on March 31, 2019. The amendment fee was USD 250,000.
The Tarmin Warrant was assessed as an equity investment without a readily determinable fair value and we elected the measurement
at cost less impairment, adjusted for observable price changes for identical or similar investments of the same issuer as permitted
by ASU 2016-01. As such, the Tarmin Warrant was initially recognized on the balance sheet at USD 7,000,000.



In line with ASC 470-50, we compared
the present value of the new debt per the eleventh amendment to the present value of the old debt under the tenth amendment and
concluded that the difference was below the 10% threshold. The eleventh amendment was analyzed as a debt modification and accounted
for under ASC 470-50-40-14. Total debt issue costs of USD 2,540,000 were recorded as debt discounts and amortized over
the duration of the credit line.



As at December 31, 2018, outstanding borrowings
were USD 22,642,012 and unamortized debt discount USD 1,375,374.



On January 16, 2019, WISeKey repaid in
cash all outstanding amounts: USD 22,618,226 of principal, USD 120,654 of accrued interests, and USD 2,595,000 of accrued fees.



For the period starting January 01, 2019
to January 16, 2019, WISeKey recorded a total debt amortization charge of USD 49,822. Therefore the unamortized debt discount as
at January 16, 2019 amounted to USD 1,325,552.





F-22







The repayment of the loan was assessed
as a debt extinguishment in line with ASC 405-20-40-1. As a result, the unamortized debt discount of USD 1,325,552 was expensed
as loss on debt extinguishment in the income statement. Because most of the principal loan balance related to the acquisition credit
line for the purchase of QuoVadis in 2017, and in application of ASC 205-20-45-6 to 205-20-45-8 after the signature of the SPA
to sell QuoVadis, WISeKey further elected to apply ASC 205-20-45-8 and to allocate interest to the discontinued operations based
on the debt that can be identified as specifically attributed to the operations of QuoVadis. As a result USD 1,092,783 out of the
USD 1,325,552 total loss on debt extinguishment was recorded under discontinued operations and presented as a separate line item
in the income / (loss) on discontinued operations presented in Note 37. The remaining USD 232,769 loss on debt extinguishment
attributable to continuing operations is showing as a separate line item on the face of the income statement.



Standby Equity Distribution Agreement
with YA II PN, Ltd.



On February 08, 2018 WISeKey entered into
a Standby Equity Distribution Agreement (“SEDA”) with YA II PN, Ltd., a fund managed by Yorkville Advisors Global,
LLC (“Yorkville”). Under the terms of the SEDA as amended, Yorkville has committed to provide WISeKey, upon
a drawdown request by WISeKey, up to CHF 50,000,000 in equity financing over a three-year period ending March 01, 2021. Provided
that a sufficient number of class B shares is provided through share lending, WISeKey has the right to make drawdowns under the
SEDA, at its discretion, by requesting Yorkville to subscribe for (if the class B shares are issued out of authorized share capital)
or purchase (if the class B shares are delivered out of treasury) class B shares worth up to CHF 5,000,000 by drawdown, subject
to certain exceptions and limitations (including the exception that a drawdown request by WISeKey shall in no event cause the aggregate
number of class B shares held by Yorkville to meet or exceed 4.99% of the total number of shares registered with the commercial
register of the Canton of Zug). The purchase price will be 93% of the relevant market price at the time of the drawdown, determined
by reference to a five-day trading period following the draw down request by WISeKey.



The instrument was assessed under ASC 815
as an equity instrument. WISeKey paid a one-time commitment fee of CHF 500,000 (USD 524,231 at historical rate) on April 24,
2018 in 100,000 WIHN class B shares. In line with ASU 2015-15 the commitment fee was capitalized as deferred charges to be
amortized over the duration of the contract as a reduction of equity.



In 2018, WISeKey made 4 drawdowns for a
total of CHF 1,749,992 (USD 1,755,378 at historical rate) in exchange for a total of 540,539 WIHN class B shares issued out of
authorized share capital or treasury share capital.



In 2019, WISeKey made the following drawdowns:



| | - | On January 08, 2019 one drawdown for CHF 250,000 (USD 245,125 at historical rate) in exchange
for 97,125 WIHN class B shares issued out of treasury share capital.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | On August 15, 2019 one drawdown for CHF 250,000 (USD 256,187 at historical rate) in exchange
for 120,250 WIHN class B shares issued out of treasury share capital.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | On September 17, 2019 one drawdown for CHF 199,999 (USD 202,520 at historical rate) in exchange
for 84,281 WIHN class B shares issued out of treasury share capital.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | On October 10, 2019 one drawdown for CHF 249,999 (USD 249,999 at historical rate) in
exchange for 111,012 WIHN class B shares issued out of treasury share capital.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | On November 07, 2019 one drawdown for CHF 157,933 (USD 157,933 at historical rate) in
exchange for 78,146 WIHN class B shares issued out of treasury share capital.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



The amortization charge for the capitalized
fee recognized in APIC amounted to USD 183,631 for the year to December 31, 2019 and the remaining deferred charge balance
was USD 214,322 made up of USD 184,134 current and USD 30,188 noncurrent.



As at December 31, 2019 the outstanding
equity financing available was CHF 47,142,077.



Facility Agreement with YA II PN,
Ltd.



On September 28, 2018 WISeKey entered into
short-term Facility Agreement (the “Yorkville Loan”) with Yorkville to borrow USD 3,500,000 repayable by May
01, 2019 in monthly cash instalments starting in November 2018. The loan bears an interest rate of 4% per annum payable monthly
in arrears. A fee of USD 140,000 and debt issuance costs of USD 20,000 paid at inception.



The debt instrument was assessed as a term
debt. A discount of USD 160,000 was recorded at inception and will be amortized using the effective interest method over the life
of the debt.



The remaining loan balance at December
31, 2018 was USD 2,717,773 including unamortized debt discount of USD 57,007.



The discount amortization expense recorded
for the period to December 31, 2018 was USD 102,993.



In the period to December 31, 2018, WISeKey
repaid USD 725,220 of the principal loan amount in cash.



On June 27, 2019, WISeKey entered into
a Convertible Loan Agreement (the “Yorkville Convertible Loan”) with Yorkville to borrow USD 3,500,000 repayable
by August 01, 2020 in monthly instalments starting in August 01, 2019 either in cash or in WIHN class B Shares. The loan bears
an interest rate of 6% per annum payable monthly in arrears. Total fees of USD 160,000 were paid at inception.



The conversion option into WIHN Class B
shares is exercisable at the election of Yorkville and may be exercised at each monthly repayment date, covering any amount outstanding,
be it principal and/or accrued interests. The initial exercise price is set at CHF 3.00 per WIHN class B Share but may be adjusted
as a result of specific events so as to prevent any dissolution effect. The events triggering anti-dissolution adjustments are:
(a) increase of capital by means of capitalization of reserves, profits or premiums by distribution of WIHN Shares, or division
or consolidation of WIHN Shares, (b) issue of WIHN shares or other securities by way of conferring subscription or purchase rights,
(c) spin-offs and capital distributions other than dividends, and (d) dividends.





F-23







At the date of inception of the Yorkville
Convertible Loan, on June 27, 2019, an unpaid balance of USD 500,000 remained on the Yorkville Loan. There was no unamortized debt
discount on the Yorkville Loan as it was amortized in accordance with the planned repayment schedule, i.e. by May 01, 2019.



In line with ASC 470-50, we compared the
present value of the new debt (the Yorkville Convertible Loan) to the present value of the old debt (the Yorkville Loan) using
the net method and concluded that the difference was below the 10% threshold. Therefore the Yorkville Convertible Loan was analyzed
as a debt modification and accounted for under ASC 470-50-40-14.



In line with ASU 2014-16, the convertible
note was assessed as a hybrid instrument, being a debt instrument with an equity-linked component (the conversion option). Per
ASC 815-10, the embedded conversion option met the definition of a derivative and was accounted for separately, thereby creating
a debt discount.



The derivative liability component (the
conversion option) was fair valued using a binomial lattice model, building in quoted market prices of WIHN class B shares, and
inputs such as time value of money, volatility, and risk-free interest rates. It was valued at inception at USD 257,435, and was
allocated between current and noncurrent on a prorata temporis basis according to the monthly repayment schedule. The derivative
component will be revalued at fair value at each reporting date in line with ASC 815-15-30-1.



On the date of the agreement, WISeKey signed
an option agreement granting Yorkville the option to acquire up to 500,000 WIHN class B shares at an exercise price of CHF 3.00,
exercisable between June 27, 2019 and June 27, 2022. In order to prevent any dissolution effect, the exercise price may be adjusted
as a result of the same specific events listed above as adjustments to the conversion price of the principal amount. In line with
ASC 470-20-25-2, the proceeds from the convertible debt with a detachable warrant was allocated to the two elements based on the
relative fair values of the debt instrument net of the warrant and the embedded conversion separated out on the one side, and the
warrant at time of issuance on the other side. The option agreement was assessed as an equity instrument and was fair valued at
grant for an amount of USD 373,574 using the Black-Scholes model and the market price of WIHN class B shares on the date of grant,
June 27, 2019, of CH 2.35. The fair value of the debt was calculated using the discounted cash flow method as USD 3,635,638. Applying
the relative fair value method per ASC 470-20-25-2, the recognition of the option agreement created a debt discount on the debt
host in the amount of USD 326,126, and the credit entry was booked in APIC.



As a result of the above accounting entries,
the total debt discount recorded at inception was USD 743,561, made up of USD 160,000 fees to Yorkville, USD 257,435 from the bifurcation
of the embedded conversion option into derivative liabilities, and USD 326,126 from the recognition of the warrant agreement.



As at December 31, 2019, WISeKey had repaid
USD 1,162,607 and the principal amount outstanding was USD 2,337,393 with an unamortized debt discount of USD 275,296.



For the year 2019, the Group recorded in
the income statement a net debt discount amortization expense of USD 468,265.



Convertible Loan with Crede CG III,
Ltd



On September 28, 2018 the Group closed
a Convertible Loan Agreement (the “Crede Convertible Loan”) with Crede CG III (“Crede”),
Ltd for an amount of USD 3,000,000. The funds were made available on October 31, 2018. The loan bears a 10% p.a. interest
rate, payable in arrears on a quarterly basis starting December 31, 2018, and is repayable in WIHN class B Shares any time between
November 30, 2018 and the maturity date of September 28, 2020, at Crede’s election. Accrued interests are payable, at WISeKey’s
sole election, either in cash or in WIHN class B Shares. The conversion price applicable to the prepayment of the principal amount
or accrued interest is calculated as 93% of the average of the 2 lowest daily volume-weighted average prices quoted on the SIX
Stock Exchange during the 10 Trading Days immediately preceding the relevant conversion date or interest payment date respectively,
disregarding any day on which Crede (or its Affiliates or related party) has effected any trade, converted into USD at the exchange
rate reported by Bloomberg at 9 a.m. Swiss time on the relevant conversion date or interest payment date. As at December 31, 2018
the full amount of USD 3 million remained outstanding and accrued interest of USD 50,833 were recognized in the income
statement.



Due to Crede’s option to convert
the loan in part or in full at any time before maturity, the Crede Convertible Loan was assessed as a share-settled debt instrument
with an embedded put option. Because the value that Crede will receive at settlement does not vary with the value of the shares,
the settlement provision is not considered a conversion option. We assessed the put option under ASC 815 and concluded that
it is clearly and closely related to its debt host and therefore did not require bifurcation. Per ASC 480-10-25, the Crede
Convertible Loan was accounted for as a liability measured at fair value using the discounted cash flow method at inception.



On the date of the agreement, WISeKey signed
an option agreement granting Crede the option to acquire up to 408,247 WIHN class B shares at an exercise price of CHF 3.84, exercisable
between October 31, 2018 and October 29, 2021. Per the option agreement’s term, the date of grant under US GAAP is October
29, 2018 upon issuance of a Tax Ruling from the Swiss Federal Tax Administration and the Zug tax authority. In line with ASC 470-20-25-2,
the proceeds from the convertible debt with a detachable warrant was allocated to the two elements based on the relative fair values
of the debt instrument without the warrant and of the warrant at time of issuance. The option agreement was assessed as an equity
instrument and was fair valued at grant for an amount of USD 408,056 using the Black-Scholes model and the market price of
WIHN class B shares on the date of grant, October 29, 2018, of CH 3.06. The fair value of the debt was calculated using the
discounted cash flow method as USD 2,920,556. Applying the relative fair value method per ASC 470-20-25-2, the recognition
of the option agreement created a debt discount on the debt host in the amount of USD 367,771, and the credit entry was booked
in APIC.



In 2019, Crede issued six exercise notices,
resulting in the following conversions:





| | - | On January 03, 2019 for 30,000 WHIN class B shares delivered on January 08, 2019 for a conversion
of USD 73,559.
| | - | ----------------------------------------------------------------------------------------------------------------



| | - | On January 15, 2019 for 100,000 WHIN class B shares delivered on January 17, 2019 for a conversion
of USD 265,099.
| | - | ------------------------------------------------------------------------------------------------------------------







F-24







| | - | On February 19, 2019 for 100,000 WHIN class B shares delivered on February 26, 2019 for a
conversion of USD 279,525.
| | - | --------------------------------------------------------------------------------------------------------------------



| | - | On June 24, 2019 for 100,000 WHIN class B shares delivered on July 01, 2019 for a conversion
of USD 208,755.
| | - | ------------------------------------------------------------------------------------------------------------



| | - | On September 03, 2019 for 300,000 WHIN class B shares delivered on September 09, 2019
for a conversion of USD 640,934.
| | - | ----------------------------------------------------------------------------------------------------------------------



| | - | On December 03, 2019 for 150,000 WHIN class B shares delivered on December 09, 2019 for a conversion
of USD 303,228.
| | - | --------------------------------------------------------------------------------------------------------------------



As at December 31, 2019, the principal
amount outstanding was USD 1,228,899, and the unamortized debt discount USD 64,971.



For the year 2019, the Group recorded in
the income statement a net debt discount amortization expense of USD 114,103. In line with ASC 470-20-50-5, as at December
31,2019, the amount by which the instrument’s if-converted value exceeds its principal amount is USD 318,270.



Credit Agreement with ExWorks Capital
Fund I, L.P



On April 04, 2019 WISeCoin AG (“WISeCoin”),
an affiliate of the Company, signed a credit agreement with ExWorks. Under this credit agreement, WISeCoin was granted a USD 4,000,000
term loan and may add up to USD 80,000 accrued interest to the loan principal, hence a maximum loan amount of USD 4,080,000.
The loan bears an interest rate of 10% p.a. payable monthly in arrears. The maturity date of the arrangement is April 04, 2020
therefore all outstanding balances are classified as current liabilities in the balance sheet. ExWorks can elect to have part of
or all of the principal loan amount and interests paid either in cash or in WISeCoin Security Tokens (the “WCN Token”)
as may be issued by WISeCoin from time to time. As at June 30, 2019, the conversion price is set at CHF 12.42 per WCN Token
based on a non-legally binding term sheet.



Under the terms of the credit agreement,
WISeCoin is required to not enter into agreements that would result in liens on property, assets or controlled subsidiaries, in
indebtedness other than the exceptions listed in the credit agreement, in mergers, consolidations, organizational changes except
with an affiliate, contingent and third party liabilities, any substantial change in the nature of its business, restricted payments,
insider transactions, certain debt payments, certain agreements, negative pledge, asset transfer other than sale of assets in the
ordinary course of business, or holding or acquiring shares and/or quotas in another person other than WISeCoin R&D. Furthermore,
WISeCoin is required to maintain its existence, pay all taxes and other liabilities.



Borrowings under the line of credit are
secured by first ranking security interests on all material assets and personal property of WISeCoin, and a pledge over the shares
in WISeCoin representing 90% of the capital held by the Company. Under certain circumstances, additional security may be granted
over the intellectual property rights of WISeCoin and WISeCoin R&D, and the shares held by WISeCoin in WISeCoin R&D.



Total debt issue costs of USD 160,000
were recorded as debt discount and amortized over the duration of the loan.



In the year 2019, WISeKey recorded a total
debt discount amortization charge of USD 151,343 and an unamortized debt discount of USD 8,657 remained as at December 31,
2019.



As at December 31, 2019, outstanding
borrowings were USD 4,030,129.



Credit Agreement with Long State
Investment Limited



On December 16, 2019, WISeKey entered
into a Convertible Term Loan Facility Agreement (the “LSI Convertible Facility”) with Long State Investment
Limited (“LSI“), a Hong Kong-based investment company, to borrow up to CHF 30 million. Under the terms
of the LSI Convertible Facility, WISeKey will be able to drawdown individual term loans of up to CHF 500,000 or, if so agreed
between the parties, up to CHF 2.5 million at an interest rate of 1.5% p.a., up to an aggregate amount of CHF 30 million
over a commitment period of 24 months. LSI will have the right to convert a drawdown tranche into WIHN class B shares or, if so
agreed among the parties and permitted by law, into American Depositary Shares (“ADSs”) representing WIHN class
B shares, within a period of 21 SIX trading days after each individual drawdown at 95% of the higher of (i) the then prevailing
market rate and (ii) the minimum conversion price of CHF 1.80. Any term loan not converted by LSI initially will automatically
convert into WIHN class B shares, or ADSs, 20 SIX trading days before the expiration of the commitment period at the applicable
conversion price. Under certain circumstances, interest payments may be “paid in kind” by capitalizing such interest
and adding to it the aggregate principal balance of the loan outstanding.



Under the arrangement, WISeKey and LSI
plan to establish a Joint Venture in Hong Kong in the first quarter of 2020 to focus on business opportunities in Asia. A memorandum
of understanding has been executed between WISeKey and LSI to that effect.



Due to LSI’s option to convert the
loan in part at each drawdown before maturity, the LSI Convertible Facility was assessed as a debt instrument with an embedded
put option. We assessed the put option under ASC 815 and concluded that it is clearly and closely related to its debt host and
therefore did not require bifurcation. Per ASC 480-10-25, the LSI Convertible Facility will be accounted for as a liability measured
at fair value using the discounted cash flow method for each term loan (corresponding to each drawdown).



As at December 31, 2019, debt issue costs
corresponding to CHF 22,230 in legal fees were recorded in the income statement by WISeKey to execute the LSI Convertible
Facility. Also, per the terms of the LSI Convertible Facility, WISeKey owes LSI a CHF 10,000 expense allowance and a commitment
fee payable in 400,000 WIHN class B shares, which were not yet settled as at December 31, 2019 and are expected to be settled in
January 2020. The debt issue costs and commitment fee will be recorded as a debt discount proportionately to each drawdown.
However, as at December 31, 2019, WISeKey had not yet drawn down on the LSI Convertible Facility, therefore, in application of
ASC 340-10-S99-1, WISeKey accounted for the debt issue costs of CHF 22,230 as a deferred asset to be amortized on a straight-line
basis over the access period of the LSI Convertible Facility.



As at December 31, 2019 the outstanding
LSI Convertible Facility available was CHF 30 million.





F-25







| | Note 25. | Employee benefit plans
| | -------- | ----------------------



Defined benefit post-retirement plan



The Group maintains three pension plans:
one maintained by WISeKey SA covering its employees in Switzerland, and one maintained by WISeKey Semiconductors SAS as well as
one maintained by WISeCoin France R&D Lab SAS, both covering WISeKey’s French employees.



All plans are considered defined benefit
plans and accounted for in accordance with ASC 715 Compensation – Retirement Benefits. This model allocates pension
costs over the service period of employees in the plan. The underlying principle is that employees render services ratably over
this period, and therefore, the income statement effects of pensions should follow a similar pattern. ASC 715 requires recognition
of the funded status or difference between the fair value of plan assets and the projected benefit obligations of the pension plan
on the balance sheet, with a corresponding adjustment recorded in the net loss. If the projected benefit obligation exceeds the
fair value of the plan assets, then that difference or unfunded status represents the pension liability.



The Group records net service cost as an
operating expense and other components of defined benefit plans as a non-operating expense in the statement of comprehensive loss.



The liabilities and annual income or expense
of the pension plan are determined using methodologies that involve several actuarial assumptions, the most significant of which
are the discount rate and the long-term rate of asset return (based on the market-related value of assets). The fair value of plan
assets is determined based on prevailing market prices.



The defined benefit pension plan maintained
by WISeKey Semiconductors SAS and WISeCoin France R&D Lab SAS, and their obligations to employees in terms of retirement benefits,
are limited to a lump sum payment based on remuneration and length of service, determined for each employee. The plans are not
funded.



The pension liability calculated as at
December 31, 2019 is based on annual personnel costs and assumptions as of December 31, 2019.



|Personnel Costs                                | As at December 31, |  | As at December 31, |  | As at December 31,
|---------------------------------------------- | ------------------ |  | ------------------ |  | ------------------
|USD'000                                        | 2019               |  | 2018               |  | 2017              
|Wages and Salaries                             | 11,161             |  | 9,738              |  | 8,698             
|Social security contributions                  | 2,813              |  | 2,974              |  | 2,647             
|Net service costs                              | 281                |  | 372                |  | 361               
|Other components of defined benefit plans, net | 132                |  | 140                |  | 143               
|Total                                          | 14,387             |  | 13,224             |  | 11,849            



|                                           | As
    at December 31,
|------------------------------------------ | ----------------------
|Assumptions                                | 2019                  
|                                           | France                
|Discount
    rate                          | 0.70%                 
|Expected
    rate of return on plan assets | n/a                   
|Salary
    increases                       | 3%                    
|                                           |                       



For WISeKey SA’s funded plan, the expected
long-term rate of return on assets is based on the pension fund policy which is based on approximately +0.5% in addition to the
minimum interest by law in Switzerland (“Min LPP”). In 2020, Min LPP is 1.0% hence an assumption of 1.5%.



As at December 31, 2019 the Group’s
accumulated benefit obligation amounted to USD 16,815,840.





F-26







|Reconciliation to Balance Sheet start of year                 |          |  |        
|------------------------------------------------------------- | -------- |  | -------
|USD'000                                                       |          |  |        
|Fiscal year                                                   | 2019     |  | 2018   
|                                                              |          |  |        
|Fair value of plan assets                                     | (8,275)  |  | (7,789)
|Projected benefit obligation                                  | 12,740   |  | 12,374 
|Surplus/deficit                                               | 4,465    |  | 4,585  
|                                                              |          |  |        
|Opening balance sheet asset/provision (funded status)         | 4,465    |  | 4,585  
|                                                              |          |  |        
|Reconciliation of benefit obligation during the year          |          |  |        
|Projected benefit obligation at start of year                 | 12,740   |  | 12,374 
|Net Service cost                                              | 412      |  | 372    
|Interest expense                                              | 107      |  | 86     
|Plan participant contributions                                | 216      |  | 180    
|Net benefits paid to participants                             | 1,377    |  | (88)   
|Actuarial losses/(gains)                                      | 2,487    |  | (37)   
|Currency translation adjustment                               | 227      |  | (148)  
|Projected benefit obligation at end of year                   | 17,566   |  | 12,740 
|                                                              |          |  |        
|Reconciliation of plan assets during year                     |          |  |        
|Fair value of plan assets at start of year                    | (8,275)  |  | (7,789)
|Employer contributions paid over the year                     | (347)    |  | (293)  
|Plan participant contributions                                | (216)    |  | (180)  
|Net benefits paid to participants                             | (1,401)  |  | 88     
|Interest income                                               | (123)    |  | (116)  
|Return in plan assets, excl. amounts included in net interest | (136)    |  | (56)   
|Currency translation adjustment                               | (188)    |  | 71     
|Fair value of plan assets at end of year                      | (10,686) |  | (8,275)
|                                                              |          |  |        
|Reconcilation to balance sheet end of year                    |          |  |        
|Fair value of plan assets                                     | (10,686) |  | (8,275)
|Defined benefit obligation - funded plans                     | 17,566   |  | 12,740 
|Surplus/deficit                                               | 6,880    |  | 4,465  
|                                                              |          |  |        
|Closing balance sheet asset/provision (funded status)         | 6,880    |  | 4,465  





F-27







|Estimated amount to be amortized from accumulated OCI into NPBC over next fiscal year |     |  |   
|------------------------------------------------------------------------------------- | --- |  | --
|Net loss (gain)                                                                       | 283 |  | 88
|Unrecognized transition (asset)/obligation                                            | 0   |  | 0 
|Prior service cost/(credit)                                                           | 61  |  | 62



|USD'000                                    |       |  |       |  |      
|------------------------------------------ | ----- |  | ----- |  | -----
|Fiscal year                                | 2019  |  | 2018  |  | 2017 
|Amounts recognized in accumulated OCI      |       |  |       |  |      
|Net loss (gain)                            | 4,258 |  | 1,964 |  | 2,187
|Unrecognized transition (asset)/obligation | 0     |  | 0     |  | 0    
|Prior service cost/(credit)                | 300   |  | 357   |  | 423  
|Deficit                                    | 4,558 |  | 2,321 |  | 2,609
|                                           |       |  |       |  |      



|Movement in Funded Status                                     |       |  |       |  |      
|------------------------------------------------------------- | ----- |  | ----- |  | -----
|USD'000                                                       |       |  |       |  |      
|Fiscal year                                                   | 2019  |  | 2018  |  | 2017 
|                                                              |       |  |       |  |      
|Opening balance sheet liability (funded status)               | 4,465 |  | 4,585 |  | 3,810
|                                                              |       |  |       |  |      
|Net Service cost                                              | 412   |  | 372   |  | 361  
|Interest cost/(credit)                                        | 107   |  | 86    |  | 71   
|Expected return on Assets                                     | (123) |  | (116) |  | (93) 
|Amortization on Net (gain)/loss                               | 88    |  | 108   |  | 103  
|Amortization on Prior service cost/(credit)                   | 62    |  | 62    |  | 61   
|Currency translation adjustment                               | (2)   |  | 1     |  | 0    
|Total Net Periodic Benefit Cost/(credit)                      | 544   |  | 512   |  | 504  
|                                                              |       |  |       |  |      
|Actuarial (gain)/loss on liabilities due to experience        | 1,056 |  | 272   |  | 743  
|Actuarial gain/loss on liab. from changes to fin. assump      | 1,431 |  | (309) |  | 1    
|Actuarial (gain)/loss on liab. from changes to demo. assump   | 0     |  | 1     |  | 0    
|Return in plan assets, excl. amounts included in net interest | (136) |  | (56)  |  | (299)
|Amortization on Net (gain)/loss                               | (88)  |  | (108) |  | (103)
|Amortization on Prior service cost/(credit)                   | (62)  |  | (62)  |  | (61) 
|Currency translation adjustment                               | (2)   |  | (0)   |  | (3)  
|Total gain/loss recognized via OCI                            | 2,200 |  | (262) |  | 279  
|                                                              |       |  |       |  |      
|Employer contributions paid in the year                       | (371) |  | (293) |  | (250)
|Total cashflow                                                | (371) |  | (293) |  | (250)
|                                                              |       |  |       |  |      
|Currency translation adjustment                               | 43    |  | (77)  |  | 242  
|                                                              |       |  |       |  |      
|Closing balance sheet liability (funded status)               | 6,880 |  | 4,465 |  | 4,585
|                                                              |       |  |       |  |      
|                                                              |       |  |       |  |      
|Reconciliation of Net Gain / Loss                             |       |  |       |  |      
|Amount at beginning of year                                   | 1,964 |  | 2,187 |  | 1,852
|Amortization during the year                                  | (86)  |  | (109) |  | (103)
|Asset (gain) / loss                                           | (136) |  | (56)  |  | (299)
|Liability (gain) / loss                                       | 2,487 |  | (37)  |  | 744  
|Currency translation adjustment                               | 29    |  | (21)  |  | 16   
|Amount at year-end                                            | 4,258 |  | 1,964 |  | 2,187
|                                                              |       |  |       |  |      
|Reconciliation of prior service cost/(credit)                 |       |  |       |  |      
|Amount at beginning of year                                   | 357   |  | 423   |  | 479  
|Amortization during the year                                  | (62)  |  | (62)  |  | (61) 
|Currency translation adjustment                               | 5     |  | (4)   |  | 5    
|Amount at year-end                                            | 300   |  | 357   |  | 423  



All of the assets are held under the collective
contract by the plan’s re-insurer company and are invested in a mix of Swiss and International bond and equity securities.
In line with ASC 820’s three-tier fair value hierarchy, pension assets belong to the fair value level 3.





F-28







The table below shows the breakdown of
expected future contributions payable to the Plan :



|Period
USD'000 | France |  | Switzerland
|-------------- | ------ |  | -----------
|2020           | 19     |  | 1,337      
|2021           | -      |  | 348        
|2022           | 142    |  | 344        
|2023           | -      |  | 366        
|2024           | 7      |  | 1,958      
|2025-2029      | 202    |  | 2,955      



The Group expects to make contributions
of approximately $346,023 in 2020.



| | Note 26. | Commitments and contingencies
| | -------- | -----------------------------



Lease commitments



The future payments due under leases are
shown in Note 17.



Guarantees



Our software and hardware product sales
agreements generally include certain provisions for indemnifying customers against liabilities if our products infringe a third
party’s intellectual property rights. Certain of our product sales agreements also include provisions indemnifying customers
against liabilities in the event we breach confidentiality or service level requirements. It is not possible to determine the maximum
potential amount under these indemnification agreements due to our lack of history of prior indemnification claims and the unique
facts and circumstances involved in each particular agreement. To date, we have not incurred any costs as a result of such indemnifications
and have not accrued any liabilities related to such obligations in our consolidated financial statements



| | Note 27. | Stockholders’ equity
| | -------- | --------------------



|WISeKey
    International Holding AG                               | As
    at December 31, 2019 | As
    at December 31, 2018
|------------------------------------------------------------------ | --------------------------- | ---------------------------
|Share
    Capital                                                  | Class
    A Shares          | Class
    B Shares         
|Par
    value per share (in CHF)                                   | 0.01                        | 0.05                       
|Share
    capital (in USD)                                         | 400,186                     | 1,475,000                  
|                                                                   |                             |                            
|Per
    Articles of association and Swiss capital categories       | -                           | -                          
|Authorized
    Capital - Total number of authorized shares         | -                           | 8,881,829                  
|Conditional
    Share Capital - Total number of conditional shares | -                           | 11,840,090                 
|Total
    number of fully paid-in shares                           | 40,021,988                  | 28,824,086                 
|                                                                   |                             |                            
|Per
    US GAAP                                                    |                             |                            
|Total
    number of authorized shares                              | 40,021,988                  | 41,066,298                 
|Total
    number of fully paid-in issued shares                    | 40,021,988                  | 28,824,086                 
|Total
    number of fully paid-in outstanding shares               | 40,021,988                  | 27,621,895                 
|Par
    value per share (in CHF)                                   | 0.01                        | 0.05                       
|Share
    capital (in USD)                                         | 400,186                     | 1,475,000                  
|Total
    share capital (in USD)                                   | 1,875,186                   | 1,872,462                  
|                                                                   |                             |                            
|Treasury
    Share Capital                                         |                             |                            
|Total
    number of fully paid-in shares held as treasury shares   | -                           | 1,202,191                  
|Treasury
    share capital (in USD)                                | -                           | 1,288,591                  
|Total
    treasury share capital (in USD)                          | -                           | 1,288,591                  



Note:
unregistered conversion of conditional capital NOT deducted from total number of conditional shares, i.e. as if the issue had
not taken place.





F-29







In the year to December 31, 2019 and 2018
respectively, WISeKey purchased a total of 593,824 and 2,729,657 treasury shares at an average purchase price of USD 2.75
and USD 0.96 per share, and sold a total of 1,479,694 and 641,596 treasury shares at an average sale price of USD 2.40
and USD 2.92 per share.



Share buyback program



On July 09, 2019, the Group started a share
buyback program on the SIX Swiss Exchange to buy back WIHN class B shares up to a maximum 10.0% of the share capital and 5.35%
of the voting rights. In compliance with Swiss Law, at no time will the group hold more than 10% of its own registered shares.
The share buyback program will end on July 08, 2022 but WISeKey may terminate the buyback program early. Aa at December 31, 2019,
WISeKey’s treasury share balance included 90,500 WIHN class B shares purchased through the share buyback program.



Voting rights



Each share carries one vote at a general
meeting of shareholders, irrespective of the difference in par value of class A shares (CHF 0.01 per share) and class B shares
(CHF 0.05 per share). Our class A shares have a lower par value (CHF 0.01) than our class B shares (CHF 0.05) but have same voting
right as the higher par value class B shares, namely one (1) vote per share. This means that, relative to their respective per
share contribution to the Company’s capital, the holders of our class A shares have a greater relative per share voting power
than the holders of our class B shares for matters that require approval on the basis of a specified majority of shares present
at the shareholders meeting.



Shareholder resolutions and elections (including
elections of members of the board of directors) require the affirmative vote of an absolute majority of the votes represented (in
person or by proxy) at a general meeting of shareholders (each class A share and each class B share having one vote), unless otherwise
stipulated by law or our Articles. The following matters require approval by a majority of the par value of the shares represented
at the general meeting (each class A share having a par value of CHF 0.01 per share and each class B share having a par value of
CHF 0.05 per share):



| | - | electing our auditor;
| | - | ---------------------



| | - | appointing an expert to audit our business management or parts thereof;
| | - | -----------------------------------------------------------------------



| | - | adopting any resolution regarding the instigation of a special investigation; and
| | - | ---------------------------------------------------------------------------------



| | - | adopting any resolution regarding the initiation of a derivative liability action.
| | - | ----------------------------------------------------------------------------------



In addition, under Swiss corporation law
and our Articles, approval by two-thirds of the shares represented at the meeting, and by the absolute majority of the par value
of the shares represented is required for:



| | - | amending our corporate purpose;
| | - | -------------------------------



| | - | creating or cancelling shares with preference rights;
| | - | -----------------------------------------------------



| | - | restricting the transferability of registered shares;
| | - | -----------------------------------------------------



| | - | restricting the exercise of the right to vote or the cancellation thereof;
| | - | --------------------------------------------------------------------------



| | - | creating authorized or conditional share capital;
| | - | -------------------------------------------------



| | - | increasing the share capital out of equity, against contributions in kind or for the purpose of
acquiring specific assets 	and granting specific benefits;
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| | - | limiting or withdrawing shareholder's pre-emptive rights;
| | - | ---------------------------------------------------------



| | - | relocating our registered office;
| | - | ---------------------------------



| | - | converting registered shares into bearer shares and vice versa;
| | - | ---------------------------------------------------------------



| | - | our dissolution or liquidation; and
| | - | -----------------------------------



| | - | transactions among corporations based on Switzerland's Federal Act on Mergers, Demergers, Transformations
and the Transfer of Assets of 2003, as amended (the "Swiss Merger Act") including a merger, demerger or conversion of
a corporation.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



In accordance with Swiss law and generally
accepted business practices, our Articles do not provide attendance quorum requirements generally applicable to general meetings
of shareholders.



Both categories of Shares confer equal
entitlement to dividends and liquidation rights relative to the nominal value of the class A shares and the class B shares, respectively.



Only holders of Shares (including nominees)
that are recorded in the share register as of the record date communicated in the invitation to the General Meeting are entitled
to vote at a General Meeting.



Any acquirer of Shares who is not registered
in the share register as a shareholder with voting rights may not vote at or participate in any General Meeting, but will still
be entitled to dividends and other rights with financial value with respect to such Shares.



Each holder of class A shares has entered
into an agreement (each such agreement a "Shareholder Agreement") with WISeKey, pursuant to which such holder of class
A shares has given the undertaking vis-à-vis WISeKey not to (i) directly or indirectly offer, sell, transfer or grant any
option or contract to purchase, purchase any option or contract to sell, grant instruction rights with respect to or otherwise
dispose of, or (ii) solicit any offers to purchase, otherwise acquire or be entitled to, any of his/her/its class A shares or any
right associated therewith (collectively a "Transfer"), except if such Transfer constitutes a "Permitted Transfer",
as defined hereafter. A Permitted Transfer is defined as a Transfer by a holder of class A share to his/her spouse or immediate
family member (or a trust related to such immediate family member) or a third party for reasonable estate planning purposes, the
transfer to an affiliate and any transfer following conversion of his/her/its class A shares into class B shares. Each holder of
a class A share has the right to request that, at WISeKey's annual General Meeting, an item be included on the agenda according
to which class A shares are, at the discretion of each holder of class A shares, converted into class B shares.





F-30







| | Note 28. | Accumulated other comprehensive income
| | -------- | --------------------------------------



|USD'000                                                        |                                                                         |         | 
|-------------------------------------------------------------- | ----------------------------------------------------------------------- | ------- | 
|Accumulated other comprehensive income as at December 31, 2017 |                                                                         | (650)  
|                                                               | Total net foreign currency translation adjustments                      | 131     | 
|                                                               | Total defined benefit pension adjustment                                | 287     | 
|                                                               | Total unrealized loss on securities reclassified to accumulated deficit | 375     | 
|                                                               | Total adjustment from liquidation of group companies                    | (43)    | 
|Total Other comprehensive income/(loss), net                   |                                                                         | 750    
|Accumulated other comprehensive income as at December 31, 2018 |                                                                         | 100    
|                                                               | Total net foreign currency translation adjustments                      | 643     | 
|                                                               | Total defined benefit pension adjustment                                | (2,199) | 
|                                                               | Total unrealized loss on securities reclassified to accumulated deficit |         | 
|                                                               | Total adjustment from liquidation of group companies                    | (21)    | 
|                                                               | Total adjustment from sale of QuoVadis Group                            | 34      | 
|                                                               | Total adjustment from change in Ownership                               | (10)    | 
|Total Other comprehensive income/(loss), net                   |                                                                         | (1,553)
|Accumulated other comprehensive income as at December 31, 2019 |                                                                         | (1,453)



| | Note 29. | Revenue
| | -------- | -------



Nature of goods and services



The following is a description of the principal
activities – separated by reportable segment – from which the Group generates its revenue. For more detailed information
about reportable segments, see note 35 - Segment Information and Geographic Data.





| | - | IoT Segment
| | - | -----------





The IoT segment of the Group principally
generates revenue from the sale of semiconductors secure chips. Although they may be sold in connection with other services of
the Group, they always represent distinct performance obligations.



The Group recognizes revenue when a customer
takes possession of the chips, which usually occurs when the goods are delivered. Customers typically pay once goods are delivered.





| | - | mPKI Segment
| | - | ------------



The mPKI Segment of the Group generates
revenues from Digital Certificates, Software as a Service, Software license and Post-Contract Customer Support (PCS) for cybersecurity
applications. Products and services are sold principally separately and more in bundled packages.



For bundled packages, the Group accounts
for individual products and services separately if they are distinct – i.e. if a product or service is separately identified
from other items in the bundled package and if a customer can benefit from it. The consideration is allocated between separate
products and services in a bundle based on their stand-alone selling prices. The stand-alone selling prices are determined based
on the list prices when available or estimated based on the Adjusted Market Assessment approach (e.g. licenses), or the Expected
Cost-Plus Margin approach (e.g. PCS).



|Product and services | Nature, timing of satisfaction of performance obligations and significant payment terms                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Certificates         | The Group recognizes revenue on a straight-line basis over the validity period of the certificate, which is usually one to three years. This period starts after the certificate has been issued by the Certificate Authority and may be used by the customer for authentication and signature, by checking the certificate validity against the Root of Trust which is maintained by the Group on its IT infrastructure. Customers pay certificates when certificates are issued and invoiced. The excess of payments over recognized revenue is shown as deferred revenue.
|SaaS                 | The Group’s SaaS arrangement cover the provision of cloud-based certificate life-cycle-management solutions and signing and authentication solutions. The Group recognizes revenue on a straight-line basis over the service period which is usually yearly renewable. Customers usually pay ahead of quarterly or yearly service periods; the paid amounts which have not yet been recognized are shown as deferred revenue.                                                                                                                                               





F-31







|Software                                       | The Group provides software for certificates life-cycle management and signing and authentication solutions. The Group recognizes license revenue when the software has been delivered and PCS revenue over the service period which is usually one-year renewable. Customers pay upon delivery of the software or over the PCS.                                                                                                                                                                                                                                                                                                          
|---------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Implementation, integration and other services | The Group provides services to implement
        and integrate multi-element cybersecurity solutions. Most of the time the solution elements are off-the-shelve non-customized components
        which represent distinct performance obligations. Implementation and integration services are payable when rendered, while other
        revenue elements are payable and recognized as per their specific description in this section.
        
        WISeKey also provides hosting and monitoring
        of infrastructure services which are distinct performance obligations and are paid and recognized over the service period.



Disaggregation of revenue



The following table shows the Group’s
revenues disaggregated by reportable segment and by product or service type:



|Disaggregation
    of revenue     | Typical payment     | At
    one point in time | Over
    time | Total  |     
|--------------------------------- | ------------------- | ------------------------ | ------------- | ------ | ----
|USD'000                           |                     | 2019                     | 2018          | 2017   | 2019
|IoT
    Segment                   |                     |                          |               |        |     
|Payment
    at one point in time: |                     |                          |               |        |     
|Secure chips                      | Upon delivery       | 20,504                   | 29,404        | 30,435 | -   
|Total
    IoT segment revenue     | 20,504              | 29,404                   | 30,435        | -      | -   
|mPKI
    Segment                  |                     |                          |               |        |     
|Certificates                      | Upon issuance       | -                        | -             | -      | 172 
|Licenses and integration          | Upon delivery       | 1,976                    | 4,538         | 808    | -   
|SaaS, PCS and hosting             | Quarterly or yearly | -                        | -             | -      | -   
|Total
    mPKI segment revenue    | 1,976               | 4,538                    | 808           | 172    | 338 
|Total
    Revenue                 |                     | 22,480                   | 33,942        | 31,243 | 172 



For the years ended December 31, 2019,
2018, and 2017 the Group recorded no revenues related to performance obligations satisfied in prior periods.



The following table shows the Group’s
revenues disaggregated by geography, based on our customers’ billing addresses:



|Net sales by region        | 12 months ended December 31, |  | 12 months ended December 31, |  | 12 months ended December 31,
|-------------------------- | ---------------------------- |  | ---------------------------- |  | ----------------------------
|USD'000                    | 2019                         |  | 2018                         |  | 2017                        
|IoT Segment                |                              |  |                              |  |                             
|Switzerland                | 708                          |  | 1,171                        |  | 3,090                       
|Rest of EMEA               | 7,508                        |  | 10,695                       |  | 9,748                       
|North America              | 9,547                        |  | 15,165                       |  | 12,714                      
|Asia Pacific               | 2,503                        |  | 2,257                        |  | 3,649                       
|Latin America              | 238                          |  | 116                          |  | 1,234                       
|Total IoT segment revenue  | 20,504                       |  | 29,404                       |  | 30,435                      
|mPKI Segment               |                              |  |                              |  |                             
|Switzerland                | 1,428                        |  | 1,341                        |  | 1,539                       
|Rest of EMEA               | 539                          |  | 3,428                        |  | 1,594                       
|North America              | 144                          |  | -                            |  | -                           
|Asia Pacific               | 1                            |  | 49                           |  | 15                          
|Latin America              | 36                           |  | 58                           |  | 91                          
|Total mPKI segment revenue | 2,148                        |  | 4,876                        |  | 3,239                       
|Total Net sales            | 22,652                       |  | 34,280                       |  | 33,674                      



*EMEA includes Europe, Africa and Middle-east





F-32







Contract assets, deferred revenue
and contract liability



Our contract assets, deferred revenue and
contract liability consist of:



|                                                                                                                              | As at December 31, |  | As at December 31,
|----------------------------------------------------------------------------------------------------------------------------- | ------------------ |  | ------------------
|USD'000                                                                                                                       | 2019               |  | 2018              
|Trade accounts receivables                                                                                                    |                    |  |                   
|Trade accounts receivable - IoT segment                                                                                       | 2,843              |  | 4,871             
|Trade accounts receivable - mPKI segment                                                                                      | 800                |  | 2,736             
|Total trade accounts receivables                                                                                              | 3,643              |  | 7,607             
|Contract assets                                                                                                               | 15                 |  | -                 
|Total contract assets                                                                                                         | 15                 |  | -                 
|Contract liabilities - current                                                                                                | 255                |  | -                 
|Contract liabilities - noncurrent                                                                                             | 2                  |  | -                 
|Total contract liabilities                                                                                                    | 257                |  | -                 
|Deferred revenue                                                                                                              |                    |  |                   
|Deferred revenue  - mPKI segment                                                                                              | 92                 |  | 100               
|Deferred revenue  - IoT segment                                                                                               | 7                  |  | -                 
|Total Deferred revenue                                                                                                        | 99                 |  | 100               
|Revenue recognized in the year from amounts included in the deferred revenue of the mPKI segment at the beginning of the year | 83                 |  | 297               





Increases or decreases in trade accounts
receivable, contract assets, deferred revenue and contract liability were primarily due to normal timing differences between our
performance and customer payments.



Remaining performance obligations



As of December 31, 2019, approximately
USD 355,997 is expected to be recognized from remaining performance obligations for mPKI contracts.We expect to recognize revenue for these remaining performance obligations during the next three years approximately as
follows:



|Estimated
    mPKI revenue from remaining performance obligations as at December 31, 2019 | USD'000
|----------------------------------------------------------------------------------------- | -------
|2020                                                                                      | 344    
|2021                                                                                      | 12     
|Total remaining performance obligation                                                    | 356    



| | Note 30. | Other operating income
| | -------- | ----------------------



Other operating income consisted of the
following:



|                                            | 12 months ended December 31, |  | 12 months ended December 31, |  | 12 months ended December 31,
|------------------------------------------- | ---------------------------- |  | ---------------------------- |  | ----------------------------
|USD'000                                     | 2019                         |  | 2018                         |  | 2017                        
|Other operating income from related parties | 140                          |  | -                            |  | 88                          
|Other operating income - other              | 40                           |  | 289                          |  | 1,438                       
|Total other operating income                | 180                          |  | 289                          |  | 1,526                       



In the year 2019, other operating income
from related parties was made up of the amounts invoiced by WISeKey to the OISTE Foundation for the use of its premises and equipment.





F-33







In 2019, the Group recorded gains of respectively
USD 23,387 and USD 16,538 on the liquidation of its subsidiaries WISeKey Italia s.r.l. and WISeKey Singapore Pte Ltd,
classified as other operating income.



| | Note 31. | Stock-based compensation
| | -------- | ------------------------



Employee stock option plans



The Stock Option Plan (“ESOP 1”)
was approved on December 31, 2007 by the stockholders of WISeKey SA, representing 2,632,500 options convertible into WISeKey SA
shares with an exercise price of CHF 0.01 per share.



The Stock Option Plan (“ESOP 2”)
was approved on December 31, 2011 by the stockholders of WISeKey SA, representing 16,698,300 options convertible into WISeKey SA
shares with an exercise price of CHF 0.01 per share.



At March 22, 2016 as part of the reverse
acquisition transaction, both ESOP plans in existence in WISeKey SA were transferred to WISeKey International Holding AG at the
same terms, with the share exchange term of 5:1 into WIHN class B shares.



Grants



In the 12 months to December 31, 2017,
the Group granted a total of 782,012 options exercisable on WISeKey International Holding AG’s class B shares. Each warrant
is exercisable into one class B share.



The warrants granted consist of:





| | - | 159,996 warrants with immediate vesting granted to external advisors, all of which had been exercised
as of December 31, 2017;
| | - | ------------------------------------------------------------------------------------------------------------------------------



| | - | 23,016 warrants with immediate vesting granted to external advisors, all of which had been exercised
as of December 31, 2017;
| | - | -----------------------------------------------------------------------------------------------------------------------------



| | - | 265,666 warrants with immediate vesting granted to external advisors, none of which had been exercised
as of December 31, 2017.
| | - | -------------------------------------------------------------------------------------------------------------------------------



| | - | 166,667 warrants vesting on July 05, 2018
| | - | -----------------------------------------



| | - | 166,667 warrants vesting on July 05, 2019
| | - | -----------------------------------------



The warrants granted were valued at grant
date using the Black-Scholes model. Unexercised warrants to external advisers at December 31, 2017 were revalued to their fair
value at December 31, 2017 using the same model.



In the 12 months to December 31, 2018,
the Group granted a total of 851,131 options exercisable on WIHN class B shares. Each warrant is exercisable into one class B share.



The warrants granted consist of:





| | - | 113,750 options with immediate vesting granted to employees, all of which had been exercised as
of December 31, 2018;
| | - | ---------------------------------------------------------------------------------------------------------------------



| | - | 100,000 options with immediate vesting granted to an external advisor, all of which had been exercised
as of December 31, 2018;
| | - | -------------------------------------------------------------------------------------------------------------------------------



| | - | 214,000 options with immediate vesting granted to external advisors, none of which had been exercised
as of December 31, 2018;
| | - | ------------------------------------------------------------------------------------------------------------------------------



| | - | 13,167 options granted to an employee, which vested on February 01, 2018 but were not exercised
and were forfeited on September 30, 2019;
| | - | -----------------------------------------------------------------------------------------------------------------------------------------



| | - | 13,167 options granted to an employee, which vested on August 01, 2018 but were not exercised and
were forfeited on September 30, 2019.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------



| | - | 132,346 options vesting on December 31, 2018 granted to employees, none of which had been exercised
as of December 31, 2018;
| | - | ----------------------------------------------------------------------------------------------------------------------------



| | - | 132,349 options vesting on December 31, 2019 granted to employees;
| | - | ------------------------------------------------------------------



| | - | 132,352 options vesting on December 31, 2020 granted to employees.
| | - | ------------------------------------------------------------------



The warrants granted were valued at grant
date using the Black-Scholes model. Unexercised warrants to external advisers at December 31, 2018 were revalued to their
fair value at December 31, 2018 using the same model.



In the 12 months to December 31, 2019,
the Group granted a total of 2,292,539 options exercisable in WISeKey International Holding AG’s class B shares. Each warrant
is exercisable into one class B share.



The warrants granted consisted of:





| | - | 2,074,770 options with immediate vesting granted to employees and Board members, none of which
had been exercised as of December 31, 2019.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------



| | - | 145,854 options with immediate vesting granted to employees and Board members, all of which had
been exercised as of December 31, 2019;
| | - | ---------------------------------------------------------------------------------------------------------------------------------------



| | - | 60,394 options with immediate vesting granted in exchange for WISeKey SA shares, all of which had
been exercised as of December 31, 2019; and
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------



| | - | 11,521 options with immediate vesting granted to an external advisor and which had not been exercised
as of December 31, 2019.
| | - | ------------------------------------------------------------------------------------------------------------------------------



The warrants granted were valued at grant
date using the Black-Scholes model.



Stock option charge to the income
statement



The Group calculates the fair value of
options granted by applying the Black-Scholes option pricing model. Expected volatility is based on historical volatility of WIHN
class B shares.



In the fiscal year 2019, a total charge
of USD 5,414,487 was recognized in the consolidated income statement calculated by applying the Black-Scholes model at grant,
in relation to options:





| | - | USD 5,475,763 for options granted to employees and Board members;
| | - | -----------------------------------------------------------------



| | - | USD 178,983 for options granted to nonemployees; and
| | - | ----------------------------------------------------



| | - | a credit of USD 240,259 in relation to the forfeiture following the sale of QuoVadis of a
total of 333,905 options granted to former employees, out of which 79,256 had vested and 254,649 remained unvested at the date
of forfeiture. In line with ASU 2016-09, the compensation cost previously recognized in relation to unvested forfeited options
were reversed to the income statement upon forfeiture. This resulted in a credit to the income statement of USD 240,259. There
was no credit recorded for the forfeiture of vested options.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------





F-34







The following assumptions were used to
calculate the compensation expense and the calculated fair value of stock options granted:



|Assumption                                               | December 31, 2019 |  | December 31, 2018 |  | December 31, 2017
|-------------------------------------------------------- | ----------------- |  | ----------------- |  | -----------------
|Dividend yield                                           | None              |  | None              |  | None             
|Risk-free interest rate used (average)                   | 1.00%             |  | 1.00%             |  | 1.00%            
|Expected market price volatility                         | 51.59% - 56.86%   |  | 46.11% - 58.22%   |  | 57.88%           
|Average remaining expected life of stock options (years) | 3.01              |  | 3.10              |  | 3.37             



As a result of the entry into force of
ASU 2018-07 and its transitional guidance, unvested options to external advisers which were previously revalued to their fair value
at reporting date, are no longer revalued in 2019.



Unvested options to employees as at December
31, 2019 were recognized prorata temporis over the service period (grant date to vesting date).



The following table illustrates the development
of the Group’s non-vested options for the years ended December 31, 2019 and 2018.



|Non-vested options                         | Number of WIHN Class B Shares under options |  | Weighted-average grant date fair value (USD)
|------------------------------------------ | ------------------------------------------- |  | --------------------------------------------
|Non-vested options as at December 31, 2017 | 333,334                                     |  | 1.78                                        
|Granted                                    | 851,131                                     |  | 3.67                                        
|Vested                                     | (753,097)                                   |  | 3.22                                        
|Non-vested forfeited or cancelled          | -                                           |  | -                                           
|Non-vested options as at December 31, 2018 | 431,368                                     |  | 2.99                                        
|Granted                                    | 2,292,539                                   |  | 2.45                                        
|Vested                                     | (2,464,232)                                 |  | 2.47                                        
|Non-vested forfeited or cancelled          | (254,649)                                   |  | 3.75                                        
|Non-vested options as at December 31, 2019 | 5,026                                       |  | 3.65                                        



As at December 31, 2019, there was a USD 10,652
unrecognized compensation expense related to non-vested stock option-based compensation arrangements. Non-vested stock options
outstanding as at December 31, 2019 were accounted for using the graded-vesting method, as permitted under ASC 718-10-35-8, and
we therefore recognized compensation costs calculated using the Black-Scholes model and the market price of WIHN class B shares
at grant date, over the requisite service period.



The following table summarizes the Group’s
stock option activity for the years ended December 31, 2019 and 2018.



|Options on WIHN Shares              | WIHN Class B Shares under options | Weighted-average exercise price
(USD) | Weighted average remaining contractual term
(in years) | Aggregate intrinsic value
(USD)
|----------------------------------- | --------------------------------- | ------------------------------------- | ------------------------------------------------------ | -------------------------------
|Outstanding at December 31, 2017    | 731,772                           | 3.61                                  | 2.59                                                   | (1,149,461)                    
|Of which vested                     | 398,438                           | 3.07                                  | 2.65                                                   | (410,792)                      
|Of which non-vested                 | 333,334                           | -                                     | -                                                      | -                              
|Granted                             | 851,131                           | 1.56                                  | -                                                      | -                              
|Exercised or converted              | (213,750)                         | 0.98                                  | -                                                      | 238,614                        
|Forfeited or cancelled              | (26,334)                          | 0.05                                  | -                                                      | -                              
|Expired                             | -                                 | -                                     | -                                                      | -                              
|Outstanding as at December 31, 2018 | 1,342,819                         | 2.76                                  | 3.00                                                   | (895,404)                      
|Of which vested                     | 911,451                           | 3.28                                  | 2.26                                                   | (1,082,233)                    
|Of which non-vested                 | 431,368                           | -                                     | -                                                      | -                              
|Granted                             | 2,292,539                         | 0.99                                  | -                                                      | -                              
|Exercised or converted              | (259,338)                         | 1.00                                  | -                                                      | 581,477                        
|Forfeited or cancelled              | (333,905)                         | 0.05                                  | -                                                      | -                              
|Expired                             | (199,000)                         | 5.17                                  | -                                                      | -                              
|Outstanding as at December 31, 2019 | 2,843,115                         | 0.99                                  | 5.19                                                   | 3,693,941                      
|Of which vested                     | 2,838,089                         | 1.00                                  | 5.19                                                   | 3,682,672                      
|Of which non-vested                 | 5,026                             | -                                     | -                                                      |                                





F-35







Summary of stock-based compensation
expenses



|Stock-based compensation expenses                 | 12 months ended December 31, |  | 12 months ended December 31, |  | 12 months ended December 31,
|------------------------------------------------- | ---------------------------- |  | ---------------------------- |  | ----------------------------
|USD’000                                           | 2019                         |  | 2018                         |  | 2017                        
|In relation to Employee Stock Option Plans (ESOP) | 5,386                        |  | 1,278                        |  | 2,147                       
|In relation to non-ESOP Option Agreements         | 28                           |  | 382                          |  | 85                          
|Total                                             | 5,414                        |  | 1,660                        |  | 2,232                       



Stock-based compensation expenses are recorded
under the following expense categories in the income statement.



|Stock-based compensation expenses | 12 months ended December 31, |  | 12 months ended December 31, |  | 12 months ended December 31,
|--------------------------------- | ---------------------------- |  | ---------------------------- |  | ----------------------------
|USD’000                           | 2019                         |  | 2018                         |  | 2017                        
|Research & development expenses   | 786                          |  | 121                          |  | -                           
|Selling & marketing expenses      | 1,269                        |  | 571                          |  | 466                         
|General & administrative expenses | 3,359                        |  | 967                          |  | 1,765                       
|Total                             | 5,414                        |  | 1,660                        |  | 2,232                       



Note
32.Non-operating income



Non-operating income consisted of the following:



|                                                      | 12 months ended December 31, |  | 12 months ended December 31, |  | 12 months ended December 31,
|----------------------------------------------------- | ---------------------------- |  | ---------------------------- |  | ----------------------------
|USD'000                                               | 2019                         |  | 2018                         |  | 2017                        
|Foreign exchange gain                                 | 1,761                        |  | 1,664                        |  | 687                         
|Financial income                                      | 74                           |  | 85                           |  | 31                          
|Other                                                 | 83                           |  | 432                          |  | 42                          
|Total non-operating income from continuing operations | 1,918                        |  | 2,181                        |  | 762                         



| | Note 33. | Non-operating expenses
| | -------- | ----------------------



Non-operating expenses consisted of the
following:



|                                                        | 12 months ended December 31, |  | 12 months ended December 31, |  | 12 months ended December 31,
|------------------------------------------------------- | ---------------------------- |  | ---------------------------- |  | ----------------------------
|USD'000                                                 | 2019                         |  | 2018                         |  | 2017                        
|Foreign exchange losses                                 | 2,401                        |  | 1,984                        |  | 477                         
|Financial charges                                       | 341                          |  | 104                          |  | 1,120                       
|Interest expense                                        | 643                          |  | 244                          |  | -                           
|Other components of defined benefit plans, net          | 132                          |  | 140                          |  | 143                         
|Other                                                   | 153                          |  | 354                          |  | 11                          
|Total non-operating expenses from continuing operations | 3,670                        |  | 2,826                        |  | 1,751                       





F-36







| | Note 34. | Income taxes
| | -------- | ------------



The components of income before income
taxes are as follows:



|Income / (Loss)                 | As at December 31, |  | As at December 31, |  | As at December 31,
|------------------------------- | ------------------ |  | ------------------ |  | ------------------
|USD'000                         | 2019               |  | 2018               |  | 2017              
|Switzerland                     | (19,179)           |  | (11,428)           |  | (24,363)          
|Foreign                         | (3,838)            |  | (4,989)            |  | (1,424)           
|Less discontinued operations    | -                  |  | 6,562              |  | 15,732            
|Income/(loss) before income tax | (23,017)           |  | (9,855)            |  | (10,055)          

Income taxes relating to the Group are as
follows:



|Income taxes                 | As at December 31, |  | As at December 31, |  | As at December 31,
|---------------------------- | ------------------ |  | ------------------ |  | ------------------
|USD'000                      | 2019               |  | 2018               |  | 2017              
|Switzerland                  | (42)               |  | 328                |  | (293)             
|Foreign                      | 13                 |  | (479)              |  | (744)             
|Less discontinued operations | 42                 |  | 205                |  | 1,108             
|Income tax expense           | 13                 |  | 53                 |  | 71                



|Deferred income tax assets/(liabilities) | As at December 31, |  | As at December 31, |  | As at December 31,
|---------------------------------------- | ------------------ |  | ------------------ |  | ------------------
|USD'000                                  | 2019               |  | 2018               |  | 2017              
|Switzerland                              | -                  |  | 134                |  | 307               
|Foreign                                  | 6                  |  | 708                |  | 134               
|Less discontinued operations             | -                  |  | (834)              |  | (399)             
|Deferred income tax assets/(liabilities) | 6                  |  | 8                  |  | 42                



Income tax at the Swiss statutory rate
compared to the Group’s income tax expenses as reported are as follows:



|Income taxes at the Swiss statutory rate                       | As at December 31, |  | As at December 31, |  | As at December 31,
|-------------------------------------------------------------- | ------------------ |  | ------------------ |  | ------------------
|USD'000                                                        | 2019               |  | 2018               |  | 2017              
|Net income/(loss) from continuing operations before income tax | (23,017)           |  | (9,855)            |  | (10,055)          
|Statutory tax rate                                             | 24%                |  | 24%                |  | 24%               
|Expected income tax (expense)/recovery                         | 5,524              |  | 2,365              |  | 2,433             
|Income tax (expense)/recovery                                  | (13)               |  | (53)               |  | (71)              
|Change in valuation allowance                                  | (2,129)            |  | 4,228              |  | (4,487)           
|Permanent Difference                                           | 0                  |  | (9)                |  | (344)             
|Change in expiration of tax loss carryforwards                 | (3,395)            |  | (6,584)            |  | 2,397             
|Income tax (expense) / recovery                                | (13)               |  | (53)               |  | (71)              



The Group assesses the recoverability of
its deferred tax assets and, to the extent recoverability does not satisfy the “more likely than not” recognition criterion
under ASC 740, records a valuation allowance against its deferred tax assets. The Group considered its recent operating results
and anticipated future taxable income in assessing the need for its valuation allowance.





F-37







The Group’s deferred tax assets and
liabilities consist of the following:



|Deferred tax assets and liabilities | As at December 31, |  | As at December 31, |  | As at December 31,
|----------------------------------- | ------------------ |  | ------------------ |  | ------------------
|USD'000                             | 2019               |  | 2018               |  | 2017              
|Stock-based compensation            | -                  |  | 9                  |  | 344               
|Defined benefit accrual             | 1,100              |  | 1,272              |  | 1,289             
|Tax loss carry-forwards             | 11,264             |  | 10,606             |  | 14,888            
|Deferred Income tax liability       | -                  |  | (1,356)            |  | (1,476)           
|Deferred tax asset from acquisition | -                  |  | 477                |  | 477               
|Other temporary adjustments         | -                  |  | 2,426              |  | 1,396             
|Less discontinued Operations        | -                  |  | (3,196)            |  | (2,418)           
|Valuation allowance                 | (12,358)           |  | (10,230)           |  | (14,458)          
|Deferred tax assets / (liabilities) | 6                  |  | 8                  |  | 42                



As of December 31, 2019, the Group’s
operating cumulated loss carry-forwards of all jurisdictions for its continuing operations are as follows:



|Operating loss-carryforward as of December 31, 2019                                    |     |             |      
|-------------------------------------------------------------------------------------- | --- | ----------- | -----
|                                                                                       |     |             |      
|USD'000                                                                                | USA | Switzerland | Spain
|2020                                                                                   | -   | 441         | -    
|2021                                                                                   | -   | 8,123       | 206  
|2022                                                                                   | -   | 6,519       | 1,197
|2023                                                                                   | -   | 6,877       | 1,227
|2024                                                                                   | -   | 4,041       | -    
|2025                                                                                   | -   | 9,789       | -    
|2026                                                                                   | -   | 5,376       | -    
|2027                                                                                   | -   | -           | -    
|2028                                                                                   | 91  | -           | -    
|2029                                                                                   | 9   | -           | 23   
|2030                                                                                   | 2   | -           | 23   
|2031                                                                                   | 54  | -           | 69   
|2032                                                                                   | 89  | -           | 79   
|2033                                                                                   | -   | -           | 181  
|2034                                                                                   | -   | -           | 141  
|2035                                                                                   | 247 | -           | -    
|2036                                                                                   | -   | -           | -    
|2037                                                                                   | 159 | -           | -    
|2038                                                                                   | -   | -           | -    
|2039                                                                                   | 221 | -           | -    
|2040                                                                                   | -   | -           | -    
|Total operating loss carry-forwards / Year of expiration if applicable to jurisdiction
|                                                                                       | 872 | 41,166      | 3,146



The following tax years remain subject
to examination:



|Significant jurisdictions | Open years 
|------------------------- | -----------
|Switzerland               | 2015 - 2018
|USA                       | 2016 - 2018
|France                    | 2017 - 2019
|Spain                     | 2016 - 2019
|Japan                     | 2019       
|Taiwan                    | 2018 - 2019
|India                     | 2018 - 2019
|UK                        | 2018 - 2019





F-38







As at December 31, 2019, WISeKey Semiconductors
SAS had recorded a USD 118,294 tax provision following a tax audit started in 2018 in relation to prior years. Although the
final conclusions have not yet been communicated formally, management believes that it is more probable than not that the entity
will have to pay additional taxes and has calculated the provision based on preliminary discussions with the tax authorities. As
at December 31, 2018, WISeKey Semiconductors SAS had recorded a USD 90,831 tax provision which was neither utilized nor released
and is therefore included in the USD 118,294 tax provision as at December 31, 2019.



The Group has no unrecognized tax benefits.



| | Note | 35. Segment information and geographic data
| | ---- | -------------------------------------------



The Group has two segments: Internet of
Things (“IoT”, previously referred to as “Semiconductors”) and managed Public Key Infrastructure
(“mPKI”, previously referred to as “Others”). The Group’s chief operating decision maker,
who is its Chief Executive Officer, reviews financial performance according to these two segments for purposes of allocating resources
and assessing budgets and performance.



The IoT segment encompasses the design,
manufacturing, sales and distribution of microprocessors operations. The mPKI segment includes all operations relating to the provision
of secured access keys, authentication, signing software, certificates and digital security applications.



|12
    months to December 31,                              | 2019   |  | 2018     |  | 2017    
|---------------------------------------------------------- | ------ |  | -------- |  | --------
|USD'000                                                    | IoT    |  | mPKI     |  | Total   
|Revenues
    from external customers                       | 20,504 |  | 2,148    |  | 22,652  
|Intersegment
    revenues                                  | 344    |  | 6,169    |  | 6,513   
|Interest
    revenue                                       | 36     |  | 38       |  | 74      
|Interest
    expense                                       | 29     |  | 695      |  | 724     
|Depreciation
    and amortization                          | 1,298  |  | 57       |  | 1,355   
|Segment
    income /(loss) before income taxes             | 130    |  | (22,837) |  | (22,707)
|Profit
    / (loss) from intersegment sales                | 16     |  | 294      |  | 310     
|Income
    tax recovery /(expense)                         | -      |  | (13)     |  | (13)    
|Other
    significant non cash items                       |        |  |          |  |         
|Share-based
    compensation expense                       | -      |  | 5,414    |  | 5,414   
|Gain/(loss)
    on derivative liability                    | -      |  | 214      |  | 214     
|Interest
    and amortization of debt discount and expense | -      |  | 742      |  | 742     
|Segment
    assets                                         | 15,794 |  | 29,919   |  | 45,713  
|                                                           |        |  |          |  |         



|12 months to December 31,                      | 2019     |  | 2018    |  | 2017    
|---------------------------------------------- | -------- |  | ------- |  | --------
|                                               | USD'000  |  | USD'000 |  | USD'000 
|Revenue reconciliation                         |          |  |         |  |         
|Total revenue for reportable segment           | 29,165   |  | 37,568  |  | 35,379  
|Elimination of intersegment revenue            | (6,513)  |  | (3,288) |  | (1,705) 
|Total consolidated revenue                     | 22,652   |  | 34,280  |  | 33,674  
|                                               |          |  |         |  |         
|Loss reconciliation                            |          |  |         |  |         
|Total profit / (loss) from reportable segments | (22,707) |  | (9,698) |  | (9,974) 
|Elimination of intersegment profits            | (310)    |  | (157)   |  | (81)    
|Loss before income taxes                       | (23,017) |  | (9,855) |  | (10,055)





F-39







|As at December 31,                                      | 2019    |  | 2018     |  | 2017    
|------------------------------------------------------- | ------- |  | -------- |  | --------
|                                                        | USD'000 |  | USD'000  |  | USD'000 
|Asset reconciliation                                    |         |  |          |  |         
|Total assets from reportable segments                   | 45,713  |  | 71,757   |  | 53,168  
|Elimination of intersegment receivables                 | (6,794) |  | (6,430)  |  | (6,414) 
|Elimination of intersegment investment and goodwill     | 10,985  |  | (19,533) |  | (10,907)
|Total assets held for sale from discontinued operations | -       |  | 32,659   |  | 31,309  
|Consolidated total assets                               | 49,904  |  | 78,453   |  | 67,156  



Revenue and property, plant and equipment
by geography



The following tables summarize geographic
information for net sales based on the billing address of the customer, and for property, plant and equipment.



|Net sales by region from continuing operations | 12 months ended December 31, |  | 12 months ended December 31, |  | 12 months ended December 31,
|---------------------------------------------- | ---------------------------- |  | ---------------------------- |  | ----------------------------
|USD'000                                        | 2019                         |  | 2018                         |  | 2017                        
|Switzerland                                    | 2,137                        |  | 2,512                        |  | 4,629                       
|Rest of EMEA*                                  | 8,046                        |  | 14,122                       |  | 11,342                      
|North America                                  | 9,691                        |  | 15,165                       |  | 12,714                      
|Asia Pacific                                   | 2,504                        |  | 2,306                        |  | 3,664                       
|Latin America                                  | 274                          |  | 175                          |  | 1,325                       
|Total Net sales from continuing operations     | 22,652                       |  | 34,280                       |  | 33,674                      



* EMEA includes
Europe, Africa and the Middle-East



|Property, plant and equipment, net of depreciation, by region | As at December 31, |  | As at December 31,
|------------------------------------------------------------- | ------------------ |  | ------------------
|USD'000                                                       | 2019               |  | 2018              
|Switzerland                                                   | 44                 |  | 57                
|Rest of EMEA*                                                 | 1,742              |  | 2,289             
|North America                                                 | 1                  |  | 1                 
|Asia Pacific                                                  | 14                 |  | 23                
|Total Property, plant and equipment, net of depreciation      | 1,801              |  | 2,370             



* EMEA includes
Europe, Africa and the Middle-East



| | Note 36. | Earnings/(Loss) per share
| | -------- | -------------------------



The computation of basic and diluted net
earnings/(loss) per share for the Group is as follows:



|                                                                                                                                    | 12 months
    ended December 31, |  | 12 months
    ended December 31, |  | 12 months
    ended December 31,
|----------------------------------------------------------------------------------------------------------------------------------- | -------------------------------- |  | -------------------------------- |  | --------------------------------
|Earnings
    / (loss) per share                                                                                                     | 2019                             |  | 2018                             |  | 2017                            
|Net income / (loss)
    attributable to WISeKey International Holding AG (USD'000)                                                  | 8,187                            |  | (16,278)                         |  | (24,267)                        
|Effect
    of potentially dilutive instruments on net gain (USD'000)                                                                | 335                              |  | N/A                              |  | N/A                             
|Net income / (loss)
    attributable to WISeKey International Holding AG after effect of potentially dilutive instruments (USD'000) | 8,522                            |  | N/A                              |  | N/A                             
|Shares
    used in net earnings / (loss) per share computation:                                                                     |                                  |  |                                  |  |                                 
|Weighted
    average shares outstanding - basic                                                                                     | 36,079,000                       |  | 33,904,659                       |  | 29,505,629                      
|Effect
    of potentially dilutive equivalent shares                                                                                | 1,399,458                        |  | N/A                              |  | N/A                             
|Weighted
    average shares outstanding - diluted                                                                                   | 37,478,458                       |  | N/A                              |  | N/A                             
|Net
    earnings / (loss) per share                                                                                                 |                                  |  |                                  |  |                                 
|Basic
    weighted average loss per share attributable to WIHN (USD)                                                                | 0.23                             |  | (0.48)                           |  | (0.82)                          
|Diluted
    weighted average loss per share attributable to WIHN (USD)                                                              | 0.23                             |  | (0.48)                           |  | (0.82)                          



For purposes of the diluted net loss per
share calculation, stock options, convertible instruments and warrants are considered potentially dilutive securities and are excluded
from the calculation of diluted net loss per share, because their effect would be anti-dilutive.





F-40







The following table shows the number of
stock equivalents that were excluded from the computation of diluted earnings per share because the effect would have been anti-dilutive.



|Dilutive vehicles with anti-dilutive effect                             | 2019 |  | 2018       |  | 2017     
|----------------------------------------------------------------------- | ---- |  | ---------- |  | ---------
|Total stock options                                                     | -    |  | 1,342,819  |  | 731,772  
|Warrants                                                                | -    |  | 2,942,374  |  | 2,534,127
|Redeemable preferred stock                                              |      |  | -          |  | 860,000  
|Total convertible instruments                                           | -    |  | 6,821,804  |  | 3,922,438
|Total number of shares from dilutive vehicles with anti-dilutive effect | -    |  | 11,106,997 |  | 8,048,337



The following table shows the number of
stock equivalents that were included in the computation of diluted earnings per share:



|Dilutive vehicles                             | 2019      |  | 2018 |  | 2017
|--------------------------------------------- | --------- |  | ---- |  | ----
|Total stock options                           | 2,327,115 |  | -    |  | -   
|Warrants                                      | -         |  | -    |  | -   
|Redeemable preferred stock                    |           |  | -    |  | -   
|Total convertible instruments                 | 693,230   |  | -    |  | -   
|Total number of shares from dilutive vehicles | 3,020,345 |  | -    |  | -   



| | Note 37. | Divestiture and Discontinued operations
| | -------- | ---------------------------------------



Classification as discontinued operations
of the QuoVadis Group



On December 21, 2018 the Group signed a
sale and purchase agreement (the “SPA”) to sell WISeKey (Bermuda) Holding Ltd and its affiliates to Digicert
Inc, excluding the ISTANA product line. The group subsidiaries making up the QuoVadis Group in scope for the sale were WISeKey
(Bermuda) Holding Ltd, QuoVadis Trustlink Schweiz AG, WISeKey (UK) Ltd, QuoVadis Trustlink BVBA, QuoVadis Trustlink BV, QV BE BV,
QuoVadis Trustlink GmbH, QuoVadis Services Ltd, and QuoVadis Ltd.



The completion of the sale was conditional
on: (i) the release of liens on QuoVadis companies held by ExWorks; (ii) consent from Edmund Gibbons Ltd, the joint venture partner
holding 49% of QuoVadis Services Ltd; (iii) consent from the Bermuda Monetary Authority; and (iv) consent from the Regulatory Authority
in Bermuda (the “RAB”) (the “RAB Consent”) to the change in ultimate beneficial ownership
of QuoVadis Services Ltd, being the entity holding the Communications Operating Licence in Bermuda. The SPA states that should
the RAB Consent not have been obtained when the other completion conditions are satisfied, WISeKey or Digicert Inc may require
to complete the transaction except for QuoVadis Services Ltd, in which case the transfer of ownership of all QuoVadis entities
to Digicert Inc would occur except for the shares held by WISeKey (Bermuda) Holding Ltd in QuoVadis Services Ltd which would be
transferred to WISeKey International Holding AG until the RAB Consent is obtained.



We assessed the SPA under ASC 205 and concluded
that the operation met the requirement to be classified as held for sale and as such qualifies as a discontinued operation from
the date of the SPA, December 21, 2018. In line with ASC 205-20-45-3A and ASC 205-20-45-10 respectively, we reported the results
of the discontinued operations as a separate component of income for the years 2019, 2018, and 2017, and we classified their assets
and liabilities separately as held for sale in the balance sheet for the year to December 31, 2018.



No gain or loss on classification as held
for sale was recorded in 2018.



The table below shows the reconciliation
of the major classes of line items constituting income / (loss) on discontinued operations to the income / (loss) on
discontinued operations reported in discontinued operations in the income statement:



|                                                                                                | 12 months ended December 31, |  | 12 months ended December 31, |  | 12 months ended December 31,
|----------------------------------------------------------------------------------------------- | ---------------------------- |  | ---------------------------- |  | ----------------------------
|USD'000                                                                                         | 2019                         |  | 2018                         |  | 2017                        
|Net sales from discontinued operations                                                          | 1,934                        |  | 19,412                       |  | 9,404                       
|Cost of sales from discontinued operations                                                      | (791)                        |  | (6,196)                      |  | (4,516)                     
|Gross profit                                                                                    | 1,143                        |  | 13,216                       |  | 4,888                       
|                                                                                                |                              |  |                              |  |                             
|Other operating income                                                                          | -                            |  | 28                           |  | -                           
|Research & development expenses                                                                 | (121)                        |  | (2,801)                      |  | (2,047)                     
|Selling & marketing expenses                                                                    | (142)                        |  | (2,826)                      |  | (1,795)                     
|General & administrative expenses                                                               | (337)                        |  | (10,509)                     |  | (6,544)                     
|                                                                                                |                              |  |                              |  |                             
|Non-operating income                                                                            | 36                           |  | 62                           |  | 7                           
|Non-operating expenses                                                                          | (103)                        |  | (2,676)                      |  | (2,772)                     
|Gain / (loss) on debt extinguishment                                                            | (1,093)                      |  | -                            |  | (6,511)                     
|Interest and amortization of debt discount                                                      | (41)                         |  | (1,056)                      |  | (958)                       
|Gain on disposal of a business                                                                  | 31,100                       |  | -                            |  | -                           
|Total operating and non-operating expenses from discontinued operations                         | 29,299                       |  | (19,778)                     |  | (20,620)                    
|Income / (loss) from discontinued operations before income tax                                  | 30,442                       |  | (6,562)                      |  | (15,732)                    
|                                                                                                |                              |  |                              |  |                             
|Income tax (expense) / recovery from discontinued operations                                    | 42                           |  | 205                          |  | 1,108                       
|Income / (loss) on discontinued operations                                                      | 30,484                       |  | (6,357)                      |  | (14,624)                    
|Less: Net income on discontinued operations attributable to noncontrolling interests            | 58                           |  | 309                          |  | 82                          
|Net income / (loss) on discontinued operations attributable to WISeKey International Holding AG | 30,426                       |  | (6,666)                      |  | (14,706)                    





F-41







The depreciation charge from discontinued
operations for the years 2018 and 2017 was respectively USD 581,757 and USD 481,467. In line with ASC 205, the depreciation
of property, plant and equipment from discontinued operations stopped on the day that they qualified as held for sale. As a result,
we did not record any depreciation charge from discontinued operations for the year 2019.



The amortization charge from discontinued
operations for the years 2018 and 2017 was respectively USD 1,587,895 and USD 1,953,606. In line with ASC 205, the amortization
of intangible assets from discontinued operations stopped on the day that they qualified as held for sale. As a result, we did
not record any amortization charge from discontinued operations for the year 2019.



WISeKey considered guidance on allocation
of interest to discontinued operations per ASC 205-20-45-6 to 205-20-45-8. In the year 2017, the Group secured an acquisition
line of credit agreement with ExWorks with an annual interest rate of 12% (see note 24 for detail). The purpose of this line of
credit was the acquisition of the QuoVadis group which was completed on April 03, 2017. Although the debt and interest on debt
will not be assumed by Digicert Inc nor is required to be repaid upon disposal, we have assessed that the amount of debt and related
interest contracted for the acquisition of the QuoVadis Group is not directly attributable to or related to other operations of
WISeKey, and elected to allocate those interests relating to the debt to acquire QuoVadis to discontinued operations. We reviewed
the method of allocation based on net assets proposed under ASC 205-20-45-7 and considered that such allocation would not
provide meaningful results because it would spread the interest onto other operations of the entity to which the interest is not
directly attributable or related. Therefore, WISeKey further elected to apply ASC 205-20-45-8 and to allocate interest to
the discontinued operations based on the debt that can be identified as specifically attributed to the operations of QuoVadis.



The interest amounts allocated to and included
in discontinued operations were respectively USD 1,233,324, USD 3,602,553 and USD 9,903,009 for the years 2019, 2018
and 2017.



In previous annual and interim reports,
the results of the discontinued operations were included in the mPKI segment.



The table below shows the total operating,
investing and financing cash flows of the discontinued operation:



|                                                    | 12 months ended December 31, |  | 12 months ended December 31, |  | 12 months ended December 31,
|--------------------------------------------------- | ---------------------------- |  | ---------------------------- |  | ----------------------------
|USD'000                                             | 2019                         |  | 2018                         |  | 2017                        
|Net cash provided by (used in) operating activities | 783                          |  | (6,164)                      |  | (6,526)                     
|Net cash provided by (used in) investing activities | -                            |  | 1,245                        |  | (440)                       
|Net cash provided by (used in) financing activities | -                            |  | 3,678                        |  | 18,592                      



There were no significant operating and
investing noncash items from discontinued operations in the years 2019, 2018 and 2017.



Divestiture of the QuoVadis Group



The sale was completed on January 16, 2019,
when all QuoVadis entities except QuoVadis Services Ltd were transferred to Digicert Inc. The transfer of ownership of QuoVadis
Services Ltd was conditional on receiving the consent from the Regulatory Authority in Bermuda (the “RAB”) (the
“RAB Consent”) to the change in ultimate beneficial ownership of QuoVadis Services Ltd, being the entity holding
the Communications Operating Licence in Bermuda. The RAB Consent was obtained in February 2019 and the transfer of ownership of
QuoVadis Services Ltd from WISeKey to Digicert Inc. was effective on February 28, 2019. We assessed the SPA under ASC 810-10-40-6
and concluded that the terms and conditions of the SPA met the definition to account for the sale as a single transaction effective
on January 16, 2019.



The purchase price set in the SPA was USD 45,000,000
to be split USD 40,500,000 at completion of the sale and USD 4,500,000 to be paid into an escrow account used for the
settlement of any post-completion claims and released in an amount up to USD 2,500,000 on the first anniversary of the completion
and the remaining amount on the second anniversary of completion. The net purchase price of USD 35,839,960 paid to WISeKey
was adjusted for the following items: (a) all accounts payable items and other liability items due for payment on or before December
31, 2018 were paid in full; (b) the QuoVadis Group companies was transferred free of indebtedness including any loan with WISeKey;
and (c) the equivalent of USD 4,000,000 in cash in aggregate was retained in the bank accounts of the QuoVadis companies.



ISTANA-related contracts and rights were
transferred to WISeKey SA prior to December 31, 2018.





F-42







The table below shows the reconciliation
of the cash inflow from divestiture presented in the consolidated statement of cash flows to the net purchase price:



|                                                                                                               |        
|-------------------------------------------------------------------------------------------------------------- | -------
|USD'000                                                                                                        |        
|Net cash inflow from divestiture                                                                               | 40,919 
|Less:                                                                                                          | -      
|Payment of all accounts payable items and other liability items due for payment on or before December 31, 2018 | (6,541)
|Debt repayment                                                                                                 | (869)  
|Plus:                                                                                                          |        
|Net assets divested                                                                                            | 2,331  
|Net purchase price                                                                                             | 35,840 



The gain from divestiture recorded in the
reporting period is USD 31,099,632, shown as a separate line within discontinued operations in the income statement.



WISeKey did not have any involvement with
the QuoVadis Group or Digicert Inc after it had been deconsolidated. Digicert Inc was not and is not a related party of WISeKey,
and neither the QuoVadis Group nor Digicert Inc are related parties to WISeKey after the deconsolidation.



| | Note 38. | Legal proceedings
| | -------- | -----------------



We are currently not party to any legal
proceedings and claims.



| | Note 39. | Related parties disclosure
| | -------- | --------------------------



Subsidiaries



The consolidated financial statements of
the Group include the entities listed in the following table:





|Group Company Name                          |  | Country of    |  | Year of       |  | Share Capital |  | % ownership
                                   as of December 31, |  | % ownership
                                  as of December
                                  31, |  | Nature of business
|------------------------------------------- |  | ------------- |  | ------------- |  | ------------- |  | ----------------------------------------------------------------- |  | -------------------------------------------------------------------------------------------------- |  | ------------------
|                                            |  | incorporation |  | incorporation |  |               |  |                                                                   |  | 2019                                                                                               |  | 2018              
|WISeKey SA                                  |  | Switzerland   |  | 1999          |  | CHF           |  | 933,436                                                           |  | 95.58%                                                                                             |  | 95.35%            
|WISeKey Semiconductors SAS                  |  | France        |  | 2010          |  | EUR           |  | 1,298,162                                                         |  | 100.0%                                                                                             |  | 100.0%            
|WiseTrust SA                                |  | Switzerland   |  | 1999          |  | CHF           |  | 680,000                                                           |  | 100.0%                                                                                             |  | 100.0%            
|WISeKey (Suisse) SA**                       |  | Switzerland   |  | 2002          |  | CHF           |  | 100,000                                                           |  | 100.0%                                                                                             |  | 100.0%            
|WISeKey ELA SL                              |  | Spain         |  | 2006          |  | EUR           |  | 4,000,000                                                         |  | 100.0%                                                                                             |  | 100.0%            
|WISeKey SAARC Ltd                           |  | U.K.          |  | 2016          |  | GBP           |  | 100,000                                                           |  | 51.0%                                                                                              |  | 51.0%             
|WISeKey USA Inc*                            |  | U.S.A         |  | 2006          |  | USD           |  | 6,500                                                             |  | 100%*                                                                                              |  | 100%*             
|WISeKey India Private Ltd***                |  | India         |  | 2016          |  | INR           |  | 1,000,000                                                         |  | 45.9%                                                                                              |  | 45.9%             
|WISeKey KK                                  |  | Japan         |  | 2017          |  | JPY           |  | 1,000,000                                                         |  | 100.0%                                                                                             |  | 100.0%            
|WISeKey Taiwan                              |  | Taiwan        |  | 2017          |  | TWD           |  | 100,000                                                           |  | 100.0%                                                                                             |  | 100.0%            
|WISeCoin AG                                 |  | Switzerland   |  | 2018          |  | CHF           |  | 100,000                                                           |  | 90.0%                                                                                              |  | 90.0%             
|WISeKey Equities AG                         |  | Switzerland   |  | 2018          |  | CHF           |  | 100,000                                                           |  | 100.0%                                                                                             |  | 100.0%            
|WISeCoin France R&D Lab SAS                 |  | France        |  | 2019          |  | EUR           |  | 10,000                                                            |  | 90.0%                                                                                              |  | not incorporated  
|WISeKey Semiconductors GmbH                 |  | Germany       |  | 2019          |  | EUR           |  | 25,000                                                            |  | 100.0%                                                                                             |  | not incorporated  
|WISeKey Arabia - Information Technology Ltd |  | Saudi Arabia  |  | 2019          |  | SAR           |  | 200,000.00                                                        |  | 51.0%                                                                                              |  | not incorporated  



|* 50% owned by WISeKey SA and 50% owned by WiseTrust SA                               
|--------------------------------------------------------------------------------------
|** dormant or in the process of being liquidated                                      
|*** 88% owned by WISeKey SAARC which is controlled by WISeKey International Holding AG





F-43







Related party transactions and balances







|                                     | Receivables as at | Payables as at | Net expenses to |              | Net income from                |      
|------------------------------------ | ----------------- | -------------- | --------------- | ------------ | ------------------------------ | -----
|Related Parties                      | December 31,      | December 31,   | December 31,    | December 31, | in the year ended December 31, |      
|(in USD'000)                         | 2019              | 2018           | 2019            | 2018         | 2019                           | 2018 
|1 CarlosMoreira                      | -                 | 8              | -               | -            | -                              | -    
|2 Maryla Shingler-Bobbio             | -                 | -              | -               | -            | 123                            | 80   
|3 Philippe Doubre                    | -                 | -              | 40              | 54           | 114                            | 80   
|4 Juan Hernández Zayas               | -                 | -              | 37              | 62           | 165                            | 88   
|5 Thomas Hürlimann                   | -                 | -              | 16              | 24           | 63                             | 24   
|6 Dourgam Kummer                     | -                 | -              | 2               | 68           | 52                             | 264  
|7 David Fergusson                    | -                 | -              | 22              | 31           | 161                            | 47   
|8 Roman Brunner                      | -                 | -              | -               | 418          | 426                            | 242  
|9 Anthony Nagel                      | -                 | -              | -               | -            | 5                              | 164  
|10 Harald Steger                     | -                 | -              | -               | -            | -                              | 445  
|11 Don Tapscott                      | -                 | -              | -               | 200          | -                              | 394  
|12 Wei Wang                          | -                 | -              | -               | -            | -                              | 187  
|13 OISTE                             | 119               | -              | -               | 92           | 219                            | 221  
|14 Todd Ruppert                      | -                 | -              | -               | -            | -                              | 353  
|15 Edmund Gibbons Limited            | -                 | -              | -               | 451          | 479                            | 173  
|16 Terra Ventures Inc                | -                 | -              | 33              | 31           | -                              | -    
|17 SAI LLC (SBT Ventures)            | -                 | -              | 33              | 32           | -                              | -    
|18 GSP Holdings Ltd                  | -                 | -              | 17              | 16           | -                              | -    
|19 Indian Potash Limited             | -                 | -              | -               | -            | -                              | -    
|20 ACXIT Capital                     | -                 | -              | -               | -            | -                              | -    
|21 Philippe Gerwill                  | -                 | -              | -               | -            | 14                             | -    
|22 Related parties of Carlos Moreira | -                 | -              | 2               | -            | 360                            | -    
|23 Thomas J. Egger                   | -                 | -              | -               | -            | -                              | -    
|Total                                | 119               | 8              | 202             | 1,479        | 2,181                          | 2,762



1. Carlos Moreira is the Chairman of the
Board and CEO of WISeKey. A short-term receivable in an amount of CHF 7,713.14 (USD 7,844) from Carlos Moreira was outstanding
as at December 31, 2018, made up of short-term cash advances to Carlos Moreira for his travel expenses. This short-term receivable
was cleared in 2019 when expense claims were processed.



A credit of CHF 204,633 (USD 209,314)
was recorded in the income statement in 2018 in relation to a loan of 322,900 WIHN class B shares from Carlos Moreira to WISeKey
on September 25, 2018. The equivalent of 100,000 WIHN class B shares was repaid by WISeKey in cash at market price CHF 3.22
per share, hence a repayment of CHF 322,000 on November 13, 2018, and the remaining 222,900 WIHN class B shares were delivered
back to M. Moreira on December 28, 2018 as full and final repayment of the loan. The credit recorded in the income statement correspond
to the accounting revaluation of the loan at market price at each transaction date, there was and will not be any cash paid to
Carlos Moreira for this credit entry.



2. Maryla Shingler Bobbio is a former Board
member of the Group, and former member of the Group’s audit committee and nomination & compensation committee. Ms. Shingler
Bobbio resigned from WISeKey’s Board on November 21, 2019. The expenses recorded in the income statement in the year to December
31, 2019 relate to her Board fees.



3. Philippe Doubre is a Board member of
the Group, and member of the Group’s nomination & compensation committee, as well as a shareholder. The payable to Philippe
Doubre as at December 31, 2019 and expenses recorded in the income statement in the year to December 31, 2019 relate to his Board
fee.



4. Juan Hernandez-Zayas is a Board member
of the Group, and member of the Group’s audit committee and the strategy committee, as well as a shareholder. The payable
to Juan Hernandez-Zayas as at December 31, 2019 and expenses recorded in the income statement in the year to December 31, 2019
relate to his Board fees.



5. Thomas Hürlimann is a former Board
member of the Group. Mr. Hürlimann did not seek reelection at the Group’s last Annual General Meeting on May 21, 2019.
The payable to Thomas Hürlimann as at December 31, 2019 and expenses recorded in the income statement in the year to December
31, 2019 relate to his Board fees.



6. Dourgam Kummer is a Board member of
the Group, as well as a shareholder. Since January 2019, Dourgam Kummer serves as Head of M&A of WISeKey and has therefore
become an executive member of the Board. The payable to Dourgam Kummer as at December 31, 2019 relates to unpaid business expenses.
The expenses recorded in the income statement in the year to December 31, 2019 relate to his Board fees up until December 31, 2018.



7. David Fergusson is a Board member of
the Group, and member of the Group’s audit committee and nomination & compensation committee, as well as a shareholder.
The payable to David Fergusson as at December 31, 2019 and expenses recorded in the income statement in the year to December 31,
2019 relate to his Board fees.



8. Roman Brunner is the former Chief Revenue
Officer of the Group and a shareholder. He entered into a loan agreement with WISeKey (Bermuda) Holding Ltd in 2007 and has made
loans to WISeKey (Bermuda) Holding Ltd of varying amounts since 2004. The loan carried an interest rate of 5% per annum and had
no fixed repayment date. Upon the divestiture of the QuoVadis Group on January 16, 2019, WISeKey repaid in full the loan from Mr.
Brunner in an amount of USD 418,832.



9. Anthony Nagel is the former Chief Operations
Officer of QuoVadis.



10. Harald Steger is a former member of
the Group’s advisory committee.





F-44







11. Don Tapscott is a member of the Group’s
advisory committee, and cofounder of The Tapscott Group Inc.



The Blockchain Research Institute (the
“BRI”) is a division of The Tapscott Group Inc. On December 20, 2018 WISeKey and the BRI entered into an agreement
to establish BlockChain Centers of Excellence and promote BlockChain technology worldwide.



12. Wei Wang is a former member of the
Group’s advisory committee.



13. The Organisation Internationale pour
la Sécurité des Transactions Electroniques (“OISTE”) is a Swiss non-profit making foundation that
owns a cryptographic rootkey. In 2001 WISeKey SA entered into a contract with OISTE to operate and maintain the global trust infrastructures
of OISTE. In line with the contract, WISeKey pays a regular fee to OISTE for the use of its cryptographic rootkey. A member of
the Board of Directors of WISeKey is also a member of the Counsel of the Foundation which gives rise to the related party situation.



OISTE is also the minority shareholder
in WISeCoin AG with a 10% ownership.



The receivable from OISTE as at December
31, 2019 and income recorded in the income statement in the year to December 31, 2019 relate to the facilities and personnel hosted
by WISeKey SA on behalf of OISTE. In the year 2019, WISeKey SA invoiced OISTE CHF 138,610 (USD 139,506).



The expenses relating to OISTE recognized
in 2019 are made up of license and royalty fees for the year 2019 under the contract agreement with WISeKey SA.



14. Todd Ruppert is a former investor in
WISeKey.



15. Edmund Gibbons Limited had a 49% shareholding
in QuoVadis Services Ltd which was 51% owned by WISeKey until the divestiture of the QuoVadis Group on January 16, 2019. QuoVadis
Services Ltd had issued a promissory note to Edmund Gibbons Limited for USD 450,000 outstanding as at December 31, 2018. The
note was non-interest bearing. Upon the divestiture of the QuoVadis Group on January 16, 2019, WISeKey repaid in full the loan
from Edmund Gibbons Limited in an amount of USD 450,134.



16. Terra Ventures Inc has a 49% shareholding
in WISeKey SAARC Ltd. Terra Ventures granted a GBP 24,507 loan to WISeKey SAARC Ltd on January 24, 2017. The loan is non-interest
bearing and has no set repayment date.



17. SAI LLC, doing business as SBT Ventures,
is a former shareholder in WISeKey SAARC Ltd. SAI LLC granted a GBP 25,000 loan to WISeKey SAARC Ltd on January 25, 2017. The loan
is non-interest bearing and has no set repayment date.



18. GSP Holdings Ltd is a former shareholder
in WISeKey SAARC Ltd. GSP Holdings Ltd granted a GBP 12,500 loan to WISeKey SAARC Ltd on February 02, 2017. The loan is non-interest
bearing and has no set repayment date.



19. Indian Potash Limited has a 10% shareholding
in WISeKey India Private Ltd.



20. ACXIT Capital Partners, an international
corporate finance and investment advisory firm, has provided advisory services to WISeKey since 2014.



21. Philipp Gerwill is an external consultant
for the group. On November 21, 2019, WISeKey granted options to Philipp Gerwill which were valued using the Black-Scholes model
and the market price of the WIHN class B shares at grant. The stock-based expense recorded in 2019 was USD 14,197.



22. Two immediate family members of Carlos
Moreira are employed by WISeKey SA and WISeKey USA respectively. In line with ASC 850-10-50-5, transactions involving related
parties cannot be presumed to be carried out on an arm’s-length basis. The aggregate employment remuneration of these two
immediate family members amounted to USD 356,096 recorded in the income statement in 2019. The payable as at December 31,
2019 relates to unpaid business expenses.



Additionally, one other immediate family
member of Carlos Moreira has access to WISeKey’s facilities for a cost of CHF 2,760 (USD 2,778) per annum, whilst
another immediate family member was remunerated CHF 1,204 (USD 1,212) for services provided to WISeKey in January 2019.



23. Thomas J. Egger is a former Board member
of the Group, and former member of the Group’s audit committee, as well as a shareholder.



| | Note 40. | Subsequent events
| | -------- | -----------------



Capital increase



On January 09, 2020, the Company made an
Authorised Share Capital increase by issuing 378,788 WIHN Class B shares against an investment of USD 1,000,000.32 from a
private fund.



Crede Convertible Loan



On January 09, 2020 Crede exercised a conversion
in the amount of USD 259,436 in exchange for 150,000 WIHN class B shares issued out of treasury share capital.





F-45







Release of restricted cash



On January 16, 2020, as per the terms of
the SPA relating to the sale of WISeKey (Bermuda) Holding Ltd and its affiliates to Digicert Inc, USD 2.5 million of the
consideration retained on an escrow account was released to WISeKey.



LSI Convertible Facility



In January 2020, WISeKey:



| | - | paid an additional CHF 24,527 legal fees qualifying as debt issue costs, and
| | - | ----------------------------------------------------------------------------



| | - | transferred the 400,000 WIHN class B shares owed as commitment fee to LSI out of treasury stock.
| | - | ------------------------------------------------------------------------------------------------



Extension of share buyback program



On February 03, 2020, WISeKey announced
that its Board of Directors had approved the expansion of its existing WIHN class B share buyback program to include its recently
NASDAQ-listed ADSs. Class B shares or ADSs repurchased under the buyback program will be used, as previously announced, for potential
future M&A transactions and in addition for (1) WISeKey’s existing employee share incentive program, (2) convertible
loans entered into by WISeKey and (3) on demand equity lines available to WISeKey.



Extension of the SEDA



On March 04, 2020, WISeKey signed with
Yorkville the extension of the SEDA agreement for a further 24 months, until March 31, 2023.



New facility with Yorkville



On March 04, 2020, WISeKey executed with
Yorkville a new convertible loan agreement for a total amount of USD 4 million repayable in monthly instalments starting
March 30, 2020. This new USD 4 million agreement replaces the existing Yorkville Convertible Loan signed on June 27,
2019 and the USD 2,337,393 remaining balance under the Yorkville Convertible Loan was rolled over into the new agreement.
The new convertible loan agreement bears an interest rate of 6% per annum payable monthly in arrears and matures on April 30, 2021.Yorkville
has the right to convert the outstanding loan amount or any portion thereof, and any accrued interest, into class B shares at an
initial conversion price of CHF 3.00, subject to customary adjustments.



Options granted under WISeKey ESOP



After December 31, 2019 a total of 54,000
options were granted under the Group’s ESOP.