# EDGAR Filing Document

**Accession Number:** 0001023549
**File Stem:** 0001213900-26-073831
**Filing Date:** 2026-6
**Character Count:** 683258
**Document Hash:** f4a05b1fc4825f504728e0073be86ac4
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-26-073831.hdr.sgml**: 20260630

**ACCESSION NUMBER**: 0001213900-26-073831

**CONFORMED SUBMISSION TYPE**: 20-F

**PUBLIC DOCUMENT COUNT**: 132

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260630

**DATE AS OF CHANGE**: 20260630

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** XTL BIOPHARMACEUTICALS LTD
- **CENTRAL INDEX KEY:** 0001023549
- **STANDARD INDUSTRIAL CLASSIFICATION:** PHARMACEUTICAL PREPARATIONS [2834]
- **ORGANIZATION NAME:** 03 Life Sciences
- **EIN:** 000000000
- **STATE OF INCORPORATION:** L3

**FILING VALUES:**
- **FORM TYPE:** 20-F
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-36000
- **FILM NUMBER:** 261141733

**BUSINESS ADDRESS:**
- **STREET 1:** XTL BIOPHARMACEUTICALS LTD
- **STREET 2:** C/O ALSTON & BIRD LLP, 90 PARK AVENUE
- **CITY:** NEW YORK
- **STATE:** NY
- **ZIP:** 10016
- **BUSINESS PHONE:** 972 9 955 7080

**MAIL ADDRESS:**
- **ADDRESS IS A NON US LOCATION:** YES
- **STREET 1:** 85 MEDINAT HA-YEHUDIM ST.
- **CITY:** HERZLIYA
- **PROVINCE COUNTRY:** L3
- **ZIP:** 4676670

?xml version='1.0' encoding='ASCII'?

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 20-F**

(Mark One)

☐ **REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (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, 2025

OR

☐ **TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

OR

☐ **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: **001-36000**

**XTL BIOPHARMACEUTICALS LTD.**

(Exact name of registrant as specified in its charter)

**N/A**

(Translation of Registrant's Name into English)

**Israel**

(Jurisdiction of incorporation or organization)

**85 Medinat Hayehudim St.**

**Herzliya, 4676670, Israel**

(Address of principal executive offices)

**Noam Band**

**Chief Executive Officer**

**85 Medinat Hayehudim St.**

**Herzliya, 4676670, Israel**

**Tel: +972-54-2288897**

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

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

---

| | | |
|:---|:---|:---|
| American Depositary Shares, each <br> representing one hundred Ordinary <br> Shares, par value NIS 0.1 | XTLB | The Nasdaq Capital Market |
| **(Title of Class)** | **Trading Symbol** | **(Name of each exchange on which <br> registered)** |

---

Securities registered or to be registered pursuant to Section 12(g) of the Act: None.

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None.

Indicate the number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of the period covered by the annual report.

As of December 31, 2025 - 946,243,356 Ordinary Shares were issued and outstanding. This number includes 2,365,608 American Depositary Shares and excludes 372,957,973 dormant ordinary shares.

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

Yes ☐&nbsp;&nbsp;&nbsp;&nbsp;No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

Yes ☐&nbsp;&nbsp;&nbsp;&nbsp;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 ☒&nbsp;&nbsp;&nbsp;&nbsp;No ☐

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 during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.)

Yes ☒&nbsp;&nbsp;&nbsp;&nbsp;No ☐

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 "large accelerated filer", "accelerated filer", and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐ Accelerated filer ☐ <br>Non-accelerated filer ☒ 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. ☐

† The term "new or revised financial accounting standard" refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C.7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

US GAAP ☐ International Financial Reporting Standards as issued by the International Accounting Standards Board ☒ Other ☐

If "Other" has been check in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 ☐ Item 18 ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐&nbsp;&nbsp;&nbsp;&nbsp;No ☒

**XTL BIOPHARMACEUTICALS LTD.**

**ANNUAL REPORT ON FORM 20-F**

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
|  |  | **Page** |
| EXPLANATORY NOTE | EXPLANATORY NOTE |  |
| [SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS](#a_001) | [SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS](#a_001) | ii |
|  | [**PART I**](#a_002) | 1 |
| ITEM 1 | [Identity of Directors, Senior Management and Advisers](#a_003) | 1 |
| ITEM 2 | [Offer Statistics and Expected Timetable](#a_004) | 1 |
| ITEM 3 | [Key Information](#a_005) | 1 |
| ITEM 4 | [Information on the Company](#a_033) | 29 |
| ITEM 4A | [Unresolved Staff Comments](#a_006) | 37 |
| ITEM 5 | [Operating and Financial Review and Prospects](#a_007) | 37 |
| ITEM 6 | [Directors, Senior Management and Employees](#a_008) | 44 |
| ITEM 7 | [Major Shareholders and Related Party Transactions](#a_009) | 54 |
| ITEM 8 | [Financial Information](#a_010) | 56 |
| ITEM 9 | [The Offer and Listing](#a_011) | 56 |
| ITEM 10 | [Additional Information](#a_012) | 56 |
| ITEM 11 | [Quantitative and Qualitative Disclosures About Market Risk](#a_013) | 80 |
| ITEM 12 | [Description of Securities other than Equity Securities](#a_014) | 81 |
|  | [**PART II**](#a_015) | 82 |
| ITEM 13 | [Defaults, Dividend Arrearages and Delinquencies](#a_016) | 82 |
| ITEM 14 | [Material Modifications to the Rights of Security Holders and Use of Proceeds](#a_017) | 82 |
| ITEM 15 | [Controls and Procedures](#a_018) | 82 |
| ITEM 16 | [Reserved](#a_019) | 83 |
| ITEM 16A | [Audit Committee Financial Expert](#a_020) | 83 |
| ITEM 16B | [Code of Ethics](#a_021) | 83 |
| ITEM 16C | [Principal Accountant Fees And Services](#a_022) | 83 |
| ITEM 16D | [Exemptions From The Listing Standards For Audit Committees](#a_023) | 83 |
| ITEM 16E | [Purchases Of Equity Securities By The Issuer And Affiliated Purchasers](#a_024) | 83 |
| ITEM 16F | [Change In Registrant's Registered Accountant](#a_025) | 84 |
| ITEM 16G | [Corporate Governance](#a_026) | 84 |
| ITEM 16H | [Mine Safety Disclosure](#a_027) | 85 |
| ITEM 16I | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#a_028) | 85 |
| ITEM 16J | [Insider Trading Policy](#a_029) | 85 |
| ITEM 16K | [Cybersecurity](#a_030) | 85 |
| ITEM 17 | [Financial Statements](#k_001) | F-1 |
| ITEM 18 | [Financial Statements](#k_002) | F-1 |
| ITEM 19 | [Exhibits](#a_031) | 87 |
| [SIGNATURES](#a_032) | [SIGNATURES](#a_032) | 89 |

---

i

**SPECIAL CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS**

Certain matters discussed in this report, including matters discussed under the caption "Item 5. Operating and Financial Review and Prospects," may constitute forward-looking statements for purposes of the Securities Act of 1933, as amended, or the Securities Act, and the Securities Exchange Act of 1934, as amended, or the Exchange Act, and involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by such forward-looking statements. In some instances, you can identify these forward-looking statements by words such as "anticipates," "believes," "estimates," "expects," "intends," "may," "plan," "potential," "will," "should," "would," or similar expressions, including their negatives. These forward-looking statements include, without limitation, statements relating to our expectations and beliefs regarding:

● our ability to continue operating as a going concern;

● fluctuations in the market price of our securities;

● the possibility that our securities could be delisted from The Nasdaq Capital Market or the Tel-Aviv Stock Exchange ("TASE");

● potential dilution to the holders of our securities as a result of future issuances of our securities;

● fluctuations in our results of operations;

● the availability of capital to satisfy our working capital requirements;

● our current and future capital requirements and our ability to raise additional funds to satisfy our capital needs;

● our ability to identify potential acquisition targets or our ability to consummate such transactions;

● the integration and effects of our acquisitions, including the acquisition of Psyga Bio Ltd.;

● the accuracy of our financial forecasts and the uncertainty regarding the adequacy of our liquidity to pursue our complete business objectives;

● the timing and cost of the in-licensing, partnering and acquisition of new product opportunities;

● the Company's offices are located in Israel and, therefore, the business, financial condition and results of operation may be adversely affected by political, economic and military instability in Israel and in the Middle East;

● our ability to obtain and maintain intellectual property protection for our core assets and the costs involved in prosecuting and enforcing patent claims and other intellectual property rights; and

● other risks and uncertainties described in this report.

Our actual results may differ materially from the results anticipated in these forward-looking statements due to a variety of factors, including, without limitation, those discussed under "Item 3. Key Information-Risk Factors," "Item 4. Information on the Company," "Item 5. Operating and Financial Review and Prospects," and elsewhere in this report, as well as factors which may be identified from time to time in our other filings with the Securities and Exchange Commission, or the SEC, or in the documents where such forward-looking statements appear. All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by these cautionary statements.

Forward-looking statements contained in this report reflect our views and assumptions only as of the date this report is filed. Therefore, you should not place undue reliance on any forward-looking statement as a prediction of future results. Forward-looking statements made in this report and the documents incorporated by reference are made as of the date of the respective documents, and we undertake no obligation to update them in light of new information or future results. Except as required by law, we assume no responsibility for updating any forward-looking statements.

ii

**PART I**

*Unless the context requires otherwise, references in this report to "XTL," the "Company," "we," "us" and "our" refer to XTL Biopharmaceuticals Ltd, an Israeli company and our consolidated subsidiaries. We have prepared our consolidated financial statements in United States, or US, dollars and in accordance with International Financial Reporting Standards, or IFRS. All references herein to "dollars" or "$" are to US dollars, and all references to "Shekels" or "NIS" are to New Israeli Shekels.*

**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. [Reserved]**

**B. Capitalization And Indebtedness**

Not applicable.

**C. Reasons For Offer And Use Of Proceeds**

Not applicable.

**D. Risk Factors**

 

*Before you invest in our ordinary shares or American Depositary Shares, you should understand the high degree of risk involved. You should carefully consider the risks described below and other information in this report, including our consolidated financial statements and related notes included elsewhere in this report, before you decide to purchase our ordinary shares or American Depositary Shares ("ADSs"). If any of the following risks actually occur, our business, financial condition and operating results could be adversely affected. As a result, the trading price of our ordinary shares or ADSs could decline and you could lose part or all of your investment. The risks described below are not the only risks we face. Additional risks and uncertainties, not presently known to us or that we currently deem immaterial, may also adversely affect our business.*

***<u>Risk Factors Summary</u>***

● Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.

● Management has concluded that there is substantial doubt about our ability to continue as a going concern which could prevent us from obtaining new financing on reasonable terms or at all.

● Psyga Bio's limited operating history makes it difficult to evaluate its future prospects and the risks and challenges we may encounter. We expect to continue to incur losses for the foreseeable future, and we may never achieve or maintain profitability.

● We are engaged in on-going development of our current and future products. Our research and development efforts may not produce successful products or enhancements to our solution that result in significant revenue or other benefits in the near future, if at all.

● We plan to eventually introduce improved as well as new products and services as working capital and cash flow may permit, and our business will be harmed if we are not successful in selling these improved as well as new products and services to our existing customers and new customers.

● To the extent we experience management turnover, this will create uncertainties and could harm our business.

● If we lose our key personnel or are unable to attract and retain additional personnel, our business could be harmed.

● Any acquisitions we make may dilute your equity or require a significant amount of our available cash and may not be scientifically or commercially successful. We may not realize the benefits of these acquisitions.

● A material breach in security relating to the Company's information systems and regulation related to such breaches, cyber-attacks, or other disruptions could adversely affect the Company, expose us to liability and affect our business and reputation.

● Our business involves risks and uncertainties that may not be covered by our insurance.

● We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing military conflict between Russia and Ukraine, Israel and Iran and the greater conflict in the Middle East. Our business, financial condition and results of operations may be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine, Iran or any other geopolitical tensions.

● We are subject to governmental export and import controls that could subject us to liability in the event of non-compliance or impair our ability to compete in international markets.

● We may fail to realize the anticipated benefits of our acquisition of Psyga, which could materially and adversely affect our business, financial condition, and results of operations.

● The acquisition of Psyga Bio represents a transformative change to our business profile that subjects us to entirely new risks and uncertainties.

● The issuance of shares or other consideration in connection with the Psyga Bio acquisition may result in significant dilution to our existing shareholders.

● Psyga's product candidates are in early stages of development, have not been approved by any regulatory authority, and may never receive regulatory approval or become commercially viable.

● The FDA regulatory pathway for psychedelic compounds is complex, evolving, and uncertain, and we may face novel regulatory challenges that delay or prevent approval of our product candidates.

● Clinical trials of psychedelic compounds face unique methodological challenges that may compromise trial results or delay development timelines.

● We rely on third-party contract research organizations and clinical trial sites to conduct our clinical trials, and their failure to perform satisfactorily could delay or compromise our clinical development programs.

● Regulatory and manufacturing complexities of drug-device combination products may delay or halt our clinical development programs.

● Negative results, therapeutic failures, or ethical breaches from external clinical trials or studies conducted by third parties could cast a negative shadow over our entire class of therapies.

● Scientific uncertainty surrounding next-generation non-hallucinogenic compounds remains unproven and could lead to clinical failure.

● Misconduct, fraudulent, or illegal activity by our employees or partners could result in the immediate revocation of regulatory licenses and civil or criminal penalties.

● We may rely on in-licensed delivery, formulation, or manufacturing technologies, and any failure to comply with our material obligations could result in the loss of valuable license rights.

● Manufacturing nature-derived and botanical psychedelics presents unique Chemistry, Manufacturing, and Controls (CMC) risks and batch-to-batch consistency challenges.

● Evolving social media use by patients in ongoing blinded clinical trials could lead to a failure to identify and report applicable adverse event obligations.

● Failure to comply with environmental, health, and safety laws and regulations regarding hazardous materials could subject us to significant fines or penalties.

● State-by-state variation in controlled substance laws may restrict or prevent commercialization of our products in certain jurisdictions, even if we obtain federal approval.

● The manufacture, storage, and distribution of controlled substances require specialized facilities and licenses, and any disruption in our controlled substance supply chain could materially harm our business.

● Uncertainty regarding pricing, insurance coverage, and reimbursement for psychedelic-assisted therapies could significantly limit patient access and our revenue potential.

● Availability of raw materials and chemical precursors for psychedelic compounds may be limited, and supply disruptions could delay our clinical programs.

● Novel formulations of psychedelic compounds may present unique quality control and manufacturing challenges that could delay development or commercialization.

● The legal and regulatory landscape for psychedelic substances is rapidly evolving and subject to significant uncertainty, and changes in applicable laws could materially affect our business, either positively or negatively.

● We may face product liability claims related to the administration of psychedelic compounds, and our insurance coverage may be insufficient to cover all potential claims.

● The psychedelic therapeutics sector is characterized by rapidly proliferating patent filings, creating a complex and uncertain intellectual property landscape that may result in costly disputes.

● If we are unable to adequately protect our intellectual property, third parties may be able to use our technology, which could adversely affect our ability to compete in the market.

● Litigation or third-party claims of intellectual property infringement could require us to spend substantial time, money and other resources defending such claims and adversely affect our ability to develop and commercialize our products.

● We will need additional capital in the future. If additional capital is not available, we may not be able to continue to operate our business pursuant to our business plan or we may have to discontinue our operations entirely.

● The ADSs are traded in small volumes, limiting ability to sell ADSs that represent ordinary shares at a desirable price, if at all.

● Our stock price can be volatile, which increases the risk of litigation and may result in a significant decline in the value of your investment.

● Future issuances or sales of the ADSs could depress the market for the ADSs.

● Our ordinary shares and ADSs trade on two different markets, and this may result in price variations and regulatory compliance issues.

● Holders of our ordinary shares or ADSs who are U.S. citizens or residents may be required to pay additional income taxes.

● As a foreign private issuer, we are permitted to follow certain home country corporate governance practices instead of applicable SEC and Nasdaq requirements, which may result in less protection than is accorded to investors under rules applicable to domestic issuers.

● ADS holders are not shareholders and do not have shareholder rights.

● There are circumstances where it may be unlawful or impractical to make distributions to the holders of the ADSs.

● Shareholders' percentage ownership in us may be diluted by future issuances of share capital, which could reduce their influence over matters on which shareholders vote.

● We may fail to regain compliance with the continued listing standards of The Nasdaq Capital Market and a delisting of our ADSs could make it more difficult for investors to sell their shares

● We conduct our operations in Israel and therefore our results may be adversely affected by political, economic and military instability in Israel and its region.

● Our results of operations may be adversely affected by inflation and foreign currency fluctuations.

● Provisions of Israeli law may delay, prevent or otherwise impede a merger with, or an acquisition of, our company, which could prevent a change of control, even when the terms of such a transaction are favorable to us and our shareholders.

● It may be difficult to enforce a U.S. judgment against us, our officers or our directors or to assert U.S. securities law claims in Israel.

● Under applicable U.S. and Israeli law, we may not be able to enforce covenants not to compete and therefore may be unable to prevent our competitors from benefiting from the expertise of some of our former employees. In addition, employees may be entitled to seek compensation for their inventions irrespective of their agreements with us, which in turn could impact our future profitability.

● Your rights and responsibilities as a shareholder will be governed by Israeli law which may differ in some respects from the rights and responsibilities of shareholders of U.S. companies.

***<u>Risks Related to Our Financial Position and Capital Requirements</u>***

***Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our technologies or product candidates.***

We may seek additional capital through a combination of private and public equity offerings, debt financing, strategic partnerships and alliances, and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of existing shareholders will be diluted, and the terms may include liquidation or other preferences that adversely affect shareholder rights. Debt financing, if available, may involve agreements that include covenants limiting or restricting our ability to take certain actions, such as incurring debt, making capital expenditures or declaring dividends. If we raise additional funds through strategic partnerships and alliances and licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies or product candidates, or grant licenses on terms that are not favorable to us. If we are unable to raise additional funds through equity or debt financing when needed, we may be required to delay, limit, reduce or terminate our product development or commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

***Management has concluded that there is substantial doubt about our ability to continue as a going concern which could prevent us from obtaining new financing on reasonable terms or at all.***

 ****

We have incurred significant losses and negative cash flows from operations and have an accumulated deficit that raises substantial doubt about its ability to continue as a going concern. Our audited consolidated financial statements for the year ended December 31, 2025 were prepared under the assumption that we would continue our operations as a going concern. Our independent registered public accounting firm has included a "going concern" explanatory paragraph in its report on our financial statements for the year ended December 31, 2025. If we are unable to improve our liquidity position, by, among other things, raising capital through public or private offerings or reducing our expenses, we may exhaust our cash resources and will be unable to continue our operations. If we cannot continue as a viable entity, our shareholders would likely lose most or all of their investment in us.

 **

***<u>Risks Related to our Business and Industry</u>***

 

***Psyga Bio's limited operating history makes it difficult to evaluate its future prospects and the risks and challenges we may encounter. We expect to continue to incur losses for the foreseeable future, and we may never achieve or maintain profitability.***

 ****

Psyga Bio Ltd. commenced its operations only a few years ago. Accordingly, Psyga Bio has a limited operating history in a rapidly evolving industry that may not develop in a manner favorable to its business. As a result of Psyga Bio's limited operating history, our ability to forecast Psyga Bio's and our future results of operations is limited and subject to a number of uncertainties. For the year ended December 31, 2025, Psyga Bio has not generated any revenue.

We have encountered and expect to continue to encounter risks and uncertainties frequently experienced by growing companies in rapidly evolving industries, such as the risks and uncertainties described herein. Accordingly, we may be unable to prepare accurate internal financial forecasts or replace the anticipated revenue that we do not receive as a result of delays arising from these factors, and our results of operations in future reporting periods may be below the expectations of investors or analysts. If we do not address these risks successfully, our results of operations could differ materially from our estimates and forecasts or the expectations of investors or analysts, causing our business to suffer and the market price of our ADSs to decline.

Our expenses may continue to exceed revenues in the foreseeable future and we may not achieve profitability. If we fail to achieve profitability, or if the time required to achieve profitability is longer than we anticipate, we may not be able to expand or continue our business, and the value of our ADSs could be negatively impacted. Our ability to achieve or sustain profitability is based on numerous factors, many of which are beyond our control. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis.

 ****

Furthermore, our historical performance may not be indicative of our future growth or financial results. We cannot assure you that we will be able to grow at the same rate as we did in the past or avoid any decline in the future. Our growth may slow down or become negative, and revenues may decline for a number of possible reasons, some of which are beyond our control, including decreasing user spending, increasing competition, declining growth of our overall market or industry, the emergence of alternative business models, and changes in rules, regulations, government policies or general economic conditions. In addition, our growth pace may also be impacted by our strategic shift of focus on sustainable growth. It is difficult to evaluate our prospects as we may not have sufficient experience in addressing the risks to which companies operating in rapidly evolving markets may be exposed. If our growth rate declines, investors' perceptions of our business and prospects may be materially and adversely affected, and the market price of our ADSs could decline. You should consider our prospects in light of the risks and uncertainties that companies with a limited operating history may encounter.

 ****

***We are engaged in on-going development of our current and future products. Our research and development efforts may not produce successful products or enhancements to our solution that result in significant revenue or other benefits in the near future, if at all.***

We operate in a fast-evolving industry that demands continuous technological advancements. We regularly update and enhance our offerings to remain competitive and expect to continue to dedicate significant financial and other resources to our research and development efforts in order to continuously evolve the development of our products and maintain our competitive position. As a result, our business is significantly dependent on our ability to successfully complete the development of our next- generation products. 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 successful development of our products, 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 materially and adversely affected.

***We plan to eventually introduce improved as well as new products and services as working capital and cash flow may permit, and our business will be harmed if we are not successful in selling these improved as well as new products and services to our existing customers and new customers.***

 ****

While we plan to eventually introduce improved as well as new products and services as working capital and cash flow may permit, we do not yet know whether any improved or new products and services will be well received and broadly adopted by the market or whether sales will be sufficient for us to offset the costs of development, implementation, support, operation, sales and marketing. Broad-based implementation of any improved or new products and services may require more support than we anticipate, which would further increase our expenses. Additionally, new products and services may subject us to additional risks of product performance, customer complaints and litigation. If sales of any improved or new products and services are lower than we expect, or if we expend additional resources to correct unforeseen problems and develop modifications, our operating margins are likely to decrease.

 ****

 ****

***To the extent we experience management turnover, this will create uncertainties and could harm our business.***

Changes to strategic or operating goals, which can often times occur with the appointment of new executives, can create uncertainty, may negatively impact our ability to execute quickly and effectively, and may ultimately be unsuccessful. In addition, executive leadership transition periods are often difficult as the new executives gain detailed knowledge of our operations, and friction can result from changes in strategy and management style. Management turnover inherently causes some loss of institutional knowledge, which can negatively affect strategy and execution. If we do not integrate new executives successfully and in a timely manner, we may be unable to manage and grow our business, and our financial condition and profitability may suffer as a result. Competition for top management is high, and it may take months to find a candidate that meets our requirements. If we are unable to attract and retain qualified management personnel, our business could suffer.

 ****

***If we lose our key personnel or are unable to attract and retain additional personnel, our business could be harmed.***

We depend on the continuing services of our senior management team and other key personnel, and if we lose a member of our senior management or are unable to successfully retain, recruit and train key personnel, our ability to develop and market our products and services could be harmed. Our success depends upon the continuing services of members of our senior management team and various other key personnel. As of the date hereof, we have a full-time CEO and part-time CFO. Our subsidiaries have 3 full-time employees. To successfully develop our company and its products we need to be able to retain highly skilled personnel. The engagement and/or retention of their services cannot be guaranteed. Our failure to retain and/or recruit such professionals might impair our performance and materially affect our technological and product development capabilities and our product marketing ability.

***Our Chief Financial Officer is not required to work exclusively for us, which could materially and adversely affect us and our business.***

Niv Segal, our Chief Financial Officer, is not required to work exclusively for us and does not devote all of his time to our operations. Since serving as our Chief Financial Officer, he has devoted approximately 9 hours a week of his time to the operation of our business. He also serves as a Partner of the accounting firm Optivail Finance. It is possible that his pursuit of other activities may slow our operations and impact our ability to timely complete our financial statements.

***Any acquisitions we make may dilute your equity or require a significant amount of our available cash and may not be scientifically or commercially successful. We may not realize the benefits of these acquisitions.***

During 2024 we acquired The Social Proxy and in June 2026 we completed the acquisition of Psyga Bio, and as part of our business strategy, we may effect additional acquisitions to obtain additional businesses, products, technologies, capabilities and personnel. If we complete one or more such transactions in which the consideration includes our ordinary shares or other securities, your equity may be significantly diluted. If we complete one or more such transactions in which the consideration includes cash, we may be required to use a substantial portion of our available cash.

Acquisitions also involve a number of operational risks, including:

● difficulty and expense of assimilating the operations, technology, intellectual property and products of the acquired company, or integrating new personnel of the new business;

● our inability to attract and retain management and key personnel necessary to conduct the business;

● our inability to maintain relationships with key third parties, such as alliance partners, associated with the business;

● exposure to legal claims for activities of the business prior to the acquisition;

● the diversion of our management's attention from our other drug development businesses;

● risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing technologies;

● our inability to generate revenue from acquired company's technologies or products sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs; and

● the potential impairment of goodwill, adversely affecting our reported results of operations.

All of the foregoing risks may be magnified as the cost, size or complexity of an acquisition or acquired company increases, or where the acquired company's products, market or business are materially different from ours, or where more than one integration is occurring simultaneously or within a concentrated period of time. We may also be required to pay third parties substantial transaction fees, in the form of cash or ordinary shares, in connection with such transactions. For those and other reasons, we may ultimately fail to consummate an acquisition, even if we announce the intended acquisition.

In addition, we may require significant financing to complete an acquisition or investment, whether through bank loans, raising equity or debt or otherwise. We cannot assure you that such financing options will be available to us on reasonable terms, or at all. If we are not able to obtain such necessary financing, it could have an impact on our ability to consummate a substantial acquisition or investment and execute a future growth strategy. Alternatively, we may issue a significant number of shares as consideration for an acquisition, which would have a dilutive effect on our existing shareholders. For example, for the acquisition of Psyga Bio we agreed, as part of the consideration, to issue to the stockholders of Psyga Bio 1,371,265 unregistered American Depositary Shares. Furthermore, if we undertake acquisitions, we may incur large one-time expenses and acquire intangible assets that could result in significant future amortization expenses.

***A material breach in security relating to the Company's information systems and regulation related to such breaches, cyber-attacks, or other disruptions could adversely affect the Company, expose us to liability and affect our business and reputation.***

Information security risks have generally increased in recent years, in part because of the proliferation of new technologies and the use of the Internet, and the increased sophistication and activity of organized crime, hackers, terrorists, activists, cybercriminals and other external parties, some of which may be linked to terrorist organizations or hostile foreign governments. Cybersecurity attacks are becoming more sophisticated and include malicious software, ransomware, attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions in critical systems, unauthorized release of confidential or otherwise protected information and corruption of data, substantially damaging the Company's reputation. Any person who circumvents the security measures could steal proprietary or confidential customer information or cause interruptions in the Company's operations.

***Our business involves risks and uncertainties that may not be covered by our insurance.***

We maintain or intend to obtain insurance policies to cover certain business risks, including cybersecurity threats, data breaches, regulatory compliance liabilities, and operational disruptions. However, our insurance coverage may not adequately protect us against all potential losses. Cybersecurity threats continue to evolve, and insurance providers are increasingly imposing exclusions, higher deductibles, and restrictive terms, making it challenging to secure comprehensive coverage at reasonable rates. If we experience a significant cyberattack, data breach, or regulatory enforcement action that is not sufficiently covered by our insurance policies, we may be required to bear substantial costs, which could materially affect our financial condition and results of operations. If any of these vendors experience security breaches or fail to meet regulatory compliance obligations, we could be exposed to legal claims and liabilities that may not be fully covered by our insurance. In addition, the unpredictability of the cyber insurance market may result in coverage limitations, unexpected policy exclusions, or increased premiums, further impacting our ability to manage risk effectively. If we are unable to maintain sufficient insurance coverage or if insurers deny claims, our business, reputation, and financial position could be adversely affected.

***We are currently operating in a period of economic uncertainty and capital markets disruption, which has been significantly impacted by geopolitical instability due to the ongoing military conflict between Russia and Ukraine, Israel and Iran and the greater conflict in the Middle East. Our business, financial condition and results of operations may be materially adversely affected by any negative impact on the global economy and capital markets resulting from the conflict in Ukraine, Iran or any other geopolitical tensions.***

U.S. and global markets are experiencing volatility and disruption following the escalation of geopolitical tensions and the start of the military conflict between Russia and Ukraine. On February 24, 2022, a full-scale military invasion of Ukraine by Russian troops was reported. Although the length and impact of the ongoing military conflict is highly unpredictable, the conflict in Ukraine could lead to market disruptions, including significant volatility in credit and capital markets.

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Additionally, Russia's prior annexation of Crimea, recent recognition of two separatist republics in the Donetsk and Luhansk regions of Ukraine and subsequent military interventions in Ukraine have led to sanctions and other penalties being levied by the United States, European Union and other countries against Russia, Belarus, the Crimea Region of Ukraine, the so-called Donetsk People's Republic, and the so-called Luhansk People's Republic, including agreement to remove certain Russian financial institutions from the Society for Worldwide Interbank Financial Telecommunication, or SWIFT, payment system. Additional potential sanctions and penalties have also been proposed and/or threatened. Russian military actions and the resulting sanctions could adversely affect the global economy and financial markets.

Furthermore, on April 2, 2025, President Trump announced that the United States would impose a 10% tariff on all countries, effective on April 5, 2025, and an individualized reciprocal higher tariff on countries with which the United States has the largest trade deficits. These policies have adversely affected the global economy and financial markets, such as significant declines in the global stock markets. We believe that such tariffs would not have a material imminent impact on our business operations, but as relevant policies are rapidly evolving, it may be difficult to evaluate their potential future impacts. Geopolitical conflicts like this may also lead to volatility in financial markets, fluctuations in currency exchange rates, increased procurement costs and declines in trading prices of the ADSs. In extreme cases, such conflicts could result in economic downturns that materially and adversely impact our operations.

In addition, the significant escalation in geopolitical tensions and direct military confrontations between the United States, Israel and Iran has further heightened instability in the Middle East. The ongoing conflict, including direct missile strikes, drone attacks, and activities by regional proxy groups, has contributed to global market uncertainty and threatens critical trade infrastructure. Specifically, these tensions have caused disruptions to key maritime shipping lanes in the Red Sea and the Strait of Hormuz, leading to increased freight and insurance costs, supply chain bottlenecks, and heightened volatility in global energy markets, particularly oil prices. Any continued escalation or prolonged conflict in the region could result in expanded international sanctions, broader macroeconomic downturns, and further disruptions to global capital markets, any of which could materially and adversely affect our business, financial condition, and results of operations.

Any of the abovementioned factors could affect our business, prospects, financial condition, and operating results. The extent and duration of the military action, sanctions and resulting market disruptions are impossible to predict, but could be substantial. Any such disruptions may also magnify the impact of other risks described in this document.

***We are subject to governmental export and import controls that could subject us to liability in the event of non-compliance or impair our ability to compete in international markets.***

We are subject to U.S. and Israeli export control and economic sanctions laws, which prohibit the delivery and sale of certain products to embargoed or sanctioned countries, governments, and persons. Any change in export or import regulations, economic sanctions or related legislation, shift in the enforcement or scope of existing regulations, or change in the countries, governments, persons or technologies targeted by such regulations, could require export licenses or result in decreased use of our products by, or in our decreased ability to export or sell our products to, existing or potential customers with international operations or cessation of export or sale of our products in sanctioned countries or to sanctioned persons. Any decreased use of our products or limitation on our ability to export or sell our products would likely adversely affect our business, financial condition, and results of operations

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***Our relationships with business partners in existing and new international markets may subject us to an increased risk of litigation.***

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We heavily rely on third-party business partners, including distributors, joint development collaborators, and acquisition targets. These international relationships, particularly those involving joint product development or corporate acquisitions to accelerate our growth, are governed by complex agreements subject to diverse and unfamiliar legal systems and regulatory frameworks. Disputes may frequently arise regarding contract interpretation, intellectual property ownership in development partnerships, post-closing indemnification claims or undisclosed liabilities in acquisitions, or compliance with local laws. Resolving these conflicts through litigation or arbitration, particularly in foreign jurisdictions, can be exceptionally costly, time-consuming, and unpredictable. Any significant legal dispute arising from our growth strategies, development alliances, or acquisition activities could distract our management, result in substantial legal liabilities, harm our reputation, and severely disrupt our global expansion.

**Risks Related to the Acquisition and Integration of Psyga Bio**

***We may fail to realize the anticipated benefits of our acquisition of Psyga, which could materially and adversely affect our business, financial condition, and results of operations.***

In April 2026, we entered into a Share Purchase Agreement to acquire the outstanding shares of Psyga, a psychedelic therapeutics company. The acquisition was closed in June 2026. The integration of Psyga's operations and personnel into our existing business involves significant challenges, including retention of key scientific and management personnel, integration of research programs, establishment of appropriate regulatory compliance frameworks, and alignment of corporate cultures. Our management team has limited experience in psychedelic drug development, and the integration process may divert management attention from other business operations. If we fail to integrate Psyga Bio operations or to realize the anticipated benefits from the Psyga Bio transaction this could materially and adversely affect our business, financial condition, and results of operations.

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***The acquisition of Psyga Bio represents a transformative change to our business profile that subjects us to entirely new risks and uncertainties.***

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Prior to the acquisition of Psyga Bio, our operations consisted primarily of data collection services through The Social Proxy and the management of legacy pharmaceutical assets that have since been sublicensed. The acquisition of Psyga Bio fundamentally changes our business profile by causing us to enter the psychedelic therapeutics industry, a sector in which we have no prior operating history. This transformation subjects us to a new set of risks, including those inherent in early-stage drug development, controlled substance regulation, and the commercialization of novel psychiatric treatments. Investors who acquired our shares based on our prior business profile may not wish to remain invested in a company primarily focused on psychedelic therapeutics.

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***We may be required to record significant impairment charges related to goodwill and intangible assets acquired in connection with the Psyga Bio acquisition.***

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Upon consummation of the Acquisition, we expect to record significant goodwill and intangible assets on our consolidated balance sheet. These assets are subject to periodic impairment testing and may become impaired if Psyga Bio's product candidates fail in clinical development, if regulatory pathways prove more challenging than anticipated, or if market conditions for psychedelic therapeutics deteriorate. Any impairment charges could have a material adverse effect on our financial condition and results of operations.

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***The issuance of shares or other consideration in connection with the Psyga Bio acquisition may result in significant dilution to our existing shareholders.***

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The acquisition consideration for Psyga Bio may include the issuance of a substantial number of our ordinary shares to the sellers of Psyga Bio, which would dilute the ownership interest of our existing shareholders. In addition, we may be required to issue additional shares in connection with earn-out provisions, milestone payments, or future financing transactions necessary to fund Psyga's clinical development programs. Such dilution could adversely affect the market price of our ordinary shares and reduce earnings per share.

**Risks Related to Clinical Development and Regulatory Approval**

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***Psyga's product candidates are in early stages of development, have not been approved by any regulatory authority, and may never receive regulatory approval or become commercially viable.***

Following the Acquisition, our psychedelic product candidates will be in early stages of clinical or preclinical development. Drug development is a highly uncertain process, and there is no guarantee that any of our product candidates will successfully complete clinical trials, obtain regulatory approval, or achieve commercial viability. The history of pharmaceutical development includes numerous examples of product candidates that produced promising preclinical or early clinical results but ultimately failed to demonstrate sufficient safety or efficacy in later-stage trials. We cannot predict whether our product candidates will encounter similar challenges.

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***The drug development process is lengthy, expensive, and inherently uncertain, and we may encounter substantial delays or fail to complete development of our product candidates.***

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The development of pharmaceutical products, from preclinical testing through regulatory approval, typically takes many years and requires the expenditure of substantial resources. Each stage of development presents unique risks of failure, and product candidates can fail at any stage for a variety of reasons, including unfavorable safety or efficacy data, manufacturing difficulties, and changes in the regulatory landscape. We may experience significant delays in our clinical development programs due to difficulties in enrolling patients, obtaining regulatory clearances, manufacturing clinical supplies at scale, or managing our controlled substance obligations. Any such delays would increase our costs and may harm our competitive position.

***The FDA regulatory pathway for psychedelic compounds is complex, evolving, and uncertain, and we may face novel regulatory challenges that delay or prevent approval of our product candidates.***

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Psychedelic therapeutics represent a relatively novel class of compounds for the FDA, and the regulatory pathway for their approval is still evolving. The FDA may require us to conduct additional or different types of clinical trials than those typically required for conventional pharmaceutical products, including studies evaluating the psychological effects of our compounds, the adequacy of therapist training protocols, and the safety of supervised treatment settings. The FDA may also impose risk evaluation and mitigation strategies ("REMS") or other post-marketing requirements that significantly limit the commercial potential of our product candidates. Changes in FDA leadership, policies, or guidance applicable to psychedelic compounds could further complicate or delay the regulatory approval process.

***Clinical trials of psychedelic compounds face unique methodological challenges that may compromise trial results or delay development timelines.***

Clinical trials of psychedelic compounds present unique challenges not typically encountered in conventional drug development. The acute psychoactive effects of psychedelic substances make it difficult to maintain blinding in controlled trials, as both patients and investigators may be able to identify active treatment from placebo. This functional unblinding may introduce expectation bias that confounds efficacy results. Additionally, clinical trials of psychedelic-assisted therapy must incorporate standardized therapist protocols, which introduces variability and complicates the assessment of whether observed effects are attributable to the compound, the therapy, or the combination. Regulatory authorities may require novel trial designs or additional confirmatory studies to address these methodological challenges.

***Drug development for central nervous system disorders is particularly difficult and has a higher rate of failure compared to other therapeutic areas.***

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The development of drugs for central nervous system ("CNS") disorders, including the psychiatric indications targeted by psychedelic compounds, is associated with higher clinical failure rates compared to other therapeutic areas. CNS drug candidates frequently fail in Phase 2 or Phase 3 clinical trials due to the heterogeneity of psychiatric patient populations, the high placebo response rates observed in psychiatric trials, the difficulty of objectively measuring treatment outcomes for mental health conditions, and the potential for unexpected neurological adverse events. These inherent challenges in CNS drug development increase the risk that our product candidates will not achieve clinical success.

***We rely on third-party contract research organizations and clinical trial sites to conduct our clinical trials, and their failure to perform satisfactorily could delay or compromise our clinical development programs.***

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We expect to rely on third-party contract research organizations ("CROs"), academic institutions, and clinical trial sites to conduct and monitor our clinical trials. Our reliance on these third parties means we will have limited control over the timing, cost, and quality of our clinical programs. If any of our CROs or clinical sites fail to perform their obligations in a timely and competent manner, fail to comply with good clinical practice ("GCP") requirements, or experience operational difficulties, our clinical trials may be delayed, compromised, or terminated. Finding CROs and clinical sites with experience in conducting trials of controlled substances, particularly Schedule I compounds, presents additional challenges and may limit the number of sites available for our programs.

***Our pipeline candidates may include ultra-potent, short-acting psychedelic compounds that present significant safety and tolerability risks.***

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Some of our pipeline candidates may include ultra-potent, short-acting psychedelic compounds designed to induce therapeutic effects within minutes. While a shorter duration may be commercially attractive, the ultra-rapid onset of intense psychoactive effects (often occurring within seconds) can trigger acute psychological distress, severe panic, existential terror, or rapid fluctuations in cardiovascular and respiratory metrics. This sudden onset may require emergency medical interventions and mandate that administration occurs exclusively in highly specialized acute-care settings, which would severely restrict patient accessibility and market adoption.

***Regulatory and manufacturing complexities of drug-device combination products may delay or halt our clinical development programs.***

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If we utilize novel administration routes, such as proprietary vaporization devices, inhalers, or targeted intranasal delivery systems, our product candidates may be regulated as "Combination Products" by regulatory authorities. Developing a combination product involves highly complex regulatory pathways, requiring us to demonstrate not only the safety and efficacy of the drug but also the reliability, accuracy, and usability of the delivery device. If the third-party device malfunctions, fails to deliver consistent dosing, or encounters its own regulatory hurdles, our entire clinical development program could be delayed or halted.

***Negative results, therapeutic failures, or ethical breaches from external clinical trials or studies conducted by third parties could cast a negative shadow over our entire class of therapies.***

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The psychedelic pharmaceutical industry is subject to intense public and regulatory scrutiny. If other biotechnology companies or academic institutions conducting clinical trials with psychedelic compounds experience severe adverse events, therapeutic failures, ethical breaches, or patient harm, it could cast a negative shadow over the entire class of therapies. Such controversies could lead to heightened regulatory restrictions and diminished investor confidence.

***Changes in our formulation or delivery technology components could cause our product candidates to perform differently and require expensive, time-consuming bridging studies.***

Changes in our formulation or components of our product candidates could cause them to perform differently or affect the results of clinical trials. Modifying our formulation after initial phases of development may require expensive and time-consuming pharmacokinetic bridging studies.

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***Scientific uncertainty surrounding next-generation non-hallucinogenic compounds remains unproven and could lead to clinical failure.***

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As part of our development strategy, we may explore next-generation compounds designed to provide the therapeutic benefits of psychedelic compounds without inducing hallucinogenic effects. The scientific premise that therapeutic efficacy can be uncoupled from the subjective psychedelic experience remains unproven and could lead to clinical failure.

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***Misconduct, fraudulent, or illegal activity by our employees or partners could result in the immediate revocation of regulatory licenses and civil or criminal penalties.***

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Given the strict legal framework surrounding controlled substances, our operations are highly sensitive to misconduct. We are exposed to the risk that our employees or partners may engage in fraudulent or illegal activities, including the theft or diversion of controlled substances. Such misconduct could result in the immediate revocation of our regulatory licenses, civil and criminal penalties, and the halt of our clinical trials.

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***Unmonitored off-label use of our approved products by physicians could lead to severe adverse events and trigger regulatory crackdowns or market withdrawal.***

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Once a product candidate is approved for a specific indication, physicians may legally prescribe it for other unapproved mental health conditions ("off-label use"). Given the potent nature of psychedelic compounds, unmonitored off-label use could lead to severe adverse events in patient populations that were not studied in our clinical trials. Such events could trigger regulatory crackdowns, strict black box warnings, or the withdrawal of our approved product from the market.

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***We may rely on in-licensed delivery, formulation, or manufacturing technologies, and any failure to comply with our material obligations could result in the loss of valuable license rights.***

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We may enter into exclusive licensing agreements with third parties to utilize specific drug delivery, formulation, or manufacturing technologies critical to our product candidates. If we fail to comply with our material obligations under these agreements, we could lose valuable license rights.

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***Trademarks we obtain may be infringed, successfully challenged, or rejected if our products remain restricted under controlled substance regulations.***

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Any trademarks we may obtain may be infringed or successfully challenged. Under certain laws, registration of a trademark requires lawful use of the mark in commerce, which may be complicated or rejected if our products remain restricted under controlled substance regulations.

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***Manufacturing nature-derived and botanical psychedelics presents unique Chemistry, Manufacturing, and Controls (CMC) risks and batch-to-batch consistency challenges.***

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If our development strategy includes nature-derived or botanical psychedelic compounds (such as naturally extracted psilocybin or other alkaloids) rather than fully synthetic molecules, we face unique Chemistry, Manufacturing, and Controls (CMC) risks. Natural raw materials are inherently variable due to environmental, agricultural, and extraction factors. Demonstrating strict batch-to-batch consistency in purity, potency, and stability to satisfy regulatory requirements is exceptionally difficult.

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***Adoption of a decentralized or hub-and-spoke business model makes our success partially dependent on affiliated entities over which we have limited control.***

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If we adopt a decentralized or "hub-and-spoke" business model involving investments in other biotechnology companies or subsidiaries, our success will be partially dependent on the performance of these affiliated entities, over which we may have limited control.

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***Evolving social media use by patients in ongoing blinded clinical trials could lead to a failure to identify and report applicable adverse event obligations.***

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Social media practices in the biopharmaceutical industry continue to evolve. Patients may use social media channels to comment on their experience in an ongoing blinded clinical trial, and we may fail to identify the comment and comply with applicable adverse event reporting obligations.

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***Failure to comply with environmental, health, and safety laws and regulations regarding hazardous materials could subject us to significant fines or penalties.***

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If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties due to the storage, use, and disposal of hazardous chemical or biological materials.

**Risks Related to Controlled Substance Regulation**

***Our product candidates contain or are derived from psychedelic compounds classified as Schedule I controlled substances under the U.S. Controlled Substances Act, subjecting us to extensive DEA regulation and potential criminal liability for non-compliance.***

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Psychedelic compounds such as psilocybin, dimethyltryptamine ("DMT"), and 5-methoxy-N,N-dimethyltryptamine ("5-MeO-DMT") are classified as Schedule I controlled substances under the U.S. Controlled Substances Act (the "CSA"). Schedule I substances are deemed to have a high potential for abuse, no currently accepted medical use, and a lack of accepted safety for use under medical supervision. As a result, our research, manufacturing, distribution, and handling of these compounds are subject to extensive regulation by the U.S. Drug Enforcement Administration (the "DEA"), including strict requirements regarding registration, security, recordkeeping, reporting, storage, distribution, and disposal. Non-compliance with DEA regulations can result in civil penalties, criminal prosecution, imprisonment, and revocation of DEA registrations. Any failure by us or our partners to maintain compliance with applicable controlled substance laws could materially disrupt our operations and expose us to significant legal liability.

***Even if we obtain FDA approval for a product candidate containing a Schedule I controlled substance, we will be unable to commercialize it until the DEA reschedules or takes other administrative action, and there is no assurance that such rescheduling will occur in a timely manner or at all.***

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Under the CSA, a drug product containing a Schedule I substance cannot be legally marketed in the United States, even if it has received FDA approval, until the DEA reschedules the substance to a lower schedule (typically Schedule II through V) that permits commercial distribution with a prescription. The DEA rescheduling process is a separate administrative proceeding from FDA approval and involves its own timeline, public comment period, and regulatory requirements. There is no guarantee that the DEA will reschedule any compound contained in our product candidates, or that it will do so within a timeframe that aligns with our commercialization plans. Any delay in DEA rescheduling would prevent us from generating revenue from an approved product and could undermine investor confidence in our business.

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***State-by-state variation in controlled substance laws may restrict or prevent commercialization of our products in certain jurisdictions, even if we obtain federal approval.***

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In addition to federal controlled substance regulations, each U.S. state maintains its own controlled substance schedules and regulations. Even if the DEA reschedules a psychedelic compound at the federal level, individual states are not required to follow suit and may maintain their own Schedule I classification or impose additional restrictions on the prescribing, dispensing, or administration of psychedelic therapeutics. This patchwork of state-level regulation could significantly limit our addressable market, increase compliance costs, and create uncertainty for healthcare providers seeking to administer our products. We may need to pursue state-by-state regulatory approvals or legislative changes to enable full commercial access, which would be time-consuming and costly.

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***International restrictions on controlled substances may limit our ability to conduct research, manufacture product candidates, and commercialize products outside the United States.***

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Psychedelic compounds are subject to international regulation under the United Nations Convention on Psychotropic Substances of 1971 and the domestic laws of individual countries. Many countries classify psilocybin, DMT, 5-MeO-DMT, and related compounds as prohibited or strictly controlled substances, which may restrict our ability to conduct clinical trials, establish manufacturing operations, or commercialize products in those jurisdictions. International regulatory requirements vary significantly, and obtaining the necessary authorizations to work with controlled substances in multiple countries is complex, time-consuming, and subject to political and regulatory uncertainty. Our inability to operate in certain international markets could limit our growth opportunities and competitive position.

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***The manufacture, storage, and distribution of controlled substances require specialized facilities and licenses, and any disruption in our controlled substance supply chain could materially harm our business.***

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The manufacture of pharmaceutical products containing Schedule I controlled substances requires DEA-registered facilities that meet stringent security, storage, and recordkeeping requirements. The number of contract manufacturers licensed to handle Schedule I compounds is extremely limited, and we may face difficulties in securing manufacturing capacity at reasonable cost. Any disruption in our controlled substance supply chain—whether due to regulatory action, security breaches, loss of DEA registration, or manufacturing failures—could delay our clinical programs, prevent us from meeting commercial demand, and materially harm our business. Additionally, DEA annual production quotas for Schedule I substances may limit the quantities we are able to manufacture for clinical trials or commercial sale.

**Risks Related to Therapist and Treatment Infrastructure Requirements**

***Our psychedelic product candidates may require administration by trained healthcare practitioners in specialized clinical settings, and a shortage of qualified practitioners or appropriate facilities could limit the commercial potential of our products.***

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Many psychedelic-assisted therapies under development by companies in our sector require supervised administration by specially trained healthcare practitioners in clinical settings equipped to manage the acute psychological effects of these compounds. These sessions may last several hours and require one-on-one or small-group supervision by licensed therapists, psychiatrists, or other qualified professionals. The pool of healthcare practitioners trained in psychedelic-assisted therapy is currently very limited, and establishing adequate training programs, certification standards, and supervision protocols will require significant investment and time. If an insufficient number of qualified practitioners are available to administer our products, or if the required clinical infrastructure is not developed at scale, our ability to commercialize our product candidates and achieve meaningful market penetration will be materially constrained.

***The supervised therapy model for psychedelic-assisted treatments presents significant scalability challenges that may limit revenue potential relative to conventional pharmaceutical products.***

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Unlike conventional oral medications that patients can self-administer at home, psychedelic-assisted therapies typically require patients to attend in-person treatment sessions at specialized facilities under the supervision of trained professionals. This supervised therapy model inherently limits the number of patients who can be treated per practitioner per day, increases the per-treatment cost relative to conventional medications, and may create logistical barriers for patients who lack access to treatment centers. These scalability constraints could limit the peak revenue potential of our products relative to conventional psychiatric medications and may reduce the willingness of payors to provide coverage or reimbursement at levels sufficient to support our business model.

***If regulatory authorities require specific therapist training protocols or facility certifications as a condition of product approval, the commercialization of our products could be significantly delayed.***

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The FDA or other regulatory authorities may impose requirements regarding the training and certification of healthcare practitioners authorized to administer our psychedelic product candidates, as well as standards for the clinical facilities in which treatments are provided. If such requirements are imposed as part of a REMS or other regulatory condition, we would need to develop, implement, and maintain compliance with therapist training programs and facility certification standards before we could commercialize our products. The development and scaling of these programs could take considerable time and resources, and any failure to establish an adequate network of trained practitioners and certified facilities could delay or limit our commercial launch.

**Risks Related to Market Acceptance and Public Perception**

***Significant stigma associated with psychedelic substances may impair market acceptance of our product candidates, even if they receive regulatory approval.***

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Psychedelic substances have been associated with recreational drug use and counterculture movements for decades, and they carry significant social stigma. This stigma may cause healthcare providers to be reluctant to prescribe or administer our products, patients to be reluctant to accept psychedelic-assisted treatments, and healthcare institutions to be reluctant to offer our therapies. Negative media coverage, reports of adverse events associated with recreational psychedelic use, or public misunderstanding of the distinction between clinical psychedelic therapy and recreational use could further reinforce these perceptions and impair market acceptance of our products. If we are unable to overcome public perception challenges, the commercial potential of our product candidates could be materially limited.

***There is limited market data available regarding the commercial potential of psychedelic therapeutics, making it difficult to predict market size, pricing, and demand for our product candidates.***

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The psychedelic therapeutics industry is in its early stages, and there are currently no FDA-approved psychedelic products available for commercial sale in the United States. As a result, there is very limited real-world data regarding physician and patient adoption rates, optimal pricing strategies, treatment frequency, patient compliance with supervised therapy protocols, or the size of the addressable patient population willing to undergo psychedelic-assisted treatment. Our assumptions regarding market size and commercial potential are based on limited clinical trial data, surveys, and extrapolation from adjacent markets, all of which may prove to be inaccurate. If the actual market for psychedelic therapeutics is smaller than we anticipate, our business and financial prospects could be materially harmed.

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***Uncertainty regarding pricing, insurance coverage, and reimbursement for psychedelic-assisted therapies could significantly limit patient access and our revenue potential.***

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The pricing and reimbursement landscape for psychedelic-assisted therapies is highly uncertain. Psychedelic-assisted treatments may involve multi-hour supervised sessions, specialized facility costs, and trained therapist time, resulting in a per-treatment cost structure that differs substantially from conventional pharmaceutical products. Third-party payors, including managed care organizations and government healthcare programs, may not provide coverage or adequate reimbursement for these treatments, particularly given their novelty, the stigma associated with psychedelic substances, and the availability of lower-cost conventional treatments for the same psychiatric indications. Without adequate insurance coverage and reimbursement, patient access to our products will be limited to those who can pay out of pocket, which would significantly reduce our addressable market and revenue potential.

**Risks Related to Competition**

***We face intense competition in the psychedelic therapeutics space from companies with substantially greater resources and more advanced product development programs, and we may not be able to compete effectively.***

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The psychedelic therapeutics sector is rapidly evolving and increasingly competitive. Several companies have product candidates at more advanced stages of clinical development than ours, including COMPASS Pathways, which is pursuing a rolling NDA submission for its psilocybin therapy for treatment-resistant depression, and MindMed, which has a pharmacologically optimized LSD candidate in Phase 3 clinical trials for generalized anxiety disorder and major depressive disorder. Other companies, such as atai Life Sciences, GH Research, Cybin, and Psyence Biomedical, are advancing various psychedelic compounds, including DMT, 5-MeO-DMT, deuterated psilocybin, and natural botanical psilocybin products, through clinical development.

Many of our competitors have significantly greater financial, technical, manufacturing, regulatory, and commercial resources than we do. These competitors may develop safer or more effective products, obtain regulatory approval faster, achieve superior market access, or establish dominant competitive positions before we are able to bring any product to market. In addition, large pharmaceutical companies with established neuroscience franchises may seek to enter the psychedelic therapeutics space through internal development, licensing, or acquisition, which would further intensify competition.

***Multiple companies are pursuing psychedelic compounds for overlapping indications, and if competitors achieve approval for the same indications before us, our market opportunity could be significantly diminished.***

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Several companies in the psychedelic therapeutics sector are developing product candidates targeting overlapping psychiatric indications, including treatment-resistant depression, major depressive disorder, generalized anxiety disorder, post-traumatic stress disorder, and substance use disorders. If one or more competitors achieve regulatory approval and successful commercialization for any of these indications before us, our ability to gain market share for our own products could be significantly reduced. Healthcare providers and payors may be unwilling to adopt a later-to-market psychedelic therapy without demonstrated superiority over an existing approved product, and first-mover advantages in establishing therapist networks and treatment infrastructure may be difficult to overcome.

**Risks Related to Manufacturing and Supply Chain**

***The manufacture of pharmaceutical products containing Schedule I controlled substances requires DEA-licensed facilities, and the limited number of qualified contract manufacturers could constrain our development and commercialization efforts.***

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Manufacturing pharmaceutical products containing Schedule I controlled substances requires specialized facilities that hold active DEA registrations and comply with stringent security, storage, and recordkeeping requirements. The number of contract development and manufacturing organizations ("CDMOs") with the requisite DEA registrations, facility infrastructure, and technical capabilities to manufacture psychedelic compounds in compliance with both DEA regulations and current good manufacturing practice ("cGMP") requirements is extremely limited. We may face difficulties in identifying and engaging qualified CDMOs, negotiating favorable terms, or securing sufficient manufacturing capacity to support our clinical and commercial needs. Any failure or unwillingness of our manufacturing partners to maintain their DEA registrations or comply with applicable regulations could disrupt our supply chain and materially delay our development programs.

***Availability of raw materials and chemical precursors for psychedelic compounds may be limited, and supply disruptions could delay our clinical programs.***

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The synthesis or extraction of psychedelic compounds requires specialized raw materials and chemical precursors that may themselves be controlled substances or subject to regulatory restrictions on their import, export, or commercial availability. Supply disruptions—whether caused by regulatory changes, supplier capacity constraints, quality failures, or geopolitical factors—could delay the manufacture of our product candidates and compromise our ability to supply clinical trials on schedule. We may not be able to establish alternative sources of supply quickly or at reasonable cost, and any prolonged supply disruption could materially harm our development timelines and business prospects.

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***Novel formulations of psychedelic compounds may present unique quality control and manufacturing challenges that could delay development or commercialization.***

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Psyga Bio may be developing novel formulations of psychedelic compounds, such as inhaled, sublingual, extended-release, or deuterated formulations, that present unique manufacturing challenges. These formulations may require specialized manufacturing processes, equipment, and analytical methods that differ significantly from those used for conventional oral dosage forms. Ensuring batch-to-batch consistency, stability, and quality for novel formulations of controlled substances is complex and may require significant development work. Any quality control issues, manufacturing failures, or inability to scale up production could delay our clinical programs, increase costs, and potentially result in regulatory action against our products.

**Risks Related to the Regulatory and Legal Environment**

***The legal and regulatory landscape for psychedelic substances is rapidly evolving and subject to significant uncertainty, and changes in applicable laws could materially affect our business, either positively or negatively.***

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The legal status of psychedelic substances is subject to ongoing debate and potential change at the federal, state, and international levels. Several U.S. states and municipalities have enacted or are considering legislation to decriminalize, legalize, or create regulated access programs for certain psychedelic substances outside of the FDA-approval framework. While such developments could increase public acceptance of psychedelic therapies, they could also create unregulated markets that compete with our FDA-approved products, undermine the commercial rationale for pursuing expensive clinical development, or result in safety incidents that damage public confidence in psychedelic treatments generally. Conversely, increased political opposition to psychedelic substances, or a reversal of the current trend toward more permissive policies, could result in more restrictive regulations that impede our clinical development or commercialization efforts.

***If our psychedelic product candidates are approved and commercialized, we will be subject to healthcare fraud and abuse laws, including the federal Anti-Kickback Statute and the False Claims Act, which could expose us to significant liability.***

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If any of our psychedelic product candidates receive regulatory approval and are commercialized, we will become subject to various healthcare fraud and abuse laws, including the federal Anti-Kickback Statute, the False Claims Act, the Health Insurance Portability and Accountability Act ("HIPAA"), the Physician Payments Sunshine Act, and analogous state and international laws. These laws impose restrictions on the marketing, promotion, and distribution of pharmaceutical products and limit the financial relationships that pharmaceutical companies may have with healthcare providers, institutions, and payors. The psychedelic-assisted therapy model—which involves close relationships between pharmaceutical companies, trained therapists, and treatment centers—may create heightened compliance risks under these laws. Violations of healthcare fraud and abuse laws can result in substantial civil and criminal penalties, exclusion from government healthcare programs, and reputational damage.

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***Evolving state-level psychedelic access laws may create a complex and uncertain regulatory environment for our business.***

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An increasing number of U.S. states and municipalities are enacting or considering legislation to create regulated access frameworks for psychedelic substances, including psilocybin, outside of the traditional FDA drug approval pathway. Oregon and Colorado, for example, have established or are establishing programs for supervised psilocybin access. These state-level programs may create competitive alternatives to our FDA-approved products, establish different safety standards or practitioner requirements, or generate adverse event data that could affect public or regulatory perception of psychedelic therapies. The interaction between state-level access programs and the federal drug approval framework remains uncertain and could create legal conflicts, compliance challenges, or market confusion that adversely affects our business.

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***We may face product liability claims related to the administration of psychedelic compounds, and our insurance coverage may be insufficient to cover all potential claims.***

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The administration of psychedelic compounds to human subjects in clinical trials and, if approved, commercial use involves inherent risks of adverse events, including serious psychological reactions, self-harm ideation, cardiovascular events, or other unexpected harms. We may be exposed to product liability claims from clinical trial participants or patients who experience adverse effects associated with our products. Psychedelic-assisted therapy involves altered states of consciousness that may create unique liability risks, including claims related to informed consent, therapist misconduct during supervised sessions, or patient actions taken while under the influence of a psychedelic compound. Product liability litigation, regardless of merit, could be costly, divert management attention, and damage our reputation. Our current and anticipated insurance coverage may be insufficient to cover all potential product liability claims, and additional coverage may not be available on acceptable terms.

**Risks Related to Our Intellectual Property**

***Many psychedelic compounds are naturally occurring or have been known for decades, making it difficult to obtain and enforce broad patent protection for our product candidates.***

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Unlike novel chemical entities that can be protected by composition-of-matter patents, many psychedelic compounds—including psilocybin, DMT, and 5-MeO-DMT—are naturally occurring molecules that have been known and studied for decades. As a result, we may be unable to obtain broad composition-of-matter patent claims for these compounds themselves. Our intellectual property strategy may instead rely on narrower claims directed to specific formulations, dosage forms, methods of use, treatment protocols, manufacturing processes, or chemical modifications (such as deuterated or prodrug analogs). Such narrower claims may be more susceptible to design-around strategies by competitors and may provide less robust protection than composition-of-matter patents. Moreover, the validity and enforceability of patents in the psychedelic space remain relatively untested, and courts or patent offices may interpret the scope of our claims more narrowly than we anticipate.

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***The psychedelic therapeutics sector is characterized by rapidly proliferating patent filings, creating a complex and uncertain intellectual property landscape that may result in costly disputes.***

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Multiple companies and academic institutions are actively filing patent applications relating to psychedelic compounds, formulations, treatment methods, and associated technologies. This dense and evolving patent landscape creates significant uncertainty regarding freedom to operate and increases the risk of inadvertent infringement of third-party patent rights. We may be subject to claims of patent infringement, or we may need to initiate proceedings to challenge third-party patents that could block our product development or commercialization. Patent litigation in the pharmaceutical industry is typically costly, time-consuming, and uncertain in outcome. An adverse outcome in any patent dispute could require us to obtain licenses, redesign our products, or cease certain activities, any of which could materially harm our business.

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***If we are unable to adequately protect our intellectual property, third parties may be able to use our technology, which could adversely affect our ability to compete in the market.***

Our commercial success might depend in part on our ability to obtain and maintain patent protection on our products and technologies and successfully defend these patents and technologies against third-party challenges. As part of our business strategy, our policy is to actively file patent applications in the U.S. and internationally.

Generally, patent applications in the U.S. are maintained in secrecy for a period of at least 18 months. Third parties or competitors may challenge or circumvent our patents or patent applications, if issued. If our competitors prepare and file patent applications in the U.S. that claim compounds or technology also claimed by us, we may be required to challenge competing patent rights, which could result in substantial cost, even if the eventual outcome is favorable to us.

We also rely on trade secrets to protect technology where we believe patent protection is not appropriate or obtainable. Trade secrets are difficult to protect. While we require our collaborators and consultants to enter into confidentiality agreements, this may not be sufficient to protect our trade secrets or other proprietary information adequately.

***Litigation or third-party claims of intellectual property infringement could require us to spend substantial time, money and other resources defending such claims and adversely affect our ability to develop and commercialize our products.***

Third parties may assert that we are using their proprietary technology without authorization. In addition, third parties may have or obtain patents in the future and claim that our products infringe their patents. If we are required to defend against patent suits brought by third parties, or if we sue third parties to protect our patent rights, we may be required to pay substantial litigation costs, and our management's attention may be diverted from operating our business. In addition, any legal action against us that seeks damages or an injunction relating to the affected activities could subject us to monetary liability and/or require us to discontinue the affected technologies or obtain a license to continue use thereof.

In addition, there can be no assurance that our patents or patent applications will not become involved in opposition or revocation proceedings instituted by third parties. If such proceedings were initiated against one or more of our patents the defense of such rights could involve substantial costs and the outcome could not be predicted.

Competitors or potential competitors may have filed applications for, may have been granted patents for, or may obtain additional patents and proprietary rights that may relate to technologies competitive with ours. If patents are granted to other parties that contain claims having a scope that is interpreted to cover any of our products, there can be no assurance that we will be able to obtain licenses to such patents at reasonable cost, if at all, or be able to develop or obtain alternative technology.

***If we are unable to protect the confidentiality of our trade secrets and other proprietary information, our business and competitive position may be harmed.***

In addition to patent protection, we may rely or may rely heavily on trade secrets, know-how, and unpatented proprietary information to maintain our competitive advantage. To protect these assets, we enter into confidentiality and non-disclosure agreements with our employees, consultants, contractors, and third-party collaborators. However, we cannot guarantee that these agreements will not be breached, that we will have adequate remedies for any breach, or that our trade secrets will not otherwise become known or independently developed by our competitors. If we fail to maintain the confidentiality of our proprietary technology and processes, our technological advantage could be compromised, which would seriously undermine our market position and business prospects.

***Risks Related to our ADSs***

***We will need additional capital in the future. If additional capital is not available, we may not be able to continue to operate our business pursuant to our business plan or we may have to discontinue our operations entirely.***

Our net cash used in operating activities for the year ended December 31, 2025 was $1,025 thousand. If we continue to use cash at this rate we will need significant additional financing, which we may seek to raise through, among other things, public and private equity offerings and debt financing. Any equity financings will likely be dilutive to existing stockholders, and any debt financings will likely involve covenants restricting our business activities. Additional financing may not be available on acceptable terms, or at all.

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***The ADSs are traded in small volumes, limiting ability to sell ADSs that represent ordinary shares at a desirable price, if at all.***

The trading volume of the ADSs has historically been low. Even if the trading volume of the ADSs increases, we can give no assurance that it will be maintained or will result in a desirable stock price. As a result of this low trading volume, it may be difficult to identify buyers to whom shareholders can sell ADSs in desirable volume and shareholders may be unable to sell your ADSs at an established market price, at a price that is favorable, or at all. A low volume market also limits shareholders' ability to sell large blocks of the ADSs at a desirable or stable price at any one time. Shareholders should be prepared to own the ADSs indefinitely.

***Our stock price can be volatile, which increases the risk of litigation and may result in a significant decline in the value of your investment.***

The trading price of the ADSs representing our ordinary shares is likely to be highly volatile and subject to wide fluctuations in price in response to various factors, many of which are beyond our control. These factors include:

● announcements of technological innovations by us or our competitors;

● introductions or announcements of new products or services by us or our competitors;

● developments in the markets of the field of activities and changes in customer attributes;

● announcements by us of significant acquisitions, in/out license transactions, strategic partnerships, joint ventures or capital commitments;

● changes in financial estimates by securities analysts;

● actual or anticipated variations in interim operating results and near-term working capital as well as failure to raise required funds for the continued development and operations of the company;

● conditions or trends in the regulatory climate;

● failure to increase awareness of our products and services ;

● changes in the market valuations of similar companies;

● geopolitical instabilities, including the war between Russia and Ukraine; and

● additions or departures of key personnel.

In addition, equity markets have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies traded in those markets. These broad market and industry factors may materially affect the market price of the ADSs, regardless of our development and operating performance. In the past, following periods of volatility in the market price of a company's securities, securities class-action litigation has often been instituted against that company. Such litigation, if instituted against us, could cause us to incur substantial costs to defend such claims and divert management's attention and resources even if we prevail in the litigation, all of which could seriously harm our business.

***Future issuances or sales of the ADSs could depress the market for the ADSs.***

Future issuances of a substantial number of the ADSs, or the perception by the market that those issuances could occur, could cause the market price of our ordinary shares or ADSs to decline or could make it more difficult for us to raise funds through the sale of equity in the future. Also, if we make one or more significant acquisitions in which the consideration includes ordinary shares or other securities, your portion of shareholders' equity in us may be significantly diluted.

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***Concentration of ownership of our ordinary shares among our principal stockholders may prevent new investors from influencing significant corporate decisions.***

There is one shareholder (Mr. Alexander Rabinovitch, a director), who in the aggregate beneficially holds approximately 24.51% of our ordinary shares, (as of June 30, 2026). As a result, this person may have the ability to significantly influence the outcome of all matters submitted to our shareholders for approval, including the election and removal of directors and any merger, consolidation or sale of all or substantially all of our assets. In addition, such persons, acting alone or together, may have the ability to effectively control our management and affairs. Accordingly, this concentration of ownership may depress the market price of our ordinary shares or ADSs.

***Our ordinary shares and ADSs trade on two different markets, and this may result in price variations and regulatory compliance issues.***

ADSs representing our ordinary shares are listed for trading on The Nasdaq Capital Market and our ordinary shares are traded on the TASE. Trading in our securities on these markets is made in different currencies and at different times, including as a result of different time zones, different trading days and different public holidays in the U.S. and Israel. Consequently, the effective trading prices of our securities on these two markets may differ. Any decrease in the trading price of our securities on one of these markets could cause a decrease in the trading price of our securities on the other market.

***Holders of our ordinary shares or ADSs who are U.S. citizens or residents may be required to pay additional income taxes.***

There is a risk that we will be classified as a passive foreign investment company, or PFIC, for certain tax years. If we are classified as a PFIC, a U.S. holder of our ordinary shares or ADSs representing our ordinary shares will be subject to special federal income tax rules that determine the amount of federal income tax imposed on income derived with respect to the PFIC shares. We will be a PFIC if either 75% or more of our gross income in a tax year is passive income or the average percentage of our assets (by value) that produce or are held for the production of passive income in a tax year is at least 50%. The risk that we will be classified as a PFIC arises because cash balances, are generally considered to be assets that produce passive income. Therefore, any determination of PFIC status will depend upon the sources of our income and the relative values of passive and non-passive assets, including goodwill. A determination as to a corporation's status as a PFIC must be made annually. We believe we may be a PFIC during 2025 and although we have not determined whether we will be a PFIC in 2026, or in any subsequent year, our operating results for any such years may cause us to be a PFIC. Although we may not be a PFIC in any one year, the PFIC taint remains with respect to those years in which we were or are a PFIC and the special PFIC taxation regime will continue to apply.

In view of the complexity of the issues regarding our treatment as a PFIC, U.S. shareholders are urged to consult their own tax advisors for guidance as to our status as a PFIC.

***As a foreign private issuer, we are permitted to follow certain home country corporate governance practices instead of applicable SEC and Nasdaq requirements, which may result in less protection than is accorded to investors under rules applicable to domestic issuers.***

As a foreign private issuer, we are permitted to follow certain home country corporate governance practices instead of those otherwise required under Nasdaq for domestic issuers. For instance, we may follow home country practice in Israel with regard to, among other things, composition and function of the audit committee and other committees of our Board of Directors and certain general corporate governance matters. In addition, in certain instances we will follow our home country law, instead of Nasdaq, which requires that we obtain shareholder approval for certain dilutive events, such as an issuance that will result in a change of control of the company, certain transactions other than a public offering involving issuances of a 20% or more interest in the company and certain acquisitions of the stock or assets of another company. We comply with the director independence requirements of Nasdaq, including the requirement that a majority of the Board of Directors be independent. Following our home country governance practices as opposed to the requirements that would otherwise apply to a United States company listed on Nasdaq may provide less protection than is accorded to investors under Nasdaq applicable to domestic issuers.

In addition, as a foreign private issuer, we are exempt from the rules and regulations under the Exchange Act, related to the furnishing and content of proxy statements. However, effective March 18, 2026, pursuant to the Holding Foreign Insiders Accountable Act enacted in December 2025, our officers and directors will be required to report their beneficial ownership of, and transactions in, our equity securities to the SEC on Forms 3, 4, and 5 under Section 16(a) of the Exchange Act. Prior to this date, our officers, directors and principal shareholders were exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file annual, quarterly and current reports and financial statements with the SEC as frequently or as promptly as domestic companies whose securities are registered under the Exchange Act.

***ADS holders are not shareholders and do not have shareholder rights.***

The Bank of New York Mellon, as depositary, executes and delivers the ADSs on our behalf. Each ADS is a certificate evidencing a specific number of ADSs. The ADS holders will not be treated as shareholders and do not have the rights of shareholders. The depositary will be the holder of the shares underlying the ADSs. Holders of the ADSs will have ADS holder rights. A deposit agreement among us, the depositary and the ADS holders, and the beneficial owners of ADSs, sets out ADS holder rights as well as the rights and obligations of the depositary. New York law governs the deposit agreement and the ADSs. Our shareholders have shareholder rights prescribed by Israeli law. Israeli law and our Articles of Association, or Articles, govern such shareholder rights. The ADS holders do not have the same voting rights as our shareholders. Shareholders are entitled to our notices of general meetings and to attend and vote at our general meetings of shareholders. At a general meeting, every shareholder present (in person or by proxy, attorney or representative) and entitled to vote has one vote on a show of hands. Every shareholder present (in person or by proxy, attorney or representative) and entitled to vote has one vote per fully paid ordinary share on a poll. This is subject to any other rights or restrictions which may be attached to any shares. The ADS holders may instruct the depositary to vote the ordinary shares underlying their ADSs, but only if we ask the depositary to ask for their instructions. If we do not ask the depositary to ask for their instructions, the ADS holders are not entitled to receive our notices of general meeting or instruct the depositary how to vote. The ADS holders will not be entitled to attend and vote at a general meeting unless they withdraw the ordinary shares from the depository. However, the ADS holders may not know about the meeting far enough in advance to withdraw the ordinary shares. If we ask for the ADS holders' instructions, the depositary will notify the ADS holders of the upcoming vote and arrange to deliver our voting materials and form of notice to them. The depositary will try, as far as is practical, subject to the provisions of the deposit agreement, to vote the shares as the ADS holders instruct. The depositary will not vote or attempt to exercise the right to vote other than in accordance with the instructions of the ADS holders. We cannot assure the ADS holders that they will receive the voting materials in time to ensure that they can instruct the depositary to vote their shares. In addition, there may be other circumstances in which the ADS holders may not be able to exercise voting rights.

The ADS holders do not have the same rights to receive dividends or other distributions as our shareholders. Subject to any special rights or restrictions attached to a share, the directors may determine that a dividend will be payable on a share and fix the amount, the time for payment and the method for payment (although we have never declared or paid any cash dividends on our ordinary stock and we do not anticipate paying any cash dividends in the foreseeable future). Dividends and other distributions payable to our shareholders with respect to our ordinary shares generally will be payable directly to them. Any dividends or distributions payable with respect to ordinary shares will be paid to the depositary, which has agreed to pay to the ADS holders the cash dividends or other distributions it or the custodian receives on shares or other deposited securities, after deducting its fees and expenses. The ADS holders will receive these distributions in proportion to the number of shares their ADSs represent. In addition, there may be certain circumstances in which the depositary may not pay to the ADS holders amounts distributed by us as a dividend or distribution.

***There are circumstances where it may be unlawful or impractical to make distributions to the holders of the ADSs.***

The deposit agreement with the depositary allows the depositary to distribute foreign currency only to those ADS holders to whom it is possible to do so. If a distribution is payable by us in New Israeli Shekels, the depositary will hold the foreign currency it cannot convert for the account of the ADS holders who have not been paid. It will not invest the foreign currency and it will not be liable for any interest. If the exchange rates fluctuate during a time when the depositary cannot convert the foreign currency, the ADS holders may lose some of the value of the distribution.

The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADS holders. This means that the ADS holders may not receive the distributions we make on our shares or any value for them if it is illegal or impractical for the depository to make such distributions available to them.

***Shareholders' percentage ownership in us may be diluted by future issuances of share capital, which could reduce their influence over matters on which shareholders vote.***

Issuances of additional shares would reduce shareholders' influence over matters on which our shareholders vote.

***We may fail to regain compliance with the continued listing standards of The Nasdaq Capital Market and a delisting of our ADSs could make it more difficult for investors to sell their shares***

Our ADSs were approved for listing on The Nasdaq Capital Market in July 2013 where they continue to be listed. We are required to meet certain qualitative and financial tests to maintain the listing of our ADSs on The Nasdaq Capital Market. Specifically, under Nasdaq Listing Rule 5550(b), a company must satisfy at least one of the following standards: (1) stockholders' equity of at least $2.5 million (the "Stockholders' Equity Requirement" under Rule 5550(b)(1)); (2) market value of listed securities of at least $35 million (Rule 5550(b)(2)); or (3) net income from continuing operations of $500,000 in the most recently completed fiscal year or in two of the three most recently completed fiscal years (Rule 5550(b)(3)).

On December 22, 2025, the Company received a written notification from Nasdaq, notifying the Company that based on Company's closing bid price for the last 30 consecutive business days, the Company did not meet the continued listing requirement of Nasdaq, under Nasdaq Listing Rules 5550(a)(2), to maintain a minimum bid price of $1 per share.

Pursuant to Nasdaq Listing Rule 5810(c)(3)(A), the Company had a compliance period of 180 calendar days, or until June 22, 2026, to regain compliance. On March 25, 2026, we implemented a change to the ratio of our ADSs to our ordinary shares, from the previous ratio of one (1) ADS to one hundred (100) ordinary shares to a new ratio of one (1) ADS to four hundred (400) ordinary shares. Since the ratio has changed the closing price of our ADSs was above $1.

On January 20, 2026, the Company received a written notification from Nasdaq, notifying the Company that the Company currently does not meet the continued listing requirement of Nasdaq, under Nasdaq Listing Rules 5550(b)(1), to maintain a minimum of $2,500,000 in stockholders' equity for continued listing. This Nasdaq determination was based on (i) the Company's Form 6-K, dated December 30, 2025, that included financial information for the period ended June 30, 2025, and which reported stockholders' equity deficit of $47,000, and (ii) that the Company does not meet the alternatives of market value of listed securities or net income from continuing operations as of January 20, 2026.

On January 25, 2026, the Company received a written notification from Nasdaq, notifying the Company of the Staff's belief, based upon its review of the Company and pursuant to Nasdaq Listing Rule 5101, that the Company is a "public shell", and that continued listing of the Company's American Depositary Shares ("ADSs") is no longer warranted. The Company requested a hearing (the "Hearing") to appeal the delisting process before a Nasdaq Hearings Panel (the "Panel"). The Hearing was held on April 16, 2026, at which the Company's management and outside counsel presented its compliance plan.

On May 4, 2026, the Company received a letter (the "Decision Letter") from Nasdaq, informing the Company that the Panel has determined to grant the request of the Company to continue its listing on The Nasdaq Stock Market ("Nasdaq" or the "Exchange") subject to the conditions described in the Letter.

According to the Decision Letter, the Panel determined to grant the Company an exception for continued listing on the Exchange subject to that the company will, on or prior to June 30, 2026, complete the Psyga Bio transaction and demonstrate compliance with all continued listing requirements of Nasdaq.

In addition, while the Decision Letter notes the prior violation of Listing Rule 5550(a)(2) as disclosed in the Report of Foreign Private Issuer on Form 6-K furnished to SEC on December 29, 2025, this issue has been fully resolved. Following the Company's reverse stock split (through ADS ratio change) on March 25, 2026, our ADSs have consistently maintained a closing bid price in excess of $1.

On May 18, 2026, the Company received a written notification from Nasdaq, notifying the Company that since the Company had not yet filed its Annual Report on Form 20-F for the year ended December 31, 2025, it no longer complies with Nasdaq's Listing Rule Listing Rule 5250(c)(1) which requires companies to timely file all required periodic financial reports with the SEC. Nasdaq informed the Company that this matter serves as an additional basis for delisting the Company's securities from Nasdaq and that the Panel will consider this matter in its decision regarding the Company's continued listing on The Nasdaq Capital Market. The Company had until May 26, 2026, to present its views with respect to this additional deficiency to the Panel in writing and to request a stay of the suspension of its securities from The Nasdaq Capital Market, pending a Panel decision. On May 26, 2026, the Company submitted its views on this additional matter and requested to stay the suspension of its securities from The Nasdaq Capital Market.

If we fail to regain compliance with the continued listing requirements for Nasdaq within specified periods and subject to permitted extensions, our ADSs may be delisted. If our ADSs were delisted, it could be more difficult to buy or sell our ADSs and to obtain accurate quotations, and the price of our stock could suffer a material decline. Delisting would also impair our ability to raise capital.

If we are delisted from Nasdaq, our ADSs will trade, if at all, only on the over-the-counter market, such as the OTC Bulletin Board or OTCQX market, and then only if one or more registered broker-dealer market makers comply with quotation requirements. In addition, delisting of our ADSs could depress the price of our ADSs, substantially limit liquidity of our ADSs and materially adversely affect our ability to raise capital on terms acceptable to us, or at all.

Finally, delisting of our ADSs would likely result in our ADSs becoming a "penny stock" under the Exchange Act. The principal result or effect of being designated a "penny stock" is that securities broker-dealers cannot recommend the shares but must trade it on an unsolicited basis. Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC, which specifies information about penny stocks and the nature and significance of risks of the penny stock market. A broker-dealer must also provide the customer with bid and offer quotations for the penny stock, the compensation of the broker-dealer and salesperson in the transaction, and monthly account statements indicating the market value of each penny stock held in the customer's account. In addition, the penny stock rules require that, prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for shares that become subject to those penny stock rules. Under such circumstances, shareholders may find it more difficult to sell, or to obtain accurate quotations, for our ADSs, and our ADSs would become substantially less attractive to certain purchasers such as financial institutions, hedge funds and other similar investors.

**Risks Relating to Operations in Israel**

***We conduct our operations in Israel and therefore our results may be adversely affected by political, economic and military instability in Israel and its region.***

Our headquarters are located in Israel and we conduct operations in Israel. Accordingly, political, economic and military conditions in the Middle East may affect our business directly. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and its neighboring countries, as well as terrorist acts committed within Israel by hostile elements.

In particular, in October 2023, Hamas terrorists infiltrated Israel's southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Hamas also launched extensive rocket attacks on the Israeli population and industrial centers located along Israel's border with the Gaza Strip and in other areas within the State of Israel. These attacks resulted in thousands of deaths and injuries, and Hamas additionally kidnapped many Israeli civilians and soldiers. Following the attack, Israel's security cabinet declared war against Hamas and commenced a military campaign against Hamas. In January 2025, Israel and Hamas entered into a ceasefire agreement that included the phased release of hostages. In October 2025, a second ceasefire was announced under a US-proposed peace framework, and by January 2026, all hostages and hostage remains had been returned to Israel, completing Phase 1 of the agreement. However, the ceasefire remains fragile, with intermittent violations reported by both sides, and Phase 2 of the peace plan, which addresses the permanent end to the conflict, Israeli withdrawal, and Gaza governance, is ongoing. Military service call ups that resulted in absences of personnel for extended periods of time may have materially and adversely affected Israeli businesses. As of the date hereof, we have no employees, and our management which provides services through a consultant agreement were not called for duty. Our subsidiaries have 3 full-time employees, who may be called for duty.

In addition, since the commencement of these events, there have been continued hostilities along Israel's northern border with Lebanon (with the Hezbollah terror organization) and from the Houthi movement in Yemen. In September 2024, hostilities with Hezbollah significantly escalated, including an Israeli ground operation in southern Lebanon. In November 2024, Israel and Hezbollah entered into a ceasefire agreement. However, fighting in Lebanon resumed in March 2026 following the outbreak of war between the United States, Israel and Iran. In February 2026, the United States and Israel launched joint military strikes on Iran, triggering Iranian retaliatory attacks on Israel and US interests in the region. Lebanon was drawn into the conflict in early March 2026 when Hezbollah launched rockets at Israel in retaliation for Israeli strikes. Subsequent ceasefires between Israel and Hezbollah have been agreed but remain fragile, with intermittent violations. The Houthi movement in Yemen, which had previously attacked Red Sea shipping during the Gaza war, announced a ban on Israeli shipping in the Red Sea in June 2026, raising concerns about renewed disruption to global trade routes. Iran is also believed to have a strong influence among extremist groups in the region, such as Hamas in Gaza, Hezbollah in Lebanon, the Houthi movement in Yemen and various rebel militia groups in Syria and Iraq. Any hostilities, armed conflicts, terrorist activities involving Israel or the interruption or curtailment of trade between Israel and its trading partners, or any political instability in the region could adversely affect business conditions and our results of operations and could make it more difficult for us to raise capital and could adversely affect the market price of our ordinary shares. An escalation of tensions or violence might result in a significant downturn in the economic or financial condition of Israel, which could have a material adverse effect on our operations in Israel and our business. Parties with whom we do business have sometimes declined to travel to Israel during periods of heightened unrest or tension, forcing us to make alternative arrangements when necessary in order to meet our business partners face to face. In addition, the political and security situation in Israel may result in parties with whom we have agreements involving performance in Israel claiming that they are not obligated to perform their commitments under those agreements pursuant to force majeure provisions in such agreements.

Since the war broke out on October 7, 2023, our operations have not been materially adversely affected by this situation, and we have not experienced significant disruptions to our operations. Although ceasefire agreements have been reached with Hamas and are being negotiated with respect to the broader US-Iran conflict, the long-term stability of these agreements remains uncertain. If hostilities resume or expand to additional fronts, including Syria and the West Bank, or if the US-Iran conflict escalates further, our operations may be adversely affected.

Our commercial insurance does not cover losses that may occur as a result of events associated with the security situation in the Middle East. Although the Israeli government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained. Any losses or damages incurred by us could have a material adverse effect on our business. Any armed conflicts or political instability in the region would likely negatively affect business conditions and could harm our results of operations.

Further, the State of Israel and Israeli companies have been subjected to an economic boycott. Several countries still restrict business with the State of Israel and with Israeli companies. These restrictive laws and policies may have an adverse impact on our operating results, financial condition or the expansion of our business.

Finally, political conditions within Israel may affect our operations. In recent years, Israel has experienced periods of political uncertainty, including multiple election cycles, as well as significant public debate and protests relating to proposed changes to Israel's judicial system, some of which have been delayed or placed on hold. Actual or perceived political instability in Israel, changes in governmental policy or priorities, legislative or regulatory changes, civil unrest, or other adverse political developments could individually or in the aggregate adversely affect the Israeli economy and, in turn, our business, financial condition, results of operations and growth prospects.

***Our results of operations may be adversely affected by inflation and foreign currency fluctuations.***

We hold most of our cash, cash equivalents and bank deposits in New Israeli Shekels and U.S. dollars. As we are located in Israel, a significant portion of our expenses are in New Israeli Shekels, or NIS, mainly due to payment to Israeli service providers and suppliers. As a result, we could be exposed to the risk that the U.S. dollar will be devalued against the NIS or other currencies, and consequentially our financial results could be harmed. To protect against currency fluctuations, we may decide to hold a significant portion of our cash, cash equivalents, bank deposits and marketable securities in NIS, as well as to enter into currency hedging transactions if needed. These measures, however, may not adequately protect us from the adverse effects of inflation in Israel. In addition, we are exposed to the risk that the rate of inflation in Israel will exceed the rate of devaluation of the New Israeli Shekel in relation to the U.S. dollar or that the timing of any devaluation may lag behind inflation in Israel.

***Provisions of Israeli law may delay, prevent or otherwise impede a merger with, or an acquisition of, our company, which could prevent a change of control, even when the terms of such a transaction are favorable to us and our shareholders.***

As a company incorporated under the laws of the State of Israel, we are subject to Israeli corporate law which regulates mergers, requires tender offers for acquisitions of shares above specified thresholds, requires special approvals for transactions involving directors, officers or significant shareholders and regulates other matters that may be relevant to these types of transactions. For example, a merger may not be consummated unless at least 50 days have passed from the date that a merger proposal was filed by each merging company with the Israel Registrar of Companies and at least 30 days from the date that the shareholders of both merging companies approved the merger. In addition, the holder of a majority of each class of securities of the target company must approve a merger. Moreover, a full tender offer can only be completed if the acquirer receives at least 95% of the issued share capital (provided that a majority of the offerees that do not have a personal interest in such tender offer shall have approved the tender offer, except that if the total votes to reject the tender offer represent less than 2% of the company's issued and outstanding share capital, in the aggregate, approval by a majority of the offerees that do not have a personal interest in such tender offer is not required to complete the tender offer), and the shareholders, including those who indicated their acceptance of the tender offer, may, at any time within six months following the completion of the tender offer, petition the court to alter the consideration for the acquisition (unless the acquirer stipulated in the tender offer that a shareholder that accepts the offer may not seek appraisal rights).

In addition, in April 2025, the Israeli Knesset's constitution Law and Justice committee approved a proposed amendment to the Companies Law (proposed Amendment No. 37) to strengthen corporate governance standards in public companies with dispersed ownership structures. If enacted, this amendment could impose additional governance requirements on us or affect our corporate governance practices.

Furthermore, Israeli tax considerations may make potential transactions unappealing to us or to those of our shareholders whose country of residence does not have a tax treaty with Israel exempting such shareholders from Israeli tax. For example, Israeli tax law does not recognize tax-free share exchanges to the same extent as U.S. tax law. With respect to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on the fulfillment of numerous conditions, including a holding period of two years from the date of the transaction during which sales and dispositions of shares of the participating companies are restricted. Moreover, with respect to certain share swap transactions, the tax deferral is limited in time, and when such time expires, the tax becomes payable even if no actual disposition of the shares has occurred.

These and other similar provisions could delay, prevent or impede an acquisition of us or our merger with another company, even if such an acquisition or merger would be beneficial to us or to our shareholders.

***It may be difficult to enforce a U.S. judgment against us, our officers or our directors or to assert U.S. securities law claims in Israel.***

Service of process upon us, since we are incorporated in Israel, and upon our directors and officers, who reside outside the U.S., may be difficult to obtain within the U.S. In addition, because substantially all of our assets and most of our directors and officers are located outside the U.S., any judgment obtained in the U.S. against us or any of our directors and officers may not be collectible within the U.S. There is a doubt as to the enforceability of civil liabilities under the Securities Act or the Exchange Act pursuant to original actions instituted in Israel. Subject to particular time limitations and provided certain conditions are met, executory judgments of a U.S. court for monetary damages in civil matters may be enforced by an Israeli court.

***Under applicable U.S. and Israeli law, we may not be able to enforce covenants not to compete and therefore may be unable to prevent our competitors from benefiting from the expertise of some of our former employees. In addition, employees may be entitled to seek compensation for their inventions irrespective of their agreements with us, which in turn could impact our future profitability.***

We generally enter into non-competition agreements with our key consultants. These agreements prohibit our key consultants, if they cease working for us, from competing directly with us or working for our competitors or clients for a limited period of time. We may be unable to enforce these agreements under the laws of the jurisdictions in which our key consultants work and it may be difficult for us to restrict our competitors from benefitting from the expertise our former employees or consultants developed while working for us. For example, Israeli courts have required employers seeking to enforce non-compete undertakings of a former employee to demonstrate that the competitive activities of the former employee will harm one of a limited number of material interests of the employer which have been recognized by the courts, such as the secrecy of a company's confidential commercial information or the protection of its intellectual property. If we cannot demonstrate that such interests will be harmed, we may be unable to prevent our competitors from benefiting from the expertise of our former employees or consultants and our ability to remain competitive may be diminished.

In addition, Chapter 8 to the Israeli Patents Law, 5727-1967, or the Patents Law, deals with inventions made in the course of an employee's service and during his or her term of employment, whether or not the invention is patentable, or service inventions. Section 134 of the Patents Law, sets forth that if there is no agreement which explicitly determines whether the employee is entitled to compensation for the service inventions and the extent and terms of such compensation, such determination will be made by the Compensation and Rewards Committee, a statutory committee of the Israeli Patents Office. As a result, it is unclear if, and to what extent, our research and development employees may be able to claim compensation with respect to our future revenue. As a result, we may receive less revenue from future products if such claims are successful, which in turn could impact our future profitability.

***Your rights and responsibilities as a shareholder will be governed by Israeli law which may differ in some respects from the rights and responsibilities of shareholders of U.S. companies.***

We are incorporated under Israeli law. The rights and responsibilities of the holders of our ordinary shares and ADSs are governed by our Articles of Association and Israeli law. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders in typical U.S.-based corporations. In particular, a shareholder of an Israeli company has a duty to act in good faith toward the company and other shareholders and to refrain from abusing its power in the company, including, among other things, in voting at the general meeting of shareholders on matters such as amendments to a company's articles of association, increases in a company's authorized share capital, mergers and acquisitions and interested party transactions requiring shareholder approval. In addition, a shareholder who knows that it possesses the power to determine the outcome of a shareholder vote or to appoint or prevent the appointment of a director or executive officer in the company has a duty of fairness toward the company. There is limited case law available to assist us in understanding the implications of these provisions that govern shareholders' actions. These provisions may be interpreted to impose additional obligations and liabilities on holders of our ordinary shares and ADSs that are not typically imposed on shareholders of U.S. corporations.

**Risks Relating to Weaknesses in Internal Accounting Control**

***We Have Identified a Material Weakness in Our Internal Accounting and Financial Reporting Controls***

Our management has concluded that, for the year ended December 31, 2025, a material weakness existed in our internal control over financial reporting. This material weakness arises, among other things, from our inability to file this annual report on Form 20-F within the time period prescribed by the Securities and Exchange Commission's rules and regulations. The timely preparation and filing of our periodic reports is an integral component of our period-end financial reporting process, and our failure to complete and file this report on a timely basis constitutes a deficiency in that process that resulted in a reasonable possibility that a material misstatement of our annual financial statements would not be prevented or detected on a timely basis. For the avoidance of doubt, this material weakness is unrelated to the scope of operations covered by our assessment. As permitted under SEC guidance for recently acquired businesses, our evaluation as of December 31, 2024 excluded The Social Proxy, whose acquisition was completed in August 2024, close to year-end. Effective January 1, 2025, The Social Proxy was classified as a discontinued operation, and its results are therefore presented as such and are not included within our internal control over financial reporting for continuing operations. Accordingly, our evaluation for the year ended December 31, 2025 likewise does not encompass The Social Proxy, and there is no gap or discontinuity in the scope of our assessment between the two periods. We are implementing remedial measures to strengthen our period-end close and filing processes so as to enable the timely filing of our periodic reports in future periods. Please refer to "Item 15. Controls and Procedures" for details on our internal control over financial reporting. Any failure to maintain effective internal control over financial reporting could harm our business, erode investor confidence in our financial statements, and negatively impact the trading price of our ordinary shares and ADSs. Furthermore, we may incur additional costs and require additional management and other resources to comply with Section 404 of the Sarbanes-Oxley Act and other requirements in the future.

**A. ITEM 4. INFORMATION ON THE COMPANY**

**A. History and Development of XTL**

We were established as a biopharmaceutical company engaged in the acquisition and development of pharmaceutical drugs for the treatment of autoimmune diseases. During 2024 we expanded into the data collection industry after completing in August 2024 the acquisition of 100% of the share capital of The Social Proxy Ltd., or The Social Proxy, an AI web data company, which developed, operated and distributed an internet protocol based proxy data extraction platform for AI and for Business Intelligence purposes, at scale.

In February 2026, after The Social Proxy has filed a formal application with the competent Israeli court for the commencement of insolvency proceedings (Order for the Opening of Proceedings) in accordance with the Israeli Insolvency and Economic Rehabilitation Law, 2018 (the "Insolvency Law"), the Israeli court ordered the opening of insolvency proceedings in all matters concerning The Social Proxy pursuant to the Insolvency Law, and after finding that there is no reasonable prospect for The Social Proxy's economic rehabilitation, the court also ordered The Social Proxy's liquidation and the appointment of a trustee for the insolvency proceedings.

Based on a legal opinion provided by our Israeli commercial litigation expert, and following a dispute with the former Social Proxy shareholders, the effective control over The Social Proxy since January 1, 2025, was held by the former stockholders of The Social Proxy and we had no control over The Social Proxy during 2025. We do not consolidate The Social Proxy in our financial statements effective January 1, 2025, notwithstanding that we held 100% of its share capital during 2025. Based on a legal opinion and in accordance with IFRS 10, we determined that we do not, in substance, control The Social Proxy. Accordingly, effective January 1, 2025, we ceased consolidating The Social Proxy in our financial statements, and all activity related to The Social Proxy was classified as a discontinued operation in accordance with IFRS 5. In addition, and in accordance with IFRS 5, we reclassified all of the financial results related to The Social Proxy for 2024 as a discontinued operation.

Because we do not consolidate The Social Proxy in our financial statements, and because, in accordance with IFRS 10, we did not control it during 2025, our evaluation of the effectiveness of our internal control over financial reporting does not include any components relating to The Social Proxy. With respect to 2024, because the business combination with The Social Proxy occurred only at the end of 2024, our evaluation likewise did not include the components relating to the internal control over financial reporting of The Social Proxy, due to the proximity of the business combination to the fiscal year end and in accordance with the relief afforded by the SEC.

In June 2026 we completed the acquisition of 83.4% of the share capital of Psyga Bio Ltd., or Psyga, an advanced biotechnology company focused on the research, development and commercialization of proprietary products derived from psychedelic and functional mushrooms, including clinically researched therapeutic candidates, microdosing solutions and wellness-focused formulations.

***Company Information and History***

Our legal and commercial name is XTL Biopharmaceuticals Ltd. We were established as a private company limited by shares under the laws of the State of Israel on March 9, 1993, under the name Xenograft Technologies Ltd. We re-registered as a public company on June 7, 1993, in Israel, and changed our name to XTL Biopharmaceuticals Ltd. on July 3, 1995.

We commenced operations to use and commercialize technology developed at the Weizmann Institute, in Rehovot, Israel. Since 1993, we have pursued therapeutic and pharmaceutical development programs for the treatment of a variety of indications including hepatitis B, hepatitis C, diabetic neuropathic pain, schizophrenia, SLE, and multiple myeloma, most of which have terminated. We are looking at additional assets in complementary fields as well as other fields.

We currently have three subsidiaries, Psyga Bio Ltd., a private biotechnology company limited by shares under the laws of the State of Israel, which focuses on the research, development and commercialization of proprietary products derived from psychedelic and functional mushrooms, including clinically researched therapeutic candidates, microdosing solutions and wellness-focused formulations, Xtepo Ltd., a private company limited by shares under the laws of the State of Israel, which holds a license for the exclusive use of rHuEPO for the treatment of multiple myeloma, and The Social Proxy Ltd., a private AI web data company limited by shares under the laws of the State of Israel (Psyga Bio Ltd., Xtepo Ltd., and the Company, the "Group"). Based on a legal opinion provided by an Israeli commercial litigation expert, and following a dispute with the former The Social Proxy shareholders, the effective control over The Social Proxy since January 1, 2025 was held by the former stockholders of The Social Proxy and we had no control over The Social Proxy during 2025. We do not consolidate The Social Proxy in our financial statements effective January 1, 2025, notwithstanding that we held 100% of its share capital during the fiscal year ending December 31, 2025.

The ADSs are listed for trading on The Nasdaq Capital Market under the symbol "XTLB." Our ordinary shares are traded on the TASE under the symbol "XTLB." We operate under the laws of the State of Israel under the Israeli Companies Law, and in the U.S. under the Securities Act and the Exchange Act.

Our principal offices are located at 85 Medinat Hayehudim St. Herzliya 4676670, Israel, and our telephone number is (972) 54-2288897. Our primary internet address is www.xtlbio.com. None of the information on our website is incorporated by reference herein.

In August 2024 we completed our acquisition of The Social Proxy for consideration consisting of (i) 5,292,153 unregistered ADSs, representing immediately after such issuance, 44.6% of the issued and outstanding share capital of the Company, (ii) the payment of $430,000 to the former shareholders of The Social Proxy and (iii) warrants to purchase ADSs which may only be exercised upon reaching certain financial measured milestones within a period of up to three (3) years from the closing. In November 2024 we and the former shareholders of the Social Proxy agreed to reduce the number of ADSs and warrants issued to 1,864,790 and 2,896,142, respectively, and that the former shareholders shall be entitled to appoint one representative to our Board of Directors instead of two representatives as originally agreed upon. As a result, the Social Proxy's previous shareholders own approximately 20% of our current issued and outstanding share capital on a non-diluted basis.

In February 2026, after The Social Proxy has filed a formal application with the competent Israeli court for the commencement of insolvency proceedings (Order for the Opening of Proceedings) in accordance with the Israeli Insolvency Law, the Israeli court ordered the opening of insolvency proceedings in all matters concerning The Social Proxy pursuant to the Insolvency Law, and after finding that there is no reasonable prospect for The Social Proxy's economic rehabilitation, the court also ordered The Social Proxy's liquidation and the appointment of a trustee for the insolvency proceedings.

Based on a legal opinion provided by Israeli commercial litigation expert, and following a dispute with the former Social Proxy shareholders, the effective control over The Social Proxy since January 1, 2025, was held by the former stockholders of The Social Proxy and we had no control over The Social Proxy during 2025. Thus, and although we held 100% of the outstanding shares of The Social Proxy until, and in accordance with IFRS 10 (Consolidated Financial Statements), we are not consolidating The Social Proxy's financial results in this Annual Report.

In March 2025, we announced that we entered into an Exclusive Sublicense Agreement with Biossil Inc., a company incorporated under the laws of Canada ("Biossil"). Pursuant to this agreement we granted Biossil, for the term of the agreement, a royalty-free, exclusive, worldwide perpetual sublicense, with the right to sublicense through multiple tiers, to our novel synthetic peptide, hCDR1, including the patent applications and provisional applications and the resulting patents listed in the said agreement and all know-how including all clinical and pre-clinical data related to the product called Edratide, or the Product, trademarks, trade names, logos and labelling owned or controlled by us or our affiliates that is necessary or useful for the research, development, manufacture and/or commercialization of the Product. Yeda was informed by us and by Biossil about the Exclusive Sublicense Agreement and has agreed to its execution. In consideration for granting the rights under this agreement the Company will be entitled to cumulative payments of up to approximately $11,500,000. At closing, Biossil paid us $137,500 as license issuing fee and up to an aggregate of $3,362,000 will be due upon the occurrence of certain regulatory milestones and up to an aggregate of $8,000,000 will be due upon the occurrence of certain commercial milestones. As of June 30, 2026, these milestones have not occurred.

In June 2026 we complete the acquisition of 83.4% of the share capital of Psyga Bio Ltd in exchange for the issuance by us to the former shareholders of Psyga, by way of a private placement, of such number of ADSs of the Company representing, immediately after such issuance, 33.36% of the issued and outstanding share capital of the Company. In addition, as part of the consideration, the former shareholders of Psyga Bio will be issued additional ADSs (or warrants in lieu thereof) representing ten percent (10%) of the issued and outstanding share capital of the Company as of the effective date of the Purchase Agreement upon the achievement of each of three (3) milestones: (i) the commencement of at least three (3) clinical trials with human patients of certain products from Psyga's pipeline within twelve (12) months following the closing of the Transaction; (ii) the successful achievement of targets in at least two (2) clinical trials with human patients of certain products from Psyga's pipeline within thirty-six (36) months following the closing of the Transaction; and (iii) entering the development of Ibogaine-based products triggered by execution of a binding commercialization agreement and/or development partnership agreement with a reputable third-party pharmaceutical, biotechnology, or life sciences company for the commercialization, licensing, development and/or co-development of Ibogaine-based products based on the Company's regulatory licenses.

**B. Business Overview**

***Introduction***

 ****

We are an intellectual property based company, focusing on the development, management, and commercialization of intellectual property, and are engaged in biotech through our subsidiary Psyga Bio and in the biopharmaceutical industry, in which we hold a license from Yeda Research and Development Company Ltd., or Yeda, for hCDR1, a potential treatment for (1) systemic lupus erythematosus, or SLE and (2) Sjogren's syndrome, or SS.

In March 2025, we announced that we entered into an Exclusive Sublicense Agreement with Biossil Inc., a company incorporated under the laws of Canada ("Biossil"). Pursuant to this agreement we granted Biossil, for the term of the agreement, a royalty-free, exclusive, worldwide perpetual sublicense, with the right to sublicense through multiple tiers, to our novel synthetic peptide, hCDR1, including the patent applications and provisional applications and the resulting patents listed in the said agreement and all know-how including all clinical and pre-clinical data related to the product called Edratide, or the Product, trademarks, trade names, logos and labelling owned or controlled by us or our affiliates that is necessary or useful for the research, development, manufacture and/or commercialization of the Product. Yeda was informed by us and by Biossil about the Exclusive Sublicense Agreement and has agreed to its execution.

In April 2026, we announced that we entered into a share purchase agreement with the shareholders of Psyga Bio Ltd., an Israeli company led by Professor David Meiri, an internationally recognized researcher in the field of medical natural product drug discovery and head of the Laboratory of Cancer Biology and Cannabinoid Research at the Technion – Israel Institute of Technology. Psyga Bio is an advanced biotechnology company focused on the research, development and commercialization of proprietary products derived from psychedelic and functional mushrooms, including clinically researched therapeutic candidates, microdosing solutions and wellness-focused formulations. Psyga Bio operates a licensed, GMP-ready pharmaceutical manufacturing facility designed for the cultivation, extraction, isolation, formulation and production of pharmaceutical-grade botanical and synthetic psilocybin, Ibogaine and other psychedelic active pharmaceutical ingredients (APIs), in accordance with applicable international pharmaceutical manufacturing standards. It has developed a proprietary library of 250 unique mushroom strains, including differentiated high-potency and bioactive strains, which support pharmaceutical development, product consistency, future intellectual property protection and scalable commercial manufacturing capabilities. In addition, Psyga Bio is advancing a clinical pipeline consisting of seven (7) approved Phase 2a human clinical trials, which are expected to commence patient enrollment in the near future, across multiple indications, including mental health disorders, neurological conditions, trauma-related disorders, addiction treatment and additional central nervous system indications. Several of these programs are fully funded and are expected to be conducted in collaboration with leading academic institutions and medical centers. This transaction closed in June 2026 and Psyga Bio has been operating since then as a subsidiary of the Company.

In June 2024, we announced that we entered into a share purchase agreement with the shareholders of The Social Proxy, an Israeli-based technology company specializing in the development and provision of advanced web proxy solutions and data extraction. This transaction closed in August 2024. In November 2024, we announced that we entered into a settlement agreement with the chief executive officer of The Social Proxy and the previous shareholders of The Social Proxy, according to which the share purchase agreement between the Company, The Social Proxy and The Social Proxy Previous Shareholders dated June 5, 2024 will be amended such that the number of ADSs of the Company and the additional warrants, which may only be exercised upon the reaching of certain financial milestones, issuable to The Social Proxy Previous Shareholders, will each be reduced by approximately two-thirds. As a result, The Social Proxy Previous Shareholders own approximately 20% of our current issued and outstanding share capital on a non-diluted basis. In February 2026, after The Social Proxy has filed a formal application with the competent Israeli court for the commencement of insolvency proceedings (Order for the Opening of Proceedings) in accordance with the Israeli Insolvency Law, the Israeli court ordered the opening of insolvency proceedings in all matters concerning The Social Proxy pursuant to the Insolvency Law, and after finding that there is no reasonable prospect for The Social Proxy's economic rehabilitation, the court also ordered The Social Proxy's liquidation and the appointment of a trustee for the insolvency proceedings. Based on a legal opinion provided by Israeli commercial litigation expert, and following a dispute with the former Social Proxy shareholders, the effective control over The Social Proxy since January 1, 2025, was held by the former stockholders of The Social Proxy and we had no control over The Social Proxy during 2025. Thus, and although we held 100% of the outstanding shares of The Social Proxy until, and in accordance with IFRS 10 (Consolidated Financial Statements), we are not consolidating The Social Proxy's financial results in this Annual Report.

**Psyga Bio**

Psyga Bio is an Israeli company led by Professor David Meiri, an internationally recognized researcher in the field of medical natural product drug discovery and head of the Laboratory of Cancer Biology and Cannabinoid Research at the Technion – Israel Institute of Technology.

Psyga Bio is an advanced biotechnology company dedicated to the research, development, and commercialization of proprietary products derived from psychedelic and functional mushrooms. Psyga's diverse portfolio spans clinically researched treatment candidates, precision microdosing solutions, and wellness-focused formulations. Psyga Bio operates at the cutting edge of the industry by maintaining a fully licensed, GMP-ready pharmaceutical manufacturing facility designed for the cultivation, extraction, isolation, formulation, and production of pharmaceutical-grade botanical and synthetic active pharmaceutical ingredients (APIs), including psilocybin, ibogaine, and other psychedelic compounds, in compliance with strict international manufacturing standards.

Psyga Bio's operational model relies on a powerful scientific, clinical, infrastructural, and commercial edge. The company's competitive advantage is anchored by the following assets:

● The company operates a 200 sqm GMP-ready cleanroom facility located in Caesarea, Israel. The facility is on track to achieve full GMP certification.

● Psyga Bio possesses an extensive library consisting of over 250 unique mushroom strains across 20 distinct mushroom species.

● Through rigorous analytics, the company has identified 100 to 130 distinct compounds. This includes 9 novel tryptamines, securing a robust pipeline for future intellectual property (IP) protection and commercial manufacturing scalability.

● Psyga Bio has launched a dedicated micro-dosing mission to address the current market gaps which include a total lack of standardization, inconsistent production, absent clinical validation, and a lack of regulatory readiness. The platform delivers a highly standardized solution featuring defined mushroom strains, calibrated micro-dose ranges, strict GMP cultivation protocols, and human validation of measurable brain activity. These products target non-psychoactive precision applications for ADHD, anxiety, focus, and neuroplasticity.

The company is advancing a core clinical pipeline consisting of seven (7) approved Phase 2a human clinical trials, which are expected to commence patient enrollment in the near future. These funded programs cover central nervous system indications, mental health disorders, neurological conditions, and addiction treatment, conducted alongside top-tier medical centers. Concurrently, there are several approved clinical trials in Israel currently awaiting GMP-certified botanical material. Psyga Bio is positioned to supply its stable, proprietary GMP strains to these approved trials, which directly target the following therapeutic fields: Treatment-Resistant Depression (TRD), Post-Traumatic Stress Disorder (PTSD), Cancer survival-related PTSD, End-of-life depression, and Anorexia.

Psyga's scientific activities are led by Professor David Meiri, and are supported by collaborations with leading Israeli academic institutions and medical centers, including the Technion – Israel Institute of Technology, Rambam Health Care Campus, Sheba Medical Center and additional research institutions.

**Our Strategy**

Our strategy is centered on creating long-term value by identifying, acquiring, and developing intellectual property and technology assets with high-impact potential in substantial and growing markets. Through strategic acquisitions, innovation, and operational excellence, we aim to enhance the scalability, efficiency, and market reach of our portfolio companies while driving sustainable growth and competitive differentiation.

The core pillars of our strategy are:

● **Identifying and Acquiring High-Potential Intellectual Property and Technology Assets in Biomed and other areas** 

We actively seek out proprietary technologies and unique assets with transformative potential, particularly in industries characterized by biomed challenges. Our approach prioritizes:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Technological
Differentiation – Identifying Intellectual Property-driven solutions that offer a clear competitive edge.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Market
Opportunity – Targeting industries with strong growth trajectories and increasing reliance on disruptive technologies.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Scalability
and Monetization – Ensuring that assets can be expanded and monetized through strategic partnerships and global market penetration.

● **Developing and Enhancing Acquired Technologies** 

We focus on optimizing, scaling, and expanding the capabilities of the assets we acquire. This involves:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Investing
in R&D – Enhancing proprietary technologies to maintain leadership in the market.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Expanding
Infrastructure – Strengthening network capabilities to improve performance, security, and service reliability.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Ensuring
Ethical and Regulatory Compliance – Aligning our technologies with evolving legal and ethical standards.

● **Leveraging Strategic Partnerships and Market Expansion** 

We drive growth through strategic alliances, partnerships, and geographic expansion to maximize the commercial potential of our technologies.

Enhancing our presence in high-demand regions such as the United States, Europe, and Asia.

● **Sustaining Long-Term Growth through Innovation** 

We are committed to continuous technological advancement and value creation by:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Anticipating
Market Trends – Staying ahead of industry shifts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Building
Resilient and Adaptive Solutions – Ensuring that our platforms can adapt to evolving business needs and regulatory landscapes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o Maintaining
an Ethical Approach to Data Utilization – Developing solutions that respect privacy, transparency, and ethical AI principles.

By identifying, acquiring, and developing cutting-edge intellectual property and technology assets, we aim to unlock new business opportunities, maximize investment returns, and strengthen our leadership.

**Recent Developments**

*The Social Proxy* 

 

In June 2024, we announced that we entered into a share purchase agreement with the shareholders of The Social Proxy. This transaction closed in August 2024 In November 2024, we announced that we entered into a settlement agreement with the chief executive officer of The Social Proxy and the previous shareholders of The Social Proxy, according to which the share purchase agreement between the Company, The Social Proxy and The Social Proxy Previous Shareholders dated June 5, 2024 will be amended such that the number of ADSs of the Company and the additional warrants, which may only be exercised upon the reaching of certain financial milestones, issuable to The Social Proxy Previous Shareholders, will each be reduced by approximately two-thirds. As a result, The Social Proxy Previous Shareholders own approximately 20% of our current issued and outstanding share capital on a non-diluted basis. In February 2026, after The Social Proxy has filed a formal application with the competent Israeli court for the commencement of insolvency proceedings (Order for the Opening of Proceedings) in accordance with the Israeli Insolvency Law, the Israeli court ordered the opening of insolvency proceedings in all matters concerning The Social Proxy pursuant to the Insolvency Law, and after finding that there is no reasonable prospect for The Social Proxy's economic rehabilitation, the court also ordered The Social Proxy's liquidation and the appointment of a trustee for the insolvency proceedings. Based on a legal opinion provided by Israeli commercial litigation expert, and following a dispute with the former Social Proxy shareholders, the effective control over The Social Proxy since January 1, 2025, was held by the former stockholders of The Social Proxy and we had no control over The Social Proxy during 2025. Thus, and although we held 100% of the outstanding shares of The Social Proxy until, and in accordance with IFRS 10 (Consolidated Financial Statements), we are not consolidating The Social Proxy's financial results in this Annual Report.

*Psyga*

 

In April 2026, we announced that we entered into a share purchase agreement with the shareholders of Psyga Bio Ltd. This transaction closed in June 2026 and Psyga Bio will operate as a subsidiary of the Company.

*Nasdaq*

On January 20, 2026, the Company received a written notification from Nasdaq, notifying the Company that the Company currently does not meet the continued listing requirement of Nasdaq, under Nasdaq Listing Rules 5550(b)(1), to maintain a minimum of $2,500,000 in stockholders' equity for continued listing. This Nasdaq determination was based on (i) the Company's Form 6-K, dated December 30, 2025, that included financial information for the period ended June 30, 2025, and which reported stockholders' equity deficit of $47,000, and (ii) that the Company does not meet the alternatives of market value of listed securities or net income from continuing operations as of January 20, 2026.

On January 25, 2026, the Company received a written notification from Nasdaq, notifying the Company of the Staff's belief, based upon its review of the Company and pursuant to Nasdaq Listing Rule 5101, that the Company is a "public shell", and that continued listing of the Company's American Depositary Shares ("ADSs") is no longer warranted. The Company requested a hearing (the "Hearing") to appeal the delisting process before a Nasdaq Hearings Panel (the "Panel"). The Hearing was held on April 16, 2026, at which the Company's management and outside counsel presented its compliance plan.

On May 4, 2026, the Company received a letter (the "Decision Letter") from Nasdaq, informing the Company that the Panel has determined to grant the request of the Company to continue its listing on The Nasdaq Stock Market ("Nasdaq" or the "Exchange") subject to the conditions described in the Letter.

According to the Decision Letter, the Panel determined to grant the Company an exception for continued listing on the Exchange subject to that the company will, on or prior to June 30, 2026, complete the Psyga Bio transaction and demonstrate compliance with all continued listing requirements of Nasdaq.

In addition, while the Decision Letter notes the prior violation of Listing Rule 5550(a)(2) as disclosed in the Report of Foreign Private Issuer on Form 6-K furnished to SEC on December 29, 2025, this issue has been fully resolved. Following the Company's reverse stock split (through ADS ratio change) on March 25, 2026, our ADSs have consistently maintained a closing bid price in excess of $1.

On May 18, 2026, the Company received a written notification from Nasdaq, notifying the Company that since the Company has not yet filed its Annual Report on Form 20-F for the year ended December 31, 2025, it no longer complies with Nasdaq's Listing Rule Listing Rule 5250(c)(1) which requires companies to timely file all required periodic financial reports with the SEC. Nasdaq informed the Company that this matter serves as an additional basis for delisting the Company's securities from Nasdaq and that the Panel will consider this matter in its decision regarding the Company's continued listing on The Nasdaq Capital Market. The Company had until May 26, 2026, to present its views with respect to this additional deficiency to the Panel in writing and to request a stay of the suspension of its securities from The Nasdaq Capital Market, pending a Panel decision. On May 26, 2026, the Company submitted its views on this additional matter and requested to stay the suspension of its securities from The Nasdaq Capital Market.

**Drug Candidates**

**hCDR1 for the Treatment of Systemic Lupus Erythematosus**

 

As mentioned above, in March 2025, we announced that we entered into an Exclusive Sublicense Agreement with Biossil, pursuant to which we have granted Biossil, for the term of the agreement, a royalty-free, exclusive, worldwide perpetual sublicense, with the right to sublicense through multiple tiers, to our novel synthetic peptide hCDR1. Thus, from such date, we are no longer actively involved with the development of hCDR1.

**rHuEPO for the Treatment of Multiple Myeloma**

As our focus has changed, we do not anticipate conducting material research and development activities for rHuEPO.

**Intellectual Property**

**Patents**

***General***

Patents and other proprietary rights may be very important to the development of our business. We will be able to protect our proprietary technologies from unauthorized use by third parties only to the extent that our proprietary rights are covered by valid and enforceable patents or are effectively maintained as trade secrets. We intend to seek and maintain patent and trade secret protection for our drug candidates and our proprietary technologies. As part of our business strategy, our policy is to file patent applications in the U.S. and internationally. We also rely on trade secret information, technical know-how, innovation and agreements with third parties to continuously expand and protect our competitive position.

Generally, patent applications in the U.S. are maintained in secrecy for a period of at least 18 months. Third parties or competitors may challenge or circumvent our patents or patent applications, if issued. Granted patents can be challenged and ruled invalid at any time, therefore the grant of a patent is not of itself sufficient to demonstrate our entitlement to a proprietary right. The disallowance of a claim or invalidation of a patent in any one territory can have adverse commercial consequences in other territories.

If our competitors prepare and file patent applications in the U.S. that claim technology also claimed by us, we may choose to challenge competing patent rights, which could result in substantial cost, even if the eventual outcome is favorable to us. While we have the right to defend patent rights related to our licensed drug candidates and technologies, we are not obligated to do so. In the event that we decide to defend our licensed patent rights, we will be obligated to cover all of the expenses associated with that effort.

If a patent is issued to a third party containing one or more preclusive or conflicting claims, and those claims are ultimately determined to be valid and enforceable, we may be required to obtain a license under such patent or to develop or obtain alternative technology. In the event of a litigation involving a third party claim, an adverse outcome in the litigation could subject us to significant liabilities to such third party, require us to seek a license for the disputed rights from such third party, and/or require us to cease use of the technology. We also may need to commence litigation to enforce any patents issued to us or to determine the scope, validity and/or enforceability of third-party proprietary rights. Litigation would involve substantial costs.

***hCDR1 for the Treatment of SLE and SS***

We have exclusively licensed from Yeda, three families of patents relating to hCDR1. These three families of patents were sublicensed to Biossil pursuant to the Exclusive Sublicense Agreement that we have entered into with Biossil.

● A basic patent family entitled "Synthetic Human Peptides and Pharmaceutical Compositions Comprising Them" for the Treatment of Systemic Lupus Erythematosus" that covers the active pharmaceutical agent, the Edratide peptide.

● A patent family for the formulation entitled "Parenteral Formulations of Peptides for the Treatment of Systemic Lupus Erythematosus" that covers a very specific pharmaceutical composition comprising Edratide.

● A patent family for treatment of Sjögren's syndrome with Edratide and similar peptides was filed on January 4, 2018.

***Licensing Agreements and Collaborations***

**hCDR1**

On January 7, 2014, we entered into a license agreement with Yeda, as amended on September 6, 2015, which grants us the exclusive worldwide right to research, develop, and commercialize hCDR1 for all indications. Yeda is the commercial arm of the Weizmann Institute of Science.

In March 2025, we announced that we have entered into an Exclusive Sublicense Agreement with Biossil. Pursuant to this agreement we have granted Biossil, for the term of the agreement, a royalty-free, exclusive, worldwide perpetual sublicense, with the right to sublicense through multiple tiers, to our novel synthetic peptide, hCDR1, including the patent applications and provisional applications and the resulting patents listed in the said agreement and all know-how including all clinical and pre-clinical data related to the Product, trademarks, trade names, logos and labelling owned or controlled by us or our affiliates that is necessary or useful for the research, development, manufacture and/or commercialization of the Product. Yeda was informed by us and by Biossil about the Exclusive Sublicense Agreement and has agreed to its execution.

**Employees**

As of the date hereof, we have a full-time CEO and part-time CFO. Our subsidiaries have 3 full-time employees. We and Israeli employees who might be employed by us, are subject, by an extension order of the Israeli Ministry of Welfare, to certain provisions of collective bargaining agreements between the Histadrut, the General Federation of Labor Unions in Israel and the Coordination Bureau of Economic Organizations, including the Industrialists Associations. Our part-time service providers are not subject to these collective bargaining agreements. These provisions principally address cost of living increases, recreation pay, travel expenses, vacation pay and other conditions of employment. We provide our employees with benefits and working conditions equal to or above the required minimum. Other than those provisions, our employees are not represented by a labor union.

***Organizational structure***

Our legal and commercial name is XTL Biopharmaceuticals Ltd. We were established as a private company limited by shares under the laws of the State of Israel on March 9, 1993, under the name Xenograft Technologies Ltd. We re-registered as a public company on June 7, 1993, in Israel, and changed our name to XTL Biopharmaceuticals Ltd. on July 3, 1995.

We commenced operations to use and commercialize technology developed at the Weizmann Institute, in Rehovot, Israel. Since 1993 we pursued therapeutic and pharmaceutical development programs for the treatment of a variety of indications including hepatitis B, hepatitis C, diabetic neuropathic pain, schizophrenia, SLE and multiple myeloma, most of which have terminated.

We currently have three subsidiaries, Psyga Bio Ltd. a private company limited, Xtepo Ltd., a private company limited by shares under the laws of the State of Israel and The Social Proxy Ltd., a private company limited by shares under the laws of the State of Israel. Based on a legal opinion provided by an Israeli commercial litigation expert, and following a dispute with the former The Social Proxy shareholders, the effective control over The Social Proxy since January 1, 2025 was held by the former stockholders of The Social Proxy and we had no control over The Social Proxy during 2025. We do not consolidate The Social Proxy in our financial statements effective January 1, 2025, notwithstanding that we held 100% of its share capital during the fiscal year ending December 31, 2025.

The ADSs are listed for trading on The Nasdaq Capital Market under the symbol "XTLB." Our ordinary shares are traded on the TASE under the symbol "XTLB." We operate under the laws of the State of Israel under the Israeli Companies Law, and in the U.S. under the Securities Act and the Exchange Act.

Our principal offices are located at 85 Medinat Hayehudim St.Herzliya 4676670, Israel, and our telephone number is (972) 54-2288897. Our primary internet address is www.xtlbio.com. None of the information on our website is incorporated by reference herein.

**ITEM 4A. UNRESOLVED STAFF COMMENTS**

None.

**ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS**

You should read the following discussion and analysis in conjunction with our audited consolidated financial statements, including the related notes, prepared in accordance with IFRS Accounting Standards as issued by the International Accounting Standards Board ("IFRS Accounting standards" or "IFRS") for the years ended December 31, 2025, 2024 and 2023, and as of December 31, 2025 and 2024, contained in "Item 18. Consolidated Financial Statements" and with any other selected financial data included elsewhere in this annual report.

The tables below present selected financial data for the fiscal years ended as of December 31, 2025, 2024 and 2023. We have derived this selected financial data from our audited consolidated financial statements, included elsewhere in this report and prepared in accordance with IFRS. You should read the selected financial data in conjunction with "Item 3. Key Information" and "Item 8. Financial Information" and "Item 18. Consolidated Financial Statements."

**Consolidated Statements of Comprehensive Income (Loss):**

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
|  | **U.S. dollars in thousands <br> (except per share data)** | **U.S. dollars in thousands <br> (except per share data)** | **U.S. dollars in thousands <br> (except per share data)** |
| Revenues |  |  |  |
| Cost of service | - | - | - |
| Gross profit |  |  |  |
| Research and development expenses | (28) | (16) | (31) |
| Sales and Marketing expenses |  |  |  |
| General and administrative expenses | (1437) | (759) | (734) |
| Other expenses | (223) | - | - |
| Operating loss | (1688) | (775) | (765) |
| Change in fair value of financial instruments | 1102 | 926 |  |
| Change in fair value of marketable securities | 5 | 167 | (1022) |
| Change in fair value of convertible loan from shareholder | (54) |  |  |
| Interest expenses | (7) |  |  |
| Other finance income | 60 | 34 | 41 |
| Other finance expenses | (177) | (112) | (36) |
| Finance income (expenses), net | 929 | 1015 | (1017) |
| Loss before income taxes | (759) | 240 | (1782) |
| Income taxes benefit | - | - | - |
| Profit (loss) from continuing operations | (759) | 240 | (1782) |
| Loss from discontinued operations, net of tax | (6210) | (1267) | - |
| Net loss for the year | (6969) | (1027) | (1782) |
| Basic and diluted loss per share (in U.S. dollars): |  |  |  |
| &nbsp;&nbsp;&nbsp;Profit (loss) from continuing operations | (0.0009) | 0.0004 | (0.003) |
| &nbsp;&nbsp;&nbsp;Loss from discontinued operations | (0.007) | (0.002) |  |
| Total basic and diluted loss per share | (0.008) | (0.002) | (0.003) |
| Weighted average number of issued ordinary shares | 896174328 | 673044737 | 544906149 |
| Diluted weighted average number of ordinary shares | 896174328 | 673044737 | 544906149 |

---

**Consolidated Statements of Financial Position Data:**

---

| | | |
|:---|:---|:---|
|  | **As of December 31,** | **As of December 31,** |
|  | **2025** | **2024** |
|  | **U.S Dollars in thousands** | **U.S Dollars in thousands** |
| Cash and cash equivalents | 76 | 371 |
| Working capital (deficit) | (254) | (867) |
| Total assets | 166 | 8550 |
| Long term liabilities |  | 908 |
| Total shareholders' equity | (254) | 5435 |

---

***Overview***

We are an Intellectual Property based company engaged in the biopharmaceutical industry, in which we hold a license from Yeda for hCDR1, a potential treatment for SLE and SS.

We were established as a corporation under the laws of Israel in 1993, and commenced operations to use and commercialize technology developed at the Weizmann Institute, in Rehovot, Israel. Since commencing operations, our activities have been primarily devoted to developing our technologies and drug candidates, acquiring pre-clinical and clinical-stage compounds, raising capital, purchasing assets for our facilities, and recruiting personnel. We have had no drug product sales to date. Our major sources of working capital have been proceeds from various private and public offerings of our securities and option and warrant exercises.

In March 2025, we announced that we have entered into an Exclusive Sublicense Agreement with Biossil Inc., a company incorporated under the laws of Canada ("**Biossil**"). Pursuant to this agreement we have granted Biossil, for the term of the agreement, a royalty-free, exclusive, worldwide perpetual sublicense, with the right to sublicense through multiple tiers, to our novel synthetic peptide, hCDR1, including the patent applications and provisional applications and the resulting patents listed in the said agreement and all know-how including all clinical and pre-clinical data related to the product called Edratide (the "**Product**"), trademarks, trade names, logos and labelling owned or controlled by us or our affiliates that is necessary or useful for the research, development, manufacture and/or commercialization of the Product. Thus, from such date, we are no longer actively involved with the development of hCDR1 or with the development of any other drug candidate.

In June 2024, we announced that we have entered into a share purchase agreement with the shareholders of The Social Proxy, a web data company, developing and powering a unique ethical, internet protocol based, proxy and data extraction platform for AI and BI Applications at scale. Pursuant to this purchase agreement, we have acquired all of the issued and outstanding share capital of The Social Proxy. This transaction was closed in August 2024 and Social Proxy operated as a wholly owned subsidiary of the Company. In February 2026, after The Social Proxy has filed a formal application with the competent Israeli court for the commencement of insolvency proceedings (Order for the Opening of Proceedings) in accordance with the Israeli Insolvency Law, the Israeli court ordered the opening of insolvency proceedings in all matters concerning The Social Proxy pursuant to the Insolvency Law, and after finding that there is no reasonable prospect for The Social Proxy's economic rehabilitation, the court also ordered The Social Proxy's liquidation and the appointment of a trustee for the insolvency proceedings. Based on a legal opinion provided to us by our Israeli counsel, and following a dispute with the former Social Proxy shareholders, the effective control over The Social Proxy since January 1, 2025, was held by the former stockholders of The Social proxy and we had no control over The Social Proxy during 2025. Thus, and although we held 100% of the outstanding shares of The Social Proxy until, and in accordance with IFRS 10 (Consolidated Financial Statements), we are not consolidating The Social Proxy's financial results in this Annual Report.

In April 2026, we announced that we entered into a share purchase agreement with the shareholders of Psyga Bio Ltd., an Israeli company led by Professor David Meiri, an internationally recognized researcher in the field of medical natural product drug discovery and head of the Laboratory of Cancer Biology and Cannabinoid Research at the Technion – Israel Institute of Technology. Psyga Bio is an advanced biotechnology company focused on the research, development and commercialization of proprietary products derived from psychedelic and functional mushrooms, including clinically researched therapeutic candidates, microdosing solutions and wellness-focused formulations. Psyga Bio operates a licensed, GMP-ready pharmaceutical manufacturing facility designed for the cultivation, extraction, isolation, formulation and production of pharmaceutical-grade botanical and synthetic psilocybin, Ibogaine and other psychedelic active pharmaceutical ingredients (APIs), in accordance with applicable international pharmaceutical manufacturing standards. It has developed a proprietary library of 250 unique mushroom strains, including differentiated high-potency and bioactive strains, which support pharmaceutical development, product consistency, future intellectual property protection and scalable commercial manufacturing capabilities. In addition, Psyga Bio is advancing a clinical pipeline consisting of seven (7) approved Phase 2a human clinical trials, which are expected to commence patient enrollment in the near future, across multiple indications, including mental health disorders, neurological conditions, trauma-related disorders, addiction treatment and additional central nervous system indications. Several of these programs are fully funded and are expected to be conducted in collaboration with leading academic institutions and medical centers. This transaction closed in June 2026 and Psyga Bio has been operating since then as a subsidiary of the Company.

The Company has incurred a net loss of $6,969 thousands for the year ended December 31, 2025, consisting of a loss from continuing operations of $759 thousands and a loss from discontinued operations of $6,210 thousands. As of December 31, 2025, the Company's accumulated deficit was $165,632 thousands. We have incurred negative cash flow from operations each year since our inception and we anticipate incurring negative cash flows from operating activities for the foreseeable future.

We expect to incur additional losses through the end of 2026 and beyond arising from research and development activities, testing additional technologies and operating activities, which will be reflected in negative cash flows from operating activities. In order for us to continue our operations, we will require additional funds over the next 12 months. While we hope we will be able to generate funds necessary to maintain our operations, without additional funds there might not be enough resources to maintain our operations. Our ability to obtain such additional financing and to achieve our operating goals is uncertain. In the event that we do not obtain additional capital or are not able to increase cash flow through the increase in revenues, there is a substantial doubt about our being able to continue as a going concern.

The Company is constantly looking to identify additional assets to add to XTL's portfolio.

Currently the company has no revenues, no cost of service, no cost of sales and marketing,

Our general and administrative expenses consist primarily of management fees, consultant fees, and related expenses for executive, finance and other administrative personnel, professional fees, director fees and other corporate expenses, including investor relations, business development costs and facilities related expenses. We expense our general and administrative costs as incurred.

Our results of operations include non-cash compensation expense as a result of the grants of XTL stock options. Compensation expense for awards of options granted to key service providers and directors represents the fair value of the award (measured using the Black-Scholes valuation model) recorded over the respective vesting periods of the individual stock options (see details below.)

For awards of options to consultants and other third-parties, according to IFRS 2, the treatment of such options is the same as employee options compensation expense (see note 17 to the consolidated financial statements for the year ended December 31, 2025). We record compensation expense based on the fair value of the award at the grant date according to the Black-Scholes valuation model. According to IFRS 2, in non-performance-based options, we recognize options expenses using the graded vesting method (accelerated amortization). Graded vesting means that portions of a single option grant will vest on several dates, equal to the number of tranches. We treat each tranche as a separate share option grant; because each tranche has a different vesting period, and hence the fair value of each tranche is different. Therefore, under this method the compensation cost amortization is accelerated to earlier periods in the overall vesting period.

**A. Results of Operations**

***Year ended December 31, 2025 compared to the year ended December 31, 2024***

 ****

*No revenues in both years.* 

 

*No Cost of Revenues in both years.*

 

*Research and Development Expenses*. Research and development expenses in the years ended December 31, 2025 and 2024 totaled approximately $28 thousand and $16 thousand, respectively. These expenses were comprised mainly of expenses related to consulting for hCDR1 product.

*No Sales and Marketing Expenses in both years*.

*General and Administrative Expenses*. General and administrative expenses for the years ended December 31, 2025 and 2024 totaled approximately $1,437 thousand and $759 thousand, respectively. The increase in 2025 compared to 2024 is mainly from increase in salary of CEO and increase in professional services and options granted to our directors and executives under its share option plan and bad debt of $308,000.

*Impairment of intangible assets.* The Company is required to determine, at least on an annual basis and as of year-end, whether the fair value of its unamortized intangible assets exceeds their book value. As of December 31, 2025 the company recognized an impairment loss of 223 thousand and in 2024 the Company recognized no impairments. For further information, see also Note 10 of the consolidated financial statements for the year ended December 31, 2025.

*Finance income (expenses), net*. Finance income, net for the year ended December 31, 2025 totaled approximately $929 thousand compared to finance expenses, net in the amount of $1,015 thousand in 2024. The difference primarily derives from revaluation of marketable securities and warrants to purchase ADS's which were issued in 2024 and 2025.

***Year ended December 31, 2024 compared to the year ended December 31, 2023***

 ****

Refer to Form 20-F of December 31, 2023.

***Material Accounting Policies***

We describe our material accounting policies in Note 3 to our consolidated financial statements for the year ended December 31, 2025.

***Impact of Inflation and Currency Fluctuations***

While some amount of our operating expenses are in US dollars, we incur a portion of our expenses in New Israeli Shekels. In addition, we also pay for some of our services and supplies in the local currencies of our suppliers. As a result, we are exposed to the risk that the US dollar will be devalued against the New Israeli Shekel or other currencies, and as result our financial results could be harmed if we are unable to protect against currency fluctuations in Israel or other countries in which services and supplies are obtained in the future. Accordingly, we may enter into currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchange rates of currencies. The Company's treasury's risk management policy is to hold NIS-denominated cash and cash equivalents and short-term deposits in the amount of the anticipated NIS-denominated liabilities for six consecutive months from time to time in line with the directives of the Company's Board. These measures, however, may not adequately protect us from the adverse effects of inflation in Israel. In addition, we are exposed to the risk that the rate of inflation in Israel will exceed the rate of devaluation of the New Israeli Shekel in relation to the US Dollar or that the timing of any devaluation may lag behind inflation in Israel.

As of December 31, 2025, had the Group's functional currency weakened by 12.5% against the NIS with all other variables remaining constant, loss for the year would have been approximately by $95 thousand lower (2024 loss would have been approximately $53 thousand higher; 2023 - loss approximately $185 thousand higher), mainly as a result of exchange rate changes on translation of other accounts receivable, net and exchange rate changes on NIS-denominated cash and cash equivalents and marketable securities – investment in InterCure Ltd.

***Governmental Economic, Fiscal, Monetary or Political Policies that Materially Affected or Could Materially Affect Our Operations***

Tax rates applicable to the Company:

● Since the tax year 2018, the taxable income of the Company and XTEPO is subject to a corporate tax rate of 23%.

● Benefits granted to a Preferred Enterprise include reduced tax rates. As part of the Economic Efficiency Law (Legislative Amendments for Accomplishment of Budgetary Targets for Budget Years 2017-2018), 5777-2016, the tax rate is 12% for all areas other than Development Area A (which is 7.5%).

As of December 31, 2025, XTL Biopharmaceuticals Ltd. did not have any taxable income. As of December 31, 2025, our net operating loss carries forwards for Israeli tax purposes registered on behalf of XTL Biopharmaceuticals Ltd. amounted to approximately $39 million and approximately $23 million capital loss carryforward which may be offset against future capital gain. Under Israeli law, these net-operating losses may be carried forward indefinitely and offset within XTL Biopharmaceuticals Ltd only, against future taxable income, including capital gains from the sale of assets used in the business, with no expiration date.

**B. Liquidity and Capital Resources**

The Company has incurred a net loss of $6,969 thousands for the year ended December 31, 2025, consisting of a loss from continuing operations of $759 thousands and a loss from discontinued operations of $6,210 thousands. As of December 31, 2025, the Company's accumulated deficit was $165,632 thousands. We have incurred negative cash flow from operations each year since our inception and we anticipate incurring negative cash flows from operating activities for the foreseeable future.

We expect to incur additional losses through the end of 2026 and beyond arising from research and development activities, testing additional technologies and operating activities, which will be reflected in negative cash flows from operating activities. In order for us to continue our operations, we will require additional funds over the next 12 months. While we hope we will be able to generate funds necessary to maintain our operations, without additional funds there might not be enough resources to maintain our operations. Our ability to obtain such additional financing and to achieve our operating goals is uncertain. In the event that we do not obtain additional capital or are not able to increase cash flow through the increase in revenues, there is a substantial doubt about our being able to continue as a going concern.

We have financed our operations from inception primarily through various proceeds from various private and public offerings of our securities and option and warrant exercises. As of December 31, 2025, we received net proceeds of approximately $87.6 million from various private placement transactions, public offerings and exercises of warrants.

As of December 31, 2025, we had approximately $76 thousand in cash and cash equivalents, compared to approximately $371 thousand on December 31, 2024. The decrease is mainly from the general and administrative expenses of 2025.

Net cash used in operating activities for the year ended December 31, 2025 was $1,025 thousand, compared to net cash used in operating activities of $1,618 thousand for year ended December 31, 2024. The decrease in net cash used in operating activities is mainly from the reevaluation of warrants.

Net cash provided by investing activities for the year ended December 31, 2025 was $522 thousand compared to net cash used in investing activities of $844 thousand for the year ended December 31, 2024. The change is due to the acquisition of The Social Proxy in 2024 and proceeds from sell of marketable securities.

Net cash provided by financing activities for the year ended December 31, 2025 was $208, mainly from shareholders convertible loan. Net cash provided by financing activities for the year ended December 31, 2024 was $1,447 mainly from issuance of shares and warrants in 2024.

We have incurred continuing losses and depend on outside financing resources to continue our activities.

**C. Research and Development, Patents and Licenses**

Research and development costs in 2025 totaled approximately $28 thousand and $16 thousand in 2024. These expenses were comprised mainly of expenses related to consulting for our related to the hCDR1 product.

***hCDR1 for the Treatment of SLE***

In March 2025, we announced that we have entered into an Exclusive Sublicense Agreement with Biossil and that pursuant to this agreement we have granted Biossil, for the term of the agreement, a royalty-free, exclusive, worldwide perpetual sublicense, with the right to sublicense through multiple tiers, to our novel synthetic peptide, hCDR1. Therefore, from such date, we are not actively involved with the development of hCDR1.

***rHuEPO for the Treatment of Multiple Myeloma***

 ****

We have decided to concentrate our efforts and resources on the development of hCDR1 and therefore do not expect to initiate any activities related to rHuEPO.

The following table sets forth the research and development costs for the years 2025, 2024 and 2023 including all costs related to the clinical-stage projects, our pre-clinical activities, and all other research and development. We in-licensed hCDR1 in January 2014 and started preparations for clinical development of this asset during the year. We started preparations for rHuEPO clinical development in the last quarter of 2010 (after the completion of the Bio-Gal transaction on August 2010). We in-licensed SAM-101 in November 2011 and in June 2015, the Company terminated the license agreement and all rights in and to the licensed technology reverted to MinoGuard. Whether or not and how quickly we commence and complete development of our clinical stage projects is dependent on a variety of factors, including the rate at which we are able to engage clinical trial sites and the rate of enrollment of patients. As such, the costs associated with the development of our drug candidates will probably increase significantly.

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| | | | |
|:---|:---|:---|:---|
|  | **Research and development<br> Expenses in thousand US$** | **Research and development<br> Expenses in thousand US$** | **Research and development<br> Expenses in thousand US$** |
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
| **hCDR1** | 28 | 16 | 31 |
| **Total Research and Development** | 28 | 16 | 31 |

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**D. Trend Information**

The trends impacting us are described elsewhere in this annual report on Form 20-F, including in Items 3.D., 4.B., and 5.A. and B.

**E. Critical Accounting Estimates**

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

● Critical accounting estimates and assumptions

Our management's discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which we have prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. The preparation of these consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as well as the reported expenses during the reporting periods. Actual results may differ from these estimates under different assumptions or conditions.

● Accounting for business combination

 ****

We allocate the purchase price of acquired companies to the tangible and intangible assets acquired and liabilities assumed, based upon their estimated fair values at the acquisition date. These fair values are typically estimated with assistance from independent valuation specialists.

The purchase price allocation process requires us to make significant estimates and assumptions, especially at the acquisition date with respect to intangible assets, contractual support obligations assumed, contingent consideration arrangements, and pre-acquisition contingencies.

Although we believe the assumptions and estimates we have made in the past have been reasonable and appropriate, they are based in part on historical experience and information obtained from the management of the acquired companies and are inherently uncertain.

Examples of critical estimates in valuing certain of the intangible assets we have acquired or may acquire in the future include but are not limited to:

● future expected cash flows from product sales or other customer contracts;

● expected costs of fulfillment including marketing, warehousing and product sales;

● the acquired company's brand and competitive position, as well as assumptions about the period of time the acquired brand will continue to be used in the combined company's product portfolio;

● EBIT margins;

● revenues growth rates;

● Royalty rate;

● cost of capital and discount rates; and

● estimating the useful lives of acquired assets as well as the pattern or manner in which the assets will amortize.

Refer to Note 5, Subsidiaries, to the consolidated financial statements included in "Item 8. Financial Statements and Supplementary Data" of this Annual Report on Form 20-F

● Intangible assets

These assets are reviewed for impairment once a year and whenever there are indicators of a possible impairment, in accordance with the provisions of IAS 36, *Impairment of Assets*. The amortization of an asset on a straight-line basis over its useful life begins when the development procedure is completed, and the asset is available for use.

Non-financial assets that sustained impairment are reviewed for possible reversal of the impairment at each date of the statement of financial position. An impairment is tested at least every year. In addition, discretion is exercised as to whether there is an indication to examine impairment more frequently.

● Issuance of warrants

The exercise price of the warrants issued is in NIS (different than the functional currency) and therefore these warrants are classified as a liability. The warrants issued at the fund-raising have a cashless exercise mechanism and therefore, in accordance with International Accounting Standard 32: "Financial Instruments: Presentation", are also a financial liability.

The Company has initially recognized them at fair value as of the date of issuance (measured through third-party appraiser, using a Black-Scholes model).

The warrants are carried at fair value. On each reporting period, the changes in their fair value are recognized in profit or loss.

● Discontinued Operations

In accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations, a discontinued operation is a component of the Company that has either been disposed of or otherwise ceased to be consolidated, and that represents a separate major line of business or geographical area of operations. The post-tax results of discontinued operations are presented as a single line item in the statement of operations, separately from continuing operations. As required by IFRS 5, the statement of operations for the comparative period is re-presented as if the operation had been discontinued from the start of that period, so that all periods are presented on a consistent basis.

**F. Off-Balance Sheet Arrangements**

We have not entered into any transactions with unconsolidated entities whereby we have financial guarantees, subordinated retained interests, derivative instruments or other contingent arrangements that expose us to material continuing risks, contingent liabilities, or any other obligations under a variable interest in an unconsolidated entity that provides us with financing, liquidity, market risk or credit risk support.

**ITEM 6. DIRECTORS AND SENIOR MANAGEMENT** 

**Directors and Senior Management**

The following sets forth information with respect to our directors and executive officers as of the date hereof.

---

| | | |
|:---|:---|:---|
| **Name** | **Age** | **Position** |
| Noam Band | 56 | Chief Executive Officer and Director |
| Niv Segal | 40 | Chief Financial Officer |
| Shlomo Shalev | 64 | Non-Executive Director and Chairman of the Board |
| Osnat Hillel Fain | 60 | Non-Executive and External Director |
| Iris Shapira Yalon | 58 | Non-Executive and External Director |
| Alexander Rabinovich | 55 | Non-Executive Director |

---

 ****

***Noam Band*** was appointed to serve as Chief Executive Officer of the Company in April 2025. Most recently, Mr. Band has served as the Chief Executive Officer of Monitor2Heart. From 2020 through its acquisition in 2023 he served as a board advisor to 7digital Group plc (formerly AIM: 7DIG), contributing to its strategic direction and corporate governance. Mr. Band served as the Chairman and Chief Executive Officer of Gix Internet Ltd. (formerly Algomizer Ltd.) (TASE:GIX) from 2013 to 2020 and as a Chairman of Viewbix Inc. (OTCMKTS: VBIX) from 2018 to 2020. Additionally, Mr. Band has served as the Chief Executive Officer of Timest, Mobillion, and Dotomi (acquired by ValueClick). Mr. Band holds an MBA and a B.A. in Economics from The Hebrew University of Jerusalem, Israel.

***Niv Segal*** was appointed our Chief Financial Officer in December 2025. Mr. Segal, CPA, has over 12 years of senior financial management experience, primarily in the high-tech sector. He served as the Chief Financial Officer of G.S. Innplay Labs, where he led the company's $300M acquisition by Playtika, and as the Chief Financial Officer of Beach Bum, managing its $700M acquisition process. Earlier, Mr. Segal was the Group Corporate Controller at Gix Ltd. (TASE: GIX; NASDAQ: VBIX), overseeing global finance operations, public company reporting, M&A processes, and SOX compliance. Mr. Segal began his career at PwC Israel, auditing public and private companies. Mr. Segal holds an MBA in Accounting, a BA in Economics and Accounting, and is a Certified Public Accountant in Israel..

***Shlomo Shalev*** joined our Board of Directors in December 2014. In April 2025, Mr. Shalev was appointed to serve as Chairman, a position filled by him between August 2015, and June 2018 as well. From May 2020 through April 2025 Mr. Shalev served as the company's CEO. Previously he served as Executive Chairman of the Board of Intercure, a TASE and Nasdaq listed company. In addition to serving as a board member on a number of Nasdaq and TASE listed companies. Mr. Shalev was the Senior Vice President of Investments for Ampal. He has also worked on a number of transactions in mergers and acquisitions and initial public offerings. With an educational background in economics, Mr. Shalev was Israel's Consul for Economic Affairs and the Economic Advisor to the Director General, Ministry of Industry and Trade. Mr. Shalev holds an MBA from the University of San Francisco and a B.A. degree in Economics from the University of Ben Gurion, Beer Sheva, Israel. We believe Mr. Shalev's extensive company strategy and oversight experience, along with his board experience makes him well-qualified to serve as a Director of our Board of Directors.

***Osnat Hillel Fain*** joined our Board of Directors in March 2015. Ms. Fain served as Founder, Director and Managing Partner of Newton Propulsion Technologies LTD from 2003 to 2016. Since 2017, Ms. Fain has served as Consultant, Strategy and Business Development at Adi Shefaram Management LTD where she locates, examines and screens economic feasibility for ventures in various fields and provides business development assistance among other duties. In addition, Ms. Fain serves as a board member on a number of TASE listed companies, including Tigi, Alrov Real Estate and Mehadrin and a former director of TASE listed companies such as DIC Discount Investment Corporation, Elron, PBC Group, ICB, Priortech LTD, E.T.VIEW, Aran R&D, Leumi Start LTD. Ms. Fain was the Business Development Manager at Giora Eiland Ltd., a representative of the Cheyne Capital Group in Israel, General Director of InterVision, Managing Partner at Aran Medical Ventures Hedge Fund, Marketing Manager at Datasphere Ltd. and a marketing consultant for TCB, Elgan Office Supplies, the Haifa Theatre, Adar (software house). A director in Anabella since Jan 2025. Ms. Fain earned a BA in Humanities and Executive MBA from Tel Aviv University and completed a one year course in Management at the Tel Aviv campus of the College of Management. We believe Ms. Fain's extensive management and board experience makes her well-qualified to serve as a member of our Board of Directors.

***Iris Shapira Yalon*** was appointed a director on January 29, 2020. Ms. Yalon serves as External Director of Shufersal Ltd (The leading Israeli retail chain)., as well as Director of One Technologies Ltd, an Israeli public company, a leader in information technology services and innovative solutions and City people Ltd, a public company traded on TASE, in the field of urban renewal). Mei Avivim, (a water corporation of Tel Aviv) and in several associations for the benefit of the public as the Chair of audit committee (such as World WIZO and others) and as a Lecturer of Director's course. Prior to that, Ms. Yalon served as Board member on a number of TASE listed companies, including Electra real estate Ltd., Computer Direct Group Ltd. Rotem Industries (Israeli government-owned company), and on a dual listed company such as TAT Technologies Ltd., Ms. Yalon served as the Chief Financial Officer of multiple companies such as Kryon Systems Ltd., Haldor Advanced Technologies Ltd., Mofet Technology Fund Ltd., and Cloverleaf Media Ltd., which was acquired in 2010 by Dot Hill. Moreover, Ms. Yalon has served as Audit Team Manager at Ernest & Young. She earned a BA in Economics and Accounting (cum laude) at Tel Aviv University and she is a licensed accountant. We believe Ms. Yalon's extensive board experience makes her well-qualified to serve as a member of our Board of Directors.

***Alexander Rabinovich*** joined our Board of Directors in April 2017. Mr. Rabinovich has served on the board of directors of Intercure Ltd. since October 2018, and as Chairman of Intercure's Board since February 2025 and is also the Chief Executive Officer of InterCure. He has significant public company experience with both Nasdaq and TASE listed companies. Mr. Rabinovich is currently also the Chief Executive Officer and director of Green Fields Capital Ltd., a public company listed on the TASE, engaged in investments in renewable energies. Mr. Rabinovich also served until 2014, on the board of directors of Pilat Media Global PLC, a public company listed on TASE and on the Alternative Investment Market of the London Stock Exchange. Mr. Rabinovich holds a B.A. degree in economics and accounting from the University of Haifa, Israel.

**B. Compensation**

The aggregate compensation paid by us to all persons who served as directors or officers for the year 2025 was approximately $658 thousand.

All members of our Board of Directors who are not our employees are reimbursed for their expenses for each meeting attended, save for Alexander Rabinovich, who is a significant shareholder of our Company. Our directors are eligible to receive stock options under our stock option plans. Non-executive directors do not receive any remuneration from us other than fees for their services as members of the board or committees of the board and expense reimbursement, save for one director who is eligible for fees for consulting services provided to the Company.

In 2017, we fixed the monetary compensation for non-executive directors as follows: annual consideration of NIS 29 thousand (to be paid in 4 equal quarterly payments), payments of NIS 1,460 for attendance at each board or committee meeting in person, NIS 876 for meetings held by teleconference, NIS 730 for unanimous written board resolutions and reimbursement of reasonable out-of-pocket expenses. These payments are indexed to the US Dollar exchange rate.

For further details regarding share options granted to our directors and service providers, see Note 14 to the consolidated financial statements for the year ended December 31, 2025.

**Employment Agreements**

 ****

***Noam Band***

Our Chief Executive Officer, Noam Band, was appointed on April 7, 2025. Mr. Band will receive compensation as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Monthly
retainer – Mr. Band shall be entitled to a fixed gross monthly fee of NIS 50,000 (approximately USD 13,744), excluding value added
tax. For the first 3 months and NIS 60,000 thereafter.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Options
- subject to the approval of the Board of Directors of the Company, and applicable law, Mr. Band shall be granted:

● Time-Based Option - 42,300,000 options to acquire up to 42,300,000 ordinary shares of the Company, NIS 0.1 nominal value each, of the Company, represented by 423,000 ADSs (before ratio change in 2026) of the Company. These options shall vest equally on a quarterly basis over a period of forty-eight (48) months following the date of the agreement. The exercise price for each such option is USD 1.4 per ADS (before the ratio change in 2026).

● Milestone Based Option - 42,300,000 options to acquire up to 42,300,000 ordinary shares, represented by 423,000 ADSs (before ratio change in 2026). Upon the occurrence within a period of twenty-four (24) months as of the date of the grant of these options (i) reaching positive EBITDA (based on financial statement audited by the Company' auditors), 300,000 options shall vest and (ii) closing of a strategic transaction (as defined by the Board), additional 123,000 options shall vest, provided however that on the date of achievement of the relevant Milestone, the Service Provider continues to provide services to the Company. The exercise price for each such option being USD 1.6 per ADS 423,000 (before ratio change in 2026).

In the event of termination of this agreement: (i) The options shall stop vesting upon the termination notice (as defined in the agreement); and (ii) any options already vested may be exercisable within 90 days following the date of the termination notice.

In accordance with the Israeli Companies Law, Mr. Band's compensation was approved by the shareholder.

 ****

***Shlomo Shalev***

Shlomo Shalev. Mr. Shalev, who served as our chief executive officer until April 2025 and who is now serving as our Chairman of the Board, will receive compensation as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Monthly
retainer – Mr. Shalev shall be entitled to a fixed gross monthly fee of NIS 30,000 (approximately USD 8,264), excluding value added
tax.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Working
Hours – Mr. Shalev shall be employed at a 50% capacity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Social
Benefits – Mr. Shalev shall be entitled to receive monthly car expense payments of NIS 3,000 (approximately USD 933).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. Options
– Mr. Shalev was issued in (1) in the years 2014, and 2016 options that have expired.; (2) in the year 2020 with 10,000,000 options
to purchase, under the approved ESOP plan of the Company, 10,000,000 ordinary shares of the Company, at an exercise price of NIS 0.09
(approximately USD 0.03) per option. These options are fully vested; and (3) During the year 2024 with 10,000,000 options to purchase,
under the approved ESOP plan of the Company, 10,000,000 ordinary shares of the Company, at an exercise price of NIS 0.0438 (approximately
USD 0.01) per option. These options were fully vested on grant date.(4) During the year 2025 with 10,000,000 options to purchase, under
the approved ESOP plan of the Company, 10,000,000 ordinary shares of the Company, at an exercise price of USD 0.012 per option. These
options were fully vested on grant date.

***Niv Segal***

 ****

Monthly retainer – Mr. Segal shall be entitled to a fixed gross monthly fee of NIS 15,000 (approximately USD 4,700), excluding value added tax.

**C. Board Practices**

***Election of Directors and Terms of Office***

 ****

Our Board of Directors currently consists of five members. The nomination of our directors is proposed by our Board of Directors or a designated nomination committee composed of three members of our Board of Directors, whose proposal is then approved by the board. Our board, following receipt of a proposal of the nomination committee, has the authority to add additional directors up to the maximum number of 12 directors allowed under our Articles. Such directors appointed by the board serve until the next annual general meeting of the shareholders. Unless they resign before the end of their term or are removed in accordance with our Articles, all of our directors, other than our external directors, will serve as directors until our next annual general meeting of shareholders.

None of our directors or officers has any family relationship with any other director or officer.

Our Articles permit us to maintain directors' and officers' liability insurance and to indemnify our directors and officers for actions performed on behalf of us, subject to specified limitations. We maintain a directors and officers insurance policy which covers the liability of our directors and officers as allowed under Israeli Companies Law.

There are no service contracts or similar arrangements with any director that provide for benefits upon termination of a directorship.

***External and Independent Directors***

 ****

The Israeli Companies Law requires Israeli companies with shares that have been offered to the public either in or outside of Israel to appoint two external directors. No person may be appointed as an external director if that person or that person's relative, partner, employer or any entity under the person's control, has or had, on or within the two years preceding the date of that person's appointment to serve as an external director, any affiliation with the company or any entity controlling, controlled by or under common control with the company. The term affiliation includes:

● an employment relationship;

● a business or professional relationship maintained on a regular basis;

● control; and

● service as an office holder, other than service as an officer for a period of not more than three months, during which the company first offered shares to the public.

No person may serve as an external director if that person's position or business activities create, or may create, a conflict of interest with that person's responsibilities as an external director or may otherwise interfere with his/her ability to serve as an external director. If, at the time external directors are to be appointed, all current members of the Board of Directors are of the same gender, then at least one external director must be of the other gender. A director in one company shall not be appointed as an external director in another company if at that time a director of the other company serves as an external director in the first company. In addition, no person may be appointed as an external director if he/she is a member or employee of the Israeli Security Authority, and also not if he/she is a member of the Board of Directors or an employee of a stock exchange in Israel.

External directors are to be elected by a majority vote at a shareholders' meeting, provided that either:

● the majority of shares voted at the meeting, including at least one-half of the shares held by non-controlling shareholders or other shareholders who have a personal interest in such election voted at the meeting, vote in favor of election of the director, with abstaining votes not being counted in this vote; or

● the total number of shares held by non-controlling shareholders voted against the election of the director does not exceed two percent of the aggregate voting rights in the company.

The initial term of an external director is three years and may be extended for two additional three-year terms. Notwithstanding, pursuant to applicable articles of the Companies Regulations (Reliefs for Israeli companies whose securities are listed for trading on a stock exchange outside of Israel), promulgated under the Companies Law and as amended from time to time, following the Audit Committee and the Board of Directors recommendation, the Company shareholders may re-elect an external director for additional terms. An external director may be removed only by the same percentage of shareholders as is required for their election, or by a court, and then only if such external director ceases to meet the statutory qualifications for their appointment or violates his or her duty of loyalty to the company. Both external directors must serve on every committee that is empowered to exercise one of the functions of the Board of Directors.

An external director is entitled to compensation as provided in regulations adopted under the Israeli Companies Law and is otherwise prohibited from receiving any other compensation, directly or indirectly, in connection with service provided as an external director.

Osnat Hillel Fain and Iris Shapira Yalon serve as external directors pursuant to the provisions of the Israeli Companies Law. They both serve on our audit committee, our committee for the approval of financial statements, our nomination committee and our compensation committee.

 ****

 ****

***Audit Committee***

The Israeli Companies Law requires public companies to appoint an audit committee. The responsibilities of the audit committee include identifying irregularities in the management of the company's business and approving related party transactions as required by law. An audit committee must consist of at least three directors, including all of its external directors. The chairman of the Board of Directors, any director employed by or otherwise providing services to the company, and a controlling shareholder or any relative of a controlling shareholder, may not serve as members of the audit committee. An audit committee may not approve an action or a transaction with a controlling shareholder, or with an office holder, unless at the time of approval two external directors are serving as members of the audit committee and at least one of the external directors was present at the meeting in which an approval was granted.

Our audit committee is currently comprised of three non-executive directors who meet the independence requirements under applicable SEC rules. The audit committee is chaired by Osnat Hillel Fain, who serves as the audit committee financial expert, Iris Shapira Yalon who is also a financial expert and Alex Rabinovich as members. The audit committee meets at least four times a year and monitors the adequacy of our internal controls, accounting policies and financial reporting. It regularly reviews the results of the ongoing risk self-assessment process which we undertake, and our interim and annual reports prior to their submission for approval by the full Board of Directors. The audit committee oversees the activities of the internal auditor, sets its annual tasks and goals and reviews its reports. The audit committee reviews the objectivity and independence of the external auditors and also considers the scope of their work and fees.

We have adopted a written charter for our audit committee, setting forth its responsibilities as outlined by the regulations of the SEC. In addition, our audit committee has adopted procedures for the receipt, retention and treatment of complaints we may receive regarding accounting, internal accounting controls, or auditing matters and the submission by our key consultants of concerns regarding questionable accounting or auditing matters. In addition, SEC rules mandate that the audit committee of a listed issuer consist of at least three members, all of whom must be independent, as such term is defined by rules and regulations promulgated by the SEC. We are in compliance with the independence requirements of the SEC rules.

***Financial Statement Examination Committee***

According to regulations promulgated under the Companies law and since we are considered as a "Small Corporation" under the Israeli Securities law Regulation, we are not required to appoint a financial statement examination committee, therefore our financial statements are examined and approved by our board of directors.

***Compensation Committee***

Under the Companies Law, the board of directors of any public company must establish a compensation committee and to adopt a compensation policy with respect to its officers, or the Compensation Policy. In addition, the Companies Law sets forth the approval process required for a public company's engagement with its officers (with specific reference to a director, a non-director officer, a chief executive officer and controlling shareholders and their relatives who are employed by the company).

The compensation committee shall be nominated by the board of directors and be comprised of its members. The compensation committee must consist of at least three members. All of the external directors must serve on the compensation committee and constitute a majority of its members. The remaining members of the compensation committee must be directors who qualify to serve as members of the audit committee (including the fact that they are independent) and their compensation should be identical to the compensation paid to the external directors of the company. The approval of the compensation committee is required in order to approve terms of office and/or employment of office holders. The Company's Compensation Policy was duly approved on January 7, 2021.

Similar to the rules that apply to the audit committee, the compensation committee may not include the chairman of the board, or any director employed by the company, by a controlling shareholder or by any entity controlled by a controlling shareholder, or any director providing services to the company, to a controlling shareholder or to any entity controlled by a controlling shareholder on a regular basis, or any director whose primary income is dependent on a controlling shareholder, and may not include a controlling shareholder or any of its relatives. Individuals who are not permitted to be compensation committee members may not participate in the committee's meetings other than to present a particular issue; provided, however, that an employee that is not a controlling shareholder or relative may participate in the committee's discussions, but not in any vote, and the company's legal counsel and corporate secretary may participate in the committee's discussions and votes if requested by the committee.

The roles of the compensation committee are, among other things, to: (i) recommend to the board of directors the Compensation Policy for office holders and recommend to the board once every three years the extension of a Compensation Policy that had been approved for a period of more than three years; (ii) recommend to the directors any update of the Compensation Policy, from time to time, and examine its implementation; (iii) decide whether to approve the terms of office and of employment of office holders that require approval of the compensation committee; and (iv) decide, in certain circumstances, whether to exempt the approval of terms of office of a chief executive officer from the requirement of shareholder approval.

The Compensation Policy requires the approval of the general meeting of shareholders with a "Special Majority", which requires a majority of the shareholders of the company who are not either a controlling shareholder or an "interested party" in the proposed resolution, or the shareholders holding less than 2% of the voting power in the company voted against the proposed resolution at such meeting. However, under special circumstances, the board of directors may approve the Compensation Policy without shareholder approval, if the compensation committee and thereafter the board of directors decided, based on substantiated reasons after they have reviewed the compensation policy again, that the Compensation Policy is in the best interest of the company.

The compensation policy must serve as the basis for decisions concerning the financial terms of employment or engagement of executive officers and directors, including exculpation, insurance, indemnification or any monetary payment or obligation of payment in respect of employment or engagement. The Compensation Policy must relate to certain factors, including advancement of the company's objectives, the company's business and its long-term strategy, and creation of appropriate incentives for executives. It must also consider, among other things, the company's risk management, size and the nature of its operations. The Compensation Policy must furthermore consider the following additional factors:

● the knowledge, skills, expertise and accomplishments of the relevant director or executive;

● the director's or executive's roles and responsibilities and prior compensation agreements with him or her;

● the relationship between the terms offered and the average and median compensation of the key consultants of the company;

● the impact of disparities in salary upon work relationships in the company;

● the possibility of reducing variable compensation at the discretion of the board of directors; and the possibility of setting a limit on the exercise value of non-cash variable compensation; and

● as to severance compensation, the period of service of the director or executive, the terms of his or her compensation during such service period, the company's performance during that period of service, the person's contribution towards the company's achievement of its goals and the maximization of its profits, and the circumstances under which the person is leaving the company.

The compensation policy must also include the following principles:

● the link between variable compensation and long-term performance and measurable criteria;

● the relationship between variable and fixed compensation, and the ceiling for the value of variable compensation;

● the conditions under which a director or executive would be required to repay compensation paid to him or her if it was later shown that the data upon which such compensation was based was inaccurate and was required to be restated in the company's financial statements;

● the minimum holding or vesting period for variable, equity-based compensation; and

● maximum limits for severance compensation.

The compensation policy must also consider appropriate incentives from a long-term perspective and maximum limits for severance compensation.

Osnat Hillel Fain is the chairman of our compensation committee. Alex Rabinovitch and Iris Shapira Yalon serve as the other members of our compensation committee.

***Approval of Compensation to Our Officers***

The Israeli Companies Law prescribes that compensation to officers must be approved by a company's board of directors.

The responsibilities of the compensation committee are to set our overall policy on executive remuneration and to decide the specific remuneration, benefits and terms of employment for directors, officers and the Chief Executive Officer.

The objectives of the compensation committee's policies are that such individuals should receive compensation which is appropriate given their performance, level of responsibility and experience. Compensation packages should also allow us to attract and retain executives of the necessary caliber while, at the same time, motivating them to achieve the highest level of corporate performance in line with the best interests of shareholders. In order to determine the elements and level of remuneration appropriate to each executive director, the compensation committee reviews surveys on executive pay, obtains external professional advice and considers individual performance.

***Internal Auditor***

 ****

Under the Israeli Companies Law, the board of directors must appoint an internal auditor, nominated by the audit committee. Our internal auditor is Daniel Spira. The role of the internal auditor is to examine, among other matters, whether the company's actions comply with the law and orderly business procedure. Under the Israeli Companies Law, an internal auditor may not be:

● a person (or a relative of a person) who holds more than 5% of the company's shares;

● a person (or a relative of a person) who has the power to appoint a director or the general manager of the company;

● an executive officer or director of the company; or

● a member of the company's independent accounting firm.

We comply with the requirement of the Israeli Companies Law relating to internal auditors. Our internal auditors examine whether our various activities comply with the law and orderly business procedure. Our internal auditor is not our employee, but the managing partner of a firm which specializes in internal auditing.

**D. Employees**

As of the date hereof, we have a full-time CEO and part-time CFO. Our subsidiaries have 3 full-time employees. We and Israeli employees who might be employed by us, are subject, by an extension order of the Israeli Ministry of Welfare, to certain provisions of collective bargaining agreements between the Histadrut, the General Federation of Labor Unions in Israel and the Coordination Bureau of Economic Organizations, including the Industrialists Associations. Our part-time service providers are not subject to these collective bargaining agreements. These provisions principally address cost of living increases, recreation pay, travel expenses, vacation pay and other conditions of employment. We provide our employees with benefits and working conditions equal to or above the required minimum. Other than those provisions, our employees are not represented by a labor union.

**E. Share Ownership**

The following table sets forth information regarding the beneficial ownership of our outstanding ordinary shares as of June 30, 2026, by the members of our senior management, board of directors, individually and as a group, and each person who we know beneficially owns 5% or more of our outstanding ordinary shares. The beneficial ownership of ordinary shares is based on 982,985,356 ordinary shares outstanding as of June 30, 2026 and is determined in accordance with the rules of the SEC and generally includes any ordinary shares over which a person exercises sole or shared voting or investment power. For purposes of the table below, we deem shares subject to options or warrants that are currently exercisable or exercisable within 60 days of June 30, 2026, to be outstanding and to be beneficially owned by the person holding the options or warrants for the purposes of computing the percentage ownership of that person but we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person.

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| | | | |
|:---|:---|:---|:---|
| **Name of Beneficial Owner** | **Number of Ordinary Shares** |  | **Percentage of Class\*** |
| **Senior Management and Directors** | |  | |
| Noam Band<br> *Chief Executive Officer* | 52875 | (1) |  |
| Shlomo Shalev <br> *Chairman of the Board* | 33409309 | (2) | 3.4% |
| Osnat Hillel Fain <br> *Director* | 583333 | (3) |  |
| Iris Shapira Yalon <br> *Director* | 645833 | (4) |  |
| Alexander Rabinovich<br> *Director* | 240905100 |  | 24.51% |
| Niv Segal <br> *Chief Financial Officer* |  |  |  |
| Directors and Senior Management as a group (7 persons) | 275596450 |  | 27.9% |
| **Beneficial owners of 5% or more** |  |  |  |
| Alexander Rabinovitch | 240905100 | (5) | 24.51% |
| Tal Klinger | 86229088 |  | 8.77% |
| Roy Klinger | 86229088 |  | 8.77% |

---

\* Denotes less than 1%

(1) Includes 423,000 options (the "First Grant"), exercisable into 423,000 ADSs (42,300,000 ordinary shares), at an exercise price of $1.40 per ADS. The First Grant options are subject to service-based vesting and vest in 16 equal portions each month from the date of grant. Additional 423,000 options (the "Second Grant"), at an exercise price of $1.60 per ADS. The Second Grant options are not subject to a service-based vesting period but rather to performance (milestone) conditions, whereby the options vest only upon the achievement, within 24 months of the date of grant, of (i) the Company reaching positive EBITDA (300,000 options) and (ii) the closing of a strategic transaction (123,000 options) - all figures are before ratio change. Exercisable until July 4, 2035.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Includes (i) 3,409,309 ordinary shares, (ii) 10,000,000 ordinary shares issuable upon the exercise of options at an exercise price of NIS 0.09 per share exercisable until July 6, 2030, and (iii) 10,000,000 ordinary shares issuable upon the exercise of options at an exercise price of NIS 0.0438 per share exercisable until March 17, 2029, and 10,000,000 ordinary shares issuable upon the exercise of options at an exercise price of USD 0.012 per share exercisable until August 11, 2034 .

(3) Includes 583,333 ordinary shares issuable upon the exercise of options at an exercise price of NIS 0.0438 per share exercisable until March 17, 2029.

&nbsp;&nbsp;&nbsp;&nbsp;(4) Includes (i) 150,000 ordinary shares issuable upon the exercise of options at an exercise price of NIS 0.0495 per share exercisable until March 1, 2033, and (ii) 850,000 ordinary shares issuable upon the exercise of options at an exercise price of NIS 0.0438 per share exercisable until March 17, 2029.

***Share Option Plans***

 ****

We maintain the following share option plans for our and our subsidiary's directors and consultants. In addition to the discussion below, see note 14 of our consolidated financial statements for the year ended December 31, 2025.

Our Board of Directors administers our share option plans and has the authority to designate all terms of the options granted under our plans including the grantees, exercise prices, grant dates, vesting schedules and expiration dates, which may be no more than ten years after the grant date. Options may not be granted with an exercise price of less than the fair market value of our ordinary shares on the date of grant, unless otherwise determined by our Board of Directors.

As of December 31, 2025, we have granted to directors and consultants options that are outstanding to purchase up to 118,100,000 ordinary shares under two share option plans.

*2011 Share Option Plan*

 

On August 29, 2011, our Board of Directors approved the adoption of an employee stock option scheme for the grant of options exercisable into shares of the Company according to section 102 to the Israeli Tax Ordinance, or the 2011 Plan, and to reserve up to 10 million ordinary shares in the framework of the 2011 Plan, for options allocation to employees, directors and consultants.

During 2020 it was decided to enlarge the reserve to 30 million options.

The 2011 Plan shall be subject to section 102 of the Israeli Tax Ordinance. According to the Capital Gain Track, which was adopted by us and the abovementioned section 102, we are not entitled to receive a tax deduction that relates to remuneration paid to employees, including amounts recorded as salary benefit for options granted to employees in the framework of the 2011 Plan, except the yield benefit component, if available, that was determined on the grant date. The terms of the options which will be granted according to the 2011 Plan, including option period, exercise price, vesting period and exercise period, shall be determined by our Board of Directors on the date of the actual allocation. On March 14, 2023, Company's Board of Directors approved to extend retroactively the expiration date of the 2011 Plan by additional 5 years to August 29, 2026.

As of December 31, 2025, we have granted options to purchase 118,100,000 ordinary shares under the 2011 Plan at exercise prices between $0.01 and $0.17 per ordinary share.

For further details regarding share options granted to our directors and service providers, see note 14 to the consolidated financial statements for the year ended December 31, 2025.

**ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS**

**A. Major shareholders** 

As of June 30, 2026, there were 2,457,463 ADSs outstanding, held by approximately 15 DTC participants and a registered shareholder.

The following table sets forth the number of our ordinary shares owned by any person known to us to be the beneficial owner of 5% or more of our ordinary shares as of the date hereof. The information in this table is based on 982,985,356 outstanding ordinary shares as of such date. The number of ordinary shares beneficially owned by a person includes ordinary shares subject to options held by that person that were currently exercisable. None of the holders of the ordinary shares listed in this table have voting rights different from other holders of the ordinary shares.

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| | | |
|:---|:---|:---|
| **Name** | **Number of<br> shares<br> owned** | **Percent of<br> ordinary<br> shares** |
| Alexander Rabinovitch | 240905100 | 24.51% |
| Tal Klinger | 86229088 | 8.77% |
| Roy Klinger | 86229088 | 8.77% |

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**B. Related Party Transactions**

The following is a description of the transactions with related parties to which we, or our subsidiaries, are party, and which were in effect within the past three fiscal years. The descriptions provided below are summaries of the terms of such agreements, do not purport to be complete and are qualified in their entirety by the complete agreements.

We believe that we have executed all of our transactions with related parties on terms no less favorable to us than those we could have obtained from unaffiliated third parties. We are required by Israeli law to ensure that all future transactions between us and our officers, directors and principal shareholders and their affiliates are approved by a majority of our board of directors, including a majority of the independent and disinterested members of our board of directors, and that they are on terms no less favorable to us than those that we could obtain from unaffiliated third parties.

***Private Placement***

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On June 29<sup>,</sup> 2026, shareholders meeting approved an investment for the total investment amount of $1,500,000 USD. This investment may include related parties.

● Investors will receive approximately 555,555 American Depositary Shares (ADSs) and/or ordinary shares of the Company at a purchase price of $2.70 per ADS. Each ADS represents four hundred (400) ordinary shares, And;

● Series A Warrants: The Company will issue 666,666 Series A Warrants to the investors. The initial exercise price is $2.70 per ADS, which will be permanently reduced to $1.70 per ADS upon the occurrence of a "Series A Trigger Event" (such as the ADS closing price reaching $5.00, a Change of Control/liquidity event exceeding an enterprise/equity value of $150,000,000, or the successful completion of two Phase 2 clinical trials). And;

● Series B Warrants: The Company will issue 666,666 Series B Warrants. The initial exercise price is $5.00 per ADS, which will be permanently reduced to $2.50 per ADS upon the occurrence of a "Series B Trigger Event" (such as the ADS closing price reaching or exceeding $7.00, a Change of Control/liquidity event exceeding an enterprise/equity value of $250,000,000, or the successful completion of three Phase 2 clinical trials). And;

● Anti-Dilution Protection (Series C Warrants): If the Company executes a subsequent financing round within 5 years at a price below $2.70 per ADS, investors will receive a one-time issuance of Series C Warrants. Upon full exercise, these warrants entitle investors to receive subsequent financing securities with an aggregate value equal to the price difference between $2.70 and the lower financing price.

● All warrants are exercisable for cash only for a period of five (5) years from the closing date.

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***Employment and Consulting Agreements***

We have or have had employment, consulting or related agreements with our senior management. See Item 6 - Compensation-Employment Agreements".

***Indemnification Agreements***

Israeli law permits a company to insure an office holder in respect of liabilities incurred by him or her as a result of an act or omission in the capacity of an office holder for:

● a breach of the office holder's duty of care towards the company or towards another person;

● a breach of the office holder's fiduciary duty to the company, provided that he or she acted in good faith and had reasonable cause to believe that the act would not prejudice the company; and

● a financial liability imposed upon the office holder in favor of another person.

● A financial liability imposed on the office holder's for all victims of the violation in an Administrative Proceeding.

● Expenses incurred by the office holder's in connection with an Administrative Proceeding conducted in his or her case, including litigation expenses and reasonable legal fees.

Moreover, a company can indemnify an office holder for any of the following obligations or expenses incurred in connection with the acts or omissions of such person in his or her capacity as an office holder:

● monetary liability imposed upon him or her in favor of a third party by a judgment, including a settlement or an arbitral award confirmed by the court; and

● reasonable litigation expenses, including legal fees, actually incurred by the office holder or imposed upon him or her by a court, in a proceeding brought against him or her by or on behalf of the company or by a third party, or in a criminal action in which he or she was acquitted, or in a criminal action which does not require criminal intent in which he or she was convicted; furthermore, a company can, with a limited exception, exculpate an office holder in advance, in whole or in part, from liability for damages sustained by a breach of duty of care to the company.

● financial liability imposed on the office holder for all victims of the violation in an Administrative Proceeding.

● expenses incurred by the office holder in connection with an Administrative Proceeding conducted in his or her case, including litigation expenses and reasonable legal fees.

Our Articles of Association allow for insurance, exculpation and indemnification of office holders to the fullest extent permitted by law. We have entered into indemnification, insurance and exculpation agreements with our directors and executive officers, following shareholder approval of these agreements. We have directors' and officers' liability insurance covering our officers and directors for a claim imposed upon them as a result of an action carried out while serving as an officer or director, for (a) the breach of duty of care towards us or towards another person, (b) the breach of fiduciary duty towards us, provided that the officer or director acted in good faith and had reasonable grounds to assume that the action would not harm our interests, and (c) a monetary liability imposed upon him in favor of a third party.

**ITEM 8. FINANCIAL INFORMATION**

**A. Consolidated Statements and Other Financial Information**

Our audited consolidated financial statements appear in this annual report on Form 20-F. See "Item 18. Financial Statements."

**Significant Changes**

None.

**ITEM 9. THE OFFER AND LISTING**

**Markets and Share Price History**

Our ordinary shares have been trading on the Tel Aviv Stock Exchange, or TASE, since July 2005. Our ordinary shares currently trade on the TASE under the symbol "XTLB".

On June 1, 2012, the Company filed an application for relisting its ADSs on The Nasdaq Capital Market. On July 10, 2013, the Company received a notice from Nasdaq stating that the admission committee had approved the Company's application to relist its ADSs for trading on The Nasdaq Capital Market. Accordingly, on July 15, 2013, the Company's ADSs began trading on The Nasdaq Capital Market under the ticker symbol "XTLB".

**ITEM 10. ADDITIONAL INFORMATION**

**Memorandum and Articles of Association**

***Objects and Purposes of the Company***

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Pursuant to Part B, Section 3 of our Articles of Association, we may undertake any lawful activity.

***Powers and Obligations of the Directors***

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Pursuant to the Israeli Companies Law and our Articles of Association, a director is not permitted to vote on a proposal, arrangement or contract in which he or she has a personal interest. Also, the directors may not vote on compensation to themselves or any members of their body, as that term is defined under Israeli law, without the approval of our audit committee and our shareholders at a general meeting. The power of our directors to enter into borrowing arrangements on our behalf is limited to the same extent as any other transaction by us.

The Israeli Companies Law codifies the fiduciary duties that office holders, including directors and executive officers, owe to a company. An office holder's fiduciary duties consist of a duty of care and a duty of loyalty. The duty of care generally requires an office holder to act with the same level of care as a reasonable office holder in the same position would employ under the same circumstances. The duty of loyalty includes avoiding any conflict of interest between the office holder's position in the company and such person's personal affairs, avoiding any competition with the company, avoiding exploiting any corporate opportunity of the company in order to receive personal advantage for such person or others, and revealing to the company any information or documents relating to the company's affairs which the office holder has received due to his or her position as an office holder.

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***Indemnification of Directors and Officers; Limitations on Liability***

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Israeli law permits a company to insure an office holder in respect of liabilities incurred by him or her as a result of an act or omission in the capacity of an office holder for:

● a breach of the office holder's duty of care towards the company or towards another person;

● a breach of the office holder's fiduciary duty to the company, provided that he or she acted in good faith and had reasonable cause to believe that the act would not prejudice the company; and

● a financial liability imposed upon the office holder in favor of another person.

● A financial liability imposed on the office holder's for all victims of the violation in an Administrative Proceeding.

● Expenses incurred by the office holder's in connection with an Administrative Proceeding conducted in his or her case, including litigation expenses and reasonable legal fees.

Moreover, a company can indemnify an office holder for any of the following obligations or expenses incurred in connection with the acts or omissions of such person in his or her capacity as an office holder:

● monetary liability imposed upon him or her in favor of a third party by a judgment, including a settlement or an arbitral award confirmed by the court; and

● reasonable litigation expenses, including legal fees, actually incurred by the office holder or imposed upon him or her by a court, in a proceeding brought against him or her by or on behalf of the company or by a third party, or in a criminal action in which he or she was acquitted, or in a criminal action which does not require criminal intent in which he or she was convicted; furthermore, a company can, with a limited exception, exculpate an office holder in advance, in whole or in part, from liability for damages sustained by a breach of duty of care to the company.

● financial liability imposed on the office holder for all victims of the violation in an Administrative Proceeding.

● expenses incurred by the office holder in connection with an Administrative Proceeding conducted in his or her case, including litigation expenses and reasonable legal fees.

Our Articles of Association allow for insurance, exculpation and indemnification of office holders to the fullest extent permitted by law. We have entered into indemnification, insurance and exculpation agreements with our directors and executive officers, following shareholder approval of these agreements. We have directors' and officers' liability insurance covering our officers and directors for a claim imposed upon them as a result of an action carried out while serving as an officer or director, for (a) the breach of duty of care towards us or towards another person, (b) the breach of fiduciary duty towards us, provided that the officer or director acted in good faith and had reasonable grounds to assume that the action would not harm our interests, and (c) a monetary liability imposed upon him in favor of a third party.

***Approval of Related Party Transactions under the Israeli Companies Law***

*Fiduciary duties of the office holders*

The Israeli Companies Law imposes a duty of care and a duty of loyalty on all office holders of a company. The duty of care of an office holder is based on the duty of care set forth in connection with the tort of negligence under the Israeli Torts Ordinance (New Version) 5728-1968. This duty of care requires an office holder to act with the degree of proficiency with which a reasonable office holder in the same position would have acted under the same circumstances. The duty of care includes a duty to use reasonable means, in light of the circumstances, to obtain:

● information on the advisability of a given action brought for his or her approval or performed by virtue of his or her position; and

● All other important information pertaining to these actions.

The duty of loyalty requires an office holder to act in good faith and for the benefit of the company, and includes the duty to:

● refrain from any act involving a conflict of interest between the performance of his or her duties in the company and his or her other duties or personal affairs;

● refrain from any activity that is competitive with the business of the company;

● refrain from exploiting any business opportunity of the company for the purpose of gaining a personal advantage for himself or herself or others; and

● disclose to the company any information or documents relating to the company's affairs which the office holder received as a result of his or her position as an office holder.

We may approve an act performed in breach of the duty of loyalty of an office holder provided that the office holder acted in good faith, the act or its approval does not harm the company, and the office holder discloses his or her personal interest, as described below.

*Disclosure of personal interests of an office holder and approval of acts and transactions*

 

The Israeli Companies Law requires that an office holder promptly disclose to the company any personal interest that he or she may have and all related material information or documents relating to any existing or proposed transaction by the company. An interested office holder's disclosure must be made promptly and in any event no later than the first meeting of the board of directors at which the transaction is considered. An office holder is not obligated to disclose such information if the personal interest of the office holder derives solely from the personal interest of his or her relative in a transaction that is not considered as an extraordinary transaction.

The term personal interest is defined under the Israeli Companies Law to include the personal interest of a person in an action or in the business of a company, including the personal interest of such person's relative or the interest of any corporation in which the person is an interested party, but excluding a personal interest stemming solely from the fact of holding shares in the company. A personal interest furthermore includes the personal interest of a person for whom the office holder holds a voting proxy or the interest of the office holder with respect to his or her vote on behalf of the shareholder for whom he or she holds a proxy even if such shareholder itself has no personal interest in the approval of the matter. An office holder is not, however, obligated to disclose a personal interest if it derives solely from the personal interest of his or her relative in a transaction that is not considered an extraordinary transaction.

Under the Israeli Companies Law, an extraordinary transaction which requires approval is defined any of the following:

● a transaction other than in the ordinary course of business;

● a transaction that is not on market terms; or

● a transaction that may have a material impact on the company's profitability, assets or liabilities.

Under the Israeli Companies Law, once an office holder has complied with the disclosure requirement described above, a company may approve a transaction between the company and the office holder or a third party in which the office holder has a personal interest, or approve an action by the office holder that would otherwise be deemed a breach of duty of loyalty. However, a company may not approve a transaction or action that is adverse to the company's interest or that is not performed by the office holder in good faith.

Under the Companies Law, unless the articles of association of a company provide otherwise, a transaction with an office holder, a transaction with a third party in which the office holder has a personal interest, and an action of an office holder that would otherwise be deemed a breach of duty of loyalty requires approval by the board of directors. Our Articles of Association do not provide otherwise. If the transaction or action considered is (i) an extraordinary transaction, (ii) an action of an office holder that would otherwise be deemed a breach of duty of loyalty and may have a material impact on a company's profitability, assets or liabilities, (iii) an undertaking to indemnify or insure an office holder who is not a director, or (iv) for matters considered an undertaking concerning the terms of compensation of an office holder who is not a director, including, an undertaking to indemnify or insure such office holder, then approval by the audit committee is required prior to approval by the board of directors. Arrangements regarding the compensation, indemnification or insurance of a director require the approval of the audit committee, board of directors and shareholders, in that order.

A director who has a personal interest in a matter that is considered at a meeting of the board of directors or the audit committee may generally not be present at the meeting or vote on the matter, unless a majority of the directors or members of the audit committee have a personal interest in the matter or the chairman of the audit committee or board of directors, as applicable, determines that he or she should be present to present the transaction that is subject to approval. If a majority of the directors have a personal interest in the matter, such matter would also require approval of the shareholders of the company.

*Disclosure of personal interests of a controlling shareholder and approval of transactions*

Under the Israeli Companies Law, the disclosure requirements that apply to an office holder also apply to a controlling shareholder of a public company. Extraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest, including a private placement in which a controlling shareholder has a personal interest, as well as transactions for the provision of services whether directly or indirectly by a controlling shareholder or his or her relative, or a company such controlling shareholder controls, and transactions concerning the terms of engagement of a controlling shareholder or a controlling shareholder's relative, whether as an office holder or an employee, require the approval of the audit committee, the board of directors and a majority of the shares voted by the shareholders of the company participating and voting on the matter in a shareholders' meeting. In addition, such shareholder approval must fulfill one of the following requirements:

● at least a majority of the shares held by shareholders who have no personal interest in the transaction and are voting at the meeting must be voted in favor of approving the transaction, excluding abstentions; or

● the shares voted by shareholders who have no personal interest in the transaction who vote against the transaction represent no more than 2% of the voting rights in the company.

To the extent that any such transaction with a controlling shareholder is for a period extending beyond three years, approval is required once every three years, unless the audit committee determines that the duration of the transaction is reasonable given the circumstances related thereto.

*Duties of shareholders*

Under the Israeli Companies Law, a shareholder has a duty to refrain from abusing its power in the company and to act in good faith and in an acceptable manner in exercising its rights and performing its obligations to the company and other shareholders, including, among other things, voting at general meetings of shareholders on the following matters:

● an amendment to the articles of association;

● an increase in the company's authorized share capital;

● a merger;

● an increase in the company's authorized share capital; and

● the approval of related party transactions and acts of office holders that require shareholder approval.

A shareholder also has a general duty to refrain from discriminating against other shareholders.

The remedies generally available upon a breach of contract will also apply to a breach of the above mentioned duties, and in the event of discrimination against other shareholders, additional remedies are available to the injured shareholder.

In addition, any controlling shareholder, any shareholder that knows that its vote can determine the outcome of a shareholder vote and any shareholder that, under a company's articles of association, has the power to appoint or prevent the appointment of an office holder, or has another power with respect to a company, is under a duty to act with fairness towards the company. The Israeli Companies Law does not describe the substance of this duty except to state that the remedies generally available upon a breach of contract will also apply in the event of a breach of the duty to act with fairness, taking the shareholder's position in the company into account.

**ORDINARY SHARES**

***Rights Attached to Ordinary Shares***

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Through March 18, 2009, our authorized share capital was NIS 10,000,000 consisting of 500,000,000 ordinary shares, par value NIS 0.02 per share. On March 18, 2009, pursuant to a shareholder's meeting, the share capital of our company was consolidated and re-divided so that each five (5) shares of NIS 0.02 nominal value was consolidated into one (1) share of NIS 0.1 nominal value so that following such consolidation and re-division, our authorized share capital consisted of 100,000,000 ordinary shares, par value NIS 0.10 per share. In addition, the authorized share capital of our company was increased from NIS 10,000,000 to NIS 70,000,000 divided into 700,000,000 ordinary shares, NIS 0.10 nominal value. The share consolidation was effected on June 22, 2009. Effective August 3, 2017, the authorized share capital of the company increased from NIS 70,000,000 divided into 700,000,000 ordinary shares to NIS 145,000,000 divided into 1,450,000,000 ordinary shares. Effective February 24, 2026 the authorized share capital of the company increased from NIS 145,000,000 divided into 1,450,000,000 ordinary shares to NIS 290,000,000 divided into 2,900,000,000 ordinary shares. Effective June 30, 2026, the authorized share capital of the company increased from NIS 290,000,000 divided into 2,900,000,000 ordinary shares to NIS 580,000,000 divided into 5,800,000,000 ordinary shares.

Holders of ordinary shares have one vote per share, and are entitled to participate equally in the payment of dividends and share distributions and, in the event of our liquidation, in the distribution of assets after satisfaction of liabilities to creditors. No preferred shares are currently authorized. All outstanding ordinary shares are validly issued and fully paid.

***Transfer of Shares***

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Fully paid ordinary shares are issued in registered form and may be freely transferred under our Articles of Association unless the transfer is restricted or prohibited by another instrument or applicable securities laws.

***Dividend and Liquidation Rights***

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We may declare a dividend to be paid to the holders of ordinary shares according to their rights and interests in our profits. In the event of our liquidation, after satisfaction of liabilities to creditors, our assets will be distributed to the holders of ordinary shares in proportion to the nominal value of their holdings.

This right may be affected by the grant of preferential dividend or distribution rights, to the holders of a class of shares with preferential rights that may be authorized in the future. Under the Israeli Companies Law, the declaration of a dividend does not require the approval of the shareholders of the company, unless the company's articles of association require otherwise. Our Articles provide that the Board of Directors may declare and distribute dividends without the approval of the shareholders.

***Annual and Extraordinary General Meetings***

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We must hold our annual general meeting of shareholders each year and no later than 15 months from the last annual meeting, at a time and place determined by the Board of Directors, upon at least 21 days' prior notice to our shareholders, to which we need to add an additional three days for notices sent outside of Israel. A special meeting may be convened by request of two directors, 25% of the directors then in office, one or more shareholders holding at least 5% of our issued share capital and at least 1% of our issued voting rights, or one or more shareholders holding at least 5% of our issued voting rights. Notice of a general meeting must set forth the date, time and place of the meeting. Such notice must be given at least 21 days but not more than 45 days prior to the general meeting. The quorum required for a meeting of shareholders consists of at least two shareholders present in person or by proxy who hold or represent between them at least one-third of the voting rights in the company. A meeting adjourned for lack of a quorum generally is adjourned to the same day in the following week at the same time and place (with no need for any notice to the shareholders) or until such other later time if such time is specified in the original notice convening the general meeting, or if we serve notice to the shareholders no less than seven days before the date fixed for the adjourned meeting. If at an adjourned meeting there is no quorum present half an hour after the time set for the meeting, any number participating in the meeting shall represent a quorum and shall be entitled to discuss the matters set down on the agenda for the original meeting. All shareholders who are registered in our registrar on the record date, or who will provide us with proof of ownership on that date as applicable to the relevant registered shareholder, are entitled to participate in a general meeting and may vote as described in "Voting Rights" and "Voting by Proxy and in Other Manners," below.

***Voting Rights***

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Our ordinary shares do not have cumulative voting rights in the election of directors. As a result, the holders of ordinary shares that represent more than 50% of the voting power represented at a shareholders meeting in which a quorum is present have the power to elect all of our directors, except the external directors whose election requires a special majority.

Holders of ordinary shares have one vote for each ordinary share held on all matters submitted to a vote of shareholders. Shareholders may vote in person or by proxy. These voting rights may be affected by the grant of any special voting rights to the holders of a class of shares with preferential rights that may be authorized in the future.

Under the Israeli Companies Law, unless otherwise provided in the Articles of Association or by applicable law, all resolutions of the shareholders require a simple majority. Our Articles of Association provide that all decisions may be made by a simple majority. See "Approval of Related Party Transactions" above for certain duties of shareholders towards the company.

***Voting by Proxy and in Other Manners***

 

Our Articles of Association enable a shareholder to appoint a proxy, who need not be a shareholder, to vote at any shareholders meeting. We require that the appointment of a proxy be in writing signed by the person making the appointment or by an attorney authorized for this purpose, and if the person making the appointment is a corporation, by a person or persons authorized to bind the corporation. In the document appointing a proxy, each shareholder may specify how the proxy should vote on any matter presented at a shareholders meeting. The document appointing the proxy shall be deposited in our offices or at such other address as shall be specified in the notice of the meeting not less than 48 hours before the time of the meeting at which the person specified in the appointment is due to vote.

The Israeli Companies Law and our Articles of Association do not permit resolutions of the shareholders to be adopted by way of written consent, for as long as our ordinary shares are publicly traded.

***Limitations on the Rights to Own Securities***

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The ownership or voting of ordinary shares by non-residents of Israel is not restricted in any way by our Articles of Association or the laws of the State of Israel, except that nationals of countries which are, or have been, in a state of war with Israel may not be recognized as owners of ordinary shares.

***Anti-Takeover Provisions under Israeli Law***

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The Israeli Companies Law permits merger transactions with the approval of each party's board of directors and shareholders. In accordance with the Israeli Companies Law, a merger may be approved at a shareholders meeting by a majority of the voting power represented at the meeting, in person or by proxy, and voting on that resolution. In determining whether the required majority has approved the merger, shares held by the other party to the merger, any person holding at least 25% of the outstanding voting shares or means of appointing the board of directors of the other party to the merger, or the relatives or companies controlled by these persons, are excluded from the vote.

Under the Israeli Companies Law, a merging company must inform its creditors of the proposed merger. Any creditor of a party to the merger may seek a court order blocking the merger, if there is a reasonable concern that the surviving company will not be able to satisfy all of the obligations of the parties to the merger. Moreover, a merger may not be completed until at least 30 days have passed from the time the merger was approved in a general meeting of each of the merging companies, and at least 50 days have passed from the time that a merger proposal was filed with the Israeli Registrar of Companies.

Israeli corporate law provides that an acquisition of shares in a public company must be made by means of a tender offer if, as a result of such acquisition, the purchaser would become a 25% or greater shareholder of the company. This rule does not apply if there is already another shareholder with 25% or greater shares in the company. Similarly, Israeli corporate law provides that an acquisition of shares in a public company must be made by means of a tender offer if, as a result of the acquisition, the purchaser's shareholdings would entitle the purchaser to over 45% of the shares in the company, unless there is a shareholder with 45% or more of the shares in the company. These requirements do not apply if, in general, the acquisition (1) was made in a private placement that received the approval of the company's shareholders; (2) was from a 25% or greater shareholder of the company which resulted in the purchaser becoming a 25% or greater shareholder of the company, or (3) was from a 45% or greater shareholder of the company which resulted in the acquirer becoming a 45% or greater shareholder of the company. These rules do not apply if the acquisition is made by way of a merger. Regulations promulgated under the Israeli Companies Law provide that these tender offer requirements do not apply to companies whose shares are listed for trading outside of Israel if, according to the law in the country in which the shares are traded, including the rules and regulations of the stock exchange or which the shares are traded, either:

● there is a limitation on acquisition of any level of control of the company; or

● the acquisition of any level of control requires the purchaser to do so by means of a tender offer to the public.

The Israeli Companies Law provides specific rules and procedures for the acquisition of shares held by minority shareholders, if the majority shareholder holds more than 90% of the outstanding shares. If, as a result of an acquisition of shares, the purchaser will hold more than 90% of a company's outstanding shares, the acquisition must be made by means of a tender offer for all of the outstanding shares. If less than 5% of the outstanding shares are not tendered in the tender offer, all the shares that the purchaser offered to purchase will be transferred to it. The Israeli Companies Law provides for appraisal rights if any shareholder files a request in court within three months following the consummation of a full tender offer. If more than 5% of the outstanding shares are not tendered in the tender offer, then the purchaser may not acquire shares in the tender offer that will cause his shareholding to exceed 90% of the outstanding shares of the company. Israeli tax law treats specified acquisitions, including a stock-for-stock swap between an Israeli company and a foreign company, less favorably than does U.S. tax law. These laws may have the effect of delaying or deterring a change in control of us, thereby limiting the opportunity for shareholders to receive a premium for their shares and possibly affecting the price that some investors are willing to pay for our securities.

***Rights of Shareholders***

Under the Israeli Companies Law, our shareholders have the right to inspect certain documents and registers including the minutes of general meetings, the register of shareholders and the register of substantial shareholders, any document held by us that relates to an act or transaction requiring the consent of the general meeting as stated above under "Approval of Related Party Transactions" our Articles of Association and our financial statements, and any other document which we are required to file under the Israeli Companies Law or under any law with the Registrar of Companies or the Israeli Securities Authority, and is available for public inspection at the Registrar of Companies or the Securities Authority, as the case may be.

If the document required for inspection by one of our shareholders relates to an act or transaction requiring the consent of the general meeting as stated above, we may refuse the request of the shareholder if in our opinion the request was not made in good faith, the documents requested contain a commercial secret or a patent, or disclosure of the documents could prejudice our good in some other way.

The Israeli Companies Law provides that with the approval of the court any of our shareholders or directors may file a derivative action on our behalf if the court finds the action is a priori, to our benefit, and the person demanding the action is acting in good faith. The demand to take action can be filed with the court only after it is serviced to us, and we decline or omit to act in accordance to this demand.

***Enforceability of Civil Liabilities***

We are incorporated in Israel and most of our directors and officers named in this report reside outside the U.S. Service of process upon them may be difficult to effect within the U.S. Furthermore, because substantially all of our assets, and those of our non-U.S. directors and officers and the Israeli experts named herein, are located outside the U.S., any judgment obtained in the U.S. against us or any of these persons may not be collectible within the U.S.

We have been informed by our legal counsel in Israel, Amit Pollack Matalon & Co.- Law Offices, that there is doubt as to the enforceability of civil liabilities under the Securities Act or the Exchange Act, pursuant to original actions instituted in Israel. However, subject to particular time limitations, executory judgments of a U.S. court for monetary damages in civil matters may be enforced by an Israeli court, provided that:

● the judgment was obtained after due process before a court of competent jurisdiction, that recognizes and enforces similar judgments of Israeli courts, and the court had authority according to the rules of private international law currently prevailing in Israel;

● adequate service of process was effected and the defendant had a reasonable opportunity to be heard;

● the judgment is not contrary to the law, public policy, security or sovereignty of the State of Israel and its enforcement is not contrary to the laws governing enforcement of judgments;

● the judgment was not obtained by fraud and does not conflict with any other valid judgment in the same matter between the same parties;

● the judgment is no longer appealable; and

● an action between the same parties in the same matter is not pending in any Israeli court at the time the lawsuit is instituted in the foreign court.

Foreign judgments enforced by Israeli courts generally will be payable in Israeli currency. The usual practice in an action before an Israeli court to recover an amount in a non-Israeli currency is for the Israeli court to render judgment for the equivalent amount in Israeli currency at the rate of exchange in force on the date of the judgment. Under existing Israeli law, a foreign judgment payable in foreign currency may be paid in Israeli currency at the rate of exchange for the foreign currency published on the day before date of payment. Current Israeli exchange control regulations also permit a judgment debtor to make payment in foreign currency. Pending collection, the amount of the judgment of an Israeli court stated in Israeli currency ordinarily may be linked to Israel's consumer price index plus interest at the annual statutory rate set by Israeli regulations prevailing at that time. Judgment creditors must bear the risk of unfavorable exchange rates.

**AMERICAN DEPOSITORY SHARES**

We have issued and deposited ordinary shares with Bank Hapoalim B.M., The Bank of New York's custodian in Tel Aviv, Israel. The Bank of New York in turn issued American Depositary Shares, or ADSs, representing American Depositary Shares, or ADSs. One ADS represents an ownership interest in one hundred of our ordinary shares. Each ADS also represents securities, cash or other property deposited with The Bank of New York but not distributed to ADS holders. The Bank of New York's Corporate Trust Office is located at 101 Barclay Street, New York, NY 10286, U.S.A. Their principal executive office is located at One Wall Street, New York, NY 10286, U.S.A.

You may hold ADSs either directly or indirectly through your broker or other financial institution. If you hold ADSs directly, you are an ADS holder. This description assumes you hold your ADSs directly. If you hold the ADSs indirectly, you must rely on the procedures of your broker or other financial institution to assert the rights of ADS holders described in this section. You should consult with your broker or financial institution to find out what those procedures are.

Because The Bank of New York will actually hold the ordinary shares, you must rely on it to exercise the rights of a shareholder. The obligations of The Bank of New York are set out in a deposit agreement among us, The Bank of New York and you, as an ADS holder. The agreement and the ADSs are generally governed by New York law.

The following is a summary of the agreement. Because it is a summary, it does not contain all the information that may be important to you. For more complete information, you should read the entire agreement and the ADS. Directions on how to obtain copies of these are provided in the section entitled "Where You Can Find More Information."

***Share Dividends and Other Distributions***

The Bank of New York has agreed to pay to you the cash dividends or other distributions it or the custodian receives on shares or other deposited securities after deducting its fees and expenses. You will receive these distributions in proportion to the number of shares your ADSs represent.

*Cash.* The Bank of New York will convert any cash dividend or other cash distribution we pay on the shares into U.S. dollars, if it can do so on a reasonable basis and can transfer the U.S. dollars to the U.S. If that is not possible or if any approval from any government or agency thereof is needed and cannot be obtained, the agreement allows The Bank of New York to distribute the foreign currency only to those ADS holders to whom it is possible to do so. It will hold the foreign currency it cannot convert for the account of the ADS holders who have not been paid. It will not invest the foreign currency and it will not be liable for the interest.

Before making a distribution, any withholding taxes that must be paid under U.S. law will be deducted. The Bank of New York will distribute only whole U.S. dollars and cents and will round fractional cents to the nearest whole cent. If the exchange rates fluctuate during a time when The Bank of New York cannot convert the foreign currency, you may lose some or all of the value of the distribution.

*Shares.* The Bank of New York may distribute new ADSs representing any shares we may distribute as a dividend or free distribution, if we furnish it promptly with satisfactory evidence that it is legal to do so. The Bank of New York will only distribute whole ADSs. It will sell shares which would require it to use a fractional ADS and distribute the net proceeds in the same way as it does with cash. If The Bank of New York does not distribute additional ADSs, each ADS will also represent the new shares.

*Rights to receive additional shares*. If we offer holders of our ordinary shares any rights to subscribe for additional shares or any other rights, The Bank of New York may make these rights available to you. We must first instruct The Bank of New York to do so and furnish it with satisfactory evidence that it is legal to do so. If we do not furnish this evidence and/or give these instructions, and The Bank of New York decides it is practical to sell the rights, The Bank of New York will sell the rights and distribute the proceeds, in the same way as it does with cash. The Bank of New York may allow rights that are not distributed or sold to lapse. In that case, you will receive no value for them. If The Bank of New York makes rights available to you, upon instruction from you, it will exercise the rights and purchase the shares on your behalf. The Bank of New York will then deposit the shares and issue ADSs to you. It will only exercise rights if you pay it the exercise price and any other charges the rights require you to pay.

U.S. securities laws may restrict the sale, deposit, cancellation and transfer of the ADSs issued after exercise of rights. For example, you may not be able to trade the ADSs freely in the U.S. In this case, The Bank of New York may issue the ADSs under a separate restricted deposit agreement, which will contain the same provisions as the agreement, except for the changes needed to put the restrictions in place.

*Other Distributions*. The Bank of New York will send to you anything else we distribute on deposited securities by any means it thinks is legal, fair and practical. If it cannot make the distribution in that way, The Bank of New York has a choice. It may decide to sell what we distributed and distribute the net proceeds in the same way as it does with cash or it may decide to hold what we distributed, in which case the ADSs will also represent the newly distributed property.

The Bank of New York is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADS holders. We have no obligation to register ADSs, shares, rights or other securities under the Securities Act. We also have no obligation to take any other action to permit the distribution of ADSs, shares, rights or anything else to ADS holders. This means that you may not receive the distribution we make on our shares or any value for them if it is illegal or impractical for us to make them available to you.

***Deposit, Withdrawal and Cancellation***

The Bank of New York will issue ADSs if you or your broker deposits shares or evidence of rights to receive shares with the custodian upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees. The Bank of New York will register the appropriate number of ADSs in the names you request and will deliver the ADSs at its office to the persons you request.

You may turn in your ADSs at The Bank of New York's office. Upon payment of its fees and expenses and of any taxes or charges, such as stamp taxes or stock transfer taxes or fees, The Bank of New York will deliver (1) the underlying shares to an account designated by you and (2) any other deposited securities underlying the ADS at the office of the custodian; or, at your request, risk and expense, The Bank of New York will deliver the deposited securities at its office.

***Voting Rights***

You may instruct The Bank of New York to vote the shares underlying your ADSs but only if we ask The Bank of New York to ask for your instructions. Otherwise, you will not be able to exercise your right to vote unless you withdraw the shares. However, you may not know about the meeting enough in advance to withdraw the shares.

If we ask for your instructions, The Bank of New York will notify you of the upcoming vote and arrange to deliver our voting materials to you. The materials will (1) describe the matters to be voted on and (2) explain how you, on a certain date, may instruct The Bank of New York to vote the shares or other deposited securities underlying your ADSs as you direct. For instructions to be valid, The Bank of New York must receive them on or before the date specified. The Bank of New York will try, as far as practical, subject to Israeli law and the provisions of our Articles of Association, to vote or to have its agents vote the shares or other deposited securities as you instruct. The Bank of New York will only vote or attempt to vote as you instruct. However, if The Bank of New York does not receive your voting instructions, it will deem you to have instructed it to give a discretionary proxy to vote the shares underlying your ADSs to a person designated by us provided that no such instruction shall be deemed given and no such discretionary proxy shall be given with respect to any matter as to which we inform The Bank of New York that (x) we do not wish such proxy given, (y) substantial opposition exists, (z) such matter materially affects the rights of the holders of the shares underlying the ADSs.

We cannot assure you that you will receive the voting materials in time to ensure that you can instruct The Bank of New York to vote your shares. In addition, The Bank of New York and its agents are not responsible for failing to carry out voting instructions or for the manner of carrying out voting instructions. This means that you may not be able to exercise your right to vote and there may be nothing you can do if your shares are not voted as you requested.

***Rights of Non-Israeli Shareholders to Vote***

The ADSs may be freely held and traded pursuant to the General Permit and the Currency Control Law. The ownership or voting of ADSs by non-residents of Israel is not restricted in any way by our Articles of Association or by the laws of the State of Israel.

***Fees and Expenses***

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| | |
|:---|:---|
| ***ADS holders must pay:*** | ***For:*** |
| $5.00 (or less) per 100 ADSs (or portion thereof) | Each issuance of an ADS, including as a result of a distribution of shares or rights or other property.<br>Each cancellation of an ADS, including if the agreement terminates. |
| $0.05 (or less) per ADS | Any cash payment. |
| Registration or Transfer Fees | Transfer and registration of shares on the share register of the Foreign Registrar from your name to the name of The Bank of New York or its agent when you deposit or withdraw shares. |
| Expenses of The Bank of New York | Conversion of foreign currency to U.S. dollars.<br>Cable, telex and facsimile transmission expenses.<br>Servicing of shares or deposited securities. |
| $0.02 (or less) per ADS per calendar year (if the depositary has not collected any cash distribution fee during that year) | Depositary services. |
| Taxes and other governmental charges | As necessary The Bank of New York or the Custodian have to pay on any ADS or share underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes. |
| A fee equivalent to the fee that would be payable if securities distributed to you had been ordinary shares and the ordinary 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. |

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***Payment of Taxes***

You will be responsible for any taxes or other governmental charges payable on your ADSs or on the deposited securities underlying your ADSs. The Bank of New York may refuse to transfer your ADSs or allow you to withdraw the deposited securities underlying your ADSs until such taxes or other charges are paid. It may apply payments owed to you or sell deposited securities underlying your ADSs to pay any taxes owed and you will remain liable for any deficiency. If it sells deposited securities, it will, if appropriate, reduce the number of ADSs to reflect the sale and pay to you any proceeds, or send to you any property, remaining after it has paid the taxes.

  ****

 ****

***Reclassifications, Recapitalizations and Mergers***

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| | |
|:---|:---|
| ***If we:*** | ***Then:*** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Change the nominal or par value of our shares;<br>| The cash, shares or other securities received by The Bank of New York will become deposited securities. Each ADS will automatically represent its equal share of the new deposited securities. The Bank of New York may, and will if we ask it to, distribute some or all of the cash, shares or other securities it received. It may also issue new ADSs or ask you to surrender your outstanding ADSs in exchange for new ADSs, identifying the new deposited securities. |
| Reclassify, split up or consolidate any of the deposited securities; |  |
| Distribute securities on the shares that are not distributed to you; or |  |
| Recapitalize, reorganize, merge, liquidate, sell all or substantially all of our assets, or take any similar action. |  |

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***Amendment and Termination***

We may agree with The Bank of New York to amend the agreement and the ADSs without your consent for any reason. If the amendment adds or increases fees or charges, except for taxes and other governmental charges or registration fees, cable, telex or facsimile transmission costs, delivery costs or other such expenses, or prejudices an important right of ADS holders, it will only become effective thirty days after The Bank of New York notifies you of the amendment. At the time an amendment becomes effective, you are considered, by continuing to hold your ADS, to agree to the amendment and to be bound by the ADSs and the agreement is amended.

The Bank of New York will terminate the agreement if we ask it to do so. The Bank of New York may also terminate the agreement if The Bank of New York has told us that it would like to resign and we have not appointed a new depositary bank within ninety days. In both cases, The Bank of New York must notify you at least ninety days before termination.

After termination, The Bank of New York and its agents will be required to do only the following under the agreement: (1) advise you that the agreement is terminated, and (2) collect distributions on the deposited securities and deliver shares and other deposited securities upon cancellation of ADSs. After termination, The Bank of New York will, if practical, sell any remaining deposited securities by public or private sale. After that, The Bank of New York will hold the proceeds of the sale, as well as any other cash it is holding under the agreement for the pro rata benefit of the ADS holders that have not surrendered their ADSs. It will not invest the money and will have no liability for interest. The Bank of New York's only obligations will be to account for the proceeds of the sale and other cash. After termination our only obligations will be with respect to indemnification and to pay certain amounts to The Bank of New York.

***Limitations on Obligations and Liability to ADS Holders***

The agreement expressly limits our obligations and the obligations of The Bank of New York, and it limits our liability and the liability of The Bank of New York. We and The Bank of New York:

● are only obligated to take the actions specifically set forth in the agreement without negligence or bad faith;

● are not liable if either is prevented or delayed by law or circumstances beyond their control from performing their obligations under the agreement;

● are not liable if either exercises discretion permitted under the agreement;

● have no obligation to become involved in a lawsuit or other proceeding related to the ADSs or the agreement on your behalf or on behalf of any other party; and

● may rely upon any documents they believe in good faith to be genuine and to have been signed or presented by the proper party.

In the agreement, we and The Bank of New York agree to indemnify each other under certain circumstances.

***Requirements for Depositary Actions***

Before The Bank of New York will issue or register transfer of an ADS, make a distribution on an ADS, or make a withdrawal of shares, The Bank of New York may require payment of stock transfer or other taxes or other governmental charges and transfer or registration fees charged by third parties for the:

● transfer of any shares or other deposited securities;

● production of satisfactory proof of the identity and genuineness of any signature or other information it deems necessary, and

● compliance with regulations it may establish, from time to time, consistent with the agreement, including presentation of transfer documents.

The Bank of New York may refuse to deliver, transfer, or register transfers of ADSs generally when the books of The Bank of New York or our books are closed, or at any time if The Bank of New York or we think it advisable to do so. You have the right to cancel your ADSs and withdraw the underlying shares at any time except:

● when temporary delays arise because: (1) The Bank of New York or we have closed its transfer books; (2) the transfer of shares is blocked to permit voting at a shareholders' meeting; or (3) we are paying a dividend on the shares; or

● when it is necessary to prohibit withdrawals in order to comply with any laws or governmental regulations that apply to ADSs or to the withdrawal of shares or other deposited securities.

This right of withdrawal may not be limited by any other provision of the agreement.

***Pre-Release of ADSs***

In certain circumstances, subject to the provisions of the agreement, The Bank of New York may issue ADSs before deposit of the underlying shares. This is called a pre-release of the ADS. The Bank of New York may also deliver shares upon cancellation of pre-released ADSs (even if the ADSs are cancelled before the pre-release transaction has been closed out). A pre-release is closed out as soon as the underlying shares are delivered to The Bank of New York. The Bank of New York may receive ADSs instead of shares to close out a pre-release. The Bank of New York may pre-release ADSs only under the following conditions: (1) before or at the time of the pre-release, the person to whom the pre-release is being made must represent to The Bank of New York in writing that it or its customer owns the shares or ADSs to be deposited; (2) the pre-release must be fully collateralized with cash or other collateral that The Bank of New York considers appropriate; and (3) The Bank of New York must be able to close out the pre-release on not more than five business days' notice. In addition, The Bank of New York will limit the number of ADSs that may be outstanding at any time as a result of prerelease, although The Bank of New York may disregard the limit from time to time, if it thinks it is appropriate to do so.

***Inspection of Books of the Depositary***

Under the terms of the agreement, holders of ADSs may inspect the transfer books of the depositary at any reasonable time, provided that such inspection shall not be for the purpose of communicating with holders of ADSs in the interest of a business or object other than either our business or a matter related to the deposit agreement or ADSs.

***Book-Entry Only Issuance - The Depository Trust Company***

The Depository Trust Company, or DTC, New York, New York, will act as securities depository for the ADSs. The ADSs will be represented by one global security that will be deposited with and registered in the name of Cede & Co. (DTC's partnership nominee), or such other name as may be requested by an authorized representative of DTC. This means that we will not issue certificates to you for the ADSs. One global security will be issued to DTC, which will keep a computerized record of its participants (for example, your broker) whose clients have purchased the ADSs. Each participant will then keep a record of its clients. Unless it is exchanged in whole or in part for a certificated security, a global security may not be transferred. However, DTC, its nominees, and their successors may transfer a global security as a whole to one another. Beneficial interests in the global security will be shown on, and transfers of the global security will be made only through, records maintained by DTC and its participants.

DTC is a limited-purpose trust company organized under the New York Banking Law, a "banking organization" within the meaning of the New York Banking Law, a member of the United States Federal Reserve System, a "clearing corporation" within the meaning of the New York Uniform Commercial Code and a "clearing agency" registered under the provisions of Section 17A of the Exchange Act. DTC holds securities that its participants (direct participants) deposit with DTC. DTC also records the settlement among direct participants of securities transactions, such as transfers and pledges, in deposited securities through computerized records for direct participant's accounts. This eliminates the need to exchange certificates. Direct participants include securities brokers and dealers, banks, trust companies, clearing corporations and certain other organizations.

DTC's book-entry system is also used by other organizations such as securities brokers and dealers, banks and trust companies that work through a direct participant. The rules that apply to DTC and its participants are on file with the SEC.

DTC is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation, or DTCC. DTCC is, in turn, owned by a number of DTC's direct participants and by the New York Stock Exchange, Inc., the American Stock Exchange, Inc. and the National Association of Securities Dealers, Inc.

When you purchase ADSs through the DTC system, the purchases must be made by or through a direct participant, who will receive credit for the ADSs on DTC's records. Since you actually own the ADSs, you are the beneficial owner and your ownership interest will only be recorded on the direct (or indirect) participants' records. DTC has no knowledge of your individual ownership of the ADSs. DTC's records only show the identity of the direct participants and the amount of ADSs held by or through them. You will not receive a written confirmation of your purchase or sale or any periodic account statement directly from DTC. You will receive these from your direct (or indirect) participant. Thus the direct (or indirect) participants are responsible for keeping accurate account of the holdings of their customers like you.

We will wire dividend payments to DTC's nominee, and we will treat DTC's nominee as the owner of the global security for all purposes. Accordingly, we will have no direct responsibility or liability to pay amounts due on the global security to you or any other beneficial owners in the global security.

Any redemption notices will be sent by us directly to DTC, who will in turn inform the direct participants, who will then contact you as a beneficial holder.

It is DTC's current practice, upon receipt of any payment of dividends or liquidation amount, to credit direct participants' accounts on the payment date based on their holdings of beneficial interests in the global securities as shown on DTC's records. In addition, it is DTC's current practice to assign any consenting or voting rights to direct participants whose accounts are credited with preferred securities on a record date, by using an omnibus proxy. Payments by participants to owners of beneficial interests in the global securities, and voting by participants, will be based on the customary practices between the participants and owners of beneficial interests, as is the case with the ADSs held for the account of customers registered in "street name." However, payments will be the responsibility of the participants and not of DTC or us.

ADSs represented by a global security will be exchangeable for certificated securities with the same terms in authorized denominations only if:

● DTC is unwilling or unable to continue as depositary or if DTC ceases to be a clearing agency registered under applicable law and a successor depositary is not appointed by us within 90 days; or

● we determine not to require all of the ADSs to be represented by a global security.

If the book-entry only system is discontinued, the transfer agent will keep the registration books for the ADSs at its corporate office.

The information in this section concerning DTC and DTC's book-entry system has been obtained from sources we believe to be reliable, but we take no responsibility for the accuracy thereof.

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**Exchange Controls**

There are no Israeli government laws, decrees or regulations that restrict or that affect our export or import of capital or the remittance of dividends, interest or other payments to non-resident holders of our securities, including the availability of cash and cash equivalents for use by us and our owned subsidiaries, except or otherwise as set forth under Taxation.

**Taxation**

The following discussion summarizes certain Israeli and U.S. federal income tax consequences that may be material to our shareholders, but is not intended, and should not be construed, as legal or professional tax advice and does not exhaust all possible tax considerations that may be relevant to holders of our ordinary shares. This discussion is based on existing law, judicial authorities and administrative interpretations, all of which are subject to change or differing interpretations, possibly with retroactive effect. This summary does not purport to be a complete analysis of all potential tax consequences of owning our ordinary shares. In particular, this discussion does not take into account the specific circumstances of any particular holder or holders who may be subject to special rules, such as tax-exempt entities, broker-dealers, shareholders subject to Alternative Minimum Tax, shareholders that actually or constructively own 10% or more of our voting securities, shareholders that hold ordinary shares or ADSs as part of straddle or hedging or conversion transaction, traders in securities that elect mark to market, banks and other financial institutions or partnerships or other pass-through entities. The following tax considerations are not relevant to employees of the company or any controlling shareholders. The tax aspects do not include reference to the Encouragement of Capital Investments Law and the Encouragement of Industry Taxes Law.

*We urge shareholders to consult their own tax advisors as to the potential U.S., Israeli, or other tax consequences of the purchase, ownership and disposition of ordinary shares and ADSs, including, in particular, the effect of any foreign, state or local taxes. For purposes of the entire Taxation discussion, we refer to ordinary shares and ADSs collectively as ordinary shares.*

**Israeli Tax Considerations and Government Programs**

The following is a brief summary of the material Israeli tax laws applicable to us and certain Israeli Government programs that benefit us. This section also contains a discussion of material Israeli tax consequences concerning the ownership and disposition of our ordinary shares. This summary does not discuss all the aspects of Israeli tax law that may be relevant to a particular investor in light of his or her personal investment circumstances or to some types of investors subject to special treatment under Israeli law. Examples of such investors include residents of Israel or traders in securities who are subject to special tax regimes not covered in this discussion. To the extent that the discussion is based on new tax legislation that has not yet been subject to judicial or administrative interpretation, we cannot assure you that the appropriate tax authorities or the courts will accept the views expressed in this discussion. The discussion below is subject to change, including due to amendments under Israeli law or changes to the applicable judicial or administrative interpretations of Israeli law, which change could affect the tax consequences described below.

In August 2024, the Israeli Knesset approved Amendment No. 13 to the Protection of Privacy Law, 5741-1981, which became effective on August 14, 2025. Amendment 13 significantly expands Israel's data protection framework, introducing GDPR-like requirements including expanded definitions of sensitive personal information, mandatory appointment of a Privacy Protection Officer (PPO) for certain organizations, enhanced data subject rights, new data broker regulations, and significantly increased enforcement powers and penalties for the Privacy Protection Authority (PPA). Organizations operating in Israel that process personal data may be subject to these enhanced requirements, and failure to comply could result in significant fines and penalties. As we continue our operations in Israel, we will need to ensure compliance with these evolving data protection requirements, which may require additional resources and could affect our operational processes.

*General Corporate Tax Structure in Israel*

 

Israeli resident (as defined below) companies, such as us, are generally subject to corporate tax at the rate of 23% since 2018. However, the effective tax rate imposed on a company that derives income from a Preferred Enterprise or a Preferred Technology Enterprise (as discussed below) may be considerably lower. Capital gains derived by an Israeli company are generally subject to tax at the prevailing corporate tax rate.

*Law for the Encouragement of Industry (Taxes), 5729-1969*

 

The Law for the Encouragement of Industry (Taxes), 5729-1969 (the "Industry Encouragement Law"), grants several tax benefits for "Industrial Companies."

The Industry Encouragement Law defines an "Industrial Company" as a company resident in Israel, of which 90% or more of its income in any tax year, other than income deriving from defense loans, and is derived from an "Industrial Enterprise" owned by it. An "Industrial Enterprise" is defined as an enterprise whose principal activity in a given tax year is industrial production (and several other activities listed in the said law, and are associated with industrial production).

The following corporate tax benefits, among others, are available to Industrial Companies:

● amortization over an eight-year period of the cost of patents and/or rights to use a patent and know-how which were purchased in good faith and/or are used for the development or advancement of the Industrial Enterprise over an eight-year period;

● deduction of expenses incurred in connection with the issuance and listing of shares on a stock market over a three-year period; and

● under certain conditions, an election to file its tax returns along with related Israeli Industrial Companies.

There can be no assurance that we currently qualify, or will continue to qualify, as an Industrial Company or that the benefits described above will be available in the future.

*Law for the Encouragement of Capital Investments, 5719-1959*

 

*Tax Benefits for Income from Preferred Enterprise*

 

The Law for the Encouragement of Capital Investments, 5719-1959 (the "Investment Law"), currently provides certain tax benefits for income generated by "Preferred Companies" from their "Preferred Enterprises." The definition of a Preferred Company includes, inter alia, a company incorporated in Israel and that is not wholly owned by a governmental entity, which:

● owns a Preferred Enterprise, which is defined as an "Industrial Enterprise" (as defined under the Investment Law) that is classified as either a "Competitive Enterprise" (as defined under the Investment Law) or a "Competitive Enterprise in the Field of Renewable Energy" (as defined under the Investment Law);

● is controlled and managed from Israel;

● is not a "Family Company," a "Home Company," or a "Kibbutz" (collective community) as defined under the Income Tax Ordinance;

● keeps acceptable ledgers and files reports in accordance with the provisions of the Investment Law and the Income Tax Ordinance; and

● was not, and certain officers of which were not, convicted of certain crimes in the 10 years prior to the tax year with respect to which benefits are being claimed.

As of January 1, 2017, a Preferred Company is currently entitled to a reduced corporate tax rate of 16% with respect to its income derived by its Preferred Enterprise, unless the Preferred Enterprise is located in development area A, in which case the rate is currently 7.5% (our operations are currently not located in development area A).

Dividends paid out of income attributed to a Preferred Enterprise are generally subject to tax at the rate of 20% or such lower rate as may be provided in an applicable tax treaty. However, if such dividends are paid to an Israeli company, such dividends should be exempt from tax (although, if such dividends are subsequently distributed to non-Israeli individuals or a non-Israeli company, tax at a rate of 20% or such lower rate as may be provided in an applicable tax treaty will apply).

If in the future we generate taxable income, to the extent that we qualify as a "Preferred Company," the benefits provided under the Investment Law could potentially reduce our corporate tax liabilities. Therefore, the termination or substantial reduction of the benefits available under the Investment Law could materially increase our tax liabilities.

*Tax Benefits for Income from Preferred Technology Enterprise*

 

An amendment to the Investment Law was enacted as part of the Economic Efficiency Law that was published on December 29, 2016, and entered into effect as of January 1, 2017 (the "2017 Amendment"). The 2017 Amendment provides additional tax benefits to Preferred Companies for "Technology Enterprises," as described below, and is in addition to the Preferred Enterprise regime provided under the Investment Law.

The 2017 Amendment provides that a technology company satisfying certain conditions will qualify as a "Preferred Technology Enterprise" and may thereby enjoy a reduced corporate tax rate of 12% on income that qualifies as "Preferred Technology Income," as defined in the Investment Law. The tax rate is further reduced to 7.5% for a Preferred Technology Enterprise located in development area A. In addition, a Preferred Technology Enterprise may enjoy a reduced capital gains tax rate of 12% on capital gain derived from the sale of certain "Benefited Intangible Assets" (as defined in the Investment Law) to a related foreign company if the Benefited Intangible Assets were acquired from a foreign company on or after January 1, 2017 for at least NIS 200 million, pending that the sale receives is pre-approved by the IIA.

Dividends distributed by a Preferred Technology Enterprise that are paid out of Preferred Technology Income are subject to tax at the rate of 20%, but if they are distributed to a foreign company and at least 90% of the shares of the distributing company are held by foreign resident companies then the tax rate may be as low as 4%, subject to the fulfillment of certain conditions.

As we have not yet generated taxable income, there is no assurance that we qualify as a Preferred Technology Enterprise or that the benefits described above will be available to us in the future.

If in the future we generate taxable income, to the extent that we qualify as a "Preferred Company," the benefits provided under the Investment Law could potentially reduce our corporate tax liabilities. Therefore, the termination or substantial reduction of the benefits available under the Investment Law could materially increase our tax liabilities.

*The Encouragement of Research, Development and Technological Innovation in the Industry Law 5744*

 

Under the Encouragement of Research, Development and Technological Innovation in the Industry Law 5744-1984 (formerly known as the Law for the Encouragement of Research and Development in Industry 5744-1984) ("Innovation Law"), and the regulations and guidelines promulgated thereunder, research and development programs which meet specified criteria and are approved by a committee of the IIA, are eligible for grants. The grants awarded are typically up to 50% of the project's expenditures, as determined by the research committee. The grantee is required to pay royalties to the State of Israel from the sale of products developed under the program. Regulations under the Innovation Law generally provide for the payment of royalties ranging between 3% and 5% on income generated from products and services based on technology developed using grants, depending on the company's size and sector, until 100% of the grant, linked to the dollar and bearing interest at the SOFR rate, is repaid. The terms of the IIA participation also require that products developed with IIA grants be manufactured in Israel and that the know-how developed thereunder may not be transferred outside of Israel, unless approval is received from the IIA and additional payments are made to the IIA. However, this does not restrict the export of products that incorporate the funded know-how. The royalty repayment ceiling can reach up to three times the amount of the grant received (plus interest) if manufacturing is transferred outside of Israel, and repayment of up to six times the amount of the grant (plus interest) may be required if the technology itself is transferred outside of Israel or license to use it was granted to a foreign entity.

 

*Taxation of our Shareholders*

 

*Capital Gains Tax*

 

Israeli law generally imposes a capital gains tax (i) on the sale of any capital assets by residents of Israel, as defined for Israeli tax purposes, and (ii) on the sale of capital assets located in Israel, including shares of Israeli companies, by non-residents of Israel, unless a specific exemption is available or unless a tax treaty between Israel and the shareholder's country of residence provides otherwise. The law distinguishes between real gain and inflationary surplus. The inflationary surplus is a portion of the total capital gain that is equivalent to the increase of the relevant asset's purchase price which is attributable to the increase in the Israeli consumer price index or a foreign currency exchange rate between the date of purchase and the date of sale. The real gain is the excess of the total capital gain over the inflationary surplus.

*Israeli Residents*

 

Generally, as of January 1, 2012 and thereafter, the tax rate applicable to real capital gains derived from the sale of shares, whether listed on a stock market or not, is 25% for Israeli individuals, unless such shareholder claims a deduction for financing expenses in connection with such shares, in which case the gain will generally be taxed at a rate of 30%. Additionally, if such shareholder is considered a "substantial shareholder" (SSH) at the time of the sale or at any time during the 12-month period preceding such sale, the tax rate will be 30%. A "substantial shareholder" is defined as one who holds, directly or indirectly, alone or "together with another" (i.e., together with a relative, or together with someone who is not a relative but with whom, according to an agreement, there is regular cooperation in material matters of the company, directly or indirectly), directly or indirectly, at least 10% of any of the "means of control" in the company. "Means of control" generally include the right to vote, receive profits, nominate a director or an executive officer, receive assets upon liquidation, or instruct someone who holds any of the aforementioned rights regarding the manner in which such rights are to be exercised. However, different tax rates will apply to dealers in securities. Israeli companies are subject to capital gains tax at the regular corporate tax rate (i.e., 23% for the tax year 2018 and thereafter) on real capital gains derived from the sale of listed shares.

With respect to individuals, the term "Israeli resident" is generally defined under Israeli tax legislation as a person whose center of life is in Israel. The Israeli Tax Ordinance (as amended by Amendment Law No. 132 of 2002), states that in order to determine the center of life of an individual, consideration will be given to the individual's family, economic and social connections, including: (i) place of permanent residence; (ii) place of residential dwelling of the individual and the individual's immediate family; (iii) place of the individual's regular or permanent occupation or the place of his or her permanent employment; (iv) place of the individual's active and substantial economic interests; (v) place of the individual's activities in organizations, associations and other institutions. The center of life of an individual will be presumed to be in Israel if: (i) the individual was present in Israel for 183 days or more in the tax year; or (ii) the individual was present in Israel for 30 days or more in the tax year, and the total period of the individual's presence in Israel in that tax year and the two previous tax years is 425 days or more. Such presumption may be rebutted either by the individual or by the assessing officer. On July 2, 2025, the Israeli Tax Authority published a draft bill which, if enacted, could generally broaden the circumstances in which an individual would be treated as an Israeli resident for Israeli tax purposes.

As of January 1, 2025, Israeli resident shareholders who are individuals with taxable income that exceeds NIS 721,560 in a tax year (linked to the Israeli consumer price index each year) will be subject to an additional sur tax at the rate of 3% on the portion of their taxable income for such tax year that is in excess of NIS 721,560. In addition, as of 2025, the portion of an individual's taxable annual income from capital sources (including capital gains from the sale of shares) exceeding NIS 721,560 is subject to an additional 2% surtax. This means that taxable income from capital sources exceeding NIS 721,560 may be subject to a total surtax of up to 5%.

In some instances where our shareholders are liable for Israeli tax on the sale of their ordinary shares, the payment of the consideration may be subject to the withholding of Israeli tax at source.

*Non-Israeli Residents*

 

A non-Israeli resident who derives capital gains from the sale of shares in an Israeli resident company that were purchased after the company was listed for trading on a stock exchange outside of Israel will be exempt from Israeli tax so long as the shares were not held through a permanent establishment that the non-resident maintains in Israel. However, non-Israeli resident corporations will not be entitled to the foregoing exemption if (i) an Israeli resident has a controlling interest, directly or indirectly, alone, "together with another" (as defined above), or together with another Israeli resident, of more than 25% in one or more of the "means of control" (as defined above) in such non-Israeli resident corporation, or (ii) Israeli residents are the beneficiaries of, or are entitled to, 25% or more of the revenues or profits of such non-Israeli resident corporation, whether directly or indirectly.

In addition, a sale of securities by a non-Israeli resident may be exempt from Israeli capital gains tax under the provisions of an applicable tax treaty. For example, pursuant to the provisions of the Convention between the Government of the United States of America and the Government of the State of Israel with respect to Taxes on Income, as amended (the "U.S.-Israel Tax Treaty"), capital gains arising from the sale, exchange or disposition of our ordinary shares by (i) a person who qualifies as a resident of the United States within the meaning of the U.S.-Israel Tax Treaty, (ii) who holds the shares as a capital asset, and (iii) who is entitled to claim the benefits afforded to such person by the U.S.-Israel Tax Treaty generally is generally exempt from Israeli capital gains tax. Such exemption will not apply if: (i) such person holds, directly or indirectly, shares representing 10% or more of our voting power during any part of the 12-month period preceding such sale, exchange, or disposition, subject to particular conditions; (ii) the capital gains from such sale, exchange, or disposition are attributable to a permanent establishment in Israel; or (iii) such person is an individual and was present in Israel for 183 days or more during the relevant tax year. In such case, the capital gain arising from the sale, exchange, or disposition of our ordinary shares would be subject to Israeli tax, to the extent applicable; however, under the U.S.-Israel Tax Treaty, the taxpayer may be permitted to claim a credit for such taxes against the U.S. federal income tax imposed with respect to such sale, exchange, or disposition, subject to the limitations under U.S. law applicable to foreign tax credits. The U.S.-Israel Tax Treaty does not relate to U.S. state or local taxes.

Shareholders may be required to demonstrate that they are exempt from tax on their capital gains in order to refrain from withholding at source at the time of sale.

It should be noted that in the event that the real capital gain realized by an individual shareholder is not exempt from tax in Israel, the tax rates applicable to Israeli resident individual shareholders should generally apply.

In some instances where our shareholders may be liable for Israeli tax on the sale of their ordinary shares, the payment of the consideration may be subject to the withholding of Israeli tax at source.

*Taxation of Dividend Distributions*

 

*Israeli Residents*

 

Israeli resident individuals are generally subject to Israeli income tax on the receipt of dividends paid on our ordinary shares, other than bonus shares (share dividends). As of January 1, 2012 and thereafter, the tax rate applicable to such dividends is generally 25%. With respect to a person who is a "substantial shareholder" (as defined above) at the time the dividend is received or at any time during the preceding 12-month period, the applicable tax rate is 30%. Dividends paid from income derived from Preferred Enterprises and Preferred Technology Enterprises will generally be subject to income tax at a rate of 20%.

As of January 1, 2025, Israeli resident shareholders who are individuals with taxable income that exceeds NIS 721,560 in a tax year (linked to the Israeli consumer price index each year) will be subject to an additional surtax at the rate of 3% on the portion of their taxable income for such tax year that is in excess of NIS 721,560. In addition, as of 2025, the portion of an individual's taxable annual income from capital sources (including dividends) exceeding NIS 721,560 is subject to an additional 2% surtax. This means that taxable income from capital sources, including dividend distributions, exceeding NIS 721,560 may be subject to a total surtax of up to 5%.

Dividends paid to an Israeli resident individual shareholder on our ordinary shares will generally be subject to withholding tax at the rates corresponding with the income tax rates detailed above unless we are provided in advance with a withholding tax certificate issued by the Israel Tax Authority stipulating a different rate.

Notwithstanding the above, dividends paid to an Israeli resident "substantial shareholder" (as defined above) on publicly traded shares, like our ordinary shares, which are held via a "nominee company" (as defined under the Israeli Securities Law), are generally subject to Israeli withholding tax at a rate of 25%, unless a different rate is provided under an applicable tax treaty, provided that a certificate from the Israel Tax Authority allowing for a reduced withholding tax rate is obtained in advance.

If the dividend is attributable partly to income derived from a Preferred Enterprise or a Preferred Technology Enterprise and partly to other sources of income, the tax rate will be a blended rate reflecting the relative portions of the various types of income. We cannot assure you that we will designate the profits that are being distributed in a way that will reduce shareholders' tax liability.

Israeli resident companies are generally exempt from tax on the receipt of dividends paid on our ordinary shares.

*Non-Israeli Residents*

 

Unless a tax relief is provided by a treaty between Israel and the shareholder's country of residence, non-Israeli residents are generally subject to Israeli income tax on the receipt of dividends paid on our ordinary shares at the rate of 25%. With respect to a person (including a corporation) who is a "substantial shareholder" (as defined above) at the time of receiving the dividend or at any time during the preceding 12-month period, absent treaty relief as mentioned above, the applicable Israeli income tax rate is 30%. Notwithstanding the above, dividends paid from income derived from Preferred Enterprises will be subject to Israeli income tax at a rate of 20%. In addition, dividends distributed by a Preferred Technology Enterprise that are paid out of Preferred Technology Income are subject to tax at the rate of 20%, but if they are distributed to a foreign company and at least 90% of the shares of the distributing company are held by foreign resident companies then the tax rate may be as low as 4%, subject to the fulfillment of certain conditions.

In this regard, dividends paid to a non-Israeli resident shareholder on our ordinary shares will generally be subject to withholding tax at the rates corresponding with the income tax rates detailed above unless we are provided in advance with a withholding tax certificate issued by the Israel Tax Authority stipulating a different rate (e.g., in accordance with the provisions of an applicable tax treaty).

Notwithstanding the above, dividends paid to a non-Israeli resident "substantial shareholder" (as defined above) on publicly traded shares, like our ordinary shares, which are held via a "nominee company" (as defined under the Israeli Securities Law), are generally subject to Israeli withholding tax at a rate of 25%, unless a different rate is provided under an applicable tax treaty, provided that a certificate from the Israel Tax Authority allowing for a reduced withholding tax rate is obtained in advance.

In addition, it should be noted that as of 2025, the portion of an individual's taxable annual income from capital sources (including dividends) exceeding NIS 721,560 may be subject to a total surtax of up to 5% (consisting of a 3% general surtax plus a 2% additional surtax on capital sources) if certain conditions are met.

Under the U.S.-Israel Tax Treaty, the maximum Israeli tax on dividends paid to a holder of ordinary shares who qualifies as a resident of the United States within the meaning of the U.S.-Israel Tax Treaty is 25%. Such tax rate is generally reduced to 12.5% if: (i) the shareholder is a U.S. corporation and holds at least 10% of the outstanding shares of our voting stock during the part of our tax year that precedes the date of payment of the dividends and during the whole of our prior tax year; (ii) not more than 25% of our gross income in the tax year preceding the payment of the dividends consists of interest or dividends, other than dividends or interest received from subsidiary corporations 50% or more of the outstanding shares of voting stock of which is owned by us at the time such dividends or interest are received by us; and (iii) the dividends are not sourced from income derived during a period for which we were entitled to the reduced tax rate applicable to a Preferred Enterprise under the Investment Law. If the dividends are sourced from income derived during a period for which we are entitled to the reduced tax rate applicable to a Preferred Enterprise or a Preferred Technology Enterprise under the Investment Law, to the extent that the first two conditions detailed above are met, the Israeli tax rate applicable to such dividends should be 15%.

If the dividend is attributable partly to income derived from a Preferred Enterprise or a Preferred Technology Enterprise and partly to other sources of income, the tax rate will be a blended rate reflecting the relative portions of the various types of income. We cannot assure you that we will designate the profits that are being distributed in a way that will reduce shareholders' tax liability.

*Estate and gift tax*

 

Israeli law presently does not impose estate tax.

Israeli law also does not presently impose gift taxes upon the transfer of assets to Israeli resident individuals so long as it is demonstrated to the satisfaction of the Israel Tax Authority that the transfer was executed in good faith.

**U.S. Federal Income Tax Considerations**

**TO ENSURE COMPLIANCE WITH U.S. TREASURY DEPARTMENT CIRCULAR 230, PROSPECTIVE HOLDERS OF ORDINARY SHARES ARE HEREBY NOTIFIED THAT: (A) ANY DISCUSSION OF U.S. FEDERAL TAX ISSUES IN THIS MEMORANDUM IS NOT INTENDED OR WRITTEN TO BE RELIED UPON, AND CANNOT BE RELIED UPON, BY HOLDERS OF ORDINARY SHARES FOR THE PURPOSE OF AVOIDING PENALTIES THAT MAY BE IMPOSED ON SUCH HOLDERS UNDER THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE"); (B) SUCH DISCUSSION IS WRITTEN IN CONNECTION WITH THE PROMOTION OR MARKETING OF THE TRANSACTIONS OR MATTERS ADDRESSED HEREIN; AND (C) PROSPECTIVE HOLDERS OF ORDINARY SHARES SHOULD SEEK ADVICE BASED ON THEIR PARTICULAR CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.**

The following discussion applies only to a holder of our ordinary shares who qualifies as a "U.S. holder". For purposes of this discussion a "U.S. holder" is a beneficial owner of our ordinary shares that is for U.S. federal income tax purposes:

● an individual who is a U.S. citizen or U.S. resident alien;

● a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) that was created or organized under the laws of the U.S., any state thereof or the District of Columbia;

● an estate whose income is subject to U.S. federal income taxation regardless of its source; or

● a trust (i) if a U.S. court is able to exercise primary supervision over the administration of the trust and one or more "United States persons" (as defined in the Code) have the authority to control all substantial decisions of the trust, or (ii) if the trust has a valid election in effect under applicable Treasury Regulations to be treated as a "United States person."

This discussion is based on current provisions of the Internal Revenue Code of 1986, as amended, which we refer to as the Code, current and proposed Treasury regulations promulgated under the Code, and administrative and judicial decisions as of the date of this report, all of which are subject to change or differing interpretation, possibly on a retroactive basis. This discussion does not address any aspect of state, local or non-U.S. tax laws. Except where noted, this discussion addresses only those holders who hold our shares as capital assets. This discussion does not purport to be a comprehensive description of all of the tax considerations that may be relevant to U.S. holders entitled to special treatment under U.S. federal income tax laws, for example, financial institutions, insurance companies, tax-exempt organizations and broker/dealers, and it does not address all aspects of U.S. federal income taxation that may be relevant to any particular shareholder based on the shareholder's individual circumstances. In particular, this discussion does not address the potential application of the alternative minimum tax, or the special U.S. federal income tax rules applicable in special circumstances, including to U.S. holders who:

● have elected mark-to-market accounting;

● hold our ordinary shares as part of a straddle, hedge or conversion transaction with other investments;

● own directly, indirectly or by attribution at least 10% of our voting power;

● are tax exempt entities;

● are persons who acquire shares in connection with employment or other performance of services; and

● have a functional currency that is not the U.S. dollar.

Additionally, this discussion does not consider the tax treatment of partnerships or persons who hold ordinary shares through a partnership or other pass-through entity or the possible application of U.S. federal gift or estate taxes.

EACH PROSPECTIVE SHAREHOLDER IS URGED TO CONSULT ITS TAX ADVISOR REGARDING THE PARTICULAR TAX CONSEQUENCES TO SUCH HOLDER OF OWNERSHIP AND DISPOSITION OF OUR SHARES, AS WELL AS ANY TAX CONSEQUENCES THAT MAY ARISE UNDER THE LAWS OF ANY OTHER RELEVANT FOREIGN, STATE, LOCAL, OR OTHER TAXING JURISDICTION.

***Taxation of Distributions Paid on Ordinary Shares***

Subject to the description of the passive foreign investment company rules below, a U.S. holder will be required to include in gross income as ordinary income from sources outside of the U.S. the amount of any distribution paid on ordinary shares, including any Israeli taxes withheld from the amount paid, to the extent the distribution is paid out of our current or accumulated earnings and profits as determined for U.S. federal income tax purposes. Distributions in excess of these earnings and profits will be applied against and will reduce the U.S. holder's basis in the ordinary shares and, to the extent in excess of this basis, will be treated as gain from the sale or exchange of ordinary shares. We do not expect to maintain calculations of our earnings and profits under U.S. federal income tax principles and, therefore, U.S. holder should expect that the entire amount of any distribution generally will be reported as dividend income.

On December 22, 2017, President Trump signed into law the Tax Cuts and Jobs Act, or the TCJA. The TCJA provides a 100% deduction for the foreign-source portion of dividends received from "specified 10-percent owned foreign corporations" by U.S. corporate holders, subject to a one-year holding period. No foreign tax credit, including Israeli withholding tax (or deduction for foreign taxes paid with respect to qualifying dividends) would be permitted for foreign taxes paid or accrued with respect to a qualifying dividend. Deduction would be unavailable for "hybrid dividends." The dividend received deduction enacted under the TCJA may not apply to dividends from a passive foreign investment company, as discussed below.

Certain dividend income may be eligible for a reduced rate of taxation. Dividend income will be taxed to a non-corporate holder at the applicable long-term capital gains rate if the dividend is received from a "qualified foreign corporation," and the shareholder of such foreign corporation holds such stock for more than 60 days during the 121 day period that begins on the date that is 60 days before the ex-dividend date for the stock. The holding period is tolled for any days on which the shareholder has reduced his risk of loss with respect to the stock. A "qualified foreign corporation" is either a corporation that is eligible for the benefits of a comprehensive income tax treaty with the U.S. or a corporation whose stock, the shares of which are with respect to any dividend paid by such corporation, is readily tradable on an established securities market in the United States (including, for this purpose, ADSs traded on a securities market in the United States with respect to the foreign corporation's shares). However, a foreign corporation will not be treated as a "qualified foreign corporation" if it is a passive foreign investment company (as discussed below) for the year in which the dividend was paid or the preceding year. Distributions of current or accumulated earnings and profits paid in foreign currency to a U.S. holder will be includible in the income of a U.S. holder in a U.S. dollar amount calculated by reference to the exchange rate in effect on the day the distribution is received by the U.S. holder (or, in the case of ADSs, on the day the distribution is received by the depository). A U.S. holder that receives a foreign currency distribution and converts the foreign currency into U.S. dollars subsequent to receipt will have foreign exchange gain or loss based on any appreciation or depreciation in the value of the foreign currency against the U.S. dollar, which will generally be U.S. source ordinary income or loss.

As described above, we will generally be required to withhold Israeli income tax from any dividends paid to holders who are not residents of Israel. See "- Israeli Tax Considerations—Taxation of Dividends" above.

With respect to certain non-corporate U.S. Holders, including individual U.S. Holders, dividends may be taxed at the lower capital gain rates applicable to "qualified dividend income," provided (1) our ordinary shares are readily tradable on an established securities market in the United States (such as Nasdaq), (2) we are neither a PFIC nor treated as such with respect to you (as discussed above) for either the taxable year in which the dividend was paid or the preceding taxable year, (3) certain holding period requirements are met and (4) you are not under an obligation to make related payments with respect to positions in substantially similar or related property. As discussed above under "Passive foreign investment company," there is a significant risk that we will be a PFIC for U.S. federal income tax purposes, and, as a result, the qualified dividend rate may be unavailable with respect to dividends we pay.

The amount of any distribution paid in a currency other than U.S. dollars will be equal to the U.S. dollar value of such currency on the date such distribution is includible in your income, regardless of whether the payment is in fact converted into U.S. dollars at that time. The amount of any distribution of property other than cash will be the fair market value of such property on the date of distribution.

Any dividends will constitute foreign source income for foreign tax credit limitation purposes. If the dividends are taxed as qualified dividend income (as discussed above), the amount of the dividend taken into account for purposes of calculating the foreign tax credit limitation will in general be limited to the gross amount of the dividend, multiplied by the reduced tax rate applicable to qualified dividend income and divided by the highest tax rate normally applicable to dividends. The limitation on foreign taxes eligible for credit is calculated separately with respect to specific classes of income. For this purpose, dividends distributed by us with respect to our ordinary shares will generally constitute "passive category income" but could, in the case of certain U.S. Holders, constitute "general category income."

If Israeli withholding taxes apply to any dividends paid to you with respect to our ordinary shares, subject to certain conditions and limitations, such withholding taxes may be treated as foreign taxes eligible for credit against your U.S. federal income tax liability. Instead of claiming a credit, you may elect to deduct such taxes in computing taxable income, subject to applicable limitations. If a refund of the tax withheld is available under the applicable laws of Israel or under the Israel-U.S. income tax treaty (the "Treaty"), the amount of tax withheld that is refundable will not be eligible for such credit against your U.S. federal income tax liability (and will not be eligible for the deduction against your U.S. federal taxable income). The rules relating to the determination of the foreign tax credit are complex, and you should consult your tax advisor regarding the availability of a foreign tax credit in your particular circumstances, including the effects of the Treaty.

Special rules, described below, apply if we are a passive foreign investment company.

***Taxation of the Disposition of Ordinary Shares***

Subject to the description of the passive foreign investment company rules below, upon the sale, exchange or other disposition of our ordinary shares, a U.S. holder will recognize capital gain or loss in an amount equal to the difference between the U.S. holder's basis in the ordinary shares, which is usually the cost of those shares, and the amount realized on the disposition. Capital gain from the sale, exchange or other disposition of ordinary shares held more than one year is long-term capital gain and is eligible for a reduced rate of taxation for non-corporate holders. In general, gain realized by a U.S. holder on a sale, exchange or other disposition of ordinary shares generally will be treated as U.S. source income for U.S. foreign tax credit purposes. A loss realized by a U.S. holder on the sale, exchange or other disposition of ordinary shares is generally allocated to U.S. source income. However, regulations require the loss to be allocated to foreign source income to the extent certain dividends were received by the taxpayer within the 24-month period preceding the date on which the taxpayer recognized the loss. The deductibility of a loss realized on the sale, exchange or other disposition of ordinary shares is subject to limitations for both corporate and individual shareholders.

A U.S. holder that uses the cash method of accounting calculates the U.S. dollar value of the proceeds received from a sale of ordinary shares as of the date that the sale settles, and will generally have no additional foreign currency gain or loss on the sale, while a U.S. holder that uses the accrual method of accounting is required to calculate the value of the proceeds of the sale as of the trade date and may therefore realize foreign currency gain or loss, unless the U.S. holder has elected to use the settlement date to determine its proceeds of sale for purposes of calculating this foreign currency gain or loss. In addition, a U.S. holder that receives foreign currency upon disposition of our ordinary shares and converts the foreign currency into U.S. dollars subsequent to receipt will have foreign exchange gain or loss based on any appreciation or depreciation in the value of the foreign currency against the U.S. dollar, which will generally be U.S. source ordinary income or loss.

***Tax Consequences if we are a Passive Foreign Investment Company***

Special federal income tax rules apply to the timing and character of income received by a U.S. holder of a PFIC. We will be a PFIC if either 75% or more of our gross income in a tax year is passive income or the average percentage of our assets (by value) that produce or are held for the production of passive income in a tax year is at least 50%. The IRS has indicated that cash balances, even if held as working capital, are considered to be assets that produce passive income. Therefore, any determination of PFIC status will depend upon the sources of our income, and the relative values of passive and non- passive assets, including goodwill. Furthermore, because the goodwill of a publicly-traded corporation is largely a function of the trading price of its shares, the valuation of that goodwill is subject to significant change throughout each year. A determination as to a corporation's status as a PFIC must be made annually. We believe we may be a PFIC during 2025 and although we have not determined whether we will be a PFIC in 2026, or in any subsequent year, our operating results for any such years may cause us to be a PFIC. Although we may not be a PFIC in any one year, the PFIC taint remains with respect to those years in which we were or are a PFIC and the special PFIC taxation regime will continue to apply.

If we are classified as a PFIC, a special tax regime would apply to both (a) any "excess distribution" by us (generally, the U.S. holder's ratable share of distributions in any year that are greater than 125% of the average annual distributions received by such U.S. holder in the three preceding years or its holding period, if shorter) and (b) any gain recognized on the sale or other disposition of your ordinary shares. Under this special regime, any excess distribution and recognized gain would be treated as ordinary income and the federal income tax on such ordinary income would be determined as follows: (i) the amount of the excess distribution or gain would be allocated ratably over the U.S. holder's holding period for our ordinary shares; (ii) U.S. federal income tax would be determined for the amounts allocated to the first year in the holding period in which we were classified as a PFIC and for all subsequent years (except the year in which the excess distribution was received or the sale occurred) by applying the highest applicable tax rate in effect in the year to which the income was allocated; (iii) an interest charge would be added to this tax, calculated by applying the underpayment interest rate to the tax for each year determined under the preceding sentence from the due date of the income tax return for such year to the due date of the return for the year in which the excess distribution or sale occurs; and (iv) amounts allocated to a year prior to the first year in the U.S. holder's holding period in which we were classified as a PFIC or to the year in which the excess distribution or the disposition occurred would be taxed as ordinary income but without the imposition of an interest charge.

A U.S. holder may generally avoid the PFIC "excess distribution" regime by electing to treat his PFIC shares as a "qualified electing fund." If a U.S. holder elects to treat PFIC shares as a qualified electing fund, also known as a "QEF Election," the U.S. holder must include annually in gross income (for each year in which PFIC status is met) his *pro rata* share of the PFIC's ordinary earnings and net capital gains, whether or not such amounts are actually distributed to the U.S. holder. A U.S. holder may make a QEF Election with respect to a PFIC for any taxable year in which he was a shareholder. A QEF Election is effective for the year in which the election is made and all subsequent taxable years of the U.S. holder. Procedures exist for both retroactive elections and the filing of protective statements. A U.S. holder making the QEF Election must make the election on or before the due date, as extended, for the filing of the U.S. holder's income tax return for the first taxable year to which the election will apply.

A QEF Election is made on a shareholder-by-shareholder basis. A U.S. holder must make a QEF Election by completing Form 8621, Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund, and attaching it to the holder's timely filed U.S. federal income tax return.

Alternatively, a U.S. holder may also generally avoid the PFIC regime by making a so-called "mark-to-market" election. Such an election may be made by a U.S. holder with respect to ordinary shares owned at the close of such holder's taxable year, provided that we are a PFIC and the ordinary shares are considered "marketable stock." The ordinary shares will be marketable stock if they are regularly traded on a national securities exchange that is registered with the Securities and Exchange Commission, or the national market system established pursuant to section 11A of the Exchange Act, or an equivalent regulated and supervised foreign securities exchange.

If a U.S. holder were to make a mark-to-market election with respect to ordinary shares, such holder generally will be required to include in its annual gross income the excess of the fair market value of the PFIC shares at year-end over such shareholder's adjusted tax basis in the ordinary shares. Such amounts will be taxable to the U.S. holder as ordinary income, and will increase the holder's tax basis in the ordinary shares. Alternatively, if in any year, a United States holder's tax basis exceeds the fair market value of the ordinary shares at year-end, then the U.S. holder generally may take an ordinary loss deduction to the extent of the aggregate amount of ordinary income inclusions for prior years not previously recovered through loss deductions and any loss deductions taken will reduce the shareholder's tax basis in the ordinary shares. Gains from an actual sale or other disposition of the ordinary shares with a "mark-to-market" election will be treated as ordinary income, and any losses incurred on an actual sale or other disposition of the ordinary shares will be treated as an ordinary loss to the extent of any prior "unreversed inclusions" as defined in Section 1296(d) of the Code.

The mark-to-market election is made on a shareholder-by-shareholder basis. The mark-to-market election is made by completing Form 8621, Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund, and attaching it to the holder's timely filed U.S. federal income tax return for the year of election. Such election is effective for the taxable year for which made and all subsequent years until either (a) the ordinary shares cease to be marketable stock or (b) the election is revoked with the consent of the IRS.

***In view of the complexity of the issues regarding our treatment as a PFIC, U.S. shareholders are urged to consult their own tax advisors for guidance as to our status as a PFIC.***

***Information Reporting and Back-Up Withholding***

U.S. holders generally are subject to information reporting requirements with respect to dividends paid in the U.S. on ordinary shares. Existing regulations impose information reporting and back-up withholding on dividends paid in the U.S. on ordinary shares and on proceeds from the disposition of ordinary shares unless the U.S. holder provides IRS Form W-9 or otherwise establishes an exemption.

Prospective investors should consult their tax advisors concerning the effect, if any, of these Treasury regulations on an investment in ordinary shares. Back-up withholding is not an additional tax. The amount of any back-up withholding will be allowed as a credit against a holder's U.S. federal income tax liability and may entitle the holder to a refund, provided that specified required information is furnished to the IRS on a timely basis.

**Documents on Display**

We file reports and other information with the SEC under the Exchange Act and the regulations thereunder applicable to foreign private issuers. You may inspect and copy reports and other information filed by us with the SEC at the SEC's public reference facilities described below. Although as a foreign private issuer we are not required to file periodic information as frequently or as promptly as U.S. companies, we generally announce publicly our interim and year-end results promptly on a voluntary basis and will file that periodic information with the SEC under cover of Form 6-K. As a foreign private issuer, we are also exempt from the rules under the Exchange Act prescribing the furnishing and content of proxy statements. However, effective March 18, 2026, pursuant to the Holding Foreign Insiders Accountable Act enacted in December 2025, our officers and directors will be required to report their beneficial ownership of, and transactions in, our equity securities under Section 16(a) of the Exchange Act on Forms 3, 4, and 5.

You can review our SEC filings by accessing the SEC's internet site at http://www.sec.gov.

We also maintain a website at http://www.xtlbio.com, but information contained on our website does not constitute a part of this report and is not incorporated by reference into this report.

**ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

*Interest Rate Risk*. The primary objective of our investment activities is to preserve principal while maximizing our income from investments and minimizing our market risk. We invest in bank deposits and marketable securities in accordance with our investment policy. As of December 31, 2025, our portfolio of financial instruments consists of cash and cash equivalents and marketable securities. Due to the short-term nature of these investments, we believe we have no material exposure to interest rate risk arising from our investments.

*Foreign Currency and Inflation Risk.* We hold most of our cash, cash equivalents and bank deposits in U.S. dollars. While a substantial amount of our operating expenses are in U.S. dollars, we incur a portion of our expenses in New Israeli Shekels. In addition, we also pay for some of our services and supplies in the local currencies of our suppliers, as our head office is located in Israel. As a result, we are exposed to the risk that the U.S. dollar will be devalued against the New Israeli Shekel or other currencies, and as a result our financial results could be harmed if we are unable to guard against currency fluctuations in Israel or other countries in which services and supplies are obtained in the future. Accordingly, we may enter into currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchange rates of currencies. The Company's treasury risk management policy is to hold NIS-denominated cash and cash equivalents and short-term deposits in the amount of the anticipated NIS-denominated liabilities for six consecutive months from time to time and this in line with the directives of the Company's Board. These measures, however, may not adequately protect us from the adverse effects of inflation in Israel. In addition, we are exposed to the risk that the rate of inflation in Israel will exceed the rate of devaluation of the New Israeli Shekel in relation to the dollar or that the timing of any devaluation may lag behind inflation in Israel.

As of December 31, 2025, had the Group's functional currency weakened by 12.5% against the NIS with all other variables remaining constant, loss for the year would have been approximately by $95 thousand lower (2024 loss would have been approximately $53 thousand higher; 2023 - loss approximately $185 thousand higher), mainly as a result of exchange rate changes on translation of other accounts receivable, net and exchange rate changes on NIS-denominated cash and cash equivalents and marketable securities – investment in InterCure Ltd.

*Credit Risk*. Credit risks are managed at the Group level. The Group has no significant concentrations of credit risk. The Group has a policy to ensure collection through sales of its products to wholesalers with an appropriate credit history and through retail sales in cash or by credit card.

*Liquidity Risk.* Cash flow forecasting is performed by the Group's management both in the entities of the Group and aggregated by the Group. The Group's management monitors rolling forecasts of the Group's liquidity requirements to ensure it has sufficient cash to meet operations. The Group currently does not use credit facilities. Forecasting takes into consideration several factors such as raising capital to finance operations and certain liquidity ratios that the Group strives to achieve.

Surplus cash held to finance operating activities is invested in interest bearing current accounts, time deposits and other similar channels. These channels were chosen by reference to their appropriate maturities or liquidity to provide sufficient cash balances to the Group as determined by the abovementioned forecasts.

**ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES**

Not applicable.

**PART II**

**ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES**

Not applicable.

**ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS**

Not applicable.

**ITEM 15. CONTROLS AND PROCEDURES**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) *Disclosure controls and procedures*. Our management is responsible for establishing and maintaining effective disclosure controls and procedures, as defined under Rules 13a-15(e) and 15d-15(e) of the Exchange Act. As of December 31, 2025, an evaluation was performed under the supervision and with the participation of our management of the effectiveness of the design and operation of our disclosure controls and procedures. Based on that evaluation, management, including the Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures as of December 31, 2025 were not effective.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) *Management's annual report on internal controls over financial reporting*. Our management is responsible for establishing and maintaining adequate control over financial reporting, as such term is defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2024. In making this assessment, our management used the criteria established in *Internal Control - Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) (2013).* Our management concluded that our control over the financial reporting was not effective.

**Scope of the Assessment — The Social Proxy**

Effective January 1, 2025, we ceased to consolidate The Social Proxy in our financial statements. Based on a legal opinion and in accordance with IFRS 10, we determined that we do not, in substance, control The Social Proxy, notwithstanding that we held 100% of its share capital. Accordingly, the results of The Social Proxy are presented as a discontinued operation in accordance with IFRS 5, and, for comparative purposes, all financial results related to The Social Proxy for 2024 were likewise reclassified as a discontinued operation.

Because we do not consolidate The Social Proxy and, in accordance with IFRS 10, did not control it during 2025, our assessment of the effectiveness of our internal control over financial reporting as of December 31, 2025 does not include any components relating to The Social Proxy. With respect to the year ended December 31, 2024, the business combination with The Social Proxy was completed at the end of 2024, and, due to its proximity to the fiscal year end and in accordance with the relief afforded by the SEC for recently acquired businesses, our assessment as of December 31, 2024 likewise excluded the internal control over financial reporting of The Social Proxy. Accordingly, there is no gap or change in the scope of our assessment of internal control over financial reporting between the year ended December 31, 2024 and the year ended December 31, 2025, as The Social Proxy was outside the scope of our assessment in both periods.

Based on our assessment, our management concluded that, as of December 31, 2025, our internal control over financial reporting was effective.

All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective may not prevent or detect misstatements and can provide only reasonable assurances with respect to the preparation and presentation of financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Not applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) *Internal controls*. There has been a change in our internal control over financial reporting that occurred during the year ended December 31, 2025 which derived from the change of CFO and the deconsolidation of The Social Proxy.

**ITEM 16. RESERVED**

**ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT**

Our Board of Directors has determined that Osnat Hillel Fain, chairperson of our audit committee, is an audit committee financial expert, as defined by applicable SEC regulations, and is independent in accordance with applicable SEC regulations.

**ITEM 16B. CODE OF ETHICS**

We have adopted a Code of Conduct applicable to all directors and officers of our company, including our principal executive officer, principal financial officer, principal accounting officer or controller and other individuals performing similar functions. A copy of our Code of Conduct can be found on our website (http://www.xtlbio.com) and may also be obtained, without charge, upon a written request addressed to our investor relations department, XTL Biopharmaceuticals Ltd., 85 Medinat Hayehudim St.Herzliya 4676670, Israel.

**ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES**

**Policy on Pre-Approval of Audit and Non-Audit Services of Independent Registered Public Accounting Firm**

Our audit committee is responsible for the oversight of the independent registered public accounting firm's work. The audit committee's policy is to pre-approve all audit and non-audit services provided by our independent registered public accounting firm, BARZILY & CO. C.P.A ("BARZILY"), located in Jerusalem, Israel. PCAOB ID No. 1015. These services may include audit services, audit-related services and tax services, as further described below.

**Principal Accountant Fees and Services**

The following table presents the aggregate amount of fees for professional services rendered to the Company by our principal accountant, for the years ended December 31, 2025 and December 31, 2024:

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
|  | **U.S. dollars in <br> thousands** | **U.S. dollars in <br> thousands** |
| Audit fees (1) | 75 | 120 |
| Tax services (2) | 3 | 5 |
| Total | 78 | 125 |

---

&nbsp;&nbsp;&nbsp;&nbsp;(1) The audit fees for the year ended December 31, 2025 and 2024 were for professional services rendered for the audit of our annual consolidated financial statements and for review of interim consolidated financial information.

&nbsp;&nbsp;&nbsp;&nbsp;(2) Tax fees are the aggregate fees for professional services rendered during the period for tax compliance and tax advice other than in connection with the audit.

In the fiscal years ended December 31, 2025, the services performed by our independent registered public accounting firm *BARZILY* and December 31, 2024 performed by our former independent registered public accounting firm, Somekh Chaikin, a member firm of KPMG International ("KPMG") (PCAOB ID 1057) both were pre-approved by the audit committee.

**ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES**

Not applicable.

**ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS**

None.

**ITEM 16F. CHANGE IN REGISTRANT'S REGISTERED ACCOUNTANT**

*Appointment of BARZILY*

 

On June 29, 2026, the Company's shareholders approved the appointment of BARZILY as the Company's independent auditors for the fiscal year ending December 31, 2025, instead of KPMG. The appointment was recommended by the Company's audit committee and approved by the board of directors

KPMG has been the independent registered public accounting firm for the Company from 2022 through its release on June 29, 2026

During the fiscal years ended December 31, 2025 and 2024 and through June 29, 2026, (1) KPMG has not issued any reports on the consolidated financial statements of the Company that contained an adverse opinion or a disclaimer of opinion, nor were the auditors' reports of KPMG qualified or modified as to uncertainty, audit scope, or accounting principles; and (2) there has not been any disagreement as that term is used in Item 16F(a)(1)(iv) of Form 20-F over any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreement if not resolved to KPMG's satisfaction would have caused it to make reference to the subject matter of the disagreement in connection with its auditors' reports, or any "reportable event" as that term is used in Item 16F(a)(1)(v) of Form 20-F.

The Company has provided KPMG with a copy of the foregoing disclosure and has requested that they furnish the Company with a letter addressed to the SEC stating whether they agree with such disclosure and, if not, stating the respects in which they do not agree. A copy of KPMG's letter dated June 30, 2026 is filed as Exhibit 16.1 to this annual report.

During the fiscal years ended December 31, 2025 and 2024 and through June 30, 2026, the Company did not consult with BARZILY regarding (1) the application of accounting principles to a specified transaction, (2) the type of audit opinion that might be rendered on the Company's financial statements, (3) written or oral advice provided that would be an important factor considered by the Company in reaching a decision as to an accounting, auditing or financial reporting issue, or (4) any matter that was the subject of a disagreement between the Company and its predecessor auditor as described in Item 16F(a)(1)(iv) or a reportable event as described in Item 16F(a)(1)(v) of the Form 20-F.

**ITEM 16G. CORPORATE GOVERNANCE**

Under the Nasdaq corporate governance rules, foreign private issuers are exempt from many of the requirements if they instead elect to comply with home country practices and disclose where they have elected to do so. As noted above, we are currently in compliance with Nasdaq rules relating to the independence of our board of directors and our audit committee. Our board of directors and our audit committee has adopted a written charter for the audit committee setting forth the responsibilities of the audit committee as required by the SEC and Nasdaq. Also as noted above, we currently have a nomination committee to identify, review and recommend to the Board of Directors individuals believed to be qualified to become directors. We have adopted a written charter for the nomination committee, as required by Nasdaq. We currently have in place a compensation committee, as discussed in more detail above. We have adopted a written charter for the compensation committee.

The Company does not follow Nasdaq Rule 5635(d), which requires shareholder approval in order to enter into any transaction, other than a public offering, involving the sale, issuance or potential issuance by the Company of ordinary shares (or securities convertible into or exercisable for ordinary shares) equal to 20% or more of the outstanding share capital of the Company or 20% or more of the voting power outstanding before the issuance for less than the greater of book or market value of the ordinary shares. We will follow Israeli law with respect to any requirement to obtain shareholder approval in connection with any private placements of equity securities.

The Company does not follow Nasdaq Rule 5635(c), which requires shareholder approval prior to an issuance of securities when a stock option or purchase plan is to be established or materially amended or other equity compensation arrangement made or materially amended, pursuant to which stock may be acquired by officers, directors, employees or consultants. We will follow Israeli law with respect to any requirement to obtain shareholder approval in connection with such issuances.

In August 2005, our board of directors adopted a Code of Conduct that applies to all employees, directors and officers of our company, including our principal executive officer, principal financial officer, principal accounting officer or controller and other individuals performing similar functions. A copy of our Code of Conduct may be obtained, without charge, upon a written request addressed to our investor relations department, XTL Biopharmaceuticals Ltd., 85 Medinat Hayehudim St., Herzliya 4676670, Israel.

**ITEM 16H. MINE SAFETY DISCLOSURE**

Not applicable.

**ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS**

Not applicable.

**ITEM 16J. INSIDER TRADING POLICIES**

We have adopted an Insider Trading Policy (the "Insider Trading Policy"), which, among other things, governs the purchase, sale and other dispositions of our securities by our directors, executive officers and employees. Our Insider Trading Policy aims to promote compliance with applicable insider trading laws, rules and regulations, and Nasdaq listing standards. A copy of our Insider Trading Policy is filed as Exhibit 11.1 to this Annual Report.

**ITEM 16K. CYBERSECURITY**

We have established policies and processes for assessing, identifying, and managing material risk from cybersecurity threats, and have integrated these processes into our overall risk management systems and processes. We routinely assess material risks from cybersecurity threats, including any potential unauthorized access to or use of our information systems, or any information residing therein, that may result in adverse effects on the confidentiality, integrity, or availability of our information systems or any information residing therein.

We conduct periodic risk assessments to identify cybersecurity threats, as well as assessments in the event of a material change in our business practices that may affect information systems that are vulnerable to such cybersecurity threats. These risk assessments include identification of reasonably foreseeable internal and external risks, the likelihood and potential damage that could result from such risks, and the sufficiency of existing policies, procedures, systems, and safeguards in place to manage such risks.

Following these risk assessments, we re-design, implement, and maintain reasonable safeguards to minimize identified risks; reasonably address any identified gaps in existing safeguards; and regularly monitor the effectiveness of our safeguards. Primary responsibility for assessing, monitoring and managing our cybersecurity risks rests with our chief financial officer, to manage the risk assessment and mitigation process.

Our audit committee is responsible for cybersecurity oversight and monitoring risk. Management informs the audit committee of such risk by committee meetings.

As part of our overall risk management system, we monitor and test our safeguards and train our key consultants on these safeguards, in collaboration with IT and management. Personnel at all levels and departments are made aware of our cybersecurity policies through trainings.

We engage consultants, or other third parties in connection with our risk assessment processes. These service providers assist us to design and implement our cybersecurity policies and procedures, as well as to monitor and test our safeguards. We are in the process of requiring each third-party service provider to certify that it has the ability to implement and maintain appropriate security measures, consistent with all applicable laws, to implement and maintain reasonable security measures in connection with their work with us, and to promptly report any suspected breach of its security measures that may affect our company.

Prior to the acquisition of The Social Proxy the need to oversee cybersecurity risks was minimal as the majority of the company's operations conducted internally. Following the acquisition of The Social Proxy, our Board of Directors has taken an active role in overseeing cybersecurity posture of the newly integrated business.

In parallel to actions taken by the board to strengthen the company's cybersecurity risks protection, the Board of Directors appointed a new Chief Executive Officer with significant experience and expertise in cybersecurity defense. He starts to execute an in depth cybersecurity protection program. designed to meet the expanded risk landscape introduced by the acquisition.

This program is subject to active oversight by a designated Board Committee, which is responsible for regularly reviewing the effectiveness of the company's cybersecurity strategy and ensuring alignment with evolving business needs.

The cybersecurity program encompasses the following key components:

● Risk assessment findings and mitigation plans;

● Incident response protocols and outcomes of any material cybersecurity incidents;

● Compliance with applicable cybersecurity laws and regulations;

● Investment in cybersecurity infrastructure and technology;

● Training and awareness programs for employees.

As of the date of this report, we have not encountered cybersecurity challenges that have materially impaired our operations or financial standing. For additional information regarding risks from cybersecurity threats, please refer to Item 1A, "Risk Factors," in this annual report on Form 20-F.

**PART III**

**ITEM 17. FINANCIAL STATEMENTS**

We have elected to furnish financial statements and related information specified in Item 18.

**ITEM 18. FINANCIAL STATEMENTS**

**XTL BIOPHARMACEUTICALS LTD.**

**CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF DECEMBER 31, 2025**

**INDEX**

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| | |
|:---|:---|
|  | **Page** |
| [**Report of Independent Registered Public Accounting Firm**](#a_034) | **F-2** |
| **Consolidated Financial Statements - in U.S. dollars:** |  |
| &nbsp;&nbsp;&nbsp;[**Statements of Financial Position**](#a_035) | **F-5** |
| &nbsp;&nbsp;&nbsp;[**Statements of Comprehensive Income (Loss)**](#a_036) | **F-6** |
| &nbsp;&nbsp;&nbsp;[**Statements of Changes in Equity**](#a_037) | **F-7** |
| &nbsp;&nbsp;&nbsp;[**Statements of Cash Flows**](#a_038) | **F-8 - F-9** |
| &nbsp;&nbsp;&nbsp;[**Notes to Consolidated Financial Statements**](#a_039) | **F-10 - F-50** |

---

- - - - - - - - - - - -

![](ea029609501_img1.jpg)

KPMG Somekh Chaikin

Millennium Tower

17 Ha'arba'a street, PO Box 609

Tel Aviv 6100601 Israel

+972 3 684 8000

**Report of Independent Registered Public Accounting Firm**

To the Shareholders and Board of Directors

XTL Biopharmaceuticals Ltd.:

*Opinion on the Consolidated Financial Statements* 

We have audited, before the effects of the adjustments to retrospectively apply the change in accounting described in Note 6, the consolidated statements of financial position of XTL Biopharmaceuticals Ltd. and its subsidiary (hereinafter – "the Company") as of December 31, 2024, the related consolidated statements of comprehensive income (loss), changes in equity, and cash flows for each of the years in the two-year period ended December 31, 2024, and the related notes (collectively, "the consolidated financial statements"). The 2024 financial statements before the effects of the adjustments discussed in Note 6 are not presented herein.

In our opinion, the 2024 consolidated financial statements, before the effects of the adjustments to retrospectively apply the change in accounting described in Note 6, present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards).

We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the change in accounting described in Note 6 and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied. Those adjustments were audited by other auditors. 

 

*Basis for Opinion*

These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these 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 Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the 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.

---

| |
|:---|
| /s/ Somekh Chaikin |
| Somekh Chaikin |
| Member Firm of KPMG International |

---

We have served as the Company's auditor from 2022 – 2026.

Tel Aviv, Israel

April 30, 2025

![](ea029609501_img2.jpg)

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

To the Shareholders and the Board of Directors of XTL Biopharmaceuticals Ltd.

**Opinion on the Financial Statements**

We have audited the accompanying consolidated balance sheet of XTL Biopharmaceuticals Ltd. and its subsidiary ("the Company") as of December 31, 2025, the related consolidated statement of comprehensive income (loss), changes in equity and cash flows, for the year then ended, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year then ended, in conformity with IFRS Accounting Standards as issued by the International Accounting Standards Board (IFRS Accounting Standards).

**Other Matter**

We also have audited the adjustments to the 2024 financial statements to retrospectively reflect the presentation of discontinued operations, as described in Note 6. In our opinion, such adjustments are appropriate and have been properly applied. We were not engaged to audit, review, or apply any other procedures to the 2024 financial statements of the Company other than with respect to the adjustments and, accordingly, we do not express an opinion or any other form of assurance on the 2024 financial statements taken as a whole, which were audited by the predecessor auditor

**Going concern**

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1B to the consolidated financial statements, the Company has incurred significant losses and negative cash flows from operations and has an accumulated deficit that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 1B. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

**Basis for Opinion**

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, 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 audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

**Critical Audit Matter**

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the board of Directors and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

**Assessment of Loss of Control and Deconsolidation of The Social Proxy Ltd. ("TSP")**

As described in Notes 5 and 6 to the consolidated financial statements, during 2025, a severe dispute arose between the Company and the founding management of TSP, who exclusively held its technological know-how. Management concluded that the Company was entirely excluded from TSP's operations and denied access to its systems, passwords, and financial records. Under IFRS 10, control is based on the practical ability to direct relevant activities rather than legal ownership alone. Management determined that the Company lost effective control over TSP as of January 1, 2025, resulting in its deconsolidation from that date and the write-off of over $1.5 million in unrecoverable intercompany funding.

Auditing management's assessment required significant auditor judgment due to the need to evaluate whether control had been lost despite the Company's legal ownership interest, to determine the appropriate date of deconsolidation, and to assess the accounting consequences of the transaction, all of which had a material effect on the consolidated financial statements. Accordingly, we identified this matter as a critical audit matter

How the Matter Was Addressed in the Audit:

Our audit procedures over the loss of control and deconsolidation date included the following:

● Evaluating Methodology: We assessed management's accounting analysis against the control elements of IFRS 10.

● Testing Evidence of Exclusion: We inspected real-time correspondence and written demands sent by the Company during 2025 to corroborate the denial of operational and financial access.

● Evaluating Legal Opinions: We evaluated the external legal opinion obtained by management and considered its consistency with management's assessment and the factual circumstances relevant to the application of IFRS 10

● Assessing the Deconsolidation Date: We assessed the appropriateness of management's determination of the date control was lost by evaluating the underlying facts and circumstances and the timing of relevant events.

● Assessing the Accounting Impact: We evaluated the accounting for the deconsolidation, including the write-off of intercompany balances, the presentation of the transaction in the consolidated financial statements, and the classification of the discontinued operation, including the presentation of the comparative information in the consolidated statement of profit or loss and the consolidated statement of cash flow.

● Assessing Disclosures: We evaluated the adequacy and completeness of the disclosures in accordance with IAS 1 and IFRS 12.

We have served as the Company's auditor since 2026.

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| |
|:---|
| /s/ *Barzily and Co. CPAs* |
| BARZILY AND CO., CPAs |
| Jerusalem, Israel |
| June 30, 2026 |

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| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **CONSOLIDATED STATEMENTS OF FINANCIAL POSITION** |

---

---

| | | | |
|:---|:---|:---|:---|
|  | | **December 31,** | **December 31,** |
|  | | **2025** | **2024** |
|  | <br>**Note** | **U.S. dollars in thousands** | **U.S. dollars in thousands** |
| ASSETS |  |  |  |
| CURRENT ASSETS: |  |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | 7 | 76 | 371 |
| &nbsp;&nbsp;&nbsp;Marketable securities – InterCure Ltd. | 8 | - | 772 |
| &nbsp;&nbsp;&nbsp;Trade receivable (net of allowance for credit losses of $0 and $36 at December 31, 2025 and 2024, respectively) |  | - | 99 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other current assets | 9 | 22 | 98 |
| &nbsp;&nbsp;&nbsp;Warrants, net | 413 | 68 | - |
|  |  | 166 | 1340 |
| NON-CURRENT ASSETS: |  |  |  |
| &nbsp;&nbsp;&nbsp;Fixed assets, net |  | - | 187 |
| &nbsp;&nbsp;&nbsp;Intangible assets, net | 610 | - | 3816 |
| &nbsp;&nbsp;&nbsp;Goodwill | 6 | - | 3193 |
| &nbsp;&nbsp;&nbsp;Long-term bank deposit |  | - | 14 |
|  |  | - | 7210 |
| Total assets |  | 166 | 8550 |
| LIABILITIES AND EQUITY |  |  |  |
| CURRENT LIABILITIES: |  |  |  |
| Loans and credit from banking corporations | 11 | - | 138 |
| Accounts payable | 12 | 151 | 790 |
| Warrants, net | 413 | - | 1279 |
| Convertible loan from shareholder | 14 | 269 |  |
|  |  | 420 | 2207 |
| NON-CURRENT LIABILITIES: |  |  |  |
| Warrants | 413 | - | 689 |
| Deferred tax liability, net | 25 | - | 219 |
|  |  | - | 908 |
| EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY: | 16 |  |  |
| Share capital - ordinary shares of NIS 0.1 par value: Authorized December 31, 2025 and 2024 - 1,450,000,000; Issued and outstanding - 946,243,356 on December 31, 2025 and 881,385,256 on December 31, 2024; |  | 25139 | 23138 |
| Additional paid in capital |  | 140219 | 141286 |
| Reserve from transactions with non-controlling interests |  | 20 | 20 |
| Accumulated deficit |  | (165632) | (159009) |
| Total equity |  | (254) | 5435 |
| Total liabilities and equity |  | 166 | 8550 |

---

      <br> Noam Band Shlomo Shalev Niv Segal <br> Chief Executive Officer Chairman of the Board Chief Financial Officer

Date of approval of the financial statements by the Company's Board of Directors: June 30, 2026. The accompanying notes are an integral part of the consolidated financial statements.

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| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS** |

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| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | | **2025** | **2024** | **2023** |
|  | <br>**Note** | **U.S. dollars in thousands <br> (except per share data)** | **U.S. dollars in thousands <br> (except per share data)** | **U.S. dollars in thousands <br> (except per share data)** |
| Revenues | 19 | - | - | - |
| Cost of service | 20 | - | - | - |
| Gross profit |  | - | - | - |
| Research and development expenses | 21 | (28) | (16) | (31) |
| Sales and Marketing expenses | 22 | - | - | - |
| General and administrative expenses | 23 | (1437) | (759) | (734) |
| Other expenses | 10 | (223) | - | - |
| Operating loss |  | (1688) | (775) | (765) |
| Change in fair value of financial instruments | 1324 | 1102 | 926 | - |
| Change in fair value of marketable securities | 8 | 5 | 167 | (1022) |
| Change in fair value of convertible loan from shareholder | 14 | (54) | - | - |
| Interest expenses | 14 | (7) |  |  |
| Other finance income |  | 60 | 34 | 41 |
| Other finance expenses |  | (177) | (112) | (36) |
| Finance income (expenses), net | 24 | 929 | 1015 | (1017) |
| Loss before income taxes |  | (759) | 240 | (1782) |
| Income taxes benefit | 25 | - | - | - |
| Profit (loss) from continuing operations |  | (759) | 240 | (1782) |
| Loss from discontinued operations, net of tax | 6 | (6210) | (1267) | - |
| Net loss for the year |  | (6969) | (1027) | (1782) |
| Basic and diluted loss per share (in U.S. dollars): | 27 |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Profit (loss) from continuing operations |  | (0.0009) | 0.0004 | (0.003) |
| &nbsp;&nbsp;&nbsp;&nbsp;Loss from discontinued operations |  | (0.007) | (0.002) | - |
| Total basic and diluted loss per share |  | (0.008) | (0.002) | (0.003) |
| Weighted average number of issued ordinary shares |  | 896174328 | 673044737 | 544906149 |
| Diluted weighted average number of ordinary shares |  | 896174328 | 673044737 | 544906149 |

---

The accompanying notes are an integral part of the consolidated financial statements.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Attributable to equity holders of the Company** | **Attributable to equity holders of the Company** | **Attributable to equity holders of the Company** | **Attributable to equity holders of the Company** | **Attributable to equity holders of the Company** |
|  | **Share**<br> **capital** | **Additional <br> paid in <br> capital** | **Accumulated deficit** | **Reserve from<br> transactions<br> with non-<br> controlling<br> interests** | **Total**<br> **equity** |
|  | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** |
| Balance as of January 1, 2025 | 23138 | 141286 | (159009) | 20 | 5435 |
| Loss from continuing operations |  |  | (759) |  | (759) |
| Loss from discontinued operations | - | - | (6210) |  | (6210) |
| Conversion of warrants (refer to Note 13) | 2001 | (1067) | - | - | 934 |
| Share-based payment | - | - | 346 | - | 346 |
| Balance as of December 31, 2025 | 25139 | 140219 | (165632) | 20 | (254) |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Attributable to equity holders of the Company** | **Attributable to equity holders of the Company** | **Attributable to equity holders of the Company** | **Attributable to equity holders of the Company** | **Attributable to equity holders of the Company** |
|  | **Share**<br> **capital** | **Additional <br> paid in <br> capital** | **Accumulated deficit** | **Reserve from<br> transactions<br> with non-<br> controlling<br> interests** | **Total**<br> **equity** |
|  | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** |
| Balance as of January 1, 2024 | 14120 | 146326 | (158246) | 20 | 2220 |
| Profit (loss) from continuing operations | - | - | 240 |  | 240 |
| Loss from discontinued operations |  |  | (1267) |  | (1267) |
| Issuance of shares and warrants, net (refer to Note 13c) | 4020 | (4020) | - | - | - |
| Issuance of shares and warrants as part of the Social Proxy transaction (refer to Note 5) | 4998 | (1020) | - | - | 3978 |
| Share-based payment | - | - | 264 | - | 264 |
| Balance as of December 31, 2024 | 23138 | 141286 | (159009) | 20 | 5435 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **Attributable to equity holders of the Company** | **Attributable to equity holders of the Company** | **Attributable to equity holders of the Company** | **Attributable to equity holders of the Company** | **Attributable to equity holders of the Company** |
|  | **Share**<br> **capital** | **Additional <br> paid in <br> capital** | **Accumulated deficit** | **Reserve from<br> transactions<br> with non-<br> controlling<br> interests** | **Total**<br> **equity** |
|  | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** |
| Balance as of January 1, 2023 | 14120 | 146326 | (156467) | 20 | 3999 |
| Loss for the year | - | - | (1782) | - | (1782) |
| Share-based payment | - | - | 3 | - | 3 |
| Balance as of December 31, 2023 | 14120 | 146326 | (158246) | 20 | 2220 |

---

 ****

The accompanying notes are an integral part of the consolidated financial statements.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **CONSOLIDATED STATEMENTS OF CASH FLOWS** |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
|  | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** |
| <u>Cash flows from operating activities:</u> |  |  |  |
| Net Loss for the Year | (6969) | (1027) | (1782) |
| Adjustments to reconcile net income (loss) to net cash used in operating activities (a) | 5944 | (591) | 1075 |
| Net cash used in operating activities | (1025) | (1618) | (707) |
| <u>Cash flows from investing activities:</u> |  |  |  |
| Purchase of fixed assets | - | (54) | - |
| Interest from bank deposit | - | 34 | 41 |
| Investment in long-term deposits | - | (14) | - |
| Acquisition of subsidiary, consolidated for the first time (see Note 5) | - | (410) | - |
| Loan provided to subsidiary prior to acquisition | - | (400) | - |
| Proceeds from sale of marketable securities | 777 | - | - |
| Loan to former subsidiary | (250) | - | - |
| Cash and cash equivalents of deconsolidated subsidiary (see note 6) | (5) | - | - |
| Net cash provided by (used in) investing activities | 522 | (844) | 41 |
| <u>Cash flows from financing activities:</u> |  |  |  |
| Loan repayment | - | (13) | - |
| Issuance of shares and warrants | - | 1460 | - |
| Shareholder loan | 208 | - | - |
| Net cash provided by financing activities | 208 | 1447 | - |
| Decrease in cash and cash equivalents | (295) | (1015) | (666) |
| Losses from exchange rate differences on cash and cash equivalents | - | (15) | (27) |
| Cash and cash equivalents at the beginning of the year | 371 | 1401 | 2094 |
| Cash and cash equivalents at the end of the year | 76 | 371 | 1401 |

---

(\*) For further information regarding the cash flows from the discontinued operations, see Note 6.

The accompanying notes are an integral part of the consolidated financial statements.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **CONSOLIDATED STATEMENT OF CASH FLOWS (Cont.)** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | | **2025** | **2024** | **2023** |
|  | <br>**Note** | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** |
| (a) Adjustments to reconcile net loss to net cash used in operating activities: |  |  |  |  |
| Income and expenses not involving operating cash flows: |  |  |  |  |
| Depreciation and amortization |  | - | 199 | - |
| Change in deferred taxes |  | - | (130) | - |
| Revaluation of marketable securities | 8 | (5) | (167) | 1022 |
| Revaluation of warrants |  | (1102) | (926) | - |
| Share-based payment expense | 17 | 346 | 264 | 3 |
| Impairment loss on intangible assets |  | 223 | - | - |
| Bad debt loss | 623 | 308 | - | - |
| Exchange rate differences |  | (35) | 14 | 27 |
| Interest income |  | (60) | (34) | (41) |
| Interest expenses | 14 | 7 | - | - |
| Revaluation of convertible loan | 14 | 54 | - | - |
| Loss from disposal/deconsolidation of subsidiary |  | 6210 | - | - |
|  |  | 5946 | (780) | 1011 |
| Changes in operating asset and liability items: |  |  |  |  |
| Decrease (increase) in <u>prepaid</u> expenses and other current assets |  | 28 | (58) | 45 |
| Decrease in trade receivables |  | 157 | 39 | - |
| Increase (decrease) in accounts payable |  | (187) | 208 | 19 |
|  |  | (2) | 189 | 64 |
|  |  | 5944 | (591) | 1075 |

---

The accompanying notes are an integral part of the consolidated financial statements.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 1:** | **GENERAL** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. A general description of the Company and its activity:

XTL Biopharmaceuticals Ltd. (the "Company") was established as a biopharmaceutical company engaged in the acquisition and development of pharmaceutical drugs for the treatment of autoimmune diseases. The Company was incorporated under the Israeli Companies Law on March 9, 1993. The registered office of the Company is located at 85 Medinat Hayehudim Street, Hertzlia, Israel.

The Company's American Depository Shares ("ADSs") are listed for trading on the Nasdaq Capital Market ("Nasdaq") and its ordinary shares are traded on the Tel-Aviv Stock Exchange ("TASE").

During 2024 the Company expanded into the artificial intelligence, or AI, data collection industry after completing in August 2024 the acquisition of 100% of the share capital of The Social Proxy Ltd., or the Social Proxy, an innovating and leading AI web data company, developing and powering, a unique ethical, IP based, proxy data extraction platform for AI and business intelligence, or BI, applications at scale, see also Note 5. Effective January 1, 2025, the Company lost control of The Social Proxy (TSP) because it ceased to hold substantive control in accordance with IFRS 10. Accordingly, the Company ceased to consolidate the financial statements of TSP as of that date, and this activity was classified as a discontinued operation in accordance with the provisions of IFRS 5. See also Note 5 and Note 6.

As of December 31, 2025, the Company has a wholly-owned subsidiary, Xtepo Ltd. ("Xtepo"), incorporated in Israel.

The Company and Xtepo are heretofore referred to as "the Group".

In March 2025, the Company entered into a definitive exclusive sublicense agreement for its novel synthetic peptide, hCDR1 with Biossil Inc., a company incorporated under the laws of Canada ("Biossil").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Going concern:

Since its inception, the Company has incurred significant losses and negative cash flows from operations, resulting in an accumulated deficit of $165,632 thousand as of December 31, 2025. The Company has financed its operations primarily through equity fundraising from various investors.

The Company's management expects that the Company will continue to incur losses and negative cash flows from operations for the foreseeable future. The Company's strategy is premised on exogenous growth through mergers, acquisitions, and other business combinations, the execution of which depends on the Company's ability to raise new capital. Moreover, the pursuit of mergers, acquisitions, and similar business combinations is inherently capital-intensive, typically entailing substantial expenditures on financial, legal, and other professional advisory services in connection with due diligence, structuring, and execution, irrespective of whether any such transaction is ultimately consummated. Based on its current expected level of operating expenditures, the Company's cash resources as of December 31, 2025, of approximately $76 thousand, will not be sufficient to fund its operations and planned strategic activities for a period of at least twelve months from the end of the reporting period.

The Company's ability to continue as a going concern is therefore dependent on its success in securing sufficient additional financing — through the issuance of equity securities, debt, or other capital inflows — to both sustain its ongoing operations and execute its acquisition-driven growth strategy. There can be no assurance that such funding will be available when needed, on terms acceptable to the Company, or at all. Should the Company be unable to obtain adequate financing, it may be required to curtail or cease its operations.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 1:** | **GENERAL (Cont.)** |

---

These factors, individually and in the aggregate, raise substantial doubt about the Company's ability to continue as a going concern.

The financial statements do not include any adjustments to the measurement or presentation of assets and liabilities that may be required should the Company be unable to continue as a going concern.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. In October 2023, Hamas terrorists infiltrated Israel's southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets. Following the attack, Israel's security cabinet declared war against Hamas and commenced a military campaign against Hamas. In addition, since the commencement of these events, there have been continued hostilities along Israel's northern border with Lebanon (with the Hezbollah terror organization), Israel's southern border with the Gaza Strip (with the Hamas terrorist organization) and on other fronts from various extremist groups in region, such as the Houthis in Yemen and various rebel militia groups in Syria and Iraq. Further, on April 13, 2024, and on October 1, 2024, Iran launched a series of drone and missile strikes against Israel. As of December 31, 2025, a ceasefire agreement has been reached between Israel the Hezbollah terror organization in Lebanon. To date the Company's operations and financial results have not been materially affected. Since the war broke out in October 2023, the Company's operations have not been adversely affected by this situation, and it has not experienced disruptions to its clinical studies. As such, its clinical and business development activities remain on track. However, the intensity and duration of Israel's current war against Hamas and Hezbollah is difficult to predict at this stage, as are such war's economic implications on its business and operations and on Israel's economy in general. If the ceasefire declared collapses or a new war commences or hostilities expand to other fronts, its operations may be adversely affected.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Definitions:

"Related party" - as the term is defined in IAS 24, *"Related Party Disclosures"* ("IAS 24").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. Approval of financial statements:

These financial statements were approved by the Company's Board of Directors ("BoD") on June 30, 2026.

---

| | |
|:---|:---|
| **NOTE 2:** | **BASIS OF PREPARATION** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Statement of Compliance:

The consolidated financial statements of the Company (the "Financial Statements") have been prepared in accordance with International Financial Reporting Standards (IFRSs), as issued by the International Accounting Standards Board (IASB).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Basis of measurement:

The Financial Statements have been prepared under the historical cost convention, except for financial assets and liabilities measured at fair value.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Use of judgments and estimates:

The preparation of Financial Statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires the Group's management to exercise its judgment in the process of applying the Group's accounting policies. Actual results could significantly differ from the estimates and assumptions used by the Group's management.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 2:** | **BASIS OF PREPARATION (Cont.)** |

---

Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Critical accounting estimates and assumptions:

Accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.

Warrants - In accordance with International Accounting Standard 32: "Financial Instruments: Presentation", warrants allotted to investors with an exercise price that differs from the Company's functional currency are a "financial liability". As the aforementioned liability is a non-equity derivative financial instrument, it is classified in accordance with International Accounting Standard 32 "Financial Instruments: Presentation" as a financial liability at fair value through profit or loss, which is measured at its fair value using Black-Scholes model at each date of the balance sheet, with changes in the fair value carried to "revaluation of warrants to purchase ADSs" in the statements of comprehensive income (loss).

The Company's management is required to estimate, among others, different parameters included in the computation of the fair value of the warrants such as risk-free interest rate, expected volatility and dividend yield.

Share-based payments - in evaluating the amount of expenses of share-based payment that will be recognized, the Group's management is required to estimate, among others, different parameters included in the computation of the fair value of the options and the number of options that will vest.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Translation of balances and transactions in foreign currency:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Functional currency and presentation currency:

Items included in the Financial Statements of each of the Group's entities are measured using the currency of the primary economic environment in which the entity operates (the "Functional Currency"). The consolidated financial statements are presented in U.S. dollars, which is the Functional Currency of each of the Group's entities and the Company's presentation currency and have been rounded to the nearest thousand.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 2:** | **BASIS OF PREPARATION (Cont.)** |

---

Below are the exchange rate of the U.S. dollar in relation to the NIS:

---

| | |
|:---|:---|
| <br>**As of** | **Exchange rate of**<br>**U.S. $1**<br>**NIS** |
| December 31, 2025 | 3.190 |
| December 31, 2024 | 3.647 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Transactions and balances:

Transactions in a currency other than the Functional Currency ("Foreign Currency") are translated into the Functional Currency using the exchange rates at the dates of the transactions. After initial recognition, monetary assets and liabilities denominated in Foreign Currency are translated at the end of each reporting period into the Functional Currency at the exchange rate at that date.

Exchange differences are recognized in the statement of comprehensive income (loss) in the line-item finance income (expenses), net. Non-monetary assets and liabilities denominated in foreign currency and measured at cost are translated at the exchange rate at the date of the transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. Disclosure of new standards, amendments to standards and interpretations issued but not yet effective:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Amendment to IAS 1, Presentation of Financial Statements: Classification of Liabilities as Current or Non-Current and subsequent amendment: Non-Current Liabilities with Covenants.

The Amendment replaces certain requirements for classifying liabilities as current or non-current. According to the Amendment, a liability will be classified as non-current when the entity has the right to defer settlement for at least 12 months after the reporting period, and it "has substance" and is in existence at the end of the reporting period.

According to the Amendment, as published in October 2022, covenants with which the entity must comply after the reporting date, do not affect classification of the liability as current or non-current. Additionally, the Amendment adds disclosure requirements for liabilities subject to covenants within 12 months after the reporting date, such as disclosure regarding the nature of the covenants, the date they need to be complied with and facts and circumstances that indicate the entity may have difficulty complying with the covenants. Furthermore, the Amendment clarifies that the conversion option of a liability will affect its classification as current or non-current, other than when the conversion option is recognized as equity.

The Amendment is effective for reporting periods beginning on or after January 1, 2024. The Amendment is applicable retrospectively, including an amendment to comparative data.

Application of the Amendment did not have a material effect on the financial statements.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 2:** | **BASIS OF PREPARATION (Cont.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. IFRS 18, Presentation and Disclosure in Financial Statements.

IFRS 18 will replace IAS 1 Presentation of Financial Statements and applies for annual reporting periods beginning on or after 1 January 2027. The new standard introduces the following key new requirements:

&nbsp;&nbsp;&nbsp;&nbsp;● Entities are required to classify all income and expenses into five categories in the statement of profit or loss, namely the operating, investing, financing, discontinued operations and income tax categories. Entities are also required to present a newly-defined operating profit subtotal. Entities' net profit will not change.

&nbsp;&nbsp;&nbsp;&nbsp;● Management-defined performance measures (MPMs) are disclosed in a single note in the financial statements.

&nbsp;&nbsp;&nbsp;&nbsp;● Enhanced guidance is provided on how to group information in the financial statements.

In addition, all entities are required to use the operating profit subtotal as the starting point for the statement of cash flows when presenting operating cash flows under the indirect method.

The Group is still in the process of assessing the impact of the new standard, particularly with respect to the structure of the Group's statement of profit or loss, the statement of cash flows and the additional disclosures required for MPMs. The Group is also assessing the impact on how information is grouped in the financial statements, including for items currently labelled as Other.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments:

On May 30, 2024, IASB has issued amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: Disclosures, which clarifies the classification of financial assets with environmental, social and corporate governance (ESG) and similar features, derecognition of financial liability settled through electronic payment systems and also introduces additional disclosure requirements to enhance transparency for investors regarding investments in equity instruments designated at fair value through other comprehensive income and financial instruments with contingent features. The effective date for adoption of this amendment is annual reporting periods beginning on or after January 1, 2026, although early adoption is permitted. The Company is currently evaluating the impact of the amendment and does not expect to early adopt this standard.

---

| | |
|:---|:---|
| **NOTE 3:** | **MATERIAL ACCOUNTING POLICIES** |

---

The accounting policies have been consistently applied to all the years presented, unless otherwise stated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Business combination:

The Group implements the acquisition method to all business combinations. The acquisition date is the date on which the acquirer obtains control over the acquiree. Control exists when the Group is exposed, or has rights, to variable returns from its involvement with the acquiree and it has the ability to affect those returns through its power over the acquiree. Substantive rights held by the Group and others are taken into account when assessing control.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

The Group recognizes goodwill on acquisition according to the fair value of the consideration transferred including any amounts recognized in respect of rights that do not confer control in the acquiree as well as the fair value at the acquisition date of any pre-existing equity right of the Group in the acquiree, less the net amount of the identifiable assets acquired and the liabilities assumed.

The Group accounts for business combinations under the acquisition method when the acquired set of activities and assets meets the definition of a business and control is transferred to the Group. In determining whether a particular set of activities and assets is a business, the Group assesses whether the set of assets and activities acquired includes, at a minimum, an input and substantive process and whether the acquired set has the ability to produce outputs.

The Group has an option to apply a 'concentration test' that permits a simplified assessment of whether an acquired set of activities and assets is not a business. The optional concentration test is met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or group of similar identifiable assets.

The consideration transferred in the acquisition is generally measured at fair value, as are the identifiable net assets acquired. Any goodwill that arises is tested annually for impairment. Transaction costs are expensed as incurred, except if related to the issue of debt or equity securities.

The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognized in profit or loss.

Any contingent consideration is measured at fair value at the date of acquisition. If an obligation to pay contingent consideration that meets the definition of a financial instrument is classified as equity, then it is not remeasured, and settlement is accounted for within equity. Otherwise, other contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value of the contingent consideration are recognized in profit or loss.

Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control is lost. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by the Group.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Cash and cash equivalents

Cash and cash equivalents include cash on hand, demand deposits with banks and other short-term highly liquid investments with original maturities of three months or less from the date of acquisition that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 3:** | **MATERIAL ACCOUNTING POLICIES (Cont.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Intangible assets:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Unamortized intangible assets (licenses and patent rights):

These assets are reviewed for impairment once a year and whenever there are indicators of a possible impairment, in accordance with the provisions of IAS 36, Impairment of Assets (see also Note 10). The amortization of an asset on a straight-line basis over its useful life begins when the development procedure is completed, and the asset is available for use.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Amortized intangible assets (technology, customer list and brand):

Annual amortization rates:

---

| | |
|:---|:---|
|  | **%** |
| Technology | 14.3 |
| Customer list | 10.0 |
| Brand | 6.7 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Research and development:

Research expenditures are recognized as expenses when incurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Impairment of non-financial assets:

Goodwill, and intangible assets which are not yet available for use are not amortized and impairment in their respect is tested at least every year. Depreciable assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. An impairment loss is recognized for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units).

Non-financial assets that sustained impairment are reviewed for possible reversal of the impairment at each date of the statement of financial position. An impairment is tested at least every year. In addition, discretion is exercised as to whether there is an indication to examine impairment more frequently.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. Investments and other financial assets:

The Group classifies its equity investments as financial assets at fair value through profit or loss (FVPL).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. Revenue recognition:

The Company's revenues are comprised of one category: licensing cloud-enabled software subscriptions.

The Company recognizes revenue in accordance with IFRS 15, "Revenue from Contracts with Customers" ("the Standard"). A contract with a customer exists only when: the parties to the contract have approved it and are committed to perform their respective obligations, the Company can identify each party's rights regarding the distinct goods or services to be transferred ("performance obligations"), the Company can determine the transaction price for the goods or services to be transferred, the contract has commercial substance and it is probable that the Company will collect the consideration to which it will be entitled in exchange for the goods or services that will be transferred to the customer.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 3:** | **MATERIAL ACCOUNTING POLICIES (Cont.)** |

---

Revenues from licensing cloud-enabled software subscriptions include subscription fees from customers accessing the Company's enterprise cloud services. Cloud services allow customers to use the Company's software without taking possession of the software. Revenue is recognized ratably over the contract term. Substantially all of the Company's subscription service arrangements are non-cancelable and do not contain refund-type provisions.

The Company recorded an allowance for doubtful debts in the amounts of $0 thousand and $36 thousand as of December 31, 2025, and 2024, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. Share-based payment:

The Group operates a share-based payment plan for employees, directors, officers and other service providers who render services that are settled with the Group's equity instruments. In this framework, the Company grants employees, directors, officers and other service providers, from time to time, and, at its discretion, options to purchase shares of the Company. The fair value of options granted is measured according to the Black-Scholes model as of the date of grant (the date of the Company's Board of Directors' decision unless shareholders' approval is required) and recognized as an expense in the statement of comprehensive income (loss) and correspondingly carried to equity. The total amount recognized as an expense over the vesting term of the options (the term over which all pre-established vesting conditions are expected to be satisfied) is determined by reference to the fair value of the options granted at grant date.

At each reporting date, the Company revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions and recognizes the impact of the revision to original estimates, if any, in the statement of comprehensive income (loss) with a corresponding adjustment in equity.

When options are exercised, the Company issues new shares. The proceeds net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h. Earnings (loss) per share:

Basic loss per share is calculated by dividing the earnings attributable to equity holders of the Company by the weighted average number of ordinary shares outstanding during the period.

For the diluted earnings per share calculation, the weighted average number of shares outstanding during the year is adjusted for the average number of shares and ordinary shares that are potentially issuable in connection with service-provider share-based payment and warrants, using the treasury stock method. If the inclusion of potentially issuable shares would decrease loss per share, the potentially issuable shares are excluded from the weighted average number of shares outstanding used to calculate diluted earnings per share.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 3:** | **MATERIAL ACCOUNTING POLICIES (Cont.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. Issuance of warrants:

The exercise price of the warrants issued at the Social Proxy Transaction is in NIS (different than the functional currency) and therefore these warrants are classified as a liability. The warrants issued at the fund-raising have a cashless exercise mechanism and therefore, in accordance with International Accounting Standard 32: "Financial Instruments: Presentation", are also a financial liability.

The Company has initially recognized them at fair value as of the date of issuance (measured through third-party appraiser, using a Black-Scholes model and Black-Scholes-Merton Digital/Binary call option model).

The warrants are carried at fair value. On each reporting period, the changes in their fair value are recognized in profit or loss.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j. Discontinued operations:

In accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations, a discontinued operation is a component of the Group that has either been disposed of or is classified as held for sale, and represents a separate major line of business or geographical area of operations, is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations, or is a subsidiary acquired exclusively with a view to resale. Classification as a discontinued operation occurs at the earlier of disposal or when the operation meets the criteria to be classified as held for sale.

When an operation is classified as a discontinued operation, the comparative statement of comprehensive income (loss) is re-presented as if the operation had been discontinued from the start of the comparative period. Assets and liabilities of a disposal group classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell, and are presented separately in the statement of financial position.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;k. Consolidation:

The consolidated financial statements comprise the financial statements of the Company and the entities controlled by the Company (its subsidiaries). In accordance with IFRS 10, Consolidated Financial Statements, control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. The Group reassesses whether it controls an investee whenever facts and circumstances indicate that there are changes to one or more of the elements of control.

A subsidiary is consolidated from the date on which control is obtained by the Group and is de-consolidated from the date on which the Group loses control. The financial statements of the subsidiaries are prepared for the same reporting period as the Company, applying uniform accounting policies. All intra-group balances, transactions, income and expenses, and any unrealized gains and losses arising from intra-group transactions, are eliminated in full on consolidation.

When the Group loses control of a subsidiary, it derecognizes the assets and liabilities of the subsidiary and any related components of equity. Any retained interest in the former subsidiary is recognized at its fair value at the date on which control is lost, and any resulting gain or loss is recognized in profit or loss. During the reporting period, the Group lost control of its subsidiary, The Social Proxy LTD, effective January 1, 2025; accordingly, Social Proxy was deconsolidated as of that date and its results are presented as a discontinued operation (see Notes 5 and 6).

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 3:** | **MATERIAL ACCOUNTING POLICIES (Cont.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;l. Convertible loan:

A convertible loan is a hybrid (combined) financial instrument comprising a host debt liability and an embedded conversion feature.

On initial recognition, the Company assesses the conversion feature in accordance with IAS 32 to determine whether it represents an equity instrument or a financial liability. A conversion feature is classified as equity only if it is settled solely by the exchange of a fixed amount of cash for a fixed number of the Company's own equity instruments (the "fixed-for-fixed" condition). As the number of ADSs to be issued upon conversion is variable — since the conversion price is determined by reference to the future market price of the Company's ADSs, less a discount — the "fixed-for-fixed" condition is not met, the conversion feature does not qualify as equity, and the entire instrument is accounted for as a financial liability. Accordingly, no equity component is recognized in respect of the convertible loan.

Since the embedded conversion feature is not closely related to the host debt contract, it is separated from the host and accounted for under IFRS 9 as a derivative financial liability measured at fair value through profit or loss. The host debt component is subsequently measured at amortized cost using the effective interest method.

Interest expense on the host debt component is recognized in profit or loss using the effective interest method. In addition, the embedded conversion feature is remeasured to its fair value at each reporting date, and the resulting revaluation gains or losses are recognized in profit or loss.

Transaction costs directly attributable to the host liability are deducted from its initial carrying amount, while transaction costs attributable to items measured at fair value through profit or loss are recognized immediately in profit or loss.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;m. Contingent liabilities and provisions:

A provision is recognized when the Group has a present obligation (legal or constructive) as a result of a past event, it is more likely than not that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate can be made of the amount of the obligation. Where the Group expects some or all of a provision to be reimbursed, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. Provisions are measured at the present value of management's best estimate of the expenditure required to settle the present obligation at the end of the reporting period, using a discount rate that reflects current market assessments of the time value of money and the risks specific to the liability.

A contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group, or a present obligation that is not recognized because it is not probable that an outflow of resources will be required to settle it or because the amount of the obligation cannot be measured with sufficient reliability. Contingent liabilities are not recognized in the financial statements but are disclosed, unless the possibility of an outflow of resources embodying economic benefits is remote.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 4:** | **FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Financial risk management:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Financial risk factors:

The Group's activities expose it to a variety of financial risks: market risks and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Group's financial performance.

Risk management is carried out by the Group's management under policies approved by the Board. The Group's treasury identifies, evaluates and defines financial risks. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk and investment of excess liquidity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Market risks:

*Foreign currency exchange rate risk:*

The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures with respect to the NIS. Foreign exchange risk arises from assets and liabilities denominated in currency that is other than the functional currency.

The Group treasury's risk management policy is to hold NIS-denominated cash and cash equivalents in the amount of the anticipated NIS-denominated liabilities for six to twelve consecutive months from time to time and this in line with the directives of the Company's Board.

As of December 31, 2025, had the Group's functional currency weakened by 12.5% against the NIS with all other variables remaining constant, loss for the year would have been approximately by $95 thousand lower (2024 loss would have been approximately $53 thousand higher; 2023 - loss approximately $185 thousand higher), mainly as a result of exchange rate changes on translation of other accounts receivable, net and exchange rate changes on NIS-denominated cash and cash equivalents and marketable securities – investment in InterCure Ltd.

*Equity securities price risk:*

The group's exposure to equity securities price risk arises from investments held by the group and classified in the balance sheet at fair value through profit or loss (currently only the investment in the shares of InterCure Ltd)

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Liquidity risk:

Cash flow forecasting is performed by the Group's management both in the entities of the Group and aggregated by the Group.

The Group's management monitors rolling forecasts of the Group's liquidity requirements to ensure it has sufficient cash to meet operations. The Group does not use borrowing credit facilities.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 4:** | **FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (Cont.)** |

---

Surplus cash held to finance operating activities is invested in interest bearing current accounts and time deposits. The Company holds cash and deposits with banks and financial institutions and in the estimation of management, the credit risk for these financial instruments is low.

These channels were chosen by reference to their appropriate maturities or liquidity to provide sufficient cash balances to the Group as determined by the abovementioned forecasts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Capital management:

The Group's objectives when managing capital are to ensure the Group's ability to continue as a going concern in order to provide returns on investments for shareholders and benefits for other interested parties and to maintain an optimal capital structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Group may take a variety of measures such as issue new shares or sell assets to reduce liabilities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Financial instruments by category:

As of December 31, 2025, the financial asset of the group is classified in one category: measured subsequently at fair value through profit or loss.

As of December 31, 2024, all financial liabilities were classified in one of two categories: Trade and other account payables, measured at amortized cost, and warrants measured at fair value through profit or loss.

As of December 31, 2023, all financial liabilities were classified in one category: Trade and other account payables, measured at amortized cost.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Changes in financial liabilities:

---

| | |
|:---|:---|
|  | **Warrants** |
|  | **U.S. dollars <br> in thousands** |
| **Balance as of December 31, 2022** | - |
| Revaluation during the year | - |
| Exercises during the year | - |
| **Balance as of December 31, 2023** | - |
| Revaluation during the year | 2894 |
| Revaluation during the year | (926) |
| **Balance as of December 31, 2024** | 1968 |
| Exercises during the year | (934) |
| Revaluation during the year | (1102) |
| **Balance as of December 31, 2025** | (68) |

---

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 4:** | **FINANCIAL INSTRUMENTS AND FINANCIAL RISK MANAGEMENT (Cont.)** |

---

Warrant sensitivity analysis:

---

| | | |
|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** |
|  | **Increase** | **Decrease** |
|  | **U.S. dollars in thousands** | **U.S. dollars in thousands** |
| Warrants issued at the fund-raising: |  |  |
| Volatility (5% movement) | (3) | 3 |

---

See also note 13.

---

| | |
|:---|:---|
| **NOTE 5:** | **SUBSIDIARIES** |

---

As of December 31, 2025, the Company has one wholly-owned subsidiary classified as continuing operations: Xtepo.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Xtepo is a private company established in Israel on November 9, 2009. In August 2010, a share exchange transaction was completed between Xtepo and the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. On August 14, 2024, as part of the Company's strategy to expand its assets portfolio with high potential assets, the Company completed the acquisition of 100% of the shares of Social Proxy LTD (the "Transaction"), an AI web data company, developing and powering a unique ethical, IP based, proxy and data extraction platform for AI & BI Applications at scale. Social Proxy LTD had two subsidiaries – Social Proxy Inc (a United States company) and Social Proxy LDA (a Portugal company). Effective January 1, 2025, the Company lost control of and deconsolidated Social Proxy LTD, and the results of its operations have been presented as a discontinued operation in these consolidated financial statements. The disclosures below describe the Transaction and the purchase price allocation as of the August 14, 2024 acquisition date; see Note 6 for further details regarding the discontinuance. As was amended on November 11, 2024, the Transaction was in exchange for the issuance by the Company to the shareholders of the Social Proxy, by way of a private placement, of 186,479,027 ordinary shares of the Company, and the payment of $430 thousand to the shareholders of the Social Proxy. In addition, as part of the Transaction, the shareholders of Social Proxy were issued 2,896,142 warrants to purchase the same amount of ADS's, which may only be exercised upon reaching certain financial-measured milestones within a period of up to 3 years from the closing of the Transaction. During the year ended December 31, 2024, the Company incurred approximately $60 thousand in transaction costs related to the acquisition, which primarily consisted of legal and valuation-related expenses. These expenses were recorded in general and administrative expense in the accompanying Consolidated Statements of Comprehensive Income. The results of the operations of Social Proxy have been included in the consolidated financial statements since the acquisition date of August 14, 2024. In these 2025 consolidated financial statements, the results of Social Proxy for the period from August 14, 2024, through December 31, 2024, have been reclassified to discontinued operations in the comparative period, and are presented in Note 6.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 5:** | **SUBSIDIARIES (Cont.)** |

---

The Company accounted the acquisition as a Business combination.

Under the purchase price allocation, the Company allocated the purchase price to tangible and identified intangible assets acquired and liabilities.

The table below summarizes the fair value of assets acquired and liabilities as of the acquisition date:

---

| | |
|:---|:---|
|  | **August 14, 2024** |
|  | **U.S. dollars <br> in thousands** |
| Cash and cash equivalents | 20 |
| Trade receivables | 138 |
| Fixed assets, net | 167 |
| Accounts payable | (377) |
| Loans | (551) |
| Intangible assets | 3601 |
| Goodwill | 3193 |
| Deferred taxes liabilities, net | (349) |
|  | 5842 |
| Cash consideration | 430 |
| Fair value of issued shares (\*) | 4018 |
| Fair value of issued warrants (see Note 13) | 1394 |
|  | 5842 |

---

(\*) Fair value of issued shares was measured according to the quoted share price.

The intangible assets as of the closing date of the acquisition included:

---

| | | |
|:---|:---|:---|
|  | **U.S. dollars <br> in thousands** | **U.S. dollars <br> in thousands** |
| Technology |  | 2508 |
| Customer relationships |  | 291 |
| Brand name | | 802 |
|  | | 3,601 |

---

Indications of fair value of the intangible assets acquired in connection with the acquisition were determined using either the income, market or replacement cost methodologies. The intangible assets are being amortized based on their estimated revenue producing life span.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 5:** | **SUBSIDIARIES (Cont.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Valuation of the intangible assets involved multiple assumptions. The key assumptions are described below.

Developed technology acquired primarily consists of existing technology related to a unique ethical, IP based, proxy and data extraction platform for AI & BI Applications at scale. The technology was valued using the multi-period excess earnings method, under the income approach. Using this approach, the estimated fair values were calculated using the following assumptions discounted to their net present value:

● Forecasted revenues;

● Useful life of 7 years;

● R&D expenses for the development of new technology was estimated to be 20 percent of the R&D costs, and this was added back;

● A tax rate of 12%;

● An after-tax discount rate of 26%;

The Customer relationships represent the fair value of future projected revenues that will be derived from the sale of products to Social Proxy's existing customers. Customer relationships were valued using the Distributor method, under the income approach. Using this approach, the estimated fair values were calculated using the following assumptions discounted to their net present value:

● Forecasted revenues based on a 2.5% growth rate for 2025 and onwards;

● Annual attrition rate of 10%;

● EBIT margin of 7.2%;

● A tax rate of 12%;

● An after-tax discount rate of 25%;

The Brand name reflects the estimated fair value of future cash flows associated with the Social Proxy brand. The brand was valued by applying the relief-from-royalty method under the income approach. Using this approach, the estimated fair values were calculated using the following assumptions, discounted to their net present value:

● Forecasted revenues;

● Royalty rate of 2%;

● A tax rate of 12%;

● An after-tax discount rate of 25.5%.

---

| | |
|:---|:---|
| **NOTE 6:** | **DISCONTINUED OPERATIONS** |

---

Effective January 1, 2025, the Company classified its wholly-owned subsidiary, The Social Proxy Ltd. ("Social Proxy"), as a discontinued operation in accordance with IFRS 5 — Non-current Assets Held for Sale and Discontinued Operations, following a dispute with the former Social Proxy shareholders. Based on a supporting legal opinion from an Israeli commercial litigation expert, the Company concluded that it had lost control of Social Proxy under IFRS 10, with that loss of control deemed effective retroactively as of January 1, 2025. Accordingly, the Company deconsolidated Social Proxy as of that date and presented its results as a discontinued operation.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 6:** | **DISCONTINUED OPERATIONS (Cont.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Statement of financial position of discontinued operations:

The following table presents the statement of financial position of Social Proxy as of December 31, 2024 and January 1, 2025 (the date of deconsolidation):

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2024** | **January 1, <br> 2025** |
|  | **U.S. dollars in thousands** | **U.S. dollars in thousands** |
| CURRENT ASSETS: |  |  |
| Cash and cash equivalents (\*) | 5 | 5 |
| Trade receivable | 99 | 99 |
| Prepaid expenses and other current assets | 46 | 46 |
|  | 150 | 150 |
| NON-CURRENT ASSETS: |  |  |
| Fixed assets, net | 187 | 187 |
| Long-term bank deposit | 14 | 14 |
|  | 201 | 201 |
| Total assets | 351 | 351 |
| LIABILITIES AND EQUITY |  |  |
| Loans and credit from banking corporations | 138 | 138 |
| Accounts payable | 1729 | 1729 |
|  | 1867 | 1867 |
| EQUITY |  |  |
| Share capital | - | - |
| Accumulated deficit | (284) | (1516) |
| Net loss (\*\*\*\*) | (1232) | - |
| Total equity | (1516) | (1516) |
| Total liabilities and equity | 351 | 351 |

---

(\*) Represents the cash and cash equivalents of Social Proxy that were derecognized from the consolidated financial statements upon the deconsolidation of the subsidiary in connection with the discontinuation of its operations.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 6:** | **DISCONTINUED OPERATIONS (Cont.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Results of discontinued operations:

The following table presents the results of Social Proxy that have been classified as discontinued operations.

---

| | | |
|:---|:---|:---|
|  | **2025** | **2024** |
|  | **U.S. dollars in thousands** | **U.S. dollars in thousands** |
| Revenues | - | 451 |
| Cost of service (\*\*) | - | (448) |
| Gross profit | - | 3 |
| Research and development expenses | - | (82) |
| Sales and Marketing expenses (\*\*\*) | - | (487) |
| General and administrative expenses | - | (666) |
| Intangible assets amortization | - | (165) |
| Operating loss | - | (1397) |
| Finance expenses, net | - |  |
|  | - | (1397) |
| Loss before income taxes |  |  |
| Income taxes benefit | - | 130 |
| Net loss from discontinued operations (\*\*\*\*) | - | (1267) |
| Loss from disposal/deconsolidation | (6210) | - |
| **Net loss** | (6210) | (1267) |

---

(\*\*) Cost of Service for the year ended December 31, 2024 is comprised of Social Proxy's cost of service and amortization of intangible assets (technology) recognized in connection with the Social Proxy acquisition; see breakdown in the table below.

---

| | |
|:---|:---|
| SAAS – Social Proxy | 314 |
| Amortization | 134 |
|  | 448 |

---

(\*\*\*) Sales and Marketing expenses for the year ended December 31, 2024 is comprised of Social Proxy's sales and marketing expenses and amortization of intangible assets (technology) recognized in connection with the Social Proxy acquisition; see breakdown in the table below.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 6:** | **DISCONTINUED OPERATIONS (Cont.)** |

---

---

| | |
|:---|:---|
| SAAS – Social Proxy | 456 |
| Amortization | 31 |
|  | 487 |

---

---

| | |
|:---|:---|
| (\*\*\*\*) | The results of the discontinued operation presented above reflect Social Proxy on a consolidated basis and therefore differ from its stand-alone results. On consolidation, the intangible assets identified in the purchase price allocation (see Note 5) are amortized at the Group level — $134 thousand charged to cost of service and $31 thousand to sales and marketing — and a related deferred tax income of $130 thousand is recognized (see Note 25). The table below reconciles Social Proxy's stand-alone loss for 2024 to the net loss from discontinued operations presented in these financial statements. |

---

---

| | |
|:---|:---|
| Social Proxy's stand-alone loss for the period from acquisition to December 31, 2024 | (1232) |
| Amortization of acquired intangibles — Cost of Service | (134) |
| Amortization of acquired intangibles — Sales and Marketing | (31) |
| Operating loss from discontinued operations | (1397) |
| Deferred tax income on amortization of acquired intangibles | 130 |
| Net loss from discontinued operations | (1267) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Loss from discontinued operations comprises:

The loss from discontinued operations for the year ended December 31, 2025 of $6,210 thousand reflects the derecognition of the Company's net investment in Social Proxy upon its deconsolidation effective January 1, 2025, including the related deferred tax liability previously recognized on the underlying intangible assets.

---

| | |
|:---|:---|
|  | **1.1.2025** |
| Intangible assets, net | 3436 |
| Goodwill | 3193 |
| Other adjustments | (2) |
|  | 6627 |
| Social Proxy's equity | (1516) |
| Deferred tax liability | (219) |
| Loan to Social Proxy (\*) | 1318 |
|  | 6210 |

---

---

| | |
|:---|:---|
| (\*) | The Company's total loan to Social Proxy amounted to $1,626 thousand. Of this amount, $1,318 thousand, relating to the period up to December 31, 2024, was included within discontinued operations, while the remaining $308 thousand, relating to 2025, was recognized as a bad debt within continuing operations. See Note 23 |

---

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 6:** | **DISCONTINUED OPERATIONS (Cont.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Additional information regarding the cash flows from the discontinued operations

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024 (\*)** |
|  | **U.S. dollars in thousands** | **U.S. dollars in thousands** |
| Net cash used in operating activities | (303) | (1346) |
| Net cash provided by (used in) investing activities | (237) | (19) |
| &nbsp;&nbsp;&nbsp;Net cash provided by financing activities |  | 893 |

---

(\*) Social Proxy was consolidated in the Company's financial statements from the date of acquisition, August 14, 2024, through the end of 2024, at which point control over the company was lost and its operations were discontinued.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. Subsequent developments:

Following the deconsolidation, Social Proxy ceased operations. The Company has no continuing involvement in Social Proxy and is not expected to receive any further consideration in respect of the disposal.

---

| | |
|:---|:---|
| **NOTE 7:** | **CASH AND CASH EQUIVALENTS** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
|  | **2025** | **2025** | **2024** | **2024** |
|  | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** |
| Cash in banks | | 76 | | 371 |
|  | | 76 | | 371 |

---

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 7:** | **CASH** **AND CASH EQUIVALENTS (Cont.)** |

---

The currencies in which the cash and cash equivalents are denominated or linked to are:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
|  | **2025** | **2025** | **2024** | **2024** |
|  | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** |
| U.S. dollars |  | 1 |  | 343 |
| NIS (not linked to the Israeli CPI) | | 75 | | 28 |
|  | | 76 | | 371 |

---

---

| | |
|:---|:---|
| **NOTE 8:** | **MARKETABLE SECURITIES – InterCure Ltd** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. All marketable securities held by the Company constitute Level 1 financial instruments, as defined in IFRS 13 - "*Fair Value Measurement* ". Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can access at the measurement date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. The entire investment in marketable securities is classified as a financial asset at fair value through profit or loss. As of December 31, 2025, the Company does not hold any shares of InterCure Ltd, as all shares were sold during 2025. As of December 31, 2024, the Company

held approximately 473,998 (1.04%) of InterCure Ltd's shares (the shares are traded at the Tel-Aviv Stock Exchange - "TASE" and at the Nasdaq Capital Market - "Nasdaq").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Changes in marketable securities for the years ended December 31, 2025, 2024 and 2023, were as follows:

---

| | | | |
|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **December 31,** |
|  | **2025** | **2024** | **2023** |
|  | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** |
| Fair value opening balance | 772 | 605 | 1627 |
| Changes in fair value during the year | 5 | (167) | (1022) |
| Fair value before disposal | 777 | 772 | 605 |
| Proceeds from sale | (777) | - | - |
| Fair value closing balance | - | 772 | 605 |

---

During the year ended December 31, 2025, the Company sold its entire holding of 473,998 shares of InterCure Ltd in aggregate consideration of approximately $777 thousand.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 9:** | **PREPAID EXPENSES AND OTHER CURRENT ASSETS** |

---

Composition:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
|  | **2025** | **2025** | **2024** | **2024** |
|  | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** |
| Prepaid expenses and other receivables |  | - |  | 51 |
| Government authorities (\*) | | 22 | | 47 |
|  | | 22 | | 98 |

---

(\*) The government authorities are monetary items, which are denominated or linked in NIS.

The carrying amount of government authorities is a reasonable approximation of the fair value because the effect of discounting is immaterial.

---

| | |
|:---|:---|
| **NOTE 10:** | **INTANGIBLE ASSETS** |

---

---

| | |
|:---|:---|
| a. | On January 7, 2014, the Company signed a licensing agreement with Yeda Research and Development Company Ltd. ("Yeda"), as amended on September 6, 2015, to develop hCDR1, a Phase II-ready asset for the treatment of Systemic Lupus Erythematosus ("SLE"). The license from Yeda also included all clinical data of the Phase 1 and Phase 2A trials previously conducted with hCDR1. The terms of the license agreement include, among other things, reimbursement of patent expenses payable in installments, milestone payments to Yeda, royalties based on net sales, and additional customary royalties payable to the Israel Innovation Authority. |
|  | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the license agreement, the Company is required to make milestone payments of up to $2.2 million: $200,000 upon starting a Phase 3 clinical trial, $1 million upon FDA approval to market in the U.S., and $250,000 for marketing approval in each of China and three of the European Union's Group of Five. In addition, the Company is required to pay 2%-3% royalties of annual net sales and sublicense fees of 15%-20% of whatever it receives from any sub-license.<br>Under the license agreement, the Company was also required to meet certain development milestones, including the delivery of a trial protocol to Yeda, raising specified investment amounts, and commencement of a Phase 2 clinical trial. The Company decided not to conduct the Phase 2 trial itself and instead to seek a strategic partner. As a result, the development milestone relating to commencement of Phase 2 has not been met.<br>The term of the license agreement is the later of the date of expiry of the last of the licensed patents or the expiry of a continuous period of 11 years after first commercial sale in any country during which there shall not have been a first commercial sale in the U.S., EU, Japan, China or any OECD member. The license agreement may be terminated by the Company without cause upon 60 days prior written notice.<br>The license agreement may also be terminated by Yeda upon 45 days prior written notice if either the Company fails to meet certain development milestones or commercial sale shall have commenced and there shall be a period of 6 months of no sales, subject to certain exceptions. Yeda shall also be entitled to terminate the license agreement if the Company were to commence legal action against Yeda challenging the validity of any of the licensed patents, and the Company was unsuccessful in such challenge, in which event the Company would be required to pay Yeda liquidated damages of $8 million. Either party may also terminate the license agreement in the case of a material breach that remains uncured or certain bankruptcy events.  |

---

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 10:** | **INTANGIBLE ASSETS (Cont.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; As of December 31, 2025, the Company had paid $380 thousand of patent expense reimbursements to Yeda. A remaining liability of $127 thousand is disclosed under accounts payable.<br>The Company reviews the hCDR1 asset for impairment on December 31 of each year, or more frequently if events or changes in circumstances indicate that an impairment may exist. If the carrying amount of the asset exceeds its recoverable amount, the asset is written down to its recoverable amount.<br>On October 1, 2024, the Company signed a letter of intent for the sublicense of hCDR1, and on February 12, 2025 entered into a definitive Exclusive Sublicense Agreement with Biossil Inc., a company incorporated under the laws of Canada ("Biossil"), for sublicense of hCDR1 (see also Note 28). Yeda was notified by the Company and by Biossil of the agreement and consented to its execution. In connection with the agreement, the Company engaged a third- party appraiser to assess the recoverable amount of the hCDR1 asset. Based on the appraisal, the Company recognized consideration of $157 thousand received from Biossil and an impairment loss of $223 thousand on the remaining carrying amount, resulting in the full derecognition of the hCDR1 asset.<br>The carrying amount as of December 31, 2025 is nil. For the year ended December 31, 2024, the Company measured the recoverable amount by deducting the fair value of its other assets and liabilities from the amount representing its market value, and concluded that no impairment was required.<br>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Intangible assets acquired as a result of subsidiary acquisition

On August 14, 2024, the Company completed the acquisition of 100% of the shares of Social Proxy. As part of the acquisition, the Company recognized intangible assets in the amount of $3,601 thousand. See also Note 5 . Effective January 1, 2025, Social Proxy was classified as a discontinued operation, and accordingly, the intangible assets attributable to Social Proxy (Technology, Customer List and Brand) are no longer included in the Group's intangible assets from continuing operations as of December 31, 2025. See Note 6.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Composition and movement:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | **hCDR1** | **Technology** | **Customer<br> List** | **Brand** | **Total** |
|  | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** |
| Balance as of January 1, 2025 | 380 | 2374 | 280 | 782 | 3816 |
| Reclassification to discontinued operations | - | (2374) | (280) | (782) | (3436) |
| Impairment loss | (223) |  |  |  | (223) |
| Derecognition upon receipt of consideration (Biossil sublicense) | (157) |  |  |  | (157) |
| Balance as of December 31, 2025 | - | - | - | - | - |

---

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 10:** | **INTANGIBLE ASSETS (Cont.)** |

---

Amortization of the Social Proxy intangible assets (Technology, Customer List and Brand) for the period prior to its classification as a discontinued operation was recognized within general and administrative expenses in the statements of comprehensive income (loss). Effective January 1, 2025, amortization of these assets is presented within results from discontinued operations (see Note 6). The hCDR1 asset has not been amortized as it is not yet ready for use.

---

| | |
|:---|:---|
| **NOTE 11:** | **LOANS AND CREDIT FROM BANKING CORPORATIONS** |

---

Composition:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
|  | **2025** | **2025** | **2024** | **2024** |
|  | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** |
| Short-term loan (\*) |  | - |  | 132 |
| Credit from banking corporations | | - | | 6 |
|  | | - | | 138 |

---

---

| | |
|:---|:---|
| (\*) | On October 15, 2024, Social Proxy received a $163 thousand loan, repaid monthly over 12 months and bearing annual interest of 12% on the initial amount. Both the loan and the credit from banking corporations relate to Social Proxy, which was classified as a discontinued operation effective January 1, 2025 (see Note 6). Accordingly, as of December 31, 2025, there are no outstanding loans or credit from banking corporations attributable to continuing operations. |

---

---

| | |
|:---|:---|
| **NOTE 12:** | **ACCOUNTS PAYABLE** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Composition:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
|  | **2025** | **2025** | **2024** | **2024** |
|  | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** |
| Trade payables |  | 20 |  | 196 |
| Accrued expenses |  | 129 |  | 492 |
| Deferred revenues |  | - |  | 18 |
| Employees and related |  | 2 |  | 53 |
| Other payables | | - | | 31 |
|  | | 151 | | 790 |

---

The carrying amount of accounts payable is a reasonable approximation of their fair value because the effect of discounting is immaterial.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 12:** | **ACCOUNTS PAYABLE (Cont.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. The carrying amount of accounts payable is denominated in the following currencies:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
|  | **2025** | **2025** | **2024** | **2024** |
|  | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** |
| U.S. dollars |  | 1 |  | 362 |
| NIS (not linked to the Israeli CPI) | | 150 | | 428 |
|  | | 151 | | 790 |

---

---

| | |
|:---|:---|
| **NOTE 13:** | **WARRANTS** |

---

On August 14, 2024, the Company raised through a private placement gross funds amounting to $1,500 thousand by issuing 1,500,000 ADS's (equal to 150,000,000 ordinary shares) and 1,500,000 warrants to purchase the same amount of ADS's at an exercise price of NIS 0.1 per share. The warrants shall be exercisable immediately and will expire five years from the issuance date. The number of warrants and their exercise price could be adjusted upon standard anti-dilution protection clauses and subject to a cashless exercise mechanism. On October 9, 2025, 1,250,000 warrants (equal to 125,000,000 ordinary shares) were exercised on a cashless basis, and as a result the Company issued 64,858,100 ordinary shares. As of December 31, 2025, 250,000 warrants (equal to 25,000,000 ordinary shares) remain outstanding. For information regarding the change in the ADS ratio effected in March 2026, see Note 16 and Note 28.

On August 14, 2024, as part of the Social Proxy Transaction, the Company issued the previous owners 2,896,142 warrants to purchase the same amount of ADS's (equal to 289,614,200 ordinary shares). These warrants could be exercised only upon the achievement of certain financial milestones relating to Social Proxy's performance, measurable within a period of up to three years from the August 2024 closing, and were to expire five years from the issuance date. During the fourth quarter of 2025, following the resignation of Social Proxy's Chief Executive Officer and Chief Technology Officer and the deterioration of its operations, the Company determined that these financial milestones would not be achieved, and accordingly the contingent warrants were forfeited and cancelled.

As of December 31, 2025, no Social Proxy contingent warrants remain outstanding. Subsequent to the reporting date, Social Proxy filed an application for the commencement of insolvency proceedings and, on February 22, 2026, the Israeli court ordered its liquidation and the appointment of a trustee; see Note 28.

IFRS 13 "Fair Value Measurement", ("IFRS 13"), defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions and risk of nonperformance.

IFRS 13 also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument's categorization within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. IFRS 13 establishes three levels of inputs that may be used to measure fair value.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 13:** | **WARRANTS (Cont.)** |

---

Level 1 - quoted prices in active markets for identical assets or liabilities;

---

| | |
|:---|:---|
| Level 2 - | inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices in active markets for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities; or |

---

Level 3 - unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The Company accounted for the warrants issued with a cashless exercise mechanism and exercise price different from Company's functional currency as a non-current liability according to provisions of IAS 32. The Company measures the warrants at fair value by using a Black-Scholes model.

The warrants are measured in each reporting period. Changes in the fair value are recognized in the Company's statement of comprehensive income (loss) as financial income or expense, as appropriate. The warrants are classified as level 3, see also Note 4.

The Company used the following assumptions to estimate the warrants issued at the fund-raising:

---

| | | |
|:---|:---|:---|
|  | **December 31, <br> 2025** | **December 31,<br> 2024** |
| Risk-free interest rate (1) | 3.60% | 4.36% |
| Expected volatility (2) | 108.11% | 95.95% |
| Expected life (in years) (3) | 3.62 | 4.62 |
| Dividend yield (4) | 0% | 0% |

---

(1) Risk-free interest rate - based on yield rates of non-index linked U.S. Federal Reserve treasury bonds.

(2) Expected volatility - was calculated based on actual historical share price movements of the Company over a term that is equivalent to the contractual term of the option.

(3) Expected life - the expected life was based on the expiration date of the warrants.

In 2025, the Company recorded finance income of $875 thousand in statements of comprehensive loss due to the change in the fair value of the warrants. In 2024, the Company recorded finance income of $926 thousand from the change in the fair value of the warrants. See also note 4c.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 13:** | **WARRANTS (Cont.)** |

---

Outstanding warrants:

The table below summarizes the outstanding warrants as of December 31, 2025 -

---

| | | | | |
|:---|:---|:---|:---|:---|
| **Number of<br> shares<br> exercisable** | **Issuance <br> date** | **Exercise<br> price<br> (per warrant)** | **Exercise<br> price<br> (per warrant)** | **Expiration <br> date** |
| 25000000 | August 14, 2024 | NIS | 0.1 | August 14, 2029 |
| - | August 14, 2024 | NIS | 0.1 | August 14, 2029 |
| 25000000 |  |  |  |  |

---

---

| | |
|:---|:---|
| **NOTE 14:** | **CONVERTIBLE LOAN FROM SHAREHOLDER** |

---

During 2025, the Company received a convertible loan of approximately $208 thousand (NIS 700 thousand) from a director of the Company. The loan bears interest at an annual rate of 8% and is convertible into the Company's ADSs at a conversion price equal to the average ADS price over the 30 trading days preceding the conversion notice, less a 20% discount.

The loan is classified as a financial liability and measured at amortized cost using the effective interest method, at an effective interest rate of 8% per annum. For the period from the receipt of the loan through December 31, 2025, the Company recognized interest expense of approximately $7 thousand, increasing the carrying amount of the loan to approximately $215 thousand before the fair value adjustment described below.

As the loan is convertible into ADSs at a 20% discount to their market price, the Company remeasured the loan to its fair value of approximately $269 thousand as of December 31, 2025, and recognized a revaluation loss of approximately $54 thousand in profit or loss. Accordingly, the carrying amount of the loan as of December 31, 2025 was approximately $269 thousand. As the lender is a director of the Company, the loan constitutes a related party transaction. Subsequent to the reporting date, the loan was converted in full into shares of the Company (see Note 28).

---

| | |
|:---|:---|
| **NOTE 15:** | **COMMITMENTS AND CONTINGENT LIABILITIES** |

---

The Company is a party to legal proceedings pending before the Magistrate Court in Tel Aviv-Jaffa (C.A. 24375-10-25), in which Afik & Co., Attorneys at Law (the "Plaintiff") is claiming approximately NIS 452 thousand, plus interest, linkage and legal costs, in respect of allegedly unpaid legal fees for services purportedly rendered to the company and its former shareholders in connection with the Company's acquisition of the The Social Proxy.

The company has filed a statement of defense contesting the claim, including on the grounds of the absence of liability and the existence of an agreed settlement. The Defendants have also filed a third-party notice against the former shareholders seeking indemnification, a counterclaim against the Plaintiff for restitution of amounts paid, and an application for a temporary attachment over shares held in trust for the former shareholders.

Based on the opinion of its legal counsel, the Company's management believes that it is more likely than not that the claim will not result in an outflow of economic resources from the Company. Accordingly, no provision has been recognized in respect of the claim in these financial statements.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 16:** | **SHARE CAPITAL, RESERVES AND ACCUMULATED DEFICIT** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. The Company's Ordinary shares of NIS 0.1 par value are traded on the TASE. The Company's ADSs are listed for trading on the Nasdaq Capital Market in the U.S. Each ADS consist of 100 Company's Ordinary shares.

Ordinary shares confer upon their holders voting rights and right to participate in the shareholders' meeting, right to receive dividends and the right to participate in the excess of assets upon liquidation of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. The Company's authorized share capital is 1,450,000,000 Ordinary Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. On August 14, 2024, the Company issued 150,000,000 ordinary shares and warrants to purchase 150,000,000 ordinary shares, in a fund-raising round of US$1,500 thousand. In the fund-raising participated one of the Company's related parties. The consideration received from the issuance of different financial instruments in a single transaction is attributed initially to financial liabilities that are measured at each period at fair value through profit or loss, and then to financial liabilities that are measured only upon initial recognition at fair value and the remaining amount is recognized as equity component. At the closing, the fair value of the Warrants was greater than the gross proceeds received. Therefore, the entire consideration was allocated to the Warrants liability and no consideration has been allocated to equity component, except for a sorting between Share Capital and Additional Paid In Capital, in the amount of $4,020 thousand, representing the 150,000,000 ordinary shares issued. As a result, applicable issuance costs of $71 thousand have been recorded as an expense under financing expenses. See note 13 regarding the measurement of the warrants liability.

If, at inception of a contract, the valuation cannot be supported by observable market data, any gain or loss determined by the valuation methodology is not recognized in the income statement but is deferred on the balance sheet and is commonly known as a 'day-one gain or loss'. This deferred gain or loss is recognized in the income statement over the life of the contract until substantially all the remaining contractual cash flows can be valued using observable market data at which point any remaining deferred gain or loss is recognized in the income statement. Changes in valuation subsequent to the initial valuation at inception of a contract are recognized immediately in the income statement. As of August 14, 2024, December 31, 2024 and December 31, 2025, the deferred loss amounted to $1,128 thousand, $1,044 thousand and $136 thousand, respectively.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. On October 9, 2025, 1,250,000 warrants (equal to 125,000,000 ordinary shares) were exercised on a cashless basis (see Note 13). As a result, the Company issued 64,858,100 ordinary shares. Upon exercise, the warrant liability of $934 thousand was reclassified to equity, of which $2,001 thousand was recorded as Share Capital (representing the par value of the shares issued) and $(1,067) thousand was recorded against Additional Paid-In Capital.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. On August 14, 2024, the Company issued 186,479,027 ordinary shares as part of the Transaction, see also Note 5. During 2025, the contingent warrants issued to the previous owners of Social Proxy were cancelled, as the underlying financial milestones were not achieved within the applicable measurement periods (see Note 13).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. In March 2026, subsequent to the reporting date, the Company changed the ratio of its ADSs to its ordinary shares from one ADS for every 100 ordinary shares to one ADS for every 400 ordinary shares; the change had no impact on the Company's outstanding ordinary shares (see Note 28).

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 16:** | **SHARE CAPITAL, RESERVES AND ACCUMULATED DEFICIT (Cont.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. Subsequent to the reporting date, a convertible loan from a director (see Note 14) was converted into 92,105 ADSs, representing 36,842,000 ordinary shares of NIS 0.1 par value each. As the shares were allotted below their par value, the Company capitalized approximately NIS 3.0 million from share premium to share capital in accordance with Section 304 of the Israeli Companies Law, 1999 (see Note 28).

---

| | |
|:---|:---|
| **NOTE 17:** | **SHARE-BASED PAYMENT** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. On August 29, 2011, the Company's Board of Directors approved the adoption of an employee share option plan for the grant of options exercisable into shares of the Company, in accordance with section 102 to the Israeli Tax Ordinance (the "2011 Plan") which ended after 10 years, and the holding of up to 10,000,000 shares in the framework of the 2011 Plan, for option allocation to Company employees, directors and consultants. The terms of the options, which will be granted according to the 2011 Plan, including the option period, exercise price, vesting period and exercise period shall be determined by the Company's Board of Directors on the date of the actual allocation. On January 29, 2020, it was decided to increase the reserve by 10 million and on May 19, 2020, it was decided to increase the reserve by another 10 million options. The total reserve after these increases is 30 million. As of December 31, 2025, the remaining number of options available for grant under the 2011 Plan is 7,112,000 options.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. On March 2, 2023, the Company's shareholders approved the grant of options exercisable into 150,000 of the Company's ordinary shares to one of Company's directors for an exercise price of NIS 0.0495 per share (USD 0.014 per share, respectively, based on the exchange rate reported by the Bank of Israel on the same day). The options were fully vested on the day of grant.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. On March 14, 2023, Company's Board of directors approved retroactively to extend the expiration date of the 2011 plan by additional 5 years to August 29, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. On March 17, 2024, the Company's board of directors approved
the grant of 148,500 options exercisable into 148,500 ADSs (14,850,000 ordinary shares) of the Company, out of which 138,500 were subject
to a shareholders' meeting (approved on April 30, 2024, by the Company's shareholders' meeting) to certain officers and directors
of the Company. 100,000 options fully vested on the date of grant and 48,500 options vest according to the Company's 2011 share
option plan.

---

| | |
|:---|:---|
| e. | During 2025, the Company's board of directors approved two option grants to the Company's Chief Executive Officer, who also serves as a director of the Company. |
|  | On July 21, 2025, the board approved the grant of 423,000 options (the "First Grant"), exercisable into 423,000 ADSs (42,300,000 ordinary shares), at an exercise price of $1.40 per ADS. The First Grant options are subject to service-based vesting and vest in 16 equal portions each month from the date of grant. |
|  | On July 21, 2025, the board approved the grant of an additional 423,000 options to the Chief Executive Officer (the "Second Grant"), at an exercise price of $1.60 per ADS. The Second Grant options are not subject to a service-based vesting period but rather to performance (milestone) conditions, whereby the options vest only upon the achievement, within 24 months of the date of grant, of (i) the Company reaching positive EBITDA (300,000 options) and (ii) the closing of a strategic transaction (123,000 options). Based on management's assessment, it is more likely than not that these performance targets will not be achieved and that none of the Second Grant options are expected to vest. Accordingly, in accordance with IFRS 2, Share-based Payment, no compensation expense has been recognized in respect of the Second Grant. |
|  | On July 21, 2025, the board approved the grant of an additional 100,000 options to the Chairman of the board of directors of the Company at an exercise price of $1.2 Per ADS. The options are fully vested. |

---

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 17:** | **SHARE-BASED PAYMENT (Cont.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. During 2025, 1,500,000 options previously granted to a former officer and a former director were forfeited upon their cessation of service, and 2,100,000 additional options expired in accordance with their original terms.

Movements in the number of share options and their related weighted average exercise prices (in dollars) during the years ended December 31, 2025, 2024 and 2023 are as follows:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2025** | **2024** | **2024** | **2023** | **2023** |
|  | **Number of<br> options** | **Weighted<br> average<br> exercise<br> price<br> (USD)** | **Number of<br> options** | **Weighted<br> average<br> exercise<br> price<br> (USD)** | **Number of<br> options** | **Weighted<br> average<br> exercise<br> price<br> (USD)** |
| Outstanding at beginning of year | 27100000 | 0.03 | 12550000 | 0.05 | 12400000 | 0.05 |
| Granted | 94600000 | 1.47 | 14850000 | 0.01 | 150000 | 0.01 |
| Expired | (2100000) | 0.55 | (300000) | 0.12 | - | - |
| Forfeited | (1500000) | 0.04 |  |  |  |  |
| Outstanding at end of year | 118100000 | 1.17 | 27100000 | 0.03 | 12550000 | 0.05 |
| Exercisable at end of year | 75289083 | 1.08 | 23462500 | 0.03 | 12550000 | 0.05 |

---

Below is information about the exercise price (in dollars) and the remaining contractual life (in years) for options outstanding at end of year:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **December 31,** | **December 31,** | **December 31,** | **December 31,** | **December 31,** | **December 31,** |
| **2025** | **2025** | **2025** | **2024** | **2024** | **2024** |
| **Options<br> outstanding at<br> end of year** | **Range of<br> exercise prices<br> (USD)** | **Weighted <br> average<br> remaining<br> contractual life** | **Options<br> outstanding at <br> end of year** | **Range of<br> exercise prices<br> (USD)** | **Weighted<br> average<br> remaining<br> contractual life** |
| 23500000 | 0.04-0.09 | 3.59 | 10150000 | 0.03 - 0.11 | 5.30 |
| 94600000 | 0.012-0.016 | 9.21 | 37012500 | 0.17 | 0.66 |
|  |  |  | 15450000 | 0.01 | 4.25 |
| 118100000 |  |  | 62612500 |  |  |

---

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 17:** | **SHARE-BASED PAYMENT (Cont.)** |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **December 31, 2023** | **December 31, 2023** | **December 31, 2023** | **December 31, 2023** | **December 31, 2023** | **December 31, 2023** |
| **Options <br> outstanding at<br> end of year** | **Options <br> outstanding at<br> end of year** | **Range of<br> exercise prices <br> (USD)** | **Range of<br> exercise prices <br> (USD)** | **Weighted <br> average <br> remaining <br> contractual life** | **Weighted <br> average <br> remaining <br> contractual life** |
|  | 10900000 |  | 0.03 - 0.14 |  | 6.07 |
|  | 1500000 |  | 0.17 |  | 1.66 |
| | 150,000 |  | 0.01 |  | 9.17 |
| | 12,550,000 |  |  |  |  |

---

The table below summarizes the outstanding options as of December 31, 2025 that have been granted to the Company's executives, directors and consultants –

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| **Options <br> outstanding** | **Position** | **Grant date (\*)** | **Exercise<br> price in<br> NIS** | | **Fair value USD in<br> thousands** | **Vesting schedule** |
| 10000000 | Former Chief Executive Officer | July 7, 2020 | 0.09 |  | 103 | Fully vested |
| 150000 | Director | March 2, 2023 | 0.0495 |  | 1 | Fully vested |
| 500000 | Chief Financial Officer | March 17, 2024 | 0.0438 |  | 3 | 12 equal portions each quarter over a period of 3 years from the date of grant |
| 1000000 | Director | March 17, 2024 | 0.0438 |  | 21 | 12 equal portions each quarter over a period of 3 years from the date of grant |
| 10000000 | Chief Executive Officer | March 17, 2024 | 0.0438 |  | 214 | Fully vested on date of grant |
| 850000 | Director | March 17, 2024 | 0.0438 |  | 18 | 12 equal portions each quarter over a period of 3 years from the date of grant |
| 1000000 | Director | March 17, 2024 | 0.0438 |  | 22 | 12 equal portions each quarter over a period of 3 years from the date of grant |
| 42300000 | Chief Executive Officer | July 21, 2025 | 0.04 | 46 | 441 | 16 equal portions each month from the date of grant |
| 42300000 | Chief Executive Officer and Director | July 21, 2025 | 0.0510 |  | 433 | Subject to performance conditions which were not met; accordingly, the options did not vest. |
| 10000000 | Director | July 21, 2025 | 0.038 |  | 106 | Fully vested on date of grant |
| 118100000 |  |  |  |  |  |  |

---

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 17:** | **SHARE-BASED PAYMENT (Cont.)** |

---

The fair value for options granted in 2025 is estimated at the date of grant using a Black-Scholes model with the following weighted average assumptions:

---

| | | |
|:---|:---|:---|
|  | **April 7,<br> 2025** | **July 21,<br> 2025** |
| Dividend yield | 0% | 0% |
| Expected volatility | 112.50% | 112.50% |
| Risk-free interest | 4.17% | 4.17% |
| Expected life (years) | 5 | 5 |

---

We have calculated the volatility based on the Company's historical volatility. The share price was set according to the Company's share market value.

The fair value for options granted in 2024 is estimated at the date of grant using a Black-Scholes model with the following weighted average assumptions:

---

| | | |
|:---|:---|:---|
|  | **March 17,<br> 2024** | **April 30,<br> 2024** |
| Dividend yield | 0% | 0% |
| Expected volatility | 81.27% | 91.15% |
| Risk-free interest | 4.31% | 4.72% |
| Expected life (years) | 5 | 5 |

---

We have calculated the volatility based on the Company's historical volatility. The share price was set according to the Company's share market value.

The fair value for options granted in 2023 is estimated at the date of grant using a Black-Scholes model with the following weighted average assumptions:

---

| | |
|:---|:---|
|  | **March 2,<br> 2023** |
| Dividend yield | 0% |
| Expected volatility | 67.5% |
| Risk-free interest | 4.08% |
| Expected life (years) | 10 |

---

We have calculated the volatility based on the Company's historical volatility. The share price was set according to the Company's share market value.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 18:** | **SEGMENT REPORTING** |

---

Following the classification of Social Proxy as a discontinued operation effective January 1, 2025 (see Note 6), the Group operates in a single reportable segment — development of pharmaceutical drugs for the treatment of autoimmune diseases. Accordingly, segment information is not separately disclosed for the year ended December 31, 2025, as the operating results, assets and liabilities of the single reportable segment are presented in the consolidated statements of comprehensive income (loss) and the consolidated statements of financial position. The Chief Operating Decision Maker ("CODM") is the Chief Executive Officer of XTL. The CODM uses revenues and expenses to evaluate the performance of the segment and to decide on resource allocation. In the year ended December 31, 2024, the Group reported two operating segments — development of pharmaceutical drugs for the treatment of autoimmune diseases and software as a service ("SAAS"), the latter relating to Social Proxy, which has been re-presented as a discontinued operation. In the years 2023 and 2022, the Company had only one segment — development of pharmaceutical drugs for the treatment of autoimmune diseases.

---

| | |
|:---|:---|
| **NOTE 19:** | **REVENUES** |

---

Revenues related to Social Proxy, which was classified as a discontinued operation effective January 1, 2025 (see Note 6). Accordingly, no revenues are presented for the year ended December 31, 2025 in continuing operations. In the year ended December 31, 2024, all revenues were provided by Social Proxy, whose revenues were derived from a single stream — software as a service ("SAAS") — and have been re-presented as part of discontinued operations (see Note 6).

---

| | |
|:---|:---|
| **NOTE 20:** | **COST OF SERVICE** |

---

Cost of service related to Social Proxy, which was classified as a discontinued operation effective January 1, 2025 (see Note 6). Accordingly, no cost of service is presented for the year ended December 31, 2025 in continuing operations. In the year ended December 31, 2024, all cost of service related to Social Proxy and has been re-presented as part of discontinued operations (see Note 6).

---

| | |
|:---|:---|
| **NOTE 21:** | **RESEARCH AND DEVELOPMENT EXPENSES** |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2025** | **2024** | **2024** | **2023** | **2023** |
|  | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** |
| Service providers and other expenses | | 28 | | 16 | | 31 |
|  | | 28 | | 16 | | 31 |

---

---

| | |
|:---|:---|
| **NOTE 22:** | **SALES AND MARKETING EXPENSES** |

---

Sales and marketing expenses related to Social Proxy, which was classified as a discontinued operation effective January 1, 2025 (see Note 6). Accordingly, no sales and marketing expenses are presented for the year ended December 31, 2025 in continuing operations. In the year ended December 31, 2024, all sales and marketing expenses related to Social Proxy and have been re-presented as part of discontinued operations (see Note 6).

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 23:** | **GENERAL AND ADMINISTRATIVE EXPENSES** |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
|  | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** |
| Salaries, management fees and expenses relating to service providers | 198 | 107 | 107 |
| Share based payment expense | 346 | 264 | 3 |
| Patents and fees | 74 | 55 | 94 |
| Directors' fees | 117 | 75 | 60 |
| Rent and office maintenance | - | - | 12 |
| Insurance | 107 | 100 | 119 |
| Professional services | 269 | 158 | 330 |
| Bad debt loss (\*) | 308 | - | - |
| Other | 18 | - | 9 |
|  | 1437 | 759 | 734 |

---

---

| | |
|:---|:---|
| (\*) | From its acquisition of Social Proxy in August 2024 and through May 2025, the Company extended loans to Social Proxy bearing interest at an annual rate of 8%. Upon the discontinuation of Social Proxy's operations, the total outstanding loan balance of $1,626 thousand was allocated as follows: $1,318 thousand, relating to the period up to December 31, 2024, was included within discontinued operations, while the remaining $308 thousand, relating to 2025, was recognized as a bad debt loss within continuing operations. See Note 6. |

---

---

| | |
|:---|:---|
| **NOTE 24:** | **FINANCE INCOME (EXPENSES), NET** |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
|  | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** |
| Finance expenses: |  |  |  |
| Revaluation of marketable securities | - | - | (1022) |
| Bank account management fees and commissions | (25) | (27) | (4) |
| Exchange rate differences | (152) | (26) | (32) |
| Issuance costs | - | (31) | - |
| Interest expenses | (7) | (28) | - |
| Revaluation of convertible loan from shareholder | (54) | - | - |
| Revaluation of warrants to purchase ADS's | (28) |  |  |
| Total finance expenses | (266) | (112) | (1058) |
| Finance income: |  |  |  |
| Revaluation of warrants to purchase ADS's |  | 926 | - |
| Cancellation of Earn-out warrants | 1130 | - | - |
| Revaluation of marketable securities | 5 | 167 | - |
| Interest income | 60 | 34 | 41 |
| Total finance income | 1195 | 1127 | 41 |
| Finance income (expenses), net | 929 | 1015 | (1017) |

---

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 25:** | **TAXES ON INCOME** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Tax rates applicable to the Company:

Since the tax year 2018, the taxable income of the Company and XTEPO is subject to a corporate tax rate of 23%.

Benefits granted to a Preferred Enterprise include reduced tax rates. As part of the Economic Efficiency Law (Legislative Amendments for Accomplishment of Budgetary Targets for Budget Years 2017-2018), 5777-2016, the tax rate is 12% for all areas other than Development Area A (which is 7.5%).

During 2024, the Company believed its then-subsidiary Social Proxy would be entitled to a beneficial tax rate of 12% under the Preferred Technology Enterprise ("PTE") regime. Effective January 1, 2025, Social Proxy LTD and its subsidiaries (Social Proxy Inc and Social Proxy LDA) have been classified as a discontinued operation (see Note 6). Disclosures relating to tax matters of Social Proxy are presented within the discontinued operation note.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Tax income:

No tax income or expense from continuing operations was recorded in 2025, 2024 and 2023. A deferred tax income of $130 thousand recorded in 2024 related to Social Proxy and is presented within discontinued operations in the comparative period (see Note 6).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. The Group's carryforward tax losses of continuing operations as of December 31, 2025, totaled approximately $39 million which may be carried forward and offset against taxable income in the future for an indefinite period and approximately $23 million capital loss carryforward which may be offset against future capital gain. The Company did not recognize deferred taxes for carryforward losses and temporary differences, as well as capital losses and real losses, because their utilization in the foreseeable future is not probable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Income tax expense (income): No current or deferred tax expense (income) attributable to continuing operations was recognized in the years ended December 31, 2025, 2024 and 2023. A deferred tax income of $130 thousand recognized in 2024 related to Social Proxy is presented within discontinued operations in the comparative period (see Note 6).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. Deferred tax movement: As of December 31, 2025 and 2024, the Group had
 no deferred tax assets or liabilities attributable to continuing operations. Deferred tax movements relating to Social Proxy are presented
 within discontinued operations (see Note 6).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. The main reconciling items between the "theoretical" tax expense, assuming that all income were taxed at the regular tax rate applicable to companies in Israel (23%), and the taxes recorded in the statements of comprehensive income (loss) in the reporting year are: revaluation expenses (income) not recognized for tax purposes; changes in taxes resulting from exchange rate differences; changes in deferred tax for tax losses carryforwards; and taxable losses for which no deferred taxes were recognized.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 25:** | **TAXES ON INCOME (Cont.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. Tax assessments:

The Company and Xtepo filed self-assessments that are deemed final through the 2020 tax year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h. Unrecognized deferred taxes:

As of December 31, 2024, the Company had a deferred tax liability of approximately $101 thousand attributable to its investment in marketable securities of InterCure Ltd. During 2025, the Company sold its entire investment in InterCure Ltd., and accordingly no deferred tax liability remained as of December 31, 2025. In all periods, the deferred tax liability was fully offset by a deferred tax asset arising from the utilization of tax losses carried forward from prior years.

---

| | |
|:---|:---|
| **NOTE 26:** | **TRANSACTIONS AND BALANCES WITH RELATED PARTIES** |

---

The Company's related parties, as defined in IAS 24, include its key management personnel — namely directors and members of the executive committee. Until its disposal during 2025, InterCure Ltd. was also considered a related party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Compensation to key management personnel:

The compensation to key management personnel for employee services provided to the Company is shown below:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
|  | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** |
| Management fees, directors, and consulting fees | 312 | 341 | 240 |
| Share-based payments | 346 | 264 | 3 |
|  | 658 | 605 | 243 |
| Number of persons | 6 | 11 | 8 |

---

The Company pays to an accounting firm of which the company's CFO is a Partner ("accounting firm"), a monthly fee of NIS 30 thousand (approximately $9.5 thousand) for controller and bookkeeping services. Total fees for controller and bookkeeping services for the years ended 2025, 2024 and 2023 were approximately $103 thousand, $73 thousand and $49 thousand respectively.

In addition, as of December 31, 2025 and 2024, the Company's balances with key management personnel and the accounting firm totaled approximately $66 thousand and $71 thousand, respectively (all of which were linked to the NIS).

For further information regarding share-based payment to related parties, see also Note 17.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 26:** | **TRANSACTIONS AND BALANCES WITH RELATED PARTIES (Cont.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. InterCure Ltd:

During 2025, the Company sold its entire investment in InterCure Ltd. As of December 31, 2024, the Company's holding in InterCure Ltd. was 1.04%.

Until its disposal during 2025, the Company's investment in the shares of InterCure Ltd. was presented as marketable securities. The opening balance as of January 1, 2025 was $772 thousand. Following a revaluation gain of approximately $5 thousand recognized during 2025, the investment was sold for approximately $777 thousand, resulting in no material gain or loss on disposal. As of December 31, 2024, the carrying amount of the Company's investment in InterCure Ltd. was approximately $772 thousand (see also Note 8).

Until 2024, the Company subleased an office from Canndoc Ltd., a subsidiary of InterCure Ltd. During 2025, 2024 and 2023, the Company recorded rent expenses of approximately $0 thousand, $0 thousand and $11 thousand, respectively, to Canndoc Ltd. As of December 31, 2025 and 2024, no balances were due to or from Canndoc Ltd. Following the disposal of the investment in InterCure Ltd. during 2025, Canndoc Ltd. is no longer a related party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Convertible loan from shareholder

During 2025, the Company received a convertible loan of approximately $208 thousand (NIS 700 thousand) from a director of the Company, bearing interest at an annual rate of 8% and convertible into the Company's ADSs at a 20% discount to their market price. As of December 31, 2025, the loan was measured at its fair value of approximately $269 thousand, and subsequent to the reporting date it was converted in full into shares of the Company. For further details, see Note 14.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Loan to Social Proxy

From its acquisition of Social Proxy in August 2024 and through May 2025, the Company extended loans to Social Proxy bearing interest at an annual rate of 8%, in a total amount of approximately $1,626 thousand. Of this amount, $1,318 thousand, relating to the period through December 31, 2024, was included within discontinued operations, and the remaining $308 thousand, relating to 2025, was recognized as a bad debt loss within continuing operations. For further details, see Notes 6 and 23.

---

| | |
|:---|:---|
| **NOTE 27:** | **PROFIT** (**LOSS**) **PER SHARE** |

---

<u>Basic loss per share</u>

The calculation of basic earnings per share (EPS) is based on the following profit (loss) attributable to shareholders and weighted-average number of ordinary shares outstanding.

Loss attributed to ordinary shareholders (basic)

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | **2024** | **2023** |
|  | **U.S. dollars in thousands** | **U.S. dollars in thousands** | **U.S. dollars in thousands** |
| Profit (loss) from continuing operations | (759) | 240 | (1782) |
| Loss from discontinued operations, net of tax | (6210) | (1267) | - |
| Total loss for the year | (6969) | (1027) | (1782) |

---

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 27:** | **PROFIT** (**LOSS**) **PER SHARE (Cont.)** |

---

Weighted-average number of ordinary shares (basic)

---

| | | | |
|:---|:---|:---|:---|
|  | **2025** | **2024** | **2023** |
|  | **Number of shares** | **Number of shares** | **Number of shares** |
| Issued ordinary shares at January 1 | 881385256 | 544906149 | 544906149 |
| Issued August 14, 2024, due to fundraising | - | 57123287 | - |
| Issued August 14, 2024, due to The Social Proxy Transaction | - | 71015301 | - |
| Issued Oct 9, 2025 (warrant exercise) | 14789072 |  |  |
| Weighted average number of ordinary shares (basic) | 896174328 | 673044737 | 544906149 |

---

<u>Diluted loss per share</u>

Diluted loss per share equals basic loss per share for all periods presented, as all potential ordinary shares were anti-dilutive and therefore excluded from the calculation of diluted loss per share. The potential ordinary shares excluded comprise share options exercisable into approximately 24,446,000 ordinary shares and warrants exercisable into 25,000,000 ordinary shares as of December 31, 2025

---

| | |
|:---|:---|
| **NOTE 28:** | **SUBSEQUENT EVENTS** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. In January 2026, subsequent to the reporting date, the Company entered into a binding letter of intent with Beyond Air, Inc. for the proposed acquisition of Beyond Air's approximately 85% interest in NeuroNOS, a company focused on autism spectrum disorder and other neurological conditions. The proposed consideration comprised ADSs, warrants, cash payments and development and commercial milestones, and was linked to a contemplated private placement of up to US$2 million.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. In January 2026, the Company announced that an Extraordinary General Meeting of shareholders would be convened on February 17, 2026 to approve matters connected to the proposed transaction described in (a) above and the related financing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. In January 2026, a director of the Company delivered a conversion notice
with respect to the subordinated convertible loan (see Note 14). The loan, with a principal amount of $208 thousand, was converted into
92,105 ADSs at a conversion price of $2.28 per ADS, representing 36,742,000 ordinary shares with NIS 0.1 par value each. As the shares
were allotted below their par value, the Company capitalized approximately NIS 3.0 million from share premium to share capital in accordance
with Section 304 of the Israeli Companies Law, 1999.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. In January 2026, the Company,
filed an application with the Israeli court for the commencement of insolvency proceedings of The Social Proxy Ltd.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 28:** | **SUBSEQUENT EVENTS (Cont.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. In January 2026, the Company received a notice from Nasdaq indicating that it was not in compliance with Nasdaq Listing Rule 5550(b)(1), which requires a minimum stockholders' equity of US$2.5 million. The notice did not have an immediate effect on the listing of the Company's ADSs, and the Company was granted 45 calendar days, until March 6, 2026, to submit a compliance plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. In January 2026, the Company announced that it was working to complete the proposed acquisition of approximately 85% of NeuroNOS and that the forthcoming Extraordinary General Meeting would also address a private placement of up to US$2 million. Management indicated that, if completed, the acquisition and financing could remedy the Nasdaq stockholders' equity deficiency, although there can be no assurance of success.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. In February 2026, the Extraordinary General Meeting convened on February 17, 2026 was adjourned for lack of a quorum and was postponed to February 24, 2026 with the same agenda.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h. In February 2026, following the insolvency application, the Israeli court ordered the opening of insolvency proceedings in respect of The Social Proxy Ltd., determined that there was no reasonable prospect of rehabilitation, ordered its liquidation and appointed a trustee.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. In February 2026, the adjourned Extraordinary General Meeting was held on February 24, 2026 and all proposals brought before the shareholders were approved by the requisite majority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j. In February 2026, the Company received a Nasdaq Staff delisting determination, which included a determination that the Company constituted a 'public shell'. The Company intends to request a hearing before a Nasdaq Hearings Panel; a timely request stays the suspension and delisting of the Company's ADSs pending the hearing process.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;k. In March 2026, the letter of intent with Beyond Air regarding the NeuroNOS transaction expired on March 9, 2026, as the parties had not entered into a definitive agreement. The parties were released from their obligations under the letter of intent, other than surviving provisions such as confidentiality.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;l. In March 2026, subsequent to the reporting date, the Company announced a change in the ratio of its American Depositary Shares ("ADSs") to its ordinary shares, par value NIS 0.1 per share, from one (1) ADS representing one hundred (100) ordinary shares to one (1) ADS representing four hundred (400) ordinary shares, effective March 25, 2026 (equivalent, for ADS holders, to a one-for-four reverse ADS split). The change had no impact on the Company's ordinary shares (none were issued or cancelled and the par value remained NIS 0.1 per share) and accordingly had no effect on these financial statements.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 28:** | **SUBSEQUENT EVENTS (Cont.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;m. In April 2026, the Company announced that it had entered into a definitive share purchase agreement, dated April 28, 2026, to acquire the entire issued and outstanding share capital of Psyga Bio Ltd. ("Psyga") from its shareholders. Psyga Bio is an Israeli company led by Professor David Meiri, an internationally recognized researcher in the field of medical natural product drug discovery and head of the Laboratory of Cancer Biology and Cannabinoid Research at the Technion – Israel Institute of Technology.

Psyga Bio is an advanced biotechnology company focused on the research, development, and commercialization of proprietary products derived from psychedelic and functional mushrooms, including clinically researched therapeutic candidates, microdosing solutions, and wellness-focused formulations. It operates a licensed, GMP-ready pharmaceutical manufacturing facility designed for the cultivation, extraction, isolation, formulation, and production of pharmaceutical-grade botanical and synthetic psilocybin, ibogaine, and other psychedelic active pharmaceutical ingredients (APIs), in accordance with applicable international pharmaceutical manufacturing standards.

Psyga Bio has developed a proprietary library of 250 unique mushroom strains, including differentiated high-potency and bioactive strains, which support pharmaceutical development, product consistency, future intellectual property protection, and scalable commercial manufacturing capabilities. In addition, Psyga Bio is advancing a clinical pipeline consisting of seven (7) approved Phase 2a human clinical trials, which are expected to commence patient enrollment in the near future, across multiple indications, including mental health disorders, neurological conditions, trauma-related disorders, addiction treatment, and additional central nervous system indications. Several of these programs are fully funded and are expected to be conducted in collaboration with leading academic institutions and medical centers.

The acquisition constitutes an interested-party transaction and was subject to approval by the Company's shareholders and to other customary closing conditions.

Pursuant to the agreement, the consideration for the acquisition of the shares of Psyga Bio is structured as equity consideration, with no cash payable, and consists of an initial consideration and contingent additional consideration subject to the achievement of specified milestones:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1.** **Initial Consideration (Share Issuance)** 

The initial consideration consists of the issuance of shares of the acquirer (XTL) as follows:

● The existing shareholders of Psyga Bio will receive restricted shares of XTL, represented by American Depositary Shares (ADSs), with each ADS representing 400 ordinary shares of XTL.

● The aggregate number of shares to be issued at the initial stage shall represent 33.36% of XTL's issued and outstanding share capital immediately following such issuance in consideration for 83.4 % of Psyga's share capital.

● Such consideration shall be allocated among Psyga's shareholders on a pro rata basis, in accordance with their respective holdings.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2.** **Milestone-Based Consideration (Additional Issuance)** 

Psyga's shareholders shall be entitled to additional consideration, in the form of ADSs or, at the Company's election, warrants in lieu thereof, upon the achievement of each of the following milestones:

● **Consideration per milestone:** Issuance of shares and/or warrants representing 8.34% of XTL's issued and outstanding share capital as of the date of such issuance, for an aggregate of up to an additional 25%.

The defined milestones are as follows:

● **First Milestone:** Initiation of at least three (3) clinical trials from the Company's development pipeline within twelve (12) months following the closing date of the transaction.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 28:** | **SUBSEQUENT EVENTS (Cont.)** |

---

● **Second Milestone:** Successful achievement of predefined targets in at least two (2) clinical trials from the Company's development pipeline within thirty-six (36) months following the closing date.

● **Third Milestone:** Advancement into development of ibogaine-based products, triggered upon the execution of a binding commercialization agreement and/or a development partnership agreement with a reputable third-party pharmaceutical, biotechnology, or life sciences company, for the commercialization, licensing, development, or co-development of such products, based on the Company's regulatory licenses.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;n. In April 2026, the Company filed a Form 12b-25 notifying that it would be unable to file its 2025 Annual Report on Form 20-F within the prescribed time. The delay was attributed to the liquidation proceedings of The Social Proxy and the absence of sufficient operational and financial information from that subsidiary.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o. In May 2026, the Nasdaq Hearings Panel granted the Company's request to continue the listing of its ADSs, subject to conditions linked to completion of the Psyga Bio transaction and the related financing and to the Company demonstrating compliance with all applicable Nasdaq requirements by June 30, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;p. In May 2026, the Company announced that an Extraordinary General Meeting would be held on June 22, 2026, with an agenda including shareholder approvals connected to the Psyga Bio acquisition, a private placement of up to US$1.5 million, an increase in the Company's share capital and auditor-related matters.

Pursuant to the binding term sheet, in consideration for a total investment of US$1,500,000, the investors will receive the following:

● **Shares / ADSs:** Investors will receive approximately 555,555 American Depositary Shares (ADSs) and/or ordinary shares of the Company at a purchase price of $2.70 per ADS. Each ADS represents four hundred (400) ordinary shares.

● **Series A Warrants:** The Company will issue 666,666 Series A Warrants to the investors. The initial exercise price is $2.70 per ADS, which will be permanently reduced to $1.70 per ADS upon the occurrence of a "Series A Trigger Event" (such as the ADS closing price reaching $5.00, a Change of Control/liquidity event exceeding an enterprise/equity value of $150,000,000, or the successful completion of two Phase 2 clinical trials).

● **Series B Warrants:** The Company will issue 666,666 Series B Warrants. The initial exercise price is $5.00 per ADS, which will be permanently reduced to $2.50 per ADS upon the occurrence of a "Series B Trigger Event" (such as the ADS closing price reaching or exceeding $7.00, a Change of Control/liquidity event exceeding an enterprise/equity value of $250,000,000, or the successful completion of three Phase 2 clinical trials).

● **Anti-Dilution Protection (Series C Warrants):** If the Company executes a subsequent financing round within 5 years at a price below $2.70 per ADS, investors will receive a one-time issuance of Series C Warrants. Upon full exercise, these warrants entitle investors to receive subsequent financing securities with an aggregate value equal to the price difference between $2.70 and the lower financing price.

All warrants are exercisable for cash only for a period of five (5) years from the closing date.

---

| |
|:---|
| **XTL BIOPHARMACEUTICALS LTD.** |
| **NOTES TO CONSOLIDATED FINANCIAL STATEMENTS** |

---

---

| | |
|:---|:---|
| **NOTE 28:** | **SUBSEQUENT EVENTS (Cont.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;q. In May 2026, the Company received an additional Nasdaq notice as a result of not having filed its 2025 Form 20-F, resulting in non-compliance with Nasdaq Listing Rule 5250(c)(1). The Company was afforded a short period to present its position and to seek a stay or extension in connection with the ongoing Nasdaq process.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;r. The Extraordinary General Meeting convened on June 22, 2026 was adjourned for lack of a quorum and was postponed by one week to June 29, 2026.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;s. On June 29, 2026, the adjourned Extraordinary General Meeting
referred to in (r) above was held, at which the shareholders approved the matters set out on its agenda described in (p) above, as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. the acquisition of Psyga Bio pursuant to the share purchase agreement described in (m) above;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. the private placement of up to US$1.5 million referred to
in (p) above; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. the appointment of the Company's independent auditor.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;t. Subsequent to the date of signing of these financial statements, the closing of the acquisition of Psyga Bio described in (m) above is expected to be completed, upon which Psyga Bio will become a subsidiary of the Company.

**ITEM 19. EXHIBITS**

The following exhibits are filed as part of this annual report:

---

| | |
|:---|:---|
| **Exhibit No.** | **Description** |
| 1.1 | [Articles of Association \*](ea029609501ex1-1.htm) |
| 1.2 | [Form of Share Certificate (including both Hebrew and English translations) (Incorporated by reference from the annual report on Form 20-F filed by XTL Biopharmaceuticals Ltd. with the Securities and Exchange Commission on March 23, 2007.](https://www.sec.gov/Archives/edgar/data/1023549/000114420407014214/v068912_ex4-1.htm) |
| 1.3 | [Form of American Depositary Receipt (included in Exhibit 4.1)](http://www.sec.gov/Archives/edgar/data/1023549/000101915507000345/xtlexdepagmt83105.htm) |
| 2.1 | [Description of Securities (Incorporated by reference from the annual report on Form 20-F filed by XTL Biopharmaceuticals Ltd. with the Securities and Exchange Commission on March 15, 2021.](https://www.sec.gov/Archives/edgar/data/1023549/000121390021015290/f20f2020ex2d_xtlbiopharma.htm) |
| 4.1 | [Deposit Agreement, dated as of August 31, 2005, by and between XTL Biopharmaceuticals Ltd., The Bank of New York, as Depositary, and each holder and beneficial owner of American Depositary Shares issued thereunder (Incorporated by reference from the registration statement on F-6 filed with the Securities and Exchange Commission on November 28, 2007, as it may be amended or restated.](https://www.sec.gov/Archives/edgar/data/1023549/000101915507000345/xtlexdepagmt83105.htm) |
| 4.2 | [2011 Share Option Plan dated August 29, 2011 (Incorporated by reference from the registration statement on Form F-1 filed by XTL Biopharmaceuticals Ltd. with the Securities and Exchange Commission on December 31, 2015](http://www.sec.gov/Archives/edgar/data/1023549/000114420415073635/v427869_ex10-3.htm) |
| 4.3 | [Research and License Agreement Between Yeda Research and Development Company Ltd., Mor Research Applications Ltd., Biogal Ltd. (under its previous name Haverfield Ltd.) and Biogal Advanced Biotechnology Ltd. dated January 7, 2002 (Incorporated by reference from the annual report on Form 20-F filed by XTL Biopharmaceuticals Ltd. with the Securities and Exchange Commission on April 6, 2009.†](https://www.sec.gov/Archives/edgar/data/1023549/000114420409019131/v145414_ex10-44.htm) |
| 4.4 | [Amendment to Research and License Agreement Between Yeda Research and Development Company Ltd., Mor Research Applications Ltd., Haverfield Ltd. and Biogal Advanced Biotechnology Ltd. effective April 1, 2008 (Incorporated by reference from the annual report on Form 20-F filed by XTL Biopharmaceuticals Ltd. with the Securities and Exchange Commission on April 6, 2009. †](https://www.sec.gov/Archives/edgar/data/1023549/000114420409019131/v145414_ex10-45.htm) |
| 4.5 | [Option to License Agreement, dated as of September 1, 2010, between XTL Biopharmaceuticals Ltd. and Yeda Research and Development Company Limited (Incorporated by reference from the annual report on Form 20-F filed by XTL Biopharmaceuticals Ltd. with the Securities and Exchange Commission on May 31, 2011.](https://www.sec.gov/Archives/edgar/data/1023549/000114420411033048/v224319_ex10-52.htm) |
| 4.6 | [License Agreement dated January 7, 2014, by and between Yeda Research and Development Company Limited and XTL Biopharmaceuticals Ltd (Incorporated by reference from the annual report on Form 20-F filed by XTL Biopharmaceuticals Ltd. with the Securities and Exchange Commission on April 2, 2014.](https://www.sec.gov/Archives/edgar/data/1023549/000114420414020261/v373623_ex10-13.htm) |
| 4.7 | [Form of First Amendment to License Agreement between Yeda Research and Development Company Limited and XTL Biopharmaceuticals Ltd (Incorporated by reference from the registration statement on Form F-1 filed by XTL Biopharmaceuticals Ltd. with the Securities and Exchange Commission on December 31, 2015.](http://www.sec.gov/Archives/edgar/data/1023549/000114420415073635/v427869_ex10-8.htm) |
| 4.8 | [Form of Service Agreement, dated July 2020, between XTL Biopharmaceuticals Ltd. and Shlomo Shalev. (Incorporated by reference from the annual report on Form 20-F filed by XTL Biopharmaceuticals Ltd. with the Securities and Exchange Commission on April 30, 2025.)](https://www.sec.gov/Archives/edgar/data/1023549/000121390025037590/ea023966101ex4-8_xtlbio.htm) |
| 4.9 | [Form of CEO Employment Agreement dated April 2, 2025, between XTL Biopharmaceuticals Ltd. and Noam Band Ltd. (Incorporated by reference from the annual report on Form 20-F filed by XTL Biopharmaceuticals Ltd. with the Securities and Exchange Commission on April 30, 2025.)](https://www.sec.gov/Archives/edgar/data/1023549/000121390025037590/ea023966101ex4-9_xtlbio.htm) |
| 4.10 | [Share Purchase Agreement, dated as June 5, 2024, by and between the then shareholders of THE SOCIAL PROXY LTD. and XTL Biopharmaceuticals Ltd. (Incorporated by reference from the current report on Form 6-K filed by XTL Biopharmaceuticals Ltd. with the Securities and Exchange Commission on June 5, 2024.)](https://www.sec.gov/Archives/edgar/data/1023549/000121390024049874/ea020735301ex99-1_xtlbio.htm) |
| 4.11 | [Exclusive Sublicense Agreement, dated as February 12, 2025, by and between XTL Biopharmaceuticals Ltd.,and Biossil Inc, (Incorporated by reference from the annual report on Form 20-F filed by XTL Biopharmaceuticals Ltd. with the Securities and Exchange Commission on April 30, 2025)](https://www.sec.gov/Archives/edgar/data/1023549/000121390025037590/ea023966101ex4-11_xtlbio.htm) |
| 4.12 | [Form of Share Purchase Agreement, by and among XTL Biopharmaceuticals Ltd. and the current shareholders of Psyga Bio Ltd.(Incorporated by reference from the current report on Form 6-K filed by XTL Biopharmaceuticals Ltd. with the Securities and Exchange Commission on April 29, 2026)](https://www.sec.gov/Archives/edgar/data/1023549/000121390026048875/ea028812601ex99-1.htm) |
| 4.13 | [Form of service provider dated November 11, 2025, between XTL Biopharmaceuticals Ltd. and Optivailfinance Ltd\*](ea029609501ex4-13.htm) |
| 8.1 | [List of Subsidiaries\*](ea029609501ex8-1.htm) |
| 11.1 | [Insider Trading Policy (Incorporated by reference from the annual report on Form 20-F filed by XTL Biopharmaceuticals Ltd. with the Securities and Exchange Commission on April 30, 2025)](https://www.sec.gov/Archives/edgar/data/1023549/000121390025037590/ea023966101ex11-1_xtlbio.htm) |

---

---

| | |
|:---|:---|
| 12.1 | [Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002,\*](ea029609501ex12-1.htm) |
| 12.2 | [Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.\*](ea029609501ex12-2.htm) |
| 13.1 | [Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 USC. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.\*\*](ea029609501ex13-1.htm) |
| 16.1\* | [Letter from Somekh, Chaikin, a member of KPMG International, dated June 30, 2026.](ea029609501ex16-1.htm) |
| 99.7 | [Clawback Policy (Incorporated by reference from the annual report on Form 20-F filed by XTL Biopharmaceuticals Ltd. with the Securities and Exchange Commission on April 30, 2024)](https://www.sec.gov/Archives/edgar/data/1023549/000121390024037717/ea020456101ex99-7_xtlbio.htm) |
| 101.INS | Inline XBRL Instance Document. |
| 101.SCH | Inline XBRL Taxonomy Extension Schema Document. |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document. |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document. |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document. |
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document. |
| 104 | Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). |

---

---

| | |
|:---|:---|
| \* | Filed herewith. |
| \*\* | Furnished herewith. |
| † | Certain confidential information contained in this exhibit was omitted. |

---

**SIGNATURES**

The registrant hereby certifies that it meets all the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this registration statement on its behalf.

---

| | | |
|:---|:---|:---|
|  | **XTL BIOPHARMACEUTICALS LTD.** | **XTL BIOPHARMACEUTICALS LTD.** |
|  | (*Registrant*) | (*Registrant*) |
| Date: June 30, 2026 | Signature: | /s/ Noam Band |
|  |  | Noam Band |
|  |  | Chief Executive Officer |

---

## Exhibit 1.1

**Exhibit 1.1**

The Companies Law 5759-1999

Public Company

ARTICLES OF ASSOCIATION

OF

**XTL BIOPHARMACEUTICALS LTD.**

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

---

| | | |
|:---|:---|:---|
| **Contents** | **Contents** |  |
| **Part A:** | **<u>Definitions & Interpretations</u>** | **1** |
| 1. | Definitions | 1 |
| 2. | Interpretation | 3 |
| **Part B:** | **<u>The Company</u> , <u>its Ob</u>j<u>ects and its Capital</u>** | **4** |
| 3. | The Company and its Objects | 4 |
| 4. | Capital of the Company | 4 |
| 5. | Limited Liability | 5 |
| 6. | Rights attaching to Shares | 5 |
| 7. | Shareholders | 8 |
| 8. | Changes in Share Capital | 9 |
| 9. | Special Rights; Modification of Rights | 9 |
| 10. | Consolidation, Subdivision, Cancellation and Reduction of Share Capital | 10 |
| **Part C:** | **<u>The Shares</u>** | 11 |
| 11. | Share Certificates and uncertified shares | 11 |
| 12. | Transfer of Shares | 15 |
| 13. | Notice of Refusal | 16 |
| 14. | Call on Shares | 16 |
| 15. | Prepayment | 18 |
| 16. | Forfeiture and Surrender | 18 |
| 17. | Lien | 17 |
| 18. | Sale after Forfeiture or Surrender or in Enforcement of Lien | 19 |
| 19. | Redeemable Shares | 20 |
| 20. | Conversion of Shares into Stock | 21 |
| 21. | Decedents' Shares | 22 |
| **Part D:** | **<u>General Meetings</u>** | 22 |
| 22. | Convening a General Meeting | 22 |
| 23. | Notices to Shareholders | 23 |
| 24. | Resolutions at General Meetings | 25 |
| 25. | Voting by Proxy and in Other Manners | 27 |
| **Part E:** | **<u>The Board of Directors</u>** | 30 |
| 26. | The Board of Directors, Appointment and Removal of Directors | 30 |
| 27. | Alternate Director and Corporate Representative | 32 |
| 28. | Directors Remuneration | 33 |
| 29. | Chairman of the Board of Directors | 33 |
| 30. | Convening and Conduct of Meetings of the Board of Directors | 34 |
| 31. | Notice of Meetings of the Board of Directors | 37 |
| 32. | Authority of the Board of Directors | 38 |
| 33. | Committees of the Board of Directors | 40 |

---

i

---

| | | |
|:---|:---|:---|
| **Part F:** | **<u>The Managing Director and Officers</u>** | 40.0 |
| 34. | The Managing Director | 40.0 |
| 35. | The Secretary | 41.0 |
| 36. | Personal Interest in Transactions of the Company | 42.0 |
| 37. | Insurance, Release and Indemnity of Officers | 42.0 |
| 38. | Signature in the Name of the Company | 43.0 |
| **Part G:** | **<u>Minutes, Registers and Books of Account</u>** | 44.0 |
| 39. | Minutes | 44.0 |
| 40. | Books and Registers of the Company | 45.0 |
| 41. | Information and Documents | 46.0 |
| **Part H:** | **<u>Audit</u>** | 46.0 |
| 42. | Auditor | 46.0 |
| **Part I:** | **<u>Reserves, Distributions, Bonus Shares and Reduction of Capital</u>** | 47.0 |
| 43. | Reserves | 47.0 |
| 44. | Distribution of Dividends and Bonus Shares | 48.0 |
| 45. | Reduction of Capital | 51.0 |
| 46. | Acquisition of Securities of the Company by the Company itself | 52.0 |
| **Part J:** | **<u>Liquidation, Merger and Reorganisation</u>** | 52.0 |
| 47. | Liquidation | 52.0 |
| 48. | Reorganisation | 53.0 |
| 49. | Presumption of Delivery of Notices | 54.0 |

---

ii

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

**PART A: <u>DEFINITIONS AND INTERPRETATION</u>**

1. Definitions

In these Articles of Association, the following terms shall have the meaning appearing opposite them, unless another interpretation is expressly stated herein:

---

| | |
|:---|:---|
| **"Alternate Director"** | As defined in Part E below |
| **"Auditors"** | Means the auditors for the time being of the Company or, in the case of joint auditors, anyone of them; |
| **"Board of Directors"** | The Board of Directors of the Company elected or properly appointed in accordance with the provisions of these Articles of Association or present or deemed to be present at a duly/convened meeting of Directors at which a quorum is present; any committee of the Board of Directors to the extent that any of the authorities of the Board of Directors are delegated to it; any person authorised by the Board of Directors, to the extent so authorised, for the purposes of any matter or class of matters; |
| **"Business Day"** | A day on which customer services are provided by a majority of the commercial banks in Israel and in the United Kingdom; |
| **"CA1985"** | Means the Companies Act 1985 and where the context requires, every other statute from time to time in force concerning companies and affecting the Company; (including without limitation, the Regulations) |
| **"Chairman"** | Means the Chairman (if any) of the Board or, where the context requires, the Chairman of a general meeting of the company |

---

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

---

| | |
|:---|:---|
| **"Companies Law"** | The Companies Law, 5759 - 1999, as the same shall be amended from time to time, or any other law which shall replace that Law, together with any amendments thereto; |
| **"Companies Ordinance"** | Those sections of the Companies Ordinance [New Version] 5743 - 1983 that shall remain in force after the date of the coming into force of the Companies Law, as the same shall be amended from time to time thereafter, or any other law which shall replace those sections after the date of entry into force of the Companies Law; |
| **"Company"** | XTL Biopharmaceuticals Ltd. |
| **"Corporate Representative"** | As defined in Part E below; |
| **"Depository"** | Means a custodian or other person (or a nominee for such custodian or other person) appointed under contractual arrangements with the Company or other arrangements approved by the Board of Directors whereby such custodian or other person or nominee holds or is interested in shares of the Company or rights or interests in shares of the Company and issues securities or other documents of title or otherwise evidencing the entitlement of the holder thereof to or to receive such shares, rights or interests, provided and to the extent that such arrangements have been approved by the Board for the purpose of these Articles, and shall include where approved by the Board, the trustees (acting in their capacity as such) of any employees share scheme established by the Company or any other scheme or arrangement principally for the benefit of employees or those in the service of the Company and/or its subsidiaries or their respective businesses and the managers (acting in their capacity as such) of any investment or savings plan, which in each case the Board has approved. |

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|:---|:---|
| **"Director" or "Directors"** | A member or members of the Board of Directors who are elected or appointed in accordance with the provisions of these Articles of Association, including an Alternate Director and a Corporate Representative serving in such capacity at the relevant time; |
| **"Document"** | Including a printed article, photocopy, telegram, facsimile, electronic mail, web-site and any other visible of words, and any other graphic form stored in a computer or stored in any other form; |
| **"execution"** | Includes any mode of execution (and "executed" shall be construed accordingly) |
| **"Extraordinary Transaction"** | A Transaction which is not in the ordinary course of business of the Company; a Transaction which is not on market terms or a Transaction liable to have a material affect on the profitability of the Company, its assets or its liabilities; an arrangement between the Company and an Officer regarding the terms of his office and engagement, including the grant of a release from liability, insurance, and an undertaking to indemnify or an indemnity according to the Indemnity Permit. |
| **"General Meeting"** | Any general meeting of the members other than an annual general meeting in accordance with Article 22.4 |
| **"holder"** | Means (in relation to any share) the member whose name is entered in the Register as the holder or, where the context permits the members whose names are entered in the Register as the joint holders of that share; |

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|:---|:---|
| **"Information"** | Including know-how, statistics, financial statements, records of account, documents (including drafts), computer files, computer print-outs, agreements, protocols (including protocols of meetings of the Board of Directors and its committees), registers, business |
|  | plans, valuations, forecasts, lists of clients, price-lists, costs, market surveys and any other similar information related directly or indirectly to the activities of the Company; |
| **"Israeli Securities Authority"** | Means the Israeli Securities Authority as established in accordance with Section 2 of the Israeli Securities Act - 5728. |

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**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

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|:---|:---|
| **"London Stock Exchange"** | Means London Stock Exchange plc or other principal stock exchange in the United Kingdom for the time being on which the Ordinary Shares are listed; |
| **"Managing Director"** | The person holding this title and any person having the authority of a Managing Director, whatever his title. |
| **"Office "or" the Offices of the Company"** | The registered office of the Company at the relevant time; |
| **"Officer"** | a Director, General Manager, Chief Business Manager, Deputy General Manager, Vice General Manager, any person who holds a said position in the company even if he has a different title, and also any other manager who is directly subject to the authority of the |
| **"Ordinary Share"** | General Manager. Means an ordinary share of the Company (as defined in Article 4.1) |
| **"Recognised Person"** | Means a recognised clearing house or a nominee of a recognised investment exchange which is designated as mentioned in section 185 (4) CA 1985 |
| **"Reduction of Capital"** | A distribution which is not a permitted distribution under the provisions of the Companies Law; |
| **"Register"** | The shareholders register together with any additional shareholders register that the Company may maintain outside Israel in England/pursuant to Article 40.3; |
| **"Regulations"** | Means the Uncertified Securities Regulations 1995 (SI 1995 No.3272) including any modifications thereof and rules made thereunder or any regulations in substitution thereof made under section 207 Companies Act 1989 for the time being in force; |
| **"Secretary"** | Means the secretary for the time being of the Company or any other person appointed to perform any of the duties of the secretary of the Company including a joint, temporary, assistant or deputy secretary. |
| **"Security"** | Share, debenture, capital note, security, certificate or right entitling membership or participation in the Company or a claim from it (if issued in series), a certificate or right entitling the holder to acquire a security of the Company, in each case whether the security is in name form or bearer form including a debenture or option convertible into shares; |
| **"Simple Majority"** | A majority of those present and voting at a general meeting or meeting of the Board of Directors. The vote of any person present at a meeting as aforesaid who does not vote or abstains from voting with respect to any matter on the agenda shall not be included in the number of votes cast; |
| **"Surplus Account"** | The profits of the Company as appearing in the books of accounts of the Company; |
| **"These Articles of Association" or "The Articles of Association"** | These Articles of Association, as they shall be amended from time to time by the General Meeting; |
| **"Transaction"** | A contract or an agreement or a unilateral decision to bestow a right or some other benefit; |
| **"United Kingdom"** | Means Great Britain and Northern Ireland; |
| **"writing" or "written"** | Means and includes printing, typewriting, lithography, photography and any other modes or mode or representing or reproducing words in a legible and non-transitory form; |
| **"Year" or "Month"** | According to the Gregorian calendar; |

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**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

2. Interpretation

2.1 Subject to the provision of Article 1 above, and unless the context expressly requires some other interpretation, the terms defined in the Companies Law or in the Companies Ordinance, as the case may be, shall bear the same meaning in these Articles of Association; words in the singular shall include the plural and, vice versa; masculine terms shall include the feminine gender, and words indicating individuals shall include corporations.

2.2 Any Article in these Articles of Association which provides for an arrangement which differs in whole or in part from any provision in the Companies Law or the Companies Ordinance, as the case may be, which can be stipulated against, amended or added to, in whole or with regard to specific matters or within specific limitations, in accordance with any law, shall be considered a stipulation against the provision of the Companies Law or Companies Ordinance, as the case may be, even if the actual stipulation is not specified in the said Article, and even if it is expressly stated in the Article (in whatever form) that the effectiveness of the Article is subject to the provisions of any law.

2.3 In the event of a contradiction between any Article and the provisions of any law that may not be stipulated against, amended or added to, the provisions of the said law shall prevail, provided that nothing thereby shall nullify or impair the effectiveness of these Articles or any other Article therein.

In interpreting any Article or examining its effectiveness, the interpretation shall be given to that Article which is most likely to achieve its purpose as appearing therefrom or as appearing from the other Articles included within these Articles of Association.

**PART B: <u>THE COMPANY, ITS OBJECTS AND ITS CAPITAL</u>**

3. The Company and its Objects

3.1 The Company is a public company.

3.2 The objects of the Company shall be that it may undertake any lawful activity.

3.3 The Company may contribute reasonable amounts for any suitable purpose or categories of purpose even if such contributions do not fall within business considerations of the Company. The Board of Directors may determine the amounts of the contributions, the purpose or category of purposes for which the contribution is to be made, and the identity of the recipients of any contribution.

3.4 The Company may at any time undertake any kind of business activity which is permitted to the Company under the terms of these Articles, expressly or by implication, and may refrain from these activities, whether or not the Company has commenced that kind of business activity, all in the absolute discretion of the Board of Directors.

4. Capital of the Company

4.1 The authorised share capital of the Company at the date of the adoption of these Articles is NIS 580,000,000 (Five hundred eithyMillion New Israel Shekalim) divided into 5,800,000,000 (Three Hundred Million) Ordinary Shares, nominal value NIS 0.1

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

5. Limited Liability

5.1 The liability of the shareholders of the Company for the indebtedness of the Company shall be limited as follows:

5.2 If the shares of the Company have a nominal value, the liability of each shareholder for the indebtedness of the Company is limited to payment of the nominal value and any premiuim thereon of the shares of that shareholder.

5.3 If at any time the Company shall issue shares with no nominal value, the liability of the shareholders shall be limited to payment of the amount which the shareholders should have paid to the Company in the respect of each share according to the conditions of issue.

6. Rights attaching to the Shares

6.1 The shares of the Company shall be under the control of the Board of Directors, who shall have the power to allot shares or otherwise dispose of them to such persons, on such terms and conditions, and either at par or at a premium, or, subject to the provisions of the Companies Law, at a discount, and at such times, as the Board of Directors may think fit, and the power to give to any person the option to acquire from the Company any shares, either at par or at a premium, or, subject as aforesaid, at a discount, during such time and for such consideration as the Board of Directors may think fit.

6.2 Unless these Articles provide otherwise, all of the shares shall carry equal rights for all purposes, and each share shall vest in the holder thereof the right:

6.2.1 to receive an invitation to and to participate in each general meeting of the Company, annual or special, and the right to one vote in respect of each share held in every vote at each general meeting of the Company in which he participates provided that the share is owned by the shareholder on the date upon which it is resolved to convene the General Meeting in question;

6.2.2 to receive dividends (if and to the extent distributed), the right to receive bonus shares (if and to the extent distributed) - in each case in accordance with the number of shares and the nominal value of the shares that he holds on the date upon which it is resolved to distribute the dividend or bonus shares or other distribution (as the case may be) or at such later date as shall be provided in the resolution in question;

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

6.2.3 to participate in the distribution of any surplus assets of the Company upon liquidation.

6.3 Reserved.

6.4 Reserved.

6.5 Subject to the provisions of any law, if any, the Company (acting through the Board of Directors) may issue shares, whether included within the original capital of the Company or as a result of an increase in capital, with rights that are superior or inferior to the outstanding shares, or may issue shares which are preferred or subordinated with regard to distributions, voting rights, the right to repayment of capital or in connection with any other matter, all as the Company shall determine from time to time.

6.6 If at any time the share capital is divided into different classes of shares, the General Meeting may, unless the terms of issue of that class of shares provide otherwise, amend, convert, expand, add to or otherwise alter the rights, preferences, limitations and directions relating to those shares (or which do not relate at such time to one of the classes), provided that the holders of the class of shares that have been issued and whose rights will be affected thereby agree thereto at a meeting of the holders of the shares of the said class.

6.7 The special rights of the holders of any shares or class of shares that have been issued, including shares issued with preferred rights or other special rights, shall not be deemed to have been altered or impaired as a result of the creation or issue of additional shares of equal rank or as a result of the cancellation of authorised share capital of the same class which have not yet been issued, unless it is otherwise specified in the conditions of issue of those shares.

6.8 The consolidation or division of the share capital of the Company shall not be deemed to amend the class rights attaching to the shares which are the subject of such consolidation or division.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

6.9 The provisions of these Articles with respect to General Meetings shall apply to all meetings of any class of shareholders, mutatis mutandis.

6.10 Subject to any special provisions in this regard contained in these Articles and to any relevant authority of the Company in general meeting required by CA1985 or by the Companies Law, the unissued shares forming part of the authorised share capital of the Company shall at all times be under the control of the Board of Directors, which shall be entitled to issue or otherwise deal with them, in favour of such persons, for cash or other non-cash consideration, upon such terms and conditions and at such times as the Board of Directors shall deem fit. The Board of Directors shall have full authority to issue a demand for payment in respect of any shares at such times, for such period and for such consideration as the Board of Directors shall deem fit, and to grant any person the right to demand that any shares be issued to him at such times, for such period and for such consideration as the Board of Directors shall determine in its absolute discretion.

6.11 Subject to Article 9.1 below, the Board of Directors of the Company may resolve to issue shares without nominal value. In the event that shares are issued without nominal value, only the number of such shares shall be fixed in the Articles of Association and the provisions of the Companies Law regarding the conversion of shares with a nominal value to shares with no nominal value or the provisions of these Articles of Association dealing with authorised or issued capital shall apply, mutatis mutandis.

6.12 The Board of Directors of the Company may pay brokerage, underwriting or agents fees in connection with any issue of securities of the Company, in such a manner as the Board of Directors shall determine, and subject to the provisions of any law.

6.13 Subject to the provisions of the Companies Law, all or any of the rights for the time being attached to any class of shares for the time being issued may from time to time (whether or not the Company is being wound up) be varied or abrogated with the consent in writing of the holders of three quarters in nominal value of the issued shares of the class or with the sanction of an extraordinary resolution passed at a separate general meeting of the holders of those shares.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

7. Shareholders

7.1 A shareholder ("Shareholder") is any one of the following:

(1) a person to whose credit a share is registered with a stock exchange shareholder, and that share is included among the shares registered in the name of a registration company in the register of the Company's shareholders ("**Shareholders Register**");

(2) a person registered as a shareholder in the shareholders Register in accordance with Part C [Share Certificates/Uncertified Shares]

(3) a person who holds a share certificate.

7.2 Unless otherwise specified in any law or in these Articles, the Company shall be entitled to treat the registered holder of any share, including a shareholder holding a share on trust, as the absolute owner, and accordingly shall not be required to recognize any claim on the part of any person on the basis of any equitable right or on any other basis in relation to such share, or in relation to any benefit therein on the part of any other person unless an order to this effect has been given by a court of competent jurisdiction.

7.3 The Board of Directors of the Company may, from time to time, settle procedures in connection with determining the identity of shareholders and in connection with the manner in which any right, benefit, asset or amount should be transferred to or distributed among them, including, without limitation, with respect to the distribution of dividends or bonus shares, and with respect to the grant of any right, asset or other benefit to the shareholders of the Company in their capacity as such. Any monies, bonus shares, rights or property of any kind that are transferred to a shareholder (including to his agent, attorney or to any other person that the shareholder directs) whose identity has been authenticated in accordance with the procedures as aforesaid shall be deemed settlement in full and release of the indebtedness of the Company towards any person claiming a right to such payment, transfer, distribution or grant of right, as the case maybe.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

8. Changes in Share Capital

8.1 The General Meeting of the Company may, from time to time, by resolution requiring the approval of shareholders holding a majority of the voting rights in the Company, whether or not all the shares then authorized have been issued, and whether or not all the shares theretofore issued have been called up for payment, increase its share capital. Any such increase shall be in such amount and shall be divided into shares of such nominal amounts, and such shares shall confer such rights and preferences, and shall be subject to such restrictions, as such resolution shall provide.

8.2 Except to the extent otherwise provided in such resolution, any new shares included in the authorized share capital increased as aforesaid shall be subject to all the provisions of these Articles which are applicable to shares included in the existing share capital without regard to class (and, if such new shares are of the same class as a class of shares included in the existing share capital, to all of the provisions which are applicable to shares of such class included in the existing share capital).

8.3 The General Meeting of the Company may, from time to time, cancel any of its unissued authorised share capital, unless there is any outstanding obligation on the part of the Company, including a conditional obligation, to issue the shares.

8.4 Subject to the provisions of any law and the provisions of these Articles, the Company shall be entitled, from time to time, to cancel any issued share capital.

9. Special Rights; Modifications of Rights

9.1 Subject to the provisions of these Articles, and without prejudice to any special rights previously conferred upon the holders of existing shares in the Company, the Company may, from time to time, by resolution requiring the approval of shareholders holding a majority of the voting rights in the Company present at such shareholders meeting, provide for shares with such preferred or deferred rights or rights of redemption or other special rights and/or such restrictions, whether in regard to dividends, voting, repayment of share capital or otherwise, as may be stipulated in such resolution.

9.2 The provisions of these Articles relating to General Meetings shall, mutatis mutandis, apply to any separate General Meeting of the holders of the shares of a particular class, provided, however, that the requisite quorum at any such separate General Meeting shall be one or more shareholders present in person or proxy and holding not less than one-third of the issued shares of such class.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

9.3 Unless otherwise provided by these Articles, the enlargement of an authorized class of shares , or the issuance of additional shares thereof out of the authorized and unissued share capital, shall not be deemed, for purposes of this Article 9, to modify or abrogate the rights attached to the previously issued shares of such class or of any other class.

9.4 Subject to the terms of issue or of rights attached to any shares, the rights or privileges attached to any class of shares shall be deemed not to be varied or abrogated by the creation or issue of any new shares ranking pari passu in all respects (save as to the date from which such new shares shall rank for dividend) with or subsequent to those already issued or by the reduction of the capital paid up on such shares or by the purchase or redemption by the Company of its own shares in accordance with the provisions of these Articles.

10. Consolidation, Subdivision, Cancellation and Reduction of Share Capital

10.1 The Company may, from time to time, by resolution requiring the approval of shareholders holding a majority of the voting rights in the Company present at such shareholders meeting (subject, however, to the provisions of applicable law):

10.1.1 consolidate and divide all or any of its issued or unissued authorized share capital into shares of a per share nominal value which is larger than the per share nominal value of its existing shares,

10.1.2 subdivide its shares (issued or unissued) or any of them, into shares of smaller nominal value than is fixed by these Articles.

10.1.3 cancel any shares which, at the date of the adoption of such resolution, have not been taken or agreed to be taken by any person, and diminish the amount of its share capital by the amount of the shares so cancelled, or

10.1.4 reduce its share capital in any manner, and with and subject to any incident authorized, and consent required, by law.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

10.2 Subject to the provisions of these Articles, with respect to any consolidation of issued shares into shares of a larger nominal value per share, and with respect to any other action which may result in fractional shares, the Board of Directors may settle any difficulty which may arise with regard thereto, as it deems fit, and, in connection with any such consolidation or other action which could result in fractional shares, may, without limiting its aforesaid power:

(i) determine, as to the holder of shares so consolidated, which issued shares shall be consolidated into a share of a larger nominal value per share;

(ii) allot, in contemplation of or subsequent to such consolidation or other action, such shares or fractional shares sufficient to preclude or remove fractional share holdings;

(iii) redeem, in the case of redeemable preference shares, and subject to applicable law, such shares or fractional shares sufficient to preclude or remove fractional share holdings;

(iv) cause the transfer of fractional shares by certain shareholders of the Company to other shareholders thereof so as to most expediently preclude or remove any fractional shareholdings, and cause the transferees of such fractional shares to pay the transferors thereof the fair value thereof, and the Board of Directors is hereby authorized to act in connection with such transfer, as agent for the transferors and transferees of any such fractional shares, with full power of substitution, for the purpose of implementing the provisions of this sub-Article 10.2.

**PART C: <u>THE SHARES</u>**

11. Share Certificates

11.1.1 Share certificates shall be signed by authorised signatories designated by the Board of Directors, together with the name of the Company in printed form or rubber stamp.

11.1.2 Each shareholder whose name appears in the Register shall be entitled to receive one share certificate in respect of the shares registered in his name, or, if the Board of Directors so authorises (and after payment of the amount which the Board of Directors shall determine from time to time) to a number of share certificates, each one in respect of one or more of these shares; each share certificate shall indicate the name of the shareholder, the number of shares in respect of which it has been issued, and additional particulars that shall be determined by the Board of Directors.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

11.1.3 A certificate in respect of a share registered in the names of two or more persons shall be delivered, to the person whose name appears first on the Register from among the names of the joint owners.

11.1.4 If a certificate is lost or damaged, or a shareholder holding more than one certificate representing the same class of shares and wishes to combine them into one certificate, the Board of Directors may issue a new certificate in its place, provided that that the original certificate is presented to and destroyed by the Board of Directors, or it is proved to the satisfaction of the Board of Directors that the certificate has been lost or destroyed, and the Board of Director receives security satisfactory to it in respect for any possible damage, in each case against payment if a requirement for such a payment is imposed.

11.1.5 The Company shall not issue shares other than shares that are paid in full. Shares shall be deemed to have been paid in full if the full amount of the nominal value and any premium thereon has been paid, in accordance with the terms of issue of the shares.

11.1.6 No certificate shall be issued representing shares held by a Recognised Person.

11.2 Uncertified shares

11.2.1 Notwithstanding anything in these Articles to the contrary any shares in the Company may be issued, held, registered, converted to, transferred or otherwise dealt with in uncertified form and converted from uncertificated form to certificated form in accordance with the Regulations and practices instituted by the operator of the relevant system. Any provisions of these Articles shall not apply to any uncertificated shares to the extent that such provisions are inconsistent with:

11.2.1.1 the holding of shares in uncertificated form;

11.2.1.2 the transfer of title to shares by means of a relevant system; or

11.2.1.3 any provision of the Regulations

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

11.2.2 Without prejudice to the generality and effectiveness of the foregoing:

11.2.2.1 Article 11.1 and 12 shall not apply to uncertificated shares and any reference to registering a transfer of a share in Article 12 shall apply in relation to such shares as if the reference therein to the date on which the transfer was lodged with the Company were a reference to the date on which the appropriate instruction was received by or on behalf of the Company in accordance with the facilities and requirments of the relevant system;

11.2.2.2 without prejudice to Article 12 in relation to uncertified shares, the Board may also refuse to register a transfer of uncertificated shares in such other circumstances as may be permitted or required by the Regulations and the relevant system;

11.2.2.3 references in these Articles to a requirement on any person to execute or deliver an instrument of transfer or certificate or other document which shall not be appropriate in the case of uncertificated shares shall, in the case of uncertificated shares, be treated as references to a requirment to comply with any relevant requirements of the relevant system and any relevant arrangements or regulations which the Board may make from time to time pursuant to Article 11.2.2.11 below;

11.2.2.4 for the purposes referred to in Article 21 a person entitled by transmission to a share in uncertificated from who elects to have some other person registered shall either:

(i) procure that instructions are given by means of the relevant system to effect transfer of such uncertificated share to that person; or

(ii) change the uncertificated share to certificated form and execute an instrument of transfer of that certificated share to that

person;

11.2.2.5 the Company shall enter on the Register the number of shares which are held by each member in uncertificated form and in certificated form and shall maintain the Register in each case as is required by the Regulations and the relevant system and, unless the Board otherwise determines, holdings of the same holder or joint holders in certificated form and uncertificated form shall be treated as separate holdings;

11.2.2.6 a class of share shall not be treated as two classes by virtue only of that class comprising both certificated shares and uncertificated shares or as a result of any provision of these Articles or the Regulations which applies only in respect of certificated shares or uncertificated shares;

11.2.2.7 for the purposes referred to in Article 11.2.1 the Board may in respect of uncertificated shares authorise some person to transfer and/or require the holder to transfer the relevant shares in accordance with the facilities and requirements of the relevant system;

11.2.2.8 for the purposes of Article 44, any payment in the case of uncertificated shares may be made by means of the relevant system (subject always to the facilities and requirements of the relevant system) and without prejudice to the generality of the foregoing such payment may be made by the sending by the Company or any person on its behalf of an instruction to the operator of the relevant system to credit the cash memorandum account of the holder or joint holders of such shares or, if permitted by the Company, of such person as the holder or joint holders may in writing direct and for the purposes of Article 44 the making of a payment in accordance with the facilities and requirements of the relevant system concerned shall be a good discharge to the Company;

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

11.2.2.9 subject to CA 1985 and the Regulations the Board may issue shares as certificated shares or as uncertificated shares in its absolute discretion and Article 43 shall be construed accordingly;

11.2.2.10 the Board may make such arrangements or regulations (if any) as it may from time to time in its absolute discretion think fit in relation to the evidencing and transfer of uncertificated shares and otherwise for the purpose of implementing and/or supplementing the provisions of this Article 11.2 and the Regulations and the facilities and requirements of the relevant system and such arrangements and regulations (as the case may be) shall have the same effect as if set out in this Article 11.2;

11.2.2.11 the Board may utilise the relevant system to the fullest extent available from time to time in the exercise of the Company's powers or functions under CA 1985 or these Articles or otherwise in effecting any actions including permitting shares to be transferred to a Depository for the purposes of facilitating trading of interest in shares within the relevant system in accordance with the Regulations; and

11.2.2.12 the Board may resolve that a class of shares is to become a participating security and may at any time determine that a class of shares shall cease to be a participating security.

11.2.3 Where any class of shares in the capital of the Company is a participating security and the Company is entitled under any provisions of CA 1985 or the rules made and practices instituted by the operator of any relevant system or under these Articles to dispose of, forfeit, enforce a lien or sell or otherwise procure the sale of any shares which are held in uncertificated form, such entitlement (to the extent permitted by the Regulations and the rules made and practices instituted by the operator of the relevant system) shall include the right to:

11.2.3.1 request or require the deletion of any computer-based entries in the relevant system relating to the holding of such shares in uncertificated form; and/or

11.2.3.2 require any holder of any uncertificated shares which are the subject of any exercise by the Company of any such entitlement, by notice in writing to the holder concerned, to change his holding of such uncertificated shares into certificated form within such period as may be specified in the notice, prior to completion of any disposal, sale or transfer of such shares or direct the holder to take such steps, by instructions given by means of a relevant system or otherwise, as may be necessary to sell or transfer such shares; and/or

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

11.2.3.3 appoint any person to take such other steps, by instruction given by means of a relevant system or otherwise, in the name of the holder of such shares as may be required to effect a transfer of such shares and such steps shall be as effective as if they had been taken by the registered holder of the uncertificated shares concerned; and/or

11.2.3.4 transfer any uncertificated shares which are the subject of any exercise by the Company of any such entitlement by entering the name of the transferee in the Register in respect of that share as a transferred share; and/or

11.2.3.5 otherwise rectify or change the Register in respect of that share in such manner as may be appropriate; and

11.2.3.6 take such other action as may be necessary to enable those shares to be registered in the name of the person to whom the shares have been sold or disposed of or as directed by him.

11.2.4 For the purposes of this Article 11:

11.2.4.1 words and expressions shall have the same respective meanings as in the Regulations;

11.2.4.2 references herein to an uncertificated share or to a share (or to a holding of shares) being in uncertificated form are references to that share being an uncertificated unit of a security, and references to a certificated share or to a share being in certificated form are references to that share being a unit of a security which is not an uncertificated unit; and

11.2.4.3 "cash memorandum account" means an account so designated by the operator of the relevant system.

12. Transfer of Shares

12.1 Subject to such of the restrictions of these Articles as may be applicable, each member may transfer all or any of his shares by instrument of transfer in writing in any usual form or in any form approved by the Board. Such instrument shall be executed by or on behalf of the transferor and (in the case of a transfer of a share which is not fully paid up) by or on behalf of the transferee. The transferor shall be deemed to remain the holder of such share until the name of the transferee is entered in the Register in respect of it.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

12.2 The Board may, in its absolute discretion and without giving any reason, refuse to register any transfer of a share (or renunciation of a renounceable letter of allotment) unless:

12.2.1 it is in respect of share which is fully paid up;

12.2.2 it is in respect of only one class of shares;

12.2.3 it is in favour of a single transferee or not more than four joint transferres;

12.2.4 it is duly stamped (if so required); and

12.2.5 it is delivered for registration to the Office or such other place as the Board may from time to time determine, accompanied (except in the case of a transfer by a recognised person where a certificate has not been issued or in the case of a renunciation) by the certificate for the shares to which it relates and such other evidence as the Board may reasonably require to prove the title of the transferor or person renouncing and the due execution of the transfer or renunciation by him or, if the transfer or renunciation is executed by some other person on his behalf, the authority of that person to do so; provided that the Board shall not refuse to register any transfer or renunciation of partly paid shares which are listed on the London Stock Exchange on the grounds that they are partly paid shares in circumstances where such refusal would prevent dealings in such shares from taking place on an open and proper basis.

13. Notice of refusal

13.1 If the Board refuses to register a transfer of a share it shall, within two months after the date on which the transfer was lodged with the Company, send notice of the refusal to the transferee. Any instrument of transfer which the Board refuses to register shall (except in the case of suspected or actual fraud) be returned to the person depositing it. All instruments of transfer which are registered may be retained by the Company.

14. Calls on Shares

14.1 The Board of Directors may, from time to time, as it, in its discretion, deems fit, make calls for payment upon shareholders in respect of any sum which has not been paid up in respect of shares held by such shareholders and which is not, pursuant to the terms of allotment or issue of such shares or otherwise, payable at a fixed time, and each shareholder shall pay the amount of every call so made upon him (and of each installment thereof if the same is payable in installments), to the person(s) and at the time(s) and place(s) designated by the Board of Directors, as any such time(s) may be thereafter extended and/or such person(s) or place(s) changed. Unless otherwise stipulated in the resolution of the Board of Directors (and in the notice hereafter referred to), each payment in response to a call shall be deemed to constitute a pro rata payment on account of all the shares in respect of which such call was made.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

14.2 Notice of any call for payment by a shareholder shall be given in writing to such shareholder not less than fourteen (14) days prior to the time of payment fixed in such notice, and shall specify the time and place of payment, and the person to whom such payment is to be made. Prior to the time for any such payment fixed in a notice of a call given to a shareholder, the Board of Directors may in its absolute discretion, by notice in writing to such shareholder, revoke such call in whole or in part, extend the time fixed for payment thereof, or designate a different place of payment or person to whom payment is to be made. In the event of a call payable in installments, only one notice thereof need be given.

14.3 If pursuant to the terms of allotment or issue of a share or otherwise, an amount is made payable at a fixed time (whether on account of such share or by way of premium), such amount shall be payable at such time as if it were payable by virtue of a call made by the Board of Directors and for which notice was given in accordance with paragraphs (a) and (b) of this Article 13, and the provisions of these Articles with regard to calls and the non-payment thereof shall be applicable to such amount and the non-payment thereof.

14.4 Joint holders of a share shall be jointly and severally liable to pay all calls for payment in respect of such share and all interest payable thereon.

14.5 Any shareholder on whom a call is made shall remain liable to pay all calls notwithstanding the subsequent transfer to a third party of the shares in connection to which the call was made.

14.6 Any amount called for payment which is not paid when due shall bear interest from the date fixed for until actual payment thereof, at such rate (not exceeding the then prevailing debitory rate charged by leading commercial banks in Israel), and payable at such time(s) as the Board of Directors may prescribe. In addition, all shareholder rights belonging to the shareholder who has not paid following a call shall be suspended until any amount called for payment, or installment thereof approved by the Board of Directors, has been paid.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

14.7 Upon the allotment of shares, the Board of Directors may provide for differences among the allottees of such shares as to the amounts and times for payment of calls for payment in respect of such shares.

15. Prepayment

With the approval of the Board of Directors, any shareholder may pay to the Company any amount not yet payable in respect of his shares, and the Board of Directors may approve the payment by the Company of interest on any such amount until the same would be payable if it had not been paid in advance, at such rate and time(s) as may be approved by the Board of Directors. The Board of Directors may at any time cause the Company to repay all or any part of the money so advanced, without premium or penalty. Nothing in this Article 14 shall derogate from the right of the Board of Directors to make any call for payment before or after receipt by the Company of any such advance.

16. Forfeiture and Surrender

16.1 If any shareholder fails to pay an amount payable by virtue of a call, or interest thereon as provided for in accordance herewith, on or before the day fixed for payment of the same, the Board of Directors, may at any time after the day fixed for such payment, so long as such amount (or any portion thereof) or interest thereon (or any portion thereof) remains unpaid, forfeit all or any of the shares in respect of which such payment was called for. All expenses incurred by the Company in attempting to collect any such amount or interest thereon, including, without limitation, attorneys' fees and costs of legal proceedings, shall be added to, and shall, for all purposes (including the accrual of interest thereon), constitute a part of, the amount payable to the Company in respect of such call.

16.2 Upon the adoption of a resolution as to the forfeiture of a shareholder's share, the Board of Directors shall cause notice thereof to be given to such shareholder, which notice shall state that, in the event of the failure to pay the entire amount so payable by a date specified in the notice (which date shall be not less than fourteen (14) days after the date such notice is given and which may be extended by the Board of Directors), such shares shall be ipso facto forfeited, provided, however, that, prior to such date, the Board of Directors may nullify such resolution of forfeiture, but no such nullification shall estop the Board of Directors from adopting a further resolution of forfeiture in respect of the non-payment of the same amount.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

16.3 Without derogating from any other provision under these Articles, whenever shares are forfeited as herein provided, all dividends, if any, theretofore declared in respect thereof and not actually paid shall be deemed to have been forfeited at the same time.

16.4 The Company, by resolution of the Board of Directors, may accept the voluntary surrender of any share.

16.5 Any share forfeited or surrendered as provided herein shall become the property of the Company, and the same, subject to the provisions of these Articles, may be sold, re-allotted or otherwise disposed of as the Board of Directors deems fit.

16.6 Any shareholder whose shares have been forfeited or surrendered shall cease to be a shareholder in respect of the forfeited or surrendered shares, and shall return all relevant share certificates to the Company immediately. However, such shareholder shall, notwithstanding, be liable to pay, and shall forthwith pay, to the Company, all calls, interest and expenses owing upon or in respect of such shares at the time of forfeiture or surrender, together with interest thereon from the time of forfeiture or surrender until actual payment, at the rate prescribed in Article 13.6 above, and the Board of Directors, in its discretion, may, but shall not be obligated to, enforce the payment of such moneys, or any part thereof. In the event of such forfeiture or surrender, the Company, by resolution of the Board of Directors, may accelerate the date(s) of payment of any or all amounts then owing to the Company by the shareholder in question (but not yet due) in respect of all shares owned by such shareholder, solely or jointly with another.

16.7 The Board of Directors may at any time, before any share so forfeited or surrendered shall have been sold, re-allotted or otherwise disposed of, nullify the forfeiture or surrender on such conditions as it deems fit, but no such nullification shall estop the Board of Directors from re-exercising its powers of forfeiture pursuant to this Article 15.

17. Lien

17.1 Except to the extent the same may be waived or subordinated in writing, the Company shall have a first and paramount lien upon all the shares registered in the name of each shareholder (without regard to any equitable or other claim or interest in such shares on the part of any other person), and upon the proceeds of the sale thereof, for his debts, liabilities and engagements to the Company arising from any amount payable by such shareholder in respect of any unpaid or partly paid share, whether or not such debt, liability or engagement has matured. Such lien shall extend to all dividends from time to time declared or paid in respect of such share. Unless otherwise provided, the registration by the Company of a transfer of shares shall be deemed to be a waiver on the part of the Company of the lien (if any) existing on such shares immediately prior to such transfer.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

17.2 The Board of Directors may cause the Company to sell a share subject to such a lien when the debt, liability or engagement giving rise to such lien has matured, in such manner as the Board of Directors deems fit, but no such sale shall be made unless such debt, liability or engagement has not been satisfied within fourteen (14) days after written notice of the intention to sell shall have been served on such shareholder, his executors or administrators.

17.3 The net proceeds of any such sale, after payment of the costs thereof, shall be applied in or toward satisfaction of the debts, liabilities or engagements of such shareholder in respect of such share (whether or not the same have matured), or any specific part of the same (as the Company may determine), and the residue (if any) shall be paid to the shareholder, his executors, administrators or assigns.

18. Sale after Forfeiture or Surrender or in Enforcement of Lien

Upon any sale of a share after forfeiture or surrender or for enforcing a lien, the Board of Directors may appoint any person to execute an instrument of transfer of the share so sold and cause the purchaser's name to be entered in the Shareholders Register in respect of such share. The purchaser shall be registered as the shareholder and shall not be bound to see to the regularity of the sale proceedings, or to the application of the proceeds of such sale, and after his name has been entered in the Shareholders Register in respect of such share, the validity of the sale shall not be impeached by any person, and the remedy of any person aggrieved by the sale shall be in damages only and against the Company exclusively.

19. Redeemable Shares

19.1 The Company may, subject to applicable law, issue redeemable shares and redeem the same.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

19.2 Where a power is reserved to purchase redeemable shares: (i) unless a tender or partial offer is made to all holders of the class of securities on the same terms, the purchase must be limited to a maximum price which, in the case of purchasers through the market of redeemable shares other than those that are normally brought and traded by a limited number of investors who are particularly knowledgeable in investment matters, must not exceed five percent (5%) above the average market value for ten (10) consecutive business days before the purchases; and (ii) if purchases are made by tender, tenders must be available to all shareholders on equal terms..

20. Conversion of Shares into Stock

20.1 Subject to the provisions of Articles 9.2 hereof, the Board of Directors may, with the sanction of the shareholders previously given by resolution requiring the approval of shareholders holding a majority of the voting rights in the Company present at such shareholders meeting, convert any paid-up shares into stock, and may, with like sanction, reconvert any stock into paid-up shares of any denomination.

20.2 The holders of stock may transfer the same, or any part thereof, in the same manner and subject to the same regulations, as the shares from which the stock arose might have been transferred prior to conversion, or as near thereto as circumstances admit, provided, however, that the Board of Directors may from time to time fix the minimum amount of stock so transferable, and restrict or forbid the transfer of fractions of such minimum, but the minimum shall not exceed the nominal value of each of the shares from which such stock arose.

20.3 The holders of stock shall, in accordance with the amount of stock held by them, have the same rights and privileges as regards dividends, voting at meetings of the Company and other matters as if they held the shares from which such stock arose, but no such right or privilege, except participation in the dividends and profits of the Company, shall be conferred by any such aliquot part of such stock as would not, if existing in shares, have conferred that right or privilege.

20.4 Such of the Articles of the Company as are applicable to paid-up shares shall apply to stock, and the words "share" and "shareholder" (or "shareholder") therein shall include "stock" and "stockholder."

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

21. Decedents' Shares

In case of a share registered in the names of two or more holders, the Company may recognize the survivor(s) as the sole owner(s) thereof unless and until the provisions of Article 20.2 have been effectively invoked.

Any person becoming entitled to a share in consequence of the death of any person, upon producing evidence of the grant of probate or letters of administration or declaration of succession (or such other evidence as the Board of Directors may reasonably deem sufficient), shall be registered as a member in respect of such share, or may, subject to the regulations as to transfer herein contained, transfer such share.

**PART D - <u>GENERAL MEETINGS</u>**

22. Convening a General Meeting

22.1 An Annual General Meeting shall be held once in every calendar year at such time (within a period of not more than fifteen (15) months after the last preceding Annual General Meeting) and at such place, either within or without the State of Israel, as may be determined by the Board of Directors.

22.2 Unless otherwise expressly directed by a court of competent jurisdiction, the provisions of these Articles shall apply, with such changes as shall be required in the circumstances, to the convening, conduct and proceedings of a General Meeting convened by order of a court of competent jurisdiction and of a General Meeting lawfully convened other than by the Board of Directors, and to any vote at such meeting.

22.3 Subject to the provisions of the Companies Law, each General Meeting shall be convened at such place as the Board of Directors shall direct, or, if the Board of Directors does not direct a location for convening the meeting, at such place as the Chairman of the Board of Directors shall direct. If no location for the convening of the meeting is specified by the Board of Directors or by the Chairman of the Board of Directors, the meeting shall convene at the Offices of the Company.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

22.4 All General Meetings other than Annual General Meetings shall be called "Special Meetings." The Board of Directors shall convene a Special Meeting in accordance with a resolution of the Board of Directors, and also at the request of each of the following:

(a) two Directors or 25% of the number of Directors then in office;

(b) one or more shareholders holding at least 5% of the issued share capital and at least 1% of the voting rights of the Company;

(c) one or more shareholder holding at least 5% of the voting rights of the Company.

22.5 The agenda for a General Meeting shall be determined by the Board of Directors and shall include also the matters in respect of which the convening of the General Meeting was requested. One or more shareholder holding at least 1% of the voting rights at a General Meeting may request the Board of Directors to include a matter on the agenda for a General Meeting that is to be convened in the future, provided that the matter is within the scope of the shareholders powers as set out in Section 57 of the Companies Act.

22.6 At a General Meeting, only matters included on the agenda shall be brought to a vote.

23. Notices to Shareholders

23.1 Notice of a General Meeting shall be delivered at least 21 days prior to the date for convening of the meeting (but not more than 45 days before such date) to each of the shareholders registered in the Register, in the manner specified in these Articles.

23.2 The notice of the General Meeting shall specify the date and place of convening the meeting, the agenda, reasonable details of the matters to be discussed at the meeting and arrangements for voting by proxy if the matters on the agenda for the meeting include matters in respect of which shareholders may vote by proxy under any law or in accordance with these Articles. If the agenda for the meeting includes a proposal to amend these Articles, the text of the proposed amendment shall be specified.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

23.3 If the Company has reason to believe that an address provided by a shareholder is no longer that shareholder's address, the shareholder shall be deemed not to have provided the Company with an address in each of the following instances:

(a) If the Company has sent the shareholder a letter by registered mail to that address, requiring the shareholder to confirm that the said address is still his address or to notify the Company of a new address and the Company has not received a reply within 60 days from the date of delivery of the said letter by the Company to the post office.

(b) If the Company has sent a letter by registered mail to the shareholder at the said address and the Postal Service - whether or not the Postal Service has returned the letter - has notified the Company that the letter was not delivered to the shareholder at the said address since he is not known at the said address or for any other similar reason.

22.4 Subject to the provisions of any law:

(a) the Company may deliver any notice and any document to a shareholder by hand or by mail to the address which the shareholder has provided to the Company;

(b) the Company may deliver any notice and any document to a shareholder by delivering the same to him in any other manner in writing, unless prohibited by law;

(c) confirmation in writing signed by an Officer of the Company regarding the delivery of a document or the service of notice in any of the manners specified above shall be deemed prima facie evidence of every matter contained therein;

(d) notice of a General Meeting shall be delivered in one of the manners specified above to each person who has the right to a share as a result of the death, bankruptcy or liquidation of a shareholder and who, but for any of the aforesaid circumstances, would have been entitled to receive notice of the General Meeting.

(e) Notwithstanding anything contained in this Article 22.4 above, the Company may in lieu of sending separate notices to all the shareholders as set forth above, deliver notice to its shareholders by way of publishing a notice, in English, simultaneously in one widely available national newspaper in the United Kingdom and one widely available national newspaper in Israel. Such notice shall include all the details required by these Articles and by the applicable law for the convening of a shareholders meeting. Delivery of a notice by way of publishing in the newspapers as set forth above shall be deemed for all purposes as appropriate notice to the shareholders as required by these Articles.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

23.5 Each shareholder may waive his right to receive notice or his right to receive a notice at any specified time, and may agree that a General Meeting be convened and decisions taken thereat even though he has not received notice of the meeting or has not received notice within a specified time, in each case subject to the provisions of any law prohibiting a waiver or agreement of this nature.

23.6 The Company may give notice to joint holders of any share by notice to the joint holder whose name is first recorded on the Register with respect to that share.

23.7 The validity of any resolutions carried at a General Meeting shall not be affected if the Company, by oversight, has not sent a notice of the convening of the meeting to a shareholder entitled to receive written notice of the convening the meeting, or has sent an incomplete or incorrect notice regarding the convening of the meeting or its agenda, or has not served a notice as aforesaid to the shareholder or has delayed in sending or delivering the said notice.

23.8 Any document or notice delivered by the Company in accordance with the provisions of these Articles shall be deemed to have been properly served notwithstanding the death, bankruptcy or liquidation of that shareholder (whether or not the Company knew of the circumstance) so long as no other person has been registered in his place as shareholder in the Register, and delivery or service as aforesaid shall be deemed sufficient for all purposes with respect to any person who claims to be entitled to the shares in question.

24. Resolutions at General Meetings

24.1 No discussion shall be commenced at a general meeting unless a quorum is present at the commencement of the meeting. Other than where a different rule is provided in these Articles or by any law or by a court of competent jurisdiction, a quorum shall be two or more shareholders present in person or by proxy or by written proxy, who hold an aggregate of at least one third (1/3) of the voting rights in the Company

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

24.2 If half an hour after the time set for the General Meeting no quorum is present, the meeting shall automatically be adjourned until the same day and same time one week thereafter, at the same place fixed for the original meeting (with no need for any notice to the shareholders) or until such other later time if such time is specified in the original notice convening the General Meeting, or if the Company serves notice to the shareholders no less than 72 hours before the date fixed for the adjourned meeting.

24.3 If at an adjourned meeting there is no quorum present half an hour after the time set for the meeting, any number participating in the meeting shall represent a quorum and shall be entitled to discuss the matters set down on the agenda for the original meeting.

24.4 Notwithstanding any other provision in these Articles, if the convening of a special meeting is demanded other than by resolution of the Board of Directors of the Company, the adjourned meeting shall take place only if there are present at least two shareholders holding voting rights in an amount no less than the amount required in order to constitute a quorum at the original meeting. If there is no quorum as aforesaid at the adjourned meeting, the meeting shall not be adjourned to another date and all of the proposed resolutions on the agenda shall be deemed to have been rejected by the meeting.

24.5 The Chairman of the Board of Directors of the Company shall act as Chairman of every General Meeting of the Company. If there is no Chairman of the Board of Directors of the Company and the Board of Directors has not determined that another individual shall act as Chairman of the meeting as aforesaid, or if the proposed Chairman is not present fifteen minutes after the time set for the meeting, or if that person does not wish to act as Chairman of the meeting, the shareholders present at the meeting shall themselves or by their proxies elect a shareholder or a proxy present at the meeting to act as Chairman of the meeting.

24.6 The Chairman of the meeting may, with the agreement of a meeting at which a quorum is present, postpone the meeting from time to time and from place to place, and he must postpone the meeting as aforesaid if the meeting directs him to do so. At a resumption of the meeting that has been adjourned as aforesaid, only those matters shall be discussed which were on the agenda of the original meeting and the discussion of which was not completed or commenced. There shall be no need to give any notice regarding the resumption of the adjourned meeting and regarding the matters on the agenda of the adjourned meeting.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

24.7 A resolution at a General Meeting shall be carried by a vote of the shareholders present and voting at the meeting, in person or by proxy. Every question submitted to a General Meeting shall be decided by a show of hands, but if a written ballot is demanded by a majority of the members present in person or by proxy and entitled to vote at the meeting, the same shall be decided by such ballot. A written ballot may be demanded before the proposed resolution is voted upon or immediately after the declaration by the Chairman of the results of the vote by a show of hands. If a vote by written ballot is taken after such declaration, the results of the vote by a show of hands shall be of no effect, and the proposed resolution shall be decided by such written ballot. The demand for a written ballot may be withdrawn at any time before the same is conducted, in which event another member may then demand such written ballot. The demand for a written ballot shall not prevent the continuance of the meeting for the transaction of business other than the question on which the written ballot has been demanded.

24.8 Unless otherwise set forth in these Articles or required by Law, each resolution of the General Meeting shall be carried by a simple majority.

24.9 Each share shall entitle the holder thereof to one vote for each share which belongs to him and to which a voting right is attached without regard to the nominal value of that share, unless the terms of issue of the share provide otherwise.

24.10 The announcement by the Chairman that a resolution has been carried unanimously or by a certain majority or has been rejected shall be prima facie evidence of that fact. An announcement as aforesaid and a notification to this effect that has been recorded in the minute books of the Company shall be prima facie evidence of the matter stated therein and there shall be no need to prove the number of votes or the proportion of the votes cast in favour or against the proposed resolution.

25. Voting by Proxy and in Other Manners

25.1 A resolution may be adopted at a General Meeting without notice and without the meeting having been duly convened, provided that the resolution is carried unanimously by the shareholders entitled to vote at the General Meeting.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

25.2 A corporation which is a shareholder in the Company may authorise an Officer in the corporation to be its representative at any meeting of the Company. A person authorised as aforesaid shall be entitled to make use, on behalf of the corporation that he represents, of the same powers which the corporation itself could have used if it was an individual shareholder in the Company.

25.3 A shareholder who is a minor and a shareholder who has been declared legally incompetent by a court of competent jurisdiction may vote only through his guardian, and the said guardian may vote by proxy.

25.4 In the case of joint owners of a share, the vote of the principal joint owner shall be accepted by the Company, whether given in person or by proxy, and the vote of the remaining joint owners shall not be accepted. For the purpose of this Article, the principal joint owner shall be deemed to be the shareholder whose name first appears in the Shareholders Register with respect to the relevant shares.

25.5 A shareholder may appoint a proxy to vote in his place and the proxy need not be a shareholder in the Company. The appointment of a proxy shall be in writing signed by the person making the appointment or by an attorney authorised for this purpose, and if the person making the appointment is a corporation, by a person or persons authorised to bind the corporation.

25.6 The document appointing the proxy to vote (the "**Appointment**") and power of attorney (if any) pursuant to which the Appointment has been signed, or a copy thereof certified to the satisfaction of the Board of Directors, shall be deposited in the Office or at such other address as shall be specifiedin the notice of the meeting not less than 48 hours before the time of the meeting at which the person specified in the Appointment is due to vote.

25.7 A shareholder holding more than one share may appoint more than one proxy, subject to the following provisions:

(a) The Appointment shall indicate the class and number of shares in respect of which it is given;

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

(b) If the number of the shares of any class specified in the Appointments that have been given by one shareholder exceeds the number of shares of that class held by him, all of the Appointments given by that shareholder shall be void;

(c) If only one proxy is appointed by the shareholder and the Appointment does not indicate the number and class of shares in respect of which it is given, the Appointment shall be deemed to have been given with respect to all of the shares owned by the shareholder at the time for determining the entitlement to participate and vote in the meeting (if the Appointment is given for a specific meeting) or in respect of all of the shares held by the shareholder at the date of depositing the Appointment with the Company or on the date of delivery to the Chairman of the meeting, as the case may be. In the event that an Appointment is given with respect to a number of shares less than the number of shares held by the shareholder, the shareholder shall be deemed to have abstained from voting with respect to the remainder of the shares that he owns and the Appointment shall be valid with respect to the number of shares specified therein.

25.8 Each appointment of a proxy, whether for a specific meeting or otherwise, shall, to the extent that the circumstances permit, be substantially in the following form (or such other form as shall be approved by the Board of Directors):

I, __________ (I.D. Number/Company Number ________) of _______________, in my capacity as shareholder in ______________ Limited, hereby appoint _________, (I.D. Number/Company Number ________) of _____________, or in his/her absence, _____________, (I.D. Number/Company Number) of _________, to vote on my behalf and in my name with respect to __________ Class ____shares held by me at the (annual/special) meeting of the Company that shall be held on the _____day of _______, and at any adjournment of such meeting.

In witness whereof I have signed hereon this ____day of_______.

____________________

Name and Signature

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

25.9 A vote cast pursuant to an Appointment appointing a proxy shall be valid notwithstanding the death of the person making the Appointment or the cancellation of the power of attorney or the transfer of the share in respect of which the vote is cast as aforesaid, unless notice in writing of the death, cancellation or transfer as aforesaid has been received in the Offices of the Company or by the Chairman of the meeting, by the time of the vote.

**PART E: <u>THE BOARD OF DIRECTORS</u>**

26. The Board of Directors, Appointment and Dismissal of Directors

26.1 Until such time as the General Meeting decides otherwise, the number of members of the Board of Directors shall be not less than five (5) and not more than twelve (12).

26.2 The Directors of the Company shall be appointed by a simple majority of the shareholders at a duly convened General Meeting for a term of office which, unless terminated earlier as set forth in there Articles, shall expire upon the closing of the next Annual General Meeting. All the Director's term of office shall expire upon the closing of the next General Meeting appointing Directors of the Company.

26.3 A Director may be removed from office by a simple majority of the shareholders of the Company at a duly convened General Meeting.

26.4 A Director who has been appointed or removed from office in accordance with these Articles shall commence his duties or shall cease to serve as Director, as the case may be, on the effective date of the closing of the General Meeting appointing or removing such Director as applicable.

26.5 In addition to the Directors who shall be appointed by written notice as aforesaid, the Board of Directors of the Company may at its discretion appoint additional Directors, provided that the number of members of the Board of Directors after such appointment shall not exceed the maximum number of Directors fixed in these Articles.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

26.6 A Director appointed by the Board of Directors shall commence his duties on the date fixed by the Board of Directors and such office shall expire, unless terminated earlier in accordance with these Articles, upon the closing of the next Annual General Meeting of the Company

26.7 Subject to the provisions of any law, a Director who has ceased to act as Director is eligible to be re-appointed.

26.8 Subject to the provisions of any law, the office of a Director shall be vacated (including the office of an Alternate Director and a Corporate Representative as defined in Article 26.5 below) automatically in each of the following events:-

(a) upon his death;

(b) if he is declared to be legally incompetent;

(c) if he is declared bankrupt, and if the Director is a corporation, if a liquidator, receiver, special manager or trustee (in each case temporary or permanent) is appointed for the corporation or its assets within the context of a creditors scheme of arrangement or an order of stay of proceedings;

(d) if he resigns from office by written notice to the Company, to the Chairman of the Board of Directors or to the Board of Directors, in which case the office of the Director shall be vacated on the date of service of notice or at such later date as is specified in the notice as the effective date of resignation;

(e) if his period of office has terminated in accordance with the provisions of these Articles;

(f) if the Director is convicted in a final judgment of an offence of a nature which disqualifies a person from serving as a company director;

(g) if a court of competent jurisdiction decides to terminate his office in a decision or judgment for which no stay of enforcement granted.

26.9 Notwithstanding anything stated in these Articles, the appointment of a Director, an Alternate Director or a Corporate Representative, as the case may be, (together "**the Appointee**") shall not come into effect before the Appointee has delivered to the Company a notice in writing in which the Appointee declares that he is lawfully competent to be appointed as a Director of the Company and that he agrees to be appointed as Director of the Company. The notice shall include the personal details of the Appointee for entry into the register of Directors of the Company ("**Register of Directors**") of the Company and any other particulars required by law. The form of the aforesaid notice shall be set down by the Board of Directors from time to time and may be in the form of an affidavit prepared and authenticated in accordance with the law.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

26.10 If any Director is not appointed, or if the appointment of any Director does not come into force, or if the office of Director becomes vacant, the remaining Directors may act in any manner provided that their number does not fall below the minimum number specified in these Articles. If the number of Directors falls below the minimum number as aforesaid, the Directors shall not be able to act other than in emergencies, or for the purpose of convening a General Meeting, or for the purpose of the appointment of additional Directors by the Board of Directors.

26.11 A corporation is fit to act as a Director and as an Alternate Director of the Company.

27. Alternate Director and Corporate Representative

27.1 A Director may at any time appoint an alternate ("the **Alternate Director**"), who is fit to serve as Director of the Company (other than a person as aforesaid who at that time is serving as a Director, an Alternate Director of another Director or as an individual serving as a "**Corporate Representative**", as defined in Article 26.5 below). So long as the appointment of the Alternate Director remains in force, the Alternate Director alone is entitled to participate in any meeting of the Board of Directors and he shall have all of the duties, rights and authorities (other than the authority to appoint an alternate for himself) which the Director who appointed him has, but without thereby limiting the liability under any law of the Director who appointed him.

27.2 An Alternate Director may not serve as an alternate or Corporate Representative of more than one Director.

27.3 The appointment of an Alternate Director and the cancellation thereof shall be by written notice that the appointing Director shall deliver to the Company. The appointment and cancellation of appointment shall come into effect on the date of delivery of the notice to the Company or the date specified in the notice, whichever shall be later.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

27.4 A Director who appoints an Alternate Director may at any time cancel the appointment. In addition, the office of Alternate Director shall be vacated whenever the Alternate Director shall notify the Company in writing of his resignation from office as Alternate Director, with effect from the date of his notice or whenever the Director who has appointed the Alternate Director ceases to be a Director of the Company for whatever reason.

27.5 A corporation which acts as Director or Alternate Director shall appoint an individual who is qualified to be appointed as a Director of the Company to act on its behalf on the Board of Directors (the "**Corporate Representative**").

27.6 The appointment of a Corporate Representative and the cancellation thereof shall be by notice in writing which the appointing corporation shall deliver to the Company, and shall come into effect on the date of service of notice to the Company or on the date specified in the notice, whichever shall be later.

27.7 The appointing corporation shall not be entitled to the rights or authorities of a Director at a time at which the corporation has no validly appointed Corporate Representative.

28. Directors Remuneration

Subject to any approval required by law, a Director shall be entitled to receive from the Company director's remuneration, a benefit, and reimbursement or payment on account of expenses.

29. Chairman of the Board of Directors

29.1 The Board of Directors may appoint one of the Directors to act as Chairman of the Board of Directors, and may remove the Chairman of the Board of Directors and appoint another person in his place. The Chairman of the Board of Directors shall not have a casting vote at meetings of the Board of Directors.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

29.2 The Chairman of the Board of Directors may, from time to time by written notice to the Company, appoint another Director to act as a Deputy Chairman of the Board of Directors, to dismiss the Deputy Chairman and to appoint another in his place, provided that the tenure of the Deputy Chairman of the Board of Directors shall not cease even if the person who appointed him ceases to act as Chairman of the Board of Directors or as a Director, unless the Board of Directors decides otherwise. If the Chairman of the Board of Directors is not present 15 minutes after the beginning of a meeting of the Board of Directors, or if he does not wish to sit as Chairman of the meeting, the Deputy Chairman shall conduct the meeting and may exercise all of the authorities vested in the Chairman of the Board of Directors and shall have all of his powers, rights and authorities under these Articles and by law.

29.3 The Chairman of the Board of Directors shall have all of the powers, rights and authorities granted to him under these Articles or by law. Without prejudice to the generality of the aforesaid, the Chairman of the Board of Directors shall have all power and authority necessary in order to carry out his functions and to exercise his rights and authorities in an efficient manner, including the authority to act in the name of the Company and on its behalf in the matters referred to above and to give directions to the Managing Director of the Company and to employees and consultants of the Company for this purpose.

29.4 If both the Chairman of the Board of Directors and the Deputy Chairman are absent 15 minutes after the beginning of a meeting of the Board of Directors, or they do not wish to act as Chairman, or no Chairman of the Board of Directors has been appointed for the Company, the Board of Directors shall appoint one of its members (including an Alternate Director or Corporate Representative) to conduct the meeting and to sign the minutes of the meeting, provided that the said Chairman of the meeting shall not have an additional or casting vote in any vote of the Board of Directors.

30. Convening and Conduct of Meetings of the Board of Directors

30.1 The Board of Directors shall convene as often as the needs of the Company require.

30.2 The Board of Directors shall be convened as follows:

(a) In accordance with a decision of the Chairman of the Board of Directors;

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

(b) At the request of two Directors;

(c) In any other case in which there is an obligation by any relevant law or regulation to convene a meeting of the Board of Directors.

30.3 If a meeting of the Board of Directors is convened by the Chairman of the Board of Directors or by a majority of the members of the Board of Directors, the meeting shall be convened no earlier than three (3) business days following delivery of notice of the meeting to all of the members of the Board of Directors, unless the Chairman of the Board of Directors or a majority of the members of the Board of Directors determine that because of the urgent nature of any matter on the agenda, the meeting must be convened within a shorter period of time. In such a case, the meeting shall be convened in the manner which will allow the participation of the maximum number of members of the Board of Directors in the meeting. If a meeting is demanded other than by the Chairman of the Board of Directors or by a majority of the members of the Board of Directors, the meeting shall be convened at such time as the persons authorised to convene the meeting shall determine, in a notice which shall be delivered by them to the members of the Board of Directors, but in any event no earlier than three business days after the date of delivery of the notice

30.4 Subject to the provisions of any law, the agenda for a meeting of the Board of Directors shall be fixed by the persons authorised to convene that meeting. At a meeting of the Board of Directors, only those matters specified in the notice convening the meeting shall be discussed, unless all of the members of the Board of Directors agree to discuss additional matters.

30.5 Meetings of the Board of Directors shall take place at the Offices of the Company, other than in the following circumstances:

(a) If the Company has a Chairman of the Board of Directors, the Chairman of the Board of Directors may decide that a meeting be convened in some other place in Israel.

(b) The Board of Directors may decide to convene a meeting or meetings of the Board of Directors in some other place in Israel and this decision shall prevail over any contrary decision of the Chairman of the Board of Directors (if any).

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

(c) The Board of Directors may, by unanimous agreement, in advance or after the fact, decide to convene a meeting or meetings of the Board of Directors at some place outside Israel.

30.6 The agenda of meetings of the Board of Directors shall be fixed by the Chairman of the Board of Directors and shall include:

(a) matters determined by the Chairman of the Board of Directors;

(b) matters specified by the person at whose request the meeting has been convened;

(c) any matter which a Director or the Managing Director of the Company has requested the Chairman to include on the agenda a reasonable time prior to the convening of the meeting of the Board of Directors.

30.7 The Board of Directors may hold meetings using any means of communication, provided that all of Directors participating can hear one another at the same time, as well as in any other manner permitted by law.

30.8 A quorum for a meeting of the Board of Directors shall be a majority of the members of the Board of Directors present at the start of the meeting.

30.9 The Board of Directors may make a decision without actually convening, provided that all of the Directors entitled to participate in the discussion and vote on the matter brought for decision agree thereto.

30.10 The Chairman of the Board of Directors or his Deputy or the person appointed by the Board of Directors or any person authorised by them shall record minutes of the decisions taken without the convening of the Board of Directors, as mentioned above. The minutes shall be signed by the Chairman of the Board of Directors, or the Chairman of the meeting, as the case may be.

30.11 At a vote of the Board of Directors, each Director shall have one vote.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

30.12 Decisions of the Board of Directors shall be carried by a simple majority of the Directors voting on any matter on the agenda.

30.13 Any action taken by or in accordance with a decision of the Board of Directors or by or in accordance with a decision of a Committee of the Board of Directors or by a Director acting in his capacity as Director shall be valid and effective even if it is subsequently discovered that there was a defect in the appointment of the Directors or the election of the Directors or if all or one of them was disqualified, in each case as if each of the Directors had been lawfully elected and as if he was fully qualified to act as Director, Alternate Director, Corporate Representative or member of the said Committee, as the case may be.

31. Notice of Meetings of the Board of Directors

31.1 A notice of a meeting of the Board of Directors that shall be convened by the Chairman of the Board of Directors, or by a majority of the members of the Board of Directors, may be delivered verbally, by telephone, in writing or by any other means of communication.

31.2 Notice of a meeting of the Board of Directors shall be delivered to each Director. If a Director has appointed an Alternate for himself, notice shall be provided both to the Director and to the Alternate. Notice to a Director which is a corporation shall be delivered to the corporation and to the Corporate Representative.

31.3 The details for a Director appearing in the Register of Directors which the Company maintains or which have been notified to the Company in writing together with a request that these details be used for the purposes of delivery of notices shall be the address and other details of the Director for the purposes of delivery of notices to him.

31.4 A notice convening a meeting of the Board of Directors shall include reasonable particulars of all of the matters on the agenda, as well as the place and time fixed for the meeting.

31.5 All of the Directors may agree to waive prior notice of a meeting of the Board of Directors and the agenda at that meeting.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

32. Authority of the Board of Directors

32.1 The Board of Directors shall set the policy guidelines for the Company and shall supervise the performance and activities of the Managing Director (if one has been appointed). The Board of Directors shall have the powers and authorities necessary, in the opinion of the Board of Directors, in order to carry out its duties fully and efficiently.

32.2 Without prejudice to the generality of the aforesaid, the Board of Directors shall be entitled to use all of its authorities and powers and to carry out any of the actions vested in it by law or by these Articles.

32.3 The Board of Directors may exercise any authority of the Company which has not been delegated by these Articles or by law to the Managing Director or to the General Meeting, and such authority shall be deemed to have been delegated to the Board of Directors by these Articles.

32.4 The power of the Board of Directors shall be subject to the provisions of any law, and to any Article that shall be adopted by the Company in General Meeting, provided that no such Article shall invalidate any action taken prior thereto by the Board of Directors or pursuant to a decision thereof which would have been legally valid but for the adoption of the said Article.

32.5 The General Meeting may assume the authority vested in the Board of Directors (including the authorities vested in the Board of Directors in the absence of a Managing Director) for a specific matter or for a specific period of time.

32.6 For the purpose of exercising the general authorities vested in the Board of Directors and without limiting or restricting in any way whatsoever the said authorities or any of them, it is hereby expressly stated that the Board of Directors shall have the following authorities:

(a) From time to time to appoint one or more persons (whether or not that person is a member of the Board of Directors) as Managing Director or other Officer of the Company, either for a fixed period of time or for an unlimited period of time, and from time to time (bearing in mind the terms of any contract between the Company and such person or persons) to dismiss him or them from office and appoint another person or persons in his or their place.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

(b) Subject to any rule of law, to fix the remuneration of the Managing Director or other Officer from time to time (bearing in mind the terms of any contract between the Company and such person). Such remuneration can be in the form of a fixed salary, payment based on the profits or turnover of the Company or of any other company in which the Company is interested, or by way of participation in such profits, or by way of receipt of securities of the Company, or in one or more of these ways, or in any other manner which the Board of Directors sees fit.

(c) To determine the remuneration of the auditor of the Company ("**Auditor**") in respect of the audit.

32.7 For the purpose of setting the policy guidelines for the Company and supervising its activities, any Director may examine the documents and records of the Company and receive copies thereof, examine the assets of the Company and receive professional advice at the expense of the Company if the Board of Directors or the court approves the covering of this expense.

32.8 The Board of Directors may from time to time, at its discretion, cause the Company to borrow or secure the payment of any sum or sums of money for the purposes of the Company, and may secure or provide for the repayment of such sum or sums in such manner, at such times and upon such terms and conditions as it deems fit, and, in particular, by the issuance of bonds, perpetual or redeemable debentures, debenture stock, or any mortgages, charges, or other securities on the undertaking or the whole or any part of the property of the Company, both present and future, including its uncalled or called but unpaid capital for the time being.

32.9 The Board of Directors may, from time to time, set aside any amount(s) out of the profits of the Company as a reserve or reserves for any purpose(s) which the Board of Directors, in its absolute discretion, shall deem fit, and may invest any sum so set aside in any manner and from time to time deal with and vary such investments, and dispose of all or any part thereof, and employ any such reserve or any part thereof in the business of the Company without being bound to keep the same separate from other assets of the Company, and may subdivide or redesignate any reserve or cancel the same or apply the funds therein for another purpose, all as the Board of Directors may from time to time think fit.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

33. Committees of the Board of Directors

33.1 The Board of Directors may from time to time establish Committees, appoint the members thereof from among the Directors and determine, subject to the provisions of any law, those authorities of the Board of Directors that shall be delegated to the Committees of the Board of Directors. The Board of Directors may from time to time cancel any delegation of authority as aforesaid, in whole or in part, and cancel any of the Committees of the Board of Directors.

33.2 Each Committee of the Board of Directors must, in exercising its authority, comply with the directions of the Board of Directors.

33.3 Unless the Board of Directors has determined otherwise, meetings, decisions and activities of the Committees of the Board of Directors shall be conducted and convened in accordance with the provisions of these Articles which relate to the convening and conduct of meetings of the Board of Directors, the manner of adopting resolutions and the methods of operation of the Board of Directors, mutatis mutandis.

33.4 Any decision adopted or action taken by any Committee of the Board of Directors shall be equivalent to a decision adopted or action taken by the Board of Directors itself.

**PART F: <u>THE MANAGING DIRECTOR AND OFFICERS</u>**

34. The Managing Director

34.1 The Board of Directors of the Company must appoint one or more Managing Directors for the Company. The Managing Director who is appointed shall have all of the authorities vested in the Managing Director under these Articles.

34.2 The Managing Director is responsible for the day-to-day management of the affairs of the Company within the framework of the policies set down by the Board of Directors and subject to their directions.

34.3 The Managing Director shall have full managerial and operational authority to carry out all of the activities which the Company may carry on by law and under these Articles and which have not been vested by law or by these Articles of Association in any other organ of the Company. The Managing Director shall be subject to the supervision of the Board of Directors.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

34.4 The Managing Director shall be entitled to enter into transactions in the name of the Company other than Extraordinary Transactions. Any Extraordinary Transaction to which the Company is a party is subject to any approval necessary by law for the purpose of giving effect to that transaction, and in any event is subject to the approval of the Board of Directors. Such transaction shall not be valid unless approved in accordance with this Article.

34.5 The Managing Director may, with the approval of the Board of Directors, delegate his authority to another person who is subordinate to him.

34.6 The Board of Directors may decide to transfer the authority vested in the Managing Director to the Board of Directors, in a specific instance or for a specific period of time.

34.7 The Board of Directors may direct the Managing Director how to act in a specific matter. If the Managing Director does not comply with the direction, the Board of Directors may exercise the authority necessary to carry out the direction in his place.

34.8 The Board of Directors may exercise the authorities of the Managing Director if the Managing Director is incapable of performing them.

34.9 The General Meeting may assume for itself the authorities vested in the Managing Director or transfer these authorities to the Board of Directors, for a specific matter or for a specific period of time.

35. Secretary

The Board of Directors may appoint a Secretary for the Company and determine his duties and authorities. The Secretary, if appointed, shall be responsible to the Board of Directors and shall report to it.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

36. Personal Interest in Transactions of the Company

Any transaction which is not an Extraordinary Transaction and which is (i) a transaction with an Officer or (ii) a transaction of the Company with another person in which an Officer has a personal interest shall be subject to the approvals that are required under the Companies Law.

37. Insurance, Release and Indemnification of Officers

37.1 The Company may, from time to time and subject to any provision of law, enter into an agreement to insure against any liability on the part of an Officer in whole or in part, that may be imposed upon him as a result of an action carried out while an Officer in each of the following cases:

(a) breach of duty of care towards the Company or towards another person;

(b) breach of fiduciary duty towards the Company, provided that the Officer acted in good faith and had reasonable grounds to assume that the action would not harm the interests of the Company;

(c) a monetary liability imposed upon him in favour of a third party.

37.2 Subject to the provisions of any law, the Company may indemnify an Officer in respect of a liability or expense which is imposed upon him as a result of an action taken in his capacity as an Officer of the Company:

(a) Monetary liability imposed on him in favour of a third party by a judgment, including a settlement or a decision of an arbitrator which is given the force of a judgment by court order;

(b) Reasonable litigation expenses, including legal fees, which the Officer has expended or is obliged to pay by the court, in proceedings commenced against him by the Company or in its name or by any other person, or pursuant to criminal charges of which he is acquitted or criminal charges pursuant to which he is convicted of an offence which does not require proof of criminal intent;

37.3 The Company may, following receipt of shareholders consent, undertake in advance to indemnify an Officer of the Company, as detailed in Section 37.2 (a) and (b) above, provided that the undertaking is limited to the kinds of events which in the opinion of the Board of Directors can be anticipated at the time of giving the indemnification undertaking, and for an amount which the Board of Directors has determined is a reasonable amount in the circumstances;

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

Without the prejudice to the provisions of the preceding paragraph, the Company may indemnify an Officer after the occurrence of the event which is the subject of the indemnity.

37.4 The Company may, following receipt of shareholders consent, release an Officer in advance from liability, in whole or in part, for damage suffered as a result of breach of duty of care of the Officer towards the Company.

37.5 The above-mentioned provisions are not intended and shall not in any way limit the Company in its ability to enter into any contract of insurance or to grant a release from liability or an indemnity:

(a) in connection with a person who is not an Officer, including employees, contractors or consultants of the Company who are not Officers;

(b) in connection with Officers - to the extent that the insurance, release or indemnity is not prohibited by law.

37.6 The provisions of this Article shall apply to a Corporate Representative and an Alternate Director.

38. Signature in the Name of the Company

The signature rights in the name of the Company shall be determined by the Board of Directors of the Company, generally, for a class of matters or for a specific matter. Any signature in the name of the Company shall be accompanied by the name of the Company. The authorised signatories do not necessarily have to be Directors of the Company.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

**PART G: <u>MINUTES, REGISTERS AND BOOKS OF ACCOUNTS</u>**

39. Minutes

39.1 The Board of Directors shall ensure that records of the following matters are duly maintained in books that shall be prepared for this purpose:

(a) The names of members of the Board of Directors who are present at any meeting of the Board of Directors and at any meeting of a Committee of the Board of Directors (including any decision of the Board of Directors or of its Committees which is adopted without actually convening).

(b) The names of the shareholders participating in any General Meeting.

(c) The instructions given by the Board of Directors to the Committees of the Board of Directors.

(d) The proceedings at General Meetings, meetings of the Board of Directors, and meetings of Committees of the Board of Directors, including decisions adopted without actually convening these meetings.

39.2 Any minute of a meeting of the Board of Directors or of any Committee of the Board of Directors or of the General Meeting of the Company which purports to be signed by the chairman of the meeting or by the chairman of the next following meeting shall be prima facie evidence of the matters stated therein.

39.3 The Company shall maintain the records referred to in this Part G as required by law.

39.4 The minute book of General Meetings shall be open to inspection by the shareholders of the Company at all reasonable times, and a copy thereof shall be sent to any shareholder who requests this, subject to the procedures that the Board of Directors may specify from time to time regarding the times at which the minute book is open for inspection (including periods during which the minute book will be closed), regarding the authentication of the identity of the shareholder, and regarding any fee to be paid for inspection or delivery as aforesaid.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

40. Books and Registers of the Company

40.1 The Managing Director shall comply with all of the provisions of the Companies Law in connection with registering charges and in connection with maintaining the Register of Directors, the Shareholders Register, any additional Share Register, a Register of Substantial Shareholders and a Register of Charges.

40.2 Each book, register and registration that the Company must maintain in accordance with the provisions of the Companies Law or these Articles shall be made in regular books or by electronic means, as the Managing Director shall determine, provided that the persons entitled to inspect them are able to receive copies of the documents.

40.3 The Company may, bearing in mind the provisions of the Companies Law and any other law, maintain in any other State a register or registers of shareholders who live in that other State, and exercise all of the authorities mentioned in the Companies Law in connection with these registers, subject to the authority of the Minister of Justice to enact rules in connection with the administration of theregister.

40.4 If the Company elects to maintain an additional Share Register outside Israel, it must indicate in the Register the number of shares that are registered in the additional Share Register, and the numbers of those shares if the shares are numbered.

40.5 The Company may close the Register and any other register which the Company maintains or shall maintain (whether by law, by agreement or at the election of the Company) in connection with any security of the Company, as the case may be, for such period of time as the Board of Directors shall see fit, but no longer than for 30 Business Days in any year.

40.6 Subject to any provisions of law, the Company may determine a record date for the purposes of entitlement to receive invitations to General Meetings, and to participate and vote thereat, provided that this date shall not be more than 21 Business Days before the date set for the General Meeting. In addition, subject to any provisions of law, the Company may determine a record date for the purpose of entitlement to dividends and with respect to share and right offerings,provided that this date shall not be more than 21 Business Days before the date set for the General Meeting.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

40.7 The Company may destroy any request for entering any change in the Register six years after the date of the change in the Register, and there shall be a prima facie assumption that all requests for changes in the Register were valid and that any action taken by virtue or as a result thereof was lawfully taken.

41. Information and Documents

41.1 All information and documents belonging to the Company shall be maintained at the Office or at such other place or places as the Board of Directors shall see fit, and shall be open for the inspection of the Directors, subject to the directions and internal procedures which the Chairman of the Board of Directors shall lay down in connection with the inspection of documents.

41.2 A shareholder shall not be entitled to receive any information or documents of the Company other than the documents and information which shareholders are lawfully entitled to receive, unless the Board of Directors or the General Meeting decides otherwise.

41.3 The Company shall maintain accounts and prepare financial statements as required by law. The financial statements shall be approved by the Board of Directors and signed in its name.

41.4 Copies of the financial statements shall be sent to all persons entitled to receive them no later than fourteen (14) Business Days before the date for the Annual Meeting.

41.5 Subject to any provision of law, the Company may determine the manner and form in which documents which shareholders are entitled to inspect are presented to them, and may decide that copies of documents be provided against payment.

**PART H: <u>AUDIT</u>**

42. Auditor

42.1 At least once in each year, the financial statements of the Company shall be audited by an auditor or auditors who will express their opinion as to the financial statements.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

42.2 The Company shall appoint at the Annual Meeting an auditor or auditors to act in this capacity until the following Annual Meeting, but the General Meeting may appoint an auditor to serve in this capacity for a longer period of time, not extending beyond the end of the third Annual Meeting after the appointment.

42.3 Subject to the provisions of the Companies Law, any act of the auditors of the Company shall be valid with regard to any person acting in good faith with the Company, notwithstanding any defect in the appointment or qualification of the auditor.

42.4 The fees of the auditor for the audit and for any additional services of the auditor that are not within the scope of the audit shall be determined by the Board of Directors. The Board of Directors shall report to the annual meeting the fees of the auditor which the Board of Directors shall settle for the audit.

**PART I: <u>RESERVES, DISTRIBUTIONS, BONUS SHARES AND REDUCTION OF CAPITAL</u>**

43. Reserves

43.1 The Board of Directors may at any time allocate such amounts as it sees fit to a reserve for the distribution of dividends, the distribution of bonus shares, for the acquisition of shares in the Company or for any other purpose as it sees fit. Likewise, the Board of Directors may direct the management of and the uses to which any reserve or part thereof is put, including using of any reserve or part thereof for the business of the Company, without need to maintain such amount separate from the remaining assets of the Company.

43.2 The Board of Directors may transfer from time to time sums which have been set aside as a reserve as aforesaid to the Surplus Account.

43.3 The Board of Directors may from time to time, subject to the provisions of any law and the provisions of these Articles, change the purpose for which any capital reserve has been designated or the manner in which they are managed, to combine or split reserves and to transfer the amount of any capital reserve to the Surplus Account or to any other account in the accounting records of the Company. Notwithstanding the aforesaid, the Board of Directors may not transfer any amount from the share premium account other than to share capital of the Company or for the purposes of a reduction of capital.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

44. Distribution of Dividends and Bonus Shares

44.1 Each share, unless otherwise provided in the terms of issue of that share, shall entitle its holder to receive dividends and bonus shares if and when these are distributed, proportionate to the nominal value of shares which are paid up or deemed to be paid up, without taking into account any premium paid in respect thereof.

44.2 A decision regarding a distribution (as defined in the Companies Law) shall be taken by the Board of Directors. However, the Board of Directors may make a distribution conditional upon the approval of the General Meeting by a simple majority or by a greater majority, as the Board of Directors shall see fit.

44.3 Unless the Board of Directors decides otherwise, the Company shall not pay interest on dividends, including dividends which are paid after the date set for payment for whatever reason. The Board of Directors may decide from time to time in its absolute discretion, with regard to the payment of a specific dividend or class of dividends, to pay linkage differentials in respect of dividends paid after the date set for payment, based on a consumer price index or a rate of exchange of any foreign currency.

44.4 A dividend may be paid, in whole or in part, by way of distribution of assets of any kind. A distribution of assets as aforesaid shall be made by transfer, assignment, transfer of title, grant of a contractual or proprietary right or in any other manner as the Board of Directors shall direct.

44.5 If the Board of Directors decides to distribute a dividend, in whole or in part by way of an allotment of shares in the Company to those shareholders entitled to the dividend at a price lower than the nominal value of those shares, the Company shall convert to share capital a portion of its profits in respect of which the dividend has been distributed equal in amount to the difference between the nominal value of the said shares and the price paid therefor.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

44.6 The Board of Directors may decide from time to time that all or part of the balance in the Surplus Account, the balance in the share premium account, the balance of any capital reserve that stands in credit or any other reserve included within the equity of the Company shall form part of the share capital of the Company and shall be considered to be payment in full for bonus shares of such class and number as the Board of Directors shall determine (in such amount, being not less than the nominal value of the shares, as the Board of Directors shall direct). The said bonus shares shall be allotted without payment to the shareholders of the Company who would have been entitled to receive the amount converted to share capital for the purpose of distribution of the bonus shares if that amount had been distributed by way of cash dividend and in the same proportion.

44.7 The Board of Directors may from time to time transfer to the holders of securities issued by the Company that are convertible into shares of the Company bonus shares or dividends that the Company shall distribute as if the said securities had been converted into shares prior to the distribution in question, in each case subject to the terms of issue of the said securities.

The Board of Directors may make any arrangements and take any actions necessary for the efficient and speedy implementation of the provisions of this Article, to determine the rights which the holders of convertible securities shall receive and the manner in which they shall receive these rights, and to carry out any adjustment necessary to the rights of the holders of the said securities as a result of any distribution of dividends or bonus shares or rights, and to exercise any authority granted to the Board of Directors in connection with the distribution of a dividend or bonus shares or rights to the shareholders in the Company, mutatis mutandis - all in the absolute discretion of the Board of Directors.

44.8 In order to implement any decision regarding the distribution of a dividend or bonus shares or in connection with the acquisition of securities of the Company, the Board of Directors may:

(a) resolve any difficulty that arises in connection with the aforesaid distribution as it sees fit, and take any steps that it deems appropriate in order to overcome such difficulty;

(b) issue certificates for partial shares or to decide that shares in the Company which entitle the holder thereof to partial shares in an amount lower than the level fixed by the Board of Directors shall not entitle the holder to participate in that distribution, or to sell the partial shares and to pay the net proceeds of sale (after deduction of the expenses of sale and any tax that shall be payable in respect of the sale) to the persons entitled thereto;

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

(c) sign or appoint a person to sign on behalf of the shareholders on any contract or other document required for the purpose of implementing a distribution, and in particular the Board of Directors shall be entitled to sign or appoint another person who shall be entitled to enter into and sign a written document as required by the Companies Law, and this contract shall bind the Company and the shareholders;

(d) effect any arrangement which is, in the opinion of the Board of Directors, necessary in order to enable or facilitate the distribution or other arrangement.

44.9 The Board of Directors may appoint a trustee or trustees ("the **Trustee**") for shareholders who for a period of time that shall be determined by the Board of Directors have not applied to the Company in order to receive dividends, bonus shares or any other right (together "**the Benefit**") which the Company has issued or distributed to its shareholders in their capacity as such. Any action taken by the Trustee, and any agreement between the Board of Directors and the Trustee shall be valid and shall bind the shareholders in connection with the Benefit to which they are entitled and for which the Trustee has been appointed.

44.10 The Trustee shall be appointed for the purpose of exercising, collecting, receiving or depositing the Benefit, but the Trustee shall not be entitled to transfer the Benefit or part thereof or to grant any right in the Benefit or to make any use thereof and the Trustee shall not be entitled to vote in respect of any securities of the Company which are included in the Benefits.

44.11 The Trustee shall transfer the Benefit, including any income arising thereon, less the Trustee's fee as settled by the Board of Directors, to the shareholders entitled to the Benefit as soon as possible after he receives the first written demand from the shareholders, subject to authentication of the identity of any shareholder and details of the Benefit to which he is entitled, in accordance with procedures that the Board of Directors shall lay down.

44.12 The Board of Directors may determine from time to time the manner of payment of the dividends or the distribution of bonus shares and the arrangements therefore for each class of shareholder. Without prejudice to the generality of the aforesaid, the Board of Directors may pay all dividends or monies due in respect of shares by sending cheques in the mail, via telegraphic transfer or secure electronic media, and if the Benefit is, in whole or in part, an asset or a right, by sending by mail any document confirming or creating the said right, to the address of the shareholder as appearing in the Register. Any cheque or document sent as aforesaid shall be dispatched at the risk of the shareholder.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

44.13 The Board of Directors may decide that bonus shares shall be of the same class of shares as those shares which entitle the holders thereof to participate in the distribution of bonus shares, or that all bonus shares shall be of a single class which shall be distributed to all persons entitled thereto without taking into account the class of shares which they hold, or that bonus shares be a combination of classes of shares.

44.14 The transferee of any shares shall not be entitled to any dividend or any other distribution which has been declared in respect of those shares after the date of transfer but before registration of the transfer in the Register, and in the event of the transfer of shares which is subject to the approval of the Board of Directors, before the date of said approval.

44.15 If the payment of the dividend is not demanded within twelve (12) years from the date of the decision to distribute that dividend, the person entitled thereto shall be deemed to have waived the dividend, and ownership thereof shall return to the Company.

44.16 The Board of Directors may deduct from any dividend, distribution or other monies which are to be paid to a shareholder (including to a person who is one of the joint holders of a share) any amounts due from such a person to the Company (either by that person alone jointly with another person) in respect any indebtedness which the shareholder owes to the Company in his capacity as shareholder.

44.17 If there are a number of persons registered as joint holder of a share, each one may give a valid receipt to the Company for any dividend or bonus share which is paid or transferred in respect of that share or in respect of any consideration which the Company shall pay for acquiring that share and for any other monies or Benefit given in respect of that share or as a result thereof.

45. The Distribution that does not Satisfy the Profit Test

The Board of Directors may from time to time and subject to the approvals required by law make a distribution which does not satisfy the Profit Test (as defined in the Companies Law) provided that it is satisfied that there is no reasonable concern that the distribution will result in the Company being unable to pay its existing and foreseeable debts as they fall due.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

46. Acquisition of Securities of the Company by the Company Itself

Decisions regarding the acquisition of the securities which have been issued by the Company and the manner in which these securities shall be dealt with by the Company shall rest with the Board of Directors.

**PART J: <u>LIQUIDATION, MERGER AND REORGANISATION</u>**

47. Liquidation

47.1 Subject to the provisions of Section 319 (1) of the Companies Ordinance, the General Meeting may adopt a resolution for the winding up of the Company, provided that the resolution is passed by the majority required by law, and in the absence of any legal requirement for a specific majority, by the majority required in accordance with these Articles.

47.2 If the Company is wound up and the assets available for distribution among the shareholders are not sufficient for payment in full of the paid up share capital of the Company, the assets shall be distributed, as far as possible, so that the shareholders will bear the losses proportionately to the share capital paid or that should have been paid by the commencement of the winding up, and the number of shares held by the shareholders.

47.3 If the Company is wound up and the assets available for distribution among the shareholders are more than sufficient for payment in full of the paid up share capital at the time of commencement of the winding up, the surplus shall be distributed among the shareholders proportionately to the share capital paid or that should have been paid by the commencement of the winding up, and the number of shares held by the shareholders. This Article shall not affect the rights of holders of any shares issued with special rights

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

47.4 For the purposes of the distribution of the assets of the Company at the time of a liquidation, no account shall be taken of any payments that have been made by way of share premium.

47.5 If the Company is wound up, by way of voluntary liquidation or otherwise, the liquidators may, if the approval of the General Meeting is given with the majority required by law, and in the absence of any legal requirement for a specific majority by the majority required by these Articles, distribute any portion of the assets of the Company among the shareholders <u>in specie</u>, and the liquidators may, subject to receiving approval as aforesaid, deposit any part of the assets of the Company with trustees upon trust for the benefit of the shareholders. A General Meeting that approves any distribution as aforesaid may also approve a distribution in a manner other than in accordance with the legal rights of the shareholders and may grant special rights to any class of shareholders, provided that if a resolution is adopted authorising any distribution other than in accordance with the legal rights of the shareholders, a shareholder who has been harmed thereby shall have the right to object, in the same manner as if the resolution had been adopted by the majority required in Section 334 of the Companies Ordinance.

48. Reorganization

In the event of the sale of the assets of the Company, the Directors (or the liquidators in the event of the liquidation, if they have been so authorised by a resolution passed by the General Meeting with the majority required by law) may receive fully paid or partly paid shares, debentures or any other security interests of another company, Israeli or foreign, whether existing or being established for the purpose of acquiring all or part of the assets of the Company. The Board of Directors or the liquidators may distribute <u>in specie</u> such shares or debentures or security interests or any other property of the Company among the shareholders without realizing the same or may deposit them on trust on behalf of the shareholders. Any decision of the General Meeting as aforesaid may direct the distribution of cash, shares or other security interests, rights or property in a manner other than in accordance with the legal rights of the shareholders (or participants in the Company) and may determine the value of any asset of the Company at such price and in such manner as the General Meeting shall direct. All of the shareholders (or participants) shall accept the valuation or distribution approved as aforesaid and shall waive their existing rights other than in the event that the Company is about to enter into liquidation or is in the process of being wound up, and the legal rights (if any) under the Companies Ordinance or the Companies Law, as the case may be, cannot be varied or cancelled by the provisions of this Article.

**XTL BIOPHARMACEUTICALS LTD. - ARTICLES OF ASSOCIATION**

49. Presumption of Delivery of Notices

49.1 Unless otherwise expressly stated in these Articles, notices to be served under these Articles or in connection therewith shall be in writing and signed by the person serving the notice.

49.2 (a) A notice shall be sent by the Company by mail to the addressee at the address registered with the Company, and shall be deemed to have been received by an addressee, with an address in Israel, unless proven otherwise, within 48 hours of delivery of the notice by the Company to the mail, and within three (3) days to an address outside of Israel.

(b) A notice that is hand-delivered by the Company to an addressee at the address registered with the Company shall be deemed to have been received at the time of delivery to the addressee or at the time of deposit in the post box of the addressee.

(c) A notice that is sent by the Company by facsimile, by electronic mail, via an internet site or other similar electronic means shall be deemed to have been received by shareholders at the time of transmission unless the notice is transmitted on a day which is not a Business Day in which case it shall be deemed to have been received on the next following Business Day.

49.3 Confirmation of an Officer of the Company regarding the date and manner of delivery of a notice on behalf of the Company in accordance with or relating to these Articles shall be p <u>rima facie</u> evidence of the facts stated therein.

## Exhibit 4.13

**Exhibit 4.13**

![](ea029609501_ex4-13img1.jpg)

Novermber 11, 2025

Attn: , Noam BandContract for Financial Services for: **XTL Biopharmaceuticals and its subsidiaries** ("**Group**")

Optivailfinance is a highly experienced financial Services firm that provides comprehensive ﬁnancial solutions to companies without in-house expertise in financial management, control, and processing. Optivailfinance has a professional and multi-disciplined staff that offers end-to-end service solutions and point-to-point solutions tailored to our customers' speciﬁc needs.

Optivailfinance offers a wide range of Services, which are performed by a team with proven multidisciplinary knowledge, experience, and expertise in financial management, control, and processing. Our Services include tasks usually associated with those provided by a Chief Financial Officer, Treasurer, Controller, Bookkeeper, and payroll expert.

Please ﬁnd below our proposal to provide services to your Company.

**The services:**

Our services shall include the following (the "**Services**"):

***<u>CFO services</u>*** *for* the Group (Israeli Mother Company and subsidiaries in Israel and Abroad):

✓ Preparation of Management reports for the Management team, Board and Shareholders.

✓ Preparation of Periodic Reports to the stock exchange (F20 etc…)

✓ Budget, Cash Flow, BVA and other requested reports

✓ Working with the legal team on Various agreements – Employment, Clients and Vendors.

✓ Responsible for fillings of tax reports/returns of the group with the auditors

✓ Participation in Board and Shareholder meetings

✓ Representing the company during fundraising rounds, M&A transactions, banking relationships.

✓ Handling and Monitoring the Cap table and ESOP plan.

✓ Working with the internal auditor.

✓ Most and foremost, Being the right hand man for the CEO.

*<u>Controller services</u>:*

Controller services generally include the following tasks:

&nbsp;&nbsp;&nbsp;&nbsp;● ✓ **Focal** point in the company for all ongoing ﬁnancial
matters (employees, banks, suppliers, Salary and bookkeeping, etc.)

&nbsp;&nbsp;&nbsp;&nbsp;● ✓ Preparing the company for the audit of its ﬁnancial statements
and responding to the auditors' requirements.

![](ea029609501_ex4-13img1.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;● ✓ Monthly reporting, in English, in $USD, meeting the standards
of 'Big 4' reporting and VC's standard reporting requirements, including the following monthly report:

○ Monitoring the bookkeeping team <u>globally</u>, verifying there work and timing so the company can prepare the monthly reports.

○ Monthly Budget Vs. Actual

○ Cash ﬂow

○ Preparation of the Periodic Financial Statements

○ End of month Balance Sheet

○ P&L for the end-of-month period and the month

*<u>Bookkeeping services</u>:*

 

The bookkeeping services are performed remotely and generally include the following tasks:

✓ Monthly basis closing of bookkeeping system - all major month-end reconciliations, including Bank reconciliation.

✓ Related ongoing reporting to tax and VAT authorities.

✓ Uploading approved payments to the banks to be signed.

---

| | |
|:---|:---|
| ✓ | Multi currency (NIS and $) bookkeeping system. |

---

*Salary processing services /Payroll services:*

● Salary processing and production of conﬁdential salary/pay slips

● Copy of salary slips for employees' personal ﬁles

● Full report to the controller or the manager in charge of salary components per employee, section, and all possible breakdowns

● Filing and production of all due reports and forms (102, 126; 106, etc) for tax and social security authorities.

● Execution of the salary payment.

● Calculation, payment, and reporting of all social beneﬁts' components to all relevant institutions, including Pension and Managers' Insurance funds, Education Funds, and Disability Insurance on a monthly basis, and ongoing control over payment and amount paid and accrued.

● Monitoring, recording, reporting, and management of vacation days, sick days, absences due to army reserves service, etc., in the salary system.

● Produce periodical calculations for all salary-related accruals such as severance and vacation.

● Processing of all relevant calculations needed at the termination of an employee and related reporting to authorities.

**The fees (the "Fees"):**

&nbsp;&nbsp;&nbsp;&nbsp;1. CFO
Services for the Group (Mother Company and subsidiaries) will be provided at a monthly fee of NIS 15,000 + VAT, based on a 20% CFO employment
scope.

&nbsp;&nbsp;&nbsp;&nbsp;2. Controller
 Services for the Group (Mother Company and subsidiaries) will be provided when required (towards
 periodic reports etc..) and will be charged according to the number of hours the project
 will take and based on an hourly rate of NIS 400 + VAT.

&nbsp;&nbsp;&nbsp;&nbsp;3. Bookkeeping
 for the  **<u>Israeli</u>** entity (XTL) will be provided at a monthly fee of NIS 1,500
 + VAT. **First free months** will be free of charge.

![](ea029609501_ex4-13img1.jpg)

In the **event** of extraordinary or non-recurring matters — such as mergers, acquisitions, due diligence processes, or other significant financial transactions — any additional hours required by the CFO beyond the agreed scope will be billed separately, subject to prior mutual agreement between the parties.

● **We're starting with a 20% engagement, and as the business grows and our collaboration develops, we'll revisit the scope together. If more hours or involvement are needed, we'll adjust the time and fees accordingly — always with full transparency and mutual agreement.** 

Addendum:

&nbsp;&nbsp;&nbsp;&nbsp;● ❖ It is agreed that during this agreement and for 24 months from
the end of the relationship, the client will not **knowingly** hire, recruit, or solicit in any way any of Optivailfinance employees
directly or indirectly or through any related party. For this section, Optivailfinance's employees are defined as those who are
currently working for Optivailfinance on Optivailfinance's payroll, or those who are paid by invoice, and those who worked for Optivailfinance
at any point in the last 24 months, regardless of the reason they stopped being Optivailfinance's employees.

&nbsp;&nbsp;&nbsp;&nbsp;● ❖ It is agreed that Optivailfinance will not be held responsible
or liable for any loss or damages caused directly or indirectly by the services rendered by Optivailfinance to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;● ❖ Optivailfinance shall indemnify and hold harmless the Company,
its affiliates, subsidiaries and their respective owners, directors, officers, employees, and representatives, and the successors and
assigns of any of them, from and against all losses, claims, damages, costs and expenses arising out of or resulting, directly or indirectly,
from any breach of this contract, negligence, willful act or omission by Optivailfinance or anyone on its behalf, in connection with
the performance of its obligations hereunder

● If the Services are provided on-site, the Company shall provide a parking space for Optivailfinance's bookkeeper/controller at its own expense.

&nbsp;&nbsp;&nbsp;&nbsp;● ❖ Conﬁdentiality – Optivailfinance and its employees
and subcontractors agree to keep confidential, during and after the termination of this contract, aחd not disclose or use except
for the provision of the Services all information about the Company, including database, company documents, ﬁnancial data, strategic
plans and documents, customer and supplier lists, and all other propriety information held by the Company.

![](ea029609501_ex4-13img1.jpg)

&nbsp;&nbsp;&nbsp;&nbsp;● ❖ The Company agrees to receive notices, business invitations
to participate in various events and conferences, marketing information about business opportunities, professional updates, and service
information via email, SMS, or telephone. Following an amendment to the Media Act 2008 (Amendment No. 40), we require the company's consent
to receive marketing information from commercial trade. If the Company's consent to receive this information from us is not expressed
in writing, we cannot update the Company on the above. We could not get an invitation to other events, RSVP for conferences, changes
in dates of events, various reminders before the event, and general information that may be important to us. The company may take the
Company's name off distribution whenever the Company so wants.

&nbsp;&nbsp;&nbsp;&nbsp;● ❖ This contract is only an agreement for the provision of services
on a strictly contractual basis and does not create joint venture, partnership, employment, or agency relations between Optivailfinance
and the Company or anyone on their behalf. Each Party shall be responsible for its own employees and service providers and any payments
and/or taxes related to it.

&nbsp;&nbsp;&nbsp;&nbsp;● ❖ Each side can terminate this agreement with a 30-day notice.
The ﬁrst item of the addendum, indemnification, and Confidentiality obligations hereunder will be in force even if the contract
is terminated.

&nbsp;&nbsp;&nbsp;&nbsp;● ❖ **"The successful and timely completion of our services depends on the Client's cooperation, including providing necessary information, responding to inquiries, and addressing any missing documentation as requested. Delays caused by the Client's inaction or lack of response may impact the timeline and scope of the services provided."** 

Kindly

Date: 11/11/2025

Signed by: ________________________ on Behalf of XTL Biopharmaceuticals:

Stamp: ________________________<u> </u> Signature Date: __________________

Signed by: ________________________ on Behalf of Optivailfinance Ltd

Stamp: ________________________<u> </u> Signature Date: __________________

## Exhibit 8.1

**Exhibit 8.1**

**SUBSIDIARIES OF XTL BIOPHARMACEUTICALS LTD.**

---

| | | |
|:---|:---|:---|
| **Name of Subsidiary** | **Percent Owned** | **Jurisdiction of Incorporation** |
| XTEPO, Ltd. | 100% | Israel |
| The Proxy Social Ltd.<sup>1</sup> | 100% | Israel |
| Psyga Bio Ltd | 83.7% | Israel |

---

(1) Based on a legal opinion provided by an Israeli commercial
litigation expert, and following a dispute with the former The Social Proxy Ltd. ("TSP") shareholders, the effective control
over TSP since January 1, 2025 was held by the former stockholders of TSP and we had no control over TSP during 2025. We do not consolidate
TSP in our financial statements effective January 1, 2025, notwithstanding that we held 100% of its share capital during the fiscal year
ending December 31, 2025.

## Exhibit 12.1

**Exhibit 12.1**

**CERTIFICATION**

I, Noam Band, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this annual report on Form 20-F of XTL Biopharmaceuticals Ltd. (the "Company");

&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;4. The Company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The Company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other key consultants who have a significant role in the Company's internal control over financial reporting.

---

| | |
|:---|:---|
| Date: June 30, 2026 | /s/ Noam Band |
|  | Noam Band |
|  | *Chief Executive Officer* |

---

## Exhibit 12.2

**Exhibit 12.2**

**CERTIFICATION**

I, Niv Segal, certify that:

&nbsp;&nbsp;&nbsp;&nbsp;1. I have reviewed this report on Form 20-F of XTL Biopharmaceuticals Ltd. (the "Company");

&nbsp;&nbsp;&nbsp;&nbsp;2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

&nbsp;&nbsp;&nbsp;&nbsp;3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presented in this report;

&nbsp;&nbsp;&nbsp;&nbsp;4. The Company's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiary, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Evaluated the effectiveness of the Company's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Disclosed in this report any change in the Company's internal control over financial reporting that occurred during the period covered by this annual report that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting; and

&nbsp;&nbsp;&nbsp;&nbsp;5. The Company's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company's auditors and the audit committee of the Company's board of directors (or persons performing the equivalent functions):

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company's ability to record, process, summarize and report financial information; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any fraud, whether or not material, that involves management or other key consultants who have a significant role in the Company's internal control over financial reporting.

---

| | |
|:---|:---|
| Date: June 30, 2026 | /s/ Niv Segal |
|  | Niv Segal |
|  | *Chief Financial Officer* |

---

## Exhibit 13.1

**Exhibit 13.1**

**CERTIFICATION PURSUANT TO**

**18 USC. SECTION 1350, AS ADOPTED PURSUANT TO**

**SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002**

In connection with the Annual Report of XTL Biopharmaceuticals Ltd. (the "Company") on Form 20-F for the year ending December 31, 2025 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), the undersigned, Noam Band, Chief Executive Officer of the Company, and Niv Segal, Chief Financial Officer of the Company, certify, pursuant to 18 USC. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

---

| | |
|:---|:---|
| Date: June 30, 2026 | /s/ Noam Band |
|  | Noam Band |
|  | *Chief Executive Officer* |
|  | /s/ Niv Segal |
|  | Niv Segal |
|  | *Chief Financial Officer* |

---

## Exhibit 16.1

**Exhibit 16.1**

![](ea029609501_ex16-1img1.jpg)

KPMG Somekh Chaikin

Millennium Tower

17 Ha'arba'a street, PO Box 609

Tel Aviv 6100601 Israel

+972 3 684 8000

June 30, 2026

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Ladies and Gentlemen:

We were previously principal accountants for XTL Biopharmaceuticals Ltd. and, under the date of April 30, 2025, we reported on the consolidated financial statements of XTL Biopharmaceuticals Ltd. as of and for the years ended December 31, 2024 and 2023 . On June 30, 2026, we resigned.

We have read XTL Biopharmaceuticals Ltd.'s statements included under Item 16F of its Form 20-F dated June 30, 2026, and we agree with the statements contained therein, except that we are not in a position to agree or disagree with the statements made in the first and fifth paragraphs thereof.

Very truly yours,

/s/ Somekh Chaikin

Somekh Chaikin

Member Firm of KPMG International

Tel-Aviv, Israel

KPMG Somekh Chaikin, an Israeli partnership and a member firm of the KPMG global organization of independent

member firms affiliated with KPMG International Limited, a private English company limited by guarantee.