# EDGAR Filing Document

**Accession Number:** 0001611746
**File Stem:** 0001213900-26-049322
**Filing Date:** 2026-4
**Character Count:** 1029472
**Document Hash:** 55ac9f5a63801e2ac92d87a6e62b5bb6
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0001213900-26-049322.hdr.sgml**: 20260429

**ACCESSION NUMBER**: 0001213900-26-049322

**CONFORMED SUBMISSION TYPE**: 20-F

**PUBLIC DOCUMENT COUNT**: 119

**CONFORMED PERIOD OF REPORT**: 20251231

**FILED AS OF DATE**: 20260429

**DATE AS OF CHANGE**: 20260429

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** SciSparc Ltd.
- **CENTRAL INDEX KEY:** 0001611746
- **STANDARD INDUSTRIAL CLASSIFICATION:** PHARMACEUTICAL PREPARATIONS [2834]
- **ORGANIZATION NAME:** 03 Life Sciences
- **EIN:** 000000000
- **STATE OF INCORPORATION:** L3
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 20-F
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 001-38041
- **FILM NUMBER:** 26916432

**BUSINESS ADDRESS:**
- **STREET 1:** 20 RAUL WALLENBERG STREET, TOWER A
- **CITY:** TEL AVIV
- **STATE:** L3
- **ZIP:** 6971916
- **BUSINESS PHONE:** 972-3-6103100

**MAIL ADDRESS:**
- **STREET 1:** 20 RAUL WALLENBERG STREET, TOWER A
- **CITY:** TEL AVIV
- **STATE:** L3
- **ZIP:** 6971916

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** SciSparc Ltd./ADR
- **DATE OF NAME CHANGE:** 20210129

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** Therapix Biosciences Ltd.
- **DATE OF NAME CHANGE:** 20140624

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

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**WASHINGTON, DC 20549**

**FORM 20-F**

☐ 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

Commission File No.: 001-38041

**SCISPARC LTD.**

*(Exact name of registrant as specified in its charter)*

 

*Translation of registrant's name into English:* Not applicable

**State of Israel** 

*(Jurisdiction of incorporation or organization)*

**20 Raul Wallenberg St.**

**Tower A, 2<sup>nd</sup> Floor**

**Tel Aviv 6971916, Israel** 

*(Address of principal executive offices)*

**Oz Adler**

**Chief Executive Officer**

**Tel: +972-3-7175777**

**Email: oz@scisparc.com**

**20 Raul Wallenberg St.**

**Tower A, 2<sup>nd</sup> Floor**

**Tel Aviv 6971916, Israel**

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

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

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

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol(s)** | **Name of each exchange on which registered** |
| Ordinary Shares, no par value | SPRC | The Nasdaq Capital Market |

---

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.

365,444 Ordinary Shares, no par value, as of December 31, 2025

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

Yes ☐ No ☒

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

Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted 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 such files).

Yes ☒ 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 the definitions 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.

U.S. GAAP ☐

International Financial Reporting Standards as issued by the International Accounting Standards Board ☒

Other ☐

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

☐ Item 17 ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company.

Yes ☐ No ☒

**TABLE OF CONTENTS**

---

| | | |
|:---|:---|:---|
|  |  | **Page** |
| [INTRODUCTION](#a_001) | [INTRODUCTION](#a_001) | iii |
| [CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](#a_002) | [CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS](#a_002) | iv |
| [SUMMARY RISK FACTORS](#a_003) | [SUMMARY RISK FACTORS](#a_003) | v |
|  | [PART I](#a_004) | 1 |
| ITEM 1. | [IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS](#a_005) | 1 |
| ITEM 2. | [OFFER STATISTICS AND EXPECTED TIMETABLE](#a_006) | 1 |
| ITEM 3. | [KEY INFORMATION](#a_007) | 1 |
| A. | [\[Reserved\]](#a_008) | 1 |
| B. | [Capitalization and Indebtedness](#a_009) | 1 |
| C. | [Reasons for the Offer and Use of Proceeds](#a_010) | 1 |
| D. | [Risk Factors](#a_011) | 1 |
| ITEM 4. | [INFORMATION ON THE COMPANY](#a_012) | 51 |
| A. | [History and Development of the Company](#a_013) | 51 |
| B. | [Business Overview](#a_014) | 51 |
| C. | [Organizational Structure](#a_015) | 89 |
| D. | [Property, Plants and Equipment](#a_016) | 90 |
| ITEM 4A. | [UNRESOLVED STAFF COMMENTS](#a_017) | 90 |
| ITEM 5. | [OPERATING AND FINANCIAL REVIEW AND PROSPECTS](#a_018) | 90 |
| A. | [Operating Results](#a_019) | 90 |
| B. | [Liquidity and Capital Resources](#a_020) | 94 |
| C. | [Research and development, patents and licenses, etc.](#a_021) | 99 |
| D. | [Trend information](#a_022) | 99 |
| E. | [Critical Accounting Estimates](#a_023) | 99 |
| ITEM 6. | [DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES](#a_024) | 100 |
| A. | [Directors and Senior Management](#a_025) | 100 |
| B. | [Compensation](#a_026) | 102 |
| C. | [Board Practices](#a_027) | 104 |
| D. | [Employees](#a_028) | 117 |
| E. | [Share Ownership](#a_029) | 117 |
| F. | [Action to Recover Erroneously Awarded Compensation](#a_030) | 117 |
| ITEM 7. | [MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS](#a_031) | 117 |
| A. | [Major Shareholders](#a_032) | 117 |
| B. | [Related Party Transactions](#a_033) | 120 |
| C. | [Interests of Experts and Counsel](#a_034) | 122 |
| ITEM 8. | [FINANCIAL INFORMATION](#a_035) | 122 |
| A. | [Consolidated Statements and Other Financial Information](#a_036) | 122 |
| B. | [Significant Changes](#a_037) | 123 |
| ITEM 9. | [THE OFFER AND LISTING](#a_038) | 124 |
| A. | [Offer and Listing Details](#a_039) | 124 |
| B. | [Plan of Distribution](#a_040) | 124 |
| C. | [Markets](#a_041) | 124 |
| D. | [Selling Shareholders](#a_042) | 124 |
| E. | [Dilution](#a_043) | 124 |
| F. | [Expenses of the Issue](#a_044) | 124 |

---

i

---

| | | |
|:---|:---|:---|
| ITEM 10. | [ADDITIONAL INFORMATION](#a_045) | 124 |
| A. | [Share Capital](#a_046) | 124 |
| B. | [Memorandum and Articles of Association](#a_047) | 124 |
| C. | [Material Contracts](#a_048) | 124 |
| D. | [Exchange Controls](#a_049) | 124 |
| E. | [Taxation](#a_050) | 125 |
| F. | [Dividends and Paying Agents](#a_051) | 133 |
| G. | [Statement by Experts](#a_052) | 134 |
| H. | [Documents on Display](#a_053) | 134 |
| I. | [Subsidiary Information](#a_054) | 134 |
| J. | [Annual Report to Security Holders](#a_055) | 134 |
| ITEM 11. | [QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](#a_056) | 134 |
| ITEM 12. | [DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES](#a_057) | 134 |
| A. | Debt Securities |  |
| B. | Warrants and rights |  |
| C. | Other Securities |  |
| D. | American Depositary Shares |  |
|  | [PART II](#a_058) | 135 |
| ITEM 13. | [DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES](#a_059) | 135 |
| ITEM 14. | [MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS](#a_060) | 135 |
| ITEM 15. | [CONTROLS AND PROCEDURES](#a_061) | 135 |
| ITEM 16. | [\[Reserved\].](#a_062) | 136 |
| ITEM 16A. | [AUDIT COMMITTEE FINANCIAL EXPERT](#a_063) | 136 |
| ITEM 16B. | [CODE OF ETHICS](#a_064) | 136 |
| ITEM 16C. | [PRINCIPAL ACCOUNTANT FEES AND SERVICES](#a_065) | 136 |
| ITEM 16D. | [EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES](#a_066) | 137 |
| ITEM 16E. | [PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS](#a_067) | 137 |
| ITEM 16F. | [CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT](#a_078) | 137 |
| ITEM 16G. | [CORPORATE GOVERNANCE](#a_068) | 137 |
| ITEM 16H. | [MINE SAFETY DISCLOSURE](#a_069) | 138 |
| ITEM 16I. | [DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS](#a_070) | 138 |
| ITEM 16J. | [INSIDER TRADING POLICIES](#a_071) | 139 |
| ITEM 16K. | [CYBERSECURITY](#a_072) | 139 |
|  | [PART III](#a_073) | 141 |
| ITEM 17. | [FINANCIAL STATEMENTS](#a_074) | 141 |
| ITEM 18. | [FINANCIAL STATEMENTS](#a_075) | 141 |
| ITEM 19. | [EXHIBITS](#a_076) | 141 |
| [SIGNATURES](#a_077) | [SIGNATURES](#a_077) | 143 |

---

ii

**INTRODUCTION**

We, through our subsidiary NeuroThera Labs Inc. (formerly known as Miza III Ventures Inc.) (TSXV:NTLX), or NeuroThera, engage in clinical-stage pharmaceutical developments. Our focus is on creating and enhancing a portfolio of technologies and assets based on cannabinoid pharmaceuticals. In October 2025, we acquired a controlling interest in NeuroThera, a publicly traded company on the TSX Venture Exchange, or the TSXV, in Canada, and we transferred to NeuroThera our advanced clinical stage pharmaceutical portfolio and our equity stake of approximately 51% in SciSparc Nutraceuticals Inc., or SciSparc Nutraceuticals.

With the focus on creating and enhancing a portfolio of technologies and assets based on cannabinoid therapies, through our majority owned subsidiary NeuroThera, we are currently engaged in the following development programs based on Δ9-tetrahydrocannabinol, or THC, and/or non-psychoactive cannabidiol, or CBD, and/or other cannabinoid receptors, agonists: SCI-110 for the treatment of Tourette syndrome, or TS, and for the treatment of Alzheimer's disease and agitation; and SCI-210 for the treatment of Autism Spectrum Disorder, or ASD, and Status Epilepticus, or SE. We also have a majority-owned subsidiary, held by NeuroThera, whose business focuses on the sale of hemp seed oil-based products and others on Amazon Marketplace.

We were incorporated under the laws of the State of Israel on August 23, 2004. Our Ordinary Shares are listed on the Nasdaq Capital Market, or Nasdaq, under the symbol "SPRC".

Unless otherwise indicated, all references to the "Company," "we," "us," "our" and "SciSparc" refer to SciSparc Ltd. (formerly known as Therapix Biosciences Ltd.) and its subsidiaries.

On July 3, 2025, we completed a reverse split of our share capital in the ratio of 21 to 1, and on March 4, 2026, we completed a reverse split of our share capital in the ratio of 9 to 1, or the Reverse Splits. Unless the context expressly indicates otherwise, all references to share and per share amounts referred to in this Annual Report on Form 20-F reflect the amounts after giving effect to the Reverse Splits.

References to "U.S. dollars", "USD" and "$" are to currency of the United States of America, references to "Canadian dollars", "CAD", or to "C$" are to Canadian dollars. and references to "NIS" are to New Israeli Shekels. References to "Ordinary Shares" are to our Ordinary Shares, no par value. We report financial information under International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board and none of the financial statements were prepared in accordance with generally accepted accounting principles in the United States. Unless derived from our financial statements or otherwise indicated, U.S. dollar translations of NIS amounts presented in this Annual Report on Form 20-F, or the Annual Report, are translated using a rate of NIS 3.19 to USD 1.00, the last exchange rate published by the Bank of Israel on December 31, 2025.

iii

**CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS**

Certain information included or incorporated by reference in this Annual Report may be deemed to be "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and other securities laws. Forward-looking statements are often characterized by the use of forward-looking terminology such as "may," "will," "expect," "anticipate," "estimate," "continue," "believe," "should," "intend," "project" or other similar words, but are not the only way these statements are identified.

Forward-looking statements include, but are not limited to, statements about:

● our ability to raise capital through the issuance of additional securities and ability to continue as a going concern;

● our ability to advance the development our pharmaceutical product candidates, including the anticipated starting and ending dates of our anticipated clinical trials;

● our assessment of the potential of our pharmaceutical product candidates to treat certain indications;

● our ability to successfully receive approvals from the U.S. Food and Drug Administration, or FDA, or other regulatory bodies, including approval to conduct clinical trials, the scope of those trials and the prospects for regulatory approval of, or other regulatory action with respect to our product candidates, including the regulatory pathway to be designated to our product candidates;

● the regulatory environment and changes in the healthcare policies and regimes in the countries in which we operate, including the impact of any changes in regulation and legislation that could affect the pharmaceutical industry;

● our ability to commercialize our existing product candidates and future sales of our existing product candidates or any other future potential product candidates;

● our ability to meet our expectations regarding the commercial supply of our product candidates;

● our ability to integrate our eCommerce operations and business, which focuses on the sale of hemp-based products on Amazon Marketplace;

● our ability to list NeuroThera on a national U.S. stock exchange and realize the anticipated benefits of the acquisition;

● the overall global economic environment;

● NeuroThera's ability to comply with its disclosure obligations and TSXV annual and interim filing deadlines;

● the closing of the CliniQ (as defined below) transaction and the timing thereof;

● our ability to comply with continued listing requirements and standards of Nasdaq;

● general market, political, military and economic conditions in the countries in which we operate;

● projected capital expenditures and liquidity;

● changes in our strategy;

● litigation; and

● those factors referred to in "Item 3. Key Information - D. Risk Factors," "Item 4. Information on the Company," and "Item 5. Operating and Financial Review and Prospects," as well as elsewhere in this Annual Report.

iv

These statements are only current predictions and are subject to known and unknown risks, uncertainties, and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from those anticipated by the forward-looking statements. You should not rely upon forward-looking statements as predictions of future events.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements.

Readers are urged to carefully review and consider the various disclosures made throughout this Annual Report which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

You should not put undue reliance on any forward-looking statements. Any forward-looking statements in this Annual Report are made as of the date hereof, and we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

**Summary Risk Factors** 

The risk factors described below are a summary of the principal risk factors associated with an investment in us. These are not the only risks we face. You should carefully consider these risk factors, together with the risk factors set forth in Item 3.D of this Annual Report and the other reports and documents filed by us with the SEC.

 ****

***Risks Related to Our Financial Condition and Capital Requirements***

● We are a specialty clinical-stage pharmaceutical company and have a limited operating history on which to assess the prospects for our business, have incurred significant losses since the date of our inception, and anticipate that we will continue to incur significant losses until we are able to successfully commercialize our product candidates.

● We have not generated any revenue from the sale of our current product candidates and may never be profitable.

● We expect that we will need to raise substantial additional funding before we can expect to become profitable from sales of our product candidates. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our product candidate development efforts or other operations.

● The report of our independent registered public accounting firm contains an explanatory paragraph regarding 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.

 ****

***Risks Related to the Discovery and Development of Our Pharmaceutical Product Candidates***

● We are heavily dependent on the success of our pharmaceutical product candidates, which are in the late stages of pre-clinical development or early stages of clinical development. We cannot give any assurance that any of our product candidates will receive regulatory approval, which is necessary before they can be commercialized.

● Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies may not be predictive of future study results. We may also find it difficult to enroll patients in our clinical studies. Difficulty in enrolling patients could delay or prevent clinical studies of our pharmaceutical product candidates.

 ****

v

 ****

***Risks Related to Our Reliance on Third Parties***

● We rely on third parties to conduct our preclinical and clinical studies and perform other tasks for us. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval for or commercialize our pharmaceutical product candidates and our business could be substantially harmed.

● We will rely on third parties to manufacture our active pharmaceutical ingredient, or API, and formulations. Our business could be harmed if those third parties fail to provide us with sufficient quantities of our needed supplies or fail to do so at acceptable quality levels or prices.

 ****

***Risks Related to Commercialization of Our Pharmaceutical Product Candidates***

● If the market opportunities for our pharmaceutical product candidates are smaller than we believe they are, our revenue may be adversely affected, and our business may suffer.

 ****

***Risks Related to Our Intellectual Property***

● If we are unable to obtain and maintain effective patent rights for our product candidates, we may not be able to compete effectively in our markets. Further, if we are unable to protect the confidentiality of our trade secrets or know-how, such proprietary information may be used by others to compete against us.

● We face risks related to the acquisition of the complete portfolio of patents, trademarks, know-how, and related intellectual property rights primarily associated with the MUSE™ system for innovative endoscopic systems and medical camera from Xylo Technologies Ltd., or Xylo, including the expiration or near-term expiration of certain acquired patents; Xylo's ability to assign certain commercial contracts to us and the completion of the formal transfer of the acquired patents to our name.

 ****

***Risks Related to Our Pharmaceutical Business Operations***

● From time to time, we may sign letters of intent and/or enter into term sheets or other similar arrangements that are subject to negotiation of definitive agreements. There can be no assurance that we will enter into any such definitive agreements. Similarly, we may strategically invest in transactions from time to time, and there can be no assurance that the value of our investment will increase or that it will not fluctuate.

 ****

***Risks Related to Our Subsidiaries' Operations***

● We may be unable to successfully integrate or execute our subsidiary's eCommerce operations business, which we control through NeuroThera.

● We depend in part on the operations and strategic activities of our subsidiaries, and these activities may involve new business areas or technologies and may not achieve the anticipated benefits.

 ****

***Risks Related to the Ownership of Our Securities***

● We will need additional capital in the future. Raising additional capital by issuing securities may cause dilution to existing shareholders.

● The market price of our Ordinary Shares has been and may continue to be highly volatile, and future sales of our Ordinary Shares or securities convertible into our Ordinary Shares, or the perception that such sales may occur, could cause our share price to decline and impair our ability to raise additional capital.

 ****

***Risks Related to Israeli Law and Our Operations in Israel***

● Provisions of Israeli law may make it easy for our shareholders to demand that we convene a shareholders meeting, and/or allow shareholders to convene a shareholder meeting without the consent of our management, which may disrupt our management's ability to run our company.

● Our principal executive offices, most of our research and development activities and other significant operations are located in Israel, and, therefore, our results may be adversely affected by political, economic and military instability in Israel.

vi

**PART I**

**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 the Offer and Use of Proceeds**

Not applicable.

**D. Risk Factors** 

You should carefully consider the risks described below, together with all of the other information in this Annual Report. The risks described below are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business operations. If any of these risks actually occurs, our business and financial condition could suffer and the price of our Ordinary Shares could decline. These disclosures reflect our belief and opinion as to factors that could materially and adversely affect us and our securities in the future. References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future.

**Risks Related to Our Financial Condition and Capital Requirements**

 ****

***We are a specialty clinical***-***stage pharmaceutical company and have incurred significant losses since the date of our inception, and anticipate that we will continue to incur significant losses until we are able to successfully commercialize our product candidates.***

We have historically incurred substantial net losses, including net losses of approximately $12.6 million for the year ended December 31, 2025, $7.5 million for the year ended December 31, 2024, and $5.9 million for the year ended December 31, 2023. As of December 31, 2025, we had an accumulated deficit of approximately $87 million.

We have devoted substantially all of our financial resources to develop our product candidates, and more recently, to a lesser degree, we have been searching for strategic transactions. We have financed our operations primarily through the issuance of equity securities. The amount of our future net losses will depend, in part, on completing the development of our product candidates, the demand for our product candidates, the rate of our future expenditures and our ability to obtain funding through the issuance of our securities, strategic collaborations or grants. Pharmaceutical product development is a highly speculative undertaking and involves a substantial degree of risk. We are in the late stages of preclinical and at the early stages of clinical development for our product candidates, we have not yet commenced pivotal clinical studies for any product candidate. Although we have begun early commercialization efforts for our proprietary Palmitoylethanolamide, or PEA, oral tablets formulation, CannAmide™, which we expect will be marketed to pharmacies and other retail outlets across Canada following our entering into a distribution agreement(s), it may be several years, if ever, before we complete pivotal clinical studies and have our lead product candidate approved for commercialization. Even if we obtain regulatory approval to market a product candidate, our future revenue will depend upon the size of the markets for which our product candidates may receive approval and our ability to achieve sufficient market acceptance, pricing, reimbursement from third-party payors and adequate market share for our product candidates in those markets.

We expect to continue to incur significant losses until we are able to commercialize our main pharmaceutical product candidates, which we may not be successful in achieving. We anticipate that our expenses will increase substantially if and as we:

● continue the research and development of our product candidates;

● expand the scope of our current clinical studies for our product candidates;

● seek regulatory and marketing approvals for our product candidates that successfully complete clinical studies;

● establish a sales, marketing and distribution infrastructure to commercialize our product candidates;

● seek to identify, assess, acquire, license, and/or develop other product candidates and subsequent generations of our current product candidates;

● seek to maintain, protect, and expand our intellectual property portfolio;

● seek to attract and retain skilled personnel; and

● create additional infrastructure to support our operations as a public company and our product candidate development and planned future commercialization efforts.

 ****

***We have not generated any revenue from the sale of our current pharmaceutical product candidates and may never be profitable.***

We have not yet commercialized any of our pharmaceutical product candidates and have not generated any revenue from sales of our pharmaceutical product candidates since the date of our inception. Although we have undertaken preliminary activities relating to potential commercialization efforts of our proprietary PEA oral tablets formulation. CannAmide™, we do not currently expect the sale of CannAmide™ to result in material revenues, nor is CannAmide™ our lead pharmaceutical product candidate. We do not know whether or when we will become profitable. Our ability to generate revenue and achieve profitability depends on our ability to successfully complete the development of, and to commercialize, our pharmaceutical product candidates and on the demand for our pharmaceutical product candidates. We expect that we will need to continue to fund these development and commercialization activities through external financing sources. Our ability to generate revenue and achieve profitability depends on our ability, alone or with strategic collaboration partners, to successfully complete the development of, and obtain the regulatory and marketing approvals necessary to commercialize, one or more of our pharmaceutical product candidates. Our ability to generate future revenue from pharmaceutical product candidate sales depends heavily on our success in many areas, including but not limited to:

● completing research and preclinical and clinical development of our pharmaceutical product candidates;

● obtaining regulatory and marketing approvals for pharmaceutical product candidates for which we complete clinical studies;

● establishing and maintaining supply and manufacturing relationships with third parties that can provide adequate (in amount and quality) pharmaceutical products to support market demand for our pharmaceutical product candidates, if approved;

● launching and commercializing pharmaceutical product candidates if and when we obtain regulatory and marketing approval, either directly or with a collaborator or distributor;

● obtaining market acceptance of our pharmaceutical product candidates as viable treatment options;

● addressing any competing pharmaceutical or biotechnological and market developments;

● identifying, assessing, acquiring and/or developing new pharmaceutical product candidates;

● negotiating favorable terms in any collaboration, licensing or other arrangements into which we may enter;

● maintaining, protecting and expanding our portfolio of intellectual property rights, including patents, trade secrets and know-how; and

● attracting, hiring and retaining qualified personnel.

Even if one or more of the pharmaceutical product candidates that we develop is approved for commercial sale, we anticipate incurring significant costs associated with commercializing any approved pharmaceutical product candidate. Our expenses could increase beyond expectations if we are required by the FDA, the European Medicines Agency, or the EMA, or other regulatory agencies, domestic or foreign, to perform clinical, nonclinical or other types of studies in addition to those that we currently anticipate. In cases where we are successful in obtaining regulatory approvals to market one or more of our pharmaceutical product candidates, our revenue will be dependent, in part, upon the size of the markets in the territories for which we gain regulatory approval, the accepted price for the pharmaceutical product candidate, the ability to get reimbursement at an acceptable price and whether we own the commercial rights for that territory. If the number of our addressable patients is not as significant as we estimate, the indication approved by regulatory authorities is narrower than we expect, or the reasonably expected population for treatment is narrowed by competition, physician choice or treatment guidelines, we may not generate significant revenue from sales of such pharmaceutical product candidates, even if approved. Additionally, if we are not able to generate revenue from the sale of any approved pharmaceutical product candidates, we may be forced to cease operations.

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***We expect that we will need to raise substantial additional funding before we can expect to become profitable from sales of our pharmaceutical product candidates. This additional financing may not be available on acceptable terms, or at all. Failure to obtain this necessary capital when needed may force us to delay, limit or terminate our pharmaceutical product candidate development efforts or other operations.***

As of December 31, 2025, our cash was approximately $4.6 million, other accounts receivable was approximately $0.3 million, we had working capital of approximately $3.2 million and we also had an accumulated deficit of approximately $87 million. Based upon our current operating plan, we do not expect that our existing cash will be sufficient to fund operations for at least the next 12 months. We expect that we will require substantial additional capital to commercialize our pharmaceutical product candidates. In addition, our operating plans may change as a result of many factors that may currently be unknown to us, and we may need to seek additional funds sooner than planned. Our capital needs have increased in recent periods as a result of our reliance on recurring equity and equity-linked financings, and we expect that we will continue to depend on external financing sources for the foreseeable future. Our funding requirements may also increase if we pursue strategic transactions, acquisitions or investments. Our future funding requirements will depend on many factors, including but not limited to:

● the scope, rate of progress, results and cost of pharmaceutical product development, clinical studies, preclinical testing, and other related activities;

● the cost, timing and outcomes of regulatory approvals;

● the cost and timing of establishing sales, marketing, and distribution capabilities; and

● the terms and timing of any collaborative, licensing, and other arrangements that we may establish.

Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and commercialize our pharmaceutical product candidates. In addition, we cannot guarantee that future financing will be available in sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of holders of our securities and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our Ordinary Shares to decline. The incurrence of indebtedness could result in increased fixed payment obligations, and we may be required to agree to certain restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property rights and other operating restrictions that could adversely impact our ability to conduct our business. We could also be required to seek funds through arrangements with collaborative partners or otherwise at an earlier stage than otherwise would be desirable, and we may be required to relinquish rights to some of our technologies or pharmaceutical product candidates or otherwise agree to terms unfavorable to us, any of which may have a material adverse effect on our business, operating results and prospects. Even if we believe that we have sufficient funds for our current or future operating plans, we may seek additional capital if market conditions are favorable or if we have specific strategic considerations.

If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of any pharmaceutical product candidates or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations.

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***We may not recover amounts owed to us by AutoMax, which could adversely affect our financial condition and results of operations.***

Between June 2023 and March 2025, we entered into a series of agreements with AutoMax Motors Ltd., or AutoMax, including a share purchase agreement, a non-binding letter of intent, an agreement and plan of merger entered into on April 10, 2024, as amended from time to time, and multiple loan arrangements, including a bridge loan entered into on January 14, 2024, or the Bridge Loan, and an additional loan entered into on February 24, 2025, or the Additional Loan Agreement. These arrangements were entered into in the context of a proposed business combination transaction that was approved by the shareholders of both companies.

In October 2025, contemplated merger agreement with AutoMax was terminated and the merger was not consummated. In addition, in October 2025, insolvency proceedings in respect of AutoMax commenced in Israeli court and the Israeli court froze proceedings against AutoMax and appointed a trustee in connection with insolvency proceedings. We have filed a debt petition as part of those proceedings. See "Item 8.A. Legal Proceedings – AutoMax" for additional information. We have outstanding loan exposure to AutoMax under the Bridge Loan and the Additional Loan Agreement and we recognized a loss on impairment of loans granted to AutoMax in the amount of $5,973,000 for the year ended December 31, 2025.

Given AutoMax's financial condition and the ongoing insolvency process, we may not recover from AutoMax the outstanding principal and accrued interest owed to us under the Bridge Loan and Additional Loan Agreement, on a revised repayment schedule, or at all. Any failure to recover such amounts could have a material adverse effect on our financial condition, results of operations and liquidity.

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***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.***

The report of our independent registered public accounting firm on our audited consolidated financial statements for the period ended December 31, 2025, contains an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of the uncertainty regarding our ability to continue as a going concern. This doubt about our ability to continue as a going concern could materially limit our ability to raise additional funds through the issuance of equity or debt securities or otherwise. Until we can generate significant recurring revenues, we expect to satisfy our future cash needs through debt or equity financing. We cannot be certain that additional funding will be available to us on acceptable terms, if at all. If funds are not available, we may be required to delay, reduce the scope of, or eliminate research or development plans for, or commercialization efforts with respect to our products. This may raise substantial doubts about our ability to continue as a going concern.

**Risks Related to the Discovery and Development of Our Pharmaceutical Product Candidates** 

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***We are heavily dependent on the success of our pharmaceutical product candidates, which are in the late stages of pre-clinical development or early stages of clinical development. We cannot give any assurance that any of our pharmaceutical product candidates will receive regulatory approval, which is necessary before they can be commercialized.***

To date, we have invested substantially all of our efforts and financial resources to design and develop our pharmaceutical product candidates, including conducting preclinical studies and providing general and administrative support for these operations. Our future success is dependent on our ability to successfully develop, obtain regulatory approval for, and then successfully commercialize one or more pharmaceutical product candidates. We currently generate no revenue from sales of any pharmaceutical product candidate, and we may never be able to develop or commercialize a marketable pharmaceutical product candidate. A significant portion of our pharmaceutical development activities is conducted through our subsidiary, NeuroThera.

Each of our pharmaceutical product candidates is in the late stages of pre-clinical development or early stages of development and will require additional clinical development (and in some cases additional preclinical development), management of nonclinical, clinical and manufacturing activities, regulatory approval, obtaining adequate manufacturing supply, building of a commercial organization and significant marketing efforts before we generate any revenue from pharmaceutical product candidate sales. It may be years before a pivotal study is initiated, if at all. Any clinical trials in the United States will require the approval of an Investigational New Drug, or IND, application by the FDA, and we cannot assure that we will obtain such approval in a timely manner, or at all. We are not permitted to market or promote any of our pharmaceutical product candidates before we receive regulatory approval from the FDA or comparable foreign regulatory authorities, and we may never receive such regulatory approval for any of our pharmaceutical product candidates.

We as a company have never submitted marketing applications to the FDA or comparable foreign regulatory authorities. We cannot be certain that any of our pharmaceutical product candidates will be successful in clinical studies or receive regulatory approval or what regulatory pathway the regulatory authorities shall designate for our pharmaceutical product candidates. Further, our pharmaceutical product candidates may not receive regulatory approval even if they are successful in clinical studies. If we do not receive regulatory approvals for our pharmaceutical product candidates, we may not be able to continue our operations.

We generally plan to seek regulatory approval to commercialize our pharmaceutical product candidates in the United States, the European Union and in additional foreign countries. To obtain regulatory approvals we must comply with the numerous and varying regulatory requirements of such countries regarding safety, efficacy, chemistry, manufacturing and controls, clinical studies, commercial sales, pricing and distribution of our product candidates. Even if we are successful in obtaining approval in one jurisdiction, we cannot ensure that we will obtain approval in any other jurisdictions. If we are unable to obtain approval for our pharmaceutical product candidates in multiple jurisdictions, our revenue and results of operations would be negatively affected.

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***The regulatory approval processes of the FDA and comparable foreign authorities are lengthy, time consuming and inherently unpredictable. If we are ultimately unable to obtain regulatory approval for our pharmaceutical product candidates, our business will be substantially harmed.***

The time required to obtain approval by the FDA and comparable foreign authorities is unpredictable, typically takes many years following the commencement of clinical studies and depends upon numerous factors. In addition, approval policies, regulations or the type and amount of clinical data necessary to gain approval may change during the course of a pharmaceutical product candidate's clinical development and may vary among jurisdictions, which may cause delays in the approval or the decision not to approve an application. We have not obtained regulatory approval for any pharmaceutical product candidate, and it is possible that none of our existing pharmaceutical product candidates or any pharmaceutical product candidates we may seek to develop in the future will ever obtain regulatory approval.

Applications for our pharmaceutical product candidates could fail to receive regulatory approval for many reasons, including but not limited to the following:

● the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical studies;

● we may be unable to demonstrate to the FDA or comparable foreign regulatory authorities that a pharmaceutical product candidate's safety-benefit ratio for its proposed indication is acceptable;

● the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical studies;

● the data collected from clinical studies of our pharmaceutical product candidates may not be sufficient to support the submission of a New Drug Application, or NDA, in the United States or elsewhere

● the FDA or comparable foreign regulatory authorities may fail to approve the manufacturing processes, test procedures and specifications or facilities of third-party manufacturers with which we contract for clinical and commercial supplies; and

● the approval policies or regulations of the FDA or comparable foreign regulatory authorities may significantly change in a manner rendering our clinical data insufficient for approval.

This lengthy approval process, as well as the unpredictability of the results of clinical studies, may result in our failing to obtain regulatory approval to market any of our pharmaceutical product candidates, which would significantly harm our business, results of operations and prospects.

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***Inadequate funding for the FDA and other government agencies could hinder their ability to hire and retain key leadership and other personnel, prevent new products and services from being developed or commercialized in a timely manner or otherwise prevent those agencies from performing normal business functions on which the operation of our business may rely, which could negatively impact our business.***

The ability of the FDA to review and approve new products can be affected by a variety of factors, including government budget and funding levels, ability to hire and retain key personnel and accept the payment of user fees, and statutory, regulatory, and policy changes. Average review times at the agency have fluctuated in recent years as a result. In addition, government funding of the FDA and other government agencies on which our operations may rely, including those that fund research and development activities, is subject to the political process, which is inherently fluid and unpredictable.

Future legislative and regulatory proposals may materially impact the ability of the FDA and other regulatory agencies to operate as they have historically operated. We cannot be sure whether additional legislative changes or executive orders will be enacted, or whether any of the FDA's regulations, guidance or interpretations will be changed, or what the impact of such changes on the agency and its scientific review staff, if any, may be. In addition, disruptions at the FDA and other agencies may slow the time necessary for new products to be reviewed and/or approved by necessary government agencies, which would adversely affect our business. For example, political disputes in the U.S. Congress may result in a shutdown of the U.S. federal government, and in such cases certain regulatory agencies, such as the FDA, would have to furlough critical employees and stop critical activities.

If a prolonged government shutdown occurs, or if legislative or regulatory developments or global health concerns hinder or prevent the FDA or other regulatory authorities from conducting their regular inspections, reviews, or other regulatory activities, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

Disruptions at the FDA and other agencies may also increase the time necessary for new drugs or medical devices to be reviewed and/or approved by necessary government agencies or to otherwise respond to regulatory submissions, which would adversely affect our business. For example, the Trump Administration has discussed several changes to the reach and oversight of the FDA, which could affect its relationship with the medical device and pharmaceutical industry, transparency in decision making and ultimately the cost and availability of prescription drugs or treatments. Additionally, over the last several years, the US government has shut down multiple times and certain regulatory agencies, such as the FDA, have had to furlough critical FDA and other government employees and stop critical activities. If funding for the FDA is reduced, FDA priorities change, or a prolonged government shutdown occurs, it could significantly impact the ability of the FDA to timely review and process our regulatory submissions, which could have a material adverse effect on our business.

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***Clinical drug development involves a lengthy and expensive process with an uncertain outcome, and results of earlier studies may not be predictive of future study results.***

Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. Failure can occur at any time during the clinical study process. The results of preclinical studies and early clinical studies of our product candidates may not be predictive of the results of later-stage clinical studies. Product candidates that have shown promising results in early-stage clinical studies may still suffer significant setbacks in subsequent advanced clinical studies. There is a high failure rate for drugs proceeding through clinical studies, and product candidates in later stages of clinical studies may fail to show the desired safety and efficacy traits despite having progressed satisfactorily through preclinical studies and initial clinical studies. A number of companies in the pharmaceutical industry have suffered significant setbacks in advanced clinical studies due to lack of efficacy or adverse safety profiles, notwithstanding promising results in earlier studies. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses. We do not know whether any Phase I, Phase II, Phase III or other clinical studies we may conduct will demonstrate consistent or adequate efficacy and safety sufficient to obtain regulatory approval to market our product candidates.

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***We may find it difficult to enroll patients in our clinical studies. Difficulty in enrolling patients could delay or prevent clinical studies of our pharmaceutical product candidates.***

Identifying and qualifying patients to participate in clinical studies of our pharmaceutical product candidates is critical to our success. The timing of our clinical studies depends in part on the speed at which we can recruit patients to participate in testing our pharmaceutical product candidates, and we may experience delays in our clinical studies if we encounter difficulties in enrollment.

Some of the conditions for which we plan to evaluate our current pharmaceutical product candidates are for rare diseases. Accordingly, there is a limited patient pool from which to draw for clinical studies. Further, the eligibility criteria of our clinical studies will further limit the pool of available study participants as we will require that patients have specific characteristics that we can measure or to assure their disease is either severe enough or not too advanced to include them in a study.

Additionally, the process of finding patients may prove costly. We also may not be able to identify, recruit and enroll a sufficient number of patients to complete our clinical studies because of the perceived risks and benefits of the pharmaceutical product candidate under study, the availability and efficacy of competing therapies and clinical studies, the proximity and availability of clinical study sites for prospective patients and the patient referral practices of physicians. If patients are unwilling to participate in our studies for any reason, the timeline for recruiting patients, conducting studies and obtaining regulatory approval of potential pharmaceutical product candidates will be delayed.

If we experience delays in the completion or termination of any clinical study of our pharmaceutical product candidates, the commercial prospects of our pharmaceutical product candidates will be harmed, and our ability to generate pharmaceutical product candidate revenue from any of these pharmaceutical product candidates could be delayed or prevented. In addition, any delays in completing our clinical studies will increase our costs, slow down our product candidate development and approval process and jeopardize our ability to commence pharmaceutical product candidate sales and generate revenue. Any of these occurrences may harm our business, financial condition and prospects significantly. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical studies may also ultimately lead to the denial of regulatory approval of our pharmaceutical product candidates.

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***If the FDA does not conclude that our pharmaceutical product candidates satisfy the requirements for the Section 505(b)(2) regulatory approval pathway, or if the requirements for our pharmaceutical product candidates under Section 505(b)(2) are not as we expect, the approval pathway would likely take significantly longer, cost significantly more and entail significantly greater complications and risks than anticipated and in either case may not be successful.***

We intend to seek FDA approval through the Section 505(b)(2) regulatory pathway for our pharmaceutical product candidate- SCI-110 and potentially for our drug candidate SCI-210. The Drug Price Competition and Patent Term Restoration Act of 1984, also known as the Hatch-Waxman Amendments, added Section 505(b)(2) to the Federal Food, Drug, and Cosmetic Act of 1938, as amended, or the FDC Act, or Section 505(b)(2). Section 505(b)(2) permits the filing of an NDA where at least some of the information required for approval comes from studies not conducted by or for the applicant and for which the applicant has not obtained a right of reference.

If the FDA does not allow us to pursue the Section 505(b)(2) regulatory pathway as anticipated, we may need to conduct additional clinical trials, provide additional data and information and meet additional standards for regulatory approval. If this were to occur, the time and financial resources required to obtain FDA approval, and complications and risks associated with FDA approval, would substantially increase. We may need to obtain additional funding, which could result in significant dilution to the ownership interests of our then existing shareholders to the extent we issue equity securities or convertible debt. We cannot assure you that we would be able to obtain such additional financing on terms acceptable to us, if at all. Moreover, inability to pursue the Section 505(b)(2) regulatory pathway could result in new competitive pharmaceutical product candidates reaching the market faster than our pharmaceutical product candidates, which could materially adversely impact our competitive position and prospects. Even if we are allowed to pursue the Section 505(b)(2) regulatory pathway, we cannot assure you that our pharmaceutical product candidates will receive the requisite approvals for commercialization.

In addition, notwithstanding the approval of a number of pharmaceutical product candidates by the FDA under Section 505(b)(2) over the last few years, some pharmaceutical companies and others have objected to the FDA's interpretation of Section 505(b)(2). For example, several companies have previously petitioned the FDA regarding the constitutionality of allowing others to rely upon FDA findings that are based on their proprietary data. If the FDA's interpretation of Section 505(b)(2) is successfully challenged, the FDA may be required to change its 505(b)(2) policies and practices, which could require that we generate full data regarding safety and effectiveness for previously approved active ingredients and delay or even prevent the FDA from approving any NDA that we submit under Section 505(b)(2). In addition, the pharmaceutical industry is highly competitive, and Section 505(b)(2) NDAs are subject to special requirements designed to protect the patent rights of sponsors of previously approved drugs that are referenced in a Section 505(b)(2) NDA. These requirements may give rise to patent litigation and mandatory delays in approval of our potential future NDAs for up to 30 months depending on the outcome of any litigation. It is not uncommon for a manufacturer of an approved pharmaceutical product to file a citizen petition with the FDA seeking to delay approval of, or impose additional approval requirements for, pending competing pharmaceutical products. If successful, such petitions can significantly delay, or even prevent, the approval of the new pharmaceutical product. However, even if the FDA ultimately denies such a petition, the FDA may substantially delay approval while it considers and responds to the petition. In addition, even if we are able to utilize the Section 505(b)(2) regulatory pathway for our pharmaceutical product candidates, there is no guarantee this would ultimately lead to faster pharmaceutical product development or earlier approval. Moreover, even if these pharmaceutical product candidates are approved under the Section 505(b)(2) pathway, as the case may be, the approval may be subject to limitations on the indicated uses for which the pharmaceutical products may be marketed or to other conditions of approval or may contain requirements for costly post-marketing testing and surveillance to monitor the safety or efficacy of the pharmaceutical products. Our pharmaceutical product candidates are at early stages of development and are subject to uncertainty over what we must do on our development program in order to secure approval under Section 505(b)(2).

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***We may encounter substantial delays in our clinical studies, or we may fail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities.***

Before obtaining marketing approval from regulatory authorities for the sale of our pharmaceutical product candidates, we must conduct extensive clinical studies to demonstrate the safety and efficacy of the pharmaceutical product candidates in humans. Clinical testing is expensive, time consuming and uncertain as to outcome. We cannot guarantee that any clinical studies will be conducted as planned or completed on schedule, if at all. A failure of one or more clinical studies can occur at any stage of testing, and our future clinical studies may not be successful. Events that may prevent successful or timely completion of clinical development include but are not limited to:

● inability to generate sufficient preclinical, toxicology or other in vivo or in vitro data to support the initiation of human clinical studies;

● the occurrence of a pandemic or the spread of a virus that diverts the attention of regulatory agencies from reviewing our study design or results or which, as a result of such pandemic or widespread, requires us to materially modify our planned clinical studies;

● delays in reaching a consensus with regulatory agencies on study design;

● delays in reaching agreement on acceptable terms with prospective contract research organizations, or CROs, and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and clinical study sites;

● delays in obtaining required Institutional Review Board, or IRB, approval at each clinical study site;

● imposition of a clinical hold by regulatory agencies, after review of an IND, application, or equivalent application, or an inspection of our clinical study operations or study sites;

● delays in recruiting suitable patients to participate in our clinical studies;

● difficulty collaborating with patient groups and investigators;

● failure by our CROs, other third parties or us to adhere to clinical study requirements;

● failure to perform in accordance with the FDA's Good Clinical Practices, or GCP, requirements, or applicable regulatory guidelines in other countries;

● delays in having patients complete participation in a study or return for post-treatment follow-up;

● patients dropping out of a study;

● occurrence of serious adverse events associated with the pharmaceutical product candidate that are viewed to outweigh its potential benefits;

● changes in regulatory requirements and guidance that require amending or submitting new clinical protocols;

● the cost of clinical studies of our pharmaceutical product candidates being greater than we anticipate;

● clinical studies of our pharmaceutical product candidates producing negative or inconclusive results, which may result in us deciding, or regulators requiring us, to conduct additional clinical studies or abandon pharmaceutical product candidate development programs; and

● delays in manufacturing, testing, releasing, validating or importing/exporting sufficient stable quantities of our pharmaceutical product candidates for use in clinical studies or the inability to do any of the foregoing.

Any inability to successfully complete preclinical and clinical development could result in additional costs to us or impair our ability to generate revenue. We may also be required to conduct additional safety, efficacy and comparability studies before we will be allowed to start clinical studies with our repurposed drugs. Clinical study delays could also shorten any periods during which our pharmaceutical product candidates have patent protection and may allow our competitors to bring pharmaceutical product candidates to market before we do, which could impair our ability to obtain orphan exclusivity and successfully commercialize our pharmaceutical product candidates and may harm our business and results of operations.

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***In respect of our pharmaceutical product candidates targeting rare indications, orphan drug exclusivity may afford limited protection, and if another party obtains orphan drug exclusivity for the drugs and indications we are targeting, we may be precluded from commercializing our pharmaceutical product candidates in those indications during that period of exclusivity*.**

We are seeking to obtain an orphan designation for some of our pharmaceutical product candidates in the United States. Under the Orphan Drug Act, the FDA may designate a product as an orphan drug if it is a drug intended to treat a rare disease or condition, defined, in part, as a patient population of fewer than 200,000 in the United States, or a patient population greater than 200,000 in the United States where there is no reasonable expectation that the cost of developing the drug will be recovered from sales in the United States. Additionally, designation is granted for products intended for the diagnosis, prevention or treatment of a life-threatening, seriously debilitating or serious and chronic condition and when, without incentives, it is unlikely that sales of the drug in the European Union would be sufficient to justify the necessary investment in developing the drug.

In the United States, the first NDA applicant with an orphan drug designation for a particular active moiety to treat a specific disease or condition that receives FDA approval is entitled to a seven-year exclusive marketing period in the United States for that product candidate, for that indication. In the European Union, orphan drug designation also entitles a party to financial incentives such as reduction of fees or fee waivers and 10 years of market exclusivity is granted following drug approval. This period may be reduced to six years if the orphan drug designation criteria are no longer met, including where it is shown that the product is sufficiently profitable not to justify maintenance of market exclusivity.

In June 2016, we submitted a request for orphan drug designation to the FDA for SCI-110 for the treatment of TS. After multiple requests from the FDA and our responses to those requests from 2016 to 2021, the FDA repeatedly declined to grant the request, primarily citing insufficient prevalence data and concerns about limiting treatment to a specific patient subgroup. While the FDA acknowledged preliminary clinical data supporting SCI-110's potential benefit and agreed the moderate-to-severe TS subpopulation could qualify, it raised additional concerns regarding patient subset restrictions and safety, particularly in pediatric use, leading us to amend our request to focus on adults. In June 2021, the FDA stated it could not grant the designation without new supporting data, and we plan to revisit the application following results from our upcoming Phase IIb clinical trial.

There is no assurance that we will successfully obtain orphan drug designation for TS, any future rare indications or orphan exclusivity upon approval of any of our pharmaceutical product candidates that have already obtained designation.

Even if we do obtain orphan exclusivity for any pharmaceutical product candidate, the exclusive marketing rights may be lost if the FDA later determines that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the drug. Moreover, a drug product candidate with an active moiety that is a different cannabinoid from that in our drug candidate or, under limited circumstances, the same drug product candidate, may be approved by the FDA for the same indication during the period of marketing exclusivity. The limited circumstances include a showing that the second drug is clinically superior to the drug with marketing exclusivity through a demonstration of superior safety or efficacy or that it makes a major contribution to patient care. In addition, if a competitor obtains approval and marketing exclusivity for a drug product candidate with an active moiety that is the same as that in a pharmaceutical product candidate we are pursuing for the same indication, approval of our pharmaceutical product candidate would be blocked during the period of marketing exclusivity unless we could demonstrate that our product candidate is clinically superior to the approved pharmaceutical product candidate. In addition, if a competitor obtains approval and marketing exclusivity for a drug product candidate with an active moiety that is the same as that in a pharmaceutical product candidate we are pursuing for a different orphan indication, this may negatively impact the market opportunity for our pharmaceutical product candidate.

There have been legal challenges to aspects of the FDA's regulations and policies concerning the exclusivity provisions of the Orphan Drug Act, and future challenges could lead to changes that affect the protections afforded our pharmaceutical product candidates in ways that are difficult to predict. In a recent successful legal challenge, a court invalidated the FDA's denial of orphan exclusivity to a drug on the grounds that the drug was not proven to be clinically superior to a previously approved pharmaceutical product candidate containing the same ingredient for the same orphan use. In response to the decision, the FDA released a policy statement stating that the court's decision is limited just to the facts of that particular case and that the FDA will continue to require the sponsor of a designated drug that is the "same" as a previously approved drug to demonstrate that its drug is clinically superior to that drug upon approval in order to be eligible for orphan drug exclusivity, or in some cases, to even be eligible for marketing approval. In the future, there is the potential for additional legal challenges to the FDA's orphan drug regulations and policies, and it is uncertain how such challenges might affect our business.

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***While orphan drug product candidates are typically sold at a high price relative to other medications, the market may not be receptive to high pricing of our product candidates.***

We develop our product candidates to treat rare diseases, a space where medications are usually sold at high prices compared with other medications. However, our product candidates are repurposed drugs, which means, among other things, that they contain drug substances available in pharmacies for the purpose of treating indications that are different from the indications for which we plan to use. Accordingly, even if regulatory authorities approve our product candidates, the market may not be receptive to, and it may be difficult for us to achieve, a per-patient per-year price high enough to allow us to realize a return on our investment.

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***Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit the commercial profile of an approved label or result in significant negative consequences following marketing approval, if any.***

The use of dronabinol has been associated with seizures, paranoia, rapid heart rate and unusual thoughts and behaviors. In addition, certain of our other product candidates contain cannabinoid-based components (for example, SCI-210 includes CBD in combination with CannAmide™), and their safety profiles may not be fully characterized for the indications we are pursuing. Undesirable side effects caused by our product candidates could cause us or regulatory authorities to interrupt, delay or halt clinical studies and could result in a more restrictive marketing label or the delay or denial of regulatory approval by the FDA or other comparable foreign authorities. Potential side effects of our cannabinoid-based treatments may include: asthenia, palpitations, tachycardia, vasodilation/facial flush, abdominal pain, nausea, vomiting, amnesia, anxiety/nervousness, ataxia, confusion, depersonalization, dizziness, euphoria, hallucinations, paranoid reaction, somnolence and abnormal thinking. Results of our studies may identify unacceptable severity and prevalence of these or other side effects. In such an event, our studies could be suspended or terminated, and the FDA or comparable foreign regulatory authorities could order us to cease further development of or deny or withdraw approval of our product candidates for any or all targeted indications.

Drug-related side effects could affect patient recruitment, the ability of enrolled patients to complete the study or result in potential product candidate liability claims.

Additionally, if one or more of our product candidates receives marketing approval, and we or others later identify undesirable side effects caused by such product candidates, a number of potentially significant negative consequences could result, including but not limited to:

● regulatory authorities may withdraw approvals of such product candidate;

● regulatory authorities may require additional warnings on the label;

● we may be required to create a risk evaluation and mitigation strategy, or REMS, plan, which could include a medication guide outlining the risks of such side effects for distribution to patients, a communication plan for healthcare providers and/or other elements to assure safe use, or ETASU;

● we could be sued and held liable for harm caused to patients; and

● our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of the particular product candidate, if approved, and could significantly harm our business, results of operations and prospects.

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***Even if we obtain regulatory approval for a product candidate, our product candidates will remain subject to regulatory scrutiny.***

If our product candidates are approved, they will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record-keeping, conduct of post-marketing studies and submission of safety, efficacy and other post-market information, including both federal and state requirements in the United States. In addition, manufacturers and manufacturers' facilities are required to comply with extensive FDA requirements, including ensuring that quality control and manufacturing procedures conform to current Good Manufacturing Practices, or cGMP, regulations and Quality System Regulation, or QSR. As such, we and our contract manufacturers will be subject to continual review and inspections to assess compliance with cGMP, QSR and adherence to commitments made in any NDA. Accordingly, we and others with whom we work must continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production and quality control.

Any regulatory approvals that we receive for our product candidates may also be subject to limitations on the approved indicated uses for which the product candidate may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials and surveillance to monitor the safety and efficacy of the product candidate. We will also be required to report certain adverse reactions and production problems, if any, to the FDA, and to comply with requirements concerning advertising and promotion for our product candidates. Promotional communications with respect to prescription drugs are subject to a variety of legal and regulatory restrictions and must be consistent with the information in the product candidate's approved label. As such, we may not promote our product candidates for indications or uses for which they do not have FDA approval. The holder of an approved NDA must also submit new or supplemental applications and obtain FDA approval for certain changes to the approved product candidate, product candidate labeling or manufacturing process. We could also be asked to conduct post-marketing clinical studies to verify the safety and efficacy of our product candidates in general or in specific patient subsets. If original marketing approval were obtained via the accelerated approval pathway, we could be required to conduct a successful post-marketing clinical study to confirm clinical benefit for our product candidates. An unsuccessful post-marketing study or failure to complete such a study could result in the withdrawal of marketing approval. Furthermore, any new legislation addressing drug safety issues could result in delays in product candidate development or commercialization or increased costs to assure compliance. Foreign regulatory authorities impose similar requirements.

If a regulatory agency discovers previously unknown problems with a product candidate, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product candidate is manufactured, or disagrees with the promotion, marketing or labeling of a product candidate, such regulatory agency may impose restrictions on that product candidate or us, including requiring withdrawal of the product candidate from the market. If we fail to comply with applicable regulatory requirements, a regulatory agency or enforcement authority may, among other things:

● issue warning letters;

● impose civil or criminal penalties;

● suspend or withdraw regulatory approval;

● suspend any of our ongoing clinical studies;

● refuse to approve pending applications or supplements to approved applications submitted by us;

● impose restrictions on our operations, including closing our contract manufacturers' facilities; or

● seize or detain product candidates, or require a product candidate recall.

Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity. Any failure to comply with ongoing regulatory requirements may significantly and adversely affect our ability to commercialize and generate revenue from our product candidates. If regulatory sanctions are applied or if regulatory approval is withdrawn, the value of our company and our operating results will be adversely affected.

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***We are subject to numerous complex regulations and failure to comply with these regulations, or the cost of compliance with these regulations, may harm our business.***

The research, testing, development, manufacturing, quality control, approval, labeling, packaging, storage, recordkeeping, promotion, advertising, marketing, distribution, possession and use of our product candidates, among other things, are subject to regulation by numerous governmental authorities in the United States and elsewhere. The FDA regulates drugs under the FDC Act, and implementing regulations. Noncompliance with any applicable regulatory requirements can result in refusal to approve product candidates for marketing, warning letters, product candidate recalls or seizure of product candidates, total or partial suspension of production, prohibitions or limitations on the commercial sale of product candidates or refusal to allow the entering into of federal and state supply contracts, fines, civil penalties and/or criminal prosecution. Additionally, the FDA and comparable governmental authorities have the authority to withdraw product candidate approvals that have been previously granted. Moreover, the regulatory requirements relating to our product candidates may change from time to time and it is impossible to predict what the impact of any such changes may be.

We are developing product candidates that are controlled substances as defined in the Controlled Substances Act of 1970, or CSA, which establishes, among other things, certain registration, production quotas, security, recordkeeping, reporting, import, export and other requirements administered by the Drug Enforcement Administration, or the DEA. As a result, any product candidate that is a controlled substance (or includes a controlled substance) cannot be marketed before such substance is rescheduled by the DEA as a Schedule II, III, IV or V substance. The active ingredient in our product candidates is dronabinol, which is a Schedule III controlled substance. See Item 4.B. "Business-Government Regulation-Controlled Substances" for additional information.

The manufacture, shipment, storage, sale and use, among other things, of controlled substances that are pharmaceutical product candidates are subject to a high degree of regulation. The DEA also conducts periodic inspections of registered establishments that handle controlled substances. Facilities that conduct research, manufacture, distribute, import or export controlled substances must be registered to perform these activities and have the security, control and inventory mechanisms required by the DEA to prevent drug loss and diversion. Failure to maintain compliance, particularly non-compliance resulting in loss or diversion, can result in regulatory action that could have a material adverse effect on our business, results of operations, financial condition and prospects. The DEA may seek civil penalties, refuse to renew necessary registrations, or initiate proceedings to suspend or revoke those registrations. In certain circumstances, violations could lead to criminal proceedings.

Individual states also have controlled substances laws. Though state controlled substances laws often mirror federal law, because the states are separate jurisdictions, they may separately schedule our product candidates as well. While some states automatically schedule a drug when the DEA does so, other states schedule drugs through rulemaking or a legislative action. State scheduling may delay commercial sale of any product candidate for which we obtain federal regulatory approval and adverse scheduling could have a material adverse effect on the commercial attractiveness of such product candidate. We or our partners must also obtain separate state registrations, permits or licenses in order to be able to obtain, handle, and distribute controlled substances for clinical trials or commercial sale, and failure to meet applicable regulatory requirements could lead to enforcement and sanctions from the states in addition to those from the DEA or otherwise arising under federal law.

**Risks Related to Our Reliance on Third Parties** 

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***We rely on third parties to conduct our preclinical and clinical studies and perform other tasks for us. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or comply with regulatory requirements, we may not be able to obtain regulatory approval for or commercialize our product candidates and our business could be substantially harmed.***

We have relied upon and plan to continue to rely upon third-party CROs to monitor and manage data for our ongoing preclinical and clinical programs, including Target Health, Inc., FGK Clinical Research GmbH, or FGK, and others. We rely on these parties for execution of our preclinical and clinical studies, and control only certain aspects of their activities. Nevertheless, we are responsible for ensuring that each of our studies is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards and our reliance on the CROs does not relieve us of our regulatory responsibilities. We and our CROs and other vendors are required to comply with current cGMP, GCP, QSR and Good Laboratory Practices, or GLP, which are regulations and guidelines enforced by the FDA, the Competent Authorities of the Member States of the European Economic Area, and comparable foreign regulatory authorities for all of our product candidates in clinical development. Regulatory authorities enforce these regulations through periodic inspections of study sponsors, principal investigators, study sites and other contractors. If we or any of our CROs or vendors fail to comply with applicable regulations, the clinical data generated in our clinical studies may be deemed unreliable and the FDA, EMA or comparable foreign regulatory authorities may require us to perform additional clinical studies before approving our marketing applications. We cannot assure you that upon inspection by a given regulatory authority, such regulatory authority will determine that any of our clinical studies comply with GCP regulations. In addition, our clinical studies must be conducted with product candidates which are produced under cGMP regulations. Our failure to comply with these regulations may require us to repeat clinical studies, which would delay the regulatory approval process.

If any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs or do so on commercially reasonable terms. In addition, our CROs are not our employees, and except for remedies available to us under our agreements with such CROs, we cannot control whether or not they devote sufficient time and resources to our on-going clinical, nonclinical and preclinical programs. If CROs do not successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, our clinical studies may be extended, delayed or terminated and we may not be able to obtain regulatory approval for or successfully commercialize our product candidates. CROs may also generate higher costs than anticipated. As a result, our results of operations and the commercial prospects for our product candidates would be harmed, our costs could increase and our ability to generate revenue could be delayed.

Switching or adding additional CROs involves additional cost and requires management time and focus. In addition, there is a natural transition period when a new CRO commences work. As a result, delays may occur, which could materially impact our ability to meet our desired clinical development timelines. Though we carefully manage our relationships with our CROs, there can be no assurance that we will not encounter similar challenges or delays in the future or that these delays or challenges will not have a material adverse impact on our business, financial condition and prospects.

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***We will rely on third parties to manufacture our API and formulations. Our business could be harmed if those third parties fail to provide us with sufficient quantities of our needed supplies, or fail to do so at acceptable quality levels or prices.***

We do not have the infrastructure or capability internally to manufacture the API formulations, and we lack the resources and the capability to manufacture any of our product candidates on a clinical or commercial scale. We plan to rely on third parties for such supplies. There are a limited number of manufacturers who have the ability to produce our API and there may be a need to identify alternate manufacturers to prevent a possible disruption of our clinical studies. Any significant delay or discontinuity in the supply of these components could considerably delay completion of our clinical studies, product candidate testing and potential regulatory approval of our product candidates, which could harm our business and results of operations.

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***We and our collaborators and contract manufacturers are subject to significant regulation with respect to manufacturing our product candidates. The manufacturing facilities on which we rely may not continue to meet regulatory requirements and have limited capacity.***

All entities involved in the preparation of therapeutics for clinical studies or commercial sale, including our existing contract manufacturers for our product candidates, are subject to extensive regulation. Components of a finished therapeutic product approved for commercial sale or a product candidate used in late-stage clinical studies must be manufactured in accordance with cGMP. These regulations govern manufacturing processes and procedures (including record keeping) and the implementation and operation of quality systems to control and assure the quality of investigational product candidates and products approved for sale. Poor control of production processes can lead to the introduction of contaminants or to inadvertent changes in the properties or stability of our product candidates that may not be detectable in final product testing. We, our collaborators or our contract manufacturers must supply all necessary documentation in support of an NDA, or Marketing Authorization Application, or MAA, on a timely basis and must adhere to GLP and cGMP QSR regulations enforced by the FDA and other regulatory agencies through their facilities inspection program. Some of our contract manufacturers have never produced a commercially approved pharmaceutical product and therefore have not obtained the requisite regulatory authority approvals to do so. The facilities and quality systems of some or all of our collaborators and third-party contractors must pass a pre-approval inspection for compliance with the applicable regulations as a condition of regulatory approval of our product candidates or any of our other potential product candidates. In addition, the regulatory authorities may, at any time, audit or inspect a manufacturing facility involved with the preparation of our product candidates or our other potential product candidates or the associated quality systems for compliance with the regulations applicable to the activities being conducted. We do not control the manufacturing process of, and are completely dependent on, our contract manufacturing partners for compliance with the regulatory requirements. If these facilities do not pass a pre-approval plant inspection, regulatory approval of the product candidates may not be granted or may be substantially delayed until any violations are corrected to the satisfaction of the regulatory authority, if ever.

The regulatory authorities also may, at any time following approval of a product candidate for sale, if ever, audit the manufacturing facilities of our collaborators and third-party contractors. If any such inspection or audit identifies a failure to comply with applicable regulations or if a violation of our product candidate specifications or applicable regulations occurs independent of such an inspection or audit, we or the relevant regulatory authority may require remedial measures that may be costly and/or time consuming for us or a third party to implement, and that may include the temporary or permanent suspension of a clinical study or commercial sales, or the temporary or permanent closure of a facility. Any such remedial measures imposed upon us or third parties with whom we contract could materially harm our business.

If we, our collaborators, or any of our third-party manufacturers fail to maintain regulatory compliance, the FDA or other applicable regulatory authority can impose regulatory sanctions including, among other things, refusal to approve a pending application for a new drug product, withdrawal of an approval or suspension of production. As a result, our business, financial condition and results of operations may be materially harmed.

Additionally, if supply from one approved manufacturer is interrupted, an alternative manufacturer would need to be qualified through an NDA or MAA amendment, or equivalent foreign regulatory filing, which could result in further delay. The regulatory agencies may also require additional studies if a new manufacturer is relied upon for commercial production. Switching manufacturers may involve substantial costs and is likely to result in a delay in our desired clinical and commercial timelines.

These factors could cause us to incur higher costs and could cause the delay or termination of clinical studies, regulatory submissions, required approvals or commercialization of our product candidates. Furthermore, if our suppliers fail to meet contractual requirements and we are unable to secure one or more replacement suppliers capable of production at a substantially equivalent cost, our clinical studies may be delayed or we could lose potential revenue.

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***Our reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed.***

Because we rely on third parties to develop and manufacture our product candidates, we must, at times, share trade secrets with them. We seek to protect our proprietary technology in part by entering into confidentiality agreements and, if applicable, material transfer agreements, collaborative research agreements, consulting agreements or other similar agreements with our collaborators, advisors, employees and consultants prior to beginning research or disclosing proprietary information. These agreements typically limit the rights of the third parties to use or disclose our confidential information, such as trade secrets. Despite the contractual provisions employed when working with third parties, the need to share trade secrets and other confidential information increases the risk that such trade secrets become known by our competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements. Given that our proprietary position is based, in part, on our know-how and trade secrets, a competitor's discovery of our trade secrets or other unauthorized use or disclosure would impair our competitive position and may have a material adverse effect on our business.

**Risks Related to Commercialization of Our Pharmaceutical Product Candidates**

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***If the market opportunities for our pharmaceutical product candidates are smaller than we believe they are, our revenue may be adversely affected, and our business may suffer.***

Our projections of both the number of people who have our target diseases, as well as the subset of people with these diseases who have the potential to benefit from treatment with our pharmaceutical product candidates, are based on our beliefs and estimates. These estimates have been derived from a variety of sources, including the scientific literature, surveys of clinics, patient foundations or market research and may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of these diseases. The number of patients may turn out to be lower than expected. The effort to identify patients with diseases we seek to treat is in early stages, and we cannot accurately predict the number of patients for whom treatment might be possible. Additionally, the potentially addressable patient population for each of our pharmaceutical product candidates may be limited or may not be amenable to treatment with our pharmaceutical product candidates, and new patients may become increasingly difficult to identify or gain access to, which would adversely affect our results of operations and our business.

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***We face intense competition and rapid technological change and the possibility that our competitors may discover, develop or commercialize therapies that are similar, more advanced or more effective than ours, which may adversely affect our financial condition and our ability to successfully commercialize our product candidates.***

The biotechnology and pharmaceutical industries are highly competitive. There are many pharmaceutical companies, biotechnology companies, public and private universities and research organizations actively engaged in the research and development of products that may be similar to our product candidates.

The first THC-based pharmaceutical, a pill sold under the commercial name of Marinol (scientific name: dronabinol), was developed by a company called Unimed Pharmaceuticals, with funding provided by the National Cancer Institute. In 1985, Marinol received FDA approval as a treatment for chemotherapy-related nausea and vomiting. Today, Marinol is marketed by AbbVie, Inc. Since the introduction of Marinol into the market, other pharmaceuticals containing THC have also been developed. These include generic oral capsules of dronabinol, such as those marketed by SVC Pharma LP and Akorn Inc., Meda AB's Cesamet (nabilone), a synthetic derivative of THC, and Sativex (nabiximols), a whole cannabis extract administered as an oral spray. Furthermore, to the best of our knowledge, a number of companies are working in the cannabis therapeutic area and are pursuing regulatory approval for their product candidates. For example, GW Pharmaceuticals PLC (acquired by Jazz Pharmaceuticals, Inc.), or GW, which markets Sativex, a botanical cannabinoid oral mucosal for the treatment of spasticity due to multiple sclerosis, received FDA approval in the United States in June 2018 for Epidiolex, a liquid formulation of highly purified cannabidiol extract, as a treatment for Dravet's Syndrome, Lennox Gastaut Syndrome, and various childhood epilepsy syndromes. In addition, GW is developing, among others, cannabidivarin, or CBDV, based therapy for ASD and therapy for neonatal hypoxic-ischemic encephalopathy and schizophrenia. Zynerba Pharmaceuticals, Inc. (acquired by Harmony Biosciences Holdings, Inc., or Zynerba, is developing a transdermal formulation of cannabidiol for Fragile X and certain refractory epilepsies and ASD.

More established companies may have a competitive advantage over us due to their greater size, cash flows and institutional experience. Compared to us, many of our competitors may have significantly greater financial, technical and human resources. As a result of these factors, our competitors may have an advantage in marketing their approved products and may obtain regulatory approval of their product candidates before we are able to, which may limit our ability to develop or commercialize our product candidates. Our competitors may also develop drugs that are safer, more effective, more widely used and less expensive than ours, and may also be more successful than us in manufacturing and marketing their products. These advantages could materially impact our ability to develop and commercialize our product candidates successfully.

Our product candidates may also compete with medical and recreational marijuana, in markets where the recreational and/or medical use of marijuana is legal. There is support in the United States for further legalization of marijuana. For example, on December 18, 2025, President Trump signed an Executive Order on increasing medical marijuana and cannabinol research. In markets where recreational and/or medical marijuana is not legal, our product candidates may compete with marijuana purchased in the illegal drug market. We cannot assess the extent to which patients may utilize marijuana obtained illegally for the treatment of the indications for which we are developing our product candidates.

Even if we successfully develop our product candidates, and obtain marketing approval for them, other treatments or therapeutics may be preferred and we may not be successful in commercializing our product candidates or in bringing them to market.

Many of our competitors have substantially greater financial, technical and other resources, such as larger research and development staff and experienced marketing and manufacturing organizations. Additional mergers and acquisitions in the biotechnology and pharmaceutical industries may result in even more resources being concentrated in our competitors. As a result, these companies may obtain regulatory approval more rapidly than we are able to and may be more effective in selling and marketing their products as well. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. Competition may increase further as a result of advances in the commercial applicability of technologies and greater availability of capital for investment in these industries. Our competitors may succeed in developing, acquiring or licensing on an exclusive basis, products that are more effective or less costly than any product candidate that we may develop, or achieve earlier patent protection, regulatory approval, product commercialization and market penetration than we do. Additionally, technologies developed by our competitors may render our potential product candidates uneconomical or obsolete, and we may not be successful in marketing our product candidates against competitors.

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***We currently have no marketing and sales organization. If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product candidates, we may be unable to generate any revenue.***

Although our employees may have sold other similar products in the past while employed at other companies, we as a company have no experience selling and marketing our product candidates and we currently have no marketing or sales organization. To successfully commercialize any products that may result from our development programs, we will need to develop these capabilities, either on our own or with others. If our product candidates receive regulatory approval, we intend to establish a sales and marketing organization with technical expertise and supporting distribution capabilities to commercialize our product candidates in major markets, which will be expensive, difficult and time consuming. Any failure or delay in the development of our internal sales, marketing and distribution capabilities would adversely impact the commercialization of our products.

Further, given our lack of prior experience in marketing and selling pharmaceutical products, our initial estimate of the size of the required sales force may be materially more or less than the size of the sales force actually required to effectively commercialize our product candidates. As such, we may be required to hire substantially more sales representatives to adequately support the commercialization of our product candidates or we may incur excess costs as a result of hiring more sales representatives than necessary. With respect to certain geographical markets, we may enter into collaborations with other entities to utilize their local marketing and distribution capabilities, but we may be unable to enter into such agreements on favorable terms, if at all. If our future collaborators do not commit sufficient resources to commercialize our future products, if any, and we are unable to develop the necessary marketing capabilities on our own, we will be unable to generate sufficient product revenue to sustain our business. We may be competing with companies that currently have extensive and well-funded marketing and sales operations. Without an internal team or the support of a third party to perform marketing and sales functions, we may be unable to compete successfully against these more established companies.

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***The commercial success of any current or future product candidate will depend upon the degree of market acceptance by physicians, patients, third-party payors and others in the medical community.***

Even with the requisite approvals from the FDA and comparable foreign regulatory authorities, the commercial success of our product candidates will depend in part on the medical community, patients and third-party payors accepting our product candidates as medically useful, cost-effective and safe. Any product that we bring to the market may not gain market acceptance by physicians, patients, third-party payors and others in the medical community. The degree of market acceptance of any of our product candidates, if approved for commercial sale, will depend on a number of factors, including:

● the safety and efficacy of the product as demonstrated in clinical studies and potential advantages over competing treatments;

● the prevalence and severity of any side effects, including any limitations or warnings contained in a product's approved labeling;

● the clinical indications for which approval is granted;

● relative convenience and ease of administration;

● the cost of treatment, particularly in relation to competing treatments;

● the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;

● the strength of marketing and distribution support and timing of market introduction of competitive products;

● publicity concerning our products or competing products and treatments; and

● sufficient third-party insurance coverage and reimbursement.

Even if a potential product displays a favorable efficacy and safety profile in preclinical and clinical studies, market acceptance of the product will not be fully known until after it is launched. Our efforts to educate the medical community and third-party payors on the benefits of the product candidates may require significant resources and may never be successful. If our product candidates are approved but fail to achieve an adequate level of acceptance by physicians, patients, third-party payors and others in the medical community, we will not be able to generate sufficient revenue to become or remain profitable.

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***The insurance coverage and reimbursement status of newly-approved products is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for new or current products could limit our ability to market those products and decrease our ability to generate revenue.***

The pricing, coverage and reimbursement of our product candidates, if approved, must be adequate to support our commercial infrastructure. Our per-patient prices must be sufficient to recover our development and manufacturing costs and potentially achieve profitability. Accordingly, the availability and adequacy of coverage and reimbursement by governmental and private payors are essential for most patients to be able to afford expensive treatments such as ours, assuming approval. Sales of our product candidates will depend substantially, both domestically and abroad, on the extent to which the costs of our product candidates will be paid for by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or reimbursed by government authorities, private health insurers and other third-party payors. If coverage and reimbursement are not available, or are available only to limited levels, we may not be able to successfully commercialize our product candidates. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to realize a return on our investment.

There is significant uncertainty related to the insurance coverage and reimbursement of newly approved products. In the United States, the principal decisions about coverage and reimbursement for new drugs are typically made by the Centers for Medicare & Medicaid Services, or CMS, an agency within the U.S. Department of Health and Human Services, or DHHS, as CMS decides whether and to what extent a new drug will be covered and reimbursed under Medicare. Private payors tend to follow the coverage reimbursement policies established by CMS to a substantial degree. It is difficult to predict what CMS will decide with respect to reimbursement for products such as ours.

Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations, and we believe the increasing emphasis on cost-containment initiatives in Europe, Canada and other countries has and will continue to put pressure on the pricing and usage of our product candidates. In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health systems. In general, the prices of medicines under such systems are substantially lower than in the United States. Other countries allow companies to fix their own prices for medicinal products, but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our product candidates. Accordingly, in markets outside the United States, the reimbursement for our products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenue and profits.

Moreover, increasing efforts by governmental and third-party payors in the United States and abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level of reimbursement for new products approved and, as a result, they may not cover or provide adequate payment for our product candidates. We expect to experience pricing pressures in connection with the sale of any of our product candidates due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products.

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***Healthcare legislative reform measures may have a material adverse effect on our business and results of operations.***

In the United States, there have been and continue to be a number of legislative initiatives to contain healthcare costs. The following are among the provisions established by the Patient Protection and Affordable Care Act of 2010, or ACA, of greatest importance to the pharmaceutical and biotechnology industry:

● an annual, nondeductible fee on any entity that manufactures or imports certain specified branded prescription drugs and biologic agents apportioned among these entities according to their market share in some government healthcare programs;

● an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program to 23.1% and 13% of the Average Manufacturer Price, or AMP, for most branded and generic drugs, respectively, and capped the total rebate amount for innovator drugs at 100% of the AMP;

● extension of manufacturers' Medicaid rebate liability to covered drugs dispensed to individuals who are enrolled in Medicaid managed care organizations, or MCOs;

● expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid coverage to additional individuals and by adding new mandatory eligibility categories for individuals with income at or below 133% of the federal poverty level, thereby potentially increasing manufacturers' Medicaid rebate liability;

● a Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% (now 70%) point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer's outpatient drugs to be covered under Medicare Part D;

● expansion of the entities eligible for discounts under federal 340B;

● a Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research;

● establishment of a Center for Medicare Innovation at CMS to test innovative payment and service delivery models to lower Medicare and Medicaid spending. This center is currently focused on the following priorities:

● testing new payment and service delivery models;

● evaluating results and advancing best practices;

● engaging a broad range of stakeholders to develop additional models for testing; and

● implementation of the federal physician payment transparency requirements, or the Sunshine Act. The Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act, or the SUPPORT Act, signed into law on October 24, 2018, expanded Sunshine Act reporting to include data for physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and certified nurse midwifes. The amendment applies to reports submitted to CMS on or after January 1, 2022.

The ACA may be modified, amended or repealed at any time and may or may not be replaced with a different law or health care payment system. The ACA is expected to continue to have a significant impact on the health care industry. With regard to pharmaceutical product candidates, among other things, the ACA may expand and increase industry rebates for drugs covered under Medicaid programs and make changes to the coverage requirements under the Medicare D program. Since the enactment of the ACA, numerous regulations have been issued providing further guidance on its requirements. The ACA continues to be implemented through regulation and government activity but is subject to possible amendment, additional implementing regulations and interpretive guidelines. Several states have decided not to expand their Medicaid programs and are seeking alternative reimbursement models to provide care to the uninsured. The manner in which these issues are resolved could materially affect the extent to which and the amount at which pharmaceuticals are reimbursed by government programs such as Medicare, Medicaid and Tricare.

In 2016, CMS issued a final rule regarding the Medicaid Drug Rebate Program that, among other things, revised the manner in which the AMP is calculated by manufacturers participating in the program and implemented certain amendments to the Medicaid rebate statute created under the ACA. In addition, on December 21, 2020, CMS issued a final rule that made changes to the Medicaid Drug Rebate Program regulations in several areas, including some changes to the treatment of value-based purchasing arrangements and price reporting for patient benefit programs sponsored by pharmaceutical manufacturers.

Two bills affecting the implementation of certain taxes under the ACA have been signed into law. The Tax Cuts and Jobs Act of 2017, or the TCJA, included a provision that repealed, effective January 1, 2019, the tax-based shared responsibility payment imposed by the ACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year, that is commonly referred to as the "individual mandate." Additionally, on January 22, 2018, President Trump signed a continuing resolution on appropriations for fiscal year 2018 that delayed the implementation of certain ACA-mandated fees. Further, the Bipartisan Budget Act of 2018, among other things, amended the ACA, effective January 1, 2019, to close the coverage gap in most Medicare drug plans, commonly referred to as the "donut hole." In July 2018, CMS published a final rule permitting further collections and payments to and from certain ACA qualified health plans and health insurance issuers under the ACA risk adjustment program in response to the outcome of federal district court litigation regarding the method CMS uses to determine this risk adjustment. On April 27, 2020, the U.S. Supreme Court reversed a Federal Circuit decision that previously upheld Congress' denial of $12 billion in "risk corridor" funding. Congress may consider additional legislation to repeal, or repeal and replace, other elements of the ACA. On June 17, 2021, the U.S. Supreme Court dismissed a challenge on procedural grounds that argued that the ACA is unconstitutional in its entirety because the individual mandate was repealed by Congress. Thus, the ACA will remain in effect in its current form. Prior to the U.S. Supreme Court ruling, on January 28, 2021, then President Biden issued an executive order that initiated a special enrollment period for purposes of obtaining health insurance coverage through the ACA marketplace. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. It is possible that the ACA will be subject to judicial or Congressional challenges in the future. It is unclear how such challenges and the healthcare reform measures of the Trump administration will impact the ACA and our business. We continue to evaluate the ACA and its possible repeal and replacement, as the extent to which any such changes may impact our business or financial condition remains uncertain.

In addition, other legislative changes have been proposed and adopted in the United States since the ACA was enacted. In 2011, the Budget Control Act of 2011 among other things, created measures for spending reductions by Congress. This includes aggregate reductions of Medicare payments to providers of 2% per fiscal year. These reductions, known as Medicare sequestration adjustments, went into effect in 2013. However, under the Coronavirus Aid, Relief, Economic Securities Act of 2020, and related legislation, Medicare sequestration adjustments from May 1, 2020 through March 31, 2021 have been suspended, though sequestration has been extended through 2030. Additionally, there has been heightened governmental scrutiny recently over the manner in which manufacturers set prices for their marketed products. For example, there have been several recent Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drug products. At the federal level, including the former Administration's budget for fiscal year 2020, there were further drug price control measures to permit Medicare Part D plans to negotiate the price of certain drugs under Medicare Part D, to continue to allow some states to negotiate drug prices under Medicaid through supplemental rebate negotiations and other mechanisms, and legislation was introduced to eliminate cost sharing for generic drugs for Part D low-income patients.

In addition, in November 2020, the U.S. DHHS, finalized a regulation aimed at lowering prescription drug prices and out-of-pocket spending for prescription drugs by excluding rebates on prescription drugs paid by manufacturers to or purchased by Medicare Part D plan sponsors or pharmacy benefit managers, or PBMs, acting under contract with Medicare Part D plan sponsors from the existing discount safe harbor under the federal Anti-Kickback Statute, or the AKS. The regulation reflects the first change to the AKS Statute discount safe harbor since the Medicare Part D program was established. In addition to the rebate exclusions, two new safe harbors were added. One of these new safe harbors protects point-of-sale reductions in price from a manufacturer to a plan sponsor under Medicare Part D or a MCO, for a prescription drug payable, in whole or in part, by a plan sponsor under Medicare Part D or a MCO, provided certain conditions are met. The other protects certain fixed-fee services arrangements between manufacturers and PBMs.

Congress and the executive branch have each indicated that it will continue to seek new legislative or administrative measures to control drug costs. At the state level, legislatures have been increasingly passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, drug price increases, and, in some cases, designed to encourage importation from other countries and bulk purchasing.

In the European Union, similar political, economic and regulatory developments may affect our ability to profitably commercialize any of our product candidates, if approved. In addition to continuing pressure on prices and cost containment measures, legislative developments at the European Union or member state level may result in significant additional requirements or obstacles that may increase our operating costs. The delivery of healthcare in the European Union, including the establishment and operation of health services and the pricing and reimbursement of medicines, is almost exclusively a matter for national, rather than European Union, law and policy. National governments and health service providers have different priorities and approaches to the delivery of health care and the pricing and reimbursement of products in that context. In general, however, the healthcare budgetary constraints in most EU member states have resulted in restrictions on the pricing and reimbursement of medicines by relevant health service providers. Coupled with ever-increasing European Union and national regulatory burdens on those wishing to develop and market products, this could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to commercialize any products for which we obtain marketing approval. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may continue after reimbursement has been obtained. Reference pricing used by various EU member states, and parallel trade, i.e., arbitrage between low-priced and high-priced member states, can further reduce prices. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any products, if approved in those countries. In international markets, reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted price ceilings on specific products and therapies.

We expect that these and other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and lower reimbursement, and in additional downward pressure on the price that we receive for any approved product. Any reduction in reimbursement from Medicare or other government-funded programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our drugs, once marketing approval is obtained. We cannot predict what healthcare reform initiatives may be adopted in the future. However, it is possible that there will be further legislation or regulation that could harm the business, financial condition and results of operations.

**Risks Related to Our Intellectual Property** 

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***If we are unable to obtain and maintain effective patent rights for our product candidates, we may not be able to compete effectively in our markets. If we are unable to protect the confidentiality of our trade secrets or know-how, such proprietary information may be used by others to compete against us***

Historically, we have relied on trade secret protection and confidentiality agreements to protect the intellectual property related to our technologies and product candidates. Since 2015, we have also sought patent protection for certain of our product candidates. Our success depends in large part on our ability to obtain and maintain patent and other intellectual property protection in the United States and in other countries with respect to our proprietary technology and new product candidates.

We seek to protect our proprietary position by filing patent applications in the United States and in other countries, with respect to our novel technologies and product candidates, which are important to our business. Patent prosecution is expensive and time consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection.

Not including patents and applications which we are in the process of being assigned, we have a portfolio of seven granted patents with the U.S. Patent and Trademark Office, or USPTO, eight patent families and two trademarks, of which eight families include Patent Cooperation Treaty, or PCT, applications, that have entered the national phase in various national entities. We cannot offer any assurances about which, if any, patent applications will issue, the breadth of any such patent or whether any issued patents will be found invalid and unenforceable or will be threatened by third parties. Any successful opposition to our patents after issuance could deprive us of rights necessary for the successful commercialization of any new product candidates that we may develop and would allow other third parties to compete with us.

We have exclusively licensed one U.S. patent family from Yissum Research Development Company of the Hebrew University of Jerusalem Ltd., or Yissum. We cannot assure you that we will ever enter into definitive license agreements with any third party licensor. See Item 4.B. "Business Overview-Intellectual Property-In-Licensed Patents and Patent Applications." To the extent the licensed or future licensed patents are found to be invalid or unenforceable, we may be limited in our ability to compete and market our product candidates. Moreover, the terms of our licenses affect our ability to control the value of any of our product candidates. If we or any of the parties that control the enforcement of licensed patents elect not to enforce any or all of the licensed patents it could significantly undercut the value of any of our product candidates, which would materially adversely affect our future revenue, financial condition and results of operations. Moreover, fluctuating currency rates may create inconsistencies in the royalty payments we are obligated to make under our licenses.

Also, there is no guarantee that the patent registration applications that were submitted by us with regard to our technologies will result in patent registration. In the event of failure to complete patent registration, our developments will not be proprietary, which might allow other entities to manufacture our product candidates and compete with them.

Further, there is no assurance that all potentially relevant prior art relating to our patent applications has been found. Such prior art, to the extent it exists, may invalidate a patent or prevent a patent from issuing from a pending patent application. Even if patents do successfully issue, and even if such patents cover our product candidates, third parties may challenge their validity, enforceability, or scope, which may result in such patents being narrowed, found unenforceable or invalidated. Furthermore, even if they are unchallenged, our patent applications and any future patents may not adequately protect our intellectual property, provide exclusivity for our new product candidates, or prevent others from designing around our claims. Any of these outcomes could impair our ability to prevent competition from third parties, which may have an adverse impact on our business.

Engagement in any type of intellectual property collaboration agreement requires diligent management of intellectual property rights. Joint intellectual property engagements may create additional administrative and financial burdens and may place us at heightened risk of disputes or litigation regarding ownership, maintenance or enforcement of such joint intellectual property. For example, our collaboration with Clearmind Medicine Inc., or Clearmind, has resulted in filings of provisional patent applications related to certain combinations of our respective proprietary compounds. As a joint-owner of intellectual property, we are generally or would be unable to use or exploit the intellectual property without the consent of the other joint owner. If we cannot obtain sole commercial use rights for such jointly-owned intellectual property as a result of our collaboration, our future product development and commercialization plans may be adversely affected. Moreover, if we cannot obtain and maintain effective patent rights for our product candidates, we may not be able to compete effectively, and our business and results of operations may be harmed.

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***We may not be able to identify infringements of our patents and accordingly the enforcement of our intellectual property rights may be difficult.***

The drug substance in some of our product candidates is repurposed, which means that it is available in other pharmaceutical products for the purpose of treating indications that are different from the indications for our product candidates. It is possible that if we receive regulatory approval to market and sell our drug candidates, some patients that receive a prescription could be sold the same drug substance but not our product candidate. It would be difficult, if not impossible, for us to identify such instances that may constitute an infringement of our patents. In addition, because the drug substance of some of our product candidates is repurposed, such substance may not be eligible for patent protection or data exclusivity. Even if we identify infringing parties, there is no guarantee that a court will agree with our arguments and find that a third party is infringing our patents or that the court will issue an order for an adequate remedy for that infringement.

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***If we are unable to maintain effective proprietary rights for our product candidates, we may not be able to compete effectively in our markets.***

In addition to the protection afforded by any patents currently owned and that may be granted, historically, we have relied on trade secret protection and confidentiality agreements to protect proprietary know-how that is not patentable or that we elect not to patent, processes that are not easily known, knowable or easily ascertainable, and for which patent infringement is difficult to monitor and enforce and any other elements of our product candidate discovery and development processes that involve proprietary know-how, information or technology that is not covered by patents. However, trade secrets can be difficult to protect. We seek to protect our proprietary technology and processes, in part, by entering into confidentiality agreements with our employees, consultants, scientific advisors, and contractors. We also seek to preserve the integrity and confidentiality of our data, trade secrets and intellectual property by maintaining physical security of our premises and physical and electronic security of our information technology systems. Agreements or security measures may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets and intellectual property may otherwise become known or be independently discovered by competitors.

We cannot provide any assurances that our trade secrets and other confidential proprietary information will not be disclosed in violation of our confidentiality agreements or that competitors will not otherwise gain access to our trade secrets or independently develop substantially equivalent information and techniques. Also, misappropriation or unauthorized and unavoidable disclosure of our trade secrets and intellectual property could impair our competitive position and may have a material adverse effect on our business. Additionally, if the steps taken to maintain our trade secrets and intellectual property are deemed inadequate, we may have insufficient recourse against third parties for misappropriating any trade secret.

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***Intellectual property rights of third parties could adversely affect our ability to commercialize our product candidates, and we might be required to litigate or obtain licenses from third parties in order to develop or market our product candidates. Such litigation or licenses could be costly or not available on commercially reasonable terms.***

It is inherently difficult to conclusively assess our freedom to operate without infringing on third party rights. Our competitive position may be adversely affected if existing patents or patents resulting from patent applications issued to third parties or other third party intellectual property rights are held to cover our product candidates or elements thereof, or our manufacturing or uses relevant to our development plans. In such cases, we may not be in a position to develop or commercialize product candidates or our product candidates unless we successfully pursue litigation to nullify or invalidate the third party intellectual property right concerned, or enter into a license agreement with the intellectual property right holder, if available on commercially reasonable terms. There may also be pending patent applications that if they result in issued patents, could be alleged to be infringed by our new product candidates. If such an infringement claim should be brought and be successful, we may be required to pay substantial damages, be forced to abandon our new product candidates or seek a license from any patent holders. No assurances can be given that a license will be available on commercially reasonable terms, if at all.

It is also possible that we have failed to identify relevant third-party patents or applications. For example, certain U.S. patent applications that will not be filed outside the United States remain confidential until patents issue. Patent applications in the United States and elsewhere are published approximately 18 months after the earliest filing for which priority is claimed, with such earliest filing date being commonly referred to as the priority date. Therefore, patent applications covering our new product candidates or platform technology could have been filed by others without our knowledge. Additionally, pending patent applications which have been published can, subject to certain limitations, be later amended in a manner that could cover our platform technologies, our new product candidates or the use of our new product candidates. Third party intellectual property right holders may also actively bring infringement claims against us. We cannot guarantee that we will be able to successfully settle or otherwise resolve such infringement claims. If we are unable to successfully settle future claims on terms acceptable to us, we may be required to engage in or continue costly, unpredictable and time-consuming litigation and may be prevented from or experience substantial delays in pursuing the development of and/or marketing our new product candidates. If we fail in any such dispute, in addition to being forced to pay damages, we may be temporarily or permanently prohibited from commercializing our new product candidates that are held to be infringing. We might, if possible, also be forced to redesign our new product candidates so that we no longer infringe the third-party intellectual property rights. Any of these events, even if we were ultimately to prevail, could require us to divert substantial financial and management resources that we would otherwise be able to devote to our business.

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***Third-party claims of intellectual property infringement may prevent or delay our development and commercialization efforts.***

Our commercial success depends in part on our avoiding infringement of the patents and proprietary rights of third parties. Numerous U.S. and foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields in which we are developing new product candidates. As our industries expand and more patents are issued, the risk increases that our product candidates may be subject to claims of infringement of the patent rights of third parties.

Third parties may assert that we are employing their proprietary technology without authorization. There may be third-party patents or patent applications with claims to materials, designs or methods of manufacture related to the use or manufacture of our product candidates. There may be currently pending patent applications that may later result in issued patents that our product candidates may infringe. In addition, third parties may obtain patents in the future and claim that use of our technologies infringes upon these patents.

If any third-party patents were held by a court of competent jurisdiction to cover aspects of our formulations, processes for designs, or methods of use, the holders of any such patents may be able to block our ability to develop and commercialize the applicable product candidate unless we obtain a license or until such patent expires or is finally determined to be invalid or unenforceable. In either case, such a license may not be available on commercially reasonable terms or at all.

Parties making claims against us may obtain injunctive or other equitable relief, which could effectively block our ability to further develop and commercialize one or more of our product candidates. Defense of these claims, regardless of their merit, would involve substantial litigation expense and would be a substantial diversion of employee resources from our business. In the event of a successful claim of infringement against us in the U.S. or any other relevant jurisdiction, we may have to pay substantial damages, including treble damages and attorneys' fees for willful infringement, pay royalties, redesign our infringing product candidates or obtain one or more licenses from third parties, which may be impossible or require substantial time and monetary expenditure.

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***Patent policy and rule changes could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of any issued patents.***

Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of any patents that may issue from our patent applications, or narrow the scope of our patent protection. The laws of foreign countries may not protect our rights to the same extent as the laws of the United States. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. We therefore cannot be certain that we were the first to file the invention claimed in our owned and licensed patent or pending applications, or that we or our licensor were the first to file for patent protection of such inventions. Assuming all other requirements for patentability are met, in the United States prior to 2013, the first to make the claimed invention without undue delay in filing, is entitled to the patent, while outside the United States, the first to file a patent application is entitled to the patent. After 2013, the United States moved to a first to file system. Changes in patent litigation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of any issued patents, all of which could have a material adverse effect on our business and financial condition.

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***We may be involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming, and unsuccessful.***

Competitors may infringe our intellectual property. If we were to initiate legal proceedings against a third party to enforce a patent covering one of our new product candidates, the defendant could counterclaim that the patent covering our product candidate is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, or non-enablement. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement, during prosecution. The validity of U.S. patents may also be challenged in post-grant proceedings before the USPTO. The outcome following legal assertions of invalidity and unenforceability is unpredictable.

Derivation proceedings initiated by third parties or brought by us may be necessary to determine the priority of inventions and/or their scope with respect to our patent or patent applications or those of our licensors. An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. Our defense of litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees. In addition, the uncertainties associated with litigation could have a material adverse effect on our ability to raise the funds necessary to continue our clinical trials, continue our research programs, license necessary technology from third parties, or enter into development partnerships that would help us bring our new product candidates to market.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions, or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our Ordinary Shares.

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***We may be subject to claims challenging the inventorship of our intellectual property.***

We may be subject to claims that former employees, collaborators or other third parties have an interest in, or right to compensation, with respect to our current patent and patent applications, future patents or other intellectual property as an inventor or co-inventor. For example, we may have inventorship disputes arise from conflicting obligations of consultants or others who are involved in developing our product candidates. Litigation may be necessary to defend against these and other claims challenging inventorship or claiming the right to compensation. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.

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***We may not be able to protect our intellectual property rights throughout the world.***

Filing, prosecuting, and defending patents on product candidates, as well as monitoring their infringement in all countries throughout the world would be prohibitively expensive, and our intellectual property rights in some countries can be less extensive than those in the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States.

Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and may also export otherwise infringing products to territories where we have patent protection, but enforcement is not as strong as that in the United States. These products may compete with our product candidates. Future patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets, and other intellectual property protection, which could make it difficult for us to stop the marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our future patents at risk of being invalidated or interpreted narrowly and our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to monitor and enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.

***Certain of the patents we acquired from Xylo have expired and certain others will expire in the near term, which may limit or eliminate the intellectual property protections available to us and adversely affect our ability to commercialize the acquired technologies.***

On January 8, 2026, we entered into an asset purchase agreement with Xylo, pursuant to which we acquired the complete portfolio of patents, trademarks, know-how, and related intellectual property rights primarily associated with the MUSE™ system for innovative endoscopic systems and medical cameras. As of the date of this Annual Report, the terms of certain patents included in the acquired portfolio have already expired and the terms of certain other patents are expected to expire in the near term. Upon the expiration of a patent, the protections afforded by such patent cease and third parties may be free to manufacture, use, sell, or import products or technologies that were previously covered by such patent without our authorization. The expiration of one or more patents within the acquired portfolio may reduce or eliminate barriers to competition, enabling competitors to develop and market products based on the same or similar technologies. This could lead to increased competition, downward pressure on pricing for products that use such technologies and a reduction in our potential revenues from the planned commercialization of the acquired assets. In addition, to the extent that patents that have already expired or will expire in the near term cover key aspects of the MUSE™ system or the other acquired endoscopic technologies, we may be unable to prevent third parties from practicing the inventions claimed in those patents, which could materially and adversely affect the value of the acquired intellectual property portfolio and our ability to generate revenue from the commercialization thereof. There can be no assurance that the remaining patents within the acquired portfolio will provide adequate protection or that we will be able to develop, file, or obtain additional patents or other forms of intellectual property protection to supplement the expiring or expired patents. Our inability to maintain meaningful patent protection over the acquired technologies could have a material adverse effect on our business, financial condition, results of operations and prospects.

***Xylo may not be able to assign certain commercial contracts to us as required under the asset purchase agreement, which could impair our ability to commercialize the acquired assets from the ground up and generate anticipated revenues.***

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terms of the asset purchase agreement, Xylo is required to assign to us certain commercial contracts relating to the acquired intellectual property portfolio, including contracts that may be material to our planned commercialization strategy from the ground up. The assignment of such commercial contracts may require the consent of the applicable counterparties, and there can be no assurance that such consents will be obtained on a timely basis, on acceptable terms, or at all. Counterparties to such contracts may refuse to consent to the assignment, may seek to renegotiate the terms of such contracts in connection with any assignment, or may assert that the attempted assignment constitutes a breach of the applicable agreement, potentially giving rise to termination rights or other remedies in favor of such counterparties. If Xylo is unable to assign one or more of the relevant commercial contracts to us, or if such assignments are delayed, we may be unable to realize the full expected benefits of the acquisition. We may also need to negotiate new agreements with such counterparties, which may be on terms less favorable than the existing arrangements, or we may be unable to enter into replacement agreements at all. Any failure by Xylo to assign the relevant commercial contracts, or any disruption to existing commercial relationships arising from the assignment process, could have a material adverse effect on our business, financial condition, results of operations and prospects.

***The process of transferring the acquired patents from Xylo to our name has not yet been completed, and any delay or failure in completing such transfers could impair our intellectual property rights and adversely affect our business.***

As of the date of this Annual Report, the process of recording the transfer of certain patents acquired from Xylo pursuant to the asset purchase agreement in the relevant patent offices has not yet been completed. Although Xylo executed an assets transfer deed with respect to the acquired patents, the formal recordation of such transfers with the applicable patent authorities in various jurisdictions may take a significant period of time and is subject to administrative and procedural requirements that are outside of our control. Until the transfer of the acquired patents is formally recorded in the relevant patent offices, our ability to enforce such patents against third parties may be limited, and questions may arise regarding the chain of title to such patents. Any deficiency in the documentation or procedures required to effect the transfer could result in a delay in, or failure to complete, the recordation of our ownership of such patents. In addition, if the transfer of certain patents is not completed in a timely manner, third parties could challenge our standing to enforce such patents, or we could face difficulties in licensing such patents to potential commercial partners. Any inability to complete the transfer of the acquired patents, or any delay in doing so, could limit our ability to fully protect and exploit the acquired assets, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

**Risks Related to Our Pharmaceutical Business Operations** 

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***From time to time, we may sign letters of intent and/or enter into term sheets or other similar arrangements that are subject to negotiation of definitive agreements. There can be no assurance that we will enter into any such definitive agreement. Similarly, we may strategically invest in transactions from time to time, and there can be no assurance that the value of our investment will increase or that it will not fluctuate.***

From time to time, we may sign letters of intent and/or enter into term sheets or other similar arrangements that are subject to negotiation of definitive agreements. We may never enter into definitive agreements after signing a letter of intent and/or entering into a term sheet or other similar arrangement for a multitude of reasons, including, but not limited to, regulatory, operational, financial and other considerations. There may also be forces outside of our control that have an effect on our ability or decision as to whether we enter into such definitive agreements. As a result, there can be no assurance that upon signing a letter of intent and/or entering into a term sheet or similar arrangement, that we will enter into definitive documents. This could have a material adverse effect on our reputation and could cause us to incur expenses if any legal claims arise as a result thereof.

Similarly, we may strategically invest into various companies. However, we can offer no assurance that the value of our investment will increase or that it will not fluctuate because the value of our investments may be adversely affected by a number of factors, such as negative changes in a company's results of operations, cash flows, financial position and accounting impairment.

For example, in November 2022, we invested in Clearmind, a psychedelic pharmaceutical biotech company focused on the discovery and development of novel psychedelic-derived therapeutics to solve widespread and underserved health conditions. In addition, in August 2024, we entered into an exclusive patent license agreement with Polyrizon Ltd., or Polyrizon, for the out-licensing of our SCI-160 program, or the Polyrizon License. As of the date of this Annual Report, the SCI-160 license remains in effect, and we do not hold any Polyrizon securities, other than Series A warrants received in connection with the April 1, 2025 private placement described under "Item 4.B. Business Overview – Polyrizon."

In January 2026, we closed the acquisition of the complete portfolio of patents, trademarks, know-how, brand names and related intellectual property rights, including unregistered intellectual property rights, owned by Xylo. However, Xylo ceased all commercial and operational activities related to the acquired assets in early 2023, and has had no operations, revenue, expenses, or active business with respect to such assets from that time through the date of the acquisition. We are planning to build Xylo's commercial activities essentially from the ground up.

In December 2025, we, through NeuroThera, entered into a non-binding term sheet to acquire a majority interest in an Israeli-based quantum computing bio data analysis company focused on quantum-enabled clinical and biological data analysis. On March 9, 2026, NeuroThera entered into a share purchase agreement among certain shareholders of CliniQuantum Ltd., or CliniQ, CliniQ and NeuroThera. Pursuant to the agreement, NeuroThera will acquire 56,375 ordinary shares of CliniQ, representing approximately 54% of the issued and outstanding ordinary shares of CliniQ on a fully diluted basis immediately prior to the closing of the transaction. As of April 28, 2026, NeuroThera had not closed the transaction with CliniQ.

The anticipated benefits of the investment in Clearmind, the exclusive patent license agreement with Polyrizon, letters of intent, term sheets or other potential investments or strategic transactions may not be realized to the full extent, in a timely fashion, or at all, and any failure to realize such benefits could have a material adverse effect on our results of operations, cash flows and financial position. In addition, the anticipated benefits of any future strategic investments, collaborations or transactions may not materialize or may not be realized to the full extent, in a timely fashion, or at all, which could similarly adversely affect our business, results of operations, cash flows and financial position.

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***We will need to expand our organization and we may experience difficulties in recruiting needed additional employees and consultants, which could disrupt our operations.***

As our development and commercialization plans and strategies develop and because we are so leanly staffed, we will need additional managerial, operational, sales, marketing, financial, legal and other resources. The competition for qualified personnel in the pharmaceutical field is intense. Due to this intense competition, we may be unable to attract and retain qualified personnel necessary for the development of our business or to recruit suitable replacement personnel.

Our management may need to divert a disproportionate amount of its attention away from our day-to-day activities and devote a substantial amount of time to managing these growth activities. We may not be able to effectively manage the expansion of our operations, which may result in weaknesses in our infrastructure, operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. Our expected growth could require significant capital expenditures and may divert financial resources from other projects, such as the development of additional pharmaceutical product candidates. If our management is unable to effectively manage our growth, our expenses may increase more than expected, our ability to generate and/or grow revenue could be reduced and we may not be able to implement our business strategy. Our future financial performance and our ability to commercialize pharmaceutical product candidates and compete effectively will depend, in part, on our ability to effectively manage any future growth.

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***We may not be successful in our efforts to identify, license or discover additional pharmaceutical product candidates.***

Although a substantial amount of our effort will focus on the continued clinical testing, potential approval and commercialization of our existing pharmaceutical product candidates, the success of our business also depends in part upon our ability to identify, license or discover additional pharmaceutical product candidates. Our research programs or licensing efforts may fail to yield additional pharmaceutical product candidates for clinical development for a number of reasons, including but not limited to the following:

● our research or business development methodology or search criteria and process may be unsuccessful in identifying potential pharmaceutical product candidates;

● we may not be able or willing to assemble sufficient resources to acquire or discover additional pharmaceutical product candidates;

● our pharmaceutical product candidates may not succeed in preclinical or clinical testing;

● our potential pharmaceutical product candidates may be shown to have harmful side effects or may have other characteristics that may make the pharmaceutical products unmarketable or unlikely to receive marketing approval;

● competitors may develop alternatives that render our pharmaceutical product candidates obsolete or less attractive;

● pharmaceutical product candidates we develop may be covered by third parties' patents or other exclusive rights;

● the market for a pharmaceutical product candidate may change during our program so that such a pharmaceutical product may become unreasonable to continue to develop;

● a pharmaceutical product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and

● a pharmaceutical product candidate may not be accepted as safe and effective by patients, the medical community or third-party payors.

If any of these events occur, we may be forced to abandon our development efforts for a program or programs, or we may not be able to identify, license or discover additional pharmaceutical product candidates, which would have a material adverse effect on our business and could potentially cause us to cease operations. Research programs to identify new pharmaceutical product candidates require substantial technical, financial and human resources. We may focus our efforts and resources on potential programs or pharmaceutical product candidates that ultimately prove to be unsuccessful.

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***We may be subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws and health information privacy and security laws. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties.***

If we obtain FDA approval for any of our pharmaceutical product candidates and begin commercializing those pharmaceutical products in the United States, our operations may be directly or indirectly through our customers, subject to various federal and state fraud and abuse laws, including, without limitation, the federal AKS, the federal False Claims Act and physician sunshine laws and regulations. These laws may impact, among other things, our proposed sales, marketing and education programs. In addition, we may be subject to patient privacy regulation by both the federal government and the states in which we conduct our business. The laws that may affect our ability to operate include:

● the federal AKS, which prohibits, among other things, persons from knowingly and willfully soliciting, receiving, offering or paying remuneration, directly or indirectly, to induce, or in return for, the purchase or recommendation of an item or service reimbursable under a federal healthcare program, such as the Medicare and Medicaid programs;

● federal civil and criminal false claims laws and civil monetary penalty laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other third-party payors that are false or fraudulent;

● the Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created new federal criminal statutes that prohibit executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters;

● HIPAA, as amended by the Health Information Technology and Clinical Health Act, or HITECH and its implementing regulations, which imposes certain requirements relating to the privacy, security and transmission of individually identifiable health information;

● the federal physician sunshine requirements under the ACA requires manufacturers of drugs, devices and medical supplies to report annually to the U.S. DHHS information related to payments and other transfers of value to physicians, other healthcare providers and teaching hospitals and ownership and investment interests held by physicians and other healthcare providers and their immediate family members and applicable group purchasing organizations; and

● state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payor, including commercial insurers, state laws that require pharmaceutical companies to comply with the pharmaceutical industry's voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and state laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts.

Because of the breadth of these laws and the narrowness of the statutory exceptions and safe harbors available, it is possible that some of our business activities could be subject to challenge under one or more of such laws. In addition, recent health care reform legislation has strengthened these laws. For example, the ACA, among other things, amends the intent requirement of the federal anti-kickback and criminal healthcare fraud statutes. A person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it. Moreover, the ACA provides that the government may assert that a claim including items or services resulting from a violation of the federal AKS constitutes a false or fraudulent claim for purposes of the False Claims Act.

If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal penalties, damages, fines, exclusion from participation in government health care programs, such as Medicare and Medicaid, imprisonment and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations.

***The use of any of our pharmaceutical product candidates and marketed products could result in product liability or similar claims that could be expensive, damage our reputation and harm our business.***

Our business exposes us to an inherent risk of potential pharmaceutical product liability or similar claims. The pharmaceutical and nutraceuticals industries have historically been litigious, and we face financial exposure to pharmaceutical product liability or similar claims if the use of any of our pharmaceutical products were to cause or contribute to injury or death. There is also the possibility that defects in the design or manufacture of any of our pharmaceutical products might necessitate a pharmaceutical product recall. Although we plan to maintain pharmaceutical product liability insurance, the coverage limits of these policies may not be adequate to cover future claims. In the future, we may be unable to maintain pharmaceutical product liability insurance on acceptable terms or at reasonable costs and such insurance may not provide us with adequate coverage against potential liabilities. A pharmaceutical product liability claim, regardless of merit or ultimate outcome, or any pharmaceutical product recall could result in substantial costs to us, damage to our reputation, customer dissatisfaction and frustration and a substantial diversion of management attention. A successful claim brought against us in excess of, or outside of, our insurance coverage could have a material adverse effect on our business, financial condition and results of operations.

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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 or incur costs that could have a material adverse effect on the success of our business.***

Our research and development activities and our third-party manufacturers' and suppliers' activities involve the controlled storage, use and disposal of hazardous materials, including the components of our pharmaceutical product candidates and other hazardous compounds. We and our manufacturers and suppliers are subject to laws and regulations governing the use, manufacture, storage, handling and disposal of these hazardous materials. In some cases, these hazardous materials and various wastes resulting from their use are stored at our and our manufacturers' facilities pending their use and disposal. We cannot eliminate the risk of contamination, which could cause an interruption of our commercialization efforts, research and development efforts, business operations and environmental damage resulting in costly clean-up and liabilities under applicable laws and regulations governing the use, storage, handling and disposal of these materials and specified waste pharmaceutical products. Although we believe that the safety procedures utilized by our third-party manufacturers for handling and disposing of these materials generally comply with the standards prescribed by these laws and regulations, we cannot guarantee that this is the case or eliminate the risk of accidental contamination or injury from these materials. In such an event, we may be held liable for any resulting damages and such liability could exceed our resources and state or federal or other applicable authorities may curtail our use of certain materials and/or interrupt our business operations. Furthermore, environmental laws and regulations are complex, change frequently and have tended to become more stringent. We cannot predict the impact of such changes and cannot be certain of our future compliance. We do not currently carry biological or hazardous waste insurance coverage.

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***The success of our business depends in part on the successful execution of the NeuroThera transaction and NeuroThera's ability to operate as a public company.***

In October 2025, we completed the NeuroThera transaction pursuant to which we transferred our advanced clinical-stage pharmaceutical portfolio and certain related assets, including our equity interest in SciSparc Nutraceuticals, to NeuroThera, in which we hold a controlling equity interest. As a result, a significant portion of our pharmaceutical development activities is conducted through NeuroThera. The success of this transaction depends on NeuroThera's ability to execute its business strategy and operate effectively as a public company. Among other things, NeuroThera must comply with its disclosure obligations and the applicable filing requirements of the TSXV, including annual and interim filing deadlines. In addition, our ability to realize the anticipated benefits of the transaction may depend in part on our ability to list NeuroThera on a national securities exchange in the United States. There can be no assurance that NeuroThera will successfully comply with these requirements, obtain such a listing, secure financing, effectively integrate the transferred assets, or advance the development and commercialization of the transferred technologies. If NeuroThera is unable to successfully execute its strategy, comply with applicable regulatory and disclosure requirements, or achieve the anticipated benefits of the NeuroThera transaction, it could have a material adverse effect on our business, financial condition and results of operations.

**Risks Related to the eCommerce Operations of SciSparc Nutraceuticals**

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***We may be unable to successfully pursue, integrate, or execute upon the eCommerce operations business of SciSparc Nutraceuticals.***

In September 2022, we purchased Wellution™, a business and brand which sells hemp-based products on Amazon Marketplace. In October 2025, as part of a strategic transaction, we transferred our equity interest of approximately 51% in SciSparc Nutraceuticals to NeuroThera, and our exposure to the Wellution™ business is now held indirectly through NeuroThera.

Our management has limited prior experience in eCommerce business operations. There can be no assurance that the Wellution™ business, conducted through SciSparc Nutraceuticals and held indirectly through NeuroThera, will be successfully implement our new business ventures or successfully operate within this industry. The successful integration of a new business also depends on our ability to manage the new business, realize forecasted synergies and full value from the combined business. Our business, results of operations, financial condition and cash flows could be materially adversely affected if we are unable, through NeuroThera, to successfully integrate Wellution into our existing operations and any inability to do so may also hinder our ability to grow, divert the attention of management and our key personnel, disrupt our business and impair our financial results.

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***The eCommerce operations of SciSparc Nutraceuticals rely on Amazon Marketplace and fulfillment by Amazon.com and changes to Amazon Marketplace, Amazon's services and their terms of use may harm our business.***

Wellution's products are sold predominantly on Amazon Marketplace and orders are fulfilled entirely by Amazon Marketplace utilizing the fulfilled by Amazon, or FBA, model. In order to continue to utilize Amazon Marketplace and FBA, we must comply with the applicable policies and terms of use relating to these services. Such policies and terms of use may be altered or amended at Amazon Marketplace's sole discretion, including changes regarding the cost of securing these services, and changes that increase the burden of compliance with its requirements, may cause us to significantly alter our business model or incur additional costs in order to comply, which could negatively impact our results of operations. Non-compliance with applicable terms of use and policies can result in the removal of one or more products from the marketplace and suspension of fulfillment services either of which could have a material adverse effect on our business and results of our operations. In February 2024, Wellution was in non-compliance with changes in Amazon's policies concerning claims associated with vitamin and cosmetic products. The new Amazon policy mandated that no claims, in any form, could be displayed on the product label, in the Amazon listing, or within the product descriptions. For instance, phrases such as "Our Keto Weight Loss Gummy Bear Reduces Appetite" were no longer permissible. Instead, it was required to describe the product using terminology such as "Keto Gummy Bears For A Healthy Lifestyle". Due to the extensive descriptions present on both the Amazon listing and the product label itself, it took several weeks to achieve a comprehensive understanding of Amazon's new requirements. Moreover, each word within the description required prior approval from the Amazon team, with revision responses typically taking several days or longer. Often, these responses originated from automated systems, lacking the clarity and specificity needed for effective resolution. To navigate this process efficiently, Amazon experts were engaged to assist with the necessary adjustments. As a result, all products sold by Wellution were removed for sale from the marketplace and product labels were updated, a process that spanned several weeks to complete and caused the sales on the Wellution platform to dramatically decrease for such period. Since implementing these changes and resolving the issue, we have experienced no further instances of non-compliance and remains committed to maintaining compliance. However, there is no guarantee that similar issues will not arise in the future, which could lead to product removal from the marketplace or suspension of fulfillment services, adversely impacting its business and operational outcomes. ****

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***The eCommerce operations of SciSparc Nutraceuticals rely on other information technologies and systems to operate its business and to maintain its competitiveness, and any failure to invest in and adapt to technological developments and industry trends could harm our business.***

We depend on sophisticated information technologies and systems, technology and systems used for Wellution's websites and apps, customer service, logistics and fulfillment, supplier connectivity, communications and administration. As our operations grow in size, scope and complexity, we will need to continuously improve and upgrade our systems and infrastructure to offer an increasing number of consumer-enhanced services, features and functionalities, while maintaining and improving the reliability and integrity of our systems and infrastructure.

Our future success also depends on our ability to use A.I. tools and infrastructure, including logistics and fulfillment platform which leverages, to meet rapidly evolving eCommerce trends and demands. The emergence of alternative platforms may require us to continue to invest in new and costly technology. We may not be successful, or we may be less successful than our competitors, in adopting technologies that operate effectively across multiple eCommerce platforms, which would negatively impact our business and financial performance. New developments in other areas, such as cloud computing providers, could also make it easier for competitors to enter our markets due to lower up-front technology costs. In addition, we may not be able to maintain our existing systems or replace our current systems or introduce new technologies and systems as quickly or cost effectively as we would like. Failure to invest in and adapt to technological developments and industry trends may have a material adverse effect on our business, results of operations, financial condition and prospects.

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***The eCommerce operations of SciSparc Nutraceuticals rely on data provided by third parties, the loss of which could limit the functionality of our platforms, cause us to invest in the wrong product or disrupt our business.***

We use third party software to determine market trends and what markets to enter into. Our ability to successfully use this software depends on our ability to analyze and utilize data, including search engine results, provided by unaffiliated third parties, primarily, Google and Amazon. Some of this data is provided to us pursuant to third-party data sharing policies and terms of use, under data sharing agreements by third-party providers or by customer consent. The majority of this data is sourced for free or for de minimis amounts. These sources of data allow us, along with A.I. tools, to determine trends, performance and consumer sentiment on products and searches within eCommerce platforms. This functionality allows us to help determine which products to market, in some cases manufacture through contract manufacturers, import and sell on eCommerce marketplaces. The connection to multiple eCommerce platforms through application programming interfaces allow us to develop the automation of the purchase of marketing and automate the change of pricing of product listings on those eCommerce platforms.

In the future, any of these third parties could change its data sharing policies, including making them more restrictive, charging fees or altering its algorithms that determine the placement, display and accessibility of search results and social media updates, any of which could result in the loss of, or significant impairment to, our ability to collect useful data. These third parties could also interpret our, or our service providers', data collection policies or practices as being inconsistent with their policies, which could result in the loss of our ability to collect this data. Privacy concerns may cause end users to resist providing the personal data necessary to allow us to determine market trends as well as our ability to effectively retain existing customers. Privacy advocacy groups and the technology and other industries are considering various new, additional or different self-regulatory standards that may place additional burdens on us. Any such changes could impair our ability to use data and could adversely impact select functionality of our proprietary software, impairing our ability to use this data to anticipate customer demand and market trends, as well as adversely affecting our business and our ability to generate revenue.

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***The eCommerce operations of SciSparc Nutraceuticals depend on our ability to build and maintain strong product listings on eCommerce platforms. We may not be able to maintain and enhance our product listings if we receive a substantial number of customer complaints, negative publicity or otherwise fail to live up to customers' expectations, any of which could materially adversely affect our business, results of operations and growth prospects.***

Maintaining and enhancing our product listings is critical in expanding and growing our business. However, a significant portion of our perceived performance to the customer depends on third parties outside of our control, including suppliers and logistics providers such as FedEx, UPS, postal services and other third-party delivery agents and online retailers, mainly Amazon. Because our agreements with our online retail partners are generally terminable at will, we may be unable to maintain these relationships, and our results of operations could fluctuate significantly from period to period. Because we rely on third party logistics companies to deliver our products, we are subject to shipping delays or disruptions caused by inclement weather, natural disasters, labor activism, health epidemics or bioterrorism. In addition, because we rely on national, regional and local transportation companies for the delivery of some of our other products, we are also subject to risks of breakage or other damage during delivery by any of these third parties. If these third parties do not meet our or our customers' expectations, our brands may suffer irreparable damage. In addition, maintaining and enhancing our current and future brands may require us to make substantial investments, and these investments may not yield sufficient returns. If we fail to promote and maintain our brands, or if we incur excessive expenses in this effort, our business, operating results and financial condition may be materially adversely affected. We anticipate that, as our market becomes increasingly competitive, maintaining and enhancing our brands may become increasingly difficult and expensive. Maintaining and enhancing our brands will depend largely on our ability to anticipate market trends and customer demand and to provide high quality products to our customers and a reliable, trustworthy and profitable sales channel to our suppliers, which we may not be able to do successfully.

A substantial number of customer complaints or negative publicity about our sites, products, delivery times, customer data handling and security practices or customer support, especially on blogs, social media websites or our sites, could rapidly and severely diminish consumer views of our products and result in harm to our brands. Customers may also make safety-related claims regarding products sold through our online retail partners, such as Amazon, which may result in an online retail partner removing the product from its marketplace. Such removal may materially impact our financial results depending on the product that is removed and length of time that it is removed. We also use and rely on other services from third parties, such as our telecommunications services, and those services may be subject to outages and interruptions that are not within our control.

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***The eCommerce operations' efforts of SciSparc Nutraceuticals to acquire or retain customers, and our efforts to sell new products or increase sales of our existing products, may not be successful, which could prevent us from maintaining or increasing our sales and achieving profitability.***

If we do not successfully promote and sustain our new and/or existing product listings and brands through marketing and other tools, we may fail to maintain or increase our sales and achieve profitability. Promoting and positioning our brands and product listings will depend largely on the success of our marketing efforts, our ability to attract customers cost effectively and our ability to consistently provide a high-quality product and maintain consumer satisfaction. We also use promotions to drive sales, which may not be effective and may adversely affect our gross margins. Our investments in marketing may not effectively reach potential customers, potential customers may decide not to buy our products or the spending of customers that purchase from us may not yield the intended return on investment, any of which could negatively affect our financial results. The failure of our marketing activities could also adversely affect our ability to promote our product listings and sell our products, and to develop and maintain relationships with our customers, retailers and brands, which may have a material adverse effect on our business, results of operations, financial condition and prospects.

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***If the eCommerce operations of SciSparc Nutraceuticals fail to offer high-quality customer support, our business and reputation may suffer.***

High-quality education and training of customer support personnel to deliver high-quality customer support are important for the successful retention of existing customers. Providing this education, training and support requires that our support personnel have specific knowledge and expertise of our products and markets, making it more difficult for us to hire experienced personnel and to scale up our support operations. The importance of high-quality customer support will increase as we expand our business and pursue new customers. If we do not provide effective and timely ongoing support, our ability to retain existing customers may suffer, and our reputation with existing or potential customers may be harmed, which would have a material adverse effect on our business, results of operations, financial condition and prospects.

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***The eCommerce operations' efforts of SciSparc Nutraceuticals to expand our business into new brands, products, services, technologies and geographic regions will subject us to additional business, legal, financial and competitive risks and may not be successful.***

Wellution's business success depends to some extent on our ability to expand our consumer offerings by launching new brands, products and services and by expanding our existing offerings into new geographic regions. Our strategy is to use our skills to determine which markets to enter and optimize the mix of products and services that we offer.

Launching new brands, products and services requires significant upfront investments, including investments in marketing (namely digital marketing and Pay Per Click (PPC)), information technology and additional personnel. We operate in highly competitive industries with relatively low barriers to entry and must compete successfully in order to grow our business. We may not be able to generate satisfactory revenue from these efforts to offset these costs. Any lack of market acceptance of our efforts to launch new brands, products or services or to expand our existing offerings could have a material adverse effect on our business, prospects, financial condition and results of operations. Further, as we continue to expand our fulfillment capability or add new businesses with different requirements, our logistics networks will become increasingly complex and operating them will become more challenging. There can be no assurance that we will be able to operate our networks effectively.

We have also entered and may continue to enter new markets and provide product offerings in which we have limited or no experience, which may not be successful or appealing to our customers.

The eCommerce consumer products goods industry is subject to evolving standards and practices, as well as changing consumer needs, requirements and preferences. Our ability to attract new customers and increase revenue from existing customers depends, in part, on our ability to enhance and improve our existing tools that enable us to pinpoint new markets and introduce new products. The success of any enhancements or new instruments depends on, in part, market-accepted pricing levels and overall market acceptance. We may not be successful in these efforts, which could result in significant expenditures that could impact our revenue or distract management's attention from current offerings.

Increased emphasis on the sale of new products could distract us from sales of our existing products in existing markets, negatively affecting our overall sales. We have invested and expect to continue to invest in new businesses, products, features, services and technologies. Such endeavors may involve significant risks and uncertainties, including insufficient revenue from such investments to offset any new liabilities assumed and expenses associated with these new investments, inadequate return of capital on our investments, distraction of management from current operations and unidentified issues not discovered in our due diligence of such investments that could cause us to fail to realize the anticipated benefits of such investments and incur unanticipated liabilities. Because these new strategies and offerings are inherently risky, no assurance can be given that they will be successful. Our new features or enhancements could fail to attain sufficient market acceptance for many reasons, including:

● delays in introducing products in new markets;

● failure to accurately predict market demand or end consumer preferences;

● introduction of competing products;

● poor financial conditions for our customers or poor general macroeconomic conditions;

● changes in legal or regulatory requirements, or increased legal or regulatory scrutiny, adversely affecting our products;

● failure of our brands, and products, digital promotion activities or negative publicity about the performance or effectiveness of our existing brands and products; and

● disruptions or delays in the online retailers and, or in addition to, logistics providers distributing our products.

There is no assurance that we will successfully identify new opportunities or develop and bring new products to market on a timely basis, which could materially and adversely affect our business and operating results and compromise our ability to generate revenue.

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***The eCommerce operations' use of social media and email by SciSparc Nutraceuticals may adversely impact our reputation or subject us to fines or other penalties.***

We use social media and email as part of our digital marketing efforts. As laws and regulations rapidly evolve to govern the use of these channels, the failure by us, our employees or third parties acting at on our behalf to abide by applicable laws and regulations in the use of these channels could adversely affect our reputation or subject us to fines or other penalties. In addition, our employees or third parties acting on our behalf may knowingly or inadvertently make use of social media in ways that could lead to the loss or infringement of intellectual property, as well as the public disclosure of proprietary, confidential or sensitive personal information of our business, employees, customers or others. Any such inappropriate use of social media or email could also cause reputational damage.

Customers value readily available information concerning retailers and their goods and services and often act on such information without further investigation and with no regard to its accuracy. Our customers may engage with us online through our social media platforms, including Facebook and Instagram, by providing feedback and public commentary about all aspects of our business. Information concerning us or our retailers and brands, whether accurate or not, may be posted on social media platforms at any time and may have a disproportionately adverse impact on our brand, reputation or business. The harm may be immediate without affording us an opportunity for redress or correction and could have a material adverse effect on our business, results of operations, financial condition and prospects.

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***With respect to the eCommerce operations of SciSparc Nutraceuticals, if our emails are not delivered and accepted or are routed by email providers less favorably than other emails, or our sites or mobile applications are not accessible or are treated disadvantageously by Internet service providers, our business may be substantially harmed.***

If email providers or Internet service providers, or ISPs, implement new restrictive email or content delivery or accessibility policies, including with respect to net neutrality, or begin enforcement of existing policies, it may become more difficult to deliver emails to our customers or for customers to access our sites, products and services. For example, certain email providers, including Google, categorize our emails as "promotional", and these emails are directed to an alternate, and less readily accessible, section of a customer's inbox. If email providers materially limit or halt the delivery of our emails, or if we fail to deliver emails to customers in a manner compatible with email providers' email handling or authentication technologies, our ability to contact customers through email could be significantly restricted. In addition, if we are placed on "spam" lists or lists of entities that have been involved in sending unwanted, unsolicited emails, our operating results and financial condition could be substantially harmed. Further, if ISPs prioritize or provide superior access to our competitors' content, our business and results of operations may be negatively impacted.

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***The eCommerce operations of SciSparc Nutraceuticals are subject to risks related to online payment methods.***

We accept payments using a variety of methods, including credit card, debit card, PayPal, Payoneer, credit accounts (including promotional financing) and gift cards. For certain payment methods, including credit and debit cards, we pay interchange and other fees, which may increase over time and raise our operating costs and lower profitability. In addition, our credit card and other payment processors could impose receivable holdback or reserve requirements in the future. We rely on third parties to provide payment processing services, including the processing of credit cards and debit cards, and it could disrupt our business if these companies become unwilling or unable to provide these services to us. We are also subject to payment card association operating rules, certification requirements and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply. If we fail to comply with the rules or requirements of any provider of a payment method we accept, if the volume of fraud in our transactions limits or terminates our rights to use payment methods we currently accept, or if a data breach occurs relating to our payment systems, we may, among other things, be subject to fines or higher transaction fees and may lose, or face restrictions placed upon, our ability to accept credit card or debit card payments from customers or to facilitate other types of online payments. If any of these events were to occur, our business, financial condition and operating results could be materially adversely affected.

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***With respect to the eCommerce operations of SciSparc Nutraceuticals, if we are unable to manage our inventory effectively, our operating results could be adversely affected.***

To ensure timely delivery of products, we generally enter into purchase orders in advance with manufacturers. As a result, we are vulnerable to demand and pricing shifts and to suboptimal selection and timing of product purchases. We rely on our procurement team to order products and we rely on our data analytics to inform the levels of inventory we purchase, including when to reorder items that are selling well and when to write off items that are not selling well. In these instances, we may be unable to always predict the appropriate demand for our products by customers with accuracy, which may result in inventory shortages, inventory write offs and lower gross margins.

If our sales and procurement teams do not predict demand well or if our algorithms do not help us reorder the right products or write off the right products timely, we may not effectively manage our inventory, which could result in inventory excess or shortages, and our operating results and financial condition could be adversely affected.

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***The eCommerce operations of SciSparc Nutraceuticals, including the costs and supply chain, are subject to risks associated with sourcing, importing and warehousing.***

We source the products we offer from third-party vendors and, as a result, we may be subject to price fluctuations or demand disruptions. Our operating results could be negatively impacted by increases in the prices of our products, and we have no guarantees that prices will not rise. In addition, as we expand into new categories and types of products, we expect that we may not have strong purchasing power in these new areas, which could lead to higher costs than we have historically seen in our current product categories and types. We may not be able to pass increased costs on to customers, which could adversely affect our operating results.

In addition, we cannot guarantee that products we receive from vendors will be of sufficient quality or free from damage or defects, or that such merchandise will not be damaged during shipping or storage. While we take measures to ensure product quality and avoid damage, including evaluating vendor facilities, operations and product samples, conducting inventory inspections and inspecting returned products, we cannot control merchandise while it is out of our possession or prevent all damage while in our distribution centers. We may incur additional expenses and our reputation could be harmed if or current or potential customers believe that our merchandise is not of high quality or may be damaged.

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***Risks associated with the suppliers from whom our products are sourced could materially adversely affect our financial performance, as well as our reputation and brand.***

We depend on our ability to provide our customers with a wide range of products from high quality suppliers in a timely and efficient manner. Our agreements with most of our suppliers do not provide for the long-term availability of merchandise or the continuation of particular pricing practices, nor do they usually restrict such suppliers from selling products to other buyers or directly themselves. There can be no assurance that our current suppliers will continue to seek to sell us products on current terms or that we will be able to establish new or otherwise extend current supply relationships to ensure product acquisitions in a timely and efficient manner and on acceptable commercial terms. Our ability to develop and maintain relationships with reputable suppliers and offer high quality products to our customers is critical to our success. If we are unable to develop and maintain relationships with suppliers that would allow us to offer a sufficient amount and variety of quality products on acceptable commercial terms, our ability to satisfy our customers' needs, and therefore our long-term growth prospects, would be materially adversely affected.

We also are unable to predict whether any of the countries in which our suppliers' products are currently manufactured or may be manufactured in the future will be subject to trade restrictions imposed by the U.S. or foreign governments or the likelihood, type or effect of any such restrictions. Any event causing a disruption or delay of imports from suppliers with international manufacturing operations, including the imposition of additional import restrictions, restrictions on the transfer of funds or increased tariffs or quotas, could increase the cost or reduce the supply of merchandise available to our customers and materially adversely affect our financial performance as well as our reputation and brand. Our competitors may have greater existing inventory positions and other advantages that may allow them to price more competitively relative to our products. Furthermore, some or all of our suppliers' foreign operations may be adversely affected by political and financial instability, resulting in the disruption of trade from exporting countries, restrictions on the transfer of funds or other trade disruptions.

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***We may not accurately forecast revenues, profitability and appropriately plan our expenses.***

We base our current and future expense levels on our operating forecasts and estimates of future income and operating results. Income and operating results are difficult to forecast because they generally depend on the volume and timing of the orders we receive, which are uncertain. Additionally, our business is affected by general economic and business conditions around the world. A softening in income, whether caused by changes in consumer preferences, a weakening in global economies or inflation, may result in decreased net revenue levels, and we may be unable to adjust our spending in a timely manner to compensate for any unexpected shortfall in income. This inability could cause our income (loss) from operations after tax in a given quarter to be lower or higher than expected. We also make certain assumptions when forecasting the amount of expenses we expect related to our share-based payments, which includes the expected volatility of our share price, and the expected life of equity awards granted. These assumptions are partly based on historical results. If actual results differ from our estimates, our operating results in a given quarter may be lower than expected.

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***The eCommerce operation's operating results of SciSparc Nutraceuticals are subject to seasonal fluctuations.***

The eCommerce business is seasonal in nature and the fourth quarter is a significant period for our operating results due to the holiday season. As a result, revenue generally declines and loss from operations generally increases in the first quarter sequentially from the fourth quarter of the previous year. Any disruption in our ability to process and fulfill customer orders during the fourth quarter could have a negative effect on our quarterly and annual operating results. For example, if a large number of customers purchase our products in a short period of time due to increased holiday demand, inefficient management of our inventory may prevent us from efficiently fulfilling orders, which may reduce sales and harm our brands.

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***The inability to acquire, use or maintain our marks and domain names for our sites could substantially harm our business and operating results.***

We currently have registered trademarks for our brands in numerous jurisdictions and have registered the Internet domain names for our websites, as well as various related domain names. However, we have not registered our trademarks or domain names in all major international jurisdictions. Domain names generally are regulated by Internet regulatory bodies. If we do not have, or cannot obtain on reasonable terms, the ability to use our marks in a particular country or to use or register any of our domain names, we could be forced either to incur significant additional expenses to market our products within that country, including the development of a new brand and the creation of new promotional materials and packaging, or to elect not to sell products in that country. Either result could materially adversely affect our business, financial condition and operating results.

Furthermore, the regulations governing domain names and laws protecting marks and similar proprietary rights could change in ways that block or interfere with our ability to use relevant domains or our current brand names. Furthermore, we might not be able to prevent third parties from registering, using or retaining domain names that interfere with our consumer communications or infringe or otherwise decrease the value of our marks, domain names and other proprietary rights. Regulatory bodies also may establish additional generic or country-code top-level domains or may allow modifications of the requirements for registering, holding or using domain names. As a result, we may not be able to register, use or maintain the domain names that utilize the Wellution name in all of the countries in which we currently or intend to conduct business.

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***Any significant disruption in service on our websites or apps or in our computer systems, a number of which are currently hosted or provided by third-party providers, could materially affect our ability to operate, damage our reputation and result in a loss of customers, which would harm our business and results of operations.***

Our ability to sell and market our products relies on FBA platform whose functionality relies upon a number of third-party related services, including those relating to cloud infrastructure, technology services, servers, open-source libraries and vendor application programming interfaces. Any disruption or loss of any of these third-party services could have a negative effect on our business, results of operations, financial condition and prospects. We may experience interruptions in our systems, including server failures that temporarily slow down or interfere with the performance of our platforms and the ability to sell on eCommerce marketplaces.

Interruptions in these systems, whether due to system failures, human input errors, computer viruses or physical or electronic break-ins, and denial-of-service attacks on us, third-party vendors or communications infrastructure, could affect the availability of our services on our platform and prevent or inhibit the ability of selling our products. Volume of traffic and activity on eCommerce marketplaces spikes on certain days, such as during a Black Friday promotion, and any such interruption would be particularly problematic if it were to occur at such a high-volume time. Problems with the reliability of our systems or third-party marketplaces could prevent us from earning revenue and could harm our reputation. Damage to our reputation, any resulting loss of customers, eCommerce confidence and the cost of remedying these problems could negatively affect our business, results of operations, financial condition and prospects.

Our ability to maintain communications, network and computer hardware in the countries in which they are used may in the future be subject to regulatory review and licensing, and the failure to obtain any required licenses could negatively affect our business. Our systems and infrastructure are predominately reliant on third parties. Problems faced by our third-party service providers with the telecommunications network providers with whom they contract or with the systems by which they allocate capacity among their users, including us, could adversely affect the experience of our customers. Our third-party service providers could decide to close their facilities without adequate notice. Any financial difficulties, such as bankruptcy or reorganization, faced by our third-party service providers or any of the service providers with whom they contract may have negative effects on our business, the nature and extent of which are difficult to predict. If our third-party service providers are unable to keep up with our needs for capacity, this could have an adverse effect on our business. Any errors, defects, disruptions or other performance problems with our services could harm our reputation and may have a material adverse effect on our business, results of operations, financial condition and prospects.

**Risks Related to the Ownership of Our Securities**

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***We will need additional capital in the future. Raising additional capital by issuing securities may cause dilution to existing shareholders.***

We have incurred losses every year since our inception. If we continue to use cash at our historical rates of use we will need significant additional financing, which we may seek through a combination of private and public equity offerings, debt financings and collaborations and strategic and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, an existing shareholder's ownership interest will be diluted, and the terms of any such offerings may include liquidation or other preferences that may adversely affect the then existing shareholders rights. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring debt or making capital expenditures. If we raise additional funds through collaboration, strategic alliance or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates, or grant licenses on terms that are not favorable to us.

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***We do not know whether a market for the Ordinary Shares will be sustained or what the trading price of the Ordinary Shares will be and as a result it may be difficult for you to sell your Ordinary Shares***.

Although our Ordinary Shares are listed on Nasdaq, an active trading market for the Ordinary Shares may not be sustained. It may be difficult for you to sell your Ordinary Shares without depressing the market price for the Ordinary Shares or at all. Further, an inactive market may also impair our ability to raise capital by selling Ordinary Shares and may impair our ability to enter into strategic partnerships or acquire companies, products, or services by using our equity securities as consideration.

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***Sales of a substantial number of our Ordinary Shares in the public market by our existing shareholders could cause our share price to fall.***

Sales of a substantial number of our Ordinary Shares in the public market, or the perception that these sales might occur, could depress the market price of our Ordinary Shares and could impair our ability to raise capital through the sale of additional equity securities. We are unable to predict the effect that sales may have on the prevailing market price of our Ordinary Shares.

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***The exercise of outstanding warrants or conversion of outstanding convertible securities will cause significant dilution to holders of our equity securities and could adversely affect the price of our Ordinary Shares.***

As of April 28, 2026, holders of warrants (including pre-funded warrants) and a convertible promissory note may exercise their warrants or convertible promissory note into up to 520,565 Ordinary Shares. In the event that such warrants are exercised in full or such promissory note is converted into Ordinary Shares, the ownership interest of existing holders of our equity securities will be diluted and may have a negative effect on the trading price of our Ordinary Shares.

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***The market price of our securities may be highly volatile, and you may not be able to resell your Ordinary Shares at or above the price you paid.***

The market price of our Ordinary Shares is volatile. Our Ordinary Share price is and will continue to be subject to wide fluctuations in response to a variety of factors, including the following:

● adverse results or delays in preclinical studies or clinical trials;

● reports of adverse events in our product candidates or clinical trial failures of our product candidates;

● inability to obtain additional funding;

● any delay in filing a regulatory submission for any of our product or product candidates and any adverse development or perceived adverse development with respect to the review of that regulatory submission by the FDA or European or Asian authorities;

● failure to successfully develop and commercialize our products or product candidates;

● failure to enter into strategic collaborations or failure to successfully integrate acquisitions we have made;

● failure by us or strategic collaboration partners to prosecute, maintain or enforce our intellectual property rights;

● changes in laws or regulations applicable to future products;

● inability to scale up our manufacturing capabilities through third-party manufacturers, inability to obtain adequate product supply for our products or the inability to do so at acceptable prices;

● introduction of new products or technologies by our competitors;

● failure to meet or exceed financial projections we may provide to the public;

● failure to meet or exceed the financial expectations of the investment community;

● announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by our competitors;

● disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our platform technologies, technologies, products or product candidates;

● additions or departures of key scientific or management personnel;

● significant lawsuits, including patent or shareholder litigation;

● changes in the market valuations of similar companies;

● changes in general conditions in the economy and the financial markets in the countries in which we operate including those related to recent unrest and actual or potential armed conflict in Israel and other parts of the Middle East, such as the multi-front conflict Israel faces;

● sales of our securities by us or our shareholders in the future; and

● trading volumes of our securities.

In addition, companies trading in the stock market have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of our Ordinary Shares, regardless of our actual operating performance.

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***Outstanding warrants and pre-funded warrants to acquire our Ordinary Shares are speculative in nature. Furthermore, holders of our warrants and pre-funded warrants will have no rights as shareholders until such holders exercise their warrants and acquire our Ordinary Shares.***

Until holders of the warrants and pre-funded warrants acquire our Ordinary Shares upon exercise of the warrants and pre-funded warrants, holders of the warrants and pre-funded warrants will have no rights with respect to our Ordinary Shares underlying such warrants and pre-funded warrants. Upon exercise of the warrants and pre-funded warrants, the holders thereof will be entitled to exercise the rights of a holder of Ordinary Shares only as to matters for which the record date occurs after the exercise date.

Our warrants and pre-funded warrants only represent the right to acquire Ordinary Shares at a fixed price, and in the case of the warrants, for a limited period of time. Specifically, holders of the warrants and pre-funded warrants that we issued in private placements in March 2021, June 2022 and October 2023 and in our November 2020 and August 2023 public offerings may exercise their right to acquire Ordinary Shares and pay an exercise price per Ordinary Shares (in the case of the pre-funded warrants, $0.189 to $4.914 per Ordinary Share and in the case of other warrants, ranging from $12,923.82 to $120,393 per Ordinary Share), subject to adjustment upon certain events, within five years from their date of issuance, with the exception of the June 2022 warrants, which will expire seven years from the date of issuance.

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***If we fail to meet all applicable Nasdaq Capital Market requirements, Nasdaq could delist our Ordinary Shares, which could adversely affect the market liquidity of our Ordinary Shares and the market price of our Ordinary Shares could decrease.***

Nasdaq monitors our ongoing compliance with its minimum listing requirements and if we fail to meet those requirements and cannot cure such failure in the prescribed period of time, our Ordinary Shares could be subject to delisting from the Nasdaq market. In the event that our Ordinary Shares are delisted from Nasdaq and are not eligible for quotation or listing on another market or exchange, trading of our Ordinary Shares could be conducted only in the over-the-counter market such as the OTC Pink or the OTCQB. In such event, it could become more difficult to dispose of, or obtain accurate price quotations for, our Ordinary Shares, and there would likely also be a reduction in our coverage by securities analysts and the news media, which could cause the price of our Ordinary Shares to decline further. Also, it may be difficult for us to raise additional capital if we are not listed on a major exchange.

On July 16, 2024, we received a written notice from Nasdaq indicating that we were not in compliance with the minimum bid price requirement for continued listing set forth in Nasdaq Listing Rule 5550(a)(2), which requires listed securities to maintain a minimum bid price of $1.00 per share. Under Nasdaq Listing Rule 5810(c)(3)(A), we were initially granted a period of 180 calendar days to regain compliance with the minimum bid price requirement, or until January 12, 2025. On January 14, 2025, we received an additional written notice from Nasdaq indicating that we had been granted, per our request, an additional 180-day compliance period, or until July 14, 2025, to regain compliance with the minimum bid price requirement.

Effective as of market open on July 3, 2025, we effected the Reverse Split of our issued and outstanding Ordinary Shares. In addition, on June 26, 2025, our shareholders approved a framework for a reverse split of the issued and outstanding Ordinary Shares in the range of a ratio of between 1:2 and 1:250, to be effected at the discretion of, at such ratio within the approved range and by such number of increments, and on such dates, as may be determined by our board of directors within 18 months following the date of approval.

On July 18, 2025, we received a written notice from Nasdaq indicating that Nasdaq determined that for 10 consecutive business days, from July 3 through July 17, 2025, the closing bid price of our Ordinary Shares had been at least $1.00 per share or greater, and accordingly, we regained compliance with Listing Rule 5550(a)(2). Although we have since cured this deficiency and have regained compliance with Nasdaq Listing Rule 5550(a)(2), there is a risk that we could be subject to additional notices of delisting for failure to comply with Nasdaq Listing Rule 5550(a)(2) or other Nasdaq Listing Rules.

On January 17, 2025, the SEC approved an amendment to Nasdaq Listing Rule 5810(c)(3)(A)(iv), according to which, if a company fails to meet the minimum bid price requirement and the company has effected a reverse share split over the prior one-year period, the company would not be eligible for any compliance period and the Listing Qualifications Department will issue a Delisting Determination under Nasdaq Listing Rule 5810 with respect to that company's securities. This change will apply to a company even if the company was in compliance with the bid price requirement at the time of its prior reverse share split. In addition, if a company's security fails to meet the bid price requirement and the company has effected one or more reverse stock splits over the prior two-year period with a cumulative ratio of 250 shares or more to one, then the company is not eligible for any compliance periods and Nasdaq must issue a Delisting Determination with respect to that security.

***We cannot assure you that our Ordinary Shares will remain listed on Nasdaq or any other securities exchange.***

Our ADSs, which previously represented our Ordinary Shares, were listed on Nasdaq from March 2017 through July 2020. On September 21, 2020, our ADSs were delisted from Nasdaq as a result of not meeting the shareholders equity requirements of Nasdaq. Between December 2020 and August 2021, our ADSs were quoted on the OTCQB. In August 2021, our ADR program was terminated and our ADSs were converted to Ordinary Shares on a one-for-one basis. In September 2021, our Ordinary Shares began to be quoted for trading on the OTCQB under the ticker "SPRCF". In December 2021, our Ordinary Shares were re-listed on Nasdaq and began trading under the symbol "SPRC".

As described in greater detail above under "*If we fail to meet all applicable Nasdaq Capital Market requirements, Nasdaq could delist our Ordinary Shares, which could adversely affect the market liquidity of our Ordinary Shares and the market price of our Ordinary Shares could decrease*," we have previously received notices from Nasdaq regarding our compliance with the minimum bid price requirement and have taken actions to regain compliance. There is a risk that we could be subject to additional notices of delisting for failure to comply with Nasdaq Listing Rule 5550(a)(2) or other Nasdaq Listing Rules and no assurance can be given that we will remain eligible to be listed on Nasdaq.

Further, because of the previous delisting of our ADSs from Nasdaq, if we fall out of compliance with Nasdaq requirements in the future, our Ordinary Shares may be more likely to be subject to Nasdaq's delisting process and no assurance can be given that we will be able to regain compliance. Any delisting could adversely affect our ability to obtain financing for the continuation of our operations and could result in a loss of confidence by investors, customers and employees.

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***Failure to achieve and maintain effective internal controls in accordance with Section 404 of the Sarbanes-Oxley Act could have a material adverse effect on our business, results of operation or financial condition. In addition, current and potential shareholders could lose confidence in our financial reporting, which could have a material adverse effect on the price of our Ordinary Shares.***

Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. We are required to document and test our internal control procedures in order to satisfy the requirements of Section 404 of the Sarbanes-Oxley Act, which requires annual management assessments of the effectiveness of our internal control over financial reporting. In addition, if we fail to maintain the adequacy of our internal control, as such standards are modified, supplemented or amended from time to time, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404. Disclosing deficiencies or weaknesses in our internal control, failing to remediate these deficiencies or weaknesses in a timely fashion or failing to achieve and maintain an effective internal control environment may cause investors to lose confidence in our reported financial information, which could have a material adverse effect on the price of our Ordinary Shares. If we cannot provide reliable financial reports or prevent fraud, our operating results could be harmed.

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***We have not paid, and do not intend to pay, dividends on our Ordinary Shares and, therefore, unless our traded securities appreciate in value, our investors may not benefit from holding our securities.***

We have not paid any cash dividends on our Ordinary Shares since inception. We do not anticipate paying any cash dividends our Ordinary Shares in the foreseeable future. Moreover, the Israeli Companies Law-1999, or the Companies Law, imposes certain restrictions on our ability to declare and pay dividends. As a result, investors in our Ordinary Shares will not be able to benefit from owning these securities unless their market price becomes greater than the price paid by such investors and they are able to sell such securities. We cannot assure you that you will ever be able to resell our securities at a price in excess of the price paid.

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***Unfavorable outcomes in legal proceedings may harm our business and results of operations.***

Regardless of whether or not there is merit to the claims underlying any legal proceedings to which we are subject, and regardless of whether we are found as a result of such proceedings to have violated any applicable laws, such proceedings can be expensive to defend or respond to, and could result in substantial costs and diversion of management's attention and resources, which could harm our business, and potentially could cause substantial and irreparable harm to our public reputation. For example, on May 2, 2023, Capital Point Ltd., or Capital Point, filed a lawsuit in the Tel Aviv-Jaffa District Court against us as the sole defendant in connection with the warrant we issued to Capital Point pursuant to a joint venture transaction entered into on May 15, 2020 by and between us, Capital Point and Evero Health Ltd. one of our subsidiaries. The lawsuit includes allegations of breaches of contract under the Israeli Contracts Law (General Part), 1973, unjust enrichment under the Israeli Unjust Enrichment Law, 1979 and breaches under the Israeli Torts Ordinance (New Version), 1968. The lawsuit claims damages in the amount of NIS 10,000,000 (approximately $3.13 million), which accounts for, as of the date of the filing of the lawsuit, liquidated damages according to the provisions set forth in the warrant, and seeks as well for the court to order a mandatory injunction order for us to issue a warrant to Capital Point to purchase $340,000 of our ordinary shares, the return of any unlawful profits received by us and punitive damages. As of April 28, 2026, we cannot predict the likelihood of our success in the lawsuit. If we do not prevail in such lawsuit, our results of operations and reputation could be adversely affected.

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***We may be a "passive foreign investment company," or PFIC, for U.S. federal income tax purposes in the current taxable year or may become one in any subsequent taxable year. There generally would be negative tax consequences for U.S. taxpayers that are holders of our Ordinary Shares if we are or were to become a PFIC.***

In general, we will be treated as a PFIC for U.S. federal income tax purposes in any taxable year in which either (1) at least 75% of our gross income is "passive income" or (2) on average at least 50% of our assets by value produce passive income or are held for the production of passive income. Passive income for this purpose generally includes, among other things, certain dividends, interest, royalties, rents and gains from commodities and securities transactions and from the sale or exchange of property that gives rise to passive income. Passive income also includes amounts derived by reason of the temporary investment of funds, including those raised in a public offering. In determining whether a non-U.S. corporation is a PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account. We do not believe that we were deemed a PFIC for 2025 and do not expect to be deemed a PFIC for 2026. If we are a PFIC in any taxable year during which a U.S. taxpayer holds the Ordinary Shares, such U.S. taxpayer would be subject to certain adverse U.S. federal income tax rules. In particular, if the U.S. taxpayer did not make an election to treat us as a "qualified electing fund," or QEF, or make a "mark-to-market" election, then "excess distributions" to the U.S. taxpayer, and any gain realized on the sale or other disposition of the Ordinary Shares by the U.S. taxpayer: (1) would be allocated ratably over the U.S. taxpayer's holding period for the Ordinary Shares; (2) the amount allocated to the current taxable year and any period prior to the first day of the first taxable year in which we were a PFIC would be taxed as ordinary income; and (3) the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. In addition, if the U.S. Internal Revenue Service, or the IRS, determines that we are a PFIC for a year with respect to which we have determined that we were not a PFIC, it may be too late for a U.S. taxpayer to make a timely QEF or mark-to-market election. U.S. taxpayers that have held the Ordinary Shares during a period when we were a PFIC will be subject to the foregoing rules, even if we cease to be a PFIC in subsequent years, subject to exceptions for U.S. taxpayer who made a timely QEF or mark-to-market election. A U.S. taxpayer can make a QEF election by completing the relevant portions of and filing IRS Form 8621 in accordance with the instructions thereto. U.S. taxpayers that hold the Ordinary Shares are strongly urged to consult their tax advisors about the PFIC rules, including tax return filing requirements and the eligibility, manner, and consequences to them of making a QEF or mark-to-market election with respect to the Ordinary Shares in the event that we are a PFIC. See Item 10.E. "Taxation-U.S. Federal Income Tax Considerations-Passive Foreign Investment Companies" for additional information.

**Risks Related to Israeli Law and Our Operations in Israel**

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***We conduct our operations in Israel. Conditions in Israel, including pollical, military or economic instability in the region, may affect our operations.***

We are incorporated under Israeli law, and all of our employees, including our Chief Executive Officer and Chief Financial Officer, and other senior members of our management team, operate from our headquarters located in Israel. In addition, all of our officers and directors are residents of Israel. Accordingly, our business and operations are directly affected by economic, political, geopolitical, and military conditions in Israel.

In October 2023, Hamas militants and members of other terrorist organizations infiltrated Israel's southern border from the Gaza Strip and carried out attacks against both civilian and military targets. Hezbollah militants also launched attacks against civilian and military targets from Israel's northern border. Since these events began, additional hostilities have involved other parties in the region, including Iran and its proxies, and tensions between the United States and Iran have increased. In June 2025, following intelligence assessments indicating imminent attacks, Israel conducted strikes against Iranian military and nuclear infrastructure together with the United States, which led to Iranian counterattacks before a ceasefire was reached on June 24, 2025, after 12 days of hostilities. On February 28, 2026, Israel and the United States launched a second, larger-scale offensive against Iran. Iran has retaliated with sustained attacks across the Middle East and was joined by renewed Hezbollah attacks on Israel. As of the date hereof, a ceasefire agreement has been reached with Hamas and Iran; however, there is no assurance that this agreement will be upheld and military activity and hostilities may continue to exist at varying levels of intensity.

While our facilities have not been damaged during the recent war, the hostilities with Hamas, Hezbollah, Iran and its proxies and others have caused and may continue to cause damage to private and public facilities, infrastructure, utilities, and telecommunication networks, and potentially disrupting our operations and supply chains. For example, our SCI-210 ASD clinical trial at Soroka Medical Center was delayed by three months. In addition, Israeli organizations, government agencies and companies have been subject to extensive cyber attacks. This could lead to increased costs, risks to employee safety, and challenges to business continuity, with potential financial losses.

In connection with the recent conflicts, several hundred thousand Israeli military reservists were drafted to perform immediate military service, and military reservists are expected to perform long reserve duty service in the coming years. None of our employees have been called to active military duty as of April 28, 2026. The absence of our employees due to any future military service may materially and adversely affect our ability to conduct our operations.

Our commercial insurance does not cover losses that may occur as a result of events associated with war and terrorism. Although the Israeli government currently covers the reinstatement value of certain direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that such government coverage will be maintained or that it will sufficiently cover our potential damages. Any losses or damages incurred by us could have a material adverse effect on our business.

The global perception of Israel and Israeli companies, influenced by actions by international judicial bodies, may lead to increased sanctions and other negative measures against Israel, as well as Israeli companies and academic institutions. There is also a growing movement among countries, activists, and organizations to boycott Israeli goods, services and academic research or restrict business with Israel, which could affect business operations. If these efforts become widespread, along with any future rulings from international tribunals against Israel, they could significantly and negatively impact business operations.

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***Provisions of Israeli law may make it easy for our shareholders to demand that we convene a shareholders meeting, and/or allow shareholders to convene a shareholder meeting without the consent of our management, which may disrupt our management's ability to run our company.***

As a company listed on an exchange in the U.S., Israeli law may allow any one or more of our shareholders holding, in the aggregate, at least 10% of our voting rights to demand that we convene a special shareholders meeting. Also, in the event that we choose not to convene a special shareholders meeting pursuant to such a request, Sections 64-65 of the Companies Law provide, among others, that such shareholders may independently convene a special shareholders meeting within three months (or under court's ruling) and require us to cover the costs, within reason, and as a result thereof, our directors might be required to repay us such costs. If our shareholders decide to exercise these rights in a way inconsistent with our management's strategic plans, our management's ability to run our company may be disrupted, and this process may entail significant costs to us.

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***Our operations are subject to currency and interest rate fluctuations.***

We incur expenses in U.S. dollars and NIS, but our financial statements are denominated in U.S. dollars. U.S. dollars is our functional currency and is the currency that represents the principal economic environment in which we operate. As a result, we are affected by foreign currency exchange fluctuations through both translation risk and transaction risk. As a result, we are exposed to the risk that the NIS may appreciate relative to the dollar, or, if the NIS instead devalues relative to the dollar, that the inflation rate in Israel may exceed such rate of devaluation of the NIS, or that the timing of such devaluation may lag behind inflation in Israel. In any such event, the dollar cost of our operations in Israel would increase and our dollar-denominated results of operations would be adversely affected.

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***Provisions of Israeli law and our amended and restated articles of association 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.***

Provisions of Israeli law and our amended and restated articles of association could have the effect of delaying or preventing a change in control and may make it more difficult for a third party to acquire us or our shareholders to elect different individuals to our board of directors, even if doing so would be considered to be beneficial by some of our shareholders, and may limit the price that investors may be willing to pay in the future for our Ordinary Shares. Among other things:

● Israeli corporate law regulates mergers and requires that a tender offer be effected when more than a specified percentage of shares in a company are purchased;

● Israeli corporate law does not provide for shareholder action by written consent, thereby requiring all shareholder actions to be taken at a general meeting of shareholders;

● our amended and restated articles of association divide our directors into three classes, each of which is elected once every three years;

● our amended and restated articles of association require a vote of the holders of a majority of our outstanding Ordinary Shares entitled to vote present and voting on the matter at a general meeting of shareholders (referred to as simple majority), and the amendment of a limited number of provisions, such as the provision stating that each year the term of office of only one class of directors will and dividing our directors into three classes, requires a vote of the holders of 65% of the voting power represented at a general meeting of our shareholders and voting thereon has been obtained, provided the majority constitutes more than 33.33% of the total issued and outstanding share capital as of the record date of such meeting. The affirmative vote of at least three-quarters (3/4) of the directors, in addition to the approval of our shareholders, is also required in order to amend our amended and restated articles of association;

● our amended and restated articles of association provide that director vacancies may be filled by our board of directors;

● subject to certain exceptions, our amended and restated articles of association restrict us from engaging in certain business combination transactions, with any shareholder who holds 15% or more of our voting power. The transactions subject to such restrictions include mergers, consolidations and dispositions of our assets with a market value of 10% or more of our assets or outstanding shares. Subject to certain exceptions, such restrictions will apply for a period of three years following each time a shareholder became the holder of 15% or more of our voting power; and

● subject to certain exceptions, our amended and restated articles of association restrict certain transactions which may have a significant effect on the Company's structure, assets or business, including significant mergers and acquisitions, a disposition of all or substantially all of the assets of the Company, a voluntary dissolution and material changes to the principal business of the Company.

Further, Israeli tax considerations may make potential transactions undesirable to us or to some of our shareholders whose country of residence does not have a tax treaty with Israel granting tax relief to such shareholders from Israeli tax. With respect to mergers, Israeli tax law allows for tax deferral in certain circumstances but makes the deferral contingent on the fulfillment of numerous conditions, including a holding period of two years from the date of the transaction during which certain sales and dispositions of shares of the participating companies are restricted. See "Item 10.E. Taxation-Israeli Tax Considerations and Government Programs" for additional information.

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***It may be difficult to enforce a judgment of a United States court against us and our officers and directors and the Israeli experts named in this Annual Report in Israel or the United States, to assert United States securities laws claims in Israel or to serve process on our officers and directors and these experts.***

We were incorporated in Israel and our corporate headquarters are located in Israel. All of our executive officers and directors and the Israeli experts named in this Annual Report are located in Israel. All of our assets and most of the assets of these persons are located in Israel. Service of process upon us or our non-U.S. resident directors and officers and enforcement of judgments obtained in the United States against us or our non-U.S. directors and executive officers may be difficult to obtain within the United States. We have been informed by our legal counsel in Israel that it may be difficult to assert claims under U.S. securities laws in original actions instituted in Israel, or obtain a judgment based on the civil liability provisions of U.S. federal securities laws. Israeli courts may refuse to hear a claim based on a violation of U.S. securities laws against us or our non-U.S. officers and directors because Israel may not be the most appropriate forum to bring such a claim. In addition, even if an Israeli court agrees to hear a claim, it may determine that Israeli law and not U.S. law is applicable to the claim. If U.S. law is found to be applicable, the content of applicable U.S. law must be proved as a fact, which can be a time-consuming and costly process. Certain matters of procedure will also be governed by Israeli law. There is little binding case law in Israel addressing the matters described above. Israeli courts might not enforce judgments rendered outside Israel, which may make it difficult to collect on judgments rendered against us or our non-U.S. officers and directors.

Moreover, an Israeli court will not enforce a non-Israeli judgment if it was given in a state whose laws do not provide for the enforcement of judgments of Israeli courts (subject to exceptional cases), if its enforcement is likely to prejudice the sovereignty or security of the State of Israel, if it was obtained by fraud or in the absence of due process, if it is at variance with another valid judgment that was given in the same matter between the same parties, or if a suit in the same matter between the same parties was pending before a court or tribunal in Israel at the time the foreign action was brought.

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***Your rights and responsibilities as a holder of our securities will be governed by Israeli law, which differs in some material respects from the rights and responsibilities of shareholders of U.S. companies.***

We are incorporated under Israeli law. The rights and responsibilities of holders of our Ordinary Shares are governed by our amended and restated articles of association and the Companies Law. These rights and responsibilities differ in some respects from the rights and responsibilities of shareholders in typical U.S. corporations. In particular, pursuant to the Companies Law, each shareholder of an Israeli company has to act in good faith and in a customary manner in exercising his or her rights and fulfilling his or her obligations toward the Company and other shareholders and to refrain from abusing his or her power in the Company, including, among other things, in voting at the general meeting of shareholders, on amendments to a company's articles of association, increases in a company's authorized share capital, mergers and certain transactions requiring shareholders' approval under the Companies Law. In addition, a controlling shareholder of an Israeli company or a shareholder who knows that it possesses the power to determine the outcome of a shareholder vote or who has the power to appoint or prevent the appointment of a director or officer in the Company, or has other powers toward the Company has a duty of fairness toward the Company. However, Israeli law does not define the substance of this duty of fairness. There is little case law available to assist in understanding the implications of these provisions that govern shareholder behavior.

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***We received Israeli government grants for certain of our past research and development activities and programs, some of which we sold or are in the process of selling. The terms of such grants may require us, in the future, to pay royalties and to satisfy specific conditions if and to the extent we generate revenues from the know-how funded with these grants. We may be required to pay penalties in addition to payment of the royalties.***

Our research and development efforts with respect to some of our past activities, which was focused on developing an immunotherapeutic monoclonal antibody for the treatment of Alzheimer's disease, which we sold in March 2015, and our Anti-CD3 technology directed toward the treatment of inflammatory and autoimmune diseases, which in part was returned and re-assigned to Hadasit Medical Research Services & Development Ltd., or Hadasit, and in part is still in the process of being sold, were financed in part through royalty-bearing grants from the Israeli Innovation Authority, or the IIA. As of December 31, 2025, we had received the aggregate amount of approximately $1.1 million from the IIA for the development of our abovementioned technologies. As of December 31, 2025, our contingent liabilities regarding IIA grants received by us were in an aggregate amount of $1.1 million including interest. With respect to such grants, we are committed to pay royalties up to $1.1 million relating only to technologies in our possession and excluding any royalties for technologies that we sold to third parties. We are required to comply with the requirements of the Israeli Encouragement of Industrial Research, Development and Technological Innovation Law, 5744-1984, as amended, or the Innovation Law, and related regulations, as amended, with respect to those past grants. When a company develops know-how, technology or products using IIA grants, the terms of these grants and the Innovation Law restrict the transfer or license of such know-how, and the transfer of manufacturing or manufacturing rights of such products, technologies or know-how outside of Israel, without the prior approval of the IIA. Therefore, the discretionary approval of an IIA Research Committee would be required for any transfer or license to third parties inside or outside of Israel of know-how or for the transfer outside of Israel of manufacturing or manufacturing rights related to those aspects of such technologies. We may not receive those approvals. Furthermore, the IIA may impose certain conditions on any arrangement under which it permits us to transfer technology or development or manufacturing.

Under the Innovation Law and the regulations thereunder, a recipient of IIA grants is typically required to return the grants by the payment of royalties of 3% to 5% on the revenues generated from the sale of products (and related services) developed (in whole or in part) under an IIA program up to the total amount of the grants received from IIA plus the relevant interest rate, if any. Under IIA regulations, grants received before June 30, 2017, bear the annual interest rate that applied at the time of the approval of the applicable IIA file which will apply to all of the funding received under such IIA approval. Grants received from the IIA after June 30, 2017, bear an annual interest rate based on the 12-month Secured Overnight Financing Rate, or SOFR, or at an alternative rate published by the Bank of Israel plus 0.71513%. Grants approved after January 1, 2024, bear the higher rate of (i) 12 months SOFR, plus 1%, or (ii) a fixed annual interest rate of 4%.

The transfer or license of IIA-supported technology or know-how outside of Israel and the transfer of manufacturing of IIA-supported products, technology or know-how outside of Israel may involve the payment of significant amounts. These restrictions and requirements for payment may impair our ability to sell, license or otherwise transfer our technology assets outside of Israel or to outsource or transfer development or manufacturing activities with respect to any product or technology outside of Israel. Furthermore, the consideration available to our shareholders in a transaction involving the transfer outside of Israel of technology or know-how developed with IIA funding (such as a merger or similar transaction) may be reduced by any amounts that we are required to pay to the IIA.

**General Risk Factors**

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

Our status as a foreign private issuer also exempts us from compliance with certain SEC laws and regulations, including the proxy rules and the short-swing profits recapture rules. In addition, we will not be required under the Exchange Act to file current reports and financial statements with the SEC as frequently or as promptly as U.S. domestic companies whose securities are registered under the Exchange Act and we will generally be exempt from filing quarterly reports with the SEC. Also, although the Companies Law requires us to disclose the annual compensation of our five most highly compensated senior officers on an individual basis, this disclosure is not as extensive as that required of a U.S. domestic issuer. Furthermore, as a foreign private issuer, we are also not subject to the requirements of Regulation FD (Fair Disclosure) promulgated under the Exchange Act. These exemptions and leniencies will reduce the frequency and scope of information and protections to which you are entitled as an investor.

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***International expansion of our business exposes us to business, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States or Israel.***

Other than our headquarters and other operations which are located in Israel (as further described below), we currently have limited international operations, but our business strategy incorporates potentially significant international expansion, particularly in anticipation of approval of our product candidates. We plan to maintain sales representatives and conduct physician and patient association outreach activities, as well as clinical trials, outside of the United States and Israel. Doing business internationally involves a number of risks, including but not limited to:

● multiple, conflicting and changing laws and regulations such as privacy regulations, tax laws, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits and licenses;

● failure by us to obtain regulatory approvals for the use of our products in various countries;

● additional potentially relevant third-party patent rights;

● complexities and difficulties in obtaining protection and enforcing our intellectual property;

● difficulties in staffing and managing foreign operations;

● complexities associated with managing multiple payor reimbursement regimes, government payors or patient self-pay systems;

● limits in our ability to penetrate international markets;

● financial risks, such as longer payment cycles, difficulty collecting accounts receivable, the impact of local and regional financial crises on demand and payment for our products and exposure to foreign currency exchange rate fluctuations;

● natural disasters, political and economic instability, including wars, terrorism and political unrest, outbreak of disease, boycotts, curtailment of trade and other business restrictions;

● an outbreak of a contagious disease, such as coronavirus, which may cause us, third party vendors and manufacturers and/or customers to temporarily suspend our or their respective operations in the affected city or country;

● certain expenses including, among others, expenses for travel, translation and insurance; and

● regulatory and compliance risks that relate to maintaining accurate information and control over sales and activities that may fall within the purview of the U.S. Foreign Corrupt Practices Act of 1977, or FCPA, its books and records provisions or its anti-bribery provisions.

Any of these factors could significantly harm our future international expansion and operations and, consequently, our results of operations.

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***Failure to comply with the FCPA could subject us to penalties and other adverse consequences.***

We are subject to the FCPA, which generally prohibits companies, such as us, whose securities are listed in the United States, from paying, offering or authorizing payment or offering of anything of value, directly or indirectly, to any foreign government official, political party or candidate for public office for the purpose of influencing any act or decision of such foreign person in order to assist companies like us in obtaining or retaining business. The FCPA also obligates companies like us, whose securities are listed in the United States, to comply with accounting provisions requiring the companies to maintain books and records that accurately and fairly reflect all transactions of the companies, including international subsidiaries, and to devise and maintain an adequate system of internal accounting controls for international operations. The U.S. Department of Justice and the SEC, which have responsibility for enforcement of the FCPA, both consider employees of government-operated health care systems to be "foreign officials" for FCPA purposes. In addition, the U.S. Department of Justice and the SEC are both engaged in a long-running FCPA compliance review of pharmaceutical companies. Enforcement priorities, policies and practices under the FCPA may change over time, including as a result of changes in administration or enforcement guidance; however, such changes may not reduce, and could increase, the likelihood or severity of enforcement actions. If our employees or agents are found to have engaged in conduct that violates the FCPA, we would be held responsible and could suffer severe penalties and other consequences, including adverse publicity and damage to our reputation.

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***Cybersecurity issues, security breaches and other disruptions could compromise our information, expose us to liability and harm our reputation and business.***

Our business relies upon information technology systems operated by us and by our third-party service providers. These systems may fail or experience operational disruption, experience cybersecurity attacks, or be damaged by computer viruses and unauthorized access. In the ordinary course of our business we collect and store sensitive data, including intellectual property, personal information and our proprietary business information. The secure maintenance and transmission of this information is critical to our operations and business strategy. We rely on commercially available systems, software, tools and domestically available monitoring to provide security for processing, transmitting and storing this sensitive data.

Hackers may attempt to penetrate our computer systems, and, if successful, misappropriate personal or confidential business information. In addition, an associate, contractor or other third-party with whom we do business may attempt to circumvent our security measures in order to obtain such information, and may purposefully or inadvertently cause a breach involving such information. While we continue to implement additional protective measures to reduce the risk of and detect cyber incidents, cyber-attacks are becoming more sophisticated and frequent, and the techniques used in such attacks change rapidly. If our third-party vendors fail to protect their information technology systems and our confidential and proprietary information, we may be vulnerable to disruptions in service and unauthorized access to our confidential or proprietary information and we could incur liability and reputational damage and the further development and commercialization of our product candidates could be delayed. While we have not, to our knowledge, experienced any material IT system failures or cybersecurity attacks to date, we cannot assure you that our data protection efforts and our investment in information technology will prevent significant breakdowns, data leakages, breaches in our systems or those of our third-party vendors and other contractors and consultants, or other cyber incidents that could have a material adverse effect upon our reputation, business, operations or financial condition. If such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our development programs, business operations, a breach of sensitive personal information or a loss or corruption of critical data assets including trade secrets or other proprietary information. For example, the loss of clinical trial data from future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. Such IT system failures, cybersecurity attacks or vulnerabilities to our or our third-party vendors' information security programs or defenses could result in legal liability, reputational damage, business interruption, and our competitive position could be harmed and the further development and commercialization of our products or any future products could be delayed or disrupted. Moreover, containing and remediating any IT system failure, cybersecurity attack or vulnerability may require significant investment of resources.

Our information technology networks and infrastructure may still be vulnerable to damage, disruptions or shutdowns due to attack by hackers or breaches, employee error or malfeasance, power outages, computer viruses, telecommunication or utility failures, systems failures, natural disasters or other catastrophic events. Furthermore, significant security breaches or disruptions of our internal information technology systems or those of our third-party vendors and other contractors and consultants could result in the loss, misappropriation and/or unauthorized access, use, or disclosure of, or the prevention of access to, confidential information (including trade secrets or other intellectual property, proprietary business information and personal information), which could result in financial, legal, business and reputational harm to us., Any such compromise could disrupt our operations, damage our reputation and subject us to additional costs and liabilities, any of which could adversely affect our business.

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***We may be subject to securities litigation, which is expensive and could divert management attention.***

In the past, companies that have experienced volatility in the market price of their stock have been subject to securities class action litigation. We may be the target of this type of litigation in the future. Litigation of this type could result in substantial costs and diversion of management's attention and resources, which could seriously hurt our business. Any adverse determination in litigation could also subject us to significant liabilities.

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***If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they adversely change their recommendations or publish negative reports regarding our business or our shares, the share price and trading volume of our securities could decline.***

The trading market for our Ordinary Shares may be influenced by the research and reports that industry or securities analysts may publish about us, our business, our market or our competitors. We do not have any control over these analysts and we cannot provide any assurance that analysts will cover us or provide favorable coverage. If any of the analysts who may cover us adversely change their recommendation regarding our securities, or provide more favorable relative recommendations about our competitors, the price of our securities would likely decline. If any analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the price or trading volume of our securities to decline.

**ITEM 4. INFORMATION ON THE COMPANY**

**A. History and Development of the Company**

Our legal and commercial name is SciSparc Ltd. We were incorporated in the State of Israel on August 23, 2004, and are subject to the Companies Law. Our registered office and principal place of business is located at 20 Raul Wallenberg St., Tower A, 2<sup>nd</sup> Floor, Tel Aviv 6971916, Israel. Our telephone number in Israel is: +972-73-3447180.

Our website address is http://www.scisparc.com. The information contained on our website or available through our website is not incorporated by reference into and should not be considered a part of this Annual Report, and the reference to our website in this Annual Report is an inactive textual reference only. The SEC also maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. Our filings with the SEC will also be available to the public through the SEC's website at www.sec.gov.

We are a foreign private issuer as defined by the rules under the Securities Act and the Exchange Act. Our status as a foreign private issuer also exempts us from compliance with certain laws and regulations of the SEC, including the proxy rules and the short-swing profits recapture rules. In addition, we will not be required to file annual, quarterly and current reports and financial statements with the SEC as frequently or as promptly as U.S. domestic companies registered under the Exchange Act.

Our capital expenditures for 2025, 2024 and 2023 amounted to $0.

**B. Business Overview** 

**Overview** 

We, through our subsidiary NeuroThera, engage in clinical-stage pharmaceutical developments. Our focus is on creating and enhancing a portfolio of technologies and assets based on cannabinoid pharmaceuticals. With this focus, through our majority owned subsidiary NeuroThera, we are currently engaged in the following development programs based on THC and/or non-psychoactive CBD: SCI-110 for the treatment of TS and for the treatment of Alzheimer's disease and agitation; and SCI-210 for the treatment of ASD and SE. We also have a majority-owned subsidiary, held by NeuroThera, whose business focuses on the sale of hemp seed oil-based products and others on Amazon Marketplace.

On August 13, 2024, we entered into the license agreement to outlicense our SCI-160 program, which was a novel pharmaceutical preparation containing a cannabinoid receptor type 2 agonist for the treatment of pain, to Polyrizon. Therefore, we are no longer engaged in development of this pharmaceutical product.

SCI-110 is a proprietary drug candidate based on two components: (1) THC, which is the major cannabinoid molecule in the cannabis plant, and (2) CannAmide™, a proprietary PEA, formulation. PEA is an endogenous fatty acid amide that belongs to the class of nuclear factor agonists, which are molecules that regulate the expression of genes. We believe that the combination of THC and PEA may induce a reaction known as the "sparing effect," which has strong potential to treat various diseases of the central nervous system such as TS and Alzheimer's disease and agitation.

SCI-210 is a proprietary drug candidate based on two components: (1) CBD, and (2) CannAmide™. We believe that the combination of CBD and PEA may also induce a sparing effect reaction, which has strong potential to treat various diseases such as ASD and SE.

Pursuant to the positive results obtained in a phase IIa TS study conducted at Yale School of Medicine, we developed a regulatory dossier that was submitted to the German Federal Institute for Drugs and Medical Devices, or BfArM, and the Israeli Ministry of Health, or MoH, and the FDA for our SCI-110 program for TS. Following the Phase IIa study, we announced in June 2023 BfArM approval for a Phase IIb clinical trial for SCI-110 in subjects suffering from TS, with a view to such clinical trial being carried out in Germany at the Hannover Medical School. In August 2022, we received MoH approval to conduct the clinical trial in Israel at Sourasky Medical Center. In October 2024, we received FDA clearance to proceed under our IND, enabling us to conduct the clinical trial in the United States. Depending on the availability of financing and other resources, we may consider advancing SCI-110 into a Phase IIb clinical trial for this indication; however, there can be no assurance that we will proceed with such a trial or that sufficient funding will be available on acceptable terms, or at all.

In February 2021, we announced an agreement with The Israeli Medical Center for Alzheimer's, to conduct a phase IIa clinical trial to evaluate the safety, tolerability and efficacy of SCI-110 in patients with Alzheimer's disease and agitation using our proprietary cannabinoid-based technology. In December 2021, The Israeli Medical Center for Alzheimer's recruited the first patient to participate in the phase IIa clinical trial. In June 2023, we announced positive topline results from our Phase IIa clinical trial of SCI-110 in patients with Alzheimer's disease and agitation at the Israeli Medical Center for Alzheimer's, suggesting that SCI-110 is safe and tolerable while significantly improving agitation symptoms over time in the elderly population with Alzheimer's disease. This Phase IIa clinical trial was an open label study, which included 18 patients diagnosed with Alzheimer's disease and agitation, to evaluate the safety, tolerability and efficacy trends of twice daily oral administration of SCI-110. Results showed that the clinical trial met its primary endpoints of the number of drop-out subjects due to poor tolerability and the number of clinical trial treatment-related adverse events, with no SCI-110 related safety issues observed and no dropouts from the clinical trial due to clinical trial medication. Specifically, SCI-110 did not cause delirium, oversedation, hypotension or falls. In addition, analysis of the clinical trial results showed that the clinical trial also met its secondary end point of change from baseline to end of treatment in agitation measured by the Cohen Mansfield Agitation Inventory where out of the fifteen patients treated with SCI-110 at least two consecutive times during the trial, thirteen of them at doses ranging between 7.5mg-12.5mg/day showed amelioration in agitation with no need to use rescue medication to control agitation. Although not significant, in the exploratory endpoints, eleven patients reduced food intake and showed feeding difficulties, as measured by the Edinburgh Feeding Evaluation in Dementia scale. There was not an effect observed resulting from the treatment on cognition and sleep quality, as measured by the Mini Mental State Examination and by the Sleep Order Inventory, respectively. Depending on the availability of financing and other resources, we may consider advancing SCI-110 into a Phase IIb clinical trial for this indication; however, there can be no assurance that we will proceed with such a trial or that sufficient funding will be available on acceptable terms, or at all.

On August 8, 2022, we announced that we have received approval from the MoH and Ethics Committee of Soroka Medical Center to conduct our clinical trial for SCI-210 in patients suffering ASD. On January 9, 2023, we signed an agreement with Soroka Medical Center to conduct the clinical trial with pediatric patients suffering from ASD. Our regulatory request to carry out this clinical trial was granted by the Israeli Medical Cannabis Agency, or IMCA, on July 10, 2023. This randomized, double-blind placebo-controlled clinical trial to evaluate the potential efficacy, safety and tolerability of SCI-210 in treating patients with ASD was initiated in July 2023. As of the date of this Annual Report, 25 children suffering from ASD have been randomized into the study, and we expect to receive topline results within the next 12 to 18 months.

**Our Pharmaceutical Drug Development Programs**

<u>SCI-110 - TS, Alzheimer's disease and agitation</u> 

We believe that our pharmaceutical product candidate, SCI-110, offers a safe and potentially effective solution for a variety of medical concerns. Despite being in its early phases of clinical testing, the application of SCI-110 has extended into several treatments, including TS and Alzheimer's disease and agitation.

 

 

*TS*

TS is a neuropsychiatric disorder, characterized by physical (motor) tics and vocal (phonic) tics. Motor tics generally precede the development of phonic tics in TS, and the onset of simple tics usually predates that of complex tics. TS ranges from mild symptoms to loud noises and forceful movements that can result in self-injury (e.g. punching oneself in the face, repeating other people's words or involuntary swearing). Many with TS experience additional neurobehavioral problems and comorbidities including inattention, hyperactivity and impulsivity, anger control problems, sleep difficulties, and obsessive-compulsive symptoms. Pharmacotherapy is used when symptoms are more severe and interfere with the ability to function. Furthermore, according to the CDC, in most cases, the prevalence of tics decreases during adolescence and early adulthood, and sometimes disappears entirely; therefore, there are a limited number of adults with TS and it is usually manifested mainly through moderate to severe symptoms.

<u>Market Size</u>

Rising healthcare expenditure, favorable government initiatives, an increase in use of telemedicine and increasing aging population will drive the TS treatment market. According to the article titled "Global Tourette Syndrome Market – Industry Trends and Forecast to 2030," published in July 2023**,** North America currently dominates the Tourette syndrome market due to major key players, high disposable income, high healthcare expenditure, and a well-developed healthcare sector in this region. Asia-Pacific is expected to grow by 2030 due to development activities, rising investment in the healthcare sector, and growing government support.

The global TS treatment market size is expected to reach $6.5 billion by 2030, according to the article titled "Global Tourette Syndrome Market – Industry Trends and Forecast to 2030", published by Data Bridge Market Research in July 2023. According to the same source, the market drivers are:

● Increasing Awareness and Diagnosis - Growing awareness about TS among healthcare professionals and the general population has increased diagnosis rates. As more individuals are diagnosed with TS, the demand for effective treatments and management options is expected to rise, driving market growth.

● Advancements in Medical Research - Ongoing advancements in medical research have improved the understanding of TS's underlying causes and mechanisms. This has facilitated the development of novel therapies and treatment approaches. The progress in research is expected to continue driving the market's growth by providing better treatment options.

● Collaboration and Partnerships - Collaborative efforts between pharmaceutical companies, research institutions, and advocacy organizations have significantly developed new treatment options for TS. These partnerships help accelerate the drug discovery process and facilitate the translation of scientific findings into clinical applications.

According to the CDC, the prevalence of moderate to severe TS is reported to be 44%, indicating a significant portion of individuals experiencing notable symptoms of the condition. Interestingly, adolescents between the ages of 12 and 17 show a more than twofold likelihood of being diagnosed with TS compared to children aged 6 to 11. It highlights the impact of TS on various age groups. It emphasizes the substantial demand for effective treatments within the TS treatment market to address the diverse needs of individuals with the condition.

According to the CDC, 83% of children diagnosed with TS also have at least one additional mental, behavioral, or developmental disorder that serves as a driver for the TS treatment market.

<u>Current Treatment</u>

Pharmacological intervention is considered the first line of therapy for TS, but is reserved for more severe symptoms that interfere with the individual's ability to function. Today, a full class of drugs that interact with dopamine and non-dopamine systems in the brain are used in the treatment of TS symptoms. Although as of the date of this Annual Report, the FDA has approved only two pharmacological treatments (for adult TS- haloperidol and pimozide) these treatments have a "black box warning". Many drugs approved or off-label to treat TS are limited to the treatment of a narrow range of TS symptoms (mainly tics), and are associated with severe side effects, both of which limit their utility. Furthermore, several of these drugs have a black box warning on their label due to their potentially lethal effect. A black box warning is the strictest warning put in the labeling of prescription drugs or drug products by the FDA when there is reasonable evidence of an association of a serious hazard with the drug.

The medications commonly used to treat symptoms of TS can be divided into the following groups:

● Antipsychotic medications: belong to a class of drugs primarily used to manage psychosis (including haloperidol, pimozide and fluphenazine), all of which are associated with severe side effects (including weight gain, sedation, akathisia (a state of agitation, distress, and restlessness), nausea and tardive dyskinesia (involuntary movements of the face and jaw), among others).

● Alpha2 Adrenergic Agonists: belong to a class of drugs primarily used to manage hypertension and migraine headaches prevention (including clonidine and guanfacine), which have limited utility despite common application to children with Attention Deficit Hyperactivity Disorder, or ADHD. Similar to antipsychotic medications, these also are associated with several side effects, and some of them, such as clonidine, might even be lethal.

● Benzodiazepines, an anticonvulsant or antiepileptic drug: belong to a class of drugs primarily used to manage seizures, panic disorder and movement disorders. Of these, Clonazepam is used off-label for the reduction of tics in TS patients, which also has associated negative side effects.

As the currently used medications are managing only a small number of disease symptoms with limited efficacy and questionable safety, there is a clear unmet medical need for the management of TS.

<u>Our SCI-110 Solution for TS</u>

Our SCI-110 platform is a drug candidate for the treatment of TS.

On April 4, 2018, we announced topline results of our Phase IIa investigator-initiated study at Yale University of SCI-110 for the treatment of TS. The study was a single-arm, open-label trial, in which each subject both received one daily treatment of SCI-110 via oral administration and was followed-up for a period of 12 weeks. 16 subjects participated in the study and received SCI-110 at the Yale University Child Study Center at Yale University. The primary endpoint of the study was to assess the performance of SCI-110 in the treatment of adult patients suffering from symptoms of TS, as measured by the Yale Global Tic Severity Scale Total Tic Score, or YGTSS-TTS, the customary index for assessing symptom severity. Treatment was given in a dose titration regimen with a maximum dose of SCI-110 consisting of 10mg dronabinol and 800mg CannAmide™.

The topline results of the study showed that each of these 16 subjects with medication-refractory TS sustained a significant reduction of tic symptoms (paired t-test: YGTSS-TTS mean difference (mean +/- SD) =7.9+/-8.4, t= 3.7, df=15, p=0.002) from baseline (YGTSS-TTS: 38.4 +/- 8.3) to endpoint YGTSS-TTS: 30.5 +/- 10.9). This resulted in an average tic reduction of 21% across the entire sample of 16 TS subjects. Six of the 16 medication-refractory TS subjects experienced a response to treatment as defined by a reduction in YGTSS-TTS of greater than 25%. Improvement over time with treatment was also observed when generalized linear models were used to analyze repeated measures data on the YGTSS-TTS. In the study, SCI-110 demonstrated no significant effects on comorbid ADHD, anxiety, depression or obsessive-compulsive disorder, or OCD, symptoms. The medication was generally well-tolerated by the subjects with only two subjects stopping treatment early (one due to sedation and another due to lack of improvement in tic symptoms). 12 of the 16 subjects elected to proceed with a 24-week extension phase of the trial, which was also completed.

Following the Phase IIa study, we announced in June 2023 BfArM approval for a Phase IIb clinical trial for SCI-110 in subjects suffering from TS, with a view to such clinical trial being carried out in Germany at the Hannover Medical School. In August 2022, we received MoH approval to conduct the clinical trial in Isarael at Sourasky Medical Center. In October 2024, we received FDA clearance to proceed under our IND, enabling us to conduct the clinical trial in the United States. We also received Ethics Committee approvals in 2022 from Hannover Medical School and Sourasky Medical Center and Internal Review Board approval in 2023 at the Child Study Center at Yale School of Medicine.

In September 2023, we initiated the Phase IIb clinical trial at Sourasky Medical Center. The 86 patients in the clinical trial are randomized to either oral SCI-110 or placebo at a 1:1 ratio. The overall estimated clinical trial duration is 18-24 months from the time all clinical sites are up and running. We may also be required to conduct further preclinical studies in parallel to our clinical plans as part of registration process with the FDA and EMA. Following these clinical trials, if successful, we intend to conduct a Phase III, multinational, multicenter, randomized, double-blind, parallel-group, placebo controlled clinical trial to evaluate the safety, tolerability and efficacy of up to twice daily oral SCI-110 in treating TS. We expect to start enrollment into Phase III in the third quarter of 2026.

In June 2016, we submitted a request for orphan drug designation to the FDA for SCI-110 for the treatment of TS. The request is still pending and we are in communication with FDA. Our last communication was in December 2020 when we received a letter from FDA raising a concern that it will be hard to limit the use of the pharmaceutical product to the subset of patients we are pursuing. There is no assurance that we will successfully obtain orphan drug designation for TS. However, in light of the fact that we disagree with this concern expressed by the FDA, we requested a clarification call. In the clarification call conducted on February 2, 2021, we agreed with the FDA concern about our ability to limit the use of the pharmaceutical product to the subset of patients in addition to a safety concern associated with THC treatment in pediatrics population so we suggested to amend our preliminary request and asked to include only adults in the treated population. An amendment letter was discussed and the FDA described what it would want to see in such an amendment. In March we sent our response to the FDA. In June 2021, we received a response from the FDA, explaining that they are unable to grant our request until new information becomes available to support our request for orphan drug designation. We will re-visit the application after we obtain clinical results from our phase IIb clinical trial in TS.

If the FDA does not allow us to pursue the Section 505(b)(2) regulatory pathway as anticipated, we may need to conduct additional clinical trials, provide additional data and information and meet additional standards for regulatory approval. If this were to occur, the time and financial resources required to obtain FDA approval, and complications and risks associated with FDA approval, would substantially increase. In a pre-IND meeting we had with FDA in February 2018, the FDA did not oppose our plans to submit an NDA via the 505(b)(2) pathway relying, in part, on clinical and nonclinical information from literature related to dronabinol and the FDA's previous finding of safety and efficacy for the reference listed drug (Marinol).

In October 2024, we received FDA clearance to proceed under our IND, enabling us to conduct the clinical trial in the United States. We expect to initiate the site to conduct the clinical trial in May 2026 and to start the enrollment in the third quarter of 2026.

 

*Alzheimer's disease and Agitation*

Alzheimer's disease is the most common type of dementia, accounting for over two-thirds of cases of dementia. Alzheimer's disease is a neurodegenerative disease that causes progressive and disabling impairment of cognitive functions including memory, comprehension, language, attention, reasoning and judgment. Symptoms of Alzheimer's disease depend on the stage of the disease. Neuropsychiatric symptoms like apathy, social withdrawal, disinhibition, agitation, psychosis, insomnia, poor appetite and wandering are also common in the mid to late stages.

<u>Market Size</u> 

It is estimated that the global Alzheimer's therapeutics market is projected to reach $10.4 billion by 2035 from $4.28 billion in 2023 with a CAGR of 9.23%. According to the CDC, Alzheimer's disease is a top ten leading cause of death in the United States. In 2022, it was the seventh leading cause of death among U.S. adults and sixth leading cause of death among adults 65 years or older. The actual number of older people who die from Alzheimer's may be much higher than what is officially recorded. Alzheimer's and other types of dementia are not always reported on death certificates.

The demand for Alzheimer's therapeutics is accelerating due to a wave of breakthrough drug approvals, increased investment in disease-modifying therapies, and advancements in precision medicine. Researchers are focusing on transforming treatments from symptom management to targeted interventions that slow disease progression. The integration of monoclonal antibodies, small-molecule inhibitors, and gene therapies is expected to reshape treatment efficacy and accessibility.

<u>Current Treatment</u>

The current pharmacological treatment of agitation in Alzheimer's disease has an unsatisfactory benefit/risk ratio and often involves using off-label drugs. Antipsychotic drugs, which are the most frequently used drugs for this purpose, are only marginally better than placebo.

<u>Our SCI-110 Solution for Alzheimer's disease and Agitation</u>

The drug product, SCI-110, is a unique proprietary combination of dronabinol (synthetic delta-9-tetrahydrocannabinol (Δ⁹-THC), and PEA).

In February 2021, we signed an agreement with The Israeli Medical Center for Alzheimer's, to conduct a phase IIa clinical trial to evaluate the safety, tolerability and efficacy of SCI-110 in patients with Alzheimer's disease and agitation using our proprietary cannabinoid-based technology. The study's primary objective is the safety of SCI-110 and the secondary objective is the ability of the compound to ameliorate agitation and other behavioral disturbances in patients with Alzheimer's disease. Depending on the availability of financing and other resources, we may consider advancing SCI-110 into a Phase IIb clinical trial for this indication; however, there can be no assurance that we will proceed with such a trial or that sufficient funding will be available on acceptable terms, or at all.

This Phase IIa clinical trial was an open label clinical trial, which included 18 patients diagnosed with AD and agitation, to evaluate the safety, tolerability and efficacy trends of twice daily oral administration of SCI-110. Results showed that the clinical trial met its primary endpoints of the number of drop-out subjects due to poor tolerability and the number of clinical trial treatment-related adverse events, with no SCI-110 related safety issues observed and no dropouts from the clinical trial due to clinical trial medication. Specifically, SCI-110 did not cause delirium, oversedation, hypotension or falls. In addition, analysis of the clinical trial results showed that the clinical trial also met its secondary endpoint of change from baseline to end of treatment in agitation measured by the Cohen Mansfield Agitation Inventory, or CMAI, where out of 15 patients treated with SCI-110 at least two consecutive times during the clinical trial, thirteen of them at doses ranging between 7.5mg-12.5mg/day showed amelioration in agitation with no need to use rescue medication to control agitation. CMAI is a standard measure for measuring agitation in people with dementia. The clinical trial showed that these subjects had amelioration in agitation (paired t-test: CMAI mean difference (mean +/- SD) =10.6+/-14.88, t= 2.76, df=14, p=0.015) from baseline (CMAI: 45.87 +/- 15.17) to endpoint (CMAI: 35.27 +/- 11.09). This resulted in an average reduction of 23% across the entire sample.

In the exploratory endpoints, a decrease in eating and feeding difficulties was shown in 11 patients out of the 15 patients treated at least two consecutive times during the trial as measured by the Edinburgh Feeding Evaluation in Dementia Scale, although the increase was not significant. No effect from the treatment was observed on cognitive measurements and sleep quality, as measured by the Mini Mental State Exam and by the and the Sleep Disorder Inventory, respectively.

<u>SCI-210 - ASD and SE</u>

We believe that our pharmaceutical product candidate, SCI-210, offers a safe and potentially effective solution for a variety of medical concerns. Despite being in its early phases of pre-clinical and clinical testing, the application of SCI-210 has extended into several treatments, including ASD and SE.

 

*ASD*

ASD is a neurodevelopmental disorder. The specific etiologies and neural bases of autism remain largely unknown; it has been proposed that alterations in multiple genes in combination with environmental factors constitute the cause for the development of the autism phenotype. ASD is characterized by early dysfunction in communication and social interactions, presenting with repetitive, restrictive, stereotyped patterns of behavior and loss of interest in diverse activities. Additionally, ASD is frequently accompanied by impairments in adaptive functioning, sensory processing disorder, aggression, or self-injury.

In August 2024, we announced the enrollment of the first five patients in the clinical trial of SCI-210 in children with ASD at Soroka Medical Center in Israel. As of the date of this Annual Report, 25 children suffering from ASD have been randomized into the study, and we expect to receive topline results within the next 12 to 18 months.

In December 2024, we announced the renewal by the Israeli Medical Cannabis Agency of the clinical trial for SCI-210 in children with ASD.

<u>Market Size</u>

According to the World Health Organization, or WHO, fact sheet on epilepsy in 2024, around 50 million people have epilepsy, making it one of the most common neurological diseases globally. The risk of premature death in people with epilepsy is up to three times higher than for the general population.

Globally, an estimated 5 million people are diagnosed with epilepsy each year. In high-income countries, there are estimated to be 49 per 100,000 people diagnosed with epilepsy each year. In low- and middle-income countries, this figure can be as high as 139 per 100,000.

The epilepsy drugs market is forecast to experience significant growth, with estimations projecting the market to reach $11.85 billion by 2033, up from $7.92 billion in 2024. The growth is attributed to heightened global incidence of epilepsy, advancement in drug research and development, and a surge in public and healthcare recognition of the condition. Improved healthcare spending and increased accessibility to medical treatments further amplify market expansion.

Strategic initiatives taken by global health organizations and campaigns to raise awareness about epilepsy are significantly influencing the market dynamics. Governmental health bodies are reportedly fostering an environment conducive to the approval of new epilepsy treatments, which is propelling the market forward. These campaigns, coupled with the growing emphasis on National Epilepsy Awareness Month initiatives, improve the understanding of epilepsy and encourage an increase in the quality and reach of treatments available.

The pharmaceutical industry has seen a host of developments aimed at enhancing the treatment for epilepsy. Increased investment in research and development aspires to produce new and improved drugs, addressing not only medical needs but also economic considerations.

<u>Current Treatment</u>

No cure exists for ASD. The goal of treatment is to maximize patients' ability to function by reducing ASD symptoms and supporting development and learning. Treatment options may include: (i) behavior and communication therapies - successful programs typically include a team of specialists and a variety of activities to improve social skills, communication and behavior; and (ii) medications - to date, no medication can improve the core signs of ASD, specific medications can help control comorbidity symptoms. The main symptoms to be treated in patients with ASD are: epilepsy, aggression, hyperactivity, irritability, attention deficit, sleep problems, obsessions and anxiety. Antipsychotic drugs are sometimes used to treat severe behavioral problems and antidepressants may be prescribed for anxiety. Among the main drugs used in the treatment of ASD are typical antipsychotics such as Haloperidol, Thioridazine, Chlorpromazine and the atypical risperidone, Olanzapine and Clozapine, whose use is more common. These are used with the objective to treat the child's behavioral problems by blocking the D2 dopaminergic channels, causing a diminished reaction to stimuli known as "neuroleptic syndrome," observed as calm and quiet behavior in the child. In turn, some atypical antipsychotics also exhibit an antagonism of type 2A receptors for serotonin, aside from their effect on the D2 channels. It is important to individualize the patient when these drugs are administered, since there are no pre-established criteria for dosing and such drugs could present extrapyramidal adverse effects such as tremors, sialorrhea, sedation, impaired liver function, etc. Serotonin reuptake inhibitors such as Fluoxetine, Paroxetine and Sertraline are given to children with autism because they have been found to increase 25% of serotonin levels in platelets and serum. This treatment is based on suppressing symptoms such as anxiety, depression, OCDs, and self-injurious behavior.

Unfortunately, about 40% of children with ASD and disruptive behavior do not respond well to standard behavioral and medical treatment. Consequently, an exceptionally high percentage of parents are seeking help through unproven methods, including the use of compounds made of the cannabis plant.

<u>Our SCI-210 Solution for ASD</u>

The drug product SCI-210 is a proprietary drug candidate based on two components: (1) CBD, and (2) CannAmide™.

On August 8, 2022, we announced that we have received approval from the MoH and Ethics Committee of Soroka Medical Center to conduct our clinical trial for SCI-210 in patients suffering ASD. On January 9, 2023, we signed an agreement with Soroka Medical Center to conduct the clinical trial on pediatric patients suffering from ASD. Our regulatory request to carry out this clinical trial was granted by the IMCA on July 10, 2023. This randomized, double-blind placebo-controlled clinical trial to evaluate the potential efficacy, safety and tolerability of SCI-210 in treating patients with ASD was initiated in July 2023. We initiated patient enrollment for the clinical trial in January 2024. In February 2024, we announced that we had successfully completed the manufacturing of the SCI-210 treatment for the clinical trial. In March 2024, the first patient was enrolled in this clinical trial. As of the date of this Annual Report, 25 children suffering from ASD have been randomized into the study, and we expect to receive topline results within the next 12 to 18 months.

 

*SE*

SE is a common life-threatening medical emergency characterized by an acute, prolonged epileptic seizure. SE can represent either the exacerbation of a pre-existing seizure or the initial manifestation of epilepsy. In order to avoid neurological sequelae, a timely treatment should be started. When the continuous seizure does not respond to conventional drug treatment, SE can pose serious life-threatening risks.

In 2018, GW's Epidiolex, a plant-based, pharmaceutical grade CBD extract was approved by the FDA for the treatment of seizures associated with two rare and severe forms of epilepsy. Our study for SCI-210 previously met its endpoint (efficacy) when comparing its effect to the effect of CBD alone in an in-vitro hepatocytes model of fat accumulation; the effect of CBD was enhanced by the addition of PEA, lowering the required effective concentration of CBD. In this study, we hope to meet the study endpoint (efficacy) when comparing treatment using our pharmaceutical product candidate compared to the effect of CBD alone on SE and its neurological cognitive sequelae.

<u>Current Treatment</u>

The first-line treatment for early SE mainly comprises the administration of benzodiazepines, the most frequently used of which include Diazepam, Lorazepam, and Midazolam. Seizures continue and progress to established SE in about 40% of patients with Convulsive Status Epilepticus (CSE) despite benzodiazepine administration as the first-line treatment. The second-line treatment for established SE consists of a loading dose of antiepileptic drugs. Frequently used antiepileptic drugs include Phenytoin or Fosphenytoin, Valproate, Levetiracetam, Phenobarbital, and Lacosamide. There is no clear evidence for the relative superiority of any of these drugs.

<u>Our SCI-210 Solution for SE</u>

The drug product SCI-210 is a proprietary drug candidate based on two components: (1) CBD, and (2) CannAmide™.

On December 7, 2022, we announced positive results from our pre-clinical study of SCI-210 on SE, conducted at The Sheba Fund for Health Services and Research at Chaim Sheba Medical Center, which reaffirms the potential of its proprietary combination products to have a positive effect while minimizing adverse side effects. Our SCI-210 platform combines PEA with CBD. The non-clinical trial objective was to study the potential therapeutic effects of SCI-210 on SE and on neuro-biochemical markers for neurological cognitive sequelae. A pilocarpine SE-induced mice (C57BL/6 male) model to study SCI-210's effects on seizure severity and mortality was used. After calibration, four groups of animals were studied: an effective-high dose CBD group, a sub-effective dose CBD group, a SCI-210 group (a combination of sub-effective CBD dose and PEA) and a non-treated control group. The results indicated differences in mortality rate as well as seizure rates over time. In the low-CBD group, a higher mortality rate (although not significant) was found and therefore it is reasonable to believe that no significant impact on neuronal protection was achieved. In the high-CBD group, higher, although not significant, levels of neuronal protection were found together with a decreased mortality rate when compared to control. The level of neuronal protection in the SCI-210 treatment was significantly higher compared to the control group and no mortality was found in this group. It was concluded that SCI-210 treatment may potentially be more effective than a CBD monotherapy. Moreover, since the concentrations used in the combo treatment are significantly lower than those recommended for CBD monotherapy, this treatment also has the potential to be safer. As of the date of this Annual Report, we are not actively advancing SCI-210 for this indication. Depending on the availability of financing and other resources, we may consider further development of this program in the future; however, there can be no assurance that we will do so.

**Other Programs**

 

*Our CannAmide™ Anti-Inflammatory and Chronic Pain Solution*

CannAmide™ is a cannabimimetic compound that regulates endocannabinoid levels by enhancing receptor sensitivity and inhibiting their metabolism, and is particularly attractive therapeutically as it appears to have a very high safety profile with low or no abuse liability. Although numerous clinical trials have shown the favorable effect of PEA as an analgesic agent it has low solubility.

In July 2019, we announced the issuance of a product license for our proprietary PEA oral tablet CannAmide™ by Health Canada's Natural and NNHPD, for the recommended use as an anti-inflammatory and to help relieve chronic pain. This license was issued by the NNHPD under the authority of the NHPR. Dosage form of the described natural health product is tablets composed of 400mg PEA with a recommended dose of one tablet three times a day. Chronic pain is estimated to affect 38% of people worldwide, and according to an analysis by the World Health Organization, half of the most prevalent conditions responsible for living with disability is characterized by the presence of different kinds of pain. With the NNHPD license, we are able to offer safe and beneficial non-opiate pain management products. CannAmide™'s active compound PEA is a cannabimimetic compound that regulates endocannabinoid levels by enhancing receptor sensitivity and inhibiting their metabolism, and is particularly attractive therapeutically as it appears to have a very high safety profile with low or to no possibility for abuse. On February 10, 2021, we announced that we had entered into an agreement with Procaps, a leader in contract development and manufacturing services in softgel advanced technologies for the global pharmaceutical and nutraceutical industries, to develop and commercially manufacture both of our drug candidates, SCI-110 and our proprietary PEA oral tablets CannAmide™, in softgel capsule form.

Cannabinoids have great therapeutic potential and have been used for years for medicinal purposes. For example, cannabis and cannabinoids are being used to improve the quality of life of patients with numerous and diverse indications (oncological patients, chronic pain conditions, etc.). We believe that the novel approaches and unique mechanism of action of our proprietary technology platforms, including our drug delivery systems and unique combination and specific dosages, may be expanded to treat additional diseases and unmet medical needs.

In the future, we may consider expanding our pipeline to include these additional indications.

 

*Quantum Computing–Enabled Drug Discovery Initiative*

In September 2025, our board of directors approved the launch of an early-stage research initiative focused on the application of quantum computing technologies to three-dimensional protein modeling and drug discovery. The objective of this initiative is to explore whether advanced computational approaches may, over time, enhance our ability to model protein structures and protein-ligand interactions relevant to neurological and rare diseases.

In December 2025, we, through NeuroThera, entered into a non-binding term sheet to acquire a majority equity interest in an Israeli-based quantum computing bio data analytics company focused on quantum-enabled clinical and biological data analysis. On March 9, 2026, NeuroThera entered into a share purchase agreement with CliniQ and certain shareholders of CliniQ to acquire 56,375 ordinary shares of CliniQ, representing approximately 54% of the issued and outstanding shares of CliniQ in consideration for 56,600,000 common shares of NeuroThera issued to the selling shareholders party to the share purchase agreement, representing an aggregate value of approximately $9,459,954.20 based on the 20-day trailing volume weighted average trading price of NeuroThera's common shares on the TSXV. In addition to the consideration shares, the selling shareholders may be entitled to receive earn-out payments of up to $2,500,000 in the aggregate, payable in cash and/or common shares of NeuroThera at the sole discretion of NeuroThera, contingent upon the achievement of the certain milestones, including $500,000 for each of the first three patent applications filed by CliniQ with the USPTO or the European Patent Office, up to a maximum of $1,500,000 in the aggregate filed during a three year earn-out period following closing of the transaction, and an amount equal to 7.0% of any fundraising proceeds raised by NeuroThera, up to a maximum of $1,000,000 in the aggregate. Closing of the transaction is expected to occur within 30 days following the submission of the application for the Israeli tax ruling to the Israeli Tax Authority, subject to satisfaction or waiver of all closing conditions. The closing of the transaction is anticipated to be on or about May 15, 2026, unless otherwise agreed by the parties in writing.

CliniQ is a quantum technology company that submitted a patent application for a quantum based Monte-Carlo algorithm, a new field of quantum simulation. CliniQ develops a next-generation platform to transform clinical trials with the power of quantum computing. Its aim is to unlock insights hidden in massive, complex datasets to design smarter, faster, and more adaptive studies.

 

*Collaboration with Clearmind*

On March 7, 2022, we entered into a cooperation agreement, or the Cooperation Agreement, with Clearmind. The Cooperation Agreement includes, among others, examination of the benefit of integrating the core technologies of each company to explore the development of psychedelic-centric drug candidates and targeting mental health-related diseases. Pursuant to the terms of the Cooperation Agreement, we conducted a joint pre-clinical study with Clearmind. Under the Cooperation Agreement, we aim to pursue, develop and commercialize psychedelic-centric drug candidates. Our collaboration with Clearmind has resulted as of the date of this Annual Report, in the filing of thirteen patent applications. All patent applications refer to the combination of SciSparc's CannAmide™ with several psychedelic molecules such as Clearmind's 5-Methoxy-2-aminoindane, or MEAI, an innovative proprietary psychedelic treatment for addictions and others.

In May 2022, we announced that our collaboration with Clearmind resulted in the filing of a provisional patent application related to a psychedelic combination therapy treating numerous binge behaviors. The patent application referred to the combination of our CannAmide™ with Clearmind's MEAI. The patent application followed successful pre-clinical studies that showed a significant dose dependent effect for MEAI treatment in reducing alcohol consumption of treated animals, with additional significant effect for the CannAmide™ treatment at the lower sub-effective MEAI dose. Additionally, in May 2022, we announced positive safety profile results from our joint pre-clinical trial with Clearmind. The clinical trial tested the proprietary combination of our CannAmide™ with Clearmind's psychedelic molecule, MEAI, for alcohol consumption. A histopathology assessment was conducted on several organs (heart, lungs, liver, kidneys, brain, pancreas, spleen, and thyroid gland) from all experiment groups (n=3-5 per group) to determine the safety of the proprietary combination of MEAI and CannAmide™ versus control (mice) that were not exposed to alcohol. The severity of changes was scored by a 5-point scale by a qualified blinded toxicologist (Schafer et al., Toxicol Pathol 2018, 46:256-265). The results indicated a high safety profile of the combination treatment with no treatment-related changes observed.

In June 2022, we announced that our collaboration with Clearmind resulted in the filing of a provisional patent application related to treating cocaine addiction. The patent application refers to the proprietary combination of our CannAmide™ with Clearmind's MEAI, for treating cocaine addiction.

In August 2022, we announced additional positive pre-clinical results of our psychedelic-based pharma collaboration for treatment for cocaine addiction using MEAI. These pre-clinical study results added to our announcements regarding our collaboration with Clearmind for their combination treatment based on our CannAmide™ compound and Clearmind's MEAI for various addictions, including pre-clinical studies results, the filing of two provisional patent applications related to compositions comprised of MEAI and n-acylethanolamines and uses thereof and treating cocaine addiction. The pre-clinical trial was led by Professor Gal Yadid and his team from the Gonda Multidisciplinary Brain Research Center located at Bar Ilan University (Ramat Gan, Israel) and was designed to evaluate the possible reward-like effects of MEAI with connection to cocaine and its ability to abolish cocaine-induced conditioned place preference. In the pre-clinical trial, the self-administration paradigm was utilized, which is the gold-standard model for examining drug addiction and is based on operant conditioning. Rats were catheterized and trained to self-administer cocaine. The results identified a statistically significant sub-group within the study, in a non-biased manner and high integrity, which dramatically responded to the treatment, significantly decreasing the craving for cocaine as compared to non-treated control group. This sub-group, representing 60% of animals, showed a very high response within the group.

In September 2022, we announced that Clearmind filed a provisional patent application related to metabolic syndromes including obesity, regarding our collaboration with Clearmind. The patent application is the third of the collaboration, each referring to the proprietary combination of our PEA and Clearmind's MEAI.

In February 2023, we announced that announced that Clearmind filed three provisional patent applications were filed by Clearmind with the USPTO as a part of our ongoing collaboration. The patent applications refer to novel proprietary combinations of lysergic acid diethylamide, psilocybin, and N,N-dimethyltryptamine and our PEA. Additionally, in February 2023, we announced that as part of our ongoing collaboration with Clearmind, Clearmind filed three provisional patent applications with the USPTO, for unique combinations of future psychedelic-based compounds. The patent applications refer to novel proprietary combinations of 3,4 Methylenedioxymethamphetamine, Ibogaine and Ketamine each with our PEA.

From June 2023 through November 2025, our collaboration with Clearmind continued to generate extensive pre-clinical data and intellectual property across multiple therapeutic indications, including addiction, obesity, metabolic syndrome, eating disorders, depression and other central nervous system–related conditions.

During this period, we and Clearmind conducted and announced multiple pre-clinical studies evaluating proprietary combinations of psychedelic or psychoactive compounds, such as MEAI, together with N-acylethanolamines such as palmitoylethanolamide (PEA). The studies demonstrated, among other findings, reductions in addictive behaviors, improvements in metabolic parameters, weight loss, increased energy expenditure, fat oxidation and favorable safety and tolerability profiles in established animal models.

In parallel, we and Clearmind pursued a broad intellectual property strategy, resulting in the filing and publication of patent applications in the United States and internationally under the Patent Cooperation Treaty, as well as in Europe, Israel, South Korea, Mexico and other jurisdictions. These patent applications cover proprietary compositions and methods of use for the treatment of indications including alcohol and cocaine addiction, binge behavior disorders, obesity, metabolic dysfunction-associated steatotic liver disease (MASLD), eating disorders and depression.

In November 2025, following the completion of the NeuroThera Transaction (as defined below), we, through NeuroThera, together with Clearmind, filed an Israeli patent application covering a novel combination therapy of MEAI and N-acylethanolamines, including PEA, for the treatment of depression.

To date, our collaboration with Clearmind has resulted in the filing of 13 patent families with the United States Patent and Trademark Office and in multiple other global jurisdictions, reflecting a broad and continuing effort to develop psychedelic-based combination therapies integrating N-acylethanolamines for central nervous system and metabolic indications.

 

*Polyrizon* 

On May 31, 2022, we entered into a collaboration agreement with Polyrizon, a biotech company focused on the development of innovative medical device hydrogels delivered in the form of nasal sprays, or the Polyrizon Collaboration Agreement. As part of this collaboration, we worked together to develop a unique technology for the treatment of pain, based on our SCI-160 platform and Polyrizon's Trap and Target<sup>TM</sup> intranasal drug delivery technology to target the central nervous system. We have agreed to pay development fees to Polyrizon up to a total of $2,550,000 upon the completion of certain milestones, as well as royalties in the low single digits upon sales of products under the agreement and additional royalties for sales under any sublicense by us. On August 13, 2024, SciSparc entered into a termination agreement with Polyrizon to terminate the Polyrizon Collaboration Agreement.

On August 13, 2024, we entered into the Polyrizon License. Pursuant to this agreement, we granted Polyrizon a royalty-bearing, exclusive, sub-licensable right and license to the SCI-160 platform and received ordinary shares of Polyrizon, pre-funded warrants to purchase ordinary shares of Polyrizon, and common warrants to purchase ordinary shares of Polyrizon. In addition, in consideration for the license, we will receive royalties from sales related to the SCI-160 platform and income generated from it.

On December 30, 2024, pursuant to a share transfer agreement, or the Polyrizon Share Transfer Agreement, we sold all of the Polyrizon ordinary shares and pre-funded warrants held by us, as well as approximately 75% of the Polyrizon common warrants to third parties, for aggregate consideration of $770,548.

On April 1, 2025, we entered into a securities purchase agreement with Polyrizon pursuant to which we participated in a private placement of Polyrizon and invested $100,000 (out of an aggregate investment of approximately $17 million), in exchange for ordinary shares and Series A warrants to purchase ordinary shares, of Polyrizon. In addition, we entered into an exchange agreement with Polyrizon, pursuant to which we exchanged existing ordinary share warrants of Polyrizon held by us for Series A warrants to purchase ordinary shares of Polyrizon.

 

*Acquisition of Wellution™*

On September 14, 2022, we entered into the Wellution Acquisition Agreement with Merhavit M.R.M Holding and Management Ltd., or M.R.M, and the other parties named therein, to acquire from M.R.M its rights to purchase, the Wellution™ brand. In connection therewith, we incorporated a new wholly owned subsidiary, SciSparc Nutraceuticals, to hold the new assets of the Brand. The Brand sells hemp-based products, including hemp gummies, hemp oil capsules, hemp gel, hemp cream, detox pills, height pills, antibacterial creams, and anti-aging creams, among other beauty and hair treatment products that are all manufactured in the United States.

In accordance with the closing of the Wellution Acquisition Agreement for the Brand which took place on September 30, 2022, we paid $4.59 million for the Brand and issued to M.R.M $15 million worth of warrants to purchase Ordinary Shares, or the M.R.M Warrants. On March 26, 2024, M.R.M. agreed with us to waive all its rights under the M.R.M. Warrants and the M.R.M. Warrants were cancelled for no consideration.

On February 23, 2023, we entered into the Wellution Sale Agreement with KeepZone AI Inc. (formerly Jeffs' Brands Holdings Inc.), or KeepZone, and Nexera Technologies Ltd. (formerly Jeffs' Brands Ltd.), or Nexera Technologies, pursuant to which, at the closing on March 28, 2023, KeepZone acquired from us 57 shares of common stock of SciSparc Nutraceuticals, equal to approximately a 49% interest in our wholly owned subsidiary, SciSparc Nutraceuticals, which owns the Wellution<sup>TM</sup> Brand, for a cash consideration of $2.5 million. In addition to the cash consideration upon closing, we received from Nexera Technologies an additional amount accounting for certain purchase price adjustments related to inventory and working capital, which adjustments increased the purchase price by approximately $489,330.

Following the closing of the Wellution Sale Agreement on March 28, 2023, including an equity conversion of the financing amounts, we previously provided to SciSparc Nutraceuticals for working capital, we hold approximately 51% of the outstanding capital stock of SciSparc Nutraceuticals. In October 2025, we transferred this equity interest to NeuroThera in connection with the NeuroThera Transaction.

In connection with the Wellution Sale Agreement, at the closing, Nexera Technologies and SciSparc Nutraceuticals entered into a consulting agreement, or the Wellution Management Agreement, for the provision of services by Nexera Technologies for the management of the Brand for a monthly fee of $20,000, which was reduced to $10,000 in November 2023. Nexera Technologies also received a one-time signing bonus at the closing in the amount of $51,000. The Wellution Management Agreement is in effect for an undefined period of time and may be terminated by either party with 30 days' advance notice.

In addition, pursuant to the Wellution Sale Agreement, at the closing, we undertook a share exchange with Nexera Technologies, in which we acquired ordinary shares of Nexera Technologies and Nexera Technologies acquired SciSparc's ordinary shares, in each case having an aggregate value of $288,238 on the date of issuance.

**Intellectual Property**

Our intellectual property portfolio is comprised of seven granted U.S. patents, and pending patent applications in eight families, all of which are in the national phase of examination. Of this portfolio, we have exclusively licensed one patent family from Yissum. Our intellectual property portfolio also includes.an application to register the trademark CannAmide™ pending in the United States. SciSparc has also been granted a trademark registration for Wellution® in Class 003 in the United States.

SciSparc has also been granted a trademark registration for Wellution® in Class 005 in the United States.

 

*Internally Developed Patent Applications*

In March 2013, we filed a provisional application with the USPTO for the technology of proprietary sequences of anti-CD3 antibody and the utilization of the latter in various autoimmune diseases, as well as in hepato-pathologies. The provisional application has been converted to a PCT and then entered a National Status in December 2014 in the U.S., with the European Patent Office, or EPO, and in China and Canada. In the U.S. it received a grant status in June 2018.

In April 2015, we filed a provisional application with the USPTO for combinations of cannabinoids, n-acylethanolamines, and inhibitors of n-acylethanolamine degradation, which, in April 2016 was converted into an international PCT application that subsequently entered national phase in the following state entities: U.S., EPO, Israel, Australia, Canada, China and Japan. The technology is directed to utilizing the potentiating effect of n-acylethanolamines on cannabinoids for any cannabinoid amenable indication, including but not limited to analgesia and TS. The 20-year term of any patent issuing from this application would expire in April 2036. In August and September 2021, the patent was granted in Australia and Japan, respectively, and two other patents were granted in Australia in November 2023 and March 2026. A patent was granted in Israel in August of 2022, and three patents have been issued in the U.S., two in December 2021 and one in February 2022. In December 2022, we were granted a patent from the EPO. A patent was issued in Canada in April 2024.

In May 2015, we filed a provisional application with the USPTO for combinations of opioids, n-acylethanolamines, and inhibitors of n-acylethanolamines degradation, which, in May 2016 was converted into an international PCT application that subsequently entered national phase in the following state entities: U.S., EPO, Israel, Australia, Canada, China and Japan. The technology is directed to potentiating effect of N-acylethanolamines on opioids for opioid amenable indications. The 20-year term of any patent issuing from this application would expire in May 2036. In July 2021, the first patent was granted in Australia, a second was granted in November 2023 and a third was granted in January 2026. A patent was issued in Japan in March 2023, and the EPO granted a patent in November 2023. A patent was issued in Canada in April 2024.

In July 2016, we filed a provisional application with the USPTO for the use of cannabinoids for potentiating the efficacy of antibiotics, which in July 2017 was converted into an international PCT application that subsequently entered national phase in the following state entities: U.S., EPO, Canada and China. The 20-year term of any patent issuing from this application would expire in July 2037. In November 2022, the USPTO issued this patent called "Compositions and Methods of Potentiating Antimicrobials," and a second patent was granted in January 2026. A patent was issued in Europe in May 2024.

In January 2018, we filed a provisional application with the USPTO directed to methods of treating OSA, which in January 2019 was converted into an international PCT application that subsequently entered national phase in the following state entities: U.S., EPO, Canada and Australia. The 20-year term of any patent issuing from this application would expire in January 2039. A patent was issued in Australia in February 2025.

In April 2019, we filed a provisional application with the USPTO directed to compositions and methods for potentiating derivatives of 4-aminophenols, which in April 2020 was converted into an international PCT application. The PCT application subsequently entered the national phase in Australia, Canada, China, EPO, Israel, India, Japan, Mexico, Russia, and the U.S. The 20-year term of any patent issuing from this application would expire in April 2040. An allowance was received in January 2026 for a patent application in Canada and in March 2026 for a patent application in Japan.

In August 2020, we filed a provisional application with the USPTO directed to methods for maintaining microvascular integrity, which in August 2021 was converted into an international PCT application. The PCT application subsequently entered the national phase in Australia, Canada, China, EPO, Israel, India, Japan, and the U.S. The 20-year term of any patent issuing from this application would expire in August 2041. An allowance was received in January 2026 for a patent application in Canada.

*In-Licensed Patents and Patent Applications*

On July 29, 2018, we entered into an exclusive, worldwide, sublicensable, royalty-bearing license agreement with Yissum for a license to make commercial use of the licensed technology, in order to develop, obtain regulatory approvals, manufacture, market, distribute or sell products, or the Yissum License Agreement. According to the Yissum License Agreement, we were required to pay Yissum an initial payment of $133,000, and shall pay Yissum royalties at the rates of 3% of net sales, subject to the royalty reductions as described in the Yissum License Agreement. All right, title and interest in and to the Yissum License Agreement shall vest solely in Yissum, and we shall hold and make use of the rights granted. All rights in the development results shall be solely owned by us, except to the extent that an employee of the Yissum, including the researcher, is considered an inventor of a patentable invention arising from the development results, in which case such invention and all patent applications and/or patents claiming such invention shall be owned jointly by us and Yissum, as appropriate, and Yissum's share in such joint patents shall be automatically included in the Yissum License Agreements.

 

*Other Intellectual Property Protection* 

In addition to patent and trademark protection, we intend to use other means to protect our proprietary rights, including pursuing marketing or data exclusivity periods, orphan drug status, and similar rights that are available under regulatory provisions in certain countries, including but not limited to the United States, Europe, Canada, Japan, and China.

We also rely on trade secrets, know-how, and continuing innovation to develop and maintain our competitive position. We cannot be certain that patents will be granted with respect to any of our pending patent applications or with respect to any patent applications filed by us in the future, nor can we be sure that any of our existing patents or any patents granted to us in the future will be commercially useful in protecting our technology.

We also seek regulatory approval for our products for indications with high unmet medical need, great market potential, and where we have a proprietary position through patents covering various aspects of our products, including but not limited to: composition, dosage, formulation, use, and manufacturing process. Our success depends, in part, on an intellectual property portfolio that supports future revenue streams and erects barriers to our competitors. We are maintaining and building our patent portfolio through filing new patent applications, prosecuting existing applications, and licensing and acquiring new patents and patent applications.

Despite these measures, any of our intellectual property and proprietary rights could be challenged, invalidated, circumvented, infringed or misappropriated. Intellectual property and proprietary rights may not be sufficient to permit us to take advantage of current market trends or otherwise to provide competitive one. For more information, see Item 3D "*Risk Factors-Risks Related to our Intellectual Property*."

The following table summarizes our portfolio of patents:

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Country** | **Status** | **Filing Date** | **Title** | **Estimated<br> Expiration Date** | **Product<br> Covered** |
| Australia | Granted | 19-Apr-2016 | COMBINATIONS OF CANNABINOIDS AND N-ACYLETHANOLAMINES | April 2036 | SCI-110<br> SCI-210 |
| Australia | Granted | 19-Jul-2021 | COMBINATIONS OF CANNABINOIDS AND N-ACYLETHANOLAMINES | April 2036 | SCI-110 <br> SCI-210 |
| Australia | Granted | 17-Oct-2023 | COMBINATIONS OF CANNABINOIDS AND N-ACYLETHANOLAMINES | April 2036 | SCI-110<br> SCI-210 |
| Australia | Pending | 31-Dec-2025 | COMBINATIONS OF CANNABINOIDS AND N-ACYLETHANOLAMINES | April 2036 | N/A<br> SCI-210 |
| Canada | Granted | 19-Apr-2016 | COMBINATIONS OF CANNABINOIDS AND N-ACYLETHANOLAMINES | April 2036 | SCI-110 <br> SCI-210 |
| United States of America | Granted | 19-Apr-2016 | COMBINATIONS OF CANNABINOIDS AND N-ACYLETHANOLAMINES | May 2036 | SCI-110 |
| United States of America | Abandoned | 01-Oct-2019 | COMBINATIONS OF CANNABINOIDS AND N-ACYLETHANOLAMINES | N/A |  |
| United States of America | Granted | 10-Oct-2019 | COMBINATIONS OF CANNABINOIDS AND N-ACYLETHANOLAMINES | April 2036 | SCI-210 |
| United States of America | Granted | 30-Aug-2019 | COMBINATIONS OF CANNABINOIDS AND N-ACYLETHANOLAMINES | April 2036 | SCI-210 |
| United States of America | Published | 27-Aug-2021 | COMBINATIONS OF CANNABINOIDS AND N-ACYLETHANOLAMINES | April 2036 | SCI-110 |
| United States of America | Published | 27-Aug-2021 | COMBINATIONS OF CANNABINOIDS AND N-ACYLETHANOLAMINES | April 2036 | SCI-210 |
| United States of America |  | 12-Nov-2021 | COMBINATIONS OF CANNABINOIDS AND N-ACYLETHANOLAMINES | N/A |  |
| Israel | Granted | 19-Apr-2016 | COMBINATIONS OF CANNABINOIDS AND N-ACYLETHANOLAMINES | April 2036 | SCI-110 <br> SCI-210 |
| Israel | Pending | 31-Mar-2022 | COMBINATIONS OF CANNABINOIDS AND N-ACYLETHANOLAMINES | April 2036 | SCI-210 |
| China (People's Republic) | Abandoned | 19-Apr-2016 | COMBINATIONS OF CANNABINOIDS AND N-ACYLETHANOLAMINES | N/A |  |
| China | Published | 08-Jun-2023 | COMBINATIONS OF CANNABINOIDS AND N-ACYLETHANOLAMINES | April 2036 | SCI-110 <br> SCI-210 |
| European Patent Convention<sup>(1)</sup> | Granted | 19-Apr-2016 | COMBINATIONS OF CANNABINOIDS AND N-ACYLETHANOLAMINES | April 2036 | SCI-110 |
| European Patent Convention<sup>(1)</sup> | Published | 19-Apr-2016 | COMBINATIONS OF CANNABINOIDS AND N-ACYLETHANOLAMINES | April 2036 | SCI-110 |
| Japan | Granted | 19-Apr-2016 | COMBINATIONS OF CANNABINOIDS AND N-ACYLETHANOLAMINES | April 2036 | SCI-110 <br>|
| Japan | Abandoned | 30-Mar-2021 | COMBINATIONS OF CANNABINOIDS AND N-ACYLETHANOLAMINES |  |  |
| Hong Kong | Published | 16-Jun-2023 | COMBINATIONS OF CANNABINOIDS AND N-ACYLETHANOLAMINES | April 2036 | SCI-110 <br> SCI-210 |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Country** | **Status** | **Filing Date** | **Title** | **Estimated<br> Expiration Date** | **Product<br> Covered** |
| Australia | Granted | 17-May-2016 | COMBINATIONS OF OPIOIDS AND N-ACYLETHANOLAMINES | May 2036 | N/A |
| Australia | Granted | 19-Jun-2021 | COMBINATIONS OF OPIOIDS AND N-ACYLETHANOLAMINES | May 2036 | N/A |
| Australia | Granted | 19-Oct-2023 | COMBINATIONS OF OPIOIDS AND N-ACYLETHANOLAMINES | May 2036 | N/A |
| Australia | Pending | 11-Dec-2025 | COMBINATIONS OF OPIOIDS AND N-ACYLETHANOLAMINES | May 2036 | N/A |
| Israel | Abandoned | 17-May-2016 | COMBINATIONS OF OPIOIDS AND N-ACYLETHANOLAMINES | N/A | N/A |
| Israel | Granted | 28-Aug-2023 | COMBINATIONS OF OPIOIDS AND N-ACYLETHANOLAMINES | May 2036 | N/A |
| Israel | Pending | 21-Jul-2025 | COMBINATIONS OF OPIOIDS AND N-ACYLETHANOLAMINES | May 2036 | N/A |
| China (People's Republic) | Abandoned | 17-May-2016 | COMBINATIONS OF OPIOIDS AND N-ACYLETHANOLAMINES | N/A | N/A |
| China | Published | 03-Apr-2023 | COMBINATIONS OF OPIODS AND N-ACYLETHANOLAMINES | May 2036 | N/A |
| Japan | Granted | 17-May-2016 | COMBINATIONS OF OPIOIDS AND N-ACYLETHANOLAMINES | May 2036 | N/A |
| Japan | Abandoned | 30-Apr-2021 | COMBINATIONS OF OPIOIDS AND N-ACYLETHANOLAMINES | N/A | N/A |
| Hong Kong | Published | 20-Nov-2023 | COMBINATIONS OF OPIOIDS AND N-ACYLETHANOLAMINES | May 2036 | N/A |
| European Patent Convention<sup>(1)</sup> | Granted | 17-May-2016 | COMBINATIONS OF OPIOIDS AND N-ACYLETHANOLAMINES | May 2036 | N/A |
| United States of America | Abandoned | 17-May-2016 | COMBINATIONS OF OPIOIDS AND N-ACYLETHANOLAMINES | N/A | N/A |
| United States of America | Published | 27-Nov-2020 | COMBINATIONS OF OPIOIDS AND N-ACYLETHANOLAMINES | May 2036 | N/A |
| Canada | Granted | 17-May-2016 | COMBINATIONS OF OPIOIDS AND N-ACYLETHANOLAMINES | May 2036 | N/A |
| United States of America | Abandoned | 25-Jan-2019 | COMPOSITIONS AND METHODS FOR TREATING OBSTRUCTIVE SLEEP APNEA | N/A | N/A |
| European Patent Convention<sup>(1)</sup> | Published | 25-Jan-2019 | COMPOSITIONS AND METHODS FOR TREATING OBSTRUCTIVE SLEEP APNEA | January 2039 | SCI-110 |
| Australia | Granted | 25-Jan-2019 | COMPOSITIONS AND METHODS FOR TREATING OBSTRUCTIVE SLEEP APNEA | January 2039 | SCI-110 |
| Australia | Pending | 31-Jan-2025 | COMPOSITIONS AND METHODS FOR TREATING OBSTRUCTIVE SLEEP APNEA | January 2039 | SCI-210 |
| Hong Kong | Published | 24-Aug-2020 | COMPOSITIONS AND METHODS FOR TREATING OBSTRUCTIVE SLEEP APNEA | January 2039 | SCI-110 |
| Canada | Pending | 25-Jan-2019 | COMPOSITIONS AND METHODS FOR TREATING OBSTRUCTIVE SLEEP APNEA | January 2039 | SCI-110 |
| Australia | Abandoned | 22-Apr-2020 | COMPOSITIONS AND METHODS FOR POTENTIATING DERIVATIVES OF 4-AMINOPHENOLS | N/A | N/A |
| Canada | Allowed | 22-Apr-2020 | COMPOSITIONS AND METHODS FOR POTENTIATING DERIVATIVES OF 4-AMINOPHENOLS | April 2040 | N/A |
| China | Published | 22-Apr-2020 | COMPOSITIONS AND METHODS FOR POTENTIATING DERIVATIVES OF 4-AMINOPHENOLS | April 2040 | N/A |
| European Patent Convention<sup>(1)</sup> | Published | 22-Apr-2020 | COMPOSITIONS AND METHODS FOR POTENTIATING DERIVATIVES OF 4-AMINOPHENOLS | April 2040 | N/A |
| Hong Kong | Published | 18-Mar-2022 | COMPOSITIONS AND METHODS FOR POTENTIATING DERIVATIVES OF 4-AMINOPHENOLS | April 2040 | N/A |
| Israel | Pending | 22-Apr-2020 | COMPOSITIONS AND METHODS FOR POTENTIATING DERIVATIVES OF 4-AMINOPHENOLS | April 2040 | N/A |
| India | Abandoned | 22-Apr-2020 | COMPOSITIONS AND METHODS FOR POTENTIATING DERIVATIVES OF 4-AMINOPHENOLS | N/A | N/A |
| Japan | Abandoned | 22-Apr-2020 | COMPOSITIONS AND METHODS FOR POTENTIATING DERIVATIVES OF 4-AMINOPHENOLS | N/A | N/A |
| Japan | Allowed | 14-Feb-2025 | COMPOSITIONS AND METHODS FOR POTENTIATING DERIVATIVES OF 4-AMINOPHENOLS | April 2040 | N/A |
| Mexico | Abandoned | 22-Apr-2020 | COMPOSITIONS AND METHODS FOR POTENTIATING DERIVATIVES OF 4-AMINOPHENOLS | N/A | N/A |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Country** | **Status** | **Filing Date** | **Title** | **Estimated<br> Expiration Date** | **Product<br> Covered** |
| Russia | Abandoned | 22-Apr-2020 | COMPOSITIONS AND METHODS FOR POTENTIATING DERIVATIVES OF 4-AMINOPHENOLS | N/A | N/A |
| Hong Kong | Published | 20-Mar-2022 | COMPOSITIONS AND METHODS FOR POTENTIATING DERIVATIVES OF 4-AMINOPHENOLS | April 2040 | N/A |
| United States of America | Published | 22-Apr-2020 | COMPOSITIONS AND METHODS FOR POTENTIATING DERIVATIVES OF 4-AMINOPHENOLS | April 2040 | N/A |
| Canada | Abandoned | 12-Mar-2013 | HUMANIZED ANTIBODIES TO CLUSTER OF DIFFERENTIATION 3 (CD3) | N/A | N/A |
| China | Granted | 12-Mar-2013 | HUMANIZED ANTIBODIES TO CLUSTER OF DIFFERENTIATION 3 (CD3) | March 2033 | N/A |
| United Kingdom | Granted | 12-Mar-2013 | HUMANIZED ANTIBODIES TO CLUSTER OF DIFFERENTIATION 3 (CD3) | March 2033 | N/A |
| Germany | Granted | 12-Mar-2013 | HUMANIZED ANTIBODIES TO CLUSTER OF DIFFERENTIATION 3 (CD3) | March 2033 | N/A |
| France | Granted | 12-Mar-2013 | HUMANIZED ANTIBODIES TO CLUSTER OF DIFFERENTIATION 3 (CD3) | March 2033 | N/A |
| United States of America | Granted | 12-Mar-2013 | HUMANIZED ANTIBODIES TO CLUSTER OF DIFFERENTIATION 3 (CD3) | March 2033 | N/A |
| United States of America (Continuation) | Abandoned | 14-May-2018 | HUMANIZED ANTIBODIES TO CLUSTERS OF DIFFERENTIATION 3 (CD3) | N/A | N/A |
| United States of America | Granted | 09-Jun-2020 | COMPOSITIONS AND METHODS OF POTENTIATING ANTIMICROBIALS | July 2037 | N/A |
| United States of America | Abandoned | 11-Jan-2019 | COMPOSITIONS AND METHODS OF POTENTIATING ANTIMICROBIALS | N/A | N/A |
| United States of America | Granted | 29-Sep-2022 | COMPOSITIONS AND METHODS OF POTENTIATING ANTIMICROBIALS | July 2037 | N/A |
| European Patent Convention<sup>(1)</sup> | Granted | 11-Jan-2019 | COMPOSITIONS AND METHODS OF POTENTIATING ANTIMICROBIALS | July 2037 | N/A |

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Country** | **Status** | **Filing Date** | **Title** | **Estimated<br> Expiration Date** | **Product<br> Covered** |
| China | Granted | 11-Jan-2019 | COMPOSITIONS AND METHODS OF POTENTIATING ANTIMICROBIALS | N/A | N/A |
| China | Pending | 21-Oct-2024 | COMPOSITIONS AND METHODS OF POTENTIATING ANTIMICROBIALS | July 2037 | N/A |
| China | Pending | 21-Oct-2024 | COMPOSITIONS AND METHODS OF POTENTIATING ANTIMICROBIALS | July 2037 | N/A |
| Canada | Abandoned | 13-Jul-2017 | COMPOSITIONS AND METHODS OF POTENTIATING ANTIMICROBIALS | N/A | N/A |
| United States of America | Granted |  | \* Compositions comprising CB receptor agonists, uses thereof and methods for their preparation | October 2029 | SCI-160 |
| United Kingdom | Granted |  | \* Composition comprising cb receptor agonists and uses thereof | October 2029 | SCI-160 |
| Germany | Granted |  | \* Composition comprising cb receptor agonists and uses thereof | October 2029 | SCI-160 |
| France | Granted |  | \* Composition comprising cb receptor agonists and uses thereof | October 2029 | SCI-160 |
| Australia | Pending | 2-Aug-21 | METHODS FOR MAINTAINING MICROVASCULAR INTEGRITY | August 2041 | N/A |
| Canada | Allowed | 2-Aug-2021 | METHODS FOR MAINTAINING MICROVASCULAR INTEGRITY | August 2041 | N/A |
| China | Published | 2-Aug-21 | METHODS FOR MAINTAINING MICROVASCULAR INTEGRITY | August 2041 | N/A |
| European Patent Convention<sup>(1)</sup> | Published | 2-Aug-21 | METHODS FOR MAINTAINING MICROVASCULAR INTEGRITY | August 2041 | N/A |
| Israel | Pending | 2-Aug-21 | METHODS FOR MAINTAINING MICROVASCULAR INTEGRITY | August 2041 | N/A |
| India | Abandoned | 2-Aug-21 | METHODS FOR MAINTAINING MICROVASCULAR INTEGRITY | N/A | N/A |
| Japan | Published | 2-Aug-21 | METHODS FOR MAINTAINING MICROVASCULAR INTEGRITY | August 2041 | N/A |
| Japan | Allowed | 14-Feb-2025 | COMPOSITIONS AND METHODS FOR POTENTIATING DERIVATIVES OF 4-AMINOPHENOLS | April 2040 | N/A |
| United States of America | Published | 2-Aug-21 | METHODS FOR MAINTAINING MICROVASCULAR INTEGRITY | August 2041 | N/A |
| Hong Kong | Published | 7-Jun-2023 | METHODS FOR MAINTAINING MICROVASCULAR INTEGRITY | August 2041 | N/A |

---

There is a pending trademark application for CannAmide™ in class 005 in the United States.

We have also been granted trademarks for Wellution® in Class 003 and Class 005 in the United States.

(1) Validation states are not listed separately.

 

*Sales and Transfer of Intellectual Property Assets*

**Transaction with Former Subsidiary**

In June 2016, we entered into a share transfer agreement with our former subsidiary, Orimmune Bio Ltd., or Orimmune, and Karma Link Ltd., or Karma Link. According to the agreement, we agreed to sell our interests in Orimmune to Karma Link, and also use our best efforts to transfer to and assign Orimmune our rights in the Anti-CD3 technology.

On December 13, 2018, an additional amendment to the transfer agreement was signed, or the Additional Amendment, between us, Karma Link and Orimmune, under which it was agreed that Orimmune (and Karma Link) will be assigned certain rights in IP related to the licensed technology owned by us, subject to certain conditions precedent. In 2021, we received the approval of the IIA to complete the assignment and we are now seeking to complete the transaction. As of the date of this Annual Report on Form 20-F, the conditions precedent have not yet been completed and the assignment of the intellectual property rights related to the licensed technology owned by us has not yet been transferred.

**MitoCareX** 

On March 10, 2022, we entered into a Founders and Investment Agreement with Dr. Alon Silberman, or the MitoCareX Agreement. Pursuant to the MitoCareX Agreement, we invested an initial amount of $700,000 in MitoCareX and agreed to invest over the next two years an additional $1,000,000, subject to the achievement of certain pre-determined milestones as agreed upon in the MitoCareX Agreement, for up to 50.01% ownership in MitoCareX. MitoCareX is focused on the discovery and development of potential drugs for cancers and other life-threatening conditions. The MitoCareX Agreement also contains customary representations, warranties, covenants and indemnification provisions and on March 31, 2022, the closing conditions were met.

On February 17, 2023, we announced that MitoCareX has achieved its first milestone pursuant to the MitoCareX Agreement. The first milestone refers to the establishment of MitoCareX's cloud-based computing infrastructure that is expected to allow its future expansion into machine learning system. The system is harnessed to investigating mitochondrial carriers that are crucial for cell viability. As a result of MitoCareX meeting this milestone, we invested an additional $400,000 in MitoCareX and increased our share ownership holdings in MitoCareX Bio from 31.48% to 41.92%.

On May 8, 2023, we announced that MitoCareX successfully developed its core algorithm for allowing the generation of reliable 3D comparative models of human SLC25A mitochondrial carrier proteins.

On November 27, 2023, we announced that MitoCareX achieved positive results with the development of its laboratory capabilities by establishing a variety of small-molecule screening platforms. With this development, MitoCareX achieved its second milestone pursuant to the MitoCareX Agreement and as a result, on March 11, 2024 we invested an additional $600,000 and increased our share ownership holdings in MitoCareX Bio from 41.92% to 52.73%.

On February 25, 2025, we entered into a securities purchase and exchange agreement, or the MitoCareX SPEA, together with MitoCareX, Dr. Alon Silberman and Prof. Ciro Leonardo Pierri, as the Sellers, pursuant to which the Sellers agreed to sell their stakes in MitoCareX to Nexentis Technologies, Inc. (formerly N2OFF, Inc.), or Nexentis, thereby resulting in MitoCareX becoming a wholly-owned subsidiary of Nexentis. The MitoCareX SPEA contains customary representations, warranties and covenants by each of the parties. The closing of the MitoCareX SPEA was contingent upon, among other customary obligations, obtaining approval of Nexentis' stockholders by the requisite majority.

On September 25, 2025, the stockholders of Nexentis approved the transactions contemplated by the MitoCareX SPEA at a special meeting of stockholders, thereby satisfying one of the principal closing conditions under the MitoCareX SPEA.

On October 20, 2025, following the satisfaction of the remaining closing conditions, under the MitoCareX SPEA, the transactions contemplated thereby were consummated. At the closing, the Sellers transferred all of their MitoCareX shares to Nexentis, resulting in Nexentis owning 100% of the fully diluted share capital of MitoCareX. In consideration therefor, we received the $700,000 cash payment and 490,751 shares of Nexentis common stock, representing 16.75% of N2OFF's fully diluted share capital as of the closing date. As a result of the sale of our holdings in MitoCareX, we recorded a capital gain in the amount of $2.2 million for the year ended December 31, 2025.

Following the closing of the MitoCareX SPEA, the Sellers may receive such number of additional shares of Nexentis Common Stock, for no additional consideration, that reflects an aggregate amount of up to 25% of the issued and outstanding capital stock of Nexentis on a fully-diluted basis, or the Additional Nexentis Stock, which Additional Nexentis Stock, if the respective milestones are achieved as defined in the MitoCareX SPEA, will be duly issued in installments based on the achievement of each milestone, as set forth in the MitoCareX SPEA, and will be allocated amongst the Sellers as follows: 50% to us, 33.33% to Mr. Silberman and 16.67% to Mr. Pierri. The Sellers' eligibility to receive Additional Nexentis Stock will terminate on December 31, 2028, such that if a specific milestone is not achieved and therefore the right to receive the respective number of shares of Additional Nexentis Stock issuable upon the achievement of such milestone is not earned by December 31, 2028, the right to receive the number of shares of Additional Nexentis Stock attributable to any such non-achieved milestone pursuant to the MitoCareX SPEA will terminate.

**NeuroThera** 

On July 8, 2024, we entered into a non-binding letter of intent, or the "Spin-off LOI" with Miza III Ventures Inc., or Miza, a publicly traded company listed on the TSXV, relating to the spin-off of our advanced clinical-stage pharmaceutical portfolio. Pursuant to the Spin-off LOI, we contemplated selling, assigning, conveying and transferring certain assets to Miza in consideration for common shares and contingent rights based on pre-determined milestones, following which we expected to hold a controlling interest in Miza, subject to the definitive terms to be agreed between the parties.

The Spin-off LOI and the amendments thereto were superseded by the definitive asset and share purchase agreement entered into on October 9, 2025, as described below.

On October 9, 2025, we entered into a definitive asset and share purchase agreement, or the NeuroThera Transaction, with Miza and SciSparc Nutraceuticals, pursuant to which, subject to customary closing conditions, we agreed to transfer to Miza (i) our advanced clinical-stage pharmaceutical portfolio and related intellectual property and assets (ii) our equity interest of approximately 51% in SciSparc Nutraceuticals, or collectively, the Target Assets, in exchange for equity and equity-linked consideration of Miza.

At the closing of the NeuroThera Transaction on October 22, 2025, we received 63,300,000 common shares of Miza, 4,000,000 common share purchase warrants exercisable at CAD 0.25 per share until October 22, 2030, and contingent rights entitling us to acquire up to 48,000,000 additional common shares upon the achievement of specified milestones, or collectively the Transaction Securities. Following the closing, we hold a controlling equity interest of approximately 75% in Miza, which may increase to approximately 84% upon the exercise of the warrants and the achievement of all milestones. Concurrently with the closing, Miza changed its name to NeuroThera and its TSXV trading symbol to NTLX.

The Transaction Securities are subject to escrow pursuant to TSXV Policy 5.4, under which 10% of the securities are released upon final TSXV acceptance, with additional releases of 15% every six months thereafter.

In connection with the closing, we committed up to CAD 1 million (approximately $716 thousand) to NeuroThera pursuant to an unsecured convertible note maturing on October 22, 2027, bearing interest at 7% per annum, and convertible, at our election and subject to TSXV policies, into NeuroThera common shares at CAD 0.25 per share, up to a maximum of 4,000,000 shares.

 ****

***Post-Closing Activities and Intellectual Property Development***

Following the completion of the NeuroThera Transaction, we, through NeuroThera, continued to advance intellectual property and business development initiatives aligned with its focus on central nervous system disorders.

In November 2025, we, through NeuroThera, advanced the collaboration with Clearmind by filing an Israeli patent application covering a novel combination therapy of MEAI and N-Acylethanolamines, including PEA, for the treatment of depression. This filing expanded the joint intellectual property portfolio developed through the collaboration, which as of April 28, 2026, comprises 13 patent families relating to MEAI- and N-Acylethanolamine-based therapies for indications including alcohol use disorder, cocaine addiction, obesity, weight loss and depression.

In December 2025, we, through NeuroThera, entered into a non-binding term sheet with an Israeli-based quantum computing bio-data analytics company, pursuant to which NeuroThera would acquire a 55% equity interest in the target company on a fully diluted basis, in consideration for the issuance of NeuroThera common shares representing 40% of NeuroThera's non-diluted share capital. On March 9, 2026, NeuroThera entered into a share purchase agreement among certain shareholders of CliniQ, CliniQ and NeuroThera. Pursuant to the agreement, NeuroThera will acquire 56,375 ordinary shares of CliniQ, representing approximately 54% of the issued and outstanding ordinary shares of CliniQ on a fully diluted basis immediately prior to the closing of the transaction. CliniQ is a quantum technology company that has submitted a patent application for a quantum based Monte-Carlo algorithm, a new field of quantum simulation. CliniQ develops a next-generation platform to transform clinical trials with the power of quantum computing. Its aim is to unlock insights hidden in massive, complex datasets to design smarter, faster, and more adaptive studies. The closing of the CliniQ transaction is anticipated to be on or about May 15, 2026, unless otherwise agreed by the parties in writing; however, there can be no assurance that the transaction will be completed.

In December 2025, we, through NeuroThera, were granted a patent by the Israeli Patent Office covering a proprietary combination of opioids and N-acylethanolamines, including PEA. The granted patent relates to methods and formulations designed to enhance opioid analgesic efficacy while reducing associated side effects, such as tolerance, dependence and gastrointestinal effects. This patent forms part of NeuroThera's opioid-based patent family and follows previously granted patents covering the same technology in Europe, Japan, Australia and Canada. The patented technology is based on preclinical studies evaluating combinations of opioids, including oxycodone, with PEA.

**Acquisition of Medical Endoscopy Intellectual Property**

On January 8, 2026, we entered into an asset purchase agreement with Xylo, pursuant to which we agreed to acquire the complete portfolio of patents, trademarks, know-how and other intellectual property rights relating to endoscopic systems and medical cameras, including intellectual property associated with the MUSE™ system, a single-use endoscopic device designed for transoral fundoplication for the treatment of gastroesophageal reflux disease.

On January 26, 2026, the Xylo transaction closed and we acquired the applicable intellectual property portfolio in consideration for the issuance to Xylo of pre-funded warrants to purchase 113,043 ordinary shares of the Company, in lieu of issuing ordinary shares of the Company, which represents 19.99% of the issued and outstanding share capital of the Company on the closing date.

**Commercialization**

Although we started early commercialization of our proprietary PEA oral tablets CannAmide™, we intend to build a global commercial infrastructure to effectively support the commercialization of our main pharmaceutical product candidates, if and when we believe regulatory approval of a pharmaceutical product candidate in a particular geographic market appears imminent.

To develop the appropriate commercial infrastructure, we will likely have to invest significant amounts of financial and management resources, some of which we expect to commit prior to completing the regulatory process for our pharmaceutical product candidates. Where appropriate, we may elect in the future to utilize strategic partners, distributors, or contract sales forces to assist in the commercialization of our pharmaceutical products. In certain instances we may consider building our own commercial infrastructure.

In June 2023, we entered into a license and distribution agreement with SciSparc Nutraceuticals pursuant to which we granted SciSparc Nutraceuticals an exclusive license to sell and market its PEA oral tablets, CannAmide™ on Amazon Marketplace in Canada. Effective as of June 7, 2024, SciSparc Nutraceuticals and we entered into an amendment to the license and distribution agreement to amend the term of the license and distribution agreement to an indefinite term, unless terminated by either party upon 30 days advanced notice.

**Competition**

The biotechnology and pharmaceutical industries are characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. While we believe that our scientific knowledge, technology and development experience provide us with competitive advantages, we face potential competition from many different sources, including major pharmaceutical, specialty pharmaceutical and biotechnology companies, academic institutions, governmental agencies and public and private research institutions. Any product candidates that we successfully develop and commercialize will compete with existing therapies and new therapies that may become available in the future.

The first THC-based pharmaceutical, a pill sold under the commercial name of Marinol (scientific name: dronabinol), was developed by a company called Unimed Pharmaceuticals, with funding provided by the National Cancer Institute. In 1985, Marinol received FDA approval as a treatment for chemotherapy-related nausea and vomiting. Today, Marinol is marketed by AbbVie, Inc. Since the introduction of Marinol into the market, other pharmaceuticals containing THC have also been developed. These include generic oral capsules of dronabinol, such as those marketed by SVC Pharma LP and Akorn Inc., Meda AB's Cesamet (nabilone), a synthetic derivative of THC, and Sativex (nabiximols), a whole cannabis extract administered as an oral spray. Furthermore, to the best of our knowledge, there are multiple companies that are working in the cannabis therapeutic area and are pursuing regulatory approval for their product candidates. For example, GW, which markets Sativex, a botanical cannabinoid oral mucosal for the treatment of spasticity due to multiple sclerosis, received FDA approval in the United States in June 2018 for Epidiolex, a liquid formulation of highly purified cannabidiol extract, as a treatment for Dravet's Syndrome, Lennox Gastaut Syndrome, and various childhood epilepsy syndromes. In addition, GW is developing, among others, CBDV based therapy for ASD and therapy for neonatal hypoxic-ischemic encephalopathy and schizophrenia. Zynerba is developing a transdermal formulation of cannabidiol for Fragile X and certain refractory epilepsies and ASD. Skye is focused on developing proprietary, synthetic cannabinoid-derived molecules to treat glaucoma and other diseases with significant unmet need. Corbus Pharmaceuticals Holdings is seeking FDA approval for their synthetic cannabinoid for systemic sclerosis, cystic fibrosis, dermatomyositis and systemic lupus erythematosus and metabolism and solid tumors. Synendos is a developer of endocannabinoid modulators for the treatment of CNS disorders. It has developed pharmaceutical products to restore the natural function of the brain and treat neuropsychiatric disorders. Synendos is developing small molecules as selective endocannabinoid reuptake inhibitors that increase the levels of endogenous cannabinoids to treat CNS disorders caused by cannabinoid deficiency. Inversago Pharma (formerly GIcare Pharma) is focused on developing peripheral cannabinoid (CB1) receptor antagonist/inverse agonist for the treatment of metabolic diseases such as obesity, insulin resistance, and liver fibrosis. Its drug INV-101 (Inverse agonist of peripheral CB1) under phase-1.

Our competitors, either alone or through their strategic partners, might have substantially greater name recognition and financial, technical, manufacturing, marketing and human resources than we do and significantly greater experience and infrastructure in researching and developing pharmaceutical products, obtaining FDA and other regulatory approvals of those products and commercializing those products around the world. They may also have intellectual property portfolios that provide them with significant competitive advantages or create substantial barriers in our target markets.

**Manufacturing**

We currently contract with third parties for the manufacturing and testing of our product candidates for preclinical trials and clinical trials and also intend to do so in the future. We do not own or operate manufacturing facilities for the production of clinical quantities of our product candidates. The use of contracted manufacturing and reliance on collaboration partners is relatively cost-efficient and may eliminate the need to directly invest in manufacturing facilities and additional staff.

To date, our third-party manufacturers have met our manufacturing requirements. We expect third-party manufacturers to be capable of providing sufficient quantities of our product candidates to meet anticipated full scale commercial demands. To meet our projected needs for commercial manufacturing, third parties with whom we currently work might need to increase their scale of production, or we will need to secure alternate suppliers. We believe that there are alternate sources of supply that can satisfy our clinical and commercial requirements, although we cannot be certain that identifying and establishing relationships with such sources, if necessary, would not result in significant delay or material additional costs.

**Government Regulation** 

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***FDA Approval Process***

In the United States, pharmaceutical product candidates are subject to extensive regulation by the FDA. The FDC Act, and other federal and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion, marketing, distribution, post-approval monitoring, reporting, sampling, and import and export of pharmaceutical drug product candidates. Failure to comply with applicable U.S. rules and regulations may subject a company to a variety of administrative or judicial sanctions, such as FDA refusal to approve pending NDAs, warning letters, product candidate recalls, product candidate seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties and criminal prosecution.

Pharmaceutical drug product candidate development in the United States typically involves pre-clinical laboratory and animal testing, the submission to the FDA of an IND Application, which must become effective before clinical testing may commence, and adequate, well-controlled clinical trials to establish the safety and effectiveness of the drug for each indication for which FDA approval is sought. Satisfaction of FDA pre-market approval requirements typically takes many years and the actual time required may vary substantially based upon the type, complexity and novelty of the product candidate or disease.

Nonclinical tests include laboratory evaluation of an API or drug substance and drug product's candidate chemistry, formulation and toxicity, as well as animal trials to assess the characteristics and potential safety and efficacy of the product candidate. The conduct of the nonclinical toxicology studies must comply with federal regulations and requirements, including GLP. The results of nonclinical testing are submitted to the FDA as part of an IND along with other information, including information about product candidate chemistry, manufacturing and controls, and a proposed clinical trial protocol. Long term nonclinical tests, such as animal tests of reproductive toxicity and carcinogenicity, may continue after the IND is submitted.

A 30-day waiting period after the submission of an original IND is required prior to the commencement of clinical testing in humans. If the FDA has not imposed a clinical hold on the IND or otherwise commented or questioned the IND within this 30-day period, the clinical trial proposed in the IND may begin. In practice, a submitting party should contact the division after this 30 day period to ensure that the FDA has reviewed the IND to the extent that they can assure there will be no hold placed on the IND if the FDA has not responded to the Company within this period.

Clinical trials involve the administration of the investigational product to healthy volunteers or patients under the supervision of a qualified investigator. Clinical trials must be conducted: (i) in compliance with federal regulations, (ii) in compliance with GCP, an international standard meant to protect the rights and health of patients to ensure the quality of the trial and to define the roles of clinical trial sponsors, administrators and monitors. Clinical protocols and details of the objectives of the trial, the parameters to be used in monitoring safety, and the effectiveness criteria to be evaluated. Each protocol and any amendment involving testing of U.S. study subjects within the United States and subsequent protocol amendments must be submitted to the FDA as part of the IND.

The FDA may order the temporary hold of a clinical trial at any time or impose other sanctions if the FDA believes that the clinical trial either is not being conducted in accordance with FDA requirements, regulations or presents a potentially unacceptable risk to the clinical trial subjects. The trial protocol and informed consent information for subjects in clinical trials must also be submitted to an IRB for approval. An IRB may impose other conditions for the protocol and may also require the clinical trial at the site to be halted, either temporarily or permanently, for failure to comply with the IRB's requirements.

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***505(b)(2) Regulatory Approval Process***

Section 505(b)(2) of the FDC Act, or 505(b)(2), provides a regulatory pathway to FDA approval for new or improved formulations or new uses of previously approved drug products. Specifically, 505(b)(2) permits the filing of an NDA where at least some of the information required for approval comes from studies not conducted by or for the applicant and for which the applicant has not obtained a right of reference, or use from the person by or for whom the investigations were conducted. The applicant may rely upon the FDA's prior findings of safety and efficacy for an approved product that acts as the reference listed drug for purposes of a 505(b)(2) NDA. The FDA may also require 505(b)(2) applicants to perform additional studies or measurements to support any changes from the reference listed drug. The FDA may then approve the new product candidate for all or some of the labeled indications for which the referenced product has been approved, as well as for any new indication sought by the 505(b)(2) applicant.

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***Orange Book Listing***

Section 505 of the FDC Act describes three types of marketing applications that may be submitted to the FDA to request marketing authorization for a new drug. A Section 505(b)(1) NDA is an application that contains full reports of investigations of safety and efficacy. A Section 505(b)(2) NDA is an application that contains full reports of investigations of safety and efficacy, but where at least some of the information required for approval comes from investigations that were not conducted by or for the applicant and for which the applicant has not obtained a right of reference or use from the person by or for whom the investigations were conducted. This regulatory pathway enables the applicant to rely, in part, on the FDA's prior findings of safety and efficacy for an existing product, or published literature, in support of its application.

In seeking approval for a drug through an NDA, including a 505(b)(2) NDA, applicants are required to list with the FDA patents whose claims cover the applicant's product. Upon approval of an NDA, each of the patents listed in the application for the drug is then published in Approved Drug Products with Therapeutic Equivalence Evaluations, also known as the Orange Book. These products may be cited by potential competitors in support of approval of a 505(b)(2) NDA.

Any applicant who submits a 505(b)(2) NDA referencing a drug listed in the Orange Book must certify to the FDA that (1) no patent information on the drug product that is the subject of the application has been submitted to the FDA; (2) such patent has expired; (3) the date on which such patent expires; or (4) such patent is invalid or will not be infringed upon by the manufacture, use or sale of the drug product for which the application is submitted. This last certification is known as a Paragraph IV certification. Generally, 505(b)(2) NDA cannot be approved until all listed patents have expired, except where 505(b)(2) NDA applicant challenges a listed patent through a Paragraph IV certification. If the applicant does not challenge the listed patents or does not indicate that it is not seeking approval of a patented method of use, the 505(b)(2) NDA application will not be approved until all of the listed patents claiming the referenced product have expired.

Although some of our product candidates are based on repurposed drugs, there are at present no patents or other exclusivities listed in the Orange Book pertaining to a product containing the active ingredient dronabinol.

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***Exclusivity***

Three-year exclusivity is available to the holder of an NDA, including a 505(b)(2) NDA, for a particular condition of approval, or change to a marketed product, such as a new formulation for a previously approved product, if one or more new clinical trials, other than bioavailability or bioequivalence trials, was essential to the approval of the application and was conducted or sponsored by the applicant. This three-year exclusivity period protects against FDA approval of 505(b)(2) NDAs for the condition of the new drug's approval. As a general matter, three-year exclusivity does not prohibit the FDA from approving 505(b)(2) NDAs for generic versions of the original, unmodified drug product. Five-year and three-year exclusivity will not delay the submission or approval of a full NDA; however, an applicant submitting a full NDA would be required to conduct or obtain a right of reference to all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and efficacy.

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***NDA Submission and Review by the FDA***

Assuming successful completion of the required clinical and nonclinical testing, among other items, the results of product development, including chemistry, manufacture and controls, nonclinical studies and clinical trials are submitted to the FDA, along with proposed labeling, as part of an NDA. The submission of an NDA requires payment of a substantial user fee to the FDA. These user fees must be paid at the time of the first submission of the application, even if the application is being submitted on a rolling basis. Fee waivers or reductions are available in some circumstances. One basis for a waiver of the application user fee is if the applicant employs fewer than 500 employees, including employees of affiliates, the applicant does not have an approved marketing application for a product that has been introduced or delivered for introduction into interstate commerce, and the applicant, including its affiliates, is submitting its first marketing application.

The cost of preparing and submitting an NDA is substantial, mainly due to the non-clinical and clinical trial costs. Under federal law, the submission of most NDAs is additionally subject to a substantial application user fee; the fee in the financial year 2025 was $4,310,002.

The FDA has 60 or 74 days from its receipt of an NDA to determine whether the application will be accepted for filing based on the agency's threshold determination that it is sufficiently complete to permit substantive review. Once the submission is accepted for filing, the FDA begins an in-depth review. The FDA has agreed to certain performance goals in the review of NDAs. Most such applications for standard review drug product candidates are reviewed within 10 to 12 months, while most applications for priority review drugs are reviewed within six months. Priority review can be applied to drugs that the FDA determines offer major advances in treatment or provide a treatment where no adequate therapy exists. The review process for both standard and priority review may be extended by FDA for three additional months to consider certain late-submitted information, or information intended to clarify information already provided in the submission.

The FDA may also refer applications for novel drug product candidates, or drug product candidates that present difficult questions of safety or efficacy, to an advisory committee, which is typically a panel that includes clinicians and other experts, for review, evaluation and a recommendation as to whether the application should be approved. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations. Before approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP. Additionally, the FDA may inspect the facility or the facilities at which the drug substance and drug product are manufactured. The FDA will not approve the drug product candidate unless compliance with cGMP is satisfactory and the NDA contains data that provide substantial evidence that the drug is safe and effective in the indication studied.

After the FDA evaluates the NDA and the manufacturing facilities, it issues either an approval letter or a complete response letter. A complete response letter generally outlines the deficiencies in the submission and may require substantial additional testing, or information, in order for the FDA to reconsider the application. If, or when, those deficiencies have been addressed to the FDA's satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. The FDA has committed to reviewing such resubmissions in two or six months depending on the type of requested information.

An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. As a condition of NDA approval, the FDA may require a REMS plan to help ensure that the benefits of the drug outweigh the potential risks. REMS can include medication guides, communication plans for health care professionals, and ETASU. An ETASU can include, but are not limited to, special training or certification for prescribing or dispensing, dispensing only under certain circumstances, special monitoring, and the use of patient registries. The requirement for a REMS can materially affect the potential market and profitability of the drug. Moreover, product candidate approval may require substantial post-approval testing and surveillance to monitor the drug's safety or efficacy. Once granted, product candidate approvals may be withdrawn if compliance with regulatory standards is not maintained related to the manufacture, safety or effectiveness or problems are identified following initial marketing.

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***Disclosure of Clinical Trial Information***

Sponsors of clinical trials of certain FDA-regulated product candidates, including prescription drugs, are required to register and disclose certain clinical trial information on a public website (clinicaltrials.gov) which is maintained by the U.S. National Institutes of Health. Information related to the product candidate, patient population, phase of investigation, study sites and investigator, and other aspects of the clinical trial is made public as part of the registration. Sponsors are also obligated to disclose the results of these trials after completion. Disclosure of the results of these trials can be delayed until the product candidate drug product or new indication being studied has been approved. Competitors may use this publicly available information to gain knowledge regarding the design and progress of our development programs.

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***Fast Track Designation and Accelerated Approval***

The FDA has programs to facilitate the development, and thus expedite the review, of drugs that are intended for the treatment of a serious or life-threatening disease or condition for which there is no effective treatment and which demonstrate the potential to address unmet medical needs for the condition. These therapies for serious conditions are approved and available to patients as soon as it can be concluded that the therapies' benefits outweigh their risk. Under the Fast Track Program, the sponsor of a new drug candidate may request that FDA designate the drug candidate for a specific indication as a Fast Track drug concurrent with, or after, the filing of the IND for the drug candidate. FDA must determine if the drug candidate qualifies for Fast Track designation within 60 days of receipt of the sponsor's request.

Under the FDA's accelerated approval regulations, FDA may approve a drug for a serious or life-threatening illness that provides meaningful therapeutic benefit to patients over existing treatments based upon a surrogate endpoint that is reasonably likely to predict clinical benefit. Accelerated approval may also be based on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, considering the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments.

In clinical trials, a surrogate endpoint is a measurement of laboratory or clinical signs of a disease or condition that substitutes for a direct measurement of how a patient feels, functions or survives. Surrogate endpoints can often be measured more easily or more rapidly than clinical endpoints. A drug product that is approved on this basis is subject to rigorous post-marketing compliance requirements, including the completion of confirmatory or post-approval clinical trial(s) or registries to confirm the effect on the clinical endpoint. Failure to conduct required post-approval studies, or confirm a clinical benefit during post-marketing studies, will allow FDA to withdraw the drug from the market on an expedited basis. All promotional materials for drug candidates approved under accelerated approval regulations are subject to prior review by FDA.

In addition to other benefits such as the ability to use surrogate endpoints and engage in more frequent interactions with FDA, FDA may initiate review of sections of a Fast Track drug's NDA before the application is complete. This rolling review is available if the applicant provides, and FDA approves, a schedule for the submission of the remaining information and the applicant pays applicable user fees. However, FDA's time period goal for reviewing an application does not begin until the last section of the NDA is submitted. Additionally, the Fast Track designation may be withdrawn by FDA if FDA believes that the designation is no longer supported by data emerging in the clinical trial process.

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***Patent Term Extension***

After NDA approval, owners of relevant drug patents may apply for up to a five-year patent extension. The allowable patent term extension is calculated as half of the drug's testing phase, the time between IND submission and NDA submission, and all of the review phase-the time between NDA submission and approval up to a maximum of five years. The time can be shortened if FDA determines that the applicant did not pursue approval with due diligence. The total patent term after the extension may not exceed 14 years.

For patents that might expire during the application phase, the patent owner may request an interim patent extension. An interim patent extension increases the patent term by one year and may be renewed up to four times. For each interim patent extension granted, the post-approval patent extension is reduced by one year. The director of the USPTO must determine that approval of the drug covered by the patent for which a patent extension is being sought is likely. Interim patent extensions are not available for a drug for which an NDA has not been submitted.

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***Advertising and Promotion***

Once an NDA is approved, a drug product will be subject to certain post-approval requirements. Products manufactured or distributed by us pursuant to FDA approvals are subject to continuing regulation by the FDA, including manufacturing, periodic reporting, product sampling and distribution, advertising, promotion, drug shortage reporting, compliance with any post-approval requirements imposed as a conditional of approval such as Phase 4 clinical trials, REMS and surveillance, recordkeeping and reporting requirements, including adverse experiences. For instance, FDA closely regulates the post-approval marketing and promotion of drugs, including standards and regulations for direct-to-consumer advertising, off-label promotion, industry-sponsored scientific and educational activities and promotional activities involving the internet.

Drugs may be marketed only for the approved indications and in accordance with the provisions of the approved labeling. Changes to some of the conditions established in an approved application, including changes in indications, labeling, or manufacturing processes or facilities, require submission and FDA approval of a new NDA or NDA supplement before the change can be implemented. An NDA supplement for a new indication typically requires clinical data similar to that in the original application. The FDA uses the same procedures and actions in reviewing NDA supplements as it does in reviewing NDAs.

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***Adverse Event Reporting and GMP Compliance***

Adverse event reporting and submission of periodic reports are required following FDA approval of an NDA. The FDA also may require post-marketing testing, known as Phase 4 testing, REMS and surveillance to monitor the effects of an approved product candidate, or the FDA may place conditions on an approval that could restrict the distribution or use of the drug product. In addition, quality-control, drug manufacture, packaging, and labeling procedures must continue to conform with cGMPs after approval. Drug manufacturers and certain of their subcontractors are required to register their establishments with the FDA and certain state agencies. Registration with the FDA subjects entities to periodic unannounced inspections by the FDA, during which the FDA inspects manufacturing facilities to assess compliance with cGMPs. Accordingly, manufacturers must continue to expend time, money and effort in the areas of production and quality control to maintain compliance with cGMPs. Regulatory authorities may withdraw product candidate approvals or request product candidate recalls if a company fails to comply with regulatory standards, if it encounters problems following initial marketing or if previously unrecognized problems are subsequently discovered.

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***Pediatric Exclusivity and Pediatric Use***

The Best Pharmaceuticals for Children Act, or BPCA, provides NDA holders a six-month extension of any exclusivity-patent or non-patent-for a drug if certain conditions are met. Conditions for exclusivity include a determination by the FDA that information relating to the use of a new drug in the pediatric population may produce health benefits in that population; a written request by the FDA for pediatric studies; and agreement by the applicant to perform the requested studies and the submission to the FDA; and the acceptance by the FDA, of the reports of the requested studies within the statutory timeframe. Applications under the BPCA are treated as priority applications.

In addition, under the Pediatric Research Equity Act, or PREA, NDAs or supplements to NDAs must contain data to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the drug is safe and effective, unless the sponsor has received a deferral or waiver from the FDA. Unless otherwise required by regulation, PREA does not apply to any drug for an indication for which orphan designation has been granted with the exception of certain oncological indications. The required pediatric assessment must assess the safety and effectiveness of the product candidate for the claimed indications in all relevant pediatric subpopulations and support dosing and administration for each pediatric subpopulation for which the product candidate is safe and effective. The sponsor or FDA may request a deferral of pediatric studies for some or all of the pediatric subpopulations. A deferral may be granted for several reasons, including a finding that the drug is ready for approval for use in adults before pediatric studies are complete or that additional safety or effectiveness data need to be collected before the pediatric studies begin. Under PREA, the FDA must send a non-compliance letter requesting a response with 45 days to any sponsor that fails to submit the required assessment, keep a deferral current or fails to submit a request for approval of a pediatric formulation.

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***Orphan Drugs***

Under the Orphan Drug Act, the FDA may grant orphan drug designation to drugs intended to treat a rare disease or condition-generally a disease or condition with a prevalence of fewer than 200,000 individuals in the United States. Orphan drug designation must be requested and granted before submitting an NDA. After the FDA grants orphan drug designation, the generic identity of the drug and its potential orphan use are disclosed publicly by the FDA. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process. The first NDA applicant to receive FDA approval for a particular active ingredient to treat a particular disease with an FDA orphan drug designation is entitled to a seven-year exclusive marketing period in the United States for that drug product candidate for that indication. During the seven-year exclusivity period, the FDA may not approve any other applications to market the same drug for the same disease, except in limited circumstances, such as a showing of clinical superiority to the product candidate with orphan drug exclusivity. Orphan drug exclusivity does not prevent the FDA from approving a different drug for the same disease or condition, or the same drug for a different disease or condition. Among the other benefits of orphan drug designation are tax credits for certain research and a waiver of the NDA application user fee. In addition to the potential seven years of market exclusivity after approval, orphan drug designation status qualifies sponsors for tax credits for qualified clinical trials and exemption from user fees.

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***Special Protocol Assessment***

A company may reach an agreement with the FDA under the Special Protocol Assessment, or SPA, process as to the required design and size of clinical trials intended to form the primary basis of an efficacy claim. According to its performance goals, the FDA is supposed to evaluate the protocol within 45 days of the request to assess whether the proposed trial is adequate, and that evaluation may result in discussions and a request for additional information. An SPA request must be made, and all open issues must be resolved before the clinical trial begins. If a written agreement is reached, it will be documented and made part of the administrative record. Under the FDC Act and FDA guidance implementing the statutory requirement, an SPA is generally binding upon the FDA except in limited circumstances, such as if the FDA identifies a substantial scientific issue essential to determining safety or efficacy after the study begins, public health concerns emerge that were unrecognized at the time of the protocol assessment, the sponsor and FDA agree to the change in writing, or if the study sponsor fails to follow the protocol that was agreed upon with the FDA.

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***Controlled Substances***

The CSA and its implementing regulations establish a "closed system" of regulations for controlled substances. The CSA imposes registration, security, recordkeeping and reporting, storage, manufacturing, distribution, importation and other requirements under the oversight of the DEA. The DEA is the federal agency responsible for regulating controlled substances, and requires those individuals or entities that manufacture, import, export, distribute, research, or dispense controlled substances to comply with the regulatory requirements in order to prevent the diversion of controlled substances to illicit channels of commerce.

The DEA categorizes controlled substances into one of five schedules-Schedule I, II, III, IV or V-with varying qualifications for listing in each schedule. Schedule I substances by definition have a high potential for abuse, have no currently accepted medical use in treatment in the United States and lack accepted safety for use under medical supervision. Schedule I substances may be used only in federally approved research programs and may not be marketed or sold for dispensing to patients in the United States. Pharmaceutical product candidates having a currently accepted medical use that are otherwise approved for marketing may be listed as Schedule II, III, IV or V substances, with Schedule II substances presenting the highest potential for abuse and physical or psychological dependence, and Schedule V substances presenting the lowest relative potential for abuse and dependence. The regulatory requirements are more restrictive for Schedule II substances than Schedule III substances. For example, all Schedule II drug prescriptions must be signed by a physician, physically presented to a pharmacist in most situations and cannot be refilled.

Following NDA approval of a drug containing a Schedule I controlled substance, that substance must be rescheduled as a Schedule II, III, IV or V substance before it can be marketed. In 2015, the Improving Regulatory Transparency for New Medical Therapies Act, removed uncertainty associated with timing of the DEA rescheduling process after NDA approval. Specifically, it requires DEA to issue an "interim final rule," pursuant to which a manufacturer may market its product candidate within 90 days of FDA approval. The new law also preserves the period of orphan marketing exclusivity for the full seven years such that this period only begins after DEA scheduling. This contrasts with the previous situation whereby the orphan "clock" began to tick upon FDA approval, even though the product candidate could not be marketed until DEA scheduling was complete.

Facilities that manufacture, distribute, import or export any controlled substance must register annually with the DEA. The DEA registration is specific to the particular location, activity(ies) and controlled substance schedule(s). For example, separate registrations are required for importation and manufacturing activities, and each registration authorizes which schedules of controlled substances the registrant may handle. However, certain coincident activities are permitted without obtaining a separate DEA registration, such as distribution of controlled substances by the manufacturer that produces them.

The DEA inspects all manufacturing facilities to review security, recordkeeping, reporting and handling prior to issuing a controlled substance registration. The specific security requirements vary by the type of business activity and the schedule and quantity of controlled substances handled. The most stringent requirements apply to manufacturers of Schedule I and Schedule II substances. Required security measures commonly include background checks on all employees and physical control of controlled substances through storage in approved vaults, safes and cages, and through use of alarm systems and surveillance cameras. An application for a manufacturing registration as a bulk manufacturer (not a dosage form manufacturer or a repacker/relabeler) for a Schedule I or II substance must be published in the Federal Register, and the application is open for 30 days to permit interested persons to submit comments, objections or requests for a hearing. A copy of the notice of the Federal Register publication is forwarded by DEA to all those registered, or applicants for registration, as bulk manufacturers of that substance. Once registered, manufacturing facilities must maintain records documenting the manufacture, receipt and distribution of all controlled substances. Manufacturers must submit periodic reports to the DEA of the distribution of Schedule I and II controlled substances, Schedule III narcotic substances, and other designated substances. Registrants must also report any controlled substance thefts or significant losses, and must obtain authorization to destroy or dispose of controlled substances. As with applications for registration as a bulk manufacturer, an application for an importer registration for a Schedule I or II substance must also be published in the Federal Register, which remains open for 30 days for comments. Imports of Schedule I and II controlled substances for commercial purposes are generally restricted to substances not already available from domestic supplier or where there is not adequate competition among domestic suppliers. In addition to an importer or exporter registration, importers and exporters must obtain a permit for every import or export of a Schedule I and II substance or Schedule III, IV and V narcotic, and submit import or export declarations for Schedule III, IV and V non-narcotics. In some cases, Schedule III non-narcotic substances may be subject to the import/export permit requirement, if it is necessary to ensure that the United States complies with its obligations under international drug control treaties.

For drugs manufactured in the United States, the DEA establishes annually an aggregate quota for the amount of substances within Schedules I and II that may be manufactured or produced in the United States based on the DEA's estimate of the quantity needed to meet legitimate medical, scientific, research and industrial needs. This limited aggregate amount of cannabis that the DEA allows to be produced in the United States each year is allocated among individual companies, which, in turn, must annually apply to the DEA for individual manufacturing and procurement quotas. The quotas apply equally to the manufacturing of the API/drug substance and production of dosage forms. The DEA may adjust aggregate production quotas a few times per year, and individual manufacturing or procurement quotas from time to time during the year, although the DEA has substantial discretion in whether or not to make such adjustments for individual companies.

Individual states may also maintain separate controlled substance laws and regulations, including licensing, recordkeeping, security, distribution, and dispensing requirements. State Authorities, including Boards of Pharmacy, regulate use of controlled substances in each state. Failure to maintain compliance with applicable requirements, particularly as manifested in the loss or diversion of controlled substances, can result in enforcement action that could have a material adverse effect on our business, operations and financial condition. The DEA may seek civil penalties, refuse to renew necessary registrations, or initiate proceedings to revoke those registrations. In certain circumstances, violations could lead to criminal prosecution.

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***Europe/Rest of World Government Regulation***

In addition to regulations in the United States, we will be subject to a variety of foreign regulations governing clinical trials and commercial sales and distribution of our products to the extent we choose to develop or sell any products outside of the United States. The approval process varies from country to country and the time may be longer or shorter than that required to obtain FDA approval. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.

Whether or not we obtain FDA approval for a product candidate, we must obtain the requisite approvals from regulatory authorities in non-U.S. countries prior to the commencement of clinical trials or marketing of the product candidate in those countries. Certain countries outside of the United States have a process that requires the submission of a Clinical Trial Application, or CTA, much like an IND prior to the commencement of human clinical trials. In Europe, for example, a CTA must be submitted to the competent national health authority and to independent ethics committees in each country in which a company intends to conduct clinical trials pursuant to European Clinical Trials Regulation regulations. Once the CTA is approved in accordance with a country's requirements, clinical trial development may proceed in that country.

The requirements and process governing the conduct of clinical trials, product candidate licensing, pricing and reimbursement vary from country to country, even though there is already some degree of legal harmonization in the European Union member states resulting from the national implementation of underlying European Union legislation. In all cases, the clinical trials are conducted in accordance with GCP and other applicable regulatory requirements.

To obtain regulatory approval of an investigational drug under the European Union. regulatory systems, we must submit a MAA. This application is similar to the NDA in the United States, with the exception of, among other things, country-specific document requirements. Drugs can be authorized in the European Union by using (i) the centralized authorization procedure, (ii) the Mutual Recognition Procedure, or MRP, (iii) the decentralized procedure or (iv) national authorization procedures. The initial Sativex approvals were a consequence of an application under the de-centralized procedure to the European Union member state of Spain acting as reference member state.

The European Commission implemented the centralized procedure for the approval of human drugs to facilitate marketing authorizations that are valid throughout the European Economic Area, or EEA. This procedure results in a single marketing authorization granted by the European Commission that is valid across the European Union, as well as in Iceland, Liechtenstein and Norway (forming together the EEA). The centralized procedure is compulsory for human drugs that are: (i) derived from biotechnology processes, such as genetic engineering, (ii) contain a new active substance indicated for the treatment of certain diseases, such as HIV/AIDS, cancer, diabetes, neurodegenerative diseases, autoimmune and other immune dysfunctions and viral diseases, (iii) officially designated "orphan drugs" (drugs used for rare human diseases) and (iv) advanced-therapy medicines, such as gene- therapy, somatic cell-therapy or tissue-engineered medicines. The centralized procedure may at the request of the applicant also be used for human drugs which do not fall within the above mentioned categories if the human drug (a) contains a new active substance which, on the date of entry into force of this Regulation, was not authorized in the Community; or (b) the applicant shows that the medicinal product candidate constitutes a significant therapeutic, scientific or technical innovation or that the granting of authorization in the centralized procedure is in the interests of patients or animal health at the European Community level.

Under the centralized procedure in the European Union, the maximum timeframe for the evaluation of a MAA by the EMA is 210 days (excluding clock stops, when additional written or oral information is to be provided by the applicant in response to questions asked by the Committee for Medicinal Products for Human Use, or CHMP), with adoption of the actual marketing authorization by the European Commission thereafter. Accelerated evaluation might be granted by the CHMP in exceptional cases, when a medicinal product candidate is expected to be of a major public health interest from the point of view of therapeutic innovation, defined by three cumulative criteria: (1) the seriousness of the disease to be treated; (2) the absence of an appropriate alternative therapeutic approach, and (3) anticipation of exceptional high therapeutic benefit. In this circumstance, EMA ensures that the evaluation for the opinion of the CHMP is completed within 150 days and the opinion issued thereafter.

Should any Member State refuse to recognize the marketing authorization by the reference member state in a decentralized procedure, on the grounds of potential serious risk to public health, the issue will be referred to the Committee for the Mutual Recognition and Decentralized Procedures human. Within a timeframe of 60 days, member states shall, within the coordination group, make all efforts to reach a consensus. If this fails, the procedure is submitted to the CHMP for arbitration. The opinion of the CHMP is then forwarded to the Commission, for the start of the decision making process. As in the centralized procedure, this process entails consulting various European Commission Directorates General and the Standing Committee on Human Medicinal Product candidates or Veterinary Medicinal Product candidates, as appropriate. Since the initial approvals of Sativex in the United Kingdom and Spain, there have been three "waves" of additional approvals under three separate MRPs. Each of these procedures have been completed without any referral, and therefore without any delay.

For other countries outside of the European Union, the requirements governing the conduct of clinical trials, product candidate licensing, pricing and reimbursement vary from country to country. In all cases, again, the clinical trials are conducted in accordance with GCP and the other applicable regulatory requirements.

If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension of clinical trials, suspension or withdrawal of regulatory approvals, product candidate recalls, seizure of product candidates, operating restrictions and criminal prosecution.

In addition, most countries are parties to the Single Convention on Narcotic Drugs 1961, which governs international trade and domestic control of narcotic substances, including cannabis extracts. Countries may interpret and implement their treaty obligations in a way that creates a legal obstacle to our obtaining marketing approval for Sativex and our other product candidates in those countries. These countries may not be willing or able to amend or otherwise modify their laws and regulations to permit Sativex or our other product candidates to be marketed, or achieving such amendments to the laws and regulations may take a prolonged period of time. In that case, we would be unable to market our product candidates in those countries in the near future or perhaps at all.

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***Expanded Access to Investigational Drugs in the U.S.***

An investigational drug may be eligible for clinical use outside the context of a manufacturer's clinical trial of the drug. "Expanded access" refers to the use of an investigational drug where the primary purpose is to diagnose, monitor, or treat a patient's disease or condition rather than to collect information about the safety or effectiveness of a drug. Expanded access INDs are typically sponsored by individual physicians to treat patients who fall into one of three FDA-recognized categories of expanded access: expanded access for individual patients, including for emergency use; expanded access for intermediate-size patient populations; and expanded access for large patient populations under a treatment IND or treatment protocol. For all types of expanded access, the FDA must determine prior to authorizing expanded access that: (1) the patient or patients to be treated have a serious or life threatening disease or condition and there is no comparable or satisfactory alternative therapy; (2) the potential patient benefit justifies the potential risks of use and that the potential risks are not unreasonable in the context of the disease or condition to be treated; and (3) granting the expanded access will not interfere with the initiation, conduct, or completion of clinical studies in support of the drug's approval. In addition, the sponsor of an expanded access IND must submit IND safety reports and, in the cases of protocols continuing for one year or longer, annual reports to the FDA. Expanded access programs are not intended to yield information relevant to evaluating a drug's effectiveness for regulatory purposes. If a patient enrolled in one of our clinical trials is not eligible or able to continue enrollment, we may be required to continue to provide our product candidate to such patient through expanded access.

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***Pricing and Reimbursement in the U.S.***

Sales of pharmaceutical product candidates in the United States will depend, in part, on the extent to which the costs of the product candidates will be covered by third-party payors, such as government health programs, commercial insurance and managed health care organizations. These third-party payors are increasingly challenging the prices charged for medical product candidates and services. Additionally, the containment of health care costs has become a priority of federal and state governments, and the prices of drugs have been a focus in this effort. The United States government, state legislatures and foreign governments have shown significant interest in implementing cost-containment programs, including price controls, restrictions on reimbursement and requirements for substitution of generic product candidates. Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit our net revenue and results. If these third-party payors do not consider our product candidates to be cost-effective compared to other available therapies, they may not cover our product candidates after approval as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our product candidates on a profitable basis.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or the MMA, imposed new requirements for the distribution and pricing of prescription drugs for Medicare beneficiaries and included a major expansion of the prescription drug benefit under Medicare Part D. Under Part D, Medicare beneficiaries may enroll in prescription drug plans offered by private entities which will provide coverage of outpatient prescription drugs. Part D plans include both stand-alone prescription drug benefit plans and prescription drug coverage as a supplement to Medicare Advantage plans. Unlike Medicare Part A and B, Part D coverage is not standardized. Part D prescription drug plan sponsors are not required to pay for all covered Part D drugs, and each drug plan can develop its own drug formulary that identifies which drugs it will cover and at what tier or level. However, Part D prescription drug formularies must include drugs within each therapeutic category and class of covered Part D drugs, though not necessarily all the drugs in each category or class. Any formulary used by a Part D prescription drug plan must be developed and reviewed by a pharmacy and therapeutic committee. Government payment for some of the costs of prescription drugs may increase demand for product candidates for which we receive marketing approval. However, any negotiated prices for our product candidates covered by a Part D prescription drug plan will likely be lower than the prices we might otherwise obtain. Moreover, while the MMA applies only to drug benefits for Medicare beneficiaries, private payers often follow Medicare coverage policy and payment limitations in setting their own payment rates. Any reduction in payment that results from the MMA may result in a similar reduction in payments from non-governmental payers.

The ACA was enacted in March 2010. Since its enactment, there have been judicial and Congressional challenges to certain aspects of the law. The ACA may be modified, amended or repealed at any time and may or may not be replaced with a different law or health care payment system. The ACA is expected to continue to have a significant impact on the health care industry. With regard to pharmaceutical product candidates, among other things, the ACA may expand and increase industry rebates for drugs covered under Medicaid programs and make changes to the coverage requirements under the Medicare Part D program. Since the enactment of the ACA, numerous regulations have been issued providing further guidance on its requirements. The ACA continues to be implemented through regulation and government activity but is subject to possible amendment, additional implementing regulations and interpretive guidelines. Several states have decided not to expand their Medicaid programs and are seeking alternative reimbursement models to provide care to the uninsured. The manner in which these issues are resolved could materially affect the extent to which and the amount at which pharmaceuticals are reimbursed by government programs such as Medicare, Medicaid and Tricare. We are unable to predict the full impact of any potential modification, amendment, or repeal of the ACA.

Our ability to commercialize any products successfully also will depend in part on the extent to which coverage and adequate reimbursement for our products, once approved, and related treatments will be available from third-party payors, such as government health administration authorities, private health insurers and managed care organizations. Third-party payors determine which medications they will cover and separately establish reimbursement levels. Even if we obtain coverage for a given product by a third-party payor, the third-party payor's reimbursement rates may not be adequate to make the product affordable to patients or profitable to us, or the third-party payors may require co-payments that patients find unacceptably high. Patients who are prescribed medications for the treatment of their conditions, and their prescribing physicians, generally rely on third-party payors to reimburse all or part of the costs associated with their prescription drugs. Patients are unlikely to use our products unless coverage is provided, and reimbursement is adequate to cover all or a significant portion of the cost of our products. Therefore, coverage and adequate reimbursement is critical to new product acceptance. Coverage decisions may depend upon clinical and economic standards that disfavor new drug products when more established or lower cost therapeutic alternatives are already available or subsequently become available.

Government authorities and other third-party payors are developing increasingly sophisticated methods of controlling healthcare costs, such as by limiting coverage and the amount of reimbursement for particular medications. Increasingly, third-party payors are requiring that drug companies provide them with predetermined discounts from list prices as a condition of coverage, are using restrictive formularies and preferred drug lists to leverage greater discounts in competitive classes and are challenging the prices charged for medical products. Further, no uniform policy for determining coverage and reimbursement for drug products exists among third-party payors in the United States. Therefore, coverage and reimbursement for drug products can differ significantly from payor to payor. As a result, the coverage determination process is often a time-consuming and costly process that will require us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage and adequate reimbursement will be applied consistently or obtained in the first instance.

We cannot be sure that coverage and reimbursement will be available for any product that we commercialize and, if reimbursement is available, that the level of reimbursement will be adequate. Coverage and reimbursement may impact the demand for, or the price of, any product candidate for which we obtain marketing approval. If coverage and reimbursement are not available, or if reimbursement is available only to limited levels, we may not successfully commercialize any product candidate for which we obtain marketing approval.

As a condition of receiving Medicaid coverage for prescription drugs, the Medicaid Drug Rebate Program requires manufacturers to calculate and report to CMS their AMP, which is used to determine rebate payments shared between the states and the federal government and, for some multiple source drugs, Medicaid payment rates for the drug, and for drugs paid under Medicare Part B, to also calculate and report their average sales price, which is used to determine the Medicare Part B payment rate for the drug. In January 2016, CMS issued a final rule regarding the Medicaid Drug Rebate Program, effective April 1, 2016, that, among other things, revised the manner in which the AMP is calculated by manufacturers participating in the program and implemented certain amendments to the Medicaid rebate statute created under the ACA. Drugs that are approved under an NDA, including a 505(b)(2) NDA, are subject to an additional requirement to calculate and report the manufacturer's best price for the drug and inflation penalties which can substantially increase rebate payments. On December 21, 2020, CMS issued a final rule that made changes to the Medicaid Drug Rebate Program regulations in several areas, including some changes to the treatment of value-based purchasing arrangements and price reporting for patient benefit programs sponsored by pharmaceutical manufacturers.

For NDA drugs, the Veterans Health Care Act of 1992 requires manufacturers to calculate and report to the Department of Veterans Affairs a different price called the Non-Federal AMP, offer the drugs for sale on the Federal Supply Schedule, and charge the government no more than a statutory price referred to as the Federal Ceiling Price, which includes an inflation penalty. A separate law requires manufacturers to pay rebates on these drugs when paid by the Department of Defense under its TRICARE Retail Pharmacy Program. Knowingly submitting false pricing information to the government creates potential federal False Claims Act liability.

Further, there has been increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices. Specifically, there have been several recent U.S. Congressional inquiries and proposed and enacted legislation at the federal and state levels designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the cost of drugs under Medicare, and reform government program reimbursement methodologies for drugs. We expect that the pharmaceutical industry will continue to experience pricing pressures due to the trend toward managed healthcare, particularly towards specialty pharmacy, the increasing influence of managed care organizations, and additional legislative proposals. For example, CMS issued an interim final rule on November 27, 2020 designed to test whether a Most-Favored-Nation model will help control growth in spending for Medicare Part B drugs without adversely affecting quality of care. This followed an Executive Order issued in September 2020 that directed the Secretary of DHHS to implement new payment models under the Medicare Part B and Part D programs to curb "unfair" and high drug prices in the United States. Implementation of this interim final rule was blocked by a temporary restraining order and preliminary injunctions through various court actions and CMS published a final rule on December 27, 2021 that rescinded the interim final rule. Nonetheless, we expect that there will continue to be a number of U.S. federal and state proposals to implement governmental pricing controls and limit the growth of healthcare costs, including the cost of prescription drugs. It is unknown what form any such changes or any law would take, and how or whether it may affect the biopharmaceutical industry as a whole or our business in the future. We expect that changes or additions to the ACA, the Medicare and Medicaid programs, such as changes allowing the federal government to directly negotiate drug prices, and changes stemming from other healthcare reform measures, especially with regard to healthcare access, financing or other legislation in individual states, could have a material adverse effect on the health care industry in the United States.

At the state level, legislatures have been increasingly passing legislation and implementing regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, drug price increases, and, in some cases, designed to encourage importation from other countries and bulk purchasing. On the federal level, the Trump Administration issued a final rule in 2020 for the safe importation of drugs from Canada and other countries. Per this rule, the FDA authorized its first section 804 importation program, or SIP, a program allowing the State of Florida to import certain prescription products from Canada. Section 804 (21 U.S.C. § 384) of the Federal Food, Drug, and Cosmetic Act provides a pathway for U.S. states and Indian tribes to allow importation of certain prescription drugs from Canada. Programs under this pathway must significantly reduce the cost of these drugs to the American consumer without imposing additional risk to public health and safety. As the first program of its kind, we have yet to see how this Program will be implemented and what specific products will be imported. There is much opposition from the biopharmaceutical industry regarding this Program, but if Florida can execute it as planned, it may signal a trend in the U.S. The practical implications of SIPs, and their implications for the biopharmaceutical industry as a whole or our business in particular remain to be determined.

In July 2021, the Biden administration issued an executive order, "Promoting Competition in the American Economy," with multiple provisions aimed at increasing competition for prescription drugs. The DHHS has released a Comprehensive Plan for Addressing High Drug Prices that outlines principles for drug pricing reform and potential legislative policies that Congress could pursue to advance these principles. While no legislation or administrative actions have been finalized to implement these principles, Congress is considering legislation that, if passed, could have significant impact on prices of prescription drugs covered by Medicare, including limitations on drug price increases and allowing Medicare to negotiate pricing for certain covered drug products. The impact of these legislative, executive, and administrative actions and any future healthcare measures and agency rules implemented by the Biden administration on us and the pharmaceutical industry as a whole is unclear. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize any of the product candidates for which we receive approval.

The passage of the Inflation Reduction Act, or the IRA, of 2022 further affects Medicare reimbursement. The IRA has three key elements reforming Medicare drug-pricing policy. The implementation of certain elements of the IRA are still forthcoming, as outlined below, so the specific implications for biopharmaceutical pricing and reimbursement are yet to be determined. Likewise, we are unable to predict potential modification, amendment, or repeal of the IRA, though some predict that challenges may be made as different provisions are enacted.

As the first key element, the IRA created a program for Medicare drug-price negotiation, enabling the Secretary of DHHS to negotiate the prices of certain costly, single-source drugs or biologics within the Medicare program. Certain drugs and biologics are excluded from this negotiation process, such as drugs that are less than 9 years, and biologics less than 13 years, from their FDA-approval or licensure date, and drugs with an orphan designation as their only FDA-approved indication. The first set of these negotiated prices will not take effect until 2026.

Second, the IRA requires drug manufacturers to pay rebates to the federal government for price increases above the rate of inflation for single-source drugs or biologics covered under Medicare Part B and most drugs under Medicare Part D, which already occurs under the Medicaid program. This inflation-rebate provision for Medicare Part B took effect at the start of 2023, and such provision for Medicare Part D took effect in 2022 as the starting point for measuring drug-price increases, with rebate payments required as of the beginning of 2023. DHHS will start to send rebate invoices to drug manufacturers in 2025.

Third, the IRA restructures the Medicare Part D benefit to limit patients' out-of-pocket costs and rebalance the bearing of risk for Part D plans and manufacturers. As of 2024, Medicare Part D plan buyers will no longer have to pay out-of-pocket costs for covered drugs once they reach the catastrophic coverage level (when the policyholder's out-of-pocket spending reaches $7,400). Other aspects of this provision will take effect in 2025.

The bipartisan *Drug-Price Transparency for Consumers Act* was introduced to Senate on April 20, 2023, and the House of Representatives on October 13, 2023 (S.1250 and H.R.5958, respectively). The Act is currently in committee. This Act would require that direct-to-consumer advertisements for drugs and biologics include a disclosure of pricing information. The Act would apply to drugs and biologicals reimbursable under Medicare or Medicaid and for which direct-to-consumer advertisements are required to include information relating to side effects, contraindications, and effectiveness in accordance with section 202.1(e)(1) of title 21, Code of Federal Regulations. If passed, this Act would amend the Social Security Act to allow the Secretary of DHHS to require such advertisements to disclose the wholesale acquisition cost, or WAC, for a 30-day supply or typical course of treatment and clearly and conspicuously present such price information. If enacted, the Act contemplates that implementing regulations would include the visual and audio components required to communicate the WAC appropriately for the medium of the advertisement, the reasonable amount of time to update the advertisement to reflect any changes to WAC, and the way the manufacturer may include a statement explaining that certain consumers may pay a different amount depending on their insurance coverage. The Act would also subject advertisers to a penalty of up to $100,000 per violation.

The full implications of changes such as those discussed above, and their practical impact on biopharmaceutical pricing and reimbursement, as well as advertising requirements and related costs, on the biopharmaceutical industry as a whole and our business in particular cannot yet be determined.

As noted above, the marketability of any products for which we receive regulatory approval for commercial sale may suffer if the government and other third-party payers fail to provide adequate coverage and reimbursement. We expect that an increasing emphasis on cost containment measures in the U.S. will continue to increase the pressure on pharmaceutical pricing. Coverage policies and third-party reimbursement rates may change at any time. Even if favorable coverage and reimbursement status is attained for one or more products for which we receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

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***Pricing and Reimbursement in Foreign Countries***

In addition, in some foreign countries, the proposed pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug pricing vary widely from country to country. For example, a member state of the European Union may approve a specific price for the medicinal product candidate. There can be no assurance that any country that has price controls or reimbursement limitations for pharmaceutical product candidates will allow favorable reimbursement and pricing arrangements for any of our product candidates. Historically, product candidates launched in the European Union do not follow price structures of the United States and generally tend to be significantly lower.

As another example, in Canada, for patented drugs, the Patented Medicines Prices Review Board (PMPRB) uses the median international publicly available ex-factory list price (using prices in 11 pre-determined countries) as the maximum price the company is allowed to charge. The PMPRB is a quasi-judicial body with a regulatory mandate to prevent pharmaceutical patentees from charging consumers excessive prices during the market exclusivity period. This agency then monitors the prices charged by patentees for patented drugs on an ongoing basis. Under the Canadian Patent Act, patentees are required to file price and sales information about their patented drug products at introduction and twice a year thereafter for each strength of each dosage form of each patented drug product sold in Canada.

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***Other Health Care Laws and Compliance Requirements***

In the United States, our activities are potentially subject to regulation by various federal, state and local authorities in addition to the FDA, including the CMS, other divisions of the DHHS (e.g., the Office of Inspector General), the U.S. Department of Justice and individual U.S. Attorney offices within the Department of Justice, and state and local governments.

The federal AKS prohibits, among other things, any person or entity, from knowingly and willfully offering, paying, soliciting or receiving any remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce or reward, or in return for, the referral of an individual for, or purchasing, leasing, ordering, or arranging for the purchase, lease or order of, any good, facility, item or service reimbursable, in whole or in part, by Medicare, Medicaid or other federal healthcare programs. The term remuneration has been interpreted broadly to include anything of value, including unlawful financial inducements paid to prescribers and beneficiaries, as well as impermissible promotional practices. There are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, but the exceptions and safe harbors are drawn narrowly. Failure to meet all of the requirements of a particular applicable statutory exception or regulatory safe harbor does not make the conduct per se illegal under the federal AKS. Instead, the legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all of its facts and circumstances. Additionally, the ACA amended the intent requirement of the federal AKS so that a person or entity no longer needs to have actual knowledge of the federal AKS, or specific intent to violate it, to have violated the statute. The ACA also provided that a violation of the federal AKS is grounds for the government or whistleblower to assert that a claim for payment of items or services resulting from such violation constitutes a false or fraudulent claim for purposes of the civil False Claims Act.

In addition, in November 2020, DHHS finalized a regulation aimed at lowering prescription drug prices and out-of-pocket spending for prescription drugs by excluding rebates on prescription drugs paid by manufacturers to or purchased by Medicare Part D plan sponsors or PBMs acting under contract with Medicare Part D plan sponsors from the existing discount safe harbor under the federal AKS. The regulation reflects the first change to the AKS discount safe harbor since the Medicare Part D program was established. In addition to the rebate exclusions, two new safe harbors were added. One of these new safe harbors protects point-of-sale reductions in price from a manufacturer to a plan sponsor under Medicare Part D or a MCO for a prescription drug payable, in whole or in part, by a plan sponsor under Medicare Part D or a MCO, provided certain conditions are met. The other protects certain fixed-fee services arrangements between manufacturers and PBMs.

The federal civil and criminal false claims laws, including the federal False Claims Act, prohibit, among other things, any person or entity from knowingly presenting, or causing to be presented, a false claim for payment to, or for approval by, the federal government, including the Medicare and Medicaid programs, or knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim to avoid, decrease or conceal an obligation to pay money to the federal government.

The civil monetary penalties statute imposes penalties against any person or entity who, among other things, is determined to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent.

HIPAA created additional federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including public and private payors, or obtain, by means of false or fraudulent pretenses, representations or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of whether the payor is public or private, knowingly and willfully embezzling or stealing from a health care benefit program, willfully obstructing a criminal investigation of a health care offense and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters. The ACA amended the federal health care fraud criminal statute implemented under HIPAA so that a person or entity no longer needs to have actual knowledge of the statute, or the specific intent to violate it, to have violated the statute.

Additionally, the federal Open Payments program pursuant to the Physician Payments Sunshine Act, created under Section 6002 of the ACA and its implementing regulations, require some manufacturers of drugs, devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid or the Children's Health Insurance Program (with specified exceptions) to report annually information related to specified payments or other transfers of value provided to physicians and teaching hospitals, or to entities or individuals at the request of, or designated on behalf of, the physicians and teaching hospitals and to report annually specified ownership and investment interests held by physicians and their immediate family members. The SUPPORT Act, signed into law on October 24, 2018, expanded Sunshine Act reporting to include data for physician assistants, nurse practitioners, clinical nurse specialists, certified registered nurse anesthetists and certified nurse midwifes. The amendment applies to reports submitted to CMS on or after January 1, 2022.

In addition, we may be subject to data privacy and security regulation by both the federal government and the states in which we conduct our business or target consumers. HIPAA, as amended by HITECH, and their implementing regulations, impose requirements relating to the privacy, security and transmission of individually identifiable health information on HIPAA covered entities and their business associates, including mandatory contractual terms and the implementation of certain safeguards of such information. Among other things, HITECH makes HIPAA's security standards directly applicable to business associates, independent contractors or agents of covered entities that receive or obtain protected health information in connection with providing a service on behalf of a covered entity. HITECH also created four new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal HIPAA laws and seek attorneys' fees and costs associated with pursuing federal civil actions. In addition, state laws govern the privacy and security of health information in some circumstances, many of which differ from each other in significant ways, may not have the same effect and may not be preempted by HIPAA, thus complicating compliance efforts. Most recently, fourteen states including California have adopted laws that regulate the privacy and security of consumer personal information, and apply in instances where HIPAA and clinical trial laws do not. In addition, other states such as Washington, have adopted laws that regulate the privacy and security of consumer health data which, again, apply in instances where HIPAA and clinical trial laws do not.

Many states have also adopted laws similar to each of the above federal laws, which may be broader in scope and apply to items or services reimbursed by any payor, including commercial insurers. We may also be subject to state laws that require pharmaceutical companies to comply with the pharmaceutical industry's voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, and/or state laws that require drug manufacturers to report information related to marketing expenditures or payments and other transfers of value to physicians and other healthcare providers.

Enforcement actions can be brought by federal or state governments or, in some cases, as "qui tam" actions brought by individual whistleblowers in the name of the government. Depending on the circumstances, failure to comply with these laws can result in penalties, including criminal, civil and/or administrative criminal penalties, damages, fines, disgorgement, debarment from government contracts, individual imprisonment, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, exclusion from government programs, refusal to allow us to enter into supply contracts, including government contracts, reputational harm, diminished profits and future earnings and the curtailment or restructuring of our operations, any of which could adversely affect our business.

In order to distribute product candidates commercially, we must comply with state laws that require the registration of manufacturers and wholesale distributors of pharmaceutical product candidates in a state, including, in certain states, manufacturers and distributors who ship product candidates into the state, even if such manufacturers or distributors have no place of business within the state. Some states also impose requirements on manufacturers and distributors to establish the pedigree of product candidate in the chain of distribution, including some states that require manufacturers and others to adopt new technology capable of tracking and tracing product candidate as it moves through the distribution chain. Several states have enacted legislation requiring pharmaceutical companies to establish marketing compliance programs, file periodic reports with the state, make periodic public disclosures on sales, marketing, pricing, clinical trials and other activities or register their sales representatives. Other legislation has been enacted in certain states prohibiting pharmacies and other health care entities from providing certain physician prescribing data to pharmaceutical companies for use in sales and marketing, and prohibiting certain other sales and marketing practices. All of our activities are potentially subject to federal and state consumer protection and unfair competition laws.

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***The Foreign Corrupt Practices Act***

The FCPA regulates part of our business activities. The FCPA has two main provisions applicable to us: (a) the antibribery provisions, which prohibit individuals and businesses from bribing foreign government officials in order to obtain or retain business; and (b) the accounting provisions, which impose certain record keeping and internal control requirements on issuers, and prohibit individuals and companies from knowingly falsifying an issuer's books and records or circumventing or failing to implement an issuer's system of internal controls. Violations of the FCPA can lead to civil and criminal penalties, sanctions, and remedies, including fines, disgorgement, and/or imprisonment.

The antibribery provisions of the FCPA prohibits the paying, offering, promising, or authorizing payment or offering money or of anything of value, directly or indirectly, to any foreign official, political party, or candidate for the purpose of influencing any act or decision of such foreign official, political party, or candidate in his or her official capacity or to secure any improper advantage in obtaining or retaining business. Under the statute, a company is liable when its directors, officers, employees, or agents, acting within the scope of their employment, commit FCPA violations intended, at least in part, to benefit the Company.

The accounting provisions of the FCPA consist of two primary components. First, under the "books and records" provision, issuers must make and keep books, records, and accounts that, in reasonable detail, accurately and fairly reflect an issuer's transactions and dispositions of an issuer's assets. Second, under the "internal controls" provision, issuers must devise and maintain a system of internal accounting controls sufficient to assure management's control, authority, and responsibility over the Company's assets. The accounting provisions do not apply only to bribery-related violations. Rather, the accounting provisions require that all public companies account for all of their assets and liabilities accurately and in reasonable detail.

The Company, its affiliates, and its and their operations around the world are subject to the FCPA because the Company is an 'issuer' as defined in the statute. The U.S. Department of Justice aggressively enforces the FCPA and has, at times, focused its enforcement attention to the pharmaceutical sector. Enforcement priorities, policies and practices under the FCPA may change over time, including as a result of changes in administration or enforcement guidance, and such changes could affect the nature, scope, timing or severity of enforcement actions.

**Grants from the IIA**

Our research and development efforts mainly with respect to our past activities (with respect to immunotherapy programs such as the Anti-CD3) were financed in part through royalty-bearing grants from the IIA. As of December 31, 2025, we received the aggregate amount of approximately $1.1 million from the IIA for the development of our abovementioned technologies. With respect to such grants, we are committed to pay royalties of up to an aggregate amount of approximately $1.1 million relating only to technologies in our possession and excluding any royalties for technologies that we sold to third parties. We are further required to comply with the requirements of the Innovation Law, with respect to those past grants. In addition, any change of control and any change of ownership of our securities that would make a non-Israel citizen or resident an "interested party" as defined in the Israeli Securities Law, 5728 - 1968 requires a written notice to the IIA. Non-Israeli citizens and residents are required to execute an undertaking in favor of the IIA, in the form prescribed by the IIA. When a company develops know-how, technology or products using IIA grants, the terms of these grants and the Innovation Law and regulations thereunder restrict the transfer or licensing of such know-how inside or outside of Israel, and the transfer or licensing outside of Israel of manufacturing or manufacturing rights of such products, technologies or know-how, without the prior approval of the IIA. None of our current projects in the field of cannabinoid therapeutics are supported by the IIA, yet if eligible, we might apply for such support in the future.

**Current Regulatory Status of SciSparc's Pharmaceutical Products**

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***United States***

The active ingredient in our pharmaceutical product candidate SCI-110 is a Schedule I controlled substance. Other drug candidates in our portfolio are either not controlled or as yet to be scheduled.

Our drug candidate SCI-110 is being developed, among others, for the treatment of TS. TS may be considered a serious condition with a potentially disabling nature. Thus, it may be eligible for a fast-tracked submission. However, a request for eligibility may be filed by us later in the development of this molecule. In June 2016, we submitted a request for orphan drug designation to the FDA for SCI-110 for the treatment of TS. In a letter dated September 29, 2016, the FDA informed us that our request could not be granted at such time and is being held in abeyance until and subject to us providing additional information pertaining to the overall prevalence of TS in both children and adults, and further clinical data to support our scientific rationale for our request for orphan drug designation within 12 months. In September 2017, we responded to such FDA letter within the designated time frame and provided the FDA with our articulated and reasoned responses including documentation and clinical data that supports it. On December 26, 2017, we received the FDA's response to our response. The FDA accepted that there is adequate scientific rationale for the treatment of TS with SCI-110 mainly through the preliminary results of ongoing clinical trials, suggesting that SCI-110 may provide benefit in treating TS. However, the FDA stated that it was unable to grant our request and indicated that we did not provide adequate prevalence estimates, and any evidence to support our statement that only moderate to severe TS patients would require pharmacological treatment. We further responded in January 2018 by providing the requested information. On January 23, 2020, following additional correspondence with the FDA, the FDA still did not grant us our request due to fact that we have not yet provided adequate prevalence estimates. However, the FDA did agree with our position that we could potentially qualify for orphan drug designation with respect to the moderate-to-severe TS sub-group population only rather than the entire population. After we had provided additional prevalence estimates, the FDA raised a concern in its letter, dated December 7, 2020, about our ability to limit the use of the pharmaceutical product to the subset of patients we are pursuing. Due to the fact that we disagree with this concern, we requested a clarification call. In the clarification call conducted on February 2, 2021, we agreed with the FDA concern about our ability to limit the use of the pharmaceutical product to the subset of patients in addition to a safety concern associated with THC treatment in pediatrics population so we suggested to amend our preliminary request and asked to include only adults in the treated population. An amendment letter was discussed and the FDA described what it would want to see in such an amendment. In March 2021, we sent our response to the FDA. In June 2021, we received a response from the FDA explaining that they are unable to grant our request until new information becomes available to support our request for orphan drug designation. We will re-visit the application after we obtain clinical results from our phase IIb clinical study in TS.

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***Canada***

 

***NNHPD Approval***

Pursuant to a non-traditional class III Product License Application, CannAmide™, or TheraPEA, received Health Canada approval (NPN 80093504) from the NNHPD on July 23, 2019. In the approval letter, the NNHPD confirmed that the application was in compliance with section 7 of the NHPR. The dosage of 1 x 400 mg tablet 3 times daily was approved for the following use: "Studies show that PEA may be used as an anti-inflammatory to help relieve chronic pain".

Any labels used in the marketing of TheraPEA must reflect the information outlined on the product license and must comply with the labelling requirements as per Part 5 of the NHPR. In addition, natural health products, such as TheraPEA, must be manufactured, packaged, labelled, imported, distributed and stored in accordance with GMP as required by NHPR or in accordance with equivalent requirements if the natural health product is imported. Furthermore, in accordance with Section 44 of the NHPR, each product for sale in Canada must comply with the finished product specifications submitted to Health Canada.

Pursuant to the NHPR, companies are required to provide the NNHPD with the Canadian site information prior to commencing the importation and/or sale of the natural health products in Canada.

Changes made in respect of a licensed product require the submission of an amendment, notification or a new product license application as per sections 11, 12 and 13 of the NHPR.

**C. Organizational Structure**

We conduct our pharmaceutical operations primarily through NeuroThera, a publicly traded company listed on the TSXV, in which we hold a controlling equity interest of approximately 75%. NeuroThera serves as our principal operating platform for the development and advancement of clinical-stage pharmaceutical assets targeting disorders of the central nervous system. In October 2025, in connection with the NeuroThera Transaction, we transferred to NeuroThera our advanced clinical-stage pharmaceutical portfolio and our equity interest of approximately 51% in SciSparc Nutraceuticals. As a result of this transaction, SciSparc Nutraceuticals is no longer a direct subsidiary of the Company.

Brain Bright Ltd. and SciSparc Merger Sub Ltd. are inactive wholly-owned subsidiaries. We also own 100% of the issued and outstanding share capital of Evero Health Ltd., a company focused on the development and commercialization of SCI-110 sleep technology. Following the NeuroThera Transaction, our principal pharmaceutical operations are conducted through NeuroThera, as described above. In October 2025, we completed the sale of our entire equity interest in MitoCareX Bio Ltd., and as of the date of this Annual Report, we no longer hold any ownership interest in MitoCareX. See Item 4.B. Business Overview for more information.

We hold a minority interest of less than 1% of Nexera Technologies and a 17.70% interest in Nexentis. We hold a minority interest of approximately 4.82% in AutoMax.

**D. Property, Plants and Equipment** 

Our offices are located at 20 Raul Wallenberg Street, Tower A, 2nd Floor, Tel Aviv 6971916, Israel, where we occupy approximately 386 square meters, under a sublease agreement. The sublease ends on March 31, 2028, and may be renewed for a period of sixty additional months. Our current monthly rent payment is NIS 12,500 (approximately $3,600).

We consider that our current office space is sufficient to meet our anticipated needs for the foreseeable future and is suitable for the conduct of our business.

 

**ITEM 4A. UNRESOLVED STAFF COMMENTS**

None.

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

The following discussion and analysis should be read in conjunction with our financial statements and related notes included elsewhere in this Annual Report. This discussion and other parts of this Annual Report contain forward-looking statements based upon current expectations that involve risks and uncertainties. Our actual results and the timing of selected events could differ materially from those anticipated in these forward-looking statements as a result of several factors, including those set forth under Item 3.D. "Risk Factors" and elsewhere in this Annual Report. We report financial information under IFRS as issued by the International Accounting Standards Board and none of the financial statements were prepared in accordance with generally accepted accounting principles in the United States. Our discussion and analysis for the year ended December 31, 2023 can be found in Item 5. "Operating And Financial Review and Prospects" in our Annual Report for the fiscal year ended December 31, 2024, filed with the SEC on April 24, 2025 (File No. 001-38041), and is incorporated by reference herein.

Unless the context expressly indicates otherwise, all references to share and per share amounts in this Item 5 are presented on a basis that reflects the Reverse Splits, as described elsewhere in this Annual Report.

The following financial data in this narrative are expressed in thousands, except for share and per share data or as otherwise noted.

**A. Operating Results**

During the year ended December 31, 2025, we generated revenues through our subsidiary SciSparc Nutraceuticals, which owns the Wellution™ brand. Total revenues recognized in the year ended December 31, 2025, amounted to $856 thousand.

To date, we have not generated revenue from our drug development business from the sale of any pharmaceutical product candidates, and we do not expect to generate significant revenue in this business within the next year at least. As of December 31, 2025, we had an accumulated deficit of approximately $87 million. Our operating activities are described below under "Operating Expenses."

**Revenues**

In the year ended December 31, 2025, we generated revenues in the amount of $856 thousand.

**Cost of goods sold** 

The cost of goods sold comprises mainly purchase of products and transportation costs to our warehouse for the SciSparc Nutraceuticals business. In the year ended December 31, 2025, the cost of goods sold amounted to $225 thousand.

**Operating Expenses** 

Our current operating expenses consist of five components - research and development expenses, sales and marketing expenses, impairment of intangible assets, general and administrative expenses, and other income.

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***Research and Development Expenses***

Our research and development expenses consist primarily of salaries and related personnel expenses, research and preclinical studies, chemistry and formulations, regulatory, professional and other related research and development expenses.

The following table discloses the breakdown of research and development expenses for the periods presented:

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| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| *USD in thousands* |  |  |
| Wages and related expenses | $329 | $390 |
| Share-based payments | 85 | 45 |
| Regulatory, professional and other expenses | 980 | 681 |
| Research and preclinical studies | 364 | 211 |
| Clinical studies | 266 | 276 |
| Chemistry and formulations | 73 | 104 |
| **Total** | $**2097** | $**1707** |

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We expect that our research and development expenses will materially increase as we plan to continue clinical trials and develop new products.

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***Sales and Marketing Expenses***

Our sales and marketing expenses consist primarily of Amazon fees, advertising costs, depreciation costs, storage and shipping costs, and management fees.

The following table discloses the breakdown of sales and marketing expenses for the periods presented:

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| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| *USD in thousands* |  |  |
| Advertising | $155 | $367 |
| Amazon fees | 331 | 495 |
| Amortization | 194 | 366 |
| Storage and shipping | 112 | 167 |
| Management fees | 120 | 120 |
| **Total** | $**912** | $**1515** |

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***General and Administrative Expenses***

General and administrative expenses consist primarily of salaries, professional service fees for accounting, legal, bookkeeping, investor relations, regulatory expenses and other general and administrative expenses.

The following table discloses the breakdown of general and administrative expenses for the periods presented:

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| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| *USD in thousands* |  |  |
| Wages and related expenses | $458 | $507 |
| Share-based payment | 1103 | 419 |
| Professional and directors' fees | 2823 | 3009 |
| Deemed issuance listing expenses | 1410 |  |
| Business development expenses | 89 | 108 |
| Regulatory expenses | 222 | 158 |
| Office maintenance, rent and other expenses | 152 | 128 |
| Investor relations and business expenses | 114 | 197 |
| **Total** | $**6371** | $**4526** |

---

**Comparison of the year ended December 31, 2025 to the year ended December 31, 2024**

***Results of Operations***

 **

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| *USD in thousands* |  |  |
| Revenues | $856 | $1306 |
| Cost of revenues | 225 | 800 |
| Gross profit | 631 | 506 |
| Research and development expenses | 2097 | 1707 |
| Sales and marketing | 912 | 1515 |
| Impairment of intangible asset | 115 | 1344 |
| General and administrative expenses | 6371 | 4526 |
| Other income | 490 | 1270 |
| Operating loss | 8374 | 7316 |
| Equity losses from the investment in MitoCareX | 500 | 429 |
| Gain from sale of an associate | 2231 |  |
| Financial expenses (income), net | 5921 | (259) |
| Comprehensive loss | 12564 | 7472 |
| Net loss attributable to holders of Ordinary Shares | 12179 | 6284 |

---

 ****

***Revenues***

Our revenues for the year ended December 31, 2025 decreased by $450 thousand, or 35%, to $856 thousand, compared to $1,306 thousand for the year ended December 31, 2024. The decrease is primarily due to operational difficulties which caused the WelllutionTM brand to be temporarily put offline from the Amazon Marketplace. For further discussion of the operational difficulties, see Item 3.D. "Risk Factors – Risks Related to the eCommerce Operations of SciSparc Nutraceuticals - The eCommerce operations of SciSparc Nutraceuticals rely on Amazon Marketplace and fulfillment by Amazon.com and changes to Amazon Marketplace, Amazon's services and their terms of use may harm our business***.*"**

 ****

***Cost of Goods Sold***

Our cost of goods sold for the year ended December 31, 2025 decreased by $575 thousand, or 72%, to $225 thousand, compared to $800 thousand for the year ended December 31, 2024. This decrease resulted primarily from a decrease in revenues in 2025. In addition, cost of goods sold in 2024 was higher compared to 2025 due to a write-off of inventory in 2024. The write-off in 2024 resulted primarily from losses resulting from the revaluation of inventory.

 ****

 ****

***Gross Profit***

Our gross profit for the year ended December 31, 2025, increased by $125 thousand, or 25%, to $631 thousand, compared to $506 thousand for the year ended December 31, 2024. This increase resulted primarily from the decrease in cost of goods sold, partially offset by the decrease in revenues.

 ****

***Research and Development Expenses***

Our research and development expenses for the year ended December 31, 2025, amounted to $2,097 thousand, representing an increase of $390 thousand, or 23%, compared to $1,707 thousand for the year ended December 31, 2024. The increase resulted primarily from an increase in expenses related to regulatory, professional and other expenses which amounted to $980 thousand for the year ended December 31, 2025, compared to $681 thousand for the year ended December 31, 2024. The increase in regulatory, professional and other expenses is primarily due to the increase in patents expenses which amounted to $741 thousand for the year ended December 31, 2025, compared to $388 thousand for the year ended December 31, 2024.

 ****

***General and Administrative Expenses***

Our general and administrative expenses totaled $6,371 thousand for the year ended December 31, 2025, representing an increase of $1,845 thousand, or 41%, compared to $4,526 thousand for the year ended December 31, 2024. The increase resulted primarily from a deemed issuance listing expense related to the NeuroThera Transaction in the amount of $1,410 thousand, and an increase in share-based expenses that amounted to $1,104 thousand for the year ended December 31, 2025, compared to $419 thousand for the year ended December 31, 2024.

 ****

***Sales and marketing expenses***

Our sales and marketing expenses totaled $912 thousand for the year ended December 31, 2025, representing a decrease of $603 thousand, or 40% compared to $1,515 thousand for the year ended December 31, 2024. All sales and marketing expenses are generated by SciSparc Nutraceuticals, which owns the Wellution™ brand. The decrease resulted mainly from a decrease in Amazon fees, which were a result of the decrease in sales of goods by SciSparc Nutraceuticals in 2025 compared to 2024. Other reasons for the decrease in sales and marketing expenses include the decrease in advertising and depreciation costs.

 ****

***Other income***

Other income in the year ended December 31, 2025, amounted to $490 thousand, resulting mainly from a gain on settlement of a legal dispute in the amount of $464 thousand. Other income in the year ended December 31, 2024, amounted to $1,270 thousand, from the sale of: (i) ordinary shares of Polyrizon, (ii) pre-funded warrants to purchase ordinary shares of Polyrizon, and (iii) common warrants to purchase ordinary shares of Polyrizon to third parties, for aggregate consideration of $771 thousand. Also in the year ended December 31, 2024, we recorded a gain in the amount of $517 thousand from the remeasurement of our remaining investment in such Polyrizon warrants.

 ****

***Impairment of intangible asset***

Our impairment of intangible asset totaled $115 thousand for the year ended December 31, 2025, representing an decrease of $1,229 thousand compared to $1,344 thousand for the year ended December 31, 2024. The impairment in the year ended December 31, 2025 resulted from continued losses in the Wellution™ brand, similar to the loss on impairment recognized in the year ended December 31, 2024.

 ****

***Operating Loss***

Our operating loss for the year ended December 31, 2025, was $8,374 thousand, representing an increase of $1,418 thousand, or 19%, as compared to an operating loss of $7,316 thousand for the year ended December 31, 2024. The increase resulted primarily from the increase in general and administrative expenses.

 ****

***Financial Expense and Income***

Financial expenses and income consist of remeasurement of instruments measured at fair value, exchange rate differences, bank fees, loans interest and other transactional costs.

We recognized financial income in the amount of $2,278 thousand for the year ended December 31, 2025, as compared to financial income of $612 thousand for the year ended December 31, 2024. The financial income for the year ended December 31, 2025 resulted mainly from income recorded due to a cancellation of a warrant liability in the amount of $1,568 thousand, income due to revaluation of convertible debentures in the amount of $422 thousand, and interest from loans to related parties and deposits in the amount of $207 thousand. The financial income for the year ended December 31, 2024 resulted mainly due to interest from loans to related parties and deposits in the amount of $421 thousand and income from the change in fair value of financial liabilities in the amount of $191 thousand.

We recognized financial expenses for the year ended December 31, 2025, of $8,199 thousand, as compared to financial expense of $353 thousand for the year ended December 31, 2024. The financial expenses for the year ended December 31, 2025, resulted mainly from to an impairment of loans in the amount of $5,973 thousand, losses from remeasurement of investment in financial assets in the amount of $1,791 thousand, and convertible debentures issuance expenses in the amount of $410 thousand. The financial expenses for the year ended December 31, 2024, resulted mainly from losses from remeasurement of investment in financial assets in the amount of $305 thousand.

 ****

***Total Comprehensive Loss***

Our total comprehensive loss for the year ended December 31, 2025, was $12,564 thousand, representing an increase of $5,092, or 68%, as compared to $7,472 thousand for the year ended December 31, 2024. The increase resulted primarily from the increase in financial expenses, net, and an increase in operating loss.

**B. Liquidity and Capital Resources** 

 ****

***Overview***

Since our inception in 2004, and through December 31, 2025, we have funded our operations principally with $82 million from the issuance of our securities in public offerings and private placements. As of December 31, 2025, we had $4.6 million in cash, $10 thousand in trade receivables, $289 thousand in other accounts receivable, $75 thousand in inventory, $20 thousand in restricted deposits, and an additional amount of $451 thousand in current maturities of long-term loan. In the event that additional financing is required from outside sources, we may not be able to raise such financing on terms acceptable to us or at all. If we are unable to raise additional capital when desired, our business, operating results, and financial condition would be adversely affected, and there is substantial doubt about our ability to continue as a going concern.

The table below presents our cash flows for the periods indicated:

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| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| *USD in thousands* |  |  |
| Operating activities | $(4137) | $(5104) |
| Investing activities | $(1400) | $(1625) |
| Financing activities | $8588 | 6193 |
| Increase (decrease) in cash | $3051 | $(536) |

---

***Operating Activities***

Net cash used in operating activities was $4,137 thousand during 2025 in comparison to $5,104 thousand during 2024. The decrease in cash used in operating activities was mainly driven by lower cash payments for directors' and officers' insurance expenses compared to 2024, primarily due to a discount on the insurance premium and to a lesser extent lower cash payments for development expenses due to a slowdown in development activities in 2025. ****

***Investing Activities***

Net cash used in investing activities was $1,400 thousand during 2025 in comparison to net cash used in investing activities of $1,625 thousand during 2024. Net cash used by investing activities during 2025 resulted mainly from a loan granted in the amount of $2,000, offset in part by proceeds from the sale of MitoCareX in the amount of $700 thousand. Net cash used by investing activities during 2024 resulted mainly from a loan granted to a related party in the amount of $4,078, and an investment in a company accounted for using the equity method in the amount of $600 thousand, offset in part by a divestment in short-term bank deposits in the amount of $3,000 thousand.

 ****

***Financing Activities***

Net cash provided by financing activities of $8,588 thousand in the year ended December 31, 2025, primarily consisted of proceeds from issuance of convertible debentures in the amount of $3,990 thousand, proceeds from issuance of share capital in the amount of $2,262 thousand, proceeds from exercise of warrants in the amount of $1,121 thousand, and proceeds from deemed issuance of shares by a subsidiary in connection with our consolidation of NeuroThera in the amount of $710 thousand.

Net cash provided by financing activities of $6,193 thousand in the year ended December 31, 2024, primarily consisted of proceeds from the issuance of share capital in the amount of $6,225 thousand.

 

*Wellution Sales Agreement*

On February 23, 2023, we entered into the Wellution Sale Agreement with KeepZone and Nexera Technologies, pursuant to which, at the closing, which occurred on March 28, 2023, KeepZone acquired from us 57 shares of common stock of SciSparc Nutraceuticals, which equals approximately a 49% interest in our wholly owned subsidiary, SciSparc Nutraceuticals, which owns the Wellution<sup>TM</sup> brand, for a consideration of $2.5 million in cash, and additional deferred cash payments of approximately $489 thousand.

In connection with the closing, we and Nexera Technologies undertook a mutual share exchange in the amount of approximately $288 thousand of ordinary shares from each of us and Nexera Technologies.

Following the closing of the transaction, which included an equity conversion of the financing amounts of approximately $700 thousand previously provided by the Company to SciSparc Nutraceuticals for working capital, into shares of common stock at the price per share of the Wellution Sale Agreement, we hold approximately 51% of SciSparc Nutraceuticals.

In connection with the Wellution Sale Agreement, at the closing, Nexera Technologies and SciSparc Nutraceuticals entered into the Wellution Management Agreement for management services of the Wellution<sup>TM</sup> brand by Nexera Technologies, for a monthly fee of $20 thousand, which was reduced to $10 thousand in 2024. Nexera Technologies also received a one-time signing bonus in the amount of $51 thousand.

 

*AutoMax*

On October 6, 2025, we entered into the Framework Agreement with AutoMax, pursuant to which the Merger Agreement was mutually terminated. Following the termination of the Merger Agreement, we have outstanding loan exposure to AutoMax under the Bridge Loan and the Additional Loan Agreement and we recognized a loss on impairment of loans granted to AutoMax in the amount of $5,973,000 for the year ended December 31, 2025.

In addition, in October 2025, insolvency proceedings in respect of AutoMax commenced in an Israeli court and the Israeli court froze proceedings against AutoMax and appointed a trustee in connection with insolvency proceedings. We have filed a debt petition as part of those proceedings. See "Item 8.A Legal Proceedings – AutoMax" for additional information.

 

*January 2024 Standby Equity Purchase Agreement*

On January 21, 2024, we entered into a SEPA with YA, as amended on February 26, 2024. Pursuant to the SEPA, we will be able to sell up to $20.0 million Ordinary Shares, at our sole option, any time during the three-year period following the execution date of the SEPA. Of the $20.0 million eligible to be sold pursuant to the SEPA, as of April 28, 2026, we have sold 30,678 Ordinary Shares to YA pursuant to the SEPA. Pursuant to the terms of the SEPA, any Ordinary Shares sold to YA will be priced at 97% of the market price, which is defined as the lowest daily volume weighted average price of the Ordinary Shares during the three consecutive trading days commencing on the trading day immediately following our delivery of an advance notice to YA. Any sale of Ordinary Shares pursuant to the SEPA is subject to certain limitations, including that YA is not permitted to purchase any shares that would result in it owning more than 9.99% Ordinary Shares. We are not permitted to utilize the SEPA pursuant to the February 2025 Securities Purchase Agreements, as defined below, until all of the convertible debentures have been paid off.

 

 

*February 2025 Securities Purchase Agreements*

On February 25, 2025, we entered into securities purchase agreements, or the February 2025 Securities Purchase Agreements, with certain investors, pursuant to which we sold and issued to the investors convertible debentures, or Debentures, in the aggregate principal amount of $4.2 million, or the Subscription Amount, which are convertible into Ordinary Shares at a purchase price equal to 95% of the Subscription Amount. The Debentures, having been issued, will mature on the one-year anniversary of the issuance date of the Debentures. Further, interest will accrue on the outstanding principal balance of the Debentures at an annual rate of 8%, which will increase to an annual rate of 18% upon an event of default for so long as such Event of Default remains uncured. The investors will have the right to convert the Debentures into Ordinary Shares at the lower of (i) 110% of volume weighted average price of the Ordinary Shares the trading day immediately preceding the closing or (ii) 95% of the lowest daily volume weighted average price of the Ordinary Shares during the 20 consecutive trading days immediately preceding the conversion date or other date of determination, or the Market Price; provided that the Market Price may not be lower than the floor price, which will be equal to 20% of the volume weighted average price of the Ordinary Shares on the day prior to the closing. At the closing of the transaction, we issued to the investors 19,130 warrants which are exercisable into a number of Ordinary Shares equal to the Subscription Amount applicable to the investors divided by a price equal to 130% of the volume weighted average price of the Ordinary Shares immediately prior to the closing date, or $104.5548 per warrant. The warrants are exercisable for a term of five years from the issuance date.

We entered into a global guaranty agreement, or the Global Guaranty Agreement, with one of the investors through certain of our subsidiaries, pursuant to which such subsidiaries will guaranty its obligations under the Debenture with the lead debenture investor and other instruments, agreements or other items executed or delivered pursuant to the Global Guaranty Agreement.

We also entered into a registration rights agreement with the lead debenture investor, pursuant to which we have agreed to provide to the lead debenture investor registration rights under the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder, and applicable state securities laws.

In connection with the securities purchase agreements with the investors, on February 25, 2025, we entered into a deed, or Deed, with AutoMax and three investors. Pursuant to the Deed, SciSparc assigned part of the Subscription Amount in the amount of $2 million to AutoMax in lieu of making the payment under the Additional Loan Agreement.

 

*Inducement Offer Letter Agreements*

On September 26, 2025, we entered into inducement offer letter agreements, or the Inducement Letters, with certain holders, or the Holders, of our outstanding warrants to purchase an aggregate of 40,172 Ordinary Shares, which warrants were originally issued on February 25, 2025 and had an exercise price of $104.5548 per Ordinary Share, or the Existing Warrants.

Pursuant to the Inducement Letters, the Holders agreed to exercise for cash all of their Existing Warrants at a reduced exercise price of $27.90 per Ordinary Share. The transactions closed on September 29, 2025. We received aggregate gross proceeds of $1.12 million from the exercise of the Existing Warrants.

*November Registered Direct Offering*

On November 27, 2025, we entered into a securities purchase agreement with certain institutional and accredited investors, providing for the issuance of an aggregate of 143,617 Ordinary Shares at a purchase price of $15.75 per share.

The offering resulted in gross proceeds to us of $2.2 million.

 

 

*Convertible Promissory Note*

On February 12, 2026, we entered into a Securities Purchase Agreement, or the Notes SPA with an institutional investor, pursuant to which we may issue and sell, from time to time, convertible promissory notes, or the Convertible Notes, in the aggregate principal amount of up to $10,000,000. Upon the execution of the Notes SPA, on February 12, 2026 we issued to the investor a Convertible Note in the principal amount of $2,000,000 for a purchase price of $1,800,000, or the Initial Note. On February 12, 2026, we also entered into a side letter to the Notes SPA, pursuant to which, among others, we agreed that the investor deliver the purchase price for the Initial Note upon the filing of a resale registration statement with the SEC, which was filed on February 17, 2026.

Subject to the conditions of the Notes SPA, beginning on April, 1, 2026, we may request, at our sole discretion, that the investor purchase additional Convertible Notes, each in the principal amount of up to $2,500,000, with a purchase price payable in cash and equal to 90% of such principal amount, during each subsequent three-month period. Notwithstanding the foregoing, if at any time following the execution of the Notes SPA, the daily trading volume of the Company's Ordinary Shares, is at least 150% of the amount of Ordinary Shares then outstanding, we may request, at our sole discretion, that the investor purchase additional Convertible Notes for a purchase price payable in cash equal to 90% of the principal amount, provided that the aggregate principal amount of all Convertible Notes purchased pursuant to the Notes SPA shall not exceed the $10,000,000.

In addition, under the terms and conditions of the Notes SPA, concurrently with the issuance of each Convertible Note, we shall issue to the investor, for no additional consideration, an accompanying to purchase Ordinary Shares, or the Note Warrant, representing a warrant coverage of 100% of the maximum number of Ordinary Shares issuable upon conversion of each such Convertible Note (calculated based on the then applicable Variable Price (as defined below)) at an exercise price equal to the Variable Price of the accompanying Convertible Note. Thus, on February 2, 2026, we issued to the investor a warrant to purchase up to 3,651,554 Ordinary Shares, or the Initial Note Warrant. The Initial Note Warrant was exercisable upon issuance at an exercise price of $0.5477 and has a term of 3 years from its issuance date, or February 12, 2029.

The exercise of each Note Warrant is the investor's sole recourse against non-payment of the Principal Amount, Interest, and any Payment Premium (each as defined in the Convertible Note), if applicable, regardless of whether the value realized from the Note Warrant and/or the Ordinary Shares issued upon conversion of the Convertible Note is less than the then outstanding due Principal Amount, Interest, and if applicable, the Payment Premium.

Each Convertible Note will be issued at a purchase price equal to 90% of the principal amount of such Convertible Note, and is to be repaid, together with the accrued due interest, in ten equal monthly installments beginning on the eighteenth month anniversary of its issuance date, unless repaid earlier (partially or in full) at our option or if extended at the option of the investor. The principal amount under each Convertible Note will bear an annual interest rate of 4% (which will increase to 14% upon an Event of Default, as defined in the Convertible Note). Thus, the Initial Note Warrant is to be repaid in ten equal monthly installments commencing on August 12, 2027. The outstanding amount due under each Convertible Note is convertible into Ordinary Shares at the option of the investor, at any time after the issuance date of such Convertible Note, at a conversion price equal to the lower of (i) the closing price of the Ordinary Shares on the Nasdaq Capital Market on the last trading day immediately prior to the date of issuance of such Convertible Note, or the Fixed Price and (ii) 88% of the lowest daily volume weighted average price during the 20 consecutive trading days immediately preceding the applicable date of conversion, or the Variable Price, provided that such Variable Price may not be lower than the floor price which is equal to 20% of the Fixed Price, or the Floor Price, subject to certain adjustments as provided in the Convertible Note. The investor's option to convert the outstanding amount due is subject to the limitation that the conversion may not result in the investor's beneficial ownership exceeding 4.99% of the outstanding Ordinary Shares.

We are not obligated to utilize any of the remaining subscription amount available under the Notes SPA, which as of the date of this Annual Report is $7,500,000, and there are no minimum commitments or minimum use penalties.

***Current Outlook***

We have financed our operations to date primarily through proceeds from sales of our securities as well as exercises of warrants and options to purchase Ordinary Shares or ADSs, as the case may be. We have incurred losses and generated negative cash flows from operations since August 2004. Since August 2004, we have not generated any revenue from the sale of pharmaceutical product candidates and we do not expect to generate revenues from sale of our pharmaceutical product candidates in the next few years.

As of December 31, 2025, our cash and cash equivalents, including restricted deposits, was $4.6 million.

Our cash and cash equivalents position is not sufficient to fund our planned operations for at least a year beyond the date of the filing date of this Annual Report. The ability to continue as a going concern is dependent upon our obtaining the necessary financing to meet our obligations and repay liabilities arising from normal business operations when they become due. While we have successfully raised funds in the past, there is no guarantee that we will be able to do so in the future. The inability to borrow or raise sufficient funds on commercially reasonable terms would have serious consequences on our financial condition and results of operations. In addition, we started to recognize revenues from sales. However, our pharmaceutical operations are dependent on our ability to raise additional funds from existing and/or new investors. This dependency will continue until we are able to finance our operations through generating revenue from our products. These factors raise substantial doubt about our ability to continue as a going concern.

In September 2022, we purchased Wellution™, a business and brand which sells hemp-based products on Amazon Marketplace.

On January 25, 2023, we announced that our board of directors resolved to pursue a Restructuring Plan which may involve transferring our pharmaceutical activities to NewCo. As part or independent of the Restructuring Plan, we intend to examine the possibility of listing NewCo on a leading stock exchange, while maintaining our controlling interest in NewCo such that we will continue to control our current business activities. We also intend to explore other potential new opportunities, activities and investments in a variety of sectors.

Any Restructuring Plan and possible listing of NewCo on a stock exchange may be subject to, among other things, market conditions, tax or other business analyses, regulatory approvals, receipt of any necessary consents, final approvals from our board of directors and shareholders and satisfaction of any closing conditions to effectuate such corporate Restructuring Plan and listing of NewCo. There can be no assurance regarding the ultimate timing of the Restructuring Plan and listing of NewCo or that they will be completed at all.

In light of an investigation by the Israeli Securities Authority and the Israeli Police and the arrest of senior officials of AutoMax, we entered into a framework agreement with AutoMax on October 6, 2025 to mutually terminate our previously announced merger agreement. The merger, originally entered into on April 10, 2024 and amended from time to time, had been approved by the shareholders of both companies but was not consummated, and on October 21, 2025, an Israeli court froze proceedings against AutoMax and appointed a trustee. Following the ongoing uncertainty surrounding AutoMax, we recognized a loss on impairment of loans granted to AutoMax in the amount of $5,973,000.

In addition, our operating plans may change as a result of many factors that may currently be unknown to us, and we may need to seek additional financing sooner than planned. Our efforts to commercialize our proprietary PEA oral tablets CannAmide™ may not lead to any revenue or revenue at the level at which we are expecting. Our future capital requirements will depend on many factors, including:

● the progress and costs of our research and development activities;

● the costs of manufacturing our product candidates;

● the costs of filing, prosecuting, enforcing and defending patent claims and other intellectual property rights;

● the potential costs of contracting with third parties to provide marketing and distribution services for us or for building such capacities internally; and

● the magnitude of our general and administrative expenses.

Until we can generate significant recurring revenues, we expect to satisfy our future cash needs through debt and/or equity financings. We cannot be certain that additional funding will be available to us on acceptable terms, if at all. This raises substantial doubts about our ability to continue as a going concern. If funds are not available, we may be required to delay, reduce the scope of, or eliminate research or development plans for, or commercialization efforts with respect to our product candidates.

**C. Research and development, patents and licenses, etc.**

For a description of our research and development programs and the amounts that we have incurred over the last two years pursuant to those programs, please see "Item 5. Operating and Financial Review and Prospects-A. Operating Results-Operating Expenses-Research and Development Expenses" and "Item 5. Operating and Financial Review and Prospects-A. Operating Results-Comparison of the year ended December 31, 2025 to the year ended December 31, 2024-Research and Development Expenses."

**D. Trend information**

The trends impacting us are described elsewhere in this Annual Report on Form 20-F, including in "Item 3.D. Risk Factors", "Item 4.B. Business Overview", "Item 5.A. Operating Results", "Item 5.B. Liquidity and Capital Resources", and "Item 10.C. Material Contracts".

In addition, during 2025, our strategic direction evolved significantly. The previously announced proposed merger with AutoMax was terminated, and we instead completed a transaction in October 2025 pursuant to which we transferred our advanced clinical-stage pharmaceutical portfolio and our equity stake in SciSparc Nutraceuticals to NeuroThera, a publicly traded company on the TSXV, and obtained a controlling interest in NeuroThera.

As a result, our operating and financial profile is expected to be increasingly influenced by NeuroThera's performance, capital requirements, regulatory progress and execution of its development strategy, rather than the direct operation of these assets by us. In the near term, we incurred transaction-related costs associated with the restructuring, and we may be required to provide additional financial support to NeuroThera pursuant to existing arrangements.

In parallel, we continued to expand our intellectual property portfolio and pursue strategic initiatives intended to enhance long-term optionality. The ultimate impact of these trends will depend on regulatory outcomes, market conditions, access to capital and the successful execution of our strategic initiatives.

**E. Critical Accounting Estimates**

The Company applies IFRS as issued by the IASB in its financial statements (see Note 3 to the Company's consolidated financial statements included under "Item 18. Financial Statements" of this Annual Report).

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**ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES** 

**A. Directors and Senior Management** 

The following table sets forth information regarding our executive officers, key employees and directors as of April 28, 2026:

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| | | |
|:---|:---|:---|
| **Name** | **Age** | **Position** |
| Itschak Shrem | 78 | Chairman of the Board of Directors |
| Amitay Weiss | 64 | President and Director |
| Oz Adler | 39 | Chief Executive Officer and Chief Financial Officer |
| Dr. Adi Zuloff-Shani | 57 | Chief Technologies Officer |
| Amnon Ben Shay<sup>(1)(2)(3)</sup> | 63 | Director |
| Alon Dayan<sup>(1)(2)(3)</sup> | 50 | Director |
| Moshe Revach<sup>(3)</sup> | 50 | Director |
| Liat Sidi<sup>(3)</sup> | 51 | Director |
| Lior Vider<sup>(1)(2)(3)</sup> | 49 | Director |

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(1) Member of the Compensation Committee

(2) Member of the Audit Committee

(3) Independent Director (as determined by our Board of Directors, pursuant to the definition prescribed to such term under Nasdaq Stock
Market rules)

 

*Mr. Itschak Shrem* was appointed to serve as our Chairman of the Board of Directors in September 2025, prior to which he served as our President from January 2022 to September 2025, and our Chairman from August 2020 to January 2022. Mr. Shrem currently serves as chairman of the board of directors of NeuroThera (TSXV:NTLX) since October 2025. Mr. Shrem has more than 40 years of experience in financial markets and venture capital. In 1991, Mr. Shrem founded Dovrat Shrem Ltd., an investment banking, management and technology company. Prior to that, he spent 15 years at Clal Israel Ltd., where he served in various capacities, including chief operating officer, and was responsible for capital markets and insurance businesses. In 1993, Mr. Shrem founded Pitango Venture Capital Fund (formerly, Polaris) and served as a partner of Pitango Funds I, II and III. He has been the Managing Director of Yaad Consulting 1995 Ltd. since 1995. Previously, Mr. Shrem served on the board of Tel-Aviv Sourasky Medical Center, the Weizman Institute Eden Spring Ltd., Rail Vision Ltd., Nano Dimension Ltd., Ormat Industries Ltd., Retalix Ltd. and as chairman of Sphera Funds Management Ltd. Mr. Shrem holds a B.A. in Economics and Accounting from Bar-Ilan University and an M.B.A. from Tel-Aviv University.

 

*Mr. Amitay Weiss* has served on our Board of Directors since August 2020, and was appointed to serve as our President in September 2025, prior to which he served as our Chairman from January 2022 to September 2025, and as our Chief Executive Officer from August 2020 to January 2022. Mr. Weiss currently serves as a director of Nexera Technologies Ltd. (Nasdaq: NEXR) and as an external director of Cofix Group Ltd. (TASE: CFCS). Mr. Weiss also chairs and serves as director on the board of directors of several public and private companies, including Clearmind (Nasdaq: CMND), Maris Tech Ltd. (Nasdaq: MTEK) and Nexentis Technologies Inc. (Nasdaq: NXTS). Mr. Weiss also previously served as Chairman of AutoMax Motors Ltd. (TASE: AMX.TA), until October 16, 2025. In 2016, Mr. Weiss founded Amitay Weiss Management Ltd. and now serves as its chief executive officer. From 2001 until 2015, Mr. Weiss served as vice president of business marketing & development and in various other positions at Bank Poalei Agudat Israel Ltd. from the First International Bank of Israel group. Mr. Weiss holds a B.A. in economics from New England College, an M.B.A. in business administration from Ono Academic College in Israel, an Israeli branch of University of Manchester and an LL.B. from the Ono Academic College.

 

*Mr. Oz Adler, CPA,* was appointed to serve as our Chief Executive Officer in January 2022 and has served as our Chief Financial Officer since April 2018 and previously served as our VP Finance from March 2018 until April 2018 and as our Controller from September 2017 to March 2018. Mr. Adler has experience in a wide variety of managerial, financial, tax and accounting roles. Mr. Adler currently serves on the board of directors of numerous public companies such as Polyrizon Ltd., Nexera Technologies Ltd. (Nasdaq: NEXR), Rail Vision Ltd. (Nasdaq: RVSN) and Clearmind (Nasdaq: CMND), (FSE: CWY), and previously served as the chief financial officer of Xylo Technologies Ltd. from December 2020 to April 2021. From 2012 until 2017, Mr. Adler was employed as a certified public accountant at Kost Forer Gabbay & Kasierer, a member of Ernst & Young Global. Mr. Adler holds a B.A. in Accounting and Business management from The College of Management, Israel.

 

 

*Dr. Adi Zuloff-Shani*, PhD, has served as our Chief Technologies Officer since February 2016. Dr. Zuloff-Shani has more than 20 years of experience as a research and development executive. Prior to joining us, and from 2012 to 2016, Dr. Zuloff-Shani served as a vice president development at Macrocure Ltd. (Nasdaq: MCUR) where besides leading all research and development activities, she interacted and was involved with the activities of all departments including clinical, operations, quality assurance, quality control, finance, and regulatory affairs. Dr. Zuloff-Shani currently serves as the Chief Executive Officer of Clearmind (Nasdaq: CMND), (FSE: CWY). She has served as the Chairman of Orsus Therapeutics, Inc. since November 2022, as a member of the scientific advisory board of Nexentis Technologies Inc. (Nasdaq: NXTS) since October 2021 and as a director of MitoCareX since May 2022. Dr. Zuloff-Shani holds a Ph.D. in human biology and immunology from Bar-Ilan University, Israel.

 

*Mr. Amnon Ben Shay* has served as a member of our Board of Directors since January 2021 and served as our external director under the Companies Law between January 2021 and January 2022. Mr. Ben Shay has been chief financial officer of Aerodrome Group Ltd since October 2022. Mr. Ben Shay previously served on the board of directors of Azorim Investments and Building Development Company Ltd. (TASE: AZRM), Value Capital One Ltd. (TASE: VALU) and B.G.I. Investments (1961) Ltd. (TASE: BGI). Mr. Ben Shay has been serving as Head of Finance division at Seeach Sod Foundation since May 1, 2025. Mr. Ben Shay was chief financial officer of Hadar Hasharon Marketing and Distributions Ltd. from February 2019 to October 2022. From February 2017 to January 2019, Mr. Ben Shay served as the chief financial officer of Fridenson Air & Ocean Ltd. From January 2014 to January 2017, Mr. Ben Shay served as the chief financial officer of Abetrans Logistics Ltd. Prior to that, Mr. Ben Shay served as the chief financial officer of Isline Export and Import Services Ltd. from 2010 to 2013. Prior to the year 2009, Mr. Ben Shay served as the chief financial officer of several Israeli real estate investment groups. Mr. Ben Shay holds a B.A. in economics and business and an M.B.A in business, both from The Hebrew University of Jerusalem, Israel, and an accounting certificate from The College of Management Academic Studies, Israel.

 

*Mr. Alon Dayan* has served as a member of our Board of Directors since January 2021 and served as our external director under the Companies Law between January 2021 and January 2022. Mr. Dayan is the chief executive officer of KeepZone AI Inc. since December 8, 2025 (a wholly owned subsidiary of Nexera Technologies Inc). Mr. Dayan is the founder of L1-Systems Ltd. and has served as its chief executive officer since 2014 and is also the founder of Viewbix Inc. (formerly known as Virtual Crypto Technologies Inc.) (Nasdaq: VBIX), a company he served as chief executive officer from 2018 to 2019. Mr. Dayan is currently a director at Viewbix Inc. Prior to that, he served as a business development manager at Elbit Systems Ltd. from 2006 to 2013. Mr. Dayan holds a B.A. in electronical engineering from Ariel University, Israel.

 

*Mr. Moshe Revach* has served as a member of our board of directors since September 2022. Mr. Revach also previously served as our director since August 2020 until his resignation on March 13, 2022. Mr. Revach has served as vice-counselor of the Ramat Gan municipality and has been on its financial committee since March 2024. Mr. Revach serves as a director of L.L.N IT solutions, a wholly owned subsidiary of the Jewish Agency for Israel, RPG Economic Society, ParaZero Technologies Ltd. (Nasdaq: PRZO), Plantify Foods Inc (CVE: PTFY), and Nexera Technologies Ltd. (Nasdaq: NEXR). Mr. Revach previously served as a director of Upsellon Brands Holdings Ltd. (TASE: UPSL) from 2019 to 2024, Biomedico Hadarim, and Jewish Experience Company on behalf of the Jewish Agency and also served as deputy mayor of Ramat Gan, Israel from 2013 to 2023, while also heading the sports and government relations departments in the Ramat Gan municipality. Mr. Revach holds an LL.B from the Ono Academic College, Israel, and a B.A. in management and economics from the University of Derby.

 

*Ms. Liat Sidi* has served as our Director since August 2020. Ms. Sidi has served as the manager of the accounting department for Foresight Autonomous Holdings Ltd. (Nasdaq and TASE: FRSX) since 2010 and has served as director for Nexentis Technologies Inc. (Nasdaq: NXTS) since November 2023. Ms. Sidi has also served as a director of Polyrizon Ltd. (Nasdaq: PLRZ) since November 2024, Ms. Sidi previously served as director for Plantify Foods Inc (CVW: PTFY) from September 2023 to January 2024. Ms. Sidi previously served as an accountant for Panaxia Labs Israel Ltd. (TASE: PNAK) from 2015 to 2020 and as an accountant for Soho Real Estate Ltd. from 2015 to 2016. Ms. Sidi also served as an accountant for Feldman-Felco Ltd. from 2006 to 2010 and as an accountant for Eli Abraham accounting firm from 2000 to 2006. Ms. Sidi completed tax, finance and accounting studies at Ramat Gan College of Accounting.

 

*Mr. Lior Vider* has served as our Director since August 2020. Mr. Vider has served as investment manager at Finessa Capital since November 2023. Mr. Vider previously served as chief investment manager for Impact Investment Management Ltd., from the Union Bank group, from 2007 to 2010 and as chairman of the board of directors and a member of the group's investment committee of Rahkia Capital Markets Ltd. from 2006 to 2007. Mr. Vider also served as a director at Endymed Medical Ltd. and Apollo Power Ltd. Mr. Vider founded and managed sponser.co.il, a financial portal specializing in services for investors from 2005 to 2017. Mr. Vider holds a B.A. in industry and management engineering from Shenkar College in Israel.

 

***Family Relationships***

There are no family relationships between any members of our executive management and our directors.

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***Arrangements for Election of Directors and Members of Management***

We are not a party to, and there are no arrangements or voting agreements that we are aware of for the election of our directors and members of management.

**B. Compensation**

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***Compensation***

The following table presents in the aggregate all compensation we paid to all of our directors and senior management, as a group for the year ended December 31, 2025. The table does not include any amounts we paid to reimburse any of such persons for costs incurred in providing us with services during this period.

All amounts reported in the tables below reflect the cost to us for the year ended December 31, 2025.

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| | | | |
|:---|:---|:---|:---|
| *USD in thousands* | **Salary/Fee** | **Pension,<br> Retirement<br> and Other <br> Similar<br> Benefits<sup>(1)</sup>** | **Share-<br> Based<br> Compensation<sup>(2)</sup>** |
| All directors and senior management as a group, consisting of 9 persons | $1020 | $122 | $&nbsp;&nbsp;&nbsp;&nbsp; 302 |

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(1) Represents the directors and senior management's payment of mandatory social benefits made by us on behalf of such officer.
Such benefits may include, to the extent applicable to the executive, payments, contributions and/or allocations for savings funds, education
funds (referred to in Hebrew as "*Keren Hishtalmut* "), pension, severance, risk insurances (e.g., life or work disability
insurance) and payments for social security.

(2) Computed based on fair value for Ordinary Shares options granted and estimated using the Black-Scholes option pricing model.

In accordance with the Companies Law, the table below reflects the compensation granted to our five most highly compensated officers or directors during or with respect to the year ended December 31, 2025.

**Annual Compensation**

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| | | | | |
|:---|:---|:---|:---|:---|
| **Executive Officer** | **Salary/Fee** | **Pension,<br> Retirement<br> and Other<br> Similar<br> Benefits** | **Share-<br> Based<br> Compensation<sup>(1)</sup>** | **Total** |
| *USD in thousands* |  |  |  |  |
| Oz Adler<br> *Chief Executive Officer and Chief Financial Officer* | $272 | $64 | $60 | $396 |
| Dr. Adi Zuloff-Shani*<br> Chief Technologies Officer* | $232 | $58 | $30 | $320 |
| Itschak Shrem<br> *Chairman* | $185 | $- | $60 | $245 |
| Amitay Weiss<br> *President* | $185 | $- | $60 | $245 |
| Lior Vider*<br> Director* | $30 | $- | $18 | $48 |

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(1) Share-based compensation includes the cost of our non-cash share-based compensation in 2025.

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***Employment and Services Agreements with Executive Officers***

We have entered into written employment agreements and/or consulting agreements with each of our executive officers. All of these agreements contain customary provisions regarding noncompetition, confidentiality of information and assignment of inventions. However, the enforceability of the noncompetition provisions may be limited under applicable law. Most of these agreements are terminable by either party upon 30 days' prior written notice. However, a longer 90 day notice period is required with respect to each of our executive officers. In addition, we have entered into agreements with each executive officer and director pursuant to which we have agreed to indemnify each of them up to a certain amount and to the extent that these liabilities are not covered by directors and officers insurance. Members of our senior management are eligible for bonuses each year, subject to a pre-determined target-based bonus plan, which is usually set during the first quarter of each calendar year following the recommendation of our compensation committee and the approval of our Board of Directors. The annual bonuses are payable upon meeting objectives and targets that are set by our Chief Executive Officer and compensation committee and approved annually by our Board of Directors.

For a description of the terms of our options and option plans, see Item 6.C. "Board Practices – Equity Incentive Plans" below.

As required by the Companies Law, our compensation committee and Board of Directors approved, and recommended to our shareholders to approve, amended terms of compensation of our Chief Executive Officer, Mr. Oz Adler, our Chairman of the Board of Directors, Mr. Itschak Shrem (former President), and our President, Mr. Amitay Weiss (former Chairman of the Board of Directors), as set forth below. Such terms are in line with our Compensation Policy and were approved by our shareholders on February 10, 2022. Our Compensation Policy was re-approved by our shareholders in accordance with the Israeli Companies Law, at the annual meeting that was held on June 26, 2025.

● <u>President and Chairman of the Board of Directors</u> - a monthly fee in the amount of NIS 52,500 (approximately $14,919) and an annual target bonus of up to six monthly salaries, or eight in the case of overachievement.

● <u>Chief Executive Officer</u> - a monthly fee in the amount of NIS 66,000 (approximately $18,755) and an annual target bonus of up to six monthly salaries, or eight in the case of overachievement, plus applicable pension, retirement and other similar benefits.

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***Directors' Service Contracts***

We do not have written agreements with any director providing for benefits upon the termination of his/her employment with us.

**C. Board Practices** 

**Corporate Governance Practices**

As an Israeli company, we are subject to various corporate governance requirements under the Companies Law. However, pursuant to regulations promulgated under the Companies Law, companies with shares traded on certain U.S. stock exchanges, including the Nasdaq, may, subject to certain conditions, "opt out" from the requirements to appoint external directors and related rules concerning the composition of the audit committee and compensation committee of the board of directors, other than the gender diversification rule, which requires the appointment of a director from the other gender if, at the time a director is appointed, all members of the board of directors are of the same gender. In accordance with these regulations, following our listing on the Nasdaq, in January 2022, we elected to "opt out" from these requirements of the Companies Law. Under these regulations, the exemptions from such Companies Law requirements will continue to be available to us so long as: (i) we do not have a "controlling shareholder", as such term is defined under the Companies Law, (ii) our shares are traded on certain U.S. stock exchanges, including the Nasdaq, and (iii) we comply with the director independence requirements and the audit committee and compensation committee composition requirements under U.S. laws, including the rules of the applicable exchange, that are applicable to U.S. domestic issuers.

We are a "foreign private issuer", as such term is defined in Rule 405 under the Securities Act. As a foreign private issuer we are permitted to comply with Israeli corporate governance practices instead of the corporate governance rules of Nasdaq, provided that we disclose which requirements we are not following and the equivalent Israeli requirement. As a foreign private issuer, we are exempt under the Exchange Act from, among other things, the rules prescribing the furnishing and content of proxy statements and our principal shareholders are exempt from the reporting provisions contained in Section 16 of the Exchange Act. Further, our officers, directors and principal shareholders are exempt from the 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 periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act.

For more information regarding our corporate governance practices and foreign private issuer status, see "Item 16.G Corporate Governance" below.

**Board of Directors**

Our Board of Directors presently consists of seven members. Nasdaq listing standards require that a majority of our Board of Directors be independent. These standards provide, among other things, that a person will be considered an independent director if he or she is not an officer of the Company and is, in the view of our board of directors, free of any relationship that would interfere with the exercise of independent judgment. We believe that Mr. Vider, Ms. Sidi, Mr. Ben Shay, Mr. Revach and Mr. Dayan are all currently considered "independent" for purposes of the Nasdaq rules. As such, our Board of Directors is comprised of a majority of independent directors as such term is defined in the Nasdaq rules. Our amended and restated articles of association provide that the number of directors shall be set by the general meeting of the shareholders provided that it will consist of not less than three and not more than 12 directors. Pursuant to the Companies Law, the overall planning and management of our business is vested in our Board of Directors. Our Board of Directors may exercise all powers and may take all actions that are not specifically granted to our shareholders or to management. Our executive officers are responsible for our day-to-day management and have individual responsibilities established by our Board of Directors. Our Chief Executive Officer is appointed by, and serves at the discretion of, our Board of Directors. All other executive officers are appointed by the Board of Directors or by our Chief Executive Officer, provided that he was authorized by the Board of Directors to do so. Their terms of employment are subject to the approval of our Board of Directors' Compensation Committee (see "-Compensation Committee") and of the Board of Directors (and in case the terms are not compatible with the provisions of the compensation policy, to our shareholders' approval as well), and are subject to the terms of any applicable employment agreements that we may enter into with them.

Our directors are divided into three classes with staggered three-year terms. Each class of directors consists, as nearly as possible, of one third of the total number of directors constituting the entire board of directors. At each annual general meeting of our shareholders, the election or re-election of directors following the expiration of the term of office of the directors of that class of directors is for a term of office that expires on the third annual general meeting following such election or re-election, such that at each annual general meeting the term of office only one class of directors will expire. Each director holds office until the annual general meeting of our shareholders for the year in which his or her term expires and until his or her successor is duly appointed, unless the tenure of such director expires earlier pursuant to the Companies Law upon the occurrence of certain events or unless removed from office by a vote of the holders of at least 65% of the total voting power of our shareholders at a general meeting of our shareholders in accordance with our amended and restated articles of association.

Our directors are divided among the three classes as follows:

● the Class I directors consist of Ms. Liat Sidi and Mr. Amnon Ben Shay, and their terms will expire at our annual general meeting of shareholders to be held in 2027;

● the Class II directors consist of Mr. Alon Dayan, Mr. Moshe Revach and Mr. Lior Vider and their terms will expire at our annual general meeting of shareholders to be held in 2028; and

● the Class III directors consist of Mr. Amitay Weiss and Mr. Itschak Shrem and their terms will expire at our annual general meeting of shareholders to be held in 2026.

In addition, our amended and restated articles of association allow our Board of Directors to appoint directors to fill vacancies on our Board of Directors or in addition to the acting directors (subject to the limitation on the number of directors and their qualifications), until the next general meeting in which directors may be appointed or such appointment terminated.

Under the Companies Law, nominations for directors may be made by any shareholder holding at least 5% of our outstanding voting power. However, any such shareholder may make such a nomination only if a written notice of such shareholder's intent to make such nomination has been given to our Board of Directors. Any such notice must include certain information, a description of all arrangements between the nominating shareholder and the proposed director nominee(s) and any other person pursuant to which the nomination(s) are to be made by the nominating shareholder, the consent of the proposed director nominee(s) to serve as our director(s) if elected and a declaration signed by the nominee(s) declaring that there is no limitation under the Companies Law preventing their election and that all of the information that is required to be provided to us in connection with such election under the Companies Law has been provided.

Under the Companies Law, our Board of Directors must determine the minimum number of directors who are required to have accounting and financial expertise. Our Board of Directors has determined that the minimum number of our directors of who are required to have accounting and financial expertise is one.

Our Board of Directors is required to elect one director to serve as the Chairman of the Board of Directors to preside at the meetings of the Board of Directors and may also remove that director as Chairman. Pursuant to the Companies Law, neither the chief executive officer nor any of his or her relatives is permitted to serve as the Chairman of the Board of Directors, and a company may not (subject to a certain time-limited exemption, as described below) vest the Chairman or any of his or her relatives with the chief executive officer's authorities. In addition, a person who reports, directly or indirectly, to the chief executive officer may not serve as the Chairman of the Board of Directors; the Chairman may not be vested with authorities of a person who reports, directly or indirectly, to the chief executive officer; and the Chairman may not serve in any other position in the company or a controlled company, but he or she may serve as a director or chairman of a controlled company. However, and notwithstanding the foregoing, the Companies Law permits the shareholders of a company to determine, for periods not exceeding three years from each such determination, that the Chairman or his or her relative may serve as chief executive officer or be vested with the chief executive officer's authorities, and that the chief executive officer or his or her relative may serve as Chairman or be vested with the Chairman's authorities. Such determination of a company's shareholders requires either: (1) the approval of at least the majority of the shares of those shareholders present and voting on the matter (other than controlling shareholders and those having a personal interest in the determination); or (2) that the total number of shares opposing such determination does not exceed 2% of the total voting power in the company.

The Board of Directors may, subject to the provisions of the Companies Law, delegate any or all of its powers to committees of the Board of Directors, and it may, from time to time, revoke such delegation or alter the composition of any such committees, subject to certain limitations. Unless otherwise expressly provided by the Board of Directors, the committees shall not be empowered to further delegate such powers. The composition and duties of our audit committee and compensation committee, are described below. See "-Committees of the Board of Directors" below.

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***Role of Board of Directors in Risk Oversight Process***

The Board of Directors oversees how management monitors compliance with our risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by us. Our Board of Directors encourages management to promote a culture that incorporates risk management into our corporate strategy and day-to-day business operations. Management discusses strategic and operational risks at regular management meetings, and conducts specific strategic planning and review sessions that include a focused discussion and analysis of the risks we face. Senior management reviews these risks with the Board of Directors focusing on particular business functions, operations or strategies, and presents the steps taken by management to mitigate or eliminate such risks. The Board of Directors is assisted in its oversight role by an internal auditor. The internal auditor undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to our audit committee. See "-Committees of the Board of Directors-Internal Auditor" below.

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***Leadership Structure of the Board of Directors***

In accordance with the Companies Law and our amended and restated articles of association, our Board of Directors is required to appoint one of its members to serve as Chairman of the Board of Directors. Our Board of Directors has appointed Mr. Amitay Weiss to serve as Chairman of the Board of Directors, effective January 10, 2022, and subsequently further named as the President of the Company, Mr. Itschak Shrem, the authorities of the Chairman of the Board of Directors as well.

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***Alternate Directors***

Our amended and restated articles of association provide, consistent with the Companies Law, that any director, and with respect to external directors (to the extent required under applicable law - see the description of the External Directors Relief Resolution under "-External Directors" below) - only subject to certain preconditions, may appoint another person to serve as his alternate director, provided such person has the qualifications prescribed under the Companies Law to be appointed and to serve as a director and is not already serving as a director or an alternate director of the company. The term of an alternate director may be terminated at any time by the appointing director and automatically terminates upon the termination of the term of the appointing director. An alternate director has the same rights and responsibilities as a director. To date there are no alternate director appointments in effect.

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***External Directors***

Under the Companies Law, companies incorporated under the laws of the State of Israel that are "public companies" are required to appoint at least two external directors who meet the qualification requirements under the Companies Law. Pursuant to regulations promulgated under the Companies Law, companies with shares traded on certain U.S. stock exchanges, including Nasdaq, which do not have a "controlling shareholder," may, subject to certain conditions, "opt out" from the Companies Law requirements to appoint external directors and related Companies Law rules concerning the composition of the audit committee and compensation committee of the board of directors (other than the gender diversification rule under the Companies Law, which requires the appointment of a director from the other gender if at the time a director is appointed all members of the board of directors are of the same gender). In accordance with these regulations, in January 2022, following our listing on Nasdaq, our Board of Directors elected to "opt out" from the Companies Law requirement to appoint external directors and related Companies Law rules concerning the composition of the audit committee and compensation committee of our board of directors.

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***Fiduciary Duties of Office Holders***

The Companies Law imposes a duty of care and a duty of loyalty on all office holders of a company. "Office holders" includes the chief executive officer, general manager, chief business manager, deputy general manager, vice general manager, any other person assuming the responsibilities of any of the above positions regardless of that person's title, and a director, or a manager directly subordinate to the chief executive officer or general manager.

The duty of care requires an office holder to act with the level of care with which a reasonable office holder in the same position would have acted under the same circumstances. The duty of care of an office holder includes a duty to use reasonable means to obtain:

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

● all other important information pertaining to these actions.

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

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

● refrain from any action that constitutes competition with the company's business;

● refrain from exploiting any business opportunity of the company to receive a personal gain for himself or others; and

● disclose to the company any information or documents relating to the company's affairs which the office holder has received due to his position as an office holder.

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

 

*General*

Under the Companies Law, we may approve an action by an office holder from which the office holder would otherwise have to refrain, as described above, if:

● the office holder acts in good faith and the act or its approval does not cause harm to the company; and

● the office holder disclosed the nature of his or her interest in the transaction (including any significant fact or document) to the company at a reasonable time before the company's approval of such matter.

 

 

*Disclosure of Personal Interests of an Office Holder*

The Companies Law requires that an office holder disclose to the company, promptly, and, in any event, not later than the board meeting at which the transaction is first discussed, any direct or indirect personal interest that he or she may have and all related material information known to him or her relating to any existing or proposed transaction by the company.

A "personal interest" includes the personal interest of a person for whom the office holder holds a voting proxy or the personal interest of the office holder with respect to his or her vote on behalf of a person for whom he or she holds a proxy even if such shareholder has no personal interest in the matter.

If the transaction is an extraordinary transaction, the office holder must also disclose any personal interest held by:

● the office holder's relatives; or

● any corporation in which the office holder or his or her relatives holds 5% or more of the shares or voting rights, serves as a director or general manager or has the right to appoint at least one director or the general manager.

An office holder is not, however, obliged 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 Companies Law, an extraordinary transaction is a transaction:

● not in the ordinary course of business;

● not on market terms; or

● that is likely to have a material effect on the company's profitability, assets or liabilities.

The Companies Law does not specify neither to who within us nor the manner in which required disclosures are to be made. We require our office holders to make such disclosures to our Board of Directors.

Under the Companies Law, once an office holder complies with the above disclosure requirement, the board of directors may approve a transaction between the company and an office holder, or a third party in which an office holder has a personal interest, unless the articles of association provide otherwise and provided that the transaction is in the company's interest and is performed by the office holder in good faith. If the transaction is an extraordinary transaction, first the audit committee and then the board of directors, in that order, must approve the transaction. Under specific circumstances, shareholder approval may also be required. Any director (and any person, in general) who has a personal interest in an extraordinary transaction, which is considered at a meeting of the board of directors or the audit committee, may not be present at this meeting or vote on this matter, unless the chairman of the relevant committee or board of directors determines that he or she should be present in order to present the transaction that is subject to approval. If a majority of the board of directors or the audit committee, as the case may be, has a personal interest in the approval of a transaction, then all directors may participate in discussions of the audit committee or the board of directors (as applicable) on such transaction and the voting on approval thereof, but shareholder approval is also required for such transaction.

Under the Companies Law, all arrangements as to compensation and indemnification or insurance of office holders require approval of the compensation committee and board of directors, and compensation of office holders who are directors must be also approved, subject to certain exceptions, by the shareholders, in that order. If shareholders of a company do not approve the compensation terms of office holders, other than directors, the compensation committee and board of directors may override the shareholders' decision, subject to certain conditions.

 

 

*Disclosure of Personal Interests of a Controlling Shareholder*

Under the 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 or the compensation committee, as the case may be, 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, the 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.

In addition, any extraordinary transaction with a controlling shareholder or in which a controlling shareholder has a personal interest with a term of more than three years requires the abovementioned approval every three years; however, such transactions not involving the receipt of services or compensation can be approved for a longer term, provided that the audit committee determines that such longer term is reasonable under the circumstances.

Pursuant to regulations promulgated under the Companies Law, certain transactions with a controlling shareholder or his or her relative, or with directors, that would otherwise require approval of a company's shareholders may be exempt from shareholder approval upon certain determinations of the audit or compensation committee and board of directors.

The Companies Law requires that every shareholder that participates, in person, by proxy or by voting instrument, in a vote regarding a transaction with a controlling shareholder, must indicate in advance or in the ballot whether or not that shareholder has a personal interest in the vote in question. Failure to so indicate will result in the invalidation of that shareholder's vote.

The term "controlling shareholder" is defined in the Companies Law as a shareholder with the ability to direct the activities of the company, other than by virtue of being an office holder. A shareholder is presumed to be a controlling shareholder if the shareholder holds 50% or more of the voting rights in a company or has the right to appoint the majority of the directors of the company or its general manager. The definition a "controlling shareholder" is deemed to include any shareholder that holds 25% or more of the voting rights in a company if no other shareholder holds more than 50% of the voting rights in the company. For the purpose of determining the holding percentage stated above, two or more shareholders who have a personal interest in a transaction that is brought for the company's approval are deemed as joint holders. According to the foregoing, the Companies Law recognizes a situation where there exists a "controlling shareholder" regarding a particular matter or in relation to a particular transaction, although such shareholder would not be considered to have a controlling interest on an ongoing basis or in any other case.

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***Duties of Shareholders***

Under the 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:

● amendment of the articles of association;

● increase in the company's authorized share capital;

● merger; 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 oppressing and 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 oppression of 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 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.

**Committees of the Board of Directors**

Our Board of Directors has established two standing committees, both of which (the audit committee and the compensation committee) are mandatory (and to date comprised of the same members and combined into one functional committee which resides as a unified committee). In addition, occasionally our Board of Directors may form sub-committees for certain matters on an ad hoc basis, such as a pricing committee or a nomination and corporate governance committee, with advisory powers only, operating under a framework and guidelines as outlined and defined in advance by our Board of Directors.

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***Audit Committee***

 

*Companies Law Requirements*

Under the Companies Law, we are required to appoint an audit committee.

 

*Listing Requirements*

Under the corporate governance rules of Nasdaq, we are required to maintain an audit committee consisting of at least three independent directors, each of whom is financially literate and one of whom has accounting or related financial management expertise.

Our audit committee, acting pursuant to a written charter, consists of Mr. Vider, Mr. Ben Shay and Mr. Dayan. Mr. Ben Shay serves as chairperson of our audit committee. All members of our audit committee meet the requirements for financial literacy under the applicable rules and regulations of the SEC and the corporate governance rules of Nasdaq. Our Board of Directors has determined that Amnon Ben Shay is an audit committee financial expert as defined by the SEC rules and has the requisite financial experience as defined by the corporate governance rules of Nasdaq.

 

*Audit Committee Role*

Under the Companies Law, our audit committee is responsible for:

● determining whether there are deficiencies in the business management practices of our company, and making recommendations to the Board of Directors to improve such practices;

● determining whether to approve certain related party transactions (including transactions in which an office holder has a personal interest and whether such transaction is extraordinary or material under Companies Law) (see "-Approval of Related Party Transactions under Israeli Law");

● examining our internal controls and internal auditor's performance, including whether the internal auditor has sufficient resources and tools to dispose of its responsibilities;

● examining the scope of our auditor's work and compensation and submitting a recommendation with respect thereto to our Board of Directors or shareholders, depending on which of them is considering the appointment of our auditor;

● establishing procedures for the handling of employees' complaints as to the management of our business and the protection to be provided to such employees;

● determining whether certain acts of an office holder not in accordance with his or her fiduciary duty owed to the company are extraordinary or material and to approve such acts and certain related party transactions (including transactions in which an office holder has a personal interest) and whether such transaction is extraordinary or material under the Companies Law (see "-Approval of Related Party Transactions Under Israeli Law");

● deciding whether to approve and to establish the approval process (including by tender or other competitive proceedings) for certain transactions with a controlling shareholder or in which a controlling shareholder has a personal interest; and

● determining the process of approving of transactions that are not negligible, including determining the types of transactions that will be subject to the approval of the audit committee.

We have adopted an audit committee charter setting forth among others, the responsibilities of the audit committee consistent with the rules of the SEC and Nasdaq listing rules, including, among others, the following:

● considering and making recommendations to the Board of Directors on our financial statements, reviewing and discussing the financial statements and presenting its recommendations with respect to the financial statements to the Board of Directors prior to the approval of the financial statements by our Board of Directors;

● oversight of our independent registered public accounting firm and recommending the engagement, compensation or termination of engagement of our independent registered public accounting firm to the Board of Directors in accordance with Israeli law;

● recommending the engagement or termination of the person filling the office of our internal auditor, reviewing the services provided by our internal auditor and reviewing effectiveness of our system of internal control over financial reporting;

● recommending the terms of audit and non-audit services provided by the independent registered public accounting firm for pre-approval by our Board of Directors;

● reviewing and monitoring, if applicable, legal matters with significant impact, reviewing regulatory authorities' findings, receiving reports regarding irregularities and legal compliance, acting according to "whistleblower policy" and recommending to our Board of Directors if so required, and overseeing our policies and procedures regarding compliance with applicable financial and accounting related standards, rules and regulations; and

● supervising the manner we implement the requirements of the Privacy Protection Law, 1981 and the Privacy Protection Regulations (Data Security), 2017.

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***Compensation Committee***

 

*Companies Law Requirements*

Under the Companies Law, the board of directors of any public company must establish a compensation committee. The compensation committee must be comprised of at least three directors.

 

*Listing Requirements*

Our compensation committee is acting pursuant to a written charter, and consists of Mr. Vider, Mr. Ben Shay and Mr. Dayan. Mr. Ben Shay is the Chairperson of the compensation committee. Our Board of Directors has determined that each member of our compensation committee is independent under the corporate governance rules of Nasdaq, including the additional independence requirements applicable to the members of a compensation committee.

 

*Compensation Committee Role*

Our compensation committee reviews and recommends to our Board of Directors: (1) the annual base compensation of our executive officers and directors; (2) annual incentive bonus, including the specific goals and amount; (3) equity compensation; (4) employment agreements, severance arrangements, and change in control agreements/provisions; (5) retirement grants and/or retirement bonuses; and (6) any other benefits, compensation, compensation policies or arrangements.

The duties of the compensation committee include the recommendation to the company's board of directors of a policy regarding the terms of engagement of office holders, to which we refer as a Compensation Policy. The Compensation Policy must be adopted by the company's Board of Directors, after considering the recommendations of the Compensation Committee. The Compensation Policy is then brought for approval by our shareholders and is subject to special majority requirements. On June 26, 2025, our shareholders re-approved our current Compensation Policy, which unless amended and restated earlier, shall remain in effect until June 25, 2028. The duties of the compensation committee also include the administration of the Company's policy for recovery of erroneously awarded compensation.

 

*Compensation Policy*

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 be approved (or reapproved) at least every three years, and 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 office holder (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 other employees of the company, including those employed through manpower companies;

● 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. The Compensation Policy must be adopted by the company's board of directors, after considering the recommendations of the compensation committee. The Compensation Policy is then brought for approval by our shareholders, which requires the approval of a special majority. See "-Approval of Related Party Transactions under Israeli law" for additional information. Under the Companies Law, the board of directors may adopt the Compensation Policy even if it is not approved by the shareholders, provided that after the shareholders oppose the approval of such policy, the compensation committee and the board of directors revisit the matter and determine that adopting the Compensation Policy would be in the best interests of the company. 26, 2025, our shareholders approved our new Compensation Policy, which unless amended and restated prior, shall remain in effect until June 25, 2028.

The Compensation Committee is responsible for (1) recommending the Compensation Policy to a company's Board of Directors for its approval (and subsequent approval by our shareholders) and (2) duties related to the compensation policy and to the compensation of a company's office holders as well as functions previously fulfilled by a Company's Audit Committee with respect to matters related to approval of the terms of engagement of office holders, including:

● recommending whether a compensation policy should continue in effect, if the then-current policy has a term of greater than three years (approval of either a new compensation policy or the continuation of an existing compensation policy must in any case occur every three years);

● recommending to the board of directors periodic updates to the compensation policy;

● assessing implementation of the compensation policy; and

● determining whether the compensation terms of the chief executive officer of the company need not be brought to approval of the shareholders.

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***Internal Auditor***

Under the Companies Law, the Board of Directors of an Israeli public company must also appoint an internal auditor nominated and supervised by the audit committee. Our internal auditor is Mr. Daniel Shapira, who has been serving as our internal auditor since March 2006. Mr. Shapira is a Certified Public Accountant and holds a B.A. degree in Economics and Accounting from Bar-Ilan University, Israel.

The role of the internal auditor is to examine whether a company's actions comply with the law and proper business procedure. Our Chairman acts as the internal auditor's organizational supervisor. The internal auditor will submit his internal auditor's work plan for the approval of our audit committee. The internal auditor may not be an "interested party" or office holder, or a relative of any interested party or office holder, and may not be a member of the company's independent accounting firm or its representative. The Companies Law defines an interested party as a holder of 5% or more of the shares or voting rights of a company, any person or entity that has the right to nominate or appoint at least one director or the general manager of the company or any person who serves as a director or as the general manager of a company. Our internal auditor is not our employee, but the managing partner of a firm which specializes in internal auditing.

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***Remuneration of Directors***

Under the Companies Law, remuneration of directors is subject to the approval of the compensation committee, thereafter by the board of directors and thereafter by the general meeting of the shareholders. In case the remuneration of the directors is in accordance with regulation applicable to remuneration of the external directors then such remuneration shall be exempt from the approval of the general meeting.

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***Insurance***

Under the Companies Law and our amended and restated articles of association, a company may obtain insurance for any of its office holders for:

● a breach of his or her duty of care to the company or to another person, including a breach arising out of the negligent conduct of the office holder;

● a breach of his or her duty of loyalty to the company, provided that the office holder acted in good faith and had reasonable cause to assume that his or her act would not prejudice the company's interests;

● a financial liability imposed upon him or her in favor of another person concerning an act performed by such office holder in his or her capacity as an officer holder;

● any other insurable action in accordance with the Companies Law;

● expenses incurred by an office holder relating to an administrative enforcement proceeding conducted with respect to such office holder including reasonable litigation expenses and attorneys' fees; and

● payments to the party injured by the violation, in accordance with the Securities Law.

We currently have liability insurance providing total coverage of $5 million per claim and in the aggregate for the benefit of all of our directors and officers and company coverage for securities claims. We also have an excess Side A difference in conditions policy providing a total coverage of $2.5 million per claim and in the aggregate for the benefit of all of our directors and officers for claims against them, which may operate as a primary coverage in certain cases, subject to policy terms and conditions.

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***Indemnification***

The Companies Law and our amended and restated articles of association provide that we may indemnify an office holder against:

● a financial liability imposed on him or her in favor of another person by any judgment concerning an act performed in his or her capacity as an office holder, including a settlement or arbitrator's award approved by a court; However, if an undertaking to indemnify an office holder with respect to such liability is provided in advance, then such an undertaking must be limited to events which, in the opinion of the board of directors, can be foreseen based on a company's activities when the undertaking to indemnify is given, and to an amount or according to criteria determined by the board of directors as reasonable under the circumstances, and such undertaking must detail the abovementioned foreseen events and amount or criteria;

● reasonable litigation expenses, including attorneys' fees, incurred by the office holder: (i) as a result of an investigation or proceeding instituted against him or her by an authority authorized to conduct such investigation or proceeding, provided that (a) no indictment (as defined in the Companies Law) was filed against such office holder as a result of such investigation or proceeding; and (b) no financial liability as a substitute for the criminal proceeding (as defined in the Companies Law) was imposed upon him or her as a result of such investigation or proceeding, or, if such financial liability was imposed, it was imposed with respect to an offense that does not require proof of criminal intent; and (ii) in connection with a monetary sanction;

● reasonable litigation expenses, including attorneys' fees, expended by the office holder or charged to him or her by a court relating to an act performed in his or her capacity as an office holder, in connection with: (1) proceedings that the company institutes, or that another person institutes on the company's behalf, against him or her; (2) a criminal charge of which he or she was acquitted; or (3) a criminal charge for which he or she was convicted for a criminal offense that does not require proof of criminal thought;

● expenses incurred by an office holder relating to an administrative enforcement proceeding conducted with regard to such office holder, including reasonable litigation expenses and including attorneys' fees;

● payment to the party injured by the violation; and

● liability or expense otherwise permitted as an indemnification by the Companies Law.

Our amended and restated articles of association allow us to indemnify our office holders up to a certain amount. The Companies Law also permits a company to undertake in advance to indemnify an office holder, provided that if such indemnification relates to financial liability imposed on him or her, as described above, then the undertaking should be limited:

● to categories of events that the board of directors determines are likely to occur in light of the operations of the company at the time that the undertaking to indemnify is made; and

● in amount or criterion determined by the board of directors, at the time of the giving of such undertaking to indemnify, to be reasonable under the circumstances.

We have entered into indemnification agreements, with each of our directors and with certain members of our senior management. Each such indemnification agreement provides the office holder with indemnification to the fullest extent permitted under applicable law and up to a certain amount, and including with respect to liabilities resulting from our initial public offering in the United States and any other subsequent public offerings, and to the extent that the directors and officers insurance do not cover these liabilities.

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***Exculpation***

Under the Companies Law, an Israeli company may not exculpate an office holder from liability for a breach of his or her duty of loyalty, but may exculpate in advance an office holder from his or her liability to the company, in whole or in part, and for damages caused to the company as a result of a breach of his or her duty of care (other than in relation to distributions), but only if a provision authorizing such exculpation is included in its articles of association. A company may not exculpate a director from liability arising out of a prohibited dividend or distribution to shareholders. Our amended and restated articles of association provide that we may exculpate any office holder from liability to us to the fullest extent permitted by law.

We have entered into exculpation agreements with each of our current directors and executive officers undertaking to exculpate and release our office holders from any and all liability to us related to any breach by them of their duty of care to us to the fullest extent permitted by law and including with respect to liabilities resulting from our initial public offering in the United States and any other subsequent public offerings.

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***Limitations***

The Companies Law provides that we may not exculpate or indemnify an office holder nor enter into an insurance contract that would provide coverage for any liability incurred as a result of any of the following: (1) a breach by the office holder of his or her duty of loyalty unless (in the case of indemnity or insurance only, but not exculpation) the office holder acted in good faith and had a reasonable basis to believe that the act would not prejudice us; (2) a breach by the office holder of his or her duty of care if the breach was carried out intentionally or recklessly (as opposed to merely negligently); (3) any action taken or omission committed with the intent to derive an illegal personal benefit; or (4) any fine or forfeit levied against the office holder.

**Equity Incentive Plans**

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***Israeli Share Option Plan (2015); Israeli Share Option Plan (2005)***

In July 2005, we adopted the Israeli Share Option Plan (2005), or the 2005 Plan, which was in force for a period of 10 years. Upon the expiration of the 2005 Plan, we adopted the Israeli Share Option Plan (2015), or the 2015 Plan. There are no options outstanding under our 2005 Plan.

We no longer grant any awards under the 2015 Plan as it was superseded by the 2023 Share Incentive Plan, or the 2023 Plan, although previously granted awards remain outstanding and continue to be governed by the terms of the 2015 Plan. Ordinary shares subject to outstanding options granted under the 2015 Plan that expire or become unexercisable without having been exercised in full will become available again for future grant under the 2023 Plan. Our board of directors, or a duly authorized committee of our board of directors administers the 2015 Plan.

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***2023 Share Incentive Plan***

The 2023 Plan was adopted by our board of directors on December 28, 2023. The 2023 Plan provides for the grant of equity-based incentive awards to our employees, directors, office holders, service providers and consultants in order to incentivize them to increase their efforts on behalf of the Company and to promote the success of the Company's business. As of April 28, 2026, 105,025 Ordinary Shares were reserved and available for issuance under the 2023 Plan.

 

*Shares Available for Grants.* The maximum number ordinary shares available for issuance under the 2023 Plan is equal to the sum of (i) 2,000, 0000 shares and (ii) any shares subject to awards under the 2015 Plan which have expired, or were cancelled, terminated, forfeited or settled in cash in lieu of issuance of shares or became unexercisable without having been exercised, provided that no more than 112,643 Ordinary Shares may be issued upon the exercise of Incentive Stock Options. If permitted by our board of directors, shares tendered to pay the exercise price or withholding tax obligations with respect to an award granted under the 2023 Plan or the 2015 Plan may again be available for issuance under the 2023 Plan, unless determined otherwise by the Board. Our board of directors may also reduce the number of ordinary shares reserved and available for issuance under the 2023 Plan in its discretion.

 

*Administration.* Our board of directors, or a duly authorized committee of our board of directors, or the administrator, will administer the 2023 Plan. Under the 2023 Plan, the administrator has the authority, subject to applicable law, to interpret the terms of the 2023 Plan and any award agreements or awards granted thereunder, designate recipients of awards, determine and amend the terms of awards, including the exercise price of an option award, the fair market value of an ordinary share, the time and vesting schedule applicable to an award or the method of payment for an award, accelerate or amend the vesting schedule applicable to an award, prescribe the forms of agreement for use under the 2023 Plan and take all other actions and make all other determinations necessary for the administration of the 2023 Plan.

The administrator also has the authority to approve the conversion, substitution, cancellation or suspension under and in accordance with the 2023 Plan of any or all option awards or ordinary shares, and the authority to modify option awards to eligible individuals who are foreign nationals or are individuals who are employed outside Israel to recognize differences in local law, tax policy or custom, in order to effectuate the purposes of the 2023 Plan but without amending the 2023 Plan.

The administrator also has the authority to amend and rescind rules and regulations relating to the 2023 Plan or terminate the 2023 Plan at any time before the date of expiration of its ten year term.

**D. Employees.**

On December 31, 2023, we had 3 full-time employees. On December 31, 2024, we had 2 full-time employees. On December 31, 2025, we had 3 full-time employees, our Chief Executive Officer, who is also our Chief Financial Officer, our Chief Technologies Officer, and our bookkeeper.

None of our current employees and officeholders is represented by labor unions or covered by collective bargaining agreements. We believe that we maintain good relations with all of our employees. However, in Israel, we are subject to certain Israeli labor laws, regulations and national labor court precedent rulings, as well as certain provisions of collective bargaining agreements applicable to us by virtue of extension orders issued in accordance with relevant labor laws by the Israeli and Industry of Economy and which apply such agreement provisions to our employees even though they are not part of a union that has signed a collective bargaining agreement.

**E. Share Ownership.**

See "Item 7.A. Major Shareholders" below.

**F. Action to Recover Erroneously Awarded Compensation**

Not applicable.

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

**A. Major Shareholders** 

The following table sets forth information regarding beneficial ownership of our ordinary shares as of April 28, 2026 by:

● each person, or group of affiliated persons, known to us to be the beneficial owner of more than 5% of our outstanding ordinary shares;

● each of our directors, and executive officers; and

● all of our directors, and executive officers as a group.

Except as indicated in footnotes to this table, we believe that the shareholders named in this table have sole voting and investment power with respect to all shares shown to be beneficially owned by them, based on information provided to us by such shareholders. Unless otherwise noted below, each beneficial owner's address is c/o SciSparc Ltd., 20 Raul Wallenberg Street, Tower A, Tel Aviv, 6971916 Israel.

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| | | |
|:---|:---|:---|
| **Holders of more than 5% of our ordinary shares** | **Number of<br> Ordinary<br> Shares<br> Beneficially<br> Owned<sup>(1)</sup>** | **Percent of<br> Class<sup>(2)</sup>** |
| Kfir Silberman | 2559735<sup>(3)</sup> | 9.99% |
| **<u>Officers and Directors who are not 5% holders:</u>** |  |  |
| Itschak Shrem | 3560<sup>(4)</sup> | \* |
| Amitay Weiss | 3560<sup>(5)</sup> | \* |
| Oz Adler | 3560<sup>(6)</sup> | \* |
| Dr. Adi Zuloff-Shani | 1784<sup>(7)</sup> | \* |
| Amnon Ben Shay | 1147<sup>(8)</sup> | \* |
| Alon Dayan | 1147<sup>(9)</sup> | \* |
| Liat Sidi | 1147<sup>(10)</sup> | \* |
| Lior Vider | 1147<sup>(11)</sup> | \* |
| Moshe Revach | 1147<sup>(12)</sup> | \* |
| **All directors and executive officers as a group (9 persons)** | 18199 | 3.17% |

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\* Less than 1%

(1) Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting
or investment power with respect to securities. Ordinary Shares relating to options currently exercisable or exercisable within 60 days
of the date of this table are deemed outstanding for computing the percentage of the person holding such securities but are not deemed
outstanding for computing the percentage of any other person. Except as indicated by footnote, and subject to community property laws
where applicable, the persons named in the table above have sole voting and investment power with respect to all shares shown as beneficially
owned by them.

(2) The percentages shown are based on 573,243 ordinary shares issued and outstanding as
of April 28, 2026, plus ordinary shares relating to restricted share units, or RSUs, options and warrants currently exercisable or vesting
within 60 days of April 28, 2026, which are deemed outstanding for computing the percentage of the person holding such securities but
are not deemed outstanding for computing the percentage of any other person.

(3) Based on information provided to the Company and includes (i) up to
2,040,964 Ordinary Shares issuable upon the conversion of the initial promissory note held by L.I.A. Pure Capital Ltd., (ii) up to 405,728
Ordinary Shares issuable upon the exercise of the warrants held by L.I.A. Pure Capital Ltd. and (iii) up to 113,043 Ordinary Shares issuable
upon the exercise of the pre-funded warrant held by Xylo. L.I.A. Pure Capital Ltd. is the sole shareholder of Xylo and Kfir Silberman
is the control person for L.I.A. Pure Capital Ltd. with voting and dispositive power over the Ordinary Shares held by L.I.A. Pure Capital
Ltd. The initial promissory note held by L.I.A. Pure Capital Ltd. includes a beneficial ownership limitation of 4.99% of the Company's
outstanding Ordinary Shares and the pre-funded warrant held by Xylo includes a beneficial ownership limitation of 9.99% of the Company's
outstanding Ordinary Shares. L.I.A. Pure Capital Ltd.'s address is 20 Raoul Wallenberg Street, Tel Aviv, Israel 6971916. The address
for Xylo is 20 Raoul Wallenberg Tel Aviv 6971917 Israel.

(4) Includes (i) 2,174 vested RSUs; (ii) 1,380 RSUs vesting within 60 days
of April 28, 2026; and (iii) options to purchase 6 Ordinary Shares at an exercise price of $31,941 per share, and an expiration date of
January 3, 2028.

(5) Includes (i) 2,174 vested RSUs; (ii) 1,380 RSUs vesting within 60 days
of April 28, 2026; and (iii) options to purchase 6 Ordinary Shares at an exercise price of $31,941 per share and an expiration date of
January 3, 2028.

(6) Includes (i) 2,174 vested RSUs; (ii) 1,380 RSUs vesting within 60 days
of April 28, 2026; and (iii) options to purchase 6 Ordinary Shares at an exercise price of $31,941 per share and an expiration date of
January 3, 2028.

(7) Includes (i) 1,087 vested RSUs; (ii) 691 RSUs vesting within 60 days
of April 28, 2026; and (iii) options to purchase 6 Ordinary Shares at an exercise price of $31,941 per share and an expiration date of
January 3, 2028.

(8) Includes (i) 692 vested RSUs; (ii) 454 RSUs vesting within 60 days
of April 28, 2026; and (iii) options to purchase 1 Ordinary Shares at an exercise price of $31,941 per share and an expiration date of
January 3, 2028.

(9) Includes (i) 692 vested RSUs; (ii) 454 RSUs vesting within 60 days
of April 28, 2026; and (iii) options to purchase 1 Ordinary Shares at an exercise price of $31,941 per share and an expiration date of
January 3, 2028.

(10) Includes (i) 692 vested RSUs; (ii) 454 RSUs vesting within 60 days
of April 28, 2026; and (iii) options to purchase 1 Ordinary Shares at an exercise price of $31,941 per share and an expiration date of
January 3, 2028.

(11) Includes (i) 692 vested RSUs; (ii) 454 RSUs vesting within 60 days
of April 28, 2026; and (iii) options to purchase 1 Ordinary Shares at an exercise price of $31,941 per share and an expiration date of
January 3, 2028.

(12) Includes (i) 692 vested RSUs; (ii) 454 RSUs vesting within 60 days
of April 28, 2026; and (iii) options to purchase 1 Ordinary Shares at an exercise price of $31,941 per share and an expiration date of
January 3, 2028.

***Changes in Percentage Ownership by Major Shareholders***

In 2025, Daniel Nissim, Eli Zamir and Ronen Fatal decreased their percentage ownership from approximately 8.8% to 0%, as reflected in their Schedule 13G/A filed with the SEC on March 9, 2026, March 16, 2026 and March 16, 2026, respectively, reporting beneficial ownership as of December 31, 2025.

In 2025, there was an increase in the percentage ownership of Kfir Silberman (from 0% to 9.99%).

To our knowledge, other than as disclosed in the table above, our other filings with the SEC and this Annual Report, there has been no significant change in the percentage ownership held by any major shareholder over the course of 2025, 2024 and 2023.

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***Voting Rights***

No major shareholders listed above had or have voting rights with respect to their Ordinary Shares that are different from the voting rights of other holders of our Ordinary Shares.

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***Record Holders***

As of April 28, 2026, there were 27 holders of record of our Ordinary Shares, 8 of which have a registered address in the United States.

These numbers are not representative of the number of beneficial holders of our shares nor is it representative of where such beneficial holders reside, since many of these shares were held of record by brokers or other nominees.

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***Change in Control Arrangements***

We are not controlled by another corporation, by any foreign government or by any natural or legal persons except as set forth herein, and there are no arrangements known to us which would result in a change in control at a subsequent date.

**B. Related Party Transactions** 

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The following is a description of related-party transactions we have entered into since January 1, 2023, with any of the members of the board of directors, executive officers or holders of more than 5% of any class of our voting securities at the time of such transaction.

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***Employment Agreements***

We have entered into written employment agreements with Mr. Oz Adler, our Chief Executive Officer and Chief Financial Officer, and Dr. Adi Zuloff-Shani, our Chief Technologies Officer. Each of these agreements contains customary provisions regarding noncompetition, confidentiality of information and assignment of inventions. However, the enforceability of the noncompetition provisions may be limited under applicable law. These agreements are terminable by either party upon 30 days' prior written notice. In addition, we have entered into agreements with each executive officer and director pursuant to which we have agreed to indemnify each of them up to a certain amount and to the extent that these liabilities are not covered by directors and officers insurance. Members of our senior management are eligible for bonuses each year. The bonuses are payable upon meeting objectives and targets that are set by our Chief Executive Officer and approved annually by our Board of Directors that also set the bonus targets for our Chief Executive Officer. See Item 6.B. "Compensation-Employment and Service Agreements with Executive Officers" and see the descriptions of exculpation and indemnification agreements and directors and officers insurance arrangements in Item 6.A. "Directors and Senior Management" and Item 6.C. "Board Practices-Insurance," - "Indemnification" and "-Exculpation."

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***Options***

Since our inception, we have granted options to purchase our Ordinary Shares, and RSUs to our employees, officers, service providers and certain of our directors. Such option and RSU agreements and may contain acceleration provisions upon certain merger, acquisition, or change of control transactions. We describe our equity incentive plans under Item 6.E. "Share Ownership-Equity Incentive Plans." If the relationship between us and an executive officer or a director is terminated, except for cause (as defined in the various option plan agreements), options that are vested will generally remain exercisable for 90 days after such termination.

 ****

***Commercial Agreements***

On August 13, 2024, we entered into the License Agreement for the out-licensing of our SCI-160 program with Polyrizon. Pursuant to the License Agreement, we granted Polyrizon the Polyrizon License and received ordinary shares of Polyrizon, pre-funded warrants to purchase ordinary shares of Polyrizon, and common warrants to purchase ordinary shares of Polyrizon. On December 30, 2024, we entered into the Polyrizon Share Transfer Agreement and sold all of the Polyrizon ordinary shares and pre-funded warrants held by us, as well as approximately 75% Polyrizon common warrants to third parties, for aggregate consideration of $770,548. See Item 4.B. "*Business Overview - Polyrizon*" for additional information.

On April 1, 2025, we entered into a securities purchase agreement with Polyrizon, pursuant to which we participated in a private placement of Polyrizon and invested $100,000 (out of an aggregate investment of approximately $17 million), in exchange for ordinary shares and Series A warrants to purchase ordinary shares, of Polyrizon. In addition, we entered into an exchange agreement with Polyrizon, pursuant to which we exchanged existing ordinary share warrants of Polyrizon held by us for Series A warrants to purchase ordinary shares of Polyrizon.

 

*Nexera Technologies*

On February 23, 2023, we entered into the Wellution Sale Agreement with Nexera Technologies and KeepZone. See Item 5.B. "*Operating and Financial Review and Prospects - Liquidity and Capital Resources*" for additional information.

Mr. Oz Adler, our Chief Executive Officer and Chief Financial Officer, is the chairman of the board of directors of Nexera Technologies, Mr. Amitay Weiss, our President and Mr. Moshe Revach, a member of our board of directors, are both directors in Nexera Technologies.

 

*MitoCareX*

On February 25, 2025, we entered into the MitoCareX SPEA together with MitoCareX, the other Sellers, pursuant to which the Sellers will sell their stakes in MitoCareX to Nexentis, thereby resulting in MitoCareX becoming a wholly-owned subsidiary of Nexentis.

On October 22, 2025, the transactions contemplated by the MitoCareX SPEA were completed. In connection with the closing, we received $700,000 in cash, 63,300,000 common shares of Nexentis, 4,000,000 common share purchase warrants, and contingent rights entitling us to receive up to an additional 48,000,000 Nexentis common shares upon the achievement of specified milestones. Following the closing, we hold a controlling interest of approximately 75% in Nexentis on a fully diluted basis, which may increase to approximately 84% upon satisfaction of all milestones and full exercise of warrants. For more information, see Item 4.B. "*Business Overview - MitoCareX*" for additional information.

Each of Amitay Weiss and Liat Sidi, members of our board, also serve as board members of Nexentis.

 

*AutoMax*

Between June 2023 and March 2025, we entered into a series of agreements with AutoMax, including a share purchase agreement, a non-binding letter of intent, an agreement and plan of merger entered into on April 10, 2024, as amended from time to time, and multiple loan arrangements, including a bridge loan entered into on January 14, 2024 and an additional loan entered into on February 24, 2025. These arrangements were entered into in the context of a proposed business combination transaction that was approved by the shareholders of both companies but was not consummated.

In light of an investigation by the Israeli Securities Authority and the Israeli Police and the arrest of senior officials of AutoMax, on October 6, 2025, we entered into a Framework Agreement with AutoMax and SciSparc Merger Sub Ltd., pursuant to which the parties mutually agreed to terminate the merger agreement, effective immediately, in accordance with its terms. Under the Framework Agreement, AutoMax agreed to repay (i) an aggregate principal amount of $4.25 million outstanding under the January 14, 2024 loan agreement, together with interest at a rate of 9% per annum, compounded annually, in a single lump-sum payment due on January 1, 2028, and (ii) an aggregate principal amount of $2.0 million outstanding under the February 24, 2025 loan agreement, in monthly installments of $60,000 commencing on November 20, 2025, together with interest at a rate of 8% per annum, compounded annually, and accrued interest of $114,523 through November 20, 2025.

On October 21, 2025, an Israeli court issued an order freezing proceedings against AutoMax and appointed a trustee. See "Item 8.A. Legal Proceedings – AutoMax" for additional information. The Framework Agreement remains in effect notwithstanding these proceedings.

Mr. Amitay Weiss, our President and a director, previously served as a chairman on the board of directors of AutoMax, until October 16, 2025 when he voluntarily resigned as the Chairman of AutoMax.

 

*NeuroThera Labs Inc.*

On October 9, 2025, we entered into a definitive asset and share purchase agreement with Miza, a publicly traded company listed on the TSXV, pursuant to which we agreed to transfer to Miza our advanced clinical-stage pharmaceutical portfolio and our equity stake of approximately 51% in SciSparc Nutraceuticals. In consideration, we received common shares, warrants and contingent rights of Miza, resulting in our holding a controlling interest in Miza following the closing of the transaction.

The transaction closed on October 22, 2025. Effective upon closing, Miza changed its name to NeuroThera Labs Inc., and we currently hold a controlling interest of approximately 75% in NeuroThera, which may increase upon the exercise of warrants and achievement of certain milestones.

In connection with the transaction, we committed to provide NeuroThera with up to CAD 1.0 million pursuant to an unsecured convertible note, maturing in October 2027, which is convertible into NeuroThera common shares at our election, subject to applicable exchange approvals.

NeuroThera conducts pharmaceutical development activities using the assets transferred to it, and certain members of our management and board serve as directors or officers of NeuroThera.

Mr. Itschak Shrem, our Chairman of the Board of Directors since September 2025, serves as chairman of the board of directors of NeuroThera.

**C. Interests of Experts and Counsel**

Not applicable.

**ITEM 8. FINANCIAL INFORMATION.**

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

See Item 18. "Financial Statements."

**Legal Proceedings** 

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***Capital Point***

In connection with a joint venture transaction, entered on May 15, 2020, by and between us, Capital Point and Evero Health Ltd., one of our subsidiaries, we issued a warrant to Capital Point to purchase $340,000 of our ordinary shares, or the Warrant Shares, with an exercise price per ordinary share equal to the closing price of our ordinary shares on the trading day on which the notice of exercise is actually received by us. Such warrant was exercisable for 12 months starting from May 15, 2021.

On November 4, 2021, we received from Capital Point a notice of exercise with respect to the Warrant Shares, which was rejected by the Company. On May 2, 2023, Capital Point filed a lawsuit in the Tel Aviv-Jaffa District Court against us as the sole defendant in connection with the Warrant Shares. The lawsuit includes allegations of breaches of contract under the Israeli Contracts Law (General Part), 1973, unjust enrichment under the Israeli Unjust Enrichment Law, 1979 and breaches under the Israeli Torts Ordinance (New Version), 1968. The lawsuit claims damages in the amount of NIS 10,000,000 (approximately $3.13 million), which accounts for, as of the date of the filing of the lawsuit, liquidated damages according to the provisions set forth in the warrant, and seeks as well for the court to order a mandatory injunction order for us to issue a warrant to Capital Point to purchase $340,000 of our ordinary shares to Capital Point, the return of any unlawful profits received by us and punitive damages.

As of the date of this Annual Report, in connection with the aforementioned litigation, the shares of Evero Health Ltd. held by Capital Point are dormant and were forfeited by Evero Health Ltd. As of the date of this Annual Report, we cannot predict the likelihood of our success in the lawsuit.

***AutoMax***

 

In October 2025, the Tel Aviv District court commenced insolvency proceedings for Global AutoMax Ltd., or Global AutoMax, and AutoMax and a trustee was appointed. Accordingly, in January 2026, we filed two proofs of debt in these proceedings as a creditor of Global AutoMax and AutoMax: (i) a debt petition in the insolvency proceedings of Global AutoMax in the amount of NIS 6,314,358.73 (approximately $2.1 million), and (ii) a debt petition in the insolvency proceedings of AutoMax in the amount of NIS 21,095,819 (approximately $7 million). The debt petition have not yet been reviewed by the trustee, and there is currently no indication as to when they will be determined or what distribution rate, if any, will be paid to creditors.

**Dividends** 

We have never declared or paid any cash dividends on our Ordinary Shares and do not anticipate paying any cash dividends in the foreseeable future. Payment of cash dividends, if any, in the future will be at the discretion of our Board of Directors and will depend on then-existing conditions, including our financial condition, operating results, contractual restrictions, capital requirements, business prospects and other factors our Board of Directors may deem relevant.

The distribution of dividends may also be limited by the Companies Law, which permits the distribution of dividends only out of retained earnings or earnings derived over the two most recent fiscal years, whichever is higher, provided that there is no reasonable concern that payment of a dividend will prevent a company from satisfying its existing and foreseeable obligations as they become due.

Payment of dividends may be subject to Israeli withholding taxes. See Item 10.E. "Taxation" for additional information.

**B. Significant Changes**

No significant change, other than as otherwise described in this Annual Report, has occurred in our operations since the date of our consolidated financial statements included in this Annual Report.

**ITEM 9. THE OFFER AND LISTING**

**A. Offer and Listing Details**

Our Ordinary Shares are listed on the Nasdaq Capital Market, trading under the symbol "SPRC".

**B. Plan of Distribution**

Not applicable.

**C. Markets**

Our Ordinary Shares are traded on the Nasdaq under the symbol "SPRC".

**D. Selling Shareholders**

Not applicable.

**E. Dilution**

Not applicable.

**F. Expenses of the Issue**

Not applicable.

**ITEM 10. ADDITIONAL INFORMATION**

**A. Share Capital** 

Not applicable.

**B. Memorandum and Articles of Association** 

A copy of our amended and restated articles of association is attached as Exhibit 1.1 to this Annual Report. The information called for by this Item is set forth in Exhibit 2.1 to this Annual Report on Form 20-F and is incorporated by reference into this Annual Report.

**C. Material Contracts** 

We have not entered into any material contract within the two years prior to the date of this Annual Report, other than contracts entered into in the ordinary course of business, as otherwise described herein in "Item 4.A. History and Development of the Company" above, "Item 4.B. Business Overview" above, "Item 5.A. Operating Results" above, or "Item 7.B. Related Party Transactions" above.

**D. Exchange Controls**

There are currently no Israeli currency control restrictions on remittances of dividends on our Ordinary Shares, proceeds from the sale of the shares or interest or other payments to non-residents of Israel, except for shareholders who are subjects of countries that are, or have been, in a state of war with Israel.

**E. Taxation.** 

**ISRAELI TAX CONSIDERATIONS AND GOVERNMENT PROGRAMS** 

The following is a description of the material Israeli income tax consequences of the ownership of our Ordinary Shares. The following also contains a description of material relevant provisions of the current Israeli income tax structure applicable to companies in Israel, with reference to its effect on us. To the extent that the discussion is based on new tax legislation which has not been subject to judicial or administrative interpretation, there can be no assurance that the tax authorities will accept the views expressed in the discussion in question. The discussion is not intended, and should not be taken, as legal or professional tax advice and is not exhaustive of all possible tax considerations.

The following description is not intended to constitute a complete analysis of all tax consequences relating to the ownership or disposition of our Ordinary Shares. Shareholders should consult their own tax advisors concerning the tax consequences of their particular situation, as well as any tax consequences that may arise under the laws of any state, local, foreign or other taxing jurisdiction.

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***General Corporate Tax Structure in Israel***

Israeli resident companies are generally subject to corporate tax, currently at the rate of 23% of a company's taxable income. Capital gains derived by an Israeli resident company are subject to tax at the prevailing corporate tax rate. Under Israeli tax legislation, a corporation will be considered as an "Israeli resident company" if it meets one of the following: (i) it was incorporated in Israel; or (ii) the control and management of its business are exercised in Israel.

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***The Encouragement of Research, Development and Technological Innovations in the Industry Law, 5744-1984***

Under the Innovation Law, research and development programs which meet specified criteria and are approved by a committee of the IIA are eligible for grants of up to 50% of the project's expenditure, as determined by the research committee, and subject to the benefit track under which the grant was awarded. A company that receives a grant from the IIA, or a grant recipient, is typically required to pay royalties from the revenues generated from the sale of products and related services developed, in whole or in part pursuant to, or as a result of, a research and development program funded by the IIA. Under the regular benefits tracks, the royalties are generally at a range of 3% to 5% of revenues until the entire IIA grant is repaid, together with an annual accrued interest. Under the regulations of the Innovation Law, grants received before January 1, 1999, bear no interest. Grants received before June 30, 2017, bear an annual interest rate that applied at the time of the approval of the applicable IIA file, and that interest rate will apply to all of the funding received under that IIA approval. Grants received from the IIA after June 30, 2017, bear an annual interest rate based on the 12-month Secured Overnight Financing Rate, or SOFR, or at an alternative rate published by the Bank of Israel plus 0.71513%. Grants approved after January 1, 2024, bear the higher interest rate of (i) 12 months SOFR, plus 1%, or (ii) a fixed annual interest rate of 4%.

The obligation to pay royalties is contingent on actual income generated from such products and services. In the absence of such income, no payment of such royalties is required.

The terms of the Innovation Law also require that the manufacture of products developed with IIA grants be performed in Israel. The transfer of manufacturing activity outside Israel is subject to the prior approval of the IIA (such approval is not required for the transfer of a portion of the manufacturing capacity which does not exceed, in the aggregate, 10% of the portion declared to be manufactured outside of Israel in the applications for funding, in which case only notification is required). It should be noted that the terms of the Innovation Law do not restrict the export of products that incorporate the funded know-how. Under the regulations of the Innovation Law, assuming we receive approval from the IIA to manufacture our IIA-funded products outside Israel, our liability to the IIA may be increased to between 120% and 300% of the grants we received from IIA depending upon the manufacturing volume that is performed outside of Israel. For grant applications submitted to the IIA after October 25, 2023, the maximum increased liability in connection with manufacturing outside of Israel is up to 150% of the IIA grants, plus interest accrued thereon, instead of 300%.

If the manufacturing is performed outside of Israel, the rate of royalties payable by us on revenues from the sale of products manufactured outside of Israel will usually increase by 1% over the regular rates.

The know-how developed within the framework of the IIA plan may not be transferred or licensed to third parties outside Israel without the prior approval of the IIA. The approval, however, is not required for the export of any products developed using grants received from the IIA. The IIA approval to transfer know-how created, in whole or in part, in connection with an IIA-funded project(s) to a third party outside Israel is subject to payment of a redemption fee to the IIA calculated according to a formula provided under the Innovation Law that is based, in general, on the ratio between the aggregate IIA grants and our aggregate research and development investments in the know-how that was funded by these IIA grants, multiplied by the transaction consideration taking into account a depreciation mechanism (if applicable), and less royalties already paid to the IIA. According to regulations promulgated under the Innovation Law, the maximum amount payable to the IIA in case of transfer of know-how outside Israel shall not exceed six times the amount of the grants received plus interest, with a possibility to reduce such payment to up to three times the amount of the grants received plus interest if the grant recipient undertakes to continue the research and development activity in Israel for a period of at least three years after the transfer of know-how, and to maintain, throughout such three-year period, at least 75% of the research and development employees the company had for the six months before the know-how was transferred, subject to additional conditions specified in the regulations.

Transfer or licensing of know-how to an Israeli entity is subject to the IIA prior approval and to an undertaking of the recipient Israeli entity to undertake all the transferor's obligations to the IIA and to comply with the provisions of the Innovation Law and related regulations, including the restrictions on the transfer and licensing of know-how and the obligation to pay royalties, as further described in the Innovation Law and related regulations.

The restrictions under the Innovation Law will continue to apply even after we repay the full amount of royalties payable pursuant to the grants. In addition, the government of the State of Israel may from time to time audit sales of product candidates which it claims incorporate technology funded via IIA programs and this may lead to additional royalties being payable on additional product candidates.

These restrictions may impair our ability to outsource manufacturing or research and development activities or otherwise transfer or license our know-how outside Israel and may require us to obtain the approval of the IIA for certain actions and transactions and pay additional royalties or other payments to the IIA. If we fail to comply with certain restrictions under the Innovation Law, we may be subject to mandatory repayment of grants received by us (together with interest and penalties), as well as be exposed to criminal charges.

Our research and development efforts have been financed, partially, through grants that we have received from the IIA. We therefore must comply with the requirements of the Innovation Law and related regulations. Our total outstanding obligation to the IIA, respectively, including the interest accrued through December 31, 2025, amounts to approximately $1.1 million.

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***Tax Benefits for Research and Development***

Israeli tax law allows, under certain conditions, a tax deduction for expenditures, including capital expenditures, in scientific research in the fields of industry, agriculture, transportation or energy, for the year in which they are incurred. Expenditures are deemed related to scientific research and development projects, if:

● The expenditures are approved by the relevant Israeli government ministry, determined by the field of research;

● The research and development must be for the promotion of the company; and

● The research and development is carried out by or on behalf of the company seeking such tax deduction.

The amount of such deductible expenses is reduced by the sum of any funds received through government grants for the finance of such scientific research and development projects. No deduction under these research and development deduction rules is allowed if such deduction is related to an expense invested in an asset depreciable under the general depreciation rules of the Israeli Income Tax Ordinance (New Version) 1961, or the Ordinance. Expenditures not so approved are deductible in equal amounts over three years.

From time to time we may apply the IIA for approval to allow a tax deduction for all research and development expenses during the year incurred. There can be no assurance that such application will be accepted.

 

*<u>Law for the Encouragement of Capital Investments, 5719-1959</u>*

The Law for the Encouragement of Capital Investments, 5719-1959, generally referred to as the Investment Law, provides certain incentives for capital investments in production facilities (or other eligible assets) by "Industrial Enterprises" (as defined under the Investment Law).

The Investment Law was significantly amended effective April 1, 2005 (which we refer to as the 2005 Amendment), further amended as of January 1, 2011 (which we refer to as the 2011 Amendment) and further amended as of January 1, 2017 (which we refer to as the 2017 Amendment). Pursuant to the 2005 Amendment, tax benefits granted in accordance with the provisions of the Investment Law prior to its revision by the 2005 Amendment remain in force but any benefits granted subsequently are subject to the provisions of the 2005 Amendment. Similarly, the 2011 Amendment introduced new benefits to replace those granted in accordance with the provisions of the Investment Law in effect prior to the 2011 Amendment. However, companies entitled to benefits under the Investment Law as in effect prior to January 1, 2011 were entitled to choose to continue to enjoy such benefits, provided that certain conditions are met, or elect instead irrevocably to forego such benefits and have the benefits of the 2011 Amendment apply. The 2017 Amendment introduced new benefits for Technological Enterprises, alongside the existing tax benefits.

 **

***Taxation of our Shareholders***

 

***Capital Gains***

Capital gain tax is imposed on the disposal of capital assets by an Israeli resident, and on the disposal of such assets by a non-Israeli resident if those assets are either (i) located in Israel; (ii) are shares or a right to a share in an Israeli resident corporation, or (iii) represent, directly or indirectly, rights to assets located in Israel, unless a tax treaty between Israel and the seller's country of residence provides otherwise. The Ordinance, distinguishes between "Real Gain" and the "Inflationary Surplus." Real Gain is the excess of the total capital gain over Inflationary Surplus. Inflationary Surplus is computed generally on the basis of the increase in the Israeli Consumer Price Index or, in certain circumstances, according to the change in the foreign currency exchange rate, between the date of purchase and the date of disposal. Inflationary Surplus is not subject to tax in Israel.

Real Gain accrued by individuals on the sale of our Ordinary Shares will be taxed at the rate of 25%. However, if the shareholder claims deduction of interest and linkage differences expenses in connection with the purchase and holding of such shares or the individual shareholder is a "Significant Shareholder" (i.e., a person who holds, directly or indirectly, alone or together with such person's relative or another person who collaborates with such person on a permanent basis, based on a written contract, 10% or more of one of the Israeli resident company's "means of control" including, among other things, the right to company profits, voting rights, the right to the company's liquidation proceeds and the right to appoint a company director) at the time of sale or at any time during the preceding 12 months period, such gain will be taxed at the rate of 30%.

Real Gain derived by corporations will be generally subject to the regular corporate tax rate (23% in 2025).

Individual and corporate shareholder dealing in securities in Israel for whom the income from the sale of securities is considered "business income" as defined in Section 2(1) of the Ordinance are taxed at the tax rates applicable to business income- 23% for corporations in 2025 and a marginal tax rate of up to 47% (excluding excess tax, if applicable) in 2025 for individuals, unless the benefiting provisions of an applicable tax treaty applies. Certain Israeli institutions who are exempt from tax under Section 9(2) or Section 129(C)(a)(1) of the Ordinance (such as exempt trust fund, pension fund) may be exempt from capital gains tax from the sale of shares.

 

 

*Capital Gains Taxes is Applicable also to Non-Israeli Resident Shareholders*. A non-Israeli resident (whether an individual or a corporation) who derives capital gains from the sale of shares in an Israeli resident company may be exempt from Israeli capital gain tax so long as the following cumulative conditions are met: (i) the shares were purchased upon or after the registration of the securities on a recognized stock exchange, outside of Israel (such as Nasdaq) (ii) the seller does not have a permanent establishment in Israel to which the derived capital gain is attributed, and (iii) with respect to securities listed on a recognized stock exchange outside of Israel, such shareholders are not subject to the Israeli Income Tax Law (Inflationary Adjustments) 5745-1985. However, non-Israeli corporation will not be entitled to the foregoing exemptions if Israeli residents (a) have a controlling interest of more than 25% in such non-Israeli corporation, or (b) are the beneficiaries of or are entitled to 25% or more of the revenues or profits of such non-Israeli corporation, whether directly and indirectly. In addition, such exemption would not be available to a person whose gains from selling or otherwise disposing of the securities are deemed to be business income.

If not exempt, a non-Israeli resident would generally be subject to tax on capital gain at the ordinary corporate tax rate (23% in 2025) if generated by a company, or at the rate of 25%, if generated by an individual, or 30%, if generated by an individual who is a "Significant Shareholder", at the time of sale or at any time during the preceding 12-month period (or if the shareholder claims a deduction for interest and linkage differences expenses in connection with the purchase and holding of such shares). Individual and corporate shareholders dealing in securities in Israel are taxed at the tax rates applicable to business income (a corporate tax rate for a corporation and a marginal tax rate of up to 47%, excluding excess tax, for an individual in 2025) unless contrary provisions in a relevant tax treaty applies.

Additionally, a sale of shares by a non-Israeli resident may be exempt from Israeli capital gains tax under the provisions of an applicable tax treaty. For example, under 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, or the United States-Israel Tax Treaty, the sale, exchange or other disposition of shares by a shareholder who is a United States resident (for purposes of the United States-Israel Tax Treaty) holding the shares as a capital asset and is entitled to claim the benefits afforded to such a resident by the United States.-Israel Tax Treaty, or a Treaty U.S. Resident, is generally exempt from Israeli capital gains tax unless either: (i) the capital gain arising from such sale, exchange or disposition is attributed to real estate located in Israel; (ii) the capital gain arising from such sale, exchange or disposition is attributed to royalties; (iii) the capital gain arising from the such sale, exchange or disposition is attributed to a permanent establishment of the shareholder which is maintained in Israel, under certain terms; (iv) such Treaty U.S. Resident holds, directly or indirectly, shares representing 10% or more of the voting capital during any part of the 12-month period preceding the disposition, subject to certain conditions; or (v) such Treaty U.S. Resident, if an individual, was present in Israel for a period or periods of 183 days or more in the aggregate during the relevant taxable year. In any such case, the sale, exchange or disposition of such shares would be subject to Israeli tax, to the extent applicable; however, under the United States-Israel Treaty, a U.S. resident would be permitted to claim a credit for the Israeli tax against the U.S. federal income tax imposed with respect to the sale, exchange or disposition, subject to the limitations in U.S. laws applicable to foreign tax credits. The United States-Israel Treaty does not provide such credit against any U.S. state or local taxes.

In some instances where our shareholders may be liable for Israeli tax on the sale of their Ordinary Shares, the payment of the consideration may be subject to the withholding of Israeli tax at source. Shareholders may be required to demonstrate that they are exempt from tax on their capital gains in order to avoid withholding at source at the time of sale. Specifically, in transactions involving a sale of all of the shares of an Israeli resident company, in the form of a merger or otherwise, the Israel Tax Authority may require from shareholders who are not liable for Israeli tax to sign declarations in forms specified by this authority or obtain a specific exemption from the Israel Tax Authority to confirm their status as non-Israeli residents, and, in the absence of such declarations or exemptions, may require the purchaser of the shares to withhold taxes at source.

Either the purchaser, the Israeli stockbrokers or financial institution through which the shares are held is obliged, subject to the above mentioned exemptions, to withhold tax on the amount of consideration paid upon the sale of securities from the Real Gain at the rate of 25% for individuals and 23% for corporations.

At the sale of securities traded on a stock exchange, a detailed return, including a computation of the tax due, must be filed and an advance payment must be made on January 31 and July 31 of every calendar year in respect of sales of securities made within the previous six months. However, if all tax due was withheld at source according to applicable provisions of the Ordinance and regulations promulgated thereunder, the aforementioned return need not be filed and no advance payment must be paid. Capital gains are also reportable on the annual income tax return.

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***Dividends***

A distribution of dividends from an Israeli company to an Israeli resident individual, will generally be subject to income tax at a rate of 25%. However, a 30% tax rate will apply if the dividend recipient is a Significant Shareholder (as defined above in this section) at the time of distribution or at any time during the preceding 12 months period. If the recipient of the dividend is an Israeli resident corporation, generally, such dividend will be exempt from income tax provided the income from which such dividend is distributed was derived or accrued within Israel (although, if such dividends are subsequently distributed to individuals, the aforesaid will apply).

Non-Israeli residents (whether individuals or a corporations) are generally subject to Israeli income tax on the receipt of dividends paid on our Ordinary Shares at the rate of 25% or 30% with respect to a Significant Shareholder (as defined above) at the time of receiving the dividend or on any time during the preceding twelve months. Such dividends are generally subject to Israeli withholding tax at a rate of 25% so long as the shares are registered with a Nominee Company (whether the recipient is a Significant Shareholder or not). For example, under the United States-Israel Tax Treaty, the rate of tax withheld at source in Israel on dividends paid to a holder of our Ordinary Shares who is a Treaty U.S. Resident is 25%. However, generally, the maximum rate of withholding tax on dividends, not generated by an Approval/Beneficial/Preferred Enterprise (as defined under the Investment Law), that are paid to a United States corporation holding 10% or more of the outstanding voting capital throughout the tax year in which the dividend is distributed as well as during the previous tax year, is 12.5%, provided that not more than 25% of the gross income for such preceding year consists of certain types of dividends and interest. The aforementioned rates will not apply if the dividend income was generated through a permanent establishment of the U.S. resident in Israel.

A non-Israeli resident who receives dividends from which tax was withheld is generally exempt from the obligation to file tax returns in Israel with respect to such income, provided that (i) such income was not generated from business conducted in Israel by the taxpayer, (ii) the taxpayer has no other taxable sources of income in Israel with respect to which a tax return is required to be filed, and (iii) the taxpayer is not obligated to pay excess tax (as further explained below).

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***Excess Tax***

Individuals who are subject to tax in Israel (whether any such individual is an Israeli resident or non-Israeli resident) are also subject to an additional tax at a rate of 3% on annual income exceeding a certain threshold NIS 721,560 for 2025, which amount is linked to the annual changes to the Israeli Consumer Price Index(with the exception that based on Israeli new legislation such amount, and certain other statutory amounts will not be linked to the Israeli consumer price index for the years 2025-2027)including, but not limited to income derived from dividends, interest and capital gains. According to new legislation, in effect as of January 1, 2025, an additional 2% excess tax is imposed on Capital-Sourced Income (defined as income from any source other than employment income, business income or income from "personal effort"), to the extent that the Individual's Capital Sourced Income exceeds the specified threshold of NIS 721,560 (and regardless of the employment/business income amount of such individual). This new excess tax applies, among other things, to income from capital gains, dividends, interest, rental income, or the sale of real property.

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***Foreign Exchange Regulations***

Non-residents of Israel who hold our Ordinary Shares are able to receive any dividends, and any amounts payable upon the dissolution, liquidation and winding up of our affairs, repayable in non-Israeli currency at the rate of exchange prevailing at the time of conversion. However, Israeli income tax is generally required to have been paid or withheld on these amounts.

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***Estate and Gift Tax***

Israeli law presently does not impose estate or gift taxes if the Israeli Tax Authority is satisfied that the gift was made to an Israeli resident individual in good faith and on condition that the recipient of the gift is not a non-Israeli resident. If the gift giver is a non-Israeli resident individual, then he should be exempted under the aforementioned capital gains tax exemptions provided for a regular sale of shares.

**U.S. FEDERAL INCOME TAX CONSIDERATIONS**

THE FOLLOWING SUMMARY IS INCLUDED HEREIN FOR GENERAL INFORMATION AND IS NOT INTENDED TO BE, AND SHOULD NOT BE CONSIDERED TO BE, LEGAL OR TAX ADVICE. EACH U.S. HOLDER SHOULD CONSULT WITH HIS OR HER OWN TAX ADVISOR AS TO THE PARTICULAR U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE PURCHASE, OWNERSHIP AND SALE OF ORDINARY SHARES AND AMERICAN DEPOSITARY SHARES, INCLUDING THE EFFECTS OF APPLICABLE STATE, LOCAL, FOREIGN OR OTHER TAX LAWS AND POSSIBLE CHANGES IN THE TAX LAWS.

Subject to the limitations described in the next paragraph, the following discussion summarizes the material U.S. federal income tax consequences to a "U.S. Holder" arising from the purchase, ownership and sale of the Ordinary Shares. For this purpose, a "U.S. Holder" is a holder of Ordinary Shares that is: (1) an individual citizen or resident of the United States, including an alien individual who is a lawful permanent resident of the United States or meets the substantial presence residency test under U.S. federal income tax laws; (2) a corporation (or entity treated as a corporation for U.S. federal income tax purposes) or a partnership (other than a partnership that is not treated as a U.S. person under any applicable U.S. Treasury regulations) created or organized under the laws of the United States or the District of Columbia or any political subdivision thereof; (3) an estate, the income of which is includable in gross income for U.S. federal income tax purposes regardless of source; (4) a trust if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have authority to control all substantial decisions of the trust; or (5) a trust that has a valid election in effect to be treated as a U.S. person to the extent provided in U.S. Treasury regulations.

This summary is for general information purposes only and does not purport to be a comprehensive description of all of the U.S. federal income tax considerations that may be relevant to a decision to purchase our Ordinary Shares. This summary generally considers only U.S. Holders that will own our Ordinary Shares as capital assets. Except to the limited extent discussed below, this summary does not consider the U.S. federal tax consequences to a person that is not a U.S. Holder, nor does it describe the rules applicable to determine a taxpayer's status as a U.S. Holder. This summary is based on the provisions of the Internal Revenue Code of 1986, as amended, or the Code, final, temporary and proposed U.S. Treasury regulations promulgated thereunder, administrative and judicial interpretations thereof, (including with respect to the TCJA of 2017), and the U.S./Israel Income Tax Treaty, all as in effect as of the date hereof and all of which are subject to change, possibly on a retroactive basis, and all of which are open to differing interpretations. We will not seek a ruling from the IRS with regard to the U.S. federal income tax treatment of an investment in our Ordinary Shares by U.S. Holders and, therefore, can provide no assurances that the IRS will agree with the conclusions set forth below.

This discussion does not address all of the aspects of U.S. federal income taxation that may be relevant to a particular U.S. holder based on such holder's particular circumstances and in particular does not discuss any estate, gift, generation-skipping, transfer, state, local, excise or foreign tax considerations. In addition, this discussion does not address the U.S. federal income tax treatment of a U.S. Holder who is: (1) a bank, life insurance company, regulated investment company, or other financial institution or "financial services entity;" (2) a broker or dealer in securities or foreign currency; (3) a person who acquired our Ordinary Shares in connection with employment or other performance of services; (4) a U.S. Holder that is subject to the U.S. alternative minimum tax; (5) a U.S. Holder that holds our Ordinary Shares as a hedge or as part of a hedging, straddle, conversion or constructive sale transaction or other risk-reduction transaction for U.S. federal income tax purposes; (6) a tax-exempt entity; (7) real estate investment trusts or grantor trusts; (8) a U.S. Holder that expatriates out of the United States or a former long-term resident of the United States; or (9) a person having a functional currency other than the U.S. dollar. This discussion does not address the U.S. federal income tax treatment of a U.S. Holder that owns, directly or constructively, at any time, Ordinary Shares representing 10% or more of our voting power. Additionally, the U.S. federal income tax treatment of partnerships (or other pass-through entities) or persons who hold Ordinary Shares through a partnership or other pass-through entity are not addressed.

Each prospective investor is advised to consult his or her own tax adviser for the specific tax consequences to that investor of purchasing, holding or disposing of our Ordinary Shares, including the effects of applicable state, local, foreign or other tax laws and possible changes in the tax laws.

 ****

***Taxation of Dividends Paid on our Ordinary Shares***

We do not intend to pay dividends in the foreseeable future. In the event that we do pay dividends, and subject to the discussion under the heading "Passive Foreign Investment Companies" below and the discussion of "qualified dividend income" below, a U.S. Holder will be required to include in gross income as ordinary income the amount of any distribution paid on our Ordinary Shares (including the amount of any Israeli tax withheld on the date of the distribution), to the extent that such distribution does not exceed our current and accumulated earnings and profits, as determined for U.S. federal income tax purposes. The amount of a distribution which exceeds our earnings and profits will be treated first as a non-taxable return of capital, reducing the U.S. Holder's tax basis for the Ordinary Shares to the extent thereof, and then capital gain. We do not expect to maintain calculations of our earnings and profits under U.S. federal income tax principles and, therefore, U.S. Holders should expect that the entire amount of any distribution generally will be reported as dividend income.

In general, preferential tax rates for "qualified dividend income" and long-term capital gains are applicable for U.S. Holders that are individuals, estates or trusts. For this purpose, "qualified dividend income" means, inter alia, dividends received from a "qualified foreign corporation." A "qualified foreign corporation" is a corporation that is entitled to the benefits of a comprehensive tax treaty with the United States which includes an exchange of information program. The IRS has stated that the Israel/U.S. Tax Treaty satisfies this requirement, and we believe we are eligible for the benefits of that treaty.

Dividends will not qualify for the preferential rate if we are treated, in the year the dividend is paid or in the prior year, as a PFIC, as described below under "Passive Foreign Investment Companies." A U.S. Holder will not be entitled to the preferential rate: (1) if the U.S. Holder has not held our Ordinary Shares for at least 61 days of the 121 day period beginning on the date which is 60 days before the ex-dividend date, or (2) to the extent the U.S. Holder is under an obligation to make related payments on substantially similar property. Any days during which the U.S. Holder has diminished its risk of loss on our Ordinary Shares are not counted towards meeting the 61-day holding period. Finally, U.S. Holders who elect to treat the dividend income as "investment income" pursuant to Code section 163(d)(4) will not be eligible for the preferential rate of taxation.

The amount of a distribution with respect to our Ordinary Shares will be measured by the amount of the fair market value of any property distributed, and for U.S. federal income tax purposes, the amount of any Israeli taxes withheld therefrom. Cash distributions paid by us in NIS will be included in the income of U.S. Holders at a U.S. dollar amount based upon the spot rate of exchange in effect on the date the dividend is includible in the income of the U.S. Holder, and U.S. Holders will have a tax basis in such NIS for U.S. federal income tax purposes equal to such U.S. dollar value. If the U.S. Holder subsequently converts the NIS into U.S. dollars or otherwise disposes of it, any subsequent gain or loss in respect of such NIS arising from exchange rate fluctuations will be U.S. source ordinary exchange gain or loss.

 ****

***Taxation of the Disposition of our Ordinary Shares***

Except as provided under the PFIC rules described below under "Passive Foreign Investment Companies," 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 such U.S. Holder's tax basis for the Ordinary Shares in U.S. dollars and the amount realized on the disposition in U.S. dollar (or its U.S. dollar equivalent determined by reference to the spot rate of exchange on the date of disposition, if the amount realized is denominated in a foreign currency). The gain or loss realized on the sale, exchange or other disposition of Ordinary Shares will be long-term capital gain or loss if the U.S. Holder has a holding period of more than one year at the time of the disposition. Individuals who recognize long-term capital gains may be taxed on such gains at reduced rates of tax. The deduction of capital losses is subject to various limitations.

Gain realized by a U.S. Holder on a sale, exchange or other disposition of our Ordinary Shares will generally 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 our Ordinary Shares is generally allocated to U.S. source income. The deductibility of a loss realized on the sale, exchange or other disposition of our Ordinary Shares is subject to limitations. An additional 3.8% net investment income tax (described below) may apply to gains recognized upon the sale, exchange or other taxable disposition of our Ordinary Shares by certain U.S. Holders who meet certain income thresholds.

 ****

***Passive Foreign Investment Companies***

Special U.S. federal income tax laws apply to U.S. taxpayers who own shares of a corporation that is a PFIC. We will be treated as a PFIC for U.S. federal income tax purposes for any taxable year that either:

● 75% or more of our gross income (including our pro rata share of gross income for any company, in which we are considered to own 25% or more of the shares by value), in a taxable year is passive; or

● At least 50% of our assets, averaged over the year and generally determined based upon fair market value (including our pro rata share of the assets of any company in which we are considered to own 25% or more of the shares by value) are held for the production of, or produce, passive income.

For this purpose, passive income generally consists of dividends, interest, rents, royalties, annuities and income from certain commodities transactions and from notional principal contracts. Cash is treated as generating passive income.

We do not believe that we would be deemed a PFIC for 2025, and we do not expect to become a PFIC in the future, although there can be no assurance in this regard. The tests for determining PFIC status are applied annually, and it is difficult to make accurate projections of future income and assets which are relevant to this determination. In addition, our PFIC status may depend in part on the market value of our Ordinary Shares. Accordingly, there can be no assurance that we currently are not or will not become a PFIC.

If we currently are or become a PFIC, each U.S. Holder who has not elected to mark the shares to market (as discussed below), would, upon receipt of certain distributions by us and upon disposition of our Ordinary Shares at a gain: (1) have such distribution or gain allocated ratably over the U.S. Holder's holding period for the Ordinary Shares, as the case may be; (2) the amount allocated to the current taxable year and any period prior to the first day of the first taxable year in which we were a PFIC would be taxed as ordinary income; and (3) the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. In addition, when shares of a PFIC are acquired by reason of death from a decedent that was a U.S. Holder, the tax basis of such shares would not receive a step-up to fair market value as of the date of the decedent's death, but instead would be equal to the decedent's basis if lower, unless all gain were recognized by the decedent. Indirect investments in a PFIC may also be subject to these special U.S. federal income tax rules.

The PFIC rules described above would not apply to a U.S. Holder who makes a QEF election for all taxable years that such U.S. Holder has held our Ordinary Shares while we are a PFIC, provided that we comply with specified reporting requirements. Instead, each U.S. Holder who has made such a QEF election is required for each taxable year that we are a PFIC to include in income such U.S. Holder's pro rata share of our ordinary earnings as ordinary income and such U.S. Holder's pro rata share of our net capital gains as long-term capital gain, regardless of whether we make any distributions of such earnings or gain. In general, a QEF election is effective only if we make available certain required information. The QEF election is made on a shareholder-by-shareholder basis and generally may be revoked only with the consent of the IRS. We do not intend to furnish U.S. Holders annually with information needed in order to complete IRS Form 8621 and to make and maintain a valid QEF election for any year in which we or any of our subsidiaries are a PFIC. Therefore, the QEF election will not be available with respect to our Ordinary Shares.

U.S. Holders who hold our Ordinary Shares during a period when we are a PFIC will be subject to the foregoing rules, even if we cease to be a PFIC. U.S. Holders are strongly urged to consult their tax advisors about the PFIC rules.

**Tax on Net Investment Income**

Subject to certain adjustments under the PFIC rules, U.S. Holders who are individuals, estates or trusts will generally be required to pay a 3.8% Medicare tax on their net investment income (including dividends on and gains from the sale or other disposition of our Ordinary Shares), or in the case of estates and trusts on their net investment income that is not distributed. In each case, the 3.8% Medicare tax applies only to the extent the U.S. Holder's total adjusted income exceeds applicable thresholds.

**Tax Consequences for Non-U.S. Holders of Ordinary Shares** 

Except as provided below, an individual, corporation, estate or trust that is not a U.S. Holder referred to below as a non-U.S. Holder, generally will not be subject to U.S. federal income or withholding tax on the payment of dividends on, and the proceeds from the disposition of, our Ordinary Shares.

A non-U.S. Holder may be subject to U.S. federal income tax on a dividend paid on our Ordinary Shares or gain from the disposition of our Ordinary Shares if: (1) such item is effectively connected with the conduct by the non-U.S. Holder of a trade or business in the United States and, if required by an applicable income tax treaty is attributable to a permanent establishment or fixed place of business in the United States; or (2) in the case of a disposition of our Ordinary Shares, the individual non-U.S. Holder is present in the United States for 183 days or more in the taxable year of the disposition and other specified conditions are met. Any dividend income or gain described in clause (1) above will be subject to U.S. federal income tax on a net income tax basis in the same manner as a U.S. Holder and, with respect to corporate holders, a branch profits tax imposed at a rate of 30% (or such lower rate as may be specified by an applicable income tax treaty) may also apply to its effectively connected earnings and profits (subject to adjustments). Any dividend income or gain described in clause (2) above that is not effectively connected with the conduct by a Non-U.S. Holder of a trade or business within the U.S. generally will be subject to 30% withholding tax (or such lower rate as may be specified by an applicable income tax treaty) net of certain U.S. source capital losses.

In general, non-U.S. Holders will not be subject to backup withholding with respect to the payment of dividends on our Ordinary Shares if payment is made through a paying agent, or office of a foreign broker outside the United States. However, if payment is made in the United States or by a U.S. related person, non-U.S. Holders may be subject to backup withholding, unless the non-U.S. Holder provides an applicable IRS Form W-8 (or a substantially similar form) certifying its foreign status, or otherwise establishes an exemption.

The amount of any backup withholding from a payment to a non-U.S. Holder will be allowed as a credit against such holder's U.S. federal income tax liability and may entitle such holder to a refund, provided that the required information is timely furnished to the IRS.

 ****

***Information Reporting and Withholding***

A U.S. Holder may be subject to backup withholding at a rate of 24% with respect to cash dividends and proceeds from a disposition of Ordinary Shares. In general, backup withholding will apply only if a U.S. Holder fails to comply with specified identification procedures. Backup withholding will not apply with respect to payments made to designated exempt recipients, such as corporations and tax-exempt organizations. Backup withholding is not an additional tax and may be claimed as a credit against the U.S. federal income tax liability of a U.S. Holder, provided that the required information is timely furnished to the IRS.

**F. Dividends and Paying Agents**

Not applicable.

**G. Statement by Experts**

Not applicable.

**H. Documents on Display**

We are subject to certain information reporting requirements of the Exchange Act, applicable to foreign private issuers and under those requirements will file reports with the SEC. The SEC maintains an Internet website that contains reports and other information regarding issuers that file electronically with the SEC. Our filings with the SEC will also available to the public through the SEC's website at www.sec.gov.

As a foreign private issuer, we are exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements, and our principal shareholders are exempt from the reporting provisions contained in Section 16 of the Exchange Act. Further, our officers, directors and principal shareholders are exempt from the 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 U.S. domestic companies whose securities are registered under the Exchange Act. However, we file with the SEC, within 120 days after the end of each fiscal year, or such applicable time as required by the SEC, an annual report on Form 20-F containing financial statements audited by an independent registered public accounting firm, and may submit to the SEC, on a Form 6-K, unaudited interim financial information.

We maintain a corporate website at http://www.scisparc.com. Information contained on, or that can be accessed through, our website and the other websites referenced above do not constitute a part of this Annual Report. We have included these website addresses in this Annual Report solely as inactive textual references.

**I. Subsidiary Information.**

Not applicable.

**J. Annual Report to Security Holders.**

Not applicable.

**ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**

In the ordinary course of our operations, we are exposed to certain market risks, primarily changes in foreign currency exchange rates and interest rates.

**Quantitative and Qualitative Disclosure About Market Risk**

We are exposed to market risks in the ordinary course of our business. Market risk represents the risk of loss that may impact our financial position due to adverse changes in financial market prices and rates. Our current investment policy is to invest available cash in bank deposits with banks that have a credit rating of at least A-minus. However, a substantial majority of our cash is held in current bank accounts that do not bear interest. In the future, we intend to hold most of our cash in deposits that bear interest. Given the current low rates of interest we receive, once we begin to hold most of our cash in deposits that bear interest, we do not expect to be adversely affected if such rates are reduced. Our market risk exposure is primarily a result of NIS/U.S. dollar exchange rates, which is discussed in detail in the following paragraph.

**Foreign Currency Exchange Risk** 

Our results of operations and cash flow are subject to fluctuations due to changes mainly in NIS/U.S. dollar currency exchange rates. As of December 31, 2025, the vast majority of our liquid assets are held in U.S. dollars, and the majority of our expenses is denominated in U.S. dollars. Changes of both 5% and 10% in the U.S. Dollar/NIS exchange rate would decrease/increase our loss for 2025 by less than 1%, respectively. However, these historical figures may not be indicative of future exposure, as we expect that the percentage of our NIS denominated expenses will materially decrease in the near future, therefore reducing our exposure to exchange rate fluctuations. Our functional currency is the U.S. dollar.

We do not hedge our foreign currency exchange risk. In the future, we may enter into formal currency hedging transactions to decrease the risk of financial exposure from fluctuations in the exchange rates of our principal operating currencies. These measures, however, may not adequately protect us from the material adverse effects of such fluctuations.

**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**

**(a)** **Disclosure Controls and Procedures** 

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, 2025, or the Evaluation Date. Based on such evaluation, those officers have concluded that, as of the Evaluation Date, our disclosure controls and procedures are effective in recording, processing, summarizing and reporting, on a timely basis, information required to be included in periodic filings under the Exchange Act and that such information is accumulated and communicated to management, including our principal executive and financial officers, as appropriate to allow timely decisions regarding required disclosure.

**(b)** **Management's Annual Report on Internal Control over Financial Reporting** 

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Our internal control over financial reporting is a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. We have a program for the review of our internal control over financial reporting to ensure compliance with the requirements of the Exchange Act and Section 404 of the Sarbanes-Oxley Act. Our internal control over financial reporting includes those policies and procedures that:

● pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

● provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with IFRS;

● provide reasonable assurance that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

● provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Our management, with the participation of our Chief Executive Officer and our Chief Financial Officer, assessed the effectiveness of our internal control over financial reporting as of December 31, 2025. In conducting its assessment of internal control over financial reporting, management based its evaluation on the Internal Control Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission as of December 31, 2025. Based on its evaluation, our management has concluded that our internal control over financial reporting was effective as of December 31, 2025.

**(c)** **Attestation Report of the Registered Public Accounting Firm** 

Not applicable (we are exempt from this requirement due to our status under the Exchange Act as a non-accelerated filer as of the current time).

**(d)** **Changes in Internal Control over Financial Reporting** 

Other than as explained below, there were no changes in internal control over financial reporting during the year ended December 31, 2025 that have materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting. As previously described in this Annual Report, the Neurothera Transaction, in which Neurothera is the acquired business for financial reporting purposes, was consummated on October 22, 2025. The Neurothera Transaction was accounted for as a reverse acquisition, with the Company being identified as the accounting acquirer. Additionally, Neurothera did not have business operations prior to the consummation date. Accordingly, and while certain financial close controls have been implemented to account for our new holdings and consolidation structure, our system of internal controls was not significantly impacted by the Neurothera Transaction.

**ITEM 16. [Reserved]**

**ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT**

All of the members of our audit committee are "independent," as such term is defined under Nasdaq rules. In addition, our Board of Directors has determined that Amnon Ben Shay is an audit committee financial expert, as defined under the rules under the Exchange Act.

**ITEM 16B. CODE OF ETHICS**

We have adopted a written code of ethics that applies to our officers and employees, including our principal executive officer, principal financial officer, principal controller and persons performing similar functions as well as our directors. Our Code of Ethics and Conduct is posted on our website at http://www.scisparc.com. Information contained on, or that can be accessed through, our website does not constitute a part of this Annual Report and is not incorporated by reference herein. If we make any amendment to the Code of Ethics and Conduct grant any waivers, including any implicit waiver, from a provision of the code, we will disclose the nature of such amendment or waiver on our website to the extent required by the rules and regulations of the SEC including the instructions to Item 16B of Form 20-F. We have not granted any waivers under our Code of Ethics and Conduct.

**ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES**

On February 4, 2026, our shareholders approved the appointment of Brightman Almagor Zohar & Co., a firm in the Deloitte Global Network, or Deloitte, as our independent registered public accounting firm, following the recommendation by our audit committee and the approval of our board of directors. Kost Forer Gabbay & Kasierer (a member of Ernst & Young Global, or EY, independent registered public accounting firm), served as our principal independent registered public accounting firm for the year ended December 31, 2024. Kost Forer Gabbay & Kasierer (a member of EY) served as our principal independent registered public accounting firm from 2009 until February 4, 2026.

The following table provides information regarding fees paid by us to Kost Forer Gabbay & Kasierer and/or other member firms of EY Global for all services, including audit services, for the year ended December 31, 2024 and to Brightman Almagor Zohar & Co., a firm in the Deloitte Global Network, for all services, including audit services, for the year ended December 31, 2025:

---

| | | |
|:---|:---|:---|
|  | **Year Ended<br> December 31,** | **Year Ended<br> December 31,** |
|  | **2024** | **2025** |
| Audit fees<sup>(1)</sup> | $155000 | $180000 |
| Audit-related fees<sup>(2)</sup> | 104000 |  |
| Tax fees<sup>(3)</sup> | 8000 |  |
| All other fees | - | - |
| Total | $267000 | $180000 |

---

(1) Includes professional services rendered in connection with the audit
of the Company and its subsidiary's annual financial statements.

(2) Includes professional services rendered in connection with the fees
relating to our public equity offerings and related filings.

(3) Includes services rendered in connection with the audit of our Israeli tax return report.

All of the services provided above were approved by our audit committee and by our board of directors.

***Pre-Approval of Auditors' Compensation***

Our audit committee charter provides, among others, that our audit committee is responsible for: (1) pre-approving audit and non-audit services provided to us by the independent registered public accounting firm; (2) reviewing and approving disclosures relating to fees and non-audit services required to be included in the SEC reports; and (3) establishing pre-approval policies and procedures for the engagement of independent accountants to render us services. Subject to the Board of Directors' and shareholders' approval, if and to the extent required by applicable law, the audit committee shall have the authority to approve all audit engagement fees and terms and all non-audit engagements, as may be permissible, with the independent registered public accounting firm.

**ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES**

Not applicable.

**ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS**

Not applicable.

**ITEM 16F. CHANGE IN REGISTRANT'S CERTIFYING ACCOUNTANT**

On February 4, 2026, our shareholders approved the appointment of Deloitte as our independent registered public accounting firm, following the recommendation by our audit committee and the approval of our board of directors. The services of Kost, Forer, Gabbay & Kasierer, a member of EY, were dismissed effective February 4, 2026.

The audit reports of EY on our consolidated financial statements for the two fiscal years ended December 31, 2024 did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles, except that EY's reports for the fiscal years ended December 31, 2024 and 2023 included an explanatory paragraph expressing substantial doubt about our ability to continue as a going concern.

During the two fiscal years ended December 31, 2024 and the subsequent interim period through February 4, 2026, there were no disagreements between us and EY on any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedures.

Prior to Deloitte's appointment, we did not consult with Deloitte regarding (i) the application of accounting principles to any specified transaction, completed or proposed, or the type of audit opinion that might be rendered on our consolidated financial statements, or (ii) any matter that was the subject of a disagreement (as described in Item 16F of Annual Report on Form 20-F) or a reportable event.

**ITEM 16G. CORPORATE GOVERNANCE** 

We are a "foreign private issuer", as such term is defined in Rule 405 under the Securities Act. As a foreign private issuer we are permitted to comply with Israeli corporate governance practices instead of the corporate governance rules of Nasdaq, provided that we disclose which requirements we are not following and the equivalent Israeli requirement.

We rely on this "foreign private issuer exemption" with respect to the following items:

● *Quorum*. While the Nasdaq rules require that the quorum for purposes of any meeting of the holders of a listed company's common voting stock, as specified in the company's bylaws, be no less than 33 1/3% of the company's outstanding common voting stock, under Israeli law, a company is entitled to determine in its articles of association the number of shareholders and percentage of holdings required for a quorum at a shareholders meeting. Our amended and restated articles of association provide that a quorum of two or more shareholders holding at least 15% of the voting rights present in person or by proxy is required for commencement of business at a general meeting. However, the quorum set forth in our amended and restated articles of association with respect to an adjourned meeting consists of any number of shareholders present in person or by proxy.

● *Shareholder approval*. Although the Nasdaq rules generally require shareholder approval of equity compensation plans and material amendments thereto, we follow Israeli practice, which is to have such plans and amendments approved only by the board of directors, unless such arrangements are for the compensation of chief executive officer or directors, in which case they also require the approval of the compensation committee and the shareholders. In addition, rather than follow the Nasdaq rules requiring shareholder approval for the issuance of securities in certain circumstances, we follow Israeli law, under which a private placement of securities requires approval by our board of directors and shareholders if it will cause a person to become a controlling shareholder (generally presumed at 25% ownership) or if: (a) the securities issued amount to 20% or more of our outstanding voting rights before the issuance; (b) some or all of the consideration is other than cash or listed securities or the transaction is not on market terms; and (c) transaction will increase the relative holdings of a shareholder that holds 5% or more of our outstanding share capital or voting rights or will cause any person to become, as a result of the issuance, a holder of more than 5% of our outstanding share capital or voting rights.

● *Executive Sessions*. The Nasdaq rules require that independent directors of a Nasdaq listed company must meet regularly in executive session (without members of management present), and such executive sessions should occur at least twice a year. In this regard we have elected to adopt the practices of our home country, Israel, which does not require independent directors to meet regularly in executive sessions separate from the full board of directors *.* 

● *Nomination of our directors*. Nasdaq rules require director nominations of a Nasdaq listed company to be made or recommended solely by independent directors and the director nominations process be addressed by a formal written charter or board resolution. We follow the requirements of Israeli law, which does not require us to have a formal written charter addressing the director nominations process. The nominations for directors, which are presented to shareholders by a board of directors, are generally made by the board of directors itself, in accordance with the provisions of the Companies Law. Nominations need not be made by a nominating committee of a board of directors consisting solely of independent directors or by a vote consisting solely of our independent directors in order to determine which persons shall be nominated for election by our shareholders.

We otherwise intend to comply with the rules generally applicable to U.S. domestic companies listed on Nasdaq. We may, however, in the future decide to rely upon the "foreign private issuer exemption" for purposes of opting out of some or all of the other corporate governance rules.

**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 governing the purchase, sale and other transactions in our securities that applies to our directors, senior management, employees, consultants, contractors and other covered persons, including immediate family members and entities controlled by any of the foregoing persons.

This policy prohibits, among other things, insider trading and certain speculative transactions in our securities (including short sales, buying put and selling call options and other hedging or derivative transactions in our securities) and establishes a regular blackout period schedule during which directors, senior management, employees, and other covered persons may not trade in our securities, as well as certain pre-clearance procedures that our directors and officers, our subsidiaries and/or affiliates must observe prior to effecting any transaction in our securities.

We believe that this policy is reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and listing standards applicable to us. A copy of this policy is filed as Exhibit 11.1 to this Form 20-F.

**ITEM 16K. CYBERSECURITY.**

Our board of directors recognizes the critical importance of maintaining the trust and confidence of our customers, clients, business partners and employees. Our IT general controls cybersecurity policies, standards, processes and practices are fully integrated into our risk management approach. In general, we seek to address IT general controls cybersecurity risks through a comprehensive, cross-functional approach that is focused on preserving the confidentiality, security and availability of the information that we collect and store by identifying, preventing and mitigating cybersecurity threats and effectively responding to cybersecurity incidents when they occur.

**Risk Management and Strategy**

As part of the critical elements of our overall risk management approach, our cybersecurity program is focused on the following key areas:

● Governance: As discussed in more detail under the heading "Governance," our management oversees our cybersecurity risk management and interacts with our Sarbanes-Oxley Act, or SOX, advisor and our Information Security advisor and other relevant members of management.

● Collaborative Approach: we have implemented a comprehensive, cross-functional approach to identifying, preventing and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that provide for the prompt escalation of certain cybersecurity incidents so that decisions regarding the public disclosure and reporting of such incidents can be made by management in a timely manner.

● Technical Safeguards: we deploy technical safeguards that are designed to protect our information systems from cybersecurity threats, including firewalls, intrusion prevention and detection systems, anti-malware functionality and access controls, which are evaluated and improved through vulnerability assessments and cybersecurity threat intelligence.

● Recovery Planning: we have established and maintained comprehensive recovery plans that fully address our response to a cybersecurity incident, and such plans are tested and evaluated on a regular basis.

● Education and Awareness: We provide regular, mandatory training for personnel regarding cybersecurity threats as a means to equip our personnel with effective tools to address cybersecurity threats, and to communicate our evolving information security policies, standards, processes and practices.

We engage in the periodic assessment and testing of our policies, standards, processes and practices that are designed to address cybersecurity threats and incidents. These efforts include a wide range of activities, including audits, assessments, tabletop exercises, threat modeling, vulnerability evaluation, and other exercises focused on evaluating the effectiveness of our cybersecurity measures and planning. We are engaged with a subcontractor that monitors the IT system and cybersecurity, including centralized patch management as part of their routine job functions. We regularly engage third parties to perform assessments on our cybersecurity measures, including information security maturity assessments, audits and independent reviews of our information security control environment and operating effectiveness. The results of such assessments, audits and reviews are reported to the board of directors, and we adjust our cybersecurity policies, standards, processes and practices as necessary based on the information provided by these assessments, audits and reviews.

**Governance**

Our management interacts with our SOX advisor and our Information Security advisor and other relevant members of management. Our Information Security advisor is responsible for assessing and managing cyber risk management, informs senior management regarding the prevention, detection, mitigation, and remediation of cybersecurity incidents and supervises such efforts. Our Information Security advisor has experience selecting, deploying, and operating cybersecurity technologies, initiatives, and processes, and relies on threat intelligence as well as other information obtained from governmental, public or private sources. The board of directors is engaged in our cybersecurity monitoring managed by our Information Security advisor, receives updates on IT general controls, and a set of policies and procedures that govern how our IT systems operate and ensure the confidentiality, integrity, and availability of data as well as on cybersecurity risks, including prevention of data theft, unauthorized access, operational disruption, and data breaches. Any issues are appropriately addressed in a timely manner. Our management also receives prompt and timely information regarding any cybersecurity incident that meets established reporting thresholds, as well as ongoing updates regarding any such incident until it has been addressed. On an annual basis, our management discusses our approach to IT general controls and cybersecurity risk management with our SOX advisor.

As of April 28, 2026, we do not believe that we have experienced any cybersecurity attack. Cybersecurity threats and cybersecurity incidents, if they occur, can materially affect or are reasonably likely to affect us, including its business strategy, results of operations or financial condition.

**PART III**

**ITEM 17. FINANCIAL STATEMENTS**

We have elected to provide financial statements and related information pursuant to Item 18.

**ITEM 18. FINANCIAL STATEMENTS**

The consolidated financial statements and the related notes required by this Item are included in this Annual Report beginning on page F-1.

**ITEM 19. EXHIBITS**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | | **Incorporation by Reference** | **Incorporation by Reference** | **Incorporation by Reference** | **Incorporation by Reference** |
| <br>**Exhibit No.** | <br>**Exhibit Description** | **Form** | **File No.** | **Exhibit No.** | **Filing Date** |
| 1.1 | [Amended and Restated Articles of Association of SciSparc Ltd.](http://www.sec.gov/Archives/edgar/data/1611746/000121390025058382/ea024713301ex99-1_scisparc.htm) | 6-K | &nbsp;&nbsp;&nbsp;&nbsp;001-38041 | 99.1 | June 26, 2025 |
| 2.1 | [Description of Securities](ea028603001ex2-1.htm) |  |  |  | &nbsp;&nbsp;&nbsp;&nbsp;\* |
| 2.2 | [Form of Warrant to Purchase Ordinary Shares of SciSparc Ltd.](http://www.sec.gov/Archives/edgar/data/1611746/000121390026015553/ea027679001ex4-2_scisparc.htm) | 6-K | 001-38041 | 4.2 | February 12, 2026 |
| 2.3 | [Form of Pre-Funded Warrant](http://www.sec.gov/Archives/edgar/data/1611746/000121390026007693/ea027406602ex4-1_scisparc.htm) | 6-K | 001-38041 | 4.1 | January 26, 2026 |
| 4.1 | [Form of Indemnification Agreement](http://www.sec.gov/Archives/edgar/data/1611746/000121390017004433/f20f2016ex4xii_therapixbio.htm) | 20-F | 001-38041 | 4.12 | May 1, 2017 |
| 4.2 | [Form of Exculpation Agreement](http://www.sec.gov/Archives/edgar/data/1611746/000121390021018407/f20f2020ex4-5_scisparcltd.htm) | 20-F | 001-38041 | 4.5 | March 30, 2021 |
| 4.3 | [Compensation Policy of SciSparc Ltd. for Executive Officers and Directors](http://www.sec.gov/Archives/edgar/data/1611746/000121390025058382/ea024713301ex99-2_scisparc.htm) | 6-K | 001-38041 | 99.2 | June 26, 2025 |
| 4.4 | [License Agreement dated July 29, 2018, by and between the Company and Yissum Research Development Company of the Hebrew University of Jerusalem Ltd.](http://www.sec.gov/Archives/edgar/data/1611746/000121390019008868/f20f2018ex4-2_therapixbio.htm) | 20-F | 001-38041 | 4.2 | May 15, 2019 |
| 4.5 | [Consulting Agreement, dated March 22, 2023, by and between Jeffs' Brands Ltd and SciSparc Nutraceuticals Inc.](http://www.sec.gov/Archives/edgar/data/1611746/000121390023026713/ea176389ex10-3_scisparcltd.htm) | 6-K | 001-38041 | 10.3 | April 4, 2023 |
| 4.6 | [Standby Equity Purchase Agreement dated January 21, 2024, between YA II PN Ltd. and SciSparc Ltd.](http://www.sec.gov/Archives/edgar/data/1611746/000121390024006291/ea192120ex10-1_scisparc.htm) | 6-K | 001-38041 | 10.1 | January 25, 2024 |
| 4.7 | [First Amendment to the Standby Equity Purchase Agreement, dated as of February 26, 2024, between SciSparc Ltd. and YA II PN, Ltd](http://www.sec.gov/Archives/edgar/data/1611746/000121390024017526/ea0200391ex10-22_scisparcltd.htm) | F-1 | 333-277394 | 10.22 | February 27, 2024 |
| 4.8 | [Israeli Share Option Plan](http://www.sec.gov/Archives/edgar/data/1611746/000121390016017994/ff12016ex10v_therapix.htm) | F-1 | 333-214458 | 10.5 | November 4, 2016 |
| 4.9 | [SciSparc Share Incentive Plan (2023)](http://www.sec.gov/Archives/edgar/data/1611746/000121390024017526/ea0200391ex10-7_scisparcltd.htm) | F-1 | 333-277394 | 10.7 | February 27, 2024 |
| 4.10 | [Share Transfer Agreement, by and among Capital Point Ltd., Therapix Biosciences, Ltd. and Evero Health Ltd., dated May 15, 2020](http://www.sec.gov/Archives/edgar/data/1611746/000121390020012970/ea122045ex99-1_therapix.htm) | 6-K | 001-38041 | 99.1 | May 19, 2020 |
| 4.12 | [Amendment to the Loan Agreement, dated June 9, 2024, by and between SciSparc Ltd. and Polyrizon Ltd.](http://www.sec.gov/Archives/edgar/data/1611746/000121390024053324/ea020795601ex10-25_scisparc.htm) | F-1 | 333-277394 | 10.25 | June 17, 2024 |
| 4.13 | [Exclusive Patent License Agreement, dated August 13, 2024, between SciSparc Ltd. and Polyrizon Ltd.](http://www.sec.gov/Archives/edgar/data/1611746/000121390024070407/ea021152801ex10-1_scisparc.htm) | 6-K | 001-38041 | 10.1 | August 19, 2024 |
| 4.14 | [Securities Purchase Agreement between SciSparc Ltd. and YA II PN, Ltd.](http://www.sec.gov/Archives/edgar/data/1611746/000121390025017996/ea023226601ex10-2_scisparc.htm) | 6-K | 001-38041 | 10.2 | February 27, 2025 |
| 4.15 | [Global Guaranty Agreement, dated February 25, 2025, by Brain Bright Ltd. and Evero Health Ltd. in favor of an investor.](http://www.sec.gov/Archives/edgar/data/1611746/000121390025017996/ea023226601ex10-3_scisparc.htm) | 6-K | 001- 38041 | 10.3 | February 27, 2025 |
| 4.16 | [Securities Purchase and Exchange Agreement, dated February 25, 2025, by and among N2OFF, Inc., MitoCareX Bio Ltd., SciSparc Ltd., Dr. Alon Silberman and Prof. Ciro Leonardo Pierri.](http://www.sec.gov/Archives/edgar/data/1611746/000121390025019407/ea023280701ex10-1_scisparc.htm) | 6-K | 001- 38041 | 10.1 | March 3, 2025 |

---

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| 4.21 | [Framework Agreement, dated as of October 6, 2025, by and among SciSparc Ltd., SciSparc Merger Sub Ltd., and AutoMax Ltd.](http://www.sec.gov/Archives/edgar/data/1611746/000121390025096287/ea026036601ex99-1_scisparc.htm) | 6-K | 001- 38041 | 99.1 | October 6, 2025 |  |
| 4.22 | [Asset and Share Purchase Agreement, dated as of October 9, 2025, by and between SciSparc Ltd. and Miza III Ventures Inc.](http://www.sec.gov/Archives/edgar/data/1611746/000121390025099227/ea026136201ex99-1_scisparc.htm) | 6-K | 001- 38041 | 10.1 | October 15, 2025 |  |
| 4.23 | [Binding Term Sheet for the Sale of Patent Portfolio and Trademarks by and between SciSparc Ltd. and Xylo Technologies Ltd. (November 26, 2025)](http://www.sec.gov/Archives/edgar/data/1611746/000121390025115471/ea026740001ex10-1_scisparc.htm) | 6-K | 001- 38041 | 10.1 | November 26, 2025 |  |
| 4.24 | [Form of Securities Purchase Agreement, dated November 27, 2025, by and between the Company and the purchaser parties thereto](http://www.sec.gov/Archives/edgar/data/1611746/000121390025115749/ea026763701ex10-1_scisparc.htm) | 6-K | 001- 38041 | 10.1 | November 28, 2025 |  |
| 4.25 | [Securities Purchase Agreement, dated February 12, 2026, by and between SciSparc Ltd. and L.I.A. Pure Capital Ltd.](http://www.sec.gov/Archives/edgar/data/1611746/000121390026015553/ea027679001ex10-1_scisparc.htm) | 6-K | 001-38041 | 10.1 | February 12, 2026 |  |
| 4.26 | [Side Letter to Securities Purchase Agreement, dated February 12, 2026, by and between SciSparc Ltd. and L.I.A. Pure Capital Ltd.](http://www.sec.gov/Archives/edgar/data/1611746/000121390026017268/ea027738901ex10-1_scisparc.htm) | 6-K | 001-38041 | 10.1 | February 17, 2026 |  |
| 4.27 | [Form of Convertible Promissory Note](http://www.sec.gov/Archives/edgar/data/1611746/000121390026015553/ea027679001ex4-1_scisparc.htm) | 6-K | 001-38041 | 4.1 | February 12, 2026 |  |
| 4.28 | [Asset Purchase Agreement, Dated January 8, 2026, by and between Xylo Technologies Ltd. and SciSparc Ltd.](http://www.sec.gov/Archives/edgar/data/1611746/000121390026003694/ea027269501ex10-1_scisparc.htm) | 6-K | 001-38041 | 10.1 | January 13, 2026 |  |
| 4.29 | [Share Purchase Agreement, dated March 9, 2026, by and between Shareholders of CliniQuantum Ltd., CliniQuantum Ltd. and NeuroThera Labs Inc.](ea028603001ex4-29.htm) |  |  |  |  | \* |
| 8.1 | [List of Subsidiaries](http://www.sec.gov/Archives/edgar/data/1611746/000121390025125493/ea027086601ex21-1_scisparc.htm) | F-1 | 333-281821 | 21.1 | December 23, 2025 |  |
| 11.1 | [Insider Trading Policy](ea028603001ex11-1.htm) |  |  |  |  | \* |
| 12.1 | [Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.](ea028603001ex12-1.htm) |  |  |  |  | \* |
| 13.1 | [Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. 1350.](ea028603001ex13-1.htm) |  |  |  |  | \*\* |
| 15.1 | [Consent of Kost Forer Gabbay & Kasierer, a member of EY Global, independent registered accounting firm for the Registrant.](ea028603001ex15-1.htm) |  |  |  |  | \* |
| 15.2 | [Consent of Brightman Almagor Zohar & Co., a firm in the Deloitte Global Network.](ea028603001ex15-2.htm) |  |  |  |  | \* |
| 97.1 | [Clawback Policy](http://www.sec.gov/Archives/edgar/data/1611746/000121390024028859/ea020288201ex97-1_scisparc.htm) | 20-F | 001-38041 | 97.1 | April 1, 2024 |  |
| 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 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 (embedded within the Inline XBRL document). |  |  |  |  |  |

---

\* Filed herewith

\*\* Furnished herewith.

**SIGNATURES**

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this Annual Report on Form 20-F filed on its behalf.

---

| | |
|:---|:---|
| **SCISPARC LTD.** | **SCISPARC LTD.** |
| By: | /s/ Oz Adler |
|  | Oz Adler |
|  | Chief Executive Officer |

---

Date: April 29, 2026

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**CONSOLIDATED FINANCIAL STATEMENTS**

**AS OF DECEMBER 31, 2025**

**U.S. DOLLARS IN THOUSANDS**

**INDEX**

---

| | |
|:---|:---|
|  | **Page** |
| **[Report of Independent Registered Public Accounting Firm (PCAOB ID 1197)](#z_001)** | **F-2 - F-3** |
| **[Report of Independent Registered Public Accounting Firm (PCAOB ID 1281)](#F_001)** | **F-4** |
| [**Consolidated Statements of Financial Position**](#F_002) | **F-5 - F-6** |
| **[Consolidated Statements of Comprehensive Loss](#F_003)** | **F-7** |
| [**Consolidated Statements of Changes in Equity**](#F_004) | **F-8** |
| [**Consolidated Statements of Cash Flows**](#F_005) | **F-9 - F-11** |
| [**Notes to Consolidated Financial Statements**](#F_006) | **F-12 - F-52** |

---

![](ea028603001_img2.jpg)

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

**To the shareholders and the Board of Directors of SciSparc Ltd.**

**Opinion on the Financial Statements**

We have audited the accompanying consolidated statement of financial position of SciSparc Ltd. and its subsidiaries (the "Company") as of December 31, 2025, the related consolidated statements of comprehensive loss, changes in equity and cash flows for the year then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the 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 (IASB).

**Going Concern**

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1B to the financial statements, the Company's accumulated losses and additional funds needed to maintain its operations 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 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 audit 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 audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

**Critical Audit Matter**

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates 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 a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

**Revenue recognition — Refer to Note 2t to the Consolidated Financial Statements**

*Critical Audit Matter Description*

 

The Company recognizes revenue from product sales through Amazon's Fulfillment by Amazon ("FBA") platform. Revenue is recognized when control of the product transfers to the customer, net of estimated returns. The Company uses Amazon-generated reports and settlement statements to record revenue and reconcile sales and collection activity.

We identified revenue recognized for FBA-channel sales as a critical audit matter because of the use of third-party reports in the recording of revenues and reconciliation of sales and collection activity. This required an increased extent of effort, in relation to our audit as whole, when auditing the occurrence assertion for FBA-channel revenue.

*How the Critical Audit Matter Was Addressed in the Audit*

 

Our audit procedures related to the occurrence assertion of FBA-channel revenue included, among others:

● We agreed FBA-channel revenue to underlying Amazon orders and delivery reports.

● We tested the Company's inventory roll-forward and agreed the underlying quantities of product sales to the Company's recorded revenue.

● We agreed cash received in bank to Amazon settlement statements and to the respective recorded revenue.

/s/ Brightman Almagor Zohar & Co.

Brightman Almagor Zohar & Co.

Certified Public Accountants

A Firm in the Deloitte Global Network

Tel Aviv, Israel

April 29, 2026

We have served as the Company's auditor since 2026.

---

| | | |
|:---|:---|:---|
| ![](ea028603001_img1.jpg) | **Kost Forer Gabbay & Kasierer**<br> 144 Menachem Begin Road, <br> Tel-Aviv 6492102, Israel | Tel: +972-3-6232525<br> Fax: +972-3-5622555 <br> ey.com |

---

**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**

**To the Shareholders and the Board of Directors of**

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**Opinion on the Financial Statements**

We have audited the accompanying consolidated statement of financial position of SciSparc Ltd. and its subsidiaries (the "Company") as of December 31, 2024, the related consolidated statements of comprehensive loss, changes in equity and cash flows for each of the two years in the period ended December 31, 2024, and the related notes (collectively referred to as the "consolidated financial statements"). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

**The Company's Ability to Continue as a Going Concern**

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations, negative cash flows from operating activities, and has stated that substantial doubt exists about the Company's ability to continue as a going concern. Management's evaluation of the events and conditions and management's plans regarding these matters are also described in Note 1. 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 audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

---

| | |
|:---|:---|
| /s/ KOST FORER GABBAY & KASIERER | Tel Aviv, Israel |
|  | April 24, 2025 |

---

A Member of EY Global

We served as the Company's auditor from 2007 to 2025.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF FINANCIAL POSITION**

---

| | | | |
|:---|:---|:---|:---|
|  | | **December 31,** | **December 31,** |
|  | | **2025** | **2024** |
|  | <br>**Note** | **USD in thousands** | **USD in thousands** |
| ASSETS |  |  |  |
| CURRENT ASSETS: |  |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | 4 | $4591 | $1540 |
| &nbsp;&nbsp;&nbsp;Restricted deposit |  | 20 | 20 |
| &nbsp;&nbsp;&nbsp;Trade receivables |  | 10 | 10 |
| &nbsp;&nbsp;&nbsp;Other accounts receivable | 6 | 289 | 1079 |
| &nbsp;&nbsp;&nbsp;Investments in short-term financial assets | 24g | - | 517 |
| &nbsp;&nbsp;&nbsp;Current maturities of long-term loan | 8c | 451 | - |
| &nbsp;&nbsp;&nbsp;Loans to a related party | 8c | - | 4224 |
| &nbsp;&nbsp;&nbsp;Inventory | 5 | 75 | 113 |
|  |  | 5436 | 7503 |
| NON-CURRENT ASSETS: |  |  |  |
| &nbsp;&nbsp;&nbsp;Intangible assets, net | 11 | 1170 | 1479 |
| &nbsp;&nbsp;&nbsp;Investments in an associate accounted for under the equity method | 7 | - | 952 |
| &nbsp;&nbsp;&nbsp;Investments in financial assets | 8, 24d | 997 | 354 |
| &nbsp;&nbsp;&nbsp;Property and equipment, net | 10 | 19 | 59 |
|  |  | 2186 | 2844 |
|  |  | $7622 | $10347 |

---

The accompanying notes are an integral part of the consolidated financial statements.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF FINANCIAL POSITION**

---

| | | | |
|:---|:---|:---|:---|
|  | | **December 31,** | **December 31,** |
|  | | **2025** | **2024** |
|  | <br>**Note** | **USD in thousands** | **USD in thousands** |
| LIABILITIES AND EQUITY |  |  |  |
| CURRENT LIABILITIES: |  |  |  |
| Trade payables | 12 | $783 | $816 |
| Other payables | 13 | 270 | 242 |
| Related parties | 24a | 504 | - |
| Current maturities of long-term loans | 25b | 356 | - |
| Accrued legal contingency | 17e | 340 | 341 |
|  |  | 2253 | 1399 |
| NON-CURRENT LIABILITIES: |  |  |  |
| Related party | 24a | 222 | - |
| Lease liability, excluding current portion | 9 | - | 9 |
|  |  | 222 | 9 |
|  |  | 2475 | 1408 |
| EQUITY: | 18 |  |  |
| Share capital and premium |  | 76481 | 70886 |
| Reserve from share-based payment transactions | 19 | 6613 | 5746 |
| Warrants |  | 5190 | 5190 |
| Other reserves | 2d,25 | 1907 | 497 |
| Transactions with non-controlling interests | 25 | 1202 | 810 |
| Accumulated deficit |  | (87154) | (74975) |
| Equity attributable to owners of the Company |  | 4239 | 8154 |
| Non-controlling interests |  | 908 | 785 |
| Total equity |  | 5147 | 8939 |
| Total liabilities and equity |  | $7622 | $10347 |

---

The accompanying notes are an integral part of the consolidated financial statements.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS**

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | | **2025** | **2024** | **2023** |
|  |<br>**Note** | **USD in thousands (except per share data)** | **USD in thousands (except per share data)** | **USD in thousands (except per share data)** |
| Revenues | 2t | $856 | $1306 | $2879 |
| Cost of revenues | 20 | 225 | 800 | 683 |
| Gross profit |  | 631 | 506 | 2196 |
| Research and development expenses | 21a | 2097 | 1707 | 1641 |
| Sales and marketing | 21b | 912 | 1515 | 2484 |
| Impairment of intangible assets |  | 115 | 1344 | 1042 |
| General and administrative expenses | 21c | 6371 | 4526 | 3844 |
| Other income, net | 21d | (490) | (1270) | - |
| Operating loss |  | 8374 | 7316 | 6815 |
| Equity losses of an associate | 7 | 500 | 429 | 210 |
| Gain from sale of an associate | 7 | (2231) | - | - |
| Finance income | 21e | (2278) | (612) | (2219) |
| Finance expenses | 21f | 8199 | 353 | 1055 |
| Loss before income taxes |  | 12564 | 7486 | 5861 |
| Taxes on income |  | - | (14) | 22 |
| Net loss and total comprehensive loss |  | 12564 | 7472 | 5883 |
| Attributable to: |  |  |  |  |
| Equity holders of the Company |  | 12179 | 6284 | 5122 |
| Non-controlling interests |  | 385 | 1188 | 761 |
|  |  | 12564 | 7472 | 5883 |
| Basic and diluted loss per ordinary share attributable to equity holders of the Company (\*): | 22 | 98.07 | 203.89 | 2374.55 |

---

(\*) Share and per share data in these consolidated financial statements have been retrospectively adjusted, for all periods presented, to reflect a number of shares that is equivalent to the number of shares of the Company post the Fifth Reverse Share Split (see note 18a).

The accompanying notes are an integral part of the consolidated financial statements.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**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** | **Attributable to equity holders of the Company** | **Attributable to equity holders of the Company** | | |
|  | **Share<br> capital<br> and<br> premium** | **Reserve<br> from share-<br> based<br> payment<br> transactions** | **Warrants** | **Transactions<br> with non-<br> controlling<br> interests** | **Other<br> reserves** | **Accumulated<br> deficit** | **Total** |<br>**Non-<br> controlling<br> interests** |<br>**Total<br> equity** |
|  | **USD in thousands** | **USD in thousands** | **USD in thousands** | **USD in thousands** | **USD in thousands** | **USD in thousands** | **USD in thousands** | **USD in thousands** | **USD in thousands** |
| Balance at January 1, 2023 | $58592 | $5180 | $5190 | $559 | $497 | $(63569) | $6449 | $- | $6449 |
| Net loss | - | - | - | - | - | (5122) | (5122) | (761) | (5883) |
| Sale of non-controlling interest in subsidiary | - | - | - | 251 | - | - | 251 | 2734 | 2985 |
| Issuance of ordinary shares in respect of investment in associate | 288 | - | - | - | - | - | 288 | - | 288 |
| Issuance of ordinary shares, net of issue expenses | 5552 | - | - | - | - | - | 5552 | - | 5552 |
| Cost of share-based payment | 94 | 102 | - | - | - | - | 196 | - | 196 |
| Balance at December 31, 2023 | $64526 | $5282 | $5190 | $810 | $497 | $(68691) | $7614 | $1973 | $9587 |
| Net loss | - | - | - | - | - | (6284) | (6284) | (1188) | (7472) |
| Issuance of ordinary shares, net of issue expenses | 6255 |  |  |  |  | - | 6255 | - | 6255 |
| Cost of share-based payment | 105 | 464 | - | - | - | - | 569 | - | 569 |
| Balance at December 31, 2024 | $70886 | $5746 | $5190 | $810 | $497 | $(74975) | $8154 | $785 | $8939 |
| Net loss | - | - | - | - | - | (12179) | (12179) | (385) | (12564) |
| Issuance of ordinary shares, net of issue expenses (note 18k) | 2262 | - | - | - | - | - | 2262 | - | 2262 |
| Issuance and exercise of warrants (note 18j) | 1121 | - | - | - | - | - | 1121 | - | 1121 |
| Issuance and conversion of convertible debentures (note 18i) | 2212 | - | - | - | - | - | 2212 | - | 2212 |
| Deemed issuance of shares by a subsidiary (note 25) | - | - | - | 392 | - | - | 392 | 187 | 579 |
| Deemed stock exchange listing expenses (note 25) | - | - | - | - | 1410 | - | 1410 | - | 1410 |
| Cost of subsidiaries share-based payment (note 25) | - | - | - | - | - | - | - | 321 | 321 |
| Cost of share-based payment | - | 867 | - | - | - | - | 867 | - | 867 |
| Balance at December 31, 2025 | $76481 | $6613 | $5190 | $1202 | $1907 | $(87154) | $4239 | $908 | $5147 |

---

The accompanying notes are an integral part of the consolidated financial statements.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
|  | **USD in thousands** | **USD in thousands** | **USD in thousands** |
| <u>Cash flows from operating activities:</u> |  |  |  |
| &nbsp;&nbsp;&nbsp;Net loss | $(12564) | $(7472) | $(5883) |
| &nbsp;&nbsp;&nbsp;Adjustments to reconcile loss to net cash used in operating activities: |  |  |  |
| &nbsp;&nbsp;&nbsp;Adjustments to the profit or loss items: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 234 | 482 | 538 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of an intangible asset | 115 | 1344 | 1042 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of share-based payment | 867 | 569 | 196 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Impairment of loan (see note 8c) | 5973 | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subsidiaries' cost of share-based payment (see note 25) | 321 | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Finance income, net | (1998) | (897) | (2205) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Equity losses | 500 | 429 | 210 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deemed stock exchange listing expense | 1410 | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain on sale of an associate accounted for under the equity method | (2231) | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Losses from remeasurement of investment in financial assets | 1791 | 305 | 1048 |
|  | 6982 | 2232 | 829 |
| &nbsp;&nbsp;&nbsp;Working capital adjustments: |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Decrease in trade receivables | - | 12 | 55 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Decrease (increase) in other accounts receivable | 790 | (535) | (409) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Decrease (increase) in inventory | 38 | 629 | (74) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase (decrease) in trade payables | (164) | 25 | (397) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase (decrease) in other payables | 55 | 20 | (8) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increase (decrease) in related parties | 726 | (15) | - |
|  | 1445 | 136 | (833) |
| Net cash used in operating activities | $(4137) | $(5104) | $(5887) |

---

The accompanying notes are an integral part of the consolidated financial statements.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
|  | **USD in thousands** | **USD in thousands** | **USD in thousands** |
| <u>Cash flows from investing activities:</u> |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Withdrawal of (investment in) restricted bank deposits | $- | $45 | $(5) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Withdrawal of (investment in) short-term bank deposits | - | 3000 | (3000) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sale of property and equipment | - | 8 | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investment in an associate accounted for under the equity method | (100) | (600) | (400) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Loan to related parties | (2000) | (4078) | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Investments in financial assets | - | - | (689) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from sale of an affiliate accounted for under the equity method (see note 7) | 700 | - | - |
| &nbsp;&nbsp;&nbsp;Net cash used in investing activities | (1400) | (1625) | (4094) |
| <u>Cash flows from financing activities:</u> |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from issuance of share capital (net of issuance expenses) | 2262 | 6255 | 5552 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from exercise of warrants | 1121 | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sale of non-controlling interest in a subsidiary | - | - | 2985 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayment of loans | 192 | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Receipt of loans | 356 | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from deemed issuance of shares by a subsidiary (see (b) below) | 710 | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from issuance of convertible debentures (see note 18i) | 3990 | - | - |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Interest paid on lease liability | (5) | (8) | (7) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Repayment of lease liability | (38) | (54) | (47) |
| &nbsp;&nbsp;&nbsp;Net cash provided by financing activities | 8588 | 6193 | 8483 |
| Increase (decrease) in cash | 3051 | (536) | (1498) |
| &nbsp;&nbsp;&nbsp;Cash at the beginning of the period | 1540 | 2076 | 3574 |
| &nbsp;&nbsp;&nbsp;Cash at the end of the period | $4591 | $1540 | $2076 |

---

The accompanying notes are an integral part of the consolidated financial statements.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**CONSOLIDATED STATEMENTS OF CASH FLOWS**

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
|  | **USD in thousands** | **USD in thousands** | **USD in thousands** |
| (a) <u>Significant non-cash financing and investing activities</u>: |  |  |  |
| Right-of-use asset recognized with corresponding lease liability | - | 75 | 102 |
| Investment in financial asset | - | - | 288 |
| Exchange of MitoCareX shares with Nexentis Inc. shares (see Note 7) | 2027 | - | - |
| Conversion of convertible debentures | 2212 | - | - |

---

---

| | |
|:---|:---|
| (b) Assets and liabilities received as consideration for deemed issuance of shares by a subsidiary |  |
|  | **As of<br> October 22,<br> 2025** |
| **Consolidation of NeuroThera (as described in Note 1a)** |  |
| Trade payables | (131) |
| Net assets received as consideration for deemed issuance of shares by a subsidiary | (579) |
| **Cash received as consideration for deemed issuance of shares by a subsidiary** | (710) |

---

The accompanying notes are an integral part of the consolidated financial statements.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 1:-** | **GENERAL** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. SciSparc Ltd. (formerly
 known as Therapix Biosciences Ltd.) ("SciSparc" or the "Company" or the "Group"), a
 clinical-stage pharmaceutical company, was incorporated in Israel and commenced its operations on August 23, 2004. Until March 2014,
 SciSparc and its subsidiaries at the time were mainly engaged in developing several innovative immunotherapy products and
 SciSparc's own patents in the immunotherapy field. In August 2015, the Company decided to adopt a different business strategy
 and began focusing on developing a portfolio of approved drugs based on cannabinoid molecules. SciSparc's focus is on creating
 and enhancing a portfolio of technologies and assets based on cannabinoid pharmaceuticals. With this focus, the Company, through its
 subsidiary NeuroThera Labs Inc. (formerly known as Miza III Ventures Inc.) (TSXV:NTLX) ("NeuroThera"), is
 currently engaged in the following drug development programs based on Δ9-tetrahydrocannabinol ("THC") and/or
 non-psychoactive cannabidiol for the treatment of Tourette syndrome, Alzheimer's disease and agitation; and SCI-210 for the
 treatment of autism spectrum disorder and status epilepticus. The Company, through NeuroThera, also owns a controlling interest in a
 subsidiary whose business focuses on the sale of hemp seed oil-based products on the Amazon Marketplace.

The Company's ordinary shares, no par value per share ("ordinary shares"), are listed on Nasdaq and are trading under the symbol "SPRC".

As of December 31, 2025, the Company has a controlling interest in NeuroThera, a publicly traded company on the TSX Venture Exchange (the "TSXV") in Canada, Evero Health Ltd. ("Evero") and Brain Bright Ltd. ("Brain Bright"), together, the "Subsidiaries. Also, as of December 31, 2025, the Company holds 75% of the outstanding shares of NeuroThera (see note 25).

Evero and Brain Bright are inactive Israeli incorporated companies.

On July 3, 2025, the Company effected a one-for-twenty one (1-for-21) reverse share split of the issued and outstanding ordinary shares. On February 5, 2026, the Company effected a one-for-nine (1-for-9) reverse share split (the "Fifth Reverse Share Split") of the issued and outstanding ordinary shares. Consequently, all share and per share data included in these financial statements for all periods preceding the effective dates of the reverse share splits have been adjusted to reflect the reverse splits' ratios in these consolidated financial statements for all periods presented. See note 18.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. The Group incurred operating losses since its incorporation
and expects to continue to incur operating losses for the foreseeable future. As of December 31, 2025, the Group had an accumulated deficit
of approximately $87,154 as a result of recurring operating losses.

As of December 31, 2025, the Company's cash and cash equivalents totaled $4,591. For the year ended December 31, 2025, the Company had an operating loss of $8,374 and negative cash flows from operating activities of $4,137. The Company's current cash and cash equivalents position is not sufficient to fund the Company's planned operations for at least a year beyond the filing date of the financial statements. The ability to continue as a going concern is dependent upon the Company obtaining the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they become due. While the Company has successfully raised funds in the past, there is no guarantee that it will be able to do so in the future. The above-mentioned factors raise substantial doubt about the Group's ability to continue as a going concern.

The accompanying consolidated financial statements were prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and liabilities and commitments in the normal course of business. Such financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from uncertainty related to the Company's ability to continue as a going concern.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 1:-** | **GENERAL (CONT.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Definitions and Meanings:

---

| |
|:---|
| The Company – SciSparc Ltd. (formerly known as Therapix Biosciences Ltd.) |
| The Group – SciSparc Ltd. (formerly Therapix Biosciences Ltd.) and its Subsidiaries, as detailed in Note 1a. |
| SNI – SciSparc Neutraceuticals Inc. |
| Subsidiaries – Companies that are controlled by the Company, as defined in IFRS 10, "*Consolidated Financial Statements*", and whose accounts are consolidated with those of the Company. |
| Associate – An entity over which the Company has significant influence, as defined in IAS 28, "*Investment in Associates and Joint Ventures*" and is not a Subsidiary. |
| Related Parties – As defined in IAS 24, "*Related Party Disclosures*". |
| IAS – International Accounting Standards issued by the International Accounting Standards Board ("IASB"). |
| IFRS – International Financial Reporting Standards issued by the IASB. |

---

---

| | |
|:---|:---|
| **NOTE 2:-** | **MATERIAL ACCOUNTING POLICIES** |

---

The following accounting policies have been applied consistently in the consolidated financial statements for all periods 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. Basis of presentation of the financial statements:

The consolidated financial statements have been prepared in accordance with IFRS Accounting Standards and their interpretations, which were issued by the IASB.

The Company's financial statements have been prepared on a cost basis, unless otherwise indicated.

The consolidated financial statements are presented in USD and all values are rounded to the nearest thousand ('000), except when otherwise indicated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. The operating cycle:

The operating cycle of the Company is one year.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 2:-** | **SIGNIFICANT ACCOUNTING POLICIES (CONT.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Consolidated financial statements:

The consolidated financial statements comprise the financial statements of companies that are controlled by the Company (Subsidiaries). Control of a company is achieved when the Company 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. Potential voting rights are considered when assessing whether an entity has control over the other entity. The consolidation of the financial statements commences on the date on which control is obtained and ends when such control ceases.

The consolidated financial statements of the Company and of the Subsidiaries are prepared as of the same dates and periods. The consolidated financial statements are prepared using uniform accounting policies by all companies in the Group. Significant intra-Group balances and transactions and gains or losses resulting from intra-Group transactions are eliminated in full in the consolidated financial statements.

Non-controlling interests in subsidiaries represent the equity in subsidiaries not attributable, directly or indirectly, to a parent. Non-controlling interests are presented in equity separately from the equity attributable to the equity holders of the Company. Profit or loss and components of other comprehensive income are attributed to the Company and to non-controlling interests. Losses are attributed to non-controlling interests even if they result in a negative balance of non-controlling interests in the consolidated statement of financial position.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Functional currency and foreign currency:

The functional currency of the Company, which is the currency that best reflects the economic environment in which the Company operates and conducts its transactions is the U.S. Dollar ("USD" or "$"), since it's the primary currency of the economic environment in which the Company operates. The consolidated financial statements are also presented in USD since the Company believes that preparing the consolidated financial statements in USD provides more relevant information to the users of the consolidated financial statements. Transactions and balances originally denominated in U.S. dollars are presented at their original amounts. Balances in non-U.S. dollar currencies are translated into U.S. dollars using historical and current exchange rates for non-monetary and monetary balances, respectively. For non-U.S. dollar transactions and other items in the statements of operations (indicated below), the following exchange rates are used: (i) for transactions exchange rates at transaction dates and (ii) for other items (derived from non-monetary balance sheet items such as depreciation and amortization) historical exchange rates. Currency transaction gains and losses are presented in the financial income net, as appropriate.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. Investment in joint arrangements:

Joint arrangements are arrangements in which the Company has joint control. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. Investments accounted for using the equity method:

The Group's investments in associates and joint ventures are accounted for using the equity method.

Under the equity method, the investment in the associate or in the joint venture is presented at cost with the addition of post-acquisition changes in the Group's share of net assets, including other comprehensive income of the associate or the joint venture. Gains and losses resulting from transactions between the Group and the associate or the joint venture are eliminated to the extent of the interest in the associate or in the joint venture. The cost of the investment includes transaction costs.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 2:-** | **SIGNIFICANT ACCOUNTING POLICIES (CONT.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. Investments accounted for
 using the equity method: (Cont.)

The consolidated financial statements of the Company and of the associate or joint venture are prepared as of the same dates and periods. The accounting policies applied in the financial statements of the associate or the joint venture are uniform and consistent with the policies applied in the consolidated financial statements of the Group.

The equity method is applied until the loss of significant influence in the associate or loss of joint control in the joint venture or classification as investment held for sale.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. Property and equipment, net:

Property and equipment are measured at cost, including directly attributable costs, less accumulated depreciation, accumulated impairment losses and any related investment grants and excluding day-to-day servicing expenses.

Depreciation is calculated on a straight-line basis over the useful life of the assets at annual rates as follows:

---

| | | |
|:---|:---|:---|
|  | **%** | **Mainly %** |
| Lab equipment | 6-50 | 33 |
| Computers | 33-50 | 33 |
| Office furniture and equipment | 7-15 | 15 |
| Leasehold improvements | see below |  |

---

Leasehold improvements are depreciated on a straight-line basis over the shorter of the lease term (including the extension option held by a company and intended to be exercised) and the expected life of the improvement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h. Intangible assets:

Separately acquired intangible assets are measured on initial recognition at cost including directly attributable costs. Intangible assets acquired in a business combination are measured at fair value at the acquisition date. Expenditures relating to internally generated intangible assets, excluding capitalized development costs, are recognized in profit or loss when incurred.

Intangible assets with a finite useful life are amortized over their useful life and reviewed for impairment whenever there is an indication that the asset may be impaired. The amortization period and the amortization method for an intangible asset are reviewed at least at each year-end.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;i. Impairment of non-financial assets:

The Company evaluates the need to record an impairment of non-financial assets whenever events or changes in circumstances indicate that the carrying amount is not recoverable. If the carrying amount of non-financial assets exceeds their recoverable amount, the assets are reduced to their recoverable amount. The recoverable amount is the higher of fair value less costs of sale and value in use. In measuring value in use, the expected future cash flows are discounted using a pre-tax discount rate that reflects the risks specific to the asset. The recoverable amount of an asset that does not generate independent cash flows is determined for the cash-generating unit to which the asset belongs. Impairment losses are recognized in profit or loss.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 2:-** | **SIGNIFICANT ACCOUNTING POLICIES (CONT.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j. Financial instruments:

&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;1. Financial assets:

Financial assets are measured upon initial recognition at fair value plus transaction costs that are directly attributable to the acquisition of the financial assets, except for financial assets measured at fair value through profit or loss in respect of which transaction costs are recorded in profit or loss.

The Company classifies and measures debt instruments in the consolidated financial statements based on the following criteria:

- The Company's business model for managing financial assets; and

- The contractual cash flow terms of the financial asset.

&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;&nbsp;&nbsp;&nbsp;&nbsp;a) Debt instruments are measured at amortized cost when:

The Company's business model is to hold the financial assets in order to collect their contractual cash flows, and the contractual terms of the financial assets give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. After initial recognition, the instruments in this category are measured according to their terms at amortized cost using the effective interest rate method, less any provision for impairment.

On the date of initial recognition, the Company may irrevocably designate a debt instrument as measured at fair value through profit or loss if doing so eliminates or significantly reduces a measurement or recognition inconsistency, such as when a related financial liability is also measured at fair value through profit or loss.

&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;&nbsp;&nbsp;&nbsp;&nbsp;b) Equity instruments
 classified as fair value through profit and loss ("FVTPL"):

Investments in equity instruments are classified as at FVTPL, unless the group designates an equity investment that is neither held for trading nor a contingent consideration arising from a business combination as at fair value through other comprehensive income on initial recognition.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

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| | |
|:---|:---|
| **NOTE 2:-** | **SIGNIFICANT ACCOUNTING POLICIES (CONT.)** |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j. Financial instruments: (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;2. Impairment of financial assets:

The Company evaluates at the end of each reporting period the loss allowance for financial debt instruments which are not measured at fair value through profit or loss. The Company distinguishes between two types of loss allowances:

&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;&nbsp;&nbsp;&nbsp;&nbsp;a) Debt instruments whose credit risk has not increased significantly since initial recognition, or whose credit risk is low - the loss allowance recognized in respect of this debt instrument is measured at an amount equal to the expected credit losses within 12 months from the reporting date (12-month ECLs); or

&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;&nbsp;&nbsp;&nbsp;&nbsp;b) Debt instruments whose credit risk has increased significantly since initial recognition, and whose credit risk is not low - the loss allowance recognized is measured at an amount equal to the expected credit losses over the instrument's remaining term (lifetime ECLs).

The Company has short-term financial assets in respect of which the Company applies the simplified approach in IFRS 9 and measures the loss allowance in an amount equal to the lifetime expected credit losses.

The Company considers a financial asset in default when contractual payments are more than 180 days past due. However, in certain cases, the Company considers a financial asset to be in default when external or internal information indicates that the Company is unlikely to receive the outstanding contractual amounts in full.

&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;3. Financial liabilities:

&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;&nbsp;&nbsp;&nbsp;&nbsp;a) Financial liabilities measured at amortized cost:

Financial liabilities are initially recognized at fair value less transaction costs that are directly attributable to the issue of the financial liability.

After initial recognition, the Company measures all financial liabilities at amortized cost using the effective interest rate method, except for financial liabilities at fair value through profit or loss such as derivatives.

&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;&nbsp;&nbsp;&nbsp;&nbsp;b) Financial liabilities measured at fair value through profit or loss:

At initial recognition, the Company measures financial liabilities that are not measured at amortized cost at fair value. Transaction costs are recognized in profit or loss.

After initial recognition, changes in fair value are recognized in profit or loss.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

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| | |
|:---|:---|
| **NOTE 2:-** | **SIGNIFICANT ACCOUNTING POLICIES (CONT.)** |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;j. Financial instruments: (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;4. Compound financial instruments:

Convertible debentures which contain both an equity/derivative component and a liability component are separated into two components. This separation is performed by first determining the liability component based on the fair value of an equivalent non-convertible liability. The value of the conversion component is determined to be the residual amount. Directly attributable transaction costs are apportioned between the equity component and the liability component based on the allocation of proceeds to the equity and liability components.

&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;5. Issue of a unit of securities:

The issue of a unit of securities involves the allocation of the proceeds received (before issue expenses) to the securities issued in the unit based on the following order: financial derivatives and other financial instruments measured at fair value in each period. Then fair value is determined for financial liabilities that are measured at amortized cost. The proceeds allocated to equity instruments are determined to be the residual amount. Issue costs are allocated to each component pro rata to the amounts determined for each component in the unit.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;k. Research and development expenditures:

Research expenditures are recognized in profit or loss when incurred.

The conditions enabling capitalization of development costs as an asset have not yet been met and, therefore, all development expenditures are recognized in profit or loss when incurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;l. Finance income and expenses:

Finance income and expenses comprise interest income on amounts invested and exchange rate gains and losses. Interest income is recognized as it accrues using the effective interest method. Finance income and expenses derive also from changes in the fair value of financial liabilities measured at fair value through profit or loss. Borrowing costs are recognized in profit or loss using the effective interest method.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;m. Fair value measurement:

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement is based on the assumption that the transaction will take place in the asset's or the liability's principal market, or in the absence of a principal market, in the most advantageous market.

The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest.

Fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

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| | |
|:---|:---|
| **NOTE 2:-** | **SIGNIFICANT ACCOUNTING POLICIES (CONT.)** |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;m. Fair value measurement: (Cont.)

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data is available to measure fair value, maximizing the use of relevant observable inputs and minimizing the use of unobservable inputs.

All assets and liabilities measured at fair value or for which fair value is disclosed are categorized into levels within the fair value hierarchy based on the lowest level input that is significant to the entire fair value measurement:

---

| |
|:---|
| Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities. |
| Level 2 – Inputs other than quoted prices included within Level 1 that are observable directly or indirectly. |
| Level 3 – Inputs that are not based on observable market data (valuation techniques which use inputs that are not based on observable market data). |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;n. Taxes on income:

Current or deferred taxes are recognized in profit or loss, except to the extent that they relate to items which are recognized in other comprehensive income or equity.

&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;1. Current taxes:

A current tax liability is measured using the tax rates and tax laws that have been enacted or substantively enacted by the reporting date as well as adjustments required in connection with the tax liability in respect of previous years.

&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;2. Deferred taxes:

Deferred taxes are computed in respect of temporary differences between the carrying amounts in the financial statements and the amounts attributed for tax purposes.

Deferred taxes are measured at the tax rate that is expected to apply when the asset is realized, or the liability is settled, based on tax laws that have been enacted or substantively enacted by the reporting date.

Deferred tax assets are reviewed at each reporting date and reduced to the extent that it is not probable that they will be utilized. Deductible carryforward losses and temporary differences for which deferred tax assets had not been recognized are reviewed at each reporting date and a respective deferred tax asset is recognized to the extent that their utilization is probable.

Deferred taxes are offset if there is a legally enforceable right to offset a current tax asset against a current tax liability and the deferred taxes relate to the same taxpayer and the same taxation authority.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

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| | |
|:---|:---|
| **NOTE 2:-** | **SIGNIFICANT ACCOUNTING POLICIES (CONT.)** |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;o. Share-based payment transactions:

The Company's employees and other service providers may receive remuneration in the form of share-based payments ("Equity-settled transactions").

*Equity-settled transactions:*

The cost of equity-settled transactions with employees is measured at the fair value of the equity instruments granted at grant date. The fair value is determined using an acceptable option pricing model ("OPM"). As for service providers, the cost of the transactions is measured at the fair value of the goods or services received as consideration for equity instruments granted.

The cost of equity-settled transactions is recognized in profit or loss together with a corresponding increase in equity during the period in which the performance and/or service conditions are to be satisfied ending on the date on which the relevant employees become entitled to the award (the "Vesting Period").

If a grant of an equity instrument is cancelled, it is accounted for as if it had vested on the cancellation date and any expense not yet recognized for the grant is recognized immediately. However, if a new grant replaces the cancelled grant and is identified as a replacement grant on the grant date, the cancelled and new grants are accounted for as a modification of the original grant, as described above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;p. Earnings (loss) per share:

Earnings (loss) per share are calculated by dividing the income (loss) attributable to equity holders of the Company by the weighted number of ordinary shares outstanding during the period.

Basic loss per ordinary share includes only ordinary shares that were outstanding during the period.

Potential ordinary shares are included in the computation of diluted loss per ordinary share when their conversion increases loss per ordinary share from continuing operations.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

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| | |
|:---|:---|
| **NOTE 2:-** | **SIGNIFICANT ACCOUNTING POLICIES (CONT.)** |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;q. Employee benefit liabilities:

The Company has several employee-benefit plans:

&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;1. Short-term employee benefits:

Short-term employee benefits are benefits that are expected to be settled wholly before twelve months after the end of the annual reporting period in which the employees render the related services. These benefits include salaries, paid annual leave, paid sick leave, recreation and social security contributions and are recognized as expenses as the services are rendered. A liability in respect of a cash bonus or a profit-sharing plan is recognized when the Company has a legal or constructive obligation to make such payment as a result of past service rendered by an employee and a reliable estimate of the amount can be made.

&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;2. Post-employment benefits:

The plans are normally financed by contributions to insurance companies and classified as defined contribution plans or as defined benefit plans.

The Company has defined contribution plans to its employees according to the specific laws per country.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;r. Provisions:

A provision in accordance with IAS 37, "*Provisions, Contingent Liabilities and Contingent Assets*", is recognized when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable 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. When the Company expects part or all of the expense to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The expense is recognized in the statement of profit or loss net of any reimbursement.

Following are the types of provisions included in the financial statements:

*Legal claims:*

A provision for claims is recognized when the Company has a present legal or constructive obligation as a result of a past event, it is more likely than not that an outflow of resources embodying economic benefits will be required by the Company to settle the obligation and a reliable estimate can be made of the amount of the obligation.

*Government grants:*

 

Government grants received from the Israel Innovation Authority ("IIA") are recognized upon receipt as a liability if future economic benefits are expected from the research project, that will result in royalty-bearing sales.

If no economic benefits are expected from the research activity, the grant received is recognized as a reduction of the related research and development expenses. In that event, the royalty obligation is treated as a contingent liability in accordance with IAS 37.

At each reporting date, the Company evaluates whether there is reasonable assurance that the liability recognized, in whole or in part, will not be repaid (as the Company will not be required to pay royalties) based on the best estimate of future sales and using the original effective interest method.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

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| | |
|:---|:---|
| **NOTE 2:-** | **SIGNIFICANT ACCOUNTING POLICIES (CONT.)** |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;s. Inventories

Inventories are stated at the lower of cost and net realizable value. Inventories are adjusted for estimated excess and obsolescence and written down to net realizable value based upon estimates of future demand, technology developments, and market conditions. Cost is determined in accordance with first-in, first-out Method ("FIFO") and the cost of inventory includes shipment and freight costs.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;t. Revenue recognition

The Company's sells products directly to customers mainly through the Brand's online Amazon stores (see note 11).

Under the Company's standard contract terms, customers have a right of return within 30 to 90 days. For contracts with rights of return, the Company recognizes revenue based on the amount of the consideration which the Company expects to receive for products which it is highly probable that a significant revenue reversal will not subsequently occur. The Company recognizes a refund liability for consideration received or receivable if it expects to refund some or all of the consideration to the customer. At the end of each reporting period, the Company updates its estimates of expected product returns and adjusts the refund liabilities with a corresponding adjustment in revenues. As of December 31, 2025, the allowance for returns was immaterial. The refund liability is recorded as a decrease in revenues against other payables. A right of return asset and corresponding adjustment to cost of sales is also recognized for the right to recover the goods from the customer.

In certain contracts, the Company evaluates the nature of its promise to the customer and determines whether it is the principal or agent for each contract. In determining the nature of its promise to the customer, the Company evaluates whether it is appropriate to recognize revenues on a gross or net basis based upon its evaluation of whether the Company obtains control of the specified goods by considering if it is primarily responsible for fulfillment of the promise, has inventory risk, and has the latitude in establishing pricing and selecting suppliers, among other factors. Based on its evaluation of these factors, management has determined that it is the principal in these arrangements; therefore, revenues are recorded on a gross basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;u. Cost of revenues

Cost of revenues primarily consist of expenses related to direct costs and freight.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;v. Sales and marketing expenditures Selling and marketing and expenses consist of online retailer services (including shipping and handling costs), warehouse costs and online advertising costs (i.e. sales and distribution variable expenses). Selling and marketing expenses are expensed as incurred.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;w. Cash and cash equivalents In the consolidated statements of financial position, cash and bank balances comprise cash (i.e., cash on hand and demand deposits) and cash equivalents. Cash equivalents are short-term (generally with original maturity of three months or less), highly liquid investments that are readily convertible to a known amount of cash and which are subject to an insignificant risk of changes in value. Cash equivalents are held for the purpose of meeting short-term cash commitments rather for investment or other purposes. Bank balances for which use by the Group is subject to third party contractual restrictions are included as part of cash unless the restrictions result in a bank balance no longer meeting the definition of cash. If the contractual restrictions to use the cash extend beyond 12 months after the end of the reporting period, the related amounts are classified as non-current in the statement of financial position. For the purposes of the consolidated statements of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;x. Disclosure of new standards in the period prior to their adoption

IFRS 18, "Presentation and Disclosure in Financial Statements":

In April 2024, the IASB issued IFRS 18, "Presentation and Disclosure in Financial Statements" ("IFRS 18") which replaces IAS 1, "Presentation of Financial Statements".

As noted, IFRS 18 replaces IAS 1, carrying forward many of the requirements in IAS 1 unchanged and complementing them with new requirements. In addition, some paragraphs from IAS 1 have been moved to IAS 8 and IFRS 7. Furthermore, the IASB has made minor amendments to IAS 7 and IAS 33, "Earnings per Share".

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

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| | |
|:---|:---|
| **NOTE 2:-** | **SIGNIFICANT ACCOUNTING POLICIES (CONT.)** |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;x. Disclosure of new
 standards in the period prior to their adoption (Cont.)

IFRS 18 introduces new requirements to:

&nbsp;&nbsp;&nbsp;&nbsp;● present specified categories and defined subtotals in the statement of profit or loss.

&nbsp;&nbsp;&nbsp;&nbsp;● provide disclosures on management-defined performance measures (MPMs) in the notes to the financial statements; and

&nbsp;&nbsp;&nbsp;&nbsp;● improve aggregation and disaggregation.

An entity is required to apply IFRS 18 for annual reporting periods beginning on or after January 1, 2027, with earlier application permitted. The amendments to IAS 7 and IAS 33, as well as the revised IAS 8 and IFRS 7, become effective when an entity applies IFRS 18. IFRS 18 requires retrospective application with specific transition provisions. The Company is currently evaluating the impact that application of IFRS 18 will have on its consolidated financial statements and related disclosures.

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| | |
|:---|:---|
| **NOTE 3:-** | **SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS USED IN THE PREPARATION OF THE FINANCIAL STATEMENTS** |

---

In the process of applying the significant accounting policies, the Company has made the following judgments which have the most significant effect on the amounts recognized in the financial statements:

Estimates and assumptions:

The preparation of the financial statements requires management to make estimates and assumptions that have an effect on the application of the accounting policies and on the reported amounts of assets, liabilities, revenues and expenses. Changes in accounting estimates are reported in the period of the change in estimate.

The key assumptions made in the financial statements concerning uncertainties at the reporting date and the critical estimates computed by the Company that may result in a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.

- Legal claims:

In estimating the likelihood of outcome of legal claims filed or threatened to commence against the Company and/or its Subsidiaries and/or affiliates, the Company relies on its management's best knowledge and estimations and where applicable, on the opinion of their legal counsels. These estimates are based, among others, on management's familiarity of and proximity to the circumstances, and also on the legal counsels' best professional judgment, taking into account the stage of proceedings and legal precedents in respect of the different issues. Since the outcome of the claims might be determined in courts and/or other quasi-judicial tribunals, the results could differ from these estimates.

- Fair value of financial instruments:

When the fair values of financial assets and financial liabilities recorded in the statement of financial position cannot be derived from active markets, their fair value is determined using a variety of valuation techniques that include the use of valuation models. The inputs to these models are taken from observable markets where possible, but where this is not feasible, estimation is required in establishing fair values. The models are tested for validity by calibrating to prices from any observable current market transactions in the same instrument when available.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

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| | |
|:---|:---|
| **NOTE 4:-** | **CASH AND CASH EQUIVALENTS** |

---

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Cash for immediate withdrawal - in USD | $2699 | $1383 |
| Cash for immediate withdrawal - in CAD | 1628 | - |
| Cash for immediate withdrawal - in NIS | 264 | 157 |
|  | $4591 | $1540 |

---

---

| | |
|:---|:---|
| **NOTE 5:-** | **INVENTORY** |

---

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| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Goods in transit | $17 | $9 |
| Finished goods | 58 | 104 |
|  | $75 | $113 |

---

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| | |
|:---|:---|
| **NOTE 6:-** | **OTHER ACCOUNTS RECEIVABLE** |

---

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Government authorities | $89 | $78 |
| Other receivables | 97 | 449 |
| Prepaid expenses | 88 | 350 |
| Receivables in respect of downpayment on merger | - | 187 |
| Related party | 15 | 15 |
|  | $289 | $1079 |

---

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| | |
|:---|:---|
| **NOTE 7:-** | **INVESTMENT IN ASSOCIATES** |

---

MitoCareX Transaction

On March 10, 2022, the Company entered into a Founders and Investment Agreement with Dr. Alon Silberman (the "MitoCareX Agreement"). Pursuant to the MitoCareX Agreement, the Company invested an initial amount of $700 during 2022. As of December 31, 2022, the Company owned 31.48% of the outstanding shares of MitoCare X Bio Ltd. ("MitoCareX").

On February 17, 2023, MitoCareX achieved its first milestone pursuant to the MitoCareX Agreement. As a result of MitoCareX meeting this milestone, the Company invested an additional $400 in MitoCareX and increased its share ownership in MitoCareX from 31.48% to 41.92%.

On November 25, 2023, MitoCareX achieved its second milestone pursuant to the MitoCareX Agreement. As a result of MitoCareX meeting this milestone, the Company invested an additional sum of $600 in MitoCareX and increased its share ownership in MitoCareX from 41.92% to 52.73%. Notwithstanding the above, the Company and MitoCareX agreed for the additional $600 installment to be deferred to March 25, 2024, and the $600 installment was paid on March 11, 2024.

On February 25, 2025, the Company entered into a securities purchase and exchange agreement with Nexentis Technologies Inc. ("Nexentis", formerly known as "N2OFF, Inc.") to sell its stake in the issued and outstanding shares of MitoCareX for $700 and 490,751 shares of common stock of Nexentis, representing 17.70% of the total outstanding shares of Nexentis on a fully diluted basis.

As a result of the sale of its holdings in MitoCareX, the Company recorded a gain from sale of an associate in the amount of $2,231 for the year ended December 31, 2025.

The investment in MitoCareX was accounted for as an equity method investment, in accordance with IAS 28, *"Investment in Associates and Joint Ventures"*. For the year ended December 31, 2025, the Company recorded equity losses from the investment in MitoCareX in the amount of $500 ($429 and $210 for the years ended December 31, 2024 and 2023, respectively).

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

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| | |
|:---|:---|
| **NOTE 7:-** | **INVESTMENT IN ASSOCIATES (CONT.)** |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. MitoCareX
 Transaction (Cont.)

The table below summarizes the changes in carrying value of the investment in MitoCareX:

---

| | |
|:---|:---|
| Balance at January 1, 2023 | $591 |
| Investment following achievement of first milestone | 400 |
| Equity losses from investment in MitoCareX | (210) |
| Balance at December 31, 2023 | $781 |
| Investment following achievement of second milestone | 600 |
| Equity losses from investment in MitoCareX | (429) |
| Balance at December 31, 2024 | $952 |
| Equity losses from investment in MitoCareX | $(500) |
| Investment in 2025 | 43 |
| Sale of investment in MitoCareX | (495) |
| Balance at December 31, 2025 | $- |

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| | |
|:---|:---|
| **NOTE 8:-** | **INVESTMENT IN FINANCIAL ASSETS** |

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&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*<u>a.</u>* *<u>Clearmind</u>* 

On November 17, 2022, the Company invested $1,500 in the initial public offering of Clearmind Medicine Inc. ("Clearmind") and received 192 common shares of Clearmind, resulting in the Company holding 9.33% of share capital of Clearmind. As of December 31, 2025, the Company holds 192 common shares of Clearmind, representing a stake of less than 1% of the share capital of Clearmind, at a price of $1.81 per common share. For the year December 31, 2025, the Company recorded a loss on revaluation of the fair value of its investment in Clearmind in the amount of $11 (for the years ended December 31, 2024 and 2023 - $11 and $707, respectively).

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

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| | |
|:---|:---|
| **NOTE 8:-** | **INVESTMENT IN FINANCIAL ASSETS** (Cont.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*<u>b.</u>* *<u>AutoMax</u>* 

 

On June 25, 2023, the Company entered into a share purchase agreement (the "Share Purchase Agreement") with AutoMax Motors Ltd. ("AutoMax"), an Israeli company traded on the Tel Aviv Stock Exchange ("TASE") and a parallel importer and distributor of vehicles in Israel, pursuant to which, at the closing and upon the terms and conditions set forth in the Share Purchase Agreement, the Company invested NIS 2,500 (approximately $689) in cash, in exchange for 5,000,000 ordinary shares of AutoMax (the "AutoMax Shares") based on a price per share of NIS 0.05, representing a 4.82% of the share capital of AutoMax. As of December 31, 2025, there has been no significant change in the Company holdings in AutoMax's shares since June 25, 2023. As of December 31, 2025, the listed share price of AutoMax on the TASE was NIS 0.108 (December 31, 2024 – NIS 0.184), and the Company has recorded a loss in its statements of comprehensive loss of $83 on its investment ($277 and $158 for the years ended December 31, 2024 and 2023, respectively).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*<u>c.</u>* *<u>AutoMax Bridge Loans and Terminated Merger Agreement</u>* 

 

*<u>AutoMax Bridge Loans</u>*

On January 16, 2024, the Company entered, as a lender, into an agreement (the "Bridge Loan Agreement") with AutoMax, pursuant to which AutoMax received from the Company a bridge loan (the "Bridge Loan") in the amount of $1,400, further to the previously announced non-binding letter of intent for the Company to acquire AutoMax (the "AutoMax Acquisition").

The Bridge Loan Agreement states that the principal amount of the Bridge Loan will bear interest at a rate of 7% per annum (or 9% per annum if the AutoMax acquisition is not consummated prior to the repayment date), compounded annually.

On June 9, 2024, the Company entered into an amendment (the "Amendment") to the Bridge Loan Agreement with AutoMax. Pursuant to the Amendment, the Company extended an additional loan in the amount of $1,000 to AutoMax under terms similar to the Bridge Loan Agreement, bringing the total Bridge Loan amount to $2,400.

On September 5, 2024, the Company entered into a second amendment (the "Second Amendment") to the Bridge Loan Agreement with AutoMax. Pursuant to the Second Amendment, the Company extended an additional loan in the amount of $1,850 to AutoMax under terms similar to the Bridge Loan Agreement, bringing the total Bridge Loan amount to $4,250.

*<u>Additional Loan Agreement</u>*

On February 27, 2025, the Company entered into a loan agreement with AutoMax where a $2,000 loan was provided (the "Additional Loan"). The Additional Loan bears an 8% annual interest rate and will be repaid in equal monthly installments of $50 and interest.

 

*<u>Terminated Merger Agreement</u>*

On April 10, 2024, the Company and AutoMax entered into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant to which AutoMax's shareholders and a third party were expected to own approximately 49.99% of the Company's share capital, on a fully-diluted basis, subject to certain exceptions, and as further defined in the Merger Agreement, and the Company's shareholders were expected to own approximately 50.01% of its share capital, on a fully-diluted basis, subject to certain exceptions.

During September 2025 and following an investigation by the Israeli Securities Authority and Israeli Police, three senior officials of AutoMax were arrested. Following these events, on October 6, 2025, the Company announced that it entered into a framework agreement with AutoMax to (i) mutually terminate the Merger Agreement; (ii) amend the terms of repayment of the Bridge Loan to be repaid in a one lump-sum payment on January 1, 2028; and (iii) amend the terms of repayment of the Additional Loan to be repaid in monthly installments starting on November 20, 2025, of $60 each and the interest of 8% per annum, compounded annually up to each actual payment date, in addition to the payment of all interest accrued on such loan from its effective date until November 20, 2025, in the sum of $114.

On October 24, 2025, AutoMax announced that an Israeli court decision, made on October 21, 2025, froze proceedings against AutoMax and appointed a trustee according to an application from local Israeli banks. Following these events, the Bridge Loan and Additional Loan became due immediately.

The Company has evaluated the probabilities of recovering the funds extended to AutoMax in respect of the Bridge Loan and the Additional Loan and has determined that there is a 90% probability that the Bridge Loan and the Additional Loan will not be repaid to the Company. Accordingly, the Company recognized a loss on impairment of the loans in the amount of $5,973. As of December 31, 2025, the Bridge Loan and the Additional Loan amounts and accrued interest amounted to $451.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 9:-** | **LEASES** |

---

On April 1, 2024, the Company entered into a two-year lease agreement for a total area of approximately 240 square meters, whereby the Company occupies approximately 120 square meters for the Company's offices, in the district of Tel Aviv, Israel. The Company has an option to extend for an additional three-year term. The monthly lease fee was set at approximately $3, linked to the NIS. On January 1, 2026, the Company exercised the option to extend the lease agreement until March 31, 2028.

---

| | |
|:---|:---|
| **NOTE 10:-** | **PROPERTY AND EQUIPMENT, NET** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Computers** | **Office<br> furniture<br> and<br> equipment** | **Right of<br> use asses** | **Total** |
| ***Cost:*** | | | | |
| Balance at January 1, 2025 | $12 | 12 | 75 | 99 |
| Additions | - | 1 | - | 1 |
| Disposals | - | - | - | - |
| Balance at December 31, 2025 | 12 | 13 | 75 | 100 |
| ***Accumulated depreciation:*** |  |  |  |  |
| Balance at January 1, 2025 | 9 | 3 | 28 | 40 |
| Depreciation | 1 | 1 | 39 | 41 |
| Disposals | - | - | - | - |
| Balance at December 31, 2025 | 10 | 4 | 67 | 81 |
| Depreciated cost at December 31, 2025 | **2** | **9** | **8** | **19** |
| Balance at January 1, 2024 | $11 | 33 | 181 | 225 |
| Additions | 2 | - | 75 | 77 |
| Disposals | (1) | (21) | (181) | (203) |
| Balance at December 31, 2024 | 12 | 12 | 75 | 99 |
| ***Accumulated depreciation:*** |  |  |  |  |
| Balance at January 1, 2024 | 6 | 6 | 106 | 118 |
| Depreciation | 4 | 1 | 28 | 33 |
| Disposals | (1) | (4) | (106) | (111) |
| Balance at December 31, 2024 | 9 | 3 | 28 | 40 |
| Depreciated cost at December 31, 2024 | **3** | **9** | **47** | **59** |

---

Depreciation expenses for the years ended December 31, 2025, 2024 and 2023 amounted to $41, $33 and $52, respectively.

---

| | |
|:---|:---|
| **NOTE 11:-** | **INTANGIBLE ASSET** |

---

On September 30, 2022, the Company announced the closing of the acquisition of Wellution<sup>TM</sup>, an Amazon.com Marketplace seller account (the "Brand"), American food supplements and cosmetics brand and trademark (the "Acquisition"). In connection with the Acquisition, the Company incorporated a new wholly owned Delaware subsidiary, SciSparc Nutraceuticals Inc. ("SNI"), to hold the new assets.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 11:-** | **INTANGIBLE ASSET (CONT.)** |

---

The Company reviewed the transaction and deemed it to be the purchase of assets for accounting purposes under generally accepted accounting principles. The Company reviewed the guidance under IFRS 3 for the transaction and determined that the fair value of the gross assets acquired was concentrated in a single identifiable asset, a brand. Accordingly, the Company treated the transaction as an asset acquisition. On the closing date of the acquisition, the Company fully recognized the acquisition amount total of $4,861 as an intangible asset, to be amortized over a period of 10 years.

For the years ended December 31, 2023, 2024 and 2025, the Brand recorded significant losses. As of December 31, 2025, the Company has determined there are signs of decline in the value of the Brand and recognized a loss as a result of impairment to its intangible asset of $115 (as of December 31, 2024 - $1,344, as of December 31, 2023 - $1,042).

The table below summarizes the carrying value of the intangible asset:

---

| | |
|:---|:---|
| Balance at January 1, 2023 | $4717 |
| Loss on impairment of intangible asset | (1042) |
| Amortization of intangible asset | (486) |
| Balance at December 31, 2023 | $3189 |
| Loss on impairment of intangible asset | (1344) |
| Amortization of intangible asset | (366) |
| Balance at December 31, 2024 | $1479 |
| Loss on impairment of intangible asset | (115) |
| Amortization of intangible asset | (194) |
| Balance at December 31, 2025 | $1170 |

---

---

| | |
|:---|:---|
| **NOTE 12:-** | **TRADE PAYABLES** |

---

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Accrued expenses | $495 | $608 |
| Open debts | 288 | 208 |
|  | $783 | $816 |

---

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 13:-** | **OTHER PAYABLES** |

---

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| Employees and payroll accruals | $85 | $75 |
| Accrued vacation | 175 | 130 |
|  | $260 | $205 |

---

---

| | |
|:---|:---|
| **NOTE 14:-** | **FINANCIAL INSTRUMENTS** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Classification of financial
 assets and financial liabilities:

The financial assets and financial liabilities in the consolidated statements of financial position are classified by groups of financial instruments pursuant to IFRS 9, "*Financial Instruments*" ("IFRS 9"):

---

| | | |
|:---|:---|:---|
|  | **December 31,** | **December 31,** |
|  | **2025** | **2024** |
| *Financial assets:* |  |  |
| Cash, cash equivalents and restricted deposits | $4611 | $1560 |
| Current maturities of long-term loan | 451 | - |
| Other receivables | 97 | 449 |
| Related parties | 15 | 4239 |
| Total financial assets at amortized cost | 5174 | 6248 |
| Investments in financial assets at fair value | 997 | 871 |
| *Financial liabilities:* |  |  |
| Credit from others | 85 | 75 |
| Loans | 356 | - |
| Lease liability | 10 | 48 |
| Total financial and lease liabilities | $451 | $123 |

---

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 14:-** | **FINANCIAL INSTRUMENTS (CONT.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Classification of financial
 assets and financial liabilities: (Cont.)

The following table presents the Level 1-3 financial instruments as of December 31, 2025, and 2024:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Fair Value** | **Fair Value** | **Fair Value** |
|  | | **December 31, 2025** | **December 31, 2025** | **December 31, 2025** |
|  | **Carrying amount**<br>**December 31,**<br>**2025** | **Level 1** | **Level 2** | **Level 3** |
| Investments in short-term financial assets | $- | $- | $- | $- |
| Investments in financial assets | $997 | $997 | $- | $- |
| Current maturities of long-term loan (see note 8c) | $451 | $- | $- | $451 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | | **Fair Value** | **Fair Value** | **Fair Value** |
|  | | **December 31, 2024** | **December 31, 2024** | **December 31, 2024** |
|  | **Carrying amount**<br>**December 31,**<br>**2024** | **Level 1** | **Level 2** | **Level 3** |
| Investments in short-term financial assets | $517 | $517 | $- | $- |
| Investments in financial assets | $354 | $354 | $- | $- |
| Loans to a related party (see note 8c) | $4224 | $- | $- | $4224 |

---

Investments in short-term financial assets consist of an investment in Polyrizon Ltd. pre-funded warrants (see Note 24g).

Investments in financial assets consist of investments in Nexentis, AutoMax, Nexera (as defined in Note 18e) and Clearmind (refer to notes 7, 8b, 24d and 8a, respectively).

Management believes that the carrying amount of cash, short-term deposits, trade receivables, trade payables, and other current liabilities approximate their fair value due to the short-term maturities of these instruments.

For changes in the fair values of financial instruments measured at fair value through profit refer to Note 21.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Financial risk factors:

The Company's activities expose it to various financial risks such as market risks (foreign currency risk and interest risk), credit risk and liquidity risk. The Company's comprehensive risk management plan focuses on activities that reduce to a minimum any possible adverse effects on the Company's financial performance.

Risk management is performed by management in accordance with the policies approved by the Board. The Board establishes written principles for the overall risk management activities as well as specific policies with respect to certain exposures to risks such as exchange rate risk, credit risk and the investments of surplus funds.

&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;1. Market risks:

*Foreign currency risk:*

The Company is exposed to exchange rate risk resulting from the exposure to different currencies, mainly from transactions in NIS and CAD. Exchange rate risk arises from recognized liabilities that are denominated in a foreign currency other than the functional currency. The exchange rate risk arising from NIS and CAD balances are immaterial as the substantial amount of the monetary items is denominated in USD.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 14:-** | **FINANCIAL INSTRUMENTS (CONT.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Financial risk factors: (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;2. Credit risks:

All cash and restricted deposits related to the Company are held in two banks in Israel which are considered financially solid.

&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;3. Liquidity risk:

The Company monitors the risk of a shortage of funds on a regular basis and acts to raise funds to satisfy its liabilities. As of December 31, 2025, the Company expects to settle all of its financial liabilities in less than one year.

The carrying amounts of cash and restricted deposits, and all other financial assets and liabilities approximate their fair value.

Below is an analysis of contractual maturities of financial liabilities, including estimated interest payments and the effect of discounting, as at December 31, 2025 and 2024:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Carrying Amount** | **Contractual Cash flow** | **1 year** | **2-5 years** |
| December 31, 2025 |  |  |  |  |
| Accounts payable | 783 | 783 | 783 | - |
| Other payables | 270 | 270 | 270 |  |
| Related parties | 726 | 726 | 504 | 222 |
| Current maturities of long-term loans | 356 | 356 | 356 | - |
| Accrued legal contingency | 340 | 340 | 340 | - |
|  | 2475 | 2475 | 2253 | 222 |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Carrying Amount** | **Contractual Cash flow** | **1 year** | **2-5 years** |
| December 31, 2024 |  |  |  |  |
| Accounts payable | 816 | 816 | 816 | - |
| Other payables | 242 | 242 | 242 | - |
| Lease liability | 9 | 9 | - | 9 |
| Accrued legal contingency | 341 | 341 | 341 | - |
|  | 1408 | 1408 | 1399 | 9 |

---

The table below presents the change in the Company's financial instruments as of December 31, 2025:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **Fair value measurements using input type** | **Fair value measurements using input type** | **Fair value measurements using input type** | **Fair value measurements using input type** |
|  | **Level 1** | **Level 2** | **Level 3** | **Total** |
| Balance as of January 1, 2025 | 871 |  | 4224 | 5095 |
| Loan to related party |  |  | 2000 | 2000 |
| Interest on loan |  |  | 200 | 200 |
| Impairment of loan | - |  | (5973) | (5973) |
| Change in fair value | 126 |  | - | 126 |
| Balance as of December 31, 2025 | 997 |  | 451 | 1448 |

---

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 15:-** | **EMPLOYEE BENEFIT LIABILITIES** |

---

Employee benefits consist of short-term benefits and post-employment benefits.

*Post-employment benefits:*

According to the labor laws and the Israeli Severance Pay Law, 1963 (the "Severance Pay Law"), the Company is required to pay compensation to an employee upon dismissal or retirement or to make current contributions in defined contribution plans pursuant to Section 14 of the Severance Pay Law, as specified below. The Company's obligation to pay such compensation is accounted for as a post-employment benefit. The computation of the Company's employee benefit liability is made in accordance with a valid employment contract based on the employee's salary and employment term which establish the entitlement to receive the compensation.

The post-employment benefits are normally financed by contributions classified as defined benefit plans or as defined contribution plans as detailed below.

*Defined contribution plans:*

The Severance Pay Law applies to a substantial part of the compensation payments, pursuant to which the fixed contributions paid by the Company into pension funds and/or policies of insurance companies release the Company from any additional liability to employees for whom said contributions were made. These contributions and contributions for compensation are accounted for as defined contribution plans.

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Expenses in respect of defined contribution plans | $112 | $106 | $105 |

---

---

| | |
|:---|:---|
| **NOTE 16:-** | **TAXES ON INCOME** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Tax rates applicable to
 the Company:

The Israeli statutory corporate tax rate and real capital gains tax rate were 23% in 2025, 2024 and 2023. The combined U.S. federal and state tax rate was 28% in 2025, 2024 and 2023. The Canadian corporate tax rate was 27% in 2025, 2024 and 2023.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Tax assessments:

The assessments of the Company are deemed final through the 2019 tax year.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Carryforward tax losses
 and other temporary differences:

The Company has accumulated tax losses since its inception.

As of December 31, 2025, the Company's net carryforward tax losses are estimated to be approximately $78,000, of which SNI's losses amount to $1,300 and NeuroThera's amount to $1,328.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 17:-** | **CONTINGENT LIABILITIES, COMMITMENTS, CLAIMS AND LIENS** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. License Agreement with
 Dekel Pharmaceuticals Ltd.:

In May 2015, the Company entered into an exclusive, irrevocable, worldwide license agreement with Dekel for certain technology and one granted U.S. patent related to compositions and methods for treating inflammatory disorders (the "Dekel License Agreement"). The Dekel License Agreement became effective in August 2015.

On February 16, 2025, the Dekel License Agreement was terminated, as part of a settlement of a lawsuit filed against SciSparc's former directors, effective as of February 5, 2024. In accordance with the settlement, SciSparc retained its exclusive global rights to its intellectual property portfolio, patents, know-how and technologies and was released from all alleged commitments, claims and royalties related or arising out of the Dekel License Agreement, including those related to claimed core technologies, and Dekel assumed full and exclusive ownership of the patent application for compositions and methods for treating inflammatory disorders and all such underlying intellectual property.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. License Agreement with
 Yissum Research Development Company of the Hebrew University of Jerusalem Ltd. ("Yissum"):

On July 29, 2018, the Company entered into an exclusive, worldwide, sublicensable, royalty-bearing license with Yissum for a license to make commercial use of the licensed technology, in order to develop, obtain regulatory approvals, manufacture, market, distribute or sell products, all within the field and the territory only, as determined in the agreement (the "Yissum License Agreement"). According to the Yissum License Agreement, the Company shall pay Yissum royalties at the rates of future net sales, subject to the royalty reductions as described in the Yissum License Agreement. The Company is also obligated to pay sublicense fees out of the sublicense consideration. All rights, title and interest in and to the Yissum License Agreement shall vest solely in Yissum, and the Company shall hold and make use of the rights granted. All rights in the development results shall be solely owned by the Company, except to the extent that an employee of Yissum, including the researcher, is considered an inventor of a patentable invention arising from the development results, in which case such invention and all patent applications and/or patents claiming such invention shall be owned jointly by the Company and Yissum, as appropriate, and Yissum's share in such joint patents shall be automatically included in the Yissum License Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Agreement with Hannover
 Medical School:

On August 13, 2018, the Company entered into an agreement with Hannover Medical School to conduct a clinical study to evaluate the safety, tolerability and efficacy of daily oral SCI-110 in treating adults with Tourette syndrome, which agreement was subsequently updated on December 2, 2021, in an estimated amount of $1,385.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Agreement with Yale University: On July 27, 2022, the Company entered into an agreement with Yale University to conduct a clinical investigation and laboratory services for a randomized, double-blind, placebo-controlled, cross over study to evaluate the safety, tolerability and efficacy of daily oral SCI-110 in treating adults with Tourette syndrome in treating approximately 10 Tourette syndrome subjects aged 18 to 65. The total estimated amount of the agreement is approximately $370.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 17:-** | **CONTINGENT LIABILITIES, COMMITMENTS, CLAIMS AND LIENS (CONT.)** |

---

---

| | |
|:---|:---|
| e. | On May 2, 2023, Capital Point Ltd. ("Capital Point") filed with the Tel Aviv-Jaffa District Court (the "Court") a suit against the Company (the "Suit"). |
|  | The Suit challenges a certain warrant issued by the Company to Capital Point (the "Capital Point Warrant") to purchase ordinary shares of the Company in the amount of $340 (the "Warrant Shares"). The Capital Point Warrant was exercisable for 12 months from May 15, 2021, to May 15, 2022. The Suit claims that the Company unlawfully refused to accept the Capital Point Warrant exercise notice as of November 4, 2021. |
|  | The Suit claims damages in the amount of NIS 10,000,000 (approximately $3.13 million), which accounts for, as of the date of the filing of the Suit, the agreed compensation according to Section 2(d)(i) of the Capital Point Warrant, an injunction order for the Company to issue the Warrant Shares to Capital Point, return of any unlawful profits received by the Company and punitive damages. |
|  | As of the Approval Date the Company believes it is unlikely that the outcome of the lawsuit exceeds the $340 thousand par value of the warrants. |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. Government grants: The Company received research and development grants from the IIA. See also Note 2r. If no economic benefits are expected from the research activity, the royalty obligation is not recorded as a liability and instead is treated as a contingent liability in accordance with IAS 37. During 2015-2017, the Company received IIA royalty-bearing grants totaling approximately $1,100 and as of December 31, 2025 there are no economic benefits that are expected in relation to these grants.

---

| | |
|:---|:---|
| **NOTE 18:-** | **EQUITY** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Composition of share capital:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** |
|  | **Authorized** | **Issued and<br> outstanding** | **Authorized** | **Issued and<br> outstanding** |
|  | **Number of shares** | **Number of shares** | **Number of shares** | **Number of shares** |
| Ordinary shares | 75000000 | 365444 | 75000000 | 57293 |

---

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 18:-** | **EQUITY (CONT.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Composition of share capital:
 (Cont.)

*Reverse Share Splits*

On September 28, 2023, July 3, 2025 and February 5, 2026, the Company effected one-for-twenty six (1-for-26), one-for-twenty one (1-for-21) and one-for-nine (1-for-9) reverse splits, respectively.

Consequently, all share and per share data included in these consolidated financial statements for all periods preceding the effective dates of the reverse share splits have been adjusted to reflect the reverse splits' ratios in these consolidated financial statements for all periods presented.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Changes in share capital:

*Issued and outstanding share capital:*

---

| | |
|:---|:---|
|  | **Number of<br> ordinary<br> shares** |
| Balance at January 1, 2024 | 3739 |
| Issuance of share capital – in respect of exercise of October 2023 pre-funded warrants (Note 18g) | 19457 |
| Shares issued to consultants (Note 19(a)(3)) | 3419 |
| Issuance of share capital – in respect of January 2024 SEPA (Note 18(h)) | 30678 |
| Balance at December 31, 2024 | 57293 |
| Shares issued to consultants in respect of exercised restricted share units ("RSUs") (Note 18e) | 4205 |
| Exercise of convertible debentures (Note 18i) | 119094 |
| Exercise of warrants (Note 18j) | 40172 |
| Issuance of shares in a registered direct offering (Note 18k) | 143617 |
| Shares issued to consultants (Note 19(a)(3)) | 1059 |
| Rounding shares | 4 |
| Balance at December 31, 2025 | 365444 |

---

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 18:-** | **EQUITY (CONT.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Rights attached to shares:

Voting rights at the shareholders meeting, right to dividends, rights upon liquidation of the Company and right to nominate the directors in the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Capital management in the
 Company:

The Company's capital management objectives are to preserve the Company's ability to ensure business continuity thereby creating a return for the shareholders, investors and other interested parties. The Company is not under any minimal equity requirements nor is it required to attain a certain level of capital return.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;e. Additional issuances of
 ordinary shares:

On March 22, 2023, the Company issued 73 ordinary shares in respect of the stock purchase agreement entered into with Nexera Technologies Ltd. ("Nexera") (formerly known as Jeffs' Brands Ltd.) (see also Note 24d).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. August 2023 Financing Round

On August 14, 2023, the Company closed an underwritten public offering (the "2023 Public Offering") of 1,124 ordinary shares, at a purchase price of $982.80 per ordinary share and pre-funded warrants to purchase up to 198 ordinary shares at a purchase price of $977.886 per pre-funded warrant, for aggregate gross proceeds of approximately $1,300, pursuant to an underwriting agreement between the Company and Aegis Capital Corp ("Aegis"), the underwriter in the 2023 Public Offering, dated August 10, 2023.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 18:-** | **EQUITY (CONT.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. October 2023 Financing
 Round

On October 13, 2023, the Company announced the closing of a private placement with an institutional investor with gross cash proceeds to the Company of approximately $5,026, before deducting fees to the placement agent and other offering expenses payable by the Company.

In connection with the private placement, the Company issued an aggregate of 10,212 units, each unit consisting of two pre-funded warrants (the "Pre-Funded Warrants"). The Pre-Funded Warrants have an exercise price of $0.189, are immediately exercisable upon issuance and have a term of five years from the date of issuance.

During the year ended December 31, 2024, the Company issued 19,457 ordinary shares in respect of the exercise of 19,457 Pre-Funded Warrants.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;h. January 2024 Standby Equity
 Purchase Agreement

On January 21, 2024, the Company entered into a Standby Equity Purchase Agreement ("SEPA"), as amended on February 26, 2024, with YA II PN, LTD ("YA"), which provided for the sale of the Company's ordinary shares in the amount of up to $20,000 (the "Advance Shares"). As of December 31, 2024, of the $20,000 eligible to be sold pursuant to the SEPA (the "Commitment Amount"), the Company has sold 30,385 ordinary shares for total proceeds of $6,255. The Advance Shares to be purchased or purchased by YA pursuant to the SEPA are for a share price of 97% of the market price, which is defined as the lowest daily volume weighted average price of the Company's ordinary shares during the three consecutive trading days commencing on the trading day immediately following the delivery of an advance notice to YA.

In connection with the SEPA, the Company may request pre-paid advances of the Commitment Amount, in an amount of up to $5,000 (each a "Pre-Paid Advance"). Each Pre-Paid Advance will be evidenced by a promissory note (each a "Promissory Note"). Each Promissory Note will fully mature 24 months following its issuance and shall accrue interest on the outstanding principal balance thereon at a rate of 5% per annum, increasing to 18% per annum upon an Event of Default (as defined in the Promissory Note). Beginning 150 days after the issuance of a Promissory Note, the Company shall pay to YA a monthly installment payment of 10% of the original principal amount of the Promissory Note and accrued interest, payable in cash or by submitting an advance notice, where YA will offset the amount due to be paid to the Company under such notice against an equal amount of the monthly installment amount, at the Company's option. If the Company elects to pay in cash, the installment amount shall also include a payment premium in the amount of 5% of the principal amount of the installment payment. The Promissory Note contains the Company's customary representations and warranties and events of default.

In addition, pursuant to the SEPA, the Company issued to YA an aggregate of 293 of its ordinary shares, or the Commitment Shares, in satisfaction of payment of the commitment fee of $200.

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 18:-** | **EQUITY (CONT.)** |

---

---

| | |
|:---|:---|
| i. | August 2025 convertible debenture exercises |
|  | On February 25, 2025, the Company entered into securities purchase agreements (the "Securities Purchase Agreements") with certain investors, pursuant to which the Company sold convertible debentures (the "Debentures") in the aggregate principal amount of $4,200 (the "Subscription Amount"), which are convertible into the Company's ordinary shares (as converted, the "Conversion Shares"), at a purchase price equal to 95% of the Subscription Amount. The issuance and sale of the Debentures was subject to certain conditions and limitations. |
|  | In August 2025, certain investors under the Securities Purchase Agreements, submitted to the Company conversion notices to convert outstanding principal and accrued interest of certain Debentures, pursuant to which the Company issued an aggregate of 119,094 ordinary shares. |
|  | As a result of issuance and conversion of the Debentures, the Company recorded net finance expense of $170 in the consolidated statements of comprehensive loss for the year ended December 31, 2025. |

---

---

| | |
|:---|:---|
| j. | September 2025 Warrant exercises |
|  | At the closing of the Securities Purchase Agreements (see note 18i above), the Company issued to the investors 40,172 warrants which are exercisable into a number of ordinary shares equal to the Subscription Amount applicable to the investors divided by a price equal to 130% of the volume weighted average price of the ordinary shares immediately prior to the closing date, or $104.5548 per warrant. |
|  | On September 26, 2025, the Company entered into inducement offer letter agreements (the "Inducement Letters") with holders (the "Holders") of certain of the existing warrants to purchase in the aggregate up to 40,172 of the ordinary shares, issued on February 25, 2025, at an exercise price of $104.5548 per ordinary share (the "Existing Warrants"). Pursuant to the Inducement Letters, the Holders agreed to exercise for cash all of their Existing Warrants at a reduced exercise price of $27.90 per ordinary share. The Company received aggregate gross proceeds of approximately $1,121 from the exercise of the Existing Warrants by the Holders. |
|  | As a result of issuance and exercise of the Existing Warrants, which were measured at fair value from the date of issuance until exercise, the Company recorded net finance income of $1,750 in the consolidated statements of comprehensive loss for the year ended December 31, 2025. |

---

---

| | |
|:---|:---|
| k. | November 2025 Registered Direct Offering |
|  | On November 27, 2025, the Company entered into a securities purchase agreement with certain institutional and accredited investors, providing for the issuance of an aggregate of 143,617 ordinary shares, at a purchase price of $15.75. The registered direct offering resulted in gross proceeds in the amount of $2,262. |

---

l. Warrants <br>The following table summarizes information of outstanding warrants as of December 31, 2025:

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **Warrants** | **Warrant Term** | **Exercise Price** | **Exercise Price** | **Exercisable** | **Exercisable** |
| March 2021 Series A Warrants | March 1, 2026 | USD | 34743 |  | 233 |
| March 2021 Series B Warrants | March 1, 2026 | USD | 52088 |  | 117 |
| May 2022 Warrants | May 27, 2027 | USD | 12924 | | 1,443 |
|  |  |  |  |  | 1793 |

---

**SCISPARC LTD. AND ITS SUBSIDIARIES**

**NOTES TO CONSOLIDATED FINANCIAL STATEMENTS**

**USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 19:-** | **SHARE-BASED PAYMENT TRANSACTIONS** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. The cost of share-based payment recognized in the consolidated financial
statements:

The expenses due to share-based compensation for the years ended December 31, 2025, 2024 and 2023, recognized in the consolidated financial statements in respect of the share option plan of the Company are shown in the following table, detailed by expense classification:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Research and development expenses | $85 | $45 | $34 |
| General and administrative expenses | 1103 | 524 | 162 |
|  | $1188 | $569 | $196 |

---

&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;1. The 2015 ESOP and 2023
Plan:

On December 28, 2023, the Board adopted the 2023 Share Incentive Plan (the "2023 Plan").

The Company no longer grants any awards under the 2015 ESOP as it was superseded by the 2023 Plan, although previously granted awards under the 2015 ESOP remain outstanding and subject to the 2015 ESOP. Under the 2023 Plan, the Company may grant its employees and other service providers equity-based incentive awards ("Share Options").

On December 28, 2023, the Board approved to reserve for issuance under the 2023 Plan 5,291 ordinary shares.

&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;2. During the year ended December 31, 2025, share-based compensation in respect of Share Options of $0 was charged to the consolidated statements of comprehensive loss ($7 and $103 for the years ended December 31, 2024 and 2023, respectively).

&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;3. During the years ended
December 31, 2025 and 2024, the Company issued consultants 1,059 and 3,419 ordinary shares, respectively, for services rendered. The
shares were granted at a discount rate of 25% to the share price quoted on the date of each grant. The total fair value of the ordinary
shares granted to consultants in the years ended December 31, 2025 and 2024 was $106 and $105, respectively.

**SCISPARC LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 19:-** | **SHARE-BASED PAYMENT TRANSACTIONS (CONT.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Movement during the year:

&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;1. The following table lists the number of Share Options, the weighted average exercise prices of Share Options and changes in directors (and former directors), officers, employees and consultants Share Options during the years ended on December 31, 2025, and 2024:

---

| | | |
|:---|:---|:---|
|  | **Number of<br> Share<br> Options** | **Weighted<br> average<br> exercise<br> price** |
|  | | **USD** |
| **2025:** | | |
| Share Options outstanding at the beginning of the year | 36 | 53940.24 |
| Share Options outstanding at the end of the year | 36 | 53940.24 |
| Share Options exercisable at the end of the year | 36 | 53940.24 |
| **2024:** |  |  |
| Share Options outstanding at the beginning of the year | 37 | 31426.92 |
| Share Options outstanding at the end of the year | 36 | 53940.24 |
| Share Options exercisable at the end of the year | 36 | 53940.24 |

---

&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;2. The weighted average remaining contractual life of the Share Options outstanding was 2.04 years and 2.99 years 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;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. The range of exercise prices of Share Options outstanding at the end of the year was $31,941 - $2,063,880 (inclusive) as of December 31, 2025 and 2024, respectively.

**SCISPARC LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 19:-** | **SHARE-BASED PAYMENT TRANSACTIONS (CONT.)** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Restricted Share Units:

RSU transactions for the years ended December 31, 2025, and 2024 are as follows:

---

| | |
|:---|:---|
|  | **Number** |
| Balance, January 1, 2024 | - |
| RSUs granted | 5628 |
| Vesting of RSUs | - |
| Balance, December 31, 2024 | 5628 |
| Vesting of RSUs | (4205) |
| RSUs granted | 56111 |
| Balance, December 31, 2025 | 57534 |

---

There were no RSUs that are vested and not issued as of December 31, 2025. For the year ended December 31, 2025, share-based compensation in respect of RSUs of $867 was charged to the Consolidated Statements of Comprehensive Loss (and $456 for the year ended December 31, 2024).

---

| | |
|:---|:---|
| **NOTE 20:-** | **COST OF REVENUES** |

---

The following table discloses the breakdown of our cost of revenues for the periods set forth below:

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Purchased goods | $225 | $798 | $672 |
| Freight | - | 2 | 11 |
|  | 225 | 800 | 683 |

---

**SCISPARC LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 21:-** | **ADDITIONAL INFORMATION TO THE ITEMS OF PROFIT OR LOSS** |

---

---

| | | | | |
|:---|:---|:---|:---|:---|
|  |  | **Year ended December 31,** | **Year ended December 31,** |  |
|  |  | **2025** | **2024** | **2023** |
| a. | *Research and development expenses:* |  |  |  |
|  | Wages and related expenses | $329 | $390 | $392 |
|  | Share-based payment | 85 | 45 | 34 |
|  | Regulatory, professional and other expenses | 980 | 681 | 719 |
|  | Research and preclinical studies | 364 | 211 | 101 |
|  | Clinical studies | 266 | 276 | 254 |
|  | Chemistry and formulations | 73 | 104 | 141 |
|  |  | 2097 | 1707 | 1641 |
| b. | *<u>Sales and marketing expenses:</u>* |  |  |  |
|  | Advertising | $155 | $367 | $576 |
|  | Amazon fees | 331 | 495 | 1042 |
|  | Amortization | 194 | 366 | 486 |
|  | Storage and shipping | 112 | 167 | 145 |
|  | Management fees | 120 | 120 | 235 |
|  |  | 912 | 1515 | 2484 |
| c. | *<u>General and administrative expenses:</u>* |  |  |  |
|  | Wages and related expenses | 458 | 507 | 415 |
|  | Share-based payment | 1103 | 419 | 68 |
|  | Professional and directors' fees | 2823 | 3009 | 2594 |
|  | Deemed issuance listing expenses | 1410 | - | - |
|  | Business development expenses | 89 | 108 | 86 |
|  | Regulatory expenses | 222 | 158 | 202 |
|  | Office maintenance, rent and other expenses | 152 | 128 | 110 |
|  | Investor relations and business expenses | 114 | 197 | 369 |
|  |  | 6371 | 4526 | 3844 |
| d. | *<u>Other income, net:</u>* |  |  |  |
|  | Loss from sale of property and equipment | - | 17 | - |
|  | Gain on settlement of legal dispute | (464) | - | - |
|  | Other income | (26) | - | - |
|  | Gain on sale of patent license, net (net of Polyrizon Ltd. holdings sold) (See also Note 24g) | - | (1287) | - |
|  |  | (490) | (1270) | - |
| e. | *<u>Finance income:</u>* |  |  |  |
|  | Net change in fair value of financial liabilities designated at fair value through profit or loss | (1) | (191) | (2205) |
|  | Finance income due to cancellation of warrant liability | (1568) | - | - |
|  | Finance income due to revaluation of convertible debentures | (422) | - | - |
|  | Interest from loans to related parties and deposits | (207) | (421) | - |
|  | Exchange rate differences | (80) | - | (14) |
|  |  | (2278) | (612) | (2219) |
| f. | *Finance expenses:* |  |  |  |
|  | Impairment of loan (see note 8c) | 5973 | - | - |
|  | Issuance expenses | 410 | - | - |
|  | Exchange rate differences | 14 | 18 | - |
|  | Losses from remeasurement of investment in financial assets | 1791 | 305 | 1046 |
|  | Finance expense in respect of leases | 5 | 8 | 9 |
|  | Finance expenses from interest and commissions | 6 | 22 | - |
|  |  | $8199 | $353 | $1055 |

---

**SCISPARC LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 22:-** | **LOSS PER SHARE** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Details of the number of shares and loss used in the computation of loss per share:

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **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** |
| <br>**Amounts used in the computation of basic and diluted loss** | **Weighted<br> number of<br> shares** | **Loss** | **Weighted<br> number of<br> shares** | **Loss** | **Weighted<br> number of<br> shares** | **Loss** |
|  |  | **USD** |  | **USD** |  | **USD** |
| ***Continuing operations:*** |  |  |  |  |  |  |
| Basic loss per share | 124185 | (12179) | 30820 | (6284) | 2157 | (5122) |
| Effect of potential dilutive ordinary shares | - | - | - | - | - | - |
| Basic and diluted loss per share | 124185 | (12179) | 30820 | (6284) | 2157 | (5122) |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. The computation of diluted loss per share did not include the following
dilutive potential ordinary shares since their inclusion would decrease the loss per share (anti-dilutive effect):

&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;1. 36 Share Options to employees, officers, directors and consultants;

&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;2. 1,793 non-marketable warrants to investors; and

&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;3. 57,534 RSUs granted to officers, directors and consultants.

**SCISPARC LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 23:-** | **OPERATING SEGMENTS** |

---

The Company applies the principles of IFRS 8, "*Operating Segments*" ("IFRS 8"), regarding operating segments. The segment reporting is based on internal management reports of the Company's management, which are regularly reviewed by the Chief Operating Decision Maker ("CODM") to make decisions about resources to be allocated and assess performance. According to the principles of IFRS 8, the Company's management determined that it has two reportable segments – (1) development of drugs based on cannabinoid molecules to be approved by an official regulatory authority (the Company's operation); and (2) online sales of a various range of hemp-based products including hemp gummies, hemp oil capsules, hemp gel, hemp cream, detox pills, height pills, antibacterial creams, and anti-aging creams, among other beauty and hair treatment products that are all manufactured in the United States.

Segment performance (segment income (loss)) is evaluated based on operating income (loss) of each segment in the consolidated financial statements. The segment results reported to the CODM include items that are allocated directly to the segments and items that can be allocated on a reasonable basis.

The review of the CODM is carried out according to the results of the segment's performance. His review does not include certain expenses that are not related specifically to the activity of each of the segments. Those expenses are presented as reconciliation between segments operating results to total operating results in financial statements.

The Group's CODM is the CEO of the Company.

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31, 2025** | **Year ended December 31, 2025** | **Year ended December 31, 2025** |
|  | **Drug<br> Development** | **Online<br> Sales** | **Total** |
| *<u>Revenues</u>* |  |  |  |
| External | $- | $856 | $856 |
| *<u>Total</u>* | - | 856 | 856 |
| Cost of revenues | - | 225 | 225 |
| Research and development expenses | 2097 | - | 2097 |
| Sales and marketing | - | 912 | 912 |
| Impairment of intangible assets | - | 115 | 115 |
| General and administrative expenses | 6279 | 92 | 6371 |
| Other income, net | (490) | - | (490) |
| *<u>Segment loss</u>* | 7886 | 488 | 8374 |
| Company's share of losses of company accounted for at equity, net |  |  | 500 |
| Gain from sale of an associate |  |  | (2231) |
| Finance expense, net |  |  | 5921 |
| Loss |  |  | 12564 |

---

**SCISPARC LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 23:-** | **OPERATING SEGMENTS (CONT.)** |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31, 2024** | **Year ended December 31, 2024** | **Year ended December 31, 2024** |
|  | **Drug <br> Development** | **Online <br> Sales** | **Total** |
| *<u>Revenues</u>* |  |  |  |
| External | $- | $1306 | $1306 |
| *<u>Total</u>* | - | 1306 | 1306 |
| Cost of revenues | - | 800 | 800 |
| Research and development expenses | 1707 | - | 1707 |
| Sales and marketing | - | 1515 | 1515 |
| Impairment of intangible assets | - | 1344 | 1344 |
| General and administrative expenses | 4436 | 90 | 4526 |
| Other income, net | (1270) | - | (1270) |
| *<u>Segment loss (gain)</u>* | 4873 | 2443 | 7316 |
| Equity losses from the investment in MitoCareX |  |  | 429 |
| Finance expense (income), net |  |  | (259) |
| Tax income |  |  | (14) |
| Loss |  |  | 7472 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31, 2023** | **Year ended December 31, 2023** | **Year ended December 31, 2023** |
|  | **Drug <br> Development** | **Online <br> Sales** | **Total** |
| *<u>Revenues</u>* |  |  |  |
| External | $- | $2879 | $2879 |
| *<u>Total</u>* | - | 2879 | 2879 |
| Cost of revenues | - | 683 | 683 |
| Research and development expenses | 1641 | - | 1641 |
| Sales and marketing | - | 2484 | 2484 |
| Impairment of intangible assets | - | 1042 | 1042 |
| General and administrative expenses | 3718 | 126 | 3844 |
| Other income, net | - | - | - |
| *<u>Segment loss (gain)</u>* | 5359 | 1456 | 6815 |
| Company's share of losses of company accounted for at equity, net |  |  | 210 |
| Finance expense (income), net |  |  | (1164) |
| Tax expense |  |  | 22 |
| Loss |  |  | 5883 |

---

**SCISPARC LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 23:-** | **OPERATING SEGMENTS (CONT.)** |

---

*<u>Drug Development Segment</u>*

For the year ended December 31, 2024, the Company recognized other income in the amount of $1,288 as a result of a sale of an intangible asset.

 

*<u>Online Sales Segment</u>*

For the years ended December 31, 2023, 2024 and 2025, the Brand recorded significant losses. As of December 31, 2025, the Company has determined there are signs of decline in the value of the Brand and recognized a loss as a result of impairment to its intangible asset of $115 (as of December 31, 2024 - $1,344, as of December 31, 2023 - $1,042).

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31, 2025** | **As of December 31, 2025** | **As of December 31, 2025** |
|  | **Drug<br> Development** | **Online<br> Sales** | **Total** |
| Segment assets | $6224 | $1398 | $7622 |
| Segment liabilities | $2213 | $262 | $2475 |

---

---

| | | | |
|:---|:---|:---|:---|
|  | **As of December 31, 2024** | **As of December 31, 2024** | **As of December 31, 2024** |
|  | **Drug<br> Development** | **Online<br> Sales** | **Total** |
| Segment assets | $8407 | $1764 | $10171 |
| Segment liabilities | $1194 | $226 | $1420 |

---

**SCISPARC LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS USD in thousands (except share data)**

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| | |
|:---|:---|
| **NOTE 24:-** | **TRANSACTIONS AND BALANCES WITH RELATED PARTIES** |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. Balances with related parties:

---

| | | | | |
|:---|:---|:---|:---|:---|
|  | **December 31, 2025** | **December 31, 2025** | **December 31, 2024** | **December 31, 2024** |
|  | **Key<br> management<br> personnel** | **Other<br> related<br> parties** | **Key<br> management<br> personnel** | **Other<br> related<br> parties** |
| AutoMax bridge loans (see note 8c) | $- | $- | $- | $4224 |
| Other current assets | $- | $15 | $- | $15 |
| Current liabilities (see note 24e) | $123 | $381 | $55 | $245 |
| Non-current liabilities | $- | $222 | $- | $- |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. Transactions with related parties (not including amounts described in Note 24c):

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Research and development expenses | $216 | $63 | $40 |
| Sale of non-controlling interest in subsidiary | $- | $- | $2985 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. Benefits to key management personnel (including directors):

---

| | | | |
|:---|:---|:---|:---|
|  | **Year ended December 31,** | **Year ended December 31,** | **Year ended December 31,** |
|  | **2025** | **2024** | **2023** |
| Short-term benefits | $1142 | $765 | $1204 |
| Management fees (see also note 24d) | $120 | $120 | $220 |
| Cost of share-based payment | $302 | $157 | $84 |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;d. Pursuant to the purchase of the Wellution brand (refer to note 11),
Nexera and SciSparc U.S. entered into a consulting agreement, pursuant to which Nexera provides management services to SciSparc US for
the Wellution brand for a monthly fee of $20 and Nexera received a one-time signing bonus in the amount of $51. The consulting agreement
is for an undefined period of time and may be terminated by either party with 30 days advance notice. On November 2023 the monthly fee
was reduced to $10. For the years ended December 31, 2025 and 2024, the Company has recorded management services expenses in the amount
of $120.

**SCISPARC LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 24:-** | **TRANSACTIONS AND BALANCES WITH RELATED PARTIES (CONT.)** |

---

---

| | |
|:---|:---|
|  | In addition, during 2023 the Company and Nexera engaged in a mutual share exchange in the amount of $288 of ordinary shares from each of the Company and Nexera. Accordingly, the Company acquired 35,345 ordinary shares of Nexera and Nexera acquired 660 ordinary shares of the Company having an aggregate value of $288 As of December 31, 2025, the listed share price of Nexera on Nasdaq was $0.822, and the Company has recorded a loss in its consolidated statements of comprehensive loss of $89 on its investment (and $17 for the year ended December 31, 2024). |
|  | Mr. Oz Adler, the Company's Chief Executive Officer and Chief Financial Officer, is the chairman of the board of directors of Nexera. |
| e. | On March 7, 2022, the Company entered into the Cooperation Agreement with Clearmind, a company in which Dr. Adi Zuloff-Shani, the Company's Chief Technologies Officer, Mr. Weiss, the Company's President, and Mr. Adler, the Company's Chief Executive Officer and Chief Financial Officer serve as officers and directors (the "Cooperation Agreement"). For the years ended December 31, 2025 and 2024, the Company recognized expenses in respect of the Cooperation Agreement in the amount of $216 and $63, respectively. As of December 31, 2025, amounts owed to Clearmind in respect of the Cooperation Agreement amount to $381. |
|  | On November 17, 2022, the Company invested $1.5 million in Clearmind in connection with its initial public offering on the Nasdaq Capital Market, in exchange for 192 common shares of Clearmind, representing 9.33% of the outstanding share capital of Clearmind (see also Note 8). |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;f. Mr. Amitai Weiss, one of the Company's directors, was
 formerly chairman of the board of directors of AutoMax (see Note 8b).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;g. On August 13, 2024, the Company entered into the license agreement (the "License Agreement") of the out-licensing of its SCI-160 program (the "Assets"), with Polyrizon Ltd. (the "Licensee" or "Polyrizon"). According to the License Agreement, the Company granted the Licensee a royalty-bearing, exclusive, sub-licensable right and license to the Assets (the "License"). In consideration for the License, the Company received and will receive certain shares of the Licensee, reflecting an issue price of $805, and royalties from sales related to and income generated from the Assets. Further, the Licensee will pay the Company pre-determined fees upon the completion of certain development milestones relating to the Assets. Pursuant to the terms of the License Agreement, the Company is entitled to up to $3,320 based on the achievement of certain milestones, including (i) $50 upon a successful preclinical safety test, (ii) $100 upon first patient enrolled in phase I clinical trial, (iii) $120 upon first patient enrolled in Phase 2a clinical trial, (iv) $150 upon first patient enrolled in Phase 2b clinical trial, (v) $500 upon first patient enrolled in Phase 3 clinical trials, (vi) $800 upon approval by the U.S. Food and Drug Administration, (vii) $800 upon approval by an EU regulatory body, and (viii) $800 upon regulatory approval in any additional jurisdiction. Additionally, the Company is eligible to receive royalties, on a country-by-country and product-by-product basis, at a rate of 5%, on aggregate net sales of a product that comprises, contains and/or incorporates and/or is based on the Licensed Patent Rights, or a Licensed Product (as these are defined in the License Agreement), and sublicense income that we may receive until the longer of (i) fifteen years from the date of the first sale of a Licensed Product (on a country-by-country basis), and (ii) the last to expire valid claim of any licensed patents with respect to a Licensed Product in such country. On October 31, 2024, following an initial public offering of the Licensee, the Company received 684,931 units, of which (i) 320,000 units, with each unit consisting of one ordinary share of the Licensee and three warrants, each to purchase one additional ordinary share of the Licensee at a purchase price of $4.38 (960,000 warrants in total); and (ii) 364,931 units consisting of one pre-funded warrant to purchase one ordinary share of the Licensee, and three warrants, each to purchase one additional ordinary share of the Licensee at a purchase price of $4.38 (1,094,793 warrants in total). Altogether, the Company received 320,000 ordinary shares, 364,931 pre-funded warrants to purchase one ordinary share of the Licensee, and 2,054,793 warrants to purchase one additional ordinary share of the Licensee at a purchase price of $4.38. On December 30, 2024, pursuant to a share transfer agreement, the Company sold all of the Licensee ordinary shares and pre-funded warrants held by it to a third party, as well as an aggregate of 1,541,096 Licensee common warrants to third parties, for aggregate consideration of $771. In addition, in consideration for the License, the Company will receive royalties from sales related to the Assets and income generated from it. On April 1, 2025, the Company entered into a securities purchase agreement with Polyrizon, pursuant to which the Company participated in a private placement of Polyrizon and invested $100 (out of an aggregate investment of approximately $17 million), in exchange for ordinary shares and Series A warrants to purchase ordinary shares, of Polyrizon. In addition, the Company entered into an exchange agreement with Polyrizon, pursuant to which the Company exchanged existing ordinary share warrants of Polyrizon held the Company for Series A warrants to purchase ordinary shares of Polyrizon. As of December 31, 2025, the Company holds 88 ordinary shares of the Licensee. The value of the ordinary shares on December 31, 2025, is $1. Mr. Oz Adler, the Company's Chief Executive Officer, is Chairman of the board of directors of Polyrizon.

**SCISPARC LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS USD in thousands (except share data)**

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| | |
|:---|:---|
| **NOTE 25:-** | &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**SIGNIFICANT EVENTS DURING THE REPORTING PERIOD**<br>*<u>Transaction with NeuroThera Labs</u>* <br>On October 9, 2025, the Company entered into an asset and share purchase agreement (the "Miza Agreement") with Miza III Ventures Inc. (TSXV: MIZA.P)("Miza"), pursuant to which, on the terms and subject to the conditions of the Miza Agreement, the Company received a controlling interest in Miza, and transferred to Miza its clinical-stage pharmaceutical portfolio and equity stake of approximately 50.9% in SNI (the "Transaction"). In the financial statements of Miza, the Miza Agreement was accounted for as a reverse acquisition where SNI was identified as the accounting acquirer.<br>As of December 31, 2025, the Company held 75% of Miza issued and outstanding share capital. <br>The Transaction closed on October 22, 2025, and pursuant to the Miza Agreement, at the closing thereof (the "Closing") the Company transferred to Miza 59 ordinary shares, or approximately 50.9% of the equity, of SNI, the intellectual property rights in SciSparc's clinical-stage pharmaceutical portfolio, and the contracts, permits, pre-paid deposits, books and records, business and technical information, and all other rights, properties and assets necessary to the operation thereto, in consideration for 63,300,000 common shares of Miza, at a deemed price per share of CAD 0.25 ("Miza Common Shares"), 4,000,000 common share purchase warrants exercisable to acquire one Miza Common Share for each warrant at an exercise price of CAD 0.25 for a period of five years from the date of issuance thereof (the "Warrants"), 3,000,000 common shares to finders, with an aggregate fair value of $321 and up to 48,000,000 Miza Common Shares (the "Contingent Rights Shares") contingent upon the achievement of certain pre-determined milestones (the "Milestones"), representing a post-closing equity interest in Miza of 75% (or up to approximately 84% in the event of the full achievement of the Milestones.<br>Pursuant to the Miza Agreement, upon the achievement of the Milestones, the Contingent Right Shares will be issued to the Company as follows: (i) 16,000,000 Miza Common Shares will be issued upon the completion of a transaction resulting in the listing of Miza's securities on either the New York Stock Exchange or the Nasdaq Stock Market LLC (each, a "U.S. Exchange"), or another transaction resulting in the issuance of shares listed on a U.S. Exchange to shareholders of Miza in exchange for their Miza Common Shares (in each case, an "Uplisting Transaction"), if such Uplisting Transaction is completed within twenty-four months from the date of Closing (the "Closing Date"); (ii) 16,000,000 Miza Common Shares will be issued upon the successful raising by Miza, within forty-eight months of the Closing Date in equity and/or debt financing, of an aggregate of US$10 million or more; and (iii) 16,000,000 Miza Common Shares will be issued upon Miza completing a clinical trial within forty-eight months of the Closing Date.<br>Upon Closing, two parties have provided Miza non-convertible loans in the amount of $175 each which mature on November 22, 2026 and bear interest at the simple rate of 7% per annum.<br>The financial statements of Miza are consolidated in these financial statements from the Closing Date, and the Miza Agreement was accounted for as deemed issuance of shares by a subsidiary. Following the Closing, Miza changed its name to "NeuroThera Labs Inc." and is expected to be active in both the pharmaceutical and supplemental sectors. In the financial statements of Miza, the Miza Agreement was accounted for as a reverse acquisition where SNI was identified as the accounting acquirer. Additionally, Miza did not meet the definition of a business in IFRS 3, "Business Combinations." Accordingly, in the consolidated financial statements of the Company the agreement was accounted for as deemed issuance of 18,600,000 common shares by a subsidiary, representing the shares deemed to have been issued to the non-controlling interests by the subsidiary, and as an equity-settled share-based payment transaction by a subsidiary for the provision of a stock exchange listing and related services in accordance with IFRS 2, "Share-based Payment."<br>The deemed issuance listing expense related to the Transaction has been recorded in profit or loss and measured as the excess of fair value of the 18,600,000 common shares deemed issued by Neurothera Labs Inc. over the fair value of Neurothera's identifiable net assets acquired. The fair value of such common shares was determined based on their quoted price as of the date of completion of the Transaction.<br>The 3,000,000 common shares issued by the subsidiary to finders were recorded as share-based compensation expense in accordance with IFRS 2, "Share-based Payment," in an amount of $321, determined based on the quoted price of the common shares as of the date of completion of the Transaction.<br>For further information regarding the assets and liabilities received as consideration for deemed issuance of shares, see appendix (b) to the consolidated statements of cash flows.<br>In addition, on October 23, 2025, the Company loaned CAD 1 million (approximately US$716 thousand) in cash to Miza pursuant to an unsecured convertible note, which shall mature on the two-year anniversary of the date of the issuance thereof (the "Maturity Date") and shall bear interest at the simple rate of 7% per annum. On the Maturity Date, the outstanding principal and accrued but unpaid interest under the convertible note shall be convertible into Miza Common Shares, at the sole election of the holder, at a price of CAD 0.25 per share and up to a maximum of 4,000,000 Miza Common Shares (the "Share Cap"), subject to customary anti-dilution adjustments. Upon conversion of the convertible note, for any principal amount or accrued interest not converted into shares due to being in excess of the Share Cap or rounding, Miza will pay the holder of the convertible note a cash amount of such outstanding balance.This convertible note is eliminated in consolidation.<br>|

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**SCISPARC LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 26:-** | **EVENTS AFTER THE REPORTING DATE** |

---

The Company has evaluated subsequent events from December 31, 2025 through April 29, 2026, the date of approval of these consolidated financial statements by the board of directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;a. On January 26, 2026, the Company closed acquisition of the complete
portfolio of patents, trademarks, know-how, brand names and related intellectual property rights, including unregistered intellectual
property rights, owned by Xylo Technologies Ltd. ("Xylo") for pre-funded warrants to purchase 113,043 ordinary shares, at an exercise price of $0.009 per share to Xylo.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;b. On January 13, 2026, the Company entered into a securities purchase
agreement with certain institutional and accredited investors, providing for the issuance of an aggregate of 766,170 ordinary shares,
at a purchase price of $1.00 per share. The offering resulted in gross proceeds of approximately $766,170. The Company intends to use
the net proceeds from the offering for working capital and general corporate purposes, as may be determined by the Company's board
of directors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;c. On February 12, 2026, the Company entered into a securities purchase
agreement (the "SPA") with an institutional investor (the "February 2026 Holder"). Pursuant to the SPA, the Company
may issue and sell, from time to time, convertible promissory notes (the "February 2026 Notes"), in the aggregate principal
amount of up to $10,000 (the "February 2026 Subscription Amount"). Upon the signing of the SPA, on February 12, 2026 (the
"Initial Closing"), the Company issued to the February 2026 Holder a February 2026 Note in the principal amount of $2,000
for a purchase price of $1,800 (the "Initial Note"). Pursuant to a side letter entered into by the Company and the February
2026 Holder on February 12, 2026, the Company agreed that the February 2026 Holder deliver the purchase price for the Initial Note upon
the filing of the Registration Statement (as described below) with the SEC. The Company intends to use the net proceeds from the sale
of the February 2026 Notes and any additional net proceeds from the exercise of the Warrants (see below), to the extent exercised in cash,
for working capital and general corporate purposes. Subject to the conditions in the SPA, beginning on April, 1, 2026,
the Company may request, at its sole discretion, that the Holder purchase additional February 2026 Notes, each in the principal amount
of up to $1,800, with a purchase price payable in cash and equal to 90% of such principal amount, during each subsequent three-month period.
Notwithstanding the foregoing, if at any time after the Initial Closing, the daily trading volume of the Company's ordinary shares
is at least 150% of the amount of ordinary shares then outstanding, then the Company may request, at its sole discretion, that the February
2026 Holder purchase additional February 2026 Notes for a purchase price payable in cash equal to 90% of the principal amount, provided
that the aggregate principal amount of all notes purchased pursuant to the SPA shall not exceed the February 2026 Subscription Amount. In addition, under the terms and conditions of the SPA, concurrently
with the issuance of each note, the Company shall issue to the Holder, for no additional consideration, an accompanying warrant to purchase
the ordinary shares, representing a warrant coverage of 100% of the maximum number of ordinary shares issuable upon conversion of each
such February 2026 Note (calculated based on the lower of (i) the closing price of the ordinary share on the Nasdaq Capital Market on
the last trading day immediately prior to the date of issuance of such February 2026 Note and (ii) 88% of the lowest daily volume weighted
average price during the 20 consecutive trading days immediately preceding the applicable date of conversion). Thus, at the Initial Closing, the Company issued to the February 2026
Holder a warrant to purchase up to 405,728 ordinary shares (the "Initial Warrant"). The Initial Warrant is exercisable upon
issuance at an exercise price of $4.9293 and has a term of 3 years from the Issuance Date, or February 12, 2029.

d. On February 5, 2026, the Company announced that it intends to effect the Fifth Reverse Share Split of the Company's issued and outstanding ordinary shares, effective on March 4, 2026. Consequently, all share numbers, share prices, and exercise prices have been retroactively adjusted in these consolidated financial statements for all periods presented. The Fifth Reverse Share Split was approved by the Company's shareholders at the Company's annual general meeting of shareholders held on June 26, 2025, to be effected at the board of directors' discretion within the approved parameters.

**SCISPARC LTD. AND ITS SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS USD in thousands (except share data)**

---

| | |
|:---|:---|
| **NOTE 26:-** | **EVENTS AFTER THE REPORTING DATE (CONT.)** |

---

---

| | |
|:---|:---|
| e. | On February 28, 2026, a joint military operation (the "Operation") commenced by the United States and Israel involving attacks in Iran. In response, Iran launched ballistic missiles and unmanned aerial vehicles toward Israel and certain states in the Persian Gulf region. These events have resulted in civilian casualties and property damage in Israel. Additionally, Hezbollah, a terrorist organization in Lebanon, joined the attacks against Israel and Israel has started military operations in Lebanon.<br>Following the commencement of the Operation, Israel's Home Front Command announced a "special home front situation" and updated safety guidelines that include, among other measures, restrictions on passenger flights, limitations on gatherings, broad reserve recruitment, and temporary closure of certain businesses, which has contributed to a partial reduction in economic activity.  |
|  | Subject to the continuation and/or escalation of the Operation, and given its adverse impact on economic conditions in Israel, management expects the Operation to have a negative effect on the Company. Because this is an ongoing event and there is uncertainty regarding its duration, nature, and scope, management is unable to reasonably estimate the extent of the impact at this time. |
| f. | On March 10, 2026, the Company announced that NeuroThera, in which the Company holds a controlling interest of approximately 75%, has entered into a definitive share purchase agreement (the "CliniQ SPA"), between NeuroThera, CliniQuantum Ltd. ("CliniQ") and certain selling shareholders to acquire approximately 54.01% of the issued and outstanding ordinary shares of CliniQ (the "CliniQ Shares") on a fully diluted basis immediately prior to the closing of the transaction (the "CliniQ Transaction"). CliniQ is a quantum technology company holding patents from Ramot, which is Tel Aviv University's tech transfer company, in the field of quantum simulation and quantum Monte Claro.<br>Under the CliniQ SPA, NeuroThera will acquire 56,375 CliniQ Shares (the "Purchased Shares"), representing approximately 54.01% of the issued and outstanding ordinary shares of CliniQ from certain shareholders of CliniQ (collectively, the "Selling Shareholders"). <br>In consideration for the Purchased Shares, NeuroThera will issue an aggregate of 56,600,000 common shares (the "Consideration Shares") to the Selling Shareholders, representing an aggregate value of approximately $9,460 based on the volume weighted average trading price of the NeuroThera's common shares on the TSXV for the 20 trading days immediately preceding the date of the determination.<br>In addition to the Consideration Shares, the Selling Shareholders may be entitled to receive earn-out payments of up to $2,500 in the aggregate (the "Earn-Out Payments"), payable in cash and/or common shares of NeuroThera at the sole discretion of NeuroThera, contingent upon the achievement of the certain milestones, including $500 for each of the first three patent applications filed by CliniQ with the United States Patent and Trademark Office or the European Patent Office, up to a maximum of $1,500 in the aggregate filed during the Earn-Out Period (as defined below); and an amount equal to 7.0% of any fundraising proceeds raised by NeuroThera, up to a maximum of $1,000 in the aggregate. The Earn-Out Payments, if any, are payable during the three-year period following the closing of the Transaction (the "Earn-Out Period"). <br>Closing of the Transaction is expected to occur within 30 days following the submission of the application for the Israeli tax ruling to the Israeli Tax Authority, subject to satisfaction or waiver of all closing conditions. The closing of the Transaction is anticipated to be on or about May 15, 2026, unless otherwise agreed by the parties in writing.  |

---

## Exhibit 2.1

**Exhibit 2.1**

**DESCRIPTION OF SHARE CAPITAL**

The following description of SciSparc Ltd.'s (the "Company") share capital and provisions of the amended and restated articles of association (the "Articles") are summaries and do not purport to be complete.

**Registration number and purposes of the Company**

Our registration number with the Israeli Registrar of Companies is 51-358165-2. Our purpose as set forth in our Articles is to engage in any lawful activity.

**Type and class of securities**

Our authorized share capital consists of 2,000,000,000 ordinary shares, of no par value (the "Ordinary Shares"). All of our outstanding Ordinary Shares have been validly issued, are fully paid and non-assessable.

**Preemptive rights**

Our Ordinary Shares are not redeemable and are not subject to any preemptive right.

**Transfer of shares**

Our fully paid Ordinary Shares are issued in registered form and may be freely transferred under our Articles, unless the transfer is restricted or prohibited by another instrument, applicable law or the rules of a stock exchange on which the shares are listed for trade. The ownership or voting of our Ordinary Shares by non-residents of Israel is not restricted in any way by our Articles or the laws of the State of Israel, except for ownership by nationals of certain countries that are, or have been, in a state of war with Israel.

**Liability to further capital calls**

Our board of directors may make, from time to time, such calls as it may deem fit upon shareholders with respect to any sum unpaid with respect to shares held by such shareholders which is not payable at a fixed time. Such shareholder has to pay the amount of every call so made upon him or her.

**Election of directors**

Under our Articles, our board of directors must consist of at least three (3) and not more than eight (8) directors, including, if applicable, two external directors appointed as required under the Companies Law 5759-1999 (the "Companies Law"). Other than our external directors (if any), our directors are divided into three classes with staggered three-year terms. Each class of directors consists, as nearly as possible, of one third of the total number of directors constituting the entire board of directors. At each annual general meeting of our shareholders, the election or re-election of directors following the expiration of the term of office of the directors of that class of directors is for a term of office that expires on the third annual general meeting following such election or re-election, such that from 2020 and after, at each annual general meeting the term of office only one class of directors will expire. Each director, holds office until the annual general meeting of our shareholders for the year in which his or her term expires and until his or her successor is duly appointed, unless the tenure of such director expires earlier pursuant to the Companies Law upon the occurrence of certain events or unless removed from office by a vote of the holders of at least 65% of the total voting power of our shareholders at a general meeting of our shareholders in accordance with our amended and restated Articles.

Further, our shareholders approved an approval mechanism similar to a mechanism that exists in the Delaware Generate Corporate Law, which requires an affirmative vote of the board of directors (by 75% of the members) in addition to the approval of our shareholders in order to amend such provisions.

In addition, if a director's office becomes vacant, the remaining serving directors may continue to act in any manner, provided that the number of the serving directors shall not be less than three (3). If the number of serving Directors is lower than their minimal one, the board of directors shall not be permitted to act, other than for the purpose of convening a general meeting of the Company's shareholders for the purpose of appointing additional Directors. For further information on the election and removal of directors see "Item 6. Directors, Senior Management and Employees—C. Board Practices" of the Company's annual report on Form 20-F.

**Contested election**

Under our Articles, in the event of a contested election, our board of directors in its discretion, will set the method of calculation of the votes and the manner in which the resolutions will be presented to our shareholders at the general meeting. In the event that our board of directors does not or is unable to make a determination on such matter, then the directors will be elected by a plurality of the voting power represented at the general meeting in person or by proxy and voting on the election of directors.

**Dividend and liquidation rights**

We may declare a dividend to be paid to the holders of our Ordinary Shares in proportion to their respective shareholdings. Under the Companies Law, dividend distributions are determined by the board of directors and do not require the approval of the shareholders of a company unless the company's Articles provide otherwise. Our Articles do not require shareholder approval of a dividend distribution and provide that dividend distributions may be determined by our board of directors.

Pursuant to the Companies Law, the distribution amount is limited to the greater of retained earnings or earnings generated over the previous two years, according to our then last reviewed or audited consolidated financial statements, provided that the date of the financial statements is not more than six months prior to the date of the distribution, or we may distribute dividends that do not meet such criteria only with court approval; as a company listed on an exchange outside of Israel, however, court approval is not required if the proposed distribution is in the form of an equity repurchase, provided that we notify our creditors of the proposed equity repurchase and allow such creditors an opportunity to initiate a court proceeding to review the repurchase. If within 30 days such creditors do not file an objection, then we may proceed with the repurchase without obtaining court approval. In each case, we are only permitted to distribute a dividend if our board of directors and the court, if applicable, determines that there is no reasonable concern that payment of the dividend will prevent us from satisfying our existing and foreseeable obligations as they become due.

In the event of our liquidation, after satisfaction of liabilities to creditors, our assets will be distributed to the holders of our Ordinary Shares in proportion to their shareholdings. This right, as well as the right to receive dividends, 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.

**Exchange controls**

There are currently no Israeli currency control restrictions on remittances of dividends on our Ordinary Shares, proceeds from the sale of the shares or interest or other payments to non-residents of Israel, except for shareholders who are subjects of certain countries that are, or have been, in a state of war with Israel.

**Shareholder meetings**

Under the Companies Law, we are required to hold an annual general meeting of our shareholders once every calendar year that must be held no later than 15 months after the date of the previous annual general meeting. All general meetings other than the annual meeting of shareholders are referred to in our Articles as special general meetings. Our board of directors may call special general meetings whenever it sees fit, at such time and place, within or outside of Israel, as it may determine. In addition, the Companies Law provides that our board of directors is required to convene a special meeting upon the written request of (i) any two of our directors or one-quarter of the members of our board of directors or (ii) as a company listed on an exchange in the U.S., one or more shareholders holding, in the aggregate, either (a) 10% or more of our outstanding issued shares and 1% or more of our outstanding voting power or (b) 10% or more of our outstanding voting power.

Under the Companies Law, one or more shareholders holding at least 1% of the voting rights at the general meeting may request that the board of directors include a matter in the agenda of a general meeting to be convened in the future, provided that it is appropriate to discuss such a matter at the general meeting. Notwithstanding the foregoing, as a company listed on an exchange outside of Israel, a matter relating to the appointment or removal of a director may only be requested by one or more shareholders holding at least 5% of the voting rights at the general meeting of the shareholders.

Subject to the provisions of the Companies Law and the regulations promulgated thereunder, shareholders entitled to participate and vote at general meetings are the shareholders of record on a date to be decided by the board of directors, which may be between four and 60 days prior to the date of the meeting. Furthermore, the Companies Law requires that resolutions regarding the following matters must be passed at a general meeting of our shareholders:

● amendments to our Articles;

● appointment or termination of our auditors;

● appointment of external directors;

● approval of certain related party transactions;

● increases or reductions of our authorized share capital;

● mergers; and

● the exercise of our board of directors' powers by a general meeting, if our board of directors is unable to exercise its powers and the exercise of any of its powers is required for our proper management.

Under our Articles, we are not required to give notice to our registered shareholders pursuant to the Companies Law, unless otherwise required by law. The Companies Law requires that a notice of any annual general meeting or extraordinary general meeting be provided to shareholders at least 21 days prior to the meeting and if the agenda of the meeting includes the appointment or removal of directors, the approval of transactions with office holders or interested or related parties, or an approval of a merger, or as otherwise required under applicable law, notice must be provided at least 35 days prior to the meeting.

**Voting rights**

***Voting rights***

All our Ordinary Shares have identical voting and other rights in all respects.

***Quorum requirements***

Pursuant to our Articles, holders of our Ordinary Shares have one vote for each ordinary share held on all matters submitted to a vote before the shareholders at a general meeting. The quorum required for our general meetings of shareholders consists of at least two shareholders, present in person or by proxy, holding at least fifteen percent (15%) of the voting rights of the Company. A meeting adjourned for lack of a quorum will be adjourned for one day at the same time and place, or to such other day, time or place if such is stated in the notice of the meeting. At the reconvened meeting, if a quorum is not present within a half an hour, any number of shareholders present in person or by proxy will constitute a lawful quorum.

***Vote requirements***

Our Articles provide that all resolutions of our shareholders require a simple majority vote, unless otherwise required by the Companies Law or by our Articles. Under the Companies Law, each of (i) the approval of an extraordinary transaction with a controlling shareholder and (ii) the terms of employment or other engagement of the controlling shareholder of the company or such controlling shareholder's relative (even if not extraordinary) requires the approval described under "Item 6. Directors, Senior Management and Employees—C. Board Practices—Approval of Related Party Transactions under Israeli Law—Disclosure of Personal Interests of a Controlling Shareholder" of the Company's annual report on Form 20-F. Certain transactions with respect to remuneration of our office holders and directors require further approvals described under "Item 6. Directors, Senior Management and Employees—C. Board Practices— Approval of Related Party Transactions under Israeli Law— Disclosure of Personal Interests of an Office Holder" of the Company's annual report on Form 20-F. Another exception to the simple majority vote requirement is a resolution for the voluntary winding up, or an approval of a scheme of arrangement or reorganization, of the company pursuant to Section 350 of the Companies Law, which requires the approval of the majority of the shareholders voting their shares, other than abstainees, holding at least 75% of the voting rights represented at the meeting, in person, by proxy or by voting deed and voting on the resolution.

**Articles amendment**

In order to amend the Articles, in addition and prior to the approval of a general meeting of shareholders, the approval of the board of directors with the affirmative vote of at least three-quarters (3/4) of the directors then in office and entitled to vote thereon is required in order to approve any amendment to the Articles.

**Access to corporate records**

Under the Companies Law, shareholders are provided access to minutes of our general meetings, our shareholders register and principal shareholders register, our Articles, our financial statements and any document that we are required by law to file publicly with the Israeli Companies Registrar or the Israel Securities Authority. In addition, shareholders may request to be provided with any document related to an action or transaction requiring shareholder approval under the related party transaction provisions of the Companies Law. We may deny this request if we believe it has not been made in good faith or if such denial is necessary to protect our interest or protect a trade secret or patent.

**Modification of class rights**

Under the Companies Law and our Articles, the rights attached to any class of shares, such as voting, liquidation and dividend rights, may be amended by adoption of a resolution by the holders of a majority of the shares of that class present at a separate class meeting, or otherwise in accordance with the rights attached to such class of shares, as set forth in our Articles.

**Acquisitions under Israeli law**

***Full tender offer***

A person wishing to acquire shares of an Israeli public company and who would as a result hold over 90% of the target company's issued and outstanding share capital is required by the Companies Law to make a tender offer to all of the company's shareholders for the purchase of all of the issued and outstanding shares of the company. A person wishing to acquire shares of a public Israeli company and who would as a result hold over 90% of the issued and outstanding share capital of a certain class of shares is required to make a tender offer to all of the shareholders who hold shares of the relevant class for the purchase of all of the issued and outstanding shares of that class. If the shareholders who do not accept the offer hold less than 5% of the issued and outstanding share capital of the company or of the applicable class, and more than half of the shareholders who do not have a personal interest in the offer accept the offer, all of the shares that the acquirer offered to purchase will be transferred to the acquirer by operation of law. However, a tender offer will also be accepted if the shareholders who do not accept the offer hold less than 2% of the issued and outstanding share capital of the company or of the applicable class of shares.

Upon a successful completion of such a full tender offer, any shareholder that was an offeree in such tender offer, whether such shareholder accepted the tender offer or not, may, within six months from the date of acceptance of the tender offer, petition an Israeli court to determine whether the tender offer was for less than fair value and that the fair value should be paid as determined by the court. However, under certain conditions, the offeror may include in the terms of the tender offer that an offeree who accepted the offer will not be entitled to petition the Israeli court as described above.

If a tender offer is not accepted in accordance with the requirements set forth above, the acquirer may not acquire shares of the company that will increase its holdings to more than 90% of the company's issued and outstanding share capital or of the applicable class from shareholders who accepted the tender offer.

***Special tender offer***

The Companies Law provides that an acquisition of shares of an Israeli public company must be made by means of a special tender offer if as a result of the acquisition the purchaser would become a holder of 25% or more of the voting rights in the company. This requirement does not apply if there is already another holder of at least 25% of the voting rights in the company. Alternatively, such an acquisition may be approved pursuant to a private placement approved by the company's shareholders with the purpose of approving the acquisition of 25% or more, or 45% or more of the company's voting rights. Similarly, the Companies Law provides that an acquisition of shares in a public company must be made by means of a special tender offer if as a result of the acquisition the purchaser would become a holder of more than 45% of the voting rights in the company, if there is no other shareholder of the company who holds more than 45% of the voting rights in the company, subject to certain exceptions.

In the event that a special tender offer is made, a company's board of directors is required to express its opinion on the advisability of the offer, or shall abstain from expressing any opinion if it is unable to do so, provided that it gives the reasons for its abstention. In addition, the board of directors must disclose any personal interest each member of the board of directors has in the offer or stems therefrom.

A special tender offer must be extended to all shareholders of a company but the offeror is not required to purchase shares representing more than 5% of the voting power attached to the company's outstanding shares, regardless of how many shares are tendered by shareholders. A special tender offer may be consummated only if (i) at least 5% of the voting power attached to the company's outstanding shares will be acquired by the offeror and (ii) the number of shares tendered in the offer exceeds the number of shares whose holders objected to the offer (excluding the purchaser and its controlling shareholder, holders of 25% or more of the voting rights in the company or any person having a personal interest in the acceptance of the tender offer or any other person acting on their behalf, including relatives and entities under such person's control). If a special tender offer is accepted, then the purchaser or any person or entity controlling it or under common control with the purchaser or such controlling person or entity may not make a subsequent tender offer for the purchase of shares of the target company and may not enter into a merger with the target company for a period of one year from the date of the offer, unless the purchaser or such person or entity undertook to effect such an offer or merger in the initial special tender offer.

***Merger***

The Companies Law permits merger transactions if approved by each party's board of directors and, unless certain requirements described under the Companies Law are met, by a majority vote of each party's shares, and, in the case of the target company, a majority vote of each class of its shares voted on the proposed merger at a shareholders meeting. The board of directors of a merging company is required pursuant to the Companies Law to discuss and determine whether in its opinion there exists a reasonable concern that as a result of a proposed merger, the surviving company will not be able to satisfy its obligations towards its creditors, such determination taking into account the financial status of the merging companies. If the board of directors has determined that such a concern exists, it may not approve a proposed merger.

For purposes of the shareholder vote, unless a court rules otherwise, the merger will not be deemed approved if a majority of the votes of the shares represented at the shareholders meeting that are held by parties other than the other party to the merger, or by any person (or group of persons acting in concert) who holds (or hold, as the case may be) 25% or more of the voting rights or the right to appoint 25% or more of the directors of the other party, vote against the merger. If, however, the merger involves a merger with a company's own controlling shareholder or if the controlling shareholder has a personal interest in the merger, then the merger is instead subject to the same special majority approval that governs all extraordinary transactions with controlling shareholders (as described under "Item 6. Directors, Senior Management and Employees—C. Board Practices—Approval of Related Party Transactions under Israeli law—Disclosure of Personal Interests of a Controlling Shareholder" of the Company's annual report on Form 20-F).

If the transaction would have been approved by the shareholders of a merging company but for the separate approval of each class or the exclusion of the votes of certain shareholders as provided above, a court may still approve the merger upon the request of holders of at least 25% of the voting rights of a company, if the court holds that the merger is fair and reasonable, taking into account the value to the parties to the merger and the consideration offered to the shareholders of the company.

Upon the request of a creditor of either party to the proposed merger, the court may delay or prevent the merger if it concludes that there exists a reasonable concern that, as a result of the merger, the surviving company will be unable to satisfy the obligations of the merging entities, and may further give instructions to secure the rights of creditors.

In addition, a merger may not be consummated unless at least 50 days have passed from the date on which a proposal for approval of the merger was filed by each party with the Israeli Registrar of Companies and at least 30 days have passed from the date on which the merger was approved by the shareholders of each party.

**Special Majority Board Approvals**

Under our Articles, at least three-quarters (3/4) of our serving directors are required to vote in favor of certain transactions which may have a significant effect on the Company's structure, assets or business, including mergers acquisitions, consolidations and issuance of equity securities or debt securities convertible into equity in each case that would reasonably be expected to result in change of beneficial ownership of above than fifteen percent (15%) in the Company, material changes to the principal business of the Company and any resolution to transfer the headquarters of the Company outside of Israel.

**Approval of business combinations**

Our Articles restrict certain business transactions with any shareholder and/or its affiliates and/or investors for a period of three years following (i) with respect to any shareholder of the Company holding fifteen percent (15%) or more of the voting power of the ordinary shares as of September 15, 2022, the effective date of the Articles, and (ii) with respect to all shareholders of the Company, each time as such shareholder and/or any of its affiliates and/or investors become(s) (other than due to a buyback, redemption or cancellation of shares by the Company) the holder(s) (beneficially or of record) of fifteen percent (15%) or more of the issued and outstanding voting power of the ordinary shares. The restricted business transactions include mergers, consolidations and dispositions of assets with an aggregate market value equal to 10% or more of the Company's assets or outstanding shares.

**Borrowing powers**

Pursuant to the Companies Law and our Articles, our board of directors may exercise all powers and take all actions that are not required under law or under our Articles to be exercised or taken by a certain organ of the Company, including the power to borrow money for company purposes.

**Changes in capital**

Our Articles enable us to increase or reduce our share capital. Any such changes are subject to the provisions of the Companies Law and must be approved by a resolution duly adopted by our shareholders at a general meeting. In addition, transactions that have the effect of reducing capital, such as the declaration and payment of dividends in the absence of sufficient retained earnings or profits, require the approval of both our board of directors and an Israeli court.

**Forum for adjudication of disputes**

According to our Articles, the federal district courts of the United States of America, shall be the exclusive forum for the resolution of any complaint asserting a cause or causes of action arising under the U.S. Securities Act of 1933, as amended, including all causes of action asserted against any defendant to such complaint. The competent courts in Tel Aviv, Israel shall be the exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company's shareholders, or (iii) any action asserting a claim arising pursuant to any provision of the Companies Law or the Securities Law 5728-1968. The Company retains the ability to consent to an alternative forum in circumstances where the Company determines that its interests and those of its shareholders are best served by permitting a particular dispute to proceed in a forum other than the federal district courts or State of Israel, as applicable.

**Transfer agent and registrar**

Our transfer agent and registrar is Vstock Transfer LLC ("Vstock"). Vstock's address is 18 Lafayette Place, Woodmere, New York 11598 and its telephone number is (212) 828-8436.

## Exhibit 4.29

**Exhibit 4.29**

**SHARE PURCHASE AGREEMENT**

between

**SHAREHOLDERS OF CLINIQUANTUM LTD.,<br> AS SELLING SHAREHOLDERS**

and

**CLINIQUANTUM LTD.,<br> AS THE COMPANY**

and

**NEUROTHERA LABS INC.,<br> AS THE PURCHASER**

dated as of

March 9, 2026

**<u>SHARE PURCHASE AGREEMENT</u>**

**THIS AGREEMENT** is made as of the 9<sup>th</sup> day of March, 2026.

**BETWEEN:**

**SHAREHOLDERS OF CLINIQUANTUM LTD.** 

as set out in Section 3.03 of the Disclosure Schedules

(hereinafter referred to as the "**Selling Shareholders**")

**OF THE FIRST PART**

-and-

**CLINIQUANTUM LTD.**

a corporation incorporated under the laws of the State of Israel

(hereinafter referred to as the "**Company**")

**OF THE SECOND PART**

-and-

**NEUROTHERA LABS INC.**

a corporation incorporated pursuant to the laws of the Province of British Columbia and having its registered head office located at 2264 E 11<sup>th</sup> Ave., Vancouver, British Columbia V5N 1Z6

(hereinafter referred to as the "**Purchaser**")

**OF THE THIRD PART**

**WHEREAS** the Selling Shareholders collectively own 56,375 ordinary shares in the capital of the Company (the "**Purchased Shares**"), representing 54.01% of the issued and outstanding ordinary shares in the capital of Company (the "**Cliniquantum Shares**");

**AND WHEREAS** each such Selling Shareholder holds such number of Purchased Shares opposite their name in Section 3.03 of the Disclosure Schedules (as defined herein);

**AND WHEREAS** the Selling Shareholders wish to sell and the Purchaser wishes to acquire the Purchased Shares;

**NOW, THEREFORE**, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

**ARTICLE I<br> INTERPRETATION**

**Section 1.01 **Definitions.**

Throughout this Agreement, except as otherwise expressly provided, the following terms have the meanings specified or referred to in this Section 1.01:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) "**104H Tax Ruling**" means a ruling by the Israel Tax Authority that Taxes payable in
Israel with respect to the Consideration Shares issuable to a Selling Shareholder pursuant to this Agreement resident in Israel may be
deferred in accordance with the conditions set out in the said section.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) "**104H Filing Date**" means the date on which the application for the 104H Tax Ruling
is submitted to the Israeli Tax Authority, as confirmed in writing by Israeli counsel to the Selling Shareholders.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) "**Action**" means any claim, action, cause of action, demand, lawsuit, arbitration, inquiry,
audit, notice of violation, proceeding, litigation, citation, summons, subpoena, notice of assessment, notice or reassessment or investigation
of any nature, civil, criminal, administrative, investigative, regulatory or otherwise, whether at law or in equity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) "**Affiliate**" when used to indicate a relationship with a specified Person, means a Person
that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such
specified Person and a Person shall be deemed to be controlled by another Person if controlled in any manner whatsoever that results in
control in fact by that other Person (or that other Person and any Person or Persons with whom that other Person is acting jointly or
in concert), whether directly or indirectly. For the purposes of this definition, "control", when used with respect to any specified
Person, means the power to direct the management and policies of that Person directly or indirectly, whether through ownership of securities,
by trust, by contract or otherwise; and the term "controlled" has a corresponding meaning; *provided that*, in any event,
any Person that owns directly, indirectly or beneficially 50% or more of the securities having voting power for the election of directors
or other governing body of a corporation or 50% or more of the partnership interests or other ownership interests of any other Person
will be deemed to control that Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) "**Agreement**" means this securities purchase agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) "**Articles**" means the original or restated articles of incorporation, articles of amendment,
articles of continuance, articles of amalgamation, articles of arrangement, articles of reorganization, articles of dissolution, articles
of revival, articles of constitution, letters patent, supplemental letters patent, a special act, memorandum and articles of association
or any other instrument by which a corporation is incorporated.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) "**Assets**" means all the assets, real and personal, tangible and intangible of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) "**Balance Sheet**" has the meaning set forth in the definition of "Financial Statements"
in this Section 1.01.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) "**Balance Sheet Date**" has the meaning set forth in the definition of "Financial Statements"
in this Section 1.01.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) "**Benefit Plans**" means, with respect to any Person, any plan, arrangement, agreement,
program, policy, practice or undertaking, whether oral or written, formal or informal, funded or unfunded, insured or uninsured, registered
or unregistered, that provides any employee benefit, fringe benefit, supplemental unemployment benefit, bonus, incentive, profit sharing,
termination, change of control, pension, supplemental pension, retirement, stock option, stock purchase, stock appreciation, share unit,
phantom stock, deferred compensation, health, welfare, medical, dental, disability, life insurance and any similar plans, programmes,
arrangements or practices, in each case (i) for the benefit of Employees or former employees, officers or directors of such Person or
other Persons who are receiving remuneration for work or services provided who are not Employees thereof (or any spouses, dependants,
survivors or beneficiaries of such Persons), (ii) that are maintained, sponsored or funded by that Person, or (iii) under which such Person
has, or will have, any liability or contingent liability, provided that a Benefit Plan shall not include any Statutory Plans.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) "**Books and Records**" means: (a) all of the books of account, accounting records and other
financial data and information, including copies of filed Tax Returns and Assessments for each of the financial years of the Company,
commencing after the Tax year ended seven years before the date of this Agreement; (b) the corporate records of the Company; (c) information
of, or relating to, the Company or the Business; and (d) all other books, documents, files, records, telephone call recordings, correspondence,
data and information, financial or otherwise, that are in the possession or under the control of the Company, Selling Shareholders or
an Affiliate thereof, including all data and information stored electronically or on computer related media.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) "**Business**" means development, sale, marketing and commercialization of products and technologies
in the field of Quantum Simulation and Quantum Monte Carlo in the area of clinical trials.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) "**Business Day**" means any day except Saturday, Sunday or any other day on which banks
located in Vancouver, British Columbia or Tel-Aviv, Israel are authorized or required by Law to be closed for business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) "**Closing**" has the meaning set forth in Section 2.05.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(o) "**Closing Date**" means the date that is thirty (30) days after the 104H Filing Date, or
such other date as the Purchaser and the Selling Shareholders' Representative may mutually agree in writing; provided that in no event
shall the Closing Date be later than the Outside Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(p) "**Closing Documents**" means any agreement, certificate or other instrument to be executed
or delivered at Closing as required pursuant to Section 7.01, 7.02 and 7.03.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(q) "**Closing Time**" means 10:00 a.m. (Toronto time) on the Closing Date or such other time
on the Closing Date as the parties agree in writing that the Closing shall take place.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(r) "**Consideration Shares**" has the meaning set forth in Section 2.02(a).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(s) "**Contracts**" means all contracts, leases, deeds, mortgages, licences, instruments, notes,
commitments, undertakings, indentures, joint ventures and all other agreements, commitments and legally binding arrangements, whether
written or oral.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(t) "**Current Market Price**" means, with respect to any Consideration Shares, the volume
weighted average trading price of the common shares of the Purchaser on the TSXV (or such other stock exchange on which the common shares
of the Purchaser are then listed) for the twenty (20) trading days immediately preceding the date of determination. If the common shares
of the Purchaser are not listed on any stock exchange at the relevant time, the Current Market Price shall be determined in good faith
by the board of directors of the Purchaser.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(u) "**Direct Claim**" has the meaning set forth in Section 8.04(c).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) "**Disclosure Schedules**" means the schedules attached to this Agreement delivered by the
Company to Purchaser concurrently with the execution and delivery of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(w) "**Dollars**" or "**$**" means the lawful currency of Canada.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) "**Earn Out Payments**" has the meaning set forth in Section 2.03.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(y) "**Earn-Out Period**" means the period commencing on the Closing Date and ending on the
third (3<sup>rd</sup>) anniversary of the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(z) "**Employee**" means individuals employed by the Company as applicable, including without
limitation any and all individuals on leave of absence, including without limitation maternity leave, disability leave or workers compensation
leave.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aa) "**Employee Plans**" means all the employee benefit, fringe benefit, supplemental unemployment
benefit, bonus, incentive, profit sharing, termination, change of control, pension, retirement, stock option, stock purchase, stock appreciation,
health, welfare, medical, dental, disability, life insurance and similar plans, programmes, arrangements or practices relating to the
current and former directors, officers or employees of the Company maintained, sponsored or funded by the Company, whether written or
oral, funded or unfunded, insured or self-insured, registered or unregistered.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bb) "**Encumbrances**" means any encumbrance or restriction of any kind or nature whatsoever
and howsoever arising (whether registered or unregistered) and includes a security interest, mortgage, easement, adverse ownership interest,
defect on title, condition, right of first refusal, right of first offer, right-of-way, encroachment, building or use restriction, conditional
sale agreement, hypothec, pledge, deposit by way of security, hypothecation, assignment, charge, security under the *Bank Act* (Canada),
trust or deemed trust, voting trust or pooling agreement with respect to securities, any adverse claim, grant of any exclusive licence
or sole licence, or any other right, option or claim of others of any kind whatsoever, and includes any agreement to give any of the foregoing
in the future, and any subsequent sale or other title retention agreement or lease in the nature thereof, affecting the Company, the Purchased
Shares or the Assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cc) "**Financial Statements**" means the management prepared financial statements of the Company
for the financial period ended December 31, 2025 (the "**Balance Sheet Date**") each consisting of a balance sheet (the "**Balance Sheet** "), statement of earnings (loss) and retained earnings and statement of cash flows.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dd) "**Finder**" means each person listed in Schedule "B" hereof entitled to receive
Finders' Fees in connection with the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ee) "**Finders' Fees**" means such number of NTLX Shares issuable to each Finder opposite
their name in Schedule "B" hereof, payable in connection with Closing

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ff) "**Fundamental Representations**" has the meaning set forth in Section 9.01(a).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(gg) "**Fundraising Proceeds**" means the gross proceeds received by the Purchaser from any
issuance of equity securities or convertible debt securities of the Purchaser during the Earn-Out Period, but excludes (a) any proceeds
from the exercise of outstanding options or warrants existing as of the Closing Date, (b) any proceeds from securities issued as consideration
for an acquisition, and (c) any proceeds from securities issued to employees, directors or consultants under an equity incentive plan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(hh) "**GAAP**" means generally accepted accounting principles as set forth in the *CPA Canada Handbook – Accounting* for an entity that prepares its financial statements in accordance with International Financial Reporting
Standards, at the relevant time, applied on a consistent basis.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) "**Governmental Authority**" means: (a) any court, tribunal, judicial body or arbitral body
or arbitrator; (b) any domestic or foreign government or supranational body or authority whether multinational, national, federal, provincial,
territorial, state, municipal or local and any governmental agency, governmental authority, governmental body, governmental bureau, governmental
department, governmental tribunal or governmental commission of any kind whatsoever; (c) any subdivision or authority of any of the foregoing;
(d) any quasi-governmental or private body or public body exercising any regulatory, administrative, expropriation or taxing authority
under or for the account of the foregoing; (e) any stock or securities exchange; and (f) any public utility authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(jj) "**Governmental Order**" means any order, writ, judgment, injunction, decree, stipulation,
determination, award, decision, sanction or ruling entered by or with any Governmental Authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(kk) "**Guarantee**" means any agreement, contract or commitment providing for a guarantee with
respect to the Liabilities or other obligations of any Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ll) "**Indebtedness**" means, with respect to any Person, without duplication: (a) all obligations
for borrowed money; (b) all obligations evidenced by bonds, debentures, notes or similar instruments; (c) all obligations under conditional
sale or other title retention agreements; (d) all obligations under capital leases; (e) all obligations, contingent or otherwise, under
acceptance, letter of credit or similar facilities; (f) all guarantees of Indebtedness of others; and (g) all interest, fees, prepayment
premiums and other amounts owing in respect of the foregoing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(mm) "**Indemnified Party**" has the meaning set forth in Section 8.04.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(nn) "**Indemnifying Party**" has the meaning set forth in Section 8.04.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(oo) "**Independent Contractor**" means: (a) any individual who is not, or was not (with respect
to former Independent Contractors), an employee, officer or director of the Company, or any such individual's personal services company,
and which individual or personal services company receives or received remuneration from the Company under a Contract for services; and
(b) any individual who is an employee, officer or director of the Company, but who in the past was an individual who was not an employee,
officer or director of the Company or any such individual's personal services company, and which individual or personal services company
received remuneration from the Company under a Contract for services.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(pp) "**Intellectual and Industrial Property**" means: (a) proprietary rights provided under
patent law, copyright law, trademark law, design patent or industrial design law, semiconductor chip or mask work law, trade secret law,
or any other statutory provision or common law principle that provides a right in either intellectual property or the expression or use
of intellectual property and the goodwill associated therewith and symbolized thereby; and (b) applications, registrations or any other
evidence of a right in any of the foregoing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(qq) "**Interim Period**" means the period from the date of this Agreement to the Closing Time.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(rr) "**Israeli Tax Act**" means the *Income Tax Ordinance [New Version] 5271-1961* (Israel)
and the regulations promulgated thereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ss) "**Knowledge**" or any other similar knowledge qualification, means the actual knowledge
of the Company's directors and officers together with the knowledge such directors and officers would reasonably be expected to have after
due inquiry.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(tt) "**Law**" means any statute, law, ordinance, regulation, rule, instrument, code, order, constitution,
treaty, common law, judgment, decree, other requirement or rule of law of any Governmental Authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(uu) "**Liabilities**" has the meaning set forth in Section 4.07.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vv) "**License**" means any license, permit, approval, authorization, delegation of authority,
certificate or registration granted by any Governmental Authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ww) "**License Agreement**" has the meaning set forth in Section 4.05(b).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xx) "**Licensed IP**" means Intellectual and Industrial Property that is used by the applicable
Person under a license arrangement or arrangement from another Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(yy) "**Losses**" means losses, damages, liabilities, deficiencies, Actions, judgments, interest,
awards, penalties, fines, costs or expenses of whatever kind, including legal fees, disbursements and charges on a substantial indemnity
basis and the cost of enforcing any right to indemnification hereunder and the cost of pursuing any insurance providers; *provided that* "Losses" shall not include punitive or exemplary damages, except in the case of fraud or to the extent actually awarded to a
Governmental Authority or other third party.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(zz) "**Material Adverse Effect**" means any event, occurrence, fact, condition, change, effect
or development that, individually or in the aggregate, (a) has had or would reasonably be expected to have a material adverse effect on
the business, assets, properties, liabilities, results of operations or condition (financial or otherwise) of the Company, taken as a
whole, or (b) would reasonably be expected to prevent or materially impair or delay the ability of the Company or the Selling Shareholders
to consummate the transactions contemplated by this Agreement; provided, however, that none of the following shall be taken into account
in determining whether there has been a Material Adverse Effect:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) general business or economic conditions affecting the industry
in which the Company operates;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) national or international political or social conditions,
including:

&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) the engagement by the State of Israel in hostilities or the escalation thereof, whether or not pursuant to the declaration of a national
emergency or war;

&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) the occurrence or escalation of any military, cyber or terrorist attack upon the State of Israel, or any of its territories, possessions,
diplomatic or consular offices or upon any military installation, asset, equipment or personnel of the State of Israel; or

&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;(C) any other act of war, armed hostilities, sabotage or terrorism, or any escalation or worsening of any such act of war, armed hostilities,
sabotage or terrorism;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) changes or disruptions in financial, banking, credit or securities markets (including any decline in the
price of any security or any market index);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) changes in GAAP or applicable Laws after the date of this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) changes in the enforcement or interpretation of applicable Laws by any Governmental Authority after the
date of this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) the taking of any action expressly required by this Agreement or taken at the written request of, or with
the prior written consent of, the Purchaser;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) the announcement or pendency of this Agreement or the transactions contemplated hereby, including any
loss of, or adverse change in, the relationship of the Company with any of its customers, suppliers, employees, financing sources, shareholders
or similar relationships resulting therefrom;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) any failure by the Company to meet any internal or external projections, forecasts or estimates of revenues,
earnings or other financial metrics for any period (provided that the underlying causes of such failure may be considered in determining
whether a Material Adverse Effect has occurred, to the extent not otherwise excluded by this definition);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) any epidemic, pandemic or disease outbreak (including COVID-19) or any worsening thereof;

provided, further, that any event, occurrence, fact, condition, change, effect or development referred to in clauses (i), (ii), (iii), (iv), (v) or (ix) above shall be taken into account in determining whether a Material Adverse Effect has occurred or would reasonably be expected to occur to the extent that such event, occurrence, fact, condition, change, effect or development has a disproportionate adverse effect on the Company compared to other participants in the industry in which the Company conducts its business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aaa) "**Material Contracts**" has the meaning set forth in Section 4.12(a).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bbb) "**NIS**" means means New Israeli Shekels, the lawful currency of the State of Israel.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ccc) "**Ordinary Course** ", when used in relation to the conduct of the Business, means any transaction
that constitutes an ordinary day-to-day business activity of the Company conducted in a manner consistent with the Company's past
practice.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ddd) "**Outside Date**" means March 31, 2026, or such later date as the Purchaser and the Selling
Shareholders' Representative may agree in writing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(eee) "**Owned IP**" means Intellectual and Industrial Property that is owned by the applicable
Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(fff) "**Patent Application**" means a provisional or non-provisional patent application filed
with the United States Patent and Trademark Office or the European Patent Office.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ggg) "**Permits**" means all permits, licences, franchises, approvals, authorizations, registrations,
certificates, variances and similar rights obtained, or required to be obtained, from Governmental Authorities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(hhh) "**Person**" means an individual, corporation, company, limited liability company, body corporate,
partnership, joint venture, Governmental Authority, unincorporated organization, trust, association or other entity.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) "**Personal Information**" means any factual or subjective information, recorded or not,
about an employee, Independent Contractor, contractor, agent, consultant, officer, director, executive, client, lender, borrower, customer
or supplier of the Company who is a natural person or a natural person who is a shareholder of Selling Shareholder, or about any other
identifiable individual, including any record that can be manipulated, linked or matched by a reasonably foreseeable method to identify
an individual, but does not include the name, title or business address or telephone number of an employee of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(jjj) "**Pre-Closing Tax Periods**" shall mean any Tax Period ending before the Closing and any
pre-Closing portion of a Straddle Period.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(kkk) "**Prime Rate**" means the annual rate of interest announced from time to time by Royal Bank
of Canada as a reference rate then in effect for determining interest rates on Canadian dollar commercial loans in Canada.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(lll) "**Pro Rata Percentage**" has the meaning set forth in Section 8.02.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(mmm) "**Purchase Price**" has the meaning set forth in Section 2.02.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(nnn) "**Purchaser**" has the meaning set forth in the preamble.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ooo) "**Purchaser Indemnitees**" has the meaning set forth in Section 8.02.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ppp) "**Related Party**" has the meaning set forth in Section 4.20(b).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(qqq) "**Related Person**" has the meaning set forth in Section 4.20(a).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(rrr) "**Representative**" means, with respect to any Person, any, and all, directors, officers,
employees, consultants, financial advisors, lawyers, accountants and other agents of such Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(sss) "**Securities Act**" means the *Securities Act* (British Columbia), the rules, regulations
and published policies thereunder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ttt) "**Securities Authorities**" means the British Columbia Securities Commission and the other
applicable securities commissions and other securities regulatory authorities in each of the provinces of Canada and the TSXV;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(uuu) "**Securities Laws**" means the Securities Act, all other applicable provincial securities
laws, rules regulations and published policies thereunder, and the rules, regulations and policies of the TSXV;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vvv) "**Selling Shareholders**" has the meaning set forth in the preamble.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(www) "**Selling Shareholder Indemnitees**" has the meaning set forth in Section 8.03.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xxx) "**Selling Shareholders' Representative**" has the meaning set forth in Section 3.12(a).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(yyy) "**Software**" means all computer programs, operating systems, and applications owned (and
not licensed) by the Company and material to the operation of the Business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(zzz) "**Statutory Plans**" means employment rights governed by statute in Israel, including,
but not limited to, the Employee and Candidate Notice Law (Terms of Employment and Recruitment Procedure), 2002 (Israel); the Salary Protection
Law, 5718-1958 (Israel); Annual Leave Law, 1951 (Israel); Sick Pay Law, 1976 (Israel); General Extension Order Regarding Payment of Convalescence
(Israel); Work and Rest Hours Law, 1951 (Israel); Extension Order issued by the Minister of Economy (Pension Payments) (Israel); Severance
Pay Law, 1963 (Israel); and Advanced Notice for Dismissal and Resignation Law, 2001 (Israel).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(aaaa) "**Straddle Period**" means any Tax Period beginning before the Closing and ending after
the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(bbbb) "**Tax Act**" means the *Income Tax Act* (Canada).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(cccc) "**Tax"** or **"Taxes**" means all taxes, surtaxes, duties, levies, imposts,
fees, assessments, reassessments, withholdings, dues and other charges of any nature, imposed or collected by any Governmental Authority,
whether disputed or not, including federal, provincial, territorial, state, municipal and local, foreign and other income, franchise,
capital, real property, personal property, withholding, payroll, health, transfer, value added, alternative or add-on minimum tax, sales,
use, consumption, excise, customs, anti-dumping, countervail, net worth, stamp, registration, franchise, payroll, employment, education,
business, school, local improvement, development and occupation taxes, duties, levies, imposts, fees, assessments and withholdings and
social security contributions, national insurance contributions and all other taxes and similar governmental charges, levies or assessments
of any kind whatsoever imposed by any Governmental Authority including any installment payments, interest, penalties or other additions
associated therewith, whether or not disputed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(dddd) "**Tax Period**" means any period **prescribed** by any Governmental Authority for which
a Tax Return is required to be filed or Tax is required to be paid.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(eeee) "**Tax Return**" means all reports, returns, information returns, claims for refunds, elections,
designations, estimates, reports and other documents, including any schedule or attachments thereto, filed or required to be filed or
supplied to any Governmental Authority in respect of Taxes and including any amendment thereof or attachment thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ffff) "**Third-Party Claim**" has the meaning set forth in Section 8.04(a).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(gggg) "**TSXV**" means the TSX Venture Exchange.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(hhhh) "**Transaction Documents**" means this Agreement and the Company Amended Articles

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iiii) "**US$**" means the lawful currency of the United States of America.

**Section 1.02 Certain Rules of Interpretation**

In this Agreement and the Schedules:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Consent.</u> Whenever a provision of this Agreement requires or contemplates the consent or approval
of a Party and that approval or consent is not delivered within the applicable time limit, then, unless otherwise specified, that Party
will be deemed to have withheld its approval or consent.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Currency.</u> Unless otherwise specified, all dollar amounts in this Agreement, including the symbol
"$", refer to Canadian currency.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Gender and Number.</u> In this Agreement, unless the context requires otherwise, any reference to gender
includes all genders and words importing the singular number only include the plural and vice versa.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Predecessors and Successors.</u> In this Agreement, unless the context requires otherwise, any reference
to a Person shall be deemed to include their respective predecessors and successors.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>Headings, etc.</u> The division of this Agreement into Articles, Sections and other subdivisions and
the inclusion of headings and a table of contents are provided for convenience only and do not affect the construction or interpretation
of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Including.</u> In this Agreement, the words "include" or "including" mean "include
(or including) without limitation" and the words following "include" or "including" are not to be considered
an exhaustive list.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) <u>Performance on Holidays</u>. If any act is required by the terms of this Agreement to be performed
on a day which is not a Business Day, the act will be valid if performed on the next succeeding Business Day.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) <u>References to Documents.</u> Unless otherwise specified, any reference in this Agreement to this Agreement
or any other agreement or document, is a reference to this Agreement or the other agreement or document as it may have been, or may from
time to time be, amended, supplemented, restated, novated or replaced and includes all schedules to it and to the Disclosure Schedules.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) <u>References to Persons.</u> Unless the context otherwise requires, any reference in this Agreement to
a Person includes its successors and permitted assigns.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) <u>References to this Agreement</u>. The words "hereof", "herein", "hereto",
"hereunder", "hereby" and similar expressions refer to this Agreement as a whole and not to any particular Section
or portion of it.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(k) <u>Statutory References.</u> Unless otherwise specified, any reference in this Agreement to a statute
includes all rules and regulations made under it, in each case as it or they may have been, or may from time to time be, amended or re-enacted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(l) <u>Time.</u> Time is of the essence of this Agreement, and no extension or variation of this Agreement
will operate as a waiver of this provision.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(m) <u>Time Periods.</u> Unless otherwise specified, a period of days (or Business Days) will be deemed to
begin on the first day (or Business Day) after (or, in the calculation of days (or Business Days) prior to an event, the first day (or
Business Day) prior to) the event which began the period and to end at 5:00 p.m. (Toronto time) on the last day of the period. If a period
of time is to expire on any day that is not a Business Day, the period will be deemed to expire at 5:00 p.m. (Toronto time) on the next
succeeding Business Day.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(n) <u>Trade Terms</u>. Unless otherwise defined in this Agreement, words or abbreviations which have well-known
trade meanings are used in this Agreement with those meanings.

**Section 1.03 Virtual Data Room.**

Any reference to a document or matter being "made available to the Purchaser" includes the posting of such document or matter on the virtual data room established by the Company to which the Purchaser has had access; provided that access to such documents or matters via the virtual data room shall have been granted to the Purchaser at least two days prior to the Effective Date. Any reference to a document or matter being "made available to the Selling Shareholders" includes any document publicly filed by or on behalf of the Purchaser on its SEDAR+ profile at www.sedarplus.ca.

**Section 1.04 Entire Agreement.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) This Agreement together with the agreements and other documents to be delivered pursuant to this Agreement,
constitute the entire agreement between the Parties pertaining to the subject matter of this Agreement and supersede all prior agreements,
understandings, negotiations and discussions, whether oral, written or otherwise, of the Parties or any of their respective Affiliates
with respect thereto. There are no representations, warranties, covenants or other agreements between the Parties in connection with the
subject matter of this Agreement except as specifically set forth in this Agreement and any document delivered pursuant to this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) No supplement, modification, amendment, waiver or termination of this Agreement shall be binding unless
executed in writing by the Party to be bound thereby.

**Section 1.05 Accounting Principles.**

Unless otherwise specified, any reference in this Agreement to "generally accepted accounting principles" or "GAAP" is to the accounting standards for private enterprises, and for greater certainty, Part II of the CPA Canada Handbook, in effect in Canada at the date of determination and consistently applied in accordance with past practices.

**Section 1.06 Schedules**

The Schedules to this Agreement, including the Disclosure Schedules, form an integral part of this Agreement.

**ARTICLE II<br> PURCHASE AND SALE**

**Section 2.01 Purchase and Sale.**

Subject to the terms and conditions set forth herein, at the Closing, Selling Shareholders shall sell to Purchaser, and Purchaser shall purchase from Selling Shareholders, the Purchased Shares, free and clear of all Encumbrances, for the consideration specified in Section 2.02.

**Section 2.02 Purchase Price.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The aggregate consideration payable by the Purchaser to the Selling Shareholders for the Purchased Shares
shall be equal to $(the "**Purchase Price** "), to be paid and satisfied by delivery to the Selling Shareholders at the Closing
Time of 56,600,000 Common Shares (the "**Consideration Shares**") in the capital of the Purchaser as follows:

---

| | | | |
|:---|:---|:---|:---|
| Selling Shareholder | Consideration Shares | Value of Consideration Shares | Percentage of Purchase Price |
| Tomer Israeli | 13,754,677 Consideration Shares | $2298915.45 | 24.3% |
| Tidhar Turgeman | 7,027,938 Consideration Shares | $1174628.47 | 12.4% |
| Nir Sharon | 1,003,991 Consideration Shares | $167804.04 | 1.8% |
| Yonatan Krasney | 4,317,162 Consideration Shares | $721557.51 | 7.6% |
| Shusterman Noga Ada | 9,035,920 Consideration Shares | $1510236.56 | 16.0% |
| Yuval Fattal | 5,019,956 Consideration Shares | $839020.39 | 8.9% |
| Yaakov Baranes | 6,023,947 Consideration Shares | $1006824.43 | 10.6% |
| Nissim Daniel | 6,023,947 Consideration Shares | $1006824.43 | 10.6% |
| Hike Capital Inc. | 2,195,729 Consideration Shares | $366987.56 | 3.9% |
| Ronen Fatal | 188,750 Consideration Shares | $31547 | 0.3% |
| M.R.M. Merchavit Holdings and Management Ltd. | 941,744 Consideration Shares | $157400.27 | 1.7% |
| Invest-Pro – Shukai Hon Ltd. | 1,066,239 Consideration Shares | $178207.99 | 1.9% |
| TOTAL | 56,600,000 Consideration Shares |  | 100% |

---

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Consideration Shares issuable to the Selling Shareholders shall have a deemed issue price of the Current
Market Price per Consideration Share.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>104H Tax Ruling</u>. The Selling Shareholders shall apply to the Israeli Tax Authority ()"**ITA** ")
in connection with the Transaction, seeking to obtain a preliminary ruling pursuant to Section 104H of the Israeli Income Tax Ordinance,
confirming that the share exchange qualifies for a tax deferral under the provisions of the said section. The Parties agree to comply
with all the conditions set forth in such preliminary tax ruling (if granted) and to act accordingly. The Consideration Shares shall be
issued and immediately transferred to the trustee to enable the completion of the Transaction. By signing this Agreement, each Selling
Shareholder hereby agrees to be included in the Ruling and to comply with its terms, and to sign each and any document required for that
purpose.

**Section 2.03 Earn-Out Payments**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) <u>Patent Filing Milestone</u>. During the Earn-Out Period, if the Company files a Patent Application
 or if Patent Application is filed by Quantum X Labs Ltd. in the framework of the License
 Agreement, the Purchaser shall pay to the Selling Shareholders, in proportion to each Selling
 Shareholder's share of the Purchase Price as set out in Section 2.02(a), an aggregate
 amount equal to US$500,000 for each such Patent Application, up to a maximum aggregate amount
 of US$1,500,000 for the first three (3) Patent Applications filed during the Earn-out Period
 (each, a "**Patent Milestone Payment** "). Each Patent Milestone Payment shall
 be payable within thirty (30) days following the date on which the applicable Patent Application
 is filed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) <u>Fundraising Fee Milestone</u>. During the Earn-Out Period, if the Purchaser receives Fundraising
 Proceeds, the Purchaser shall pay to the Selling Shareholders, in proportion to each Selling
 Shareholder's share of the Purchase Price as set out in Section 2.02(a), an aggregate
 amount equal to seven percent (7.0%) of such Fundraising Proceeds, up to a maximum aggregate
 amount of US$1,000,000 (each, a "**Fundraising Fee Payment**" and together
 with the Patent Milestone Payments, the "**Earn-Out Payments** ")). Each Fundraising
 Fee Payment shall be payable within thirty (30) days following the closing of the applicable
 fundraising transaction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) <u>Form of Payment</u>. Each Earn-Out Payment shall be paid, at the sole discretion of the Purchaser,
 in any combination of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) cash, by wire transfer of immediately available funds to the account(s) designated by the Selling Shareholders;
and/or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Consideration Shares, with the number of Consideration Shares to be issued calculated by dividing the
applicable US dollar amount by the Current Market Price (converted to US dollars at the Bank of Canada daily exchange rate on the date
that is five (5) Business Days prior to the payment date), provided that such Consideration Shares shall be subject to such resale restrictions
as may be imposed by applicable Securities Laws and the rules and policies of the TSXV.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) <u>Maximum Issuance Limitation</u>. Notwithstanding anything herein to the contrary, in no event
 shall the Purchaser issue any Consideration Shares pursuant to this Section 2.03 to any individual
 Selling Shareholder (or any group of Selling Shareholders acting jointly or in concert) if
 such issuance would result in such Selling Shareholder (or group) holding in excess of 19.99%
 of the Purchaser's outstanding common shares, unless and until all applicable regulatory
 approvals have been obtained, including that of the TSXV.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) <u>No Security; Unsecured Obligation</u>. The right to receive Earn-Out Payments shall not
 be represented by any certificate or other instrument, shall not bear interest, and shall
 represent solely an unsecured contractual right of the Selling Shareholders against the Purchaser.
 No Selling Shareholder shall have any rights as a shareholder of the Purchaser with respect
 to any Earn-Out Payment until such time, if any, as Consideration Shares are issued in satisfaction
 thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) <u>Operation of the Business</u>. Following the Closing, the Purchaser shall have sole discretion with
 respect to all matters relating to the operation of the Company and the Purchaser, including
 decisions regarding patent filings and fundraising activities.

**Section 2.04 **Transactions to be Effected at the Closing.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) At the Closing, Purchaser shall deliver to or to the direction of Selling Shareholders:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Share certificates, DRS or other evidence of the Consideration Shares;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the Transaction Documents, Closing Documents and all other agreements, documents, instruments or certificates
required to be delivered by Purchaser at or before the Closing under Section 7.03.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) At the Closing, the Selling Shareholders shall deliver to Purchaser:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Certificates or other evidence representing the Purchased Shares, free and clear of all Encumbrances,
either registered in the name of the Purchaser or duly endorsed in blank or accompanied by forms of share transfers or other instruments
of transfer duly executed in blank; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) the Transaction Documents, Closing Documents and all other agreements, documents, instruments or certificates
required to be delivered by the Selling Shareholders at or before the Closing under Section 7.02.

**Section 2.05 Closing.**

Subject to the terms and conditions of this Agreement, the purchase and sale of the Purchased Shares contemplated hereby shall take place at a closing (the "**Closing**") to be held at 10 a.m., Toronto time on the Closing Date, at the offices of the Purchaser, 2264 E 11<sup>th</sup> Ave., Vancouver, British Columbia V5N 1Z6, or at such other time or on such other date or at such other place as the Selling Shareholders' Representative and Purchaser may mutually agree upon in writing.

**Section 2.06 Finders' Fees.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Purchaser shall be solely responsible for the payment of all Finders' Fees.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Purchaser shall pay the Finders' Fees at or promptly following Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Other than the Finders' Fees, no party is liable for any brokerage commission, finder's fee or similar
payment in connection with the transactions contemplated by this Agreement.

**Section 2.07 Securities Matters**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Selling Shareholders acknowledge that the Consideration Shares will be subject to, and legended to
reflect, hold periods and resale restrictions in accordance with the requirements of this Agreement, applicable Laws, the rules and policies
of the TSX Venture Exchange (the "**TSXV** ").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Selling Shareholders acknowledge that they are solely responsible to find out what these hold periods
and resale restrictions are and that it is solely responsible for compliance with applicable resale strictions and that they are aware
that during any hold period they may not resell the Consideration Shares except in accordance with limited exceptions under the applicable
Laws and the rules and policies of the TSXV.

**ARTICLE III<br> REPRESENTATIONS AND WARRANTIES OF SELLING SHAREHOLDERS**

Each Selling Shareholder, on a several basis and not a joint and several basis, hereby represents and warrants to the Purchaser with respect to itself only, as set out in this ARTICLE III as of the date hereof and as at the Closing Time and acknowledges that the Purchaser is relying on those representations and warranties in entering into this Agreement and completing the transactions contemplated by it.

**Section 3.01 Binding Effect.**

Each Selling Shareholder has the power and capacity to own the Purchased Shares held by it and to enter into and perform its obligations under this Agreement and each of the Transaction Documents and Closing Documents to which it is a party. This Agreement and each of the Transaction Documents and Closing Documents to which the Selling Shareholder is a party has been duly executed and delivered by such Selling Shareholder and is a legal, valid and binding obligation of the Selling Shareholder, enforceable against it in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency and other laws affecting the rights of creditors and others and except that equitable remedies may be granted only in the discretion of a court of competent jurisdiction.

**Section 3.02 Authority** 

Each Selling Shareholder has the legal capacity and authority to execute and deliver each Transaction Document to which he or she is a party and to consummate the transactions contemplated thereby. The execution and delivery of each Transaction Document to which such Selling Shareholder is a party, the performance of such Selling Shareholder's obligations set forth in such Transaction Documents and no other proceeding on the part of such Selling Shareholder is necessary to authorize each Transaction Document to which such Selling Shareholder is a party or to consummate the transactions contemplated thereby. This Agreement has been duly executed and delivered by such Selling Shareholder and constitutes, and each of the other Transaction Documents to which such Selling Shareholder will be a party upon execution and delivery by such Selling Shareholder will constitute, a valid, legal and binding obligation of such Selling Shareholder (assuming that this Agreement has been, and each other Transaction Document upon its execution and delivery will be, duly and validly authorized, executed and delivered by the other parties hereto or thereto), enforceable against such Selling Shareholder in accordance with its terms.

**Section 3.03 Title to Purchased Shares.**

Each Selling Shareholder is the beneficial owner and legal holder of record of all of the Purchased Shares as are set out opposite its name in Section 3.03 to the Disclosure Schedules, with good and marketable title thereto, free and clear of all Encumbrances, other than those restrictions contained in the articles of the Company.

**Section 3.04 No Other Agreements or Options**

As of the Closing Date, other than the Purchaser pursuant to this Agreement, no Person has any agreement or option or any other right or privilege (whether by law, pre-emptive or contractual) capable of becoming an agreement or option to acquire any of Purchased Shares as are referred to opposite the name of the Selling Shareholder in Section 3.03 to the Disclosure Schedules.

**Section 3.05 No Conflicts.**

Neither the execution and delivery of or performance by the Selling Shareholder of this Agreement or any other agreement contemplated hereunder or ancillary hereto (including the Transaction Documents and the Closing Documents) will result in a breach of, or conflict with, or cause the acceleration of any payment, right or obligation pursuant to, or the creation of any Encumbrance upon any of the Purchased Shares, or allow any Person to exercise any rights under, any of the terms or provisions of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) any Contract to which the Selling Shareholder is a party or by which the Selling Shareholder or any of
the Selling Shareholder's assets or properties may be bound or affected; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) any applicable Laws.

**Section 3.06 No Litigation.**

There is no action, suit or proceeding, or governmental inquiry or investigation, pending or, to the Selling Shareholder's Knowledge, threatened against either the Selling Shareholder in connection with the Purchased Shares being sold by them or that questions the validity of this Agreement or the right of the Selling Shareholder to enter into this Agreement and consummate the transactions contemplated thereby.

**Section 3.07 Required Regulatory Approvals.**

There is no requirement on the part of the Selling Shareholder to give or obtain (as applicable) any Regulatory Approval in connection with the lawful completion of the transactions contemplated by this Agreement.

**Section 3.08 Required Consents.**

No notice to, filing with, or authorization, consent, or approval of any Governmental Entity is necessary for the execution, delivery or performance of this Agreement by either Selling Shareholder or the consummation by either Selling Shareholder of the transactions contemplated hereby, except for (i) those the failure of which to obtain or make is not and would not reasonably be expected to be, individually or in the aggregate, material to such Selling Shareholder's ownership of the Purchased Shares and is and would not reasonably be expected to prevent, materially delay or materially impair the ability of such Selling Shareholder to consummate the transactions contemplated hereby and (ii) those that may be required solely by reason of Purchaser's (as opposed to any other third party's) participation in the transactions contemplated hereby. Neither the execution, delivery and performance of any Transaction Document to which any Selling Shareholder is a party nor the consummation by such Selling Shareholder of the transactions contemplated thereby will (a) to the extent such Selling Shareholder is not a natural Person, conflict with or result in any breach of any provision of such Selling Shareholder's Constating Documents, (b) result in a violation or breach of, or cause acceleration or constitute (with or without due notice or lapse of time or both) a default (or give rise to any right of termination, cancellation or acceleration) under, any of the terms, conditions or provisions of any Material Contract to which such Selling Shareholder is a party or (c) violate any Law of any Governmental Entity having jurisdiction over such Selling Shareholder, which, in the case of any of clauses (b) and (c) above, would, individually or in the aggregate, adversely affect such Selling Shareholder's ownership of the Shares.

**Section 3.09 Residence of Selling Shareholder**

Each Selling Shareholder is a "non-resident" of Canada within the meaning of the Tax Act.

**Section 3.10 Waiver of Claims Against the Company.** 

Each Selling Shareholder, solely in its capacity as shareholder of the Company, hereby irrevocably and unconditionally waives and releases, effective as of the Closing, all past, present and future claims, demands, rights of action, causes of action, suits, debts, dues, sums of money, accounts, reckonings, bonds, bills, covenants, contracts, controversies, agreements, promises, variances, trespasses, damages, judgments, executions and demands whatsoever that such Selling Shareholder has or may have against the Company or any of its past or present officers, directors, employees or agents, whether under common law, contract, statute or otherwise, whether such claims are, or could be, known to the Parties or in their contemplation at the date of this Agreement, in any jurisdiction; provided, however, that nothing in this Section 3.10 shall release or waive (a) any rights of such Selling Shareholder under this Agreement, (b) any rights of such Selling Shareholder to receive the Consideration Shares and Earn-Out Payments in accordance with Article II, or (c) any rights of such Selling Shareholder as a shareholder of the Purchaser following the Closing.

**Section 3.11 No Brokers**

Other than the Finders listed in Schedule "B" hereof, each Selling Shareholder has carried on all negotiations relating to this Agreement and the transactions contemplated by this Agreement without the intervention on its behalf of any other Person in such a manner as to give rise to any valid claim for a brokerage commission, finder's fee or other like payment payable.

**Section 3.12 Selling Shareholders' Representative.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) By executing this Agreement, each Selling Shareholder hereby irrevocably appoints Nissim Daniel as the
representative, agent and attorney-in-fact of such Selling Shareholder (the "**Selling Shareholders' Representative**") with
full power and authority to act on behalf of such Selling Shareholder with respect to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) giving and receiving notices and communications under this Agreement on behalf of the Selling Shareholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) negotiating, compromising and settling any indemnification claims under ARTICLE VIII;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) taking any and all actions necessary or appropriate in the judgment of the Selling Shareholders' Representative
for the accomplishment of the foregoing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Purchaser shall be entitled to rely conclusively on the instructions and decisions of the Selling
Shareholders' Representative as to any actions required or permitted to be taken by the Selling Shareholders' Representative hereunder,
and no Selling Shareholder shall have any cause of action against the Purchaser for any action taken by the Purchaser in reliance upon
the instructions or decisions of the Selling Shareholders' Representative.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Selling Shareholders' Representative shall not be liable to any Selling Shareholder for any act done
or omitted hereunder as the Selling Shareholders' Representative while acting in good faith and without gross negligence or wilful misconduct.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Selling Shareholders' Representative may be changed by the Selling Shareholders holding a majority
of the Consideration Shares issued to all Selling Shareholders upon not less than ten (10) Business Days' prior written notice to the
Purchaser.

**ARTICLE IV<br> REPRESENTATIONS AND WARRANTIES OF THE COMPANY**

The Company represents and warrants to the Purchaser as set out in this ARTICLE IV as of the date hereof and as of the Closing Date, and acknowledges that the Purchaser is relying on those representations and warranties in entering into this Agreement and completing the transactions contemplated by it. For purposes of this ARTICLE IV, "Knowledge" or "to the Company's Knowledge" (or similar phrases) shall mean the actual knowledge of the Company's directors and officers together with the knowledge such directors and officers would reasonably be expected to have after due inquiry.

**Section 4.01 Purchased Shares.**

The Purchased Shares represent 54.01% of the issued and outstanding Cliniquantum Shares as of the Closing Date on a fully diluted basis (as of immediately prior to the Closing). Following the Closing, the Purchaser shall hold 54.01% of the issued and outstanding Cliniquantum Shares on a fully diluted basis, free and clear of all Encumbrances, other than those restrictions contained in the Articles of the Company.

**Section 4.02 Organization and Corporate Power.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company is duly incorporated and validly existing and in good standing under the Laws of the State
of Israel with respect to the filing of annual reports with the Registrar of Companies of Israel, is not in the status of "breaching
company" (\* **hevra mafira** \*) and has all requisite corporate power and authority to own, lease and operate its properties and
other assets and to carry on its business as now being conducted and as proposed to be conducted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company is duly qualified or licensed to do business and is in good standing in each jurisdiction
in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other
than in such jurisdictions where the failure to be so qualified or licensed (individually or in the aggregate) would not have a Material
Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Section 4.02 of the Disclosure Schedules contains the incorporation documents of the Company.

**Section 4.03 **Capital Structure.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The authorized share capital of the Company consists of one million Cliniquantum Ordinary Shares with
par value of NIS 0.01 each, of which 104,375 Cliniquantum Shares are issued and outstanding as of the date hereof on a fully diluted basis
(excluding 70,800 dormant shares held by the Company). All issued and outstanding Cliniquantum Shares have been duly authorized, are validly
issued, fully paid and non-assessable. All the Purchased Shares were issued in compliance with applicable Laws. None of the Purchased
Shares were issued in violation of any agreement, arrangement or commitment to which either Selling Shareholder or the Company is a party
or is subject to or in violation of any preemptive or similar rights of any Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Section 4.03 of the Disclosure Schedules sets forth a complete and accurate list of all holders of Cliniquantum
Shares as of the date hereof, including the number of Cliniquantum Shares held by each such holder and the percentage of issued and outstanding
Cliniquantum Shares represented thereby. The Selling Shareholders are the registered and beneficial owners of an aggregate of 56,375 Cliniquantum
Shares, representing 54.01% of the issued and outstanding Cliniquantum Shares, free and clear of all Encumbrances other than those restrictions
contained in the Articles of the Company. Other than as set forth in Section 4.03 of the Disclosure Schedules, no Person holds any Cliniquantum
Shares or has any right to acquire any Cliniquantum Shares.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) Except as disclosed in Section 4.03 of the Disclosure Schedules, there are no outstanding bonds, debentures,
notes or other indebtedness or other securities of the Company having the right to vote (or convertible into, or exchangeable for, securities
having the right to vote) on any matters on which shareholders of the Company are entitled to vote.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Except as disclosed in Section 4.03 of the Disclosure Schedules, there are no outstanding securities,
options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which the Company is a party or
by which it is bound obligating the Company to issue, deliver or sell, or cause to be issued, delivered or sold, additional Cliniquantum
Shares or other equity or voting securities of the Company or obligating the Company to issue, grant, extend or enter into any such security,
option, warrant, call, right, commitment, agreement, arrangement or undertaking.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) There are no outstanding contractual obligations, commitments, understandings or arrangements of the Company
to repurchase, redeem or otherwise acquire or make any payment in respect of any Cliniquantum Shares or any other securities of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) There are no agreements or arrangements pursuant to which the Company is or could be required to register
Cliniquantum Shares or other securities under applicable Securities Laws or other agreements or arrangements with or among any holders
of the Company or with respect to any securities of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The transfer of the Purchased Shares will not trigger any anti-dilution rights of any existing securities
of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) There are no agreements among the shareholders of the Company concerning the voting, registration or transfer
of the Company's share capital other than as provided for in this Agreement and the Company Articles of Association.

**Section 4.04 Authority; Non-Contravention.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company has all requisite authority and corporate power to enter into this Agreement and each of the
Transaction Documents and Closing Documents to which it is a party and to consummate the transactions contemplated hereby and thereby.
The individual signing this Agreement on behalf of the Company has been duly authorized by the Company to do so. The execution and delivery
of this Agreement by the Company and the consummation by the Company of the transactions contemplated by this Agreement have been duly
authorized by all necessary corporate action on the part of the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) This Agreement has been duly executed and delivered by and constitutes a valid and binding obligation
of the Company, enforceable in accordance with its terms, except as enforcement may be limited by bankruptcy, insolvency and other Laws
affecting the rights of creditors generally and except that equitable remedies may be granted only in the discretion of a court of competent
jurisdiction.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated
by this Agreement and compliance with the provisions of this Agreement will not, conflict with, or result in any breach or violation of,
or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration
of or "put" right with respect to any obligation or to loss of a material benefit under, or result in the creation of any Encumbrance
upon any of the properties or assets of the Company under:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) the Articles or other constating documents of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) any loan or credit agreement, note, bond, mortgage, indenture,
lease or other agreement, instrument, Permit, concession, franchise or license applicable to the Company or its properties or assets;
or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) subject to the governmental filings and other matters referred
to in Section 4.04(d), any judgment, order, decree, statute, Law, ordinance, rule, regulation or arbitration award applicable to the
Company or its properties or assets,

other than, in the case of clauses (ii) and (iii), any such conflicts, breaches, violations, defaults, rights, losses or Encumbrances that individually or in the aggregate would not have a Material Adverse Effect or would not prevent, hinder or materially delay the ability of the Company to consummate the transactions contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) No consent, approval, order or authorization of, or registration, declaration or filing with, or notice
to, any Governmental Authority is required by or with respect to the Company in connection with the execution and delivery of this Agreement
by the Company or the consummation by the Company of any of the transactions contemplated by this Agreement.

**Section 4.05 Financial Statements; No Undisclosed Liabilities** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Complete management prepared copies of the Company's Financial Statements have been delivered to the Purchaser.
The Financial Statements:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) are based on the Books and Records of the Company; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) fairly present in all material respects the assets, liabilities
and financial position of the Company as of the respective dates they were prepared and the results of the operations of the Company
for the periods covered thereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company has no liabilities or obligations, contingent or otherwise, other than:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) liabilities incurred in the ordinary course of business which,
individually and in the aggregate, do not exceed US$150,000;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) obligations under Contracts and commitments incurred in the
ordinary course of business, including obligations resulting from the License Agreement with Quantum X Labs Ltd. dated March 2, 2026
(the "**License Agreement** "); and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) Debt in an amount of US$180,000 to Quantum X Labs Ltd. for services
provided by Quantum X Labs Ltd. to be paid to Quantum X Labs Ltd following the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Company is not a guarantor or indemnitor of any debt or obligation of another Person, nor has the
Company given any loan, security or otherwise agreed to become liable for any obligation of any Person. No Person has given any guarantee
of, or security for, any obligation of the Company. The Company has not extended any loans or advances to any Person, other than advances
for expenses to its employees or contractors in the ordinary course of business.

**Section 4.06 **Assets and Properties.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company has good and marketable title to all of the tangible or personal properties and assets owned
by the Company which are material to the Business as currently conducted, and such properties and assets are free and clear of all Encumbrances,
except for:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) statutory liens for the payment of current Taxes that are not yet delinquent; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) Encumbrances that arise in the ordinary course of business and do not materially impair the Company's
ownership or use of such property or assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) With respect to the tangible property and assets it leases, the Company is in compliance in all material
respects with such leases and, to the Company's Knowledge, holds a valid leasehold or license interest free of any Encumbrances, other
than those of the lessors of such property or assets.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Company does not own any real property.

**Section 4.07 Intellectual Property.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company owns, has or has rights to use,
all patents, patent applications, trademarks, trademark applications, service marks, trade names, trade secrets, inventions, copyrights,
licenses and other Intellectual and Industrial Property rights and similar rights necessary for use in connection with the Business, free
and clear of all Encumbrances, except as detailed in such agreements and licenses (collectively, the "**Company IP** ").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company has not received, since the date
of its incorporation, a written notice of a claim or otherwise has any Knowledge that the Company IP violates or infringes upon the rights
of any Person.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Company has taken reasonable security measures to protect the secrecy, confidentiality and value of
all of its intellectual properties, which measures are customary in the industry in which the Company operates.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Company has no Knowledge of any facts
that would preclude it from having valid license rights or clear title to the Company IP, without conducting any patent search. The Company
has no Knowledge that it lacks or will be unable to obtain any rights or licenses to use all Company IP that is necessary to conduct the
Business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Except for royalties and other payments under the License Agreement and other than with respect to commercially
available software products under standard end-user object code license agreements, the Company does not owe and will not owe (due to
current obligations of the Company) any royalties or other payments to third parties in respect of any Company IP.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Company has not received any grants from
any third party to develop intellectual property, including from the Israeli Innovation Authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Any and all intellectual property of any kind
which has been developed, or is currently being developed, for the benefit of the Company by an employee, officer, service provider or
consultant of the Company is solely owned by the Company, free and clear of all Encumbrances, unless otherwise stated in the License Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) Except as set forth in Section 4.07 of the
Disclosure Schedules, each of the Company's officers, employees, service providers and consultants who were engaged in the development
of Company IP has entered into written agreements with the Company assigning all rights (including moral rights, if applicable) in the
intellectual property developed in the course of their employment by or engagement with the Company exclusively to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) To the Company's Knowledge, none of the Company's
employees or contractors is obligated under any Contract or other agreement, or subject to any judgment, decree or order of any court
or administrative agency, that would interfere with the use of such person's best efforts to promote the interests of the Company, or
that would conflict with the Business as currently conducted.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) On the Closing Date, the Company shall own
and have all rights in and to the domain name "Cliniquantum.com".

**Section 4.08 Labour Matters.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company has no Employees and does not have any Benefit Plans.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company has engaged 3 Independent Contractors. Section 4.08 of the Disclosure Schedules sets forth
a complete list of all Independent Contractors, together with a summary of the material terms of their engagement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) All amounts owing to Independent Contractors for services rendered through the Closing Date have been
paid or adequately accrued, except for amounts not yet due in the ordinary course which do not exceed US$30,000 in the aggregate.

**Section 4.09 Litigation.**

There is no Action pending against or, to the Knowledge of the Company, threatened against the Company. The Company is not subject to any outstanding Governmental Order. No event has occurred, or circumstances exist, that may give rise to, or serve as a basis for, any such Action.

**Section 4.10 Compliance with Laws.** 

The Company has not been advised, nor does the Company have reason to believe, that it is not conducting the Business in compliance with all applicable Laws of the jurisdictions in which it is conducting the Business. The Company has not received any notice of any violation or alleged violation of any applicable Law.

**Section 4.11 Material Contracts.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All Material Contracts to which the Company is a party are included in Section 4.11 of the Disclosure
Schedules. Except for the Material Contracts, the Company has no material Contracts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Neither the Company nor, to its Knowledge, any other party to the Material Contracts is in breach of or
default under any of such Material Contracts.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) All of the Material Contracts are in full force and effect as of the date hereof and as of the Closing
and constitute legal, valid and binding obligations of the Company and, to the Company's Knowledge, the other parties thereto.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) None of the Material Contracts is being renegotiated and the validity and effectiveness of all Material
Contracts will not be affected by the transactions contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) None of the Material Contracts may be terminated in accordance with its terms as a result of the transactions
contemplated by this Agreement and the Company has not received any notice of termination of any Material Contract.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Complete and correct copies of each Material Contract (including all modifications, amendments and supplements
thereto and waivers thereunder) have been made available to the Purchaser.

**Section 4.12 Taxes.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Company has duly and timely made or prepared all Tax Returns required to be made or prepared by it,
has duly and timely filed all Tax Returns required to be filed by it with the appropriate Governmental Authority, and has duly, completely
and correctly reported all income and all other amounts and information required to be reported thereon.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company has duly and timely paid all Taxes, including all instalments on account of Taxes for the
current year, that are due and payable by it whether or not assessed by the appropriate Governmental Authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Company has not requested, offered to enter into or entered into any agreement or other arrangement,
or executed any waiver, providing for any extension of time within which:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) to file any Tax Return covering any Taxes for which the Company is or may be liable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) to file any elections, designations or similar filings relating to Taxes for which the Company is or may
be liable;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the Company is required to pay or remit any Taxes or amounts on account of Taxes; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) any Governmental Authority may assess or collect Taxes for which the Company may be liable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Company has not made, prepared and/or filed any elections, deferrals, designations or similar filings
relating to Taxes or entered into any agreement or other arrangement in respect of Taxes or Tax Returns that has effect for any period
ending after the Closing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) To the Knowledge of the Company, there are no Actions, investigations, audits or other proceedings now
pending or threatened against the Company in respect of any Taxes and there are no matters under discussion, audit or appeal with any
Governmental Authority relating to Taxes.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Company has duly and timely withheld all Taxes and other amounts required by Law to be withheld by
it (including Taxes and other amounts required to be withheld by it in respect of any amount paid or credited or deemed to be paid or
credited by it to or for the account or benefit of any Person, including any employees, officers, directors, contractors and any non-resident
Person), and has duly and timely remitted to the appropriate Governmental Authority such Taxes and other amounts required by Law to be
remitted by it.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The Company has duly and timely collected all amounts on account of any sales or transfer taxes, including
value added tax, required by Law to be collected by it and has duly and timely remitted to the appropriate Governmental Authority any
such amounts required by Law to be remitted by it.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) No deficiency assessment or proposed adjustment of income or payroll Taxes of the Company is pending and
the Company has no Knowledge of any material liability for any Tax to be imposed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) The Company has not acquired property from a non-arm's length Person for consideration the value of which
is less than the fair market value of the property acquired in circumstances which could subject it to a liability under the Israeli Tax
Act.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(j) No jurisdiction or Governmental Authority in which the Company does not file a Tax Return has alleged
that the Company is required to file such a Tax Return.

**Section 4.13 **Related Party Transactions.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Other than as set out in Section 4.13 of the Disclosure Schedules, the Company has not made any payment
or loan to, or borrowed any monies from, or is otherwise indebted to, any officer, director, employee, trustee or shareholder, or any
Affiliate or spouse of any of the foregoing (each, a "**Related Person** ").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Neither the Selling Shareholders nor any Affiliates of the Selling Shareholders (each, a "**Related Party**") is indebted to the Company.

**Section 4.14 No Subsidiaries.**

The Company does not own or control, directly or indirectly, any partnership interests, shares or other equity interests in any other entity or any voting rights or right to control the policies and direction of any entity.

**Section 4.15 **Insurance.** 

The Company doesn't maintain insurance coverage.

**Section 4.16 **Privacy and Data Protection.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All data that has been collected, stored, maintained or otherwise used by the Company has been collected,
stored, maintained and used in accordance with all applicable legal requirements and industry standards.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Company has not received a notice of non-compliance with applicable data protection Laws, rules, regulations,
guidelines or industry standards.

**Section 4.17 **Directors and Officers.** 

Section 4.17 of the Disclosure Schedules sets forth the names and titles of all of the directors and officers of the Company.

**Section 4.18 **Bank Accounts.**

Section 4.18 of the Disclosure Schedules sets forth a true and complete list of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the name and address of each bank with which the Company has an account or safe deposit box;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the name of each Person authorized to draw on each such bank account or have access thereto; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) the account number for each such bank account.

The bank accounts set forth in Section 4.18 of the Disclosure Schedules represent all of the bank accounts used in or relating to the Business and/or the Company.

**Section 4.19 Books and Records.** 

The Books and Records of the Company, all of which have been made available to the Purchaser, are complete and correct and have been maintained in accordance with sound business practices. The minute books of the Company contain accurate and complete records of all meetings, and resolutions in writing of, the shareholders, the board of directors and any committees of the board of directors of the Company.

**Section 4.20 Full Disclosure.**

All disclosure provided to the Purchaser regarding the Company, the Business and the transactions contemplated hereby, including the Disclosure Schedules, furnished by the Company or the Selling Shareholders with respect to the representations and warranties made herein, are true and correct and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

**ARTICLE V<br> REPRESENTATIONS AND WARRANTIES OF PURCHASER**

Purchaser represents and warrants to Selling Shareholders and the Company that the statements contained in this ARTICLE V are true and correct as of the date hereof.

**Section 5.01 Corporate Status and Authorization of Purchaser.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Purchaser is a corporation incorporated and validly existing under the Laws of the Province of British
Columbia;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Purchaser has the corporate power and capacity to enter into this Agreement, to carry out its obligations
hereunder and to consummate the transactions contemplated hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The execution and delivery by Purchaser of this Agreement, the performance by Purchaser of its obligations
hereunder and the consummation by Purchaser of the transactions contemplated hereby have been duly authorized by all requisite corporate
action.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) This Agreement has been duly executed and delivered by Purchaser, and (assuming due authorization, execution
and delivery by Company and each Selling Shareholder) this Agreement constitutes a legal, valid and binding obligation of Purchaser enforceable
against Purchaser in accordance with its terms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The execution, delivery and performance by the Purchaser of this Agreement, and the consummation of the
transactions contemplated hereby, do not and will not: (a) conflict with or result in a violation or breach of, or default under, any
provision of the Articles, by-laws, unanimous shareholder agreement or other constating documents of the Purchaser; (b) conflict with
any resolutions of the directors or shareholders of the Purchaser; (c) conflict with or result in a violation or breach of any provision
of any Law or Governmental Order applicable to the Purchaser; (d) require the consent, notice or other action by any Person under, conflict
with, result in a violation or breach of, constitute a default or an event that, with or without notice or lapse of time or both, would
constitute a default under, result in the acceleration of or create in any party the right to accelerate, terminate, modify or cancel
any Contract to which the Purchaser is bound or any Permit affecting the assets or business of the Purchaser; or (d) result in the creation
or imposition of any Encumbrance on any assets of the Purchaser. No consent, approval, Permit, Governmental Order, declaration or filing
with, or notice to, any Governmental Authority is required by or with respect to the Purchaser in connection with the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The Purchaser is a reporting issuer (within the meaning of applicable securities laws) in good standing
in the Provinces of Alberta, British Columbia and Ontario, is not on the list of defaulting issuers as maintained by the securities commissions
in such jurisdictions for a default of any requirement of any Securities Laws, and no order ceasing or suspending trading in the securities
of the Purchaser has been issued by any Securities Authority or other regulatory authority and is continuing in effect and no proceedings
for that purpose have been instituted or are pending or, to the knowledge of the Purchaser, contemplated or threatened by any Securities
Authority or other regulatory authority. The common shares in the capital of the Purchaser are listed and posted for trading on the TSXV
and are not listed on any other market. To the knowledge of the Purchaser, no inquiry, review or investigation (formal or informal) or
other proceedings involving the Purchaser that may operate to prevent or restrict trading of any securities of the Purchaser are currently
in progress or pending before any Securities Authority.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) Upon their issuance, the Consideration Shares will be validly issued and outstanding as fully paid and
non-assessable securities of the Purchaser registered in accordance with the instructions provided by each Selling Shareholder, free and
clear of all resale restrictions, liens, charges, escrow conditions or encumbrances of any kind whatsoever, except such escrow or resale
restrictions as may be imposed by the TSXV or applicable Laws.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) All publicly available press releases, material change reports, annual information forms, information
circulars, financial statements and other documents that have been disclosed by the Purchaser to the public and filed with any applicable
Canadian or other securities regulatory authority or otherwise posted on the System for Electronic Document Analysis and Retrieval + (collectively,
the "**Public Record**") are, in all material respects, accurate and complete and omit no facts, the omission of which
makes the Public Record or any particulars therein, materially misleading or incorrect at the time such statements were made. The Purchaser
has not filed any confidential material change reports which are, as of the date of this Agreement, maintained on a confidential basis.
Except as disclosed in the Public Record, there is no fact known to the Purchaser which has, or so far as the Purchaser can reasonably
foresee, will give rise to a material adverse change, or which would otherwise be material to any person intending to make an investment
in the Purchaser.

**ARTICLE VI<br> COVENANTS**

**Section 6.01 Confidentiality.**

From and after the Closing, the Selling Shareholders shall, and shall cause its Affiliates to, hold, and shall use its reasonable best efforts to cause its or their respective Representatives to hold, in confidence any and all information, whether written or oral, concerning the Company, except to the extent that the Selling Shareholders can show that such information: (a) is generally available to, and known by, the public through no fault of the Selling Shareholders, any of their Affiliates or any of their respective Representatives; or (b) is lawfully acquired by the Selling Shareholders, any of their Affiliates or any of their respective Representatives from sources that are not prohibited from disclosing such information by a legal, contractual or fiduciary obligation. If the Selling Shareholders, any of their Affiliates or any of their respective Representatives are compelled to disclose any information by judicial or administrative process or by other requirements of Law, the Selling Shareholders shall promptly notify Purchaser in writing and shall disclose only that portion of such information that the Selling Shareholders are advised by its counsel in writing is legally required to be disclosed; *provided that* the Selling Shareholders shall use their reasonable best efforts to obtain an appropriate protective order or other reasonable assurance that confidential treatment will be accorded such information.

**Section 6.02 Personal Information Privacy.**

Purchaser shall, at all times, comply with all Laws governing the protection of personal information with respect to Personal Information disclosed or otherwise provided to Purchaser by the Selling Shareholders or the Company under this Agreement. Purchaser shall only collect, use or disclose such Personal Information for the purposes of investigating the Company and the Business as contemplated in this Agreement and completing the transactions contemplated in this Agreement. Purchaser shall safeguard all Personal Information collected from the Selling Shareholders or the Company in a manner consistent with the degree of sensitivity of the Personal Information and maintain, at all times, the security and integrity of the Personal Information. Purchaser shall not make copies of the Personal Information or any excerpts thereof or in any way recreate the substance or contents of the Personal Information if the purchase of the Purchased Shares is not completed for any reason and shall return all Personal Information to Selling Shareholders or, at Selling Shareholders' request, destroy such Personal Information at Selling Shareholders' sole cost.

**Section 6.03 **Other Approvals and Consents.** 

The Company and Purchaser shall use their respective commercially reasonable efforts to give all notices to, and obtain all consents from, all third parties that are described in Section 4.04 of the Disclosure Schedules.

**Section 6.04 Conduct of Business Pending Closing.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) During the Interim Period, except as consented
to in writing by the Purchaser (which consent shall not be unreasonably withheld, conditioned or delayed), the Company shall, and the
Selling Shareholders shall cause the Company to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) conduct the Business in the Ordinary Course
in all material respects;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) use commercially reasonable efforts to preserve
intact the present business organization of the Company, maintain its rights and assets, keep available the services of its current officers
and key employees and Independent Contractors, and preserve its relationships with customers, suppliers, licensors, licensees and other
Persons having business dealings with it;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) maintain its Books and Records in the usual,
regular and ordinary manner, on a basis consistent with past practice;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) comply in all material respects with all applicable Laws; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) maintain in full force and effect all Permits required for the conduct of the Business.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) During the Interim Period, except as consented to in writing by the Purchaser (which consent shall not
be unreasonably withheld, conditioned or delayed), the Company shall not, and the Selling Shareholders shall cause the Company not to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) amend or propose to amend its Articles or other constating documents;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) split, combine, subdivide or reclassify any Cliniquantum Shares or other securities of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) declare, set aside or pay any dividend or other distribution (whether in cash, shares or property) in
respect of any Cliniquantum Shares, or redeem, repurchase or otherwise acquire any Cliniquantum Shares or other securities of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) issue, sell, pledge, dispose of, grant or encumber any Cliniquantum Shares or other securities of the
Company, or any options, warrants, convertible securities or other rights of any kind to acquire any Cliniquantum Shares or other securities
of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(v) acquire (by merger, consolidation, acquisition of shares or assets or otherwise) any corporation, partnership,
other business organization or any division thereof or any material assets;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vi) sell, lease, license, pledge, encumber or otherwise dispose of any material assets of the Company, except
for sales of inventory or services in the Ordinary Course;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(vii) incur any Indebtedness or guarantee any Indebtedness of another Person, or issue or sell any debt securities,
except for borrowings under existing credit facilities in the Ordinary Course not to exceed US$25,000 in the aggregate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(viii) make any loans, advances or capital contributions to, or investments in, any other Person (other than
travel advances to employees in the Ordinary Course);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ix) make or authorize any capital expenditures in excess of US$100,000 individually or US$100,000 in the aggregate;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(x) enter into, materially amend or terminate any Material Contract, other than in the Ordinary Course;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xi) increase the compensation or benefits payable to any director, officer, employee or Independent Contractor,
except as required by applicable Law or existing Contracts disclosed to the Purchaser;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xii) hire any new employee or engage any new Independent Contractor with annual compensation in excess of US$150,000,
or terminate any employee or Independent Contractor other than for cause;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiii) make any change in accounting methods, principles or practices, except as required by GAAP or applicable
Law;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xiv) settle or compromise any Action, or waive, release or assign any material claims or rights;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xv) make, change or revoke any Tax election, file any amended Tax Return, settle or compromise any Tax liability,
or enter into any closing agreement with respect to Taxes;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvi) enter into any transaction with any Related Person or Related Party, other than compensation arrangements
in the Ordinary Course; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(xvii) agree, authorize or commit to do any of the foregoing.

**Section 6.05 Notification of Certain Matters.** 

During the Interim Period, each Party shall promptly notify the other Parties in writing of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) any notice or other communication from any
Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated by this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) any notice or other communication from any
Governmental Authority in connection with the transactions contemplated by this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) any Actions commenced or, to such Party's
Knowledge, threatened against or affecting the Company or any Selling Shareholder that, if pending on the date of this Agreement, would
have been required to have been disclosed pursuant to this Agreement or that relates to the consummation of the transactions contemplated
by this Agreement;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) the discovery of any fact or circumstance
that, or the occurrence or non-occurrence of any event the occurrence or non-occurrence of which, would cause or result in any of the
conditions set forth in ARTICLE VII not being satisfied or satisfaction of those conditions being materially delayed; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) any Material Adverse Effect or any event,
occurrence, fact, condition or change that would reasonably be expected to result in a Material Adverse Effect.

No notification pursuant to this Section 6.05 shall be deemed to amend or supplement the Disclosure Schedules for the purpose of determining the accuracy of any representation or warranty made in this Agreement.

**Section 6.06 Access to Information.** 

During the Interim Period, the Company shall, and shall cause its Representatives to, afford the Purchaser and its Representatives reasonable access during normal business hours to the Company's properties, Books and Records, Contracts and personnel, and shall furnish to the Purchaser and its Representatives such financial, operating and other data and information as the Purchaser may reasonably request; provided, however, that any such access shall be conducted in a manner that does not unreasonably interfere with the Business or operations of the Company and shall be subject to reasonable confidentiality restrictions.

**Section 6.07 Exclusivity.** 

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) During the Interim Period, neither the Company nor any Selling Shareholder shall, and they shall cause
their respective Representatives not to, directly or indirectly:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) solicit, initiate, knowingly encourage or knowingly facilitate any inquiry, proposal or offer with respect
to, or the making or completion of, any Acquisition Proposal;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) enter into, continue or otherwise participate in any discussions or negotiations regarding, or furnish
any information with respect to, or take any other action to facilitate any inquiries or the making of any proposal that constitutes,
or may reasonably be expected to lead to, an Acquisition Proposal; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) enter into any agreement, arrangement or understanding with respect to any Acquisition Proposal.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) For purposes of this Agreement, "**Acquisition Proposal**" means any inquiry, proposal or
offer from any Person (other than the Purchaser or its Affiliates) relating to:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) any direct or indirect acquisition or purchase of all or any portion of the Cliniquantum Shares or other
equity securities of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) any direct or indirect acquisition or purchase of all or a substantial portion of the assets of the Company;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) any merger, consolidation, amalgamation, share exchange, business combination, recapitalization, liquidation,
dissolution or similar transaction involving the Company; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) any other transaction the consummation of which would reasonably be expected to prevent or materially
delay the consummation of the transactions contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Company and each Selling Shareholder shall promptly (and in any event within two (2) Business Days)
notify the Purchaser in writing if any Acquisition Proposal is received by the Company, any Selling Shareholder or any of their respective
Representatives, which notice shall include the identity of the Person making such Acquisition Proposal and the material terms thereof.

**Section 6.08 **Further Assurances.**

Following the Closing, each of the parties hereto shall, and shall cause their respective Affiliates to, execute and deliver such additional documents, instruments, conveyances and assurances, and take such further actions as may be reasonably required to carry out the provisions hereof and give effect to the transactions contemplated by this Agreement.

**ARTICLE VII<br> CONDITIONS TO CLOSING**

**Section 7.01 Conditions to Obligations of All Parties.**

The obligations of each party to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment, at or before the Closing, of each of the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Waivers or consents listed in Section 4.04 of the Disclosure Schedule.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) No Governmental Authority shall have enacted, issued, promulgated, enforced or entered any Governmental
Order that is in effect and has the effect of making the transactions contemplated by this Agreement illegal, otherwise restraining or
prohibiting consummation of such transactions or causing any of the transactions contemplated hereunder to be rescinded following the
completion thereof.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Selling Shareholders shall have received all consents, authorizations, orders and approvals from the
Governmental Authorities referred to in Section 4.04, in form and substance reasonably satisfactory to Purchaser, and no such consent,
authorization, order and approval shall have been revoked.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Approval of the Company's Board of Directors and Shareholders has been received, in form and
substance reasonably satisfactory to Purchaser, and no such consent, authorization, order and approval shall have been revoked

**Section 7.02 Conditions to Obligations of Purchaser.**

The obligations of Purchaser to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or Purchaser's waiver, at or before the Closing, of each of the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) All approvals, consents and waivers that are listed in Section 4.04 of the Disclosure Schedules shall
have been received and executed counterparts thereof shall have been delivered to Purchaser, at or before the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The Shareholders of the Company have approved the amendment to the Articles of Association, in substantially
the form attached hereto as Schedule "B" (the "**Company Amended Articles** ").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Selling Shareholders shall have caused the Company to deliver to Purchaser at Closing certificates
representing the Purchased Shares, registered in the name of the Purchaser and share transfer deeds signed by the Selling Shareholders
and the Purchaser in the form attached hereto as Schedule C. The Purchaser shall provide the Company the information required for reporting
the issuance of the shares in the Israeli registry of Companies including any KYC forms.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The representations and warranties of the Company and the Selling Shareholders set forth in this Agreement
shall be true and correct in all material respects (or, with respect to representations and warranties qualified by materiality or Material
Adverse Effect, in all respects) as of the date of this Agreement and as of the Closing Date as though made on and as of such date (except
for representations and warranties that expressly relate to a specified date, which shall be true and correct as of such specified date).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) The Company and each Selling Shareholder shall have performed or complied in all material respects with
all covenants and agreements required to be performed or complied with by them under this Agreement at or prior to the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) Since the date of this Agreement, there shall not have occurred any Material Adverse Effect.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The Purchaser shall have received a certificate signed by the Selling Shareholders' Representative on
behalf of the Selling Shareholders, dated as of the Closing Date, certifying that the conditions set forth in Sections 7.02(d), 7.02(e)
and 7.02(f) have been satisfied.

**Section 7.03 Conditions to Obligations of the Selling Shareholders.**

The obligations of the Selling Shareholders to consummate the transactions contemplated by this Agreement shall be subject to the fulfillment or the Selling Shareholders' waiver, at or before the Closing, of each of the following conditions:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Selling Shareholders shall have received a certificate of on officer of Purchaser certifying that
attached thereto are true and complete copies of all resolutions adopted by the board of directors of Purchaser authorizing the execution,
delivery and performance of this Agreement and the consummation of the transactions contemplated hereby, and that all such resolutions
are in full force and effect and are all the resolutions adopted in connection with the transactions contemplated hereby.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The application for the 104H Tax Ruling shall have been submitted to the Israeli Tax Authority, and the
Selling Shareholders shall have delivered to the Purchaser written confirmation from Israeli counsel confirming the 104H Filing Date.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The Selling Shareholders shall have received a certificate of an officer of Purchaser certifying the names
and signatures of the officers of Purchaser authorized to sign this Agreement and the other documents to be delivered hereunder.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) The Purchaser shall have delivered, or caused to be delivered, to counsel of the Selling Shareholders
in escrow pending Closing certificates representing the Consideration Shares, free and clear of Encumbrances, registered in the name of
the Selling Shareholders in accordance Section 2.02 or the trustee appointed in connection with the Tax Ruling whose details shall be
provided to Purchaser by the Selling Shareholders Representative.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) Purchaser shall have delivered to each Selling Shareholder such other documents or instruments as the
Selling Shareholder reasonably requests and are reasonably necessary to consummate the transactions contemplated by this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) The representations and warranties of the Purchaser set forth in this Agreement shall be true and correct
in all material respects (or, with respect to representations and warranties qualified by materiality, in all respects) as of the date
of this Agreement and as of the Closing Date as though made on and as of such date (except for representations and warranties that expressly
relate to a specified date, which shall be true and correct as of such specified date).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) The Purchaser shall have performed or complied in all material respects with all covenants and agreements
required to be performed or complied with by it under this Agreement at or prior to the Closing.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) The Selling Shareholders shall have received a certificate signed by an officer of the Purchaser, dated
as of the Closing Date, certifying that the conditions set forth in Sections 7.03(f) and 7.03(g) have been satisfied.

**ARTICLE VIII<br> INDEMNIFICATION**

**Section 8.01 Survival.**

Subject to the limitations and other provisions of this Agreement, the representations and warranties set out herein shall survive the Closing and shall remain in full force and effect as follows:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) the representations and warranties set forth in Section 3.01 (Binding Effect), Section 3.02 (Authority),
Section 3.03 (Title to Purchased Shares), Section 3.04 (No Other Agreements or Options), Section 4.01 (Purchased Shares), Section 4.02
(Organization and Corporate Power), Section 4.03 (Capital Structure), Section 4.04 (Authority; Non-Contravention), Section 5.01(a)-(e)
(Corporate Status and Authorization of Purchaser) and Section 5.01(g) (Consideration Shares) (collectively, the "Fundamental Representations")
shall survive until the expiration of the applicable statute of limitations;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) the representations and warranties set forth in Section 4.12 (Taxes) shall survive for a period of six
(6) years from the Closing Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) all other representations and warranties set out herein shall survive until the date that is twenty-four
(24) months from the Closing Date.

All covenants and agreements of the Parties set out herein shall survive the Closing indefinitely or for the period explicitly specified therein. Notwithstanding the foregoing, any claims asserted in good faith with reasonable specificity (to the extent known at such time) and in writing by notice from the non-breaching Party to the breaching Party before the expiration date of the applicable survival period shall not thereafter be barred by the expiration of the relevant representation or warranty and such claims shall survive until finally resolved or the expiry of the limitation period under applicable Law, whichever is sooner.

**Section 8.02 Indemnification by Selling Shareholders.**

Subject to the other terms and conditions of this ARTICLE VIII, each Selling Shareholder shall, severally and not jointly, indemnify and defend each of Purchaser and its Affiliates and their respective Representatives (collectively, the "Purchaser Indemnitees") against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Purchaser Indemnitees based upon, arising out of, with respect to or by reason of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) any inaccuracy in or breach of any of the representations or warranties of such Selling Shareholder set
out in ARTICLE III of this Agreement (other than Section 3.03 (Title to Purchased Shares) and Section 3.04 (No Other Agreements or Options))
or in any certificate or instrument delivered by or on behalf of such Selling Shareholder under this Agreement, for which such Selling
Shareholder shall be solely liable for the entirety of such Losses attributable to such Selling Shareholder's breach;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) any inaccuracy in or breach of the representations or warranties set forth in Section 3.03 (Title to Purchased
Shares) or Section 3.04 (No Other Agreements or Options), for which such Selling Shareholder shall be solely liable for the entirety of
such Losses to the extent attributable to the Purchased Shares held by such Selling Shareholder;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) any inaccuracy in or breach of any of the representations or warranties of the Company set out in ARTICLE
IV of this Agreement or in any certificate or instrument delivered by or on behalf of the Company under this Agreement, as of the date
such representation or warranty was made or as if such representation or warranty was made on and as of the Closing Date (except for representations
and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such
specified date), for which such Selling Shareholder shall be liable for such Selling Shareholder's Pro Rata Percentage of such Losses;
or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by such Selling
Shareholder under this Agreement, for which such Selling Shareholder shall be solely liable for the entirety of such Losses attributable
to such Selling Shareholder's breach; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by the Company
under this Agreement, for which such Selling Shareholder shall be liable for such Selling Shareholder's Pro Rata Percentage of such Losses.

For purposes of this ARTICLE VIII, "Pro Rata Percentage" means, with respect to each Selling Shareholder, the percentage of the Purchase Price received by such Selling Shareholder as set out opposite such Selling Shareholder's name in Section 2.02(a).

Notwithstanding any other provision of this Agreement or any applicable Law:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(f) the Company shall not have any liability or obligation to indemnify, save or hold harmless, contribute
to or otherwise pay, reimburse or make the Selling Shareholders or any of their Affiliates or Representatives whole for or on account
of any indemnification or other claims made by any Purchaser Indemnitees hereunder or otherwise in connection with this Agreement or the
transactions contemplated hereby;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(g) no Selling Shareholder shall have any right of contribution, indemnification, subrogation or other similar
right against the Company with respect to any indemnification or other claim made by any Purchaser Indemnitees against such Selling Shareholder
hereunder or otherwise in connection with this Agreement or the transactions contemplated hereby; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(h) each Selling Shareholder hereby irrevocably and unconditionally waives any and all rights of contribution,
indemnification, subrogation or other similar rights that such Selling Shareholder may have against the Company in connection with any
indemnification obligations of such Selling Shareholder under this Agreement.

**Section 8.03 Indemnification by Purchaser** 

Subject to the other terms and conditions of this ARTICLE VIII, Purchaser shall indemnify and defend each Selling Shareholder and their respective Affiliates and Representatives (collectively, the "**Selling Shareholder Indemnitees**") against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Selling Shareholder Indemnitees based upon, arising out of, with respect to or by reason of:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) any inaccuracy in or breach of any of the representations or warranties of Purchaser contained in this
Agreement or in any certificate or instrument delivered by or on behalf of Purchaser under this Agreement, as of the date such representation
or warranty was made or as if such representation or warranty was made on and as of the Closing Date (except for representations and warranties
that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date);
or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) any breach or non-fulfillment of any covenant, agreement or obligation to be performed by Purchaser under
this Agreement.

**Section 8.04 Indemnification Procedures.**

The party making a claim under this ARTICLE VIII is referred to as the "**Indemnified Party**", and the party against whom such claims are asserted under this ARTICLE VIII is referred to as the "**Indemnifying Party**".

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) **Third-Party Claims**. If any Indemnified Party receives notice of the assertion or commencement of
any Action made or brought by any Person who is not a party to this Agreement or an Affiliate of a party to this Agreement or a Representative
of the foregoing (a "**Third-Party Claim**") against such Indemnified Party with respect to which the Indemnifying Party
is obligated to provide indemnification under this Agreement, the Indemnified Party shall give the Indemnifying Party reasonably prompt
written notice thereof, but in any event not later than thirty (30) calendar days after receipt of such notice of such Third-Party Claim.
The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification obligations,
except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice by the Indemnified
Party shall describe the Third-Party Claim in reasonable detail, include copies of all material written evidence thereof and indicate
the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party. The Indemnifying
Party shall have the right to participate in, or by giving written notice to the Indemnified Party, to assume the defense of any Third-Party
Claim at the Indemnifying Party's expense and by the Indemnifying Party's own counsel, and the Indemnified Party shall cooperate in good
faith in such defense; provided that, if the Indemnifying Party is a Selling Shareholder, such Indemnifying Party shall not have the right
to defend or direct the defense of any such Third-Party Claim that: (i) is asserted directly by or on behalf of a Person that is a lender,
borrower, supplier or customer of the Company; or (ii) seeks an injunction or other equitable relief against the Indemnified Party. If
the Indemnifying Party assumes the defense of any Third-Party Claim, subject to Section 8.04(b), it shall have the right to take such
action as it deems necessary to avoid, dispute, defend, appeal or make counter-claims pertaining to any such Third-Party Claim in the
name and on behalf of the Indemnified Party. The Indemnified Party shall have the right to participate in the defense of any Third-Party
Claim with counsel selected by it subject to the Indemnifying Party's right to control the defense thereof. The fees and disbursements
of such counsel shall be at the expense of the Indemnified Party; provided that, if in the reasonable opinion of counsel to the Indemnified
Party: (A) there are legal defenses available to an Indemnified Party that are different from or additional to those available to the
Indemnifying Party, or (B) there exists a conflict of interest between the Indemnifying Party and the Indemnified Party that cannot be
waived, the Indemnifying Party shall be liable for the reasonable fees and expenses of counsel to the Indemnified Party in each jurisdiction
for which the Indemnified Party determines counsel is required. If the Indemnifying Party elects not to compromise or defend such Third-Party
Claim, fails to promptly notify the Indemnified Party in writing of its election to defend as provided in this Agreement or fails to diligently
prosecute the defense of such Third-Party Claim, the Indemnified Party may, subject to Section 8.04(b), pay, compromise, defend such Third-Party
Claim and seek indemnification for any and all Losses based upon, arising from or relating to such Third-Party Claim. The Selling Shareholders
(acting through the Selling Shareholders' Representative) and Purchaser shall cooperate with each other in all reasonable respects
in connection with the defense of any Third-Party Claim, including making available records relating to such Third-Party Claim and furnishing,
without expense (other than reimbursement of actual out-of-pocket expenses) to the defending party, management employees of the non-defending
party as may be reasonably necessary for the preparation of the defense of such Third-Party Claim.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) **Settlement of Third-Party Claims**. Notwithstanding any other provision of this Agreement, the Indemnifying
Party shall not enter into settlement of any Third-Party Claim without the prior written consent of the Indemnified Party, except as provided
in this Section 8.04(b). If a firm offer is made to settle a Third-Party Claim without leading to liability or the creation of a financial
or other obligation on the part of the Indemnified Party and provides, in customary form, for the unconditional release of each Indemnified
Party from all liabilities and obligations in connection with such Third-Party Claim and the Indemnifying Party desires to accept and
agree to such offer, the Indemnifying Party shall give written notice to that effect to the Indemnified Party. If the Indemnified Party
fails to consent to such firm offer within ten (10) days after its receipt of such notice, the Indemnified Party may continue to contest
or defend such Third-Party Claim and, in such event, the maximum liability of the Indemnifying Party as to such Third-Party Claim shall
not exceed the amount of such settlement offer. If the Indemnified Party fails to consent to such firm offer and also fails to assume
the defense of such Third-Party Claim, the Indemnifying Party may settle the Third-Party Claim upon the terms set forth in such firm offer
to settle such Third-Party Claim. If the Indemnified Party has assumed the defense under Section 8.04(a), it shall not agree to any settlement
without the written consent of the Indemnifying Party (which consent shall not be unreasonably withheld or delayed).

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) **Direct Claims**. Any Action by an Indemnified Party on account of a Loss which does not result from
a Third-Party Claim (each, a "**Direct Claim**") shall be asserted by the Indemnified Party giving the Indemnifying Party
reasonably prompt written notice thereof, but in any event not later than thirty (30) days after the Indemnified Party becomes aware of
such Direct Claim. The failure to give such prompt written notice shall not, however, relieve the Indemnifying Party of its indemnification
obligations, except and only to the extent that the Indemnifying Party forfeits rights or defenses by reason of such failure. Such notice
by the Indemnified Party shall describe the Direct Claim in reasonable detail, shall include copies of all material written evidence thereof
and shall indicate the estimated amount, if reasonably practicable, of the Loss that has been or may be sustained by the Indemnified Party.
The Indemnifying Party shall have thirty (30) days after its receipt of such notice to respond in writing to such Direct Claim. The Indemnified
Party shall allow the Indemnifying Party and its professional advisors to investigate the matter or circumstance alleged to give rise
to the Direct Claim, and whether and to what extent any amount is payable in respect of the Direct Claim, and the Indemnified Party shall
assist the Indemnifying Party's investigation by giving such information and assistance (including access to the Company's personnel and
the right to examine and copy any accounts, documents or records) as the Indemnifying Party or any of its professional advisors may reasonably
request. If the Indemnifying Party does not so respond within such thirty (30) day period, the Indemnifying Party shall be deemed to have
rejected such claim, in which case the Indemnified Party shall be free to pursue such remedies as may be available to the Indemnified
Party on the terms and subject to the provisions of this Agreement.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) **Selling Shareholders' Representative.** Notwithstanding any other provision of this Section 8.04:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) any notice or communication required or permitted to be given to the Selling Shareholders under this ARTICLE
VIII shall be given to the Selling Shareholders' Representative, and any such notice or communication given to the Selling Shareholders'
Representative shall be deemed to have been given to all Selling Shareholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) any notice or communication required or permitted to be given by the Selling Shareholders under this ARTICLE
VIII shall be given by the Selling Shareholders' Representative on behalf of all Selling Shareholders;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iii) the Selling Shareholders' Representative shall have full power and authority to take any and all actions
on behalf of the Selling Shareholders in connection with any Third-Party Claim or Direct Claim, including the right to assume or participate
in the defence of any Third-Party Claim, to negotiate and agree to any settlement, and to make any determinations or decisions required
of the Selling Shareholders under this Section 8.04; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(iv) the Purchaser shall be entitled to rely conclusively on any action taken or decision made by the Selling
Shareholders' Representative under this ARTICLE VIII as binding on all Selling Shareholders.

**Section 8.05 Payments.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) Once a Loss is agreed to by the Indemnifying Party or finally adjudicated to be payable under this ARTICLE
VIII, the Indemnifying Party shall satisfy its obligations within fifteen (15) Business Days of such final, non-appealable adjudication
by wire transfer of immediately available funds. The parties agree that, if the Indemnifying Party does not make full payment of any such
obligations within such fifteen (15) Business Day period, any amount payable shall accrue interest from and including the date of agreement
of the Indemnifying Party or final, non-appealable adjudication to and including the date such payment has been made at a rate per annum
equal to the Prime Rate. Such interest shall be calculated daily on the basis of a 365 day year and the actual number of days elapsed.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) The amount of the liability for a Loss in respect of the Selling Shareholders' indemnification obligations
set forth in Section 8.02 may, at the election of such Selling Shareholder, be fully and finally satisfied by return to the Purchaser
of such number of Consideration Shares issued to such Selling Shareholder as are equal to the amount owing to the Purchaser by such Selling
Shareholder, determined in accordance with this ARTICLE VIII and calculated using the Current Market Price of the Consideration Shares
at the time of payment. For greater clarity, if the value of the Consideration Shares to be returned as determined in accordance with
this ARTICLE VIII is less than the total amount owed for any indemnification obligations owed pursuant to Section 8.02, the applicable
Selling Shareholder shall satisfy the difference in cash.

**Section 8.06 Limitation on Selling Shareholder Liability.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) The Selling Shareholders shall not be obligated to pay for any Losses under Section 8.02 unless and until
the amount of all such Losses under Section 8.02 in the aggregate exceeds $150,000 (the "Basket"), in which event the Selling
Shareholders shall pay or be liable for all such Losses from the first dollar.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Notwithstanding any other provision of this Agreement, each Selling Shareholder's aggregate liability
under Section 8.02 shall not exceed the value of the Consideration Shares received by such Selling Shareholder, calculated using the deemed
issue price set out in Section 2.02(b) (each such amount, such Selling Shareholder's "Liability Cap").

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) The limitations set forth in Sections 8.06(a) and 8.06(b) shall not apply to Losses arising from fraud,
criminal activity or wilful misconduct on the part of a Selling Shareholder or the Company.

**Section 8.07 Tax Treatment of Indemnification Payments.**

All indemnification payments made under this Agreement shall be treated by the parties as an adjustment to the Purchase Price for Tax purposes, unless otherwise required by Law.

**Section 8.08 Effect of Investigation.**

**The representations, warranties and covenants of the Indemnifying Party, and the Indemnified Party's right to indemnification with respect thereto, shall not be affected or deemed waived by reason of any investigation made by or on behalf of the Indemnified Party (including by any of its Representatives) or by reason of the fact that the Indemnified Party or any of its Representatives knew or should have known that any such representation or warranty is, was or might be inaccurate or by reason of the Indemnified Party's waiver of any condition set forth in Section 7.02 or Section 7.03, as the case may be.**

**Section 8.09 Exclusive Remedies.**

Subject to Section 9.08, the parties acknowledge and agree that their sole and exclusive remedy with respect to any and all claims (other than claims arising from fraud, criminal activity or wilful misconduct on the part of a party hereto in connection with the transactions contemplated by this Agreement) for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement, shall be under the indemnification provisions set forth in this ARTICLE VIII. In furtherance of the foregoing, each party hereby waives, to the fullest extent permitted under Law, any and all rights, claims and causes of action for any breach of any representation, warranty, covenant, agreement or obligation set forth herein or otherwise relating to the subject matter of this Agreement it may have against the other parties hereto and their Affiliates and each of their respective Representatives arising under or based upon any Law, except under the indemnification provisions set forth in this ARTICLE VIII. Nothing in this Section 8.09 shall limit any Person's right to seek and obtain any equitable relief to which any Person shall be entitled or to seek any remedy on account of any party's fraudulent, criminal or wilful misconduct.

**ARTICLE IX<br> TERMINATION**

**Section 9.01 Termination.**

This Agreement may be terminated at any time prior to the Closing:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) by mutual written consent of the Purchaser and the Selling Shareholders' Representative;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) by either the Purchaser or the Selling Shareholders' Representative if the Closing has not occurred on
or before the Outside Date; provided, however, that the right to terminate this Agreement under this Section 9.01(b) shall not be available
to any Party whose failure to fulfill any obligation under this Agreement has been the principal cause of, or resulted in, the failure
of the Closing to occur on or before the Outside Date;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(c) by either the Purchaser or the Selling Shareholders' Representative if any Governmental Authority shall
have enacted, issued, promulgated, enforced or entered any Governmental Order that has become final and non-appealable and has the effect
of making consummation of the transactions contemplated by this Agreement illegal or otherwise preventing or prohibiting consummation
of such transactions;

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) by the Purchaser if:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) there has been a breach of any representation, warranty, covenant or agreement made by the Company or
any Selling Shareholder in this Agreement, or any such representation or warranty shall have become untrue after the date of this Agreement,
such that the conditions set forth in Section 7.01 or Section 7.02 would not be satisfied, and such breach or condition is not curable
or, if curable, is not cured within thirty (30) days after written notice thereof is given by the Purchaser to the Selling Shareholders'
Representative; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) there has been a Material Adverse Effect; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(e) by the Selling Shareholders' Representative if there has been a breach of any representation, warranty,
covenant or agreement made by the Purchaser in this Agreement, or any such representation or warranty shall have become untrue after the
date of this Agreement, such that the conditions set forth in Section 7.01 or Section 7.03 would not be satisfied, and such breach or
condition is not curable or, if curable, is not cured within thirty (30) days after written notice thereof is given by the Selling Shareholders'
Representative to the Purchaser.

**Section 9.02 Effect of Termination.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) In the event of termination of this Agreement as provided in Section 9.01, this Agreement shall forthwith
become void and there shall be no liability on the part of any Party, except:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(i) Section 6.01 (Confidentiality), Section 10.01 (Expenses), Section 10.02 (Notices), Section 10.07 (Governing
Law; Forum Selection), this Section 9.02 and Section 10.09 (Counterparts) shall survive the termination of this Agreement; and

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(ii) nothing herein shall relieve any Party from liability for fraud or any wilful and material breach of this
Agreement prior to such termination.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) For greater certainty, if this Agreement is terminated in accordance with Section 9.01, no Earn-Out Payments
shall be payable.

**ARTICLE X<br> MISCELLANEOUS**

**Section 10.01 Expenses.**

Except as otherwise expressly provided herein, all costs and expenses, including fees, disbursements and charges of counsel, financial advisors and accountants, incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such costs and expenses, whether or not the Closing shall have occurred.

**Section 10.02 Notices.**

All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt); (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested); or (c) on the date sent by facsimile or email of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient. Such communications must be sent to the respective parties at the following addresses (or at such other address for a party as shall be specified in a notice given in accordance with this Section 10.02):

---

| | |
|:---|:---|
| If to Selling<br> Shareholders'<br> Representative: | To the Selling Shareholders' Representative at: |
| If to Selling<br> Shareholders'<br> Representative: | Nissim Daniel |
| If to Selling<br> Shareholders'<br> Representative: | Raul Wallenberg 20Tel Aviv Israel |
| If to Selling<br> Shareholders'<br> Representative: | Email: nissim@purecapital.co.il |
| If to Selling<br> Shareholders'<br> Representative: |  |
| If to Selling<br> Shareholders'<br> Representative: | with a copy to each Selling Shareholder in accordance with Schedule "A" |
| If to the<br> Company: | Cliniquantum Ltd. |
| If to the<br> Company: | Yaakov Baranes |
| If to the<br> Company: | Email:yaki@quantumxlabs.xyz |
| If to Purchaser: | NeuroThera Labs Inc. |
|  | 2264 E 11<sup>th</sup> Ave., Vancouver, British Columbia V5N 1Z6 |
|  | Email: |
|  | Attention: |

---

**Section 10.03 Severability.**

If any term or provision of this Agreement is invalid, illegal or unenforceable in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other term or provision of this Agreement or invalidate or render unenforceable such term or provision in any other jurisdiction.

**Section 10.04 Successors and Assigns.**

This Agreement shall be binding upon and shall enure to the benefit of the parties hereto and their respective successors and permitted assigns. Neither party may assign its rights or obligations hereunder without the prior written consent of the other party, which consent shall not be unreasonably withheld or delayed; *provided that,* before the Closing Date, Purchaser may, without the prior written consent of the Selling Shareholders, assign all or any portion of its rights under this Agreement to one or more of its direct or indirect wholly owned subsidiaries. No assignment shall relieve the assigning party of any of its obligations hereunder.

**Section 10.05 No Third-Party Beneficiaries.**

Except as provided in ARTICLE VIII, this Agreement is for the sole benefit of the parties hereto and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person or entity any legal or equitable right, benefit or remedy of any nature whatsoever under, or by reason of, this Agreement.

**Section 10.06 Amendment and Modification; Waiver.**

This Agreement may only be amended, modified or supplemented by an agreement in writing signed by The Purchaser, the Company and the Selling Shareholders Representative. No waiver by any party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving. No waiver by any party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from this Agreement shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.

**Section 10.07 **Governing Law; Forum Selection.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(a) This Agreement shall be governed by and construed in accordance with the Laws of the Province of British
Columbia and the federal Laws of Canada applicable therein.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(b) Any Action arising out of or based upon this Agreement or the transactions contemplated hereby may be
brought in the courts of the Province of British Columbia, and each party irrevocably submits and agrees to attorn to the exclusive jurisdiction
of that court in any such Action. The parties irrevocably and unconditionally waive any objection to the venue of any Action or proceeding
in that court and irrevocably waive and agree not to plead or claim in that court that such Action has been brought in an inconvenient
forum.

**Section 10.08 Specific Performance.**

The parties agree that irreparable damage would occur if any provision of this Agreement were not performed in accordance with the terms hereof and that the parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy to which they are entitled at law or in equity.

**Section 10.09 Counterparts.**

This Agreement may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. A signed copy of this Agreement delivered by facsimile, email or other means of electronic transmission shall be deemed to have the same legal effect as delivery of an original signed copy of this Agreement.

[signature page follows]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

---

| |
|:---|
| /s/ Tomer Izraeli |
| **TOMER IZRAELI** |
| /s/ Tidhar Turgeman |
| **TIDHAR TURGEMAN** |
| /s/ Nir Sharon |
| **NIR SHARON** |
| /s/ Yonatan Krasney |
| **YONATAN KRASNEY** |
| /s/ Shusterman Noga Ada |
| **SHUSTERMAN NOGA ADA** |
| /s/ Yuval Fatal |
| **YUVAL FATTAL** |
| /s/ Yaakov Bernes |
| **YAAKOV BERNES** |
| /s/ Nissim Daniel |
| **NISSIM DANIEL** |
| /s/ Ronen Fatal |
| **RONEN FATAL** |

---

---

| | |
|:---|:---|
| **HIKE CAPITAL INC.** | **HIKE CAPITAL INC.** |
| By: | /s/ Itamar David |
| Name: | Itamar David |
| Title: | CEO and Director |
| **M.R.M. MERCHAVIT HOLDINGS AND MANAGEMENT LTD.** | **M.R.M. MERCHAVIT HOLDINGS AND MANAGEMENT LTD.** |
| By: | /s/ Moti Menashe |
| Name: | Moti Menashe |
| Title: | CEO and Director |
| **INVEST-PRO SHUKAI HON LTD.** | **INVEST-PRO SHUKAI HON LTD.** |
| By: | /s/ Eli Zamir |
| Name: | Eli Zamir |
| Title: | CEO and Director |
| **CLINIQUANTUM LTD.** | **CLINIQUANTUM LTD.** |
| By: | /s/ Yakov Baranes |
| Name: | Yakov Baranes |
| Title: | CEO and Director |
| **NEUROTHERA LABS INC.** | **NEUROTHERA LABS INC.** |
| By: | /s/ Oz Adler |
| Name: | Oz Adler |
| Title: | CEO and Director |

---

**SCHEDULE "A"**

**Amended Articles of Association** 

**SCHEDULE "B"**

**FINDER'S FEES** 

---

| | |
|:---|:---|
| **Finder** | **Finders Fee** |
| Capitalink Ltd. | 943,333 NTLX Shares |
| L.I.A Pure Capital Ltd. | 943,333 NTLX Shares |
| Hike Capital, Inc. | 943,333 NTLX Shares |

---

## Exhibit 11.1

**Exhibit 11.1**

**SCISPARC LTD.**

**INSIDER TRADING POLICY**

**AND GUIDELINES WITH RESPECT TO**

**CERTAIN TRANSACTIONS IN COMPANY SECURITIES**

*Amended on: April 29, 2026*

 

This Insider Trading Policy (the "**Policy**") provides guidelines to directors, officers, employees and other related individuals of SciSparc Ltd., an Israeli company (the "**Company**"), with respect to transactions in the Company's securities. The Company has adopted this Policy in order to ensure compliance with securities laws and to avoid even the appearance of improper conduct by anyone associated with the Company. Failure to comply with these procedures could result in a serious violation of the securities laws by you and/or the Company and can result in both civil penalties and criminal fines and imprisonment. We have all worked hard to establish the Company's reputation for integrity and ethical conduct, and we are all responsible for preserving and enhancing this reputation. The appearance of insider trading can cause a substantial loss of confidence in the Company and its shares on the part of the public and the securities markets. This could result in an adverse impact on the Company and its shareholders. Accordingly, avoiding the appearance of engaging in share transactions on the basis of material undisclosed information can be as important as avoiding a transaction actually based on such information. The Company has appointed its Chief Financial Officer, or in his or her absence, the Company's Chief Executive Officer (the "**Compliance Officer**," as the case may be), as the Company's Insider Trading Compliance Officer.

If any provision of this Policy contradicts the provisions of securities laws and regulations applicable to the Company, including, without limitation under Israeli law, then the provisions of such securities laws and regulations shall prevail.

**I. <u>Applicability of Policy</u>**

This Policy applies to all transactions in the Company's securities, including ordinary shares, options and any other securities the Company may issue from time to time, such as preferred shares, warrants, notes, and convertible debentures, as well as to derivative securities relating to the Company's shares, whether or not issued by the Company, such as exchange-traded options and debt securities. It applies to all officers of the Company, all members of the Company's Board of Directors, and all employees of, and consultants and contractors to, the Company and its subsidiaries/branches who receive or have access to Material Nonpublic Information (as defined below) regarding the Company (collectively, "**Company Affiliated Persons**"). Company Affiliated Persons, members of their immediate families (which include spouse and minor children), members of their households, other family members living with them or who are supported by them, are sometimes referred to in this Policy as "**Insiders**". This Policy also applies to any trust or other estate in which an Insider has a substantial beneficial interest or as to which he or she serves as trustee or in a similar fiduciary capacity, and to any trust, corporation, partnership or other entity which the Insider controls, including venture capital partnerships. This Policy also applies to any person who receives Material Nonpublic Information from any Insider.

Any person covered by this Policy who possesses Material Nonpublic Information regarding the Company is an Insider for so long as the information is not publicly known. Any employee can be an Insider from time to time, and would at those times be subject to this Policy.

The Policy imposes additional restrictions upon Insiders who have routine access to Material Nonpublic Information, referred to as "**Access Insiders**." Access Insiders are: (1) members of the board of directors, (2) the executive officers, (3) the controller, and (4) the investor relations department of the Company. In addition, other employees of the Company who have routine access to Material Nonpublic Information as determined by the Compliance Officer, who were notified that these additional restrictions apply to them shall also be Access Insiders until otherwise determined by the Compliance Officer.

**II. <u>General Policy</u>**

It is the policy of the Company to oppose the unauthorized disclosure of any nonpublic information acquired in the work-place and the misuse of Material Nonpublic Information in securities trading.

**III. <u>Specific Policies</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1. <u>Trading on Material Nonpublic Information</u>.** Unless otherwise permitted by this Policy, an Insider must not (a) purchase sell, gift or otherwise transfer any securities of the Company while they possess Material Nonpublic Information about the Company or (b) purchase, sell, gift or otherwise transfer any security of any other company, while they possess Material Nonpublic Information about the other company that they obtained in connection with their employment by or service to the Company.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2. <u>Tipping</u>.** No Insider shall disclose (sometimes called a "**Tip**") Material Nonpublic Information to any other person (including family members) where such information may be used by such person to his or her profit by trading in the securities of companies to which such information relates, nor shall such Insider or related person make recommendations or express opinions on the basis of Material Nonpublic Information as to trading in the Company's securities.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3. <u>Confidentiality of Nonpublic Information</u>.** Nonpublic information relating to the Company is the property of the Company and the unauthorized disclosure of such information is forbidden. In the event any officer, director or employee of the Company receives any inquiry from outside the Company, such as a stock analyst, for information (particularly financial results and/or projections) that may be Material Nonpublic Information, the inquiry should be referred to the Compliance Officer, and to the other appropriate Company officers.

**IV. <u>Potential Criminal and Civil Liability and/or Disciplinary Action</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1. <u>Liability for Insider Trading</u>.** In the United States and many other countries, the personal consequences to an Insider of illegally trading securities while in possession, or on the basis of, Material Nonpublic Information can be quite severe. In the United States there are substantial civil penalties and criminal sanctions which may be assessed for insider trading. Civil penalties are a payment of a penalty of up to three times the illicit windfall. In addition, Insiders may be subject to criminal fines of up to $5,000,000 and up to twenty years in prison for engaging in transactions in the Company's securities at a time when they have knowledge of Material Nonpublic Information regarding the Company.

If you are located or engaged in dealings outside the U.S., be aware that laws regarding insider trading and similar offenses differ from country to country. Employees must abide by the laws in the country where located. However, you are required to comply with this Policy even if local law is less restrictive. If a local law conflicts with this Policy, you must consult the Compliance Officer.

If securities transactions ever become the subject of scrutiny, they are likely to be viewed after-the-fact with the benefit of hindsight. As a result, before engaging in any transaction an Insider should carefully consider how the transaction may be construed in the bright light of hindsight. If you have any questions or uncertainties about this Policy or a proposed transaction, please ask the Compliance Officer.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2. <u>Liability for Tipping</u>.** Insiders may also be liable for improper transactions by any person (commonly referred to as a "**Tippee"**) to whom they have disclosed Material Nonpublic Information or any person to whom the Tippee discloses such Material Nonpublic Information regarding the Company or to whom they have made recommendations or expressed opinions on the basis of such information as to trading in the Company's securities. The civil penalties and criminal sanctions for tipping by an Insider are the same as the ones for an Insider conducting insider trading, even if the disclosing person did not profit from the trading. The U.S. Securities and Exchange Commission (the "**SEC**"), the Financial Industry Regulatory Authority ("**FINRA**") and the stock exchanges use sophisticated electronic surveillance techniques to uncover insider trading.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**3. <u>Possible Disciplinary Actions</u>.** The seriousness of securities law violations is reflected in the penalties and criminal sanctions such violations carry. These violations may also create negative publicity for the Company and a director's resignation may be sought, or an officer or other employee will be subject to possible Company disciplinary action including ineligibility for future participation in the Company's equity incentive plans or termination of employment.

**V. <u>Individual Responsibility</u>**

Every Company Affiliated Person has the individual responsibility to comply with this Policy against insider trading, regardless of whether the Company has recommended a trading window to that person or any other Insiders of the Company. The guidelines set forth in this Policy are not intended to provide a conclusive solution for all circumstances, and appropriate judgment should be exercised in connection with any trade in the Company's securities.

An Insider may, from time to time, have to forego a proposed transaction in the Company's securities even if he or she planned to make the transaction before learning of the Material Nonpublic Information and even though the Insider believes he or she may suffer an economic loss or forego anticipated profit by waiting.

**VI. <u>Applicability of Policy to Inside Information Regarding Other Companies</u>**

Civil penalties and criminal sanctions, and termination of employment, may result from trading on inside information regarding any other company obtained in connection with employment by or services performed to the Company. Further, no person shall purchase, sell, gift or otherwise transfer any security of any other company, including another company in the Company's industry, while in possession of Material Nonpublic Information if such information is obtained in the course of the Insider's employment or service with the Company, or that of a family member. All employees should treat Material Nonpublic Information about any other company with the same care required with respect to information related directly to the Company.

**VII. <u>Dissemination of Company Information</u>**

The prohibition of the disclosure of Material Nonpublic Information applies to all contacts made within and outside the Company. Care should be taken to prevent the disclosure of Material Nonpublic Information during all contact including phone calls and casual conversation. If in doubt about whether information falls into the category of Material Nonpublic Information, then the information should not be disclosed.

Prior to disclosure to any third party, any officer, director or employee of the Company who is aware of any Material Nonpublic Information concerning the Company that has not been disclosed to the public should report the intention to disclose such information promptly to the Compliance Officer and obtain approval to do so.

**VIII. <u>Definition of Material Nonpublic Information</u>**

Material Nonpublic Information is information which is material, and that has not been disclosed or otherwise made available to the general public by the Company.

It is not possible to define all categories of material information. Generally, information should be regarded as material if a reasonable investor would consider it important in making an investment decision regarding the purchase, sale, gift or otherwise transfer of the Company's securities or the information, if made public, would likely affect the market price of the Company's securities. Either positive or negative information may be material. Information may be material even if it relates to future, speculative or contingent events and even if it is significant only when considered in combination with publicly available information. Nonpublic information can be material even with respect to companies that do not have publicly traded stock, such as those with outstanding bonds or bank loans.

While it may be difficult under this standard to determine whether particular information is material, there are various categories of information that are particularly sensitive and, as a general rule, should always be considered material. If any Insider has questions as to the materiality of information, he or she should contact the Compliance Officer for clarification. Examples of information which is deemed to be material include:

● Financial results;

● Projections of future earnings or losses;

● News of a pending or proposed merger or acquisition;

● New product or project announcements of a significant nature;

● Expansion or curtailment of operations or the gain or loss of a substantial customer;

● The initiation, suspension and results of the Company's clinical and pre- clinical trials and any other material information relating thereto;

● Changes in control of the Company or major changes in senior management;

● Significant new joint ventures, alliances, or strategic partnerships or material developments in existing arrangements;

● Impending bankruptcy or financial liquidity problems;

● Significant product defects or modifications;

● Significant pricing changes;

● Events regarding the Company's securities (e.g. stock splits, repurchases, or changes in dividend policy);

● Changes in auditors or auditor notification that the Company may no longer rely on an audit report;

● A significant purchase or sale of assets or disposition of a subsidiary or division;

● New equity or debt offerings, significant borrowings, or other material financial transactions;

● Significant litigation exposure due to actual or threatened litigation;

● Significant actions by regulatory bodies;

● Receipt, cancellation or deferral of significant purchase orders;

● Proposed payment of a dividend; and

● Any of the above with respect to a subsidiary, or other affiliate of the Company.

Nonpublic information is information that has not been previously disclosed to the general public and is otherwise not available to the general public. It is important to note that information is not necessarily public merely because it has been discussed in the press, which will sometimes report rumors. You should presume that information is nonpublic unless you can point to its official release by the Company in a Regulation FD-compliant method, such as:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. Information contained in publicly available documents filed
with securities regulatory authorities (e.g., filings with the SEC);

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. Issuance of press releases; or

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. Meetings with members of the press and the public.

**IX. <u>Additional Circumstances Where No Exceptions Apply</u>**

There are almost no exceptions to the prohibition against insider trading. For example, it does not matter that the transactions in question may have been planned before the Insider came into possession of the undisclosed material information, regardless of the economic loss that the person may believe he or she might suffer as a consequence of not trading.

As noted above, the definition of Insiders, to which this Policy applies, includes immediate family members of Company Affiliated Persons. Although immediate family is narrowly defined, a Company Affiliated Person should be especially careful with respect to family members or to unrelated persons living in the same household.

Finally, there are no limits on the size of a transaction that will trigger insider trading liability; relatively small trades have in the past occasioned investigations and lawsuits.

**X. <u>Trading Window</u>**

The period beginning two weeks before the end of the last month of each calendar quarter and ending two Trading Days following the date of public disclosure of the financial results for that quarter, is a particularly sensitive period of time for transactions in the Company's shares from the perspective of compliance with applicable securities laws. This sensitivity is due to the fact that directors, officers and certain other employees will, during that period, often possess Material Nonpublic Information about the expected financial results for the quarter. As used herein, the term "**Trading Day**" shall mean a day on which the Nasdaq Capital Market is open for trading.

Accordingly, to ensure compliance with this Policy and applicable federal and state securities laws, it is the Company's policy that all directors, officers and employees refrain from conducting transactions involving the purchase, sale, gift or otherwise transfer of the Company's securities other than during the period (the "**Trading Window**") commencing at the close of business on the second Trading Day following the date of public disclosure of the financial results for a particular fiscal quarter or year and continuing until the day that is two weeks before the last day of the last month of the next fiscal quarter. As a courtesy to the persons subject to this Policy, the Company may provide advance notice before the Trading Window opens.

From time to time, the Company may also notify that directors, officers, selected employees and others are required to suspend trading because of developments known to the Company and not yet disclosed to the public. In such event, such persons are advised not to engage in any transaction involving the purchase, sale, gift or otherwise transfer of the Company's securities during such period and should not disclose to others the fact of such suspension of trading.

The purpose behind the self-imposed Trading Window period is to help establish a diligent effort to avoid any improper transaction. It should be noted, however, that even during the Trading Window, any person possessing Material Nonpublic Information concerning the Company may not attempt to "beat the market" by trading simultaneously with, or shortly after, the official release of Material Nonpublic Information. Although there is no fixed period for how long it takes the market to absorb information, out of prudence a person aware of Material Nonpublic Information should refrain from any trading activity for at least two full Trading Days following its official release, whether or not the Company has recommended a suspension of trading to that person.

**NOTWITHSTANDING THESE TIMING GUIDELINES, IT IS ILLEGAL FOR ANY PERSON TO TRADE WHILE IN POSSESSION OF MATERIAL NONPUBLIC INFORMATION, INCLUDING SITUATIONS IN WHICH THE PERSON IS AWARE OF MAJOR DEVELOPMENTS THAT HAVE NOT YET BEEN PUBLICLY ANNOUNCED BY THE COMPANY. TRADING IN THE COMPANY'S SECURITIES DURING THE TRADING WINDOW SHOULD <u>NOT</u> BE CONSIDERED A "SAFE HARBOR", AND ALL DIRECTORS, OFFICERS AND OTHER INSIDERS SHOULD USE GOOD JUDGMENT AT ALL TIMES.**

**XI. <u>Inquiries</u>**

All Insiders should review this Policy carefully and contact the Compliance Officer if they have a concern that a contemplated transaction in the Company's securities might not conform with this Policy.

**XII. <u>Rule 10b5-1 Trading Plans</u>**

The trading restrictions set forth in this Policy, do not apply to transactions under a previously established contract, plan or instruction to trade in the Company's securities entered into in accordance with Rule 10b5-1 trading plan that:

● has been submitted to and pre-approved by the Compliance Officer;

● includes a "Cooling Off Period" for

○ directors and officers that extends to the later of 90 days after adoption or modification of a Rule 10b5-1 trading plan or two (2) business days after filing the Form 20-F or Form 6-K with financial results covering the fiscal quarter in which the Rule 10b5-1 trading plan was adopted, up to a maximum of 120 days; and

○ employees and any other persons, other than the Company, that extends 30 days after adoption or modification of a Rule 10b5-1 trading plan;

● for directors and officers, includes a representation in the Rule 10b5-1 trading plan that the directors or officers is (1) not aware of any material nonpublic information about the Company or its securities; and (2) adopting the Rule 10b5-1 trading plan in good faith and not as part of a plan or scheme to evade Rule 10b-5;

● has been entered into in good faith at a time when the individual was not in possession of material nonpublic information about the Company and not otherwise in a blackout period, and the person who entered into the Rule 10b5-1 trading plan has acted in good faith with respect to the Rule 10b5-1 trading plan;

● either (1) specifies the amounts, prices, and dates of all transactions under the Rule 10b5-1 trading plan; or (2) provides a written formula, algorithm, or computer program for determining the amount, price, and date of the transactions, and (3) prohibits the individual from exercising any subsequent influence over the transactions; and

● complies with all other applicable requirements of Rule 10b5-1.

The Compliance Officer may impose such other conditions on the implementation and operation of the Rule 10b5-1 trading plan as the Compliance Officer deems necessary or advisable. Individuals may not adopt more than one Rule 10b5-1 trading plan at a time except under the limited circumstances permitted by Rule 10b5-1 and subject to pre-approval by the Compliance Officer.

Although non-discretionary Rule 10b5-1 trading plans are preferred, discretionary Rule 10b5-1 trading plans, where the discretion or control over trading is transferred to a broker, are permitted if pre-approved by the Compliance Officer.

The actual transactions effected pursuant to a pre-approved Rule 10b5-1 trading plan will not be subject to further pre-clearance for transactions in the Company's shares once the Rule 10b5-1 trading plan or other arrangement has been pre-approved.

Revocation of Rule 10b5-1 trading plans should occur only in unusual circumstances. Effectiveness of any revocation or amendment of a Rule 10b5-1 trading plan will be subject to the prior review and approval of the Compliance Officer. Revocation is effected upon written notice to the broker. You should note that revocation of a Rule 10b5-1 trading plan can result in the loss of an affirmative defense for past or future transactions under a Rule 10b5-1 trading plan. You should consult with your own legal counsel before deciding to revoke Rule 10b5-1 trading plan.

An individual may only modify a Rule 10b5-1 trading plan outside of a blackout period and, in any event, when the individual does not possess material nonpublic information. Modifications to and terminations of a Rule 10b5-1 trading plan are subject to pre-approval by the Compliance Officer and modifications of a Rule 10b5-1 trading plan that change the amount, price, or timing of the purchase or sale of the securities underlying a Rule 10b5-1 trading plan will trigger a new Cooling-Off Period.

The Company reserves the right to publicly disclose, announce, or respond to inquiries from the media regarding the adoption, modification, or termination of a Rule 10b5-1 trading plan and non-Rule 10b5-1 trading arrangements, or the execution of transactions made under a Rule 10b5-1 trading plan. The Company also reserves the right from time to time to suspend, discontinue, or otherwise prohibit transactions under a Rule 10b5-1 trading plan if the Compliance Officer or the Board of Directors, in its discretion, determines that such suspension, discontinuation, or other prohibition is in the best interests of the Company.

Compliance of a Rule 10b5-1 trading plan with the terms of Rule 10b5-1 and the execution of transactions pursuant to the Rule 10b5-1 trading plan are the sole responsibility of the person initiating the Rule 10b5-1 trading plan, and none of the Company, the Compliance Officer, or the Company's other employees assumes any liability for any delay in reviewing and/or refusing to approve a Rule 10b5-1 trading plan submitted for approval, nor the legality or consequences relating to a person entering into, informing the Company of, or trading under, a Rule 10b5-1 trading plan.

If required, an SEC Form 144 will be filled out and filed by the individual/brokerage firm in accordance with the existing rules regarding Form 144 filings. A footnote at the bottom of the Form 144 should indicate that the trades are in accordance with a Rule 10b5-1 trading plan that complies with Rule 10b5-1 and noting the expiration date of such Rule 10b5-1 trading plan.

During an open trading window, trades differing from Rule 10b5-1 trading plan instructions that are already in place are allowed as long as the Rule 10b5-1 trading plan continues to be followed.

The transactions prohibited under this Policy, including among others short sales and hedging transactions, may not be carried out through a Trading Plan or other arrangement or trading instruction involving potential sales or purchases of the Company's securities.

**XIII. <u>Certain Other Exceptions</u>**

For purposes of this Policy, the Company considers that the exercise of share options for cash under the Company's share option plans or the purchase of shares under employee purchase plans in effect at the time of the adoption of this Policy and that may be adopted in the future (but <u>not</u> the sale of any such shares) is exempt from this Policy, since the other party to the transaction is the Company itself and the price does not vary with the market but is fixed by the terms of the option agreement or the plan. Accordingly, cashless exercises of options are subject to the Policy when they involve the sale of shares into the public marketplace.

Gift transactions of securities for family or estate planning purposes, where securities are gifted to a person or entity subject to this Policy, are not deemed to be transactions for the purposes of this Policy.

**XIV. <u>Additional Information for Directors, Officers and Certain Employees with Routine Access to Material Nonpublic information</u>**

This Policy imposes additional restrictions upon Access Insiders, because of their routine access to Material Nonpublic Information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**1. <u>Preclearance of Trades</u>.** The Company has determined that all Access Insiders should refrain from trading in the Company's securities, even during the Trading Window, without first complying with the Company's "preclearance" process. Each Access Insider should contact the Compliance Officer prior to commencing any trade in the Company's securities. At the time of executing a trade in the Company's securities, such individuals will be responsible for verifying that the Company has not imposed any restrictions on their ability to engage in trades. If the individual has not completed the trade within ten (10) trading days of notification of the intention to trade, then the individual must again notify the Compliance Officer that he or she intends to execute a trade and re-verify the nonexistence of any restrictions on such trade. For the avoidance of doubt, this paragraph shall not apply to a Qualified Plan, after it has been set up.

Before each transaction in the Company's securities by a Company each officer and director should contact the Compliance Officer regarding compliance with Rule 144 under the U.S. Securities Act of 1933, as amended ("**Rule 144**"), which contains guidelines for the sale of privately issued shares and sales by affiliates of the Company, if such sales are not covered by an effective registration statement, to the extent applicable.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;**2. <u>Rule 144 and Section 16 Matters for Directors and Officers</u>.** Directors and principal officers of the Company must also comply with Rule 144, or another applicable exemption from registration. The practical effect of Rule 144 is that directors and officers who sell the Company's securities may be required to comply with a number of requirements including holding period, volume limitation, manner of sale and SEC filing requirements. The Company may provide separate memoranda and other appropriate materials to its directors and officers regarding compliance with Rule 144.

<u>Section 16 ("Section 16") of the Securities Exchange Act of 1934, as amended ("Exchange Act"), and the related rules and regulations, set forth obligations and limitations applicable to certain persons at a company. The Company's Board of Directors has determined and notified those persons who are required to comply with Section 16, and the related rules and regulations, because of their positions with the Company.</u>

The timely reporting of transactions requires tight interface with brokers handling transactions for persons that are subject to Section 16. A knowledgeable, alert broker can also serve as a gatekeeper, helping to ensure compliance with the Company's pre-clearance procedures and helping prevent inadvertent violations. Therefore, in order to facilitate timely compliance with the requirements of Section 16, persons subject to Section 16 need to make sure that their brokers comply with the following requirements:<br>

● not enter any order (except for orders under pre-approved Rule 10b5-1 trading plans) without first verifying with the Company that a transaction was pre-cleared and complying with the brokerage firm's compliance procedures (e.g., Rule 144); and

● report before the close of business on the day of the execution of the transaction to the Company in writing via e-mail to the Compliance Officer, and if receipt is not verified in writing by the Company, also verify receipt by telephone, the complete details of every transaction (i.e., date, type of transaction, number of shares and price) involving the Company's equity securities, including gifts, transfers, pledges and all transactions under 10b5-1 and other trading plans.

Because it is the legal obligation of the trading person to cause any filings on Form 3, Form 4, Form 5 or Form 144 (or as may otherwise be required) to be made, you are strongly encouraged to confirm following any transaction that your broker has immediately e-mailed the required information to the Company and confirmed receipt of such information.

**XV. <u>Specific Requirements</u>**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;1. **<u>Speculative Trading</u>**. No Insider may engage in transactions of a speculative nature at any time. All Insiders are prohibited from short-selling the Company's securities or engaging in transactions involving the Company's based derivative securities. A short sale, for these purposes, means any transaction whereby one may benefit from a decline in the price of the Company's securities. "**Derivative Securities**" are options, warrants, stock appreciation rights or similar rights whose value is derived from the value of an equity security, such as the Company's common stock. This prohibition includes, but is not limited to, trading in the Company's based put and call option contracts, transacting in straddles, hedging or monetization transaction with respect to the Company's securities, and the like. In addition, no Insider shall engage in a transaction with respect to securities of the Company if he or she owns the security, but does not deliver it against such sale (a "short sale against the box") within twenty days thereafter, or does not within five days after such sale deposit it in the mails or other usual channels of transportation. The above does not derogate from Insiders' right to hold and exercise options or other derivative securities granted under the Company's employee share option or equity incentive plans as long as such exercise is not prohibited by this Policy.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;2. **<u>Margin Accounts and Pledges</u>**. Securities held in a margin account may be sold by the broker without the consent of the owner thereof if such owner fails to meet a margin call. Similarly, securities pledged as collateral for a loan may be sold if the owner thereof defaults on the loan. In case of an owner who is subject to this Policy, these sales may occur at a time when such person is aware of material, non-public information or otherwise not permitted to trade such securities. Therefore, this policy prohibits holding any Company securities in a margin account or pledging any Company securities as collateral for a loan.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;3. **<u>Post-Termination Transactions</u>.** If an Insider is aware of Material Nonpublic Information at the time such Insider's association with the Company is terminated, whether by the Insider or the Company, the Insider may not trade in Company securities until such information is no longer material or until two Trading Days after such information has become public. In addition, if the Company is not in a Trading Window at the time such association with the Company is terminated, the Insider may not trade in Company securities until two Trading Days after the next announcement of quarterly earnings or of the material, non-public information.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;4. **<u>Ad hoc Restrictions</u>***.* The Compliance Officer has the authority to impose restrictions on trading in the Company's securities by appropriate individuals at any time. In such event, the Compliance Officer will notify the affected individuals, either personally, by email or by voicemail, to inform them of the restrictions.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;5. **<u>Open Orders</u>**. Any Insider who has placed a limit order or open instruction to buy or sell the Company's securities shall bear responsibility for canceling such instructions immediately upon becoming in possession of Material Nonpublic Information.

**XVI. <u>Interpretation and Amendment</u>**

The Compliance Officer shall have the authority to interpret and update this Policy and its Schedules and all related policies and procedures. In particular, such interpretations and updates of this Policy, as authorized by the Compliance Officer, may include amendments to or departures from the terms of this Policy, to the extent consistent with the general purpose of this Policy and applicable securities laws.

**XVII. <u>Acknowledgement</u>**

Please sign the attached acknowledgement form and return it to the Compliance Officer.

If you have any questions with respect to this Policy, please contact the Company's Compliance Officer, at Oz@scisparc.com.

**<u>ACKNOWLEDGEMENT</u>**

I have received, read and understand the Insider Trading Policy and Guidelines with Respect to Certain Transactions in Company Securities of SciSparc Ltd., a copy of which is attached hereto, and agree to comply with the provisions thereof.

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| | |
|:---|:---|
| Date:__________ |  |
|  | Signature |
|  | Name |
|  | Title |

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## Exhibit 12.1

**Exhibit 12.1**

**CERTIFICATION PURSUANT TO EXCHANGE ACT RULE 13a-14(a) OR 15d-14(a)**

I, Oz Adler, certify that:

1. I have reviewed this annual report on Form 20–F of
SciSparc Ltd. (the "Company");

2. Based on my knowledge, this annual 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;

3. Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this report;

4. I am 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;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 subsidiaries, 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;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;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;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

5. I have disclosed, based on my 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;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;b) Any fraud, whether or not material, that involves management
or other employees who have a significant role in the Company's internal control over financial reporting.

---

| | |
|:---|:---|
| Date: April 29, 2026 | /s/ Oz Adler |
|  | Oz Adler |
|  | Chief Executive Officer and Chief Financial Officer |

---

## Exhibit 13.1

**Exhibit 13.1**

**CERTIFICATION PURSUANT TO<br> 18 U.S.C. Section 1350**

In connection with the filing of the Annual Report on Form 20-F for the period ended December 31, 2025 (the "Report") by SpiSparc Ltd. (the "Company"), the undersigned, as the Chief Executive Officer and Chief Financial Officer of the Company, hereby certifies pursuant to 18 U.S.C. Section 1350, that, to my knowledge:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(1) the Report fully complies with the requirements of Section
13(a) or Section 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: April 29, 2026 | /s/ Oz Adler |
|  | Oz Adler |
|  | Chief Executive Officer and Chief Financial Officer |

---

## Exhibit 15.1

**Exhibit 15.1**

<u>CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</u> 

We consent to the incorporation by reference in the following Registration Statements:

&nbsp;&nbsp;&nbsp;&nbsp;(1) Registration
Statements (Form F-3 Nos. 333-275305, 333-266047, 333-255408, 333-293167, and 333-293533) of SciSparc Ltd., and

&nbsp;&nbsp;&nbsp;&nbsp;(2) Registration
Statements (Form S-8 Nos. 333-225773, 333- 278437, 333-286791, and 333-292952)
pertaining to the Therapix Biosciences Ltd. Israeli Share Option Plan (2015) and SciSparc Ltd. 2023 Share Incentive Plan;

of our report dated April 24, 2025, with respect to the consolidated financial statements of SciSparc Ltd. included in this Annual Report (Form 20-F) of SciSparc Ltd. for the year ended December 31, 2025.

---

| | |
|:---|:---|
|  | /s/ Kost Forer Gabbay & Kasierer |
| Tel Aviv, Israel | Kost Forer Gabbay & Kasierer |
| April 29, 2026 | A member firm of EY Global |

---

## Exhibit 15.2

**Exhibit 15.2**![](ea028603001_ex15-2img1.jpg)

**CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM** 

We consent to the incorporation by reference in Registration Statements on Form S-8 (File Nos. 333-225773, 333-278437, 333-286791 and 333-292952) and Registration Statements on Form F-3 (File Nos. 333-255408, 333-266047, 333-275305, 333-293167 and 333-293533) of our report dated April 29, 2026, relating to the consolidated financial statements of SciSparc Ltd. (the "Company"), appearing in the Annual Report on Form 20-F of the Company for the year ended December 31, 2025.

**/s/ Brightman Almagor Zohar & Co.**

**Certified Public Accountants**

**A Firm in the Deloitte Global Network**

**Tel Aviv, Israel** 

**April 29, 2026**