40-F
BIOHARVEST SCIENCES INC. (BHST)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 40-F
**☐**REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
**☒**ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2025
Commission File Number: 001-42389
BIOHARVEST SCIENCES INC.
(Exact name of Registrant as specified in its charter)
Not applicable
(Translation of Registrant’s Name into English)
British Columbia, Canada
(Province or other jurisdiction of incorporation or organization)
2836
(Primary Standard Industrial Classification Code Number)
Not applicable
(I.R.S. Employer Identification Number)
1140-625 Howe Street, Vancouver, British Columbia V6C 2T6, Canada
+1 (604) 689-5722
(Address and telephone number of Registrant’s principal executive offices)
Empire Stock Transfer Inc.
1859 Whitney Mesa Dr., Henderson, NV 89014
+1 (702) 818-5898
(Name, address (including zip code) and telephone number (including area code) of agent for service in the United States)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered |
|---|---|---|
| Common shares, without par value | BHST | The NASDAQ Stock Market LLC |
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: Common shares, without par value.
For annual reports, indicate by check mark the information filed with this Form:
| ☒ | Annual information form | ☒ | Audited annual financial statements |
|---|
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:
The registrant had 22,666,842 common shares issued and outstanding as of December 31, 2025.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒Yes ☐ No
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 12b-2 of the Exchange Act. 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).(1) ☐
EXPLANATORY NOTE
BioHarvest Sciences Inc. (the “Company” or the “Registrant”) is a corporation incorporated under the laws of British Columbia, Canada that is permitted, under a multijurisdictional disclosure system adopted by the United States, to prepare this annual report on Form 40-F for the fiscal period ended December 31, 2025 (“Annual Report”) pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), in accordance with disclosure requirements in effect in Canada, which are different from those of the United States. The Company is a "foreign private issuer" as defined in Rule 3b-4 under the Exchange Act. Accordingly, the Company's equity securities are exempt from Sections 14(a), 14(b), 14(c), 14(f) and 16 of the Exchange Act pursuant to Rule 3a12-3.
FORWARD-LOOKING STATEMENTS
This Annual Report, including the Exhibits incorporated by reference into this Annual Report, contains certain “forward-looking information” and “forward-looking statements” within the meaning of Canadian and U.S. securities legislation. The forward-looking statements herein are made as of the respective dates set forth in this Annual Report and the Exhibits incorporated by reference into this Annual Report, and the Company does not assume any obligation to update or revise them to reflect new information, estimates or opinions, future events or results or otherwise, except as required by applicable law. Forward-looking statements include, but are not limited to, statements regarding the Company’s or management’s expectations, hopes, beliefs, intentions or strategies regarding the future and other statements that are other than statements of historical fact. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking.
The forward-looking statements in this Annual Report, including the Exhibits incorporated by reference into this Annual Report, are based upon various assumptions, many of which are based, in turn, upon further assumptions, including, without limitation, management’s examination of historical operating trends, data contained in the Company’s records and other data available from third parties. Although the Company believes that these assumptions were reasonable when made, because these assumptions are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond the Company’s control, the Company cannot assure you that it will achieve or accomplish these expectations, beliefs or projections. As a result, you are cautioned not to rely on any forward-looking statements. Applicable risks and uncertainties include, but are not limited to, those identified in the section “Risk Factors” in the Annual Information Form (the “AIF”) and “Risks and Uncertainties” in the Management’s Discussion and Analysis (the “MD&A) of the Company for the year ended December 31, 2025, attached as Exhibits to this Annual Report and incorporated herein by reference, and in other filings that we have made and may make with applicable securities authorities in the future. Please also see the section entitled “Cautionary Statement Regarding Forward-Looking Statements” in each of the AIF and MD&A, attached as Exhibits to this Annual Report, in each case, incorporated by reference herein, for a discussion of forward-looking statements.
DIFFERENCES IN UNITED STATES AND CANADIAN REPORTING PRACTICES
The Company is permitted, under a multijurisdictional disclosure system adopted by the United States, to prepare this Annual Report in accordance with Canadian disclosure requirements, which are different from those of the United States. The Company prepares its financial statements, which are filed with this Annual Report in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board. Therefore, they are not comparable in all respects to financial statements of United States companies that are prepared in accordance with United States generally accepted accounting principles.
PRINCIPAL DOCUMENTS
The following documents, filed as Exhibits 99.1, 99.2, 99.3 and 99.9 hereto, are incorporated herein by reference into this Annual Report:
(a)the AIF;
(b)the Company’s audited annual consolidated financial statements for the financial year ended December 31, 2025 and the notes thereto, together with the report of the independent public accounting firm thereon (the “Financial Statements”);
(c)the Company’s management’s discussion and analysis for the financial year ended December 31, 2025 (the “MD&A”); and
(d)the Company’s Code of Business Conduct and Ethics (the “Code of Business Conduct and Ethics”).
CONTROLS AND PROCEDURES
(a)Disclosure Controls and Procedures. See the MD&A incorporated herein by reference as Exhibit 99.3, under the heading “Disclosure Controls and Procedures”.
(b)Management’s Annual Report on Internal Control Over Financial Reporting and Attestation Report of the Registered Public Accounting Firm. This Annual Report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of the Company’s registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission (the “SEC” or the “Commission”) for newly public companies.
(c)Changes in Internal Control Over Financial Reporting*.* See the MD&A incorporated herein by reference as Exhibit 99.3, under the heading “Disclosure Controls and Procedures – b) Changes in Internal Control Over Financial Reporting”.
NOTICES PURSUANT TO REGULATION BTR
The Company was not required by Rule 104 of Regulation BTR to send any notices to any of its directors or executive officers during the financial year ended December 31, 2025.
AUDIT COMMITTEE FINANCIAL EXPERT
See the AIF incorporated by reference as Exhibit 99.1, under the heading “Audit Committee - Relevant Education and Experience”.
CODE OF ETHICS
The Board has adopted the Code of Business Conduct and Ethics, which is incorporated by reference as Exhibit 99.9, by which it and all officers and employees of the Company, including the Company’s principal executive officer, principal financial officer, principal accounting officer or controller and persons performing similar functions (the “Subject Persons”), are required to abide.
There were no amendments to the Code of Business Conduct and Ethics that apply to the Subject Persons during the most recently completed financial year.
There were no waivers of the Code of Business Conduct and Ethics that apply to the Subject Persons during the most recently completed financial year.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
See the information in the AIF incorporated by reference as Exhibit 99.1, under the heading “Audit Committee – External Auditor Service Fees”.
AUDIT COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
See the information in the AIF incorporated by reference as Exhibit 99.1, under the heading “Audit Committee – Policies and Procedures of the Audit Committee”.
All audit-related fees, tax fees, or all other fees were approved by the Audit Committee pursuant to Rule 2-01(c)(7)(i) of Regulation S-X. However, none of such fees were approved pursuant to the exemption provided in Rule 2-01(c)(7)(i)(C) of Regulation S-X.
OFF-BALANCE SHEET ARRANGEMENTS
The Company has no off-balance sheet arrangements.
CONTRACTUAL AND OTHER OBLIGATIONS
The information in the MD&A incorporated by references as Exhibit 99.3, under the heading “Contractual Obligations”.
IDENTIFICATION OF THE AUDIT COMMITTEE
The Company’s board of directors (the “Board”) has a separately designated standing audit committee (the “Audit Committee”) established in accordance with Section 3(a)(58)(A) of the Exchange Act. The Audit Committee is comprised of Sharon Malka, John (Jake) Fiddick and Anne Binder, of which Mr. Malka is the chair. The Board has determined that each of the members of the Audit Committee is independent as determined under Rule 10A-3 of the Exchange Act and Rule 5605(c)(2) of the Nasdaq Stock Market LLC (“Nasdaq”) Rules (the “Nasdaq Rules”).
MINE SAFETY DISCLOSURE
Not applicable.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
RECOVERY OF ERRONEOUSLY AWARDED COMPENSATION
Since the beginning of the last completed financial year, the Company has not been required to prepare an accounting restatement that required recovery of erroneously awarded compensation pursuant to the Company’s Executive Compensation Clawback Policy (the “Executive Compensation Clawback Policy”), nor was there an outstanding balance as of the end of the last completed financial year of erroneously awarded compensation to be recovered from the application of the Executive Compensation Clawback Policy to a prior restatement.
CORPORATE GOVERNANCE PRACTICES
The common shares in the capital of the Company are listed on the Global Market of Nasdaq. A foreign private issuer listed on Nasdaq may follow the practice in such company's home country in lieu of certain provisions of the Rules
5600 and the Rules 5250(b)(3) and 5250(d) of the Nasdaq Rules (the “Subject Nasdaq Rules”). A foreign private issuer that elects to follow their home country practice in lieu of a requirement of the Subject Nasdaq Rules shall make appropriate disclosures in the Company’s annual filings with the SEC.
The Company is not relying on any exemptions available to foreign private issuers in relation to the requirements of the Subject Nasdaq Rules.
UNDERTAKINGS
The Company undertakes to make available, in person or by telephone, representatives to respond to inquiries made by the Commission staff, and to furnish promptly, when requested to do so by the Commission staff, the securities registered pursuant to Form 40-F; information relating to the securities in relation to which the obligation to file an annual report on Form 40-F arises; or transactions in said securities.
CONSENT TO SERVICE OF PROCESS
The Registrant has previously filed a Form F-X in connection with the class of securities in relation to which the obligation to file this report arises.
Any change to the name or address of the agent for service of process of the registrant shall be communicated promptly to the Commission by an amendment to the Form F-X referencing the file number of the Registrant.
EXHIBIT INDEX
The following documents are being filed with the SEC as exhibits to this Annual Report.
SIGNATURES
Pursuant to the requirements of the Exchange Act, the Registrant certifies that it meets all of the requirements for filing on Form 40-F and has duly caused this Annual Report to be signed on its behalf by the undersigned, thereto duly authorized.
BIOHARVEST SCIENCES INC.
/s/ Ilan Sobel
_____________________________
Name: Ilan Sobel
Title: Chief Executive Officer
Date: March 31, 2026
Executive compensation clawback policy
BIOHARVEST SCIENCES INC.
EXECUTIVE COMPENSATION CLAWBACK POLICY
(Adopted as of September 20, 2024)
1.INTRODUCTION.
1.1The board of directors (the “Board”) of BioHarvest Sciences Inc. (the “Company”) has adopted this executive compensation clawback policy (this “Policy”). This Policy shall supplement any other clawback or compensation recovery policy or policies adopted by the Company or included in any agreement between the Company, or any subsidiary of the Company, and a person covered by this Policy. If any such other policy or agreement provides that a greater amount of compensation shall be subject to clawback, such other policy or agreement shall apply to the amount in excess of the amount subject to clawback under this Policy.
1.2This Policy shall be interpreted to comply with Securities and Exchange Commission (“SEC”) Rule 10D-1 and Listing Rule 5608 (the “Listing Rule”) of The Nasdaq Stock Market, LLC (“Nasdaq”), as may be amended or supplemented and interpreted from time to time by Nasdaq. To the extent this Policy is in any manner deemed inconsistent with the Listing Rule, this Policy shall be treated as having been amended to be compliant with the Listing Rule.
2.DEFINITIONS
2.1In this Plan, the following words and phrases shall have the following meanings, namely:
(a)“Executive Officer” means an executive officer is the Company’s chief executive officer and/or president, chief financial officer, principal accounting officer (or if there is no such accounting officer, the controller), any vice-president of the Company in charge of a principal business unit, division or function, any other officer who performs a policy-making function, or any other person who performs similar policy-making functions for the Company. Executive officers of the Company’s parent(s) or subsidiaries are deemed executive officers of the Company if they perform such policy-making functions for the Company. The policy-making function is not intended to include policy-making functions that are not significant. Identification of an executive officer for purposes of the Listing Rule would include, at a minimum, executive officers identified in the Listing Rule;
(b)“Financial Reporting Measures” means measures that are determined and presented in accordance with the accounting principles used in preparing the Company’s financial statements, and any measures that are derived wholly or in part from such measures. Stock price and total shareholder return are also financial reporting measures. A financial reporting measure need not be presented within the financial statements or included in a filing with the SEC and may be such financial measures as may be determined by the Board or the Compensation Committee thereof (the “Compensation Committee”);
(c)“Incentive-Based Compensation” means any compensation that is granted, earned or vested based wholly or in part upon the attainment of a financial reporting measure; and
(d)Incentive-based compensation is deemed “Received” in the Company’s financial period during which the financial reporting measure specified in the incentive-based compensation award is attained, even if the payment or grant of the incentive-based compensation occurs after the end of that period.
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3.APPLICATION OF THIS POLICY
3.1This recovery of Incentive-Based Compensation from an Executive Officer as provided for in this Policy shall apply only in the event that the Company is required to prepare an accounting restatement due to the material non-compliance of the Company with any financial reporting requirement under applicable securities laws, including any required accounting restatement to correct an error in previously issued financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or left uncorrected in the current period.
4.RECOVERY PERIOD.
4.1The Incentive-Based Compensation subject to recovery is the Incentive-Based Compensation Received during the three (3) completed financial years immediately preceding the date that the Company is required to prepare an accounting restatement as described in Section 3 of this Policy, provided that the person served as an Executive Officer at any time during the performance period applicable to the Incentive-Based Compensation in question. The date that the Company is required to prepare an accounting restatement shall be determined pursuant to the Listing Rule.
4.2Notwithstanding the foregoing, this Policy shall only apply if the Incentive-Based Compensation is Received (i) while the Company has a class of securities listed on Nasdaq and (ii) on or after October 2, 2023.
4.3The provisions of the Listing Rule shall apply with respect to Incentive-Based Compensation received during a transition period arising due to a change in the Company’s financial year.
5.ERRONEOUSLY AWARDED COMPENSATION.
5.1The amount of Incentive-Based Compensation subject to recovery from the applicable Executive Officers under this Policy (“Erroneously Awarded Compensation”) shall be equal to the amount of Incentive-Based Compensation Received that exceeds the amount of Incentive Based-Compensation that otherwise would have been Received had it been determined based on the restated amounts and shall be computed without regard to any taxes paid. For Incentive-Based Compensation based on stock price or total shareholder return, where the amount of Erroneously Awarded Compensation is not subject to mathematical recalculation directly from the information in an accounting restatement:
(a)the amount shall be based on a reasonable estimate by the Company’s Chief Financial Officer (or principal accounting officer, if the office of Chief Financial Officer is not then filled) of the effect of the accounting restatement on the stock price or total shareholder return upon which the Incentive-Based Compensation was received, which estimate shall be subject to the review and approval of the Compensation Committee; and
(b)the Company must maintain reasonable documentation of the determination of that reasonable estimate and provide such documentation to Nasdaq if requested.
Notwithstanding the foregoing, if the proposed Incentive-Based Compensation recovery would affect compensation paid to the Chief Financial Officer of the Company, the determination shall be made by the Compensation Committee.
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6.TIMING OF RECOVERY.
6.1The Company shall recover any Erroneously Awarded Compensation reasonably promptly except to the extent that the conditions of paragraphs (a), (b), or (c) below apply. The Compensation Committee shall determine the repayment schedule for each amount of Erroneously Awarded Compensation in a manner that complies with this “reasonably promptly” requirement. Such determination shall be consistent with any applicable legal guidance by the SEC, Nasdaq, judicial opinion, or otherwise. The determination of “reasonably promptly” may vary from case to case and the Compensation Committee is authorized to adopt additional rules or policies to further describe what repayment schedules satisfy this requirement.
(a)Erroneously Awarded Compensation need not be recovered if the direct expense paid to a third party to assist in enforcing (or making determinations in connection with the enforcement of) this Policy would exceed the amount to be recovered and the Compensation Committee has made a determination that recovery would be impracticable. Before concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation based on the expense of enforcement, the Company shall (i) make a reasonable attempt to recover such Erroneously Awarded Compensation, (ii) document such reasonable attempt or attempts to recover, and (iii) provide appropriate documentation to the Compensation Committee or Nasdaq, if requested.
(b)Erroneously Awarded Compensation need not be recovered if recovery would violate home country law where that law was adopted prior to November 28, 2022. Before concluding that it would be impracticable to recover any amount of Erroneously Awarded Compensation based on a violation of home country law, the Company shall obtain an opinion of home country counsel, in the form and substance that would be reasonably acceptable to Nasdaq, that recovery would result in such a violation and shall provide such opinion to Nasdaq, if requested.
(c)Erroneously Awarded Compensation need not be recovered if recovery would likely cause an otherwise tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26 U.S.C. 411(a) and the regulations thereunder (as such provision may be amended, modified or supplemented).
7.COMPENSATION COMMITTEE DECISIONS.
7.1Decisions of the Compensation Committee with respect to this Policy shall be final, conclusive and binding on all Executive Officers subject to this Policy.
8.NO INDEMNIFICATION.
8.1Notwithstanding anything to the contrary in any other policy of the Company or any agreement between the Company and an Executive Officer, no Executive Officer shall be indemnified by the Company against the loss arising from the recovery of any Erroneously Awarded Compensation.
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9.AGREEMENT TO POLICY BY EXECUTIVE OFFICERS.
9.1The Company shall take reasonable steps to inform Executive Officers of this Policy and obtain their express agreement to this Policy, which steps may constitute the inclusion of this Policy as an attachment to any award that is accepted by an Executive Officer. This Policy shall be deemed to apply to each employment or grant agreement between the Company or any of its subsidiaries and any Executive Officer subject to this Policy.
Adopted by the Board on September 20, 2024.
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Annual Information Form
ANNUAL INFORMATION FORM OF
BIOHARVEST SCIENCES INC.
March 31, 2026
TABLE OF CONTENTS
| INTRODUCTORY NOTES | 4 |
|---|---|
| Date of Information | 4 |
| Cautionary Statement Regarding Forward-Looking Statements and Information | 4 |
| Presentation of Information | 5 |
| CORPORATE STRUCTURE | 6 |
| Name, Address and Jurisdiction | 6 |
| Intercorporate Relationships | 6 |
| GENERAL DEVELOPMENT OF THE BUSINESS | 8 |
| Three-Year History | 8 |
| Significant Acquisitions | 11 |
| BUSINESS | 11 |
| General | 11 |
| Products and Services | 12 |
| Manufacturing and Supply | 18 |
| Regulatory Environment | 18 |
| Specialized Skill and Knowledge | 21 |
| Competitive Conditions | 21 |
| Cycles and Seasonality | 22 |
| Components and Economic Dependence | 22 |
| Changes to Contracts | 23 |
| Employees | 23 |
| Foreign Operations | 23 |
| Bankruptcy and Similar Procedures | 24 |
| Social or Environmental Policies | 24 |
| RISK FACTORS | 24 |
| DIVIDENDS | 38 |
| DESCRIPTION OF CAPITAL STRUCTURE | 39 |
| Common Shares | 39 |
| Preferred Shares | 39 |
| MARKET FOR SECURITIES | 39 |
| Trading Price and Volume | 39 |
| Prior Sales | 40 |
| ESCROWED SECURITIES | 40 |
| DIRECTORS AND EXECUTIVE OFFICERS | 40 |
| Term | 42 |
| Shareholdings of Directors and Executive Officers | 42 |
| Cease Trade Orders or Bankruptcies | 42 |
| Penalties or Sanctions | 43 |
| Conflicts of Interest | 43 |
| PROMOTERS | 44 |
| AUDIT COMMITTEE | 44 |
| Audit Committee Charter | 44 |
| Composition of the Audit Committee | 44 |
| Relevant Education and Experience of the Audit Committee | 44 |
| Audit Committee Oversight | 45 |
| Reliance on Certain Exemptions by the Audit Committee | 45 |
| Pre-Approval Policies and Procedures of the Audit Committee | 45 |
| LEGAL PROCEEDINGS AND REGULATORY ACTIONS | 46 |
| INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS | 46 |
| TRANSFER AGENT AND REGISTRAR | 46 |
| MATERIAL CONTRACTS | 46 |
| Yavne No. 1 Agreement | 46 |
| Equipment Agreement | 46 |
| Tripartite Agreement | 47 |
| Yavne No. 2 Agreement | 47 |
| License Agreement | 48 |
|---|---|
| TV Network Agreement | 48 |
| NAMES AND INTERESTS OF EXPERTS | 49 |
| ADDITIONAL INFORMATION | 49 |
| AUDIT COMMITTEE CHARTER | A1 |
INTRODUCTORY NOTES
Date of Information In this annual information form (“Annual Information Form”), BioHarvest Sciences Inc., together with its subsidiaries, as the context requires, is referred to as the “Company”. All information contained in this Annual Information Form is as at December 31, 2025, unless otherwise stated, being the date of the most recently completed financial year-end of the Company, and the use of the present tense and of the words “is”, “are”, “current”, “currently”, “presently”, “now” and similar expressions in this Annual Information Form is to be construed as referring to information given as of that date. Cautionary Statement Regarding Forward-Looking Statements and Information This Annual Information Form contains forward-looking statements and information about the Company which reflect management’s expectations regarding the Company’s future growth, results of operations, operational and financial performance and business prospects and opportunities. In addition, the Company may make or approve certain statements or information in future filings with securities regulatory authorities, in news releases, or in oral or written presentations by representatives of the Company that are not statements of historical fact and may also constitute forward-looking statements or forward-looking information. All statements and information, other than statements or information of historical fact, made by the Company that address activities, events or developments that the Company expects or anticipates will or may occur in the future are forward-looking statements and information, including, but not limited to statements and information preceded by, followed by, or that include words such as “may”, “would”, “could”, “will”, “likely”, “expect”, “anticipate”, “believe”, “intends”, “plan”, “forecast”, “budget”, “schedule”, “project”, “estimate”, “outlook”, or the negative or grammatical variations of those words or other similar or comparable words.
Forward-looking statements and information involve significant risks, assumptions, uncertainties and other factors that may cause actual future performance, achievement or other realities to differ materiality from those expressed or implied in any forward-looking statements or information and, accordingly, should not be read as guarantees of future performance, achievement or realities. Although the forward-looking statements and information contained in this Annual Information Form reflect management’s current beliefs based upon information currently available to management and based upon what management believes to be reasonable assumptions, the Company cannot be certain that actual results will be consistent with these forward-looking statements and information. A number of risks and factors could cause actual results, performance, or achievements to differ materially from the results expressed or implied in the forward-looking statements and information. Such risks and factors include, but are not limited to, the following:
·the Company’s negative operating cash flow and the Company’s ability to continue as a going concern;
·the potential political, economic and military instability in Israel, where the Company’s principal place of business, members of the management team, facilities and employees are located;
·the Company’s additional requirements for capital;
·general business risk and liability;
·the Company’s reliance on key business inputs;
·the Company’s reliance on third-party suppliers and white-label manufacturers;
·the Company’s maintenance obligations and facility disruptions
·the success of the Company’s quality control systems;
·the effectiveness and efficiency of the Company’s advertising and promotional expenditures;
·the failure of the Company’s technology to accommodate increased traffic;
·the increasing consumer acceptance of the Internet as a medium of commerce;
·the development and maintenance of the Internet infrastructure;
·a significant downturn in the Company’s subscriptions may not be immediately reflected in its operating results;
·payment-related risks;
·changing consumer preferences;
·risks related to the price of the Company’s products and contract development and manufacturing operation (“CDMO”) services;
·fluctuations in foreign currency exchange rates;
·the recall of the Company’s products as a result of them not having the intended effects or causing undesirable side effects;
·product liability claims in relation to the Company’s products;
·risks related to insurance;
·risks related to the Company’s management of growth;
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·computer system failures, cyber-attacks or deficiencies in cyber security;
·conflicts of interest risk;
·risks related to governmental regulations;
·compliance with manufacturing regulations;
·the Company may face manufacturing stoppages and other challenges associated with audits or inspections by regulatory authorities;
·risks associated with enrolling candidates in clinical trials or studies of others for the Company’s nutraceutical and cosmeceutical products;
·delay in achieving or failure to achieve publicly announced milestones by the Company;
·competition risk;
·obsolescence;
·the loss of key personnel by the Company;
·negative results from clinical or other types of scientific studies and adverse safety events;
·risks related to potential intellectual property claims and patent infringement;
·the protection and enforcement of the intellectual property of the Company;
·the expiration and loss of patents;
·third-party license risk;
·the disclosure of proprietary information and trade secrets of the Company to third parties;
·risks related to smaller companies;
·the Company’s operations may be negatively affected by global financial conditions;
·the Company is a “foreign private issuer” and may lose its foreign private issuer status in the future, which could result in significant additional costs and expenses;
·any return on investment from the Common Shares is not guaranteed;
·the Company may not pay dividends;
·future sales or issuances of debt or equity securities could decrease the value of any existing Common Shares, dilute investors’ voting power, reduce the Company’s earnings per share and make future sales of the Company’s equity securities more difficult;
·holders of Common Shares are at risk for a substantial loss of capital;
·the Company will have broad discretion over the use of the net proceeds from its financings, and it may not use these proceeds in a manner desired by its shareholders;
·the Common Share price has experienced volatility and may be subject to fluctuation in the future based on market conditions;
·market disruption risks could have a material adverse effect on the market price of the Common Shares;
·there is currently no market through which the Company’s securities, other than the Common Shares, may be sold; and
·there is no assurance of a sufficient liquid trading market for the Common Shares in the future.
For further details, see the “Risk Factors” section of this Annual Information Form.
Although the Company has attempted to identify important risks and factors that could cause actual actions, events or results to differ materially from those described in forward-looking statements or information, there may be other factors and risks that cause actions, events or results not to be as anticipated, estimated or intended. Further, any forward-looking statements and information contained herein are made as of the date of this Annual Information Form and, other than as required by applicable securities laws, the Company assumes no obligation to update or revise them to reflect new events or circumstances. New factors emerge from time to time, and it is not possible for management to predict all of such factors and to assess in advance the impact of each such factor on the Company’s business or the extent to which any factor, or combination of factors, may cause actual realities to differ materially from those contained in any forward-looking statement or information. Accordingly, readers should not place undue reliance on forward-looking statements and information contained in this Annual Information Form and the documents incorporated by reference herein. All forward-looking statements and information disclosed in this Annual Information Form are qualified by this cautionary statement. Presentation of Information The financial statements referred to herein are reported in United States dollars. Unless otherwise indicated, all references in this Annual Information Form to ‘$” or “US$” are to United States dollars, C$ are to Canadian dollars and “NIS” are to new Israeli shekels.
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The Company completed a consolidation (the “Consolidation”) of the Common Shares on the basis of thirty-five (35) pre-Consolidation Common Shares for every one (1) post-Consolidation Common Share on June 3, 2024.
Unless otherwise indicated, all information in this Annual Information Form is presented on a post-Consolidation basis. CORPORATE STRUCTURE
Name, Address and Jurisdiction The Company is a biotechnology company that has developed a botanical synthesis platform technology (the “Botanical Synthesis Platform Technology”), which enables the Company to grow, in bioreactors at an industrial scale, the active and beneficial ingredients in certain fruits and plants without the need to grow the plant itself. The Botanical Synthesis Platform Technology is a non-genetically modified organism platform that can produce plant cells with higher concentrations of active ingredients (as compared to those that are produced naturally), as well as high levels of solubility and bio-availability. The Botanical Synthesis Platform Technology is economical, ensures consistency and avoids the negative environmental impacts associated with traditional agriculture by providing consistent product production, a year-round production cycle and products that are devoid of sugar, calories and contaminants, such as pesticides, heavy metals and residues.
BioHarvest Sciences Inc. is a corporation incorporated under the Business Corporations Act (British Columbia) (“BCBCA”) and reporting under the securities laws of British Columbia and Ontario and as a “foreign private issuer” under the securities laws of the United States. The common shares in the capital of the Company (the “Common Shares”) are registered under Section 12(b) of the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”). On June 26, 2025, the Company amended its articles to create a classified board (the “Amended Articles”). The Amended Articles created three classes of directors, designated as Class I, Class II, and Class III. The board of directors are to always be divided into each class in as equal numbers as possible. Each director initially appointed to Class I, shall serve an initial term expiring on the Company’s first annual general meeting following initial appointment to Class I (this would be the 2026 annual general meeting). Each director initially appointed to Class II, shall serve an initial term expiring on the Company’s second annual general meeting following initial appointment to Class II (the would be the 2027 annual general meeting), and each director appointed to Class II, shall serve an initial term expiring on the Company’s third annual general meeting following initial appointment to Class III (this would be the 2028 annual general meeting). Subsequent to the initial appointments, directors who are appointed shall serve for a term ending on the date of the third annual meeting at which such director was elected. These provisions created a classified board of directors which are divided into three classes, where approximately one-third of the board is elected annually and each director serves a three-year term. Any director appointed to fill a vacancy will hold office until the next election of the class for which such director shall have been elected. Under the Amended Articles, the total number of directors comprising the board of directors is a range of not less than 6 nor more than 12, with the authorized number of directors fixed by the board of directors.
The Common Shares are listed for trading on the Global Market (the “Nasdaq GM”) of the Nasdaq Stock Exchange, LLC (“Nasdaq”) under the symbol “BHST”, the Frankfurt Stock Exchange under the symbol “8MV”, the Munich Stock Exchange under the symbol “8MV”, the Stuttgart Stock Exchange under the symbol “CA09076J1084.SG” and the Tradegate Exchange under the symbol “8MV”.
The address of the Company's head office is 1140-625 Howe Street, Vancouver, British Columbia V6C 2T6. The registered and records offices of the Company are located at 704-595 Howe Street, Vancouver, British Columbia V6C 2T5. Intercorporate Relationships The Company has the following three (3) subsidiaries, BioHarvest Israel Ltd. (“BioHarvest Israel”), BioHarvest Inc. (Delaware) (“BioHarvest Delaware”) and Superfood Nutraceuticals Inc., as set out in the diagram below:
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GENERAL DEVELOPMENT OF THE BUSINESS
Three-Year History Over the past three years, the Company has strategically expanded its portfolio of products and services, including the development and commercial launch of VINIA® Superfood Coffee, VINIA® Superfood Tea, and a more potent formulation of the VINIA® supplement featuring a chewable delivery mechanism. In addition, the Company established its CDMO Services Business Unit, comprised of a Contract Development and Manufacturing Organization (“CDMO”), which provides customers in the pharmaceutical, cosmeceutical, nutraceutical, and nutrition industries with end-to-end development services and future manufacturing capabilities for specific plant-based active molecules pursuant to comprehensive service agreements.See the “Business - General” and “Business – Products and Services” sections of this Annual Information Form for additional information on the products and services of the Company and their development during the last three (3) completed financial years.
The following is a summary of the material events during the Company’s last three (3) completed financial years that have influenced the general development of the Company’s business.
Financial Year Ended December 31, 2023
The Company decided to discontinue any activity related to the development of medicinal cannabis in February 2023.
Ilana Belzer was appointed as the Chief Operating Officer of the Company on April 19, 2023.
The Company commenced clinical activity in Q2 2023 to assess the ability of the Company’s red grape cell (“RGC”) active ingredient to support additional health and wellness opportunities.
On July 18, 2023, the Company issued C$4,642,075.50 in convertible notes of the Company (“Convertible Notes”) pursuant to a non-brokered private placement. Please see “Market for Securities – Prior Sales” for additional information.
The Company created the CDMO Services Business Unit in Q3 2023.
On October 30, 2023, the Company issued C$11,786,489.98 in Convertible Notes pursuant to a non-brokered private placement. Please see “Market for Securities – Prior Sales” for additional information.
On December 22, 2023, the Company issued C$1,836,383 in Convertible Notes pursuant to a non-brokered private placement. Please see “Market for Securities – Prior Sales” for additional information.
In Q4 2023, the Company launched a “functional” VINIA® coffee pod product line, VINIA® Superfood Coffee, consisting of medium roast and decaf coffee pods in the United States (with shipment available in Canada).
Financial Year Ended December 31, 2024
Matthew Zrebiec was appointed as the Vice-President, Business Development, of the Company on March 14, 2024.
Anna Tenstam was appointed as the Vice-President, Business Development, Cosmeceuticals and Injectables, of the Company on March 18, 2024.
On March 20, 2024, Bar Dichter was appointed as the Vice-President, Finance, of the Company, Malkit Azachi was appointed as the Vice-President, Research and Development, of the Company, Michal Sapir was appointed as the Vice-President, Regulatory Affairs, of the Company, and Jared Turner was appointed as the Vice-President, D2C Products Business Unit, of the Company.
On March 28, 2024, the Company issued an aggregate of 1,136,444 common share purchase warrants (“Warrants”) in consideration for the early conversion of Convertible Notes in the aggregate principal amount and accrued interest of C$16,742,436.10 into approximately 2,093,392 Common Shares, of which 987,515 Warrants are exercisable at an exercise of price of US$7.77 to acquire one (1) Common Share until October 30, 2025 and 148,930 Warrants are exercisable at an exercise price of US$7.77 to acquire one (1) Common Share until December 22, 2025.
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On April 18, 2024, the Company issued an aggregate of 88,294 common share purchase warrants (“Warrants”) in consideration for the early conversion of Convertible Notes in the aggregate principal amount and accrued interest of C$5,675,059.91 into approximately 652,175 Common Shares, of which 83,371 Warrants are exercisable at an exercise of price of US$7.77 to acquire one (1) Common Share until October 30, 2025 and 4,923 Warrants are exercisable at an exercise price of US$7.77 to acquire one (1) Common Share until December 22, 2025.
Anne Binder was appointed as a director of the Company on May 27, 2024.
The Company completed the Consolidation of the Common Shares on the basis of thirty-five (35) pre-Consolidation Common Shares for every one (1) post-Consolidation Common Share on June 3, 2024.
On June 21, 2024, the Company issued an aggregate of 114,236 Warrants in consideration for the early conversion of Convertible Notes in the aggregate principal amount and accrued interest of C$1,331,254.50 into approximately 161,620 Common Shares, of which 107,617 Warrants are exercisable at an exercise of price of US$7.77 to acquire one (1) Common Share until October 30, 2025 and 6,619 Warrants are exercisable at an exercise price of US$7.77 to acquire one (1) Common Share until December 22, 2025.
On June 28, 2024, the Company completed a non-brokered private placement of 603,904 Units at a price of US$7.17 per Unit for aggregate gross proceeds of US$4,329,991.68, with each Unit comprising one (1) Common Share, one-quarter of one (1/4) Warrant, with each Warrant exercisable at an exercise price of US$7.68 to acquire one (1) Common Share until December 28, 2024, and one-quarter of one (1/4) Warrant, with each Warrant exercisable at an exercise price of US$11.52 to acquire one (1) Common Share until December 28, 2025.
On June 28, 2024, the Company issued an aggregate of 20,242 Warrants in consideration for the early conversion of Convertible Notes in the aggregate principal amount and accrued interest of C$288,933.09 into approximately 33,697 Common Shares, which Warrants are exercisable at an exercise of price of US$7.77 to acquire one (1) Common Share until December 22, 2025.
In Q2 2024, the Company commenced the building of a new research and development facility (the “Yavne No. 2 R&D Facility”) in the Yavne No. 2 Property (as defined herein) Yavne, Israel to support the CDMO Services Business Unit, which is expected to be completed in Q2 2025.
David Ryan resigned as a director of the Company on September 19, 2024.
Bar Dichter was appointed as the Chief Financial Officer of the Company and ceased to act as the Vice-President, Finance, of the Company, on October 28, 2024, following Alan Rootenberg’s resignation as the Chief Financial Officer of the Company on October 28, 2024.
Matthew Zrebiec resigned as the Vice-President, Business Development, of the Company on November 1, 2024.
The Common Shares ceased trading on the OTCQB on November 11, 2024. The Common Shares were listed and began trading on the Nasdaq GM under the symbol “BHST” on November 12, 2024.
The lease for the current location of the Company’s principal place of business in Rehovot, Israel, is likely to be terminated by BioHarvest Israel effective on or before June 2026. The Company intends to move all of its research and development and corporate administrative offices to the Yavne No. 2 Property by Q1 2026.
In Q4 2024, the Company commenced the building of a new manufacturing facility (“Yavne No. 2 Manufacturing Facility”), capable of supporting at least 50 tons per year in the Yavne No. 2 Property in Yavne Israel, to support the demand for VINIA® products and the introduction of new products, such as olive cells and pomegranate cells. The building of the Yavne No. 2 Manufacturing Facility is expected to be completed and start production by Q4 2026.
In Q4 2024, the Company launched a “functional” VINIA® tea product line, VINIA® Superfood Tea, in the United States (with shipment available to Canada).
Financial Year Ended December 31, 2025
On January 16, 2025, the Company amend its lease agreement with the lessor for its Yavne No. 1 Manufacturing Facility, until September 2025, subject to 2 extension options for an additional 6 months each. The average monthly fees are NIS 101 ($28), including an annual increase and other adjustments, subject to the Consumer Price Index published by the Israeli Central Bureau of Statistics.
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On January 16, 2025, Sharon Malka was appointed as a director of the Company.
On February 1, 2025, Anna Tenstam resigned as the Vice-President, Business Development, Cosmeceuticals and Injectables, of the Company.
On February 14, 2025, The Common Shares delisted from and ceased trading on the Canadian Securities Exchange (the “CSE”) on February 14, 2025.
On March 1, 2025, Brian Cornblatt resigned as the Chief Medical Officer of the Company on March 1, 2025.
Balance Sheet Strengthening and Financings:
During 2025, the Company implemented a series of capital market transactions and balance sheet management actions designed to strengthen its financial position, improve liquidity, and support the continued execution of its strategic growth initiatives.
In September 2025, the Company completed a series of accelerated warrant exercises and debt-to-equity conversions that collectively bolstered its financial position. These transactions resulted in gross proceeds of approximately $10,905 and a concurrent reduction of approximately $3,782, in outstanding debt obligations. The transactions included:
·Raising approximately $5,839 in cash through the exercise of 898,277 warrants (repriced to $6.5);
·Issuing new convertible notes and raising approximately $6,900 in gross proceeds, which were subsequently converted into common shares;
·Repaying approximately $1,397 of long-term debt following the exercise of 214,915 warrants (repriced to $6.5) by lenders; and
·Repaying approximately $600 of short-term debt by issuing ordinary shares in satisfaction of the obligation.
As a result of these transactions, the Company issued a total of 1,113,192 ordinary shares upon the exercise of warrants, converted approximately $7,600 of convertible notes into 1,169,758 ordinary shares. These initiatives were intended to deleverage the balance sheet and provide additional cash runway for working capital, capital expenditures, and continued commercial expansion.
In October 2025, the Company raised approximately $1,109 in cash through the exercise of 189,279 warrants for ordinary shares.
Subsequent to October 2025 strengthening of the balance sheet, in November 2025, the Company successfully closed an upsized underwritten public offering of common stock, resulting in gross proceeds of approximately US $19.9 million before underwriting discounts and offering expenses. The offering consisted of 2,846,854 of common shares sold at a public offering price of US $7.00 per share, which included 361,854 shares issued upon the exercise of the underwriters’ option to purchase additional shares. Transaction costs directly attributable to the issuance of the shares, including underwriting fees and commissions, legal and accounting costs, amounting to $1,666. Net proceeds from this offering were expected to be used for general corporate purposes, including funding manufacturing expansion, research and development, marketing, debt reduction or refinancing, other capital expenditures, and working capital.
Collectively, these financings and balance sheet management activities materially enhanced the Company’s liquidity and capital structure during 2025, thereby strengthening its financial flexibility and supporting its ongoing business development and execution of strategic priorities.
Subsequent Events to Financial Year Ended December 31, 2025
The Company has evaluated events occurring after the balance sheet date through March 31, 2026, the date the financial statements were issued, and has determined that the following subsequent events require disclosure:
1) In January 2026, the Company received its first advance payment from the IIA in connection with the R&D support program approved in December 2025. The initial advance amounted to NIS 980 ($309).
2) In February 2026, the Company issued 1,000 common shares in lieu of vested RSUs.
3) On March 13, 2026, the Company granted employees, consultants and directors 617,173 options to purchase shares of the Company at $4.15 per share and 264,121 RSUs with a deemed price of $4.15 per share under the Company’s plan.
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See “Business – Products and Services” for additional information on changes to the Company’s business expected to occur during the current financial year.
Significant Acquisitions The Company did not complete any “significant acquisitions” during its most recently completed financial year that required the filing of a “business acquisition report” or other information pursuant to Part 8 of National Instrument 51-102 Continuous
Disclosure Obligations.
BUSINESS
General
The Company is a biotechnology company that has developed the Botanical Synthesis Platform Technology, which enables the Company to grow, in bioreactors at an industrial scale, the active and beneficial ingredients in certain fruits and plants without the need to grow the plant itself. The Botanical Synthesis Platform Technology is a non-genetically modified organism platform that can produce plant cells with higher concentrations of active ingredients (as compared to those that are produced naturally)^1^, as well as high levels of solubility^2^ and bio-availability^3^. The Botanical Synthesis Platform Technology is economical, ensures consistency and avoids the negative environmental impacts associated with traditional agriculture by providing consistent product production, a year-round production cycle and products that are devoid of sugar, calories and contaminants, such as pesticides, heavy metals and residues.
The Company owns or has an exclusive license to use twenty three (23) patents and/or patent applications, of which twelve (12) patents and/or patent applications cover the Botanical Synthesis Platform Technology and eleven (11) patent applications are related to various usages or combinations. Eleven (11) are granted registered patents. See “Business – Patents” for further details.
The Company is currently focused on utilizing the Botanical Synthesis Platform Technology to develop the next generation of science-based and clinically proven health solutions through its two (2) business units:
1.The Products Business Unit, comprising Research, development, manufacturing, marketing and sales of science-based health and wellness nutraceutical solutions which are manufactured and sold as dietary supplements and/or functional food and/or beverages (capsules, powders, chews and other delivery mechanisms such as coffee, teas and powder electrolyte beverages).
**2.**The CDMO Services Business Unit, comprising a Contract Development and Manufacturing Operation (“CDMO”) that offers customers from the pharmaceutical, cosmeceutical, nutraceutical and nutrition industries the development and manufacturing of specific plant-based active molecules, via an end-to-end service agreement.
As of December 31, 2023, the Company’s business was comprised of two (2) business segments, nutraceuticals and pharmaceuticals. Subsequent to the financial year ended December 31, 2023 and during the three-month period ended March 31, 2024, the Company restructured its operations, such that its operations comprise two (2) business units, the Products Business Unit and the CDMO Services Business Unit, and (i) the nutraceuticals business segment continued into the Products Business Unit and (ii) as for the pharmaceuticals business segment, the Company now offers customers in the pharmaceutical
^1^ The level of resveratrol in VINIA® fresh cells is 845mg/kg (see source (a) below), whereas the average level of resveratrol in fresh grapes grown in a vineyard is 0.69*-3.8* mg/kg (see sources (b) and (c) below):
(a)M. Azachi, R. Yatuv, A. Katz, Y. Hagay, A. Danon, “A novel red grape cells complex: health effects and bioavailability of natural resveratrol.” Int J Food Sci Nutr. 2014 Nov; 65(7):848-55 <https://pubmed.ncbi.nlm.nih.gov/24827888/>.
(b)E. Cantos, J.C. Espín, F.A. Tomás-Barberán, “Varietal differences among the polyphenol profiles of seven table grape cultivars studied by LC-DAD-MS-MS.” J Agric Food Chem. 2002 Sep 25;50(20):5691-6 <https://pubmed.ncbi.nlm.nih.gov/12236700/>.
(c)L. Bavaresco, S. Vezzulli, S. Civardi, M. Gatti, P. Battilani, A. Pietri, F. Ferrari, “Effect of lime-induced leaf chlorosis on ochratoxin A, trans-resveratrol, and epsilon-viniferin production in grapevine (Vitis vinifera L.) berries infected by Aspergillus carbonarius.” J Agric Food Chem. 2008 Mar 26;56(6):2085-9 <https://pubmed.ncbi.nlm.nih.gov/18290620/>.
^2^ See the study titled “Bioavailability of natural resveratrol from VINIA®” in “Business – Products and Services - Products Business Unit – (a) Nutraceuticals - Scientific Studies” for additional information.
^3^ The solubility of piceid resveratrol is 25 times greater in water than that of regular trans-resveratrol. The solubility of regular tran-resveratrol is
0.03 g/L (see source (a) below), whereas the solubility of piceid resveratrol/polydatin is 0.766g/L (see source (b) below).
(a)NationalLibrary of Medicine, “CompoundSummary – Resveratrol - 3.2.4 Solubility”
<https://pubchem.ncbi.nlm.nih.gov/compound/445154#section=Solubility> (accessed July 22, 2024).
(b)DrugBank, “Polydatin” <https://go.drugbank.com/drugs/DB11263> (accessed July 22, 2024).
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industries the development and manufacturing of specific plant-based active molecules as part of the CDMO Services Business Unit.
Products and Services As at the date of this Annual Information Form, the Company’s business is comprised of two (2) business units, the Products Business Unit and the CDMO Services Business Unit.
Products Business Unit
i.Nutraceuticals
The Company is engaged in the research and development of science-based health and wellness solutions for the nutraceutical industry. The Company’s first product entry into this market is a polyphenol/anti-oxidant superfruit product called VINIA®, which is a red grape powder that supplies the benefits of red wine consumption but without the sugar, calories and alcohol found in wine.
VINIA® is made of red grape (Vitis vinifera) cells grown in the Company’s proprietary bioreactor facility. VINIA® is a fine, dry pink-purple powder containing a matrix of polyphenols (with a high concentration of piceid resveratrol) in their natural state (as can be found in red wine) that has additive and synergistic benefits. One of the main active ingredients in VINIA® is piceid resveratrol, maintaining the quality and inherent benefits present in nature without any solvent extraction or genetic modification. VINIA® is soluble when integrated with various liquids or cosmetics.
The Company has invested over $80 million, primarily in R&D activities, to support the business. This investment has enabled the Company to develop a disruptive technology platform which mirrors nature and allows it to efficiently produce plant cells that are identical to those originally sourced from the parent plant, ensuring optimal bio-availability and efficacy of the secondary metabolites.
Products
VINIA® powder, in capsule form, is currently sold in the United States (with shipment available worldwide) and Israel. VINIA® Superfood Coffee,VINIA® Superfood Tea, VINIA® 2X Formula Chew and VINIA® Blood Flow Hydration Electrolyte Powdered Beverage are currently sold in the United States (with shipment available worldwide).
The Company has a well-developed innovation pipeline in its nutraceuticals segment. The Company plans to introduce a number of new products under the VINIA® brand as well as additional cell-based products utilizing the Botanical Synthesis Platform Technology, such as olive cells and pomegranate cells. The existing and planned pipeline of VINIA® products is as follows: 1.In Q4 2023, the Company launched a “functional” VINIA® coffee pod product line, VINIA® Superfood Coffee, consisting of medium roast and decaf coffee pods in the United States. These coffee pods are compatible with Keurig®^4^ and certain single-serve brewing systems.
2.In Q4 2024, the Company launched a “functional” VINIA® tea product line, VINIA® Superfood Tea, in the United States (with shipment available worldwide);
3.In Q3 2025, the Company launched VINIA® 2X Formula Chew supplement in the United States; and VINIA® 2X Formula Chew is enabling the VINIA® brand to target a younger consumer base with this chew delivery system and with a formula which has twice the potency. The Company utilizes this VINIA® 2X Formula Chew to target athletes and super active consumers who are looking for a more potent version of VINIA® to generate the incremental physical energy and mental alertness they require. VINIA® 2X Formula Chew is 3rd party certified by “Informed Sport” so that it can be utilized by professional athletes.
4.In Q4 2025, the Company launched VINIA® Blood Flow Hydration Electrolyte Powdered Beverage in the United States This product contains the equivalent of one capsule of VINIA® Red Grape Powder plus a unique combination of electrolytes sourced from nature, including sodium derived from sea salt, potassium
^4^ The Company and its business, operations and products are not affiliated with, endorsed or sponsored by Keurig Dr. Pepper Inc. or Keurig Green Mountain, Inc. “Keurig®” and “K-Cup®” are registered trademarks of Keurig Green Mountain, Inc.
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from coconut water, and magnesium from the ocean bed. VINIA® Blood Flow Hydration Electrolyte is 3^rd^ party certified by “Informed Sport” so that it can be utilized by professional athletes.
On March 4, 2025, The Company announced new ‘in-vitro’ test results for the Company’s proprietary new Olive Cell compound, which showed reduced fat accumulation in human liver cells. Fat accumulation in the liver is a leading cause of non-alcohol fatty liver disease (NAFLD), which affects 30-40% of U.S. adults. The Company demonstrated that in human hepatic (liver) cells, the Olive Cell compound mitigated fat accumulation in a liver steatosis model as well as in experimental models of liver fibrosis. In addition, the Olive Cell compound also succeeded in reducing the level of collagen type 1 in XL-2 cells in an in-vitro fibrosis model. The Company attributes the positive test results of reducing fat accumulation in liver cells to the high levels of Verbascoside (a plant-derived polyphenol with known anti-inflammatory properties that have been researched for a variety of effects on the liver) in the Company’s Olive Cell compound. Based on these results and additional studies to be conducted, the Company plans to commence selling a product containing Olive Cell in the future as a nutraceutical product and/ or entering into a partnership where Olive Cells will be integrated into another Company’s portfolio.
Regulatory
The Company has conducted various clinical trials and other types of scientific studies to test the efficacy of the VINIA® powder and has submitted notifications to the FDA for the use of its structure/function claims as both a food and dietary supplement on its packaging and in communication materials, which is regulated by the FTC, in the United States.
In November 2011, the Company completed a self-determination that VINIA® is “Generally Recognized as Safe” (“GRAS”) for certain uses in food. The FDA is not required to be notified of and has not reviewed this GRAS self-determination. Subsequent to this GRAS self-determination, the Company began marketing VINIA® as a food. In 2021, the Company began marketing VINIA® as a dietary supplement in the United States, premised on the Company’s marketing of VINIA® as a food.
VINIA® was approved by the Israeli Ministry of Health as a novel food in April 2013 and as a dietary supplement in February 2016 in the Israeli Market. In September 2023, BioHarvest Israel received a product license from Health Canada, authorizing the sale of VINIA® capsules as a natural health product in Canada. This product license sets out the approved recommended use or purpose (claims) that BioHarvest Israel may use in the future marketing of VINIA® in Canada. Currently, up to ninety (90) days’ supply of VINIA® capsules, VINIA® Superfood Coffee, VINIA® Superfood Tea, VINIA® 2X Fromula Chews and VINIA® Blood Flow Hydration are permitted to be imported by Canadians for personal use from the United States through the Company’s United States e-commerce website, VINIA.com.
For the United States market, the Company plans to follow the same regulatory path for its Olive Cell Product as it employed for VINIA®. Specifically, the Company plans to conduct a GRAS self-determination, and then market a product containning Olive Cells Product as a food and dietary supplement. The Company also plans to conduct clinical trials and other scientific studies to evaluate the effect of the Olive Cell Product on areas such as liver and joint health, so that, if successful, the Company will be able to make use of structure/function claims on its labeling and in communication materials for the a Olive Cell containing product in accordance with FDA and FTC requirements.
For the Israeli market, the Company plans to apply to the Israeli Ministry of Health for approval of the Olive Cell Product as a novel food, which involves making submissions concerning the manufacturing process and characterization of the final product.
The Yavne No. 1 Manufacturing Facility received a manufacturer license and GMP approval from the Israeli Ministry of Health in November 2021, as well as key ISO certifications in October 2021.
The Yavne No. 2 Manufacturing Facility received a manufacturer license and GMP approval from the Israeli Ministry of Health in December 2025, as well as key ISO 22000 certifications in February 2026.
See “Business - Governmental Regulations” for additional information.
Research and Development
The Company has invested over US$80 million, primarily in research and development activities, to support the business. This investment has enabled the Company to develop a disruptive technology platform which mirrors nature and allows it to efficiently produce plant cells that are identical to those originally sourced from the parent plant, ensuring optimal bio-availability and efficacy of the secondary metabolites. The Company has termed this platform
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technology “Botanical Synthesis”. The Botanical Synthesis Platform Technology is a non-GMO platform that can produce plant cells with higher concentrations of active ingredients, as compared to those that are produced by nature, as well as high levels of solubility and bio-availability. The Botanical Synthesis Platform Technology provides consistent product production, a year-round production cycle and products that are devoid of sugar, calories and contaminants such as pesticides, heavy metals and residues).
Facilities and Capacity
In terms of manufacturing capacity, the Company has established the Yavne No. 1 Manufacturing Facility and commenced implementation of the required technology and process improvements to drive significant cost reduction through economies of scale.
The Company completed the biological technology transfer to the Yavne No. 1 Manufacturing Facility in March 2022 and has completed the scaling up its manufacturing of VINIA® red grape cells at the Yavne No. 1 Manufacturing Facility. This enables the Company to better meet the increasing demand for VINIA®, which is driven by the United States market as a result of the Company’s marketing activities. The Company continued to focus significant resources to increase its capacity levels to meet the growing demand for VINIA® in the United States market. The Company has invested heavily in additional bioreactor capacity and new downstream harvesting and drying equipment in the Yavne No. 1 Manufacturing Facility, which will enable a significant yield increase in the finished product and, accordingly, a corresponding reduction in COGS.
In April 2024, the Company entered into the Yavne No. 2 Lease (as defined herein) for a property comprising approximately 10,300 square meters in Yavne, Israel (the “Yavne No. 2 Property”), which will comprise the Yavne No. 2 R&D Facility to support the CDMO Services Business Unit upon completion and space to support the building of the Yavne No. 2 Manufacturing Facility to expand the Company’s capacity to produce VINIA® and other products upon completion.
On January 16, 2025, the Company amend its lease agreement with the lessor for its Yavne No. 1 manufacturing facility, until September 2025, subject to 2 extension options for an additional 6 months each. The average monthly fees are NIS 101 ($28), including an annual increase and other adjustments, subject to the Consumer Price Index published by the Israeli Central Bureau of Statistics.
At the commencement of the lease, the Company believed it was probable the 2 extension options for an additional total of 1 year will be exercised. During September 2025, the Company exercised the first extension option for additional 6 months.
The Company is currently in discussions to extend the lease agreement for an additional two years.
On June 1, 2025, the Company amend its lease agreement with the lessor for its Rehovot laboratories and offices facilities, until May 2028. The Company has the option to terminate the lease agreement (partially or completely) within the lease period. The average monthly fees are NIS 63 ($18) subject to the Consumer Price Index published by the Israeli Central Bureau of Statistics.
At the commencement of the lease, the Company believed it is probable that the lease agreement will be partially terminated early.
Scientific Studies
Below is a summary of the Company’s scientific studies, including clinical studies, which support the structure/function claims for VINIA® as a food product and dietary supplement/nutraceutical.
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| Study | Summary |
|---|---|
| Objectives: To evaluate the effect of VINIA® (RGC powder) supplementation on blood pressure and vascular function in people with mild to moderate hypertension. The primary objective was to evaluate the effect of RGC supplementation on blood pressure and vascular function, specifically, flow-mediated dilatation (“FMD”). The secondary objective was to evaluate the effect of RGC supplementation on the change in oxidative stress parameters. | |
| Study design: The study was a randomized, double-blind, placebo-controlled study which lasted three (3) months. After signing an informed consent, subjects were screened for eligibility during two (2) screening visits. Eligible subjects were enrolled and randomized into three (3) treatment arms with daily supplementation for three (3) months of 200 mg RGC powder, 400 mg RGC powder or placebo. Subjects attended the Unit of Clinical Nutrition at the Tel Aviv Sourasky Medical Center every 14±3 days for a total of nine (9) visits. Telephone appointments were conducted during the weeks with no scheduled clinic visits. The subjects were requested not to change their diet or the level of their physical activity for the duration of the study. | |
| Number of subjects: 60 planned, 50 recruited and analyzed. | |
| Diagnosis and main criteria for inclusion: Subjects aged 35-70 with a body mass index of less than 40.0 kg/m2, systolic blood pressure (SBP) of ≤ 154 mmHg, diastolic blood pressure (“DBP”) of ≤ 93 mmHg and no history of chronic disease. | |
| Effect of VINIA® (Grape Cell (RGC) Powder) supplementation on blood pressure and vascular function in people with hypertension^5^ | Test product, dose and mode of administration: RGC was supplied in a powder form containing 200 mg or 400 mg. The placebo contained 200 mg of maltodextrin powder with the addition of ponceau 4R (E-124) and brilliant blue FCF (E-133) food colorings. The RGC or placebo was ingested once daily ten (10) minutes before breakfast with a glass of water.<br><br><br>Duration of treatment: once daily for 90 days (12 weeks).<br><br><br><br><br><br>Statistical analysis: All measured variables were listed individually and, if appropriate, tabulated by descriptive statistics. For descriptive statistics, summary tables were provided giving sample size, absolute and relative frequency by study group, and sample size, arithmetic mean, standard deviation, median, minimum and maximum by study group for means of continuous variables. |
| (Clinical study) | The following statistical tests were used to study the changes in study parameters. |
| After checking for normal distribution, a Paired T-Test or Signed Rank test (as appropriate) was applied to test the statistical significance of the changes from baseline within each study group. | |
| The analysis of variance (“ANOVA”) model was applied to test the statistical significance of the difference in the changes between study groups. Student T-test or non-parametric Rank sum test (as was appropriate) was applied to test the statistical significance of the difference in quantitative parameters (changes and relative changes) between the study groups. The chi-square test or Fisher's Exact test (as was appropriate) was applied to test the statistical significance of the difference for categorical variables (% subjects with positive change) between the study groups. | |
| All tests applied were two-tailed, and a p value of 5% or less was considered statistically significant. The data was analyzed using the SAS® version 9.1.3 (SAS Institute, Cary, North Carolina). | |
| References: SAS/STAT User’s Guide, SAS Institute Inc. and SAS Procedures Guide, SAS Institute Inc. | |
| Efficacy: A significant improvement in FMD measurement and the positive change in FMD was found in the RGC 400 mg arm compared to placebo (p=0.0130 and 0.0294, respectively). A significant statistical decrease was observed in DBP following treatment in the group receiving 200 mg RGC compared to the placebo (p=0.032). A significant decrease in lipid peroxidation and the relative change in lipid peroxide levels were found in subjects on the RGC 400 mg arm (p=0.056 and p=0.052, respectively). A significant difference was detected within the combined RGC groups, mean LDL oxidation-TBARS value decreased from 586.9±48.8 nmol/ml at baseline to 556±34.9 nmol/ml after 12 weeks (p=0.013). |
^5^ N. Vaisman, E. Niv, “Daily consumption of red grape cell powder in a dietary dose improves cardiovascular parameters: a double blind, placebo-controlled, randomized study.” Int J Food Sci Nutr. 2015 May; 66(3):342-9 <https://pubmed.ncbi.nlm.nih.gov/25666417/>.
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| Study | Summary |
|---|---|
| Bioavailability of natural resveratrol from VINIA®^6^<br><br><br>(Clinical study) | A bioavailability study was performed in which doses of VINIA® equivalent to 50 and 150 mg of resveratrol were given to fifteen (15) healthy volunteers in a double-blind cross-over design. Blood samples were taken at fourteen (14) time points to compose a pharmacokinetic profile of resveratrol.<br><br><br><br><br><br>The human pharmacokinetic analysis revealed relatively high bioavailability and two (2) distinctly separated plasma concentration peaks at one (1) and five ^(5)^ h, which was different from competitors with synthetic resveratrol or resveratrol from polygonum, which revealed only one (1) peak.^7^<br><br><br><br><br><br>VINIA® in the tested doses was found to be safe with no serious adverse events. |
| The effect of VINIA® on healthy moderately trained cyclists^8^<br><br><br>(Clinical study) | A randomized placebo-control study was conducted on healthy moderately trained cyclists. 45 subjects received VINIA® at doses of either 200 mg or 1000 mg or placebo for six (6) weeks.<br><br><br>Before and after VINIA® consumption, the subjects underwent anthropometric measurements and exercise testing. A significant 5% to 6% decrease in resting diastolic blood pressure was seen only in the two (2) VINIA® groups after supplementation.<br><br><br><br><br><br>The similar effect seen in both VINIA® groups suggests this is a true phenomenon related to VINIA®. There was also a lower mean resting systolic blood pressure, with nearly twice the number of participants decreasing it in both VINIA® groups at the end of the study, yet with no statistical significance. |
| A randomized, double-blind placebo-controlled trial was conducted on subjects with type 2 diabetes. 33 subjects received 1000 mg of VINIA® powder or placebo once daily for 12 weeks. At the end of the treatment period subjects were tested for changes in mRNA expression of the clock genes and type 2 diabetes parameters: fasting and post-prandial circulating levels of HbA1c, glucose, insulin, C-peptide and lipids. | |
| The effect of VINIA® on Type 2 Diabetes^9^<br><br><br><br><br><br>(Clinical trial) | A statistically significant reduction in mRNA expression of clock genes (BMAL1, PER 2, Cry 1, CLOCK and RevErb) was detected in white blood cells of patients receiving VINIA®, but not the placebo. This reduced expression may reflect a phase shift (probably phase advance) in clock gene expression. A possible phase advance of clock genes accompanied possible health benefits affecting diabetes and cardiovascular health properties. Moreover, the VINIA® group HbA1c was significantly reduced from baseline in the VINIA® group by 0.55% (p=0.0353) and by 0.16% in the control group (p=0.2334). The difference in changes from baseline between the VINIA® group and the control group was p= 0.0563. Moreover, an ANOVA statistical analysis was performed within the subgroup of HbA1c 7.5-10.1. The difference in changes from baseline between the VINIA® and control group was significantly reduced by 0.82% (p=0.0247). In addition, C-peptide was reduced in the VINIA® group and elevated in the control group with a significant difference between the groups (P =0.0409 Wilcoxon test; P =0.0117 t-test). As a result, the estimated insulin sensitivity calculated from fasting glucose and C-peptide was increased by 40.6% with VINIA® versus control (p<0.0137). |
| According to these results, VINIA® may improve insulin resistance state. C-peptide, a part of being a marker of insulin concentrations, is a bioactive peptide with effects on vascular and microvascular blood flow and tissue health. C- peptide is an important factor for cardiovascular disease events and related mortality. C-peptide was reduced in the VINIA® group and elevated in the control group with a significant difference between the groups (P =0.0117 t-test). | |
| Evaluation of the effect of VINIA® in metabolic syndrome model on rats^10^ | In a preclinical study on the metabolic syndrome model of rats fed with a high fructose diet, VINIA® (200, 400 and 800 mg per kg of food per day) given in food was found to attenuate the increase in blood pressure, plasma triglycerides and insulin in these animals. |
| (Preclinical study) |
^6^ M. Azachi, R. Yatuv, A. Katz, Y. Hagay, A. Danon, “A novel red grape cells complex: health effects and bioavailability of natural resveratrol.” Int J Food Sci Nutr. 2014 Nov; 65(7):848-55 <https://pubmed.ncbi.nlm.nih.gov/24827888/>.
^7^ D.M. Goldberg, J. Yan, G.J. Soleas, “Absorption of three wine-related polyphenols in three different matrices by healthy subjects.” Clin Biochem. 2003 Feb;36(1):79-87 <https://pubmed.ncbi.nlm.nih.gov/12554065/>.
^8^ Unpublished.
^9^ J. Wainstein, O. Froy, Z. Landau, Y. Bar-Dayan, M. Boaz, T. Ganz, M. Menaged, Y. Hagay, M. Azachi, D. Jakubowicz, “Effect of Red Grape Cells, a High Resveratrol Polyphenols Complex, on Glycemic Control, HbA1c, and Clock Gene mRNA Expression in Type 2 Diabetes.” Presented at the American Diabetes Association’s 76th Scientific Sessions (2016) <http://app.core-apps.com/tristar_ada16/abstract/e44e3c20f4b9cf62bd1796c12c1c1cd0>.
^10^ A. Leibowitz, Z. Faltin, A. Perl, Y. Eshdat, Y. Hagay, E. Peleg, E. Grossman, “Red grape berry-cultured cells reduce blood pressure in rats with metabolic-like syndrome.” Eur J Nutr. 2013 Apr; 53(3):973-80 <https://pubmed.ncbi.nlm.nih.gov/24158651/>.
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| Demonstration of the mechanism of action of VINIA®^11^<br><br><br>(Invitro study) | The incubation of human umbilical vein endothelial cells (HUVECs) with VINIA® demonstrated a concentration-dependent inhibition of endothelin 1 (“ET-1”) secretion and an increase in the level of endothelial nitric oxide synthase (“eNOS”), signaling a positive effect of VINIA® on vasodilatation and anti-inflammatory activity. eNOS, a vasodilator peptide, and ET-1, a vasoconstrictor protein, are important<br><br><br>factors in maintaining vascular tone connection to atherosclerosis. |
|---|
ii.Cosmeceuticals
Since Q1 2023, the Company has spent significant resources investigating the opportunities that exist for its RGC molecules in the growing beauty and cosmetics skincare market. The skin care market in the United States is worth approximately US$23 billion as of 202313, and the Company believes that consumers are searching for new natural and natural origin molecules to better address their skin care needs.
In Q1 2023, the Company conducted a small-scale skin care assessment in Seoul, South Korea (the “Skin Care Assessment”), which received positive anecdotal feedback from all participants regarding their various skin ailments, such as atopic dermatosis, psoriasis, facial redness and folliculitis, after using VINIA®. After a ten (10) day selection period, each of the twelve (12) selected participants for the Skin Care Assessment took one (1) VINIA® capsule in the morning for the first two (2) weeks and then took two (2) VINIA® capsules per day thereafter for an additional three (3) weeks. At the conclusion of the assessment, all twelve (12) participants reported positive feedback, including noting skin health promotion.
Based on the results of the Skin Care Assessment, the Company intends to conduct further studies to assess the efficacy of VINIA® as both a dietary supplement and a topical cosmetic solution on skin health promotion, with a view to asses the viability of marketing a VINIA® topical solution as a cosmetic (the “VINIA® Topical Solution”) in the United States.
VINIA®, as a dietary supplement, will be required to comply with the FDA’s requirements with respect to structure/function claims on its packaging and in communication materials in the United States, and the VINIA® Topical Solution will be required to comply with the FDA’s requirements with respect to cosmetics. See “Business - Governmental Regulations” for additional information.
CDMO Services Business Unit
In Q1 2024, the Company announced the launch of its CDMO Services Business Unit. This CDMO Services Business Unit allows pharmaceutical, cosmeceutical, nutraceutical and nutrition industry companies the opportunity to partner with the Company to utilize the Botanical Synthesis Platform Technology through a CDMO contracting model. The Botanical Synthesis Platform Technology enables the development and manufacturing of patentable plant-based small molecules, complex molecules and unique compositions, which include both small and complex molecules. The Botanical Synthesis Platform Technology can develop complex molecules, otherwise known as biologics, which have a number of unique advantages, including lower costs of development and manufacturing, a faster speed of development and non-immunogenic properties that enhance safety. As a result of these advantages, the Company has decided to name these unique plant-derived complex molecules BIOLOGICS+. BIOLOGICS+ will help address unmet needs in the health industry across pharmaceutical, nutraceutical, cosmeceutical and nutrition verticals.
During 2025, the Company continued to develop and strengthen its CDMO business unit, leveraging its proprietary Botanical Synthesis platform to expand services in the pharmaceutical, nutraceutical, cosmeceutical, fragrance and high-value botanical compound sectors. The CDMO division continued to advance and secure engagements under multi-stage development frameworks with external partners and broaden its pipeline of contracted opportunities.
On May 12, 2025, the Company announced that the Company’s previously announced CDMO contract with a Nasdaq-listed pharmaceutical company has progressed from Stage 1 to Stage 2 – providing further validation of the versatility of the Company’s Botanical Synthesis platform to develop active pharmaceutical compounds while concurrently paving the road for potential future volume manufacturing. Stage 1 of the contract, launched in early 2024, focused on sourcing the required plants to develop a compound used to produce an approved drug product. Completion of Stage 1 indicates that the Company’s research team successfully isolated the cells of the target plant and mirrored, magnified and multiplied those cells in petri dishes using the Company’s proprietary Botanical Synthesis platform. Stage 2 involves the delivery of a sufficient amount of biomass to be tested for suitability and involves the development of optimal growing conditions in liquid media. Upon successful completion,
^11^ Statista, “Skin Care – United States” <https://www.statista.com/outlook/cmo/beauty-personal-care/skin-care/united-states> (accessed May 3, 2024).
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the company would transfer to small and medium scale production and ultimately enter production of commercial volumes of the target compound.
On May 21, 2025, the Company announced a new contract to develop a plant-based fragrance compound derived from a plant that is under significant threat due to over harvesting and habitat loss. This agreement is with a new commercial partner targeting the multi-billion-dollar fragrance and scents market.
On September 10, 2025, the Company announced the successful production of plant-derived exosomes in its large-scale bioreactors. This technological milestone expands the Company’s platform capabilities and introduces a potential new revenue stream for both its Nutraceuticals and CDMO business units.
Exosomes are nano-sized vesicles naturally secreted by plant cells that enhance absorption and bioavailability of active compounds. They are increasingly used in therapeutic, nutraceutical, and cosmetic applications.
The Company’s proprietary bioreactor system enables scalable, cost-efficient production of exosomes enriched with high-value metabolites. Initial production has focused on exosomes containing viniferin, a polyphenol associated with anti-aging and antioxidant properties, offering enhanced delivery and efficacy compared to conventional formulations.
This development further demonstrates the scalability and versatility of the Company’s bio-plant platform and strengthens its position in the health and wellness, cosmetics, and pharmaceutical markets.
On October 30, 2025, the Company announced a new contract to develop and commercialize saffron derived botanical compounds via a collaboration agreement with Saffron Tech Ltd., an aggrotech company specializing in year-round cultivation of top-grade saffron. The partnership aims to develop and commercialize saffron-derived botanical compounds using the Company’s patented Botanical Synthesis platform,
The collaboration combines the Company’s bioreactor and cell-growth expertise with Saffron Tech’s proprietary saffron species and early-stage cell-culture research. Development will progress through both solid-phase and liquid-phase CDMO stages in parallel, with the objective of accelerating commercialization.
The Company is focusing its resources on signing additional agreements and commencing and completing the development work required, as applicable.
Manufacturing and Supply The Company uses several proprietary formulas to feed the red grape cells at different stages of their growth cycle to produce the VINIA® powder, and all ingredients in the proprietary formulas are in stable global supply with stable pricing.
The Company has partnered with a third-party white-label manufacturer for the final manufacturing of the VINIA® Superfood Coffee and VINIA® Superfood Tea, VINIA® 2X Formula Chew and VINIA® Blood Flow Hydration Electrolyte Powdered Beverage , which incorporate the VINIA® powder, which is produced by the Company, and 100% Arabica coffee (in the case of VINIA® Superfood Coffee), green, black and herbal tea (in the case of VINIA® Superfood Tea), chew (in the case of VINIA® 2X Formula Chew ) and a unique combination of electrolytes sourced from nature including sodium derived from sea salt, potassium from coconut water, and magnesium from the ocean bed (in the case of (in the case of VINIA® Blood Flow Hydration Electrolyte Powdered Beverage), all of which are in stable global supply and subject to global market prices.
The Company uses several proprietary formulas to feed plant cells at different stages of their growth cycle in the research and development phases of its CDMO services, and all ingredients in the proprietary formulas are in stable global supply with stable pricing. Regulatory Environment Overview
The foods, food ingredients and dietary supplements that the Company develops are regulated under a number of national and state/provincial laws, including, but not limited to, the United States Food, Drug, and Cosmetic Act (“FDC Act”), as administered by the FDA, the Israeli Public Health Regulations (Food) (Prohibitions on Attributing Healing Attributes to Food Products) (the “PHR”), as administered by the Israeli Ministry of Health, and the Canadian Natural Health Product Regulations (the “NHPR”), as administered by Health Canada.
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In the United States, the Company is marketing VINIA® products in reliance on a determination supported by experts that VINIA® is “GRAS” for its intended use. This GRAS determination has not been reviewed by the FDA. If the FDA challenges the GRAS status of an ingredient, the Company could be required to undergo the food additive approval process in order to legally market the product. This process is time-consuming and costly and would interrupt the Company’s business. Furthermore, the Company cannot guarantee that, in such a situation, the use of such ingredient would be approved, and the Company’s business, financial condition and results of operations would be adversely affected.
GMP regulations establish requirements governing the methods, equipment, facilities, and controls for the sanitary production of food. Those who manufacture, package, or hold human food must comply with the GMP regulations.
From time to time in the future, the Company may become subject to additional laws or regulations administered by national, state/provincial or local regulatory authorities, such as the FDA, the FTC, the Israeli Ministry of Health and Health Canada.
Generally, the Company also may become subject to the repeal of national or state/provincial laws or regulations that the Company generally considers favorable or to more stringent interpretations of current laws or regulations. The Company is not able to predict the nature of such future laws, regulations, repeals or interpretations, and it cannot predict what effect additional governmental regulation, if and when it occurs, would have on its business in the future. Such developments could, however, require reformulation of certain products to meet new standards, recalls or discontinuance of certain products not able to be reformulated, additional record-keeping requirements, increased documentation of the properties of certain products, additional or different labeling, additional scientific substantiation, additional personnel or other new requirements. Any such developments could have a material adverse effect on the Company’s business.
The marketing and labeling of any food product in recent years have brought increased risk that consumers will bring putative class action lawsuits and that national, state/provincial or local regulatory or governmental authorities will bring legal action concerning the truth and accuracy of the marketing and labeling of the product. Examples of causes of action that may be asserted in a putative consumer class action lawsuit include fraud, unfair trade practices and breach of consumer protection laws and regulations (such as Proposition 65 in California). national, state/provincial or local regulatory or governmental authorities may bring legal action that seeks removal of a product from the marketplace, fines, and penalties. Even when not merited, putative class claims and actions by national, state/provincial or local regulatory or governmental authorities can be expensive to defend and adversely affect the Company’s reputation with existing and potential customers and consumers and the Company’s corporate and brand image.
See “Risk Factors - Governmental regulations” for additional information.
Food Product Regulation
The Company is also subject to regulation under various international, national, state/provincial and local laws that include provisions governing, among other things, the formulation, manufacturing, packaging, labeling, advertising and distribution of food products.
Food products generally are not required to receive regulatory approval prior to introduction into the United States market. However, a comprehensive regulatory framework governs the safety, manufacture (including composition and ingredients), packaging, labeling and advertising of food in the United States. Principally under the authority of the FDC Act, the FDA:
•regulates manufacturing practices for foods through its current good manufacturing practices regulations;
•specifies the standards of identity for certain foods; and
•prescribes the format and content of certain information required to appear on food product labels.
The FDC Act prohibits the distribution and/or sale of misbranded and/or adulterated foods. The FDA has broad authority to enforce the provisions of federal law, including the power to monitor claims made in product labeling, to seize adulterated or misbranded products or unapproved new drugs, to request product recall, to enjoin further manufacture or sale of a product, to issue warning letters and to institute criminal proceedings.
With the exception of color additives, food ingredients can generally be classified as food additives or GRAS substances, based on the conditions of their intended use. In particular, a food additive is a substance, the intended use of which results or may reasonably be expected to result, directly or indirectly, in it becoming a component of food or otherwise affecting the characteristics of food. Food additives require premarket approval. Excluded from the definition of “food additive” are substances that are generally recognized, among qualified experts, as having been adequately shown through scientific procedures to be safe under the conditions of their intended use or GRAS. A company may establish GRAS status through a
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“self-determination,” whereby the company determines that a substance is GRAS under the conditions of its intended use, with the assistance of a panel of qualified experts as appropriate. The FDA may disagree with a company’s GRAS determination and require the submission of a food additive petition, and may act to prohibit the marketing of products containing the substance pending approval of the petition.
In markets outside the United States, the Company is usually required to obtain approvals, licenses or certifications from a country’s ministry of health or comparable agency. In Israel, the sale of the Company’s products requires the approval of and is regulated by the Israeli Ministry of Health as a novel food for food/food ingredient products and dietary supplement. In Canada, the sale of the Company’s products requires the approval of and is regulated by Health Canada as a natural health product under the NHPR.
The Company must also comply with labeling regulations in respect of its products. In the United States, conventional foods must meet the FDA’s labeling requirements, including the declaration of Nutrition Facts. The labeling of a conventional food may include a claim regarding the effect of the food on a structure or function of the body, provided that the effect derives from the food’s nutritive value. Such claims are not subject to notification to or premarket approval by the FDA. In the United States, the labeling of dietary supplements is regulated by the FDA under the United States Fair Packaging and Labeling Act (the “FPLA”) and the FDC Act. The labeling of a dietary supplement may include different types of claims, including nutrient content claims, health claims, structure/function claims, statements of nutritional support and certain descriptive claims, subject to compliance with the FDA’s regulations in respect of the labeling of dietary supplements. In Canada, the Company’s products, as natural health products, must comply with specific labeling requirements under the NHPR. In Israel, the Company’s products, as a novel food (food/food ingredient products and dietary supplement), must comply with the labeling requirements of the Israeli Standard 1145 (Labeling of Prepacked Food), Israeli dietary supplement regulations (Public Health Regulation (Food) (Dietary Supplement), 1997) and those set in the directives issued by the Israeli Ministry of Health in approving such products of the Company.
Claims for food or dietary supplements may not imply that the food or dietary supplement is intended to treat, cure, mitigate or prevent a disease, as this causes the product to be an unapproved new drug which may not be marketed without pre-market approval by the FDA. The FDA uses the objective intent of a product’s manufacturer or distributor, as evidenced by the manufacturer or distributor’s labeling claims, advertising matter, or oral or written statements, to determine whether the product is an unapproved new drug.
Manufacturers must ensure their food products or dietary supplements are produced in a sanitary environment to prevent adulteration by contamination, in compliance with the GMP regulations. Those regulations include requirements for sanitation of buildings, facilities, personnel, equipment, and utensils. Those regulations also require processes and controls to ensure safety and prevent contamination from any source. Failure to adhere to GMP requirements can result in a finding that products produced in the facility are adulterated, even if there is no evidence that the products are actually contaminated. If the Company, its suppliers or white-label manufacturers fail to comply with the GMP regulations, the FDA, the Israeli Ministry of Health and Health Canada may take enforcement action against the Company, its suppliers or its white-label manufacturers and seek removal of the Company’s products from the market.
Advertising, including claims regarding the effects or benefits of a product, is regulated by the FTC, Ad Standards and the Israeli Ministry of Health, which may review labeling and advertising materials, including online and television advertisements, to determine whether advertising is truthful and not misleading, and adequately substantiated. Enforcement actions may result in consent decrees, cease and desist orders, judicial injunctions, the payment of fines and other outcomes with respect to advertising claims that are found to be unsubstantiated.
The Company believes it is in compliance with all material governmental regulations applicable to its products.
Cosmetic Regulation
The Company plans to assess the viability of marketing the VINIA® Topical Solution as a cosmetic in the United States. In the United States, the FDA regulates the labeling of cosmetics under the FPLA and the FDCA, which require that certain information appears on cosmetic labels and that cosmetics are not misbranded (for instance, if the labeling is incorrect or its packaging is misleading or deceptive). FDA approval of cosmetic labels is not required prior to the marketing and sale of cosmetics.
Consumer Laws
The Company sells VINIA® products through its e-commerce websites, the Amazon® Marketplace and other on-line ecommerce websites. In connection with this, the Company will be subject to various national and state/provincial consumer protection laws, including laws protecting the privacy of consumer information and regulations prohibiting unfair and deceptive acts and trade practices. In particular, under national and state/provincial privacy laws and regulations, the Company may be required to provide consumers with:
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·notice of the Company’s policies on sharing non-public information with third parties;
·advance notice of any changes to its policies; and
·with limited exceptions, the right to prevent sharing of their non-public personal information with unaffiliated third parties.
Furthermore, the growth and demand for online commerce could result in more stringent consumer protection laws that impose additional compliance burdens on online retailers. These consumer protection laws could result in substantial compliance costs and could interfere with the conduct of the Company’s business. Specialized Skill and Knowledge The Company relies on employees with specialized skills and knowledge in cell biology, data science and other disciplines, and the Company believes that such specialized skills and knowledge are available to the Company as they are broadly available in the nutraceutical industry and related industries in Israel. Competitive Conditions Products Business Unit
The Company faces competition in the nutraceutical market in which the Company currently operates and the cosmeceutical market in which it intends to operate in the future. Some of the Company’s competitors may be better positioned to develop superior products at lower costs and able to better adapt to changing market conditions than the Company. The Company’s ability to compete depends on, among other things, consistently high product quality, short lead-time, timely delivery, competitive pricing, range of product offerings and superior customer service and support. Increased competition in the markets in which the Company operates may force it to reduce its product prices or may result in increased costs and may have a material adverse effect on its business and operating results. Any decrease in the quality of the Company’s products or level of service to customers or any forced decrease in product pricing may adversely affect its business and operating results.
The Company believes that the Botanical Synthesis Platform Technology provides an advantage over its competitors in the nutraceutical and cosmeceutical markets, as it is a platform technology to solve, on an industrial and commercial scale, the challenge of (i) consistently growing plant cells which mirror the phytonutrients contained in the original plant and (ii) significantly amplifying certain phytonutrient levels without genetic engineering, all without growing such plant and with the added result of removing certain negative components.
Until recently, scientists have been limited to small-scale production with product consistency challenges. Through its use of the Botanical Synthesis Platform Technology, the Company’s unique capabilities can solve major technical challenges in achieving equivalency and consistency across large-scale production. The breakthrough is due to the focus on the parent plant cell as the genesis point of the process to convert it into a powdered form of a whole food phytochemical-rich equivalent product.
CDMO Services Business Unit
The Company’s competition in the CDMO market includes a number of full-service contract manufacturers and large pharmaceutical companies offering third-party development and manufacturing services to fill their excess capacity. Large pharmaceutical companies have been seeking to divest portions of their manufacturing capacity, and any such divested businesses may compete with the Company in the future. In addition, most of the Company’s competitors may have substantially greater financial, marketing, technical or other resources than the Company does. Moreover, additional competition may emerge and may, among other things, result in a decrease in the fees paid for the Company’s services, which would affect the Company’s results of operations and financial condition.
While the Company believes that the advantages of the Botanical Synthesis Platform Technology will enable the Company to compete effectively against other technologies and providers of technology for biologic product development and manufacturing, many of the Company’s competitors have significantly greater financial resources and expertise in research and development and manufacturing. Smaller or early-stage companies may also prove to be significant competitors, particularly through arrangements with large and established companies. In addition, these third parties compete with the Company in recruiting and retaining qualified scientific and management personnel.
See “Risk Factors - Competition risk” for additional information.
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Cycles and Seasonality The Company’s business is not affected by seasonality. Components and Economic Dependence The Company’s business is not substantially dependent on any particular sales or supply contracts. See “Manufacturing and Supply” for additional information.
Patents
VINIA® products are made from in vitro-grown RGCs without genetic manipulation, including products in the form of a powder. RGC powder, for instance, contains a matrix of polyphenols, including piceid resveratrol, quercetin, anthocyanins, tannins, vitamins, proteins and fibers. The RGC powder is a composition comprising a cell culture of RGC grown in vitro in a large scale-up process.
VINIA® is derived from the red grape skin, flesh, pulp and seed. Accordingly, VINIA® is a source of the whole matrix of nutrients and polyphenols found throughout the red grape and in red wine in their natural state without any genetic manipulation and contains polyphenols (resveratrol, tannins, quercetin, catechins, anthocyanins), vitamins, proteins and fibers. VINIA®’s advantages are the absence of solvent residuals and sugar that has a typical taste of red grapes without bitterness or being astringent.
The Company owns or has an exclusive license to use twenty three (23) patents and/or patent applications, of which twelve (12) patents and/or patent applications cover the Botanical Synthesis Platform Technology and eleven (11) patent applications are related to various usages or combinations. Eleven (11) are granted registered patents.
| Jurisdiction | Title | Status | Application No. | Filing Date | Registration No. | Registration Date | Expiration Date |
|---|---|---|---|---|---|---|---|
| United States | Methods for Treating Inflammatory Disorders ^(3)^ | Registered ^(1)^ | 11/884,774 | Sep. 20, 2007 | 8216801 | July 10, 2012 | April 21, 2026 |
| China | Process for the Large Scale Production of Fruit Cells | Registered ^(2)^ | 201380073592.3 | Dec. 24, 2013 | ZL 201380073592.3 | December 11, 2017 | December 24, 2033 |
| European Patent Office<br><br><br><br><br><br>(two (2) patents approved in Germany and Great Britain) | Process for the Large Scale Production of Fruit Cells and Treatment of Diseases With Such Cells | Registered ^(2)^ | EP13866675.5 | Dec. 24, 2013 | 2938197 | April 24, 2019 | December 24, 2033 |
| Israel | Process for the Large Scale Production of Fruit Cells and Treatment of Diseases With Such Cells | Registered ^(2)^ | 239646 | Dec. 24, 2013 | 239646 | August 1, 2019 | December 24, 2033 |
| Japan | Process for the Large Scale Production of Fruit Cells and Treatment of Diseases With Such Cells | Registered ^(2)^ | 2015-550206 | Dec. 24, 2013 | 6371777 | August 8, 2018 | December 24, 2033 |
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| United States | Process for the Large Scale Production of Fruit Cells and Treatment of Diseases With Such Cells^(6)^ | Registered ^(2)^ | 14/655,052 | June 24, 2015 | 9867861 | January 16, 2018 | December 24, 2033 |
|---|---|---|---|---|---|---|---|
| Israel | Pomegranate Derived Cell Culture | Registered ^(2)^ | 246525 | January 5, 2015 | 246525 | June 26, 2021 | January 5, 2035 |
| United States | Pomegranate Derived Cell Culture | Registered ^(2)^ | 15/109,649 | July 4, 2016 | 10,538,737 | January 21, 2020 | January 5, 2035 |
| United States | Method of Treating Raynaud’s Conditions or Erectile Dysfunction | Application filed ^(2)^ | 19/155,014 | Feb. 6, 2024 | N/A | N/A | February 6, 2044 |
| Japan | Method of Treating Raynaud’s Conditions or Erectile Dysfunction | Application filed ^(2)^ | 2025-546196 | Feb. 6, 2024 | N/A | N/A | February 6, 2044 |
| Israel | Method of Treating Raynaud’s Conditions or Erectile Dysfunction | Application filed ^(2)^ | 322615 | Feb. 6, 2024 | N/A | N/A | February 6, 2044 |
Notes:
(1)Owned by State of Israel, Ministry of Agriculture & Rural Development, Agricultural Research Organization, The Volcani Center and licensed to BioHarvest Israel pursuant to the License Agreement (as defined herein). See “Material Contracts - License Agreement” for further details.
(2)Owned by BioHarvest Israel. Changes to Contracts The Company’s business is not expected to be materially affected in the current financial year by the renegotiation or termination of any contracts or sub-contracts. See “Manufacturing and Supply” for additional information. Employees As of December 31, 2025, the Company had 89 employees. Foreign Operations The Company’s principal markets for its VINIA® products and CDMO services are Israel and the United States.
The Company’s total revenue in Israel and the United States for the financial year ended December 31, 2025 and December 31, 2024 were US$34,508,000 and US$25,188,000, respectively.
The Company is subject to foreign currency risk. See “Risk Factors – Fluctuations in foreign currency exchange rates” for additional information.
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Bankruptcy and Similar Procedures The Company has not had any bankruptcy, receivership or similar proceedings or any voluntary bankruptcy, receivership or similar proceedings within the three most recently completed financial years and does not anticipate having any such proceedings, and no such proceedings are proposed, during the current financial year. Reorganizations Other than as disclosed below, there are no material reorganizations of the Company within the three most recently completed financial years or proposed for the current financial year. Social or Environmental Policies The Company is committed to carrying out all of its activities in an ethical manner that prioritizes health and safety, recognizes the concerns of indigenous peoples, communities, local stakeholders and preserves the natural environment.
The Company ensures that all employees are trained and instructed in their assigned tasks and that safety procedures are followed at times. The importance of ethical behavior and preservation of the natural environment is stressed to all employees and contractors, and all are charged with monitoring operations to ensure they are being carried out in an environmentally-friendly manner. RISK FACTORS There are numerous and varied risks, known and unknown, that may prevent the Company from achieving its goals. The risks described below are not the only ones the Company will face. If any of these risks actually occurs, the Company business, financial condition or results of operations may be materially and adversely affected. In that case, the trading price of the Company’s securities could decline and investors in such securities could lose all or part of their investment.
Risks Relating to the Company
Negative operating cash flow and going concern.
The Company has negative cash flow from operating activities and has historically incurred net losses, including for the financial year ended December 31, 2025. As of December 31, 2025, the Company has an accumulated deficit of US$ 107,553 thousand. The Company generated negative cash flows from operating activities of US$7,226 thousandand a loss in the amount of US$11,135 thousand for the financial year ended December 31, 2025.
These conditions, together with the need for continued investment in operations and the uncertainty regarding the timing and availability of additional financing, represent factors that raise substantial doubt about the Company’s ability to continue as a going concern. The Company may require additional capital to fund its long-term growth strategy and planned capital investments. If required, the Company intends to raise such capital through one or more of the following: the issuance of equity or equity-linked securities, debt financing, strategic collaborations, licensing arrangements or other financing transactions. The Company is listed on the Nasdaq Capital Market and has previously demonstrated access to the capital markets; however, there can be no assurance that additional financing will be available on acceptable terms, or at all.
Importantly, the inclusion in note 1B to the Company’s audited annual consolidated financial statements for the financial year ended December 31, 2025 and in “Substantial Doubt about the Company’s Ability to Continue as a Going Concern” in the report thereto of Ziv Haft Certified Public Accountants (Isr.) (PCAOB ID No. 1185), a BDO member firm, of disclosure regarding the Company’s ability to continue as a going concern may negatively impact the Company’s ability to raise future financing.
Potential political, economic and military instability in Israel, where the principal place of business, members of the management team, facilities and employees are located.
The Company’s principal place of business and its facilities, where most of its employees are employed, are located in Rehovot and Yavne, Israel. In addition, the majority of the Company’s key employees and senior management are Israeli citizens. Accordingly, political, economic, and military conditions in Israel may directly affect the Company’s business. Since the establishment of the State of Israel in 1948, a number of armed conflicts have taken place between Israel and groups in its neighboring countries, Hamas (an Islamist militia and political group that has controlled the Gaza Strip) and Hezbollah (an Islamist militia and political group based in Lebanon). While Israel has entered into peace agreements with Egypt, Jordan, the United Arab Emirates, Bahrain, Morocco and Sudan, it has no peace arrangements with any other neighboring or other Arab
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countries. In addition, relations between Israel and Iran continue to be hostile due to the fact that Iran is perceived by Israel as a sponsor of Hamas and Hezbollah, maintains a military presence in Syria and is viewed as a strategic threat to Israel in light of its nuclear program. The assassinations of Iran’s senior generals Qassim Soleimani by the United States military and Mohsen Farichasde, which Iran claims is associated with Israel, have contributed to the tension in the region and further intensified the hostility between Iran and Israel and between Israel and Hezbollah, which is positioned alongside Israel’s northern border. In addition, several countries, principally in the Middle East, restrict doing business with Israel, and additional countries may impose restrictions on doing business with Israel and Israeli companies, whether as a result of hostilities in the region or otherwise. The restrictive laws, policies, or practices directed towards Israel or Israeli businesses could, individually or in the aggregate, have a material adverse effect on the Company’s business in the future, for example, by way of sales opportunities that the Company could not pursue or from which the Company will be precluded. In addition, should the movement for boycotting, divesting, and sanctioning Israel and Israeli institutions (including universities) and products become increasingly influential in the United States, Canada and elsewhere, this may also adversely affect the Company’s business and financial condition. Further deterioration of Israel’s relations with the Palestinian Authority or countries in the Middle East could expand the disruption of international trading activities in Israel, may materially and negatively affect the Company’s business conditions, could harm the Company’s results of operations, and adversely affect the market price of the Common Shares.
Any hostilities involving Israel, terrorist activities, political instability or violence in the region, or the interruption or curtailment of trade or transport between Israel and its trading partners could adversely affect the Company’s operations and results of operations and the market price of the Common Shares.
The Company’s commercial insurance does not cover losses that may occur as a result of an event associated with the security situation in the Middle East. Although the Israeli government is currently committed to covering the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, the Company cannot assure investors that this government coverage will be maintained or, if maintained, will be sufficient to compensate the Company fully for damages incurred. Any losses or damages incurred by the Company could have a material adverse effect on the Company’s business, financial condition and results of operations.
Further, many Israeli citizens are obligated to perform several days, and in some cases, more, of annual military reserve duty each year until they reach the age of 40 (or older for certain reservists) and, in the event of a military conflict, may be called to active duty. In response to increases in terrorist activity, there have been periods of significant call-ups of military reservists. For example, on October 7, 2023, Hamas terrorists invaded southern Israel and launched thousands of rockets in a widespread terrorist attack on Israel. On the same day, the Israeli government declared that the country was at war, and the Israeli military began to call up reservists for active duty, including a few of the Company’s employees. The Company’s operations could be disrupted by these and future reserve duty call-ups. While none of the Company’s facilities or infrastructure have been damaged since the war broke out on October 7, 2023, the import and export of goods may experience disruptions in and out of Israel as a result of such military conflict. Since the war broke out on October 7, 2023, there have been additional active hostilities, including with Hezbollah in Lebanon, with the Houthi movement which controls parts of Yemen, with Iran and in Syria. During November 2024, a ceasefire in Lebanon was declared. During January 2025, Israel and Hamas agreed to a Gaza three-phase ceasefire agreement and partial hostage release (the “Gaza Ceasefire”), the first six-week phase of such ceasefire began on January 19, 2025. On March 18, 2025, Israel announced a resumption of military operations against Hamas, effectively ending the Gaza Ceasefire. In June 2025, a significant escalation in hostilities occurred between Israel and Iran, resulting in widespread military operations. On June 24, 2025, Israel and Iran agreed on an immediate ceasefire. On October 9, 2025, the Israeli Cabinet approved a U.S. brokered cease fire and hostage exchange agreement between Israel and Hamas in Gaza, which came into effect on October 10, 2025. On November 17, 2025, the UN Security Council adopted Resolution 2083 to welcome the formation of the Board of Peace and authorize an International Stabilization Force. However, tension in the region continued to escalate.
On February 28, 2026, the United States and Israel conducted coordinated aerial operations targeting military and governmental facilities in Iran. Subsequently, Iran launched missile attacks across parts of the Middle East and Hezbollah launched barrages of rockets toward northern Israel, leading to retaliatory actions by Israel. As of the date of these financial statements, hostilities in the region have intensified and involve multiple parties, including Israel, the United States, Iran and Hezbollah. The evolving regional security situation has created and may continue to create significant uncertainty and could adversely affect Israel’s economy, the Company’s operations, employees, business partners, supply chain and overall business environment. The Company confirms that it has a business continuity plan and procedures in place, ensuring operational and financial continuity. As of the date of this Anuual Information Form, the Company has not experienced a material adverse impact on its operations; however, the Company continues to monitor the situation closely and cannot predict the ultimate impact that these developments may have on its business, financial condition or results of operations and have implemented (e.g., remote work protocols/safety stock) to mitigate potential disruptions.
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Additional requirements for capital.
Additional financing may be required if the Company is to be successful with the development of its business. No assurances can be given that the Company will be able to raise the additional capital that it may require for its anticipated future program of launching new products, such as cosmeceuticals or new nutraceutical cell-product lines, and expanding existing product lines, such as the VINIA® line of products, and any upgrades or improvements that the Company may need to make to its facilities to support the manufacture of its products or the provision of CDMO services. Any additional equity financing may be dilutive to investors, and debt financing, if available, may involve restrictions on financing and operating activities. There is no assurance that additional financing will be available on terms acceptable to the Company, if at all. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations or anticipated expansion or may not be able to further develop its business at all.
General business risk and liability.
Given the nature of the Company’s business, it may, from time to time, be subject to claims or complaints from investors or others in the normal course of business. The legal risk facing the Company and its directors, officers and employees in this respect includes potential liability for violations of securities laws, breach of fiduciary duty or misuse of investors’ funds. Some violations of securities laws and breaches of fiduciary duty could result in civil liability, fines, sanctions or the suspension or revocation of the Company’s right to carry on its existing business. The Company may incur significant costs in connection with such potential liabilities.
Product development.
If the Company cannot successfully develop, manufacture and distribute its products, or if the Company experiences difficulties in the development process, such as capacity constraints, quality control problems or other disruptions, the Company may not be able to develop market-ready commercial products at acceptable costs, which would adversely affect its ability to effectively enter or maintain its position in the market. A failure by the Company to achieve a low-cost structure through economies of scale or improvements in manufacturing processes would have a material adverse effect on its commercialization plans and its business, prospects, results of operations and financial condition.
Reliance on key business inputs.
The Company’s business is dependent on a number of key inputs and their related costs, including raw materials and supplies related to its growing operations, as well as electricity, water and other utilities. Any significant interruption or negative change in the availability or economics of the supply chain for key inputs (e.g. rising energy costs) could materially impact the business, financial condition and operating results of the Company. Any ability to secure required supplies and services or to do so on appropriate terms could also have a materially adverse opinion impact on the business, financial condition and operating results of the Company.
Reliance on third-party suppliers and white-label manufacturers.
The Company intends to maintain a full supply chain for the production of its products. The loss of or disruption to its existing or future suppliers and white-label manufacturers would have a material adverse effect on its business and operational results. With respect to raw ingredient and packaging suppliers, given that the Company imports certain inputs to its products from foreign countries, the Company may be subject to disruptions in supply, time delays, and/or cost increases as a result of economic, political, social or other macro factors occurring in those countries, or globally, which are beyond its control. Such disruptions to the supply of key product inputs would have negative downstream impacts on the Company’s overall product development timeline and costs.
Maintenance obligations and facility disruptions.
The Company’s manufacturing processes and those of any of its white-label manufacturers are vulnerable to operational problems that could impair the ability of their respective facilities to manufacture products and the Company to provide CDMO services. The Company and any of its white-label manufacturers could experience a breakdown in any of its machines or other important equipment, and from time to time, planned or unplanned maintenance outages that cannot be performed safely or efficiently during normal hours of operation. Such disruptions could cause a loss of production of the Company’s products or delay in the provision of CDMO services, which could potentially have a material adverse effect on the business, financial conditions and operating results of the Company.
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If our manufacturing facility in Yavne No. 1, Israel was to suffer a serious accident, or if a force majeure event were to materially affect our ability to operate and produce VINIA® and our pipeline product candidates, all of our manufacturing capacity could be shut down for an extended period. We currently rely on manufacturing facility in Yavne No. 1, Israel, and we expect that all of our revenues in the near future will be derived from products manufactured at this facility. If this facility were to suffer an accident or a force majeure event such as war, missile or terrorist attack, earthquake, major fire or explosion, major equipment failure or power failure lasting beyond the capabilities of our backup generators or similar event, our revenues would be materially adversely affected. In this situation, our manufacturing capacity could be shut down for an extended period, we could experience a loss of raw materials, work in process or finished goods inventory and our ability to operate our business would be harmed. In addition, in any such event, the reconstruction of our manufacturing facility, and obtaining regulatory approval for the new facilities could be time-consuming. Moreover, our business insurance does not cover losses that may occur as a result of events associated with the security situation in the Middle East. Although the Israeli government currently covers the reinstatement value of direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that this government coverage will be maintained, or if maintained, will be sufficient to compensate us fully for damages incurred. Any losses or damages incurred by us could have a material adverse effect on our business.
Success of quality control systems.
The quality and safety of the Company’s products are critical to the success of its business and operations. As such, it is imperative that the Company’s quality control systems and those of its service providers operate effectively and successfully. Quality control systems can be negatively impacted by the design of the quality control systems, the quality of training programs and the degree of adherence by personnel to quality control guidelines.
Effectiveness and efficiency of advertising and promotional expenditures.
The Company’s future growth and profitability will depend on the effectiveness and efficiency of its advertising and promotional expenditures, including its ability to (i) create awareness of its current and future products and CDMO services; (ii) determine the appropriate creative message and media mix for future advertising expenditures; (iii) differentiate its products and CDMO services from those of its competitors and (iv) effectively manage advertising and promotional costs in order to maintain acceptable operating margins. There can be no assurance that advertising and promotional expenditures will result in revenues in the future or will generate awareness of the Company’s current and future products and CDMO services. In addition, no assurance can be given that the Company will be able to manage its advertising and promotional expenditures on a cost-effective basis.
Failure to develop the Company’s technology to accommodate increased traffic could reduce demand for its products and impair the growth of its business.
The Company periodically enhances and expands its technology and transaction-processing systems, network infrastructure and other technologies to accommodate increases in the volume of traffic on its e-commerce websites. Any inability to add software and hardware or to develop and upgrade existing technology, transaction- processing systems or network infrastructure to manage increased traffic may cause unanticipated system disruptions, slower response times and degradation in the sales of its products, including the speed of order fulfillment. Failure to manage increased traffic could harm the Company’s reputation and significantly reduce demand for its products, which would impair the growth of its business. The Company may be unable to improve and increase the capacity of its network infrastructure sufficiently or anticipate and react to expected increases in the use of its e-commerce websites to handle increased volume.
The Company continues to enhance its e-commerce websites to better support new features and functionality expected by its customers. Failure of these to perform as expected could lead to customer dissatisfaction and loss of business.
Increasing consumer acceptance of the Internet as a medium of commerce is important to the success of the Company’s business strategy and future revenue growth. The majority of the Company’s products are soldthrough its e-commerce websites, VINIA.com and VINIA.co.il, and Amazon®^12^ Marketplace. The failure of the Internet to continue developing into a significant commercial medium would harm the Company’s ability to increase its revenue and execute its business strategy. Rapid growth in the acceptance and use of the Internet as an effective medium of commerce is a recent development. The acceptance and use of the Internet may not continue to develop, and a sufficiently broad of consumers may not adopt and continue to use the Internet as a medium of commerce. The Company relies on purchasers who have historically used traditional means of commerce to purchase goods or transact
^12^The Company and its business, operations and products are not affiliated with, endorsed or sponsored by Amazon.com, Inc. or Amazon Technologies, Inc. “Amazon®” is a registered trademark of Amazon Technologies, Inc.
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business. If the Company is to be successful, these purchasers must accept and use the Internet as a means of purchasing goods and services and exchanging information. The Company cannot predict the rate at which these purchasers will do so.
Any future disputes between the Company and Amazon®1 may cause a loss of sales.
The Company currently generates approximately 80 percent of its revenue by direct-to-consumer sales through its e-commerce websites, VINIA.com and VINIA.co.il and approximately 20 percent of its revenue from Amazon®^(12)^ Marketplace. Should a future dispute exist between the Company and Amazon®^(12)^ regarding any policy violation, the Company account may be suspended or closed which could cause a loss of sales that may take some time for the Company to make up through another customer/channel. The Company expects this risk to be reduced over time as it diversifies its channel/customer composition.
The growth of the market for the Company’s products depends on the development and maintenance of the Internet infrastructure.
The Company’s business is primarily based on selling its products over the Internet, and the success of its business, therefore, depends on the development and maintenance of a sound Internet infrastructure. This includes the maintenance of a reliable network backbone with the necessary speed, data capacity, and security, as well as the timely development of complementary products such as high-speed modems to provide reliable Internet access and services. The Company’s ability to increase the speed and scope of the sale of its products is limited by and depends upon, the speed and reliability of both the Internet. Consequently, as Internet usage increases, the growth of the market for its products depends upon improvements made to the Internet to alleviate overloading and congestion. In addition, any delays in the adoption of new standards and protocols required to govern increased levels of Internet activity or increased governmental regulation may have a detrimental effect on the Internet infrastructure.
The Company recognizes e-commerce revenue from customers’ subscriptions and, therefore, a significant downturn in its business may not be immediately reflected in its operating results.
The Company recognizes certain e-commerce revenue from its customers’ subscriptions. As a result, a significant portion of the revenue the Company reports in each quarter is generated from subscriptions entered into during previous periods. Consequently, a decline in new or renewed subscriptions in any one quarter may not impact the Company’s financial performance in that quarter but might negatively affect its e-commerce revenue in future quarters. If a number of subscriptions expire and are not renewed in the same quarter, the Company’s revenue may decline significantly in that quarter and subsequent quarters. In addition, the Company may be unable to adjust its fixed costs in response to reduced revenue. Accordingly, the effect of significant declines in sales or renewals and market acceptance of the Company’s products may not be reflected in its short-term results of operations.
Payments-related risks.
The Company accepts payments for its products using a variety of methods, including credit cards, debit cards and payment upon delivery. For existing and future payment options the Company offers to its customers, it currently is subject to and may become subject to additional regulations and compliance requirements (including obligations to implement enhanced authentication processes that could result in significant costs and reduce the ease of use of its payments methods), as well as fraud. For certain payment methods, including credit and debit cards, the Company pays interchange and other fees, which may increase over time and raise its operating costs and lower profitability. Failure to comply with these rules or requirements, as well as any breach, compromise, or failure to otherwise detect or prevent fraudulent activity involving the Company’s data security systems, could result in it being liable for card issuing banks’ costs, subject to fines and higher transaction fees, and loss of its ability to accept credit and debit card payments from its customers, process electronic funds transfers or facilitate other types of online payments, and its business and operating results could be adversely affected.
Changing consumer preferences.
As a result of rapidly changing consumer preferences, which are difficult to predict and over which the Company has little, if any, control, many nutraceutical and cosmeceutical products attain financial success for a limited period of time. Even if the Company’s current and future products find retail success, there can be no assurance that any of these products will continue to see extended financial success. The Company’s success will be dependent upon its ability to anticipate or quickly adapt to changing consumer preferences and develop new products that satisfy such preferences. Even if the Company is successful in introducing new products or developing its current products, a failure to continue to evolve its products to meet consumer preferences could cause a decline in its products’ popularity that could reduce its revenues and harm its business, operating results and financial condition.
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Risks related to prices.
As the market for the Company’s products and CDMO services matures, or as new or existing competitors introduce new products or services that compete with the Company’s products and CDMO services, the Company may experience pricing pressure and be unable to renew its agreements with existing customers or attract new customers at prices that are consistent with its pricing model and operating budget. If this were to occur, it is possible that the Company would have to change its pricing model or reduce its prices, which could harm its revenue, gross margin and operating results.
Fluctuations in foreign currency exchange rates.
The Company is subject to foreign currency risk. The strengthening or weakening of the Canadian or United States dollar or new Israeli shekel versus other currencies will impact the translation of the Company’s net revenues generated in these foreign currencies into Canadian or United States dollars or new Israeli shekels. The Company imports certain ingredients in its products from foreign countries and so may become forced to pay higher rates for ingredients as a result of the weakening of the Canadian or United States dollar, new Israeli shekel or euro.
The Company has not entered into arrangements or agreements or purchased instruments to hedge its exchange rate risks, and there is no assurance that the Company will enter into such arrangements or agreements or purchased instruments in the future and, if so, that it will continue to do so in the future. The availability and effectiveness of any hedging transaction may be limited, and as a result, the Company may not be able to successfully hedge its exchange rate risks in the future.
Product recalls as a result of the products not having the intended effects or causing undesirable side effects.
Product manufacturers and distributors are sometimes required to recall or initiate returns of their products for various reasons, including product defects such as contaminations, unintended harmful side effects or interactions with other products, packaging safety and inadequate or inaccurate labeling disclosure. While the Company believes that all of its products and the combinations of ingredients in them are safe when taken as directed, if any of the Company’s products are recalled, it could incur unexpected expenses relating to the recall and any legal proceedings that might arise in connection with the recall. The Company may lose significant revenue due to loss of sales and may not be able to compensate for or replace that revenue.
In addition, the Company’s products may not have the effect intended if they are not taken in accordance with certain instructions, which include certain dietary restrictions. Furthermore, there can be no assurance that any of the products, even when used as directed, will have the effects intended or will not have harmful side effects in an unforeseen way or on an unforeseen cohort. Furthermore, a highly publicized actual or perceived problem with products that the Company supplies could adversely affect the market’s perception of its products, which may result in a decline in demand for products supplied by the Company, thereby reducing the Company’s revenues and operating results, which could have a material adverse effect on the Company’s business.
Product liability claims.
Although the Company believes that it maintains adequate insurance coverage, it may from time to time be subject to claims for damages resulting from defects in products that it supplies. Product liability claims, even if unsuccessful, may result in significant litigation costs to defend the claims as well as other costs incurred to remedy the problem, such as product recalls, which could substantially increase the Company’s expenses. Successful or partially successful product liability claims could result in significant monetary liability and could seriously disrupt the Company’s business, particularly if the Company’s insurance coverage is inadequate or unavailable in respect of any such claims.
Insurance.
The Company’s operations, products and services may result in the Company becoming subject to liability for environmental damage, property damage, personal injury or other hazards. The Company has obtained or may obtain insurance in accordance with industry standards to address certain risks; such insurance has limitations on liability that may not be sufficient to cover the full extent of such liabilities. In addition, such risks may not be insurable in all circumstances, or, in certain circumstances, the Company may elect not to obtain insurance to deal with specific risks due to the high premiums associated with such insurance or other reasons. The payment of such uninsured liabilities would reduce the funds available to the Company. The occurrence of a significant event that the Company is not fully insured against, or the insolvency of the insurer of such event, could have a material adverse effect on the Company’s financial position, results of operations or prospects.
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Management of growth.
The inability of the Company to successfully manage its growth could have a material adverse effect on its operating results and cause its results from operations to fluctuate. As part of the Company’s growth strategy, it intends to introduce new and expand existing product lines, expand sales of its products to existing and new customers in new and existing territories and develop the CDMO Services Business Unit. The Company’s expense levels are based, in part, on expected future revenues, and the Company is constrained in its ability to reduce expenses quickly if, for any reason, its sales or revenue levels do not meet expectations for a particular quarter or period. Furthermore, rapid expansion may place a significant strain on the Company’s senior management team and other key personnel, as well as its business processes, operations and other resources. The Company’s ability to manage growth will also depend in part on its ability to continue to enhance its management information systems in a timely fashion, particularly if customer demands change in ways that the Company does not anticipate. Any inability to manage growth could result in delivery or service delays of the Company’s products and CDMO services and cancellation of customer orders or engagements, which could have a material adverse effect on the Company’s business.
Computer system failures, cyber-attacks or deficiencies in the Company’s or related parties’ cyber security could result in a material disruption of its product development programs, compromise sensitive information related to the Company’s business or trigger contractual and legal obligations, any of which could potentially expose it to liability or reputational harm or otherwise adversely affect it business and financial results.
The Company has implemented its security measures designed to protect the information (including but not limited to intellectual property, proprietary business information and personal information) in its possession, custody or control. The Company’s internal computer systems and those of current and future third parties (such as vendors, collaborators or others) on which the Company relies may fail and are vulnerable to breakdown, breach, interruption or damage from computer viruses, computer hackers, malicious code, employee error or malfeasance, theft or misuse, denial-of-service attacks, sophisticated nation-state and nation-state-supported actors, unauthorized access, natural disasters, terrorism, war, telecommunication and electrical failures or other compromise. Despite the Company’s security practices, there is a risk that it may be subject to phishing and other cyberattacks in the future. The risk of a security breach or disruption, particularly through cyber-attacks or cyber intrusion, including by computer hackers, foreign governments and cyber terrorists, has generally increased as the number, intensity and sophistication of attempted attacks and intrusions from around the world have increased.
The Company may not be able to anticipate all types of security threats, and it may not be able to implement preventive measures effective against all such security threats. The techniques used by cybercriminals change frequently, may not be recognized until launched, and can originate from a wide variety of sources, including outside groups such as external service providers, organized crime affiliates, terrorist organizations or hostile foreign governments or agencies. The Company’s information technology and other internal infrastructure systems, including corporate firewalls, servers, leased lines and connection to the Internet, face the risk of systemic failure that could disrupt its operations. If such an event were to occur and cause interruptions in the Company’s operations, it could result in a material disruption of its development programs and business operations. For example, the loss of clinical trial data from completed or future clinical trials could result in delays and significantly increase the costs to recover or reproduce the data. Likewise, the Company may rely on third parties in connection with the manufacture of its existing or future products, the performance of the CDMO services and the conduct of clinical trials, and similar events relating to their computer systems could also have a material adverse effect on its business.
To the extent that any disruption or security breach was to result in a loss of, or damage to, its data or applications, or inappropriate use, disclosure of or access to confidential or proprietary information, the Company could incur liability, its competitive position could be harmed and the further development and commercialization of its product candidates or any future product candidates could be hindered or delayed. If the Company were to experience a significant cybersecurity breach of its information systems or data, the costs associated with the investigation, remediation and potential notification of the breach to counterparties, data subjects, regulators or others could be material. In addition, the Company’s remediation efforts may not be successful. Moreover, if the information technology systems of the Company’s vendors, collaborators or other contractors or consultants become subject to disruptions or security breaches, it may have insufficient recourse against such third parties, and it may have to expend significant resources to mitigate the impact of such an event and to develop and implement protections to prevent future events of this nature from occurring. If the Company does not allocate and effectively manage the resources necessary to build and sustain the proper technology and cybersecurity infrastructure, it could suffer significant business disruption, including transaction errors, supply chain or manufacturing interruptions, processing inefficiencies, data loss or the loss of or damage to intellectual property or other proprietary information. Furthermore, any such event that leads to unauthorized access, use or disclosure of personal information, including personal information regarding clinical trial participants or employees, could harm the Company’s reputation, compel it to comply with federal and/or state/provincial breach notification laws, cause it to breach its contractual obligations, subject it to mandatory corrective action, and otherwise subject it to liability under laws, regulations and contracts that protect the privacy and security of personal information, which could result in significant legal and financial exposure and reputational damages. As cyber threats continue
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to evolve, the Company may be required to incur significant additional expenses in order to enhance its protective measures or to remediate any information security vulnerability.
The financial exposure from the events referenced above could either not be insured against or not be fully covered through any insurance that the Company maintains. There can be no assurance that the limitations of liability in the Company’s contracts would be enforceable or adequate or would otherwise protect it from liabilities or damages as a result of the events referenced above.
Conflicts of interest risk.
While the consulting and employment agreements between the Company and its directors and officers typically include non-competition clauses, certain of these directors and officers may, from time to time, become involved in other business ventures in the biotechnology, nutraceutical, cosmeceutical, CDMO services and related industries through their direct and indirect participation in corporations, partnerships, joint ventures, and the like that may become potential competitors to the Company. Situations may arise in connection with potential acquisitions or opportunities where the other interests of these directors and officers conflict with or diverge from the Company’s interests. In accordance with the BCBCA, directors who have a material interest in any person who is a party to a material contract or a proposed material contract are required, subject to certain exceptions, to disclose that interest and generally abstain from voting on any resolution to approve the contract. In addition, the directors and officers are required to act honestly and in good faith with a view to the Company’s best interests. However, in conflict-of-interest situations, directors and officers may owe the same duty to another company and will need to balance their competing interests with their duties to the Company. Circumstances (including with respect to future corporate opportunities) may arise that may be resolved in a manner that is unfavorable to the Company.
Governmental regulations.
The processing, manufacturing, packaging, labeling, advertising and distribution of the Company’s products are subject to regulation by one or more national, state/provincial and state regulatory authorities where the Company currently sells and desires to sell its products. Achievement of the Company’s business objectives is contingent, in part, upon compliance with the regulatory requirements, including those imposed by the United States Food and Drug Administration (“FDA”), the Israeli Ministry of Health, Health Canada and other government authorities, enacted by these government authorities and obtaining, where required, all regulatory approvals, for the sale of its products. The Company cannot predict the time required to secure all appropriate regulatory approvals or support claims for its products or the extent of testing and documentation that may be required by government authorities. Any delays in obtaining or failure to obtain or maintain regulatory approvals or compliance with governmental regulations could significantly delay the development of the Company’s products or require the reformulation of the Company’s products, which could have a material adverse effect on the Company’s business, results of operations and financial condition.
Dietary supplements and dietary ingredients that do not comply with regulations may be deemed adulterated or misbranded. Manufacturers and distributors of dietary supplements and dietary ingredients are prohibited from marketing products that are adulterated or misbranded, and regulatory authorities may take enforcement action against any adulterated or misbranded dietary supplement on the market.
If the Company violates applicable regulatory requirements, a regulatory authority may bring enforcement actions against the Company, which could have a material adverse effect on the Company’s business, prospects, financial condition and results of operations. A regulatory authority may not accept the evidence of safety for any new ingredient that the Company may wish to market, may determine that a particular supplement or ingredient presents an unacceptable health risk and may determine that a particular claim or statement of nutritional value that the Company uses to support the marketing of a supplement is an impermissible drug claim, is not substantiated, or is an unauthorized version of a “health claim” or a “structure/function claim” Any of these actions could prevent the Company from marketing particular nutritional supplement products or making certain claims or statements with respect to those products. Regulatory authorities could also require the Company to remove a particular product from the market. Any future recall or removal would result in additional costs to the Company, including lost revenues from any products that the Company is required to remove from the market, any of which could be material. Any product recalls or removals could also lead to an increased risk of litigation and liability, substantial costs and reduced growth prospects.
A regulatory authority in one jurisdiction may interpret claims or products presumptively valid under the laws and regulations of another jurisdiction as illegal under that jurisdiction’s regulations.
Additional or more stringent laws and regulations of dietary supplements and other products have been considered from time to time. These developments could require the reformulation of some products to meet new standards, recalls or discontinuance of some products not able to be reformulated, additional record-keeping requirements, increased documentation of the properties of some products, additional or different labeling, additional scientific substantiation, or other new requirements.
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Any of these developments could increase the Company’s costs significantly. In addition, regulators’ evolving interpretation of existing laws could have similar effects.
The United States Federal Trade Commission (the “FTC”), the Canadian Ad Standards (“Ad Standards”) and the Israeli Ministry of Health exercise jurisdiction over the advertising of dietary supplements and requires that all advertising to consumers be truthful and non-misleading. These regulatory authorities actively monitor the dietary supplement space and have instituted numerous enforcement actions against dietary supplement companies for failure to have adequate substantiation for claims made in advertising or for the use of false or misleading advertising claims. Failure to comply with applicable regulations could result in substantial monetary penalties, which could have a material adverse effect on the Company’s financial condition or results of operations.
Compliance with manufacturing regulations.
Governmental authorities ensure the quality of food products and dietary supplements/nutraceuticals by carefully monitoring food and dietary supplement manufacturers’ compliance with GMP regulations. The good manufacturing practices (“GMP”) regulations for food products and dietary supplements/nutraceuticals contain minimum requirements for the methods, facilities and controls used in manufacturing, processing and packing of food products and dietary supplements/nutraceuticals. There can be no assurances that the Company’s existing facilities and those of white-label manufacturers will be able to meet the Company’s timetable and requirements. Further, white-label manufacturers must operate in compliance with GMP regulations, and failure to do so could result in, among other things, the disruption of product supplies. The Company’s dependence upon third parties for the manufacture of its products may adversely affect its profit margins and its ability to develop and deliver products on a timely and competitive basis.
The Company may face manufacturing stoppages and other challenges associated with audits or inspections by regulatory authorities.
The regulatory authorities may, at any time and from time to time, audit the facilities in which a product of the Company is manufactured. If any such inspection or audit of such facilities identifies a failure to comply with applicable regulations or if a violation of GMP regulations, the product specifications or other applicable regulations occurs independently of such an inspection or audit, the relevant regulatory authority may require remedial measures that may be costly or time-consuming for the Company to implement and that may include the temporary or permanent suspension of commercial sales or the temporary or permanent closure of a facility. Any such remedial measures imposed upon the Company could materially harm its business.
Risks associated with enrolling candidates in clinical trials and other assessments for the Company’s nutraceutical and cosmeceutical products.
There may be significant competition for recruiting candidates in clinical trials and other assessments, and the Company may be unable to enroll the candidates it needs to complete clinical trials and other assessments on a timely basis or at all. The factors that affect its ability to enroll candidates are largely uncontrollable and include, but are not limited to, the following:
•the size and nature of the candidate population;
•the design of the study protocol;
•the competition with other companies for candidates; and
•the perceived risks and benefits of the products under study.
Delays in completing clinical trials and other assessments may prevent the Company from marketing particular nutritional supplement products or making certain claims or statements with respect to those products.
Delay in achieving or failure to achieve publicly announced milestones.
From time to time, the Company may announce the timing of certain events it expects to occur, such as the anticipated timing of results from its research and development of future products, financial achievements and revenue targets. These statements are forward-looking and are based on the best estimates of management at the time relating to the occurrence of such events. However, the actual timing of such events may differ from what has been publicly disclosed. The timing of events such as initiation or completion of a research and development or manufacturing stage of a future product, product lines or CDMO services, the entry into development agreements to provide CDMO services, the entry obtaining regulatory approval or announcement of clinical trials may ultimately vary from what is publicly disclosed. These variations in timing may occur as a result of different events, including the nature of the results obtained during the research and development phase, the timing of the completion of clinical trials or any other event that has the effect of delaying the publicly announced timeline. The Company undertakes no obligation to update or revise any forward-looking information or statements, whether as a result of new
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information, future events or otherwise, except as otherwise required by law. Any variation in the timing of previously announced milestones could have a material adverse effect on its business plan, financial condition or operating results and the trading price of the Common Shares.
Competition risk.
The Company faces competition in the markets in which the Company operates and intends to operate in the near future. While the Company believes that the Botanical Synthesis Platform Technology provides an advantage over its competitors, some of the Company’s competitors may be or become better positioned to develop superior products and services at lower costs and able to better adapt to changing market conditions than the Company. The Company’s ability to compete depends on, among other things, science-based claims, patentability and protection of intellectual property, consistency, sustainability, high product quality, efficacy, short lead-time, timely delivery, competitive pricing, range of product offerings and superior customer service. Increased competition in the markets in which the Company operates may force it to reduce its product prices or may result in increased costs and may have a material adverse effect on its business and operating results. Any decrease in the quality of the Company’s products or CDMO services or level of service to customers or any forced decrease in product pricing may adversely affect its business and operating results.
The biotechnology, nutraceutical, cosmeceutical and CDMO services industries are intensely competitive and subject to rapid and significant technological change. The Company’s competitors include large, well-established biotechnology, nutraceutical, cosmeceutical and CDMO services companies and academic and research institutions.
Many of the Company’s competitors have substantially greater financial, technical and human resources than the Company has and have significantly greater experience than the Company in scaling up manufacturing operations and obtaining regulatory approvals of products. Accordingly, the Company’s competitors may succeed in obtaining regulatory approval for products more rapidly than it does. The Company’s ability to compete successfully will largely depend on:
•the efficacy and safety profile of the Company’s future products relative to marketed products and other future products in development;
•the Company’s ability to develop and maintain a competitive position in the product and service categories and technologies on which it focuses;
•the time it takes for the Company’s future products to complete clinical development and receive marketing approval;
•the Company’s ability to obtain required regulatory approvals;
•the Company’s ability to commercialize future products and product lines;
•the Company’s ability to establish, maintain and protect intellectual property rights related to the Company’s existing and future products and product lines; and
•the acceptance and promotion of any of the Company’s existing and future products by medical practitioners and social influencers.
Competitors have developed and may develop technologies that could be the basis for products and services that challenge the products the Company is developing and manufacturing or the CDMO services the Company is providing. Some of those products or services may be more effective or less costly than the Company’s products and CDMO services. The success of the Company’s competitors and its products and technologies relative to its technological capabilities and competitiveness could have a material adverse effect on the future development of products, including its ability to obtain the necessary regulatory approvals and the provision of CDMO services. This may further negatively impact the Company’s ability to generate future product development programs. If the Company is not able to compete effectively against its current and future competitors, its business will not grow, and its financial condition and operations will substantially suffer.
Obsolescence.
Maintaining a competitive position requires constant growth, development, strategic marketing, and planning. If the Company is unable to maintain a technological advantage, the Company’s ability to grow its business will be adversely affected, and its products, CDMO services, technologies or operations may become obsolete compared with other products, services, technologies or operations.
Loss of key personnel.
The Company heavily relies on the capabilities and experience of its key executives and scientists, and the loss of any of them could affect its ability to develop its products or provide CDMO services. The loss of the Company’s Chairperson of the board of directors of the Company (the “Board”), Chief Executive Officer or other key members of staff could harm the Company. The Company also depends on its collaborators and advisors, all of whom have outside commitments that may limit their
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availability to the Company. In addition, the Company’s future success will depend in large part upon its ability to attract and retain highly skilled scientific, managerial manufacturing and regulatory personnel. The Company enters into agreements with scientific and clinical collaborators and advisors, key opinion leaders and academic partners in the ordinary course of its business. The Company cannot predict its success in hiring or retaining the personnel it requires for continued growth. The loss of the services of any of the Company executive officers or other key personnel could potentially harm the Company’s business, operating results or financial condition.
Negative results from clinical trials or studies of others and adverse safety events.
From time to time, studies or clinical trials on various aspects of nutraceutical and cosmeceutical products are conducted by academic researchers, competitors or others. The results of these studies or trials, when published, may have a significant effect on the market for the nutraceutical or cosmeceutical product that is the subject of the study. The publication of negative results of studies or clinical trials or adverse safety events related to the Company’s existing products and future products, or the categories in which the Company’s existing products or future products compete, could adversely affect the Company’s future commercialization efforts, its share price and its ability to finance future development of its future products, and its business and financial results could be materially and adversely affected.
Risks related to potential intellectual property claims and patent infringement.
Biotechnology companies frequently own trademarks and trade secrets and often enter into litigation based on allegations of infringement or other violations of intellectual property rights. While the Company believes that its existing and future products, CDMO services and operations will not violate the intellectual property rights of third parties, the Company may be subject to intellectual property rights claims in the future, and its products may not be able to withstand any third-party claims or rights against their use. Any intellectual property claims, with or without merit, could be time-consuming, expensive to litigate or settle and could divert management resources and attention. An adverse determination could also prevent the Company from offering its products and services to others and may require that it procure substitute products or services for these members.
With respect to any intellectual property rights claim, the Company may have to pay damages or stop using intellectual property found to be in violation of a third party’s rights. The Company may have to seek a license for the intellectual property, which may not be available on reasonable terms and may significantly increase its operating expenses. The technology also may not be available for license to the Company at all. As a result, the Company may also be required to pursue alternative options, which could require significant effort and expense. If the Company cannot license or obtain an alternative for the infringing aspects of its business, it may be forced to limit its product and service offerings and may be unable to compete effectively. Any of these results could harm the Company’s brand and prevent the Company from generating sufficient revenue or achieving profitability.
Protection and enforcement of intellectual property.
The Company’s success will depend in part upon its ability to protect its intellectual property, including licensed intellectual property, and proprietary technologies and upon the nature and scope of the intellectual property protection it receives. The ability to compete effectively and to achieve partnerships will depend on the Company’s ability to develop and maintain proprietary aspects of its technology and to operate without infringing on the proprietary rights of others. The presence of such proprietary rights of others could severely limit the Company’s ability to develop and commercialize its products to conduct existing research and could require financial resources to defend against litigation, which may be in excess of its ability to raise such funds. There is no assurance that the Company’s patents will be sufficient to protect its proprietary technology and gain or keep any competitive advantage that the Company may have or will be upheld in any proceedings brought by any third parties.
The Company relies upon patents, copyrights, trade secrets, unpatented proprietary know-how and continuing technology innovation to protect the intellectual property that it considers important to the development of the Company’s business. The Company relies on various methods to protect its proprietary rights, including patent applications, confidentiality agreements with its partners, collaborators, advisors, consultants, employees, service providers and management that contain terms and conditions prohibiting the unauthorized use and disclosure of its confidential information. However, despite the Company’s efforts to protect its intellectual property rights, unauthorized parties may attempt to copy or replicate its intellectual property. There can be no assurances that the steps taken by the Company to protect its intellectual property will be adequate to prevent misappropriation or independent third-party development of its intellectual property. While the Company believes that competitors are unlikely to have the necessary technical ability, resources or capacity to successfully develop, replicate and/or implement certain of the Company’s technologies, and in particular, the Botanical Synthesis Platform Technology, to the same extent or at all, it may be possible that other companies can duplicate the Company’s technologies and processes.
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The patent positions of biotechnology, nutraceutical, cosmeceutical and CDMO services companies can be highly uncertain and involve complex legal, scientific and factual questions for which important legal principles remain unresolved. Patents issued to the Company may be challenged, invalidated or circumvented. To the extent the Company’s intellectual property, including licensed intellectual property, offers inadequate protection or is found to be invalid or unenforceable, the Company is exposed to a greater risk of direct competition. If the Company’s intellectual property does not provide adequate protection against its competitors’ products, its competitive position could be adversely affected, as could its business, financial condition and results of operations. Both the patent application process and the process of managing patent disputes can be time-consuming, expensive and may divert its management’s attention and its resources, and the laws of some foreign countries may not protect the Company’s intellectual property rights to the same extent as the laws of the United States. The Company wil be able to protect its intellectual property from unauthorized use by third parties only to the extent that its proprietary technologies, key products and any future products and CDMO services are covered by valid and enforceable intellectual property rights, including patents or are effectively maintained as trade secrets, and provided it has the funds to enforce its rights, if necessary.
Expiration and loss of patents.
While the Company believes that competitors are unlikely to have the necessary technical ability, resources or capacity to successfully develop, replicate and/or implement certain of the Company’s technologies, and in particular, the Botanical Synthesis Platform Technology, to the same extent or at all, the expiration of patents would nonetheless negatively affect the Company’s ability to enforce its rights against competitors. Competitors may potentially reverse engineer the Company’s technologies, including but not limited to the Botanical Synthesis Platform Technology, and compete directly with the Company in any market where a patent is no longer in force. This may require the Company to reduce the sales price of existing products or fees for CDMO services to remain competitive, invest in further research and development to improve products and CDMO service performance and obtain new patent protection or expend additional funds on marketing to promote brand loyalty. The Company may endeavor to extend the patent life through subsequent patent applications. Commercial products will include intellectual property in the form of trade secrets and know-how; however, this alone cannot protect against competitors designing new technologies, products or services directed to the Company’s patented technologies and processes upon expiration of said patents.
Third-party license risk.
The Company may, from time to time, require third-party licenses to effectively develop, manufacture and/or sell its key products or provide the CDMO services, and it may be unable to predict the availability or cost of such licenses.
A substantial number of patents have already been issued to other biotechnology companies. To the extent that valid third-party patent rights cover its products or CDMO services, the Company or its strategic collaborators would be required to seek licenses from the holders of these patents in order to manufacture, use or sell these products and services, and payments under them would reduce its profits from these products and services. The Company is currently unable to predict the extent to which it may wish or be required to acquire rights under such patents, the availability and cost of acquiring such rights, and whether a license to such patents will be available on acceptable terms or at all. There may be patents in foreign countries or patents issued in the future that are unavailable to license on acceptable terms. The Company’s inability to obtain such licenses may hinder or eliminate its ability to manufacture and market its products or provide and market its CDMO services.
Disclosure of proprietary information and trade secrets to third parties.
The Company may, from time to time, rely to a certain extent on third parties in order to develop or manufacture its products or provide CDMO services, and it may share trade secrets with them. The Company seeks to protect its 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 its collaborators, advisors, employees and consultants prior to beginning research or disclosing proprietary information. These agreements typically restrict the ability of its partners, collaborators, advisors, employees and consultants to publish data potentially relating to the Company’s trade secrets. The Company’s partners and collaborators may have rights to publish data, provided that the Company is notified in advance and may delay publication for a specified time in order to secure intellectual property rights arising from the collaboration. In other cases, publication rights may be controlled exclusively by the Company, although in some cases, the Company may share these rights with other parties. The Company may also conduct joint research and development programs, which may require it to share trade secrets under the terms of research and development collaborations or similar agreements. Despite the Company’s efforts to protect its trade secrets, its competitors may discover its trade secrets, either through breach of these agreements, independent development or publication of information including its trade secrets in cases where the Company does not have proprietary or otherwise protected rights at the time of publication. A competitor’s discovery of the Company’s trade secrets may impair the Company’s competitive position and could have a material adverse effect on its business and financial condition.
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Smaller companies.
Market perception of smaller companies may change, potentially affecting the value of investors’ holdings and the ability of the Company to raise further funds through the issue of further Common Shares or otherwise. The share
price of publicly traded smaller companies can be highly volatile. The value of the Company’s securities may go down as well as up, and, in particular, the share price may be subject to sudden and large falls in value given the restricted marketability of the Common Shares, results of operations, changes in earnings estimates or changes in general market, economic and political conditions.
The Company’s operations may be negatively affected by global financial conditions.
Global financial conditions continue to be characterized as volatile. In recent years, global markets have been adversely impacted by various credit crises and significant fluctuations in prices, availability and delivery of fuel and energy, metals, and critical components, including as a result of the COVID-19 pandemic and due to significant fluctuations in commodity prices as a result of the ongoing military conflict between Ukraine and Russia and the economic sanctions imposed on Russia in connection therewith. Many industries have been impacted by these market conditions. Global financial conditions remain subject to sudden and rapid destabilizations in response to international events, as government authorities may have limited resources to respond to future crises. A continued or worsened slowdown in the financial markets or other economic conditions, including but not limited to consumer spending, employment rates, business conditions, inflation, fuel and energy costs, consumer debt levels, lack of available credit, the state of the financial markets, interest rates and tax rates, may adversely affect a particular offering of securities of the Company, the Company’s prospects, cash flows, results of operations, investments or financial condition or the value of the Common Shares. Future crises may be precipitated by any number of causes, including natural disasters, geopolitical instability (such as the Russian invasion of Ukraine, the Hamas-Israel war and continuing or escalating conflicts in the Middle East), changes to energy prices or sovereign defaults. If increased levels of volatility continue or in the event of a rapid destabilization of global economic conditions, it may result in a material adverse effect on prices, demand, availability of credit, investor confidence, and general financial market liquidity, all of which may adversely affect a particular offering of securities of the Company, the Company’s prospects, cash flows, results of operations, investments or financial condition or the value of the Common Shares.
The Company is a “foreign private issuer” and, as a result, is not subject to U.S. proxy rules and are subject to the Exchange Act reporting obligations that, to some extent, are more lenient and less frequent than those of a U.S. domestic public company.
The Company reports under the Exchange Act as a non-U.S. company with foreign private issuer status. Because the Company qualifies as a foreign private issuer under the Exchange Act, it is exempt from certain provisions of the Exchange Act that are applicable to U.S. domestic public companies, including (a) the sections of the Exchange Act regulating the solicitation of proxies, consents or authorizations in respect of a security registered under the Exchange Act, (b) the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time and (c) the rules under the Exchange Act requiring the filing with the U.S. Securities and Exchange Commission (the “SEC”) of quarterly reports on Form 10-Q containing unaudited financial and other specified information. In addition, foreign private issuers are not required to file their annual report on Form 20-F as promptly as U.S. domestic issuers. In addition, The Company is permitted to disclose limited compensation information for its executive officers on an individual basis. Further, the Company is not required to comply with Regulation FD, which restricts the selective disclosure of material non-public information to, among others, broker-dealers and holders of a company’s securities under circumstances in which it is reasonably foreseeable that the holder will trade in the company’s securities on the basis of the information. These exemptions and leniencies reduce the frequency and scope of information and protections afforded to shareholders of a company that is not a foreign private issuer.
The Company may lose its foreign private issuer status in the future, which could result in significant additional costs and expenses.
The determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second financial quarter, and, accordingly, the next determination will be made with respect to the Company will be on June 30, 2025. In the future, the Company could lose its foreign private issuer status if (a) more than 50% of its outstanding voting securities are owned by U.S. residents and (b) a majority of its directors or executive officers are U.S. citizens or residents, or the Company fail to meet additional requirements necessary to avoid loss of foreign private issuer status. If the Company loses it foreign private issuer status, the Company will be required to file with the SEC periodic reports and registration statements on U.S. domestic issuer forms, which are more detailed and extensive than the forms available to a foreign private issuer. The Company will also have to mandatorily comply with U.S. federal proxy requirements, and its officers, directors
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and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. As a company that is not a foreign private issuer, the Company will incur significant additional legal, accounting and other expenses that it will not incur as a foreign private issuer.
Risks Relating to the Company’s Securities
Any return on investment from the Common Shares is not guaranteed.
There can be no assurance regarding the amount of return to be generated by the Company’s business. The Common Shares are equity securities of the Company and are not fixed-income securities. Unlike fixed-income securities, there is no obligation of the Company to distribute to shareholders of the Company a fixed amount or to return the initial purchase price of a Common Share on a date in the future. The market value of the Common Shares may deteriorate, and that deterioration may be significant.
The Company may not pay dividends.
The Company intends to retain earnings, if any, to finance the growth and development of its business and does not intend to pay cash dividends on the Common Shares in the foreseeable future. The payment of future cash dividends, if any, will be reviewed periodically by Board and will depend upon, among other things, conditions then existing, including earnings, financial condition and capital requirements, restrictions in financing agreements, business opportunities and conditions and other factors.
Future sales or issuances of debt or equity securities could decrease the value of any existing Common Shares, dilute investors’ voting power, reduce the Company’s earnings per share and make future sales of the Company’s equity securities more difficult.
The Company may sell additional equity securities in subsequent offerings (including through the sale of securities convertible into equity securities) and may issue additional equity securities to finance operations, acquisitions or other projects. The Company cannot predict the size of future issuances of equity securities or the size and terms of future issuances of debt instruments or other securities convertible into equity securities or the effect, if any, that future issuances and sales of its securities will have on the market price of the Common Shares. Any transaction involving the issuance of previously authorized but unissued Common Shares, or securities convertible into Common Shares, would result in dilution, possibly substantial, to securityholders. Exercises of presently outstanding share options may also result in dilution to securityholders.
The Board has the authority to authorize certain offers and sales of additional securities without the vote of, or prior notice to, shareholders of the Company. Based on the need for additional capital to fund expected expenditures and growth, it is likely that the Company will issue additional securities to provide such capital. Such additional issuances may involve the issuance of a significant number of Common Shares at prices less than the current market price for the Common Shares.
Sales of substantial amounts of the Company’s securities, or the availability of such securities for sale, could adversely affect the prevailing market prices for the Company’s securities and dilute investors’ earnings per share. A decline in the market prices of the Company’s securities could impair the Company’s ability to raise additional capital through the sale of securities should the Company desire to do so. Sales of the Common Shares by shareholders might also make it more difficult for the Company to sell equity securities at a time and price that the Company deems appropriate.
The Common Share price has experienced volatility and may be subject to fluctuation in the future based on market conditions.
The Common Shares are listed for trading on the Nasdaq GM under the symbol “BHST”, the Frankfurt Stock Exchange under the symbol “8MV”, the Munich Stock Exchange under the symbol “8MV”, the Stuttgart Stock Exchange under the symbol “CA09076J1084.SG” and the Tradegate Exchange under the symbol “8MV”. An investment in the Company’s securities is highly speculative. The market has from time-to-time experienced significant price and volume fluctuations that are unrelated to the financial performance or prospects of any particular company. In addition, because of the nature of the Company’s business, certain factors such as the Company’s announcements, competition, the Company’s financial condition or results of operations as reflected in the Company’s interim and annual financial statements, the Company’s operating performance and the performance of competitors and other similar companies, changes in earnings estimates or recommendations by research analysts who track the Company’s securities or securities of other companies in the Company’s sector, general market conditions, announcements relating to litigation, the arrival or departure of key personnel and the factors listed under “Cautionary Statement Regarding Forward-Looking Statements and Information” and “Risk Factors” and elsewhere in this Annual Information Form can have an adverse impact on the market price of the Common Shares.
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Any negative change in the public’s perception of the Company’s prospects could cause the price of the Company’s securities, including the price of the Common Shares, to decrease dramatically. Furthermore, any negative change in the public’s perception of the prospects of biotechnology, nutraceutical, cosmeceutical or CDMO services companies in general could depress the price of the Company’s securities, including the price of the Common Shares, regardless of the Company’s results. In the past, following declines in the market price of a company’s securities, securities class-action litigation often has been instituted against the company. Litigation of this type, if instituted, could result in substantial costs and a diversion of the Company’s management’s attention and resources.
Market disruption risks could have a material adverse effect on the market price of the Common Shares.
War and occupation, terrorism and related geopolitical risks may in the future lead to increased short-term market volatility and may have adverse long-term effects on world economies and markets generally. These risks could also adversely affect securities markets, inflation and other factors relating to the securities that would be held from time to time. Such events could, directly or indirectly, have a material adverse effect on the price of the Common Shares.
Holders of Common Shares are at risk for a substantial loss of capital.
Holders of Common Shares could experience a loss of all or substantially all of their investment in the Company. There can be no assurance that the Company will be able to generate positive returns. Therefore, an investment in the Company should only be considered by persons who can afford a loss of their entire investment.
The Company will have broad discretion over the use of the net proceeds from its financings, and it may not use these proceeds in a manner desired by its shareholders.
The Company will have broad discretion over the use of the net proceeds from its financings. Because of the number and variability of factors that will determine the Company’s use of such proceeds, the Company’s ultimate use might vary substantially from its planned use. Prospective investors may not agree with how the Company allocates or spends the proceeds from its financings. The Company may pursue acquisitions, collaborations or other opportunities that do not result in an increase in the market value of its securities, including the market value of the Common Shares, and that may increase its losses.
There is no assurance of a sufficient liquid trading market for the Common Shares in the future.
Shareholders of the Company may be unable to sell significant quantities of Common Shares into the public trading markets without a significant reduction in the price of the Common Shares or at all. There can be no assurance that there will be sufficient liquidity of the Common Shares on the trading market, and that the Company will continue to meet the listing requirements of the Nasdaq GM or achieve and maintain listing on any other public listing exchange.
There is currently no market through which the Company’s securities, other than the Common Shares, may be sold.
There is currently no market through which the securities of the Company, other than the Common Shares, may be sold and purchasers of securities of the Company, other than Common Shares, may not be able to resell such securities.
Holders of securities, other than Common Shares, have no rights as shareholders of the Company.
Until a holder of securities of the Company, other than Common Shares, acquires Common Shares upon exercise or conversion of such securities, such holder will have no rights with respect to any Common Shares underlying such securities. Upon exercise or conversion of such securities into Common Shares, such holder will be entitled to exercise the rights of a shareholder of the Company only as to matters for which the record date occurs after the exercise or conversion date.
DIVIDENDS To date, the Company has not paid any dividends. The Company intends to retain its earnings, if any, to finance the future growth and development of its business and does not expect to pay dividends or to make any other distributions in the foreseeable future. Payment of dividends in the future is dependent upon the earnings and financial condition of the Company and other factors which the Board may deem appropriate at the time.
There are no restrictions in the constating documents of the Company, and it is not currently expected that there will exist such restrictions elsewhere, which could prevent the Company from paying dividends.
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DESCRIPTION OF CAPITAL STRUCTURE The Company’s authorized capital consists of an unlimited number of Common Shares without par value, of which 22,667,842 Common Shares are issued and outstanding as at the date of this Annual Information Form, and an unlimited number of preferred shares (the “Preferred Shares”) without par value, of which none are issued and outstanding. As of the date of this Annual Information Form, an additional aggregate of 3,486,569 Common Shares have been reserved and allotted for issuance upon the due exercise or vesting of Warrants, stock options (“Options”) and restricted share units (“RSUs”) of the Company. Common Shares Holders of Common Shares are entitled to receive notice of any meetings of shareholders of the Company and to attend and cast one (1) vote per Common Share at all shareholder meetings of the Company.
Holders of Common Shares are entitled to receive on a pro-rata basis such dividends on the Common Shares, if any, as and when declared by the Board at its discretion from funds legally available therefor, and upon the liquidation, dissolution or winding up of the Company are entitled to receive on a pro-rata basis the net assets of the Company after payment of debts and other liabilities, in each case subject to the rights, privileges, restrictions and conditions attaching to any other series or class of shares ranking senior in priority to or on a pro-rata basis with the holders of Common Shares with respect to dividends or liquidation. The Common Shares do not carry any pre-emptive, subscription, redemption or conversion rights, nor do they contain any sinking or purchase fund provisions. Preferred Shares The Preferred Shares may include one or more series and, subject to the BCBCA, the directors of the Company may, by resolution, if none of the shares of that particular series are issued, alter the Articles and authorize the alteration of the Notice of Articles, as the case may be, to do one or more of the following:
•determine the maximum number of shares of that series that the Company is authorized to issue, determine that there is no such maximum number, or alter any such determination;
•create an identifying name for the shares of that series, or alter any such identifying name; and
•attach special rights or restrictions to the shares of that series, or alter any such special rights or restrictions.
MARKET FOR SECURITIES
Trading Price and Volume The Common Shares are listed for trading on the Nasdaq GM under the symbol “BHST”, the Frankfurt Stock Exchange under the symbol “8MV”, the Munich Stock Exchange under the symbol “8MV”, the Stuttgart Stock Exchange under the symbol “CA09076J1084.SG” and the Tradegate Exchange under the symbol “8MV”.
The following table sets forth the reported monthly high and low sale prices and the aggregate volume of trading of the Common Shares on the Nasdaq GM, the foreign marketplace on which the greatest volume of trading or quotation of the Common Shares currently occurs, for the most recently completed financial year.
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Monthly Trading Price Range and Volume – 2025
| Month (2025) | High (US$) | Low (US$) | Aggregate Volume |
|---|---|---|---|
| January | 6.28 | 4.72 | 110,279 |
| February | 6.135 | 4.72 | 141,302 |
| March | 6.89 | 5.01 | 228,144 |
| April | 6.99 | 5.10 | 1,025,158 |
| May | 6.79 | 6.10 | 241,939 |
| June | 7.86 | 6.26 | 210,189 |
| July | 7.99 | 6.672 | 196,328 |
| August | 9.8975 | 7.5 | 423,411 |
| September | 11.59 | 6.49 | 1,147,847 |
| October | 12.80 | 7.76 | 2,308,116 |
| November | 9.283 | 5.8 | 2,210,714 |
| December | 6.89 | 5.05 | 1,325,038 |
(All prices in U.S. dollars and volumes represent the monthly aggregate number of common shares traded on NASDAQ for the year 2025.) Prior Sales During the most recently completed financial year, the Company issued the following securities not listed or quoted on a marketplace:
| Date of Sale or Grant | Security | Number/Principal Amount | Exercise / Deemed Issue Price | Expiry Date |
|---|---|---|---|---|
| August 14, 2025 | Options (1) | 60,140 | US$9.22 | August 14, 2035 |
| August 25, 2025 | Options (1) | 18,572 | US$8.30 | August 25, 2035 |
| November 21, 2025 | RSUs (2) | 6,400 | US$5.97 | N/A |
| December 19, 2025 | Options (1) | 25,713 | US$5.23 | December 19, 2035 |
Notes:
(1) Each Option is exercisable at such exercise price to acquire one (1) Common Share until such expiry date, subject to vesting conditions, as set forth in the table above.
(2) Each RSU is issued at such deemed issue price until such expiry date, subject to such vesting conditions as set forth in the table above. ESCROWED SECURITIES To the knowledge of the management of the Company, no securities of the Company are currently held in escrow or are subject to contractual restrictions on transfer. DIRECTORS AND EXECUTIVE OFFICERS The following table sets forth the name, municipality, province or state of residence, position held with the Company, the date of appointment of each director and executive officer, principal occupation within the immediately preceding five years and the shareholdings of each director and executive officer of the Company. The statement as to securities beneficially owned, or controlled or directed, directly or indirectly, by the directors and executive officers named below is in each instance based upon information furnished by the person concerned and is as at the date of this Annual Information Form.
| Name and Jurisdiction of Residence | Positions Held and Date of Appointment or Election | Principal Occupation during the past 5 years | Share Ownership |
|---|---|---|---|
| Ilan Sobel<br><br><br>Central District, Israel | Chief Executive Officer (June 9, 2020) | Chief Executive Officer of the Company since July 2020;<br><br><br>Chief Operating Officer and Chief Commercial Officer of Weissbeerger from November 2014 to June 2020. | 216,882 |
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| Bar Dichter<br><br><br>Central District, Israel | Chief Financial Officer (October 28, 2024) | Chief Financial Officer of the Company since October 2024; Vice-President, Finance, of the Company from March 2024 to October 2024; Vice-President, Finance, of BioHarvest Israel from July 2022 to October 2024; and<br><br><br>Controller of BioHarvest Israel from 2018 to July 2022. | 1,525 |
|---|---|---|---|
| Zaki Rakib (4),<br><br><br>Dubai, UAE | President (June 9, 2020)<br><br><br>Chairman (June 9, 2020)<br><br><br><br><br><br>Class III Director (September 27, 2018) | President and Chairman of the Company since June 2020; Director of the Company since September 2018; Chief Executive Officer of the Company from September 2018 to June 2020; Chief Executive Officer and a director of BioHarvest Israel since September 2018; Director of BioHarvest Delaware since February 2018; and Director of<br><br><br>Dolarin Ltd. from July 2014 to December 2021. | Nil |
| Yoheved (Yochi) Hagay<br><br><br>Central District, Israel | Chief Technology Officer (September 27, 2018) | Chief Technology Officer of the Company since<br><br><br>September 2018; and Chief Technology Officer of BioHarvest Israel since September 2018. | 31,702 |
| Ilana Belzer<br><br><br>Central District, Israel | Chief Operating Officer (April 19, 2023) | Chief Operating Officer of the Company since April 2023;<br><br><br>and Chief Operating Officer of CollPlant Biotechnologies Ltd. from 2015 to April 2023. | 546 |
| David Ryan<br><br><br>British Columbia, Canada | Secretary (April 19, 2013)<br><br><br><br><br><br>Vice-President, Investor Relations (June 9, 2020) | Secretary of the Company since April 2013; Vice-President, Investor Relations, of the Company since June 2020; Director of the Company from April 2013 to September 2024; President of the Company form April 2013 to June 2020; Director of HydroGraph Clean Power Inc. from November 2020 to April 2022; Director of International Battery from August 2019 to March 2022; Director of GlobeX Data Ltd. from March 2017 to May 2020; Chief Executive Officer and director of Scotch Creek Ventures Inc. since January 2017; Director of Ovation Science Inc. from October 2017 to October 2023; Director of InsuraGuest Technologies Inc. since August 2010; and<br><br><br>Chief Executive Officer, President and a director of Glenstar Ventures Corp. since April 2013. | 39,014 |
| Malkit Azachi<br><br><br>Central District, Israel | Vice-President, Research and Development (March 20,<br><br><br>2024 | Vice-President, Research and Development, of the Company since March 2024; Vice-President, Research and Development, of BioHarvest Israel since January<br><br><br>2011. | Nil |
| Michal Sapir<br><br><br>Central District, Israel | Vice-President, Regulatory Affairs (March 20, 2024) | Vice-President, Regulatory Affairs, of the Company since March 2024; Vice-President, Regulatory Affairs, of BioHarvest Israel since January 2010. | Nil |
| Jared Turner<br><br><br>Tokyo, Japan | Vice-President, D2C Products Business Unit (March 20, 2024) | Vice-President, D2C Products Business Unit, of the Company since March 2024; Vice-President, E-Commerce and Global Commercial Operations, of BioHarvest Israel since December 2021. | Nil |
| Vivien Rakib (4),<br><br><br>Tel Aviv District, Israel | Class III Director (September 27, 2018) | Director of the Company since September 2018; Director of BioHarvest Israel since 2007; Director of Shaker since 2011; and Director of CoPro since 2013. | 3,041,674 |
| John (Jake) Fiddick (1)(2)(3)<br><br><br>British Columbia, Canada | Class I Director (February 7, 2019) | Director of the Company since February 2019; Director of Makara Mining Corp. from June 2019 to September 2020. | Nil |
| Anne Binder (1)(2)(3)(4)<br><br><br>Île-de-France, France | Class I Director (May 27, 2024) | Director of the Company since May 2024; Director of<br><br><br>Lectra Systems SA from 2011 to April 2023; Financial strategy consultant since 1996. | 17,706 |
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| Sharon Malka (1)(2)(4)<br><br><br>Central District, Israel | Class II Director (January 16, 2025) | Director of the Company since January 2025; Chief Executive Officer of Dotz Nano Ltd. since March 2023, Director of MediWound Limited (“MediWound”) from July 2022 to June 2023; Chief Executive Officer of MediWound<br><br><br>from May 2019 to June 2022. | Nil |
|---|---|---|---|
| Prof. Chezy Levy<br><br><br>Central District, Israel | Class II Director (March 3, 2026) | A physician by education, Prof. Levy previously served Defense Forces (IDF) with the rank of Brigadier General from 05/2003-09/2007 and, as Director General of the Israeli Ministry of Health from 06/2020-08/2021. Prof. Levy also served as Head of the Medical Corps of the Israel and was the General Manager of Barzilai Medical Center from 01/2012-03/2025 | Nil |
Notes:
(1)Member of the Audit Committee of the Board (the “Audit Committee”), of which Sharon Malka is the Chair.
(2)Member of the Compensation Committee of the Board, of which Anne Binder is the Chair.
(3)Member of the Nominating and Corporate Governance Committee of the Board, of which Anne Binder is the Chair.
(4)Member of the Pricing Committee of the Board, of which Zaki Rakib is the Chair Term The Company has a classified board of directors which are divided into three classes, where approximately one-third of the board is elected annually and each director serves a three-year term. Any director appointed to fill a vacancy will hold office until the next election of the class for which such director shall have been elected. The board of directors is to always be as nearly equal in number as possible between classes and such classes are designated: Class I, Class II and Class III. Each director shall serve for a term ending on the date of the third annual meeting following the annual meeting at which such director was elected; provided that: (i) each director initially appointed to Class I shall serve for an initial term expiring at the Corporation’s first annual meeting of shareholders following the initial initial appointment to Class I (this would be the 2026 annual general meeting); (ii) each director initially appointed to Class II shall serve for an initial term expiring at the corporation’s second annual meeting of shareholders following the initial appointment to Class II (which would be the 2027 annual general meeting); and (iii) each director initially appointed to Class III shall serve for an initial term expiring at the corporation’s third annual meeting of shareholders following the initial appointment to Class III (which would be the 2027 annual general meeting); provided further, that the term of each director shall continue until the election and qualification of a successor and be subject to such director’s earlier death, resignation or removal. Shareholdings of Directors and Executive Officers As at the date of this Annual Information Form, the directors and executive officers of the Company, as a group, beneficially owned, controlled or directed, directly or indirectly, 3,349,050 Common Shares, representing approximately 14.80% of the issued and outstanding Common Shares. Cease Trade Orders or Bankruptcies For the purposes of this section, an “Order” means a Cease Trade Order (“CTO”), an order similar to a CTO, or an order that denied the relevant company access to any exemption under securities legislation.
To the knowledge of the Company:
(a)no director or executive officer of the Company is, as at the date of this Annual Information Form, or was within 10 years before the date of this Annual Information Form, a director, chief executive officer or chief financial officer of any company (including the Company), that:
(i)was subject to an order that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; or
(ii)was subject to an order that was issued after the director or executive officer ceased to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person was acting in the capacity as director, chief executive officer or chief financial officer.
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(b)no director or executive officer of the Company, or a shareholder holding a sufficient number of securities of the Company to affect materially control of the Company:
(i)is, as at the date of this Annual Information Form, or has been within the 10 years before the date of this Annual Information Form, a director, chief executive officer or chief financial officer of any company (including the Company) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or
(ii)has, within the 10 years before the date of this Annual Information Form, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or was subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder.
The foregoing information, not being within the knowledge of the Company, has been furnished by the respective directors, executive officers and shareholders holding a sufficient number of securities of the Company to affect materially control of the Company. Penalties or Sanctions To the knowledge of the Company, no director or executive officer of the Company, or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company, has been subject to:
(a)any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority; or
(b)any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable investor in making an investment decision regarding the Company.
The foregoing information, not being within the knowledge of the Company, has been furnished by the respective directors, executive officers and shareholders holding a sufficient number of securities of the Company to affect materially control of the Company. Conflicts of Interest The Company’s directors and officers may serve as directors or officers of other companies or have significant shareholdings in other companies and, to the extent that such other companies may participate in ventures in which the Company may participate, the directors of the Company may have a conflict of interest in negotiating and concluding terms respecting the extent of such participation. In the event that such conflict of interest arises at a meeting of the Board, a director who has such a conflict will abstain from voting for or against the approval of such participation or such terms. In accordance with the BCBCA, the directors of the Company are required to act honestly, in good faith and in the best interests of the Company. In determining whether or not the Company will participate in a particular program and the interest therein to be acquired by it, the directors will primarily consider the degree of risk to which the Company may be exposed and its financial position at that time.
The directors and officers of the Company are aware of the existence of laws governing the accountability of directors and officers for corporate opportunity and requiring disclosures by the directors and officers of conflicts of interest and the Company will rely upon such laws in respect of any directors’ and officers’ conflicts of interest or in respect of any breaches of duty by any of its directors and officers. All such conflicts will be disclosed by such directors or officers in accordance with the BCBCA and they will govern themselves in respect thereof to the best of their ability in accordance with the obligations imposed upon them by law. See “Risk Factors – Conflicts of Interest Risk”.
As of the date of this Annual Information Form, except as disclosed under “Interests of Management and Others in Material Transactions”, the directors and officers of the Company are not aware of any such existing or potential conflicts of interests.
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PROMOTERS During the previous two (2) most recently completed financial years or during the current financial year, no person or company has been a promoter of the Company or any subsidiary of the Company. AUDIT COMMITTEE
Audit Committee Charter The text of the Audit Committee Charter, as amended and restated on September 20, 2024, of the Company (the “Audit Committee Charter”) is attached hereto as Schedule “A”. Composition of the Audit Committee The Audit Committee consists of Sharon Malka, John (Jake) Fiddick and Anne Binder, of which Mr. Malka is the chair. National Instrument 52-110 Audit Committees (“NI 52-110”) provides that a member of an audit committee is “independent” if the member has no direct or indirect material relationship with the Company, which could, in the view of the Company’s Board, reasonably interfere with the exercise of the member’s independent judgment. All of the Audit Committee members are considered independent. All of the Audit Committee members are “financially literate, as defined in NI 52-110, as all have the industry experience necessary to understand and analyze financial statements of the Company, as well as the understanding of internal controls and procedures necessary for financial reporting. Relevant Education and Experience of the Audit Committee All members of the Audit Committee have the ability to read, analyze and understand the complexities surrounding the issuance of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of the issues that can reasonably be expected to be raised by the Company’s financial statements, and have an understanding of internal controls. The directors of the Company have determined that all members of the Audit Committee are “independent” and “financially literate” for the purposes of applicable laws and the rules of Nasdaq. The directors of the Company have also determined that the Company has two (2) “Audit Committee Financial Experts” for the purposes of applicable laws and the rules of Nasdaq. The designation of a member of the Audit Committee as an “Audit Committee Financial Expert” does not make the member an “expert” for any purpose, impose any duties, obligations or liability on the member that are greater than those imposed on members of the Board who do not carry this designation or affect the duties, obligations or liability of any other member of the Audit Committee.
In addition to each member’s general business experience, the education and experience of each Audit Committee member that is relevant to the performance of his or her responsibilities as an Audit Committee member is as follows:
Sharon Malka, Director
Mr. Malka has held senior leadership positions with a number of international healthcare and technology companies. Since March 2023, he has been the Chief Executive Officer of Dotz Nano Ltd., an Australian-based technology company focused on developing, manufacturing and commercializing advanced materials for diagnostics solutions. Mr. Malka previously served as the Chief Executive Officer (from May 2019 to June 2022), Chief Financial Officer (April 2007 to April 2019) and a director (from July 2022 to June 2023) of MediWound Limited, a Nasdaq-listed biopharmaceutical company, and as a Partner at Variance Economic Consulting Ltd., a financial services consulting boutique focused on international technology companies, from 2002 to 2006
Mr. Malka is a certified CPA (2000) in Israel and a graduate of the Executive Education Program (2021) of Harvard Business School in the United States. He holds a BSc in Business Administration (1998) from The College of Management in Israel and an MBA (2000) from Bar-Ilan University in Israel.
John (Jake) Fiddick, Director
Mr. Fiddick, a director of the Company since February 2019, founded the “Public Company Banking Group” for the Bank of Montreal (“BMO”) in 1984 and was part of a 15-person team specializing in servicing public companies before retiring in August 2017. Mr. Fiddick previously served as a director of Makara Mining Corp. from June 2019 to September 2020.
During his 58 years with BMO, he obtained his real estate license and broker’s license.
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Anne Binder, Director
Ms. Binder specializes in the support and financing of small and medium-sized enterprises. Since 1996, she has worked as a financial strategy consultant and independent director for mainly private companies operating in various sectors, such as finance, electronics, integrated technological solutions and luxury. She previously acted as a senior advisor to Tikehau Investment Management SAS, a management company specializing in corporate debt financing. Ms. Binder also previously served as a director of each of Lectra, Oceasoft, CNCEF (Chambre Nationale des Conseils Experts Financiers) and CNCIF (Chambre Nationale des Conseillers en Investissements Financiers) and as a member of the supervisory board of the Financial Investment Agency, Economic Development of Nîmes.
From 1993 to 1996, Ms. Binder was a director in charge of development in France for the international financial services group General Electric Capital, and director of its French subsidiary. From 1990 to 1993, Ms. Binder was the managing director of the holding company and deputy managing director of the EURIS investment fund. From 1983 to 1990, she participated in the creation of the Pallas Group of which she was a director. Ms. Binder was a Vice-President of Générale Occidentale, a bank and industrial holding company, from 1978 to 1982.
Ms. Binder holds a Master in Public Affairs (1971) from Sciences Po in France and an MBA (1974) from INSEAD in France. Audit Committee Oversight At no time since the commencement of the Company’s most recently completed financial year was a recommendation of the Audit Committee to nominate or compensate an external auditor not adopted by the Board. Reliance on Certain Exemptions by the Audit Committee At no time since the commencement of the Company’s most recently completed financial year has the Company relied on any of the exemptions set out in Section 2.4 (De Minimis Non-audit Services), Section 3.2 (Initial Public Offerings), Section 3.4 (Events Outside Control of Member), Section 3.5 (Death, Disability or Resignation of Audit Committee Member), Subsection 3.3(2) (Controlled Companies), 3.6 (Temporary Exemption for Limited and Exceptional Circumstances) or Section 3.8 (Acquisition of Financial Literacy) of NI 52-110, or an exemption from NI 52-110, in whole or in part, granted under Part 8 of NI 52-110. Pre-Approval Policies and Procedures of the Audit Committee The Audit Committee has adopted specific policies and procedures for the engagement of non-audit services as set out in the Audit Committee Charter attached hereto as Schedule “A”.
External **** Auditor **** Service **** Fees
The aggregate fees billed or required to be billed by the Company’s external auditor in the financial years ended December 31, 2025 and 2024 are disclosed below:
| Financial Year Ended | Audit **** Fees **** (US$) **** (1) | Audit **** Related **** Fees (US$) (2) | Tax **** Fees **** (US$) **** (3) | All **** Other **** Fees (US$) (4) | Total (US$) |
|---|---|---|---|---|---|
| December 31, 2025 | 169,000 | 45,000 | 17,500 (6) (7)<br><br><br>(approximate) | 55,162 | 286,662<br><br><br>(approximate) |
| December 31, 2024 | 315,000 | 36,000 | 4,500 (5) | - | 355,500<br><br><br>(approximate) |
Notes:
(1)“Audit fees” include fees billed or required to be billed by the Company’s external auditor in each of the last two (2) financial years for audit fees.
(2)“Audit-related fees” include the aggregate fees billed or required to be billed in each of the last two (2) financial years for assurance and related services by the Company’s external auditor that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported under “Audit fees” above.
(3)“Tax fees” include the aggregate fees billed or required to be billed in each of the last two (2) financial years for professional services rendered by the Company’s external auditor for tax compliance, tax advice and tax planning.
(4)“All other fees” include the aggregate fees billed or required to be billed in each of the last two (2) financial years for products and services provided by the Company’s external auditor, other than “Audit fees”, “Audit related fees” and “Tax fees” above.
(5)tax in Israel.
(6)Related to compliance of tax return filing in Israel.
(7)Related to advice and planning in Canada, United States and Israel.
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LEGAL PROCEEDINGS AND REGULATORY ACTIONS Since the beginning of the Company’s most recently completed financial year, the Company is not aware of: (a) any legal proceedings to which it is a party, or by which any of its property is subject, which would be material to it and are not aware of any such proceedings being contemplated, (b) any penalties or sanctions imposed by a court relating to securities legislation or a securities regulatory authority, or other penalties or sanctions imposed by a court or regulatory body against it that would likely be considered important to a reasonable investor making an investment decision and (c) any settlement agreements that the Company has entered into before a court relating to securities legislation or with a securities regulatory authority. INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS To the knowledge of the Company, no director, executive officer or shareholder holding on record or beneficially, directly or indirectly, more than 10% of the issued Common Shares, or any of their respective associates or affiliates has any material interest, direct or indirect, in any transaction in which the Company has participated within the three (3) most recently completed financial years or during the current financial year, which has materially affected or is reasonably expected to materially affect the Company.
The foregoing information, not being within the knowledge of the Company, has been furnished by the respective directors, executive officers and shareholders holding a sufficient number of securities of the Company to affect materially control of the Company. TRANSFER AGENT AND REGISTRAR The transfer agent and registrar for the Common Shares is National Securities Administrators Ltd. of Vancouver, British Columbia. MATERIAL CONTRACTS Except for contracts entered into in the ordinary course of business and as disclosed below, the Company did not enter into any material contracts in the most recently completed financial year, or before the most recently completed financial year that are still in effect. Yavne No. 1 Agreement Pursuant to the lease agreement dated January 16, 2025 (the “Yavne No. 1 Agreement”) between BioHarvest Israel and Sugart Ltd. (the “Yavne No. 1 Landlord”), BioHarvest Israel entered into a lease (the “Yavne No. 1 Lease”) for a property, comprising approximately 1,100 square meters, in Yavne, Israel from September 1, 2024 until September 1, 2025, subject to extension for an additional two (2) rental periods of six (6) months each if:
•BioHarvest Israel did not substantially breach the Yavne No. 1 Agreement during the previous rental period, which breach was not corrected within fourteen (14) days of notice by the Yavne No. 1 Landlord; and
•BioHarvest Israel provides 90 days’ notice prior to the end of the previous rental period to extend the Yavne No. 1 Lease.
In consideration for the Yavne No. 1 Lease, BioHarvest Israel pays rent monthly to the Yavne No. 1 Landlord, subject to increase and other adjustments, including based on the Consumer Price Index published by the Israeli Central Bureau of Statistics. As of the date of this Annual Information Form, BioHarvest Israel has paid NIS 1,987,242 in rent for the Yavne No. 1 Lease.
The Company is currently in discussions to extend the lease agreement for an additional two years. Equipment Agreement Pursuant to the agreement dated March 31, 2024 (the “Equipment Agreement”) between BioHarvest Israel and Enlivex Therapeutics R&D, Ltd. (the “Seller”), BioHarvest Israel agreed to assume the Seller’s lease (the “Yavne No. 2 Lease”) to a property comprising approximately 10,300 square meters (the “Yavne No. 2 Property”) in Yavne, Israel, effective April 1, 2024, and to purchase from the Seller certain equipment installed in the Yavne No. 2 Property (the “Equipment”). In consideration for BioHarvest Israel’s purchase of the Equipment, BioHarvest Israel agreed to pay to the Seller an aggregate of NIS 13,000,000 (the “Equipment Purchase Price”) as follows:
·NIS 4,000,000, by April 1, 2024 (which amount has been paid); and
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·NIS 9,000,000 (the “Equipment Purchase Price Balance”), in twenty-four (24) equal monthly instalments of NIS 375,000 commencing on April 1, 2024, in respect of which NIS 9,000,000 has been paid as at the date of this Annual Information Form, provided that:
oBioHarvest Israel will be entitled to a 4% discount to the Equipment Purchase Price Balance if the Equipment Purchase Price Balance is prepaid in one (1) installment by October 1, 2025;
oBioHarvest Israel will be entitled to a 2% discount to any portion of the Equipment Purchase Price Balance equal to or greater than NIS 4,000,000 if such portion is prepaid by October 1, 2025;
oIf BioHarvest Israel fails to pay a monthly installment of the Equipment Purchase Price Balance within seven (7) days of the due date for such installment (other than due to a breach by the Seller of the Equipment Agreement), the Seller will be entitled to charge interest at an annual rate of 8% on such installment; and
oIf BioHarvest Israel fails to pay a monthly installment of the Equipment Purchase Price within thirty (30) days of the due date for such installment, BioHarvest Israel and will discuss and attempt to agree on a revised payment schedule within thirty (30) days following the date that is thirty (30) days following the default of such installment payment. If BioHarvest Israel and the Seller fail to agree to a revised payment schedule:
·The Seller will have the right to sell the Equipment and/or assume the Yavne No. 2 Lease (and demand BioHarvest Israel evacuate the Yavne No. 2 Property), subject to providing BioHarvest Israel ninety (90) days’ prior written notice, and further subject to the portion of the Equipment Purchase Price paid by BioHarvest Israel as of the date of such evacuation notice; and
·The Seller will have the right to assume the Yavne No. 2 Lease (and demand BioHarvest Israel evacuate the Yavne No. 2 Property) if BioHarvest Israel fails to make payments to Eitan On Investment Ltd. (the “Yavne No. 2 Landlord”) in accordance with the Yavne No. 2 Agreement (as defined herein), subject to providing BioHarvest Israel thirty (30) days’ prior written notice.
The title to the Equipment shall pass to BioHarvest Israel upon payment by BioHarvest to the Seller of the Equipment Purchase Price, and the risk of loss to the Equipment passed to BioHarvest Israel on April 1, 2024. Tripartite Agreement In connection with BioHarvest Israel’s entry into the Tripartite Agreement and the Yavne No. 2 Agreement, BioHarvest Israel entered into an agreement dated March 31, 2024 with the Seller and the Yavne No. 2 Landlord, pursuant to which:
·BioHarvest Israel agreed to assume the Yavne No. 2 Lease; and
·The Seller will have the right to re-assume the Yavne No. 2 Lease until April 1, 2027 if BioHarvest fails to pay the Equipment Purchase Price Balance in accordance with the Equipment Purchase Agreement or if the Yavne No. 2 Landlord terminates the Yavne No. 2 Agreement (as defined herein) as a result of a breach by BioHarvest Israel in accordance with the Yavne No. 2 Agreement. Yavne No. 2 Agreement Pursuant to the lease agreement dated March 31, 2024 (the “Yavne No. 2 Agreement”) between BioHarvest Israel and the Yavne No. 2 Landlord, BioHarvest Israel entered into the Yavne No. 2 Lease for the Yavne No. 2 Property, comprising approximately 10,300 square meters, from April 1, 2024 until September 30, 2030 (the “Yavne No. 2 Initial Period”), subject to extension for an additional sixty (60) months (the “Yavne No. 2 First Renewal Period”) if:
·BioHarvest Israel did not substantially breach the Yavne No. 2 Agreement during the Yavne No. 2 Initial Period, which breach was not corrected within thirty (30) days of notice by the Yavne No. 2 Landlord; and
·BioHarvest Israel provides ten (10) months’ notice prior to the end of the Yavne No. 2 Initial Period to extend the Yavne No. 2 Lease for the Yavne No. 2 First Renewal Period,
and subject to extension for an additional sixty (60) months (the “Yavne No. 2 Second Renewal Period”) if:
·BioHarvest Israel did not substantially breach the Yavne No. 2 Agreement during the Yavne No. 2 First Renewal Period, which breach was not corrected within thirty (30) days of notice by the Yavne No. 2; and
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·BioHarvest Israel provides ten (10) months’ notice prior to the end of the Yavne No. 2 First Renewal Period to extend the Yavne No. 2 Lease for the Yavne No. 2 Second Renewal Period,
In consideration for the Yavne No. 2 Lease, BioHarvest Israel pays rent monthly to the Yavne No. 2 Landlord, subject to an annual increase and other adjustments, including based on the Consumer Price Index published by the Israeli Central Bureau of Statistics. As of the date of this Annual Information Form, BioHarvest Israel has paid NIS 3,604,361 in rent for the Yavne No. 2 Lease. License Agreement Pursuant to the agreement dated March 21, 2007 (the “License Agreement”) between BioHarvest Israel and State of Israel, Ministry of Agriculture & Rural Development, Agricultural Research Organization, The Volcani Center (the “Licensor”), the Licensor granted BioHarvest Israel an exclusive worldwide license, including the right to sub-license, to the rights to six (6) patents (the “Licensed Patents”) as described in “Business – Patents”, in consideration for the payment by BioHarvest Israel to the Licensor of the following payments:
·the equivalent of an aggregate of US$40,000 in NIS (which amount has been paid);
·a royalty fee equal to 3% of all sales (ex-factory) of VINIA® products in countries in which a Licensed Patent has been registered until the expiration of the Licensed Patents on February 23, 2026, subject to renewal (the “Licensed Patent Expiry Date”), in respect of which US$112,091 in NIS has been paid as at the date of this Annual Information Form;
·a royalty fee equal to 1.25% of all sales (ex-factory) of VINIA® products in countries in which a Licensed Patent has not been registered until the Licensed Patent Expiry Date, in respect of which no amounts have been payable as at the date of this Annual Information Form; and
·if BioHarvest sub-licenses the rights to the Licensed Patents to a third party, 5% of the consideration received by BioHarvest in respect of such sub-license, in respect of which no amounts have been payable as at the date of this Annual Information Form.
On January 25, 2025, BioHarvest Israel and the Licensor entered into an amendment to the License Agreement (the “Amendment”), pursuant to which the parties agreed to revise the royalty structure under the License Agreement. Under the Amendment, the royalty payable to the Licensor was revised to 1% of quarterly ex-factory sales of VINIA® products, subject to minimum quarterly payments. Such minimum payments are US$79,000 for the first quarter of 2025, US$96,000 for the second quarter of 2025, US$105,000 for the third quarter of 2025, US$115,000 for the fourth quarter of 2025, and US$120,000 for each quarter thereafter through the first quarter of 2026. The aggregate amount payable by BioHarvest Israel under the Amendment is capped at US$3,599,100, after which no further royalty payments will be required under the Amendment. The Amendment further provides that, in certain circumstances where production activities are materially interrupted due to force majeure events or regulatory restrictions preventing the manufacture or sale of the relevant products, the payment schedule may be suspended until such circumstances are resolved.
The License Agreement will terminate on the Licensed Patent Expiry Date, subject to the renewal of any Licensed Patents. TV Network Agreement Pursuant to the memorandum of agreement dated July 12, 2023 (the “TV Network Agreement”) between BioHarvest Israel and TBN Broadcasting of Texas, Inc. (the “TV Network”), the TV Network will promote the Company through programs, interviews and advertisements and provide BioHarvest with a list of donors to use to offer the Company’s products. In consideration for the TV Network’s services, BioHarvest Israel will pay to the TV Network:
·an amount equal to a percentage between 40% and 50% of the revenue from first orders of the Company’s product(s) by each customer provided by the TV Network; and
·an amount equal to a percentage between 15% and 25% of the revenue from a subsequent order of the same product(s) or any additional orders of other product(s) by each such customer,
and such payments shall be made:
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·in cash or Common Shares, at the discretion of the TV Network, such Common Shares to be issued at a price per Common Share equal to the closing price of the Common Shares on the date of the TV Network’s notice (or the trading day prior if no trading took place on such date), prior to the Common Shares being listed on a Nasdaq exchange; or
·in cash, after the Common Shares are listed on a Nasdaq exchange,
in respect of which the TV Network has received US$5,869,173 as at the date of this Annual Information Form. If, from time to time, BioHarvest Israel obtains:
·25,000 customers over any 6-month period through the TV Network’s promotion of BioHarvest Israel, the TV Network will receive US$100,000, in Common Shares; or
·30,000 customers over any 6-month period through the TV Network’s promotion of BioHarvest Israel, the TV Network will receive US$200,000, in Common Shares,
such Common Shares to be issued at a price per Common Share equal to the closing price of the Common Shares immediately prior to such issuance.
Safron Tech CDMO Agreement
On September 29, 2025, the Company entered into a strategic Contract Development and Manufacturing Organization(“CDMO”) agreement with Saffron Tech, a company pioneering advanced cultivation methods for saffron to develop and commercialize saffron-derived botanical compounds using the Company’s patented Botanical Synthesis Platform Technology. Per the terms of the agreement, the Company and Saffron Tech will collaborate to develop and commercialize saffron-derived botanical compounds using the Company’s patented Botanical Synthesis Platform Technology.
Per the terms of the agreement, the Company and Saffron Tech will collaborate to develop and commercialize saffron-derived botanical compounds using the Company’s patented Botanical Synthesis Platform Technology, which enables consistent, scalable, and cost-effective production of plant-based molecules without growing the plant itself. The partnership will combine the Company’s bioreactor-based manufacturing scale and cell-growth expertise with Saffron Tech’s specially cultivated Saffron specie as well as its initial saffron cell-culture research. The initiative covers both Stage 1 and Stage 2 of CDMO development, with solid-phase and liquid-phase work conducted simultaneously, an approach that could significantly shorten the time to market.
Under the terms of the agreement, Saffron Tech will own 75% of the developed saffron compositions, ownership IP and commercial associated rights, and the Company will hold the remaining 25%. Upon the completion of the development phases of the composition, the Company intends to manufacture the compound at large scale and market the compound in its direct-to-consumer e-commerce business by developing a line of nutraceutical products leveraging saffron’s functional benefits which include cognitive function, eye health, and antioxidant benefits.
Craig-Hallum Capital Group LLC Underwriting Agreement
On November 6, 2025, the Company entered into an underwriting agreement with Craig-Hallum Capital Group LLC in connection with an underwritten public offering of the Company’s common shares at a public offering price of US$7.00 per share. The underwriter was granted an option to purchase up to 372,750 additional common shares to cover over-allotments. The offering closed on November 7, 2025, and the over-allotment option was partially exercised, resulting in the issuance of an aggregate of 2,846,854 common shares. The Company received net proceeds of approximately US$18.4 million, after deducting underwriting discounts and certain offering expenses. The underwriting agreement contains customary representations, warranties, covenants and indemnification provisions. NAMES AND INTERESTS OF EXPERTS Ziv Haft, Certified Public Accountants (Isr), a BDO Member Firm, provided an auditor’s report in respect to the Company’s annual consolidated financial statements for the financial year ended December 31, 2025. Ziv Haft, Certified Public Accountants (Isr) has advised that they are independent with respect to the Company within the meaning of Chartered Professional Accountants of British Columbia (CPABC) Code of Professional Conduct and the rules of the SEC and the Public Company Accounting Oversight Board (PCAOB) on auditor independence. ADDITIONAL INFORMATION
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Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Company’s securities and securities authorized for issuance under equity compensation plans, as applicable, are contained in the Company’s management information circular dated May 23, 2025 in respect of the Company’s annual general and special meeting of shareholders held on June 26, 2025.
Additional financial information is provided in the Company’s audited annual consolidated financial statements and management’s discussion and analysis for the financial year ended December 31, 2025, which are available under the Company’s profile on the System for Electronic Document Analysis and Retrieval + (“SEDAR+”) at www.sedarplus.ca.
Copies of all materials incorporated by reference herein and additional information relating to the Company are available under the Company’s profile on SEDAR+ at www.sedarplus.ca.
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SCHEDULE “A”
BIOHARVEST **** SCIENCES **** INC. AUDIT COMMITTEE CHARTER (Amended and Restated as of September 20, 2024)
**1.**PURPOSE.
1.1The purpose of the Audit Committee (the “Committee”) of the board of directors (the “Board”) of BioHarvest Sciences Inc. (the “Company”) is to assist the Board with oversight of the Company’s accounting and financial reporting processes and the audit of the Company’s financial statements.
1.2The primary role of the Committee is to oversee the Company’s financial reporting and disclosure process. To fulfill this obligation, the Committee relies on:
(a)the Company’s executive officers and their employee designees (“management”) for the preparation and accuracy of the Company’s financial statements;
(b)both management and the Company’s personnel responsible for establishing effective internal controls and procedures to ensure the Company’s compliance with accounting standards, financial reporting procedures and applicable laws and regulations; and
(c)the Company’s independent auditors for an unbiased, diligent audit or review, as applicable, of the Company’s financial statements and the effectiveness of the Company’s internal controls.
The members of the Committee are not employees of the Company and are not responsible for conducting the audit or performing other accounting procedures.
**2.**COMMITTEE MEMBERSHIP.
2.1The Committee shall consist of three (3) or more directors. Each member of the Committee shall be “independent” in accordance with the requirements of Rule 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules of The Nasdaq Stock Market, LLC. No member of the Committee can have participated in the preparation of the Company’s financial statements at any time during the past three (3) years.
2.2Each member of the Committee must be financially literate and able to read and understand fundamental financial statements, including the Company’s balance sheet, income statement and cash flow statement. At least one member of the Committee must have past employment experience in finance or accounting, requisite professional certification in accounting or other comparable experience or background that leads to financial sophistication. At least one (1) member of the Committee must be an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K. A person who satisfies this definition of audit committee financial expert will also be presumed to have financial sophistication.
2.3The members of the Committee shall be appointed by the Board and shall serve for such term or terms as the Board may determine or until earlier resignation, removal or death. The Board may remove any member from the Committee at any time with or without cause.
**3.**MEETINGS AND PROCEDURES.
3.1A majority of the members of the entire Committee shall constitute a quorum. The Committee shall act on the affirmative vote of a majority of members present at the meeting at which a quorum is present. The Committee may request any officer or employee of the Company or the Company’s outside counsel or independent auditor to attend a meeting of the Committee or to meet with any members of, or consultants to, the Committee.
3.2The Board shall designate a member of the Committee as the chairperson. The Committee shall meet at least four (4) times a year at such times and places as it deems necessary to fulfill its responsibilities. The
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Committee shall report to the Board on its discussions and actions, including any significant issues or concerns that arise at its meetings, and shall make recommendations to the Board as appropriate. The Committee is governed by the same rules regarding meetings (including meetings in person or by telephone or other similar communications equipment), action without meetings, notice, waiver of notice, and quorum and voting requirements as are applicable to the Board as provided for in the Company’s Articles, as amended and/or restated from time to time.
3.3Committee shall meet separately, and periodically, with management and representatives of the Company’s independent auditors, and shall invite such individuals to its meetings as it deems appropriate, to assist in carrying out its duties and responsibilities. However, the Committee shall meet regularly without such individuals present.
3.4The Committee shall review this Charter at least annually and recommend any proposed changes to the Board for approval.
**4.**POWERS AND RESPONSIBILITIES.
4.1The Committee shall have the following authority and responsibilities:
(a)to: (i) select and retain an independent registered public accounting firm to act as the Company’s independent auditors for the purpose of auditing the Company’s annual financial statements, books, records, accounts and internal controls over financial reporting; (ii) set the compensation of the Company’s independent auditors; (iii) oversee the work done by the Company’s independent auditors; and (iv) terminate the Company’s independent auditors, if necessary in the Committee’s determination;
(b)to select, retain, compensate, oversee and terminate, if necessary, any other registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company;
(c)to (i) approve all audit engagement fees and terms (with the power to sign any engagement letter providing for the same on behalf of the Company) and (ii) pre-approve all audit and permitted non-audit and tax services that may be provided by the Company’s independent auditors or other registered public accounting firms, and establish policies and procedures for the Committee’s pre-approval of permitted services by the Company’s independent auditors or other registered public accounting firms on an on-going basis;
(d)at least annually, to obtain and review a report by the Company’s independent auditors that describes: (i) the accounting firm’s internal quality control procedures; (ii) any material issues raised by the most recent internal quality control review, peer review or Public Company Accounting Oversight Board (“PCAOB”) review or inspection of the firm or by any other inquiry or investigation by governmental or professional authorities in the past five years regarding one or more audits carried out by the firm and any steps taken to deal with any such issues; and (iii) all relationships between the firm and the Company; and to discuss with the independent auditors this report and any relationships or services that may impact the objectivity and independence of the auditors;
(e)at least annually, to evaluate the qualifications, performance and independence of the Company’s independent auditors, including an evaluation of the lead audit partner; and to assure the regular rotation of the lead audit partner at the Company’s independent auditors and consider regular rotation of the accounting firm serving as the Company’s independent auditors;
(f)to review and discuss with the Company’s independent auditors: (i) the auditors’ responsibilities under generally accepted auditing standards and the responsibilities of management in the audit process; (ii) the overall audit strategy; (iii) the scope and timing of the annual audit; (iv) any significant risks identified during the auditors’ risk assessment procedures; and (v) when completed, the results, including significant findings, of the annual audit;
(g)to review and discuss with the Company’s independent auditors: (i) all critical accounting policies and practices to be used in the audit; (ii) all alternative treatments of financial information within generally accepted accounting principles (“GAAP”) that have been discussed with management, the ramifications of the use of such alternative treatments and the treatment preferred by the auditors; and (iii) other material written communications between the auditors and management;
(h)to review and discuss with the Company’s independent auditors and management: (i) any audit problems or difficulties, including difficulties encountered by the Company’s independent auditors during their audit work (such as restrictions on the scope of their activities or their access to information); (ii) any significant disagreements with management; and (iii)
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management’s response to these problems, difficulties or disagreements; and to resolve any disagreements between the Company’s auditors and management;
(i)to review with management and the Company’s independent auditors: (i) any major issues regarding accounting principles and financial statement presentation, including any significant changes in the Company’s selection or application of accounting principles; (ii) any significant financial reporting issues and judgments made in connection with the preparation of the Company’s financial statements, including the effects of alternative GAAP methods; and (iii) the effect of regulatory and accounting initiatives and off-balance sheet structures on the Company’s financial statements;
(j)to inform the Company’s independent auditors as requested as to the Committee’s understanding of the Company’s relationships and transactions with related parties that are significant to the Company; and to review and discuss with the Company’s independent auditors the auditors’ evaluation of the Company’s identification of, accounting for, and disclosure of its relationships and transactions with related parties, including any significant matters arising from the audit regarding the Company’s relationships and transactions with related parties;
(k)to review with management and the Company’s independent auditors: (i) the adequacy and effectiveness of the Company’s internal controls, including any significant deficiencies or material weaknesses in the design or operation of, and any material changes in, the Company’s internal controls; (ii) any special audit steps adopted in light of any material control deficiencies; (iii) any fraud involving management or other employees with a significant role in such internal controls; (iv) the independent auditors’ attestation (as required) of the report on internal controls and the required management certifications to be included in or attached as exhibits to the Company’s Annual Report on Form 20-F or quarterly report on Form 6-K, as applicable;
(l)to review and discuss with the Company’s independent auditors any other matters required to be discussed by applicable requirements of the PCAOB and the Securities and Exchange Commission (“SEC”);
(m)to review and discuss with the Company’s independent auditors and management the Company’s annual audited financial statements (including the related notes), the form of audit opinion to be issued by the auditors on the financial statements and the disclosure under “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to be included in the Company’s Annual Report on Form 20-F before such Form 20-F is filed, and recommend to the Board whether the audited financial statements should be included in the Company’s Form 20-F and whether the Form 6-K should be filed with the SEC;
(n)to produce the audit committee report required to be included in the Company’s annual or other proxy statements;
(o)to review and discuss with the Company’s independent auditors and management the Company’s quarterly financial statements and management’s discussion and analysis to be included in the Company’s Quarterly Report on Form 6-K before such Form 6-K is filed; and to review and discuss the Form 6-K for filing with the SEC;
(p)to recommend to the Board policies for the Company’s hiring of employees or former employees of the Company’s independent auditors;
(q)to establish and oversee Company procedures for the receipt, retention and treatment of complaints received about the Company regarding accounting, internal accounting controls or auditing matters, or instances of fraud or unlawful conduct, and for the confidential, anonymous submission by Company employees of concerns regarding such matters;
(r)to review and discuss with management the material risks faced by the Company and the policies, guidelines and processes by which management assesses and manages the Company’s risks, including the Company’s major financial risk exposures and the steps management has taken to monitor and control such exposures;
(s)to oversee the Company’s compliance with applicable laws and regulations and to review and oversee the Company’s policies, procedures and programs designed to promote and monitor such legal and regulatory compliance;
(t)to review with the Company’s legal counsel, legal and regulatory matters, including legal cases against or regulatory investigations of the Company that could have a significant impact on the Company’s financial statements;
(u)to review, approve and oversee any transaction between the Company and any related person (as defined in Item 404 of Regulation S-K promulgated by the SEC) and any other potential conflict of interest situations on an ongoing basis, in accordance with Company policies and procedures, and to develop policies and procedures for the Committee’s approval of related party transactions; and
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(v)to implement and oversee the Company’s cybersecurity and information security policies, including the periodic review of the policies and managing potential cybersecurity incidents.
**5.**OUTSIDE ADVISORS.
5.1The Committee shall have the authority, in its sole discretion, to retain and obtain the advice and assistance of independent outside counsel and such other advisors as it deems necessary to fulfill its duties and responsibilities under this Charter. The Committee shall set the compensation, and oversee the work, of any outside counsel and other advisors.
5.2The Committee shall receive appropriate funding from the Company, as determined by the Committee in its capacity as a committee of the Board, for the payment of compensation to the Company’s independent auditors, any other accounting firm engaged to perform services for the Company, any outside counsel and any other advisors to the Committee.
**6.**DELEGATION OF AUTHORITY.
6.1The Committee shall have the authority to delegate any of its responsibilities, along with the authority to take action in relation to such responsibilities, to one or more subcommittees as the Committee may deem appropriate in its sole discretion.
**7.**PERFORMANCE EVALUATION.
7.1The Committee shall conduct or otherwise participate in/respond to an annual evaluation of the performance of its duties under this Charter and shall present, or otherwise participate in, the results of the evaluation to the Board. The Committee shall conduct this evaluation in such manner as it deems appropriate.
**8.**CLAWBACK REQUIREMENTS.
8.1To the extent that the Company continues to be listed on an exchange on which securities are traded and subject to Rule 10D-1 of the Exchange Act, the Committee shall assist and advise the Board and the Compensation Committee thereof in enforcing the Company’s Executive Compensation Clawback Policy and related laws, rules and regulations.
**9.**DISCLOSURE OF CHARTER.
9.1This Charter and any amendments or restatements to this Charter will be made available on the Company’s website.
Adopted by the Board on September 20, 2024.
A4 BIOHARVEST SCIENCES INC. - Form 40-F SEC filing
BioHarvest Sciences Inc.
Consolidated Financial Statements
For the Year Ended December 31, 2025
Expressed in U.S. dollars in thousands
TABLE OF CONTENTS
| Page | |
|---|---|
| Report of Independent registered public accounting firm<br><br><br>(BDO Ziv Haft; Tel-Aviv, Israel; PCAOB ID#1185) | 2 |
| FINANCIAL STATEMENTS: | |
| Consolidated Statements of Financial Position | 3 |
| Consolidated Statements of Loss and Other Comprehensive Loss | 4 |
| Consolidated Statements of Changes in Shareholders' Equity | 5 |
| Consolidated Statements of Cash Flows | 6 |
| Notes to the Consolidated Financial Statements | 7-46 |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors of BioHarvest Sciences Inc.
British Columbia, Canada
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated statements of financial position of BioHarvest Sciences Inc. and its subsidiaries (the "Company") as of December 31, 2025 and 2024 and the related consolidated statements of loss and other comprehensive loss, changes in shareholders’ equity and cash flows for each of the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and 2024 and the results of its operations and its cash flows for each of the years then ended, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board and Interpretations (collectively IFRS Accounting Standards).
Substantial Doubt About 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 described in Note 1B to the consolidated financial statements, the Company incurred losses from operations since its inception, and as of December 31, 2025, the Company has an accumulated deficit of $107,553 thousand. In addition, the Company generated negative cash flows from operating activities of $7,226 thousand and a loss in the amount of $11,135 thousand for the year ended December 31, 2025. These factors raise a substantial doubt 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 1B. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. Our opinion is not modified with respect to this matter.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our 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 audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion.
We have served as the Company’s auditor since 2019.
| Tel-Aviv, Israel | Ziv Haft |
|---|---|
| March 31, 2026 | Certified Public Accountants (Isr.) |
| BDO Member Firm |
2
BioHarvest Sciences Inc. and its subsidiaries
Consolidated Statement s of Financial Position
USD dollars in thousands
| As of December 31, | As of December 31, | ||
|---|---|---|---|
| Note | 2025 | 2024 | |
| Assets | |||
| Current assets | |||
| Cash and cash equivalents | $ 23,025 | $ 2,390 | |
| Trade accounts receivable | 4 | 1,981 | 1,116 |
| Other accounts receivable | 5 | 935 | 695 |
| Inventory | 6 | 4,559 | 3,655 |
| Total current assets | 30,500 | 7,856 | |
| Non-current assets | |||
| Restricted cash | 433 | 371 | |
| Property, plant and equipment, net | 7 | 8,326 | 7,750 |
| Right-of-use assets, net | 8 | 8,406 | 9,024 |
| Total non-current assets | 17,165 | 17,145 | |
| Total assets | $ 47,665 | $ 25,001 | |
| Liabilities | |||
| Current liabilities | |||
| Trade accounts payable | $ 2,627 | $ 3,525 | |
| Other accounts payable | 11 | 2,173 | 3,609 |
| Deferred revenue | 492 | 906 | |
| Lease liabilities | 8 | 1,405 | 772 |
| Loans | 10 | 149 | 3,905 |
| Liability for Agricultural Research Organization | 15 | 452 | 1,140 |
| Accrued liabilities | 386 | 401 | |
| Total current liabilities | 7,684 | 14,258 | |
| Non-current liabilities | |||
| Lease liabilities | 8 | 10,130 | 9,141 |
| Loans | 10 | 2,420 | - |
| Liability for Agricultural Research Organization | 15 | 1,983 | 272 |
| Total non-current liabilities | 14,533 | 9,413 | |
| Shareholders' equity | |||
| Share capital and contributed surplus | 12 | 133,001 | 97,748 |
| Accumulated deficit | (107,553) | (96,418) | |
| Total Shareholders' equity | 25,448 | 1,330 | |
| Total liabilities and shareholders' equity | $ 47,665 | $ 25,001 |
Going Concern (Note 1B)
| March 31, 2026 | 'Zaki Rakib' | 'Ilan Sobel' |
|---|---|---|
| Date of approval of the financial statements | Chairman of the Board | Chief Executive Officer |
The accompanying notes are an integral part of the consolidated financial statements.
3
BioHarvest Sciences Inc. and its subsidiaries
Consolidated Statements of Loss and Other Comprehensive Loss
USD in thousands, except per share data
| Year Ended December 31 | |||
|---|---|---|---|
| Note | 2025 | 2024 | |
| Revenues | 18 | $ 34,508 | $ 25,188 |
| Cost of revenues | 19 | (14,032) | (11,246) |
| Gross profit | 20,476 | 13,942 | |
| Operating expenses | |||
| Research and development | 20 | (5,312) | (4,797) |
| Sales and marketing | 21 | (15,812) | (11,733) |
| General and administrative | 22 | (4,927) | (4,401) |
| Total operating expenses | (26,051) | (20,931) | |
| Operating loss | (5,575) | (6,989) | |
| Finance income | 24 | 54 | - |
| Finance expenses | 23 | (5,538) | (5,916) |
| Net loss before tax | (11,059) | (12,905) | |
| Taxes on income | 25 | (76) | (8) |
| Net loss and comprehensive loss | (11,135) | $ (12,913) | |
| Basic and diluted loss per share | (0.60) | (0.80) | |
| Weighted average number of shares outstanding | 18,411,153 | 16,193,787 |
The accompanying notes are an integral part of the consolidated financial statements
4
BioHarvest Sciences Inc. and its subsidiaries
Consolidated Statements of Changes in Shareholders’ Equity
USD in thousands, except per share data
| Number of shares | Share Capital and contributed surplus | Accumulated deficit | Total equity | |
|---|---|---|---|---|
| Balance, December 31, 2023 | 13,676,798 | $ 68,652 | $ (83,505) | $ (14,853) |
| Exercise of employee and consultant stock options and warrants | 106,132 | 408 | - | 408 |
| Share‑based compensation expense | - | 601 | - | 601 |
| Conversion of convertible loans into equity | 2,940,882 | 20,527 | - | 20,527 |
| Issuance of warrants | - | 2,296 | - | 2,296 |
| Reclassification of warrants | - | 934 | - | 934 |
| Issuance of units of securities in private placement | 603,904 | 4,330 | - | 4,330 |
| Comprehensive loss for the period | - | - | (12,913) | (12,913) |
| Balance, December 31, 2024 | 17,327,716 | $ 97,748 | $ (96,418) | $ 1,330 |
| Exercise of employee and consultant stock options and warrants | 19,877 | 107 | - | 107 |
| Share‑based compensation expense | - | 597 | - | 597 |
| Conversion of convertible loans into equity | 1,169,758 | 7,236 | - | 7,236 |
| Issuance of shares upon vesting of RSUs | 11,114 | - | - | - |
| Modification of warrants (extension of expiration date) | - | 549 | - | 549 |
| Exercise of investor warrants | 1,291,523 | 8,502 | - | 8,502 |
| Issuance of shares in public offering | 2,846,854 | 18,262 | - | 18,262 |
| Comprehensive loss for the period | - | - | (11,135) | (11,135) |
| Balance, December 31, 2025 | 22,666,842 | $ 133,001 | (107,553) | $ 25,448 |
The accompanying notes are an integral part of the consolidated financial statements.
5
BioHarvest Sciences Inc. and its subsidiaries
Consolidated Statement of Cash Flows
USD in thousands
| Year Ended December 31 | ||
|---|---|---|
| 2025 | 2024 | |
| Cash flows from operating activities: | ||
| Net loss | $ (11,135) | $ (12,913) |
| Adjustments to reconcile net loss to net cash used in operating activities: | ||
| Depreciation and Amortization | 1,624 | 1,251 |
| Fair value adjustments of Convertible Loans | - | 3,503 |
| Fair value adjustments of derivative liability - Warrants | - | 408 |
| Re-assessment of Liability for Agricultural Research Organization | (396) | (205) |
| Interest over Liability for Agricultural Research Organization | 270 | 403 |
| Finance expense (income), net | 3,756 | 823 |
| Share based compensation | 597 | 601 |
| Adjustments for changes in working capital: | ||
| Change in Trade accounts receivable | (865) | (308) |
| Change in Other accounts receivable | (240) | (286) |
| Change in Inventory | (904) | (1,189) |
| Changes in Trade accounts payable, Other accounts payable and Accrued liabilities | 482 | 1,040 |
| Changes in deferred revenue | (415) | 188 |
| Net cash used in operating activities | (7,226) | (6,684) |
| Cash flow from investing activities: | ||
| Purchase of property and equipment | (2,355) | (2,835) |
| Deposit of restricted cash for bank guarantee, net of drawing | (10) | (192) |
| Net cash used in investing activities | (2,365) | (3,027) |
| Cash flow from financing activities | ||
| Repayments of lease liabilities | (1,382) | (579) |
| Proceeds from loans | 12,402 | 3,417 |
| Repayments of loans (principal and interest) | (5,772) | (103) |
| Repayments of Convertible Loans (principal and interest) | - | (693) |
| Proceeds from exercise of investor warrants, net of finder fees | 6,800 | - |
| Net proceeds from issuance of units of securities in private placement | - | 4,330 |
| Repayment of royalties’ liability to the Agricultural Research Organization | (159) | - |
| Net proceeds from issuance of shares in public offering | 18,262 | - |
| Proceeds from exercise of stock options | 36 | 408 |
| Net cash provided by financing activities | 30,187 | 6,780 |
| Exchange rate differences on cash and cash equivalents | 39 | (34) |
| Increase (decrease) in cash and cash equivalents | 20,596 | (2,931) |
| Cash and cash equivalents at the beginning of the period | 2,390 | 5,355 |
| Cash and cash equivalents at the end of the period | $ 23,025 | $ 2,390 |
| Supplemental disclosure of significant non-cash transactions: | ||
| Conversion of convertible loans into equity | 7,603 | 20,527 |
| Exercise of investor warrants by settlement of an outstanding debt | 1,759 | - |
| Reclassification of warrants as an equity instrument | - | 934 |
| Purchase of property under installment payment agreement | - | 1,440 |
| Recognition of right-of-use assets and lease liabilities | 399 | 8,351 |
| Supplemental disclosure of cash flow information: | ||
| Taxes paid | 39 | 45 |
6
The accompanying notes are an integral part of the consolidated financial statements.
7
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
NOTE 1- General:
**A.**Description of the Company and its operations:
BioHarvest Sciences Inc. (the “Company” or “BioHarvest Sciences”), together with its wholly owned subsidiaries, was incorporated under the Business Corporations Act of British Columbia on April 19, 2013. The Company fully owns BioHarvest Ltd. (“BioHarvest”), a company incorporated in Israel and commenced its activity on July 2007, and Superfood Nutraceuticals Inc. ("Superfood") a wholly owned subsidiary incorporated in Delaware, USA in July 2014.
In July 2014, BioHarvest incorporated a Delaware based wholly owned subsidiary, BioHarvest Inc ("BioHarvest Inc").
The Company is publicly listed and traded on the Nasdaq Stock Market under the symbol BHST and traded on the Frankfurt Stock Exchange, Munich Stock Exchange, Stuttgart Stock Exchange and Dusseldorf Stock Exchange under the symbol 8MV0.
In February 2025, the Company completed a voluntary delisting process of its common shares from the Canadian Securities Exchange and continue to be listed on the Nasdaq Stock Market.
The registered address of the Company is 1140-625 Howe St., Vancouver, BC V6C 2T6, Canada.
Description of Business
The Company is a biotechnology company that has developed the Botanical Synthesis Platform Technology, which enables the Company to grow, on an industrial scale, the active and beneficial ingredients in certain fruits and plants without the need to grow the plant itself. The Botanical Synthesis Platform Technology is the only non-genetically modified organism platform that can produce plant cells with significantly higher concentrations of active ingredients (as compared to those that are produced naturally), as well as extremely high levels of solubility and bio-availability. The Botanical Synthesis Platform Technology is economical, ensures consistency and avoids the negative environmental impacts associated with traditional agriculture by providing consistent product production, a year-round production cycle and products that are devoid of sugar, calories and contaminants, such as pesticides, heavy metals and residues.
The Company is currently focused on utilizing the Botanical Synthesis Platform Technology to develop the next generation of science-based and clinically proven therapeutic solutions through two business units:
1.The Products Business Unit - Nutraceuticals: Research, development, manufacturing, marketing and sales of science-based health and wellness nutraceutical solutions which are manufactured and sold as dietary supplements, functional food and beverages (capsules, powders, chews and other delivery mechanisms such as coffee, teas and powder electrolyte beverages).
2.The CDMO Services Business Unit - comprising a Contract Development and Manufacturing Operation (“CDMO”) that offers customers from the pharmaceuticals, cosmeceuticals, nutraceuticals and nutrition industries the development and future manufacturing of specific plant-based active molecules, via an end-to-end service agreement.
**B.**Going concern:
The consolidated financial statements have been prepared on a going concern basis in accordance with International Financial Reporting Standards. Management has evaluated the Company's ability to continue as a going concern for a period of at least twelve months from the date these consolidated financial statements are issued.
The Company has a history of operating losses and has not yet achieved sustained cash-flow profitability. For the year ended December 31, 2025, the Company generated revenues of $34,508 and incurred a net operating loss. As of December 31, 2025, the Company had cash and cash equivalents of $23,025. These conditions, together with the need for continued investment in operations and the uncertainty regarding the timing and availability of additional financing, represent factors that raise substantial doubt about the Company’s ability to continue as a going concern.
8
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
The Company may require additional capital to fund its long-term growth strategy and planned capital investments. If required, the Company intends to raise such capital through one or more of the following: the issuance of equity or equity-linked securities, debt financing, strategic collaborations, licensing arrangements or other financing transactions. The Company is listed on the Nasdaq Capital Market and has previously demonstrated access to the capital markets; however, there can be no assurance that additional financing will be available on acceptable terms, or at all.
Based on management’s assessment, the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, despite the factors noted above, the going concern basis of preparation remains appropriate, and these consolidated financial statements do not include any adjustments that might result from the outcome of uncertainties related to the going concern assessment.
The consolidated financial statements of the Company were authorized for issue by the Board of Directors on March 31, 2026.
**C.**War in Israel:
The Company’s principal place of business, operations and its facilities, where most of its employees are employed, are located in Rehovot and Yavne, Israel. In addition, the majority of the Company’s key employees and senior management are Israeli citizens.
On October 7, 2023, Hamas militants infiltrated Israel’s southern border from the Gaza Strip and carried out attacks against civilian and military targets in Israel. Following these events, the Government of Israel declared war against Hamas and the Israel Defense Forces initiated a large-scale mobilization of military reservists. Hostilities between Israel and Hamas continued through 2023, 2024 and 2025. On October 9, 2025, the Israeli Cabinet approved a ceasefire and hostage exchange agreement between Israel and Hamas that was brokered by the United States and took effect on October 10, 2025.
During this period, hostilities also escalated along Israel’s northern border involving Hezbollah forces operating from Lebanon. On November 27, 2024, Israel and Lebanon agreed to a ceasefire arrangement that remained in effect until February 18, 2025.
In June 2025, tensions between Israel and Iran escalated significantly and resulted in military operations between the two countries. On June 24, 2025, Israel and Iran agreed to an immediate ceasefire.
On February 28, 2026, the United States and Israel conducted coordinated aerial operations targeting military and governmental facilities in Iran. Subsequently, Iran launched missile attacks across parts of the Middle East and Hezbollah launched barrages of rockets toward northern Israel, leading to retaliatory actions by Israel. As of the date of these financial statements, hostilities in the region have intensified and involve multiple parties, including Israel, the United States, Iran and Hezbollah.
The evolving regional security situation has created and may continue to create significant uncertainty and could adversely affect Israel's economy, the Company's operations, employees, business partners, supply chain and overall business environment. The Company confirms that it has a business continuity plan and procedures in place, ensuring operational and financial continuity. As of the date of these financial statements, the Company has not experienced a material adverse impact on its operations; however, the Company continues to monitor the situation closely and cannot predict the ultimate impact that these developments may have on its business, financial condition or results of operations and have implemented several measurements (e.g., remote work protocols/safety stock) to mitigate potential disruptions.
9
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
NOTE 2- Significant Accounting Policies:
The following accounting policies have been applied consistently in the consolidated financial statements for all periods presented, unless otherwise stated.
a. Basis of preparation:
The principal accounting policies adopted in the preparation of the consolidated financial statements are set out below. The policies have been consistently applied to all the years presented, unless otherwise stated.
These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and Interpretations (collectively IFRS Accounting Standards). The consolidated financial statements have been prepared under the historical cost convention, except for the embedded derivative, share-based compensation, right-of-use assets and lease liabilities, hybrid instrument, liability for agricultural research organization and the convertible loans that are measured at fair value through profit or loss.
b. New standards, interpretations and amendments adopted from 1 January 2025:
The following amendments are effective for the period beginning January 1, 2025:
a)Lack of Exchangeability (Amendments to IAS 21); These amendments set out the requirements for determining the exchange rate to be used for recording a foreign currency transaction into the functional currency and translating a foreign operation into a different currency. These amendments clarify how an entity should assess whether a currency is exchangeable and how it should determine a spot exchange rate when exchangeability is lacking, as well as require the disclosure of information that enables users of financial statements to understand the impact of a currency not being exchangeable. These amendments had no material effect on the Consolidated Financial Statements of the Company.
b)IFRIC Agenda Decision on IFRS 8 Operating Segments; Requires disclosure of specified revenues and expenses for each reportable segment when those amounts are included in the measure of segment profit or loss reviewed by the Chief Operating Decision Maker or regularly provided to them. This agenda decision had no material effect on the Consolidated Financial Statements of the Company.
In April 2024, the IASB issued IFRS 18 “Presentation and Disclosure in Financial Statements” replacing IAS 1 to improve the usefulness of information presented and disclosed in financial statements. IFRS 18 introduces three sets of new requirements. The standard defines categories for income and expenses, such as operating, investing and financing, and requires entities to provide new defined subtotals, including operating profit. IFRS 18 also requires entities that define entity-specific measures that are related to the income statement to disclose explanations of those measures, referred to as management-defined performance measures. In addition, it sets out enhanced guidance on how to organize information and whether to provide it in the primary financial statements or in the notes and requires entities to provide more transparency about operating expenses. These new requirements are to improve the entities’ reporting of financial performance and give investors a better basis for analyzing and comparing entities. The standard carries forward many requirements from IAS 1 unchanged. The standard is effective for annual periods beginning on or after January 1, 2027. The Company has decided not to adopt early this standard. The Company does not believe that this standard will have a material impact on the consolidated financial statements once adopted.
There are a number of standards and interpretations which have been issued by the International Accounting Standards Board that are effective for periods beginning subsequent to December 31, 2025, that the Company has decided not to adopt early. The Company does not believe that the standards, interpretations and amendments will have a material impact on the financial statements once adopted.
c. 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, revenue and expenses. These estimates and underlying assumptions are reviewed regularly. Changes in accounting estimates are reported in the period that the change in estimate occurs.
10
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
The key assumptions made in the financial statements concerning uncertainties at the end of the reporting period and the critical estimates used by the Company that may result in a material adjustment to the carrying amounts of assets and liabilities within the next financial years are discussed in Note 3.
Other estimates and assumptions used in preparing the financial statements, which are not considered critical and do not involve significant uncertainty:
**1.**Fair value of share-based payment transactions:
The fair value of share-based payment transactions is determined upon initial recognition by the Black-Scholes pricing model. The inputs to the model include share price, exercise price and assumptions regarding expected volatility, expected life of share option and expected dividend yield.
**2.**Equity instruments - warrants:
The Company uses the Black-Scholes option-pricing model to estimate the fair value of equity-classified warrants at the grant date. The key assumptions applied in the model include the expected volatility of the Company’s share price over the warrant’s life and the risk-free interest rate.
3.Derivative liability - Warrants
The Company uses the Black-Scholes option-pricing model to estimate fair value at each reporting date. The key assumptions used in the model are the expected future volatility in the price of the Company's shares and the expected life of the warrants.
4.Derivative liability - Convertible loans:
The fair value of the convertible loans at fair value was estimated by using a binomial model. The simulation approach was designed to take into account the terms and conditions of financial liability, as well as the capital structure of the Company and the volatility of its assets. The valuation was performed based on management’s assumptions and projections.
d. Functional and presentation currency:
The functional currency of the Company and its subsidiaries and the presentation currency of the consolidated financial statements is USD. The Company and its subsidiaries determine the functional currency of each entity, and this currency is used to separately measure each Company entity's financial position and operating results.
e. Foreign currency transactions:
Transactions denominated in foreign currency other than the functional currency are recognized on initial recognition at the exchange rate as of the date of the transaction. After initial recognition, monetary assets and liabilities denominated in foreign currency are translated at the end of each reporting period into the functional currency at the exchange rate as of that date. Exchange differences are recognized in profit or loss. Non-monetary assets and liabilities measured at cost are translated at the exchange rate as of the date of the transaction.
Transactions and balances in foreign currencies are converted into USD in accordance with the principles set forth by International Accounting Standard (IAS) 21 - "The Effects of Changes in Foreign Exchange Rates”.
f. Basis of consolidation:
The Company controls an investee if and only if the Company has:
-Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee).
-Exposure, or rights, to variable returns from its involvement with the investee, and
-The ability to use its power over the investee to affect its returns.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control over the subsidiary.
11
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. All intra-Company assets and liabilities, income, expenses and cash flows relating to transactions between members of the Company are eliminated in full consolidation. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Company loses control over a subsidiary, it (i) derecognizes the assets (including goodwill) and liabilities of the subsidiary, the carrying amount of any non-controlling interests and the cumulative translation differences recorded in equity. (ii) Recognizes the consideration received at fair value, recognizes any investment retained at fair value of and recognizes any surplus or deficit in profit or loss. (iii) reclassifies the parent’s share of components previously recognized in OCI to profit or loss or retained earnings, as appropriate, as would be required if the Company had directly disposed of the related assets or liabilities.
g. Cash and cash equivalents:
Cash and cash equivalents are considered by the Company to be highly liquid investments, including short-term deposits held by financial institutions with maturity of not exceeding three months at the time of deposit and are not restricted.
h. Trade accounts receivable:
Trade accounts receivable includes billed and unbilled receivable. Trade accounts receivable is recorded at invoiced amounts and do not bear interest. Unbilled accounts receivable represent revenue recognized on contracts for which invoices have not yet been presented to customers because the amounts were earned but not contractually billable as of the balance sheet date.
The proceeds from sales transactions with end-customers are charged through credit cards and processed by authorized payment gateways which subsequently deposit the funds into the Company’s bank accounts on a scheduled payments cycles of no later than a few weeks following the transaction date.
The Company charges customers for products at the time the order is placed and subsequently arranges shipment of the goods to the customer.
i. Inventories:
Inventories are measured at the lower of cost and net realizable value. The cost of inventories comprises costs of purchase and costs incurred in bringing the inventories to their present location and condition. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and estimated costs necessary to make the sale. The Company periodically evaluates the condition and age of inventories and makes provisions for slow moving inventories accordingly. As of December 31, 2025, and 2024 there is no provision for slow-moving and obsolescent inventory.
Cost of inventories is as follows:
Raw materials - at cost of purchase, determined using the average cost method.
Work in progress and finished goods - based on average costs including materials, labor and other direct and indirect manufacturing costs based on normal capacity.
In the current reporting period, the Company revised its raw materials measurement policy and transitioned from applying the FIFO method to the average cost method. The new method provides more reliable and relevant information. As the effect of this change is not material, the Company has elected not to restate the comparative figures.
j. Restricted cash:
Restricted cash is considered by the Company to be deposits held by financial institutions which are used mainly as security for guarantees.
k. Deferred taxation:
The Company accounts for income taxes in accordance with the asset and liability method. Under this method, deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and losses carried forward.
12
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
Deferred income tax assets and liabilities are measured using enacted or substantively enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in the statement of operations in the period that includes the date of enactment or substantive enactment.
Current income taxes are recognized for the estimated income taxes payable for the current year.
Deferred income tax assets are recognized to the extent that management believes that it is probable that future taxable profit will be available against which the temporary differences can be utilized.
l. Impairment of non-financial assets:
Non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. Where the carrying value of the non-financial asset exceeds its recoverable amount (i.e. the higher of value in use and fair value less costs to dispose), the asset is written down and impairment charge is recognized accordingly.
Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the asset's cash-generating unit (i.e. the smallest class of assets to which the asset belongs that generates cash inflow that are largely independent of cash inflows from other assets).
During the years ended December 31, 2025, and 2024 no impairment charges of non-financial assets were recognized.
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.
The fair value measurement is based on the presumption that the transaction to sell the asset or transfer liability takes place either:
1.In the principal market for the asset or liability, or
2.In the absence of a principal market, in the most advantageous market for the asset or liability.
The principal or the most advantageous market must be accessible to by the Company.
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.
A 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.
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.
Classification of fair value hierarchy
The financial instruments presented in the consolidated statement of financial position at fair value are grouped into classes with similar characteristics using the following fair value hierarchy which is determined based on the source of input used in measuring fair value:
| Level 1 | - | Quoted prices (unadjusted) in active markets for identical assets or liabilities. |
|---|---|---|
| Level 2 | - | Inputs other than quoted prices included within Level 1 are observable either directly or indirectly. |
13
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
n. Financial instruments:
**1.**Financial assets:
The Company classifies its financial assets based on the business model for managing the financial asset and its contractual cash flow characteristics. The Company's accounting policy for the relevant category is as follows:
Amortized cost
These assets arise principally from the provision of goods and services to customers (e.g., trade accounts receivable, restricted cash and other accounts receivable) but also incorporate other types of financial assets where the objective is to hold these assets in order to collect contractual cash flows and the contractual cash flows are solely payments of principal and interest. They are initially recognized at fair value plus transaction costs that are directly attributable to their acquisition or issue and are subsequently carried at amortized cost using the effective interest rate method, less provision for impairment.
**2.**Financial Liabilities:
The Company classifies its financial liabilities into one of the following categories:
Amortized cost
These liabilities include trade accounts payable, accrued liabilities, loans and Liability to Agricultural Research Organization, initially recognized at fair value plus transaction costs that are directly attributable to the issue of the instrument and are subsequently carried at amortized cost using the effective interest rate method, less provision for impairment.
Fair value through profit or loss
These financial liabilities can be settled in equity instruments but nevertheless do not meet the definitions of equity instruments.
The Company measures those financial liabilities at fair value. Transaction costs are recognized as profit or loss. After initial recognition, changes in fair value are recognized in profit or loss.
Warrants and convertible loans that are denominated in a currency other than the functional currency of the Company are considered derivative liability and were classified as financial liabilities at fair value through profit or loss. Accordingly, these warrants and convertible notes were measured at fair value and the changes in fair value in each reporting period was recognized in profit or loss.
**3.**Derecognition:
Financial assets
The Company derecognizes a financial asset when the contractual rights to the cash flows from the financial asset expire or it transfers the rights to receive the contractual cash flows.
Financial Liabilities
Financial liability is derecognized when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of profit or loss.
The terms of a financial liability are substantially different if the discounted cash flows under the new terms are at least 10% different from the discounted remaining cash flows of the original financial liability.
**4.**Impairment of financial assets:
The Company assesses at the end of each reporting period whether there is any objective evidence of impairment of financial assets carried out at amortized cost. As of December 31, 2025, and 2024 there is no evidence of impairment.
The expected credit loss (“ECL”) for trade accounts receivable is measured using the simplified method in accordance with IFRS 9, which requires an estimation of the lifetime expected credit loss for trade accounts receivable.
14
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
As of December 31, 2025, and 2024, ECL for trade and other accounts receivable were $0 and $0 respectively.
o. Operating Segment:
An operating segment is a component of the Company that meets the following three criteria:
1.Engaged in business activities from which it may earn revenues and incur costs; and
2.Operating results are regularly reviewed by the Company's chief operating decision maker to make decisions about allocated resources to the segment and assess its performance; and
3.For which separate financial information is available.
Segment revenue and segment costs include items that are attributable to the relevant segments and items that can be allocated to segments. Items that cannot be allocated to segments include the Company's financial income and expenses and income tax.
The Company's chief operating decision maker is the chief executive officer.
See note 26 regarding geographical and segmental information.
p. Share-based compensation:
Equity‑settled share options and warrants granted to employees and service providers are measured at their fair value on the grant date and recognized as an expense in the Consolidated Statements of Loss and Other Comprehensive Loss over the vesting period. Fair value is determined using an option‑pricing model (such as Black‑Scholes), taking into account the terms and conditions of the grant, including the exercise price, expected volatility, expected life of the instrument, risk‑free interest rate and expected dividend yield.
Restricted Stock Units (RSUs) granted to employees are measured at their fair value on the grant date and recognized as an expense in the Consolidated Statements of Loss and Other Comprehensive Loss over the vesting period. The fair value of the RSUs is generally determined based on the market price of the Company’s common shares on the grant date, as the awards have no exercise price and do not contain market‑based performance conditions unless otherwise specified.
Non‑market vesting conditions are taken into account by adjusting the number of awards expected to vest at each reporting date. As a result, the cumulative amount recognized over the vesting period reflects the number of equity instruments that are ultimately expected to vest.
q. Liability for Agricultural Research Organization:
The Company recognizes royalties payable to The Agricultural Research Organization - Volcany Institute (the "ARO") as a financial liability in accordance with IFRS 9. Royalties are measured at the present value of the expected future payments under contractual arrangements. Liability is initially recognized when the related revenue is earned, and the obligation becomes probable and reliably measurable. Subsequent measurement is at amortized cost using the effective interest method.
Changes in estimates of future royalties, including adjustments for sales volumes or contractual terms, are recognized as a reduction in general and administrative expenses.
Royalties expense is presented within general and administrative expenses in the Statements of Loss and Other Comprehensive Loss. The corresponding liability is presented as Liability for Agricultural Research Organization or Other accounts payable in the Statement of Financial Position.
r. Property, plant and equipment:
Property, plant 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. Costs include spare parts and auxiliary equipment that are used in connection with plant and equipment.
A part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately using the component method.
The cost of an item of property, plant and equipment comprises the initial estimate of the costs of dismantling and removing the item and restoring the site on which the item is located.
15
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
Depreciation is calculated on a straight-line basis over the useful life of the assets at annual rates as follows:
| Class | % |
|---|---|
| Computers and others related | 33 |
| Furniture and office equipment | 7-33 |
| Leasehold improvements | 10-30 |
| Laboratory equipment | 10-15 |
| Factories | 7-33 |
Leasehold improvements are depreciated on a straight-line basis over the shorter of the lease term (including the extension option held by the Company and intended to be exercised) and the expected life of the improvement.
The useful life, depreciation method and residual value of an asset are reviewed at least each year-end, and any changes are accounted for prospectively as a change in accounting estimate. Depreciation of an asset ceases at the earlier of the date that the asset is classified as held for sale and the date that the asset is derecognized.
s. Revenue recognition:
Revenue is recognized in accordance with IFRS 15 Revenue from Contracts with Customers. Under IFRS 15, revenue is recognized when (or as) control of the promised goods or services transfers to the customer, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services.
The Company identifies each contract with a customer, determines the separate performance obligations, establishes the transaction price, allocates the consideration to the performance obligations based on their relative stand‑alone selling prices, and recognizes revenue as performance obligations are satisfied.
The Company generates revenue from two primary sources:
(1) In the products business unit, the Company derives its revenue from selling and transferring goods.
(2) In the CDMO Services business unit, the Company derives its revenue through completing an end-to-end service activity for the research, development and manufacturing of specific plant-based active molecules.
Sales of goods
Revenue from product sales is recognized at a point in time, when control of the goods is transferred to the customer. Control typically transfers to shipment or delivery, depending on the contractual terms.
Revenue is measured at the transaction price, net of estimated returns, rebates, discounts, and any variable consideration, to the extent that it is not subject to significant reversal.
The Company evaluated principal versus agent considerations to determine whether it is appropriate to record platform fees on one of its e-commerce platforms as an expense or as a reduction of revenue. Platform fees are recorded as expenses and are not recorded as a reduction in revenue because the Company controls all the goods before they are transferred to the customer. The Company is subject to credit risk, establishes prices of its products, determines who delivers the goods to the customer and can limit quantities or stop selling the goods at any time. Based on these considerations, the Company is the principal in this arrangement.
The right of return gives rise to variable consideration. The variable consideration is estimated at contract inception and constrained until the associated uncertainty is subsequently resolved. The application of the constraint on variable consideration increases the amount of revenue that will be deferred. To estimate the variable consideration to which it will be entitled, the Company applied the ‘most likely amount’ method. The Company includes in the transaction price amounts of variable consideration only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. At the end of each reporting period, the Company updates its estimates of variable consideration.
Providing services
The Company’s CDMO Services business unit revenue is recognized at a point in time, upon completion of the contractually defined performance obligation and when control of the completed service output is transferred to the
16
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
customer. These arrangements do not meet the criteria for over‑time revenue recognition under IFRS 15, and therefore revenue is recorded only upon delivery of the completed milestone or output.
Deferred revenues
A deferred revenue is recognized if a payment is received, or a payment is due (whichever is earlier) from a customer before the Company transfers the related goods or services. Contract liabilities are recognized as revenue when the Company performs under the contract (i.e., transfers control of the related goods or services to the customer).
Financing components
The Company does not expect to have any contracts where the period between the transfer of the promised goods or services to the customer and payment by the customer exceeds one year. Consequently, the Company does not adjust any of the transaction prices for the time value of money.
t. Provisions:
Provisions are recognized when the Company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result, and that outflow can be reliably measured. Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period.
u. Leases:
Right-of-use assets:
The Company recognizes right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and any accumulated impairment losses, and adjusted for any re-measurement of lease liabilities. The cost of right-of-use assets incurred, and lease payments made at or before the commencement date fewer any lease incentives received. The cost of right-of-use assets comprises the amount of the initial measurement of the lease liability; lease payments made at or before the commencement date less any lease incentives received; and initial direct costs incurred. The recognized right-of-use assets are depreciated on a straight-line basis over the shorter of its estimated useful life and the lease term. Right-of-use assets are subject to impairment.
Lease liabilities:
At the commencement date of the lease, the Company recognizes lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Company and payments of penalties for terminating a lease, if the lease term reflects the Company exercising the option to terminate. The variable lease payments that do not depend on an index or a rate are recognized as expense in the period during which the event or condition that triggers the payment occurs.
Lease term:
The term of a lease is determined as the non-cancellable period for which a lessee has the right to use an underlying asset, together with both periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option period covered by an option to terminate the lease if the lessee is reasonably certain not to exercise that option.
Depreciation of a right-of-use asset:
Subsequent to the inception of the lease, a right-of-use asset is measured using the cost method, less accumulated depreciation and accumulated impairment losses, and is adjusted for re-measurements of the lease liability. Depreciation is measured using the straight-line method over the useful life or contractual lease term, whichever ends earlier.
Lessees will be also required to re-measure the lease liability upon the occurrence of certain events (e.g., a change in the lease term, a change in future lease payments resulting from a change in an index or rate used to determine those
17
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
payments). The lessee will recognize the amount of the re-measurement of the lease liability as an adjustment to the right-of-use asset, until the carrying amount is reduced to zero.
v. Issuance costs:
The Company allocates incremental costs that are directly attributable to issuing new shares to equity, net of any income tax benefit. Costs related to the stock market listing, or those that are not incremental and directly attributable to issuing new shares, are recognized as an expense in the Statement of Loss and Other Comprehensive Loss.
w. Cost of revenues:
The cost of revenues consists of costs associated with manufacturing the goods sold by the Company in the period. Costs of revenues include direct costs, such as labor and raw materials, or indirect costs, such as machinery depreciation, warehouse utilities, stock-based compensation, and amortization of right of use assets.
The Company includes in the cost of revenues also referral fees and fulfillment expenditures which consist of receiving, segregating and storing the goods, picking, packing and shipping the goods and any reverse logistics when a return from customers occurred.
x. Research and development expenses:
Expenditure relating to research and development is expensed in the period incurred. Research and development expenses consist of both internal and external costs and include salaries and benefits, materials and supplies, external research, preclinical and clinical development expenses, stock-based compensation and facilities costs. Facilities primarily include the allocation of rent, utilities and depreciation.
Since the Company's research and development projects are often subject to regulatory approval procedures and other uncertainties, the conditions for the capitalization of costs incurred before receipt of approvals are not normally satisfied and, therefore, research and development expenses are recognized in profit or loss when incurred.
y. Sales and marketing expenses:
Sales and marketing costs are expended in the period incurred. Marketing costs consist of advertising and promotion activities and include search engine marketing, such as display ads and keyword search terms, and various other forms of digital advertising, direct costs, such as sales personnel labor or indirect costs, such as stock-based compensation and amortization of right of use assets.
z. Earnings (Loss) per share:
Basic and dilutive earnings or loss per share are calculated as net profit or loss attributed to the Company, divided by the weighted average number of outstanding common shares, during the period. The Company presents basic and diluted loss per share of the same amount for the reporting period. As the Company incurred a net loss, all potential common shares are considered anti-dilutive under IAS 33 Earnings per Share. Consequently, there is no difference between basic and diluted loss per share.
NOTE 3- Critical Accounting Estimates and Judgements:
The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, and revenue and expenses.
The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
18
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
**a.**Liability for Agricultural Research Organization:
At each reporting date, the Company measures the net present value of the Liability to Agricultural Research Organization based on an estimated expected payment schedule, determined as a percentage of revenues subject to a minimum amount, and discounted using an appropriate discount rate. ****
**b.**Incremental borrowing rate:
The Company measures lease liabilities at the present value of future lease payments, discounted using the incremental borrowing rate (“IBR”) when the interest rate implicit in the lease cannot be readily determined. Determining the IBR requires judgment and involves estimating reference interest rates, credit risk adjustments, lease term assumptions and economic environment factors. ****
NOTE 4 – Trade Accounts Receivable:
| As at December 31, | ||
|---|---|---|
| 2025 | 2024 | |
| Credit-cards through Payment’s gateway | 1,102 | 996 |
| Unbilled receivables | 879 | 120 |
| Total | 1,981 | 1,116 |
NOTE 5 - Other Accounts Receivable:
| As at December 31, | ||
|---|---|---|
| 2025 | 2024 | |
| Prepaid expenses | 595 | 441 |
| Government institutions | 262 | 226 |
| Advances to suppliers | 68 | 15 |
| Deposits | 10 | 13 |
| Total | 935 | 695 |
NOTE 6 -****Inventory:
| As at December 31, | ||
|---|---|---|
| 2025 | 2024 | |
| Raw materials | 839 | 557 |
| Work in progress | 2,511 | 2,287 |
| Finished goods | 1,209 | 811 |
| Total | 4,559 | 3,655 |
19
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
NOTE 7 – Property, Plant and Equipment, Net:
| Laboratory equipment | Furniture and office equipment | Leasehold improvements | Computers and other related | Factories | Total | |
|---|---|---|---|---|---|---|
| Cost: | ||||||
| As of January 1, 2024 | 830 | 89 | 400 | 127 | 4,176 | 5,622 |
| Additions | 60 | - | - | 11 | 4,204 | 4,275 |
| Disposals (*) | - | - | - | - | - | - |
| As of December 31, 2024 | 890 | 89 | 400 | 138 | 8,380 | 9,897 |
| Additions | 105 | 2 | - | 1 | 932 | 1,040 |
| Reclassifications | - | - | - | (4) | 4 | - |
| Disposals (*) | (165) | - | (157) | (97) | (12) | (431) |
| As of December 31, 2025 | 830 | 91 | 243 | 38 | 9,304 | 10,506 |
| Accumulated depreciation: | ||||||
| As of January 1, 2024 | 739 | 53 | 246 | 115 | 543 | 1,696 |
| Additions | 31 | 9 | 23 | 9 | 379 | 451 |
| Disposals (*) | - | - | - | - | - | - |
| As of December 31, 2024 | 770 | 62 | 269 | 124 | 922 | 2,147 |
| Additions | 35 | 8 | 21 | 8 | 392 | 464 |
| Reclassifications | - | (5) | 5 | - | - | - |
| Disposals (*) | (165) | - | (157) | (97) | (12) | (431) |
| As of December 31, 2025 | 640 | 65 | 138 | 35 | 1,302 | 2,180 |
| Net Book Value: | ||||||
| As of December 31, 2025 | 190 | 26 | 105 | 3 | 8,002 | 8,326 |
| As of December 31, 2024 | 120 | 27 | 131 | 14 | 7,458 | 7,750 |
(*) The disposals relate solely to assets that had become fully depreciated and were derecognized as they were no longer in operational use.
Equipment purchase agreement
In April 2024, the Company entered an equipment purchase agreement for purchasing 12 GMP (Good manufacturing practices standards) cleanrooms and laboratory spaces. The purchase price was NIS 13,000 ($3,532) and agreed to be paid as follows:
-NIS 4,000 ($1,087) were paid on April 1, 2024
-NIS 9,000 ($2,445) in 24 equal monthly installments of NIS 375 ($102) commencing on April 1, 2024
As of December 31, 2025, the outstanding due amount is NIS 750 ($235).
20
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
NOTE 8 – Leases:
The Company leases several facilities in Israel from which it operates. The Company also leases certain items of property and equipment which contain a lease of vehicles.
All leases are stated in Israeli New Shekel (“NIS”) and accounted for by recognizing a right-of-use asset and a lease liability except for:
1.Leases with low value assets; and
2.Leases with a duration of 12 months or less.
a)In December 2020, BioHarvest signed a lease extension agreement for a property at Rehovot, Israel, which ends on May 31, 2024. According to the terms of this agreement, BioHarvest has an extension option for 3 additional years for all of BioHarvest’s spaces at this location. BioHarvest exercised the extension option for 1 additional year for some of the property until May 31, 2025. The annual lease commitment is approximately $270. The incremental borrowing rate is 6.50%.
On June 1, 2025, the Company amend its lease agreement with the lessor for its Rehovot laboratories and offices facilities, until May 2028. The Company has the option to terminate the lease agreement (partially or completely) within the lease period. The average monthly fees are NIS 63 ($18) subject to the Consumer Price Index published by the Israeli Central Bureau of Statistics.
At the commencement of the lease, the Company believes it is probable that the lease agreement will be partially terminated early. The incremental borrowing rate is 12.75%.
b)BioHarvest leases several cars. The lease period is for 3 years. The annual lease commitment is approximately $92.
c)In October 2020, BioHarvest entered into a lease agreement with Sugart Ltd. Under the terms of the agreement, BioHarvest will invest in the required capital equipment for its technology as well as appropriate capital upgrades needed for Sugart’s existing manufacturing facility. The facility is located in Yavne, Israel, and will be leased for a period of 10 years. The annual lease commitment is approximately $130. The incremental borrowing rate is 6.50%.
On January 16, 2025, the Company revised its lease agreement with the lessor for its Yavne manufacturing facility until September 2025, subject to 2 extension options for an additional 6 months each. The average monthly fees are NIS 101 ($28), including an annual increase and other adjustments, subject to the Consumer Price Index published by the Israeli Central Bureau of Statistics.
At the commencement of the lease, the Company believes it is probable the 2 extension options for an additional total of 1 year will be exercised. During September 2025, the Company exercised the first extension option for additional 6 months. The incremental borrowing rate is 12.75%.
d)In April 2024, BioHarvest entered into a lease agreement for leasing approximately 10,300 square meters facility in Yavne, Israel (“Yavne 2 facility”) from April 1, 2024, until September 30, 2030, subject to 2 extension options for an additional 5 years each. The average monthly fees are NIS 328 ($88), including an annual increase and other adjustments, subject to the Consumer Price Index published by the Israeli Central Bureau of Statistics.
At lease commencement, the Company believes it’s probable the 2 extension options for an additional total of 10 years will be exercised. The incremental borrowing rate is 9.80%.
21
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
Right-of-Use Assets, net
| Buildings | Vehicles | Total | |
|---|---|---|---|
| As of January 1, 2024 | 1,789 | 56 | 1,845 |
| Additions | 8,194 | 157 | 8,351 |
| Modification | (758) | - | (758) |
| Index adjustments | 382 | 4 | 386 |
| Amortization | (749) | (51) | (800) |
| As of December 31, 2024 | 8,858 | 166 | 9,024 |
| Additions | 399 | - | 399 |
| Modification | (78) | (7) | (85) |
| Index adjustments | 225 | 3 | 228 |
| Amortization | (1,082) | (78) | (1,160) |
| As of December 31, 2025 | 8,322 | 84 | 8,406 |
Lease liabilities
| Buildings | Vehicles | Total | |
|---|---|---|---|
| As of January 1, 2024 | 1,737 | 70 | 1,807 |
| Additions | 8,194 | 143 | 8,337 |
| Lease payments | (511) | (68) | (579) |
| Modification | (751) | - | (751) |
| Interest expense | 663 | 8 | 671 |
| Index adjustments | 382 | 4 | 386 |
| Foreign exchange movements | 40 | 2 | 42 |
| As of December 31, 2024 | 9,754 | 159 | 9,913 |
| Additions | 399 | - | 399 |
| Lease payments | (1,290) | (92) | (1,382) |
| Modification | (78) | (7) | (85) |
| Interest expense | 997 | 10 | 1,007 |
| Index adjustments | 225 | 3 | 228 |
| Foreign exchange movements | 1,440 | 15 | 1,455 |
| As of December 31, 2025 | 11,447 | 88 | 11,535 |
22
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
NOTE 9 - Derivative Liability - Warrants:
(i)A summary of changes in share purchase warrants issued by the Company during the years ended December 31, is as follows:
| Number of Warrants | Weighted Average Exercise Price ($) | |
|---|---|---|
| Balance, December 31, 2023 | 518,174 | 7.77 |
| Reclassification as an equity instrument | (518,174) | 7.77 |
| Balance, December 31, 2024 | - | - |
| - | - | |
| Balance, December 31, 2025 | - | - |
As the warrants issued by the Company had an exercise price denominated in Canadian dollars, which differs from the Company’s functional currency, they did not qualify for classification as equity. These warrants were classified as warrant liability and were recorded initially at fair value and revalued at each reporting date, **** using the Black-Scholes valuation method. Changes in fair value for each period were included in the Statements of Loss and Other Comprehensive Loss for the period.
On March 28, 2024, all existing warrant holders as of December 31, 2023, agreed to convert the exercise price of the warrants from Canadian dollars to the equivalent in USD, based on the exchange rate at the dated of the approval of the Canadian Securities Exchange. Since the warrants have an exercise price denominated in USD which is the Company’s functional currency, the Company reclassified the warrants as an equity instrument.
Any new warrants issued by the Company during 2024 had an exercise price dominated in USD and as such qualify for classification as an equity instrument.
The Company uses the Black-Scholes option pricing model to estimate the fair value of the warrants at the issuance date and at the end of each reporting period.
(ii)The following assumptions were used to estimate the fair value of the warrants:
| March 31, 2024 | |
|---|---|
| Expected life of warrants | 1.58 years |
| Expected volatility | 50% |
| Expected dividend yield | 0% |
| Risk-free interest rate | 4.79% |
| Market Price of common share | CAD 9.80 |
| Exercise price | USD 7.77 |
The Company considers the expected volatility of the shares of comparable companies and its common shares in estimating its future stock price volatility. The risk-free interest rate for the expected life of the warrants was based on the yield available on Canadian government benchmark bonds with an approximate equivalent remaining term at the time of the grant. The expected life is based on the contractual term.
The total expense recorded for the year ended December 31, 2025, was $0 (December 31, 2024, expense of $408).
23
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
NOTE 10 - Loans:
A.Short-term loans:
For the years ending December 31, 2025, and 2024, the Company borrowed from private investors $5,094 under the following terms:
1)The Company will pay a 16% annual interest rate, with equal payments to be made monthly against both principal and interest.
2)The Company will pay a 20% annual interest rate with a payment of both principal and interest at the end of the loan term.
Any loan amount will have a term of 12 months from the date the funds are received.
See note 17 for further information regarding related parties transactions involved in these loans.
A summary of movements of principal and interest during the years ended December 31, 2025, and 2024, is as follows:
| 16% | 20% | Total | |
|---|---|---|---|
| Balance as of January 1, 2024 | - | - | - |
| Proceeds from drawing loans | 1,510 | 1,907 | 3,417 |
| Accrued interest recognized in Profit or loss | 26 | 34 | 60 |
| Repayment of principal and interest | (103) | - | (103) |
| Balance as of December 31, 2024 | 1,433 | 1,941 | 3,374 |
| Proceeds from drawing loans | 1,040 | 637 | 1,677 |
| Accrued interest recognized in Profit or loss | 223 | 449 | 672 |
| Repayment of principal and interest | (2,603) | (2,454) | (5,057) |
| Debt redemption upon issuance of convertible loan facility (*) | - | (573) | (573) |
| Balance as of December 31, 2025 | 93 | - | 93 |
The outstanding balance is presented as short-term loan.
(*) On September 19, 2025, an existing lender redeemed their principal and accrued interest upon issuance of convertible loan facility (Note 10D).
B.Unconverted portion of Convertible loan A:
On maturity date of Convertible loan A (Note 14a) an amount of $521 of unconverted portion of Principal Loan Amount and any interest accrued up to the maturity date is due for immediate payment. The Company accrue interest of 9% per annum over the due amount from the maturity date up to the date it will fully repay.
| Unconverted Principal Loan Amount and interest | Interest up to fully repay | Total | |
|---|---|---|---|
| Balance as of January 1, 2024 | - | - | - |
| Reclassification of unconverted portion of<br><br><br>Principal Loan Amount and interest | 521 | - | 521 |
| Accrued interest recognized in Profit or loss | - | 10 | 10 |
| Balance as of December 31, 2024 | 521 | 10 | 531 |
| Accrued interest recognized in Profit or loss | - | 41 | 41 |
| Repayment of principal and interest | (521) | (51) | (572) |
| Balance as of December 31, 2025 | - | - | - |
24
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
**C.**Returning investor notes:
For the year ended December 31, 2025, the Company received $3,925 as part of new loan facilities, available for lenders who participated in convertible loan B (Note 14b).
On April 11, 2025, the Company announced the first closing date of the offer and issued notes for an aggregate amount of $3,848.
On June 3, 2025, the Company announced the second closing date of the offer and issued notes for an aggregate amount of $77.
The loans bear interest at a rate of 5%, 10% and 12% per annum, paid on a quarterly or annually basis. The term of the loans is 24 months from the closing dates.
Any accrued interest for the period between proceeds of the loans and issuance of the notes will be added to the principal amount of the notes as incremental principal.
As additional compensation, the Company extended 503,033 Early Conversion Warrants, 257,143 Major Investor Warrants and 64,986 warrants that were accounted as shared based compensation held by the lenders for additional 24 months (Notes 12f, 10g and 13s).
The Company accounted for these transactions in accordance with the treatment of an issuance of freestanding instruments issued together. Firstly, the Company measured the value of the liability loan component (principal and interest), at fair value. Secondly, the remainder of the transaction price was allocated to the hybrid instrument as an equity component which represents the value of the warrant extension for 24 months.
The initial adjustments to the fair value of the liability component were accounted for as discount debt to the notes and as an equity reserve. The discount debt is amortized to profit and loss on straight line basis over the contractual life of the notes to reflect its fair value at each reporting period.
| 5% | 10% | 12% | Total | |
|---|---|---|---|---|
| Balance as of December 31, 2024 | - | - | - | - |
| Proceeds from drawing loans | 500 | 2,038 | 1,387 | 3,925 |
| Accrued interest recognized as incremental principal | 2 | 2 | 18 | 22 |
| Repayment of principal and interest | - | (144) | - | (144) |
| Recognition of debt discount | (37) | (331) | (181) | (549) |
| Amortization of debt discount | 37 | 144 | 124 | 305 |
| Accrued interest recognized in Profit or loss | 11 | 144 | 103 | 258 |
| Debt redemption upon exercising of Early conversion warrants (*) | (513) | (185) | (699) | (1,397) |
| Balance as of December 31, 2025 | - | 1,668 | 752 | 2,420 |
The outstanding balance is presented as long-term loan.
(*) On September 19, 2025, lenders redeemed some or all of their outstanding loan balance by cash-less exercising of warrants. 198,738 Early conversion warrants, 5,230 warrants issued on June 28, 2024, and 10,948 warrants that were accounted as shared based compensation, were exercised as part of the cash-less transactions (Notes 12f, 12i, 13s and 13t).
D.Convertible loan facility:
For the year ended December 31, 2025, the Company received $6,800 as part of a new convertible loan facility. In addition, existing lenders under the Short-term loans redeemed their outstanding loan balance of $573 by entering to the convertible loan facility (Note 10A), as well as pre-funded $200 entered to the convertible loan facility.
The convertible loan facility will bear interest at a rate of 8% per annum, paid on an annual basis. The term of the convertible loan is 36 months from the closing date (the “Maturity Date”). The lender may, at any time following 12 months from the closing date (the “First Anniversary”), prior to the Maturity Date, elect to convert any unconverted
25
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
portion of the principal amount together with the accrued interest into common shares at the Conversion Price (as defined below).
The conversion price is the price per share (the “Conversion Price”) that is equal to Closing Market Average (as defined below) of the Company’s common shares on the date of conversion less a discount of 20% but in any event not less than the Closing Market Price on the date of issuance (the “Floor Price”) and not higher than three times the Floor Price if converted after the First Anniversary and before 24 months following the closing date (the “Second Anniversary”) and five times the Floor Price if converted after the Second Anniversary.
The closing market average is the average of the published closing price (the “Closing Market Average“) of the common shares of the Company for the 20 days prior to conversion.
Any accrued interest for the period between proceeds of the funds and issuance of the convertible notes will be added to the principal amount of the convertible notes as incremental principal.
In case of an equity offering of not less than $1,000 is made by the Company (the "Equity Offering") after the Closing Date, the holder will have the option to convert the entire principal amount and any interest accrued up to and including the closing date of the Equity Offering into common shares at the same price as the Equity Offering.
On September 19, 2025, the Company announced the first closing of $7,452 convertible loans.
On September 29, 2025, the Company announced the second closing of $151 convertible loans.
As of December 31, 2025, $56 out of the total amount received was not issued and remain open.
On each closing date, the Company offered the convertible loan holders the opportunity to convert any unconverted portion of the principal amount together with the accrued interest into common shares at a conversion price of $6.50.
On September 19, 2025, the Company issued 1,146,474 common shares as a result of the conversion of $7,452 at a conversion price of $6.5.
On September 29, 2025, the Company issued 23,284 common shares as a result of the conversion of $151 at a conversion price of $6.5.
The Company recorded finder’s fees of $503 in connection with the transactions.
| Balance as of December 31, 2024 | - |
|---|---|
| Proceeds from drawing loans | 6,800 |
| Accrued interest recognized as incremental principal | 86 |
| Debt redemption upon issuance of convertible loan facility (Note 10A) | 573 |
| Pre-funded proceed entering as convertible notes | 200 |
| Conversion of convertible notes into common shares | (7,603) |
| Balance as of December 31, 2025 | 56 |
The outstanding balance is presented as short-term loan.
26
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
NOTE 11 – Other Accounts Payable:
| As at December 31, | ||
|---|---|---|
| 2025 | 2024 | |
| Government institutions | 411 | 492 |
| Liability for Agricultural Research Organization | 105 | 1,284 |
| Employees | 1,528 | 1,234 |
| Advance payments from payment gateway | - | 397 |
| Others | 129 | 202 |
| Total | 2,173 | 3,609 |
NOTE 12 - Share Capital:
| Number of shares | ||
|---|---|---|
| December 31, 2025 | December 31, 2024 | |
| Issued and outstanding | Issued and outstanding | |
| Common shares | 22,666,842 | 17,327,716 |
Ordinary Shares:
Ordinary Shares confer upon their holders, the right to receive notice of, and to participate in, all general meetings of the Company, to vote in such meetings, to receive dividends, and to participate in the distribution of the surplus assets of the Company in the event of liquidation of the Company.
| Balance as of December 31, 2023 | 13,676,798 |
|---|---|
| Issuance of units of securities (Note 12e) | 603,904 |
| Exercise of employee and consultant stock options (Note 12c) | 106,132 |
| Conversion of convertible loans into equity (Note 12d) | 2,940,882 |
| Balance as of December 31, 2024 | 17,327,716 |
| Issuance of shares upon vesting of RSUs (Note 12j) | 11,114 |
| Exercise of investor warrants (Notes 12h and 12l) | 1,291,523 |
| Issuance of shares in public offering (Note 12m) | 2,846,854 |
| Exercise of employee and consultant stock options and warrants (Notes 12i and 12k) | 19,877 |
| Conversion of convertible loans into equity (Note 12g) | 1,169,758 |
| Balance as of December 31, 2025 | 22,666,842 |
*a.*The Company is authorized to issue an unlimited number of common shares.
b.On May 27, 2024, the Company’s shareholders approved a 35-for-1 share consolidation, (hereinafter referred to as the 35:1 Share Consolidation) of the Company’s common shares pursuant to which the holders of the Company’s common shares received one common share in exchange for every 35 common shares held. The 35:1 Share Consolidation was approved by the Canadian Securities Exchange and is effective from June 3, 2024. All common shares (issued and unissued) were consolidated on the basis that every 35 common shares of no-par value were consolidated into 1 common share of no-par value.
c.During 2024 the Company issued 106,132 common shares as a result of exercise of options. The increase in share capital and premium as a result of this transaction is $408.
d.During 2024 the Company issued 2,940,882 common shares as a result of the conversion of convertible loans. Based on the terms of the convertible loans, upon conversion, the Company also issued 1,359,216 Early Conversion warrants with an exercise price of $7.77. 1,178,501 warrants are exercisable until October 30, 2025, and 180,715 are exercisable
27
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
until December 22, 2025. The increase in share capital and premium as a result of this transaction is $22,823 which consist of $20,527 as a result of the conversion of convertible loans into common shares and $2,296 as a result of issuance of the warrants.
e.On June 28, 2024, the Company completed a private placement financing by issuing 603,904 units at a price of $7.17 per unit. Each unit consists of one common share of the Company and one quarter (1/4) of one $7.68 warrant and one quarter (1/4) of one $11.52 warrant. Each whole $7.68 warrant will entitle the holder to purchase one common share and is exercisable for a period of 6 months. Each whole $11.52 warrant will entitle the holder to purchase one common share and is exercisable of a period of 18 months. The total proceeds from the private placement were $4,330. The increase in share capital and premium as a result of this transaction is $4,330.
f.During 2025 the Company extended the expiry date of 503,033 Early Conversion Warrants and 257,143 Major Investor Warrants by additional 24 months in connection with the new loan facilities (Note 10C).
g.On September 19, 2025, as part of the Equity Offering, the Company issued 1,169,758 common shares as a result of the conversion of convertible loans (Note 10D). The net increase in share capital and premium as a result of this transaction is $7,236.
h.On September 19, 2025, as part of the Equity Offering, the Company issued 1,102,244 common shares as a result of the exercise of 836,361 Early Conversion Warrants, 143,921 Major Investor warrants and 121,962 warrants issued on June 28, 2024 (Note 10C). The net increase in share capital and premium as a result of this transaction is $7,031. The exercise price of the exercised warrants was reduced from $7.77 and $11.52 to $6.50 per share.
i.On September 19, 2025, as part of the Equity Offering, the Company issued 10,948 common shares as a result of exercise of warrants (Note 13t). The net increase in share capital and premium as a result of this transaction is $71.
j.During 2025 the Company issued 11,114 common shares in lieu of vested RSUs.
k.During 2025 the Company issued 8,929 common shares as a result of exercise of options. The increase in share capital and premium as a result of this transaction is $36.
l.In October 2025, the Company issued 189,279 common shares as a result of the exercise of 72,169 Early Conversion Warrants and 117,110 Major Investor warrants. The net increase in share capital and premium as a result of this transaction is $1,471.
m.On November 11, 2025, the Company completed a public offering of its common shares. As part of the offering, the Company issued 2,846,854 common shares at a price of $7.00 per share. Transaction costs directly attributable to the issuance of the shares, including underwriting fees and commissions, legal and accounting costs, amounting to $1,666. The net increase in share capital and premium as a result of this transaction is $18,262.
n.The following table summarizes information about the warrants outstanding as at December 31, 2025:
| Warrants Outstanding | ||
|---|---|---|
| December 31, 2025 | Exercise Price | Expiry Date |
| 257,143 | $7.77 | October 30, 2027 |
| 276,567 | $7.77 | October 30, 2027 |
| 22,994 | $7.77 | December 22, 2027 |
| 556,704 | - | - |
28
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
NOTE 1 3 - Share Based Compensation**:**
Stock Options awards under Equity Incentive Plan:
a.Options granted under the Company's 2025 Equity Incentive Plan (the "Plan") are exercisable within 10 years from the date of grant upon payment of the exercise price as indicated in the Plan.
b.On February 20, 2024, the Company granted employees and consultants 2,857 options to purchase shares of the Company at CAD 7.875 ($5.95) per share. The options will be exercisable for a 10-year period. The options will vest quarterly over a 2-year period. The total value of the options granted is CAD 11 ($8).
c.On February 20, 2024, the Company granted employees and consultants 13,600 options to purchase shares of the Company at CAD 7.875 ($5.95) per share. The options will be exercisable for a 2-year period. The options will vest immediately in May 2024. The total value of the options granted is CAD 24 ($18).
d.On March 22, 2024, the Company granted employees and consultants 47,144 options to purchase the Company's shares at CAD 9.975 ($7.35) per share. The options will be exercisable for a 10-year period. 11,429 options will vest quarterly over a 2-year period, 32,287 options will vest quarterly over a 3-year period, 2,857 options will vest quarterly over a 1-year period, 571 options will vest over a 18-months period. The total value of the options granted is CAD 237 ($175).
e.On March 22, 2024, the Company granted employees and consultants 22,857 options to purchase the Company's shares at CAD 9.975 ($7.35) per share. The options will be exercisable for a 3-year period. 14,286 options will vest quarterly over a 2.75-year period after a 3-months period from the date of the grant and 8,571 options will vest monthly over a 2.5-year period after a 6-months period from the date of the grant. The total value of the options granted is CAD 77 ($57).
f.On May 31, 2024, the Company granted employees and consultants 16,429 options to purchase the Company's shares at CAD 8.925 ($6.65) per share. The options will be exercisable for a 10-year period. The options will vest quarterly over a 3-year period. The total value of the options granted is CAD 75 ($55).
g.On November 15, 2024, the Company granted employees and consultants 111,998 options to purchase the Company’s shares at CAD 8.48 ($6.05) per share. The options will be exercisable for a 10-year period. 102,140 options will vest quarterly over a 3-year period, 5,428 options will vest quarterly over a 2-year period and 4,430 options will vest quarterly over a 1-year period. The total value of the options granted is $338.
h.On August 14, 2025, the Company granted employees and consultants 60,140 options to purchase shares of the Company at $9.22 per share under the Company’s plan. 43,712 options will vest quarterly over a 3-year period, 11,428 options will vest quarterly over a 2-year period and 5,000 options will vest monthly over a 2-year period. The total value of the options granted is $284.
i.On August 25, 2025, the Company granted employees, consultants and directors 18,572 options to purchase shares of the Company at $8.30 per share under the Company’s plan. The options will vest quarterly over a 3-year period. The total value of the options granted is $79.
j.On December 19, 2025, the Company granted employees and consultants 25,713 options to purchase shares of the Company at $5.23 per share under the Company’s plan. The options will vest quarterly over a 3-year period. The total value of the options granted is $78.
k.The following assumptions were used to estimate the fair value of the options using the Black-Scholes model:
| For the year ended December 31, | ||
|---|---|---|
| Inputs | 2025 | 2024 |
| Volatility | 50%-60% | 50% |
| Dividend Yield | 0% | 0% |
| Risk-Free Interest Rate | 3.71%-3.97% | 3.26%-4.58% |
l.A summary of activity of options granted under the Company's Plan is as follows:
29
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
| December 31, 2025 | December 31, 2024 | |||
|---|---|---|---|---|
| Number of Options | Weighted Average Exercise Price | Number of Options | Weighted Average Exercise Price | |
| Options outstanding at beginning of period | 1,902,090 | 6.30 | 1,807,456 | 6.15 |
| Changes during the period: | ||||
| Granted (Notes 13b-13j) | 104,425 | 8.07 | 214,885 | 6.23 |
| Exercised (Notes 12c and 12k) | (8,929) | 4.04 | (106,132) | 3.67 |
| Forfeited | (17,024) | 6.79 | (14,119) | 5.89 |
| Options outstanding at end of period | 1,980,562 | 6.32 | 1,902,090 | 6.30 |
| Options exercisable at period end | 1,749,670 | 6.24 | 1,620,445 | 6.04 |
The options outstanding on December 31, 2025, had a weighted-average contractual life of 5.75 years (December 31, 2024: 6.5 years).
Restricted Stock Units (RSUs) Awards under Equity Incentive Plan:
m.RSUs granted under the Company's 2025 Equity Incentive Plan (the "Plan") are settled in common shares upon completion of the applicable vesting and performance conditions.
n.On April 26, 2024, the Company granted employees and consultants 20,000 restricted share units (“RSU”) under the Company’s plan with an expiry date of December 31, 2024. The RSU vesting is subject to the performance condition of achieving the Company’s specified targets in 2024.
o.On November 15, 2024, the Company granted employees and consultants 5,400 restricted share units (“RSU”) under the Company’s plan. The vesting period is 12 months following the grant date.
p.On November 21, 2025, the Company granted employees and consultants 6,400 restricted share units (“RSU”) under the Company’s plan. 5,400 RSUs will vest over 12 months following the grant date and 1,000 RSUs were fully vested on December 31, 2025.
q.A summary of activity of RSUs granted under the Company's Plan is as follows:
| December 31, 2025 | December 31, 2024 | |||
|---|---|---|---|---|
| Number of RSUs | Weighted Average Share Price | Number of RSUs | Weighted Average Share Price | |
| RSUs outstanding at beginning of period | 25,400 | 6.51 | - | - |
| Changes during the period: | ||||
| Granted (Note 13p) | 6,400 | 5.97 | 25,400 | 6.51 |
| Vested (Note 12j) | (11,114) | 6.34 | - | - |
| Forfeited | (14,286) | 6.64 | - | - |
| RSUs outstanding at end of period | 6,400 | 5.97 | 25,400 | 6.51 |
Warrants Issued to Service Providers:
r.On April 26, 2024, the Company granted employees and consultants 8,571 warrants to purchase the Company's shares at CAD 9.10 ($6.65) per share under the Company share option plan. The warrants will be exercisable for 2-year period. The total value of the warrants granted is CAD 24 ($18).
s.On April 11, 2025, the Company extended the expiry date of 64,986 warrants by additional 24 months in connection with the new loan facilities (Note 10C).
t.On September 19, 2025, as part of the Equity Offering, the Company reduced the exercise price of 10,948 warrants that were exercised from $7.66 to $6.50 per share (Notes 12i and 10C).
u.The following assumptions were used to estimate the fair value of the warrants using the Black-Scholes model:
30
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
| For the year ended December 31, | ||
|---|---|---|
| Inputs | 2025 | 2024 |
| Volatility | 59% | 50% |
| Dividend Yield | 0% | 0% |
| Risk-Free Interest Rate | 4.21% | 4.43% |
v.A summary of activity of warrants granted to purchase the Company's Shares under the Company's Plan is as follows:
| December 31, 2025 | December 31, 2024 | |||
|---|---|---|---|---|
| Number of Options | Weighted Average Exercise Price | Number of Options | Weighted Average Exercise Price | |
| Warrants outstanding at beginning of period | 73,557 | 7.54 | 64,986 | 7.66 |
| Changes during the period: | ||||
| Issued | - | - | 8,571 | 6.65 |
| Exercised (Note 12i) | (10,948) | 7.66 | - | - |
| Expired | - | - | - | - |
| Warrants outstanding at end of period | 62,609 | 7.54 | 73,557 | 7.54 |
w.The following table summarizes information about the warrants outstanding as of December 31, 2025:
| Warrants Outstanding | ||
|---|---|---|
| December 31, 2025 | Exercise Price | Expiry Date |
| 54,038 | $7.66 | October 25, 2027 |
| 8,571 | $6.66 | April 26, 2026 |
| 62,609 |
NOTE 14 – Convertible Loan:
The Convertible Loans are denominated in Canadian dollars and convertible into common shares based on the principal and interest balance. Therefore, the convertible loan is a hybrid instrument that includes a debt host contract and an embedded derivative liability.
As the instrument contains an embedded derivative, it has been designated at fair value through profit or loss on initial recognition and as such the embedded conversion feature is not separated. All transaction costs related to financial instruments designated as fair value through profit or loss are expensed as incurred.
The component of fair value changes relating to the company’s own credit risk is recognized in other comprehensive income. Amounts recorded in OCI related to credit risk are not subject to recycling in profit or loss but are transferred to retained earnings when realized. Fair value changes relating to market risk are recognized in profit or loss. There was no change in the company company’s own credit risk since the issuance of the convertible notes.
**a.**Convertible loan A:
In April 2022, the Company signed an agreement ("the Agreement") with certain lenders (the "Lenders"), according to which the Company authorized the sale and issuance to the Lenders of Convertible Loan (the "Convertible Loan") with aggregate principal amounts of $7,658 (CAD 10,034) closed in three tranches. The first tranche of $5,308 (CAD 6,878) closed on October13, 2022, the second tranche of $1,950 (CAD $2,613) closed on November 15, 2022, and the third tranche of $400 (CAD 543) closed on December 15, 2022, ("Principal Loan Amount").
The Company paid finder's fees of $124 in connection with the transaction.
The Principal Loan Amount, to the extent and for the period of time that such Principal Amount is unconverted, shall bear interest at a rate of 9% per annum from the closing date (the "Closing Date") up to and including the date that is 24 months following the Closing Date (the "Second Anniversary"). The Convertible Loan shall mature on the date that is twenty-four
31
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
months following the Closing Date (the “Maturity Date”). Any unconverted portion of the Principal Loan Amount will be paid on the Maturity Date.
The Lenders may, at any time prior to the Maturity Date, elect to convert any unconverted portion of the Principal Loan Amount together with the accrued Interest thereon (the “Remaining Amount”), into common shares of the Company at the Conversion Price.
The conversion price is the price per share (the “Conversion Price”) that is equal to:
(a)CAD 11.20, between and including the Closing Date and the date that is 90 days following the Closing Date;
(b)CAD 12.25, between and including the dates that are 91 days following the Closing Date and 180 days following the Closing Date;
(c)CAD 13.65, between and including the dates that are 181 days following the Closing Date and 270 days following the Closing Date;
(d) CAD 15.40, between and including the date that is 271 days following the Closing Date and the date that is one day prior to the Anniversary; or
(e)Occurs on or following the Anniversary the Discounted Conversion Price shall be:
·75% of the closing price of the shares, on the principal exchange on which the shares are listed (the “Exchange”), on the date of receipt of the Conversion Notice by the Company (the “Closing Price”) if the Closing Price is CAD 17.50 or less; or
·80% of the Closing Price, if the Closing Price is CAD 17.85 or greater.
In the event that the Discounted Conversion Price is less than CAD 9.10 per Share (the “Floor Price”), the Conversion Price will be equal to the Floor Price. In the event that the Discounted Conversion Price is greater than CAD 22.75 per Share, the Conversion Price shall not exceed:
·CAD 22.75, between and including the Anniversary and the date that is 90 days following the Anniversary;
·CAD 26.25, between and including the dates that are 91 days following the Anniversary and 180 days following the Anniversary;
·CAD 29.75, between and including the dates that are 181 days following the Anniversary and 270 days following the Anniversary; or
·CAD 33.25, between and including the date that is 271 days following the Anniversary and the date that is one day prior to the Maturity Date.
During 2024, the company issued 510,888 shares as a result of the conversion of $3,383 (principal and accrued interest) related to the Convertible loan A (Note 12d).
| Convertible loan A | |
|---|---|
| Balance as of December 31, 2023 | 4,503 |
| Loss recognized in Profit or loss | 55 |
| Conversion of convertible loans (Note 12d) | (3,344) |
| Repayment of principal and accrued interest (*) | (693) |
| Reclassification into Loans (**) | (521) |
| Balance as of December 31, 2024 | - |
| Convertible loan A | As of Maturity Date |
| --- | --- |
| Carrying amount | - |
| Amount to be paid at Maturity Date (principal + accrued interest) | 1,214 |
(*) On Maturity Date, the unconverted portion of Principal Loan Amount and any interest accrued up to and including the date that is twelve months following the Closing Date amounted to $1,214. Following the Maturity Date and as of December 31, 2025, the Company repaid Lenders an amount of $693.
32
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
(**) As of December 31, 2024, $521 unconverted portion of Principal Loan Amount and any interest accrued up to and including the date that is twelve months following the Closing Date were reclassified into Loans (Note 10B).
**b.**Convertible loan B:
In March 2023, the Company signed an agreement ("the Agreement") with certain lenders (the "Lenders"), according to which the Company authorized the sale and issuance to the Lenders a convertible loan (the "Convertible Loan") with aggregate principal amounts of $10,077 (CAD 13,622) closed in two tranches. The first tranche of $8,710 (CAD 11,786) closed on October 30, 2023, and the second tranche of $1,367 (CAD $1,836) closed on December 22, 2023, ("Principal Loan Amount").
The Company paid finder's fees of $148 in connection with the transaction.
The Principal Loan Amount, to the extent and for the period of time that such Principal Amount is unconverted, shall bear interest at a rate of 12% per annum from the closing date (the "Closing Date") up to and including the date that is 24 months following the Closing Date (the "Second Anniversary"). The Convertible Loan shall mature on the date that is twenty-four months following the Closing Date (the “Maturity Date”). Any unconverted portion of the Principal Loan Amount will be paid on the Maturity Date.
The Lenders may, at any time prior to the Maturity Date, elect to convert any unconverted portion of the Principal Loan Amount together with the accrued Interest thereon (the “Remaining Amount”), into common shares of the Company at the Conversion Price.
The conversion price is the price per share (the “Conversion Price”) that is equal to:
·80% of the closing price of the shares, on the principal exchange on which the shares are listed (the “Exchange”), on the date of receipt of the Conversion Notice by the Company (the “Closing Price”).
·In the event that the Discounted Conversion Price is less than CAD 8.40 per Share (the “Floor Price”), the Conversion Price will be equal to the Floor Price.
·In the event that the Discounted Conversion Price is greater than CAD 26.25 per Share (the “Ceiling Price”), the Conversion Price will be equal to the Ceiling Price.
An investor who invests a minimum amount of CAD 2,700 will also receive upon closing an additional warrant (the "Major Investment Warrant") for each CAD 10.50 invested. Each Major Investment Warrant will be exercisable for a period of 24 months from the Closing Date of the convertible loan to purchase a common share of the Company at CAD 10.50 per share. On October 30, 2023, the Company issued 518,174 Major Investment Warrants. At the Issuance date these Warrants were classified as Derivative liability (Note 9).
On March 28, 2024, all Major Investment Warrant holders agreed to convert the exercise price of the warrants from CAD to the equivalent in USD, based on the exchange rate at the dated of the approval of the Canadian Securities Exchange. Since the warrants have an exercise price denominated in USD which is the Company’s functional currency, the Company reclassified the Major Investment Warrants as an equity instrument.
As an incentive for early conversion, any investor who converts their investment amount within 12 months following the Closing Date of the convertible loan will receive a warrant for each CAD 10.50 converted (the "Early Conversion Warrant"). Each Early Conversion Warrant will be exercisable to purchase a common share of the Company at an exercise price of CAD 10.50 per share for a period expiring on the Maturity Date of the convertible loan.
On March 28, 2024, all Early Conversion Warrant holders agreed to convert the exercise price of the warrants from CAD to the equivalent in USD, based on the exchange rate at the dated of the approval of the Canadian Securities Exchange. Since the warrants have an exercise price denominated in USD, which is the Company’s functional currency, the Company reclassified the Early Conversion Warrants as an equity instrument.
During 2024, the company issued 1,699,018 shares as a result of the conversion of $10,500 (principal and accrued interest) related to the Convertible loan B and 1,359,216 Early Conversion Warrants to purchase shares of the Company at $7.77 per share.
33
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
| Convertible loan B | |
|---|---|
| Balance as of December 31, 2023 | 11,727 |
| Loss recognized in Profit or loss | 2,548 |
| Conversion of convertible loans (Note 12d) | (14,275) |
| Balance as of December 31, 2024 | - |
| Convertible loan B | As of Maturity Date |
| --- | --- |
| Carrying amount | - |
| Amount to be paid at Maturity Date (principal + accrued interest) | - |
**c.**Convertible loan C:
In April 2023, the Company signed an agreement ("the Agreement") with certain lenders (the "Lenders"), according to which the Company authorized the sale and issuance to the Lenders a convertible loan (the "Convertible Loan") with aggregate principal amounts of $3,440 (CAD 4,642) ("Principal Loan Amount").
The Company paid the finder’s fees of $31 in connection with the transaction.
The Principal Loan Amount, to the extent and for the period of time that such Principal Amount is unconverted, shall bear interest at a rate of 9% per annum from the closing date (the "Anniversary"). The Company will pay the Lenders, to the extent such interest is unconverted any interest accrued up to and including the date that is twelve months following the Closing Date on the Anniversary.
The Convertible Loan shall mature on the date that is twelve months following the Closing Date (the “Maturity Date”). Any unconverted portion of the Principal Loan Amount will be paid on the Maturity Date.
The Lenders may, at any time prior to the Maturity Date, elect to convert any unconverted portion of the Principal Loan Amount together with the accrued Interest thereon (the “Remaining Amount”), into common shares of the Company at the Conversion Price.
The conversion price is CAD 7.00 per share (the "Conversion Price").
During 2024, the company issued 730,976 shares as a result of the conversion of $3,764 (principal and accrued interest) related to Convertible loan C (Note 12d).
| Convertible loan C | |
|---|---|
| Balance as of December 31, 2023 | 4,303 |
| Loss recognized in Profit or loss | 900 |
| Conversion of convertible loans (Note 12d) | (5,203) |
| Balance as of December 31, 2024 | - |
| Convertible loan C | As of Maturity Date |
| --- | --- |
| Carrying amount | - |
| Amount to be paid at Maturity Date (principal + accrued interest) | - |
34
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
NOTE 15 – Liability For Agricultural Research Organization:
In March 2007, the Company entered into a Research and Exclusive License Agreement (the “Agreement”) with The Agricultural Research Organization – Volcani Institute (the “ARO”). The ARO granted the Company an exclusive worldwide license to use its patent as part of the manufacturing of red grape cell powder only. The ARO is entitled to receive 3% royalties from any sale of red grape cell powder products by the Company until the end of February 2026.
In September 2025, the Company and ARO executed an amendment to the existing agreement effective from January 2025, establishing updated payment terms. Under the revised terms, the total amount payable was set at $3,600. The Company is required to remit minimum quarterly payments of 1% of its quarterly revenue from sales of red grape cell powder products only. Such minimum payments were $79 for the first quarter of 2025, $96 for the second quarter of 2025, $105 for the third quarter of 2025, $115 for the fourth quarter of 2025, and will be $120 for each quarter thereafter through the first quarter of 2026 until the total payable amount is fully settled. Accordingly, the Company reassessed and remeasured the related liability to reflect the amended terms.
NOTE 16 - Financial Instruments and Risk Management:
The Company holds the following financial instruments:
| Financial assets | 2025 | 2024 |
|---|---|---|
| Financial assets at amortized cost | ||
| Cash and cash equivalents | 23,025 | 2,390 |
| Trade accounts receivable | 1,981 | 1,116 |
| Other accounts receivable (*) | 10 | 13 |
| Restricted cash | 433 | 371 |
| 25,449 | 3,890 | |
| Financial liabilities | ||
| Financial liabilities at amortized cost | ||
| Trade accounts payable and Accrued liabilities | 3,013 | 3,926 |
| Other accounts payable (**) | 2,068 | 2,325 |
| Loans | 2,569 | 3,905 |
| Liability and Provision for Agricultural Research Organization (**) | 2,540 | 2,696 |
| Lease liabilities | 11,535 | 9,913 |
| 21,725 | 22,765 |
(*) Financial instruments that are included in other accounts receivable are deposits (Note 5)
(**) Payable amounts of Liability for Agricultural Research Organization are also presented in other accounts payable and therefore reclassed only for the purposes of this note (Note 11)
The Company is exposed to a variety of financial risks, which results from its financing, operating and investing activities. The objective of financial risk management is to contain, where appropriate, exposures to these financial risks to limit any negative impact on the Company's financial performance and position. The Company's financial instruments are its cash, cash equivalents and restricted cash, trade and other accounts receivable, trade and other accounts payable, loans, accrued liabilities, liability for Agricultural Research Organization and lease liabilities. The main purpose of these financial instruments is to raise finance for the Company's operation. The Company actively measures, monitors and manages its financial risk exposures by various functions pursuant to the segregation of duties and principals. The risks arising from the Company's financial instruments are mainly currency risk and liquidity risk. The Company has no interest rate risk as the balances exposure to interest is minimal. The risk management policies employed by the Company to manage these risks are discussed below.
**a.**Foreign currency risk:
Foreign exchange risk arises when the Company enters into transactions denominated in a currency other than its functional currency. The Company is exposed to currency risk to the extent that there is a mismatch between the currency in which it
35
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
is denominated and the respective functional currency of the company. The currencies in which some transactions are primarily denominated are CAD, USD and NIS.
The company's policy is not to enter into any economic hedging transactions to neutralize the effects of foreign currency fluctuations. The carrying amounts of the Company's foreign currency denominated monetary assets and monetary liabilities at the reporting date are as follows:
| As of December 31, 2025 | ||||
|---|---|---|---|---|
| USD | CAD | NIS | Total | |
| Assets | ||||
| Cash and cash equivalents | 21,750 | 5 | 1,270 | 23,025 |
| Trade accounts receivable | 1,377 | - | 604 | 1,981 |
| Other accounts receivable | - | - | 10 | 10 |
| Restricted cash | 10 | - | 423 | 433 |
| 23,137 | 5 | 2,307 | 25,449 | |
| Liabilities | ||||
| Trade accounts payable and Accrued liabilities | 1,436 | 108 | 1,469 | 3,013 |
| Other accounts payable | 296 | 20 | 1,752 | 2,068 |
| Loans | 2,569 | - | - | 2,569 |
| Liability for Agricultural Research Organization | 2,540 | - | - | 2,540 |
| Lease liabilities | - | - | 11,535 | 11,535 |
| 6,841 | 128 | 14,756 | 21,725 | |
| As of December 31, 2024 | ||||
| --- | --- | --- | --- | --- |
| USD | CAD | NIS | Total | |
| Assets | ||||
| Cash and cash equivalents | 2,279 | 84 | 27 | 2,390 |
| Trade accounts receivable | 506 | - | 610 | 1,116 |
| Other accounts receivable | - | - | 13 | 13 |
| Restricted cash | 11 | - | 360 | 371 |
| 2,796 | 84 | 1,010 | 3,890 | |
| Liabilities | ||||
| Trade accounts payable and Accrued liabilities | 1,496 | 99 | 2,331 | 3,926 |
| Other accounts payable | 1,049 | 169 | 1,107 | 2,325 |
| Loans | 3,373 | 532 | - | 3,905 |
| Liability for Agricultural Research Organization | - | - | 2,696 | 2,696 |
| Lease liabilities | - | - | 9,913 | 9,913 |
| 5,918 | 800 | 16,047 | 22,765 |
Analysis:
A 5% appreciation of the USD against the following currencies would have increased (decreased) Shareholders’ Equity and the Loss and Other Comprehensive Loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.
For a 5% depreciation of the USD against the relevant currency, there would be an equal and opposite impact on the Shareholders’ Equity and the Loss and Other Comprehensive Loss.
36
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
| As of December 31, 2025 | As of December 31, 2024 | |||
|---|---|---|---|---|
| Linked Currency | Net Assets | Net Impact | Net Assets | Net Impact |
| CAD | (123) | (6) | (716) | (36) |
| NIS | (12,449) | (622) | (15,037) | (752) |
**b.**Liquidity risks:
Liquidity risk is the risk that arises when the maturity of assets and the maturity of liabilities do not match. An unmatched position potentially enhances profitability but can also increase the risk of loss. The Company has procedures with the object of minimizing such loss by maintaining sufficient cash and other highly liquid current assets and by having available an adequate amount of committed credit facilities and the liability. The Company has no material obligation beyond one year except for loans, lease liabilities, liability for Agricultural Research Organization and cash in bank to finance its working capital in the near future.
The following tables detail the Company's remaining contractual maturity for its financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the repayment forecast of the management of the company.
| December 31, 2025 | |||||||
|---|---|---|---|---|---|---|---|
| Book value | Less than one year | 1 to 2 years | 2 to 3<br><br><br>years | 3 to 4 years | > 5<br><br><br>years | Total | |
| Trade accounts payable and Accrued liabilities | 3,013 | (3,013) | - | - | - | - | (3,013) |
| Other accounts payable | 2,068 | (2,068) | - | - | - | - | (2,068) |
| Loans | 2,569 | (155) | (3,016) | - | - | - | (3,171) |
| Lease liabilities | 11,535 | (1,744) | (1,365) | (1,296) | (1,267) | (15,791) | (21,463) |
| Liability for Agricultural Research Organization (*) | 2,540 | (580) | (480) | (480) | (480) | (1,404) | (3,424) |
| Total | 21,725 | (7,560) | (4,861) | (1,776) | (1,747) | (17,195) | (33,139) |
| December 31, 2024 | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- |
| Book value | Less than one year | 1 to 2 years | 2 to 3<br><br><br>years | 3 to 4 years | > 5<br><br><br>years | Total | |
| Trade accounts payable and Accrued liabilities | 3,926 | (3,926) | - | - | - | - | (3,926) |
| Other accounts payable | 2,325 | (2,325) | - | - | - | - | (2,325) |
| Loans | 3,905 | (4,411) | - | - | - | - | (4,411) |
| Lease liabilities | 9,913 | (924) | (1,206) | (1,176) | (1,188) | (14,862) | (19,356) |
| Liability for Agricultural Research Organization (*) | 2,696 | (2,573) | (337) | - | - | - | (2,910) |
| Total | 22,765 | (14,159) | (1,543) | (1,176) | (1,188) | (14,862) | (32,928) |
(*) Payable amounts of Liability for Agricultural Research Organization are also presented in other accounts payable and therefore reclassed only for the purposes of this note (Note 11)
**c.**Fair value of financial assets and liabilities:
The fair value of the Company's current financial assets and liabilities approximates their carrying amounts as their maturity date is less than 1 year and they do not bear a fixed interest rate.
37
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
Reconciliation of fair value measurements that are categorized within Level 3 of the fair value hierarchy:
| Derivative liability - Warrants | 2025 | 2024 |
|---|---|---|
| Balance as of January 1 | - | 526 |
| Loss (income) recognized in Profit or loss | - | 408 |
| Reclassification as an equity instrument (Note 9) | - | (934) |
| Balance as of December 31 | - | - |
| Convertible loan | 2025 | 2024 |
| --- | --- | --- |
| Balance as of January 1 | - | 20,533 |
| Conversion of convertible loans | - | (22,822) |
| Loss recognized in Profit or loss | - | 3,503 |
| Repayment of principal and accrued interest | - | (693) |
| Reclassification into Loans | - | (521) |
| Balance as of December 31 | - | - |
**d.**Financial instruments not measured at fair value:
Financial instruments not measured at fair value include cash and cash equivalents, restricted cash, trade and other accounts receivable, trade and other accounts payable, liability for Agricultural Research Organization, loans and lease liabilities. Due to their short-term nature, the carrying value of cash and cash equivalents, restricted cash, trade and other accounts receivable, trade and other accounts payable and loans approximate their fair value.
The fair value of Liability to Agricultural Research Organization for December 31, 2025, and December 31, 2024, is not materially different to the carrying amount, since the interest rate used in the initial recognition is close to current market rates.
**e.**Capital management:
The Company seeks to maintain a capital structure which enables it to continue as a going concern. The Company's capital is provided by equity rising. The Company manages its capital structure through raising funds from shareholders. The Company has net cash and cash equivalents as of December 31, 2025, of $23,025 (2024 – $2,390). The Company has a history of operating losses and continues to require additional funding to support its planned activities. These conditions, together with the uncertainty regarding the timing and availability of additional financing, represent factors that raise substantial doubt about the Company’s ability to continue as a going concern.
38
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
NOTE 17 - Related Parties Transactions:
Related parties including the Company's CEO, CFO, Chairman and Directors.
Related party transactions:
| For the year ended December, | 2025 | 2024 |
|---|---|---|
| Compensation for key management personnel of the Company: | ||
| CEO Management fees | 576 | 532 |
| Chairman management fees | 420 | 429 |
| CFO Management fees | 210 | 54 |
| Directors management fees | 215 | 128 |
| Share-based payment to CFO | 4 | 1 |
| Other related party transactions: | ||
| Accrued interest to a close member of the chairman (*) | 107 | 4 |
| Accrued interest to the CFO (*) | 29 | 2 |
| Issuance of units of securities to directors (**) | - | 50 |
| Issuance of shares to directors (***) | 11 | 142 |
| Share-based payments to directors (****) | 39 | 21 |
Related party balances:
| For the year ended December, | 2025 | 2024 |
|---|---|---|
| Due to the CEO | 196 | 231 |
| Due to (from) the Chairman (*) | (56) | 688 |
| Due to the CFO (*) | 62 | 199 |
Bonus plan
The Company's Chairman, CEO, CFO and key management employees are entitled to receive an annual bonus based on performance.
(*) Short-term loans
For the years ended December 31, 2025, and 2024, in connection with the borrowing disclosed in note 10A, a close member of the Chairman and the CFO, each separately, have lent to the Company an aggregate amount of $660 and $157, respectively. As of December 31, 2025, the Company had no outstanding balances in respect of the loans received from related parties. All such loans were fully repaid during 2025.
(**) Issuance of unit of securities
On June 28, 2024, in connection with the private placement financing disclosed in note 12e, director of the Company participated by investing an aggregate amount of $50 which resulted in the issuing of 7,000 units.
(***) Issuance of shares to Directors
On March 28, 2024, in connection with the issuance of convertible loan A, disclosed in note 14a, director of the Company converted his carrying amount which consist of principal and accrued interest into 21,744 common shares.
On September 19, 2025, as part of the Equity Offering, director of the Company exercised 1,750 warrants.
(****) Issuance of options to Directors
On August 25, 2025, the Company granted directors 18,572 options to purchase shares of the Company at $8.30 per share under the Company’s share option plan.
39
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
NOTE 18 - Revenue:
Effective January 1, 2024, the Company has two business units: the Products business unit and the CDMO Services business unit.
1.In the products business unit, the Company generates revenue by selling products through its online platform, with revenue recognized upon transfer of control and delivery of goods.
2.In the CDMO Services business unit, the Company generates revenue by providing end‑to‑end development and manufacturing services performed on the Company’s premises.
See Note 26 regarding geographical and segmental information.
NOTE 19 - Cost of Revenues:
| For the year ended December 31, | ||
|---|---|---|
| 2025 | 2024 | |
| Wage and salaries | 3,327 | 2,312 |
| Share based compensation | 40 | 110 |
| Materials | 1,265 | 967 |
| Subcontractors | 7,885 | 6,864 |
| Depreciation and amortization | 765 | 518 |
| Exporting | 363 | 100 |
| Office maintenance, communication, travel and others | 387 | 375 |
| Total | 14,032 | 11,246 |
NOTE 20 – Research and Development Expenses:
| For the year ended December 31, | ||
|---|---|---|
| 2025 | 2024 | |
| Wage and salaries | 2,640 | 2,512 |
| Share based compensation | 90 | 127 |
| Materials | 213 | 223 |
| Professional and legal fees | 761 | 732 |
| Patents | 128 | 69 |
| Depreciation and amortization | 417 | 334 |
| Office maintenance, communication, travel and others | 1,063 | 800 |
| Total | 5,312 | 4,797 |
NOTE 21 – Sales and Marketing Expenses:
| For the year ended December 31, | ||
|---|---|---|
| 2025 | 2024 | |
| Wage and salaries | 2,251 | 2,137 |
| Share based compensation | 145 | 175 |
| Marketing, advertising and promotion | 12,840 | 9,063 |
| Depreciation and amortization | 206 | 159 |
| Office maintenance, communication, travel and others | 370 | 199 |
| Total | 15,812 | 11,733 |
40
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
NOTE 22 - General and Administrative Expenses:
| For the year ended December 31, | ||
|---|---|---|
| 2025 | 2024 | |
| Wage and salaries | 2,238 | 1,502 |
| Share based compensation | 323 | 189 |
| Professional and legal fees | 952 | 1,229 |
| Reassessment of Provision to Agricultural Research Organization | (396) | (205) |
| Depreciation and amortization | 236 | 240 |
| Investor Relation | 419 | 380 |
| Office maintenance, communication, travel and others | 1,155 | 1,066 |
| Total | 4,927 | 4,401 |
NOTE 23 - Financial Expenses:
| For the year ended December 31, | ||
|---|---|---|
| 2025 | 2024 | |
| Interest on lease liabilities | 1,007 | 762 |
| Interest on loans and borrowings | 1,446 | 70 |
| Interest on Liability for Agricultural Research Organization | 270 | 403 |
| Expense recognized from Derivative liability - Warrants | - | 408 |
| Fair value adjustments of Convertible loans and issuance of Warrants | - | 3,503 |
| Payment gateway fees | 736 | 579 |
| Bank commissions | 113 | 116 |
| Finder fees | 136 | - |
| Exchange rate differences | 1,830 | 75 |
| Total | 5,538 | 5,916 |
NOTE 24 - Financial Income:
| For the year ended December 31, | ||
|---|---|---|
| 2025 | 2024 | |
| Interest on cash and cash equivalents | 54 | - |
| Total | 54 | - |
NOTE 25 - Income Taxes:
a.Basis of taxation:
i)The Company’s subsidiaries are separately taxes under the domestic tax laws of the jurisdiction of incorporation of each entity.
ii)The Company files a federal income tax return in Canada, that includes both federal and provincial income tax filings, the Israeli subsidiary file income tax return in Israel and the U.S. subsidiaries file federal and state income tax returns in the U.S.
iii)The Company remains subject to audit by the relevant tax authorities for the years ended 2019 through 2025.
41
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
iv)The Canadian corporate tax rate stands at 27%, the Israeli corporate tax rate stands at 23% and the corporate tax rate in the U.S. stands at 21% for the years ended December 31, 2025, and 2024.
b.Current and Deferred taxes:
The components of the income or loss before the provision for income taxes for the years ended December 31, 2025, and 2024 were as follows:
| December 31, 2025 | December 31, 2024 | |
|---|---|---|
| Canada | (4,505) | (7,542) |
| Israel | (6,630) | (5,125) |
| United States | 76 | (238) |
| Total income or loss before income taxes | (11,059) | (12,905) |
The provision for income taxes for the years ended December 31, 2025, and 2024 was as follows:
| December 31, 2025 | December 31, 2024 | |
|---|---|---|
| Current | ||
| Canada | - | - |
| Israel | - | - |
| United States | (53) | (8) |
| Deferred | ||
| Canada | - | - |
| Israel | - | - |
| United States | - | - |
| Total deferred income tax expense | - | - |
| Total provision for income taxes | (53) | (8) |
c.Net operating losses carryforwards:
As of December 31, 2025, the Company has estimated carry forward tax losses of approximately $62,593, which may be carried forward and offset against taxable income for an indefinite period in the future.
Deferred tax asset over the Company's losses was not recognized since it is not probable that taxable profit will be available in the foreseen future.
The estimated carry forward tax losses for the years ended December 31, 2025, and 2024 were as follows:
| December 31, 2025 | December 31, 2024 | |
|---|---|---|
| Canada | (7,568) | (7,023) |
| Israel | (55,025) | (45,156) |
| United States | - | (38) |
| Total estimated carry forward tax losses | (62,593) | (52,217) |
d.Reconciliation of effective tax rate:
The reasons for the difference between the actual tax charge for the year and the standard rate of corporation tax applied to profits for the year are as follows:
42
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
| For the Year ended December 31, | ||
|---|---|---|
| 2025 | 2024 | |
| Loss before income tax | (11,059) | (12,905) |
| Losses for which no deferred tax asset is recognized | 11,135 | 12,966 |
| Taxable income before income taxes | 76 | 61 |
| Company’s domestic tax rate in Canada | 27% | 27% |
| Income tax expense based on average statutory tax rate | 20 | 16 |
| Imputed interest over inter-company balances in different jurisdictions | 35 | (2) |
| Carryforward net operating losses | (1) | (3) |
| Different tax rates applied in overseas jurisdictions | (4) | (3) |
| Expected penalty in the form of interest | 3 | - |
| Adjustments in respect of prior‑year income taxes | 23 | - |
| Total income tax expense | 76 | 8 |
NOTE 26 - Operating **** Segments**:**
Effective January 1, 2024, the Company has two operating segments or business units: the Products business unit and the CDMO Services business unit. In identifying these operating segments, management generally follows the Company service lines representing its main products and services.
The Company's chief operating decision maker reviews the Company's internal reports for performance evaluation and resource allocations. The Company's management determined the operating segments based on these reports. The chief operating decision maker examines the performance of the operating segments based on the measurement of operating profit. No information was presented on the assets and liabilities of the segments because these items are not analyzed by the main operational decision maker in segmentation.
The Company's chief operating decision maker is the chief executive officer.
Segment description
1.The Products Business Unit - Nutraceuticals: Research, development, manufacturing, marketing and sales of science-based health and wellness nutraceutical solutions which are manufactured and sold as dietary supplements, functional food and beverages (capsules, powders, chews and other delivery mechanisms such as coffee, teas and powder electrolyte beverages).
2.The CDMO Services Business Unit - comprising a Contract Development and Manufacturing Operation (“CDMO”) that offers customers from the pharmaceuticals, cosmeceuticals, nutraceuticals and nutrition industries the development and future manufacturing of specific plant-based active molecules, via an end-to-end service agreement.
Segment information
| For the year ended December 31, 2025 | |||
|---|---|---|---|
| Products | CDMO Services | Total | |
| Revenues | 32,630 | 1,878 | 34,508 |
| Cost of revenues | 13,451 | 581 | 14,032 |
| Segment loss | 5,333 | 242 | 5,575 |
| Finance expense, net | 5,484 | ||
| Tax expenses | 76 | ||
| Net loss and comprehensive loss | 11,135 |
43
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
| For the year ended December 31, 2024 | |||
|---|---|---|---|
| Products | CDMO Services | Total | |
| Revenues | 24,906 | 282 | 25,188 |
| Cost of revenues | 11,061 | 185 | 11,246 |
| Segment loss | 5,797 | 1,192 | 6,989 |
| Finance expense, net | 5,916 | ||
| Tax expenses | 8 | ||
| Net loss and comprehensive loss | 12,913 |
Entity wide disclosures
| For the year ended December 31, | ||
|---|---|---|
| External revenue by location | 2025 | 2024 |
| Israel | 3,922 | 2,177 |
| North America | 30,586 | 23,011 |
| 34,508 | 25,188 |
Additional information about revenue
There is no single customer from which revenue amounts to 10% or more of total revenue reported in the financial statements for the year ended December 31, 2025, and 2024.
NOTE 27 - Changes In Liabilities Arising from Financing Activities:
Reconciliation of the changes in liabilities for which cash flows have been or will be classified as financing activities in the statement of cash flows:
| Lease liabilities | Convertible loans | Derivative liability - Warrants | Liability for Agricultural Research Organization (*) | Loans | |
|---|---|---|---|---|---|
| As at January 1, 2025 | 9,913 | - | - | 2,696 | 3,905 |
| Changes from financing activities: | |||||
| Repayments of lease liabilities | (1,382) | - | - | - | - |
| Proceeds from loans, net of repayments | - | - | - | - | 6,630 |
| Repayment of royalties | - | - | - | (159) | - |
| Repayments of principal and interest of Convertible Loans | - | - | - | - | - |
| Total changes in financing activities | (8,531) | - | - | 2,537 | 10,535 |
| Additions and modifications | 313 | - | - | - | - |
| Fair value adjustments | - | - | - | (396) | (244) |
| Exercise warrants against debt | - | - | - | - | (1,397) |
| Accrued interest | 1,007 | - | - | 270 | 1,078 |
| Reclassification | - | - | - | - | 200 |
| Conversion | - | - | - | - | (7,603) |
| Index adjustments | 228 | - | - | - | - |
| Effects of foreign exchange | 1,456 | - | - | 129 | - |
| As at December 31, 2025 | 11,535 | - | - | 2,540 | 2,569 |
44
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
| Lease liabilities | Convertible loans | Derivative liability - Warrants | Liability for Agricultural Research Organization (*) | Loans | |
|---|---|---|---|---|---|
| As at January 1, 2024 | 1,807 | 20,533 | 526 | 2,508 | - |
| Changes from financing activities: | |||||
| Repayments of lease liabilities | (579) | - | - | - | - |
| Proceeds from loans, net of repayments | - | - | - | - | 3,314 |
| Repayment of royalties | - | - | - | - | - |
| Repayments of principal and interest of Convertible Loans | - | (693) | - | - | - |
| Total changes in financing activities | 1,228 | 19,840 | 526 | 2,508 | 3,314 |
| Additions and modifications | 7,586 | - | - | - | - |
| Fair value adjustments | - | 3,503 | 408 | 205 | - |
| Exercise warrants against debt | - | - | - | - | - |
| Accrued interest | 671 | - | - | - | 70 |
| Reclassification | - | (521) | (934) | - | 521 |
| Conversion | - | (22,822) | - | - | - |
| Index adjustments | 386 | - | - | - | - |
| Effects of foreign exchange | 42 | - | - | (17) | - |
| As at December 31, 2024 | 9,913 | - | - | 2,696 | 3,905 |
(*) Payable amounts of Liability for Agricultural Research Organization are also presented in other accounts payable and therefore reclassed only for the purposes of this note (Note 11)
NOTE 28 - Government Grants:
In December 2025, the Company received approval from the Israel Innovation Authority (“IIA”) for a government grant under a research and development support program aimed to expand the Company’s production capacity and efficiency (the “R&D support program”). The approved project covers a period of 24 months commencing on October 1, 2025, with a total approved budget of NIS 14 million. Under the terms of approval, the Company is entitled to receive funding for up to 40% of the approved project expenditure.
In accordance with the IIA program requirements, the grant is conditionally repayable through the payment of royalties based on future revenues that may be generated from products developed as part of the supported project. Royalty payments, if any, will commence only upon the generation of actual revenues derived from the project’s results, and will continue until the full amount of the grant (plus applicable interest as determined by the IIA regulations) has been repaid, or until the statutory repayment cap has been met.
The grant represents a government grant within the scope of IAS 20 Accounting for Government Grants and Disclosure of Government Assistance. As of December 31, 2025, no advances or cash grant payments have been received from the IIA in respect of the approved program.
NOTE 29 - Subsequent Events:
The Company has evaluated events occurring after the balance sheet date through March 31, 2026, the date the financial statements were issued, and has determined that the following subsequent events require disclosure:
1)In January 2026, the Company received its first advance payment from the IIA in connection with the R&D support program approved in December 2025 (Note 28). The initial advance amounted to NIS 980 ($309).
2)In February 2026, the Company issued 1,000 common shares in lieu of vested RSUs.
45
BioHarvest Sciences Inc. and its subsidiaries
Notes to Consolidated Financial Statements
For the Years Ended December 31, 2025, and 2024
(USD in thousands, except per share data)
On March 13, 2026, the Company granted employees, consultants and directors 617,173 options to purchase shares of the Company at $4.15 per share and 264,121 RSUs with a deemed price of $4.15 per share under the Company’s plan.
46
Management's Discussion and Analysis
BioHarvest Sciences Inc.
Management’s Discussion and Analysis
For the year ended December 31, 2025
(Expressed in U.S. dollars)
Dated March 31, 2026
1140-625 Howe Street, Vancouver
British Columbia V6C 2T6, Canada
www.bioharvest.com
BIOHARVEST SCIENCES INC.
Management’s Discussion and Analysis
Introduction
The following Management's Discussion and Analysis (”MD&A”) for BioHarvest Sciences Inc., together with its wholly owned subsidiaries (“BioHarvest Sciences” or the “Company”) prepared as of March 31, 2026, has been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and Interpretations (collectively IFRS Accounting Standards). All amounts (other than per share amounts) are stated in U.S dollars rounded to the nearest thousand, unless otherwise indicated.
The following information should be read in conjunction with the audited consolidated financial statements of the Company (the “consolidated financial statements”) for the year ended December 31, 2025, and the related notes to those financial statements.
Statements in this report that are not historical facts are forward-looking statements involving known and unknown risks and uncertainties, which could cause actual results to vary considerably from these statements. Readers are cautioned not to put undue reliance on forward-looking statements.
The Company is publicly listed and traded on the Nasdaq Stock Market under the symbol BHST and traded on the Frankfurt Stock Exchange, Munich Stock Exchange, Stuttgart Stock Exchange and Dusseldorf Stock Exchange under the symbol 8MV0.
Continuous disclosure materials are available on our website at www.bioharvest.com. This additional information is not incorporated into this Management's Discussion and Analysis and does not constitute a part of this Management's Discussion and Analysis.
Cautionary statement regarding forward-looking statements
This MD&A contains certain information that may constitute “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) which are based upon the Company’s current internal expectations, estimates, projections, assumptions and beliefs. Such statements can be identified by the use of forward-looking terminology such as "expect," “likely”, "may," "will," "should," "intend," or "anticipate", “potential”, “proposed”, “estimate” and other similar words, including negative and grammatical variations thereof, or statements that certain events or conditions “may” or “will” happen, or by discussions of strategy. Forward-looking statements include estimates, plans, expectations, opinions, forecasts, projections, targets, guidance, or other statements that are not statements of fact. The forward-looking statements included in this MD&A are made only as of the date of this MD&A. Forward-looking statements in this MD&A may include, but are not limited to, statements with respect to: a) licensing risks; b) regulatory risks; c) change in laws, regulations and guidelines; d) market risks; e) expansion of facilities; f) history of net losses; and g) competition. Certain of the forward-looking statements and forward-looking information and other information contained herein concerning the, nutraceutical, pharmaceutical and cosmeceutical industries, the general expectations of the Company concerning these industries and concerning the Company are based on estimates prepared by the Company using data from publicly available governmental sources, from market research and industry analysis and on assumptions based on data and knowledge of these industries, which the Company believes to be reasonable. The Company is not aware of any misstatement regarding any industry or government data presented herein. Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct. The Company’s forward-looking statements are expressly qualified in their entirety by this cautionary statement. In particular, but without limiting the foregoing, disclosure in this MD&A under “Nature of the Business and Overview of Operations” as well as statements regarding the Company’s objectives, plans and goals, including
1
BIOHARVEST SCIENCES INC.
Management’s Discussion and Analysis
future operating results and economic performance may make reference to or involve forward-looking statements. A number of factors could cause actual events, performance or results to differ materially from what is projected in the forward-looking statements. See “Risk and Uncertainties” for further details. The purpose of forward-looking statements is to provide the reader with a description of management’s expectations, and such forward-looking statements may not be appropriate for any other purpose. You should not place undue reliance on forward- looking statements contained in this MD&A. The Company undertakes no obligation to update or revise any forward-looking statements.
Going concern
The consolidated financial statements have been prepared on a going concern basis in accordance with IFRS Accounting Standards. Management has evaluated the Company's ability to continue as a going concern for a period of at least twelve months from the date these consolidated financial statements are issued.
The Company has a history of operating losses and has not yet achieved sustained cash-flow profitability. For the year ended December 31, 2025, the Company generated revenues of $34,508 and incurred a net operating loss. As of December 31, 2025, the Company had cash and cash equivalents of $23,025. These conditions, together with the need for continued investment in operations and the uncertainty regarding the timing and availability of additional financing, represent factors that raise substantial doubt about the Company’s ability to continue as a going concern.
The Company may require additional capital to fund its long-term growth strategy and planned capital investments. If required, the Company intends to raise such capital through one or more of the following: the issuance of equity or equity-linked securities, debt financing, strategic collaborations, licensing arrangements or other financing transactions. The Company is listed on the Nasdaq Capital Market and has previously demonstrated access to the capital markets; however, there can be no assurance that additional financing will be available on acceptable terms, or at all.
Based on management’s assessment, the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, despite the factors noted above, the going concern basis of preparation remains appropriate, and these consolidated financial statements do not include any adjustments that might result from the outcome of uncertainties related to the going concern assessment.
The consolidated financial statements of the Company were authorized for issue by the Board of Directors on March 31, 2026.
Nature of business and overview of operations
**1.**Summary
BioHarvest Sciences Inc. (the “Company” or “BioHarvest Sciences”) was incorporated under the Business Corporations Act of British Columbia on April 19, 2013.
On February 14, 2025, the Company completed a voluntary delisting process of its common shares from the Canadian Securities Exchange and continue to be listed on the Nasdaq Stock Market.
The registered address of the Company is 1140-625 Howe St., Vancouver, BC V6C 2T6, Canada.
2
BIOHARVEST SCIENCES INC.
Management’s Discussion and Analysis
**2.**Corporate Structure
**3.**Overview of the business
The Company is a biotechnology company that has developed the Botanical Synthesis Platform Technology, which enables the Company to grow, in bioreactors at an industrial scale, the active and beneficial ingredients in certain fruits and plants without the need to grow the plant itself. The Botanical Synthesis Platform Technology is a non-genetically modified organism platform that can produce plant cells with higher concentrations of active ingredients (as compared to those that are produced naturally), as well as high levels of solubility and bio-availability. The Botanical Synthesis Platform Technology is economical, ensures consistency and avoids the negative environmental impacts associated with traditional agriculture by providing consistent product production, a year-round production cycle and products that are devoid of sugar, calories and contaminants, such as pesticides, heavy metals and residues.
The Company is currently focused on utilizing the Botanical Synthesis Platform Technology to develop the next generation of science-based and clinically proven health solutions through two business units:
**1.**The Products Business Unit - Nutraceuticals: Research, development, manufacturing, marketing and sales of science-based health and wellness nutraceutical solutions which are manufactured and sold as dietary supplements, functional food and beverages (capsules, powders, chews and other delivery mechanisms such as coffee, teas and powder electrolyte beverages).
**2.**The CDMO Services Business Unit - comprising a Contract Development and Manufacturing Operation (“CDMO”) that offers customers from the pharmaceuticals, cosmeceuticals, nutraceuticals and nutrition industries the development and future manufacturing of specific plant-based active molecules, via an end-to-end service agreement.
Products Business Unit Activities
The Company is engaged in the research and development of science-based health and wellness solutions for the nutraceutical industry. The Company’s first product entry into this market is a polyphenol/anti-oxidant superfruit product called VINIA®, which is a red grape powder that
3
BIOHARVEST SCIENCES INC.
Management’s Discussion and Analysis
supplies the benefits of red wine consumption but without the sugar, calories and alcohol found in wine.
VINIA® is made of red grape (Vitis vinifera) cells grown in the Company’s proprietary bioreactor facility. VINIA® is a fine, dry pink-purple powder containing a matrix of polyphenols (with a high concentration of piceid resveratrol) in their natural state (as can be found in red wine) that has additive and synergistic benefits. One of the main active ingredients in VINIA® is piceid resveratrol, maintaining the quality and inherent benefits present in nature without any solvent extraction or genetic modification. VINIA® is soluble when integrated with various liquids or cosmetics.
The Company has invested over $80 million, primarily in R&D activities, to support the business. This investment has enabled the Company to develop a disruptive technology platform which mirrors nature and allows it to efficiently produce plant cells that are identical to those originally sourced from the parent plant, ensuring optimal bio-availability and efficacy of the secondary metabolites.
The Company completed the biological technology transfer to the new manufacturing facility in March 2022 and has established a 20 tons manufacturing facility. The Company commenced implementation of the required technology and process improvements to drive significant cost reduction through economies of scale. This facility received Good Manufacturing Practice (GMP) approvals from the Israeli Ministry of Health in October 2021 as well as key ISO certifications. The Company has continued to increase the capacity of its Bioreactors over the past 24 months and at the end of Q1, 2025, completed the transition to using 1,200L bioreactors. This enables the Company to better meet the increasing demand for VINIA which is driven by the US market as a result of the Company's marketing activities.
In 2025, VINIA® revenues increased by 31% versus the comparable period in the previous year. This continues to be a major demonstration of the Company’s ability to scale its VINIA® business using its Botanical Synthesis technology. Importantly, as a result of the aggressive scaling of the business and management’s focus on driving efficiencies where possible across the value chain, the Company continues to maintain high gross profit margin levels of the Products business unit, realizing a gross profit margin to 59% during 2025 as compared to 56% during the comparable period in the previous year. Management continues to focus on accelerating revenue momentum and improving gross profit margins as well as marketing efficiencies.
As of the date of this MD&A, the Company reached a major milestone on its VINIA® business with achieving the milestone of more than $84 Million USD in cumulative sales, with the vast majority of sales occurring since launching in the US in May 2021 as well as achieving more than 85,000 active users. The Company expects continued momentum in its sales growth of VINIA® driven by its core capsule business as well as its pipeline of VINIA® driven innovation enabling the Company to continue to enter and disrupt new sizeable categories and generate higher revenue levels per KG of VINIA® powder versus its baseline capsule business as it executes on its Superior Science, Superior Efficacy & Superior Taste Strategy.
The Company has a well-developed innovation pipeline in its Products business unit. Over the course of the last 24 months, the Company has introduced a number of new products under the VINIA® brand disrupting major billion dollar categories The Company successfully launched VINIA® Superfood Coffee in 2024 and launched a VINIA® Superfood Tea line up of 4 flavors in December 2024, which continues to gain revenue momentum and in February 2025 was launched on Amazon and in June 2025, the Company launched 2 of these flavors (English Breakfast Tea and Matcha Green Tea) in a K-Cup compatible format via its web site and Amazon. The Company’s
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BIOHARVEST SCIENCES INC.
Management’s Discussion and Analysis
successful initial launch of its Keurig compatible VINIA Superfood Coffee pods and VINIA® Superfood Teas has demonstrated that its “VINIA Inside” strategy is working as the Company delivers on its promise to consumers of delivering “Superior Science, Superior Efficacy and Superior Taste” in billion dollar categories like tea and coffee where consumers are yearning for products with improved health and wellness credentials and have a high willingness to pay a premium for these products.
To continue its focus on disrupting billion-dollar categories, in June 2025, the Company launched its VINIA® supplement in a more potent formulation in a Chew like delivery mechanism. VINIA® 2X Formula Chew is enabling the VINIA® brand to target a younger consumer base with this chew delivery system and with a formula which has twice the potency. The Company utilizes this VINIA® 2X Formula Chew to target athletes and super active consumers who are looking for a more potent version of VINIA® to generate the incremental physical energy and mental alertness they require. Given the focus of this formulation to fit the needs of amateur and professional athletes, every batch of the product is 3^rd^ party certified by “Informed Sport”. “Informed Sport” is the world’s leading testing and certification program for brands producing sports and nutritional supplements. Designed for elite sport, it protects athletes from inadvertent doping caused by supplements contaminated with banned substances. As such, it is recognized by sporting and governing bodies, anti-doping bodies and nutrition industry organizations, and the armed and special forces. The initial consumer feedback and revenue levels of VINIA 2X Formula Chew have been extremely encouraging with 4.8/5 verified rating on Amazon and the Company is optimistic that with continued marketing activities, this product will play an important role in the Company’s portfolio.
In November 2025, the Company launched its VINIA® Blood Flow Hydration Electrolyte Powdered Beverage Mix prodcut to disrupt the 17-billion-dollar US Electrolytes market where approximately 1/3 of the business is in powdered form. VINIA® Blood Flow Hydration Electrolyte Powdered Beverage is a highly differentiated proposition in the market. VINIA’s Blood Flow Hydration Solution focuses on ensuring its customers have improved blood flow to ensure that all their fluids and electrolytes can be most efficiently transported to their body’s organs, tissues and millions of cells. The product contains the equivalent of one capsule of VINIA Red Grape Powder plus a unique combination of naturally sourced electrolytes including sodium derived from sea salt, potassium from coconut water, and magnesium from the ocean bed. VINIA® Blood Flow Hydration Electrolyte is also 3rd party certified by “Informed Sport” so that it can be utilized by professional athletes. After being in the market for less than 12 weeks, the Company is very encouraged by the performance of VINIA® Blood Flow Hydration as demonstrated by encouraging sales momentum and consumer feedback on its taste and performance. As of the date of this MD&A, VINIA® Blood Flow Hydration has achieved after 8 weeks on Amazon a 5-star rating with close to 50 customer reviews.
The Company on March 4, 2025, announced new ‘in-vitro’ test results for the Company’s proprietary new Olive Cell compound, which showed reduced fat accumulation in human liver cells. Fat accumulation in the liver is a leading cause of non-alcohol fatty liver disease (NAFLD), which affects 30-40% of U.S. adults. The Company demonstrated that in human hepatic (liver) cells, the Olive Cell compound mitigated fat accumulation in a liver steatosis model as well as in experimental models of liver fibrosis. In addition, the Olive Cell compound also succeeded in reducing the level of collagen type 1 in XL-2 cells in an in-vitro fibrosis model. The Company attributes the positive test results of reducing fat accumulation in liver cells to the high levels of Verbascoside (a plant-derived polyphenol with known anti-inflammatory properties that have been researched for a variety of effects on the liver) in the Company’s Olive Cell compound. Based on these results and additional studies to be conducted, the Company plans to commence selling a
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BIOHARVEST SCIENCES INC.
Management’s Discussion and Analysis
product containing Olive Cells in the future as a nutraceutical product and/ or entering into a partnership where Olive Cells will be integrated into another Company’s portfolio.
Contract Development and Manufacturing Organization (“CDMO”) Services Business Unit
In Q1 2024, the Company announced the launch of its CDMO Services Business Unit, including its entry into two (2) development agreements to develop complex molecules.
This CDMO Services Business Unit allows pharmaceutical, cosmeceutical, nutraceutical and nutrition industry companies the opportunity to partner with the Company to utilize the Botanical Synthesis Platform Technology through a CDMO contracting model. The Botanical Synthesis Platform Technology enables the development and manufacturing of patentable plant-based small molecules, complex molecules and unique compositions, which include both small and complex molecules. The Botanical Synthesis Platform Technology can develop complex molecules, otherwise known as biologics, which have a number of unique advantages, including lower costs of development and manufacturing, a faster speed of development and non-immunogenic properties that enhance safety. As a result of these advantages, the Company has decided to name these unique plant-derived complex molecules BIOLOGICS+. BIOLOGICS+ will help address unmet needs in the health industry across pharmaceutical, nutraceutical, cosmeceutical and nutrition verticals.
On December 11, 2024, the Company announced a new partnership with Tate and Lyle, a global leader in sweetener, mouthfeel and fortification ingredients to develop the next-generation of proprietary plant-based molecules to address increasing consumer desire for affordable, nutritious and more sustainable plant-derived food and beverage ingredients. The new partnership between Tate & Lyle and the Company will focus on developing the next generation of sweeteners – botanical sweetening ingredients using plant-derived molecules.
On May 12, 2025, the Company announced that the Company’s previously announced CDMO contract with a Nasdaq-listed pharmaceutical company has progressed from Stage 1 to Stage 2 – providing further validation of the versatility of the Company’s Botanical Synthesis platform to develop active pharmaceutical compounds while concurrently paving the road for potential future volume manufacturing. Stage 1 of the contract, launched in early 2024, focused on sourcing the required plants to develop a compound used to produce an approved drug product. Completion of Stage 1 indicates that the Company’s research team successfully isolated the cells of the target plant and mirrored, magnified and multiplied those cells in petri dishes using the Company’s proprietary Botanical Synthesis platform. Stage 2 involves the delivery of a sufficient amount of biomass to be tested for suitability and involves the development of optimal growing conditions in liquid media. Upon successful completion, the company would transfer to small and medium scale production and ultimately enter production of commercial volumes of the target compound.
On May 21, 2025, the Company announced a new contract to develop a plant-based fragrance compound derived from a plant that is under significant threat due to over harvesting and habitat loss. This agreement is with a new commercial partner targeting the multi-billion-dollar fragrance and scents market.
On September 10, 2025, the Company announced the successful production of plant-derived exosomes in its large-scale bioreactors. This technological milestone expands the Company’s platform capabilities and introduces a potential new revenue stream for both its Nutraceuticals and CDMO business units.
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BIOHARVEST SCIENCES INC.
Management’s Discussion and Analysis
Exosomes are nano-sized vesicles naturally secreted by plant cells that enhance absorption and bioavailability of active compounds. They are increasingly used in therapeutic, nutraceutical, and cosmetic applications.
The Company’s proprietary bioreactor system enables scalable, cost-efficient production of exosomes enriched with high-value metabolites. Initial production has focused on exosomes containing viniferin, a polyphenol associated with anti-aging and antioxidant properties, offering enhanced delivery and efficacy compared to conventional formulations.
This development further demonstrates the scalability and versatility of the Company’s bio-plant platform and strengthens its position in the health and wellness, cosmetics, and pharmaceutical markets.
On October 30, 2025, the Company announced a new contract to develop and commercialize saffron derived botanical compounds via a collaboration agreement with Saffron Tech Ltd., an aggrotech company specializing in year-round cultivation of top-grade saffron. The partnership aims to develop and commercialize saffron-derived botanical compounds using the Company’s patented Botanical Synthesis platform,
The collaboration combines the Company’s bioreactor and cell-growth expertise with Saffron Tech’s proprietary saffron species and early-stage cell-culture research. Development will progress through both solid-phase and liquid-phase CDMO stages in parallel, with the objective of accelerating commercialization.
The Company currently has a number of customers in its short-term pipeline and expects to sign additional strategic contracts during 2026 with customers from the pharmaceutical, nutraceutical, cosmeceutical and food ingredients/nutrition industries.
Environmental, Social and Governance Reporting
On September 2021 the Company announced the publication of its inaugural Environmental, Social, and Governance (ESG) Report, detailing the Company’s performance and ongoing commitment to creating a sustainable future. The report is aligned with the United Nations Sustainable Development Goals and the reporting requirements of the Task Force on Climate-Related Financial Disclosures and the Sustainability Accounting Standards Board.
On September 6, 2022, Business Intelligence Group awarded the Company its prestigious Sustainability Leadership Award. The award recognizes the sustainability impact of the Company’s Botanical Synthesis platform technology, which enables industrial production of plant metabolites without growing the plant itself. The Company received the award with other industry thought leaders such as AstraZeneca, Agilent, and Honeywell.
In addition, the Company has completed its own Supplier Code of Conduct for its ecosystem of supply chain partners and has commenced rolling this out and plans to complete the roll out of this policy through 2026.
During 2024, the Company has also completed the development of critical HR policies such as a “Belonging, Inclusion, Diversity and Equity Policy”, a “Whistle Blower Policy” and a “Grievance Policy”. The Company has rolled out these policies to all employees of the Company in Q2, 2025.
As part of our commitment to strong corporate governance and reliable financial reporting, during 2025 the Company has adopted the COSO Internal Control – Integrated Framework to guide the design, implementation, and evaluation of our internal control systems. This framework provides a structured approach to risk assessment, control activities, information and communication, and monitoring processes. By aligning with COSO, we aim to ensure the integrity of our financial
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BIOHARVEST SCIENCES INC.
Management’s Discussion and Analysis
disclosures, enhance operational efficiency, and support compliance with applicable laws and regulations, including the requirements of the Sarbanes-Oxley Act Section 404. The Company continues to evaluate and refine its internal controls to support sustainable growth and investor confidence.
Significant Developments
To better understand the Company’s financial results, it is important to gain an appreciation of the significant events, transactions and activities that occurred during or have affected the period under review up to and including the date of this MD&A.
1.On May 27, 2024, the Company’s shareholders approved a 35-for-1 share consolidation of the Company’s common shares pursuant to which the holders of the Company’s common shares received one common share for every 35 common shares held. The 35:1 Share Consolidation was approved by the Canadian Securities Exchange and is effective from June 3, 2024. All common shares (issued and unissued) were consolidated on the basis that every 35 common shares of no-par value were consolidated into 1 common share of no-par value.
2.During the year ended December 31, 2025, the Company received $31,728 thousands, net of repayments finder fees and transaction costs, due to the following events:
·On the first quarter of 2025, the Company received funds to the Company’s short-term 16% and 20% loan facilities.
·On the second quarter of 2025, the Company announced the closings of its 5%, 10% and 12% loan facilities.
·On the third of 2025, the Company issued 1,169,758 common shares as a result of the conversion of convertible loans.
·On the third quarter and fourth quarter of 2025, the Company issued 1,291,523 common shares as a result of the exercise of warrants by investors and issued 10,948 common shares as a result of the exercise of warrants by service providers.
·On the fourth quarter of 2025, the Company issued 8,929 common shares as a result of exercise of options by employees and consultants.
·On the fourth quarter of 2025, the Company completed a Public Offering of 2,846,854 common shares at a price of $7.00 per share.
Selected Annual Information
| Year ended December 31, | ||
|---|---|---|
| 2025 | 2023 | |
| in thousands | ||
| Revenues | 34,508 | 12,672 |
| Net loss and comprehensive loss | (11,135) | (12,564) |
| Basic and diluted loss per share | (0.60) | (0.93) |
All values are in US Dollars.
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BIOHARVEST SCIENCES INC.
Management’s Discussion and Analysis
| As of December 31, | ||
|---|---|---|
| 2025 | 2023 | |
| in thousands | ||
| Cash and cash equivalents | 23,025 | 5,355 |
| Total Assets | 47,665 | 15,002 |
| Total current liabilities | 7,684 | 26,467 |
| Total non-current liabilities | 14,533 | 3,388 |
All values are in US Dollars.
Year ended December 31, 2025, compared to the year ended December 31, 2024
Revenues were $34,508 thousands for the year ended December 31, 2025, of which 95% relates to the Products Business Unit of the Company, as compared to $25,188 thousands during the same period in the prior year. In 2025, the Products Business Unit grew 31% and the CDMO services Business Unit grew 566% as compared to the same period in the prior year. The increase in 2025 is a result of the Company's significant scaling of its business-to-consumer and medical practitioner focused e-commerce strategy.
Cost of revenues were $14,032 thousands for the year ended December 31, 2025, as compared to $11,246 thousands during the same period in the prior year. The increase is due to revenue mix, growth in production, demand and sales during the period.
Gross margins were 59% for the year ended December 31, 2025, as compared to 55% during the same period in the prior year. The increase in gross margins was a result of the Company’s continuing focus on cost reduction and production scaling.
Research and development expenses were $5,312 thousands for the year ended December 31, 2025, as compared to $4,797 thousands during the same period in the prior year. The change is mainly due to an increase in wages and salaries (related to the CDMO Services Business Unit) as well as professional fees and travel to support both segments.
Sales and marketing expenses, which relate mainly to the Products Business Unit were $15,812 thousands for the year ended December 31, 2025, as compared to $11,733 thousands during the same period in the prior year. The change is due to the higher marketing expenditure and wages and salaries required to support sales growth in both segments.
General and administrative expenses were $4,927 thousands for the year ended December 31, 2025, as compared to $4,401 thousands during the same period in the prior year. The change is due to an increase in salary and wages as a result of increase in headcount to support the Company’s operations as a publicly traded entity on Nasdaq.
Finance expenses, net were $5,484 thousands for the year ended December 31, 2025, as compared to $5,916 thousands during the same period in the prior year. Finance expenses, net for the year ended December 31, 2024 were recorded due to non-cash fair value adjustments related to the Company’s derivative instruments. Most of the Company’s finance expenses during the year ended December 31, 2025, were driven from a non-cash transactions. Finance expenses are incurred to support both of our business segments.
On December 31, 2025, the Company had cash and cash equivalents of $23,025 thousands (December 31, 2024, $2,390 thousands).
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BIOHARVEST SCIENCES INC.
Management’s Discussion and Analysis
Year ended December 31, 2024, compared to the year ended December 31, 2023:
Revenues were $25,188 thousands for the year ended December 31, 2024, of which 99% relate to the Products Business Unit of the Company, as compared to $12,672 thousands during the same period in the prior year. The increase in 2024 is a result of the Company's significant scaling of its business-to-consumer and medical practitioner focused e-commerce strategy.
Cost of revenues were $11,246 thousands for the year ended December 31, 2024, as compared to $7,039 thousands during the same period in the prior year. The increase is due to growth in production, demand and sales during the period.
Gross margins were 55% for the year ended December 31, 2024, as compared to 45% during the same period in the prior year. The increase in gross margins was a result of the Company’s continuing focus on cost reduction and production scaling.
Research and development expenses were $4,797 thousands for the year ended December 31, 2024, as compared to $3,369 thousands during the same period in the prior year. The change is mainly due to an increase in wages and salaries (related to the CDMO services business unit) as well as professional fees and travel to support both segments.
Sales and marketing expenses, which relate mainly to the Products Business Unit were $11,733 thousands for the year ended December 31, 2024, as compared to $7,748 thousands during the same period in the prior year. The change is due to the higher marketing expenditure and wages and salaries required to support sales growth in both segments.
General and administrative expenses were $4,401 thousands for the year ended December 31, 2024, as compared to $4,482 thousands during the same period in the prior year.
Finance expenses were $5,916 thousands for the year ended December 31, 2024, as compared to $2,624 thousands during the same period in the prior year. The increase is primarily the result of warrants issuance and interest payments. Finance expenses are incurred to support both of our business segments. Most of the Company’s finance expenses were driven from a non-cash transaction such as fair value adjustments.
The Company had no finance income for the year ended December 31, 2024, as compared to $26 thousands during the same period in the prior year. Finance income is incurred to support both of our business segments.
On December 31, 2024, the Company had cash and cash equivalents of $2,390 thousands (December 31, 2023, $5,355 thousands).
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BIOHARVEST SCIENCES INC.
Management’s Discussion and Analysis
Summary of Quarterly Results
The following represents the summarized quarterly financial results for the past eight quarters:
| Three-month period ended | |||
|---|---|---|---|
| December 31, 2025 | June 30, 2025 | March 31, 2025 | |
| in thousands | |||
| Revenues | 9,066 | 8,515 | 7,860 |
| Net loss before income taxes | 2,268 | 4,041 | 2,300 |
| Net loss | 2,204 | 4,080 | 2,338 |
| Net loss per share | 0.10 | 0.24 | 0.13 |
| Three-month period ended | |||
| December 31, 2024 | June 30, 2024 | March 31, 2024 | |
| in thousands | |||
| Revenues | 7,278 | 6,027 | 5,344 |
| Net loss before income taxes | 2,948 | 687 | 6,581 |
| Net loss | 2,956 | 687 | 6,581 |
| Net loss per share | 0.17 | 0.04 | 0.48 |
All values are in US Dollars.
Disclosure Controls and Procedures
Disclosure controls and procedures are designed to provide reasonable assurance that material information related to the Company is gathered and reported to senior management, including the Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), as appropriate, to allow for timely decisions about the Company’s public disclosure.
Management, including the CEO and CFO, has evaluated the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in the rules of the United States Securities and Exchange Commission and the National Instrument 52-109 - Certification of Disclosure in Issuers’ Annual and Interim Filings of the Canadian Securities Administrators. The evaluation included documentation review, enquiries and other procedures considered by management to be appropriate in the circumstances. Based on this evaluation, management concluded that as of December 31, 2025, the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 and National Instrument 52-109 - Certification of Disclosure in Issuers’ Annual and Interim Filings) are effective.
**a)**Internal Control over Financial Reporting
Management of the Company is responsible for establishing and maintaining an adequate system of internal control over financial reporting and used the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) to evaluate, with the participation of the CEO and CFO, the effectiveness of the Company’s internal controls. The Company’s internal control over financial reporting includes:
·maintaining records, that in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
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BIOHARVEST SCIENCES INC.
Management’s Discussion and Analysis
·providing reasonable assurance that transactions are recorded as necessary to permit preparation of the consolidated financial statements in accordance with generally accepted accounting principles;
·providing reasonable assurance that receipts and expenditures are made in accordance with authorizations of management and the directors of the Company; and
·providing reasonable assurance that unauthorized acquisition, use or disposition of company assets that could have a material effect on the Company’s consolidated financial statements would be prevented or detected on a timely basis.
Based on this evaluation, management concluded that as of December 31, 2025, the Company’s internal control over financial reporting based on the criteria set forth in Internal Control – Integrated Framework (2013) issued by COSO was effective and provided a reasonable assurance of the reliability of the Company’s financial reporting and preparation of the financial statements.
No matter how well a system of internal control over financial reporting is designed, any system has inherent limitations. Even systems determined to be effective can provide only reasonable assurance of the reliability of financial statement preparation and presentation. Also, controls may become inadequate in the future because of changes in conditions or deterioration in the degree of compliance with the Company’s policies and procedures.
Emerging growth companies are exempt from Section 404(b) of the Sarbanes-Oxley Act, which generally requires public companies to provide an independent auditor attestation of management’s assessment of the effectiveness of their internal control over financial reporting. The Company qualifies as an emerging growth company and therefore has not included an independent registered public accounting firm attestation of management’s assessment of the effectiveness of its internal control over financial reporting in its audited annual consolidated financial statements for the year ended December 31, 2025.
**b)**Changes in Internal Control over Financial Reporting
There has been no change in the Company’s internal control over financial reporting during the year ended December 31, 2025, that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.
Financial instruments and risk management
The Company is exposed to a variety of financial risks, which results from its financing, operating and investing activities. The objective of financial risk management is to contain, where appropriate, exposures to these financial risks to limit any negative impact on the Company's financial performance and position. The Company's financial instruments are its Cash and cash equivalents, Restricted cash, Trade accounts receivable, Other accounts receivable, Trade accounts payable, Other accounts payable and Liability to Agricultural Research Organization. The main purpose of these financial instruments is to raise finance for the Company's operation. The Company actively measures, monitors and manages its financial risk exposures by various functions, including the segregation of duties and the application of financial control principals. The risks arising from the Company's financial instruments are mainly currency risk and liquidity risk. The Company has no interest rate risk as the balances exposure to interest is minimal. The risk management policies employed by the Company to manage these risks are discussed below.
Foreign currency risk
Foreign exchange risk arises when the Company enters into transactions denominated in a currency other than its functional currency. The Company is exposed to currency risk to the extent that there is a mismatch between the currency in which it is denominated and the respective functional
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BIOHARVEST SCIENCES INC.
Management’s Discussion and Analysis
currency of the company. The currencies in which some transactions are primarily denominated are CAD, US dollars and NIS. The Company's policy is not to enter into any economic hedging transactions to neutralize the effects of foreign currency fluctuations.
Liquidity and Capital resources
The consolidated financial statements have been prepared on a going concern basis whereby the Company is assumed to be able to realize its assets and discharge its liabilities in the normal course of operations. The consolidated financial statements do not reflect adjustments that would be necessary if the going concern assumption were not appropriate. If the going concern assumption was not appropriate for the consolidated financial statements, then adjustments of a material nature would be necessary in the carrying value of assets such as property and equipment, liabilities, the reported expenses, and the balance sheet classifications used. Management continues to pursue financing opportunities for the Company to ensure that it will have sufficient cash to carry out its planned programs beyond the next year.
At December 31, 2025, the Company had cash and cash equivalents of $23,025 thousands (December 31, 2024, $2,390 thousands). The Company had current assets of $30,500 thousands (December 31, 2024, $7,856 thousands) and current liabilities of $7,684 thousands (December 31, 2024, $14,258 thousands).
At December 31, 2025, the Company had net working capital of $22,816 thousands (December 31, 2024, negative $6,402 thousands).
During the year ended December 31, 2025, the Company’s overall position of cash and cash equivalents increase by $20,596 thousands (December 31, 2024, decrease by $2,931 thousands). This change in cash and cash equivalents can be attributed to the following:
·The Company’s net cash used in operating activities during the year ended December 31, 2025, was $7,226 thousands as compared to net cash used of $6,684 thousands for the year ended December 31, 2024. This amount is primarily a result of the losses incurred in the operations of the Company.
·The Company’s net cash used in investing activities during the year ended December 31, 2025, was $2,365 thousands as compared to net cash used of $3,027 thousands for the year ended December 31, 2024. The amounts are used primarily for the purchase of property and equipment to support the Company’s growth strategy.
·The Company’s net cash provided by financing activities during the year ended December 31, 2025, was $30,187 thousands as compared to net cash provided by financing activities of $6,780 thousands for the year ended December 31, 2024.
The Company has incurred operating losses since inception and has not yet achieved sustained positive cash flows from operations. Management believes that existing cash and cash equivalents, together with expected cash flows from operations, will be sufficient to fund core operating requirements for at least the next twelve months, assuming the deferral of certain non-essential capital expenditures and the execution of management’s operating plan. However, the Company’s ability to continue as a going concern remains dependent on the successful execution of its plan and, if necessary, access to additional capital. Therefore, the Company has substantial doubts about the Company's ability to continue as a going concern.
The Company may seek to raise additional capital to support its long-term growth strategy, including through the issuance of equity or equity-linked securities, debt financing, or other
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BIOHARVEST SCIENCES INC.
Management’s Discussion and Analysis
strategic financing arrangements. The Company’s ability to raise additional capital, if and when needed, will depend on, among other things, market conditions, investor demand, and the Company’s operating performance. There can be no assurance that such financing will be available on favorable terms, or at all.
Off Balance Sheet Agreements
The Company has not entered into any material off-balance sheet arrangements such as guarantee contracts, contingent interests in assets transferred to unconsolidated entities, derivative financial obligations or arrangements with respect to any obligations under a variable interest equity arrangement.
Transactions with Related Parties
The Company's key management personnel have the authority and responsibility for overseeing, planning, directing, and controlling the activities of the Company. Key management personnel include members of the Board of Directors, the Chief Executive Officer and the Chief Financial Officer.
The compensation earned by key management for the years ended December 31, 2025, and 2024, was as follows:
Related party transactions
| For the year and period ended December, | ||
|---|---|---|
| 2025 | 2024 | |
| Compensation for key management personnel of the Company: | ||
| CEO Management fees | 576 | 532 |
| Chairman Management fees | 420 | 429 |
| CFO Management fees | 210 | 54 |
| Directors Management fees | 215 | 128 |
| Share-based payment to CFO | 4 | 1 |
| Other related party transactions: | ||
| Accrued interest to a close member of the Chairman (*) | 107 | 4 |
| Accrued interest to CFO (*) | 29 | 2 |
| Issuance of units of securities to Directors (**) | - | 50 |
| Issuance of shares to Directors (***) | 11 | 142 |
| Share-based payment to Directors (****) | 39 | 21 |
Related party balances
| For the year and period ended December, | 2025 | 2024 |
|---|---|---|
| Due to the CEO | 196 | 231 |
| Due to (from) the Chairman (*) | (56) | 688 |
| Due to the CFO (*) | 62 | 199 |
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BIOHARVEST SCIENCES INC.
Management’s Discussion and Analysis
Bonus plan
The Company's Chairman, CEO, CFO and key management employees are entitled to receive an annual bonus based on performance.
(*) Short-term loans
For the years ended December 31, 2025, and 2024, in connection with the borrowing disclosed in note 10A to the Company’s financial statements for the period ended December 31, 2025, a close member of the Chairman and the CFO, each separately, have lent to the Company an aggregate amount of $660 and $157, respectively. As of December 31, 2025, the Company had no outstanding balances in respect of the loans received from related parties. All such loans were fully repaid during 2025.
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BIOHARVEST SCIENCES INC.
Management’s Discussion and Analysis
(**) Issuance of unit of securities
On June 28, 2024, director of the Company participated by investing an aggregate amount of $50 which resulted in the issuing of 7,000 units.
(***) Issuance of shares to Directors
On March 28, 2024, director of the Company converted his carrying amount which consists of principal and accrued interest into 21,744 common shares.
On September 19, 2025, director of the Company exercised 1,750 warrants.
(****) Issuance of options to Directors
On August 25, 2025, the Company granted directors 18,572 options to purchase shares of the Company at $8.30 per share under the Company’s share option plan.
Critical Accounting Estimates and Judgements
The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, and revenue and expenses.
The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.
The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are described below. The Company based its assumptions and estimates on parameters available when the consolidated financial statements were prepared. Existing circumstances and assumptions about future developments, however, may change due to market changes or circumstances arising that are beyond the control of the Company. Such changes are reflected in the assumptions when they occur.
**a.**Liability for Agricultural Research Organization:
Each reporting period, the Company measures the Liability to Agricultural Research Organization, based on discounted cash flows derived from Company's future anticipated revenues.
**b.**Incremental borrowing rate:
The Company measures lease liabilities at the present value of future lease payments, discounted using the incremental borrowing rate (“IBR”) when the interest rate implicit in the lease cannot be readily determined. Determining the IBR requires judgment and involves estimating reference interest rates, credit risk adjustments, lease term assumptions and economic environment factors.
Common Share Data
As at the date of this MD&A, the Company had the following securities issued and outstanding:
16
BIOHARVEST SCIENCES INC.
Management’s Discussion and Analysis
| Common shares | Stock options | Warrants | RSUs |
|---|---|---|---|
| 22,667,842 | 2,597,735 | 619,313 | 269,521 |
Investor Relations Contracts
LifeSci Advisors, LLC
Pursuant to the investor relations agreement dated February 16, 2026 (the “LifeSci Agreement”) between the Company and LifeSci Advisors, LLC (hereafter “LifeSci ”), LifeSci provides investor relations services to the Company. In consideration of LifeSci’s services, LifeSci is entitled to receive a monthly cash fee of $12,500 for the first 3 months following the effective date of the agreement. Following that, the monthly cash fees will be increased to $15,000.
Contractual Obligations
The Company has no contractual obligations that have not been disclosed. Please refer to Note 16b in the Company's consolidated financial statements for the year ended December 31, 2025.
Risks and Uncertainties
Global Economic Uncertainty. The Company’s ability to raise capital is subject to the risk of adverse changes in the market value of the Company’s share price. Periods of macroeconomic weakness or recession and heightened market volatility caused by adverse geopolitical developments could increase these risks, potentially resulting in adverse impacts on the Company’s ability to raise further capital on favorable terms. The impact of geopolitical tension, such as the conflict in the Middle East, a deterioration in the bilateral relationship between the US and China or an escalation in conflict between Russia and Ukraine, including any resulting sanctions, export controls or other restrictive actions that may be imposed by the US and/or other countries against governmental or other entities in, for example, Russia, also could lead to disruption, instability and volatility in global trade patterns, which may in turn impact the Company’s ability to source necessary raw materials and other inputs for manufacturing or the Company’s ability to close new revenue generating orders.
Geographical Risks. The Company’s principal place of business, operations and its facilities, where most of its employees are employed, are located in Rehovot and Yavne, Israel. In addition, the majority of the Company’s key employees and senior management are Israeli citizens. Accordingly, political, economic, and military conditions in Israel may directly affect the Company’s business.
On October 7, 2023, Hamas militants infiltrated Israel’s southern border from the Gaza Strip and carried out attacks against civilian and military targets in Israel. Following these events, the Government of Israel declared war against Hamas and the Israel Defense Forces initiated a large-scale mobilization of military reservists. Hostilities between Israel and Hamas continued through 2023, 2024 and 2025. On October 9, 2025, the Israeli Cabinet approved a ceasefire and hostage exchange agreement between Israel and Hamas that was brokered by the United States and took effect on October 10, 2025.
During this period, hostilities also escalated along Israel’s northern border involving Hezbollah forces operating from Lebanon. On November 27, 2024, Israel and Lebanon agreed to a ceasefire arrangement that remained in effect until February 18, 2025.
17
BIOHARVEST SCIENCES INC.
Management’s Discussion and Analysis
In June 2025, tensions between Israel and Iran escalated significantly and resulted in military operations between the two countries. On June 24, 2025, Israel and Iran agreed to an immediate ceasefire.
On February 28, 2026, the United States and Israel conducted coordinated aerial operations targeting military and governmental facilities in Iran. Subsequently, Iran launched missile attacks across parts of the Middle East and Hezbollah launched barrages of rockets toward northern Israel, leading to retaliatory actions by Israel. As of the date of these financial statements, hostilities in the region have intensified and involve multiple parties, including Israel, the United States, Iran and Hezbollah.
The evolving regional security situation has created and may continue to create significant uncertainty and could adversely affect Israel’s economy, the Company’s operations, employees, business partners, supply chain and overall business environment. The Company confirms that it has a business continuity plan and procedures in place, ensuring operational and financial continuity. As of the date of this MD&A, the Company has not experienced a material adverse impact on its operations; however, the Company continues to monitor the situation closely and cannot predict the ultimate impact that these developments may have on its business, financial condition or results of operations and have implemented (e.g., remote work protocols/safety stock) to mitigate potential disruptions.
Market Risks. The Company’s securities trade on public markets and the trading value thereof is
determined by the evaluations, perceptions and sentiments of both individual investors and the investment community taken as a whole. Such evaluations, perceptions and sentiments are subject to change, both in short-term time horizons and long-term time horizons. An adverse change in investor evaluations, perceptions and sentiments could have a material adverse outcome on the Company and its securities.
Financing Risks. The Company will be dependent on raising capital through a combination of debt and/or equity offerings. There can be no assurance that the capital markets will remain favorable in the future, and/or that the Company will be able to raise the financing needed to continue its business at favorable terms, or at all. Restrictions on the Company’s ability to finance could have a material adverse outcome on the Company and its securities.
Share Price Volatility and Price Fluctuations. In recent years, the securities markets all over the world have experienced a high level of price and volume volatility, and the market prices of securities of many corporations have experienced wide fluctuations which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies.
Key Personnel Risks. The Company’s efforts are dependent to a large degree on the skills and experience of certain of its key personnel, including the board of directors. The Company does not maintain “key man” insurance policies on these individuals. Should the availability of these persons’ skills and experience be in any way reduced or curtailed, this could have a material adverse outcome on the Company and its securities.
General Business Risk and Liability. Given the nature of the Company's business, it may from time to time be subject to claims or complaints from investors or others in the normal course of business. The legal risk facing the Company, its directors, officers and employees in this respect includes potential liability for violations of securities laws, breach of fiduciary duty or misuse of
18
BIOHARVEST SCIENCES INC.
Management’s Discussion and Analysis
investors' funds. Some violations of securities laws and breach of fiduciary duty could result in civil liability, fines, sanctions or the suspension or revocation of the Company's right to carry on its existing business. The Company may incur significant costs in connection with such potential liabilities.
Competition. There is the potential that the Company will face intense competition from other companies, some of which can be expected to have more financial resources, industry, manufacturing and marketing experience than the Company. Additionally, there is potential that the industry will undergo consolidation, creating larger companies that may have increased geographic scope and other economies of scale. Increased competition between larger, better-financed competitors with geographic or other structural advantages could materially and adversely affect the business, financial condition and results of operations of the Company. To remain competitive, the Company will require a continued level of investment in research and development, marketing, sales and client support. The Company may not have sufficient resources to maintain research and development, marketing, sales and client support efforts on a competitive basis which could materially and adversely affect the business, financial condition and results of operations of the Company.
Reliance on Key Business Inputs. The Company's business is dependent on a number of key inputs and their related costs including raw materials and suppliers related to its growing operations as well as electricity, water, and other utilities. Any significant interruption or negative change in the availability or economics of the supply chain for key inputs could materially impact the business, financial condition and operating results of the Company. Any liability to secure required supplies and services or to do so on appropriate terms could also have a materially adverse impact on the business, financial condition, and operating results of the Company.
Potential product recalls. Manufacturers and distributers of products are sometimes subjected to the recall or return of their products for a variety of reasons, including product defects, such as contamination, unintended harmful side effects or interactions with other substances, packing safety and inadequate or inaccurate labeling disclosers. If the Company's product is recalled due to an alleged product defect or for any other reason, the Company could be required to incur the unexpected expenses of the recall and any legal proceedings that might arise in connection with the recall.
The Company may lose a significant number of sales and may not be able to replace those sales at an acceptable margin or at all. In addition, a product recall may require significant management attention.
Although the Company had detailed procedures in place for testing finished products, there can be no assurance that any quality, potency or contamination problem will be detected in time to avoid unforeseen product recalls, regulatory action or lawsuit. Additionally, if one of the Company's products was subject to recall, the image of the Company could be harmed. A recall for any one of the foregoing reasons could lead to decreased demand for the Company's products and could have a material adverse effect on the results of operations and financial condition of the Company.
History of Net Losses; Accumulated Deficit; Lack of Revenue from Operations. The Company has incurred net losses to date. The Company may continue to incur losses. There is no certainty that the Company will operate profitably or provide a return on investment in the future.
19
BIOHARVEST SCIENCES INC.
Management’s Discussion and Analysis
Uninsurable risks. The Company may become subject to liability for events against which it cannot insure or against which it may elect not to insure. Such events could result in substantial damage to property and personal injury. The payment of any such liabilities may have a material, adverse effect on the Company's financial position.
No History of Dividends. Since incorporation, the Company has not paid any cash or other dividends on its common stock and does not expect to pay such dividends in the foreseeable future, as all available funds will be invested primarily to finance the Company’s operations. The Company will need to achieve profitability prior to any dividends being declared.
Other Information Additional information related to the Company is available for viewing on SEDAR+ at www.sedarplus.ca. This additional information is not incorporated into this Management's Discussion and Analysis and does not constitute a part of this Management's Discussion and Analysis.
20 Certification
CERTIFICATION REQUIRED BY RULE 13a-14(a) OR RULE 15d-14(a), PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Ilan Sobel, certify that:
1.I have reviewed this Annual Report on Form 40-F of BioHarvest Sciences Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
4.The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
(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 issuer, 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; and
(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;
(c)Evaluated the effectiveness of the issuer’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
(d)Disclosed in this report any change in the issuer’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 issuer’s internal control over financial reporting; and
5.The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):
(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 issuer’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.
| Date: March 31, 2026 | /s/ Ilan Sobel | |
|---|---|---|
| Name: | Ilan Sobel | |
| Title: | Chief Executive Officer |
Certification
CERTIFICATION REQUIRED BY RULE 13a-14(a) OR RULE 15d-14(a), PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Bar Dichter, certify that:
1.I have reviewed this Annual Report on Form 40-F of BioHarvest Sciences Inc.;
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the issuer as of, and for, the periods presented in this report;
4.The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the issuer and have:
(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 issuer, 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; and
(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;
(c)Evaluated the effectiveness of the issuer’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
(d)Disclosed in this report any change in the issuer’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 issuer’s internal control over financial reporting; and
5.The issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the issuer’s auditors and the audit committee of the issuer’s board of directors (or persons performing the equivalent functions):
(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 issuer’s ability to record, process, summarize and report financial information; and
(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the issuer’s internal control over financial reporting.
| Date: March 31, 2026 | /s/ Bar Dichter | |
|---|---|---|
| Name: | Bar Dichter | |
| Title: | Chief Financial Officer |
Certification
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ENACTED PURSUANT TO
SECTION 906 OF THE U.S. SARBANES-OXLEY ACT OF 2002
In connection with the annual report of BioHarvest Sciences Inc. (the “Company”) on Form 40-F for the financial year ended December 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ilan Sobel, the Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: March 31, 2026 | /s/ Ilan Sobel | |
|---|---|---|
| Name: | Ilan Sobel | |
| Title: | Chief Executive Officer |
This certification accompanies the Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed “filed” by the Company for purposes of § 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.
Certification
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ENACTED PURSUANT TO
SECTION 906 OF THE U.S. SARBANES-OXLEY ACT OF 2002
In connection with the annual report of BioHarvest Sciences Inc. (the “Company”) on Form 40-F for the financial year ended December 31, 2025, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Bar Dichter, the Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
(1)The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
| Date: March 31, 2026 | /s/ Bar Dichter | |
|---|---|---|
| Name: | Bar Dichter | |
| Title: | Chief Financial Officer |
This certification accompanies the Report pursuant to § 906 of the Sarbanes-Oxley Act of 2002 and shall not, except to the extent required by the Sarbanes-Oxley Act of 2002, be deemed “filed” by the Company for purposes of § 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section.
Consent of Independent Registered Public Accounting Firm
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the use of our report dated March 31, 2026, relating to the consolidated financial statements of BioHarvest Sciences Inc. (the “Company”) and its subsidiaries, which appears in Exhibit 99.2 incorporated by reference in this Annual Report on Form 40-F of the Company for the financial year ended December 31, 2025 (the “Annual Report”). Our report contains an explanatory paragraph regarding the Company’s ability to continue as a going concern.
We also consent to the incorporation by reference in the Registration Statement on Form F-3 (No. 333-289908) and Form S-8 (No. 333-388882) of our report dated March 31, 2026 referenced above. We also consent to the reference to us under the heading “Interests of Experts” in the Annual Information Form, filed as exhibit 99.1 to this Annual Report on Form 40-F, which is incorporated by reference in such Registration Statement~~.~~
| Tel Aviv, Israel | Ziv Haft/s/ |
|---|---|
| March 31, 2026 | Certified Public Accountants (Isr.) |
| BDO Member Firm |
Code of Business Conduct and Ethics
BIOHARVEST SCIENCES INC.
CODE OF BUSINESS CONDUCT AND ETHICS
(Adopted as of September 20, 2024)
1.INTRODUCTION.
1.1The Board of Directors (the “Board”) of BioHarvest Sciences Inc. (the “Company”) has adopted this code of business conduct and ethics (the “Code”), as may be amended from time to time by the Board and which is applicable to all of the Company’s directors, officers and employees to:
(a)promote honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
(b)promote the full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with, or submits to, the applicable securities regulators, including but not limited to the Securities and Exchange Commission (the “SEC”), as well as in other public communications made by or on behalf of the Company;
(c)promote compliance with applicable governmental laws, rules and regulations;
(d)deter wrongdoing; and
(e)require prompt internal reporting of breaches of, and accountability for adherence to, this Code.
1.2This Code may be amended and modified by the Board. In this Code, references to the “Company” means BioHarvest Sciences Inc. and/or any of the Company’s subsidiaries, if any.
2.HONEST, ETHICAL AND FAIR CONDUCT.
2.1Each person owes a duty to the Company to act with integrity. Integrity requires, among other things, being honest, fair and candid. Deceit, dishonesty and subordination of principle are inconsistent with integrity. Service to the Company should never be subordinated to personal gain and advantage.
2.2Each person must:
(a)act with integrity, including being honest and candid while still maintaining the confidentiality of the Company’s information where required or when in the Company’s interests;
(b)observe all applicable governmental laws, rules and regulations;
(c)comply with the requirements of applicable accounting and auditing standards, as well as Company policies, in order to maintain a high standard of accuracy and completeness in the Company’s financial records and other business-related information and data;
(d)adhere to a high standard of business ethics and not seek competitive advantage through unlawful or unethical business practices;
(e)deal fairly with the Company’s customers, suppliers, competitors and employees;
(f)refrain from taking advantage of anyone through manipulation, concealment, abuse of privileged information, misrepresentation of material facts or any other unfair-dealing
1
practice;
(g)protect the assets of the Company and ensure their proper use;
(h)until such time as such person ceases to be an officer or director of the Company, to first present to the Company for its consideration, prior to presentation to any other entity, any business opportunity suitable for the Company and presented to such person solely in his or her capacity as an officer or director of the Company, subject to any other fiduciary or contractual obligations such officer or director may have; and
(i)avoid conflicts of interest, wherever possible, except as may be allowed under applicable laws and regulations, resolutions approved by the Board (or the appropriate committee of the Board) or as disclosed in the Company’s public filings with the applicable securities regulators, including but not limited to the SEC. Anything that would be a conflict for a person subject to this Code also will be a conflict for a member of his or her immediate family or any other close relative. Examples of conflict of interest situations include, but are not limited to, the following:
(i)any significant ownership interest in any target, supplier or customer of the Company;
(ii)any consulting or employment relationship with any target, supplier or customer of the Company;
(iii)the receipt of any money, non-nominal gifts or excessive entertainment from any entity with which the Company has current or prospective business dealings of the Company;
(iv)selling anything to the Company or buying anything from the Company, except on the same terms and conditions as comparable officers or directors are permitted to so purchase or sell (and, in the absence of any such comparable officer or director, on the same terms and conditions as a third party would buy or sell a comparable item in an arm’s-length transaction);
(v)any other financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) involving the Company; and
(vi)any other circumstance, event, relationship or situation in which the personal interest of a person subject to this Code interferes, or even appears to interfere, with the interests of the Company as a whole.
Notwithstanding the foregoing, nothing herein shall prohibit a director, officer, employee or contractor of the Company from reporting possible violations of law or regulation to any governmental agency or entity or making other disclosures that are protected pursuant to law or regulation. Prior authorization from the Company is not required in order to make any such reports or disclosures and the reporting individual is not required to notify the Company that such reports or disclosures have been made. Should any provision in this Code conflict with this provision, this provision shall control.
2
**3.**DISCLOSURE.
3.1The Company strives to ensure that the contents of and the disclosures in the reports and documents that the Company files with the applicable securities regulators, including but not limited to the SEC, and other public communications shall be full, fair, accurate, timely and understandable in accordance with applicable disclosure standards, including standards of materiality, where appropriate. Each person must:
(a)not knowingly misrepresent, or cause others to misrepresent, facts about the Company to others, whether within or outside the Company, including to the Company’s independent registered public accountants, governmental regulators, self-regulating organizations and other governmental officials, as appropriate; and
(b)in relation to his or her area of responsibility, properly review and critically analyze proposed disclosure for accuracy and completeness.
3.2In addition to the foregoing, the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”) of the Company (or persons performing similar functions), and each other person that typically is involved in the financial reporting of the Company, must familiarize himself or herself with the disclosure requirements applicable to the Company as well as the business and financial operations of the Company.
3.3Each person must promptly bring to the attention of the Chair of the Board any information he or she may have concerning (a) significant deficiencies in the design or operation of internal and/or disclosure controls that could adversely affect the Company’s ability to record, process, summarize and report financial data or (b) any fraud that involves management or other employees of the Company who have a significant role in the Company’s financial reporting, disclosures or internal controls.
**4.**COMPLIANCE.
4.1It is the Company’s obligation and policy to comply with all applicable governmental laws, rules and regulations. All directors, officers and employees of the Company are expected to understand, respect and comply with all of the laws, regulations, policies and procedures that apply to them in their positions with the Company. Employees of the Company are responsible for talking to their supervisors to determine which laws, regulations and Company policies apply to their position and what training is necessary to understand and comply with them. Directors, officers and employees of the Company are directed to specific policies and procedures available to persons they supervise.
5.REPORTING AND ACCOUNTABILITY.
5.1The Board is responsible for applying this Code to specific situations in which questions are presented to it and has the authority to interpret this Code in any particular situation. Any person who becomes aware of any existing or potential breach of this Code is required to notify the Chair of the Board promptly. Failure to do so is, in and of itself, a breach of this Code.
Specifically, each person must:
(a)notify the Chair of the Board promptly of any existing or potential violation of this Code; and
(b)not retaliate against any other person for reports of potential violations that are made in good faith.
3
The Company will follow the following procedures in investigating and enforcing this Code and in reporting on this Code:
(c)The Board will take all appropriate action to investigate any breaches reported to it; and
(d)Upon determination by the Board that a breach has occurred, the Board (by majority decision) will take or authorize such disciplinary or preventive action as it deems appropriate, after consultation with the Company’s internal or external legal counsel, up to and including dismissal or, in the event of criminal or other serious violations of law, notification of the applicable securities regulators, including but not limited to the SEC, or other appropriate law enforcement authorities.
No person following the above procedure shall, as a result of following such procedure, be subject by the Company or any director, officer or employee thereof to discharge, demotion suspension, threat, harassment or in any manner, discrimination against such person in terms and conditions of employment.
6.WAIVERS AND AMENDMENTS.
6.1Any Waiver (as defined herein) or an Implicit Waiver (as defined herein) from a provision of this Code for the Company’s directors or officers or any Amendment (as defined herein) to this Code is required to be approved by the Board or the Committee and disclosed within four (4) business days either by providing website disclosure that satisfies the requirements of Item 5.05(c) of Form 8-K, by including disclosure in a Form 6-K or by distributing a press release.
6.2A “Waiver” means the approval by the Board of a material departure from a provision of this Code. An “Implicit waiver” means the Company’s failure to take action within a reasonable period of time regarding a material departure from a provision of this Code that has been made known to an executive officer of the Company. An “Amendment” means any amendment to this Code other than minor technical, administrative or other non-substantive amendments hereto.
6.3All persons should note that it is not the Company’s intention to grant or to permit waivers from the requirements of this Code. The Company expects full compliance with this Code.
7.INSIDER INFORMATION AND SECURITIES TRADING.
7.1No person who is aware of material, non-public information about the Company may, directly or indirectly, buy or sell the Company’s securities or engage in another action to take advantage of such information. It is also against the law to trade or to “tip” others who might make an investment decision based on material, non-public information about the Company. For example, using material, non-public information to buy or sell the Company’s securities, options in the Company’s securities or the securities of any Company supplier, customer, competitor, potential business partner or potential target is prohibited. The consequences of insider trading violations can be severe. These rules also apply to the use of material, non-public information about other companies (including, for example, the Company’s customers, competitors and potential business partners and potential targets). In addition to directors, officers or employees, these rules apply to, among others, such person’s spouse, children, parents and siblings, as well as any other family members living in such person’s home.
8.FINANCIAL STATEMENTS AND OTHER RECORDS.
8.1All of the Company’s books, records, accounts and financial statements must be maintained in reasonable detail, must appropriately reflect the Company’s transactions and must both conform to applicable legal requirements and to the Company’s system of internal controls. Unrecorded or “off the books” funds or assets should not be maintained unless permitted by applicable law or regulation.
8.2Records should always be retained or destroyed according to the Company’s record retention
4
policies. In accordance with those policies, in the event of litigation or governmental investigation, please consult the Board or the Company’s legal counsel.
9.IMPROPER INFLUENCE ON THE CONDUCT OF AUDITS.
9.1No director or officer of the Company, or any other person acting under the direction thereof, shall directly or indirectly take any action to coerce, manipulate, mislead or fraudulently influence any public or certified public accountant engaged in the performance of an audit or review of the financial statements of the Company or take any action that such person knows or should know that if successful could result in rendering the Company’s financial statements materially misleading. Any person who believes such improper influence is being exerted should report such action to such person’s supervisor, or if that is impractical under the circumstances, to any of the Company’s directors.
9.2Types of conduct that could constitute improper influence include, but are not limited to, directly or indirectly:
(a)offering or paying bribes or other financial incentives, including future employment or contracts for non-audit services;
(b)providing an auditor with an inaccurate or misleading legal analysis;
(c)threatening to cancel or cancelling existing non-audit or audit engagements if the auditor objects to the Company’s accounting;
(d)seeking to have a partner removed from the audit engagement because the partner objects to the Company’s accounting;
(e)blackmailing; and
(f)making physical threats.
10.ANTI -CORRUPTION LAWS.
10.1The Company complies with the anti-corruption laws of the countries in which it does business. Directors, officers and employees of the Company will not directly or indirectly give anything of value to government officials, including employees of state-owned enterprises or foreign political candidates. These requirements apply both to Company employees and agents, such as third-party sales representatives, no matter where they are doing business. If you are authorized to engage agents on the Company’s behalf, you are responsible for ensuring they are reputable and for obtaining a written agreement to uphold the Company’s standards in this area.
11.VIOLATION.
11.1Violation of this Code is grounds for disciplinary action up to and including termination of employment. Such an action is in addition to any civil or criminal liability which might be imposed by any court or regulatory agency.
12.OTHER POLICIES AND PROCEDURES.
12.1Any other policy or procedure set out by the Company in writing or made generally known to employees, officers or directors of the Company prior to the date hereof or hereafter are separate requirements and remain in full force and effect.
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13.INQUIRIES.
13.1All inquiries and questions in relation to this Code or its applicability to particular people or situations should be addressed to the Company’s Secretary, or such other compliance officer as shall be designated from time to time by the Company.
14.PROVISIONS FOR CHIEF EXECUTIVE OFFICER AND SENIOR FINANCIAL OFFICERS.
14.1The CEO and all senior financial officers, including the CFO and principal accounting officer, are bound by the provisions set forth herein relating to ethical conduct, conflicts of interest, and compliance with law. In addition to this Code, the CEO and senior financial officers are subject to the following additional specific policies:
(a)act with honesty and integrity, avoiding actual or apparent conflicts between personal, private interests and the interests of the Company, including receiving improper personal benefits as a result of his or her position;
(b)disclose to the CEO and the Board any material transaction or relationship that reasonably could be expected to give rise to a conflict of interest;
(c)perform responsibilities with a view to causing periodic reports and documents filed with or submitted to the applicable securities regulators, including but not limited to the SEC, and all other public communications made by the Company to contain information that is accurate, complete, fair, objective, relevant, timely and understandable, including full review of all periodic reports;
(d)comply with laws applicable to the Company, including but not limited to rules and regulations of federal, state or provincial and other local governments and with the rules and regulations of private and public regulatory agencies having jurisdiction over the Company;
(e)act in good faith, responsibly, with due care, competence and diligence, without misrepresenting or omitting material facts or allowing independent judgment to be compromised or subordinated;
(f)respect the confidentiality of information acquired in the course of performance of his or her responsibilities except when authorized or otherwise legally obligated to disclose any such information; not use confidential information acquired in the course of performing his or her responsibilities for personal advantage;
(g)share knowledge and maintain skills important and relevant to the needs of the Company, its shareholders and other constituencies and the general public;
(h)proactively promote ethical behavior among subordinates and peers in his or her work environment and community;
(i)use and control all corporate assets and resources employed by or entrusted to him or her in a responsible manner;
(j)not use corporate information, corporate assets, corporate opportunities or his or her position with the Company for personal gain; not compete directly or indirectly with the Company;
(k)comply in all respects with this Code; and
(l)advance the Company’s legitimate interests when the opportunity arises.
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14.2The Board will investigate any reported violations and will oversee an appropriate response, including corrective action and preventative measures. Any officer who violates this Code will face appropriate, case-specific disciplinary action, which may include termination.
14.3Any request for a waiver of any provision of this Code must be in writing and addressed to the Chair of the Board. Any waiver of this Code will be disclosed as provided in Section 6 of this Code.
15.OFFICER’S CERTIFICATION.
15.1It is the policy of the Company that each officer of the Company covered by this Code shall acknowledge and certify to the foregoing annually in the form attached hereto as Schedule “A” and file a copy of such certification with the Chair of the Board.
Adopted by the Board on September 20, 2024.
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SCHEDULE “A”
OFFICER’S CERTIFICATION
I have read and understand the foregoing Code. I hereby certify that I am in compliance with the foregoing Code and will continue to comply with the Code in the future. I understand that any violation of the Code will subject me to appropriate disciplinary action, which may include termination.
Dated:
Name:
Title: