Note 1 - NATURE OF OPERATIONS:

The Company expects to incur future net losses and the transition to profitability is dependent upon, among other things, the successful development and commercialization of the Company’s products and product candidates or, the establishment of contracts for the distribution of new product lines, any of which, or in combination, would contribute to the achievement of a level of revenue adequate to support the cost structure.

As of the approval date of these consolidated financial statements, the Company’s available liquidity is not sufficient to fund its operations and meet its obligations for the twelve-month period following the issuance date of these consolidated financial statements. Consequently, there is substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Management’s plans include the continued development and commercialization of the Company’s products and product candidates, advancement of its existing collaborations with global leading companies, pursuit of additional strategic partnerships and licensing arrangements, and raising capital through public or private offerings of equity or debt securities. The Company has historically accessed the capital markets and entered into strategic collaborations to support its operations, however, there can be no assurance that the Company will be successful in obtaining sufficient financing on acceptable terms, or at all.

If the Company is unsuccessful in commercializing its products, advancing its collaborations, or raising additional capital, it may be required to reduce its operating activities, modify its strategic plans, or curtail certain operations. 

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES:

NOTE 3 – INVENTORIES, NET:

NOTE 4 – COMMITMENTS AND CONTINGENCIES

The Company received grants from the Israeli Innovation Authority (IIA) for research and development funding until the year 2019, and therefore is subject to the provisions of the Israeli Law for the Encouragement of Research, Development and Technological Innovation in the Industry and the regulations and guidelines thereunder (the “Innovation Law”), the regulations promulgated thereunder, the IIA’s rules and guidelines and the terms of the approved program funded by the IIA. Under the Innovation Law royalties of 3% on the income deriving from products and from related knowhow and services developed in whole or in part, directly or indirectly, under IIA programs are payable to the IIA. Such commitment is up to the amount of grants received (dollar linked), plus interest at annual rate based on SOFR. In addition to paying any royalty due, the Company must abide by other restrictions associated with receiving such grants under the Innovation Law that continue to apply following repayment to the IIA. These restrictions may impair the Company’s ability to outsource manufacturing or otherwise transfer its know-how outside of Israel and may require it to obtain the approval of the IIA for certain actions and transactions and pay additional royalties and other amounts to the IIA.

The Company did not apply for grants from the IIA since 2019. For the six months period ended June 30, 2026 and 2025, the Company recorded royalties expenses of $5 and $67, respectively.

The royalty expenses which are related to the funded project are recognized in the statements of operations as a component of cost of revenue.

As of June 30, 2026, the maximum total royalty amount payable by the Company under the IIA funding arrangement is approximately $6,896 (without interest).

NOTE 5 - Development, Exclusivity and Option Products Agreement

On February 5, 2021, CollPlant entered into a Development, Exclusivity and Option Products Agreement with AbbVie (the “AbbVie Development Agreement”), pursuant to which CollPlant and AbbVie collaborated in the development and commercialization of dermal and soft tissue filler products for the medical aesthetics market using CollPlant’s rhCollagen technology.

Under the AbbVie Development Agreement, CollPlant received an upfront cash payment of $14,000 in February 2021. In June 2023, the Company announced the achievement of a milestone with respect to the clinical phase dermal filler product, which triggered a $10,000 payment from AbbVie that was received in July 2023. In February 2025, the Company announced the receipt of a contingent payment with respect to CollPlant’s rhCollagen, which triggered a $2,000 payment from AbbVie.

In April 2026, AbbVie notified the Company of its decision to terminate the AbbVie Development Agreement. The termination became effective following the applicable notice period. As a result of the termination, the Company does not expect to receive additional development, regulatory or commercial milestone payments or royalties under the AbbVie Development Agreement.

NOTE 6 - SHARE CAPITAL (*):

Each ordinary share is entitled to one vote. The holder of the ordinary shares is also entitled to receive dividends whenever funds are legally available, when and if declared by the Board of Directors. Since its inception, the Company has not declared any dividends.

As of June 30, 2026, the Company had received $660 on account of the securities to be issued pursuant to the June 2026 Offering. The amount was recorded within shareholders’ equity as additional paid-in capital, net of issuance costs incurred as of that date.

On July 6, 2026, the June 2026 Offering was completed. Upon closing, the Company issued 446,471 ordinary shares, pre-funded warrants to purchase 318,235 ordinary shares, Series A warrants to purchase 764,706 ordinary shares and Series B warrants to purchase 1,529,412 ordinary shares. The Company received the remaining gross proceeds of $1,940.

The pre-funded warrants have an exercise price of $0.001 per ordinary share, are immediately exercisable and do not expire until exercised in full. The Series A and Series B warrants have an exercise price of $3.40 per ordinary share and expire two years and five years, respectively, following the effective date of the registration statement covering the resale of the ordinary shares underlying such warrants. In connection with the June 2026 Offering, the Company also issued to the placement agent warrants to purchase up to 45,882 ordinary shares at an exercise price of $4.25 per ordinary share. The placement agent warrants are substantially on the same terms as the Series B warrants. Total issuance costs related to the June 2026 Offering amounted to approximately $364.

The Company determined that the pre-funded warrants, Series A warrants and Series B warrants issued in connection with the June 2026 Offering meet the criteria for equity classification. Accordingly, the related issuance costs were accounted for as a reduction of shareholders’ equity.

Under the Company’s new share award plan (the “2024 Plan”), the Company may grant its employees, directors and consultants with several equity-based awards, including options, shares, restricted shares, restricted share units, stock appreciation rights, performance units, performance shares and other stock or cash awards. The 2024 Plan is in effect for a term of ten (10) years from the date of adoption, i.e., until April 2034, unless earlier terminated by its administrator. 

The Company still has options outstanding under its former Share Ownership and Option Plan (2010), or the 2010 Plan. These options were granted to employees, directors and consultants of the Company. Each option is exercisable into one ordinary share of the Company of NIS 1.50 par value.

In the six months ended June 30, 2026, and June 30, 2025, no options were granted.

During the six months ended June 30, 2026 and  June 30, 2025, no options were exercised.

The fair value of options vested during the six months ended June 30, 2026, and 2025 was $320 and $555, respectively.

In the six months ended June 30, 2025, no RSUs were granted.

As of June 30, 2026, there was $668 of unrecognized compensation expense related to unvested RSUs and options. This amount is expected to be recognized over a weighted-average period of 1.37 years.

NOTE 7 - SUPPLEMENTARY FINANCIAL STATEMENT INFORMATION

NOTE 8 - SUBSEQUENT EVENTS:

At the same meeting, the Company’s shareholders approved a reverse share split of the Company’s ordinary shares at a ratio ranging from one-for-eight to one-for-twelve, with the final ratio and effective date to be determined by the Company’s board of directors. On September 1, 2026, the board of directors determined that the reverse share split would be effected at a ratio of one-for-ten. The reverse share split became effective on September 4, 2026, at which time every ten ordinary shares of the Company were consolidated into one ordinary share.

No fractional ordinary shares were issued as a result of the reverse share split, and fractional shares were rounded to the nearest whole ordinary share.

In connection with the reverse share split, proportionate adjustments were made to the number of ordinary shares issuable upon the exercise or vesting of the Company’s outstanding warrants, RSU’s, options and other equity awards, as applicable, and to the related exercise prices.

All share and per share amounts presented in these condensed consolidated financial statements and the accompanying notes have been retroactively adjusted to reflect the one-for-ten reverse share split for all periods presented (see Note 6).

LightSolver is an Israeli technology company developing a photonic computing platform based on its proprietary Laser Processing Unit (“LPU”) technology. Following the acquisition, the Company expanded its operations into the high-performance computing and photonics sectors, alongside its existing regenerative and aesthetic medicine activities.

Pursuant to the Purchase Agreement, as amended, the consideration to the former shareholders of LightSolver includes: (i) 336,103 newly issued ordinary shares of the Company, representing approximately 17.8% of the Company’s outstanding ordinary shares immediately prior to the execution of the Share Purchase Agreement; (ii) pre-funded warrants to purchase an aggregate of 668,448 ordinary shares of the Company at an exercise price of $0.0001 per share; and (iii) three series of milestone-based warrants to purchase an aggregate of up to 22,231,164 ordinary shares of the Company, consisting of warrants to purchase up to 2,455,120, 9,553,640 and 10,222,404 ordinary shares, respectively (collectively, the “Consideration Securities”). The milestone warrants become exercisable upon the achievement of specified technological and commercial milestones.

In addition, certain holders of outstanding and unvested options of LightSolver are entitled to receive rollover options to purchase an aggregate of 385,198 ordinary shares of the Company. The issuance of ordinary shares upon exercise of the pre-funded warrants, milestone warrants and rollover options is subject to an equity issuance limitation designed to comply with Nasdaq Listing Rule 5635. To the extent the applicable Nasdaq issuance threshold would be exceeded, shareholder approval will be required before the underlying ordinary shares may be issued.

At closing, the Company invested $5.0 million in LightSolver to fund its working capital and operational needs. In addition, one SAFE previously issued by LightSolver with an aggregate purchase amount of $2.0 million remained outstanding following the closing and may result in future dilution of the Company’s ownership interest in LightSolver.

H.C. Wainwright & Co., LLC (“Wainwright”) acted as advisor to the Company and in connection with the acquisition, the Company entered into a finder agreement pursuant to which the Company agreed to issue Wainwright (or its designees) warrants (the “Finder Warrants”) to purchase 200,000 of our ordinary shares at an exercise price of $3.60 per share upon closing of the acquisition. The warrants will have a five-year term following initial exercise date and the exercisability of the warrants shall be subject to shareholder approval.

Rodman & Renshaw, LLC (“R&R”) acted as advisor to LightSolver and in connection with the acquisition, on September 24, 2026, the Company and LightSolver entered into an agreement with R&R (the “R&R Agreement”) providing for the issuance to R&R of the following: (i) a pre-funded warrant to purchase 69,487 of our ordinary shares and milestone warrants to purchase an aggregate of 1,111,558 of our ordinary shares, the exercise of which shall be subject to the same milestone triggers as the Consideration Securities (the “Advisor Acquisition Securities”), (ii) a contingent pre-funded warrant to purchase 106,294 of our ordinary shares for each $6.25 million of gross proceeds in certain equity and debt financing and grants or sales of certain assets up to a maximum of pre-funded warrants to purchase 425,176 of our ordinary shares (the “Contingent Pre-Funded Warrants”), and (iii) a pre-funded warrant to purchase 18,761 of our ordinary shares and milestone warrants to purchase an aggregate of 300,120 of our ordinary shares, the exercise of which shall be subject to the same milestone triggers as the Consideration Securities (the “Advisory Securities”). The Company and LightSolver also entered into an agreement on substantially similar terms as the R&R Agreement with another advisor granting to such advisor Advisor Acquisition Securities, Contingent Pre-Funded Warrants and Advisory Securities and who is acting in an advisory role to LightSolver. The issuance of ordinary shares underlying the Advisor Acquisition Securities, Contingent Pre-Funded Warrants and Advisory Securities to both such parties will be subject to shareholder approval. Pursuant to an instruction from LightSolver, the Advisor Acquisition Securities and Advisory Securities issuable to such advisors will be deducted from the Consideration Securities otherwise issuable under the Purchase Agreement.