Kadimastem Ltd. Financial Statements as of

Financial Statements as of December

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Report of Independent Registered Public Accounting

To the Shareholders and the Board of Directors of

Opinion on the Financial Statements

We have audited the accompanying statements of financial

position of Kadimastem Ltd. (the "Company") as of December 31, 2023 and 2022, and the related statements of profit or loss

and other comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2023, and

the related notes. In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company

at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December

31, 2023, in conformity with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting

The Company's Ability to Continue as a Going Concern

The accompanying financial statements have been prepared

assuming that the Company will continue as a going concern. As discussed in Note 1b to the financial statements, the Company has suffered

recurring losses and negative cash flows from operations and has a deficiency in equity, an accumulated deficit and a working capital

deficiency, and has stated that substantial doubt exists about the Company's ability to continue as a going concern. Management's

evaluation of the events and conditions and management's plans regarding these matters are also described in Note 1b. The financial

statements do not include any adjustments that might result from the outcome of this uncertainty.

These financial statements are the responsibility

of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and

are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules

and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards

of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements

are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform,

an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal

control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control

over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess

the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond

to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating

the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Kost Forer Gabbay & Kasierer

Kost Forer Gabbay & Kasierer

A member of Ernst & Young Global

We have served as the Company's auditor since

The accompanying Notes are an integral part of the

financial statements.

PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

The attached Notes constitute an integral part of

the financial statements.

The attached Notes constitute an integral

part of the financial statements.

STATEMENTS OF CHANGES IN EQUITY

The attached Notes constitute an integral part of

the financial statements.

STATEMENTS OF CHANGES IN EQUITY

The attached Notes constitute an integral part of

the financial statements.

STATEMENTS OF CASH FLOWS

The attached Notes constitute an integral part of

the financial statements.

STATEMENTS OF CASH FLOWS

The attached Notes constitute an integral part of

the financial statements.

NOTES TO FINANCIAL STATEMENTS

Ltd. (hereinafter, the "Company") was incorporated in Israel on October 6, 2008, and began its business activities on August

27, 2009. On June 6, 2013, the Company completed a public offering of its shares on the Tel Aviv Stock Exchange ("TASE").

The Company's offices are located in Ness Ziona. The Company is engaged in the development of drugs for the treatment of terminal

muscular dystrophy (also known as ALS) and diabetes in the field of regenerative medicine.

ability to continue its operations depends on raising resources to finance its operations. The Company works to raise funds by making

private placements to investors in Israel and/or abroad, and/or raising funds on the TASE, and/or issuing rights to its current shareholders.

At present, there is no certainty as to the Company's ability to generate income or raise additional capital in the future, if at

These factors raise substantial doubt

regarding the Company's ability to continue as a going concern. The financial statements do not include any adjustments regarding

the carrying amounts of the assets and liabilities and their classification, should the Company not continue to operate as a going concern.

"Swords of Iron" War (hereinafter, the "War") broke out in the State of Israel in October 2023. The continued

War has led to a slowdown in business activity in the Israeli economy due to, among other things, factories in the south and north of

the country being closed, infrastructure damage, the recruitment of reserve personnel for an unknown period of time, as well as the disruption

of economic activity in Israel. The War's continuation may have far-reaching consequences for many industries and different geographical

areas of the country.

The potential fluctuations

in commodity prices, foreign exchange rates, availability of materials, availability of manpower, local services, and access to local

resources may affect entities that mostly operate with or in Israel.

is characterized by high uncertainty, and as of the date hereof, the duration and intensity of its impact on the economy in the medium

and long term is unascertainable, the Company does not have the ability to assess the full impact of the above on the scope of its business

and its operating results.

NOTES TO FINANCIAL STATEMENTS

2: - accounting policies

following accounting policies have been applied consistently in the financial statements for all periods presented, unless otherwise stated.

The financial statements

are prepared in accordance with International Financial Reporting Standards ("IFRS"), as issued by the International Accounting

Standards Board ("IASB").

The functional currency

of the Company is the New Israel Shekel ("NIS") and it represents the primary economic environment in which the Company operates.

The presentation currency of the financial statements is USD.

The financial statements

are presented in USD since the Company believes that financial statements in USD provide more relevant information to the investors and

users of the financial statements, who are located primarily in the US.