NOTE 13: - FINANCIAL INSTRUMENTS

Financial risk factors:

The Company's operations are exposed to various financial risks, such as market risk (foreign currency risk, price risk), credit risk and liquidity risk. The Company's comprehensive risk management plan focuses on measures to minimize possible negative effects on the financial performance of the Company.

The Company's Board of Directors has provided guidelines for risk management, and specific policies for various risk exposures, such as foreign currency risk, interest-rate risk, credit risk, and the use of derivative financial instruments, non-derivative financial instruments, and excess-liquidity investments.

Market Risk:

Foreign currency risk:

The Company operates primarily in Israel and has an exchange rate risk as it incurs operating costs in Israel, consisting principally of salaries and related personnel expenses, and facility expenses which are denominated in NIS, which differs from its functional currency.

Credit Risk:

The Company holds cash and cash equivalents and other financial instruments with various financial institutions. Its policy is to spread its investments among various institutions. In accordance with this policy, the Company invests its funds with stable financial institutions.

As of December 31, 2024, the Company has recorded a provision for doubtful accounts on advances paid to one of Casterra Ag Ltd.’s castor seed service providers in an amount of approximately $819 due to a delay in receiving the services as stipulated in the agreement with the service provider. See also Note 14a.

Liquidity Risk:

The following table presents the repayment dates of the Company's financial liabilities, by contractual terms, in nominal amounts (including interest payments):

Balance on December 31, 2024:

	Up to 1 year		1 year to 2 years		2 years to 3 years		3 years to 4 years		4 years to 5 years		Over 5 years		Total
Trade payables (*)	$	1,228	$	-	$	-	$	-	$	-	$	-	$	1,228
Employees and payroll accruals		1,869		-		-		-		-		-		1,869
Other payables		1,079		-		-		-		-		-		1,079
Leases liability		679		566		449		394		374		338		2,800
Liabilities in respect of government grants		323		392		336		462		632		3,884		6,029

	$	5,178	$	958	$	785	$	856	$	1,006	$	4,222	$	13,005

(*) The Company engages with trade payables under the standard payment terms accepted in the relevant markets.

Balance on December 31, 2023:

	Up to 1 year		1 year to 2 years		2 years to 3 years		3 years to 4 years		4 years to 5 years		Over 5 years		Total
Trade payables (*)	$	1,785	$	-	$	-	$	-	$	-	$	-	$	1,785
Employees and payroll accruals		2,537		-		-		-		-		-		2,537
Other payables		1,019		-		-		-		-		-		1,019
Leases liability		921		211		103		41		21		-		1,297
Liabilities in respect of government grants		388		676		778		1,123		1,566		1,315		5,846

	$	6,650	$	887	$	881	$	1,164	$	1,587	$	1,315	$	12,484

(*) The Company engages with trade payables under the standard payment terms accepted in the relevant markets.

Fair Value:

The carrying amounts of cash and cash equivalents, other receivables and prepaid expenses, trade payables and other payables approximate their fair values due to the short-term maturities of such instruments.

The fair value of the liabilities in respect of government grants is measured using a discount rate that reflects the applicable market rate of interest at the date the grants are received, which approximates the fair value at the respective balance sheet date.

The fair value of lease liability is measured using a discount rate that reflects the IBR of interest at the date of the contract.

The fair value measurement of the Convertible SAFE as described in Note 12 is based on the weighted average value of various scenarios regarding Lavie Bio Ltd.’s estimated enterprise value at the valuation date. The fair value of the ordinary shares of Lavie Bio Ltd. is measured using the income approach, whereby the expected cash flows generated by Lavie Bio Ltd. are discounted to their present value equivalent using a rate of return that reflects its relative risk, as well as the time value of the money, and is considered to be Level 3 fair value hierarchy (see Note 2n). As of December 31, 2024 and 2023 the cash flow projections were discounted using the weighted average cost of capital rates of 24.2% and 25.0%, respectively, and long-term growth rates of 3% and 3%, respectively.

The fair value of warrants and pre-funded warrants liabilities as described in Note 17(c) is initially measured as of the transaction date and then subsequently remeasured at each reporting period using the Black Scholes option pricing model.

The following table presents the fair value of financial liabilities as of December 31, 2024 and 2023:

	December 31,
	2024		2023

Convertible SAFE	$	10,371	$	10,368
Warrants and pre-funded warrants liabilities	$	2,876	$	-

Sensitivity tests relating to changes in market factors:

	December 31,
	2024			2023

Sensitivity test to changes in the USD/NIS exchange rate:

Gain (loss) from the change:
Decrease of 5% in the U.S. dollar relative to the NIS	$	(428	)	$	(377	)
Increase of 5% in the U.S. dollar relative to the NIS	$	428		$	377

Sensitivity tests and principal work assumptions:

The selected changes in the relevant risk variables were determined based on management's estimate as to reasonable possible changes in these risk variables.