Biotalys

Pre-Annual General Meeting Information • Feb 26, 2024

Non-binding unofficial translaƟon of the original Dutch version

Biotalys NV Buchtenstraat 11, 9051 Ghent RPR BE 0508.931.185 (Ghent) (the Company or Biotalys)

Special Report of the board of directors to the general meeƟng of shareholders of the Company in accordance with arƟcle 7:228 of the Belgian Code on Companies and AssociaƟons (BCCA)

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21 February 2024

Current report was prepared by the board of directors of the Company (the "Board of Directors") in accordance with ArƟcle 7:228 BCCA in view of the special general meeƟng of shareholders of the Company scheduled on 29 March 2024.

In accordance with ArƟcle 7:228 of the BCCA, a general meeƟng of shareholders of a company must be convened when, as a result of losses incurred, a company's net assets have fallen to less than half of the company's capital. The general meeƟng of shareholders shall be held within two months aŌer the loss has been determined or should have been determined under legal or statutory provisions in order to decide on the dissoluƟon of the company or on measures announced in the agenda to preserve the conƟnuity of the company.

In the present case, the Board of Directors proposes to convene a special general meeƟng of shareholders of the Company scheduled on 29 March 2024 at which the Board of Directors proposes the conƟnuaƟon of the Company's acƟviƟes.

It should be noted that at the occasion of an extraordinary general meeƟng to be held immediately following the annual shareholders meeƟng on 23 April 2024, the Board of Directors will propose to absorb the losses or part thereof through a reducƟon of the corporate capital and/or the issue premiums.

Net assets of the Company

At its meeƟng held on 21 February 2024, the Board of Directors determined that, based on statutory (non-consolidated) accounts (non-audited) made in Belgian GAAP a loss of EUR 20,014,723.17 was incurred during the accounƟng year 2023. Taking into account the carry-forward losses over the

accounƟng year 2022, this results in a total carry forward loss of EUR 41,585,512.06 at the end of December 2023.

Consequently, the Board of Directors also determined that due to these losses incurred, the Company's net assets amounted to EUR 22,751,230.29 as of 31 December 2023, compared to a capital on that date of EUR 46,198,455.95. The net assets are therefore less than half of the capital (49.25%).

Origin of the losses incurred

The aforemenƟoned net asset situaƟon is due to the losses incurred by the Company which are typical of the research and development phase in which the Company finds itself. Investments are being made in research and development, which entails the necessary costs, while there are currently no commercial revenues. This is in line with the business plan of the Company and typical for an Agtech company such as the Company which is in the research and development phase.

Measures to ensure conƟnuity

From the start of its operaƟons, the Company is aware that research and development costs will increase for a number of years before any prospect of commercial revenues is possible.

The Board of Directors reviewed and approved the necessary budgets and cash planning prepared by the ExecuƟve CommiƩee for the operaƟon of the Company in 2024 and 2025, taking into account available financial resources.

The Board of Directors believes that the restructuring measures that have already been adopted in 2023 combined with potenƟally obtaining addiƟonal financing through equity, grants, partnerships and/or other sources of financing should enable the Company to conƟnue its operaƟons.

In this regard, the Board of Directors points out the following elements:

• The Company's current situaƟon is in line with the Company's proposed business plan. Furthermore, the Board of Directors has implemented a number of measures during 2023 to extend the financial runway of the Company. Based on this, the Company expects cash burn in 2024 to be lower than last year (2023: effecƟve cash burn of €19.5 million), in view of the focus on the development of the plaƞorm and the pipeline, and the prudent managing of costs. Together with the cash and cash equivalents balance of €21.6 million at the end of 2023, the Company expects the financial runway to extend to end of April 2025 without considering any addiƟonal financing through equity, newly awarded grants, partnerships or other sources of financing.
• The Company has full control over its spendings and since there are few or no other significant long-term financial commitments of the Company besides labour agreements and lease obligaƟons, management can Ɵmely and adequately reduce budgeted expenditures should this be necessary in the context of the Company's going concern or should it be necessary to have more Ɵme to obtain addiƟonal financing. Furthermore, the Company has not concluded any contractual obligaƟons that would exceed its current cash reserves.
• In June 2023 the Company was able to secure addiƟonal financing for an amount of EUR 7 million by means of a private investment in a public equity ("PIPE"). Investors were the exisƟng shareholders Agri Investment Fund BV and the Belgian Sovereign Wealth Fund (Federale ParƟcipaƟe- en Investeringsmaatschappij NV ).
• The Board of Directors is of the opinion that the possibility of obtaining addiƟonal financing can be substanƟated by the progress that the Company has made during 2023:
  • The Company entered into various collaboraƟons (including with academic insƟtutes) to further develop the technology plaƞorm and support the pipeline programs.
  • EVOCA™, Biotalys' first protein-based biocontrol candidate aimed at targeƟng botryƟs bunch rot and powdery mildew in fruits and vegetables, conƟnued to demonstrate its efficacy in extensive global field trials, both in the Company's own trial program as well as in independent academic trials in the U.S. The Company conƟnues to work with the EPA (Environmental ProtecƟon Agency) in the U.S. and the CTGB (College voor de ToelaƟng van Gewasbeschermingsmiddelen en Biociden) in Europe on EVOCA™ regulatory review. Pending the decision on the regulatory files, the Company conƟnues to pave the way for its next generaƟon of the product-candidate (EVOCA™ NG), a biofungicide program with the same bioacƟve as EVOCA™ but an opƟmized producƟon process and formulaƟon, leading to lower producƟon costs which results in an aƩracƟve commercial potenƟal.
  • Following a strategic review of the Company in Q3 of 2023, the company announced a shiŌ to the AGROBODY™ 2.0 plaƞorm to develop its protein-based biocontrols for crop and food protecƟon. This next-generaƟon AGROBODY™ technology is aimed at increasing potency and efficacy of the Company's bioacƟve agents with mulƟple modes of acƟon while lowering cost of goods.
  • ConƟnued focus on the pipeline development:
    • BioFun-4, the biofungicide program targeting Phytophthora infestans, an Oomycete (water mould) that causes late blight/potato blight, a serious disease that particularly affects fruits and vegetable crops and potatoes, is progressing. The Company entered into a research collaboration with the University of Aberdeen within which the Company will sponsor a three-year PhD project in the Oomycete Laboratory of Prof. Pieter van West, Chair in Mycology, a leader in the field, to deepen its expertise in Oomycetes on the molecular level. This fits well with Biotalys' highly targeted strategy as the core of its AGROBODY™ 2.0 technology platform.
    • BioFun-6, the biofungicide program targeting botrytis, powdery mildew and anthracnose in fruits and vegetables, is in the final stages of discovery and lead molecules are expected to be tested in small scale field trials in the course of 2024.
    • BioFun-7, the biofungicide program in collaboration with the Bill & Melinda Gates Foundation, targeting leafspot disease in cowpeas and other legumes, is advancing as planned and supported by new academic collaborations with the lab of Prof. Dora Batista (Department of Sciences and Engineering of Biosystems) at the University of Lisbon, Portugal, and the lab of Prof. Ioannis Stergiopoulos at the University of California-Davis.

BioIns-2, the collaboration in the bioinsecticide program.

In the current circumstances, it is reasonable to expect further progress in the pipeline development, the AGROBODY™ plaƞorm and the regulatory approval process of EVOCA™ and the development of exisƟng partnerships or entering into new partnerships during 2024.

This progress should conƟnue to help building an aƩracƟve business case and thereby aƩract investors or industry players for collaboraƟons that can support the Company's operaƟon in the following years.

Consequently, the Board of Directors proposes to conƟnue the operaƟons of the Company.

For and on behalf of the Board of Directors

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Simon E. Moroney Kevin Helash

Chair of the Board of Directors Director – Chief ExecuƟve Officer