Oceansix Future Paths Ltd. — Interim / Quarterly Report 2024

Nov 28, 2024

OCEAN SIX FUTURE PATHS LTD.

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF SEPTEMBER 30, 2024

U.S. DOLLARS IN THOUSANDS

UNAUDITED

INDEX

	Page
Consolidated Statements of Financial Position	3
Consolidated Statements of Comprehensive Loss	4 - 5
Consolidated Statements of Changes in Equity	6-8
Consolidated Statements of Cash Flows	9-10
Notes to Financial Statements	11 - 23

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OCEANSIX FUTURE PATHS LTD.

NOTICE OF NO AUDITOR REVIEW OF INTERIM FINANCIAL STATEMENTS

Under National Instrument 51-102, Part 4, subsection 4.3(3) (a), if an auditor has not performed a review of the interim financial statements, they must be accompanied by a notice indicating that the financial statements have not been reviewed by an auditor.

The accompanying unaudited interim condensed financial statements of the Company have been prepared by and are the responsibility of the Company’s management.

The Company’s independent auditor, Kost Forer Gabbay & Kasierer (a member of Ernst & Young Global), has not performed a review of these financial statements in accordance with standards established by the Chartered Professional Accountants of Canada for a review of interim condensed financial statements by an entity’s auditor.

November 26, 2024

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OCEAN SIX FUTURE PATHS LTD.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (UNAUDITED)

	September 30,		December 31,
	2024	2023
	U.S. dollars in thousands
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	120	254	379
Trade receivables	319	457	454
Other accounts receivable	656	350	698
Inventories	79	164	283
	1,174	1,225	1,814
NON-CURRENT ASSETS:
Right-of-use assets	762	821	831
Finance lease receivables - related party	-	-	200
Property, plant and equipment, net	827	943	648
Intangible assets	1,089	1,255	444
Goodwill	2,141	2,945	1,628
Long-term deposits	18	30	17
	4,837	5,994	3,768
	6,011	7,219	5,582
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Credit from banks	384	232	262
Current maturities of lease liabilities	103	97	102
Current maturities of loans from others	107	-	100
Trade payables	633	641	747
Other payables	1,591	1,118	1,520
Convertible debt to related party *)	796	609	1,230
Warrants *)	1	52	9
	3,615	2,749	2,731
NON-CURRENT LIABILITIES:
Lease liabilities	661	723	730
Deferred tax liabilities	115	123	107
Loans from others	9	172	88
Other liabilities	466	28	26
Shareholders and affiliated companies	1,994	918	567
	3,245	1,964	2,757
EQUITY (DEFICIT):
Share capital and share premium	51,779	50,861	50,861
Warrants	453	453	453
Foreign currency translation reserve	20	(25)	16
Reserve from share-based payment transactions	1,664	1,882	1,894
Reserve from transaction with controlling shareholders	619	-	460
Accumulated deficit	(55,384)	(50,665)	(53,590)
Total equity (deficit)	(849)	2,506	94
	6,011	7,219	5,582
November 26, 2024
Date of approval of the financial statements	Gat Ramon
Chairman of the Board	Elad Hameiri
Chief Executive Officer	Moshe Hukaylo
Chief Financial Officer

*) Reclassified - See note 2t(1) in the 2023 annual financial statements.

The accompanying notes are an integral part of the interim financial statements.

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OCEAN SIX FUTURE PATHS LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

	Nine months ended September 30,		Three months ended September 30,		Year ended December 31,
	2024	2023	2024	2023	2023
	U.S. dollars in thousands (except loss per share)
Revenues from sales	2,417	1,952	861	558	2,454
Cost of sales	2,038	1,609	718	447	2,124
Gross profit	379	343	143	111	330
Development expenses	154	354	126	120	35
Selling and marketing expenses	487	96	286	31	305
General and administrative expenses	1,846	1,511	475	535	2,256
Other expenses (income), net	(21)	(1)	(31)	(1)	2,246
Operating loss	(2,087)	(1,617)	(713)	(574)	(4,512)
Finance income	474	139	463	-	259
Finance expenses	(221)	-	(5)	(52)	(300)
Loss before taxes	(1,834)	(1,478)	(255)	(626)	(4,553)
Tax benefit	40	9	(22)	3	190
Loss from continuing operations	(1,794)	(1,469)	(277)	(623)	(4,363)
Loss from discontinued operations, net	-	(259)	-	31	(290)
Loss	(1,794)	(1,728)	(277)	(592)	(4,653)
Other comprehensive income (loss):
Amounts that will not be reclassified subsequently to profit or loss:
Adjustments arising from translating financial statements from functional currency to presentation currency	4	(265)	-	(76)	(195)
Amounts that will be reclassified subsequently to profit or loss when specific conditions are met:
Adjustments arising from translating financial statements of foreign operations	-	255	-	9	226
Total comprehensive loss	(1,790)	(1,738)	(277)	(659)	(4,622)

The accompanying notes are an integral part of the interim financial statements.

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OCEAN SIX FUTURE PATHS LTD.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)

	Nine months ended September 30,		Three months ended September 30,		Year ended December 31,
	2024	2023	2024	2023	2023
	U.S. dollars in thousands (except loss per share)
Loss per share:
Basic Loss:
Loss from continuing operations	(0.011)	(0.010)	(0.002)	(0.005)	(0.029)
Loss from discontinued operations	-	-	-	-	(0.002)
Loss	(0.011)	(0.010)	(0.002)	(0.005)	(0.031)
Diluted Loss:
Loss from continuing operations	(0.011)	(0.010)	(0.002)	(0.005)	(0.029)
Loss from discontinued operations	-	-	-	-	(0.002)
Loss	(0.011)	(0.010)	(0.002)	(0.005)	(0.031)

The accompanying notes are an integral part of the interim financial statements.

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OCEAN SIX FUTURE PATHS LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

	Share capital and share premium	Warrants	Reserve from share-based payment transactions	Foreign currency translation reserve	Reserve from transaction with controlling shareholders	Accumulated deficit	Total equity
	U.S. dollars in thousands
Balance at January 1, 2024	50,861	453	1,894	16	460	(53,590)	94
Loss	-	-	-	-	-	(1,794)	(1,794)
Total other comprehensive income	-	-	-	4	-	-	4
Total comprehensive loss	-	-	-	4	-	(1,794)	(1,790)
Cost of share-based payment	-	-	1	-	-	-	1
Exercise of options and warrants to share (*)	242	-	(231)	-	-	-	11
Issuance of Ordinary shares	676	-	-	-	-	-	676
Transaction with controlling shareholders	-	-	-	-	159	-	159
Balance at September 30, 2024	51,779	453	1,664	20	619	(55,384)	(849)
	Share capital and share premium	Warrants	Reserve from share-based payment transactions	Foreign currency translation reserve	Reserve from transaction with controlling shareholders	Accumulated deficit	Total equity
	U.S. dollars in thousands
Balance at January 1, 2023	50,861	453	1,828	(15)	-	(48,937)	4,190
Loss	-	-	-	-	-	(1,728)	(1,728)
Total other comprehensive income	-	-	-	(10)	-	-	(10)
Total comprehensive loss	-	-	-	(10)	-	(1,728)	(1,738)
Cost of share-based payment	-	-	54	-	-	-	54
Balance at September 30, 2023	50,861	453	1,882	(25)	-	(50,665)	2,506

(*) See note 6b and 6e.

The accompanying notes are an integral part of the interim financial statements.

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OCEAN SIX FUTURE PATHS LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

	Share capital and share premium	Warrants	Reserve from share-based payment transactions	Foreign currency translation reserve	Reserve from transaction with controlling shareholders	Accumulated deficit	Total equity
	U.S. dollars in thousands
Balance at July 1, 2024	51,779	453	1,662	20	589	(55,107)	(604)
Loss	-	-	-	-	-	(277)	(277)
Total other comprehensive income	-	-	-	-	-	-	-
Total comprehensive loss	-	-	-	-	-	(277)	(277)
Cost of share-based payment	-	-	1	-	-	-	1
Exercise of options and warrants to share (*)	-	-	1	-	-	-	1
Transaction with controlling shareholders	-	-	-	-	30	-	30
Balance at September 30, 2024	51,779	453	1,664	20	619	(55,384)	(849)
	Share capital and share premium	Warrants	Reserve from share-based payment transactions	Foreign currency translation reserve	Reserve from transaction with controlling shareholders	Accumulated deficit	Total equity
	U.S. dollars in thousands
Balance at July 1, 2023	50,861	453	1,873	42	-	(50,073)	3,156
Loss	-	-	-	-	-	(592)	(592)
Total other comprehensive income	-	-	-	(67)	-	-	(67)
Total comprehensive loss	-	-	-	(67)	-	(592)	(659)
Cost of share-based payment	-	-	9	-	-	-	9
Balance at September 30, 2023	50,861	453	1,882	(25)	-	(50,665)	2,506

(*) See note 6e.

The accompanying notes are an integral part of the interim financial statements.

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OCEAN SIX FUTURE PATHS LTD.

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)

	Share capital and share premium	Warrants	Reserve from share-based payment transactions	Foreign currency translation reserve	Reserve from transaction with controlling shareholders	Accumulated deficit	Total equity
	U.S. dollars in thousands
Balance at January 1, 2023	50,861	453	1,828	(15)	-	(48,937)	4,190
Loss	-	-	-	-	-	(4,653)	(4,653)
Total other comprehensive income	-	-	-	31	-	-	31
Total comprehensive loss	-	-	-	31	-	(4,653)	(4,622)
Cost of share-based payment	-	-	66	-	-	-	66
Transaction with controlling shareholders	-	-	-	-	460	-	460
Balance at December 31, 2023	50,861	453	1,894	16	460	(53,590)	94

The accompanying notes are an integral part of the interim financial statements.

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OCEANSIX FUTURE PATHS LTD.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Nine months ended September 30,		Three months ended September 30,		Year ended December 31,
	2024	2023	2024	2023	2023
	U.S. dollars in thousands
Cash flows from operating activities:
Loss	(1,794)	(1,728)	(277)	(592)	(4,653)
Adjustments to reconcile loss to net cash used in operating activities:
Adjustments to the profit or loss items:
Depreciation	227	170	100	57	259
Gain from sales of property, plant and equipment	-	-	-	-	(18)
Gain from finance lease	-	-	-	-	(178)
Impairment loss of goodwill and other intangible assets	-	-	-	-	2,373
Depreciation of right-of-use assets	76	20	26	(30)	104
Loss (Gain) on revaluation of Warrants	(8)	(164)	(16)	40	(220)
Loss (gain) on revaluation of Convertible debt to related party	(444)	-	(535)	-	108
Finance expenses	176	86	79	36	173
Tax benefit	(40)	(9)	24	(3)	(190)
Cost of share-based payment	1	54	1	9	66
	(12)	157	(321)	109	2,477
Changes in asset and liability items:
Decrease in trade receivables	136	209	234	100	251
Decrease (Increase) in other accounts receivable	53	(23)	92	(166)	5
Decrease (increase) in inventories	201	(23)	228	(72)	(131)
Decrease in trade payables	(87)	(50)	(335)	(252)	(55)
Increase in other payables	52	76	6	155	382
Decrease in other long-term receivables	-	-	-	-	21
	355	189	225	(235)	473
Cash paid during the period for:
Interest paid	(42)	(75)	(11)	(25)	(40)
Net cash used in operating activities	(1,493)	(1,457)	(384)	(743)	(1,743)

The accompanying notes are an integral part of the interim financial statements.

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OCEANSIX FUTURE PATHS LTD.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

	Nine months ended September 30,		Three months ended September 30,		Year ended December 31, 2023
	2024	2023	2024	2023
	U.S. dollars in thousands
Cash flows from investing activities:
Purchase of property, plant and equipment	(263)	(15)	(92)	(15)	(78)
Receipt from Finance lease	192	-	68	-	70
Investment of intangible assets	-	-	-	-	(137)
Acquisition of business (*)	(108)	-	-	-	-
Proceeds from sale of assets held for sale	-	207	-	-	-
Proceeds from sale of property, plant and equipment	-	-	-	-	207
Investment in deposits	(1)	-	-	-	(17)
Net cash provided by (used in) investing activities	(180)	192	(24)	(15)	45
Cash flows from financing activities:
Credit from banks, net	113	57	70	57	78
Repayment of lease liabilities	(75)	(75)	(24)	30	(100)
Receipt (repayment) of loan from other	(80)	-	(24)	(24)	45
Receipt of loans from related parties	1,448	986	279	59	1,550
Proceeds from exercise of warrants, net	10	-	-	-	-
Net cash provided by (used in) financing activities	1,415	968	301	122	1,573
Exchange rate differences on balances of cash and cash equivalents	(1)	63	10	84	16
Decrease in cash and cash equivalents	(259)	(234)	(97)	(552)	(109)
Cash and cash equivalents at the beginning of the period	379	488	218	806	488
Cash and cash equivalents at the end of the period	120	254	120	254	379
Non-cash transactions:
Acquisition of business through issuance of shares and vendor credit (*)	1,104	-	-	-	-
Finance lease receivables - related party	-	-	-	-	513

(*) See note 8.

The accompanying notes are an integral part of the interim financial statements.

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OCEANSIX FUTURE PATHS LTD.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1:- GENERAL

a. Oceansix future paths Ltd. (the "Company") was incorporated under the laws of Israel as a private company. The Company's principal place of business is Avenida. de la Albufera, 7 - 46460 Silla, Valencia, Spain. The Company began its operations in April 2008 and operated in the plastic recycling market. In April 2021, the Company completed an initial public offering and commenced trading on the TSX Venture Exchange. In March 2024, the Company changed its registered address with the Israeli Register of Companies to Zvi Herman Shapira 7, Tel Aviv, 6435805.

Until November 2022, the Company utilized its ‘waste to product process’ to recycle post consumed household waste plastic bags and sheets combined with post consumed agricultural plastic sheets and manufactures polyurethane sheets and geomembranes utilized mainly by the building and infrastructure industry. The Company's manufacturing process was developed over the course of a number of years. The Company's process involved the processing of the waste and its direct conversion of the waste into a finished product. In June 2022, following the acquisition of two new subsidiaries, the Company's operations expanded into three dimensional recycled and non-recycled plastic industrial products through its Spanish subsidiary Plasticos Flome S.L and research and development activity of innovative and technologically advanced plastic products through its German subsidiary oceansix GMBH (see b and c below). In January 2024, the Company opened a new subsidiary in Spain, oceansix S.L. to centralize its R&D activities in Spain and to apply for local grants and tax benefits in local government and Europe.

In May 2024, the Company purchased the business of Original RePack OY and has expanded its operations into reusable packaging solutions. See Note 8a.

Following the Company's board of directors' decision, in November 2022, the Company ceased its production activities in Israel. In January 2023, the Company's Israeli production site was permanently closed. At this time, the Company ceased its activity with respect to the manufacturing and sales of recycled boards and sheets and its 'waste-to-product' process as it focuses on other core activities and working towards other production solutions in Europe or another location. Other production solutions may include utilizing sub-contractors, making use of third-party facilities and/or finding other suppliers.

As the operations in Israel represented a separate geographical area, those operations have been classified as discontinued operations and the results of those operations are presented as a single line item in profit or loss.

On November 7, 2022, the Company began trading on the Borse-Frankfurt Stock Exchange. In addition, in November 2022, the Company was approved for trading on the OTCQB.

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OCEANSIX FUTURE PATHS LTD.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1:- GENERAL (Cont.)

b. Company's financial position

In the nine and three months ended September 30, 2024, the Company incurred a loss totaling $1,794 and $244 thousand and in the nine months ended September 30, 2024 had negative cash flows from operating activities totaling $1,493 thousand.

As described in Note 1d to the Company's annual financial statements as of December 31, 2023, the Company believes that a failure to obtain sufficient funds on commercially acceptable terms when needed may have a material adverse effect on the Company's business, ability to operate and develop in conformity with its future plans and its financial condition. In light of the above, three of the Company's major shareholders undertook to provide the Company with a credit facility in the amount of up to EUR 2 million ($2.13 million) as required over the 2 years commencing from September 2022 (the "September 2022 Facility") with each shareholder providing an equal share of any requested amounts.

In addition, in April 2023, two of the Company's major shareholders undertook to provide the Company with an additional credit facility in the amount of up to EUR 500 thousand ($533 thousand) as required over the 18 month period commencing on May 1, 2023 with each shareholder providing an equal share of any requested amounts (the "May 2023 Facility"). In the event the Company has a successful capital raise, the facilities provided in the undertakings will be reduced by the amounts raised in such capital raise with the September 2022 Facility being reduced first and any amounts in excess of the September 2022 Facility will reduce the May 2023 Facility.

In April 2024, the Company's major shareholders agreed to extend the periods of the September 2022 Facility and the May 2023 Facility to December 31, 2025. RAM.ON agreed to extend its commitment not to demand the repayment of the Company's debt to RAM.ON in an amount of EUR 550 thousand until December 31, 2025. RAM.ON also agreed not to demand the repayment of the Company's liability in an amount of EUR 321 thousand as of December 31, 2023 according to the Service Agreement between RAM.ON and oceansix prior to the earlier of (i), December 31, 2025, or (ii) the consummation of a successful capital raise of at least $2 million.

In addition, RAM.ON agreed to provide the Company with an additional credit facility in the aggregate maximum amount of EUR 2 million commencing on May 1, 2024 (the "May 2024 Facility") as required by the Company over the next 18 months following May 1, 2024. The May 2024 Facility will bear interest based on the annual interest rate equal to the minimum interest rate required under Israeli Tax Ordinance, which at this time amounts to 5.18%. In the event the Company has a successful capital raise, the Facility will be reduced by the amount raised in such capital raise that exceeds the amount not yet provided to the Company by the Shareholders under the September 2022 Facility and the May 2023 Facility.

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OCEANSIX FUTURE PATHS LTD.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1:- GENERAL (Cont.)

As of the date of the approval of the consolidated financial statements, the Company's management and Board of Directors estimate that notwithstanding the credit facility that is available from the Company shareholders as described above, it is presently uncertain that the Company will have sufficient funds to continue its operations and meet its financial obligations at least for 12 months from the date of these consolidated financial statements.

With respect to the board of directors’ resolution regarding the Company’s liquidity after the reporting period and Request to Approve a Debt Settlement Arrangement with the Israeli court, see Note 7j and Note 7n.

Accordingly, there is substantial doubt about the Company's ability to continue as a going concern. The financial statements do not include adjustments to the carrying values and classification of assets and liabilities that might be necessary should the Company be unable to continue as a going concern.

c. These financial statements have been prepared in a condensed format as of September 30, 2024 and for the nine and three months then ended (the "interim consolidated financial statements"). These financial statements should be read in conjunction with the Company's annual consolidated financial statements as of December 31, 2023 and for the year then ended and accompanying notes (the "annual consolidated financial statements").

d. Functional currency and presentation currency

The functional currency is the currency of the primary economic environment in which the entity operates. As of December 31 2023, the functional currency of the financial statements was NIS. On January 1 2024, the Company has changed its functional currency to Euro since most of its financing activities are in Euro.

The consolidated financial statements are presented in USD, the presentation currency, since the Company believes that financial statements in USD provide more relevant information to the investors and users of the consolidated financial statements who are located outside of Israel.

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OCEANSIX FUTURE PATHS LTD.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2:- ACCOUNTING POLICIES

a. Basis of preparation of the interim financial statements

The interim consolidated financial statements have been prepared in accordance with IAS 34, "Interim Financial Reporting".

The significant accounting policies applied in the preparation of the interim financial statements are consistent with those followed in the preparation of the annual financial statements, except as described in b. below.

b. Initial adoption of amendments to existing financial reporting and accounting standards

1. Amendment to IAS 1, "Presentation of Financial Statements"

In January 2020, the IASB issued an amendment to IAS 1, "Presentation of Financial Statements" regarding the criteria for determining the classification of liabilities as current or non-current ("the Original Amendment"). In October 2022, the IASB issued a subsequent amendment ("the Subsequent Amendment").

According to the Subsequent Amendment:

• Only financial covenants with which an entity must comply on or before the reporting date will affect a liability's classification as current or non-current.

• In respect of a liability for which compliance with financial covenants is to be evaluated within twelve months from the reporting date, disclosure is required to enable users of the financial statements to assess the risks related to that liability. The Subsequent Amendment requires disclosure of the carrying amount of the liability, information about the financial covenants, and the facts and circumstances at the end of the reporting period that could result in the conclusion that the entity may have difficulty in complying with the financial covenants.

According to the Original Amendment, the conversion option of a liability affects the classification of the entire liability as current or non-current unless the conversion component is an equity instrument.

The Original Amendment and Subsequent Amendment are applied retrospectively for annual periods beginning on January 1, 2024.

The Amendments did not have a material impact on the Company's interim consolidated financial statements.

2. Amendment to IFRS 16, "Leases"

In September 2022, the IASB issued an amendment to IFRS 16, "Leases" ("the Amendment"), which provides guidance on how a seller-lessee should measure the lease liability arising in a sale and leaseback transaction with variable lease payments that do not depend on an index or rate. The Amendment requires the seller-lessee to choose between two approaches for measuring the lease liability on the inception date of the lease. The approach chosen becomes the accounting policy that must be applied consistently.

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OCEANSIX FUTURE PATHS LTD.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2:- ACCOUNTING POLICIES (Cont.)

The Amendment is applied retrospectively for annual periods beginning on January 1, 2024.

The Amendment did not have a material impact on the Company's interim consolidated financial statements.

3. Amendments to IAS 7, "Statement of Cash Flows", and IFRS 7, "Financial Instruments: Disclosures"

In May 2023, the IASB issued amendments to IAS 7, "Statement of Cash Flows", and IFRS 7, "Financial Instruments: Disclosures" ("the Amendments") to address the presentation of liabilities and the associated cash flows arising out of supplier finance arrangements, as well as disclosures required for such arrangements.

The disclosure requirements in the Amendments are intended to assist users of financial statements in understanding the effects of supplier finance arrangements on an entity's liabilities, cash flows and exposure to liquidity risk.

The Amendments are applied for annual reporting periods beginning on January 1, 2024.

According to the transition provisions of the Amendments, the Company is not required to provide disclosures in interim periods during the first year of adoption, and therefore the above Amendments did not have a material impact on the Company's condensed interim consolidated financial statements. Moreover, the Amendments are not expected to have a material impact on the disclosures of supplier finance arrangements in the Company's annual consolidated financial statements.

NOTE 3:- DISCLOSURE OF NEW STANDARDS IN THE PERIOD PRIOR TO THEIR ADOPTION

IFRS 18, presentation and disclosure in financial statements

In April 2024, the International Accounting Standards Board (IASB) published International Financial Reporting Standard 18 (IFRS 18), Presentation and Disclosure in Financial Statements (hereinafter: "the new standard") which replaces International Accounting Standard 1 (IAS 1), Presentation of Financial Statements (Hereafter: "IAS 1").

The purpose of the new standard is to improve comparability and transparency in financial statements.

The new standard will include existing requirements of IAS 1 and new requirements for presentation in the profit or loss statement, including the presentation of amounts and subtotals that are required in accordance with the new standard, disclosure of management-defined performance measures and new requirements for the grouping and splitting of financial information.

The new standard does not change the provisions for the recognition and measurement of items in the financial statements. However, since items on the income statement will have to be classified into one of five categories (operating activity, investing activity, financing activity, income taxes and discontinued activity) it may change the entity's operating profit.

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OCEANSIX FUTURE PATHS LTD.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3:- DISCLOSURE OF NEW STANDARDS IN THE PERIOD PRIOR TO THEIR ADOPTION (Cont.)

Also, the publication of the new standard caused amendments to a limited extent to other accounting standards, among them IAS 7 statement of cash flows and IAS 34 financial reporting for interim periods.

The new standard will be applied retroactively starting with annual periods beginning on or after January 1, 2027. Early application possible while providing disclosure.

The Company is examining the effect of the new standard, including the effect of amendments to additional accounting standards as a result of the new standard, on its consolidated interim financial statements.

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OCEANSIX FUTURE PATHS LTD.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4:- ASSETS HELD FOR SALE AND DISCONTINUED OPERATIONS

In November 2022, the Company's management committed to carry out a plan to cease its production activities in Israel and, in January 2023, the Company's Israeli production site was permanently closed. In February 2023 the Company completed the sale of its remaining assets.

a. Below are data of the operating results attributed to the discontinued operation:

	Nine months ended September 30,		Three months ended September 30,		Year ended December 31, 2023
	2024	2023	2024	2023
U.S. dollars in thousands
Revenues from sales	-	16	-	-	16
Cost of sales	-	191	-	-	193
Gross Loss	-	(175)	-	-	(177)
Development expenses (net of Government grants)	-	-	-	-	-
Selling, general and administrative expenses and other expenses (income)	-	84	-	(31)	113
Operating income (loss)	-	(259)	-	31	(290)
Income (loss) from discontinued operation, net	-	(259)	-	31	(290)

b. Below are data of the net cash flows provided by (used in) the discontinued operation:

	Nine months ended September 30,		Three months ended September 30,		Year ended December 31, 2023
	2024	2023	2024	2023
U.S. dollars in thousands
Net cash provided by (used in) discontinued operating activities	-	297	-	97	200
Net cash provided by (used in) discontinued investing activities	-	207	-	-	207
Net cash used in discontinued financing activities	-	(56)	-	-	(56)
Total net cash provided by (used in) discontinued operations	-	448	-	97	351

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OCEANSIX FUTURE PATHS LTD.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5:- FINANCIAL INSTRUMENTS

a. Fair value:

The table below is a comparison between the carrying amount and fair value of the Company's financial instruments that are presented in the financial statements not at fair value (other than those whose amortized cost is a reasonable approximation of fair values):

	Carrying amount			Fair value
	September 30, 2024	September 30, 2023	December 31 2023	September 30, 2024	September 30, 2023	December 31 2023
	U.S. dollars in thousands
Financial liabilities:
Liability for grants received from the IIA	24	32	38	24	32	38

The carrying amount of cash and cash equivalents, trade receivables, other accounts receivable, trade payables and other payables approximate their fair value due to their short-term maturities.

b. Fair value hierarchy:

The table below is an analysis of financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

• Level 1: quoted prices (unadjusted) in active markets for identical instruments
• Level 2: inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly
• Level 3: inputs that are not based on observable market data (unobservable inputs)

September 30, 2024:

	Level 1	Level 2	Level 3	Total
	U.S. dollars in thousands
Financial liabilities:
Convertible debt to related party (b)	-	-	796	796
Warrant (a)	-	-	1	1

September 30, 2023:

Level 1	Level 2	Level 3	Total
	U.S. dollars in thousands

Financial liabilities:

Warrants (a)

• • 52 52

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OCEANSIX FUTURE PATHS LTD.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5:- FINANCIAL INSTRUMENTS (Cont.)

December 31, 2023:

Level 1	Level 2	Level 3	Total
U.S. dollars in thousands

Financial liabilities:

Convertible debt to related party (b)	-	-	1,230	1,230
Warrant (a)	-	-	9	9

(a) Convertible Note and Warrant: (see also Note 15 to the annual financial statements):

In April 2021, due to the closing of the initial public offering of the Company's shares, the terms of a Warrant issued in 2020 were finalized to entitle the holder to purchase 5,638,629 Ordinary Shares at an exercise price of $ 0.266 per share. The Warrant may be exercised, in whole or part, at any time for a period of five years from the closing.

The fair value of the Warrant has been measured using the Black & Scholes option pricing model. The key assumption used in the valuation is the expected volatility of the Company's equity.

(b) Convertible debt to related party:

The Convertible debt to related party was measured at fair value based on Monta Carlo simulation. As of September 30, 2024, the fair value of the convertible debt is EUR 711 thousand ($ 796 thousand).

The gain from change in fair value for the Nine months and three months ended September 30, 2024 in the amount of EUR 408 thousand and EUR 492 thousand, respectively, ($ 444 thousand and $535 thousand respectively) was included in finance expenses.

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OCEANSIX FUTURE PATHS LTD.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6: - OPERATING SEGMENTS

a. General:

The Group operates in one principal business segment - advanced solutions based on recycled plastic products.

b. Additional information about revenues:

Revenues reported in the financial statements for a group of similar products or services:

	Nine months ended September 30,		Three months ended September 30,		Year ended December 31,
	2024	2023	2024	2023	2023
	Unaudited		Unaudited		Audited
	U.S. dollars in thousands
Revenues from sales relating to automotive industry	1,874	1,615	667	515	513
Revenues from sales relating to winery industry	357	215	109	27	640
Other revenues	186	122	85	16	1,301
Total revenues	2,417	1,952	861	558	2,454

Geographical information:

The revenues reported in the consolidated financial statements from continuing operations were generated from customers in Europe.

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OCEANSIX FUTURE PATHS LTD.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7: - EVENTS DURING AND AFTER THE REPORTING PERIOD

a. In January 2024, the Company opened a new subsidiary in Spain, oceansix S.L. to centralize its R&D activities in Spain and to apply for local grants and tax benefits in local governments in Europe.

b. In January 2024, the former CEO, Mr. Ami Krupik exercised his Options pursuant to the Grant Letter dated in February 2021. As a result, Mr. Kuprik was issued 1,315,800 ordinary shares of the Company.

c. In March 2024, RAM.ON GmbH entered into an agreement with Tedea, pursuant to which RAM.ON GmbH acquired an option to purchase from Tedea 6,193,740 ordinary shares of the Company in exchange for the assumption of certain of Tedea's funding obligations under the Shareholder Undertaking as already provided by RAM.ON. The agreement also allows for the number of option shares to be increased by an additional amount of up to 2,531,573 oceansix Shares in exchange for RAM.ON assuming additional funding obligations of Tedea. The option Shares can be purchased from Tedea at a price of CAD $0.065 per share for a period of 24 months from the date of the agreement.

d. In April 2024, The Company has entered into an agreement with US-based corporate communications firm, RB Milestone Group LLC ("RBMG"). RBMG has been engaged in providing Oceansix with investor relations services, including corporate communications advisory, non-deal roadshow advisory, market intelligence advisory, and business referrals. RBMG has been retained for an initial term of 12 months, paid in cash on quarterly basis at the beginning of each quarter.

e. In May 2024, Tedea and Sullam each exercised their vested warrants for the issuance of 2,296,886 Ordinary Shares each, which have been issued prior to September 30, 2024. They both executed the corresponding transfer of 23 thousand NIS ($9 thousand) each.

f. On June 11, 2024 and June 13, 2024, the Company's Audit Committee and the Board of Directors, respectively, approved the conversion of the debt owed to RAM.ON, Sullam and Tedea from the September 2022 Facility, May 2023 Facility and May 2024 Facility, as applicable, into Shares, pursuant to debt conversion agreements to be entered into between (i) the Company and RAM.ON, (ii) the Company and Sullam and (iii) the Company and Tedea pursuant to the Debt Conversion Agreements. The price per share with respect to the conversion of the September 2022 Facility, May 2023 Facility and May 2024 Facility debt, as applicable, will be the higher of (i) the Volume-Weighted Average Price of the company Shares for the 30 day period prior to the Meeting and (ii) CAD 0.09; and (iii) the discounted market price of the company Shares as of the date of each Debt Conversion Agreement.

RAM.ON, Sullam and Tedea will each have two years to notify the Company as to whether that it would like to convert its debt into equity as discharge of the aforementioned obligations owed to RAM.ON, Sullam and Tedea, respectively. The Debt to Equity Conversion Agreements were approved by the shareholders at the 2024 Annual and Special Meeting. RAM.ON, Sullam and Tedea each have 2 years to exercise the debt to equity conversion. The Debt Conversion Agreements are still subject to approval from the TSXV.

g. On June 11, 2024, the Company announced the initiation of a non-brokered private placement of up to 33,333,333 Units at a price of CAD $0.09 per Unit, to raise aggregate gross proceeds of up to $3,000,000 (the "Offering"). Each Unit will be comprised of one common share (the "Shares") and one share purchase warrant (the "Warrants"). Each Warrant will entitle the holder to acquire one additional common share (the "Warrant Shares") in the capital of the Company at an exercise price of CAD $0.12 per Warrant Share until December 31, 2024. On October 10, 2024, the Company announced the cancellation of the Offering.

• 21 -

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OCEANSIX FUTURE PATHS LTD.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 7: - EVENTS DURING AND AFTER THE REPORTING PERIOD (Cont.)

h. Share-based payments - Grant of options to directors

1. In July 18, 2024, at the Annual and Special Meeting, the shareholders, following the recommendation of the Company’s Compensation Committee and the Board of Directors (that took place on June 10, 2024 and June 13, respectively), approved the grant of options to Ms. Renah Persofsky, an external director of the Company, to purchase 500,000 Ordinary Shares of the Company at an exercise price of CAD 0.29 per option which will vest over three (3) years. The fair value of the options was estimated at the date of the grant as immaterial.

2. In July 18, 2024, at the Annual and Special Meeting, the shareholders, following the recommendation of the Company’s Compensation Committee and the Board of Directors (that took place on June 10, 2024 and June 13, 2024, respectively), approved the grant of options to Ms. Donatella Aurino, an external director of the Company, to purchase 500,000 Ordinary Shares of the Company at an exercise price of CAD 0.29 per option which will vest over three (3) years commencing on the third anniversary of the date of grant. The fair value of the options was estimated at the date of the grant as immaterial.

i. On September 25, 2024, the company announced the appointment of Moshe Hukaylo as Chief Financial Officer (CFO), replacing Salvador Cabañas-Lopez who resigned from the Company, effective September 1, 2024.

j. On October 10, 2024, the Company announced that it is canceling its previously announced non-brokered private placement (see note 7g above), due to market conditions and the Company's changing circumstances, and will initiate process to review, evaluate and explore a broad range of strategic decisions and alternatives.

k. On October 10, 2024, the Company announced that the term its CEO, Elad Hameiri, will be departing from his position as Chief Executive Officer of the Company on or before April 1, 2025.

l. In October 2024, Maximo Buch resigned his position as a director of the Company and as a member of the Company’s audit committee and compensation committee. Yoav Horowitz, a member of the Board, joined the Company’s audit committee and replaced Mr. Buch.

m. In October 2024, Arnon Eshed resigned his position as a director of the Company.

n. On November 28, 2024, the Company has submitted a Request to Approve a Debt Settlement (the "Debt Settlement") with the Tel Aviv District Court in Israel, pursuant to the Israeli Insolvency and Financial Rehabilitation Law, 5778-2018. The Debt Settlement, if approved, will provide for the repayment of the Company's debts to its creditors, other than its major shareholders, Sullam Holdings L.R. Ltd., Tedea Technological Development and Automation Ltd., and RAM.ON Finance GmbH (collectively, the "Major Shareholders"). Under the Debt Settlement, all shares of the Company will be cancelled. Debts owed to the Company's Major Shareholders will not be repaid, but will be converted into equity of the Company upon completion of the Debt Settlement. The Company will continue its operations during this process and will receive financing to assist in its ongoing operations from the Major Shareholders. Following the conclusion of the Debt Settlement, it is anticipated that the Company will be delisted from the TSXV (subject to TSXV acceptance), OTCQB and the Borse-Frankfurt Stock Exchange. The Debt Settlement is subject to the approval of the Israeli court and the TSXV.

• 22 -

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OCEANSIX FUTURE PATHS LTD.

NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8: - BUSINESS COMBINATIONS

a. On May 15, 2024, the Company entered into a purchase agreement pursuant to which the Company acquired, through its subsidiary oceansix S.L., the business of Original RePack OY ("RePack"). RePack is a company specializing in reusable packaging solution.

The total consideration for the Acquisition is valued by the parties at USD 1,211,000 (EUR 1,132,000). Pursuant to the Agreement, oceansix acquired the business of RePack in exchange for: (i) issuing up to 24,948,840 ordinary shares of the Company to the shareholders of RePack; and (ii) an immediate cash payment of USD 108,000 (EUR 100,000). Pursuant to the closing of the Acquisition, 15,282,176 of the Company's ordinary shares were issued to the shareholders of RePack, with the balance of the consideration to be paid to the shareholders of RePack in up to four subsequent installments. The shareholders are entitled to choose the composition of the future installments, in cash and/or shares, up to the maximum of an additional 14,666,664 ordinary shares.

All shares issued pursuant to the RePack Agreement will be restricted from trading for four months and one day after issuance.

The Company recognized the fair value of the assets acquired in the business combination according to a provisional measurement. As of the date of the approval of the financial statements, a final valuation for the fair value of the identifiable assets acquired by an external valuation specialist has not been obtained. The purchase consideration and the fair value of the acquired assets may be adjusted within 12 months from the acquisition date

The fair value of the identifiable assets of RePack on the acquisition date based on the above measurement are as follows:

	Fair Value
	U.S dollars in thousands
Intangible asset	738
Goodwill arising on acquisition	472
Total purchase cost	1,211

The total consideration of the purchase:

	U.S dollars in thousands
Cash	108
Shares issued (15,282,176 ordinary shares)	676
Credit from vendor	427
Total purchase cost	1,211

The revenues and profit/loss attributable to the acquired business from the date of acquisition to September 30, 2024, were not material.