All of the issued and outstanding ordinary shares of the Company are duly authorized, validly issued, fully paid and non-assessable. The ordinary are not redeemable, and each ordinary share is entitled to one vote. The holders of the ordinary shares have the right to vote and participate in shareholders' meetings, the right to receive profits, and the right to participate in the accumulated earnings when the Company is dissolved.

The holders of ordinary shares are entitled to vote on all matters submitted to shareholders for a vote.

The holders of the ordinary shares are entitled to receive dividends, when and as declared by the Board of Directors, and out of funds legally available.

1.In June 2015, September 2015 and November 2015, Chemomab entered into an agreement with investors according to which the Company issued the investors warrants to purchase convertible preferred A shares (the “Warrants”). The warrants were classified as equity.

2.During June to December 2020, the Company's investors exercised the warrants for a total consideration of approximately USD 1,250 thousand.

F - 17

Chemomab Therapeutics Ltd. and its subsidiaries

Notes to the Financial Statements as at December 31, 2021

Note 8 - Share Capital (cont’d)

B.Financing rounds (cont’d)

3.In September 2019, Chemomab Ltd entered into share purchase agreement with current and new investors (hereinafter – “2019 SPA”), pursuant to which Chemomab Ltd issued 130,831 series preferred C shares NIS 0.01 par value for an aggregate consideration of approximately USD 11,484 thousand.

4.In November 2019 Chemomab entered into a joinder agreement to 2019 SPA, pursuant to which it issued and sold to investors an additional 34,130 series preferred C shares NIS 0.01 par value, for an aggregate consideration of approximately USD 3,000 thousand, of which USD 500 thousand from certain investors was received immediately after the balance sheet date.

5.In May 2020, Chemomab entered a joinder agreement to 2019 SPA, pursuant to which Chemomab issued 34,130 series preferred C shares NIS 0.01 par value for a total consideration of approximately USD 3,000 thousand.

6.In connection with the Merger, on March 15, 2021, the Company entered into Securities Purchase Agreements with certain purchasers, pursuant to which the Company agreed to sell approximately USD 45.5 million of its ADSs in a private placement transaction, (or “The Private Placement”). The Private Placement closed on March 22, 2021, at which time the Company sold to the purchasers 2,619,270 ADSs together with warrants to purchase up to 261,929 ADSs at an exercise price of USD 17.35 per ADS. The warrants will expire five years from the date of issuance, and if exercised in full, will provide to the Company proceeds of approximately USD 4.5 million.

7.On April 30, 2021, the Company entered into an At the Market Offering Agreement (the “ATM Agreement”) with Cantor Fitzgerald & Co., (“Cantor”). According to the ATM Agreement, the Company may offer and sell, from time to time, its ADSs having an aggregate offering price of up to $75 million through Cantor or the ATM Agreement. From April 30, 2021, through December 31, 2021, the Company issued 699,806 ADSs at an average price of USD 22.75 per ADS under the ATM Agreement, resulting in gross proceeds of USD 15,917 thousand.

C.Share-based compensation

(1)Share-based compensation plan:

The Company maintains (i) the 2011 Share Option Plan (the “2011 Plan”), (ii) the 2017 Equity-Based Incentive Plan (the “2017 Plan”) and (iii) the Chemomab 2015 Share Incentive Plan (the “2015 Plan”), which was assumed by the Company from Chemomab Ltd. the effectiveness of the Merger. At that time, outstanding options under the 2015 Plan became exercisable for such number of ADSs of the Company as was determined based on the exchange ratio in the Merger Agreement, with a reciprocal adjustment to exercise price. As of December 31, 2021, a total of 1,422,153 of our ADSs were reserved for issuance under the 2015 Plan, of which 73,776 ADSs had been issued pursuant to previous exercises options, and 1,326,723 ADSs were issuable under outstanding options. Of such outstanding options, options to purchase 452,230 ADSs had vested and were exercisable as of that date, with a weighted average exercise price of USD 2.75 per ADS. During the year ended December 31, 2021 options to purchase 35,653 ADS were canceled as per the request of an optionee

F - 18

Chemomab Therapeutics Ltd. and its subsidiaries

Notes to the Financial Statements as at December 31, 2021

Note 8 - Share Capital (cont’d)

C.Share-based compensation (cont’d)

(2)The expenses that were recognized in the consolidated statements of operations for services received from employees and service providers are as follows:

	Year ended		Year ended
	December 31,		December 31,
	2021		2020
	USD thousands		USD thousands
Research and development		137		84
General and administrative		1,882		46

Total share-based compensation expenses		2,019		130

(3)The number and weighted average exercise price of options are as follows:

	Weighted average exercise price		Number of options			Weighted average remaining contractual life (in years)		Weighted average exercise price		Number of options			Weighted average remaining contractual life (in years)
	2021		2021			2021		2020		2020			2020
Outstanding at January 1		0.07		10,455,580			7.8		0.07		8,072,704			8.09
Acquired in Merger				609,535
Exercise		0.08		(134,220	)		-		-		-			-
Forfeited		1.25		(1,712,275	)		-		0.07		(10,804	)		-
Granted		0.62		17,784,640			9.79		0.08		2,393,680			9.77

Outstanding at December 31		0.38		27,003,260			8.12		0.07		10,455,580			7.8

(4)Fair value measurement:

The fair value of the options is measured at the grant date using the Black-Scholes Option pricing model and the assumptions used to calculate the fair value of the options are as follows:

	2021 grants
Weighted average share price (in U.S. dollar)^(a)		9.44-27.26
Exercise price (in U.S. dollar)		9.44-27.26
Expected life of options (in years)^(b)		5.73-6.28
Expected volatility^(c)		65.93%-70.88%
Risk-free interest rate^(d)		1.36%-1.64%
Dividend yield		0%

F - 19

Chemomab Therapeutics Ltd. and its subsidiaries

Notes to the Financial Statements as at December 31, 2021

Note 8 - Share Capital (cont’d)

C.Share-based compensation (cont’d)

(a)The weighted average share price is based on the Company’s ordinary share valuation as at the grant date.

(b)Expected life for the periods presented was determined according to the simplified method since, at the date of grant, the Company did not have enough history to make an estimate. This method effectively assumes that exercise occurs over the period from vesting until expiration, and therefore the expected term is the midpoint between the service period and the contractual term of the award. The simplified method is applicable to service conditions and for performance conditions that are probable of achievement. If meeting the performance condition is not probable, the Company will use the awards’ contractual term if the service period is implied, or the simplified method, if the service period is explicitly stated.

(c)Expected volatility is based on historical volatility over the most recent period commensurate with the expected term of the option. As the Company has a short trading history for its ordinary shares, when the Company's trading period is shorter than the expected term, the expected volatility is derived from the average historical share volatilities of several unrelated public companies within the Company’s industry that the Company considers to be comparable to its own business over a period equivalent to the option’s expected term.

(d)The risk-free rate for the expected term of the options is based on the Black-Scholes option-pricing model on the yields of U.S. Treasury securities with maturities appropriate for the expected term of employee share option awards.