NOTE 1 – GENERAL

Silynxcom Ltd. is engaged through Silynx Communications Inc. and Source of Sound Ltd. (together, hereinafter: “the Company”) in a single area of activity: the development, production, marketing and sale of ruggedized noise protection and communication accessories for tactical uses (including radios used by groups such as security forces, law enforcement, and rescue forces.). As part of its activity, the Company manufactures and develops speech and audio systems that include single and dual-sided communication systems integrated into headsets and intended for the personal use of those serving in armies, security and rescue forces, and law enforcement forces in Israel and across the world.

On January 17, 2024, the Company closed its initial public offering of 1,250,000 of its ordinary, no par value, of the Company (the “Ordinary Shares”) at a public offering price of $4.00 per share, for gross proceeds of $5,000 before deducting underwriting discounts and before deducting the equity transaction costs (the “IPO”). On April 2, 2025, the Company closed an underwritten public offering of 1,290,000 Ordinary Shares at a public offering price of $2.25 per share, for gross proceeds of approximately $2,900 (See also Note 3).

As of June 30, 2026, the Company incurred a net loss of $732 and had an accumulated deficit of $26,416. Notwithstanding the foregoing, the Company held cash and cash equivalents, including deposits, amounting to $2,697, and maintained positive working capital of $4,849.

The Company’s management has assessed the Company’s ability to continue as a going concern and believes that the Company has sufficient resources to meet its obligations and continue its operations for the foreseeable future.

The Company is incorporated under the laws of the State of Israel, and the Company’s principal offices are located in Israel. Accordingly, political, economic, and geo-political instability in Israel may affect the Company’s business. Any armed conflicts, political instability, terrorism, cyberattacks or any other hostilities involving Israel or the interruption or curtailment of trade between Israel and its present trading partners could affect adversely the Company’s operations. Ongoing and revived hostilities in the Middle East or other Israeli political or economic factors, could harm the Company’s operations and solution development and cause any future sales to decrease.

Following the October 7, 2023 attacks by Hamas terrorists on Israel’s southern border, Israel declared war against Hamas and since then, Israel has been involved in military conflicts with Hamas, Hezbollah, a terrorist organization based in Lebanon, and Iran, both directly and through proxies like the Houthi movement in Yemen and armed groups in Iraq and other terrorist organizations. Additionally, following the fall of the Assad regime in Syria, Israel has conducted limited military operations targeting the Syrian army, Iranian military assets and infrastructure linked to Hezbollah and other Iran-supported groups.

On June 13, 2025, Israel launched a strike against Iran, aimed to disrupt Iran’s capacity to coordinate or launch hostilities against Israel. Iran has retaliated in response, firing missiles and drones at Israeli military and civilian infrastructure.

Operation Lion’s Roar

In late February 2026, Israel, together with the United States, conducted a major joint military campaign of air and missile strikes against targets in Iran, which triggered a broad Iranian response and contributed to significant regional instability. In addition, in early March 2026, Israel has been engaged with Hezbollah in Lebanon, that has been launching missile, rocket, and shooting attacks against Israeli military sites, troops, and Israeli towns. In response to these attacks, Israel has carried out a number of targeted strikes on sites associated with Hezbollah in Lebanon. The situation remains highly fluid, and we are unable to predict when, or on what terms, this escalation will be resolved. Further escalation, whether involving direct confrontation between Israel and Iran or through regional proxy groups, could result in additional mobilization of reserve personnel, further restrictions on movement or commerce, damage to infrastructure, supply chain interruptions, disruptions to global energy markets, and heightened cybersecurity threats. Any of the foregoing could materially and adversely affect our operations, financial condition, and results of operations, particularly if disruptions are prolonged or recur.

Since this is an event beyond the Company’s control and characterized by uncertainty, in particular as to when these military operations will end, as of the approval date of these consolidated financial statements, the Company is unable to predict the intensity of the impact of operation Lion’s Roar on the Company’s financial condition and results of operations.

As of the date of approval of these consolidated financial statements, a ceasefire has been in place since April 2026. While this development may contribute to a gradual easing of certain restrictions and a recovery in economic activity, significant uncertainty remains regarding the stability of the ceasefire and the potential for renewed escalation. Accordingly, the ultimate impact of the operation and related developments on the Company’s financial condition and results of operations remains uncertain, and the Company continues to monitor the situation closely.

On February 28, 2026, extensive military operations re-commenced involving U.S. and Israeli forces against targets in Iran.

NOTE 2 – MATERIAL ACCOUNTING POLICIES:

NOTE 3 – INVENTORY

NOTE 4 – SHARE-BASED PAYMENT:

NOTE 5 – REVENUE:

The Company operates in one operating segment. The Company’s chief operating decision-maker (the chief executive officer of the Company) evaluates performance, makes operating decisions and allocates resources based on financial data, consistent with the presentation in the accompanying consolidated financial statements. The chief operating decision-maker oversees revenue, gross profit and operating income (loss). The Company identified operating income (loss) as its required (primary) measure of segment profit or loss. All of the above measures are determined on a consolidated basis.

NOTE 6 – RELATED PARTIES:

NOTE 7 – EARNINGS (LOSS) PER SHARE:

NOTE 8 – SUBSEQUENT EVENTS

On August 24, 2026, the Company was notified that a statement of claim was filed in the Central District Court of Israel by Ran Nir and Smadar Nir (the “Plaintiffs”) against the Company, its U.S. subsidiary, Silynx Communications Inc., Nir Klein, the Company’s Chief Executive Officer and a director of the Company, and Gal Nir Klein, the Company’s Vice President of Marketing and Israel Sales and a director of the Company. The Plaintiffs allege, among other things, that Nir Klein and Gal Nir Klein wrongfully took control of the family business by exploiting the alleged incapacity of Ruth Nir, the late mother of Gal Nir Klein and the Plaintiffs, relying on an allegedly invalid proxy, concealing certain corporate actions and subsequently implementing a corporate restructuring that allegedly diluted the Plaintiffs’ claimed inheritance and equity interests in the Company.

The claim alleges that, following a 2016 agreement among the Plaintiffs their sister, Gal Nir Klein, restricting unilateral actions concerning the property and inheritance-related rights of their late mother, Ruth Nir, Gal Nir Klein purported to execute a Change of Control document in Ruth Nir’s name on July 5, 2017, using a proxy granted in 2014. The Plaintiffs allege that such proxy was invalid, had lapsed or been revoked, and did not authorize the transaction. According to the claim, the transaction resulted in the issuance of 9,833,333 shares of Silynx Communications Inc. to Nir Klein, while Ruth Nir retained 1,000,000 shares, representing approximately 6% of the shares of Silynx Communications Inc.

The Plaintiffs further allege that, following Ruth Nir’s death, Nir Klein acquired in November 2019, for $250,000, a 25% equity interest in Silynx Communications Inc. held by Shamrock Israeli Investors Growth Fund L.P. and Shamrock Israel Growth Fund P.L. (together, “Shamrock”), investors in Silynx Communications Inc. The Plaintiffs allege that the acquisition occurred without their knowledge or an opportunity to participate. The Plaintiffs further allege that, in 2021 and 2022, Nir Klein caused the Company to be incorporated as an Israeli holding company and implemented a share-exchange restructuring involving Silynx Communications Inc. and Source of Sound Ltd., Silynx Communications Inc.’s wholly owned Israeli subsidiary, pursuant to which the Company became the parent holding company of Silynx Communications Inc. and Source of Sound Ltd.

Communications Inc. and Source of Sound. According to the Plaintiffs, the restructuring incorporated the allegedly diluted ownership interests in Silynx Communications Inc. into the Company’s ownership structure. The Plaintiffs seek, among other things, the appointment of an investigator, and respect to Defendants 1 and 2, Gal Nir Klein and Nir Klein, monetary damages of NIS 16,926,866 or, alternatively, an order requiring Gal Nir Klein and Nir Klein to transfer 650,694 Company shares to each Plaintiff, together with compensation for the difference between the value of such shares at the time of transfer and the amount of the claimed monetary damages, as well as other relief. The Plaintiffs do not seek monetary relief from the Company or the other corporate defendants and also seek other relief.

The Company believes, based on its legal counsel, that the claim is at the preliminary stage of the proceedings and therefore the prospects of the claim cannot be assessed. Consequently, no provision in respect of the claim has been recorded in these financial statements.