Immediate Report Regarding the Status of Highcon Systems Ltd.

Official Announcement – Immediate Report Regarding the Status of Highcon Systems Ltd.

This communication is to formally share the contents of the immediate report published by Highcon Systems Ltd. on March 26, 2025, in accordance with regulatory requirements. The report outlines significant developments regarding the Company’s current financial situation and operational adjustments.

The Company hereby announces that on March 26, 2025, following a resolution by the Company’s Board of Directors and considering the Company’s current situation, it has decided to terminate the employment of the majority of its employees and consultants. At this stage, the Company has resolved to retain 20 employees and consultants in order to maintain minimal operations.

Simultaneously, the Company is preparing to file a request for a stay of proceedings in order to formulate a debt arrangement outside of a formal insolvency order, pursuant to the Israeli Insolvency and Economic Rehabilitation Law.

It should be noted that the Company has encountered significant cashflow difficulties due to a combination of external and economic factors. Orders totalling approximately USD 10 million, which were in the final stages of approval, have been postponed to later this year due to reasons beyond the Company’s control. This has prevented the Company from securing necessary financing and meeting its financial obligations.

Additionally, the ongoing war in the region has created substantial uncertainty, leading to the deferral of commitments by current and potential customers. At the same time, the global economic slowdown, along with the impacts of the recent tariff war initiated by the United States, has increased hesitation around making large investments, including by the Company’s customers (and potential customers), and has slowed decision-making by key market players. Moreover, the “going concern” note in the Company’s financial statements has undermined the confidence of potential customers and contributed to the postponement of deals.

All these factors, combined with the fact that the Company has been operating for some time under very limited cash flow conditions, have disrupted its financial stability and intensified its economic distress.

It is further noted that, based on the draft financial statements for 2024—still under review by the auditors and not yet officially approved—there is concern that the Company may be in a state of capital deficit.

As stated, the Company expects to file a court application in the coming days, which may include a request for the appointment of a trustee and the ability for the Company to continue its business activities for the purpose of reaching a resolution in the interest of all stakeholders.

Sincerely,

Highcon Systems Ltd.

By: Yair Alcobi, CEO Ami Fishman, CFO