Benaloh Challenge

December 31, 2014 December 31, 2013

in TCHF in TCHF

1. Fire insurance value of property

and equipment

2. Authorized and conditional capital

Authorized capital with a nominal value of 1,526 1,526

Conditional capital with a nominal value of 1,526 1,526

3. Treasury shares

Balance as of January 1, 2013 2,241,143 0.10 224 Purchase – – – Sale 80,975 3.26* 8 Balance as of December 31, 2013 2,160,168 0.10 216 Balance as of January 1, 2014 2,160,168 0.10 216 Purchase – – – Sale 55,520 3.56* (6) Balance as of December 31, 2014 2,104,648 0.10 210

*average sale price

4. Important investments

Proteome Therapeutics GmbH,

Singen, Germany

Non-operative since May 2002

Paid-in capital (TEUR) 25 25

Shareholding (%) 100 100

BioSupport AG, Schlieren, Switzerland* Purpose: Provider of research services

Share capital (TCHF) 100 100

Shareholding (%) 33 33

* BioSupport AG will be liquidated in 2015 since its services are no longer required by Cytos. Preliminary excess cash of TCHF 80 has been paid to Cytos in 2014 and is accounted as a “accrued expenses”.

5. Lease commitments not

recorded in the balance sheet

6. Convertible Bond and Convertible loans notes

Convertible Bond

In February 2007, the Company issued 2.875% p.a. convertible bonds (“Convertible Bond”) with a nominal value of CHF 70 million. The Convertible Bond was initially due for repayment on Feb- ruary 20, 2012, and was convertible into the Company’s shares at a conversion price of CHF 175. However, because Cytos did not have the financial means to fully repay the Convertible Bond at maturity, it proposed a bond restructuring to the bondholders on November 10, 2011. In summary, Cytos proposed to repay half of the outstanding nominal value at par and to postpone the repay- ment for the remaining half and to defer the payment of any interest to February 20, 2015. The repayment will be at 150% of par. Also, the coupon was increased from 2.875% p.a. to 5.75% p.a. Furthermore, the conversion price was reduced to CHF 7.71. In the meantime, the conversion price has been further reduced to CHF 7.32 per share due to the anti-dilution clause. This restructuring became legally binding on March 13, 2012.

In the course of the second, third and fourth quarter of 2012, Cytos Biotechnology Ltd bought back convertible bonds on the market with a nominal value of CHF 2.97 million. Cytos Biotechnology Ltd did not buy any convertible bonds on the market in 2013 and 2014. The nominal value of the outstanding Convertible Bond as per December 31, 2014 amounted to CHF 13.17 million (the same in prior year).

The convertible bonds with extended maturity are subordinated.

Convertible loan notes

Four investors granted Cytos Biotechnology Ltd convertible loan notes, payable in two equal tranches at a total amount of CHF 13.25 million. The convertible loan notes (capital and interest) can be converted into shares of the Company, whereby the conversion price CHF 2.244 was. In the mean- time, the conversion price has been further reduced to CHF 2.13 per share due to the anti-dilution clause. The first tranche of TCHF 6,625 was due for payment upon completion of the capital increase and was paid on May 15, 2012. Upon completion of enrollment in the ongoing Phase 2 b clinical trial with CYT003 in allergic asthma, the Company called the second tranche of CHF 6.625 million on October 21, 2013. The second tranche of the convertible loan notes of CHF 6.625 million was paid in four installments between October 29, and December 10, 2013. As security for the conver- tible loan notes, the Company agreed to pledge certain patents and associated know-how (primary patents and know-how concerning CYT003) and to conclude a license agreement, which allows the use of the pledged intellectual property rights in case the Company does not meet its obligations as per the convertible loan note agreement. The convertible loan notes carry an interest rate of 9% p.a. and are due for repayment at 150% of the nominal value on February 10, 2015. In the event of a change in controlling interest, the investors can demand the repayment of the convertible loan notes at 190% of the original amount of the convertible loan notes.

December 31, 2014 December 31, 2013

A group consisting of: 0 17,372,106 shares, 56.91%

- venBio Global Strategic Fund L.P., Grand Cayman, Cayman Islands - Amgen Investments Ltd.,

Hamilton, Bermuda

- Abingworth Bioventures V L.P., London, UK - Abingworth Bioequities Master Fund Limited

Ugland House, Grand Cayman - Aisling Capital III, LP,

New York, NY, USA

For detailed information see the 2013 and 2014 Annual Report Corporate Governance, section “Significant Shareholder (DCG 1.2)”.

8. Main shareholders

As far as can be ascertained from the information available, the following shareholders owned 5% or more of the Company‘s share capital this year or last year:

9. Other disclosures

Capitalization of costs

Up until 2012, research and development costs were capitalized to the extent that research and development projects were considered to represent sustained and valuable prospective commer- cial opportunities and the financing of the finalization of the projects can be expected. The capita- lized research and development costs were amortized over the shorter of the patents’ useful life or a period of 10 years.

The assessment in the past indicated the existence of a material uncertainty regarding the valuation of the capitalized research and development costs, because it was uncertain whether the projects can be successfully finalized and therefore these capitalized research and development costs could be realized through future revenues. In order to (i) apply a more conservative accounting principle, (ii) align statutory accounting with IFRS and (iii) account for more increased regulatory scrutiny the Company decided to amend past practice and to (i) write-off capitalized research and development costs accrued up until December 31, 2012 and (ii) no longer capitalize research and development On November 29, 2007, the Board of Directors approved the risk management handbook and the comprehensive assessment of the risks which were systematically captured and analyzed with re- gard to a potential impact on the Company, whereby measures to prevent or minimize risks were presented in a risk/probability matrix.

Every year the Executive Board deals with the RM (risk management) in several meetings and pro- poses a RM/ICS report to the Board of Directors.

The Board of Directors approved the report for the year 2014 on April 27, 2015.

the ICS, the Board of Directors and the Executive Board intend to recognize risks which might endanger the goals of the Company or compliance with regulations and to define risk minimizing measures where appropriate.