Enlivex Ltd.

Certain Risks Associated with the Reverse Split

Reducing the number of our outstanding ordinary shares through the Reverse Split is intended, absent other factors, to increase the market price of our ordinary shares. However, the market price of our ordinary shares following the Reverse Split may be affected by numerous factors, including our performance, the market perception of our business, and general economic and market conditions, and trading liquidity could become more limited due to the reduced number of shares available for trading.

The history of reverse share splits for other companies is varied, particularly since some investors may view a reverse share split negatively. As a result, the market price of our ordinary shares may not be sustainable at the direct arithmetic result of the Reverse Split, and our total market capitalization could be lower after the split than before it. Additionally, we cannot assure shareholders that, if the Reverse Split is approved, our ordinary shares will be more attractive to investors. Accordingly, there can be no assurance that the Reverse Split (if approved) will result in the intended benefits described above, that the market price of our ordinary shares will rise in proportion to the reduction in the number of shares outstanding following the Reverse Split, or that the market price will remain at an increased level for any period.

The Reverse Split may result in some shareholders owning “odd lots” of less than 100 ordinary shares on a post-split basis. Odd lots may be more difficult to sell, or require greater transaction costs per share to sell, than shares in “round lots” of even multiples of 100 shares.

Certain U.S. Federal Income Tax Consequences

The following is a summary of the material U.S. federal income tax consequences of the Reverse Split to U.S. Holders (as defined below) of our ordinary shares. This summary does not purport to be a complete discussion of all of the possible U.S. federal income tax consequences. Further, it does not address the impact of the Medicare surtax on certain net investment income or the alternative minimum tax, U.S. federal estate or gift tax laws, any state, local or foreign income or other tax consequences or any tax treaties. Also, it does not address the tax consequences to holders that are subject to special tax rules, including, without limitation, (i) persons who are not U.S. Holders; (ii) banks, insurance companies, or other financial institutions; (iii) regulated investment companies; (iv) tax-qualified retirement plans; (v) dealers in securities, commodities, or foreign currencies; (vi) persons whose functional currency is not the U.S. dollar; (vii) traders in securities that use the mark-to-market method of accounting for U.S. federal income tax purposes; (viii) persons deemed to sell our ordinary shares under the constructive sale provisions of the Internal Revenue Code of 1986, as amended, or the Code; (ix) persons that acquired our ordinary shares through the exercise of employee stock options or otherwise as compensation or through a tax-qualified retirement plan; (x) persons that hold our ordinary shares as part of a straddle, appreciated financial position, synthetic security, hedge, conversion transaction or other integrated investment or risk reduction transaction; (xi) persons that own, directly, indirectly or constructively, at any time, ordinary shares representing 5% or more of our voting power or value; (xii) certain former citizens or long-term residents of the United States; (xiii) tax-exempt entities or governmental organizations, and (xiv) S corporations or other pass-through entities.

As used herein, the term “U.S. Holder” means a beneficial owner of our ordinary shares that is, for U.S. federal income tax purposes, (i) an individual citizen or resident of the United States, (ii) a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) that is created or organized (or treated as created or organized) in or under the laws of the United States, any state thereof or the District of Columbia, (iii) an estate whose income is subject to U.S. federal income tax purposes regardless of its source, or (iv) a trust if (x) a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust, or (y) it has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person.

The discussion is based on the Code, existing and proposed U.S. Treasury Regulations, administrative rulings and judicial authority as of the date hereof, all of which are subject to change or differing interpretations, possibly with retroactive effect. In addition, this discussion assumes that the ordinary shares prior to the Reverse Split, or the Old Shares, were, and the ordinary shares after the Reverse Split, or the New Shares, will be, held as a “capital asset,” as defined within the meaning of Section 1221 of the Code (i.e., generally, property held for investment). The tax treatment of a U.S. Holder may vary depending upon the particular facts and circumstances of such U.S. Holder. This summary of certain material U.S. federal income tax consequences of the Reverse Split is for general information only and is not tax advice. Each shareholder is urged to consult with such shareholder’s own tax advisor with respect to the tax consequences of the Reverse Split.

If a partnership (or other entity or arrangement classified as a partnership for U.S. federal income tax purposes) is the beneficial owner of our ordinary shares, the U.S. federal income tax treatment of a partner in the partnership will generally depend on the status of the partner and the activities of the partnership. Partnerships that hold our ordinary shares, and partners in such partnerships, should consult their own tax advisors regarding the U.S. federal income tax consequences of the Reverse Split.

We have not sought and will not seek any ruling from the Internal Revenue Service, or the IRS, or an opinion from counsel, with respect to the U.S. federal income tax consequences of the Reverse Split. Our view regarding the tax consequences of the Reverse Split is not binding on the IRS or the courts. Moreover, there can be no assurance that the IRS or a court will agree with such statements and conclusions.

The Reverse Split is intended to constitute a “reorganization” for U.S. federal income tax purposes under Section 368(a)(1)(E) of the Code. Therefore, subject to the discussion regarding passive foreign investment company, or PFIC, status below, and assuming the Reverse Split qualifies as a reorganization under Section 368(a)(1)(E) of the Code, no gain or loss should be recognized by a U.S. Holder upon such U.S. Holder’s exchange (or deemed exchange) of Old Shares for New Shares pursuant to the Reverse Split, except with respect to adjustments that may result from the treatment of fractional ordinary shares, as discussed below. The aggregate tax basis of the New Shares received (or deemed received) in the Reverse Split should be the same as the U.S. Holder’s aggregate tax basis in the Old Shares exchanged (or deemed exchanged) therefor (increased by income or gain recognized, if any, on receipt of a whole New Share in lieu of a fractional New Share). Except in the case of any portion of a New Share treated as a dividend or as to which a U.S. Holder recognizes capital gain as a result of the treatment of fractional ordinary shares, the U.S. Holder’s holding period for the New Shares should include the period during which the U.S. Holder held the Old Shares surrendered (or deemed surrendered) in the Reverse Split. U.S. Holders that hold ordinary shares acquired on different dates and at different prices should consult their tax advisors regarding identifying the bases and holding periods of the particular ordinary shares they hold after the Reverse Split.

The U.S. federal income tax treatment of fractional shares being rounded up to the next whole ordinary share is uncertain. A U.S. Holder that receives a whole New Share in the Reverse Split in lieu of a fractional New Share might recognize income, which may be characterized either as capital gain or as a dividend to the extent of the portion of our accumulated earnings and profits (if we have any) attributable to the rounded New Share. U.S. Holders should consult their tax advisors regarding the U.S. federal income tax and other tax consequences of fractional New Shares being rounded to the next whole New Share (including the holding period of a whole share received in exchange for a fractional share in the Reverse Split).

Pursuant to Section 1291(f) of the Code, to the extent provided in U.S. Treasury Regulations, if a U.S. person transfers stock in a PFIC in a transaction that does not result in full recognition of gain, then any unrecognized gain is required to be recognized notwithstanding any nonrecognition provision in the Code. The U.S. Treasury has issued proposed U.S. Treasury Regulations under Section 1291(f) of the Code, but they have not been finalized. The IRS could take the position that Section 1291(f) of the Code is effective even in the absence of finalized U.S. Treasury Regulations, or the U.S. Treasury Regulations could be finalized with retroactive effect. Accordingly, no assurances can be provided as to the potential applicability of Section 1291(f) of the Code to the Reverse Split.

Based on the nature of our business, the projected composition of our income and the projected composition and estimated fair market values of our assets, we may be classified as a PFIC and we may have been a PFIC in prior years.

If the Company is treated as a PFIC with respect to a U.S. Holder and Section 1291(f) of the Code were to be applied to the U.S. Holder’s exchange of our ordinary shares pursuant to the Reverse Split, the U.S. Holder may be required to recognize any gain realized on such exchange. Under the proposed Treasury Regulations mentioned above, if the Company were treated as a PFIC for any prior taxable year during which a U.S. Holder held our ordinary shares and the Company is treated as a PFIC at the time of the Reverse Split such that such U.S. Holder receives shares of a PFIC in the Reverse Split, such U.S. Holder would not be required to recognize any gain realized pursuant to the Reverse Split; however, if the Company is not treated as a PFIC at the time of the Reverse Split, such U.S. Holder may be required to recognize any gain realized pursuant to the Reverse Split but this is not clear. As discussed above, these proposed Treasury Regulations have not been finalized and, therefore, we cannot be certain if such proposed Treasury Regulations would be applicable to the Reverse Split. Any gain required to be recognized pursuant to the Reverse Split generally would be subject to the “excess distribution” rules under Section 1291 of the Code. U.S. Holders should consult their own tax advisors regarding the U.S. federal income tax consequences of the Reverse Split if the Company were treated as a PFIC.

Each shareholder should consult with his, her or its own tax advisor with respect to all of the potential tax consequences to such shareholder of the Reverse Split, including the applicability and effect of any state, local, and non-U.S. tax laws, as well as U.S. federal tax laws and any applicable tax treaties.