NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

a. Basis of presentation of the financial statements:

The Company’s consolidated financial statements have been prepared in accordance with the United States generally accepted accounting principles (U.S. GAAP) as set forth in the Financial Accounting Standards Board (the “FASB”) Accounting Standards Codification (the “ASC”).

b. Use of estimates, assumptions and judgements:

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates, judgments and assumptions that affect the amounts reported in the consolidated financial statements and accompanying notes. The Company’s management believes that the estimates, judgment and assumptions used are reasonable based upon information available at the time they are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities at the dates of the consolidated financial statements, and the reported amount of expenses during the reporting periods. Actual results could differ from those estimates.

c. Consolidated financial statements in U.S dollars:

The functional currency is the currency that best reflects the economic environment in which the Company and its subsidiary operates and conducts their transactions. The Company’s functional currency is the U.S. dollar. The functional currency of CR Ltd is the New Israeli Shekel.

Accordingly, monetary accounts maintained in currencies other than the U.S. dollar are remeasured into U.S. dollars at each reporting period end in accordance with ASC No. 830 “Foreign Currency Matters.” All transaction gains and losses of the remeasured monetary balance sheet items are reflected in the statements of comprehensive loss as financing income or expenses as appropriate.

d. Principle of consolidation:

The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany balances and transactions have been eliminated upon consolidation.

e. Cash and cash equivalents:

The Company considers as cash equivalents all short-term, highly liquid investments, which include short-term bank deposits with original maturities of three months or less from the date of purchase that are not restricted as to withdrawal or use and are readily convertible to known amounts of cash.

f. Intangible assets:

Intangible assets consist of acquired technology and are amortized using a straight-line method over their useful lives which was determined to be 12 years. Additionally, the intangible assets are reviewed for impairment when certain triggering events occur. As of December 31, 2025, the Company concluded there was no impairment required to its intangible asset.

g. Goodwill:

Goodwill is recognized and initially measured as any excess of the acquisition-date consideration transferred in a business combination over the acquisition-date amounts recognized for the net identifiable assets acquired. Goodwill is not amortized but is tested for impairment annually, or more frequently if an event occurs or circumstances change that would more likely than not result in an impairment of goodwill. Impairment testing is performed at the reporting unit level. A reporting unit is defined as an operating segment or one level below an operating segment, referred to as a component. A component of an operating segment is a reporting unit if the component constitutes a business for which discrete financial information is available and segment management regularly reviews the operating results of that component. Evaluating goodwill for impairment involves the determination of the fair value of each reporting unit in which goodwill is recorded using a qualitative or quantitative analysis. If fair value excess the carrying value, impairment is not indicated. If the carrying amount of a reporting unit is higher than its estimated fair value, the excess is recorded as an impairment expense. The Company performs its annual goodwill impairment test as of December 31st of each year. As of December 31, 2025, the Company performed a quantitative impairment test for its reporting unit and concluded there was no impairment of goodwill.

h. Equity method investments:

The Company accounts for its investments in common stock and in-substance common stock in accordance with ASC 323, Investments – Equity Method and Joint Ventures. Investments in entities over which the Company does not have a controlling financial interest but has significant influence, are accounted for using the equity method, with the Company’s equity in losses reported in equity in losses from investment in affiliate on the statements of comprehensive loss. Equity method investments are recorded at cost, plus the Company’s share of earnings or losses, and impairment, if any, within investment in an affiliate on the balance sheets. The Company evaluates its equity investments for impairment at each reporting period. If qualitative factors indicate that the investment is impaired and its fair value is less than the carrying value, the Company recognizes an impairment loss in earnings.

i. Fair value of financial instruments:

The accounting guidance for fair value provides a framework for measuring fair value, clarifies the definition of fair value, and expands disclosures regarding fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The accounting guidance establishes a three-tiered hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value as follows:

The carrying amounts of cash, other accounts receivables, loan to an affiliate, accounts payable, other current liabilities, short term loans and payables to related parties approximate their fair value due to the short-term maturity of such instruments.

j. Stock-based compensation:

The Company accounts for stock-based compensation awards issued to employees, directors, and non-employee consultants in accordance with ASC No. 718, “Compensation – Stock Compensation” based on the fair value of the awards at the grant date. The Company has selected the Black-Scholes option-pricing model as the most appropriate fair value method for its stock option and warrants awards. The fair value of the award is recognized as an expense over the requisite service periods, which is the vesting period of the respective award, on a straight-line basis when the only condition to vesting is continued service.

The Company also granted certain awards that have both service-based vesting conditions and performance-based vesting conditions. For these awards, we recognize stock-based compensation expense on a graded basis over the total requisite service period for each separately vesting portion of performance tranches where it is probable that the performance-based vesting conditions will be achieved. The Company recognizes forfeitures of the awards as they occur.

k. Basic and diluted net loss per Share:

The Company’s basic net loss per share is calculated by dividing net loss by the weighted-average number of shares of common shares outstanding for the period, without consideration of potentially dilutive securities. The diluted net loss per share is calculated by giving effect to all potentially dilutive securities outstanding for the period using the treasury share method or the if-converted method based on the nature of such securities. Diluted net loss per share is the same as basic net loss per share in periods when the effects of potentially dilutive common shares are anti-dilutive.

l. Research and Development costs:

Research and development costs are recognized in the consolidated statements of comprehensive loss when incurred. Research and development costs consist of intellectual property, development and production expenditures.

m. Royalty-bearing grants:

Royalty-bearing grants from the IIA for funding approved research and development projects are recognized at the time CR Ltd is entitled to such grants (i.e. at the time that there is reasonable assurance that the Company will comply with the conditions attached to the grant and that there is reasonable assurance that the grant will be received), on the basis of the costs incurred and grants received are recorded as a reduction in research and development costs. The cumulative research and development grants received by the Company from inception through December 31, 2025, amounted to $166. These amounts were deducted from research and development costs in the consolidated statements of comprehensive loss for the years ended December 31, 2025, and 2024 ($31, and $58, respectively).

n. Income Taxes:

The Company accounts for income taxes in accordance with ASC 740, “Income Taxes”, which prescribes the use of the liability method whereby deferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to reverse. The Company provides a valuation allowance, to reduce deferred tax assets to their estimated realizable value, if needed.

The Company also accounts for uncertain tax positions under ASC 740. ASC 740 offers a two-step approach for recognizing and measuring a liability for uncertain tax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight of available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will be sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. As of December 31, 2025 and 2024, no liability for unrecognized tax benefits was recorded under ASC 740.

o. Recently issued and adopted accounting standards:

As an “emerging growth company”, the Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements applicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use this extended transition period under the JOBS Act. The adoption dates discussed below reflects this election.

p. Recently issued and not yet adopted accounting standards: