Financial assets at amortized cost:

The Company’s principal financial liabilities, other than derivatives, are comprised of loans and borrowings, receivables and financial guarantee contracts. The main purpose of these financial liabilities is to finance the Company’s operations and to provide guarantees to support its operations. The Company’s principal financial assets include cash and short-term deposits that derive directly from financing rounds and convertible loans.

The Company is exposed to market risk, credit risk and liquidity risk. The Company’s senior management oversees the management of these risks. All risk management activities are carried out by specialist teams that have the appropriate skills, experience and supervision. It is the Company’s policy that no trading in derivatives for speculative purposes may be undertaken by its employees.

The Group’s activities expose it to various financial risks such as market risks (foreign currency risk, interest risk and price risk), credit risk and liquidity risk. The Group’s comprehensive risk management plan focuses on activities that reduce to a minimum any possible adverse effects on the Group’s financial performance.

Risk management is performed by the Company’s chief executive officer.

Though the Group operates internationally, its operations are primarily located in Israel and the majority of its expenses are denominated NIS. It is therefore exposed to exchange rate risk arising from exposure to various foreign currencies, mainly the USD and the Euro. Exchange rate risk arises from future commercial contracts, recognized assets and liabilities that are denominated in a foreign currency other than the functional currency and net investments in foreign operations.

In addition, the Company’s financial results are reported in USD, and changes in the exchange rate between the USD and local currencies in those countries in which the Company operates (primarily the NIS) may affect the results of its operations. The USD cost of the Company’s operations in countries other than the United States, is negatively influenced by revaluation of the USD against other currencies.

As of December 31, 2025, cash and cash equivalents amounted to $1,763 thousand. The entire cash and cash equivalents are invested with high quality financial institutions. The Company and its subsidiaries monitor customer debts on an ongoing basis and include specific allowances for doubtful accounts which adequately reflect the loss inherent in debts whose collection is doubtful as per the estimate of the Company and the subsidiaries.

The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of overdrafts and loans (see also Note 1c).

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Company’s exposure to the risk of changes in market interest rates relates primarily to the Company’s long-term liabilities with floating interest. This risk is of primary focus to the Company given its current dependency on debt financing and the ability to obtain future debt financing. The Company manages its interest rate risk by having a balanced portfolio of fixed and variable rate loans (see also note 1c).

The carrying amount of cash and cash equivalent, trade receivables net, other accounts receivable, short-term bank loans, Trade payables and other accounts payable approximates their fair value.