The significant accounting policies applied in the financial statements of the Company as of December 31, 2025, were applied consistently in these interim financial statements.

The preparation of condensed interim consolidated financial statements in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the dates of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. As applicable to these consolidated interim financial statements, the most significant estimates and assumptions include (i) net realizable value of the inventory, (ii) impairment analysis of goodwill and intangible assets, (iii) allowance for doubtful accounts; and (iv) revenue recognition.

These accompanying unaudited condensed interim consolidated financial statements have been prepared in accordance with U.S. GAAP for interim financial information. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Company’s financial position as of June 30, 2026, have been included. Operating results for the six-month period ended June 30, 2026, are not necessarily indicative of the results that may be expected for the year ended December 31, 2026, or any other interim period in the future.

The consolidated balance sheet at December 31, 2025 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles in the United States for complete financial statements.

The unaudited interim financial statements should be read in conjunction with the Company’s annual financial statements and accompanying notes as of December 31, 2025, included in the Company’s Annual Report on Form 20-F, filed with the Securities Exchange Commission on March 31, 2026.

Pursuant to the exercise of the put option, the Company acquired from the Counterparties their rights and obligations under the joint venture agreement for a total consideration of NIS 2,000,000 ($639,000).

Management determined that the consideration represented an intangible asset related to distribution rights and customer relationships. The useful life of the acquired intangible asset was estimated to be three years.

The Company operates in three reportable segments: Intelligent Robotics, RFID and Supply Chain Solutions. The Company’s goodwill was originally allocated to two reporting units, the RFID reporting unit and the Intelligent Robotics reporting unit. As of June 30, 2026 and December 31, 2025, all remaining goodwill related only to the RFID reporting unit. 

The RFID segment includes one reporting unit with an allocated goodwill balance of approximately $2,988 as of June 30, 2026. The Company performed an impairment analysis as of December 31, 2024, using the income approach and concluded that the carrying value of the reporting unit exceeded its fair value. Accordingly, the Company recognized a goodwill impairment loss of $707.

As a result of negative factors, including decreases in revenue and profit, the Company performed an interim impairment analysis as of June 30, 2025. The Company concluded that the carrying value of the RFID reporting unit exceeded its fair value and recognized a goodwill impairment loss of $700. The interim impairment test was based on a valuation performed internally by management.

The annual impairment analysis as of December 31, 2025 resulted in an additional goodwill impairment loss of $500 for the RFID reporting unit. Accordingly, the Company recognized aggregate goodwill impairment losses of $1,200 for the year ended December 31, 2025. The annual impairment test was based on a valuation performed by management with the assistance of a third-party independent appraiser.

The most significant assumptions and judgments used in the discounted cash flow model under the income approach for the 2025 impairment test were projected cash flows for four years, including projected revenues, expenses and capital expenditures, the estimated weighted-average cost of capital, short-term and long-term growth rates, and market conditions. The measurement of the fair value of reporting units as part of the goodwill impairment analysis is classified as Level 3 within the fair value hierarchy.

The Company has entered into several non-cancellable operating lease agreements for its offices and vehicles. The Company’s leases have original lease periods expiring between 2026 and 2034. Payments due under such lease contracts include primarily fixed payments. The Company assumes renewals in the determination of the lease term. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Commencing January 1, 2020, the Company presents its business operations in three reportable segments, consisting of the RFID segment, Supply Chain Solutions segment and the Intelligent Robotics segment.

The Company’s management makes financial decisions and allocates resources, based on the information it receives from its internal management system. The Company allocates resources and assesses performance for each operating segment using information about revenues and gross profit.