REG - T42 IOT Tracking Sol - 2025 Final Results
13/04/2026 10:15
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RNS Number : 1992A T42 IOT Tracking Solutions PLC 13 April 2026
13 April 2026
t42 IoT Tracking Solutions plc
("t42" or the "Company")
Full year results
t42 IoT Tracking Solutions plc (AIM: TRAC), a global provider of real-time
tracking and monitoring solutions for containers, is pleased to announce its
audited results for the year ended 31 December 2025.
Financial Highlights
· Revenue increased 47% to $6.10m (2024: $4.16m), with an increased
contribution from the supply chain solutions.
· Adjusted EBITDA improved to a gain of $1.23m (2024: Adjusted EBITDA
loss of $0.21m).
· Gross margin increased to 46%, mainly due to cost reduction impact in
the hardware segment (2024: 38%).
· Total operating expenses broadly unchanged at $2.45m (2024: $2.48m).
· Cash and cash equivalents as at 31 December 2025 increased to $0.57m
(31 December 2024: $0.15m), as a result of positive operational cash flow.
· Working capital ("WC") improved by $2.3m to a negative WC of $1.87m
(2024: A negative WC of $4.18m).
Operational and Strategic Highlights
· Continued solid performance across the four contracts secured in 2024
o Strong outperformance on one contract with others in line with management
expectations
· Strong order growth underpinning increased revenue visibility for
current year
o Year-on-year increases of 150% and 100% in sales for Lokies and Tetis,
respectively
· Ongoing discussions with a number of existing and new customers
globally
o Including positive negotiations with a major customer regarding their 2026
order expectations, which may result in an expanded contract scope
· Technological improvements provide a key operational advantage
o Improved reliability, scalability, and interoperability across the Helios,
Lokies, and Kylos product families
o Positioned to support significantly larger fleets and device volumes
CEO, Avi Hartmann commented:
"We have established a clear path towards sustained profitability - with an
enhanced product base and broader target customer base, the Company is
extremely well placed in terms of commercialization and market opportunity.
"The strong growth in sales, margins and adjusted EBITDA during the Period
combined with the technology development and growing routes to market underpin
the Board's confidence in trading for the current period."
"We continue to see strong traction and have recently entered into a number of
new distribution agreements for our software and hardware solutions with
companies internationally. We have several agreements and trials in the
pipeline and are confident that positive outcomes will result in a
significantly enhanced sales order."
Contacts:
t42 IoT Tracking Solutions PLC
Michael Rosenberg, Chairman 07785 727595
Avi Hartmann, CEO +972 5477 35663
Strand Hanson Limited (Nominated Adviser, Financial Adviser and Broker)
James Harris/ Richard Johnson/ Imogen Ellis
020 7409 3494
Walbrook PR Ltd (Media & Investor Relations) Tel: +44 (0)20 7933 8780 or t42@walbrookpr.com (mailto:t42@walbrookpr.com)
Nick Rome / Marcus Ulker
The Annual Report will be made available to shareholders shortly and be
available from the Company's website at: www.t42.co.uk/
(http://www.t42.co.uk/) . A notice of AGM will be dispatched to shareholders
in due course.
CHAIRMAN'S STATEMENT
We are pleased to report T42's audited results for the year ended 31 December
2025.
Revenues increased to $6.10 million, up from $4.16 million in 2024. We expect
continued fulfillment of the agreements announced during 2024 over the coming
years.
The software segment recorded a strong gross margin of 88%, compared to 82% in
2024, and the hardware segment recorded gross margin of 25%, compared to a
negative margin of 7% in 2024. The increases are primarily due to the
following factors:
1. Successful cost reduction measures in the production of hardware
components.
2. Improved supply chain management, reducing overhead costs.
3. Adjustments in pricing strategy that align better with market demand.
4. Savings on shipping costs are due to switching to a shipping-free
sales model for our main customers
5. Introduction of a new version of hardware products that perform
better in the market.
We continue addressing these factors and expect margin improvement in the
current year.
Several years ago, we pivoted the Company's strategy from vehicle tracking to
container monitoring solutions. This led to a rebranding to t42 and a
fundamental change in our core business. As part of this transition, key
personnel were replaced, and an experienced, focused management team was
brought in. The signs of success are evident in the 2025 results.
We have developed a new version of products in collaboration with leading
manufacturers, identified new customers, and introduced innovative business
models and solutions. Within a short period, we have demonstrated that we are
on the right path, and this positive momentum is reflected in our results.
In 2025, we experienced significant growth in the container segment, including
the signing of new multi-year agreements that exceeded the sales volumes of
2024. This momentum is driven by the high quality of our Lokies locks and
increasing demand for our new Tetis models.
We have made substantial technological improvements, particularly in power
consumption - a key operational advantage for our customers.
This trend continues: new customers are being secured, pilot projects are
advancing, and market potential is turning into a pipeline of commercial
opportunities. We are also investing in our complementary Tetis product with a
focus on energy efficiency.
Much of the container segment growth stems from agreements signed in 2024 and
2025. We now expect actual orders under these agreements to exceed customers'
initial forecasts. We are in advanced negotiations with one major customer
regarding their 2026 order forecasts, which may result in an expanded contract
scope. Though, as always, the timing of these orders remains uncertain.
There is no doubt that t42's solutions are shaping the future of container
monitoring. The expected increase in 2026 orders marks a significant step
toward fulfilling the Company's potential and its aspiration to lead the
container tracking market and the smart technology which we can provide.
In the Helios segment, our platform was selected for national deployment in a
South American country to improve safety and reduce road accidents in public
and heavy transportation, including buses and trucks.
Positioned for Growth
Of the four major contracts secured in 2024, one is already performing ahead
of management's initial expectations. Annual order growth for the Lokies
product has reached nearly 100%, which is expected to positively impact 2026
financial results. Other contracts are progressing in line with planned
schedules. As previously reported, these contracts represent total potential
sales orders of up to 100,000 units, primarily from customers in Latin
America. Subject to full implementation and delivery timelines, these
contracts are projected to generate approximately $20 million in hardware and
SaaS revenue over the next three years.
As of the date of this report, the Company is in the initial stages of several
promising new deals in the Middle East, Europe, and the USA. These
opportunities are strategically significant because they involve a new
customer profile outside the traditional shipping container sector, expanding
the application of our core technology. Furthermore, since the beginning of
2025, we have seen a nearly 100% increase in sales orders for Lokies and
Tetis, which will contribute to this year's revenue.
Historically, the Company established its roots in fleet management. We have
since evolved into a provider of sophisticated monitoring and security systems
for containers and cargo across maritime, land, and air transport. Our
solutions ensure reliability, security, and economic viability, significantly
reducing implementation time and accelerating ROI for our customers. We are
now leveraging our proven technology to enter new markets and are focused on
establishing a direct presence in Europe, North America, and South America
this year.
A key strategic objective for this year is our entry into the B2C market. This
requires bespoke software development and a tailored marketing strategy. We
are currently working to accelerate our timeline, now aiming to launch this
initiative during the Summer.
Board and Senior Management Changes
2025 also marked a period of leadership transition. In April, our CFO, Igor
Vatenmacher, stepped down to assume a CEO role at another firm, and we are
pleased to retain his expertise on our Board of Directors in a non-executive
role. His successor, Aviran Sabag, has brought renewed vigor to the finance
role, focusing on streamlining operations and reducing supplier-related
costs-initiatives that have already had a tangible positive impact on our cash
flow. Additionally, Shachar Rosiansky has succeeded Maxim Perry as VP of Sales
and is instrumental in driving the promising new business developments
mentioned above. Meanwhile, Martin Blair has served the board of directors as
a non‑executive director for a number of years and has agreed to step down
as a director with effect from 30 June 2026. We shall greatly miss his wisdom
and dedicated service over many years. Martin will also relinquish his role as
chairman of the audit committee and will be succeeded by Igor at the end of
June 2026.
R&D
Over the past twelve months, t42 continued to expand and strengthen its
technology platform across firmware, hardware integration, and cloud
infrastructure. Development efforts focused on improving reliability,
scalability, and interoperability across the Helios, Lokies, and Kylos product
families, while also expanding the platform's ability to integrate with
external sensors and enterprise systems.
On the device side, we introduced multiple firmware enhancements for the
Helios M Pro and Kylos M platforms, improving BLE connectivity stability,
battery monitoring, and odometer-based mileage and speed calculations. We also
expanded support for additional BLE sensors, including door sensors and beacon
devices, enabling broader IoT monitoring use cases across logistics and fleet
environments. Significant work was also carried out to improve firmware
upgrade reliability, GNSS performance, cellular connectivity initialization,
and device-level diagnostics, ensuring higher operational stability across
large deployments.
For the Lokies platform, we continued refining locking state awareness,
environmental monitoring, and communication protocols, including enhancements
that allow identification of the user interacting with the device and improved
temperature measurement reliability. These upgrades further strengthen Lokies'
suitability for high-security logistics and asset protection applications.
At the cloud and platform level, the t42 system underwent substantial upgrades
to improve monitoring, reporting, and system integration capabilities. New
webhook integrations, expanded APIs, and enhanced event monitoring allow
customers and partners to integrate t42 data more easily into their
operational systems. We also introduced new reporting tools for driver
behaviour, routing monitoring, SIM management, and fleet analytics, enabling
customers to gain deeper operational insights from their deployments.
In parallel, we continued investing in the performance and scalability of the
platform infrastructure. Improvements included enhanced routing services,
better transmission monitoring, API throttling mechanisms, and additional
backend services written in Rust to support future high-scale deployments.
These developments position the t42 platform to support significantly larger
fleets and device volumes while maintaining high reliability and performance.
Looking ahead, alongside ongoing platform improvements, we are currently
developing a completely new version of the Lokies platform. This new
generation of the platform is designed to support our strategic efforts to
expand into the B2C market, providing a simplified user experience, improved
onboarding, and enhanced device management capabilities tailored for
individual users and small businesses.
FINANCIAL REVIEW
· Group revenues of $6.10 million (2024: $4.16 million) - an increase
of 47%.
· Gross margin increased to 46% (2024: 38%). The software and
hardware segments recorded strong margins of 88% and 25%, respectively (2024:
82% and -7%).
· Total operating expenses decreased to $2.45 million (2024: $2.48
million).
· Operating profit of $0.37 million, a substantial improvement on the
prior year (2024: loss of $0.88 million).
· Loss after tax decreased to $0.58 million (2024: $1.75 million).
· A foreign exchange rate loss of $593k was recorded mainly due to
the depreciation of the Israeli shekel against the US dollar (2024: $72k
gain).
· Trade receivables declined to $0.60 million (2024: $0.88 million).
· Inventory declined to $0.86 million (2024: $1.12 million).
· Trade payables decreased to $0.73 million (2024: $1.11 million).
· Cash flow from operations was approximately $0.4 million, compared
to cash flow of $0.6 million in 2024.
OUTLOOK
After several years of market entry challenges and technology validation in
the container space, we made a strategic decision to rebrand the Company and
focus on container tracking solutions. This move sends a clear message: t42 is
here to lead.
In 2025, we experienced over 250% growth in container-related sales compared
to 2024, and negotiations are already underway to expand existing agreements.
It is now clear that we are not just participating in the market - we are
becoming a key player.
But our ambition goes further - to lead the next wave of innovation in the
industry. This requires breakthroughs, an advanced strategy, and
collaborations with visionary industry leaders. We are already in advanced
discussions with such partners and hope to share developments soon.
The journey has begun - long, challenging, and at times turbulent, but full of
opportunities. The Board's expectations for t42 are high, and we look forward
to updating on key milestones.
Michael Rosenberg OBE
Non-Executive Chairman
_______________
CORPORATE GOVERNANCE STATEMENT
General
The Board has adopted the QCA Corporate Governance Code ("the QCA Code"),
further detail of which is set out on the Company's website. The following
comments are intended to provide an update on the application of these
guidelines where appropriate. The Company seeks to comply with the principles
of the QCA Code that the Board considers appropriate, given the size and
nature of the business. However, there may be certain cases where
non-compliance is appropriate due to the nature of the business and its non-UK
status, as explained further below.
Division of responsibilities
As of today, the T42 IoT Tracking Solutions PLC Board consists of four
directors, three of whom are non-executive, including the Chairman. Although
the Company is a relatively small company with a small board, the roles of
Chairman and CEO are separate, clearly established roles, with a clear
division of responsibilities between them.
The Chairman
The Chairman is responsible for the leadership of the Board. The Chairman sets
the agenda for Board meetings and encourages an open and constructive debate.
Since the Company is based in Tel Aviv, some Board meetings take place by
conference call, but normally at least one meeting a year takes place
physically in Israel with all Board members attending. However, given the
current troubles in Israel it was decided to hold all meetings in 2025 by
conference call. During 2025, a total of 6 Board meetings were held and all
directors attended all meetings either in person or by conference call. There
were 2 audit committee meetings held during the year under review, and all
members of the committee attended. There was one remuneration committee
meeting held during the year under review, which all members attended.
The non-executive directors
The Chairman is responsible for the leadership of the Board. The Chairman sets
the agenda for Board meetings and encourages an open and constructive debate.
Since the Company is based in Tel Aviv, some Board meetings take place by
conference call, but normally at least one meeting a year takes place
physically in Tel Aviv with all Board members attending. However, given the
current troubles in Israel it was decided to hold all meetings in 2025 by
conference call.
Time Commitment
Each non-executive director is required to be able to devote sufficient time
to his role as a director in the light of other commitments external to the
Board. In practice, despite their limited contractual time obligations to the
Board which in general are one or two days a month, the non-executive
directors devote considerable time over and above their commitments to the
Company in support of the other executive members of the Board. On average,
they provide at least one day a week and sometimes more to assist management.
The non-executive director is fully committed to the Company and spends as
much time as is needed, both in normal working hours and very often much more.
The business model and strategy
The strategic objectives of the Company are becoming clear in the shipping
container market. The Company's target is to reach each and every container
and convert it into a transmitting data point. The Company is targeting to use
the opportunity of the present global environment of supply chain challenges
and logistics costs in order to penetrate the mass market. The Company's
legacy products and experience will support the business to challenge this
market and provide a comprehensive solution.
To understand and meet shareholder needs and expectations
The Board keeps in regular contact with investors with a view to understanding
their needs and expectations. During 2025, with the assistance of the
Company's brokers, presentations were made to a number of investors. In
addition, the Board welcomes contact from investors via the Company's brokers,
and via the website. Shareholders are encouraged to attend the Company's
Annual General Meetings where they can meet and directly communicate with the
Board.
Taking into account wider stakeholder and social responsibilities and their
implications for long-term success
The Company's tracking products are sold via distributors; therefore, the
Company has little influence over individual product sales. Thus, although the
Company continues to monitor performance of its distribution network, it is
not generally in touch with end users and has limited influence over the
processes followed by distributors. However, the Board constantly reviews the
distribution network by measuring the performance of individual distributors.
Where products are manufactured by external firms, the Company regularly
inspects the production facilities and processes used.
The Board is committed to reviewing and assessing stakeholder expectations and
guides the Company's senior management to act in accordance with feedback
received.
Embed effective risk management
The Board is fully aware of, and monitors closely, the risks that may apply to
the business. These include counterparty credit risk, foreign exchange risk
and, from time to time, political risks in countries where the Company is
actively marketing its products. It is also influenced by the covenants
imposed by its bankers on credit risk for certain countries. Operational risks
are identified and assessed by management and are reported to the Board when
necessary. The Audit Committee also addresses these risks at its regular
meetings. During 2025, management has actively been seeking to widen the
manufacturing bases for the Company's products so as to lessen reliance on any
single manufacturer, thus minimizing risk to the business. In order to monitor
risk, regular visits are made to the manufacturing facility and the Board is
informed of any issues that need addressing. The key risks facing the Company
together with any mitigation taken are considered further on pages 11-13 of
this document.
Ensure that the directors have the necessary up-to-date experience and skills
The Board currently comprises one executive and three non-executive directors
with an appropriate balance of sector, financial and public market skills, and
experience. The experience and knowledge of each of the directors gives them
the ability to constructively challenge strategy and to scrutinise
performance. In addition, the Non-Executive Chairman, Michael Rosenberg,
brings further strategic, commercial, transaction and leadership experience
which will be invaluable as the Board pursues the Company's growth strategy
and continues to transform the Company.
Ethical matters
As a small company, the directors are constantly in touch with members of the
staff. There are about 14 members based in the office in Israel and their
needs and aspirations are regularly reviewed.
Main governance structures and processes
The Non-Executive Chairman, Michael Rosenberg, has responsibility for ensuring
proper corporate governance and can also rely on the support of the non-board
CFO, Mr Sabag, who is also very familiar with corporate governance
requirements.
Further information on the Board and its Committees:
Michael Rosenberg OBE (Non-Executive Chairman)
Michael has many years of experience both as a corporate financier and as an
entrepreneur, involved in a number of new businesses in the healthcare, media
and financial sectors. He has considerable global experience, having been
chairman of the UK DTI committee on trade with Hong Kong and as member of the
China Britain Business Council. He was, for many years, also chairman of the
British Export Healthcare Association, now known as ABHI, and led a number of
UK trade missions overseas. He was a founder of the investment bank now known
as Numis Securities where he served as chairman for a number of years until
his retirement in 1999.
Over many years he has also served on the boards of other Israeli companies
listed on AIM, including Pilat Media Global PLC, as well as several other
non-listed companies.
Avi Hartmann (Chief Executive Officer)
Avi has spent his life as an entrepreneur focused on the technology of
tracking systems. He was a founder of Mobiltel Communications Services, which
was purchased by Pelephone in Israel in 1999. Together with his son, Uri
Hartmann, and his then partner, Doron Kedem, he founded t42 IoT Tracking
Solutions PLC in 2004.
Martin Blair (Non-Executive Director)
Martin qualified as a chartered accountant with Ernst & Young in 1982 and
between 1983 and 1986 also worked for PwC. He then spent 15 years in a
variety of senior financial roles, primarily for media and technology
companies, both in UK and the US. Martin became the CFO for Pilat Media Global
PLC, a company which previously traded on both AIM and the Tel Aviv Stock
Exchange. Pilat Media Global developed, marketed and supported new generation
business management software solutions for content and service providers in
the media industry. Martin is also currently non-executive Chairman of the
Board and Audit Chair at Cake Box Holdings PLC (AIM: CAKE).
Igor Vatenmacher (Non-Executive Director)
Igor is a certified public accountant in Israel and has a bachelor's degree in
economics from Ben Gurion University of the Negev, and an Executive MBA degree
with honours, specializing in financing, banking, capital markets and
financial engineering, from the Hebrew University in Jerusalem. He began his
career with Ernst and Young. Igor joined t42 IoT Tracking Solutions PLC in
December 2017 and brings highly qualified accounting experience to the
Company. Since his appointment, he has assisted with the development of more
sophisticated internal systems and controls essential to the growth of the
business. He joined the Board of the Company in January 2019 as CFO,
transitioning to a non-executive role in April 2025.
Audit Committee
The Audit Committee consists of the non-executive directors, Martin Blair and
Michael Rosenberg, and is chaired by Martin Blair. The Audit Committee, inter
alia, determines and examines matters relating to the financial affairs of the
Company, including the terms of engagement of the Company's auditors and, in
consultation with the auditors, the scope of the annual audit. The Audit
Committee met several times during 2025. In June 2025, the Audit Committee
reviewed the financial statements for the year ended 31 December 2024, paying
particular attention to the level of debtors. The Audit Committee met in
August 2025 to consider the interim financial statements for the six months
ended 30 June 2025. Again, the Committee focused on stock valuation and debtor
levels. The Board considers that, given the size and nature of the business,
it is not beneficial to include a full audit committee report in the annual
report and accounts for 2025. This will be kept under annual review by the
Board.
The Remuneration Committee reviews the performance of the directors and makes
recommendations to the Board on matters relating to their remuneration and
terms of employment. The Committee also makes recommendations to the Board on
proposals for the granting of share options and other equity incentive plans
pursuant to any share option scheme or equity incentive scheme in operation
from time to time. The committee meets as and when necessary to assess the
suitability of candidates proposed for appointment by the Board, but not less
than once per annum. Members of the Remuneration Committee comprise Michael
Rosenberg, who acts as chairman of the committee, with Martin Blair as a
member.
The Board considers that, given the size and nature of the business, it is not
beneficial to include a Remuneration Committee report in the annual report and
accounts for 2025. This will be kept under annual review by the Board.
On behalf of the Board,
M. Rosenberg, Non-Executive Chairman
_______________
t42 IoT Tracking Solutions PLC
Directors' Report
for the Year Ended December 31, 2025
The directors present the annual report together with the financial statements
and auditors' report for the year ended December 31, 2025.
The Company was incorporated in Jersey and two wholly-owned trading
subsidiaries: Starcom Systems Limited and t42 Ltd, were incorporated in Jersey
and in Israel, respectively.
Principal activities and review of business
t42 pioneering Advanced Real-Time Tracking and Management Solutions
t42 is a global leader in the field of advanced, automated real-time systems,
specializing in the remote tracking and management of vehicles, containers,
and assets. Our commitment to innovation is underpinned using cutting-edge
Artificial Intelligence (AI) and Machine Learning (ML) technologies. We offer
a unique and revolutionary real-time cargo tracking solution that caters to a
diverse clientele.
At the forefront of our product line are the revolutionary Tetis, Lokies, and
Kylos products. These products provide a comprehensive 360 degree view of
containers and goods throughout the entire supply chain. Our commitment to
excellence is evident in the strength, stability, and continuous performance
of all our systems.
Accounts production
The financial statements for the year ended December 31, 2025, have been
prepared in accordance with International Financial Reporting Standards as
adopted by the EU ("IFRS").
Dividends
The directors do not propose a final dividend.
Directors
Michael Rosenberg Appointed February 2013
Avi Hartmann Appointed February 2013
Igor Vatenmacher Appointed January 2019
Martin Blair Appointed May 2019
Remuneration of Directors
Remuneration of directors for the year ending 31 December 2025: (All amounts
presented in thousands of USD)
Executive Director Salary Pension and Related Expenses Fees Car Maintenance Total
A Hartmann 179 26 - 31 236
U Hartmann 179 26 - 22 227
Non-Executive Directors
M Rosenberg - - 53 - 53
M Blair - - 47 - 47
Total 2025 358 52 100 53 563
Directors' remuneration in share options: (In thousands)
Total vested Vested/ (Expired) during the year Total Vested at 31/12/25 Total Un-vested at 31/12/25 Grant Total
Executive Director at 01/01/25 Exercised
A Hartmann 1,165 - - 1,165 - 1,165
I Vatenmacher 375 - - 375 - 375
Non-Executive Directors
M Rosenberg 814 - - 814 - 814
M Blair 364 - - 364 - 364
2,718 2,718 2,718
Charitable and Political Donations
The Group did not make any charitable or political contributions during the
year.
Corporate governance
The Company adopts the Quoted Company Alliance's (QCA) Corporate Governance
Code ("QCA Code") and the Board believes this is the appropriate code for the
Company to adhere to. The Board assesses its compliance with the QCA Code on
an annual basis.
In common with other organizations of a similar size, the executive directors
are heavily involved in the day to day running of the business and meet
regularly on an informal basis as well as at Board Meetings.
The Board of directors meets regularly and is responsible for formulating
strategy, monitoring financial performance and approving major items of
capital expenditure.
Statement of Directors' Responsibilities
The directors are responsible for preparing the Annual Report and the
financial statements in accordance with applicable laws and regulations.
Company law requires the directors to prepare Group and parent Company
financial statements for each financial year. Under that law, the directors
are required to prepare the Group and parent Company financial statements in
accordance with International Financial Reporting Standards ("IFRS") as
adopted by the EU.
The financial statements are required by law to give a true and fair view of
the state of affairs of the Group and parent Company and of the profit and
loss of the Group for that period.
In preparing each of the Group and parent Company financial statements, the
directors are required to:
i) Select suitable accounting policies and then apply them
consistently;
ii) Make judgments and accounting estimates that are
reasonable and prudent; and
iii) State whether they have been prepared in accordance with
IFRS as adopted by the EU, subject to any material departures disclosed and
explained in the parent Company financial statements; and prepare the
financial statements on the "going concern" basis unless it is inappropriate
to presume that the Group and the parent Company will continue in business.
The directors are responsible for keeping proper accounting records which
disclose with reasonable accuracy, at any time, the financial position of the
Group and parent Company and enable them to ensure that the financial
statements comply with the Companies Act 2006 and Article 4 of the IAS
Regulations. They have a general responsibility for taking such steps as are
reasonably open to safeguard the assets of the Group and parent Company and to
prevent and detect fraud and other irregularities.
Under applicable law and regulations, the directors are also responsible for
preparing a Directors' Report to comply with that law and those regulations.
In determining how amounts are presented within terms in the income statement
and balance sheet, the directors have regarded the substance of the reported
transaction or arrangement in accordance with generally accepted accounting
principles or practice.
So far as each of the directors is aware at the time the report is approved:
There is no relevant audit information of which the Company's auditors are
unaware; and
The directors have taken all steps that they ought to have taken to make
themselves aware of any relevant audit information and to establish that the
auditors are aware of that information.
Going concern
The directors have prepared and reviewed sales forecasts and budgets for the
next twelve months and, having considered these cash flows and the
availability of other financing sources if required, have concluded that the
Group will remain a "going concern." After this process and having made
further relevant enquiries, the directors have a reasonable expectation that
the Group and the Company have adequate resources to continue in operational
existence for the foreseeable future. For this reason, they continue to adopt
the "going concern" basis in preparing the accounts.
Risks
Foreign exchange risks
Most of the Group's sales and income are in US Dollars and the US Dollar is
the currency in which the Company reports. The expenses, however, are divided
between the US Dollar, the British Pound, and the Israeli Shekel. The cost of
goods (components) are paid in US Dollars and part of the operational costs,
such as rent and other service providers, quote their fees in Israeli Shekel.
Labor costs are paid in Israeli Shekels. The Company has, therefore, a partial
currency risk in the event that the Israeli Shekel strengthens against the US
Dollar, which could have an effect on the bottom line of the Group's financial
results.
The Group consults with foreign currency experts from main Israeli banks
regarding the main financial institutions' expectations for foreign currency
changes. Management reviews them carefully and will consider with the board
whether it should purchase financial instruments sold by local banks to
protect itself from this foreign exchange risk.
Interest Rate Risks
The Company is exposed to interest risks as it uses credit lines and loans
from its banks. Changes in the effective Prime interest rate published monthly
by the Bank of Israel can influence the Company's financing costs.
Credit Risk
The Group is exposed to credit risks if its customers fail to pay for goods
supplied by the Group. In order to minimize this risk, the Group has a policy
of:
(a) Selling only to respectable integrators and distributors and not to the
end customer.
(b) Orders from customers in certain regions are shipped only after an
approved letter of credit is received by the Group's bank.
(c) New customers in common pays at least 30% before initial shipping.
Capital Risk management
The Group manages its cash carefully. In order to reduce its risk, the Group
may take measures to reduce its fixed costs (labor) if performance is below
the directors' expectations. The Group may conduct a placing for new shares of
the Company in order to raise additional capital as required when monitoring
its performance, and to continue its operations.
Supplier payment policy
It is the Group's policy to settle the terms of payment with suppliers when
agreeing to the terms of the transaction, to ensure that suppliers are aware
of these terms and to abide by them.
CREST
The Company's ordinary shares are eligible for settlement through CREST, the
system for securities to be held and transferred in electronic form rather
than on paper. Shareholders are not obliged to use CREST and can continue to
hold and transfer shares on paper without loss of rights.
Electronic Communications
The Company may deliver shareholder information, including Annual and Interim
Reports, Forms of Proxy and Notices of General Meetings, in an electronic
format to shareholders.
If you would like to receive shareholder information in electronic format,
please register your request on the Company's Registrar's electronic database
at www.linkassetservices.com. You will initially need your unique investor
code which you will find at the top of your share certificate. There is no
charge for this service. If you wish to subsequently change your mind, you may
do so by contacting the Company's Registrars by post or through their website.
If you elect to receive shareholder information electronically, please note
that it is the shareholder's responsibility to notify the Company of any
change in his name, address, email address or other contact details.
Shareholders should also note that, with electronic communication, the
Company's obligations will be satisfied when it transmits the notification of
availability of information, or such other document as may be involved, to the
electronic address it has on file. The Company cannot be held responsible for
any failure in transmission beyond its control any more than it can be held
responsible for postal failure.
In the event of the Company becoming aware that an electronic notification is
not successfully transmitted, a further two attempts will be made. In the
event that the transmission is still unsuccessful, a hard copy of the
notification will be mailed to the shareholder. In the event that specific
software is required to access information placed on the Company's website, it
will be available via the website without charge.
Before choosing electronic communications, shareholders should ensure they
have the appropriate equipment and computer capabilities sufficient for this
purpose. The Company takes all reasonable precautions to ensure no viruses are
present in any communication it sends out but cannot accept responsibility for
loss or damage arising from the opening or use of any email or attachments
from the Company and recommends that shareholders subject all messages to
virus checking procedures prior to use. Any electronic communication received
by the Company that is found to contain any virus will not be accepted.
Shareholders wishing to receive shareholder information in the conventional
printed form will continue to do so and need to take no further action.
Should you have any further questions in this regard, please contact the
Company's Registrars, Share Registrars Limited.
On behalf of the Board,
M. Rosenberg, Non-Executive Chairman
________________
INDEPENDENT AUDITORS' REPORT
To the Shareholders of t42 IoT Tracking Solutions PLC
Opinion
We have audited the consolidated financial statements of t42 IoT Tracking
Solutions PLC and its subsidiaries (hereinafter - "the Group") which comprise
the consolidated statements of financial position as of December 31, 2025, and
the consolidated statements of comprehensive income, changes in equity and
cash flows for the year then ended, and notes to the consolidated financial
statements, including material accounting policies.
In our opinion, the accompanying consolidated financial statements present
fairly, in all material respects, the consolidated financial position of the
group as at December 31, 2025, and its consolidated financial performance and
its consolidated cash flows for the year then ended, in accordance with IFRS
Accounting Standards.
Basis for Opinion
We conducted our audit in accordance with generally accepted auditing
standards in Israel, including standards prescribed by the Auditor's
Regulations (Auditor's Mode of Performance), 1973. Our responsibilities under
those standards are further described in the Auditors' Responsibilities for
the Audit of the Consolidated Financial Statements section of our report. We
are independent of the company and its subsidiaries, in accordance with the
applicable legal provisions in Israel regarding independence and conflict of
interest of auditors. Additionally, we have fulfilled our other ethical
responsibilities in accordance with the Auditors' Law, 1955 and the
regulations thereunder. We believe that the audit evidence we have obtained is
appropriate and sufficient to provide a basis for our opinion.
Emphasis of Matter - Financial Position of the Company
We draw attention to the statement in Note 1e to the financial statements
regarding the financial position of the Company and the Company's sources of
financing to meet its obligations. Our opinion does not include a change from
the standard version regarding this matter.
Key Audit Matters
The key audit matters described below are those matters that were
communicated, or were required to be communicated, to the board of directors
of the Company, and that, in our professional judgment, were of most
significance in the audit of the consolidated financial statements of the
current period. These matters include, among others, any matter that (1)
relates, or may relate, to significant accounts or disclosures in the
consolidated financial statements; and (2) involved our professional judgment
that was challenging, subjective or especially complex. These matters were
addressed in the context of our audit of the consolidated financial statements
as a whole, and in forming our opinion thereon. The communication of these
matters below does not change our opinion on the consolidated financial
statements as a whole, nor do we provide through such communication a
separate opinion on these matters or on the accounts or disclosures to which
they relate.
Why was this matter determined to be a Key Audit Matter in the audit
As stated in Note 4 to the consolidated financial statements, the Company's
inventory balance, net of the provision for impairment as of December 31,
2025, amounts to approximately $856 thousand, which constitutes 22% of the
total assets in the Company's consolidated financial Statements. Net
realizable value is the estimated selling price in the ordinary course of
business, less estimated costs of completion and costs necessary to make the
sale. The Company's management exercises judgment that involves estimates and
assessments when reducing the value of inventory, based on market demand for
its products that will affect inventory sales. In addition, the Company
periodically reviews the condition and age of inventory and makes provisions
for slow-moving inventory. Due to the complexity of the matter and its
materiality in the financial statements, we identified this matter as a key
audit matter.
The Response to the Key Matter in the Audit
The following are the main procedures we performed for this key matter as part
of our audit:
• Assessing the adequacy of the Company's policy in making a provision for
slow and/or dead inventory.
• Making inquiries of management.
• Attending inventory counts conducted by the Company and conducting sample
inspections of inventory items.
• Obtaining references for the cost of material inventory items.
• Examining the selling prices of inventory items against the value of
inventory as of December 31, 2025, in order to examine the recording of
inventory at the lower of cost or net realizable value.
• Examining the completeness of the disclosure included in the Company's
consolidated financial statements.
Responsibilities of Board of Directors and Management for the Consolidated
Financial Statements
The board of directors and management are responsible for the preparation and
fair presentation of the consolidated financial statements in accordance with
IFRS Accounting Standards and for such internal control as the board of
directors and management determine is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the consolidated financial statements, the board of directors and
management are responsible for assessing the Company's ability to continue as
a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the board of directors
and management either intend to liquidate the Company or to cease operations,
or have no realistic alternative but to do so.
Auditors' Responsibilities for the Audit of the Consolidated Financial
Statements
Our objectives are to obtain reasonable assurance about whether the
consolidated financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors' report
that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with generally
accepted auditing standards in Israel will always detect a material
misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these
consolidated financial statements.
As part of an audit in accordance with generally accepted auditing standards
in Israel, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
· Identify and assess the risks of material misstatement of the
consolidated financial statements, whether due to fraud or error, design and
perform audit procedures responsive to those risks, and obtain audit evidence
that is appropriate and sufficient to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting from fraud is higher
than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal
control.
· Obtain an understanding of internal control relevant to the audit in
order to design audit procedures that are appropriate in the circumstances,
but not for the purpose of expressing an opinion on the effectiveness of the
Company's internal control.
· Evaluate the appropriateness of accounting policies used and the
reasonableness of accounting estimates and related disclosures made by the
board of directors and management.
· Conclude on the appropriateness of the use by the board of directors
and management of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to
events or conditions that may cast significant doubt on the Company's ability
to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditors' report to the
related disclosures in the consolidated financial statements or, if such
disclosures are inadequate, to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date of our auditors' report.
However, future events or conditions may cause the Company to cease to
continue as a going concern.
· Evaluate the overall presentation, structure and content of the
consolidated financial statements, including the disclosures, and whether the
consolidated financial statements represent the underlying transactions and
events in a manner that achieves fair presentation.
We communicate with the board of directors and management regarding, among
other matters, the planned scope and timing of the audit and significant audit
findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide the board of directors and management with a statement that we
have complied with relevant ethical requirements regarding independence, and
to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, the
safeguards applied to eliminate identified threats to our independence.
From the matters communicated or required to be communicated to the board of
directors and management, we determine those matters that were of most
significance in the audit of the financial statements of the current period
and are therefore the key audit matters. We describe these matters in our
auditors' report unless law or regulation precludes public disclosure about
the matter.
The engagement partner on the audit resulting in this independent auditors'
report is Assaf Shachar.
Shtainmetz Aminoach & Co.
Certified Public Accountants (Isr.)
Tel Aviv
April 13, 2026
T42 IOT TRACKING SOLUTIONS PLC
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
U.S. Dollars in thousands
December 31,
Note 2025 2024
ASSETS
NON-CURRENT ASSETS
Properties, plant and Equipment 6 254 341
Right-of-use assets 23 840 1,039
Intangible assets 7 591 759
Trade receivables 3 18 136
Bank deposit 5 10 9
Total Non-Current Assets 1,713 2,284
CURRENT ASSETS
Cash and cash equivalents 571 147
Trade receivables 3,24 585 740
Other accounts receivable 88 86
Inventory 4 856 1,117
Total Current Assets 2,100 2,090
TOTAL ASSETS 3,813 4,374
DEFICIT AND LIABILITIES
14 (2,939) (2,682)
DEFICIT
NON-CURRENT LIABILITIES
Long-term bank loans, net of current maturities 10 - 13
Leasehold liabilities 23 715 770
Amortized cost of loans 11 A, B 2,059 -
Total Non-Current Liabilities 2,774 783
CURRENT LIABILITIES
Short-term bank credit 12 94 68
Current maturities of long-term bank loans 10 15 74
Trade payables 726 1,106
Other accounts payable 9 1,032 1,070
Current maturities of leasehold liabilities 23 187 202
Financial liabilities in fair value 11 A,B, C 249 238
Current maturities of amortized cost of loans 11A, B,D 666 2,745
Related parties 21 1,009 770
Total Current Liabilities 3,978 6,273
TOTAL DEFICIT AND LIABILITIES 3,813 4,374
The accompanying notes are an
integral part of the consolidated financial statements.
April 13, 2026
Date of Approval Aviran Sabag Avi Hartmann
CFO
of the Financial Statements CEO
T42 IOT TRACKING SOLUTIONS PLC
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
U.S. Dollars in thousands (except shares data)
+
Year ended December 31,
Note 2025 2024
Revenues 24,25 6,100 4,158
Cost of revenues 15 (3,276) (2,565)
Gross profit 2,824 1,593
Operating expenses:
Research and development (349) (159)
Sales and marketing 19 (389) (366)
General and administrative expenses 16 (1,722) (1,888)
Other expenses (income), net 8 (64)
Total operating expenses (2,452) (2,477)
Operating profit (loss) 372 (884)
Finance income 17 325 262
Finance expenses 18 (1,273) (1,126)
Net finance income (expenses) (948) (864)
Total comprehensive loss for the year (576) (1,748)
Loss per share:
Basic and diluted loss per share 14, 20 (0.009) (0.032)
The accompanying notes are an integral part of the consolidated financial
statements.
T42 IOT TRACKING SOLUTIONS PLC
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
U.S. Dollars in thousands
Share Premium on Shares Capital Reserve from Share-Based Payments Total deficit
Capital Reserve
Accumulated
Loss
Balance as of January 1, 2024 - 13,543 89 1,253 (15,824) (939)
Share-based payment - - - 5 - 5
Comprehensive loss for the year - - - - (1,748) (1,748)
Balance as of December 31, 2024 - 13,543 89 1,258 (17,572) (2,682)
Issue of share capital, net of expenses - 319 - - - 319
Comprehensive loss for the year - - - - (576) (576)
Balance as of December 31, 2025 - 13,862 89 1,258 (18,148) (2,939)
The accompanying notes are an integral part of the consolidated financial
statements.
T42 IOT TRACKING SOLUTIONS PLC
CONSOLIDATED STATEMENTS OF CASH FLOWS
U.S. Dollars in thousands
Year Ended December 31,
2025 2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss for the year (576) (1,748)
Adjustments for:
Depreciation and amortization 466 523
Financial expenses, Changes in fair value of financial liabilities and 420 700
exchange rate differences, net
Share-based payment expenses - 5
Gain from modification of debt terms - (190)
Intangible assets impairment - 122
Changes in assets and liabilities:
Decrease in inventory 261 322
Decrease in trade receivables 273 17
Increase in other accounts receivable (2) (35)
Increase (Decrease) in trade payables (380) 166
Increase (Decrease) in other accounts payable (38) 720
Net cash provided by operating activities 424 602
CASH FLOWS FOR INVESTING ACTIVITIES:
Purchases of property, plant and equipment (1) (10)
Investment in intangible assets - (142)
Net cash used in investing activities (1) (152)
CASH FLOWS FOR FINANCING ACTIVITIES:
Increase (Decrease) in short-term bank credit, net 26 (77)
Proceeds from (payment to) related parties, net 51 19
Payment of leasehold liabilities (210) (191)
Repayment of loans (185) (240)
Consideration of the issue of shares, net 319 -
Net cash provided by (used in) financing activities 1 (489)
Increase (Decrease) in cash and cash equivalents 424 (39)
Cash and cash equivalents at the beginning of the year 147 186
Cash and cash equivalents at the end of the year 571 147
Appendix A - Additional Information
Interest paid during the year 358 338
The accompanying notes are an integral part of the consolidated financial
statements.
T42 IOT TRACKING SOLUTIONS PLC
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands
NOTE 1 - GENERAL
a. The Reporting Entity
t42 IoT Tracking Solutions PLC ("the Company") was incorporated in Jersey on
November 28, 2012. The Company and its subsidiaries ("the Group") is a global
supplier in the field of advanced, automated real-time systems, specializing
in the remote tracking and management of vehicles, containers, and assets.
The Company fully owns t42 Ltd., an Israeli company, and Starcom Systems
Limited, a company incorporated in Jersey.
The Company's shares are admitted for trading on the AIM market of the London
Stock Exchange ("AIM").
The address of the official Company office is in Israel at t42 IoT Tracking
Solutions offices, which are located at 96 Dereh Ramatayim Street, Hod
Hasharon, Israel.
The address of the Company's registered office is at Starcom Systems Limited
offices, which is: Forum 4, Grenville Street, St. Helier, Jersey, Channel
Islands, JE4 8TQ.
b. Definitions in these financial statements:
1. International Financial Reporting Standards ("IFRS") - Standards and
interpretations adopted by the International Accounting Standards Board
("IASB") that include international financial reporting standards (IFRS) and
international accounting standards (IAS), with the addition of interpretations
to these Standards as determined by the International Financial Reporting
Interpretations Committee (IFRIC) or interpretations determined by the
Standards Interpretation Committee (SIC), respectively.
2. The Company - t42 IoT Tracking Solutions PLC.
3. The Subsidiaries - t42 Ltd. and Starcom Systems Limited.
4. Starcom Jersey - Starcom Systems Limited.
5. The Group - t42 IoT Tracking Solutions PLC. and the Subsidiaries.
6. Related Party - As determined in International Accounting Standard No. 24.
NOTE 1 - GENERAL (cont.)
c. Operating Turnover Period
The ordinary operating period turnover for the Group is a year. As a result,
the current assets and current liabilities include items that are expected and
intended to be realized at the end of the ordinary operating turnover period
for the Group.
d. Functional and Presentation Currency
The consolidated financial statements are presented in U.S. dollars
(hereinafter: "dollars"), which is the functional currency of the Group and is
rounded to the nearest thousand, except when otherwise indicated.
The dollar is the currency that represents the economic environment in which
the Group operates.
The Group's transactions and balances denominated in dollars are presented at
their original amounts. Transactions in foreign currencies are translated into
the respective functional currency of Group entities at the exchange rates on
the transaction dates. Monetary assets and liabilities denominated in foreign
currencies as of the reporting date are translated into the functional
currency at the exchange rate as of that date. The foreign currency gain or
loss on monetary items is the difference between amortized cost in the
functional currency at the beginning of the year, adjusted for effective
interest and payments during the year, and the amortized cost in foreign
currency translated at the exchange rate at the end of the year.
Non-monetary assets and liabilities denominated in foreign currencies that are
measured at fair value are retranslated to the functional currency at the
exchange rate at the date that the fair value was determined. Non-monetary
items that are measured in terms of historical cost in a foreign currency are
translated using the exchange rate at the date of the transaction.
Foreign currency differences arising in translation are recognized in profit
or loss.
e. As of December 31, 2025, the Group has accumulated losses of $18.2 million
from operations since inception and has a working capital deficit of $1.9
million, including loans totaling $2.8 million to be repaid or converted
within the next 24 months. In addition, the year ended on December 31, 2025,
resulted in net loss of $576k. Based on its forecasts regarding sales and
current expenses' structure, the management believes that, due to the growth
in the Group's sales and other efficient measures taken, the Company will have
sufficient cash flows to continue its activities and meet its liabilities at
least during the next 18 months.
NOTE 2A - BASIS OF PREPARATION
a. Statement of compliance
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRSs).
The consolidated financial statements were authorized for issue by the
Company's Board of Directors on April 13, 2026.
b. Basis of Measurement
The consolidated financial statements have been prepared on the historical
cost basis, except for financial liabilities at fair value through profit or
loss that are stated at fair value.
NOTE 2B - USE OF ESTIMATES AND JUDGMENTS
The preparation of financial statements in conformity with IFRS requires
management to make judgments, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets,
liabilities, income and expenses. Actual results may differ from these
estimates.
Upon formulation of accounting estimates used in preparation of the Group
financial statements, management is required to make assumptions in regard to
circumstances and events that are significantly uncertain. Management arrives
at these decisions based on prior experiences, various facts, external items
and reasonable assumptions in accordance with the circumstances related to
each assumption.
Estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognized in the period in which the
estimates are revised and in any future periods affected.
Information about assumptions made by the Group with respect to the future and
other reasons for uncertainty with respect to estimates that have a
significant risk of resulting in a material adjustment to carrying amounts of
assets and liabilities in the next financial year are included in the
following notes:
Note 8 on Recognition of deferred tax assets in respect of tax losses.
Note 11 on Fair value measurement of financial liabilities and derivatives.
Determination of fair value
Preparation of the financial statements requires the Group to determine the
fair value of certain assets and liabilities. Further information about the
assumptions that were used to determine fair value is included in the
following note 11.
When determining the fair value of an asset or liability, the Group uses
observable market data as much as possible. There are three levels of fair
value measurements in the fair value hierarchy that are based on the data used
in the measurement, as follows:
• Level 1: quoted prices (unadjusted) in active markets
for identical assets or liabilities.
• Level 2: inputs other than quoted prices included
within Level 1 that are observable, either directly or indirectly
• Level 3: inputs that are not based on observable
market data (unobservable inputs).
NOTE 2C - SIGNIFICANT ACCOUNTING POLICIES
a. Basis of consolidation
Subsidiaries are entities controlled by the Group. The financial statements of
subsidiaries are included in the consolidated financial statements from the
date that control commences until the date that control is lost. The
accounting policies of subsidiaries are like the policies adopted by the
Group.
All intra-group transactions, balances, income, and expenses of the companies
are eliminated on consolidation.
b. Foreign currency and linkage basis
Assets and liabilities stated in foreign currency are translated to USD at
exchange rates at the reporting date. The income and expenses of operations
stated in the foreign currency are translated to USD at exchange rates at the
dates of the transactions.
Foreign currency differences are recognized in other comprehensive income.
Exchange rates and changes in exchange rates during the reported periods are
as follows:
As of December 31,
2025 2024
Exchange Rate of NIS in U.S. $ 0.313 0.274
Exchange Rate of GBP in U.S. $ 1.345 1.254
For the Year Ended December 31,
2025 2024
Change in Exchange Rate of U.S. $ 14.23% (0.72) %
Change in Exchange Rate of GBP 7.26% (1.57)%
c. Financial instruments
(i) Financial assets
The Group initially recognizes trade receivables and debt instruments issued
on the date that they are created. All other financial assets are recognized
initially on the trade date at which the Group becomes a party to the
contractual provisions of the instrument. A financial asset is initially
measured at fair value plus transaction costs that are directly attributable
to the acquisition or issuance of the financial asset. A trade receivable
without a significant financing component is initially measured at the
transaction price.
Financial assets are derecognized when the contractual rights of the Group to
the cash flows from the asset expire, or the Group transfers the rights to
receive the contractual cash flows on the financial asset in a transaction in
which substantially all the risks and rewards of ownership of the financial
asset were transferred. When the Group retains substantially all of the risks
and rewards of ownership of the financial asset.
Financial assets and liabilities are offset and the net amount presented in
the statement of financial position when, and only when, the Group currently
has a legal right to offset the amounts and intends either to settle on a net
basis or to realize the asset and settle the liability simultaneously.
The Group has balances of trade and other receivables and deposits that are
held within a business model whose objective is collecting contractual cash
flows. The contractual cash flows of these financial assets represent solely
payments of principal and interest that reflect consideration for the time
value of money and the credit risk. Accordingly, the group's financial assets
are measured at amortized cost.
These assets are subsequently measured at amortized cost using the effective
interest method. The amortized cost is reduced by impairment losses. Interest
income, foreign exchange gains and losses and impairment are recognized in
profit or loss. Any gain or loss on derecognition is recognized in profit or
loss.
c. Financial instruments
(i) Financial assets
The Group initially recognizes trade receivables and debt instruments issued
on the date that they are created. All other financial assets are recognized
initially on the trade date at which the Group becomes a party to the
contractual provisions of the instrument. A financial asset is initially
measured at fair value plus transaction costs that are directly attributable
to the acquisition or issuance of the financial asset. A trade receivable
without a significant financing component is initially measured at the
transaction price.
Financial assets are derecognized when the contractual rights of the Group to
the cash flows from the asset expire, or the Group transfers the rights to
receive the contractual cash flows on the financial asset in a transaction in
which substantially all the risks and rewards of ownership of the financial
asset were transferred. When the Group retains substantially all of the risks
and rewards of ownership of the financial asset.
Financial assets and liabilities are offset and the net amount presented in
the statement of financial position when, and only when, the Group currently
has a legal right to offset the amounts and intends either to settle on a net
basis or to realize the asset and settle the liability simultaneously.
The Group has balances of trade and other receivables and deposits that are
held within a business model whose objective is collecting contractual cash
flows. The contractual cash flows of these financial assets represent solely
payments of principal and interest that reflect consideration for the time
value of money and the credit risk. Accordingly, the group's financial assets
are measured at amortized cost.
These assets are subsequently measured at amortized cost using the effective
interest method. The amortized cost is reduced by impairment losses. Interest
income, foreign exchange gains and losses and impairment are recognized in
profit or loss. Any gain or loss on derecognition is recognized in profit or
loss.
NOTE 2C - SIGNIFICANT ACCOUNTING POLICIES (cont.)
c. Financial instruments (cont.)
(ii) Non-derivative financial liabilities
Non-derivative financial liabilities include bank credit and borrowings from
banks and others, finance lease liabilities, and trade and other payables.
The Group initially recognizes debt securities issued on the date that they
originated. All other financial liabilities are recognized initially on the
trade date at which the Group becomes a party to the contractual provisions of
the instrument.
Financial liabilities (other than financial liabilities at fair value through
profit or loss) are recognized initially at fair value less any directly
attributable transaction costs. Subsequent to initial recognition these
financial liabilities are measured at amortized cost using the effective
interest method.
Financial liabilities are derecognized when the obligation of the Group, as
specified in the agreement, expires or when it is discharged or cancelled.
An exchange of debt instruments having substantially different terms, is
accounted for as an extinguishment of the original financial liability and the
recognition of a new financial liability. Furthermore, a substantial
modification of the terms of an existing financial liability, or an exchange
of debt instruments having substantially different terms between an existing
borrower and lender, are accounted for as an extinguishment of the original
financial liability and the recognition of a new financial liability at fair
value.
In such cases, the entire difference between the amortized cost of the
original financial liability and the fair value of the new financial liability
is recognized in profit or loss as financing income or expense.
The terms are substantially different if the discounted present value of the
cash flows according to the new terms, including any commissions paid, less
any commissions received and discounted using the original effective interest
rate, is different by at least ten percent from the present discounted value
of the remaining cash flows of the original financial liability.
In a non-substantial modification in terms of debt instruments, the new cash
flows are discounted using the original effective interest rate, and the
difference between the present value of the new financial liability and the
present value of the original financial liability is recognized in profit or
loss.
(iii) Hybrid financial instruments
Liabilities that are convertible into shares denominated in foreign currency
or are linked foreign currency are a hybrid instrument (combined) that is
presented fully as a financial liability.
The instrument is split into two components for measurement purposes: A
liability component without a conversion feature that is measured at amortized
cost according to the effective interest method, and a conversion option that
is an embedded derivative and is measured at fair value at each reporting
date. Interest related to the financial liabilities is recognized in profit or
loss.
Any directly attributable transaction costs are allocated to the liabilities
and equity components in proportion to their initial carrying amounts.
(iv) Derivatives that do not serve hedging purposes
The changes in fair value of these derivatives are recognized in profit or
loss, as financing income or expense. Inter alia, the Group implements the
said accounting treatment to changes in the fair value of the conversion
component of convertible loans and warrants granted to lenders.
NOTE 2C - SIGNIFICANT ACCOUNTING POLICIES (cont.)
d. Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with
maturities of three months or less from the acquisition date, subject to an
insignificant risk of changes in their fair value and used by the Group in the
management of its short-term commitments.
e. Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of ordinary shares are recognized as a deduction
from equity, net of any tax effects.
The consideration received from the issuance of a parcel of securities is
attributed initially to financial liabilities that are measured each period at
fair value through profit or loss, and then to financial liabilities that are
measured only upon initial recognition at fair value. The remaining amount is
the value of the equity component.
Direct issuance costs are attributed to the specific securities in respect of
which they were incurred, whereas joint issuance costs are attributed to the
securities on a proportionate basis according to the allocation of the
consideration from the issuance of the parcel
f. Property, plant and equipment
Property, plant and equipment are measured at cost less accumulated
depreciation.
Depreciation is calculated using the straight-line method over the estimated
useful lives of the assets, at the following annual rates:
%
Computers and software 33
Office furniture and equipment 7 - 15
Laboratory equipment 15
Leasehold improvements are depreciated by the straight-line method over the
term of the lease, ten-year period (including option terms) or the estimated
useful lives of the improvements, unless it is reasonably certain that the
Group will obtain ownership by the end of the lease term.
At each balance sheet date, the Group examines the residual value, the useful
life and the depreciation method it uses. If the Group identifies material
changes in the expected residual value, the useful life or the future pattern
of consumption of future economic benefits in the asset that may indicate that
a change in depreciation is required, such changes are treated as changes in
accounting estimates. In 2025, no material changes have taken place with any
material effect on the financial statements of the Group.
g. Intangible assets: Research and development
Expenditure on research activities, undertaken with the prospect of gaining
new scientific or technical knowledge and understanding, is recognized in
profit or loss as incurred.
Development activities involve a plan or design for the production of new or
substantially improved products and processes. Development expenditure is
capitalized only if development costs can be measured reliably, the product or
process is technically and commercially feasible, future economic benefits are
probable, and the Group intends and has sufficient resources to complete
development and to use or sell the asset.
The expenditure capitalized includes the cost of material and direct labor
that are directly attributable to preparing the asset for its intended use.
Other development expenditure is recognized in profit or loss as incurred.
NOTE 2C - SIGNIFICANT ACCOUNTING POLICIES (cont.)
g. Intangible assets: Research and development (cont.)
Capitalized development expenditure is measured at cost less accumulated
amortization and accumulated impairment losses. Amortization is calculated
using the straight-line method over the estimated useful lives of the assets:
between five to ten years.
At each balance sheet date, the Group reviews whether any events have occurred
or changes in circumstances have taken place, which might indicate that there
has been an impairment of the intangible assets. When such indicators of
impairment are present, the Group evaluates whether the carrying value of the
intangible asset in the Group's accounts can be recovered from the cash flows
anticipated from that asset, and, if necessary, records an impairment
provision up to the amount needed to adjust the carrying amount to the
recoverable amount.
h. Leases
On the inception date of the lease, the Group determines whether the
arrangement is a lease or contains a lease, while examining whether it conveys
the right to control the use of an identified asset for a period of time in
exchange for consideration. In its assessment of whether an arrangement
conveys the right to control the use of an identified asset, the Group
assesses whether it has the following two rights throughout the lease term:
(a)The right to obtain substantially all the economic benefits from use of the
identified asset; and
(b)The right to direct the identified asset's use.
1. Lease assets and lease liabilities
Contracts that award the Group control over the use of a leased asset for a
period of time in exchange for consideration, are accounted for as leases.
Upon initial recognition, the Group recognizes a liability at the present
value of the balance of future lease payments (these payments do not include
certain variable lease payments) and concurrently recognizes a right-of-use
asset at the same amount of the lease liability, adjusted for any prepaid or
accrued lease payments, plus initial direct costs incurred in respect of the
lease.
Since the interest rate implicit in the Group's leases is not readily
determinable, the incremental borrowing rate of the Lessee is used. Subsequent
to initial recognition, the right-of-use asset is accounted for using the cost
model and depreciated over the shorter of the lease term or useful life of the
asset.
The Group has elected to apply the practical expedient by which short-term
leases of up to one year and/or leases in which the underlying asset has a low
value, are accounted for such that lease payments are recognized in profit or
loss on a straight-line basis, over the lease term, without recognizing an
asset and/or liability in the statement of financial position.
2. Lease term
The lease term is the non-cancellable period of the lease plus periods covered
by an extension or termination option if it is reasonably certain that the
lessee will or will not exercise the option, respectively
3. Variable lease payments
Variable lease payments that depend on an index or a rate are initially
measured using the index or rate existing at the commencement of the lease and
are included in the measurement of the lease liability. When the cash flow of
future lease payments changes as a result of a change in an index or a rate,
the balance of the liability is adjusted against the right-of-use asset.
Other variable lease payments that are not included in the measurement of the
lease liability are recognized in profit or loss in the period in which the
event or condition that triggers payment occurs.
NOTE 2C - SIGNIFICANT ACCOUNTING POLICIES (cont.)
h. Leases (cont.)
4. Depreciation of right-of-use assets
After lease commencement, a right-of-use asset is measured on a cost basis
less accumulated depreciation and accumulated impairment losses and is
adjusted for re-measurements of the lease liability. Depreciation is
calculated on a straight-line basis over the useful life or contractual lease
period, whichever earlier, as follows:
Offices - 10
years
Vehicles - 3 years
i. Inventories
Inventories are measured at the lower of cost and net realizable value. The
cost of inventories is based on the moving average/first-in first-out (FIFO)
principle, and includes expenditure incurred in acquiring the inventories and
the costs incurred in bringing them to their existing location and condition.
In the case of manufactured inventories and work in progress, cost includes an
appropriate share of production overheads based on normal operating capacity.
Net realizable value is the estimated selling price in the ordinary course of
business, less the estimated costs of completion and selling expenses.
NOTE 2C - SIGNIFICANT ACCOUNTING POLICIES (cont.)
j. Impairment
Financial assets
The Group recognizes a provision for expected credit losses (provision for
doubtful accounts) in respect of financial assets at amortized cost which are
mainly trade receivables.
The Group has elected to measure the provision for expected credit losses in
respect of trade receivables at an amount equal to the full lifetime credit
losses of the instrument.
When determining whether the credit risk of a financial asset has increased
significantly since initial recognition, and when estimating expected credit
losses, the Group considers reasonable and supportable information that is
relevant and available with no undue cost or effort. Such information includes
quantitative and qualitative information, and an analysis, based on the
Group's past experience and informed credit assessment, and it includes
forward-looking info.
The Group assumes that the credit risk of a financial asset has increased
significantly since initial recognition when contractual payments are past due
for more than 60 days.
The Group considers a financial asset to be in default when the borrower is
unlikely to pay its credit obligations to the Group in full or when the
payments of the financial assets are past due for more than 120 days.
Credit losses are measured as the present value of the difference between the
cash flows due to the Group in accordance with the contract and the cash flows
that the Group expects to receive. At each reporting date, the Group assesses
whether financial assets carried at amortized cost is credit-impaired. A
financial asset is 'credit-impaired' when one or more events that have a
detrimental impact on the estimated future cash flows of the financial asset
have occurred.
Evidence that a financial asset is credit-impaired includes the following
events: Significant financial difficulty of the borrower, payments being past
due, it is probable that the borrower will enter bankruptcy or other financial
reorganization.
Provisions for expected credit losses of financial assets measured at
amortized cost are deducted from the gross carrying amount of the financial
assets.
The gross carrying amount of a financial asset is written off when the Group
does not have reasonable expectations of recovering a financial asset at its
entirety or a portion thereof. This is usually the case when the Group
determines that the debtor does not have assets or sources of income that may
generate sufficient cash flows for paying the amounts being written off.
However, financial assets that are written off could still be subject to
enforcement activities in order to comply with the Group's procedures for
recovery of amounts due
Non-financial assets
The carrying amounts of the Group's non-financial assets, other than
inventories are reviewed at each reporting date to determine whether there is
any indication of impairment. If any such indication exists, then the asset's
recoverable amount is estimated.
The recoverable amount of an asset is the greater of its value in use and its
fair value less costs of disposal. In assessing value in use, the estimated
future cash flows are discounted to their present value using a pre-tax
discount rate that reflects the assessments of market participants regarding
the time value of money and the risks specific to the asset for which the
estimated future cash flows from the asset were not adjusted.
An impairment loss is recognized if the carrying amount of an asset exceeds
its estimated recoverable amount. Impairment losses are recognized in profit
or loss.
k. Revenues
The Group recognizes revenue when the customer obtains control over the
promised goods or services. The revenue is measured according to the amount of
the consideration to which the Group expects to be entitled in exchange for
the goods or services promised to the customer, other than amounts collected
for third parties.
When determining the transaction price the Group takes into account the
effects of all relevant elements like: discounts, refunds, credits and an
existence of a significant financing component.
In order to measure the transaction price, the Group adjusts the amount of the
promised consideration in respect of the effects of the time value of money if
the timing of the payments agreed between the parties provides the customer a
significant financing benefit.
NOTE 2C - SIGNIFICANT ACCOUNTING POLICIES (cont.)
k. Revenues (cont.)
When assessing whether a contract contains a significant financing component,
the Group examines, inter alia, the expected length of time between the date
the Group transfers the promised goods or services to the customer and the
date the customer pays for these goods or services, as well as the difference,
if any, between the amount of the consideration promised and the cash selling
price of the promised goods or services.
When the contract contains a significant financing component, the Group
recognizes the amount of the consideration using the discount rate that would
be reflected in a separate financing transaction between it and the customer
on the contract's inception date. The financing component is recognized as
interest income over the period, which are calculated according to the
effective interest method.
In cases where the difference between the time of receiving payment and the
time of transferring the goods or services to the customer is one year or
less, the Group applies the practical expedient included in the standard and
does not separate a significant financing component. During the year of 2025
the group recognized such interest income in the amount of 49K$.
In sales of hardware products (devices) customers obtain control over the
products when they are dispatched from the Group's warehouse and or when they
are provided to the client's warehouse (depending on the specific agreement
between client and the group), therefore the Group recognizes revenue at that
time.
For Saas services, which mainly include providing access to Group's platform
that allows control and monitoring of the use of the Group's products -
revenue is recognized over time in the reporting period in which the services
are provided, since the customer simultaneously receives and consumes the
benefits provided by the Group's performance when the Group provides such
services.
In certain contracts with customers the Group provides warranty services to
the customers according to the contract or as customary in the industry. The
warranty services are provided only in order to ensure the quality of the work
and compliance with the specifications agreed between the parties, and do not
constitute an additional service to the customer. Therefore, the Group does
not identify the warranty as a distinct performance obligation but rather
accounts for it in accordance with the guidance in IAS 37 and recognizes a
provision for warranty at the estimated cost of such services.
l. Provisions
Provisions are recognized when the Group has a current obligation (legal or
derived) as a result of a past occurrence that can be reliably measured, that
will in all probability result in the Group being required to provide
additional benefits in order to settle this obligation. Provisions are
determined by capitalization of projected cash flows at a rate prior to taxes
that reflects the current market preparation for the money duration and the
specific risks for the liability.
NOTE 2C - SIGNIFICANT ACCOUNTING POLICIES (cont.)
m. Finance income and expenses
Financing income comprises interest income on funds invested, gains on changes
in the fair value of financial derivatives at fair value through profit or
loss and foreign currency gains.
Financing expenses comprise interest expense on borrowings, charges and
changes in the fair value of financial derivatives at fair value through
profit or loss.
Borrowing costs, which are not capitalized to qualifying assets, are
recognized in profit or loss using the effective interest method.
Foreign currency gains and losses on financial assets and financial
liabilities are reported on a net basis as either financing income or
financing expenses depending on whether foreign currency movements are in a
net gain or net loss position.
Interest income or expense is recognized using the effective interest method.
Generally, in calculating interest income and expense, the effective interest
rate is applied to the gross carrying amount of the financial asset or to the
amortized cost of the financial liability, as applicable.
n. Employee benefits
1. Short-term employee benefits -
Short-term employee benefit obligations are measured on an undiscounted basis
and are expensed as the related service is provided or upon the actual absence
of the employee when the benefit is not accumulated (such as maternity leave).
Aliability is recognized for the amount expected to be paid under short-term
cash bonus if the Group has a present legal or constructive obligation to pay
this amount as a result of past service provided by the employee and the
obligation can be estimated reliably.
The employee benefits are classified, for measurement purposes, as short-term
benefits or as other long-term benefits depending on when the Group expects
the benefits to be wholly settled.
2. Benefits upon retirement -
The Group has a post-employment benefit plans. The plans are financed by
deposits with insurance companies, and they are classified as defined
contribution plans. A defined contribution plan is a post-employment benefit
plan under which an entity pays fixed contributions into a separate entity and
has no legal or constructive obligation to pay further amounts. Obligations
for contributions to defined contribution pension plans are recognized as an
expense in profit or loss in the periods during which related services are
rendered by employees. Contributions to a defined contribution plan that are
due more than 12 months after the end of the period in which the employees
render the service are discounted to their present value.
3. Shares based payments
The grant date fair value of share-based payment awards granted to employees
is recognized as a salary expense, with a corresponding increase in equity,
over the period that the employees become unconditionally entitled to the
awards. The amount recognized as an expense in respect of share-based payment
awards that are conditional upon meeting service is adjusted to reflect the
number of awards that are expected to vest.
Share-based payment arrangements in which equity instruments are granted by
the parent company to the employees of the Company are accounted for by the
Company as equity-settled share-based payment transactions.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
U.S. Dollars in thousands
NOTE 2C - SIGNIFICANT ACCOUNTING POLICIES (cont.)
o. Taxes
Income tax comprises current and deferred tax. Current tax and deferred tax
are recognized in profit or loss.
Current taxes
Current tax is the expected tax payable (or receivable) on the taxable income
for the year, using tax rates enacted or substantively enacted at the
reporting date. Current taxes also include taxes in respect of prior years and
any tax arising from dividends.
Deferred taxes
Deferred tax is recognized in respect of temporary differences between the
carrying amounts of assets and liabilities for financial reporting purposes
and the amounts used for taxation purposes. Deferred tax is not recognized for
temporary differences related to the initial recognition of assets and
liabilities in a transaction that is not a business combination and that
affects neither accounting nor taxable profit or loss.
The measurement of deferred tax reflects the tax consequences that would
follow the manner in which the Group expects, at the end of the reporting
period, to recover or settle the carrying amount of its assets and
liabilities.
Deferred tax is measured at the tax rates that are expected to be applied to
temporary differences when they reverse, based on the laws that have been
enacted or substantively enacted by the reporting date.
A deferred tax asset is recognized for unused tax losses and deductible
temporary differences, to the extent that it is probable that future taxable
profits will be available against which they can be utilized. Deferred tax
assets are reviewed at each reporting date and are reduced to the extent that
it is no longer probable that the related tax benefit will be realized.
Deferred tax assets that were not recognized are reevaluated at each reporting
date and recognized if it has become probable that future taxable profits will
be available against which they can be utilized.
Offset of deferred tax assets and liabilities
Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset current tax liabilities and assets, and they
relate to income taxes levied by the same tax authority on the same taxable
entity, or on different tax entities, but they intend to settle current tax
liabilities and assets on a net basis or their current tax assets and
liabilities will be realized simultaneously.
p. Earnings per Share
The Group presents basic and diluted earnings per share (EPS) data for its
ordinary shares. Basic EPS is calculated by dividing the profit or loss
attributable to ordinary shareholders of the Company by the weighted average
number of ordinary shares outstanding during the year. Diluted EPS is
determined by adjusting the profit or loss attributable to ordinary
shareholders of the Company and the weighted average number of ordinary shares
outstanding, after adjustment for the effects of all dilutive potential
ordinary shares, which comprise convertible loans, warrants and share
options granted to employees.
NOTE 2D - CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
There were no new standards or amendments that are relevant for the Group
which are effective for annual periods beginning on or after 1 January 2024.
New significant relevant standards not yet adopted:
IFRS 18, Presentation and Disclosure in Financial Statements
This standard replaces IAS 1, Presentation of Financial Statements. The
purpose of the standard is to provide improved structure and content to the
financial statements, particularly the income statement. The standard includes
new disclosure and presentation requirements that were taken from IAS 1,
Presentation of Financial Statements, with small changes. As part of the new
disclosure requirements, companies will be required to present two subtotals
in the income statement: operating profit and profit before financing and
taxes. Furthermore, for most companies, the results in the income statements
will be classified into three categories: operating profit, profit from
investments and profit from financing. In addition to the changes in the
structure of the income statements, the standard also includes a requirement
to provide separate disclosure in the financial statements regarding the use
of management-defined performance measures (non-GAAP measures). Furthermore,
the standard adds specific guidance for aggregation and disaggregation of
items in the financial statements and in the notes. The standard will
encourage companies to avoid classifying items as 'other' (for example, other
expenses), and using this classification will lead to additional disclosure
requirements. The standard is effective from annual reporting periods
beginning on or after 1 January 2027 with earlier application being permitted.
The Group is examining the effects of the standard on its financial statements
with no plans for early adoption.
NOTE 3 - TRADE RECEIVABLES
December 31
2025 2024
Open accounts 456 439
Income to receive 147 460
603 899
Provision for doubtful accounts (credit loss) - (23)
603 876
Income to receive - long term (18) (136)
585 740
The movement in the provision for doubtful accounts respect of trade
receivables during the year was as follows:
2025 2024
Balance as at January 1 23 21
Change from write-off of financial assets (41) (42)
Allowance for doubtful accounts 18 44
Balance as of December 31 - 23
Presented hereunder is information about ages of trade receivables accounts:
December 31, 2025
Not past due 428
Past due 1-30 days 125
Past due 31-60 days 35
Past due 61-90 days 6
Past due more than 90 days (*) 9
Total 603
(*) The provision for doubtful accounts refers to debts overdue by more than
90 days.
NOTE 4 - INVENTORY
December 31
2025 2024
Raw materials 640 959
Finished goods 216 158
856 1,117
In 2025, the Group wrote down inventories to their net realizable value by the
amount of $399k.
NOTE 5 - BANK DEPOSIT
Bank deposit sums of $10 and $9 as of December 31, 2025 and 2024,
respectively, serves as a security deposit for repayment of a long-term bank
loan (see note 10). The deposit bears negligible interest.
NOTE 6 - PROPERTY, PLANT AND EQUIPMENT
Computers and Software Furniture and Equipment Laboratory Equipment Leasehold Improvements
Total
Cost:
c Balance as of January 1, 2025 159 310 347 1,060
244
Additions during the year
- 1 - - 1
Balance as of December 31, 2025 244 160 310 347 1,061
Accumulated Depreciation:
Balance as of January 1, 2025 235 131 255 98 719
Depreciation during the year
7 4 43 34 88
Balance as of December 31, 2025
242 135 298 132 807
Net book value December 31, 2025 2 25 12 215 254
Computers and Software Furniture and Equipment Laboratory Equipment Leasehold Improvements
Total
Cost:
c Balance as of January 1, 2024 159 306 345 1,050
240
Additions during the year
4 - 4 2 10
Balance as of December 31, 2024
244 159 310 347 1,060
Accumulated Depreciation:
Balance as of January 1, 2024 221 117 220 70 628
Depreciation during the year
14 14 35 28 91
Balance as of December 31, 2024
235 131 255 98 719
Net book value December 31, 2024 9 28 55 249 341
NOTE 7 - INTANGIBLE ASSETS
Total
Cost:
Balance as of January 1, 2025 2,160
Additions - capitalized development costs -
Balance as of December 31, 2025 2,160
Accumulated Amortization and impairment loss:
Balance as of January 1 ,2025 (1,401)
Amortization during the year (168)
Impairment during the year -
Balance as of December 31, 2025 (1,569)
Net book value as of December 31, 2025 591
Total
Cost:
Balance as of January 1, 2024 2,018
Additions - capitalized development costs 142
Balance as of December 31, 2024 2,160
Accumulated Amortization:
Balance as of January 1, 2024 (1,066)
Amortization during the year (213)
Impairment during the year (122)
Balance as of December 31, 2024 (1,401)
Net book value as of December 31, 2024 759
Amortization is calculated using the straight-line method over the estimated
useful lives of the assets, 5-10 years.
NOTE 8 - TAXES ON INCOME
a. Israeli taxation
1. The Israeli corporate tax rate for 2025 and 2024 is 23%.
2. Tax Benefits from the Encouragement of Capital Investments Law, 1959 ("The
Encouragement Law")
t42 Israel was determined in the past as a company which is entitled to a
reduced tax rate.
However, the Group does not expect to pay taxes in Israel by t42 Israel in the
next coming years due to carryforward tax losses.
3. t42 Israel has carryforward operating tax losses of approximately NIS 40
million as of December 31, 2025 (NIS 49 million as of December 31, 2024).
Since there is a significant uncertainty regarding the existence of taxable
revenues in the near future, deferred tax assets were not recognized. The
company recognized deferred tax assets for carryforward tax losses up to the
amount of deferred tax liabilities.
t42 Israel has been assessed by the Income Tax Authorities up to and including
the year 2019.
b. Jersey taxation
Taxable income of the Company and Starcom Jersey is subject to tax at the rate
of zero percent for the years 2025 and 2024.
c. Reconciliation between the theoretical profit before taxes and the tax expense
The difference between the statutory tax rate (23%) and the effective tax rate
(0%) is primarily due to non-recognition of deferred tax assets and
liabilities on losses and other temporary differences.
NOTE 9 - OTHER ACCOUNTS PAYABLE
December 31
2025 2024
Employees benefit obligation 103 324
Advance payments from trade receivables 655 450
Deferred revenue 16 41
Vacation provision and other employees' accrual 68 100
Government institutions 72 44
Other 118 111
1,032 1,070
NOTE 10 - LONG-TERM BANK LOAN, NET OF CURRENT MATURITIES
1. Composition: December 31
2025 2024
Long-term liability 15 87
Less: current maturities (15) (74)
- 13
NOTE 10 -
LONG-TERM BANK LOAN, NET OF CURRENT MATURITIES
1.
Composition:
December 31
2025
2024
Long-term liability
15
87
Less: current maturities
(15)
(74)
-
13
3. Additional information regarding long-term loans:
Original amount Received NIS (U. S. dollars)
In thousands Annual Interest Rate Interest Payment Terms
Loan Terms and
Date Received Maturity Dates
Dec 9, 2020 1,000 ($310) Prime + 1.5 48 equal monthly installments of principal and interest (14 months grace for Monthly basis
principal)
The loan is a state-guaranteed loan, received by t42 Israel as assistance due
to the spread of the Covid -19 virus. Per the loan's conditions, interest for
the first year was paid by the State of Israel.
As of December 31, 2025 the prime interest rate was 5.75%. The loan was fully
paid in February 2026.
See also Note 13 regarding charges.
NOTE 10 - LONG-TERM BANK LOAN, NET OF CURRENT MATURITIES (cont.)
NOTE 11 - CONVERTIBLE LOANS AND FINANCIAL LIABILITIES IN FAIR VALUE
a. During July 2023 the Company received a convertible loan, total
amount of $1.3m provided by Ewave Mobile Ltd. The loan bears interest of 10%
per annum to be paid on a monthly basis. The Loan, together with accrued
interest at the time of conversion, may be converted, at the discretion of the
Lender, at any time prior to the Loan repayment date, into such number of
shares as corresponds to 29.5% of the Company's issued ordinary share capital
immediately following such conversion. The Loan may be converted in part, on a
pro rata basis to the above terms. On 30 September 2024 an addendum with the
lender was signed, to extend the original due date from 20 January 2025 to May
20, 2025.
The Company examined the discounted present value of the future cash flows of
the loan according to the new maturity date discounted at the original
effective interest rate (before the change in terms) and found that it was
different by more than 10% from the discounted present value of the remaining
cash flows of the loan before the change in terms. Therefore, the Company
treated the change in terms as a substantial modification in terms of debt and
accordingly derecognized the original loan components on the date of the
change and recognized the loan components under the new terms at their fair
values as of that date. The difference between the original loan components
that were derecognized and the fair value of the components on the date of the
change in terms amounted to approximately $ 191,000. It was recorded as
finance income in the profit and loss statement for the year 2024.
On July 28, 2025 the company signed a collaboration agreement with the lender,
among alia, to extend the convertible loan period until December 10, 2027.
There was no change in the other terms of the loan.
On the day of recognition, the loan amount ($1.3M) was divided into
components: a conversion component and anti-dilution component which are
measured at fair value, and a residual component of liability of the loan in
amortized cost.
As of December 31, 2025 the values of components are as follows:
· Conversion component of the convertible loan and anti-dilution
liability component at fair value - $43k.
· Amortized cost of a convertible loan - $1,260K.
An effective interest rate was calculated for the liability component of the
loan, based on its amortization table. After deducting the conversion and
anti-dilution component it is 12.42% per annum.
CONVERTIBLE LOANS AND FINANCIAL LIABILITIES IN FAIR VALUE (cont.)
b. During December 2021, The Company received third parties loans in
the total amount of $1,251 thousand (£925K) in the form of convertible loans
enabling the lenders to convert the loans at an exercise price of £0.15 per
share at any time, subject to compliance with the AIM Rules, Takeover Code and
MAR regulations, up to December 31, 2023.
The convertible loans bore interest at the rate of 8% per annum calculated by
reference to the principal amount of the convertible loans. If not converted,
the loans were supposed to be repayable on December 31, 2023.
As of 31 December 2023, the loan was not repaid and in February 2024 the
company successfully negotiated the extension of the maturity date of the loan
NOTE 11 - (original principal of £925K and accrued interest of £71K) until 20 January
2025. The following terms have been agreed with the lenders as part of the
extension:
· The interest payable on the loan shall be 10% per annum to be
paid in a monthly basis, commencing from 1 January 2024.
· Conversion: the lenders will have the right to convert, at their
discretion, the amount of the loan into the number of company shares
("Conversion Shares") corresponding to 28.82% of the company issued ordinary
share capital immediately following the date of conversion, if the aggregate
loan amount is converted, and into a pro-rata number of Conversion Shares in
case of a partial conversion. The lenders shall not issue a conversion notice
if this would result in a breach of Rule 9 of the UK Takeover Code.
· Anti-dilution: the agreement includes anti-dilution provisions to
protect the equity interest percentage of the lenders, so that in the event of
the exercise or conversion of existing warrants, options, or other instruments
convertible into the company's ordinary shares (subject to certain
exceptions), the lenders will be issued for no additional consideration such
number of shares such that, together with the shares already held, each
lenders percentage shareholding shall remain the same.
· Security: security provided by way of parent guarantee, fixed,
and floating charges over the assets of t42. The floating charge ranks pari
passu with the floating charge provided to Ewave under the Ewave loan and the
fixed charge security over the intellectual property rights of t42 is second
ranking, subordinated only to the fixed charge in favor of Ewave under the
Ewave loan.
· Conversion/Repayment Event: In the event of a certain major
transaction or financing investment, the lender may elect for conversion or
repayment of the loan.
In conjunction with the agreement, the company also entered into an addendum
with Ewave, pursuant to which Ewave consented to the loan extension and will
also have the same conversion rights in the event of a major transaction.
On 30 September 2024 an addendum with the lenders was signed, to extend the
due date from 20 January 2025 to May 20, 2025, with no other changes in the
loan's terms.
The Company examined the discounted present value of the future cash flows of
the loan based on the new maturity date discounted at the original effective
interest rate (before the change in terms) and found that it does not differ
by more than 10% from the discounted present value of the remaining cash flows
of the loan before the change in terms. Accordingly, the original loan
components were not derecognized, and no new liability components were
recognized at fair value. A loss of $1,000 from the adjustment to the present
value was recognized as finance expenses in the profit and loss statement for
the year 2024.
CONVERTIBLE LOANS AND FINANCIAL LIABILITIES IN FAIR VALUE (cont.)
On the day of recognition, the loan amount (£996K) was divided into
components: a conversion component and anti-dilution component which are
measured at fair value, and a residual component of liability of the loan
measured in amortized cost.
In July, 2025 the company signed an additional addendum, with the lenders as
follows:
· As of June 30, 2025, the total amount of the principle together
with the capitalized interest is $1,476,896 which will be repaid in 30 unequal
monthly payments starting in July 2025 amounting $20,000-$75,000 per month.
The total payments the company has committed to repay during the coming year
and the year after is approximately $0.4$ million and $0.7 million,
respectively.
· The convertible loan period will be extended till December 10,
2027.
· In the event that the Company fails to meet two consecutive
repayments, then without derogating from any other remedy, lenders shall be
entitled to 60% of the Helios Saas sales revenue until repayments are resumed.
· To secure the lender's rights and in addition, the existing
securities, the company shall grant the lenders a second-ranking fixed deposit
over all its rights and assets - whether existing or future - in connection
with its Helios division. The fixed charge will be subordinated only to a
charge registered in favor of an Israeli bank, as described in notes 10 and
13(1),(2). Registration of the charge with the relevant government authorities
is one of the prerequisites for the agreements to enter into force.
· The company shall be entitled to enter into negotiations for the
sale of the Helios division, provided that the proceeds from the sale are
sufficient to repay all the outstanding principal and interest.
· All other provisions of the convertible loan agreement and its
addendum from February 2024 remain unchanged and in full force and effect.
On the day of recognition, the loan amount (1,477K$) was divided into
components: a conversion component and anti-dilution component which are
NOTE 11 - measured at fair value, and a residual component of liability of the loan
measured in amortized cost.
As of December 31, 2025, the values of components are as follows:
· Conversion component of the convertible loan and anti-dilution
liability component at fair value - $178k.
· Amortized cost of a convertible loan - $1,085K.
An effective interest rate was calculated for the liability component of the
loan, based on its amortization table. After deducting the conversion and
anti-dilution component it is 15.46% per annum.
c. During December 2022, the Israeli subsidiary entered into a loan
agreement with CSS Alpha Global Pte Ltd, in which warrants for a total of
2,976,185 company's shares have been issued to CSS, exercisable at 7p per
share over 5 years. During the year 2024 the loan and accrued interest were
fully paid. As of December 31, 2025 the fair value of the warrants is $28k.
d. In December 2022, the Company issued a £265,000 convertible loan
note to a supplier, to be applied in lieu of settlement of a supplier debt,
assisting with the Company's cashflow
management. The loan bears interest at 3% per annum, payable quarterly, and is
repayable by 31 December 2024. The loan is convertible at 9p per share at the
discretion of the holder (In the event that the company does not comply with
the loan terms, the conversion price will be updated according to the
mechanism stipulated in the loan agreement).
In addition, the Company had the right to enforce conversion of £100,000 of
the loan in the event share price exceeds 12p and full loan balance if the
share price exceeds 15p.
CONVERTIBLE LOANS AND FINANCIAL LIABILITIES IN FAIR VALUE (cont.)
As of December 31, 2025 the loan was not paid and its balance (including
accrued interest) is $380K.
During the first quarter of 2025 a binding oral agreement was reached between
the Company and the supplier's representative, according to which the supplier
will waive all remedies to which it is entitled in the case of the Company's
failure to repay the loan, as well as waiving the option to convert the loan
into shares, so that starting January 1, 2025, the loan will become a debt
bearing annual interest (3%) only and will be repaid in cash from time to time
in an agreement to be reached by the parties.
e. As of December 31, 2025, the fair values of the Warrants and the
Anti-dilution and conversion components of convertible loans were measured by
an independent appraiser.
The fair value of the Anti-dilution and conversion components of convertible
loans a was estimated as follows: Initially the fair value of the debt
component of the loans was estimated by discounting the future cash flows to
be paid to lenders using a company‑risk‑adjusted discount rate
(12.8%-16.2%). Then, the remaining loans amount not allocated to the debt
component was allocated to the Anti-dilution and conversion components.
The fair value of CSS warrants was valued under B&S model ,applying a 3.7%
risk‑free rate and a volatility (standard deviation) of 112%.
The level of the fair value hierarchy is level three.
The table hereunder presents a reconciliation from the opening balance to the
closing balance of financial liabilities carried at fair value level 3 of the
fair value hierarchy:
Anti-dilution and Conversion components
Warrants Total
Balance as of January 1, 2025 204 34 238
Additions during the year 336 - 336
Finance expenses (income), net (319) (6) (325)
Balance as of December 31, 2025 221 28 249
NOTE 11 -
NOTE 12 - SHORT-TERM BANK CREDIT
December 31
2025 2024
Bank overdraft (bears an average annual interest rate of 10%) - 13
Short-term bank loan (bears an annual interest rate of P+ 3.35%) 94 55
94 68
As of December 31, 2025 the Prime rate was 5.75%.
NOTE 13 - CHARGES
In respect of bank credit and loans set out in Notes 12 and 10 above and
convertible loans set out in Note 11 above, charges were placed as follows:
1. A charge on the t42 Israel's IPs and Intangible assets,
2. A floating pledge on the assets of t42 Israel.
3. A guarantee of the company in accordance with certain t42 Israel's bank
liabilities up to 10M $.
4. A pledge on a bank deposit of t42 Israel. See note 5.
5. A pledge on a certain bank account of t42 Israel up to 180K NIS (approx. 56k$)
6. A secondary fixed and floating pledge on t42 assets.
7. A secondary fixed deposit over all rights and assets - whether existing or
future - in connection with Helios division.
NOTE 14 - EQUITY
a. Common stock of no-par value, issued and outstanding:
As of December 31,
2025 2024
65,626,357 55,126,357
b. Company share grants to its holder voting rights, rights to receive dividends During December 2022, the Company raised £90 ($100) thousand before
and rights to net assets upon dissolution. expensesthrough a placing of 1,000,000 Ordinary Shares.
c. In February 17, 2025 the Company completed a capital raising in a total
(gross) amount of £262,500, in which the Company issued to investors
10,500,000 shares of the Company and 10,500,000 warrants. The warrants are
convertible into shares of the Company in a ratio of 1:1 in exchange for
£0.05 per warrant for a period of 3 years from the date of their issuance.
The proceeds of the offering, net of issuance expenses, amounted to
approximately £253,375.
NOTE 14 - EQUITY (cont.)
d. Warrants and Share options
The following table lists the number of share options and warrants and the
exercise prices of such during the current and prior years:
2025 2024
Number of options Weighted average Number of options Weighted average
exercise price exercise
price
£ £
Share options & warrants outstanding at the beginning of year (1) 7,584,014 0.156 10,876,650 0.166
Warrants issued during the year (2) 10,500,000 0.05
Options & Warrants exercised during the year - - (209,302) -
Options & Warrants expired and confiscated during the year (113,208) 0.1 (3,083,334) 0.18
Share options & warrants outstanding at end of year 17,970,806 0.097 7,584,014 0.156
Share options & warrants exercisable at end of year (1)(3) 17,970,806 0.097 7,584,014 0.156
(1) The balances as of December 31, 2025 and 2024 include 4,494,621 and
4,607,829, respectively, options granted to directors and employees as a share
based payment (ESOP).
(2) See note 14 C.
(3) In addition, the Group also has two convertible loans, which can be
converted as of December 31, 2025, into a maximum total amount of 117 million
shares. See notes 11a, b.
NOTE 15 - COST OF REVENUES
Year Ended December 31,
2025 2024
Purchases and manufacturing 2,789 1,687
Communication Suppliers and Others 207 343
Amortization 168 213
Change in inventory 112 322
3,276 2,565
(1) The balances as of December 31, 2025 and 2024 include 4,494,621 and
4,607,829, respectively, options granted to directors and employees as a share
based payment (ESOP).
(2) See note 14 C.
(3) In addition, the Group also has two convertible loans, which can be
converted as of December 31, 2025, into a maximum total amount of 117 million
shares. See notes 11a, b.
NOTE 15 -
COST OF REVENUES
Year Ended December 31,
2025
2024
Purchases and manufacturing
2,789
1,687
Communication Suppliers and Others
207
343
Amortization
168
213
Change in inventory
112
322
3,276
2,565
NOTE 16 - GENERAL AND ADMINISTRATIVE EXPENSES
a. Year Ended December 31,
2025 2024
Salaries and related expenses (2),(3) 798 907
Professional services (1) 323 395
Doubtful accounts and bad debts 18 23
Amortization and Depreciation 298 310
Office maintenance 225 198
Car maintenance (2) 60 55
1,722 1,888
(1) (1) Including share-based payment to directors and senior management
in the amounts of $5k for the year ended December 31, 2024. See also Note 14d.
(2) (2) Including CEO's salaries and related expenses in the amount of
$236K (2024: $216K).
(3) (3) an amount of $153 K is attributed to employees who support
production and technical service.
b. Average Number of Staff Members by Category:
Year Ended December 31,
2025 2024
Sales and marketing 4 5
Research and development 4 3
General and administrative 7 11
15 19
NOTE 17 - FINANCE INCOME
Year Ended December 31,
2025 2024
Exchange rate differences, net - 72
Gain from modification of debt terms (see note 11 A, B) - 190
Changes in fair value of financial liabilities (see note 11 e) 325 -
325 262
NOTE 18 - FINANCE EXPENSES
Loans interest (541) (768)
Bank charges (58) (37)
Interest to suppliers and institutions (37) (71)
Interest to a related party (9) (10)
Changes in the fair value of financial liabilities (See note 11e) - (193)
Exchange rate differences, net (593) -
Others (35) (47)
(1,273) (1,126)
Net finance expenses (948) (864)
NOTE 19 - SALES AND MARKETING
Year Ended December 31,
2025 2024
Salaries and related expenses 297 232
Sales commissions 36 49
Travel expenses 17 34
Others 39 51
389 366
NOTE 20 - LOSS PER SHARE
Weighted average number of shares used in computing basic and diluted loss per
share:
Year Ended December 31,
2025 2024
64,241,742 55,117,182
In calculating the loss per share for 2024 and 2023 warrants granted to
employees, CSS option and convertible loans were not taken into account
because their effect was anti-dilutive.
NOTE 21 - RELATED PARTIES
a. Related parties that own shares of the company are:
Mr. Avraham Hartmann who serves as a director and CEO (6.77%), Mr. Uri
Hartmann, a son of Mr. Avi Hartmann, who serves as CTO (4.68%) and Mr. Igor
Vatenmacher, who served as a CFO until April 2025 and currently serves as an
executive director (0.69%).
b. Current debit (credit) balances: December 31,
2025 2024
Current account
Avi Hartmann (10) 36
Uri Hartmann (744) (585)
Total Credit Balance (754) (549)
Loans to (from)
Uri Hartmann (255) (221)
Total Loans (255) (221)
(1,009) (770)
c. Shareholders' current credit balances are mainly related to deferred salaries.
Loans from shareholders accrue 4% annual interest. See also note 26(1)a.
d. Transactions: Year Ended December 31,
2025 2024
Total salaries and related expenses for Mr. Avi Hartmann and Mr. Uri Hartmann,
including car maintenance (1)
463 426
Salaries and related expenses for Mr. Igor Vatenmacher, including car
maintenance (Executive director and ex CFO)
84 171
Non-executive directors' fees (2 persons), (2) 100 108
Total share-based payment (5 persons) - 4
Interest to related parties 9 10
(1) Mr. Uri Hartmann's salaries and related expenses are included
in R&D expenses (2025:
227K$), Regarding Mr. Avi Hartmann - see note
16(a)(2).
(2) As of 31 December 2025, the company owes them 267K$, including a
short-term loan received by one of the directors in the amount of 30K$.
e. Mr. Avi Hartmann and Mr. Uri Hartmann are each entitled to benefits, in
addition to a monthly salary of 12K$, that include inter alia a vehicle, a
cellular phone, a pension fund and a professional enrichment fund. In
addition, each of them is entitled to reimbursement for expenses incurred in
connection with their duties and 18 days of annual leave. Each of the Company
and the aforementioned may notify the other party of the termination by giving
6 months' notice. The Company has a right to offset any debt of the
aforementioned against any compensation due to them.
NOTE 21 - RELATED PARTIES (cont.)
f. As of December 31, 2025 each of Mr. Uri Hartmann and Mr. Avi
Hartmann has approximately 1,165 thousand warrants convertible into the
Company's shares in a ratio of 1:1 in consideration of 0.12-0.4 £ per
warrant. Unexercised warrants will expire from July 2026 to May 2031. The
three directors together have approximately 1,553 thousand warrants
convertible into the Company's shares in a ratio of 1:1 in consideration of 0
- 0.4 £ per warrant. Unexercised warrants will expire from July 2026 to May
2029.
NOTE 22 - FINANCIAL INSTRUMENTS AND MANAGEMENT OF FINANCIAL RISKS
a. Financial Risk Factors:
The Group's operations expose it to a variety of financial risks , mainly
Currency, Credit and Liquidity risks. The comprehensive Group plan for risk
management focuses on the fact that it is not possible to predict financial
market behavior and an effort to minimize possible negative effects on Company
financial performance.
1) Exchange rate risk
The Group is exposed to currency risk on sales, purchases, receivables and
borrowings that are denominated in a currency other than the respective
functional currency of Group, the US dollar (USD). While a major part of the
Group's revenues, purchases, and manufacturing costs are denominated in
dollar, operating expenses (primarily salaries and overhead) are paid in NIS
and some of the headquarters' expenses are paid in GBP. Changes in the
exchange rates of the NIS and the GBP against the dollar can cause losses for
the Company.
2) Credit risk
The Group's credit risk arises principally from the Group's receivables from
customers. The carrying amounts of financial assets and contract assets
represent the Group's maximum credit risk exposure.
The Group's exposure to credit risk is influenced mainly by the individual
characteristics of each customer. However, management also considers the
demographics of the Group's customer base, including the default risk of the
industry and region in which customers operate, as these factors may have an
influence on credit risk. See also note 24.
The Management has established a credit policy under which each new customer
is analyzed individually for creditworthiness before the Group's standard
payment and delivery terms and conditions are offered. Purchase limits are
established for each customer, and usually an advanced payment of 25-50% is
required before shipping.
The Group holds cash and cash equivalents mainly with big banks in Israel and
therefore believes its cash and cash equivalents have low credit risk.
3) Liquidity risks
Cash flow forecasts are determined on both an individual company basis and a
consolidated basis. The Company examines current forecasts of its liquidity
requirements so as to make certain that there is sufficient cash for its
operating needs, and it is careful at all times to have enough cash that the
Company does not exceed its credit limits. These forecasts take into
consideration matters such as the Company's plan to use a bank short term
credit for financing its activity and the group's liabilities.
The following are the contractual maturities of financial liabilities at
undiscounted amounts and based on the future rates forecasted at the reporting
date, including estimated interest payments.
NOTE 22 - FINANCIAL INSTRUMENTS AND MANAGEMENT OF FINANCIAL RISKS (cont.)
(
b. The Group's exposure to linkage and foreign currency risk was as follows:
December 31, 2025
U.S. Dollar
NIS GBP Euro Total
Variable Interest Unlinked
Unlinked
Financial Assets:
Cash and cash equivalents 50 - 500 7 14 571
Short-term deposit - 10 - - - 10
Trade receivables, net 61 - 539 - 3 603
Other accounts receivable - - 6 - - 6
Financial Liabilities:
Short-term bank credit - (94) - - - (94)
Long-term bank Loan - (15) - - - (15)
Trade payables (336) - (82) (308) - (726)
Other accounts payable (190) - - - - (190)
Leasehold liabilities (902) - - - - (902)
Related parties (1,212) (255) 458 - - (1,009)
Amortized cost of other loans - - (2,345) )380) - (2,725)
Financial liabilities in fair value - - (249) - - (249)
(2,529) (354) (1,173) (681) 17 (4,720)
December 31, 2024
U.S. Dollar
NIS GBP Euro Total
Variable Interest Unlinked
Unlinked
Financial Assets:
Cash and cash equivalents 35 - 108 - 4 147
Short-term deposit - 9 - - - 9
Trade receivables, net 91 - 721 - 64 876
Other accounts receivable (175) - 205 - - 30
Financial Liabilities:
Short-term bank credit - (68) - - - (68)
Long term bank Loan - (87) - - - (87)
Trade payables (702) - (84) (319) (1) (1,106)
Other accounts payable (435) - - - - (435)
Leasehold liabilities (972) - - - - (972)
Related parties (983) (245) 458 - - (770)
Amortized cost of other loans - - (1,082) (1,662) - (2,744)
Financial liabilities in fair value - - (141) (97) - (238)
(3,141) (391) 185 (2,078) 67 (5,358)
NOTE 22 - FINANCIAL INSTRUMENTS AND MANAGEMENT OF FINANCIAL RISKS (cont.)
(
c. Sensitivity:
Analysis of Sensitivity to Changes in the Exchange Rate of the U.S. Dollar
Against the NIS:
5% Increase in 5% Decrease in
Exchange Rate Exchange Rate
For the Year Ended December 31
2025 (144) 144
2024 (176) 176
Analysis of Sensitivity to Changes in the Exchange Rate of the U.S. Dollar
Against the Euro:
5% Increase in 5% Decrease in
Exchange Rate Exchange Rate
For the Year Ended December 31
2025 1 (1)
2024 3 (3)
Analysis of Sensitivity to Changes in the Exchange Rate of the U.S. Dollar
Against the GBP:
5% Increase in 5% Decrease in
Exchange Rate Exchange Rate
For the Year Ended December 31
2025 (34) 34
2024 (104) 104
d. The following are the contractual maturities of financial liabilities at
undiscounted amounts and based on the future rates forecasted at the reporting
date, including estimated interest payments:
As of 31 December 2025,
Up Total contractual cash flows
Carrying to six months 7-12 months
amount 1-2 years 3-4 years
Related parties 1,009 - - 1,049 - 1,049
Trade and other payables 916 916 - - - 916
Short-term bank loan (1) 94 52 51 - 103
Short-term bank credit (1) 15 15 - - - 15
Other loans 2,725 274 305 2,685 - 3,264
4,759 1,257 356 3,734 - 5,347
(1) The interest payments on variable interest rate loans may be different
from the amounts in the above table.
e. Fair value
As of December 31, 2025, there was no significant difference between the
carrying amounts and fair values of the Company's financial instruments that
are presented in the financial statements not at fair value.
See also note 11E regarding financial instruments measured in fair value.
NOTE 23 - LEASES
Group as a lessee
The Group has lease contracts for offices and 7 vehicles used in its
operations. The lease for the offices is for 5 years, with an option to extend
for another 5 years, while vehicle leases are for 3 years.
Below are the carrying amounts of right-of-use assets recognized and the
movements during the period:
Offices Vehicles Total
Balance at January 1, 2024 837 207 1,044
Additions - 66 66
Effect of Index linkage 148 - 148
Depreciation expenses (122) (97) (219)
Balance at December 31, 2024 863 176 1,039
Additions - 27 27
Disposals - (37) (37)
Effect of Index linkage 21 - 21
Depreciation expenses (124) (86) (210)
Balance at December 31, 2025 760 80 840
Below are the carrying amounts of lease liabilities and the activities during
the period:
2025 2024
As at January 1 (972) (982)
Additions (27) (66)
Disposals- 43 -
Effect of Index linkage (21) (148)
Exchange rate differences (135) 4
Payments 210 191
Others - 29
Balance at December 31 (902) (972)
Current liabilities (187) (202)
Non-Current liabilities (715) (770)
Maturity analysis - Contractual discounted cash flows (*)
One to Two years 322
Three to Five years 440
Six to Ten years 140
Total discounted lease liabilities on December 31, 2025 902
(*) including potential future payments related to the extension period.
The following are the amounts recognized in profit or loss:
(*) including potential future payments related to the extension period.
The following are the amounts recognized in profit or loss:
2025 2024
Depreciation expenses of right-of-use assets (210) (219)
Interest expenses on lease liabilities (47) (54)
Total amount recognized in profit or loss (257) (273)
NOTE 23 - Leases (cont.)
The Group had total cash outflows for leases of $251 in 2025 ($242 in 2024).
The Group also had non-cash additions to right-of-use assets and lease
liabilities of $27 in 2025 ($66 in 2024)
a. Major customers' data as a percentage of total consolidated revenues to
unaffiliated customers:
NOTE 24 - CUSTOMERS AND GEOGRAPHIC INFORMATION
Year Ended December 31,
2025 2024
Customer A 55% 34%
Customer B 9% 6%
Customer C 5% 6%
b. Breakdown of consolidated revenues to unaffiliated customers according to
geographic regions
Year Ended December 31,
2025 2024
Latin America 7% 13%
Europe 4% 8%
Africa 10% 20%
Asia 3% 3%
Middle East 58% 42%
North America 18% 14%
Total 100% 100%
NOTE 25 - SEGMENTATION REPORTING
The Group has two reportable segments: Hardware and SaaS, which form the
Group's strategic business units.
The strategic business units offer different products and services and the
allocation of resources and evaluation of performance are managed separately
because they require different resources. For each of the strategic business
units, the Group's CEO reviews internal management reports on a quarterly
basis. The accounting policies of revenue recognition for each segment are
described in Note 2C(k).
There is no inter-segment transaction.
Performance is measured based on segment gross profit (loss) as included in
reports that are regularly reviewed by the CEO. Segment gross profit is used
to measure performance as management believes that such information is the
most relevant in evaluating the results of certain segments relative to other
entities that operate within these industries.
Information regarding the results of each segment is included below:
Hardware SaaS
Year Ended 31.12.2025:
Segment revenues 4,060 2,040
Cost of revenues (3,035) (241)
Gross profit (loss) 1,025 1,799
Year Ended 31.12.2024:
Segment revenues 2,036 2,122
Cost of revenues (2,182) (383)
Gross profit (146) 1,739
NOTE 26 - SIGNIFICANT EVENTS AFTER THE REPORTED PERIOD
1) The Annual General Meeting (AGM) held in December 2025 approved,
inter alia, the following decisions:
a. To increase interest payable on the loan given to the Company by
Uri Hartmann, which remains outstanding, from 4% to 8% per annum, effective
January 1, 2026. The proposal is supported by the Remuneration Committee,
which reviewed the market interest rates, the Company's size, its risk levels,
and other existing financing costs recently granted to the company.
b. Grant of options to directors and employees as follows:
Name Quantity Exercise price Vesting Period
Avi Hartmann 250,000 2.5p 1 year, equally
Avi Hartmann 250,000 3.0p 2 years, equally
Avi Hartmann 250,000 4.0p 3 years, equally
Uri Hartmann 200,000 2.5p 1 year, equally
Michael Rosenberg 75,000 2.5p 1 year, equally
Martin Blair 75,000 2.5p 1 year, equally
Aviran Sabag 150,000 2.5p 2 years, equally
c. Converting partly balances of non-executive directors into shares.
1. Michael Rosenberg - a balance of £80,078 to be converted into
shares at a price of 2.0p per share.
2. Martin Blair - a balance £70,509 to be converted into shares at
the same price.
2) On August 12, 2025, a monetary claim was filed in the Court against
t42 Israel by a former employee, alleging bodily injury in October 2018. The
case has been referred to the t42 Israel's employers' liability insurer, which
has assumed conduct of the defense while reviewing coverage and liability. The
former employee estimates the damages she suffered at 400 K Israeli shekels,
in addition to general damages and demands, and seeks, among other things,
adequate compensation for these damages. At this stage, the company's legal
advisors consider the company's potential exposure as immaterial.
c. Converting partly balances of non-executive directors into shares.
1. Michael Rosenberg - a balance of £80,078 to be converted into
shares at a price of 2.0p per share.
2. Martin Blair - a balance £70,509 to be converted into shares at
the same price.
2) On August 12, 2025, a monetary claim was filed in the Court against
t42 Israel by a former employee, alleging bodily injury in October 2018. The
case has been referred to the t42 Israel's employers' liability insurer, which
has assumed conduct of the defense while reviewing coverage and liability. The
former employee estimates the damages she suffered at 400 K Israeli shekels,
in addition to general damages and demands, and seeks, among other things,
adequate compensation for these damages. At this stage, the company's legal
advisors consider the company's potential exposure as immaterial.
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