{"url_path":"/sec/bosc/10-k/2026/item-19","section_key":"item-19","section_title":"Item 19 Exhibits**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-03-31","source_url":"https://www.sec.gov/Archives/edgar/data/1005516/0001213900-26-037333-index.html","accession_number":"0001213900-26-037333","cik":"0001005516","ticker":"BOSC","issuer_name":"BOS BETTER ONLINE SOLUTIONS LTD","edgar_url":"https://www.sec.gov/Archives/edgar/data/1005516/0001213900-26-037333-index.html","primary_entity_key":"0001005516","primary_entity_name":"BOS BETTER ONLINE SOLUTIONS LTD"},"word_count":16671,"has_tables":true,"body_markdown":"**Item 19:  Exhibits**\n\n** **\n\nThe following exhibits are\nfiled as part of this Annual Report:\n\n \n\n1.1\n \n[Memorandum of Association, as amended (incorporated by reference to the Company’s Annual Report on Form 20-F filed on March 30, 2023).](https://www.sec.gov/Archives/edgar/data/1005516/000121390023024556/f20f2022ex1-1_bosbetter.htm)\n\n1.2\n \n[Articles of Association, as amended (incorporated by reference to Exhibit A of the Company’s Proxy Statement on Form 6-K, filed on October 15, 2024).](https://www.sec.gov/Archives/edgar/data/1005516/000121390024087549/ea021751401ex99-1_bosbetter.htm)\n\n2.1\n \n[Description of Securities (incorporated by reference to the Company’s Annual Report on Form 20-F filed on March 30, 2021).](https://www.sec.gov/Archives/edgar/data/1005516/000121390021018629/f20f2020ex2-1_bosbetter.htm)\n\n4.1\n \n[Form of Indemnification Agreement between the Company and its officers and directors, as amended (incorporated by reference to Exhibit A of the Company’s Proxy Statement on Form 6-K, filed on September 3, 2025).](http://www.sec.gov/Archives/edgar/data/1005516/000121390025084003/ea0255556-01.htm)\n\n4.2\n \n[The Company’s Israeli 2003 Share Option Plan, as amended (incorporated by reference to the Company’s Annual Report on Form 20-F filed on April 1, 2024).](http://www.sec.gov/Archives/edgar/data/1005516/000121390024028176/ea020288101ex4-2_bosbetter.htm)\n\n4.3\n \n[Summary of Economic Terms: Request by BOS-Odem Ltd. for NIS Loan from the First International Bank of Israel, Overdraft Terms on the Current Account at the First International Bank of Israel, Letter of Undertaking to First International Bank of Israel (translated from Hebrew) (incorporated by reference to the Company’s Annual Report on Form 20-F filed on March 29, 2018).](http://www.sec.gov/Archives/edgar/data/1005516/000121390018003644/f20f2017ex4-5_bosbetter.htm)\n\n4.4\n \n[Compensation Policy for Directors and Officers (incorporated by reference to the Company’s Proxy Statement on Form 6-K filed on October 31, 2023).](http://www.sec.gov/Archives/edgar/data/1005516/000121390023081688/ea187430-6k_bosbetter.htm)\n\n4.5\n \n[Form of Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to the Company’s Report on Form 6-K filed on May 2, 2022)](https://www.sec.gov/Archives/edgar/data/1005516/000121390022022928/ea159188ex10-1_bosbetter.htm)\n\n4.6\n \n[Form of Ordinary Share Purchase Warrant (incorporated by reference to Exhibit 10.2 to the Company’s Report on Form 6-K filed on May 2, 2022)](https://www.sec.gov/Archives/edgar/data/1005516/000121390022022928/ea159188ex10-2_bosbetter.htm)\n\n4.7\n \n[Sales Agreement dated September 15, 2025, by and between B.O.S Better Online Solutions Ltd. and A.G.P/Alliance Global Partners (incorporated by reference to the Company’s Report on Form 6-K filed on September 16, 2025.](http://www.sec.gov/Archives/edgar/data/1005516/000121390025087760/ea0257326-6k_bosbetter.htm)\n\n8.1\n \n[List of subsidiaries (incorporated by reference to the Company’s Annual Report on Form 20-F filed on March 29, 2018).](http://www.sec.gov/Archives/edgar/data/1005516/000121390018003644/f20f2017ex8-1_bosbetter.htm)\n\n11.1\n \n[Code of Ethics (incorporated by reference to the Company’s Annual Report on Form 20-F filed on April 14, 2014).](http://www.sec.gov/Archives/edgar/data/1005516/000117891314001313/exhibit_11.htm)\n\n11.2\n \n[Trading Window Policy (incorporated by reference to the Company’s Annual Report on Form 20-F filed on March 31, 2025).](http://www.sec.gov/Archives/edgar/data/1005516/000121390022016881/f20f2021_bosbetter.htm)\n\n12.1*\n \n[Certification by Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.](ea028385901ex12-1.htm)\n\n12.2*\n \n[Certification by Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934.](ea028385901ex12-2.htm)\n\n13.1*\n \n[Certification by Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934.](ea028385901ex13-1.htm)\n\n23.1*\n \n[Consent of Fahn Kanne & Co. Grant Thornton Israel.](ea028385901ex23-1.htm)\n\n97.1\n \n[Clawback Policy (incorporated by reference to Exhibit 97.1 to the Company’s Annual Report on Form 20-F filed on April 1, 2024).](https://www.sec.gov/Archives/edgar/data/1005516/000121390024028176/ea020288101ex97-1_bosbetter.htm)\n\n101.INS\n \nInline XBRL Instance Document\n\n101.SCH\n \nInline XBRL Taxonomy Extension Schema Document.\n\n101.CAL\n \nInline XBRL Taxonomy Extension Calculation Linkbase Document.\n\n101.DEF\n \nInline XBRL Taxonomy Extension Definition Linkbase Document.\n\n101.LAB\n \nInline XBRL Taxonomy Extension Label Linkbase Document.\n\n101.PRE\n \nInline XBRL Taxonomy Extension Presentation Linkbase Document.\n\n104\n \nCover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).\n\n \n\n*\nFiled herewith.\n\n \n\n61\n\n \n\n \n\n**Signatures**\n\n \n\nThe Registrant hereby certifies\nthat it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this\nannual report on its behalf.\n\n \n\n \nB.O.S. Better Online Solutions Ltd.\n\n \n \n\n \n/s/ Eyal Cohen\n\n \nEyal Cohen\n\n \nChief Executive Officer\n\n \n\nDate: March 31, 2026\n\n \n\n62\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n** **\n\n**AND SUBSIDIARIES**\n\n** **\n\n**CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**AS OF DECEMBER 31, 2025**\n\n** **\n\n**IN U.S. DOLLARS**\n\n** **\n\n**INDEX**\n\n** **\n\n  **Page**\n\n  ** **\n\n**Report of Independent Registered Public Accounting Firm (PCAOB ID 1375)** **F-2 - F-3**\n\n  ** **\n\n**Consolidated Balance Sheets** **F-4 - F-5**\n\n  ** **\n\n**Consolidated Statements of Operations** **F-6**\n\n  ** **\n\n**Statements of Changes in Shareholders’ Equity** **F-7**\n\n  ** **\n\n**Consolidated Statements of Cash Flows** **F-8 - F-9**\n\n  ** **\n\n**Notes to Consolidated Financial Statements** **F-10 - F-44**\n\n \n\n**- - - - - - - - - - - -**\n\n \n\n F-1\n\n \n\n \n\n**Fahn Kanne & Co.**\n\nHead Office\n\n32 Hamasger Street\n\nTel-Aviv 6721118, ISRAEL\n\nPO Box 36172, 6136101\n\n \n\nT +972 3 7106666\n\nF +972 3 7106660\n\nwww.gtfk.co.il\n\n \n\n**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**\n\n** **\n\n**Board of Directors and Shareholders**\n\n**B.O.S Better Online Solutions Ltd.**\n\n \n\n**Opinion on the financial statements**\n\n \n\nWe have audited the accompanying consolidated\nbalance sheets of B.O.S Better Online Solutions Ltd. (an Israeli corporation) and subsidiaries (the “Company”) as of December\n31, 2025 and 2024, the related consolidated statements of operations, changes in shareholders’ equity, and cash flows for each\nof the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the “consolidated\nfinancial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial\nposition of the Company as of December 31, 2025, and 2024, and the results of its operations and its cash flows for each of the three\nyears in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.\n\n \n\n**Basis for opinion**\n\n \n\nThese consolidated financial statements are the\nresponsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial\nstatements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United\nStates) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities\nlaws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.\n\n \n\nWe conducted our audits in accordance with the\nstandards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial\nstatements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged\nto perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding\nof internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s\ninternal control over financial reporting. Accordingly, we express no such opinion.\n\n \n\nOur audits included performing procedures to\nassess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that\nrespond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated\nfinancial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,\nas well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable\nbasis for our opinion.\n\n \n\n F-2\n\n \n\n \n\n**Critical audit matter**\n\n \n\nThe critical audit matter communicated below\nis a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to\nthe audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our\nespecially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion\non the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate\nopinion on the critical audit matter or on the accounts or disclosures to which it relates.\n\n \n\n*Goodwill impairment analysis*\n\n \n\nAs described further in Note 2j and Note 8 to\nthe consolidated financial statements, during the year ended December 31, 2025, the Company performed goodwill impairment analysis\nwith respect to goodwill balance with a total carrying amount of $4.19 million (before the impairment loss) that was allocated to\ncertain reporting unit at June 30, 2025 due to identification of negative factors (the interim impairment test), and at December 31,\n2025, as part of the annual assessment (the annual impairment test). As part of the interim impairment test it was determined by management\nto recognize an impairment loss of $700 thousand and the annual analysis resulted an additional impairment loss of $500, totaling\nan aggregate goodwill impairment loss for the year ended December 31, 2025 in the amount of $1,200 related to this reporting unit. As\ndisclosed by management, goodwill is assigned to reporting units and tested for impairment at least annually, and whenever events or\nchanges in circumstances indicate that the carrying amount of goodwill may not be recoverable. As part of the assessment, the Company\nchooses either to perform a qualitative assessment whether a goodwill impairment test is necessary or proceeds directly to the goodwill\nimpairment test. When the Company decides or is required to perform the goodwill impairment test, the Company compares the fair value\nof the reporting unit to its carrying value and an impairment charge is recognized for the amount by which the carrying amount exceeds\nthe reporting unit’s fair value, if any. Management determined the fair value of the reporting unit using the income approach,\nwhich utilizes a discounted cash flow model The interim impairment test was based on a valuation performed by management and the annual\nimpairment test was based on a valuation performed by management with the assistance of a third-party independent appraiser. Judgments\nand assumptions used in the discounted cash flow model in both 2025 assessments included projected cash flows including future revenues,\nexpenses and capital expenditures, estimated weighted average cost of capital, short-term and long-term growth rates and market conditions.\nThe measurement of fair value of reporting units as part of goodwill impairment analysis is classified under Level 3 within the fair\nvalue hierarchy. We identified the goodwill impairment analysis as a critical audit matter.\n\n \n\nThe principal considerations for our determination\nthat the goodwill impairment assessment is a critical audit matter are the high degree of auditor judgment, effort and subjectivity in\nperforming procedures and evaluating management’s estimates. Given the subjective nature and judgment applied by management, auditing\nthese estimates required a high degree of auditor judgment and an increased extent of effort including the use of specialists.\n\n \n\nOur audit procedures\nrelated to the annual goodwill impairment analysis included the following, among others:\n\n \n\n \n●\nWe evaluated the appropriateness of the discounted cash flow model;\ntested the completeness, accuracy and relevance of underlying data used in the model; and evaluated the reasonableness of significant\nassumptions used by management, including revenue growth rates, discount rate and terminal growth rate. Our evaluation involved evaluating\nwhether the assumptions used by management were reasonable considering (i) the current and past performance of the reporting unit,\n(ii) the consistency with external market and industry data, and (iii) the consistency of the assumptions used with evidence obtained\nin other areas of the audit.\n\n \n\n \n●\nWe utilized a valuation specialist to assess the appropriateness of\nthe impairment methodology used and to assist us with testing key inputs and discount rate assumptions in the discounted cash flow\nmodel.\n\n** **\n\n**/s/ FAHN KANNE & CO. GRANT THORNTON ISRAEL**\n\nWe have served as the Company’s auditor since 2017.\n\n \n\nTel-Aviv, Israel\n\nMarch 31, 2026\n\n \n\n F-3\n\n \n\n** **\n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n \n\n**CONSOLIDATED\nBALANCE SHEETS**\n\n**U.S. dollars in thousands**\n\n \n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\nASSETS \n   \n  \n\n  \n   \n  \n\nCURRENT ASSETS: \n   \n  \n\n  \n   \n  \n\nCash and cash equivalents \n$11,825  \n$3,368 \n\nRestricted cash deposits \n 98  \n 185 \n\nTrade receivables (net of allowance for credit losses of $139 and $79 at December 31, 2025 and 2024, respectively) \n 15,638  \n 11,787 \n\nOther receivable and prepaid expenses \n 1,440  \n 1,150 \n\nInventories \n 6,541  \n 7,870 \n\n  \n    \n   \n\nTotal\ncurrent assets \n 35,542  \n 24,360 \n\n  \n    \n   \n\nOTHER LONG TERM ASSETS: \n    \n   \n\n  \n    \n   \n\nLong term assets \n 128  \n 177 \n\n  \n    \n   \n\nProperty and equipment, net \n 3,449  \n 3,417 \n\n  \n    \n   \n\nOperating lease right-of-use assets, net \n 926  \n 779 \n\n  \n    \n   \n\nDeferred tax assets \n 1,250  \n 1,000 \n\n  \n    \n   \n\nOther intangible assets, net \n 361  \n 422 \n\n  \n    \n   \n\nGoodwill \n 2,988  \n 4,188 \n\n  \n    \n   \n\nTotal assets \n$44,644  \n$34,343 \n\n \n\nThe accompanying notes are an integral part of\nthe consolidated financial statements.\n\n \n\n F-4\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n \n\n**CONSOLIDATED\nBALANCE SHEETS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n \n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n   \n  \n\nLIABILITIES AND SHAREHOLDERS’ EQUITY \n   \n  \n\n  \n   \n  \n\nCURRENT LIABILITIES: \n   \n  \n\n  \n   \n  \n\nShort term loan and Current maturities of long-term loans \n$775  \n$439 \n\nOperating lease liabilities, current \n 251  \n 176 \n\nTrade payables \n 6,778  \n 6,362 \n\nEmployees and payroll accruals \n 1,266  \n 1,087 \n\nDeferred revenues \n 3,129  \n 2,003 \n\nAccrued expenses and other liabilities \n 983  \n 598 \n\n  \n    \n   \n\nTotal current liabilities \n 13,182  \n 10,665 \n\n  \n    \n   \n\nLONG-TERM LIABILITIES: \n    \n   \n\nLong-term loans, net of current maturities \n 972  \n 980 \n\nOperating lease liabilities, non-current \n 768  \n 576 \n\nLong-term deferred revenues \n 286  \n 293 \n\nAccrued severance pay \n 732  \n 498 \n\n  \n    \n   \n\nTotal long-term liabilities \n 2,758  \n 2,347 \n\n  \n    \n   \n\nCOMMITMENTS AND CONTINGENT LIABILITIES (Note 12) \n \n \n  \n \n \n \n\n  \n    \n   \n\nSHAREHOLDERS’ EQUITY: \n    \n   \n\nShare capital: \n    \n   \n\nOrdinary Shares: Authorized; 11,000,000 shares at December 31, 2025 and 2024, respectively; Issued and outstanding: 7,028,934 and : 5,792,559 shares at December 31, 2025 and 2024, respectively and additional paid-in capital \n 90,061  \n 86,401 \n\nShares to be issued \n 102  \n - \n\nAccumulated other comprehensive loss \n (243) \n (243)\n\nAccumulated deficit \n (61,216) \n (64,827)\n\n  \n    \n   \n\nTotal shareholders’ equity \n 28,704  \n 21,331 \n\n  \n    \n   \n\nTotal liabilities and shareholders’ equity \n$44,644  \n$34,343 \n\n  \n\nThe accompanying notes are an integral part of\nthe consolidated financial statements.\n\n \n\nMarch 31, 2026\n \n\nDate of approval of the financial statements\n \n\n \n\n F-5\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n \n\n**CONSOLIDATED\nSTATEMENTS OF OPERATIONS**\n\n**U.S. dollars in thousands**\n\n \n\n  \nYear ended December 31, \n\n  \n2025  \n2024  \n2023 \n\n  \n   \n   \n  \n\nRevenues \n$50,569  \n 39,949  \n$44,179 \n\nCost of revenues \n 38,494  \n 30,655  \n 34,970 \n\n  \n    \n    \n   \n\nGross profit \n 12,075  \n 9,294  \n 9,209 \n\n  \n    \n    \n   \n\nOperating costs and expenses: \n    \n    \n   \n\nResearch and development \n 178  \n 175  \n 158 \n\nSales and marketing \n 5,242  \n 4,394  \n 4,891 \n\nGeneral and administrative \n 2,547  \n 2,113  \n 1,762 \n\nOther income \n \n-\n  \n \n-\n  \n (52)\n\nImpairment of Goodwill \n 1,200  \n 707  \n \n-\n \n\nImpairment of other Intangible assets \n \n-\n  \n 466  \n \n-\n \n\n  \n    \n    \n   \n\nTotal operating costs and expenses \n 9,167  \n 7,855  \n 6,759 \n\n  \n    \n    \n   \n\nOperating income \n 2,908  \n 1,439  \n 2,450 \n\n  \n    \n    \n   \n\nFinancial income (expenses), net \n 590  \n (139) \n (441)\n\n  \n    \n    \n   \n\nIncome before taxes on income \n 3,498  \n 1,300  \n 2,009 \n\nTaxes on income (tax benefit) \n (113) \n (1,000) \n 4 \n\n  \n    \n    \n   \n\nNet income \n$3,611  \n 2,300  \n$2,005 \n\n  \n    \n    \n   \n\nBasic net income per share \n$0.59  \n 0.40  \n$0.35 \n\n  \n    \n    \n   \n\nDiluted net income per share \n$0.57  \n 0.39  \n$0.34 \n\nShares (in thousands) used in calculation of earnings per share: \n    \n    \n   \n\n  \n    \n    \n   \n\nBasic \n 6,161  \n 5,756  \n 5,727 \n\nDiluted \n 6,312  \n 5,887  \n 5,905 \n\n \n\nThe accompanying notes are an integral part of\nthe consolidated financial statements.\n\n \n\n F-6\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n \n\n**STATEMENTS\nOF CHANGES IN SHAREHOLDERS’ EQUITY**\n\n**U.S. dollars in thousands, except share data**\n\n \n\n  \nOrdinary\nShares  \nShare\ncapital and\nadditional\npaid-in\ncapital  \nShares to be issued  \nAccumulated\nother\ncomprehensive\nincome (loss)  \nAccumulated\ndeficit  \nTotal\nshareholders’\nequity \n\n  \n   \n   \n   \n   \n   \n  \n\nBalance at December 31, 2022 \n 5,701,518  \n 86,009  \n \n-\n  \n (243) \n (69,132) \n 16,634 \n\nShare based compensation expense (see Note 13.c) \n    \n 97  \n \n-\n  \n \n-\n  \n \n-\n  \n 97 \n\nExercise of options (see Note 13) \n 46,500  \n 103  \n \n-\n  \n \n-\n  \n \n-\n  \n 103 \n\nNet income \n -  \n \n-\n  \n \n-\n  \n \n-\n  \n 2,005  \n 2,005 \n\n  \n    \n    \n    \n    \n    \n   \n\nBalance at December 31, 2023 \n 5,748,018  \n 86,209  \n \n-\n  \n (243) \n (67,127) \n 18,839 \n\nShare based compensation expense (see Note 13.c) \n    \n 74  \n \n-\n  \n \n-\n  \n \n-\n  \n 74 \n\nExercise of options \n 23,333  \n 50  \n \n-\n  \n \n-\n  \n \n-\n  \n 50 \n\nIssuance of Ordinary Shares in connection with Prospectus Supplement (see Note 13.a.4) \n 21,208  \n 68  \n \n-\n  \n \n-\n  \n \n-\n  \n 68 \n\nNet income \n -  \n \n-\n  \n \n-\n  \n \n-\n  \n 2,300  \n 2,300 \n\n  \n    \n    \n    \n    \n    \n   \n\nBalance at December 31, 2024 \n 5,792,559  \n 86,401  \n \n-\n  \n (243) \n (64,827) \n 21,331 \n\nShare based compensation expense (see Note 13.c) \n    \n 42  \n \n-\n  \n \n-\n  \n \n-\n  \n 42 \n\nExercise of options and warrants (see Note 13) \n 1,236,375  \n 3,618  \n \n-\n  \n \n-\n  \n \n-\n  \n 3,618 \n\nIssuance of Ordinary Shares (see Note 13.a.4) \n    \n \n-\n  \n 102  \n \n-\n  \n \n-\n  \n 102 \n\nNet income \n -  \n \n-\n  \n \n-\n  \n \n-\n  \n 3,611  \n 3,611 \n\n  \n    \n    \n    \n    \n    \n   \n\nBalance at December 31, 2025 \n 7,028,934  \n 90,061  \n 102  \n (243) \n (61,216) \n 28,704 \n\n \n\nThe accompanying notes are an integral part of\nthe consolidated financial statements.\n\n \n\n F-7\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n \n\n**CONSOLIDATED STATEMENTS OF CASH FLOWS**\n\n \n\n**U.S. dollars in thousands**\n\n** **\n\n  \nYear ended December 31, \n\n  \n2025  \n2024  \n2023 \n\nCash flows from operating activities: \n   \n   \n  \n\nNet income \n$3,611  \n$2,300  \n$2,005 \n\n  \n    \n    \n   \n\nAdjustments to reconcile net income to net cash provided by (used in) operating activities: \n    \n    \n   \n\nDepreciation and amortization \n 481  \n 560  \n 510 \n\nImpairment of Goodwill \n 1,200  \n 707  \n \n-\n \n\nImpairment of other intangible assets \n \n-\n  \n 466  \n \n-\n \n\nInterest and currency fluctuation of loans \n 170  \n (1) \n (69)\n\nSeverance pay, net \n 234  \n 8  \n 86 \n\nShare-based compensation expense \n 144  \n 74  \n 98 \n\nDecrease (Increase) in trade receivables, net \n (3,851) \n 637  \n (1,590)\n\nDecrease (Increase) in other accounts receivable and other long- term assets \n (241) \n (167) \n 515\n\nDecrease (Increase) in inventories \n 1,329  \n (1,937) \n 453\n\nIncrease in Deferred Tax Assets \n (250) \n (1,000) \n \n-\n \n\nDecrease in operating lease right-of-use assets, net \n 241  \n 247  \n 304 \n\nIncrease in operating lease liabilities \n (121) \n (242) \n (354)\n\nIncrease (decrease) in trade payables \n 416  \n (1,347) \n (274)\n\nIncrease (decrease) in employees and payroll accruals, accrued expenses and other liabilities \n 564  \n (367) \n (11)\n\nIncrease (decrease) in advances deferred revenues \n 1,119  \n 1,356  \n 156 \n\n  \n    \n    \n   \n\nNet cash provided by operating activities \n 5,046  \n 1,294  \n 1,829 \n\n  \n    \n    \n   \n\nCash flows from investing activities: \n    \n    \n   \n\n  \n    \n    \n   \n\nPurchase of property and equipment \n (452) \n (519) \n (341)\n\nAcquisition of Proteus and Microwave’s assets (Appendix A) \n \n-\n  \n \n-\n  \n (431)\n\n  \n    \n    \n   \n\nNet cash (used in) investing activities \n (452) \n (519) \n (772)\n\n  \n    \n    \n   \n\nCash flows from financing activities: \n    \n    \n   \n\n  \n    \n    \n   \n\nProceeds from issuance of shares, net \n \n-\n  \n 69  \n \n-\n \n\nProceeds from exercise of options and warrants \n 3,618  \n 50  \n 102 \n\nProceeds from short and long-term loans \n 621  \n 265  \n 93 \n\nRepayment of short and long-term loans \n (463) \n (167) \n (584)\n\n  \n    \n    \n   \n\nNet cash provided by (used in) financing activities \n 3,776  \n 217  \n (389)\n\n  \n    \n    \n   \n\nIncrease (decrease) in cash, cash equivalents and restricted cash \n 8,370  \n 992  \n 668 \n\nCash, cash equivalents and restricted cash at the beginning of the year \n 3,553  \n 2,561  \n 1,893 \n\n  \n    \n    \n   \n\nCash, cash equivalents and restricted cash at the end of the year \n$11,923  \n 3,553  \n$2,561 \n\n \n\nThe accompanying notes are an integral part of\nthe consolidated financial statement.\n\n \n\n F-8\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n \n\n**CONSOLIDATED\nSTATEMENTS OF CASH FLOWS**\n\n**U.S. dollars in thousands**\n\n** **\n\n  \nYear ended December 31, \n\n  \n2025  \n **2024**  \n  **2023**   \n\nSupplemental disclosure of cash flow activities: \n   \n   \n  \n\n  \n   \n   \n  \n\n(a) Net cash paid during the year for: \n   \n   \n  \n\n  \n   \n   \n  \n\nTax  \n$21  \n$\n-\n  \n$\n-\n \n\n  \n    \n    \n   \n\nInterest  \n$97  \n$102  \n$118 \n\n(b) Non-cash activities:  \n    \n    \n   \n\n  \n    \n    \n   \n\nOperating lease right-of-use assets \n 388  \n \n-\n  \n 220 \n\nOperating lease liabilities  \n$388  \n$\n-\n  \n 220 \n\n(c) Reconciliation of cash, cash equivalents and restricted cash:  \n    \n    \n   \n\n  \n    \n    \n   \n\nCash and cash equivalents  \n 11,825  \n 3,368  \n 2,344 \n\nRestricted cash  \n 98  \n 185  \n 217 \n\nTotal cash, cash equivalents and restricted cash  \n$11,923  \n$3,553  \n 2,561 \n\n \n\n**Appendix A**: Net cash used to pay for the\nacquisition of Proteus and Microwave’s assets (see Note 3):\n\n \n\n  \nApril 1,\n2023 \n\n  \n  \n\nIntangible assets, Net \n$760 \n\nAccrued expenses \n 329 \n\nNet cash used to pay for the Acquisition \n$431 \n\n \n\n F-9\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n \n\n**NOTE 1:- GENERAL**\n\n \n\n \na.\nB.O.S. Better Online Solutions Ltd. (“BOS” or the “Company”)\nis an Israeli corporation.\n\n \n\nThe Company’s shares are listed on NASDAQ under the\nticker BOSC.\n\n \n\n  b. The Company has three operating segments: the Intelligent Robotics segment managed by the Company, the RFID Division segment, and the Supply Chain Solutions segment, both of which are managed through the Company’s subsidiaries (see Note 16).\n\n \n\nThe Company’s wholly owned subsidiaries include:\n\n \n\n \n1.\nBOS-Dimex Ltd., (“BOS-Dimex”), is an Israeli company that\nprovides comprehensive turn-key solutions for Automatic Identification and Data Collection (AIDC), combining a mobile infrastructure\nwith software application of manufacturers that we represent. In addition, BOS-Dimex offers on-site inventory count services in the\nfields of apparel, food, convenience and pharma, asset tagging and counting services for corporate and governmental entities. BOS-Dimex\ncomprises the RFID segment\n\n \n\n \n2.\nBOS-Odem Ltd. (“BOS-Odem”), is an Israeli company that\nis a distributor of electro-mechanical components, mainly to customers in the aerospace, defense and other industries and a supply\nchain service provider for aviation customers that seek a comprehensive solution to their components-supply needs. BOS-Odem is part\nof the Supply Chain Solutions segment; and\n\n \n\n \n3.\nRuby-Tech Inc., a New York corporation, is a wholly-owned subsidiary\nof BOS-Odem and a part of the Supply Chain Solutions segment.\n\n \n\n \nc.\nIron Swords War\n\n \n\nIn October 2023, Israel was\nattacked by Hamas, a terrorist organization, and entered a state of war on several fronts. In June 2025, following continued nuclear\nthreats and intelligence assessments indicating imminent attacks, Israel launched a preemptive strike targeting military and nuclear\ninfrastructure inside Iran, aiming to disrupt Iran’s ability to coordinate or escalate hostilities and degrade its nuclear\ncapabilities. Iran responded with multiple waves of drones and ballistic missiles targeting Israeli cities. While most were\nintercepted, some caused civilian casualties and infrastructure damage. The Israeli military conducted further operations against\nIranian assets. As a result, a state of emergency was declared in Israel, resulting in consequences and restrictions on the Israeli\neconomy, which included, among other things, partial or complete closure of businesses, a \"closed skies\" policy and other\nlimitations. After 12 days of hostilities, a ceasefire between Israel and Iran was reached in June 2025. As of October 9, 2025,\nIsrael and Hamas entered into a ceasefire agreement calling for a permanent end of the war. However, there are no assurances that\nsuch agreements will hold.\n\n \n\nAfter the reporting date, on Saturday, February 28, 2026,\nIsrael and the United States launched a combined attack against government targets in Iran, following which Iran responded by firing\nmissiles at Israel and other countries in the region. Following these developments, the terrorist organization Hezbollah opened fire\non the State of Israel, which in response expanded the fighting front on the northern border. As a result, the Israeli government declared\na special state of emergency in the home front throughout the country, including restrictions on gatherings and a reduction in economic\nactivity except for essential workplaces until April 4, 2026.\n\n \n\nAs of the date of these financial\nstatements,the conflict continues in parts of the region and management regularly monitors developments and acts in accordance with the\nguidelines of the various authorities. As of the approval date of these financial statements, the Company believes there is no significant\nimpact on its activities.\n\n \n\n F-10\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n \n\n**NOTE 2:-\nSIGNIFICANT ACCOUNTING POLICIES**\n\n \n\nThe consolidated financial statements\nare prepared in accordance with the United States generally accepted accounting principles (“U.S. GAAP”).\n\n \n\n  a. Use of estimates:\n\n \n\nThe preparation of financial statements\nin conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial\nstatements and accompanying notes. The most significant assumptions are used with respect to the impairment analysis of goodwill and\nother identifiable intangible assets, the net realizable value of inventory, the recognition of a deferred tax asset, and the applicable\nvaluation allowance. Actual results could differ from those estimates.\n\n \n\n  b. Financial statements in U.S. dollars:\n\n \n\nA substantial portion of the Company’s\nrevenues and all of its subsidiaries’ revenues is denominated in U.S. dollars (“dollars”). The Company’s management\nbelieves that the dollar is the primary currency of the economic environment in which the Company operates. Thus, the functional and\nreporting currency of the Company is the dollar. Accordingly, monetary accounts maintained in currencies other than the dollar are re-measured\ninto dollars in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”)\n830, *Foreign Currency Matters*. All transaction gains and losses from the measurement of monetary balance sheet items are reflected\nin the statement of operations as financial income or expenses as appropriate.\n\n** **\n\n  c. Principles of consolidation:\n\n \n\nThe consolidated financial statements\ninclude the accounts of the Company and its subsidiaries. Intercompany transactions and balances, including profits from intercompany\nsales not yet realized outside the Company, were eliminated upon consolidation.\n\n \n\n  d. Cash equivalents:\n\n \n\nCash equivalents are short-term highly\nliquid investments with original maturities of less than three months from date of purchase.\n\n \n\n  e. Restricted bank deposits:\n\n \n\nRestricted bank deposits are deposits\nrelated to guaranties to customers and customs. Restricted deposits are presented at their cost. All restricted bank deposits are short\nterm in nature.\n\n \n\n F-11\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 2:-\nSIGNIFICANT ACCOUNTING POLICIES (Cont.)**\n\n** **\n\n  f. Inventory:\n\n \n\nThe inventory is valued at the lower\nof cost or net realizable value. Cost is determined using the moving average cost method. In 2025 and 2024, inventory write-down amounted\nto $784 and $563, respectively. Inventory write-offs and write-downs are provided to cover risks arising from slow-moving items or technological\nobsolescence.\n\n \n\n  g. Property and equipment, net:\n\n \n\nProperty and equipment are stated\nat cost, net of accumulated depreciation. Depreciation is calculated by using the straight-line method over the estimated useful lives\nof the assets, at the following annual rates:\n\n \n\n  \n% \n \n\n  \n  \n \n\nComputers and software \n20 - 33 \n(Mainly 33)\n\nMachines \n7-33 \n \n\nOffice furniture and equipment \n6 - 15 \n(Mainly 6)\n\nLeasehold improvements \nOver the shorter of the period of the lease or the life of the assets \n \n\nMotor vehicles \n15 \n \n\nBuildings \n4 \n \n\n** **\n\n  h. Business combination:\n\n \n\nThe consolidated financial statements\ninclude the operations of an acquired business from the date of the acquisition’s consummation. Acquired businesses are accounted\nfor using the acquisition method of accounting in accordance with ASC 805, “*Business Combinations*”, which requires,\namong other things, that most assets acquired, and liabilities assumed be recognized at their estimated fair values as of the acquisition\ndate.\n\n \n\nTransaction costs are expensed as\nincurred. Any excess of the consideration transferred over the assigned values of the net assets acquired is recorded as goodwill. Contingent\nconsideration incurred in a business combination is included as part of the acquisition price and recorded at a probability weighted\nassessment of its fair value as of the acquisition date. The fair value of the contingent consideration is re-measured at each reporting\nperiod, with any adjustments in fair value recognized in earnings.\n\n \n\n F-12\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 2:-\nSIGNIFICANT ACCOUNTING POLICIES (Cont.)**\n\n \n\n  i. Impairment of long-lived assets and intangible assets subject to amortization:\n\n \n\nThe Company’s long-lived assets\nare reviewed for impairment in accordance with ASC 360-10, *Accounting for the Impairment or Disposal of Long-Lived Asset*, whenever\nevents or changes in circumstances indicate that the carrying amount of an asset (or asset group) may not be recoverable. Recoverability\nof assets to be held and used is measured by a comparison of the carrying amount of an asset (or asset group) to the future undiscounted\ncash flows expected to be generated by the assets (or asset group). If such assets are considered to be impaired, the impairment to be\nrecognized is measured as the amount by which the carrying amount of the assets exceeds their fair value.\n\n \n\nIntangible assets with finite lives\nare amortized using the straight-line basis over their useful lives, to reflect the pattern in which the economic benefits of the intangible\nassets are consumed or otherwise used up. As of December 31, 2025, the remaining intangible assets were comprised mainly of distribution\nrights.\n\n \n\nFor the year ended December 31, 2025,\nno impairment losses were identified with respect to intangible assets.\n\n \n\nFor the year ended December 31, 2024,\nthe Company recognized an impairment loss in the amount of $189, with respect to intangible assets related to distribution rights acquired\nin 2023 as part of the acquisition of Proteus (see Note 3 below). \n\n \n\nThe impairment was made due to\na certain representative announcement that it will not market its components through the Company starting November 16, 2024.\n\n \n\nIn addition, for the year ended December\n31, 2024, the Company recognized an impairment in the amount of $277 regarding the remaining balance of “Customer relationship and\nNon-competition” related to the 2022 Dagesh acquisition.\n\n \n\nAmortization is calculated by using\nthe straight-line method over the estimated useful lives of the assets, at the following annual rates:\n\n \n\n   Periods \n\n     \n\nCustomer relationship   8.8 \n\nNon-competition   4 \n\nDistribution rights   8.8 \n\n \n\n  j. Goodwill:\n\n \n\nGoodwill represents excess of the\ncosts over the net assets of businesses acquired. Under ASC 350, Intangibles - Goodwill and Other (“ASC 350”), goodwill is\nnot amortized but instead is tested for impairment at least annually or whenever events or changes in circumstances indicate that the\ncarrying amount of goodwill may not be recoverable. \n\n \n\nThe Company performs its annual impairment\nanalysis of goodwill as of December 31 of each year, or more often if indicators of impairment are present. The provisions of ASC 350\nrequire that the impairment test be performed on goodwill at the level of the reporting unit. As required by ASC 350, the Company chooses\neither to perform a qualitative assessment whether a goodwill impairment test is necessary or proceeds directly to the goodwill impairment\ntest. Such determination is made for each reporting unit on a stand-alone basis. The qualitative assessment includes various factors\nsuch as macroeconomic conditions, industry and market considerations, cost factors, overall financial performance, earnings multiples,\ngross margin and cash flows from operating activities and other relevant factors. When the Company chooses to perform a qualitative assessment\nand determines that it is more likely than not (more than 50 percent likelihood) that the fair value of the reporting unit is less than\nits carrying value, then the Company proceeds to the goodwill impairment test. If the Company determines otherwise, no further evaluation\nis necessary.\n\n \n\nWhen the Company decides or is required\nto perform the goodwill impairment test, the Company compares the fair value of the reporting unit to its carrying value and an impairment\ncharge is recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value, if any.\n\n \n\n F-13\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n \n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 2:-\nSIGNIFICANT ACCOUNTING POLICIES (Cont.)**\n\n \n\nThe Company operates in three operating-based\nsegments: the Intelligent Robotics division, the RFID division and the Supply Chain Solutions division. The Company’s goodwill\nwas originally related to two different reporting units: the RFID division segment and the Intelligent Robotics, each of which represents\na whole separate reporting unit. However, as of December 31, 2025 and 2024, there is a balance of goodwill related only to the RFID Division. \n\n \n\nUnder the RFID Division segment there\nis one reporting unit with an allocated goodwill amount of approximately $ 2,988 (after the impairment loss). The Company performed an\nimpairment analysis as of December 31, 2024, using the income approach and concluded that the carrying value of such reporting unit\nexceeds its fair value and accordingly the analysis resulted in an impairment loss of goodwill with respect to such unit in the amount\nof $707.\n\n \n\nDue to certain negative factors such\nas decrease in revenue and profit. The Company performed an impairment analysis at an interim date as of June 30, 2025, and concluded\nthat the carrying value of such reporting unit exceeds its fair value, accordingly the analysis resulted in an impairment loss of goodwill\nwith respect to such unit in the amount of $700, The interim impairment test was based on a valuation performed internally by management.\n\n \n\nThe annual analysis, as of December 31,\n2025, resulted an additional impairment loss of goodwill with respect to such unit in the amount of $500, totaling an aggregate goodwill\nimpairment loss for the year ended December 31, 2025, in the amount of $1,200, related to this reporting unit. The annual impairment test\nwas based on a valuation performed by management with the assistance of a third-party independent appraiser.\n\n \n\nThe most significant assumptions and\njudgements used in the discounted cash flow model under the income approach for both 2025 impairment test were four years of projected\ncash flows including future revenues, expenses and capital expenditures, estimated weighted average cost of capital and short-term and\nlong-term growth rate and market conditions. The measurement of fair value of reporting units as part of goodwill impairment analysis\nis classified under Level 3 within the fair value hierarchy.\n\n \n\n  k. Severance pay:\n\n \n\nThe Company’s liability for\nseverance pay for its Israeli employees is calculated pursuant to the Israeli Severance Pay Law - 1963 (the “Israeli Severance\nPay Law”), based on the most recent salary of the employees multiplied by the number of years of employment as of the balance sheet\ndate. Employees employed for a period of more than one year are entitled to one month’s salary for each year of employment or a\nportion thereof. The Company’s liability for its Israeli employees is mostly covered by insurance or pension policies designed\nsolely for distributing severance pay.\n\n \n\nMost of the Company’s employees\nare subject to Section 14 of the Israeli Severance Pay Law. The Company’s contributions towards severance pay, for Israeli employees\nsubject to this section, have replaced its severance obligation. Upon contribution of the full amount of the employee’s monthly\nsalary for each year of service, no additional calculations are conducted between the parties regarding the matter of severance pay and\nno additional payments are required to be made by the Company to the employee in respect of severance pay. Further, the related obligation\nand amounts deposited on behalf of the employee for such obligation are not stated on the balance sheet, as the Company is legally released\nfrom the obligation to employees once the deposit amounts have been fully paid. \n\n \n\nSeverance expenses for years 2025, 2024 and 2023 amounted to $853,\n$332, and $417, respectively.\n\n \n\n  l. Revenue recognition:\n\n \n\nIn accordance with ASC 606, the Company\ndetermines revenue recognition through the following five steps: \n\n \n\n \n●\nIdentification of the contract, or contracts, with a customer;\n\n \n\n \n●\nIdentification of the performance obligations in the contract;\n\n \n\n \n●\nDetermination of the transaction price;\n\n \n\n \n●\nAllocation of the transaction price to the performance obligations\nin the contract; and\n\n \n\n \n●\nRecognition of revenue when, or as, the Company satisfies a performance\nobligation.\n\n \n\n F-14\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 2:-\nSIGNIFICANT ACCOUNTING POLICIES (Cont.)**\n\n \n\nA contract with a customer exists\nwhen all of the following criteria are met: the parties to the contract have approved it (in writing, orally, or in accordance with other\ncustomary business practices) and are committed to perform their respective obligations, the Company can identify each party’s\nrights regarding the distinct goods or services to be transferred (“performance obligations”), the Company can determine\nthe transaction price for the goods or services to be transferred, the contract has commercial substance and it is probable that the\nCompany will collect substantially all of the consideration to which it will be entitled in exchange for the goods or services that will\nbe transferred to the customer.\n\n \n\nThe transaction price represents the\namount of consideration to which the Company expects to be entitled in exchange for transferring promised goods or services to a customer.\nThe consideration promised in a contract with a customer may include fixed amounts, variable amounts, or both. Variable consideration\nis included in the transaction price only if it is not considered constrained (i.e. it is considered probable that a significant reversal\nin the amount of cumulative revenue recognized will not occur).\n\n \n\nRevenue is recognized when, or as,\nthe Company satisfies a performance obligation by transferring a promised good or service to a customer. A product is transferred when,\nor as, the customer obtains control of that product, and a service is considered transferred as the services are received and used\nby the customers.\n\n \n\nThe Company transfers control of a\ngood or service over time and, therefore, satisfies a performance obligation and recognizes revenue over time, if any of the following\ncriteria is met: a. The customer simultaneously receives and consumes the benefits provided by the Company’s performance as the\nCompany performs, b. The Company’s performance creates or enhances an asset (for example, work in process) that the customer controls\nas the asset is created or enhanced, or c. The Company’s performance does not create an asset with an alternative use and the Company\nhas an enforceable right to payment for performance completed to date. If none of the above criteria for satisfying a performance obligation\nover time are met, the performance obligation is considered as satisfied at a point in time (such as upon shipment of a completed robotics\nand automation project).\n\n \n\nRevenues are recorded in the amount\nof consideration to which the Company expects to be entitled in exchange for performance obligations upon transfer of control to the\ncustomer. If a contract contains a single performance obligation, the entire transaction price is allocated to the single performance\nobligation. With respect to contracts that contain multiple performance obligations such as different products or products and services\nthe Company performs an allocation of the transaction price to each performance obligation based on a relative standalone selling price\nbasis.\n\n \n\nFor arrangements that involve the\ndelivery or performance of multiple products or products sold with service contracts, the Company analyzes whether the goods or services\nthat were promised to the customer are distinct. A good or service promised to a customer is considered ‘distinct’ if both\nof the following criteria are met: (a) the customer can benefit from the goods or service, either on its own (i.e. without any professional\nservices, updates or technical support) or together with other resources that are readily available to the customer; and, (b) the Company’s\npromise to transfer the goods or services to the customer is separately identifiable from other promises in the contract.\n\n \n\n F-15\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 2:-\nSIGNIFICANT ACCOUNTING POLICIES (Cont.)**\n\n \n\nRevenues from service contracts sold\nto customers within a single contractually binding arrangement together with products, were determined to be distinct and therefore,\nare accounted for revenue recognition purposes, as a separate performance obligation. Accordingly, the amount attributed to the service\ncontract is deferred and recognized over time, on a straight-line basis over the contract’s period, as the services are mostly\ntime-based support services.\n\n \n\nThe Company records revenues net of\nany value added or sales tax.\n\n \n\nIn accordance with ASC 606, the Company’s\nrevenues are recognized as follows:\n\n \n\n \n1.\nThe Company generates its revenues primarily from the direct sale to\ncustomers of products such as electromechanical components and Automatic Identification Data Capture hardware manufactured by third\nparties. Revenues from sales of products are recognized at the point of time when the control of the product is transferred to the\ncustomer, mostly upon delivery to the customer, either at the Company’s premises, upon transfer to the customer’s carrier\nor upon delivery to the customer’s premises, as applicable to each contract.\n\n \n\n \n2.\nRevenues from service contracts are recognized over the contract’s\nperiod (for time-based services) or based on the amount of work performed (for on-site inventory count and similar services). Renewals\nof service support contracts create new performance obligations that are satisfied over the term with the revenues recognized ratably\nover the renewal period.\n\n \n\n \n3.\nRevenues from a robotics and automation projects are recognized at\na point in time when a project is finally completed and the installation has been successfully carried out, as the control of such\nproject is not eligible to be considered as transferred over time.\n\n \n\n \n4.\nDeferred revenues include unearned amounts received from customers\n(see Note 10) but not yet recognized as revenues.\n\n \n\nFor the years ended December 31, 2025,\n2024 and 2023 the Company recognized revenue of approximately $1,876, $1,707 and $1,770, respectively, that was included in the deferred\nrevenue balance at the beginning of each reporting period. As of December 31, 2025, the aggregate amount allocated to remaining unsatisfied\nperformance obligations (deferred revenue) that the Company expects to recognize as revenue in future periods is $3,415 of which, $3,129\n(92%) is expected to be recognized over the next 12 months (and presented as short-term balance), and the remainder amount of $286 is\nexpected to be recognized through 2027.\n\n** **\n\n F-16\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 2:-\nSIGNIFICANT ACCOUNTING POLICIES (Cont.)**\n\n** **\n\n  m. Income taxes:\n\n \n\nThe Company and its subsidiaries account\nfor income taxes in accordance with ASC 740, “Income Taxes” (“ASC 740”). ASC 740 prescribes the use of the liability\nmethod whereby deferred tax assets and liability account balances are determined based on the differences between the financial reporting\nand the tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences\nare expected to reverse. The Company and its subsidiaries provide a valuation allowance, if necessary, to reduce deferred tax assets\nto the amounts that are more likely than not to be realized. Interest expense and potential penalties related to income taxes are included\nin the tax expense line item of the Company’s Consolidated Statements of Operations.\n\n \n\nThe Company implements a two-step\napproach to recognizing and measuring uncertain tax positions accounted for in accordance with ASC 740. The first step is to evaluate\nthe tax position for recognition by determining if the weight of available evidence indicates it is more likely than not that the position\nwill be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the\ntax benefit as the largest amount which is more than 50% likely of being realized upon ultimate settlement.\n\n \n\n  n. Concentrations of credit risk and allowance for credit losses:\n\n \n\nFinancial instruments that potentially\nsubject the Company to concentrations of credit risk consist principally of cash and cash equivalents, restricted cash, bank deposits,\ntrade receivables, and other accounts receivable.\n\n \n\nThe trade receivables of the Company\nare derived from sales to customers located primarily in Israel, India , Europe and America. The Company generally does not require collateral,\nhowever a part of the Company’s customers outside of Israel are insured against customer nonpayment, through the Israeli Credit\nInsurance Company Ltd.\n\n \n\n F-17\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n \n\n**NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES (Cont.)**\n\n \n\nIn certain circumstances, the Company\nmay require letters of credit, other collateral, additional guarantees, or advanced payments. An allowance for credit loss is determined\nwith respect to specific debts that are doubtful of collection, in order to reflect the expected credit losses on accounts receivable\nbalances. Judgment is required in the estimation of the allowance for credit losses and the Company evaluates the collectability of its\naccounts receivable based on a combination of factors including, among other things, the past experience with the customers, the length\nof time that the balance is past due using an aging schedule, the customer’s current ability to pay and its creditworthiness using\nall available information about the credit risk of such customer taking into consideration the current business environment. If the Company\nbecomes aware of a customer’s inability to meet its financial obligations, a specific allowance is recorded to reduce the net receivable\nto the amount reasonably believed to be collectible from such customer.\n\n \n\nAccounts receivables are written off\nagainst the allowance for uncollectible accounts when the Company determines that these amounts are to be considered as no longer collectible.\n\n \n\nThe expenses (income) related to the\nallowance for credit loss for the years ended December 31, 2025, 2024 and 2023 was $60, ($209) and $205, respectively. \n\n \n\n  o. Contingencies\n\n \n\nThe Company and its subsidiaries are\ninvolved in certain legal proceedings that arise from time to time in the ordinary course of their business and in connection with certain\nagreements with third parties. Except for income tax contingencies, the Company records accruals for contingencies to the extent that\nthe management concludes that the occurrence is probable and that the related liabilities are estimable. Legal expenses associated with\ncontingencies are expensed as incurred.\n\n \n\n  p. Derivative financial instruments:\n\n \n\nASC 815, *“Derivatives and\nHedging”*, requires the presentation of all derivatives as either assets or liabilities on the balance sheet and the measurement\nof those instruments at fair value. For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the\nexposure to variability in expected future cash flows that is attributable to a particular risk) the Company applied the following:\n\n \n\nRecognize the entire changes in fair\nvalue of the derivative instruments designated for hedging purposes that were determined as qualifying for hedging purposes (including\nthe ineffective components of the hedging relationship) as a component of OCI, net of tax., such amounts are reclassified into earnings\nin the same period or periods during which the hedged transaction affects earnings.\n\n \n\n F-18\n\n \n\n \n\n **B.O.S. BETTER ONLINE SOLUTIONS\nLTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 2:-\nSIGNIFICANT ACCOUNTING POLICIES (Cont.)**\n\n  \n\nOther derivatives which do not qualify\nfor hedge accounting, or which have not been designated as hedging instruments, are recognized in the balance sheet at their fair value,\nwith changes in the fair value carried to the statements of income as incurred in financing income (expenses), net.\n\n \n\nDuring the reporting periods the Company’s\nactivity with derivative instruments was insignificant.\n\n \n\n  q. Basic and diluted net income per share:\n\n \n\nBasic net income per share is calculated\nby dividing the net income for the year applicable to ordinary shareholders, by the weighted average number of Ordinary Shares outstanding\nduring each year. Diluted net income per share is calculated based on the weighted average number of Ordinary Shares outstanding during\neach year, plus the potential dilution to Ordinary Shares considered outstanding during the year due to potential shares from the exercise\nof stock options or warrants, in accordance with ASC 260, *Earning per Share*. In computing diluted income per share, the average\nshare price for the period is used in determining the number of shares assumed to be purchased from the exercise of options or warrants.\n\n \n\nThe total number of Ordinary Shares\nrelated to outstanding options and warrants that was excluded from the calculations of diluted net earnings per share, since they were\ndetermined to have an anti-dilutive effect, was 0, 462,500 and 462,500 for the years ended December 31, 2025, 2024, and December 31,\n2023, respectively.\n\n \n\n  r. Accounting for share-based compensation:\n\n \n\nThe Company accounts for equity-based\ncompensation in accordance with ASC 718, *Stock Compensation* (“ASC 718”), which requires the recognition of compensation\nexpenses based on estimated fair values for all equity-based awards made to employees and directors.\n\n \n\nASC 718 requires companies to estimate\nthe fair value of equity-based payment awards on the date of grant using an option pricing model. The value of the portion of the award\nthat is ultimately expected to vest is recognized as an expense over the requisite service periods in the Company’s consolidated\nstatements of operations.\n\n \n\nThe Company recognizes compensation\nexpenses for the value of its awards granted based on the straight-line method over the requisite service period of each of the awards,\nnet of estimated forfeitures. Forfeitures are estimated at the time of grant and revised, if necessary, in subsequent periods if actual\nforfeitures differ from those estimates. Estimated forfeitures are based on actual historical pre-vesting forfeitures. The Company considers\nmany factors when estimating forfeitures, including employee class and historical experience.\n\n \n\n F-19\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 2:-\nSIGNIFICANT ACCOUNTING POLICIES (Cont.)**\n\n \n\nThe Company estimates the fair value\nof stock options granted using the Black-Scholes option pricing model. The option-pricing model requires a number of assumptions, of\nwhich the most significant are expected stock price volatility and the expected option term. Expected volatility was calculated based\nupon actual historical stock price movements over the most recent periods ending on the date of grant, equal to the expected option terms.\nThe expected option term represents the period that the Company’s stock options are expected to be outstanding and was determined\nbased on the simplified method permitted by the SEC’s Staff Accounting Bulletin (“SAB”) No.107 and extended by SAB\n110 as the average of the vesting period and the contractual term. The Company currently uses the simplified method as adequate historical\nexperience is not available to provide a reasonable estimate.\n\n \n\nThe risk-free interest rate is based\non the yield from U.S. Treasury zero-coupon bonds with an equivalent term. The Company has historically not paid dividends and has no\nforeseeable plans to pay dividends.\n\n \n\nThe fair value for options granted\nin years 2025, 2024 and 2023 was estimated on the date of grant using the Black-Scholes option pricing model with the following weighted\naverage assumptions:\n\n \n\n   Year ended December 31, \n\n   2025   2024   2023 \n\n             \n\nRisk-free interest   4.06%   4.33%   3.93%\n\nDividend yields   0    0    0 \n\nVolatility   35%   21%   42%\n\nExpected option term   3.5 years    3.5 years    3.5 years \n\n \n\n  s. Fair value of measurements:\n\n \n\nThe Company measures fair value and\ndiscloses fair value measurements for financial assets and liabilities.\n\n \n\nThe Company also measures certain non-financial\nassets, consisting mainly of a certain reporting unit that include goodwill and intangible assets at fair value on a nonrecurring basis. These\nitems are adjusted to fair value when they are considered to be impaired (see Note 8). Due to certain negative factors such as a decrease\nin revenue and profit the Company performed an impairment analysis at an interim date as of June 30, 2025 and concluded that the\ncarrying value of such reporting unit exceeds its fair value. Accordingly, the analysis resulted in an impairment loss of goodwill with\nrespect to such unit in the amount of $700. The interim impairment test was based on a valuation performed internally by management.\n\n \n\nAs of December 31, 2025, the Company\nmeasured the fair value of one reporting unit with allocated goodwill in an amount of $ 3,488 that was allocated to a certain reporting\nunit. As of December 31, 2025, the analysis resulted in an impairment loss of goodwill with respect to such unit in the amount of $500,\ntotaling an aggregate goodwill impairment loss for the year ended December 31, 2025 in the amount of $1,200, related to this reporting\nunit. The most significant assumptions used for the income approach for the June 2025 and December 2025 impairment test were four years\nof projected net cash flows, estimated weighted average cost of capital and a long-term growth rate.\n\n \n\n F-20\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 2:-\nSIGNIFICANT ACCOUNTING POLICIES (Cont.)**\n\n \n\nThe Company applies ASC 820, “*Fair\nValue Measurements and Disclosures”* (“ASC 820”), pursuant to which fair value is defined as the price that would\nbe received in consideration for the sale of an asset or paid for the transfer of a liability (i.e., the “exit price”) in\nan orderly transaction between market participants at the measurement date.\n\n \n\nIn determining fair value, the Company\nuses various valuation approaches. ASC 820 establishes a hierarchy for inputs used in measuring fair value that maximizes the use of\nobservable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable\ninputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from sources\nindependent of the Company.\n\n \n\nUnobservable inputs are inputs that\nthe Company assumes market participants would use in pricing the asset or liability developed based on the best information available\nunder the circumstances.\n\n \n\nThe fair value hierarchy is broken\ndown into three levels based on the inputs as follows:\n\n \n\n \nLevel 1 -\nQuoted prices (unadjusted) in active markets for identical assets or\nliabilities that the Company can access at the measurement date.\n\n \n\n \nLevel 2 -\nValuations based on one or more quoted prices in markets that are not\nactive or for which all significant inputs are observable, either directly or indirectly.  \n\n \n\n \nLevel 3 -\nValuations based on inputs that are unobservable and significant to\nthe overall fair value measurement.\n\n \n\nThe carrying amounts of the financial\ninstruments included in the working capital of the Company (cash and cash equivalents, restricted bank deposits, trade receivables, other\naccounts receivable, trade payables, and other accounts payable) approximate their fair values due to the short-term maturities of such\ninstruments.\n\n \n\nThe carrying value of long term loans\nis considered approximate to its fair value as their terms (mainly the interest rate) is considered close to current market terms.\n\n \n\n  t. **Cost of revenue**s, **selling, marketing, general and administrative**\n\n \n\nCost of revenues consist primarily\nof salaries, salary related expenses and costs of contractors and materials.\n\n \n\nRobotics and automation project’s\ncosts include direct material, labor, and indirect costs.\n\n \n\nSelling, marketing, general, and administrative\ncosts are charged to expense as incurred.\n\n \n\nProvisions for estimated losses on\nuncompleted contracts are made in the period in which such losses are determined.\n\n \n\n F-21\n\n \n\n** **\n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 2:-\nSIGNIFICANT ACCOUNTING POLICIES (Cont.)**\n\n** **\n\n  u. **Research and development costs**\n\n \n\nResearch and development costs (other\nthan computer software related expenses) are expensed as incurred.\n\n \n\n  v. **Leases**\n\n \n\nThe Company entered into several non-cancelable\nlease agreements for real estate (mainly offices, warehouses and base sites), and vehicles for use in its operations, which are classified\nas operating leases.\n\n \n\nIn accordance with ASC 842, the Company\ndetermines if an arrangement is a lease at inception. Under the ASC 842, arrangements meeting the definition of a lease are classified\nas operating or financing leases. A classification of a lease is determined based on the following criteria:\n\n \n\n \n1.\nThe lease transfers ownership of the underlying asset to the lessee\nby the end of the lease term.\n\n \n\n \n2.\nThe lease grants the lessee an option to purchase the underlying asset\nthat the lessee is reasonably certain to exercise.\n\n \n\n \n3.\nThe lease term is for the major part of the remaining economic life\nof the underlying asset (Generally, 75% or more of the remaining economic life of the underlying assets).\n\n \n\n \n4.\nThe present value of the sum of the lease payments and any\nresidual value guaranteed by the lessee equals or exceeds substantially all of the fair value of the underlying asset (generally,\n90% or more of the fair value of the underlying asset).\n\n \n\n \n5.\nThe underlying asset is of such a specialized nature that it is expected\nto have no alternative use to the lessor at the end of the lease term.\n\n \n\nIf any of these five criteria is met,\nthe lease is classified as a finance lease. Otherwise, the lease is classified as an operating lease. \n\n \n\n F-22\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 2:-\nSIGNIFICANT ACCOUNTING POLICIES (Cont.)**\n\n \n\nLeases are recorded\non the consolidated balance sheet as both a right of use asset and a lease liability, calculated by discounting fixed lease payments\nover the lease term at the rate implicit in the lease or the Company’s incremental borrowing rate. Lease liabilities are increased\nby interest and reduced by payments each period, and the right of use asset is amortized over the lease term. For operating leases, interest\non the lease liability and the amortization of the right of use asset results in straight-line rent expense over the lease term. Variable\nlease expenses if any, are recorded when incurred. \n\n \n\nThe Company elected\nthe short-term lease recognition exemption for all leases that qualify (leases with a term shorter than 12 months). For those leases,\nright-of-use assets or lease liabilities are not recognized and rent expense is recognized on a straight-line basis over the lease\nterm.\n\n \n\nThe Company had\nno material finance leases throughout the reporting periods\n\n \n\nw.**Accounting Pronouncements Adopted During the Current Year**\n\n** **\n\n**Improvements to Income Tax Disclosures**\n\n** **\n\nIn December 2023,\nthe FASB issued ASU 2023-09 on Improvements to Income Tax Disclosures that require greater disaggregation of income tax disclosures to\nthe income tax rate reconciliation and income taxes paid. The updates are effective for annual periods beginning after December 15, 2024.\n\n \n\nThe Company adopted ASU 2023-09 for the year ended December 31, 2025, and applied the new disclosure requirements prospectively to the current annual period. Prior period disclosures have not been adjusted to reflect the new disclosure requirements. The adoption of this guidance did not have material effect on the consolidated financial statements other than the addition of certain disclosure – see Note 14 below.\n\n \n\n F-23\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 2:-\nSIGNIFICANT ACCOUNTING POLICIES (Cont.)**\n\n \n\nx.**Recently issued accounting pronouncements, not yet adopted**\n\n \n\n**1.**In November 2024, the FASB issued ASU 2024-03 on Disaggregation of Income Statement Expenses\nthat enhances disclosure of certain costs and expenses to provide enhanced transparency into the expenses presented in the income statement.\nThe updates are effective for annual periods beginning after December 15, 2026, and may be applied either (1) prospectively to financial\nstatements issued for reporting periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in\nthe financial statements. The Company intends to apply the guidance in fiscal year 2027. The Company is currently assessing the impact\nof the disclosure of this standard.\n\n \n\n**2.**In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic\n326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (ASU 2025-05), which provides a practical expedient when\nestimating credit losses on accounts receivable and contract assets arising from transactions accounted for under ASC 606, Revenue from\nContracts with Customers. Under this practical expedient, an entity is allowed to assume that the current conditions it has applied in\ndetermining credit loss allowances for current accounts receivable and current contract assets remain unchanged for the remaining life\nof those assets. ASU 2025-05 is effective for annual periods beginning after December 15, 2025, and interim periods within those annual\nreporting periods. The Company is currently assessing the impact of the disclosure of this standard.\n\n \n\n**3.**In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use\nSoftware (Topic 350-40): Targeted Improvements (ASU 2025-06). ASU 2025-06 provides updated guidance clarifying the capitalization of\ncosts related to internal-use software, including enhanced guidance on cloud computing arrangements. ASU 2025-06 is effective for annual\nperiods beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted. The Company\nis currently evaluating this guidance to determine the impact it may have on its consolidated financial statements\n\n \n\n F-24\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 3:-\nACQUISITION OF BUSINESS**:\n\n \n\n \n**A.**\n**Acquisition of Proteus’ share in a joint venture**\n\n \n\nOn July 7, 2013, the Company entered\ninto a profit-sharing agreement with Proteus Ltd (Proteus), providing for the joint market and sale of certain products.\n\n \n\nOn April 2, 2023, Proteus sold the\nCompany its share in the joint activity in consideration of $723, of which $138 was paid on signing and the rest was paid in monthly\ninstallments during a two-year period.\n\n \n\nPursuant to the sale agreement, Proteus\nwas required to gradually phase out its marketing and sale of the products until the end of 2023.\n\n \n\nDuring 2024, the Company recognized\nan impairment in the amount of $189 regarding the remaining balance of Distribution rights related to the 2023 Proteus acquisition.\n\n \n\n \n**B.**\n**Acquisition of certain distribution rights**\n\n \n\nOn May 31, 2023, the Company entered\ninto an agreement with Microwave Ltd. for the purchase of its distribution rights for certain products, in consideration of $38, paid\nat signing.   \n\n** **\n\n**NOTE 4A:\nCASH**\n\n \n\n \n \n**December 31,**\n\n \n \n**2025**\n \n \n**2024**\n\n \n \n \n \n \n \n\nDenominated in U.S. dollar (*)\n\n$\n2,689\n \n \n \n2,137\n\nDenominated in New Israeli Shekel\n \n \n8,914\n \n \n \n1,226\n\nDenominated in other currencies\n \n \n222\n \n \n \n5\n\n \n \n$\n11,825\n \n \n$\n3,368\n\n \n\n(*)As of December 31, 2025, including short-term bank deposits for a period less than 3 months\nat an average interest rate of 7.25%.\n\n \n\n F-25\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n \n\n**NOTE 4B:-\nOTHER RECEIVABLE AND PREPAID EXPENSES**\n\n** **\n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n   \n  \n\nGovernment authorities \n$430  \n$173 \n\nAdvances to suppliers \n 615  \n 655 \n\nPrepaid expenses \n 285  \n 248 \n\nOther \n 110  \n 74 \n\n  \n    \n   \n\n  \n$1,440  \n$1,150 \n\n** **\n\n**NOTE 5:-\nINVENTORIES**:\n\n** **\n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n   \n  \n\nRaw materials \n$199  \n$200 \n\nInventory in progress \n 1,737  \n 1,559 \n\nFinished goods \n 4,605  \n 6,111 \n\n  \n    \n   \n\n  \n$6,541  \n$7,870 \n\n \n\n(*)The inventory balance as of December 31, 2025, and 2024 is presented net of an allowance\nfor slow inventory in the amounts of $2,215 and $2,999, respectively.\n\n \n\n**NOTE 6:- OTHER LONG TERM ASSETS**\n\n** **\n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n   \n  \n\nPrepaid expenses \n$108  \n$162 \n\nOther \n$20  \n$15 \n\n  \n    \n   \n\n  \n$128  \n$177 \n\n** **\n\n F-26\n\n \n\n** **\n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n \n\n**NOTE 7:-\nPROPERTY AND EQUIPMENT, NET**:\n\n** **\n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\nCost: \n   \n  \n\nBuildings \n$2,261  \n$2,251 \n\nComputers and software \n 1,560  \n 1,520 \n\nMachines \n 644  \n 634 \n\nOffice furniture and equipment \n 590  \n 563 \n\nLeasehold improvements \n 1,310  \n 1,307 \n\nMotor Vehicles \n 1,477  \n 1,115 \n\n  \n    \n   \n\n  \n$7,842  \n$7,390 \n\n  \n    \n   \n\nAccumulated Depreciation: \n    \n   \n\nBuildings \n$199  \n$137 \n\nComputers and software \n 1,472  \n 1,387 \n\nMachines \n 619  \n 599 \n\nOffice furniture and equipment \n 431  \n 418 \n\nLeasehold improvements \n 941  \n 856 \n\nMotor Vehicles \n 731  \n 576 \n\n  \n    \n   \n\n  \n$4,393  \n$3,973 \n\n  \n    \n   \n\nProperty and equipment, net \n$3,449  \n$3,417 \n\n** **\n\nDepreciation expenses amounted to $420,\n$370 and $343 for the years ended December 31, 2025, 2024 and 2023, respectively. Depreciation expenses are recorded in Cost of revenues,\nsales and marketing, and General and administrative. Additional equipment was purchased in amounts of $452, $519 and $341 for the years\nended December 31, 2025, 2024 and 2023, respectively.\n\n \n\n F-27\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n \n\n**NOTE 8:-\nGOODWILL AND OTHER INTANGIBLE ASSETS, NET**\n\n \n\n \n**A.**\n**Other Intangible Assets:**\n\n \n\nIntangible assets are amortized based\non the straight-line method for their remaining useful life.\n\n \n\n  \nDistribution rights  \nCustomers’ relationship  \nNon-competition  \nTotal \n\nBalance as of January 1 and December 31, 2023 \n 696  \n 239  \n 143  \n 1,078 \n\nChanges during 2024 \n    \n    \n    \n   \n\nAcquisition during 2024 \n \n \n  \n \n \n  \n \n \n  \n \n \n \n\nAmortization \n (85) \n (35) \n (70) \n (190)\n\nImpairment of Intangible Assets \n (189) \n (204) \n (73) \n (466)\n\nBalance as of January 1 and December 31, 2024 \n 422  \n \n-\n  \n \n-\n  \n 422 \n\nChanges during 2025 \n    \n    \n    \n   \n\nAcquisition during 2025 \n \n-\n  \n \n-\n  \n \n-\n  \n \n-\n \n\nAmortization during 2025 \n (61) \n \n-\n  \n \n-\n  \n (61)\n\nBalance as of December 31, 2025 (*) \n$361  \n \n-\n  \n \n-\n  \n$361 \n\n \n\n \n**B.**\n1. Amortization expenses amounted to $61, $190 and $168 for the years ended December 31, 2025, 2024 and 2023, respectively.\n\n \n\n2. For the year ended December\n31, 2025, no impairment losses were identified with respect to intangible asset\n\nDuring 2024, the Company recognized an impairment in the amount of\n$189 regarding the remaining balance of suppliers’ relationships related to the 2023 Proteus acquisition (see Notes 3a and 2i) and\nan amount of $277 regarding the remaining balance of customers’ relationships and Non-competition related to the 2022 Dagesh acquisition\n(see Note 2i).\n\n \n\n F-28\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n \n\n**NOTE 8:- GOODWILL AND OTHER INTANGIBLE\nASSETS, NET (Cont.)**\n\n \n\n  **C.** The changes in the carrying amount of goodwill for the years ended December 31, 2025, and 2024 are as follows:\n\n \n\n  \nGoodwill \n\nBalance as of January 1 and December 31, 2023 \n 4,895 \n\nChanges during 2024 \n   \n\nAcquisition during 2024 \n \n-\n \n\nImpairment of Goodwill (See Note 2j) \n (707)\n\nBalance as of January 1 and December 31, 2024 \n 4,188 \n\nChanges during 2025 \n   \n\nAcquisition during 2025 \n \n-\n \n\nImpairment of Goodwill (See Note 2j) \n (1,200)\n\nBalance as of December 31, 2025 (*) \n$2,988 \n\n \n\n(*)As of December 31, 2025, the entire remaining balance of goodwill relates to the RFID segment\n(see Note 16)\n\n \n\n**NOTE 9:-\nACCRUED EXPENSES AND OTHER LIABILITIES**:\n\n** **\n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n   \n  \n\nProfessional services \n 132  \n 99 \n\nTax accruals \n 544  \n 122 \n\nAgent Fees \n 4  \n 311 \n\nOther \n 303  \n 66 \n\n  \n$983  \n$598 \n\n** **\n\n**NOTE 10:-\nDEFERRED REVENUES**:** **\n\n** **\n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n   \n  \n\nAdvanced payments from customers \n 2,398  \n 1,529 \n\nService contracts \n 650  \n 617 \n\nOther \n 367  \n 150 \n\nTotal \n 3,415  \n 2,296 \n\nLess- long term deferred revenue related to service contract \n (286) \n (293)\n\n  \n$3,129  \n$2,003 \n\n \n\n F-29\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n \n\n**NOTE 11:-\nSHORT TERM AND LONG-TERM LOANS, NET OF CURRENT MATURITIES**:\n\n \n\nClassified by linkage terms and interest\nrates, the total amount of the long term loans is as follows:\n\n \n\nLoan currency \nWeighted interest\nrate as of\nDecember 31,\n2025  \nDecember 31, \n\n  \n%  \n2025  \n2024 \n\n  \n   \n   \n  \n\nNew Israeli Shekel \n 7.75% \n$1,120  \n$1,419 \n\n  \n    \n    \n   \n\nLess - current maturities \n    \n (148) \n (439)\n\n  \n    \n    \n   \n\n  \n    \n$972  \n$980 \n\n \n\n \n1.\nIn October 2017, the Company and its Israeli subsidiaries entered into\nan agreement with First International Bank of Israel Ltd. (hereinafter – the Bank), for the provision of credit facilities.\n\n \n\nThe Bank loan agreement includes covenants\nto maintain certain financial ratios related to shareholders’ equity, EBITDA, and operating results. The Bank credit facilities\nare secured by a first ranking fixed charge on any unpaid share capital of the Company, the goodwill of the Company, any insurance entitlements\nin the Company’s assets pledged thereunder, and floating charges on all of the assets of the Company and its Israeli subsidiaries,\nowned now or in the future. As of December 31, 2025, the Company met the covenants set forth in the agreement.\n\n \n\n  2. The total amount to be repaid by the Company is as follows:\n\n \n\n  \nDecember 31,\n2025 \n\nPayment schedule \n   \n\n2026 \n 148 \n\n2027 \n 128 \n\n2028 \n 128 \n\n2029 \n 128 \n\n2030 - 2034 (*) \n 588 \n\nTotal \n$1,120 \n\n \n\n(*) The total amount to be repaid by the Company every year from 2030 until 2034.\n\n   \n\n(**) As of December 31, 2025, the Company and its subsidiaries had an unutilized short term credit line in the amount of $1,494, bearing an annual interest of 7.25%.\n\n \n\n3.On December 18,2025 the Company obtained a short-term bank loan in the amount of NIS 2,000,000 (approximately $621,000), bearing interest at an annual rate of 7.25%. The loan was fully repaid in January 2026.\n\n \n\n F-30\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 12:-\nCOMMITMENTS AND CONTINGENT LIABILITIES**\n\n \n\n \n1.\nRoyalty commitments:\n\n \n\nUnder the Company’s research and\ndevelopment agreements with the Israel Innovation Authority (the IIA) and pursuant to applicable laws, the Company is required to pay\nroyalties at the rate of 3.5% of sales of products developed with funds provided by the IIA, up to an amount equal to 100% of the research\nand development grants (dollar-linked) received from the IIA. The obligation to pay these royalties is contingent upon actual sales of\nthe products. Royalties payable with respect to grants received under programs approved by the IIA after January 1, 1999, are subject\nto interest on the U.S. dollar-linked value of the total grants received at the annual rate applicable to dollar deposits at the time\nthe grants are received. No grants were received since 2007. As of December 31, 2025, the Company has an outstanding contingent obligation\nto pay royalties to the IIA, including interest, in the amount of approximately $3,603, with respect to the grants. Since year 2012,\nthe developed software for which the grant was received is no longer being sold and is not expected to be sold in the future. Accordingly\nno royalty expenses were recorded during the respective years, and the Company anticipates that no royalties will be paid in the future.\n\n \n\n \n2.\n\nLitigation:\n\n \n\nAs of March 15, 2026, the Company is not\na party to any material legal proceedings.\n\n \n\n F-31\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 13:- SHAREHOLDERS’ EQUITY**\n\n \n\n \na.\n\nOrdinary Shares:\n\n \n\n**Composition of shareholders’ equity:**\n\n \n\n \n1.\nIssuance of Ordinary Shares in connection with a Securities Purchase\nAgreement:\n\n \n\nOn May 16, 2019, the Company entered into\nand closed a securities purchase agreement with several investors for the sale of 400,000 Ordinary Shares at a price of $2.50 per share,\nresulting in gross proceeds of $1,000 and $65 issuance expenses. In addition, the Company issued to the investors 240,000 warrants with\nan exercise price of $3.30 per Ordinary Share. The warrants were exercisable for 3.5 years and were subject to a three-year vesting period\nas follows: one third of the warrants shall vest annually (upon the lapse of 12 months, 24 months and 36 months from issuance), provided\nthat on the applicable vesting date the investor did not sell any of the Ordinary Shares purchased in the private placement. Vesting of\nall of the warrants was to be accelerated in the event that any one or more shareholders acting together acquire a block of 40% of the\nCompany’s issued and outstanding share capital. In addition, the Company issued 60,000 warrants as fees to a placement agent. On\nOctober 23, 2022, the Company extended the contractual term of the warrants by an additional three years. During the year ended December\n31, 2025, all the warrants have been exercised into 300,000 Ordinary Shares of the Company. The net cash received by the Company amounted\nto $990.\n\n \n\n \n2.\nIssuance of Ordinary Shares in connection with Prospectus Supplement\nfiled on December 30, 2020:\n\n \n\nOn January 4, 2021, the Company entered\ninto a definitive agreement with several institutional investors for the purchase and sale of 800,000 Ordinary Shares and 720,000 warrants\nto purchase Ordinary Shares at a combined purchase price of $2.50 in a registered direct offering with a total gross amount of $2,000\nor $1,841 net of issuance expenses. The warrants have an exercise price of $2.75 per share, are immediately exercisable and have a five-year\nterm. During the year ended December 31, 2025, all the warrants have been exercised into 720,000 Ordinary Shares of the Company. The net\ncash received by the Company amounted to $1,980.\n\n \n\n3. \n\n \n\n** **** **\n**As of December 31, 2025**** **** **\n**As of December 31, 2024**** **\n\n** **** **\n**Authorized**** **** **\n**Issued and outstanding**** **** **\n**Authorized**** **** **\n**Issued and outstanding**** **\n\nOrdinary Shares with no par value (*)  \n 11,000,000  \n 7,028,934  \n 11,000,000  \n 5,792,559 \n\n \n\n(*) At the Annual General Meeting of shareholders held on December 15, 2022, it was approved to increase the Company’s authorized share capital by 3,000,000 Ordinary Shares, from 8,000,000 authorized shares to 11,000,000 authorized shares. The Ordinary Shares have no nominal value and rank pari-passu in all respects.\n\n \n\n  4. On May 2, 2022, the Company entered into a definitive agreement with several investors for the sale of 450,000 units, each consisting of one Ordinary Share and one half warrant to purchase an Ordinary Share, at a unit purchase price of $2.2. The warrants have an exercise price of $2.2 per Ordinary Share and are exercisable into Ordinary Shares over a five-year term. The sale of the units was made in a registered direct offering with a total gross amount of $990 or $911 net of incremental and direct issuance expenses. The Company issued 8,100 warrants as fees to a placement agent. As of December 31, 2025, 5,000 warrants have been exercised into 5,000 Ordinary Shares of the Company. The net cash received by the Company amounted to $11.\n\n \n\n F-32\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 13:-\nSHAREHOLDERS’ EQUITY (Cont.)**\n\n** **\n\n \nb.\nWarrants to shareholders\n\n \n\nThe Company’s outstanding warrants\nto shareholders as of December 31, 2025, are as follows:\n\n \n\n**Outstanding and**\n\n**exercisable**\n\n**warrants**\n  \n**Weighted average**\n\n**exercise price**\n\n**of outstanding**\n\n**warrants**\n  \n**Weighted**\n\n**average Remaining contractual life (years)**\n \n\n 228,100    2.2    1.33 \n\n \n\n**Outstanding and**\n\n**exercisable**\n\n**warrants**\n   Issuance Date  Last Date to Exercise  Exercise Price   Remaining contractual life (years) \n\n 228,100   03/05/2022  02/05/2027   2.20    1.33 \n\n \n\n \nc.\nStock option plans:\n\n \n\nIn May 2003, the Company’s shareholders\napproved the adoption of the 2003 Israeli Stock Option Plan or the Plan. On December 2012, the Company’s shareholders approved\na 10 year extension to the Plan, according to which the Board of Directors was able to grant options under the Plan through May 31, 2023.\nOn May 28, 2023, the Company’s Board of Directors approved a 10 year extension to the Plan, according to which the Board of Directors\nmay grant options under the Plan through May 31, 2033.\n\n \n\nIn December 2017, the shareholders\napproved an increase of the pool of shares reserved for issuances under the Plan, to 500,000 Ordinary Shares. In July 18, 2018, the Company’s\nshareholders approved (i) an increase of the number of Ordinary Shares available for issuance under the Plan, by 200,000 to a total of\n700,000 Ordinary Shares, and (ii) an amendment of the Plan allowing for the grant of Ordinary Shares in addition to options.\n\n \n\nOn December 15, 2022, the Company’s\nshareholders approved an increase of the number of Ordinary Shares available for issuance under the Plan, by 300,000 to a total of 1,000,000\nOrdinary Shares.\n\n \n\nUnder the Plan, the terms and conditions\nof the options and the number of shares subject thereto shall be determined by the Board of Directors. The Board of Directors also has\ndiscretion to determine the nature of the consideration to be paid upon the exercise of an option under the Plan. Such consideration\ngenerally may consist of cash, or, at the discretion of the Board of Directors, cash and a recourse promissory note.\n\n \n\n F-33\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 13:-\nSHAREHOLDERS’ EQUITY (Cont.)**\n\n \n\nThe Ordinary Shares acquired upon\nexercise of an option are subject to certain restrictions on transfer, sale, or hypothecation. Options are exercisable and restrictions\non disposition of shares lapse pursuant to the terms of the individual agreements under which such options were granted or shares issued.\n\n \n\nThe Company has elected to designate\nthe Plan under the “capital gains” track of Section 102 of Israeli Income Tax Ordinance 5721-1961 (the “Tax Ordinance”),\ndesigned to afford qualified optionees certain tax benefits under the Tax Ordinance (a “Section 102 Plan”). Pursuant to the\nelection made by the Company, capital gains derived by optionees arising from the sale of shares pursuant to the exercise of options\ngranted to them under the Plan, will be subject to a flat capital gains tax rate of 25% (instead of the gains being taxed as salary income\nat the employee’s marginal tax rate). However, as a result of this election, the Company is not allowed to claim the amounts credited\nto such employees as a benefit when the related capital gains tax is payable by them, as an expense for tax purposes.\n\n \n\nThe Company may change its election\nfrom time to time, as permitted by the Tax Ordinance. There are various conditions that must be met in order to qualify for these benefits,\nincluding the registration of the options in the name of a trustee (the “Trustee”) for each of the employees who is granted\noptions. Each option and any Ordinary Shares acquired upon the exercise of the option must be held by the Trustee for a period commencing\non the date of grant and ending no earlier than 24 months from the date of grant.\n\n \n\nIn the year 2025, the Company issued\nto its directors and officers a total of 25,000 options to purchase Ordinary Shares.\n\n \n\nIn the year 2024, the Company issued\nto its directors and officers a total of 37,500 options to purchase Ordinary Shares.\n\n \n\nIn the year 2023, the Company did\nnot issue to its directors and officers any options to purchase Ordinary Shares.\n\n \n\nThe options’ exercise price is\ndetermined as the weighted average of the closing prices of the Ordinary Shares on the Nasdaq Capital Market during the 20 trading days\npreceding the date of approval of the grant by the Board of Directors or for grants to the Chief Executive Officer or directors, 20 trading\ndays preceding the approval of the grant by the shareholders.\n\n \n\nThe options will vest and become exercisable\nannually over a period of three years, in three equal parts, such that one third of the options shall vest on each of the first, second\nand third anniversary of the grant date, provided that the director or officer is still serving on the applicable vesting date.\n\n \n\nThe options shall expire on the fifth\nanniversary of the grant date.\n\n \n\nPayment of the exercise price must\nbe made in full upon exercise of the options, by cash or check or cash equivalent, or by the assignment of the proceeds of a sale of\nsome or all of the Ordinary Shares being acquired upon exercise of the options, or by any combination of the foregoing.\n\n \n\nAs of December 31, 2025, there are\n180,700 options available for future grants under the Plan. Each option granted under the Plan expires five years from the date of the\ngrant. The options generally vest gradually over a period of up to three years.\n\n \n\n F-34\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 13:-\nSHAREHOLDERS’ EQUITY (Cont.)**\n\n \n\nA summary of the Company’s employee\nand director stock option activity and related information for the year ended December 31, 2025, 2024, 2023 is as follows:\n\n** **\n\n  \n2025  \n2024  \n2023 \n\n  \nNumber of options  \nWeighted- average exercise price  \nNumber of options  \nWeighted average exercise price  \nNumber of options  \nWeighted- average exercise price \n\n  \n   \n   \n   \n   \n   \n  \n\nOutstanding - beginning of year \n 315,000  \n$2.96  \n 300,833  \n$2.89  \n 347,333  \n$2.79 \n\nChanges during the year: \n    \n    \n    \n    \n    \n   \n\nGranted \n 25,000  \n$3.92  \n 37,500  \n$2.97  \n \n-\n  \n$\n-\n \n\nExercised \n (211,375) \n$3.01  \n (23,333) \n$2.14  \n (46,500) \n$2.16 \n\nForfeited \n (2,500) \n$2.78  \n \n-\n  \n$\n-\n  \n \n-\n  \n$\n-\n \n\nOutstanding - year end \n 126,125  \n$3.07  \n 315,000  \n$2.96  \n 300,833  \n$2.89 \n\nVested and expected to vest \n 76,124  \n$2.81  \n 248,333  \n$3.04  \n 183,333  \n$2.95 \n\nExercisable at year end \n 76,124  \n$2.81  \n 248,333  \n$3.04  \n 156,666  \n$3.09 \n\n** ** \n\nDuring the years 2025, 2024, and 2023,\nstock-based compensation expense related to employees and directors stock options amounted to $42, $74, and $98 respectively, and is included\nin general and administrative expenses within the statement of operations.\n\n \n\nBelow are the issuances of shares and\noptions during the reports periods:\n\n \n\n  ●\n\nOn August 8, 2024, the Company issued to its director and officers, a total of 37,500 options.\n\n     \n\n  ●\nOn December 5, 2024, the Company issued to its CEO, 21,208 shares.\n\n     \n\n  ● On\nMay 25, 2025, the Company issued to its director and officers, a total of 25,000 options.\n\n \n\n  ●\n\nDuring 2025, the Company approved bonuses for its Chief Executive Officer and Chief Financial Officer in the amount of $102 thousand, in recognition of their services rendered during the year. Each bonus was payable in Ordinary Shares, issued on the date of approval by the shareholders – October 2025. The number of shares issued was calculated based on a price per share equal to the volume-weighted average closing price of the Company’s Ordinary Shares on NASDAQ during the 20 trading days preceding the date of the approval of the bonus by the Board. Each bonus is subject to a clawback in accordance with the Company’s Compensation Policy. The related shares were issued in 2026.\n\n \n\n F-35\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 13:-\nSHAREHOLDERS’ EQUITY (Cont.)**\n\n \n\nThe weighted-average grant-date fair\nvalue of options granted during the years ended December 31, 2025, 2024 and 2023 was $1.25, $0.87 and $0, respectively. The weighted-average\ngrant-date fair value of unvested options as of December 31, 2025, was $1.06. The aggregate intrinsic value of the outstanding options\nin each of the years ended December 31, 2025, 2024 and 2023 was $188, $129 and $0. The aggregate intrinsic value represents the total\nintrinsic value (the difference between the fair market value of the Company’s Ordinary Shares on December 31 of the respective\nyear and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had\nall option holders exercised their options on such date.\n\n \n\nDuring the years ended December 31,\n2025, 2024 and 2023, exercised options amounted to a total of 211,375, 23,333 and 46,500, respectively. As of December 31, 2025 and 2024,\nthere were a total of $41 and $52 respectively, of unrecognized compensation cost related to non-vested share-based compensation arrangements\ngranted under the Company’s Plan. That cost is expected to be recognized through 2026 until 2028.\n\n \n\nOptions granted to employees and directors\nthat are outstanding as of December 31, 2025, broken into exercise prices, are as follows: \n\n \n\n                Weighted average \n\n    Options   Weighted   Options   Remaining \n\n    outstanding   average   exercisable   Contractual \n\n    as of   remaining   as of   life of options \n\nExercise   December 31,   contractual   December 31,   exercisable \n\nPrice   2025   life (years)   2025   (years) \n\n                  \n\n 2.245    31,667    1.95    31,667    1.95 \n\n 2.968    30,834    3.64    5,833    3.64 \n\n 3.251    7,500    0.81    7,500    0.81 \n\n 3.252    31,124    0.81    31,124    0.81 \n\n 3.876    10,000    4.40    \n-\n    4.40 \n\n 3.986    15,000    4.21    \n-\n    4.21 \n\n                       \n\n Grand Total    126,125    2.48    76,124    1.50 \n\n \n\nSee also Note 2r regarding the assumptions\nutilized for the un measurement of the fair value of stock options at the grant date.\n\n \n\n F-36\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS\nLTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 14:-\nTAXES ON INCOME**:\n\n \n\n \na.\nCorporate tax rates in Israel\n\n \n\nTaxable income of the Company is subject\nto a corporate tax rate of 23% in 2023, 2024 and 2025.\n\n \n\n \nb.\nLoss carry-forward:\n\n \n\nThe Company and its Israeli subsidiaries\nhave accumulated business losses for Israeli income tax purposes as of December 31, 2025, in the amount of approximately $21,700. In general,\nthese losses may be carried forward and offset against taxable business income and capital gains in the business in the future for an\nindefinite period. In addition, the Company and its Israeli subsidiaries have accumulated capital loses in the amount of approximately\n$29,740. Such capital losses may be carried forward and offset against taxable capital gains in the future for an indefinite period.\n\n \n\n \nc.\nDeferred income taxes:\n\n \n\nDeferred income taxes reflect the\nnet tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the\namounts used for income tax purposes. Significant components of the Company’s deferred tax liabilities and assets are as follows:\n\n \n\n \n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\nNet operating loss carry-forward (1) \n$4,991  \n$6,180 \n\nNet capital loss carry-forward (1) \n 6,840  \n 6,840 \n\nAllowances and provisions \n 277  \n 202 \n\nIntangible assets, net \n 310  \n (124)\n\n  \n    \n   \n\n  \n 12,418  \n 13,098 \n\n  \n    \n   \n\nValuation allowance (2) \n$(11,168) \n$(12,098)\n\n  \n    \n   \n\nNet deferred tax Assets \n$1,250  \n$1,000 \n\n \n\n(1) See Note 14b.\n\n \n\n(2)\nUp and until December 31, 2023, the Company has provided full valuation allowances on deferred tax assets that result from tax loss carry forward and other reserves and allowances due to its history of operating and capital losses and uncertainty about the ability to realize these deferred tax assets in the future.\n\n \n\nIn the year 2024, the Company recognized a deferred tax asset for the\nfirst time in recent years in the amount of $1,000, resulting from the possibility of utilizing losses carried forward in one of the group\ncompanies. In the year 2025, the Company increased the deferred tax asset by an additional $250. The total deferred tax asset was recorded\nin the amount of $1,250, which is expected to be utilized in 2025-2027.\n\n \n\n F-37\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO CONSOLIDATED FINANCIAL\nSTATEMENTS**\n\n**U.S. dollars in thousands, except share and per share data**\n\n** **\n\n**NOTE 14:- TAXES ON INCOME (Cont.)**\n\n** **\n\n  d. Taxes on income (tax benefit) are comprised as follows:\n\n \n\n  \nYear ended December 31, \n\n  \n2025  \n2024  \n2023 \n\n  \n   \n   \n  \n\nCurrent \n$137  \n \n-\n  \n$4 \n\nDeferred \n (250) \n (1,000) \n \n \n \n\nOther \n \n-\n  \n \n-\n  \n \n-\n \n\n  \n    \n    \n   \n\n  \n$(113) \n (1,000) \n$4 \n\n  \n    \n    \n   \n\nDomestic \n$(141) \n (1,000) \n$\n-\n \n\nForeign \n 28  \n \n-\n  \n 4 \n\n  \n    \n    \n   \n\n  \n$(113) \n (1,000) \n$4 \n\n** **\n\n  e. Income (loss) before taxes on income is comprised as follows:\n\n \n\n  \nYear ended December 31, \n\n  \n2025  \n2024  \n2023 \n\n  \n   \n   \n  \n\nDomestic \n$3,433  \n 1,321  \n$1,990 \n\nForeign \n 65  \n (21) \n 19 \n\n  \n    \n    \n   \n\n  \n$3,498  \n 1,300  \n$2,009 \n\n** **\n\n \nf.\nReconciliation of the theoretical tax expense to the actual tax expense:\n\n \n\nThe main reconciling items between\nthe statutory tax rate of the Company and the effective tax rate for the year ended December 31, 2024 and 2023 (prior the adoption of\nASU 2023-09), were the non-recognition on some of the tax benefits from accumulated net operating losses carry forward among the Company\nand various subsidiaries due to uncertainty of the realization of such tax benefits in future years.\n\n \n\nThe following table presents the reconciliation\nbetween the Company’s theoretical income tax and effective income tax for the year ended December 31, 2025, after the adoption of\nASU 2023-09:\n\n \n\n  \n2025 \n\n  \nAmount  \nPercent \n\n  \n   \n  \n\nIncome before taxes \n 3,498  \n$100%\n\n  \n    \n   \n\nIsrael Statutory Tax rate \n 805  \n$23%\n\nChange in Valuation allowance \n (930) \n$(27)%\n\nPrevious years' taxes \n 21  \n$1%\n\nOther \n (9) \n$(1)%\n\n  \n    \n   \n\n  \n (113) \n$(3)%\n\n \n\n \ng.\nTax assessments:\n\n \n\nThe Company and all of its’\nsubsidiaries have final tax assessments through 2020.\n\n \n\n F-38\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n \n\n**NOTE 14:- TAXES ON INCOME (Cont.)**\n\n \n\n \nh.\nThe Company and its subsidiaries file income tax returns in Israel\nand in the United States. The Company and its subsidiaries may be subject to auditing by the Israel tax authorities and the U.S.\nInternal Revenue Service for fiscal years 2019 and thereafter.\n\n** **\n\nThe Company believes that it has adequately provided for any reasonably\nforeseeable outcome related to tax audits and settlement. The final tax outcome of the Company’s tax audits could be different\nfrom that which is reflected in the Company’s income tax provisions and accruals. Such differences could have a material effect\non the Company’s income tax provision and net loss in the period in which such determination is made.\n\n** **\n\n \ni.\nUncertain tax positions:\n\n \n\nAs of December 31, 2025 and 2024,\nthere is no balance of uncertain tax positions.\n\n \n\nIn accordance with the Company’s\naccounting policy, tax expense line of the Company’s Consolidated Statements of Operations includes interest expense and potential\npenalties related to income taxes.\n\n** **\n\n**NOTE 15:-\nSUPPLEMENTAL INFORMATION TO STATEMENTS OF OPERATIONS**\n\n** **\n\n  a. Financial expenses:\n\n** **\n\n  \nYear ended December 31, \n\n  \n2025  \n2024  \n2023 \n\n  \n   \n   \n  \n\nFinancial income (expenses): \n   \n   \n  \n\nIn respect of interest loans and bank fees \n (673) \n (197) \n (402)\n\nOther (mainly foreign currency differences) \n 1,263  \n 58  \n (39)\n\n  \n    \n    \n   \n\n  \n 590  \n (139) \n (441)\n\n  \n    \n    \n   \n\n  \n$590  \n (139) \n$(441)\n\n** **\n\nThe following table sets forth the\ncomputation of basic and diluted net income per share:\n\n** **\n\n  b. Net earnings per share:\n\n \n\n  \nYear ended December 31, \n\n  \n2025  \n2024  \n2023 \n\n1. Numerator: \n   \n   \n  \n\nIncome (loss) \n$3,611  \n 2,300  \n$2,005 \n\n  \n    \n    \n   \n\nNet income (loss) available to Ordinary shareholders \n$3,611  \n 2,300  \n$2,005 \n\n  \n    \n    \n   \n\n2. Denominator (in thousands): \n    \n    \n   \n\n  \n    \n    \n   \n\nBasic weighted average Ordinary shares outstanding (in thousands) \n 6,161  \n 5,756  \n 5,727 \n\nDiluted weighted average Ordinary shares outstanding (in thousands) \n 6,312  \n 5,887  \n 5,905 \n\n  \n    \n    \n   \n\nBasic income (loss) per share \n$0.59  \n 0.40  \n$0.35 \n\nDiluted income (loss) per share \n$0.57  \n 0.39  \n$0.34 \n\n \n\n \nc.\nThe Company has employee options and warrants “in the money” (ITM) that were considered\nin calculating the number of diluted shares.\n\n \n\n F-39\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 16:- SEGMENTS AND GEOGRAPHICAL INFORMATION**:\n\n \n\nThe Company manages its business in\nthree reportable segments, consisting of the Intelligent Robotics and RFID Division segment and the Supply Chain Solutions segment.\n\n \n\nThe Chief Operation Decision Maker\n(CODM) is the CEO of the Company, who makes financial decisions and allocates resources, based on the information he receives from its\ninternal management system. For all of the segments, the CODMs uses segment operating income in the annual budget and forecasting process.\nThe CODM considers budget-to-actual forecast variances for operating income on a monthly basis for evaluating performance of each segment\nand making decisions about allocating capital and other resources to each segment. The Company applies ASC 280, *Segment Reporting*.\n\n \n\n  a. Revenues, gross profit, and  for the operating segments for the years 2025, 2024 and 2023 were as follows:\n\n \n\n  \nRFID\n\nDivision  \nIntelligent\n\nRobotics  \nSupply\n\nChain\n\nSolutions  \nIntercompany  \nConsolidated \n\n2025 \n   \n   \n   \n   \n  \n\nRevenues from external customers \n$13,587  \n$1,847  \n$35,545  \n$(410) \n$50,569 \n\nCost of revenues, net of allowance \n$10,687  \n$1,417  \n$27,668  \n$(410) \n$39,362 \n\nAllowance for slow inventory \n$\n\n  \n$\n\n  \n$(868) \n$\n-\n  \n$(868)\n\nGross profit \n$2,900  \n$430  \n$8,745  \n$\n-\n  \n$12,075 \n\nAllocated operating expenses \n$3,565  \n$276  \n$4,337  \n$\n-\n  \n$8,178 \n\nSegment profit (loss) \n$(665) \n$154  \n$4,408  \n$\n-\n  \n$3,897 \n\nUnallocated operating expenses1 \n    \n    \n    \n \n-\n  \n$989 \n\nFinancial income , net \n    \n    \n    \n    \n$590 \n\nIncome before taxes on income \n    \n    \n    \n    \n$3,498 \n\nTax on income \n    \n    \n    \n    \n$(113)\n\nNet Income \n    \n    \n    \n    \n$3,611 \n\n  \n    \n    \n    \n    \n   \n\n2024 \n    \n    \n    \n    \n   \n\nRevenues from external customers \n$12,877  \n$1,410  \n$25,829  \n$(167) \n$39,949 \n\nCost of revenues, net of allowance \n$9,344  \n$1,079  \n$19,763  \n$(167) \n$30,019 \n\nAllowance for slow inventory \n$  \n$  \n$636  \n$\n-\n  \n$636 \n\nGross profit \n$3,533  \n$331  \n$5,430  \n$\n-\n  \n$9,294\n\nAllocated operating expenses \n$3,257  \n$274  \n$3,527  \n$\n-\n  \n$7,058 \n\nSegment profit \n$276  \n$57  \n$1,903  \n$\n-\n  \n$2,236 \n\nUnallocated operating expenses1 \n    \n    \n    \n    \n$797 \n\nFinancial expenses \n    \n    \n    \n    \n$139 \n\nIncome before taxes on income \n    \n    \n    \n    \n$1,300 \n\nTax on income \n    \n    \n    \n    \n$(1,000)\n\nNet Income \n    \n    \n    \n    \n$2,300 \n\n  \n    \n    \n    \n    \n   \n\n2023 \n    \n    \n    \n    \n   \n\nRevenues from external customers \n$13,713  \n$1,742  \n$28,845  \n$(121) \n$44,179 \n\nCost of revenues, net of allowance \n$10,534  \n$1,557  \n$22,830  \n$(121) \n$34,800 \n\nAllowance for slow inventory \n$\n-\n  \n$\n-\n  \n$170  \n$\n-\n  \n$170 \n\nGross profit \n$3,179  \n$185  \n$5,845  \n$\n-\n  \n$9,209 \n\nAllocated operating expenses \n$2,150  \n$258  \n$3,675  \n$\n-\n  \n$6,083 \n\nSegment profit (loss) \n$1,029  \n$(73) \n$2,170  \n$\n-\n  \n$3,126 \n\nUnallocated operating expenses1 \n    \n    \n    \n    \n$676 \n\nFinancial expenses \n    \n    \n    \n    \n$441 \n\nIncome before taxes on income \n    \n    \n    \n    \n$2,009 \n\nTax on income \n    \n    \n    \n    \n$4 \n\nNet Income \n    \n    \n    \n    \n$2,005 \n\n \n\n \n\n1Unallocated operating expenses consist primarily of legal fees, office expenses, and public\ncompany expenses\n\n \n\n F-40\n\n \n\n \n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 16:- SEGMENTS AND GEOGRAPHICAL INFORMATION (Cont.)**\n\n \n\n  b. The following presents total revenues for the years 2025, 2024 and 2023 based on the location of customers, and long-lived assets based on major geographic areas in which the Company operates:\n\n \n\n  \nYear ended December 31, \n\n  \n2025  \n2024  \n2023 \n\n  \nTotal  \nLong-lived  \nTotal  \nLong-lived  \nTotal  \nLong-lived \n\n  \nrevenues  \nassets *  \nrevenues  \nassets *  \nrevenues  \nassets * \n\n  \n   \n   \n   \n   \n   \n  \n\nIsrael \n$46,195  \n 3,449  \n 36,156  \n 3,417  \n$38,125  \n$3,268 \n\nEast Asia \n 5  \n \n-\n  \n 75  \n \n-\n  \n 1,331  \n \n-\n \n\nIndia \n 1,630  \n \n-\n  \n 1,414  \n \n-\n  \n 1,726  \n \n-\n \n\nAmerica \n 1,348  \n \n-\n  \n 1,067  \n \n-\n  \n 1,433  \n \n-\n \n\nEurope \n 1,391  \n \n-\n  \n 1,236  \n \n-\n  \n 1,513  \n \n-\n \n\nRest of the world \n \n-\n  \n \n-\n  \n 1  \n \n-\n  \n 51  \n \n-\n \n\n  \n$50,569  \n 3,449  \n 39,949  \n 3,417  \n$44,179  \n$3,268 \n\n \n\n(*) Long-lived assets balance comprised of property and equipment, net (it does not include intangible assets and goodwill).\n\n \n\n \nc.\n\nDuring 2024 and 2023 there were no major customers. During 2025 the Company had one major customer.\n\n \n\n  d. In the following table, revenue is disaggregated by timing of revenue recognition for the years ended December 31, 2025, 2024, 2023:\n\n \n\n \n \n**RFID\nDivision**\n \n \n**Intelligent\nRobotics**\n \n \n**Supply\nChain\nSolutions**\n \n \n**Intercompany**\n \n \n**Consolidated**\n \n\n**2025**\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nAt a point of time\n \n$\n12,172\n \n \n$\n1,847\n \n \n$\n35,545\n \n \n$\n(410\n)\n \n$\n49,154\n \n\nOver a period of time\n \n$\n1,415\n \n \n$\n-\n \n \n$\n-\n \n \n$\n    -\n \n \n$\n1,415\n \n\n**Total**\n \n$\n13,587\n \n \n$\n1,847\n \n \n$\n35,545\n \n \n$\n(410\n)\n \n$\n50,569\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**2024**\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nAt a point of time\n \n$\n11,523\n \n \n$\n1,410\n \n \n$\n25,829\n \n \n$\n(167\n)\n \n$\n38,595\n \n\nOver a period of time\n \n$\n1,354\n \n \n$\n-\n \n \n$\n-\n \n \n$\n    -\n \n \n$\n1,354\n \n\n**Total**\n \n$\n12,877\n \n \n$\n1,410\n \n \n$\n25,829\n \n \n$\n(167\n)\n \n$\n39,949\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\n**2023**\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nAt a point of time\n \n$\n12,027\n \n \n$\n1,742\n \n \n$\n28,845\n \n \n$\n(121\n)\n \n$\n42,493\n \n\nOver a period of time\n \n$\n1,686\n \n \n$\n-\n \n \n$\n-\n \n \n$\n-\n \n \n$\n1,686\n \n\n**Total**\n \n$\n13,713\n \n \n$\n1,742\n \n \n$\n28,845\n \n \n$\n(121\n)\n \n$\n44,179\n \n\n** **\n\n F-41\n\n \n\n** **\n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 17:-\nLEASES**:\n\n \n\nThe Company has operating leases for\noffice space, warehouses, and car leases. The Company determines if a contract contains a lease at inception or modification of a contract.\nThe leases generally do not provide an implicit interest rate, and therefore the Company’s incremental borrowing rate as the discount\nrate is used when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the\nCompany would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of the\nlease within a particular currency environment. Most of the leases contain rental escalation, renewal options and/ or termination options\nthat are factored into the determination of lease payments as appropriate. Variable lease payment amounts that cannot be determined at\nthe commencement of the lease are not included in the right-to-use assets or liabilities. Most of the operating leases of the Company\ndo not include significant nonlease components.\n\n \n\nDuring 2025, the Company entered into lease agreements for several\nvehicles and also entered into a new lease agreement for a warehouse facility. The leases have original lease periods expiring during\n2029. The Company does not assume renewals in its determination of the lease term unless the renewals are considered as reasonably certain.\n\n** **\n\nThe following table presents the lease\nbalances within the Consolidated Balance Sheet as of December 31, 2025 and 2024:\n\n \n\n   Classification on the\nBalance Sheet  Year ended\nDecember 31,\n2025 \n\nAssets:       \n\nOperating lease assets  Operating lease right of use assets, net   926 \n\nLiabilities:        \n\ncurrent        \n\nOperating lease liabilities  Operating lease liabilities, current   251 \n\nLong term        \n\nOperating lease liabilities  Operating lease liabilities, non-current   768 \n\n         \n\nRemaining Lease Term        \n\nVehicles      0.46 - 3.84 years \n\nFacilities rent      0.75 - 8.59 years \n\n         \n\nWeighted Average Discount Rate        \n\nVehicles      6.02%\n\nFacilities rent      6.07%\n\n** **\n\n F-42\n\n \n\n** **\n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and\nper share data**\n\n** **\n\n**NOTE 17:-\nLEASES (Cont.)**\n\n \n\n   Classification on the\nBalance Sheet  Year ended\nDecember 31,\n2024 \n\nAssets:        \n\nOperating lease assets  Operating lease right of use assets, net   779 \n\nLiabilities:        \n\ncurrent        \n\nOperating lease liabilities  Operating lease liabilities, current   176 \n\nLong term        \n\nOperating lease liabilities  Operating lease liabilities, non-current   576 \n\n         \n\nRemaining Lease Term        \n\nVehicles      0.33 - 1.75 years \n\nFacilities rent      0.76 - 9.59 years \n\n         \n\nWeighted Average Discount Rate        \n\nVehicles      3.39%\n\nFacilities rent      5.67%\n\n \n\n F-43\n\n \n\n** **\n\n**B.O.S. BETTER ONLINE SOLUTIONS LTD.**\n\n**AND ITS SUBSIDIARIES**\n\n** **\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars in thousands, except share and per share data**\n\n** **\n\n**NOTE 17:-\nLEASES (Cont.)**\n\n** **\n\nThe following table reconciles the\nundiscounted future minimum lease payments (displayed by year and in the aggregate) under non-cancelable operating leases with terms\nof more than one year to the total operating lease liabilities recognized on our Consolidated Balance Sheet as of December 31, 2025:\n\n \n\n2026 \n 305 \n\n2027 \n 233 \n\n2028 \n 197 \n\n2029 \n 125 \n\n2030 \n 79 \n\n2031 - 2034 \n 312 \n\n  \n 1,251 \n\nLess: imputed interest \n (232)\n\nPresent value of lease liabilities \n 1,019 \n\n \n\nExpense under operating leases was\n$306 and for the years ended December 31, 2025 and 2024 respectively, the Company was not required to pay any variable lease payments\nin the reported periods. Operating income in the Consolidated Statement of Operations includes operating lease costs. Short-term lease\ncosts were not material.\n\n** **\n\n**NOTE 18:-\nSUBSEQUENT EVENTS**:\n\n \n\nIn March 2026, as part of a settlement agreement, Qpaz Technologies\nLtd. and Keren Lahav 3 L.P. 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