{"url_path":"/sec/mtekw/10-k/2026/item-18","section_key":"item-18","section_title":"Item 18 FINANCIAL STATEMENTS**","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-05-15","source_url":"https://www.sec.gov/Archives/edgar/data/1872964/0001213900-26-057766-index.html","accession_number":"0001213900-26-057766","cik":"0001872964","ticker":"MTEK","issuer_name":"Maris Tech Ltd.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1872964/0001213900-26-057766-index.html","primary_entity_key":"0001872964","primary_entity_name":"Maris Tech Ltd."},"word_count":15052,"has_tables":true,"body_markdown":"** **\n\n**ITEM 18. FINANCIAL STATEMENTS**\n\n \n\nThe financial statements and\nthe related notes required by this Item are included in this Annual Report beginning on page F-1.\n\n** **\n\n**ITEM A19. EXHIBITS**\n\n \n\nThe following documents are\nfiled as part of Annual Report.\n\n \n\n**Number**\n \n**Exhibit Description**\n\n1.1\n \n[Amended and Restated Articles of Association of Maris-Tech Ltd. (filed as Exhibit 99.1 to Form 6-K (File No. 001-41260) filed on April 1, 2022 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1872964/000121390022017376/ea157848ex99-1_maristech.htm)\n\n \n \n \n\n2.1\n \n[Form of Warrant (filed as Exhibit 4.1 to Form F-1 (File No. 333-260670) filed on November 22, 2021 and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/1872964/000121390021061134/ff12021a2ex4-1_maristech.htm)\n\n \n \n \n\n2.2\n \n[Form of Representative’s Warrant (filed as Exhibit 4.2 to Form F-1 (File No. 333-260670) filed on November 1, 2021 and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/1872964/000121390021055845/ff12021ex4-2_maristech.htm)\n\n \n \n \n\n2.6*\n \n[Form of Convertible Promissory Note, dated as of November 25, 2025.](ea028907601ex2-6.htm)\n\n \n \n \n\n2.7*\n \n[Form of Convertible Promissory Note, dated as of November 25, 2025.](ea028907601ex2-7.htm)\n\n \n \n \n\n2.8\n \n[Form of Amendment No. 1 to Convertible Promissory Note, dated as of January 26, 2026, by and between Maris-Tech Ltd. and the holder party thereto (filed as Exhibit 4.1 to Form 6-K (File No. 001-41260) filed on January 26, 2026 and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/1872964/000121390026007694/ea027404701ex4-1_maristech.htm)\n\n \n \n \n\n2.9\n \n[Form of Pre-Funded Warrant (filed as Exhibit 4.2 to Form 6-K (File No. 001-41260) filed on January 26, 2026 and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/1872964/000121390026007694/ea027404701ex4-2_maristech.htm)\n\n \n \n \n\n2.10\n \n[Form of Pre-Funded Warrant (filed as Exhibit 4.1 Form 6-K (File No. 001-41260) filed on March 6, 2026 and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/1872964/000121390026024287/ea028031201ex4-1.htm)\n\n \n \n \n\n2.11*\n \n[Description of Share Capital.](ea028907601ex2-11.htm)\n\n \n \n \n\n4.1+\n \n[Form of Indemnification Agreement (filed as Exhibit 4.1 to Form 20-F (File No. 001-41260) filed on March 6, 2023 and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/1872964/000121390023017628/f20f2022ex4-1_maristechltd.htm)\n\n \n \n \n\n4.2\n \n[Form of Warrant Agent Agreement (filed as Exhibit 4.6 to Form F-1 (File No. 333-260670) filed on January 11, 2022 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1872964/000121390022001553/ff12022a6ex4-6_maristech.htm)\n\n \n \n \n\n4.3+\n \n[Maris-Tech Ltd. 2021 Share Option Plan (filed as Exhibit 99.1 to Form S-8 (File No. 333-262910) filed on February 22, 2022 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1872964/000121390022008736/ea156027ex99-1_maristech.htm)\n\n \n \n \n\n4.4+\n \n[First Amendment to Maris-Tech Ltd. 2021 Share Option Plan (filed as Exhibit 10.1 to Form 6-K (File No. 001-41260) filed on August 17, 2023 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1872964/000121390023068539/ea183797ex10-1_maristech.htm)\n\n \n\n91\n\n \n\n \n\n4.5\n \n[Loan Facility Agreement, dated May 9, 2021, by and between Maris-Tech Ltd., Israel Bar and Joseph Gottlieb (filed as Exhibit 10.6 to Form F-1 (File No. 333-260670) filed on November 15, 2021 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1872964/000121390021059419/ff12021a1ex10-6_maristech.htm)\n\n \n \n \n\n4.6\n \n[Amendment No. 1 to Loan Facility Agreement, dated June 30, 2021, by and between Maris-Tech Ltd., Israel Bar and Joseph Gottlieb (filed as Exhibit 4.5 to Form 20-F (File No. 001-41260) filed on March 6, 2023 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1872964/000121390023017628/f20f2022ex4-5_maristechltd.htm)\n\n \n \n \n\n4.7\n \n[Amendment No. 2 to Loan Facility Agreement, dated March 2, 2023, by and between Maris-Tech Ltd., Israel Bar and Joseph Gottlieb (filed as Exhibit 10.1 to Form 6-K (File No. 001-41260) filed on March 6, 2023 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1872964/000121390023017620/ea174634ex10-1_maristech.htm)\n\n \n \n \n\n4.8\n \n[Agreement for the Provision of Consulting and Advisory Services, dated April 21, 2021, by and between Maris-Tech Ltd., Alla Felder Ltd. and A. Klainer Finances Ltd. (English Translation) (filed as Exhibit 10.7 to Form F-1 (File No. 333-260670) filed on November 15, 2021 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1872964/000121390021059419/ff12021a1ex10-7_maristech.htm)\n\n \n \n \n\n4.9\n \n[Amendment to Agreement for the Provision of Consulting and Advisory Services, dated September 17, 2021, by and between Maris-Tech Ltd., Alla Felder Ltd. and A. Klainer Finances Ltd. (filed as Exhibit 10.8 to Form F-1 (File No. 333-260670) filed on November 1, 2021 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1872964/000121390021055845/ff12021ex10-8_maristech.htm)\n\n \n \n \n\n4.10\n \n[Amendment to Agreement for the Provision of Consulting and Advisory Services, dated November 1, 2021, by and between Maris-Tech Ltd., Alla Felder Ltd. and A. Klainer Finances Ltd. (filed as Exhibit 10.9 to Form F-1 (File No. 333-260670) filed on November 1, 2021 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1872964/000121390021055845/ff12021ex10-9_maristech.htm)\n\n \n \n \n\n4.11\n \n[Amended and Restated Option Agreement, entered into as of November 11, 2021, by and among Afik & Co., Doron Afik and Maris-Tech Ltd. (filed as Exhibit 10.11 to Form F-1 (File No. 333-260670) filed on November 15, 2021 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1872964/000121390021059419/ff12021a1ex10-11_maristech.htm)\n\n \n \n \n\n4.16\n \n[Service Agreement between Maris-Tech Ltd. and Parazero Technologies Ltd. dated July 31, 2023 (filed as Exhibit 4.17 to Form 20-F (File No. 001-41260) filed on March 21, 2024 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1872964/000121390024024527/ea020211901ex4-17_maristech.htm)\n\n \n \n \n\n4.17\n \n[Compensation Policy for the Company’s Executive Officers and Directors (filed as Exhibit 99.1 to Form 6-K (File No. 001-41260) filed on June 27, 2022 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1872964/000121390022035090/ea162003ex99-1_maris.htm)\n\n \n \n \n\n4.18\n \n[Form of Note Purchase Agreement, dated as of November 25, 2025, by and between Maris-Tech Ltd. and the investor party thereto (filed as Exhibit 10.1 to Form 6-K (File No. 001-41260) filed on November 28, 2025 and incorporated herein by reference).](http://www.sec.gov/Archives/edgar/data/1872964/000121390025115980/ea026755401ex10-1_maris.htm)\n\n \n \n \n\n4.19\n \n[Form of Amendment No. 1 to Note Purchase Agreement, dated as of January 26, 2026, by and between Maris-Tech Ltd. and the investor party thereto (filed as Exhibit 10.1 to Form 6-K (File No. 001-41260) filed on January 26, 2026 and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/1872964/000121390026007694/ea027404701ex10-1_maristech.htm)\n\n \n \n \n\n4.20\n \n[Form of Securities Purchase Agreement, dated as of March 6, 2026, by and between Maris-Tech Ltd. and the investor party thereto (filed as Exhibit 10.1 to Form 6-K (File No. 001-41260) filed on March 6, 2026 and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/1872964/000121390026024287/ea028031201ex10-1.htm)\n\n \n \n \n\n4.21\n \n[Sales Agreement by and between Maris-Tech Ltd. and A.G.P./Alliance Global Partners, dated March 30, 2026 (filed as Exhibit 10.1 to Form 6-K (File No. 001-41260) filed on March 30, 2026 and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/1872964/000121390026036483/ea028402201ex10-1.htm)\n\n \n\n92\n\n \n\n \n\n11.1*\n \n[Insider Trading Policy.](ea028907601ex11-1.htm)\n\n \n \n \n\n12.1*\n \n[Certification of the Principal Executive Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.](ea028907601ex12-1.htm)\n\n \n \n \n\n12.2*\n \n[Certification of the Principal Financial and Accounting Officer pursuant to Rule 13a-14(a) of the Securities Exchange Act of 1934.](ea028907601ex12-2.htm)\n\n \n \n \n\n13.1%\n \n[Certification of the Principal Executive Officer pursuant to 18 U.S.C. 1350, furnished herewith.](ea028907601ex13-1.htm)\n\n \n \n \n\n13.2%\n \n[Certification of the Principal Financial and Accounting Officer pursuant to 18 U.S.C. 1350, furnished herewith.](ea028907601ex13-2.htm)\n\n \n\n15.1*\n \n[Consent of Kost Forer Gabbay & Kasierer, independent registered public accounting firm and member firm of EY Global.](ea028907601ex15-1.htm)\n\n \n \n \n\n97.1\n \n[Clawback Policy, dated November 3, 2023 (filed as Exhibit 97.1 to Form 20-F (File No. 001-41260) filed on March 21, 2024 and incorporated herein by reference).](https://www.sec.gov/Archives/edgar/data/1872964/000121390024024527/ea020211901ex97-1_maristech.htm)\n\n \n \n \n\n101\n \nThe following financial information from the Registrant’s Annual Report on Form 20-F for the year ended December 31, 2025, formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Report of Independent Registered Public Accounting Firm; (ii) Consolidated Balance Sheets; (iii) Consolidated Statements of Operations; (iv) Consolidated Statements of Changes in Convertible Preferred Shares and Shareholders’ Equity (Deficit); (v) Consolidated Statements of Cash Flows; and (vi) Notes to the Consolidated Financial Statements, tagged as blocks of text and in detail.\n\n \n \n \n\n104\n \nCover Page Interactive Data File (embedded within the Inline XBRL document).\n\n \n\n*Filed\nherewith.\n\n \n\n%Furnished\nherewith.\n\n \n\n+Management\ncontract or compensatory plan or arrangement.\n\n \n\n93\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 filed on its behalf.\n\n \n\n \n \nMaris-Tech Ltd.\n\n \n \n \n \n\nDate: May 15, 2026\n \nBy:\n/s/ Israel Bar\n\n \n \n \nIsrael Bar\n\n \n \n \nChief Executive Officer\n\n \n\n94\n\n \n\n \n\n**MARIS-TECH LTD.**\n\n** **\n\n**CONSOLIDATED FINANCIAL STATEMENTS**\n\n** **\n\n**AS OF DECEMBER 31, 2025**\n\n* *\n\n**INDEX**\n\n** **\n\n  **Page**\n\n   \n\n[**Report of Independent Registered Public Accounting Firm (PCAOB ID:1281)**](#b_001) **F-2**\n\n   \n\n[**Consolidated Balance Sheets**](#b_002) **F-3 - F-4**\n\n   \n\n[**Consolidated Statements of Operations**](#b_003) **F-5**\n\n   \n\n[**Consolidated Statements of Changes in Shareholders’ Equity**](#b_004) **F-6**\n\n   \n\n[**Consolidated Statements of Cash Flows**](#b_005) **F-7**\n\n   \n\n[**Notes to Consolidated Financial Statements**](#b_006) **F-8 - F-39**\n\n** **\n\n- - - - - - - - - - - - -- - - - - - - - - - - - - - - - -\n\n** **\n\nF-1\n\n \n\n** **\n\n**Kost Forer Gabbay & Kasierer** 144 Menachem Begin Road, Building A,\n\nTel-Aviv 6492102, Israel\nTel: +972-3-6232525\n\nFax: +972-3-5622555\n\ney.com\n\n**  **\n\n**REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING\nFIRM**\n\n** **\n\n**To the Board of Directors and Shareholders of**\n\n \n\n**MARIS**-**TECH LTD**.\n\n** **\n\n**Opinion on the Financial Statements**\n\n** **\n\nWe have audited the accompanying consolidated balance sheets of Maris-Tech\nLtd. and subsidiary (the Company) as of December 31, 2025 and 2024, the related consolidated statements of operations, shareholders' equity\nand cash flows for each of the three years in the period ended December 31, 2025, and the related notes (collectively referred to as the\n“consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material\nrespects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for\neach of the three years in the period ended December 31, 2024, in conformity with U.S. generally accepted accounting principles.\n\n \n\n**Basis for Opinion**\n\n** **\n\nThese financial statements are the responsibility of the Company's\nmanagement. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public\naccounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent\nwith respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities\nand Exchange Commission and the PCAOB.\n\n \n\nWe conducted our audits in accordance with the standards of the PCAOB.\nThose standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free\nof material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit\nof its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control\nover financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over\nfinancial reporting. Accordingly, we express no such opinion.\n\n \n\nOur audits included performing procedures to assess the risks of material\nmisstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures\nincluded examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included\nevaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation\nof the financial statements. We believe that our audits provide a reasonable basis for our opinion.\n\n** **\n\n/s/ KOST FORER GABBAY & KASIERER\n\n \n\nA Member of EY Global\n\n \n\nWe have served as the Company’s auditor since 2023.\n\n \n\nTel-Aviv, Israel\n\n \n\nMay 15, 2026\n\n \n\nF-2\n\n \n\n \n\n**MARIS-TECH LTD.**\n\n**CONSOLIDATED\nBALANCE SHEETS**\n\n**U.S. dollars**\n\n \n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\nASSETS \n   \n  \n\n  \n   \n  \n\nCURRENT\nASSETS: \n   \n  \n\nCash and cash equivalents \n$2,545,823  \n$2,294,679 \n\nTrade receivables, net \n 588,949  \n 3,494,701 \n\nOther current assets and prepaid expenses \n 267,019  \n 322,449 \n\nInventories \n 2,861,088  \n 2,609,314 \n\n  \n    \n   \n\nTotal current assets \n 6,262,879  \n 8,721,143 \n\n  \n    \n   \n\nNON-CURRENT ASSETS: \n    \n   \n\nRestricted deposits \n 47,271  \n 40,553 \n\nProperty, plant and equipment, net \n 313,772  \n 407,430 \n\nSeverance pay fund \n 224,306  \n 175,463 \n\nOperating lease right-of-use assets \n 356,264  \n 475,515 \n\n  \n    \n   \n\nTotal non-current assets \n 941,613  \n 1,098,961 \n\n  \n    \n   \n\nTotal assets \n$7,204,492  \n$9,820,104 \n\n \n\nThe accompanying notes are an integral part of the\nconsolidated financial statements.\n\n \n\nF-3\n\n**MARIS-TECH LTD.**\n\n**CONSOLIDATED\nBALANCE SHEETS**\n\n**U.S. dollars (except share data)**\n\n \n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\nLIABILITIES AND SHAREHOLDERS’ EQUITY \n   \n  \n\n  \n   \n  \n\nCURRENT LIABILITIES: \n   \n  \n\nShort term bank credit \n$2,001,495  \n$9,345 \n\nTrade payables \n 631,472  \n 1,156,567 \n\nOther current liabilities \n 1,082,317  \n 1,532,493 \n\nCurrent liabilities from related parties \n 270,619  \n 552,213 \n\n  \n    \n   \n\nTotal current liabilities \n 3,985,903  \n 3,250,618 \n\n  \n    \n   \n\nNON-CURRENT LIABILITIES: \n    \n   \n\nNon-current loans from related parties \n \n-\n  \n 45,343 \n\nNon-current operating lease liabilities \n 155,330  \n 268,800 \n\nConvertible promissory notes \n 1,958,304  \n \n-\n \n\nAccrued severance pay \n 503,372  \n 440,295 \n\n  \n    \n   \n\nTotal non-current liabilities \n 2,617,006  \n 754,438 \n\n  \n    \n   \n\nTotal liabilities \n 6,602,909  \n 4,005,056 \n\n  \n    \n   \n\nCOMMITMENT AND CONTINGENCIES \n \n \n  \n \n \n \n\n  \n    \n   \n\nSHAREHOLDERS’ EQUITY: \n    \n   \n\nOrdinary Shares, no par value - Authorized: 100,000,000 shares at December 31, 2025 and 2024; Issued: 8,194,306 and 8,104,180 shares at December 31, 2025 and 2024, respectively; Outstanding: 8,073,591 and 7,983,465 shares at December 31, 2025 and 2024, respectively \n \n \n  \n \n-\n \n\nTreasury shares at cost (120,715 Ordinary Shares at December 31, 2025 and 2024) \n (119,536) \n (119,536)\n\nAdditional paid-in capital \n 18,266,456  \n 18,070,599 \n\nAccumulated deficit \n (17,545,337) \n (12,136,015)\n\n  \n    \n   \n\nTotal shareholders’ equity \n 601,583  \n 5,815,048 \n\n  \n    \n   \n\nTotal liabilities and shareholders’\nequity \n$7,204,492  \n$9,820,104 \n\n \n\nThe accompanying notes are an integral part of the\nconsolidated financial statements.\n\n \n\nF-4\n\n**MARIS-TECH LTD.**\n\n**CONSOLIDATED STATEMENTS\nOF OPERATIONS**\n\n**U.S. dollars (except share and per data)**\n\n** **\n\n  \nYear ended December 31, \n\n  \n2025  \n2024  \n2023 \n\n  \n   \n   \n  \n\nRevenues  \n$1,341,218  \n$6,078,953  \n$4,031,103 \n\nCost of revenues \n 1,704,967  \n 2,562,832  \n 2,103,707 \n\n  \n    \n    \n   \n\nGross profit (loss) \n (363,749) \n 3,516,121  \n 1,927,396 \n\n  \n    \n    \n   \n\nOperating expenses: \n    \n    \n   \n\n  \n    \n    \n   \n\nResearch and development, net \n 1,286,932  \n 927,048  \n 1,054,895 \n\nSales and marketing \n 1,161,371  \n 923,439  \n 874,793 \n\nGeneral and administrative \n 2,412,373  \n 3,014,378  \n 2,927,310 \n\n  \n    \n    \n   \n\nTotal operating expenses \n 4,860,676  \n 4,864,865  \n 4,856,998 \n\n  \n    \n    \n   \n\nLoss from operations \n 5,224,425  \n 1,348,744  \n 2,929,602 \n\nFinancial expenses (income), net \n 184,897  \n (114,852) \n (220,006)\n\n  \n    \n    \n   \n\nNet loss \n$5,409,322  \n$1,233,892  \n$2,709,596 \n\n  \n    \n    \n   \n\nBasic and diluted net loss attributable to shareholders per Ordinary Share \n$(0.67) \n$(0.16) \n$(0.34)\n\n  \n    \n    \n   \n\nWeighted average number of Ordinary Shares used in computing loss per Ordinary Share \n 8,033,501  \n 7,894,961  \n 7,908,266 \n\n \n\nThe accompanying notes are an integral part of the\nconsolidated financial statements.\n\n \n\nF-5\n\n**MARIS-TECH LTD.**\n\n**CONSOLIDATED\nSTATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY**\n\n**U.S. dollars (except share and per data)**\n\n \n\n \n \n**Number of\nordinary\nshares\nissued**\n \n \nTreasury\n\nshares\n \n \n**Share\ncapital**\n \n \n**Additional\npaid-in\ncapital**\n \n \nAccumulated\n\ndeficit\n \n \nTotal\n\nshareholders’\n\nequity\n \n\n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n \n\nBalance as of January 1, 2023\n \n \n7,999,216\n \n \n \n\n-\n\n \n \n$\n\n*\n\n)\n \n$\n17,789,380\n \n \n$\n(8,192,527\n)\n \n$\n9,596,853\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 \n \n \n\nShare-based compensation\n \n \n-\n \n \n \n-\n \n \n \n\n-\n\n \n \n \n126,769\n \n \n \n\n-\n\n \n \n \n126,769\n \n\nRepurchase of treasury shares\n \n \n(120,715\n)\n \n \n(119,536\n)\n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n(119,536\n)\n\nNet loss\n \n \n-\n \n \n \n-\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n(2,709,596\n)\n \n \n(2,709,596\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 \n \n \n\nBalance as of December 31, 2023\n \n \n7,878,501\n \n \n \n(119,536\n)\n \n \n\n*\n\n)\n \n \n17,916,149\n \n \n \n(10,902,123\n)\n \n \n6,894,490\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 \n \n \n\nShare-based compensation\n \n \n-\n \n \n \n-\n \n \n \n\n-\n\n \n \n \n154,450\n \n \n \n\n-\n\n \n \n \n154,450\n \n\nRepurchase of treasury shares\n \n \n104,964\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 \n\n*)\n\n \n\nNet loss\n \n \n-\n \n \n \n-\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n(1,233,892\n)\n \n \n(1,233,892\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 \n \n \n\nBalance as of December 31, 2024\n \n \n7,983,465\n \n \n \n(119,536\n)\n \n \n\n*\n\n)\n \n \n18,070,599\n \n \n \n(12,136,015\n)\n \n \n5,815,048\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 \n \n \n\nShare-based compensation\n \n \n-\n \n \n \n-\n \n \n \n\n-\n\n \n \n \n166,571\n \n \n \n\n-\n\n \n \n \n166,571\n \n\nExercise of warrants\n \n \n61,258\n \n \n \n-\n \n \n \n\n*\n\n)\n \n \n530\n \n \n \n\n-\n\n \n \n \n530\n \n\nExercise of options\n \n \n28,868\n \n \n \n-\n \n \n \n\n*\n\n)\n \n \n28,756\n \n \n \n\n-\n\n \n \n \n28,756\n \n\nNet loss\n \n \n-\n \n \n \n-\n \n \n \n\n-\n\n \n \n \n\n-\n\n \n \n \n(5,409,322\n)\n \n \n(5,409,322\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 \n \n \n\nBalance as of December 31, 2025\n \n \n8,073,591\n \n \n \n(119,536\n)\n \n$\n\n*\n\n)\n \n$\n18,266,456\n \n \n$\n(17,545,337\n)\n \n$\n601,583\n \n\n \n\n*)Less than $1.\n\n \n\nThe\naccompanying notes are an integral part of the consolidated financial statements.\n\n \n\nF-6\n\n**MARIS-TECH LTD.**\n\n**CONSOLIDATED STATEMENTS\nOF CASH FLOWS**\n\n**U.S. dollars**\n\n  \nYear ended December 31, \n\n  \n2025  \n2024  \n2023 \n\nCash flows from operating activities: \n   \n   \n  \n\n  \n   \n   \n  \n\nNet loss from operations \n$(5,409,322) \n$(1,233,892) \n$(2,709,596)\n\nAdjustments required to reconcile net loss to net cash used in operating activities: \n    \n    \n   \n\nDepreciation \n 116,358  \n 97,213  \n 60,649 \n\nShare-based compensation \n 166,571  \n 154,450  \n 126,769 \n\nFinancial expense (income) \n 5,781  \n 7,014  \n 23,567 \n\nRemeasurement of convertible promissory notes \n (41,696) \n \n-\n  \n \n-\n \n\nIncrease in short-term bank credit \n 1,495  \n \n-\n  \n \n-\n \n\nDecrease (increase) in trade receivables, net \n 2,905,752  \n (504,396) \n (1,383,810)\n\nDecrease (increase) in other current assets and prepaid expenses \n 55,430  \n (149,640) \n 186,782 \n\nIncrease in inventories \n (251,774) \n (649,663) \n (977,922)\n\nIncrease in Severance pay fund \n (48,843) \n (13,410) \n (5,330)\n\nIncrease (decrease) in trade payables \n (525,095) \n (58,054) \n 131,276 \n\nIncrease (decrease) in other current liabilities \n (450,176) \n 151,602  \n 633,009 \n\nDecrease in current liabilities from related parties \n 3,693  \n 8,089  \n \n-\n \n\nIncrease  (decrease) in accrued severance pay \n 63,077  \n (28,896) \n 43,449 \n\n  \n    \n    \n   \n\nNet cash used in operating activities \n (3,408,749) \n (2,219,583) \n (3,871,157)\n\n  \n    \n    \n   \n\nCash flows from investing activities: \n    \n    \n   \n\n  \n    \n    \n   \n\nInvestment in short-term bank deposits \n \n-\n  \n (7,500,000) \n (6,000,000)\n\nProceeds from short-term bank deposits \n \n-\n  \n 10,652,059  \n 12,000,000 \n\nInvestment in marketable equity securities \n \n-\n  \n \n-\n  \n (200,000)\n\nProceeds from marketable equity securities \n \n-\n  \n \n-\n  \n 108,857 \n\nPurchase of property and equipment \n (22,700) \n (190,994) \n (90,508)\n\n  \n    \n    \n   \n\nNet cash provided by (used in) investing activities \n (22,700) \n 2,961,065  \n 5,818,349 \n\n  \n    \n    \n   \n\nCash flows from financing activities: \n    \n    \n   \n\n  \n    \n    \n   \n\nIssuance of convertible promissory notes \n 2,000,000  \n \n-\n  \n \n-\n \n\nIncrease in short-term bank credit, net \n 1,990,655  \n 9,345  \n \n-\n \n\nRepurchase of treasury shares \n \n-\n  \n \n-\n  \n (119,536)\n\nExercise of options and warrants \n 29,286  \n \n-\n  \n \n-\n \n\nRepayment of loan from shareholders \n (330,630) \n (498,781) \n \n-\n \n\n  \n    \n    \n   \n\nNet cash provided by (used in) financing activities \n 3,689,311  \n (489,436) \n (119,536)\n\n  \n    \n    \n   \n\nIncrease in cash, cash equivalents and restricted deposits \n 257,862  \n 252,046  \n 1,827,656 \n\nCash, cash equivalents and restricted deposits at the beginning of the year \n 2,335,232  \n 2,083,186  \n 255,530 \n\n  \n    \n    \n   \n\nCash, cash equivalents and restricted deposits at the end of the year \n$2,593,094  \n$2,335,232  \n$2,083,186 \n\n  \n    \n    \n   \n\nSupplementary disclosure on cash flows: \n    \n    \n   \n\n  \n    \n    \n   \n\nInterest paid \n$102,096  \n$2,572  \n$5,934 \n\nInterest received \n$14,849  \n$255,204  \n$157,627 \n\n  \n    \n    \n   \n\nSupplemental disclosures of non-cash flow information: \n    \n    \n   \n\n  \n    \n    \n   \n\nRight-of-use assets obtained in the exchange for operating lease liabilities  \n$41,235  \n$139,254  \n \n-\n \n\n \n\nThe accompanying notes are an integral part of the\nconsolidated financial statements.\n\n \n\nF-7\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 1:- GENERAL**\n\n \n\na.Introduction:\n\n \n\nMaris-Tech Ltd.\n(the “Company”) was incorporated in 2008, in Israel. The Company develops, designs, manufactures and markets high-end digital\nvideo and audio products and solutions, including artificial intelligence (“AI”) functionality, for the professional as\nwell as the civilian and home security markets, defense and homeland security markets, which can be sold off the shelf or fully customized\nto meet customers’ requirements. The Company’s ordinary Shares, no par value per share (the “Ordinary Shares”),\nand warrants issued in the Company’s initial public offering (“IPO”) are listed on the Nasdaq Capital Market (“Nasdaq”)\nunder the symbol “MTEK” and “MTEKW”, respectively.\n\n \n\nThe Company operates\nin Israel and sells to customers in other countries, including the United States, Australia, United Kingdom, India and Switzerland.\n\n \n\nDuring October\n2024, the Company formed a wholly-owned subsidiary, Maris North America Inc. (“Maris North America”), under the laws of Delaware.\nAs of December 31, 2025, and the date of the issuance of these consolidated financial statements, the subsidiary has not commenced its\noperations and has no material assets or liabilities. Accordingly, nominal revenues, expenses, assets or liabilities of Maris North America\nhave been included in the consolidated financial statements as of December 31, 2025.\n\n \n\nb.Liquidity and capital resources:\n\n \n\nUnder Accounting Standard Codification (“ASC”) Subtopic\n205-40, Presentation of Financial Statements—Going Concern (“ASC 205-40”), the Company has the responsibility\nto evaluate whether conditions and/or events raise substantial doubt about its ability to meet its obligations as they become due within\none year after the date that the financial statements are issued. As required under ASC 205-40, management’s evaluation should initially\nnot take into consideration the potential mitigating effects of management’s plans that have not been fully implemented as of the\ndate the financial statements are issued. When substantial doubt exists under this methodology, the Company evaluates whether the mitigating\neffect of its plans sufficiently alleviates substantial doubt about its ability to continue as a going concern.\n\n \n\nThe accompanying consolidated financial statements are\nprepared on a going concern basis in accordance with U.S. GAAP.\n\n \n\n*Evaluation of\nSubstantial Doubt Raised*\n\n \n\nAs of December\n31, 2025, the Company had $2,545,823 in available cash and cash equivalents. The Company’s accumulated deficit totaled $17,545,337\nas of December 31, 2025 and net operating cash outflows of $3,408,749 for the year then ended December 31, 2025.\n\n \n\nThese conditions\nmay raise substantial doubt about the Company's ability to continue as a going concern and therefore the Company approved a plan to improve\nits available cash balances, liquidity and cash flows generated from operations.\n\n \n\nF-8\n\n**MARIS-TECH LTD.**\n\n**NOTES\nTO CONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n* *\n\n**NOTE 1:- GENERAL (Cont.)**\n\n* *\n\n*Consideration of\nManagement’s Plan*\n\n \n\nWhen substantial\ndoubt exists under this methodology, we evaluate whether the mitigating effect of its plans sufficiently alleviates substantial doubt\nabout our ability to continue as a going concern. The mitigating effect of management’s plans, however, is only considered if both\n(1) it is probable that the plans will be effectively implemented within one year after the date that the financial statements are issued,\nand (2) it is probable that the plans, when implemented, will mitigate the relevant conditions or events that raise substantial doubt\nabout the entity’s ability to continue as a going concern within one year after the date that these consolidated financial statements\nare issued.\n\n \n\nThe Company has\napproved a plan to improve its available cash balances, liquidity and cash flows generated from operations. The Company is prepared to\nimplement the following actions as required by business and market conditions and in the event that the Company does not raise sufficient\nfunds: reducing non-essential expenses to conserve cash and improve its liquidity position and reducing total compensation for senior\nexecutives and advisors to strengthen liquidity and to preserve key research and development, commercial and functional roles.\n\n \n\n*Management Assessment of\nAbility to Continue as a Going Concern*\n\n \n\nThe Company has\na history of operating losses and negative cash flows from operations. However, despite these conditions, the Company believes management’s\nplan, as described more fully above, will provide sufficient liquidity to meet its financial obligations and maintain levels of liquidity.\n\n \n\nTherefore, management\nconcluded this plan alleviate the substantial doubt that was raised about the Company’s ability to continue as a going concern for\nat least twelve months from the date that the consolidated financial statements were issued.\n\n \n\n*Future Plans\nand Considerations*\n\n \n\nAlthough not considered\nfor purposes of the Company’s assessment of whether substantial doubt was alleviated, the Company has plans to improve operating\ncash flows by seeking to raise additional funds through the issuance of debt and/or equity securities or otherwise.\n\n \n\nThe Company’s\nplans are subject to inherent risks and uncertainties. Accordingly, there can be no assurance that the Company’s plans can be effectively\nimplemented and, therefore, that the conditions can be effectively mitigated.\n\n \n\nUntil such time,\nif ever, that the Company can generate revenue sufficient to achieve profitability, the Company expects to finance its operations through\nequity or debt financings, which may not be available to the Company on the timing needed or on terms that the Company deems to be favorable.\nTo the extent that the Company raises additional capital through the sale of equity or debt securities, the ownership interest of its\nshareholders will be diluted. If the Company is unable to maintain sufficient financial resources, its business, financial condition and\nresults of operations will be materially and adversely affected.\n\n \n\nIn the event that the Company is unable to raise sufficient capital, management intends to implement the cost reduction and liquidity\nplan described above, which are designed to enable the Company to continue its operations and meet its obligations for a period of at\nleast twelve months from the date the consolidated financial statements are issued.\n\n \n\nF-9\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 2:- SIGNIFICANT ACCOUNTING\nPOLICIES**\n\n \n\nThe consolidated\nfinancial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.\nGAAP”).\n\n \n\na.Functional currency:\n\n** **\n\nA majority of the\nCompany’s revenues are indexed to United States dollars (“dollar” or “U.S. dollars”). In addition, a substantial\nportion of the Company’s costs are indexed to the dollar. The Company’s management believes that the dollar is the primary currency of\nthe economic environment in which the Company operates. Thus, the functional and reporting currency of the Company is the dollar. Accordingly,\nmonetary accounts maintained in currencies other than the dollar are re-measured into dollars in accordance with Accounting Standards\nCodification (“ASC”) No. 830 “Foreign Currency Matters”. All transaction gains and losses from the re-measured monetary\nbalance sheet items are reflected in the statements of operations as financial income or expenses, as appropriate.\n\n \n\nb.Use of estimates:\n\n \n\nThe preparation\nof the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect\nthe reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial\nstatements and the reported amounts of revenues and expenses during reported periods. The Company’s management believes that the\nestimates, judgments and assumptions used are reasonable based upon information available at the time they are made. Actual results could\ndiffer from those estimates.\n\n \n\nc.Cash equivalents:\n\n \n\nCash equivalents\nare short-term, highly liquid investments that are readily convertible to cash with original maturities of three months or less, at acquisition.\n\n \n\nd.Bank deposits:\n\n \n\nBank deposits with\nmaturities of more than three months but less than one year are included in short-term bank deposits. Such short-term bank deposits are\nstated at cost, which approximate market values.\n\n \n\nBank deposits with\nmaturities of more than one year are included in long-term bank deposits. Long-term bank deposits are stated at cost, which approximates\nmarket values.\n\n \n\ne.Trade receivables, net:\n\n \n\nTrade receivable\nconsists of invoiced amounts and unbilled receivables, net of allowance for credit losses. Unbilled receivables represent revenue recognized\nfor which the Company expects to invoice subsequent to the period end. The allowance for credit losses is based on the Company’s\nassessment of the collectability of accounts.\n\n \n\nF-10\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES\n(Cont.)**\n\n \n\nThe Company regularly\nassesses collectability based on a combination of factors, including an assessment of the current customer’s aging balance, and\nthe nature and size of the customer, the financial condition of the customer. Trade receivable deemed uncollectible are charged against\nthe allowance for credit losses when identified. The consolidated financial statements include an allowance for credit losses for which\ncollection of the receivable is not probable in the total amount of $886,420 and $810,336 as of December 31, 2025 and 2024, respectively.\nIn determining the adequacy of the allowance, consideration is given to each trade receivable’s historical experience, the age\nof the trade receivable, adjusted to take into account current market conditions and information available about specific debtors, including\ntheir financial condition, current payment patterns, the volume of their operations, and evaluation of the security received from them\nor their guarantors. Payment terms between the Company and its customers are typically up to 150 days, and vary by the type of customer,\ncountry of sale and the products or services offered.\n\n \n\nf.Inventories:\n\n \n\nInventories are\nstated at the lower of cost or net realizable value. Inventory write-off is provided to cover risks arising from slow-moving items, technological\nobsolescence, excess inventories and discontinued products. Inventory write-offs totaled nil in 2025 and 2024 and $78,485 in 2023 and\nhave been included in cost of revenues in the Company’s statements of operations.\n\n \n\nCost is determined\nas follows:\n\n \n\nRaw materials and\ncomponents - using the “first-in, first-out” method.\n\n \n\nWork-in-progress\nand finished products - raw materials as above with the addition of subcontracting costs, calculated on the basis of direct subcontractors\ncosts and with direct overhead costs.\n\n \n\nThe Company assesses\nthe carrying value of its inventory for each reporting period to ensure inventory is reported at the lower of cost or net realizable\nvalue in accordance with ASC No. 330-10-35, “Inventory”. Charges for obsolete and slow-moving inventories are recorded based\nupon an analysis of specific identification of obsolete inventory items and quantification of slow-moving inventory items. These assessments\nconsider various factors, including historical usage rate, technological obsolescence, estimated current and future market values and\nnew product introduction. In cases when there is evidence that the anticipated utility of goods, in their disposal in the ordinary course\nof business, will be less than the historical cost of the inventory, the Company recognizes the difference as a current period charge\nto earnings and carries the inventory at the reduced cost basis until it is sold or disposed of.\n\n \n\nF-11\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES\n(Cont.)**\n\n \n\ng.Property, plant and equipment, net:\n\n \n\nProperty, plant\nand equipment is comprised of the below and stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line\nmethod over the estimated useful lives of the assets as follows:\n\n \n\n    **%**\n\n     \n\nComputers, software and manufacturing equipment   33\n\nOffice furniture and equipment   6 - 15\n\nLeasehold improvements   Over the shorter of the term of the lease or\n\nthe useful life of the asset\n\n \n\nh.Impairment of long-lived assets:\n\n \n\nProperty and equipment\nand right-of-use asset for leases are reviewed for impairment in accordance with ASC No. 360, “Accounting for the Impairment or\nDisposal of Long-Lived Assets,” whenever events or changes in circumstances indicate that the carrying amount of an asset (asset\ngroup) may not be recoverable. Recoverability of assets (asset group) to be held and used is measured by a comparison of the carrying\namount of an asset (asset group) to the future undiscounted cash flows expected to be generated by the assets (asset group). If such\nassets (asset group) are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount\nof the assets (asset group) exceeds the fair value of the assets (asset group). During 2025, 2024 and 2023, no impairment losses were\nrecorded.\n\n \n\ni.Leases:\n\n \n\nThe Company adopted ASC 842, Leases\n(“ASC 842”) on January 1, 2022, using a modified retrospective basis and applied the practical expedients related to the\ntransition. The Company determines if an arrangement is a lease and the classification of that lease at inception based on: (1) whether\nthe contract involves the use of a distinct identified asset, (2) whether the Company obtains the right to substantially all the economic\nbenefits from the use of the asset throughout the period, and (3) whether the Company has a right to direct the use of the asset. The\nCompany elected to not recognize a lease liability and a right-of-use (“ROU”) asset for leases with a term of twelve months\nor less. Lastly, the Company also elected the practical expedient to not separate lease and non-lease components for its leases.\n\n \n\nROU assets and lease liabilities\nare recognized at commencement date based on the present value of remaining lease payments over the lease term. ROU assets are initially\nmeasured at amounts, which represents the discounted present value of the lease payments over the lease, plus any initial direct costs\nincurred. The lease liability is initially measured based on the discounted present value of remaining lease payments over the lease\nterm. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement.\n\n \n\nF-12\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES\n(Cont.)**\n\n \n\nThe implicit rate within the operating\nleases is generally not determinable, therefore the Company uses the Incremental Borrowing Rate (“IBR”) based on the information\navailable at commencement date in determining the present value of lease payments. The Company’s IBR is estimated to approximate\nthe interest rate for collateralized borrowing with similar terms and payments and in economic environments where the leased asset is\nlocated.\n\n \n\nAn option to extend the lease is\nconsidered in connection with determining the ROU asset and lease liability when it is reasonably certain that the Company will exercise\nthat option. An option to terminate the lease is considered unless it is reasonably certain that the Company will not exercise the option.\n\n \n\nj.Revenue recognition:\n\n \n\nThe Company generates\nrevenues from sales of products manufactured based on the Company’s technology. The Company develops, designs and manufactures\nboth standard and customizable high-end digital Video & Audio products. The Company’s products include proprietary software\n(firmware) embedded into the tangible products and is not sold separately. The Company only sells its products to end customers with\nno right of return.\n\n \n\nThe Company applies\nASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). Under ASC 606, an entity recognizes revenue when\nits customer obtains control of promised goods or services in an amount that reflects the consideration that the entity expects to receive\nin exchange for those goods or services. In accordance with ASC 606, the entity performs the following five steps:\n\n \n\n(1)Identify the contract(s) with a customer,\n\n \n\n(2)Identify the performance obligations in the contract,\n\n \n\n(3)Determine the transaction price,\n\n \n\n(4)Allocate the transaction price to the performance obligations\nin the contract, and\n\n \n\n(5)Recognize revenue when (or as) the entity satisfies a performance\nobligation.\n\n \n\n*Identifying\nthe contract with a customer:*\n\n \n\nThe Company accounts\nfor a contract with a customer when it has approval and commitment from both parties, the rights of the parties and payment terms are\nidentified and agreed upon, the contract has commercial substance and collectability of consideration is probable.\n\n \n\n*Identifying\nthe performance obligations in the contract:*\n\n \n\nThe Company’s contracts generally include a single performance\nobligation which is the delivery of the product to the customer.\n\n \n\nF-13\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES\n(Cont.)**\n\n \n\nIn certain cases,\nthe Company customizes its products based on its customers’ requirements (Proof of Concept (“POC”) transactions).\nIn these transactions, the Company has determined that the development or the customization and the delivery of these products are not\ndistinct within the context of the contract.\n\n \n\nIn addition, the\nCompany also enters into several transactions in which it provides professional services.\n\n \n\n*Determining the\ntransaction price:*\n\n** **\n\nRevenue is measured\nbased on the consideration specified in the contract with a customer, and excludes any sales incentives and amounts collected on behalf\nof third parties (such as sales tax). The Company has elected to apply the practical expedient for financing component for transactions\nin which the difference between the payment date and the revenue recognition timing is up to 12 months.\n\n \n\n*Allocation of\nthe transaction price to the performance obligations in the contract*\n\n* *\n\nIn contracts that\ncontain a single performance obligation, the entire transaction price is allocated to the single performance obligation.\n\n \n\n*Recognize revenue\nwhen (or as) the entity satisfies a performance obligation:*\n\n** **\n\nThe Company recognizes\nrevenue when it satisfies a performance obligation by transferring control over its product to a customer based on the shipment terms.\nIn most cases, control is transferred upon shipment.\n\n \n\nAs for the POC transactions,\nthe Company analyzed the criteria in ASC 606 to determine whether control over products sold under the contracts is transferred over time.\nMainly, whether the Company’s performance does not create an asset with an alternative use to the Company, and if it has an enforceable\nright to payment for performance completed to date. Revenues from professional services are generally recognized ratably over the contract\nterm since the professional services have a consistent pattern of transfer to the customer.\n\n \n\nThe Company elected to not disclose information about the remaining\nperformance obligations that have original expected durations of one year or less.\n\n \n\nk.Warrant classification:\n\n \n\nThe Company accounts\nfor equity-linked instruments (i.e., warrants) as either equity-classified or liability-classified instruments based on an assessment\nof the instrument’s specific terms and applicable authoritative guidance. The assessment considers whether the instruments are\nfreestanding financial instruments, meet the definition of a liability under ASC 480, and meet all of the requirements for equity classification\nunder ASC 815-40, including whether the instruments are indexed to the Company’s own ordinary share and whether the conditions\nfor equity classification are met. This assessment, which requires the use of professional judgment, is conducted at the time of issuance\nand as of each subsequent reporting period end date while the instruments are outstanding.\n\n \n\nF-14\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES\n(Cont.)**\n\n \n\nInstruments that\nmeet all the criteria for equity classification are required to be recorded as a component of additional paid-in capital. Instruments\nthat do not meet all the criteria for equity classification, are required to be recorded as liabilities at their initial fair value on\nthe date of issuance and remeasured to fair value at each balance sheet date thereafter. Changes in the estimated fair value are recognized\nin financial income (expenses) in the statements of operations.\n\n \n\nl.Warranty reserve:\n\n \n\nThe Company provides\na one-year standard warranty for its products. The Company records a provision for the estimated cost to repair or replace products under\nwarranty at the time revenues are recognized based on the Company’s historical experience. The Company periodically assesses the adequacy\nof its recorded warranty liabilities and adjusts the amounts as necessary.\n\n \n\nThe following table\nsets forth activity in the Company’s accrued warranty account for each of the years ended December 31, 2025, 2024 and 2023:\n\n \n\n  \nYear ended December 31, \n\n  \n2025  \n2024  \n2023 \n\n  \n   \n   \n  \n\nBalance at the beginning of the year \n$15,000  \n$40,311  \n$25,049 \n\n  \n    \n    \n   \n\nCost incurred \n (9,825) \n (9,331) \n (15,334)\n\nExpense (income) recognized \n 9,825  \n (15,980) \n 30,596 \n\n  \n    \n    \n   \n\nBalance at the end of the year \n$15,000  \n$15,000  \n$40,311 \n\n \n\nm.Shipping and handling fees and costs:\n\n \n\nShipping and handling\nfees charged to the Company’s customers are recognized as product revenue in the period shipped and the related costs for providing these\nservices are recorded as a cost of revenues in the statements of operations.\n\n \n\nn.Research, development costs:\n\n** **\n\nResearch and development\ncosts, which consist mainly of labor costs, materials and subcontractor costs, are charged to operations as incurred.\n\n \n\nAccording to ASC\nTopic 350, Intangibles - Goodwill and Other, software that is part of a product or process to be sold to a customer shall be accounted\nfor under ASC subtopic 985-20. The Company’s products contain embedded software which is an integral part of these products because\nit allows the various components of the products to communicate with each other and the products are clearly unable to function without\nthis coding. Based on the Company’s product development process, the Company does not incur material costs after the point in time\nat which the product as a whole reaches technological feasibility. Therefore, research and development costs are charged to the statement\nof operations as incurred.\n\n \n\nF-15\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES\n(Cont.)**\n\n \n\no.Government grants:\n\n \n\nThe Company received\nnon-royalty-bearing and royalty-bearing grants from the Israel Innovation Authority (“IIA”) for approved research and development\nprojects. These grants are recognized at the time the Company is entitled to such grants on the basis of the costs incurred as provided\nby the relevant agreement and included as a deduction from research and development expenses, net.\n\n \n\nResearch and development\ngrants deducted from research and development expenses, net amounted to $56,758, $307,962 and $259,473 for the years ended December 31,\n2025, 2024 and 2023, respectively.\n\n \n\np.Basic and diluted net loss per share:\n\n \n\nBasic net loss\nper share is computed based on the weighted average number of Ordinary Shares outstanding during each period. Diluted net loss per share\nis computed based on the weighted average number of Ordinary Shares outstanding during each period, plus potential dilutive Ordinary\nShares considered outstanding during the period, if any, in accordance with ASC No. 260, “Earnings Per Share”.\n\n \n\nThe total number\nof Ordinary Shares related to outstanding share options excluded from the calculation of diluted loss per share as they would have been\nanti-dilutive was 5,804,044, 5,895,983 and 5,685,694 for the years ended December 31, 2025, 2024 and 2023, respectively.\n\n \n\nq.Fair value of financial instruments:\n\n \n\nFair value is an\nexit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction\nbetween market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market\nparticipants would use in pricing an asset or a liability.\n\n \n\nA three-tier fair\nvalue hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring\nfair value:\n\n \n\nLevel 1\n- Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.\n\n \n\nLevel 2\n- Include other inputs that are directly or indirectly observable in the marketplace.\n\n \n\nLevel 3\n- Unobservable inputs that are supported by little or no market activity.\n\n \n\nF-16\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES\n(Cont.)**\n\n \n\nThe Company, in\nestimating fair value for financial instruments, determined that the carrying amounts of cash and cash equivalents, short-term deposits,\ntrade receivables, restricted deposits including deposits for employee benefits, trade payables and liabilities from related parties\nare equivalent to, or approximate their fair value due to the short-term maturity of these instruments. The Company’s convertible promissory\nnotes were measured at fair value using Level 3 unobservable inputs, see Note 12b.\n\n \n\nr.Segments:\n\n \n\nThe Company operates\nin one segment. Management does not segregate its business for internal reporting. The Company’s chief operating decision maker\n(“CODM”), who is the Chief Executive Officer, evaluates the performance of its business based on financial data consistent\nwith the presentation in the accompanying consolidated financial statements. The Company concluded that its unified business is conducted\nglobally and accordingly represents one operating segment.\n\n \n\ns.Income taxes:\n\n \n\nThe Company accounts\nfor taxes on income in accordance with ASC Topic 740, Income Taxes, which prescribes the use of the asset and liability method whereby\ndeferred tax asset and liability account balances are determined based on differences between the financial reporting and tax bases of\nassets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected\nto reverse. The Company provides a valuation allowance, if necessary, to reduce deferred tax assets to their estimated realizable value\nif it is more likely than not that a portion or all of the deferred tax assets will not be realized, based on the weight of available\npositive and negative evidence. Deferred tax liabilities and assets are classified as non-current.\n\n \n\nThe Company accounts\nfor uncertain tax positions in accordance with ASC 740-10. ASC 740-10 contains a two-step approach to recognizing and measuring uncertain\ntax positions. The first step is to evaluate the tax position taken or expected to be taken in a tax return by determining if the weight\nof available evidence indicates that it is more likely than not that, on an evaluation of the technical merits, the tax position will\nbe sustained on audit, including resolution of any related appeals or litigation processes. The second step is to measure the tax benefit\nas the largest amount that is more than not likely to be realized upon ultimate settlement.\n\n \n\nF-17\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES\n(Cont.)**\n\n \n\nThe Company accounts\nfor interest and penalties as a component of income tax expense. There were no uncertain tax positions as of December 31, 2025 or 2024.\n\n \n\nt.Severance pay:\n\n \n\nEffective July\n1, 2022, the Company’s agreements with employees, are subject to Section 14 of the Severance Pay Law, 1963. Up to July 1, 2022, the liability\nof the Company for severance pay for employees, was calculated pursuant to Israeli severance pay law based on the most recent salary\nof each employee multiplied by the number of years of employment for these employee as of June 30, 2022. The Company’s liability for\nthe period until June 30, 2022, is fully provided for by monthly deposits with severance pay funds, insurance policies and an accrual.\nThe deposited funds include profits and losses accumulated up to June 30, 2022. The deposited funds may be withdrawn only upon the fulfillment\nof the obligation pursuant to Israeli severance pay law or labor agreements. The value of these policies is recorded as an asset on the\nCompany’s balance sheets.\n\n \n\nEffective July 1, 2022, the Company’s\nagreements with new employees in Israel are subject to Section 14 of the Severance Pay Law, 1963, and effective July 1, 2022, also with\nexisting employees. Upon contribution of the full amount based on the employee’s monthly salary for each year of service, no additional\nobligation exists regarding the matter of severance pay, and no additional payments are made by the Company to the employee. Furthermore,\nthe related obligation and amounts deposited on behalf of the employee for such obligation are not stated on the balance sheet, as the\nCompany is legally released from any obligation to employees once the required deposit amounts have been paid.\n\n \n\nSeverance pay expenses\nfor the years ended December 31, 2025, 2024 and 2023 amounted to $134,233, $139,137 and $81,212, respectively.\n\n \n\nu.Concentrations of credit or business risk:\n\n \n\nFinancial instruments\nthat potentially subject the Company to concentrations of credit risk consist principally of cash equivalents, bank deposits, trade receivables\nand trade payables.\n\n \n\nCash equivalents\nand bank deposits are invested mainly in NIS and U.S. dollars with major banks in Israel. Management believes that the financial institutions\nthat hold the Company’s investments are financially sound and, accordingly, minimal credit risk exists with respect to these investments.\n\n \n\nMost of the Company’s\ntrade receivables are derived from sales to large and financially secure organizations. In determining the adequacy of the allowance,\nmanagement bases its opinion, inter alia, on the estimated risks, current market conditions and in reliance on available information\nwith respect to the debtor’s financial position. For a discussion of the Company’s major customers see Note 10b.\n\n \n\nThe Company acquires certain component\nparts for its products from market leading suppliers that are single source manufacturers. In order to mitigate the risk and as a redundant\nsolution, the Company designs similar products based on component parts from different suppliers.\n\n \n\nF-18\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES\n(Cont.)**\n\n \n\nv.Commitments and contingencies:\n\n \n\nLiabilities for loss contingencies\narising from claims, assessments, litigations, fines and penalties and other sources are recognized when it is probable that a liability\nhas been incurred and the amount of the assessment can be reasonably estimated. Gain contingencies are recognized when they are realized\nor when all related contingencies have been resolved.\n\n \n\nw.Share-based compensation:\n\n \n\nThe Company applies ASC 718, Share-based\nPayment (“ASC 718”). ASC 718 requires companies to estimate the fair value of equity-based payment awards on the date of\ngrant using an option-pricing model. The value of the awards is recognized as an expense over the requisite service periods in the Company’s\nstatements of operations. \n\n \n\nThe Company measures the compensation\ncost related to the options awarded on the grant date and recognizes the cost on a straight-line method over the requisite service period\nof the awards, including awards with graded vesting and no additional conditions for vesting other than service conditions. The Company\naccounts for forfeitures as they occur.\n\n \n\nFair value of the equity instrument\nissued to a non-employee is measured as of the grant date. The fair value of the awards is recognized over the vesting period, which\ncoincides with the period that the counter-party is providing services to the Company.\n\n \n\nThe Company used the Black-Scholes\noption-pricing model to determine the fair value of options granted. The following assumptions were applied in determining the options’\nfair value on their grant date:\n\n \n\n   2025   2024 \n\n         \n\nRisk-free interest rate (a)   3.88%   3.84%-3.88% \n\nExpected option term (years) (b)   3.88    3.88-5 \n\nExpected share price volatility (c)   56.1%   56.1%-58.2% \n\nDividend yield (d)   \n-\n    \n\n-\n\n \n\nWeighted average grant date fair value  $1.70   $0.48-0.79 \n\n \n\nF-19\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES\n(Cont.)**\n\n \n\nThese assumptions and estimates were\ndetermined as follows:\n\n \n\n(a)Risk-free interest rate: The risk-free rate for the expected\nterm of the options is based on the Black-Scholes option-pricing model on the yields of U.S. Treasury securities with maturities appropriate\nfor the expected term of employee share option awards.\n\n \n\n(b)Expected term: The expected term represents the period that\noptions are expected to be outstanding. The Company determines the expected term using the simplified method. The simplified method deems\nthe term to be the average of the time-to-vesting and the contractual life of the options.\n\n \n\n(c)Expected volatility: As the Company has a short trading history\nfor its Ordinary Shares, the expected volatility is derived from the average historical share volatilities of several unrelated public\ncompanies within the Company’s industry that the Company considers to be comparable to its own business over a period equivalent\nto the option’s expected term.\n\n \n\n(d)Expected dividend yield: The Company has never declared\nor paid any cash dividends and does not presently plan to pay cash dividends in the foreseeable future. As a result, an expected dividend\nyield of zero percent was used.\n\n \n\nx.Treasury shares:\n\n** **\n\nDuring 2023, the Company repurchased\n120,715 Ordinary Shares on the open market and holds such shares as treasury shares. The Company presents the cost to repurchase treasury\nshares as a reduction of shareholders’ equity. Treasury shares are not entitled to vote on any matters brought before the shareholders.\n\n** **\n\ny.Cash and cash equivalents in statement of cash flows:\n\n \n\nThe following table provides a reconciliation\nof cash, cash equivalents, and restricted cash and cash equivalents reported within the accompanying balance sheets that sum to the total\nof the same such amounts presented in the accompanying statements of cash flows:\n\n \n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n   \n  \n\nCash and cash equivalents \n$2,545,823  \n$2,294,679 \n\nRestricted deposits \n 47,271  \n 40,553 \n\n  \n    \n   \n\nTotal cash, cash equivalents and restricted deposits presented in the statements of cash flows \n$2,593,094  \n$2,335,232 \n\n \n\nF-20\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n** **\n\n**NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES\n(Cont.)**\n\n \n\nz.Recently issued accounting pronouncements adopted:\n\n \n\nAs an “Emerging Growth Company”,\nthe Jumpstart Our Business Startups Act (“JOBS Act”) allows the Company to delay adoption of new or revised accounting pronouncements\napplicable to public companies until such pronouncements are made applicable to private companies. The Company has elected to use this\nextended transition period under the JOBS Act. The adoption dates discussed below reflect this election.\n\n \n\nIn December 2023, the FASB issued\nASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which requires entities, on an annual basis, to provide\ndisclosure of specific categories in the effective tax rate reconciliation, as well as provide additional information for reconciling\nitems that meet a quantitative threshold.  Further, the ASU requires certain disclosures of state versus federal income tax expense\nand taxes paid. The amendments in this ASU are required to be adopted for fiscal years beginning after December 15, 2024. The Company\nadopted ASU 2023-09 during the year ended December 31, 2025, on a prospective basis. The adoption of this ASU affected only the\nCompany’s disclosures to its consolidated financial statements (refer to Note 15).\n\n \n\naa.Recently issued accounting pronouncements not yet adopted:\n\n \n\nIn November 2024, the FASB issued\nASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosure (Subtopic 220-40): Disaggregation\nof Income Statement Expenses, which requires disclosure of disaggregated information about certain expense captions presented in the\nStatements of Operations as well as disclosure about selling expense. ASU 2024-03 is effective for fiscal years beginning after December\n15, 2026, and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted, and may be applied\neither prospectively or retrospectively. The Company is currently evaluating the impact on its consolidated financial statements disclosures.\n\n** **\n\nIn July 2025, the FASB issued ASU\n2025-05, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets.\nThe ASU provides a practical expedient for estimating expected credit losses on current accounts receivable and current contract assets\narising from transactions accounted for under Topic 606, including such assets acquired in a business combination. Under the practical\nexpedient, an entity may assume that current conditions as of the balance sheet date will remain unchanged over the remaining life of\nthese assets. This guidance is effective for the Company for annual periods beginning after December 15, 2025, and interim reporting\nperiods within those annual reporting periods, on a prospective basis, early adoption of ASU 2025-05 is permitted. The Company is currently\nevaluating the impact of adopting this new guidance on its consolidated financial statements and related disclosures.\n\n \n\nF-21\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 2:- SIGNIFICANT ACCOUNTING POLICIES\n(Cont.)**\n\n \n\nIn December 2025, the FASB issued\nASU 2025-11, Interim Reporting (Topic 270) - Narrow-Scope Improvements. The ASU was updated to improve the navigability of the required\ninterim disclosures within ASC No. 270 and to clarify when the guidance applies. This ASU is not intended to change the fundamental nature\nof interim reporting or expand or reduce current interim disclosure requirements. The amendments in this ASU are required to be adopted\nfor interim reporting periods beginning after December 15, 2027, with early adoption permitted, and may be applied either through a prospective\nor retrospective approach. The Company is currently evaluating the effect of adopting the ASU on its condensed financial statement disclosures.\n\n \n\nIn December 2025, the FASB issued\nASU 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities. The update provides recognition,\nmeasurement, presentation, and disclosure requirements for government grants, including guidance for grants related to an asset and grants\nrelated to income. The amendments introduced two permitted approaches for asset-related grants: a deferred income approach or a cost\naccumulation approach. The guidance is effective for the Company beginning January 1, 2029, with early adoption permitted. The Company\nis currently evaluating the impact on its consolidated financial statement.\n\n \n\nab.Reclassification:\n\n \n\nCertain amounts in prior periods\nin the consolidated statements of cash flows have been reclassified to conform with current period presentation.\n\n** **\n\n**NOTE 3:- RESTRICTED DEPOSITS**\n\n** **\n\nBalances at December 31, 2025 and\n2024 consisted of bank deposits. The bank deposits bore annual interest of 4.2% and 0.35% as of December 31, 2025 and 2024.\n\n \n\nRestricted deposits, as of December\n31, 2025 and 2024, are restricted due to guarantees made with regards to lease payments for the Company’s office space. For further\ninformation see Note 6.\n\n** **\n\n**NOTE 4:- INVENTORIES**\n\n \n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n   \n  \n\nRaw materials \n$1,608,888  \n$1,175,792 \n\nIn process and finished products \n 1,252,200  \n 1,433,522 \n\n  \n    \n   \n\n  \n$2,861,088  \n$2,609,314 \n\n \n\nF-22\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n** **\n\n**NOTE 5:- PROPERTY, PLANT AND EQUIPMENT,\nNET**\n\n \n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\nCost: \n   \n  \n\n  \n   \n  \n\nComputers, software and manufacturing equipment \n$180,563  \n$169,219 \n\nLeasehold improvements \n 251,657  \n 247,792 \n\nOffice furniture and equipment \n 189,065  \n 181,574 \n\n  \n    \n   \n\nTotal cost \n 621,285  \n 598,585 \n\n  \n    \n   \n\nTotal accumulated depreciation \n 307,513  \n 191,155 \n\n  \n    \n   \n\nProperty, plant and equipment, net \n$313,772  \n$407,430 \n\n \n\nDepreciation expenses amounted to\n$116,358, $97,213 and $60,649 for the years ended December 31, 2025, 2024 and 2023, respectively.\n\n** **\n\n**NOTE 6:- LEASES**\n\n \n\nAs of December 31, 2025, the Company\nis a party to three lease agreements for its facilities in Israel, which all expire in October 2027. In addition, the Company also leases\nvehicles under various operating leases, the latest of which expires in 2028.\n\n \n\nAggregate lease\npayments for the right of use assets over the remaining lease period as of December 31, 2025, are as follows:\n\n \n\n  \nDecember 31,\n\n \n\n  \n2025 \n\n  \n  \n\n2026 \n$208,796 \n\n2027 \n 160,890 \n\n2028 \n 8,304 \n\n  \n   \n\nTotal undiscounted cash flows \n 377,990 \n\nLess - imputed interest \n 19,564 \n\n  \n   \n\nPresent value of operating lease liabilities \n$358,426 \n\n \n\nThe weighted-average remaining lease\nterms and discount rates for all operating leases were as follows as of December 31, 2025:\n\n \n\nWeighted-average remaining lease term (years)   1.85 \n\n      \n\nWeighted-average discount rate   6.21%\n\n \n\nF-23\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 6:- LEASES (Cont.)**\n\n \n\nThe weighted-average remaining lease\nterms and discount rates for all of operating leases were as follows as of December 31, 2024:\n\n \n\nWeighted-average remaining lease term (years)   2.77 \n\n      \n\nWeighted-average discount rate   5.5%\n\n \n\nTotal cash payments for operating\nleases for the years ended December 31, 2025, 2024 and 2023 were $303,661, $208,055 and $96,910, respectively.\n\n \n\nTotal rent expenses for the years\nended December 31, 2025, 2024 and 2023 were $183,271, $168,845 and $153,833, respectively.\n\n \n\nTotal variable costs related to rent expenses for the years ended December\n31, 2025, 2024 and 2023 were $27,357, $19,077 and $14,641, respectively.\n\n** **\n\n**NOTE 7:- OTHER CURRENT\nLIABILITIES**\n\n \n\n   December 31, \n\n   2025   2024 \n\n         \n\nEmployees and related expenses  $668,479   $941,487 \n\nProvision for warranty   15,000    15,000 \n\nAccrued expenses   131,924    230,742 \n\nCurrent maturities of operating leases   203,096    164,395 \n\nGovernment authorities   63,818    180,869 \n\n   $1,082,317   $1,532,493 \n\n \n\n**NOTE 8:- COMMITMENTS AND\nCONTINGENCIES**\n\n** **\n\na.Liens:\n\n \n\nThe Company’s long-term restricted\ndeposits in the amounts of $47,271 have been pledged as security in respect of guarantees granted to the Company’s landlords as part\nof the office lease agreements. Such deposit cannot be pledged to others or withdrawn without the consent of the lender.\n\n \n\nF-24\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n** **\n\n**NOTE 8:- COMMITMENTS AND CONTINGENCIES\n(Cont.)**\n\n \n\nb.Israeli Innovation Authority grants:\n\n \n\nThe Company has entered into several\nresearch and development programs, pursuant to which the Company received grants from the IIA, and are therefore in some cases obligated\nto pay royalties to the IIA at a rate of 3% to 5% on sales proceeds from products that were developed under IIA programs up to the total\namount of grants received (linked to the U.S. dollar with annual interest at Secured Overnight Financing Rate (“SOFR”) as\nof the date of approval, for programs approved from January 1, 1999 and thereafter). The Company may be required to pay additional royalties\nupon the occurrence of certain events as determined by the IIA, that are within the control of the Company. No such events have occurred\nor were probable of occurrence as of the balance sheet date with respect to these royalties.\n\n \n\nAs of December 31, 2025, the\naggregate contingent liability to the IIA (including interest) amounted to $655,000.\n\n \n\nIn August\n2022, the Company received approval for a joint grant with Ben Gurion University, Be’er Sheva, Israel, from the IIA for the\njoint development of AI and machine learning (ML) based system for detecting, diagnosing and predicting faults and malfunction in\ndrones. This grant is not subject to royalty payments to the IIA. The total approved budget the Company received for the first year\nof the joint project amounts to NIS 1,314,024 (approximately $411,919). The grant represents 66% of the total budget for the project\n(approximately $271,867). As of December 31, 2025, the Company had received NIS 806,232 (approximately $252,737) from the IIA with\nrespect to this program.\n\n \n\nIn June 2023, the Company received grant approval from the IIA in the\namount of NIS 1,209,797 (approximately $379,246) to support the first-year development of an innovative system for\nonboard situation awareness for nanosatellite platforms. The grant represents 50% of the total budget for the first year of\nthe project. As of December 31, 2025, the Company had received NIS 617,459 (approximately $193,561) from the IIA with respect to this\nprogram.\n\n** **\n\nIn November 2023, the Company received grant approval for the second\nyear of the joint project with Ben Gurion University, Be’er Sheva, Israel, from the IIA. The total approved budget the Company received\nfor the second year of the joint project amounts to NIS 935,544 (approximately $293,274). The grant represents 66% of the total budget\nfor the project (approximately $193,561). As of December 31, 2025, the Company had received NIS 617,459 (approximately $193,561) from\nthe IIA with respect to this program.\n\n \n\nTotal research and development income recorded in the statements of\noperations for the year ended December 31, 2025, 2024 and 2023 were approximately $56,758, $307,962 and $259,473, respectively.\n\n \n\nF-25\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n** **\n\n**NOTE 9:– REVENUES**\n\n** **\n\nDisaggregation of revenue:\n\n \n\nThe following table disaggregates\nthe Company’s revenues based on the nature and characteristics of its contracts, for the years ended December 31, 2025, 2024 and\n2023:\n\n \n\n  \nYear ended December 31, \n\n  \n2025  \n2024  \n2023 \n\n  \n   \n   \n  \n\nSales of products \n$1,331,218  \n$4,888,968  \n$3,985,773 \n\nPOC contracts and related services \n 10,000  \n 1,189,985  \n 45,330 \n\n  \n    \n    \n   \n\n  \n$1,341,218  \n$6,078,953  \n$4,031,103 \n\n \n\n**NOTE 10:– GEOGRAPHIC INFORMATION\nAND SEGMENTS**\n\n** **\n\na.Revenues by geographical areas from external customers:\n\n \n\n  \nYear ended December 31, \n\n  \n2025  \n2024  \n2023 \n\n  \n   \n   \n  \n\nIsrael \n$975,656  \n$5,541,476  \n$3,054,021 \n\nUnited Kingdom \n 345,562  \n 228,795  \n 446,684 \n\nAustralia \n 7,500  \n 3,750  \n 469,365 \n\nUSA \n 12,500  \n 203,595  \n 950 \n\nRest of the world \n \n-\n  \n 101,337  \n 60,083 \n\n  \n    \n    \n   \n\n  \n$1,341,218  \n$6,078,953  \n$4,031,103 \n\n \n\nb.Major customers by percentage from total revenues:\n\n* *\n\n  \nYear ended December 31, \n\n  \n2025  \n2024  \n2023 \n\n  \n% \n\n  \n   \n   \n  \n\nCustomer A \n 25.8  \n 3.8  \n 11.1 \n\nCustomer B \n 18.7  \n 29  \n 17.1 \n\nCustomer C \n 6.6  \n 15.6  \n 4.6 \n\n* *\n\nc.The Company’s long-term assets and operating lease right-of-use\nassets are located in Israel.\n\n \n\nF-26\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n** **\n\n**NOTE 10:– GEOGRAPHIC INFORMATION\nAND SEGMENTS (Cont.)**\n\n** **\n\nd.The Company operates as one operating segment. Operating segments\nare defined as components of an enterprise for which separate financial information is regularly evaluated by the CODM, who is the Chief\nExecutive Officer, in deciding how to allocate resources and assess performance. The Company’s CODM evaluates the Company’s\nfinancial information and resources and assesses the performance of these resources on a consolidated basis. There is no expense or asset\ninformation that is supplemental to those disclosed in these consolidated financial statements, that are regularly provided to the CODM.\nThe allocation of resources and assessment of performance of the operating segment is based on net loss as shown in the statements of\noperations. The CODM considers net loss in the annual forecasting process and reviews actual results when making decisions about allocating\nresources. Since the Company operates as one operating segment, financial segment information, including profit or loss and asset information,\ncan be found in the consolidated financial statements.\n\n** **\n\n**NOTE 11:– NET LOSS PER\nSHARE**\n\n \n\nThe following table presents the computation\nof basic and diluted net loss per share:\n\n \n\n  \nYear ended December 31, \n\n  \n2025  \n2024  \n2023 \n\nNumerator: \n   \n   \n  \n\n  \n   \n   \n  \n\nNet loss \n$5,409,322  \n$1,233,892  \n$2,709,596 \n\n  \n    \n    \n   \n\nDenominator: \n    \n    \n   \n\n  \n    \n    \n   \n\nWeighted average shares – denominator for basic and diluted net loss per share \n 8,033,501  \n 7,894,961  \n 7,908,266 \n\n  \n    \n    \n   \n\nNet loss per share basic and diluted \n$0.67  \n$0.16  \n$0.34 \n\n \n\n**NOTE 12:– DEBT**\n\n** **\n\na.Short term bank credit:\n\n \n\nOn March 26, 2025, the Company entered\ninto an agreement for a $4,000,000 line of credit (the “Credit Facility”) with United Mizrahi-Tefahot Bank Ltd. (the “Bank”)\non customary commercial terms for similarly-sized companies. Drawings on the line of credit will have a maturity date of up to three\nmonths. For borrowings with a maturity date exceeding one month (up to three months), the interest will be paid on a monthly basis. For\nborrowings with a shorter maturity date, the interest will be paid on the maturity date. The Credit Facility was initially in effect\nfor a period of 12 months from the date of the agreement. Subsequent to year end, the Credit Facility was renewed for an additional one\nyear term on substantially similar terms. The Credit Facility is secured by all of the assets of the Company. In addition, the Credit\nFacility includes certain customary information rights in favor of the Bank, restrictive covenants of the Company and of Maris North\nAmerica Inc., the Company’s U.S. subsidiary, and the agreement by two shareholders of the Company to certain subordination restrictions\nwith respect to loans they have provided to the Company.\n\n \n\nF-27\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 12:– DEBT (Cont.)**\n\n \n\nAs of December 31, 2025, the Company\ndrew $2,000,000 from the Credit Facility and was in compliance with all restrictive covenants. For the year ended December 31, 2025,\nthe Company recorded financial expenses of $148,628 related to the Credit Facility.\n\n \n\nb.Convertible promissory notes:\n\n \n\nOn November 25, 2025, the Company\nentered into Note Purchase Agreements (the “Note Purchase Agreements”), with two institutional investors, pursuant to which,\non November 25, 2025, the Company issued to the investors convertible promissory notes (the “Convertible Promissory Notes”)\nin the aggregate principal amount of $2,000,000. The Convertible Promissory Notes do not bear interest, are not repayable in cash and\nthe Company’s obligations thereunder will be satisfied solely through the issuance of Ordinary Shares, upon conversion of the Convertible\nPromissory Notes in accordance with their terms.\n\n** **\n\nUnder one Convertible Promissory\nNote, in the principal amount of $1,500,000, up to $1,000,000 of the outstanding principal amount is convertible beginning six (6) months\nafter the issuance date, and the remaining $500,000 is convertible beginning twelve (12) months after the issuance date. Under the other\nConvertible Promissory Note, in the principal amount of $500,000, the entire outstanding principal amount is convertible beginning twelve\n(12) months after the issuance date.\n\n \n\nThe number of Ordinary Shares issuable\nupon any conversion of any outstanding principal amount under a Convertible Promissory Notes is determined by dividing the applicable\nconversion amount by the conversion price. The conversion price is equal to 70% of the lowest daily volume-weighted average price of\nthe Ordinary Shares for the five (5) consecutive trading days immediately preceding the applicable conversion date; subject to a floor\nprice equal to 20% of the closing trading price of the Ordinary Shares on the Nasdaq Capital Market on the issuance date. No fractional\nOrdinary Shares will be issued upon conversion, and any fractional amount will be rounded up to the nearest whole Ordinary Share.\n\n \n\nOn the date that is twenty-four (24)\nmonths following the issuance date of the Convertible Promissory Notes, any then-outstanding principal amount under such Convertible\nPromissory Notes will automatically convert into Ordinary Shares in accordance with the conversion formula and the conversion price then\nin effect, without any action by the applicable Investor. If, due to the absence of required shareholder approval under applicable Israeli\nlaw, or Shareholder Approval, we are not permitted to issue all Ordinary Shares otherwise issuable upon such automatic conversion, the\n24-month period will be automatically extended until the earlier of (i) the date Shareholder Approval is obtained, or (ii) the date such\nissuance may occur without requiring Shareholder Approval.\n\n \n\nF-28\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 12:– DEBT (Cont.)**\n\n \n\nAs amended on January 26, 2026, conversions\nof the Convertible Promissory Notes (including any mandatory conversion) are subject to a beneficial ownership limitation of 4.99% of\nthe Company’s outstanding Ordinary Shares. To the extent any conversion would result in an investor beneficially owning more than\n4.99% of the outstanding Ordinary Shares following any conversion, the portion of the conversion amount that would otherwise exceed such\nlimitation will be satisfied through the issuance of pre-funded warrants to purchase Ordinary Shares, rather than through the issuance\nof Ordinary Shares. The pre-funded warrants will be exercisable immediately upon issuance and until exercised in full and are subject\nto the same beneficial ownership limitations applicable to conversions of the Convertible Promissory Notes. The Convertible Promissory\nNotes also include a restriction prohibiting an investor from beneficially owning 44.99% or more of the outstanding Ordinary Shares without\nprior Shareholder Approval and a limitation on issuances in excess of the maximum number of Ordinary Shares the Company may issue without\nobtaining Shareholder Approval under applicable Israeli law. \n\n** **\n\nThe Company elected to account for\nthe Convertible Promissory Notes under the fair value option in accordance with ASC 825, “Financial Instruments.” Under the\nfair value option, changes in fair value are recorded in earnings except for fair value adjustments related to instrument specific credit\nrisk, which are recorded as other comprehensive income or loss. As such, the Company recorded financial income related to the Convertible\nPromissory Notes at fair value in the amount of $41,696. The Convertible Promissory Notes fair value estimate was obtained using\na Monte Carlo simulation. The fair value of the Convertible Promissory Notes reflects an implied probability of company dissolution of\n37.5% as of December 31, 2025. The Company recorded issuance costs related to the Convertible Promissory Notes in the amount of $30,000.\n\n \n\nThe following tables present\nsummary of the changes in the fair value of the Convertible Promissory Notes:\n\n \n\nPrincipal Balance as of January 1, 2025 \n$\n-\n \n\nIssuance \n 2,000,000 \n\nChange in fair value \n (41,696)\n\n  \n   \n\nPrincipal Balance as of December 31, 2025 \n$1,958,304 \n\n \n\n**NOTE 13:– EQUITY**\n\n \n\na.Share capital:\n\n \n\nAs of December 31, 2025, the Company’s\nshare capital was composed of 8,194,306 Ordinary Shares issued and 8,073,591 Ordinary Shares outstanding.\n\n \n\nF-29\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 13:– EQUITY (Cont.)**\n\n \n\nb.IPO:\n\n \n\nIn connection with the IPO, the Company\nissued 3,755,724 Ordinary Shares, pre-funded warrants to purchase up to 488,324 Ordinary Shares (the “Pre-Funded Warrants”)\nand Warrants to purchase up to 4,244,048 Ordinary Shares. The Warrants have an exercise price of $5.25 per Ordinary Share and may be\nexercised until February 4, 2027, and the Pre-Funded Warrants have an exercise price of $0.001 per Ordinary Share.\n\n \n\nThe Company also issued warrants to\npurchase up to 185,023 Ordinary Shares to the representative of the underwriters in the IPO (the “Representative’s Warrants”).\nThe Representative’s Warrants have an exercise price equal to $5.25, were exercisable beginning on August 3, 2022, and will expire\non February 4, 2027.\n\n \n\nAs of December 31, 2025, all Pre-Funded\nWarrants had been exercised for Ordinary Shares and Warrants to purchase up to 4,243,947 Ordinary Shares and Representative’s Warrants\nto purchase up to 185,023 Ordinary Shares, remain outstanding.\n\n \n\nCertain actions were completed in\nconnection with the closing of the IPO, including:\n\n \n\n1.The Company issued to certain advisors warrants to purchase\nup to 400,472 Ordinary Shares, exercisable until February 4, 2027, at an exercise price of $4.20 per Ordinary Share. The fair value of\nsuch warrants, amounting to $504,595 was recorded as an issuance cost. As part of the Repricing (as defined in Note 14), warrants to\npurchase up to 200,236 were included in the Repricing. For further information see Note 14. During 2024 and 2025, the advisors exercised\nwarrants to purchase up to 400,472 Ordinary Shares on a cashless basis, and the Company issued to the advisors 166,121 Ordinary Shares\nupon such exercise.\n\n \n\n2.The Company also issued to its legal advisor for the IPO warrants\nto purchase up to 145,506 Ordinary Shares, exercisable until February 4, 2027, at an exercise price of $4.20 per Ordinary Share, which\nremain outstanding as of December 31, 2025. The fair value of the warrants of $183,338 was recorded as an issuance cost.\n\n \n\nc.On January 15, 2024, the Company issued to two of its advisors warrants to purchase up to 20,000 Ordinary Shares, exercisable until January 14, 2029, at an exercise price of $1.06 per Ordinary Share. The fair value of the warrants of $11,000 was calculated based on the Black-Scholes model.\n\n \n\nd.On December 8, 2025, the Company issued to an advisor warrants to purchase up to 80,000 Ordinary Shares, exercisable until December 7, 2028, at an exercise price of $1.43 per Ordinary Share. The fair value of the warrants of $63,280 was calculated based on the Black-Scholes model.\n\n \n\ne.In March 2026, warrants to purchase up to 489,812 Ordinary Shares, originally issued during March 2021 to investors, expired unexercised in accordance with their terms and are no longer outstanding.\n\n \n\nF-30\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 13:– EQUITY (Cont.)**\n\n \n\nf.Treasury shares:\n\n \n\nOn June 1, 2022, the Company announced\nthat its board of directors has authorized a share repurchase plan (the “Repurchase Plan”) allowing the Company to invest\nup to $1,000,000 to repurchase its Ordinary Shares.\n\n \n\nThe Repurchase Plan authorized the\nCompany’s management to repurchase Ordinary Shares, from time to time, in open market transactions, and/or in privately negotiated\ntransactions or in any other legally permissible ways, depending on market conditions, share price, trading volume and other factors.\nSuch repurchases will be made in accordance with applicable U.S. securities laws and regulations, under the U.S. Securities Exchange\nAct of 1934, as amended, and applicable Israeli law, and was subject to the approval of the Israeli court which was received on September\n30, 2022.\n\n \n\nOn March 31, 2023, the Company repurchased\n120,715 Ordinary Shares in the aggregate amount of $119,536, representing approximately 1.5% of the issued and outstanding Ordinary Shares,\nat an average price of $0.987 per Ordinary Share and completed the Repurchase Plan.\n\n \n\n**NOTE 14:- SHARE BASED\nCOMPENSATION**\n\n \n\nIn June and July 2021, the Company’s\nboard of directors approved the issuance of options to purchase an aggregate of 285,422 Ordinary Shares, to be granted under the Company’s\n2021 Share Option Plan (the “Option Plan”), to certain employees, directors and consultants, upon the successful completion\nof an initial public offering.\n\n \n\nOn May 15, 2023, the compensation\ncommittee of the board of directors of the Company, approved a repricing of the exercise price of the existing options to purchase Ordinary\nShares of certain of the Company’s officers, directors and service providers, who currently provide services to the Company, from\n$4.20 to $1.00 per share (the “Repricing”). Other than the exercise price, all other terms of the existing options granted\nto such officers and directors did not change. On June 28, 2023, the Company’s shareholders approved the Repricing. The Repricing\nwas recognized as a modification with additional expense of $21,280 and $21,604 for the year ended December 31, 2025 and 2024, respectively.\n\n \n\nOn May 15, 2023, the board of directors\nof the Company approved an increase in the number of Ordinary Shares available for issuance under the Option Plan by 491,500 from 308,500\nto 800,000 and a First Amendment to the Option Plan, giving effect to the increase.\n\n \n\nF-31\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 14:- SHARE BASED COMPENSATION\n(Cont.)**\n\n \n\nShare-based compensation was recorded\nin the following items within the statements of operations:\n\n \n\n  \nYear ended\nDecember 31,\n2025  \nYear ended\nDecember 31,\n2024  \nYear ended\nDecember 31,\n2023 \n\n  \n   \n   \n  \n\nCost of revenues \n$26,580  \n$24,810  \n$16,642 \n\nResearch and development, net \n 42,506  \n 38,514  \n 27,659 \n\nSales and marketing \n 20,831  \n 18,315  \n 12,070 \n\nGeneral and administrative* \n 76,654  \n 72,811  \n 70,398 \n\n  \n    \n    \n   \n\nTotal expenses \n$166,571  \n$154,450  \n$126,769 \n\n \n\n*Including $5,385 related to warrants to purchase up to 80,000\nOrdinary Shares issued to advisors of the Company. For further information see Note 13d.\n\n \n\nA summary of the share option activity,\nunder the Option Plan, for the year ended December 31, 2025 is as follows:\n\n \n\n    Number of\noptions     **Weighted average exercise price*)**     **Weighted-\naverage\nremaining contractual\nterm (in years)**     **Aggregate\nintrinsic\nvalue*)**  \n\n                         \n\nOptions outstanding as of January 1, 2025     694,952     $ 1.05       3.45     $ 2,772,858  \n\nGranted     25,612     $ 3.68       4.04     $ (64,542 )\n\nExercised     (28,868 )     1             $ (4,619 )\n\nForfeited     (51,940 )   $ 1.15                  \n\n                                 \n\nOptions outstanding as of December 31, 2025     639,756     $ 1.15       2.53     $ 6,398  \n\n                                 \n\nOptions exercisable as of December 31, 2025     173,559     $ 1       0.95     $ 27,769  \n\n \n\n*)Reflets the Repricing.\n\n \n\nThe weighted-average grant-date fair\nvalue of options as of December 31, 2025 and 2024 were $1.01 and $1.06, respectively. There were no grants in 2023.\n\n \n\nF-32\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 14:- SHARE BASED COMPENSATION\n(Cont.)**\n\n \n\nThe total fair value of options, as of their respective vesting dates,\nwas $112,387, $196,635, and $3,062 during the years ended December 31, 2025, 2024, and 2023, respectively.\n\n \n\nAs of December 31, 2025, the Company\nhad 466,197 unvested options. As of December 31, 2025, the unrecognized compensation cost related to all unvested options of $254,394\nis expected to be recognized as an expense on a straight-line basis over a weighted-average period of 1.96 years.\n\n \n\n**NOTE 15:- INCOME TAXES**\n\n \n\na.Corporate tax rate:\n\n \n\nThe standard tax rate in Israel was\n23% during the years ended December 31, 2025 and 2024.\n\n** **\n\nb.Law for the Encouragement of Capital Investments, 1959:\n\n** **\n\nThe Law for the Encouragement of\nCapital Investments, 1959, generally referred to as the Investment Law, provides certain incentives for capital investments in production\nfacilities (or other eligible assets).\n\n \n\nThe Investment Law was significantly\namended effective on January 1, 2011, and on January 1, 2017 under amendment 73, or the 2017 Amendment. The 2017 Amendment introduces\nnew benefits for Technological Enterprises, alongside the existing tax benefits.\n\n \n\nThe 2017 Amendment was enacted as\npart of the Economic Efficiency Law that was published on December 29, 2016, and is effective as of January 1, 2017. The 2017 Amendment\nincluded new tax benefits for “Technological Enterprises,” as described below, and is in addition to the other existing tax\nbeneficial programs under the Investment Law.\n\n \n\nThe 2017 Amendment provides that\na technology company satisfying certain conditions should qualify as a “Preferred Technology Enterprises,” or PTE, granting\na 12% tax rate in central Israel on income deriving from Benefited Intangible Assets, subject to a number of conditions being fulfilled,\nincluding a minimal amount or ratio of annual R&D expenditure and R&D employees, as well as having at least 25% of annual income\nderived from exports to large markets. PTE is defined as an enterprise which meets the aforementioned conditions and for which total\nconsolidated revenues of its parent company and all subsidiaries are less than NIS 10 billion.\n\n \n\nThe Company has not adopted the PTE\nstatus currently, but believe it is eligible for the PTE status in future tax years.\n\n \n\nF-33\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 15:- INCOME TAXES (Cont.)**\n\n \n\nc.Tax benefits under the Law for the Encouragement of Industry\n(Taxation), 1969:\n\n** **\n\nManagement believes that the Company\ncurrently qualifies as an “industrial company” under the above law and as such, is entitled to certain tax benefits including\naccelerated depreciation, deduction of public offering expenses in three equal annual installments and amortization of other intangible\nproperty rights for tax purposes.\n\n \n\nd.Deferred tax assets and liabilities:\n\n \n\nDeferred income taxes reflect the\nnet tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and\nthe amounts used for income tax purposes. Deferred taxes are computed using the standard tax rates of 23%. The expected tax rate can\nbe lower as a preferred technological enterprise and depends on the fulfillment of conditions set forth in the law.\n\n \n\nSignificant components of the Company\ndeferred tax assets and liabilities are as follows:\n\n \n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n   \n  \n\nNet operating loss carryforward \n$3,667,668  \n$2,066,962 \n\nResearch and development expenses \n 308,267  \n 205,513 \n\nProvision for warranty \n 3,450  \n 3,450 \n\nProvision for vacation and convalescence \n 84,486  \n 82,579 \n\nProvision for severance, net \n 64,333  \n 60,911 \n\nProvision for credit losses \n 203,876  \n 186,377 \n\nIssuance cost \n \n-\n  \n 203,045 \n\nOperating lease liabilities \n 82,438  \n 109,368 \n\n  \n    \n   \n\nDeferred tax assets before valuation allowance \n 4,414,518  \n 2,918,205 \n\n  \n    \n   \n\nValuation allowance  \n (4,332,080) \n (2,808,837)\n\n  \n    \n   \n\nNet deferred tax assets \n 82,438  \n 109,368 \n\n  \n    \n   \n\nOperating lease right of use assets \n (82,438) \n (109,368)\n\n  \n    \n   \n\nTotal deferred tax liability \n (82,438) \n (109,368)\n\n  \n    \n   \n\nNet deferred tax assets \n$\n-\n  \n$\n-\n \n\n \n\nF-34\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 15:- INCOME TAXES (Cont.)**\n\n \n\nThe net changes in the total valuation\nallowance as of December 31, 2025 and 2024, are comprised as follows:\n\n \n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n   \n  \n\nBalance at beginning of year \n$2,918,205  \n$2,473,359 \n\nAdditions during the year \n 1,496,313  \n 444,846 \n\n  \n    \n   \n\nBalance at the end of year \n$4,414,518  \n$2,918,205 \n\n \n\nIn assessing the realizability of\ndeferred tax assets, management considers whether it is more likely than not that some or all of the deferred tax assets will not be\nrealized. The ultimate realization of deferred tax assets depends on the generation of future taxable income during the periods in which\nthose temporary differences or carry-forwards are deductible. Based on the level of historical taxable losses, management has reduced\nthe deferred tax assets with a valuation allowance to the amount to be realized.\n\n** **\n\ne.As of December 31, 2025 and December 31, 2024, the operating\nloss carry-forwards amounted to $15,946,382 and $8,963,038, respectively. Operating losses in Israel may be carried forward indefinitely\nto offset against future taxable operational income.\n\n \n\nAs of December 31, 2025, the open\ntax years that are subject to review by the applicable taxing authorities for the Company are 2021 and subsequent years.\n\n \n\nf.Reconciliation of the theoretical tax expense to actual tax\nexpense:\n\n** **\n\nA reconciliation of the provision\nfor income taxes to the amount computed by applying the 23% statutory Israeli income tax rate to income before income taxes after the\nadoption of ASU 2023-09 is as follows:\n\n \n\n  \nDecember 31, 2025 \n\n  \nAmount  \n% \n\n  \n   \n  \n\nTax at Israeli Statutory Rate \n$(1,244,144) \n 23%\n\n  \n    \n   \n\nChanges in valuation allowances \n 721,001  \n 13%\n\nNon-taxable or non-deductible items:\nForeign exchange differences \n (94,188) \n 2%\n\nOther \n 42,752  \n 1%\n\nPreferred Technological Enterprise tax \n 574,579  \n 11%\n\n  \n    \n   \n\nBalance at the end of year \n$\n-\n  \n 0%\n\n \n\nFor the years ended December 31, 2023 and 2024, prior to the adoption\nof ASU 2023-09, the main reconciling item between the statutory tax rate of the Company and the effective rate is the provision for a\nfull valuation allowance in respect of tax benefits from carry forward tax losses due to the uncertainty of the realization of such tax\nbenefits (see above).\n\n \n\nF-35\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 16:- RELATED PARTY\nTRANSACTIONS**\n\n \n\na.Related party transactions:\n\n \n\n1.On November 24, 2024, the audit committee of the board of directors\nof the Company and the board of directors of the Company approved the purchase of 30 radio-frequency transmitters from Innovative Inc.,\na company owned by Mr. Gottlieb, a then director of the Company and major shareholder, for $10,512. The audit committee of the board\nof directors of the Company and the board of directors of the Company further approved the engagement of Innovative Inc. pursuant to\nwhich the Company will make additional purchases of production materials from Innovative Inc., on market terms, during a twelve-month\nperiod beginning in January 2025, and up to a maximum amount of $100,000. During the year ended December 31, 2025, the Company paid Innovative\nInc. an aggregate of $10,512.\n\n \n\nSince the Company’s inception,\nIsrael Bar, the Company’s Chief Executive Officer, director and largest shareholder, and Joseph Gottlieb, a former director of the\nCompany and the Company’s second largest shareholder, have provided loans to the Company in an aggregate amount of NIS 7,513,887\n(approximately $2,355,137) (the “Shareholders Loans”). On May 9, 2021, the Company entered into a loan facility agreement\n(the “Loan Facility Agreement”), effective as of January 1, 2021, with Mr. Bar and Mr. Gottlieb.\n\n** **\n\nOn March 2, 2023, the Company entered\ninto an amendment (the “Amendment”) to the Loan Facility Agreement, pursuant to which the Company (i) amended the repayment\nterms set in the Loan Facility Agreement to provide that the amounts outstanding under the Loan Facility Agreement shall be due and payable\nin 24 equal monthly payments, commencing on February 4, 2024, subject to availability of available free cash (as defined in the Amendment)\nof the Company and (ii) clarified the total amount due to Mr. Gottlieb under the Loan Agreement is NIS 1,020,347 (approximately $319,858).\nThe total outstanding amount under the Loan Facility Agreement after giving effect to the Amendment was $1,088,250. The Amendment was\naccounted for as a modification with no change to the book value of the Shareholders Loans. Following Mr. Gottlieb’s passing, his\nrights under the Shareholders Loans were transferred to his estate in accordance with applicable law. As of December 31, 2025 and 2024,\nthe outstanding amount under the Loan Facility Agreement was $258,837 and $589,467, respectively.\n\n \n\nF-36\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 16:- RELATED PARTY TRANSACTIONS\n(Cont.)**\n\n \n\n2.On July 31, 2023, the Company entered into a service agreement\n(the “Service Agreement”) with Parazero Technologies Ltd. (“Parazero”), pursuant to which the Company will provide\nto Parazero certain business development services. Pursuant to the terms of the Service Agreement, in consideration for the services\nprovided by the Company, Parazero is required to pay the Company $10,000 per month plus value added tax and certain commissions, in accordance\nwith the terms of the Service Agreement. The Service Agreement was terminated by Parazero on December 31, 2024, pursuant to its terms.\nThe total amount due by Parazero to us as of December 31, 2024 amounted to $47,000.\n\n \n\nIn addition, in July 2023, the Company\npurchased 50,000 ordinary shares of Parazero (the “Investment”), at a price of $4.00 per share, for an aggregate purchase price\nof $200,000, in Parazero’s initial public offering. The Company subsequently sold the ordinary shares purchased in the open market\nfor an aggregate consideration of $108,857. As of December 31, 2025, the Company did not hold any shares of Parazero.\n\n \n\nThe Company determined that the Service\nAgreement and the purchase of shares is a related party transaction, as the Chairman of the board of directors of the Company also serves\nas the chairman of the board of directors of Parazero. The Company analyzed the terms of the Service Agreement and concluded that the\nterms represent a transaction conducted at arm’s length.\n\n \n\n3.\nOn March 3, 2021, the Company entered into a service\nagreement with a relative of the Company’s Chief Executive Officer and director (the “Service Provider”), pursuant to which\nthe Service Provider provides mechanical design services as requested by the Company in exchange for hourly compensation of NIS195 (approximately\n$62). Effective February 2022, the hourly rate under the agreement was increased to NIS 350 (approximately $110).\n\n** **\n\nThe amended terms of the Service\nProvider’s agreement were approved by the audit committee of the board of directors of the Company and the board of directors of\nthe Company on March 14, 2024 and March 20, 2024, respectively, and were ratified by the Company’s shareholders at the Company’s\n2024 annual general meeting of shareholders held on May 15, 2024.\n\n \n\n4.The Company occasionally purchases, at market prices, electronic\ncomponents from Colint Ltd., a company owned by Joseph Gottlieb, a former director of the Company and one of the Company’s major\nshareholders. No purchases were made from Colint Ltd. during 2025 or 2024.\n\n \n\nF-37\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 16:- RELATED PARTY TRANSACTIONS\n(Cont.)**\n\n \n\n5.Related party transactions:\n\n \n\n  \nYear ended December 31, \n\n  \n2025  \n2024  \n2023 \n\n  \n   \n   \n  \n\nShare-based compensation expenses to Board members \n$10,821  \n$11,709  \n$4,926 \n\n  \n    \n    \n   \n\nManagement and consulting fees to Board members \n$137,682  \n$142,055  \n$133,681 \n\n  \n    \n    \n   \n\nCost of revenues * \n$9,035  \n$10,512  \n$29,110 \n\n  \n    \n    \n   \n\nBusiness development services income \n$\n-\n  \n$150,000  \n$50,000 \n\n  \n    \n    \n   \n\nDevelopment services \n$159,948  \n$123,101  \n$191,170 \n\n \n\n*Related to cost of products purchased from Mr. Gottlieb’s companies.\n\n \n\nb.Related party balances:\n\n \n\n  \nDecember 31, \n\n  \n2025  \n2024 \n\n  \n   \n  \n\nShort-term liabilities due to shareholders and related party \n$270,619  \n$552,213 \n\n  \n    \n   \n\nLong-term loans from related party \n$\n-\n  \n$45,343 \n\n** **\n\n**NOTE 17:- FINANCIAL EXPENSES (INCOME),\nNET**\n\n \n\n  \nYear ended December 31, \n\n  \n2025  \n2024  \n2023 \n\n  \n   \n   \n  \n\nInterest on bank deposits \n$(16,818) \n$(110,078) \n$(251,724)\n\nBank charges \n 68,459  \n 7,711  \n 12,254 \n\nRemeasurement of convertible promissory notes \n 41,696  \n \n-\n  \n \n-\n \n\nRemeasurement of the Investment \n \n-\n  \n \n-\n  \n 91,305 \n\nForeign currency differences, net \n 91,560  \n (12,487) \n (71,841)\n\n  \n    \n    \n   \n\n  \n$184,897  \n$(114,854) \n$(220,006)\n\n** **\n\nF-38\n\n**MARIS-TECH LTD.**\n\n**NOTES TO\nCONSOLIDATED FINANCIAL STATEMENTS**\n\n**U.S. dollars**\n\n \n\n**NOTE 18:- SUBSEQUENT EVENTS**\n\n \n\na.On March 6, 2026, the Company entered into a Securities Purchase Agreement (the “March Purchase Agreement”) with an institutional investor (the “March Purchaser”), pursuant to which the Company issued and sold, in a registered direct offering, on March 9, 2026, to the March Purchaser (the “March Offering”): (i) 882,825 Ordinary Shares, at an offering price of $1.24 per share; and (ii) pre-funded warrants to purchase up to 722,311 Ordinary Shares (the “March Pre-Funded Warrants”) at an offering price of $1.2399 per March Pre-Funded Warrant. The March Pre-Funded Warrants are exercisable immediately and may be exercised at any time until the Pre-Funded Warrants are exercised in full (subject to the beneficial ownership limitation described above). The gross proceeds from the March Offering were $2 million before deducting offering expenses payable by the Company. As of the date of these consolidated financial statements, the pre-funded warrants have been exercised in full into 722,311 Ordinary Shares.\n\n \n\nb.On March 29, 2026, the Credit Facility for our $2,000,000 line of credit was renewed, for an additional one-year term on substantially similar terms, please refer to Note 12a.\n\n \n\nc.On March 30, 2026, the Company entered into a Sales Agreement (the “Sales Agreement”) with A.G.P./Alliance Global Partners (the “Sales Agent”), pursuant to which the Company may offer and sell, from time to time, through the Sales Agent, up to $3,007,329 of Ordinary Shares. The Ordinary Shares will be offered and sold pursuant to the Company’s Registration Statement on Form F-3 (the “Registration Statement”), and the related base prospectus included in the Registration Statement, as supplemented by the prospectus supplement to the Registration Statement dated March 30, 2026. The Company expects that any proceeds from the sale or Ordinary Shares under the Sales Agreement will be used for working capital and general corporate purposes. The Company will pay the Sales Agent a commission equal to 3.0% of the aggregate gross proceeds from each sale of Ordinary Shares and has agreed to provide the Sales Agent with customary indemnification and contribution rights. As of the date of this report, the Company has not sold any Ordinary Shares under the Sales 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