UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 001-37381

Xylo Technologies Ltd.

(Exact name of Registrant as specified in its charter)

Israel

(Jurisdiction of incorporation or organization)

10 Hanechoshet, Tel-Aviv 6971072, Israel

(Address of principal executive offices)

Tali Dinar

10 Hanechoshet, Tel-Aviv 6971072, Israel Tel: +972-3-689-9124

Fax: +972-8-853-8194

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None 

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of December 31, 2024: 32,258,663 Ordinary Shares, no par value per share.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:

Yes ☐ No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934:

Yes ☐ No ☒

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “accelerated filer and large accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark the basis of accounting the registrant has used to prepare the financial statements included in this filing:

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.

Item 17 ☐ Item 18 ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes ☐ No ☒

TABLE OF CONTENTS

INTRODUCTION

Certain Definitions

In this annual report, unless the context otherwise requires:

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND A SUMMARY OF RISK FACTORS

Certain information included or incorporated by reference in this annual report on Form 20-F may be deemed to be “forward-looking statements”. Forward-looking statements are often characterized by the use of forward-looking terminology such as “may,” “will,” “expect,” “anticipate,” “estimate,” “continue,” “believe,” “should,” “intend,” “project” or other similar words, but are not the only way these statements are identified.

These forward-looking statements may include, but are not limited to, statements relating to our objectives, plans and strategies, statements that contain projections of results of operations or of financial condition, statements relating to the research, development and use of our products, and all statements (other than statements of historical facts) that address activities, events or developments that we intend, expect, project, believe or anticipate will or may occur in the future.

Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties. We have based these forward-looking statements on assumptions and assessments made by our management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate.

Important factors that could cause actual results, developments and business decisions to differ materially from those anticipated in these forward-looking statements include, among other things:

Readers are urged to carefully review and consider the various disclosures made throughout this annual report on Form 20-F, which are designed to advise interested parties of the risks and factors that may affect our business, financial condition, results of operations and prospects.

In addition, the section of this Annual Report on Form 20-F entitled “Item 4. Information on the Company” contains information obtained from independent industry and other sources that we have not independently verified. You should not put undue reliance on any forward-looking statements. The forward-looking statements made in this Annual Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Annual Report to reflect events or circumstances after the date of this Annual Report or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.

PART I

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3. KEY INFORMATION

A. [Reserved]

B. Capitalization and Indebtedness

Not applicable.

C. Reasons for the Offer and Use of Proceeds

Not applicable.

D. Risk Factors

You should carefully consider the risks described below, together with all of the other information in this annual report on Form 20-F. The risks described below are not the only risks facing us. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business operations. If any of these risks actually occurs, our business and financial condition could suffer, and the price of our shares could decline.

Risks Related to Our Business

Starting in 2019, we made material changes to our business strategy. We cannot guarantee that any of these changes will result in any value to our shareholders.

Since 2019, we have materially changed our business model, adjusted our exclusive focus on the medical device industry to include other industries, abandoned our strategy to commercialize the MUSE^™ system, sold our holdings in Odysight.ai. and diversified our investments into new markets and industries. In addition to the medical field, we entered the electric vehicle field. We also invested in the online advertising field. Additionally, we have begun investing in real estate. As a result of these changes, we have acquired substantial stakes in a number of ventures, including but not limited to online business activities such as ad-tech, electric vehicles and online event management. We cannot guarantee that these strategic decisions will derive the anticipated value to our shareholders, or any value at all.

We have a history of operating losses, we may incur additional losses in the future and our ability to grow sales and achieve profitability is unpredictable.

As of December 31, 2024, we had an accumulated deficit of $107.6 million and incurred total operating loss of approximately $8 million in the year ended on December 31, 2024, and total operating losses of approximately $23.3 million in the year ended December 31, 2023. Our losses have had, and will continue to have, an adverse effect on our shareholders’ equity and working capital. Any failure to achieve and maintain profitability would continue to have an adverse effect on our shareholders’ equity and working capital and could result in a decline in our share price or cause us to cease operations.

Our ability to reach profitability depends on many factors, which include:

There can be no assurance that we will be able to successfully implement our business plan, meet our challenges and become profitable in the future.

We will need additional funding. If we are unable to raise capital, we will be forced to reduce or eliminate our operations.

During the year ended December 31, 2024, the Group incurred loss of $12 million mainly due to operating loss from our consolidated financial reports of approximately $8 million and a negative cash flow from operating activities of approximately $1.8 million. Furthermore, in recent years, the Group has suffered recurring losses from operations, negative cash flows from operating activities and has an accumulated deficit of $107.6 million as of December 31, 2024.

As of December 31, 2024, we had a total cash and cash equivalents balance and short term deposits of approximately $8.7 million. Our management expects that we will continue to generate operating losses. Our management plans to continue to fund its operations primarily through utilization of its financial resources. In addition, we may raise additional capital or realize some of our investments in other entities in order to fund our operating needs. Our management is of the opinion that based on our current operating plan it will be able to carry out its plan for more than a year after the issuance date of this Annual Report on Form 20-F. However, we anticipate that we are likely to continue to incur significant losses for at least the next year. There is no assurance however, that we will be successful in obtaining the level of financing needed for our operations. If we are unable to obtain additional sufficient financing our business and results of operations will be materially harmed.

Even if we are able to continue to finance our business, the sale of additional equity or debt securities could result in dilution to our current shareholders and could require us to grant a security interest in our assets. If we raise additional funds through the issuance of debt securities, these securities may have rights senior to those of our Ordinary Shares and could contain covenants that could restrict our operations. In addition, we may require additional capital beyond our currently forecasted amounts to achieve profitability. Any such required additional capital may not be available on reasonable terms, or at all.

Global economic and macroeconomic conditions may adversely affect our operating results in a material manner.

Our operating businesses are subject to normal economic cycles affecting the general economy or the specific industries in which they operate. Negative conditions in the general economy, including significant inflation, rising interest rates, financial and credit market fluctuations, international trade relations, political turmoil, geopolitical conflicts such as the military conflict between Russia and Ukraine, natural catastrophes, regional or global outbreaks of contagious diseases, warfare and terrorist attacks, could cause a decrease in business investments and could produce a material adverse effect on one or more of our subsidiaries. Extreme volatility in financial markets, has adversely impacted and may continue to adversely impact our share price and our ability to access capital markets. To the extent that access to the capital markets is restricted or the cost of funding increases, our operations could be adversely affected.

Certain of our subsidiaries rely on key employees and highly skilled personnel, and, if they are unable to attract, retain or motivate qualified personnel, they may not be able to operate their business effectively.

The success of certain of our subsidiaries depends largely on the continued employment of their senior management and key personnel who can effectively operate its business and its ability to attract and retain skilled employees. Competition for highly skilled management, technical, research and development, and other employees is intense, and our subsidiaries may not be able to attract or retain highly qualified personnel in the future. If any of the key employees of these subsidiaries leave or are terminated, and such companies fail to manage a transition to new personnel effectively, or if they fail to attract and retain qualified and experienced professionals on acceptable terms, the business, financial condition and results of operations of these subsidiaries could be adversely affected.

We, and our subsidiaries, are subject to stringent and changing laws, regulations, standards, and contractual obligations related to privacy, data protection, and data security. The actual or perceived failure to comply with such obligations could harm our business.

Our business and our subsidiaries are or could be conducted through the internet and therefore, among other things, we are subject to the laws and regulations that apply to online businesses and platform around the world. These laws and regulations are becoming more prevalent in the United States, Europe, Israel and elsewhere and may impede the growth of the internet and consequently our services. These regulations and laws may cover privacy, data collection and protection, location of data storage and processing, cybersecurity, e-commerce, content, use of “cookies,” access changes, “net neutrality,” pricing, advertising, distribution of “spam” copyright and other intellectual property, libel, marketing, distribution of products, protection of minors, consumer protection, taxation and online payment services. Many areas of the law affecting the internet remain largely unsettled, even in areas where there has been some legislative action.

Our subsidiaries and we receive, collect, store, process, transfer, and use personal information and other data relating to users of our products, our employees and contractors, and other persons. We have legal and contractual obligations regarding the protection of confidentiality and appropriate use of certain data, including personal information. We are subject to numerous federal, state, local, and international laws, directives, and regulations regarding privacy, data protection, and data security and the collection, storing, sharing, use, processing, transfer, disclosure, and protection of personal information and other data, the scope of which are changing, subject to differing interpretations, and may be inconsistent among jurisdictions or conflict with other legal and regulatory requirements. We are also subject to certain contractual obligations to third parties related to privacy, data protection and data security. We strive to comply with our applicable policies and applicable laws, regulations, contractual obligations, and other legal obligations relating to privacy, data protection, and data security to the extent possible. However, the regulatory framework for privacy, data protection and data security worldwide is, and is likely to remain for the foreseeable future, uncertain and complex, and it is possible that these or other actual or alleged obligations may be interpreted and applied in a manner that we do not anticipate or that is inconsistent from one jurisdiction to another and may conflict with other legal obligations or our practices. Further, any significant change to applicable laws, regulations or industry practices regarding the collection, use, retention, security or disclosure of data, or their interpretation, or any changes regarding the manner in which the consent of users or other data subjects for the collection, use, retention or disclosure of such data must be obtained, could increase our costs and require us to modify our services and features, possibly in a material manner, which we may be unable to complete, and may limit our ability to store and process user data or develop new services and features.

If our subsidiaries or we were found in violation of any applicable laws or regulations relating to privacy, data protection, or security, our business may be materially and adversely affected, and we would likely have to change our business practices and potentially the services and features available through our platform. In addition, these laws and regulations could impose significant costs on us and could constrain our ability to use and process data in manners that may be commercially desirable. In addition, if a breach of data security were to occur or to be alleged to have occurred, if any violation of laws and regulations relating to privacy, data protection or data security were to be alleged, or if we had any actual or alleged defect in our safeguards or practices relating to privacy, data protection, or data security, our solutions may be perceived as less desirable, and our business, prospects, financial condition, and results of operations could be materially and adversely affected.

We also expect that there will continue to be new laws, regulations, and industry standards concerning privacy, data protection, and information security proposed and enacted in various jurisdictions. For example, the data protection landscape in the European Union (“EU”) is currently evolving, resulting in possible significant operational costs for internal compliance and risks to our business. The EU adopted the General Data Protection Regulation or GDPR, which contains numerous requirements and changes from previously existing EU laws, including more robust obligations on data controllers and processors and heavier documentation requirements for data protection compliance programs by companies. Among other requirements, the GDPR regulates the transfer of personal data subject to the GDPR to third countries that have not been found to provide adequate protection to such personal data, including the United States.

In addition to the GDPR, we are also subject to evolving laws and regulations on cookies, tracking technologies, including the Directive 2002/58 on Privacy and Electronic Communications Regulation, “PECR” and the Privacy and Electronic Communications (EC Directive) Regulations 2003, “ePrivacy Directive”. Informed and freely given consent is required for the placement of non- essential cookies and similar technologies on devices and website users. The GDPR and UK regime also impose conditions on obtaining valid consent for cookies, such as a prohibition on pre-checked consents and a requirement to ensure separate consents are sought for each type of cookie or similar technology. Recent European court and regulatory decisions are driving increased attention to cookies and tracking technologies, which could lead to substantial costs, require significant system changes, limit the effectiveness of our marketing activities, divert the attention of our technology personnel, adversely affect our margins, increase costs and subject us to additional liabilities.

In addition, the U.K.’s General Data Protection Regulation (the “UK GDPR”), imposes robust obligations for the collection, control, use, sharing, disclosure and other processing of personal data and contains documentation and accountability requirements for data protection compliance. . Both the GDPR and the UK GDPR expose us to similar regimes, each of which includes similar fines and may subject us to increased compliance risk based on differing, and potentially inconsistent or conflicting interpretation and enforcement by regulators and authorities (particularly, if the laws are amended in the future in divergent ways). Failure to comply with these obligations can result in significant fines and other liability under applicable law. In particular, under the GDPR, fines of up to EUR 20 million (or GBP 17.5 million under the UK GDPR) or up to 4% of the annual global revenue of the noncompliant company, whichever is greater, could be imposed for violations of certain of the GDPR’s requirements. The GDPR and UK GDPR requirements apply not only to third-party transactions, but also to transfers of data between us and our subsidiaries, including employee data. Because our services are accessible worldwide, certain foreign jurisdictions may claim that we are required to comply with their laws, including in jurisdictions where we have no presence, local entity, employees or infrastructure.

On November 1, 2022, the Digital Markets Act, (the “DMA”), entered into force and on November 16, 2022, the Digital Services Act (the “DSA”), followed. For the DSA, most provisions became applicable on February 17, 2024. The DSA and the DMA focus on creating a safer digital space, protecting fundamental rights of all users of digital services, and establishing a level playing field for businesses and consumers with regards to online platforms. As further guidance is issued and interpretation of both the DSA and the DMA evolves, it is difficult to assess the impact of the DSA and DMA on our and our subsidiaries’ business or operations, but, to the extent applicable, it may require us to modify our practices and policies and we could incur substantial costs as a result.

Additionally, legal developments in Europe in recent years, have created complexity and uncertainty regarding transfers of personal data from the EEA to the United States. On June 27, 2021, following a decision by the Court of Justice of the European Union (“CJEU”),the European Commission published a new set of modular standard contractual clauses (the “New SCCs”). The New SCCs must be used for all relevant transfers of personal data outside the EEA (since December 27, 2022) and organizations must ensure that all new and existing contracts involving the transfer of personal data outside the EEA contain New SCCs and, for transfers out of the UK, the International Data Transfer Agreement (“IDTA”) or the UK Addendum to the New SCCs. Contracts involving data processing which are based on the old EU SCCs and concluded on or before September 21, 2022, continued to provide appropriate safeguards under the UK GDPR until March 21, 2024. In addition to the use of a valid data transfer mechanism, transfer impact assessments to evaluate the legal regime applicable in the destination country, in particular applicable surveillance laws and rights of individuals may have to be carried out in respect of planned transfers of personal data from the EEA/UK to third countries including the U.S., and failure to do so may expose us to further compliance risk. However, the nature of these additional measures is currently uncertain. Additionally, recent legal developments in the EU have created complexity and uncertainty regarding transfers of personal data from the EU to the United States and other non-adequate jurisdictions. The EU-U.S. Data Privacy Framework (EU-U.S. DPF), the UK Extension to the EU-U.S. Data Privacy Framework (UK Extension to the EU-U.S. DPF), and the Swiss-U.S. Data Privacy Framework (Swiss-U.S. DPF) were implemented to facilitate cross-border transfers to the United States from the European Union / European Economic Area, the United Kingdom (and Gibraltar), and Switzerland that are consistent with EU, UK, and Swiss law. On July 10, 2023, the European Commission adopted its adequacy decision for the EU-U.S. DPF. The adequacy decision means that participating organizations are deemed to provide “adequate” data protection (i.e., privacy protection), a requirement (subject to limited derogations) for the transfer of personal data from the EU to US companies participating in the EU-U.S. DPF. On October 12, 2023, the UK Extension to the EU-U.S. DPF, known as the UK-US Data Bridge, took effect, allowing the transfers of personal data from the United Kingdom (UK) to the US without the need of having additional mechanism or safeguards in place.

Further, the European Commission regularly re-examines its adequacy decisions, including its Decision 2011/61/EU regarding the adequacy of Israeli law. On January 15, 2024, the European Commission successfully concluded its review of 11 existing adequacy decisions. These decisions had been adopted under the EU data protection legislation that preceded the GDPR. The European Commission finds that personal data transferred from the European Union to Andorra, Argentina, Canada, Faroe Islands, Guernsey, the Isle of Man, Israel, Jersey, New Zealand, Switzerland and Uruguay, continues to benefit from adequate data protection safeguards. Therefore, the adequacy decisions adopted for these eleven countries and territories remain in place and data can continue to flow freely to these jurisdictions. In addition, while the European Commission adopted an adequacy decision for the UK on June 28, 2021, allowing the continued flow of personal data from the EEA to the UK, this decision will automatically expire in June 2025 unless the European Commission re-assesses and renews or extends that decision. The decision will be regularly reviewed by the European Commission going forward and may be revoked if the UK diverges from its current data protection laws and the European Commission deems the UK to no longer provide adequate protection of personal data. Additionally, on January 15, 2024, the European Commission announced its decision according to which Israel continues to provide an adequate level of protection for personal data transferred from the EU.

Additionally, in June 2018, California passed the California Consumer Privacy Act, or CCPA, which provides new data privacy rights for California consumers and new operational requirements for covered companies. Specifically, the CCPA provides that covered companies must provide new disclosures to California consumers and afford such consumers new data privacy rights that include the right to request a copy from a covered company of the personal information collected about them, the right to request deletion of such personal information, and the right to request to opt-out of certain sales of such personal information. The California Attorney General can enforce the CCPA, including seeking an injunction and civil penalties for violations. The CCPA also provides a private right of action for certain data breaches expected to increase data breach litigation. The CCPA may require us to modify our data practices and policies and to incur substantial costs and expenses in order to comply. On November 3, 2020, California voters passed the California Privacy Rights Act into law, which took effect in January 2023 and significantly expands the CCPA, including by introducing additional obligations such as data minimization and storage limitations, granting additional rights to consumers. The CCPA may increase our compliance costs and potential liability. More generally, some observers have noted that the CCPA could mark the beginning of a trend toward more stringent United States state and federal privacy legislations as observed with the subsequent adoption of state-level comprehensive consumer privacy legislation, which could increase our potential liability and adversely affect our business. For example, Connecticut, Virginia, Colorado and Utah each has enacted legislation similar to the CCPA that took effect in 2023; Florida, Montana, Oregon, and Texas each has enacted similar legislation that took effect in 2024; Tennessee, Iowa, Delaware, New Hampshire, New Jersey, Maryland, Minnesota, and Nebraska each has enacted similar legislation that have taken, or will take, effect in 2025; and Indiana, Kentucky, and Rhode Island each has enacted similar legislation that will become effective in 2026

In many respects, these state laws focus on advertising activities, mandating that businesses that engage in certain advertising uses of consumer personal data to offer and honor an opt-out of such activities, including, in some states, through browser or device-based preference signals. These state privacy laws also provide consumers other rights, such as to access, correct or delete their personal data (subject to certain limitations), opt out of certain processing of their personal data, and impose special rules on the collection of data from minors, as well as transparency and data governance obligations. Four US states (Vermont, California, Texas, and Oregon) have enacted data broker laws and regulations imposing certain requirements on data brokers, including, without limitation, regarding registration, consent requirements, disclosure limitations, and/or data security Additionally, new state privacy laws (including, privacy laws, social media regulations, children online data laws and data broker laws) are expected to become effective in 2025, including privacy laws in Tennessee, Minnesota and Maryland , and additional states are expected to follow in future years. There are also a number of legislative proposals pending before the U.S. Congress and various state legislative bodies concerning various data protection topics, including, privacy, children data, data brokers, which could affect us. Moreover, several federal laws have been enacted, for example, the Children’s Online Privacy Protection Rule (“COPPA”) that restricts online service providers’ collection of user data on minors as well as distribution of materials deemed harmful to minors. Furthermore, the Controlling the Assault of Non-Solicited Pornography and Marketing (“CAN-SPAM”) Act and the Federal Trade Commission (“FTC”) Act could also be applicable to some of our activities. In addition, the FTC has increasingly issued orders restricting data brokers from selling certain location data obtained by tracking individual’s mobile devices. Other countries and jurisdictions may enact similar or related laws or regulations, and/or their authorities may reach similar decisions. These laws, regulations and decisions could impact our services, business operations, practices, products, or our ability to receive information necessary to conduct our business.

The abovementioned laws, regulations and decisions could impact our services, business operations, practices, products, or our ability to receive information necessary to conduct our business.

In addition, failure to comply with the Israeli Privacy Protection Law 5741-1981, and its regulations as well as the guidelines of the Israeli Privacy Protection Authority, may expose us to administrative fines, civil claims (including class actions), and in certain cases, criminal liability. Furthermore, on August 5, 2024, the Israeli parliament approved Amendment 13 to the Israeli Privacy Protection Law 1981, which will come into effect on August 14, 2025 (“Amendment”). This Amendment enhances data security requirements, expands enforcement powers for the Privacy Protection Authority, introduces guidance for data transfers and imposes additional obligations on organizations handling personal data. The consequences of implementing the requirements under the Amendment could lead to substantial costs, require significant system changes, limit the effectiveness of our marketing activities, divert the attention of our technology personnel, adversely affect our margins, increase costs and subject us to additional liabilities.

In addition, there have also been privacy bills enacted in other countries around the world, such as Brazil, which have introduced new or expanded privacy requirements and we expect that privacy legislation will continue to evolve in the coming years. Therefore, it is difficult to determine whether and how such existing laws and regulations will apply to and impact the internet and our business.

We rely on information technology systems to operate and manage our business and to process, maintain, and safeguard information, including information related to our customers, partners, and personnel. This information is stored and managed within our internal information technology infrastructure or, in certain instances, on platforms maintained by third-party service providers. These systems, whether operated internally or externally, may be subject to breaches, failures, or disruptions as a result of, among other things, cyber-attacks, computer viruses, physical security breaches, natural disasters, accidents, power disruptions, telecommunications failures, new system implementations, or acts of terrorism or war. In the current environment, there are numerous and evolving risks to cybersecurity, data and privacy, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, employee malfeasance and human or technological error. High-profile security breaches at other companies and in government agencies have increased in frequency and sophistication in recent years. Moreover, geopolitical tensions, particularly the Hamas-Israel and the Russia-Ukraine conflicts, have contributed to a surge in cyber-attacks targeting Israeli companies and products globally, posing a threat to critical infrastructure. We have experienced and expect to continue to experience actual and attempted cyber-attacks of our IT networks and systems, such as through phishing scams and ransomware. Although none of these actual or attempted cyber-attacks has yet had a material adverse impact on our operations, financial condition, or reputation, we cannot guarantee that such incidents will not have such an impact in the future.

Any failure or perceived failure by our subsidiaries or by us to comply with our posted privacy policies, our privacy-related obligations to users or other third parties, or any other legal obligations or regulatory requirements relating to privacy, data protection, or data security may result in governmental investigations or enforcement actions, litigation, claims, or public statements against us by consumer advocacy groups or others and could result in significant liability, cause our users to lose trust in us, and otherwise materially and adversely affect our reputation and business. Furthermore, the costs of compliance with, and other burdens imposed by, the laws, regulations, other obligations, and policies that are applicable to the businesses of our users may limit the adoption and use of, and reduce the overall demand for, our platform. Additionally, if third parties we work with violate applicable laws, regulations, or contractual obligations, such violations may put our users’ data at risk, could result in governmental investigations or enforcement actions, fines, litigation, claims, or public statements against us by consumer advocacy groups or others and could result in significant liability, cause our users to lose trust in us, and otherwise materially and adversely affect our reputation and business. Further, public scrutiny of, or complaints about, technology companies or their data handling or data protection practices, even if unrelated to our business, industry, or operations, may lead to increased scrutiny of technology companies, including us, and may cause government agencies to enact additional regulatory requirements, or to modify their enforcement or investigation activities, which may increase our costs and risks.

While it is generally the laws of the jurisdiction in which our business is located apply, there is a risk that data protection regulators of other countries may seek jurisdiction over our remote activities in locations in which we process data of our customers, but do not have an operating entity. Where the local data protection and privacy laws of a jurisdiction apply, we may be required to register our operations in that jurisdiction or make changes to our business so that personal data is only collected and processed in accordance with applicable local law. In addition, because our services are accessible worldwide, certain foreign jurisdictions may claim that we are required to comply with their privacy and data protection laws, including in jurisdictions where we have no local entity, employees, or infrastructure. In such cases, we may require additional legal review and resources to ensure compliance with any applicable privacy or data protection laws and regulations. In addition, in many jurisdictions there may in the future be new legislation that may affect our business and require additional legal review. Additionally, if third parties we work with violate applicable laws, regulations, or contractual obligations, such violations may put our users’ data at risk, could result in governmental investigations or enforcement actions, fines, litigation, claims, or public statements against us by consumer advocacy groups or others and could result in significant liability, cause our users to lose trust in us, and otherwise materially and adversely affect our reputation and business. Further, public scrutiny of, or complaints about, technology companies or their data handling or data protection practices, even if unrelated to our business, industry, or operations, may lead to increased scrutiny of technology companies, including us, and may cause government agencies to enact additional regulatory requirements, or to modify their enforcement or investigation activities, which may increase our costs and risks.

Due to rapid changes in technology and the inconsistent interpretations of privacy and data collection and protection laws and regulations, we may be required to materially change the way we conduct business. The challenges imposed by the ongoing need to remain compliant with such laws and regulations, as well the need to implement any changes required based on newly introduced laws and regulations, may slow our growth, and if we are not able to cope with these challenges as effectively as other companies, we will be competitively disadvantaged. Any limitation on our ability to collect and utilize data, including personal data, would make it more difficult for us to be able to optimize sales, which could render our solutions less valuable and potentially result in loss of revenue.

Risks Related to Gix Internet’s Business and Industry

Gix Internet’s success depends, in part, upon the continued demand of digital advertising as an integral part of corporate marketing and internal communications plans and the continued growth and acceptance of digital content as effective alternatives to traditional offline marketing products and services.

Gix Internet provides digital advertising platforms. Its revenues are derived from the sale of its platforms. If the demand for digital advertising does not continue to grow or customers do not embrace its platforms, this could have a material adverse effect on its business and financial condition.

Gix Internet’s success also depends, in part, on its ability to compete for a share of available advertising/marketing expenditures as more traditional offline and emerging media companies continue to enter the digital advertising market, as well as on the continued growth and acceptance of digital advertising generally. If for any reason digital advertising is not perceived as effective (relative to traditional advertising), web browsers, software programs and/or other applications that limit or prevent advertising from being displayed become commonplace and/or the industry fails to effectively manage click fraud, the market for digital advertising will be negatively impacted. Any lack of growth in the market for digital advertising could adversely affect its business, financial condition, and results of operations.

Online platform updates, including operating systems, search engines, browsers and social media might affect Gix Internet’s ability to generate revenues, temporarily or permanently.

Gix Internet complies with certain guidelines promulgated by online platforms for the use of the respective brands and services. Online platforms may unilaterally update their policies and guidelines, which could, in turn, require modifications to, or prohibit and/or render obsolete certain of its advertising solutions, products, services and practices, which could be costly to address or otherwise have an adverse effect on its business, its financial condition and results of operations. Noncompliance with platforms’ guidelines, whether by it or by third parties it works with, if not cured, could result in such online platforms’ suspension of some or all of their services to it, or to the websites of third parties it works with, or the reimbursement of funds paid to it, or the imposition of additional restrictions on our advertising abilities or the termination of certain advertising agreements with its customers.

Should the providers of internet browsers, advertisement platforms and Search Engines further regulate, constrain or limit Gix Internet’s ability to offer advertising services, or materially change their guidelines, technology or the way they operate, its ability to generate revenue from advertising could be significantly reduced.

As Gix Internet provides its services through the internet, it’s reliant on its ability to work with the different internet browsers, search engines and advertisement platforms. If Microsoft, Google, Apple, Meta or other companies that provide internet browsers, advertisement platforms and search engines, effectively further restrict, discourage or otherwise hamper companies, like Gix Internet, from offering or advertising services, this would continue to cause a material adverse effect on its revenue and its financial results.

Large and established internet and technology companies, such as Google and Meta, play a substantial role in the digital advertising market and may significantly impair Gix Internet’s ability to operate in this industry.

Google and Meta are substantial players in the digital advertising market and account for a large portion of the digital advertising budgets, along with other smaller players. Such high concentration subjects Gix Internet to unilateral changes with respect to advertising on their respective platforms, which may be more lucrative than alternative methods of advertising or partnerships with other publishers that are not subject to such changes. Furthermore, Gix Internet could have limited ability to respond to, and adjust for, changes implemented by such players.

These companies, along with other large and established Internet and technology companies, may also leverage their power to make changes to their web browsers, operating systems, platforms, networks or other products or services in a way that impacts the entire digital advertising marketplace.

The use of third-party software solutions for the purpose of blocking ads and / or alerts may cause Gix Internet’s business to suffer.

Digital advertising may be blocked by third-party providers. As a result, Gix Internet may lose both existing and potential new customers and its ability to generate revenue will be negatively impacted.

Gix Internet depends on supply sources to provide it with an advertising inventory in order for it to deliver advertising campaigns in a cost-effective manner.

Gix Internet relies on a diverse set of publishers including direct publishers, advertising exchange platforms, social networks and other platforms, that aggregate advertising inventory, to provide it with high-quality digital advertising inventory on which it delivers ads, collectively referred to as “supply sources”. The future growth of Gix Internet’s advertising business will depend, in part, on its ability to maintain, expand and further develop successful business relationships in order to increase the network of its supply sources.

Gix Internet’s supply sources typically make their advertising inventory available to it on a non-exclusive basis and are not required to provide any minimum amounts of advertising inventory to it or to provide it with a consistent supply of advertising inventory, at any predetermined price or through real time bidding. Supply sources often maintain relationships with various sources of demand that compete with Gix Internet, and it is easy for supply sources to quickly shift their advertising inventory among these demand sources, or to shift inventory to new demand sources, without notice or accountability. Supply sources may also seek to change the terms at which they offer inventory to Gix Internet, or they may allocate their advertising inventory to its competitors who offer more favorable economic terms, better solutions and advanced technology. Supply sources may also elect to sell all, or a portion, of their advertising inventory directly to advertisers and agencies, or they may develop their own competitive offerings, which could diminish the demand for Gix Internet’s solutions. In addition, significant supply sources within the industry may enter into exclusivity arrangements with Gix Internet’s competitors, which could limit its access to a meaningful supply of inventory. As a result of all of these factors, Gix Internet’s supply sources may not supply it with sufficient amounts of high-quality digital advertising inventory in order for it to fulfill the demands of its advertising customers.

Because of these factors, Gix Internet seeks to expand and diversify its supply sources; nonetheless, if its supply sources terminate or reduce its access to their advertising inventory, increase the price of inventory or place significant restrictions on the sale of their advertising inventory, or if platforms or exchanges terminate its access to them and it is unsuccessful in establishing or maintaining its relationships with supply sources on commercially reasonable terms, it may not be able to replace this with inventory from other supply sources that satisfy its requirements in a timely and cost-effective manner. If any of these happens, Gix Internet’s revenue could decline or its cost of acquiring inventory could increase, which, in turn, could lower its operating margins and materially adversely affect its advertising business.

Reliance upon Gix Internet’s top customers may adversely affect its revenue and operating results.

Gix Internet’s main customers represented approximately 36% and 28% of its consolidated revenue for the years ended December 31, 2024, and 2023, respectively on a pro forma basis. It is likely that Gix Internet will depend on a relatively small number of customers for a significant portion of its revenue in the future. If a top customer fails to pay Gix Internet, cash flow from operations would be impacted and its operating results and financial condition could be harmed. Additionally, if Gix Internet were to lose a material customer, it may not be able to offer its services at similar utilization or pricing levels and such loss could have an adverse effect on its business until the services are offered at similar utilization or pricing levels.

Reliance upon material suppliers may adversely affect Gix Internet’s revenue and operating results.

Gix Internet is dependent on certain material suppliers and service providers for some of the services it renders. In certain cases, Gix Internet relies on a single supplier and/or service provider for the services it offers its customers. In most cases Gix Internet does not have long term contracts with these suppliers, and even in the cases where it does, the contracts include significant qualifications that would make it extremely difficult for it to force the supplier or service provider to provide it with their services, should they choose not to do so. Gix Internet is therefore subject to the risk that these third-parties it works with will not be able or willing to continue to provide it with services that meet its specifications, quality standards and delivery schedules. Factors that could impact these third parties’ willingness and ability to continue to provide Gix Internet with the required services include disruption at or affecting their facilities, such as work stoppages or natural disasters, adverse weather or other conditions that affect their supply, their financial conditions and/or deterioration in its relationships with these third parties. In addition, Gix Internet cannot be sure that it will be able procure the services its needs on satisfactory terms. Any increase in costs could reduce Gix Internet’s revenues and harm its gross margins. In addition, any loss of a material supplier and / or service provider may permanently cause a change in one or more of Gix Internet’s services that may not be accepted by its customers or cause it to eliminate that product altogether.

Gix Internet may not be able to receive credit facility to fund its operations on favorable terms, if at all.

Gix Internet generally finances its operations primarily through a combination of cash flow generated from operations and borrowings under its credit facilities, loans, and through credit with its vendors. Gix Internet’s ability to access capital through its existing credit facilities and raise additional capital by expanding its credit facilities on economically favorable terms (including available borrowing line and the rate of interest charged thereunder) or at all, or if it is in violation of its financial covenants in the future and does not receive a waiver, depends on its ability to stay in compliance with a financing agreement, which imposes certain limitations. In addition, and as a result of the decrease in its revenues, Gix Internet’s financial performance has been negatively impacted, which may affect the terms on which it is able to obtain credit facilities and loans.

If adequate capital is not available at the time Gix Internet needs it, it may have to curtail future growth or change its expansion plans, which could have a material adverse effect on it.

If borrowing under Gix Internet’s existing credit facilities is reduced, or otherwise becomes unavailable, or it is unable to arrange substitute financing facilities or other sources of capital, its ability to fund its operations would be impaired, which would have a material adverse effect on its results of operations.

Gix Internet may be unable to pay its obligations when they become due

Gix Internet has financed its acquisitions principally through the raising of debt, credit facilities, and its operations through credit with our vendors. Its ability to continue its operations and to pay its obligations, including under a financing agreement with Bank Leumi Le Israel Ltd  (the “Financing Agreement”) and credit facilities, when they become due is contingent upon obtaining additional financing.

In addition, during August 2024, Gix Internet renegotiated the terms of the Financing Agreement and entered into the Fourth Addendum to the Financing Agreement. The availability of the credit facilities is subject to Gix Internet successfully raising additional capital and depositing at least $2,000,000 with Gix Media. If Gix Internet and certain of its subsidiaries cannot maintain compliance with the terms and covenant of the Financing Agreement, or if we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned operations, and/or consider reductions in personnel costs or other operating costs, in addition to the measures currently contemplated pursuant to the Financing Agreement.

Certain of Gix Internet’s subsidiaries have signed amendments to the existing loan agreements with a banking corporation (the “Banking Corporation”), according to which the current loan payments of Gix Media Ltd. (“Gix Media”) will be deferred and the short-term credit lines with the banking corporation will be extended. If the Banking Corporation does not agree to a further update of the repayment schedule, and in addition, Gix Media fails to raise additional capital and, as a result, is unable to repay the loans according to the revised schedule, the Banking Corporation may demand immediate repayment of all loans it has provided to Gix Media. Furthermore, failure by certain subsidiaries to meet financial covenants related to loan agreements, some of which are beyond the Gix Internet’s control, may lead to the loans being called for immediate repayment and/or the realization of securities provided by the subsidiaries. In addition, Gix Internet and its subsidiaries have cash flow obligations to various suppliers, and a lack of sufficient funding sources may result in non-compliance with these obligations. In the event of payment defaults to suppliers, additional financial pressure may arise, which could adversely affect Gix Internet’s ongoing business operations. This situation could lead to demands for immediate payments, restrictions on credit lines, and even legal proceedings by suppliers with whom Gix Internet is unable to meet payment terms.

Gix Internet and its subsidiaries finance their operations primarily through cash flows from ongoing activities, credit facilities, private placements, loans, and supplier credit. The ability to raise additional capital or expand credit facilities depends on compliance with the terms of the financing agreements, which impose certain restrictions. In addition, the decline in Gix Internet’s and it subsidiaries’ revenues has affected their financial performance, which may impact the terms for obtaining credit and loans. If sufficient capital is not available, Gix Internet and its subsidiaries may be unable to meet their obligations to banking corporations and suppliers, and may also need to reduce its future growth or alter its expansion plans, which could adversely affect its results. Furthermore, Gix Internet and its subsidiaries plan to raise capital during 2025 in order to meet the conditions of a share purchase transaction and to strengthen the Gix Internet’s financial structure, including by reducing debt to the banking system and complying with the loan agreements with the banking system.

Gix Internet’s success is dependent on the preferences of consumers, internet users and advertisers.

Gix Internet’s services rely on the digital devices used by consumers and users. To the extent that users change their consumption habits, or to the extent that traffic does not grow, its activities may decrease and its business operations could be harmed.

A change in advertisers’ preferences could also affect Gix Internet’s operations. Advertisers may change their preferences relating to their willingness to work with certain technologies and certain advertising platforms, which could reduce Gix Internet’s activities and harm its business operations.

Gix Internet may not be able to retain and attract programmatic advertisers, and the associated payments received from such programmatic advertisers’ ads on websites which have been categorized as “Made for Advertising” may be adversely affected.

Certain recent developments relating to publishers that are categorized by a number of programmatic advertisers as “Made for Advertising” (MFA) sites, including decisions made by leading media programmatic advertisers to prioritize different media categories and implement publishing restrictions in connection with MFA, have negatively impacted one of Gix Internet’s subsidiaries (the “Subsidiary”) business and operations. In connection with the foregoing, a significant customer of the Subsidiary has decided to stop advertising on the Subsidiary’s sites. Additional advertising customers of the Subsidiary may opt to stop advertising on the Subsidiary’s sites, which will impact the Subsidiary’s, and as a result thereof, the Gix Internet’s current and future revenue streams and results of operations. The foregoing issues could lead to decreased advertiser interest in the Subsidiary’s sites, potentially resulting in lower bids for ad space, and as a result thereof, lower revenues from the Subsidiary’s business, and decrease in the Subsidiary’s results of operations.

A loss of the services of Gix Internet’s technology vendors could adversely affect the execution of its business strategy.

Should some of Gix Internet’s technology vendors terminate their relationship with Gix Internet, Gix Internet’s ability to continue the development of some of its platforms could be adversely affected, until such time that Gix Internet finds adequate replacement for these vendors, or until such time that it can continue the development on its own.

The report of Gix Internet’s independent registered public accounting firm contains an explanatory paragraph regarding substantial doubt about its ability to continue as a going concern, which could prevent it from obtaining new financing on reasonable terms or at all.

The report of Gix Internet’s independent registered public accounting firm on its audited consolidated financial statements for the year ended December 31, 2024, contains an explanatory paragraph regarding substantial doubt about its ability to continue as a going concern. Gix Internet’s audited consolidated financial statements do not include any adjustments that might result from the outcome of the uncertainty regarding its ability to continue as a going concern. This going concern opinion could materially limit Gix Internet’s ability to raise additional funds through the issuance of equity or debt securities or otherwise. Further reports on Gix Internet’s consolidated financial statements may include an explanatory paragraph with respect to its ability to continue as a going concern. Until Gix Internet’s can generate significant recurring cash flow, Gix Internet expects to satisfy its future cash needs through debt or equity financing. Gix Internet cannot be certain that additional funding will be available to it on acceptable terms, if at all. If funds are not available, Gix Internet may be required to delay or reduce the scope of its operations.

Risks Related to Gix Internet’s Competition

Gix Internet’s implementation and use of artificial intelligence technologies may not be successful, which may impair its ability to compete effectively, result in reputational harm and have an adverse effect on its business.

Gix Internet uses artificial intelligence technologies (“AI”) throughout its business and continuously attempts to improve its use of such technologies. For example, Gix Internet uses AI to translate articles from English into multiple languages on its content platform. As with many technological innovations, there are significant risks and challenges involved in developing, maintaining, and deploying these technologies and there can be no assurance that the usage of such technologies will always enhance Gix Internet’s products or services or be beneficial to its business, including to its efficiency or profitability. In addition, the market for AI is rapidly evolving and remains unproven in many industries, including Gix Internet’s own. Gix Internet cannot ensure that the market will continue to grow or that it will grow in the manner it anticipates.

Gix Internet is currently in various stages of development of its AI systems, and it may not be successful in such development in the face of novel and evolving technical, reputational and market factors. The development, maintenance and operation of Gix Internet’s artificial intelligence technologies are expensive and complex, and may involve unforeseen difficulties including material performance problems, undetected defects, or errors. Furthermore, Gix Internet uses third-party AI technologies or software, which may introduce significant risks to its cybersecurity as these could spread vulnerabilities, defects viruses, ransomware, or malware through our products and/or services across its supply chain and operations. Gix Internet may encounter technical obstacles, and it is possible that it may discover additional problems that may prevent its technologies from operating properly, which could adversely affect its business, customer relationships and reputation.

Gix Internet faces significant competition from other companies in its industry in relation to the development and deployment of AI. Those other companies may develop AI technologies that are similar or superior to Gix Internet’s and/or are more cost-effective and/or quicker to develop and deploy. If Gix Internet cannot develop, offer, or deploy new AI technologies as effectively, as quickly and/or as cost-efficiently as its competitors, Gix Internet could experience a material adverse effect on its operating results of operation, customer relationships and growth.

Gix Internet may not be able to protect its systems, technology, and infrastructure from cyberattacks.

Gix Internet relies on information technology systems to operate and manage its business and to process, maintain, and safeguard information, including information related to its customers, partners, and personnel. This information is stored and managed within its internal information technology infrastructure or, in certain instances, on platforms maintained by third-party service providers. These systems, whether operated internally or externally, may be subject to attacks by perpetrators of malicious technology-related events, such as the use of botnets, malware or other destructive or disruptive software, distributed denial of service attacks, phishing, attempts to misappropriate user information and other similar malicious activities. The incidence of events of this nature (or any combination thereof) is on the rise worldwide. Since the beginning of the war between Israel and Hamas which began on October 7, 2023, Israeli and Israeli associated companies have become more frequent targets of cyberattacks. As such, the risk of a cyberattack against Gix Internet’s platforms may become heightened. While Gix Internet continuously develops and maintains systems designed to detect and prevent events of this nature from impacting its platforms, Gix Internet has invested and continues to invest in these efforts. These efforts are costly and require ongoing monitoring and updating as technologies change and efforts to overcome preventative security measures become more sophisticated.

Any event of this nature that Gix Internet experiences could damage its systems, technology, or infrastructure, prevent Gix Internet from providing its services, compromise the integrity of its services, damage its reputation and/or be costly to remedy, as well as subject Gix Internet to investigations by regulatory authorities, fines and/or litigation that could result in liability to third parties.

As the regulatory framework for AI evolves, including with respect to unintentional bias and discrimination, Gix Internet’s business, financial condition, and results of operations may be adversely affected.

Gix Internet’s business increasingly relies on artificial intelligence technologies. The regulatory framework for this technology is rapidly evolving, and Gix Internet may not always be able to anticipate how to respond to these laws or regulations. Many federal, state, and foreign government bodies and agencies have introduced or are currently considering additional laws and regulations governing the use of such technologies. There is also an increase in litigation in a number of jurisdictions, including the United States, relating to the development, security and use of artificial intelligence.

For example, in October 2023, President Biden issued the Executive Order on Safe, Secure and Trustworthy Artificial Intelligence (“The Order”) with the goal of promoting the “safe, secure, and trustworthy development and use of artificial intelligence in the United States.” The Order has established certain new standards for the training, testing and cybersecurity of sophisticated artificial intelligence models, and the Order has also instructed other federal agencies to promulgate additional regulations within certain timeframes from the date of the Order. Federal artificial intelligence legislation has also been introduced in the U.S. Senate. Such additional regulations may impact Gix Internet’s ability to develop, use and commercialize artificial intelligence and machine learning technologies in the future.

It is possible that the US artificial intelligence framework, along with the adoption of new laws and regulations in other jurisdictions, or the interpretation of existing laws and regulations, may affect the operation of Gix Internet’s platforms and services and the way in which it uses artificial intelligence, including with respect to how it trains its models, unintentional bias and discrimination. Failure to comply with such laws or regulations could subject Gix Internet to legal or regulatory liability. Further, the cost of complying with such laws or regulations could be significant and would increase Gix Internet operating expenses, which could adversely affect its business, financial condition and results of operations.

Risks Related to Eventer’s Business

If Eventer is unable to maintain and enhance the quality of its platform and user experience, its business, financial condition, and results of operations could be adversely affected.

Eventer’s success depends on its ability to maintain and enhance its platform to attract clients managing online and offline events or facilitating ticket sales. To meet evolving user expectations, Eventer must continuously improve user experience, innovate, and introduce features that resonate with event managers and ticket purchasers alike. This requires significant investment in research and development, along with rapid adaptation to shifting user preferences. In addition, the usability, performance, and reliability of Eventer’s platform are critical to ensuring user satisfaction. Should Eventer encounter difficulties in implementing new technologies or integrating emerging trends in event management, it could adversely affect its competitive position. The complexity of maintaining and updating the platform, combined with the challenge of timely feature releases, makes it difficult to predict and address potential technical issues. Prolonged downtimes, bugs, or security vulnerabilities could damage user trust and brand reputation, leading to reduced engagement and financial losses. Additionally, if Eventer fails to anticipate industry changes or user demands, it may lose market relevance, impacting its growth and profitability. As the market continues to evolve, Eventer must proactively innovate to differentiate itself from competitors by offering unique functionalities and superior user experiences. Failure to achieve this may result in diminished brand value and customer loyalty, leading to a potential decline in revenue.

If Eventer is unable to respond to changing public preferences and secure a consistent supply of popular events, its business, growth, and financial results could be negatively impacted.

Eventer operates in an industry highly sensitive to public tastes and preferences. Its success hinges on securing popular artists and live events that resonate with consumers. As Eventer relies on third parties for event creation and performance, any shortage of popular artists or events could limit revenue opportunities. The platform’s effectiveness also depends on its ability to adapt to shifting entertainment trends, such as the rise of virtual events or hybrid experiences. If Eventer fails to incorporate these trends into its service offerings, it risks losing audience engagement. Changes in public preferences, economic conditions, or reduced touring frequency by artists may also impact attendance and revenue, thereby affecting Eventer’s financial performance. Furthermore, social media influence and digital marketing dynamics play a pivotal role in shaping event demand. If Eventer is unable to leverage digital channels effectively, it could hinder its growth prospects. Additionally, consumer behaviors and preferences are increasingly influenced by technological advancements, including virtual reality, augmented reality, and personalized event experiences. Eventer must stay at the forefront of these trends to remain relevant.

If Eventer is unable to compete effectively in the highly competitive event management and ticketing industry, its market share, revenue, and profitability could be adversely affected

Eventer faces intense competition in both online and offline event management and ticketing. Competitors compete for artist relationships, technological advancements, and market share. Some competitors may engage in aggressive pricing, extensive marketing, or rapid technological development, potentially impacting Eventer’s revenue. Additionally, competition from self-ticketing systems poses a threat as clients may choose to integrate these solutions into their operations, impacting Eventer’s market share and financial results. The emergence of new entrants with innovative solutions or superior technology could further intensify competition. To remain competitive, Eventer must invest in advanced technologies, including data analytics, AI-driven marketing, and seamless user experiences. Failure to do so could result in Eventer losing competitive ground. The competitive landscape is also influenced by strategic alliances and partnerships, which competitors may leverage to expand their reach and market dominance. Eventer must remain vigilant in monitoring these market dynamics to sustain its competitive position.

If Eventer fails to provide high-quality customer service and maintain a strong brand reputation, its ability to attract and retain users, as well as its financial performance, could be adversely affected

High-quality customer service is crucial for Eventer to maintain its brand reputation and client satisfaction. Inadequate support or platform issues could lead to negative user experiences, harming brand loyalty and impacting financial outcomes. Failure to provide reliable customer support could make the platform less attractive to potential users. Eventer’s ability to respond to customer feedback, resolve technical issues promptly, and offer personalized assistance is vital for retaining user trust. Poor customer experiences could result in negative reviews, diminishing Eventer’s brand value and influencing user acquisition and retention rates. In addition, as customer expectations continue to evolve, Eventer must ensure that its customer service capabilities are scalable and adaptable to different cultural and geographical preferences.

If Eventer experiences technological failures, system vulnerabilities, or disruptions in third-party infrastructure, its operations, reputation, and financial results could be negatively impacted

Eventer relies on complex systems and third-party infrastructure to deliver its services. System interruptions, security breaches, or technological failures, whether due to natural disasters, cyberattacks, or human error, could disrupt operations, resulting in financial loss and reputational damage. Although Eventer invests in security measures and disaster recovery planning, unforeseen disruptions could adversely affect its business operations and customer trust. Moreover, as technology evolves, Eventer must consistently upgrade its infrastructure to ensure compatibility, scalability, and security. Failure to do so could result in system inefficiencies, slow performance, or security vulnerabilities. Additionally, reliance on third-party technology providers poses risks related to vendor reliability and service continuity, which Eventer must carefully manage.

If adverse economic conditions reduce consumer and corporate spending, Eventer’s revenue, profitability, and financial stability could be adversely affected

Eventer’s business relies heavily on discretionary consumer and corporate spending. Economic downturns, inflation, unemployment, and geopolitical instability, including the ongoing conflicts in the Middle East, could reduce demand for events, negatively impacting Eventer’s revenue. Additionally, changes in tax rates, interest rates, and other economic variables can influence consumer behavior, impacting ticket sales and overall business performance. Eventer must continually assess economic indicators to adjust its marketing strategies and pricing models accordingly. Additionally, shifts in global economic trends, including changes in foreign exchange rates, could influence Eventer’s profitability and financial stability.

If Eventer’s platform experiences errors, defects, or disruptions, its reputation, user confidence, and financial performance could be materially and adversely affected

Errors, defects, or disruptions within Eventer’s platform could negatively impact its brand, subject it to liability, and materially affect its business, financial condition, and operational results. Any system performance issues, including bugs or glitches, could harm Eventer’s reputation and disrupt the activities of artists and clients using its platform. Eventer’s online systems, including its website and mobile applications, may contain undetected errors that adversely affect functionality. Furthermore, as Eventer regularly updates its website, platform, and other systems, newly introduced versions may contain undetected issues that cause service disruptions. These disruptions could diminish user confidence, lead to market share loss, and negatively impact Eventer’s financial performance. Continued investment in robust quality assurance processes and comprehensive testing is essential to mitigate these risks.

If Eventer fails to comply with escrow, payment services, and money transmitter regulations, its operations, financial condition, and reputation could be adversely affected

Eventer relies on third-party providers to collect funds from ticket purchasers, remit payments to event organizers, and hold funds related to ticket transactions. Despite its belief in regulatory compliance, changes in existing laws or reinterpretations of regulations concerning escrow, money transmission, or financial transactions could impact Eventer’s operations. As a result, Eventer may be required to obtain licenses as an escrow agent, money transmitter, or similar financial entity in its active jurisdictions. Additionally, Eventer may face regulatory enforcement actions, requiring significant legal and administrative resources to resolve. Increased scrutiny and evolving regulations could lead to higher compliance costs, affecting Eventer’s profitability.

If Eventer is unable to effectively manage payment and fraud risks, it could face financial losses, legal liability, and reputational harm

Eventer is exposed to payment and fraud risks, including unauthorized transactions, identity theft, and sophisticated cyber-fraud schemes. Despite implementing advanced security measures, there is no guarantee that Eventer can prevent all fraudulent activities. Possible consequences include liability for unauthorized transactions, chargebacks, or financial penalties from payment processors. Moreover, fraud incidents could result in reputational damage, diminished user trust, and adverse effects on Eventer’s financial performance. Continuous investment in fraud detection technologies, user authentication mechanisms, and secure payment processing systems is crucial to mitigate these risks.

If Eventer fails to properly manage the use of open source software, it could face legal, operational, and security risks that may adversely affect its business and competitive position

Eventer incorporates substantial open-source software in its platform, which poses risks related to intellectual property disputes, licensing compliance, and potential security vulnerabilities. Misuse or non-compliance with open source licenses could expose Eventer to legal disputes, requiring costly platform modifications. Additionally, if Eventer’s proprietary software inadvertently integrates with open source code under restrictive licenses, it may be required to disclose its source code, compromising its competitive advantage. Eventer must maintain stringent compliance protocols and regularly review its open-source usage to minimize legal and operational risks.

If Eventer experiences data security breaches or cybersecurity threats, it could suffer legal liability, regulatory penalties, reputational harm, and loss of user trust

Eventer’s platform stores sensitive user information, including payment details and personal data. As cyber threats evolve, Eventer faces risks of unauthorized access, data breaches, and security incidents that could compromise user privacy and financial data integrity. If Eventer’s security measures are compromised, it could face legal liabilities, regulatory penalties, and reputational damage. Additionally, reliance on third-party cloud infrastructure necessitates stringent security standards to protect against cyberattacks and data theft. Proactive investment in cybersecurity solutions, comprehensive threat monitoring, and regular security audits are critical to safeguarding user data and maintaining operational integrity.

Risks Related to Our Intellectual Property

If we are unable to secure and maintain patent or other intellectual property protection for the intellectual property used in our products, our ability to compete will be harmed.

Our commercial success depends, in part, on obtaining and maintaining patent and other intellectual property protection for the technologies used in our products. If we, or the other parties from whom we may license intellectual property, fail to obtain and maintain adequate patent or other intellectual property protection for intellectual property used in our products, or if any protection is reduced or eliminated, others could use the intellectual property used in our products, resulting in harm to our competitive business position. In addition, patent and other intellectual property protection may not provide us with a competitive advantage against competitors that devise ways of making competitive products without infringing any patents that we own.

U.S. patents and patent applications may be subject to interference proceedings, and U.S. patents may be subject to re-examination proceedings in the U.S. Patent and Trademark Office and the Federal courts. Foreign patents may be subject to opposition or comparable proceedings in the corresponding foreign patent offices and courts. Any of these proceedings could result in loss of the patent or denial of the patent application, or loss or reduction in the scope of one or more of the claims of the patent or patent application. Changes in either patent laws or in interpretations of patent laws may also diminish the value of our intellectual property or narrow the scope of our protection. Interference, re-examination and opposition proceedings may be costly and time consuming, and we, or the other parties from whom we might potentially license intellectual property, may be unsuccessful in defending against such proceedings. Thus, any patents that we own or might license may provide limited or no protection against competitors. In addition, our pending patent applications and those we may file in the future may have claims narrowed during prosecution or may not result in patents being issued. Even if any of our pending or future applications are issued, they may not provide us with adequate protection or any competitive advantages. Our ability to develop additional patentable technology is also uncertain.

Non-payment or delay in payment of patent fees or annuities, whether intentional or unintentional, may also result in the loss of patents or patent rights important to our business. Many countries, including certain countries in Europe, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to other parties. In addition, many countries limit the enforceability of patents against other parties, including government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of the patent. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as do the laws of the United States, particularly in the field of medical products and procedures.

If we are unable to prevent unauthorized use or disclosure of our proprietary trade secrets and unpatented know-how, our ability to compete will be harmed.

Proprietary trade secrets, copyrights, trademarks and unpatented know-how are also very important to our business. We rely on a combination of trade secrets, copyrights, trademarks, confidentiality agreements and other contractual provisions and technical security measures to protect certain aspects of our technology, especially where we do not believe that patent protection is appropriate or obtainable. We require our office holders, employees, consultants and distributors of our products and most third parties (such as contractors or clinical collaborators) to execute confidentiality agreements in connection with their relationships with us. However, these measures may not be adequate to safeguard our proprietary intellectual property and conflicts may, nonetheless, arise regarding ownership of inventions. Such conflicts may lead to the loss or impairment of our intellectual property or to expensive litigation to defend our rights against competitors who may be better funded and have superior resources. Our office holders, employees, consultants and other advisors may unintentionally or willfully disclose our confidential information to competitors. In addition, confidentiality agreements may be unenforceable or may not provide an adequate remedy in the event of unauthorized disclosure. Enforcing a claim that a third party illegally obtained and is using our trade secrets is expensive and time consuming, and the outcome is unpredictable. Moreover, our competitors may independently develop equivalent knowledge, methods and know-how. Unauthorized parties may also attempt to copy or reverse engineer certain aspects of our products that we consider proprietary. As a result, other parties may be able to use our proprietary technology or information, and our ability to compete in the market would be harmed.

We could become subject to patent and other intellectual property litigation that could be costly, result in the diversion of management’s attention, require us to pay damages and force us to discontinue selling our products.

Our industry is characterized by competing intellectual property and a substantial amount of litigation over patent and other intellectual property rights. Determining whether a product infringes a patent involves complex legal and factual issues, and the outcome of a patent litigation action is often uncertain. No assurance can be given that patents containing claims covering our products, parts of our products, technology or methods do not exist, have not been filed or could not be filed or issued. Furthermore, our competitors or other parties may assert that our products and the methods we employ in the use of our products are covered by U.S. or foreign patents held by them. In addition, because patent applications can take many years to issue and because publication schedules for pending applications vary by jurisdiction, there may be applications now pending of which we are unaware and which may result in issued patents which our current or future products infringe. Also, because the claims of published patent applications can change between publication and patent grant, there may be published patent applications with claims that we infringe. There could also be existing patents that one or more of our products or parts may infringe and of which we are unaware.

Infringement actions and other intellectual property claims and proceedings brought against or by us, whether with or without merit, may cause us to incur substantial costs and could place a significant strain on our financial resources, divert the attention of management from our business and harm our reputation. Some of our competitors may be able to sustain the costs of complex patent or intellectual property litigation more effectively than we can because they have substantially greater resources. Part of our patent portfolio may be infringed by a third party. After initial discussions with such third party we are evaluating our next steps including possibly conducting further discussions with such third party.

We cannot be certain that we will successfully defend against allegations of infringement of patents and intellectual property rights of others. In the event that we become subject to a patent infringement or other intellectual property lawsuit and if the other party’s patents or other intellectual property were upheld as valid and enforceable and we were found to infringe the other party’s patents or violate the terms of a license to which we are a party, we could be required to pay damages. We could also be prevented from selling our products unless we could obtain a license to use technology or processes covered by such patents or will be able to redesign the product to avoid infringement. A license may not be available at all or on commercially reasonable terms or we may not be able to redesign our products to avoid infringement. In these circumstances, we may be unable to sell our products at competitive prices or at all, our business and operating results could be harmed.

We may be subject to claims that our employees, consultants, or independent contractors have wrongfully used or disclosed confidential information of third parties or, that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.

Certain of our current or former employees, consultants and personnel were previously employed at universities, medical institutions, or other biotechnology or pharmaceutical companies. Although we try to ensure that our employees, consultants, and independent contractors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or our current or former employees, consultants, or independent contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets or other proprietary information, of any of our employee’s former employer or other third parties. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. Furthermore, universities or medical institutions who employ or employed some of our key employees and personnel in parallel to their engagement by us may claim that intellectual property developed by such person is owned by the respective academic or medical institution under the respective institution intellectual property policy or applicable law.

We may be subject to claims challenging the inventorship or ownership of our patents and other intellectual property.

We may be subject to claims that former employees, collaborators, or other third parties have an ownership interest in our patents or other intellectual property. Ownership disputes may arise in the future, for example, from conflicting obligations of consultants or others who are involved in developing our product candidates. Litigation may be necessary to defend against these and other claims challenging inventorship or ownership. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.  

Disruptions to the Group’s information technology systems due to cyber-attacks or the Group’s failure to upgrade and adjust our information technology systems, may materially impair the Group’s operations, hinder our growth and materially and adversely affect our business and results of operations.

We believe that an appropriate information technology, or IT, infrastructure is important in order to support the Group’s daily operations and the growth of our business. If we experience difficulties in implementing new or upgraded information systems or experience significant system failures, or if we are unable to successfully modify the Group’s management information systems or respond to changes in our business needs, we may not be able to effectively manage the Group’s business, and we may fail to meet our reporting obligations. Additionally, if our current back-up storage arrangements and our disaster recovery plan are not operated as planned, we may not be able to effectively recover our information system in the event of a crisis, which may materially and adversely affect our business and results of operations.

In the current environment, there are numerous and evolving risks to cybersecurity and privacy, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, employee malfeasance and human or technological error. High-profile security breaches at other companies and in government agencies have increased in recent years, and security industry experts and government officials have warned about the risks of hackers and cyber-attacks targeting businesses such as ours. Computer hackers and others routinely attempt to breach the security of technology products, services and systems, and to fraudulently induce employees, customers, or others to disclose information or unwittingly provide access to systems or data. We can provide no assurance that the Group’s current IT system or any updates or upgrades thereto and the current or future IT systems of our distributors use or may use in the future, are fully protected against third-party intrusions, viruses, hacker attacks, information or data theft or other similar threats. Legislative or regulatory action in these areas is also evolving, and we may be unable to adapt the Group’s IT systems or to manage the IT systems of third parties to accommodate these changes. In the current environment, there are numerous and evolving risks to cybersecurity, data and privacy, including criminal hackers, hacktivists, state-sponsored intrusions, industrial espionage, employee malfeasance and human or technological error. High-profile security breaches at other companies and in government agencies have increased in frequency and sophistication in recent years. Moreover, geopolitical tensions, particularly the Hamas-Israel and the Russia-Ukraine conflicts, have contributed to a surge in cyber-attacks targeting Israeli companies and products globally, posing a threat to critical infrastructure. We have experienced and expect to continue to experience actual or attempted cyber-attacks of our IT networks. Although none of these actual or attempted cyber-attacks has had a material adverse impact on our operations or financial condition, we cannot guarantee that any such incidents will not have such an impact in the future.

Risks Related to Our Operations in Israel

Conditions in Israel, including the ongoing war between Israel and Hamas, and other conflicts in the region, may adversely affect our operations and limit our ability to market our products, which would lead to a decrease in revenues.

We are incorporated under the laws of the State of Israel, and our employees, including management members, operate from our offices that are located in Tel Aviv, Israel. In addition, a number our officers and directors are residents of Israel. Accordingly, our business and operations are directly affected by economic, political, geopolitical and military conditions in Israel. Since the establishment of the State of Israel in 1948, a number of armed conflicts have occurred between Israel and its neighboring countries and terrorist organizations active in the region. These conflicts have involved missile strikes, hostile infiltrations and terrorism against civilian targets in various parts of Israel, which have negatively affected business conditions in Israel.

Following the October 7^th attacks by Hamas terrorists in Israel’s southern border, Israel declared war against Hamas and since then, Israel has been involved in military conflicts with Hamas, Hezbollah, a terrorist organization based in Lebanon, and Iran, both directly and through proxies like the Houthi movement in Yemen and armed groups in Iraq and other terrorist organizations. Additionally, following the fall of the Assad regime in Syria, Israel has conducted limited military operations targeting the Syrian army, Iranian military assets and infrastructure linked to Hezbollah and other Iran-supported groups. Although certain ceasefire agreements have been reached with Hamas and Lebanon (with respect to Hezbollah), and some Iranian proxies have declared a halt to their attacks, there is no assurance that these agreements will be upheld, military activity and hostilities continue to exist at varying levels of intensity, and the situation remains volatile, with the potential for escalation into a broader regional conflict involving additional terrorist organizations and possibly other countries. Also, the fall of the Assad regime in Syria may create geopolitical instability in the region.

While our facilities have not been damaged during the current war, the hostilities with Hamas, Hezbollah, Iran and its proxies and others have caused and may continue to cause damage to private and public facilities, infrastructure, utilities, and telecommunication networks, and potentially disrupting our operations and supply chains. In addition, Israeli organizations, government agencies and companies have been subject to extensive cyberattacks. This could lead to increased costs, risks to employee safety, and challenges to business continuity, with potential financial losses.

The continuation of the war has also led to a deterioration of certain indicators of Israel’s economic standing, for instance, a downgrade in Israel’s credit rating by rating agencies (such as by Moody’s, S&P Global, and Fitch).

In connection with the ongoing war, several hundred thousand Israeli military reservists were drafted to perform immediate military service, and military reservists are expected to perform long reserve duty service in the coming years. As of the date of this annual report, only several of our employees are called to active military duty. The absence of our employees due to their military service in the current or future wars or other armed conflicts may materially and adversely affect our ability to conduct our operations.

Although the Israeli government currently covers the reinstatement value of certain direct damages that are caused by terrorist attacks or acts of war, we cannot assure you that such government coverage will be maintained or that it will sufficiently cover our potential damages. Any losses or damages incurred by us could have a material adverse effect on our business.

The global perception of Israel and Israeli companies, influenced by actions by international judicial bodies, may lead to increased sanctions and other negative measures against Israel, as well as Israeli companies and academic institutions. There is also a growing movement among countries, activists, and organizations to boycott Israeli goods, services and academic research or restrict business with Israel, which could affect business operations. If these efforts become widespread, along with any future rulings from international tribunals against Israel, they could significantly and negatively impact business operations.

Exchange rate fluctuations between foreign currencies and the U.S. Dollar may negatively affect our earnings.

Our reporting and functional currency is the U.S. dollar. Gix Internet’s revenues are currently primarily payable in U.S. dollars, and we expect our future revenues to be denominated primarily in U.S. dollars. However, Eventer’s revenues and certain amount of our and Gix Internet’s expenses and investments are in NIS and as a result, we are exposed to the currency fluctuation risks relating to the recording of our expenses and Eventer’s revenues in U.S. dollars. We may, in the future, decide to enter into currency hedging transactions. These measures, however, may not adequately protect us from material adverse effects.

The government tax benefits that we currently are entitled to receive require us to meet several conditions and may be terminated or reduced in the future.

Some of our operations in Israel may entitle us to certain tax benefits under the Law for the Encouragement of Capital Investments, 5719-1959, or the Investments Law once we begin to produce taxable income. From time to time, the government of Israel has considered reducing or eliminating the tax benefits available to Benefitted Enterprise programs such as ours. If we do not meet the requirements for maintaining these benefits, they may be reduced or cancelled and the relevant operations would be subject to Israeli corporate tax at the standard rate, which was set at 23% in 2018 and thereafter. In addition to being subject to the standard corporate tax rate, we could be required to refund any tax benefits that we have already received, plus interest and penalties thereon. Even if we continue to meet the relevant requirements, the tax benefits that our current “Benefitted Enterprise” is entitled to may not be continued in the future at their current levels, or at all. If these tax benefits were reduced or eliminated, the amount of taxes that we will have to pay if we produce revenues would likely increase, as all of our operations would consequently be subject to corporate tax at the standard rate, which could adversely affect our results of operations. Additionally, if we increase our activities outside of Israel, for example, by way of acquisitions, our increased activities may not be eligible for inclusion in Israeli tax benefits programs. See Item 10. “Additional Information - E. Taxation.” 

Provisions of Israeli law and our amended and restated articles of association may delay, prevent or otherwise impede a merger with, or an acquisition of, our Company, which could prevent a change of control, even when the terms of such a transaction are favorable to us and our shareholders.

Provisions of Israeli law and our amended and restated articles of association could have the effect of delaying or preventing a change in control and may make it more difficult for a third party to acquire us or our shareholders to elect different individuals to our board of directors, even if doing so would be considered to be beneficial by some of our shareholders, and may limit the price that investors may be willing to pay in the future for our Ordinary Shares. Among other things:

Furthermore, Israeli tax considerations may make potential transactions unappealing to us or to our shareholders whose country of residence does not have a tax treaty with Israel exempting such shareholders from Israeli tax.

These and other similar provisions could delay, prevent or impede an acquisition of us or our merger with another company, even if such an acquisition or merger would be beneficial to us or to our shareholders.

It may be difficult to enforce a judgment of a U.S. court against us and our officers and directors and the Israeli experts named in this annual report on Form 20-F in Israel or the United States, to assert United States securities laws claims in Israel or to serve process on our officers and directors and these experts.

We are incorporated in Israel. Certain of our executive officers and directors reside in Israel and most of our assets and most of the assets of these persons are located outside of the United States. Therefore, a judgment obtained against us, or any of these persons in the United States, including one based on the civil liability provisions of the U.S. federal securities laws, may not be collectible in the United States and may not necessarily be enforced by an Israeli court. It may also be difficult to affect service of process on these persons in the United States or to assert United States securities law claims in original actions instituted in Israel.

Even if an Israeli court agrees to hear such claim, it may determine that Israeli law, and not U.S. law is applicable to the claim. Under Israeli law, if U.S. law is found to be applicable to such claim, the content of applicable U.S. law must be proven as a fact by expert witnesses, which can be a time consuming and costly process, and certain matters of procedure would also be governed by Israeli law. There is little binding case law in Israel that addresses the matters.

Our amended and restated articles of association provide that unless the Company consents otherwise, the competent courts of Tel Aviv, Israel shall be the sole and exclusive forum for substantially all disputes between the Company and its shareholders under the Companies Law and the Israeli Securities Law, which could limit its shareholders ability to brings claims and proceedings against, as well as obtain favorable judicial forum for disputes with the Company, its directors, officers and other employees.

The competent courts of Tel Aviv, Israel shall be the exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s shareholders, or (iii) any action asserting a claim arising pursuant to any provision of the Companies Law or the Israeli Securities Law. This exclusive forum provision is intended to apply to claims arising under Israeli Law and would not apply to claims brought pursuant to the Securities Act or the Exchange Act or any other claim for which federal courts would have exclusive jurisdiction. Such exclusive forum provision in our amended and restated articles of association will not relieve the Company of its duties to comply with federal securities laws and the rules and regulations thereunder, and shareholders of the Company will not be deemed to have waived the Company’s compliance with these laws, rules and regulations. This exclusive forum provision may limit a shareholder’s ability to bring a claim in a judicial forum of its choosing for disputes with the Company or its directors or other employees which may discourage lawsuits against the Company, its directors, officers and employees.

The rights and responsibilities of a shareholder will be governed by Israeli law which differs in some material respects from the rights and responsibilities of shareholders of U.S. companies.

The rights and responsibilities of the holders of our Ordinary Shares are governed by our amended and restated articles of association and by Israeli law. These rights and responsibilities differ in some material respects from the rights and responsibilities of shareholders in typical U.S.-registered corporations. In particular, a shareholder of an Israeli company has certain duties to act in good faith and fairness towards the company and other shareholders, and to refrain from abusing its power in the company. There is limited case law available to assist us in understanding the nature of this duty or the implications of these provisions. These provisions may be interpreted to impose additional obligations and liabilities on holders of our Ordinary Shares that are not typically imposed on shareholders of U.S. corporations.

The ability of any Israeli company to pay dividends is subject to Israeli law and the amount of cash dividends payable may be subject to devaluation in the Israeli currency.

We paid cash dividends in an amount of $1.6 million on December 28, 2022. We do not anticipate that we will pay any cash dividends on our securities in the foreseeable future. The ability of an Israeli company to pay dividends is governed by Israeli law, which provides that cash dividends may be paid only out of retained earnings or earnings derived over the two most recent fiscal years, whichever is higher, as determined for statutory purposes in Israeli currency, provided that there is no reasonable concern that payment of a dividend will prevent a company from satisfying its existing and foreseeable obligations as they become due. In the event of a devaluation of the Israeli currency against the U.S. dollar, the amount in U.S. dollars available for payment of cash dividends out of prior years’ earnings will decrease.

The termination or reduction of tax and other incentives that the Israeli Government provides to domestic companies may increase the costs involved in operating a company in Israel.

The Israeli government currently provides major tax and capital investment incentives to domestic companies, as well as grant and loan programs relating to research and development and marketing and export activities. In recent years, the Israeli Government has reduced the benefits available under these programs and the Israeli Governmental authorities have indicated that the government may in the future further reduce or eliminate the benefits of those programs. We currently take advantage of these programs. There is no assurance that such benefits and programs would continue to be available in the future to us. If such benefits and programs were terminated or further reduced, it could have an adverse effect on our business, operating results and financial condition.

We may become subject to claims for remuneration or royalties for assigned service invention rights by our employees, which could result in litigation and adversely affect our business.

A significant portion of our intellectual property has been developed by our employees in the course of their employment for us. Under the Israeli Patent Law, 5727-1967, or the Patent Law, inventions conceived by an employee in the course and as a result of or arising from his or her employment with a company are regarded as “service inventions,” which belong to the employer, absent a specific agreement between the employee and employer giving the employee service invention rights. The Patent Law also provides that if there is no such agreement between an employer and an employee, the Israeli Compensation and Royalties Committee, or the Committee, a body constituted under the Patent Law, will determine whether the employee is entitled to remuneration for his inventions. Recent case law clarifies that the right to receive consideration for “service inventions” can be waived by the employee and that in certain circumstances, such waiver does not necessarily have to be explicit. The Committee will examine, on a case-by-case basis, the general contractual framework between the parties, using interpretation rules of the general Israeli contract laws. Further, the Committee has not yet determined one specific formula for calculating this remuneration (but rather uses the criteria specified in the Patent Law). Although we generally enter into assignment-of-invention agreements with our employees pursuant to which such individuals assign to us all rights to any inventions created in the scope of their employment or engagement with us, we may face claims demanding remuneration in consideration for assigned inventions. As a consequence of such claims, we could be required to pay additional remuneration or royalties to our current and/or former employees, or be forced to litigate such claims, which could negatively affect our business.

Risks Related to an Investment Our Securities

There can be no assurance that we will not be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes in 2025 or in any subsequent year. If we are a PFIC, this may result in adverse U.S. federal income tax consequences for U.S. taxpayers that are holders of our securities. 

We will generally be treated as a PFIC for U.S. federal income tax purposes in any taxable year in which either (1) at least 75% of our gross income is “passive income” or (2) on average at least 50% of our assets by value (generally determined on the basis of a quarterly average) produce passive income or are held for the production of passive income. Passive income for this purpose generally includes, among other things, certain dividends, interest, royalties, rents and gains from commodities and securities transactions and from the sale or exchange of property that gives rise to passive income. Passive income also includes amounts derived by reason of the temporary investment of funds, including those raised in a public offering. In determining whether a non-U.S. corporation is a PFIC, a proportionate share of the income and assets of each corporation in which it owns, directly or indirectly, at least a 25% interest (by value) is taken into account. Based on our anticipated income and the composition of our income and assets, we do not believe we were a PFIC for our 2024 taxable year . Because the PFIC determination is highly fact intensive, there can be no assurance that we were not a PFIC in 2024 and will not be a PFIC in 2025 or any other year, as our operating results for any such years may cause us to be a PFIC. If we were a PFIC in 2024, or are a PFIC in any subsequent year, and a U.S. shareholder does not make an election to treat us as a “qualified electing fund,” or QEF, or make a “mark-to-market” election, then “excess distributions” to a U.S. shareholder, and any gain realized on the sale or other disposition of our securities will be subject to special rules. Under these rules: (1) the excess distribution or gain would be allocated ratably over the U.S. shareholder’s holding period for the securities; (2) the amount allocated to the current taxable year and any period prior to the first day of the first taxable year in which we were a PFIC would be taxed as ordinary income; and (3) the amount allocated to each of the other taxable years would be subject to tax at the highest rate of tax in effect for the applicable class of taxpayer for that year, and an interest charge for the deemed deferral benefit would be imposed with respect to the resulting tax attributable to each such other taxable year. In addition, if the U.S. Internal Revenue Service, or the IRS, determines that we are a PFIC for a year with respect to which we have determined that we were not a PFIC, it may be too late for a U.S. shareholder to make a timely QEF or mark-to-market election. You may make a QEF election with respect to your Ordinary Shares or ADSs only if we furnish you annually with certain tax information, and we currently do not intend to prepare or provide such information. U.S. shareholders who hold or have held our securities during a period when we were or are a PFIC will generally be subject to the foregoing rules unless we cease to be a PFIC and you make a “deemed sale” election with respect to our Ordinary Shares. If we are a PFIC in any year, U.S. shareholders may be subject to additional IRS filing requirements, including the filing of IRS Form 8621, as a result of directly or indirectly owning stock of a PFIC. U.S. shareholders are urged to consult their own tax advisors regarding the application of the PFIC rules. For more information, see Item 10. “Additional Information - Taxation - Certain Material U.S. Federal Income Tax Consequences.”

If a United States person is treated as owning at least 10% of our Ordinary Shares, such holder may be subject to adverse U.S. federal income tax consequences.

If a United States person is treated as owning (directly, indirectly, or constructively) at least 10% of the value or voting power of our Ordinary Shares, such person may be treated as a “United States shareholder” with respect to each controlled foreign corporation, or CFC, in our group (if any). Because our group includes a U.S. subsidiary, certain of our non-U.S. subsidiaries will be treated as CFCs (regardless of whether or not we are treated as a CFC). A United States shareholder of a CFC may be required to report annually and include in its U.S. taxable income its pro rata share of “Subpart F income,” “global intangible low-taxed income,” and investments in U.S. property by CFCs, regardless of whether we make any distributions. An individual that is a United States shareholder with respect to a CFC generally would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a U.S. corporation. Failure to comply with these reporting obligations may subject a United States shareholder to significant monetary penalties and may prevent the statute of limitations with respect to such shareholder’s U.S. federal income tax return for the year for which reporting was due from starting. We cannot provide any assurances that we will assist investors in determining whether we are or any of our non-U.S. subsidiaries is treated as CFC or whether any investor is treated as a United States shareholder with respect to any such CFC or furnish to  any United States shareholders information that may be necessary to comply with the aforementioned reporting and tax paying obligations. The IRS has provided limited guidance on situations in which investors may rely on publicly available information to comply with their reporting and tax paying obligations with respect to foreign-controlled CFCs. A United States investor should consult its advisors regarding the potential application of these rules to an investment in our Ordinary Shares or ADSs.

Changes in U.S. and foreign tax laws could have a material adverse effect on our business, cash flow, results of operations or financial conditions.

We are subject to taxation in several countries, including the United States and Israel; changes in tax laws or challenges to our tax positions could adversely affect our business, results of operations, and financial condition. As such, we are subject to tax laws, regulations, and policies of the U.S. federal, state, and local governments and of comparable taxing authorities in foreign jurisdictions. Changes in tax laws, including proposed legislation currently being discussed in the U.S. Congress, as well as other factors, could cause us to experience fluctuations in our tax obligations and effective tax rates in the future and otherwise adversely affect our tax positions and/or our tax liabilities. There can be no assurance that our effective tax rates, tax payments, tax credits, or incentives will not be adversely affected by changes in tax laws in various jurisdictions.

The market prices of our securities are subject to fluctuation, which could result in substantial losses by our investors.

The stock market in general and the market prices of our ADSs on Nasdaq, in particular, are or will be subject to fluctuation, and changes in these prices may be unrelated to our operating performance. We anticipate that the market prices of our securities will continue to be subject to wide fluctuations. The market price of our securities is, and will be, subject to a number of factors, including:

These factors may materially and adversely affect the market price of our securities s and result in substantial losses by our investors.

We do not know whether a market for the ADSs will be sustained or what the trading price of the ADSs will be and as a result it may be difficult for you to sell your ADSs.

Although our ADSs trade on Nasdaq, an active trading market for the ADSs may not be sustained. It may be difficult for you to sell your ADSs without depressing the market price for the ADSs. As a result of these and other factors, you may not be able to sell your ADSs. Further, an inactive market may also impair our ability to raise capital by selling ADSs and may impair our ability to enter into strategic partnerships or acquire companies or products by using our ADSs as consideration.

Future sales of our securities could reduce their market price.

Substantial sales of our securities on Nasdaq, may cause the market price of our securities to decline. Sales by us or our security holders of substantial amounts of our securities, or the perception that these sales may occur in the future, could cause a reduction in the market price of our securities.

The issuance of any additional Ordinary Shares, ADSs, warrants or any securities that are exercisable for or convertible into our Ordinary Shares or ADSs, may have an adverse effect on the market price of our securities and will have a dilutive effect on our existing shareholders and holders of ADSs.

Holders of ADSs may not receive the same distributions or dividends as those we make to the holders of our Ordinary Shares, and, in some limited circumstances, you may not receive dividends or other distributions on our Ordinary Shares and you may not receive any value for them, if it is illegal or impractical to make them available to you.

The depositary for the ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on Ordinary Shares or other deposited securities underlying the ADSs, after deducting its fees and expenses. You will receive these distributions in proportion to the number of Ordinary Shares your ADSs represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act of 1933, as amended, or the Securities Act, but that are not properly registered or distributed under an applicable exemption from registration. In addition, conversion into U.S. dollars from foreign currency that was part of a dividend made in respect of deposited Ordinary Shares may require the approval or license of, or a filing with, any government or agency thereof, which may be unobtainable. In these cases, the depositary may determine not to distribute such property and hold it as “deposited securities” or may seek to affect a substitute dividend or distribution, including net cash proceeds from the sale of the dividends that the depositary deems an equitable and practicable substitute. We have no obligation to register under U.S. securities laws any ADSs, Ordinary Shares, rights or other securities received through such distributions. We also have no obligation to take any other action to permit the distribution of ADSs, Ordinary Shares, rights or anything else to holders of ADSs. In addition, the depositary may withhold from such dividends or distributions its fees and an amount on account of taxes or other governmental charges to the extent the depositary believes it is required to make such withholding. This means that you may not receive the same distributions or dividends as those we make to the holders of our Ordinary Shares, and, in some limited circumstances, you may not receive any value for such distributions or dividends if it is illegal or impractical for us to make them available to you. These restrictions may cause a material decline in the value of the ADSs.

Holders of ADSs must act through the depositary to exercise their rights as shareholders of our Company.

Holders of our ADSs do not have the same rights as our shareholders and may only exercise the voting rights with respect to the underlying Ordinary Shares in accordance with the provisions of the Deposit Agreement. Under Israeli law and our amended and restated articles of association, the minimum notice period required to convene a shareholders meeting is no less than 21 or 35 calendar days, depending on the proposals on the agenda for the shareholders meeting. When a shareholder meeting is convened, holders of ADSs may not receive sufficient notice of a shareholders’ meeting to permit them to withdraw their Ordinary Shares to allow them to cast their vote with respect to any specific matter. In addition, the Depositary and its agents may not be able to send voting instructions to holders of ADSs or carry out their voting instructions in a timely manner. We will make all reasonable efforts to cause the Depositary to extend voting rights to holders of the ADSs in a timely manner, but we cannot assure holders that they will receive the voting materials in time to ensure that they can instruct the Depositary to vote their Ordinary Shares underlying the ADSs. Furthermore, the Depositary and its agents will not be responsible for any failure to carry out any instructions to vote, for the manner in which any vote is cast or for the effect of any such vote. As a result, holders of ADSs may not be able to exercise their right to vote and they may lack recourse if their Ordinary Shares underlying the ADSs are not voted as they requested. In addition, in the capacity as a holder of ADSs, they will not be able to call a shareholders’ meeting.

We incur additional increased costs as a result of the listing of the ADSs for trading on Nasdaq, and our management is required to devote substantial time to new compliance initiatives and reporting requirements.

As a public company in the United States, we incur significant accounting, legal and other expenses as a result of the listing of the ADSs on Nasdaq. These include costs associated with corporate governance requirements of the Securities Exchange Commission, or the SEC, and the Marketplace Rules of the Nasdaq, as well as requirements under Section 404 and other provisions of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act. These rules and regulations increase our legal and financial compliance costs, introduce costs such as investor relations, stock exchange listing fees and shareholder reporting, and make some activities more time consuming and costly. Any future changes in the laws and regulations affecting public companies in the United States and Israel, including Section 404 and other provisions of the Sarbanes-Oxley Act, the rules and regulations adopted by the SEC and the rules of the Nasdaq Stock Market may result in increased costs to us as we respond to such changes. These laws, rules and regulations could make it more difficult or more costly for us to obtain certain types of insurance, including director and officer liability insurance, and we may be forced to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. The impact of these requirements could also make it more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees or as executive officers.

As a foreign private issuer, we are permitted to follow certain home country corporate governance practices instead of applicable SEC and Nasdaq requirements, which may result in less protection than is accorded to investors under rules applicable to domestic issuers.

As a foreign private issuer, we are permitted to follow certain home country corporate governance practices instead of those otherwise required under the rules of the Nasdaq for domestic issuers. Following our home country governance practices as opposed to the requirements that would otherwise apply to a U.S. company listed on the Nasdaq, may provide less protection than is accorded to investors under the rules of the Nasdaq applicable to domestic issuers. For more information, see “Item 16G. Corporate Governance - Nasdaq Stock Market Listing Rules and Home Country Practices.”

In addition, as a foreign private issuer, we are exempt from the rules and regulations under the Securities Exchange Act of 1934, as amended, or the Exchange Act, related to the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we are not required under the Exchange Act to file annual, quarterly and current reports and financial statements with the SEC as frequently or as promptly as domestic companies whose securities are registered under the Exchange Act.

We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.

We are a foreign private issuer, as such term is defined in Rule 405 under the Securities Act, and therefore, we are not required to comply with all the periodic disclosure and current reporting requirements of the Exchange Act and related rules and regulations. Under Rule 405, the determination of foreign private issuer status is made annually on the last business day of an issuer’s most recently completed second fiscal quarter and, accordingly, the next determination will be made with respect to us on June 30, 2024.

In the future, we would lose our foreign private issuer status if a majority of our shareholders, directors or management are U.S. citizens or residents, and we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. Although we have elected to comply with certain U.S. regulatory provisions, our loss of foreign private issuer status would make such provisions mandatory. The regulatory and compliance costs to us under U.S. securities laws as a U.S. domestic issuer may be significantly higher. If we are not a foreign private issuer, we will be required to file periodic reports and registration statements on U.S. domestic issuer forms with the U.S. Securities and Exchange Commission, or the SEC, which are more detailed and extensive than the forms available to a foreign private issuer. For example, the annual report on Form 10-K requires domestic issuers to disclose executive compensation information on an individual basis with specific disclosure regarding the domestic compensation philosophy, objectives, annual total compensation (base salary, bonus, equity compensation) and potential payments in connection with change in control, retirement, death or disability, while the SEC forms applicable to foreign private issuers permit them to disclose compensation information on an aggregate basis if executive compensation disclosure on an individual basis is not required or otherwise has not been provided in the issuer’s home jurisdiction. We disclose individual compensation information, but this disclosure is not as comprehensive as that required of U.S. domestic issuers since we are not required to disclose more detailed information in Israel. We intend to continue this practice as long as it is permitted under the SEC’s rules and Israel’s rules do not require more detailed disclosure. We will also have to mandatorily comply with U.S. federal proxy requirements, and our officers, directors and principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange Act. We may also be required to modify certain of our policies to comply with good governance practices associated with U.S. domestic issuers. Such conversion and modifications will involve additional costs. In addition, we may lose our ability to rely upon exemptions from certain corporate governance requirements on U.S. stock exchanges that are available to foreign private issuers.

If we fail to develop and maintain proper and effective internal controls over financial reporting, our ability to produce timely and accurate financial statements, comply with applicable laws and regulations, or access the capital markets could be impaired.

As a public company, we are actively evaluating our internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404(a) of the Sarbanes-Oxley Act, or Section 404. As disclosed in Item 15, our management concluded that, as of December 31, 2024, the Company’s internal controls over financial reporting were effective.

The process of designing and implementing effective internal control over financial reporting is a continuous effort. If our management cannot favorably assess the effectiveness of our internal controls over financial reporting, or if our independent registered public accounting firm identifies material weaknesses in our internal control, investor confidence in our financial results may weaken, and the market price of our securities may suffer.

Our amended and restated articles of association provide that unless we consent to an alternate forum, the federal district courts of the United States shall be the exclusive forum of resolution of any claims arising under the Securities Act which may impose additional litigation costs on our shareholders.

Our amended and restated articles of association provide that the federal district courts of the United States shall be the exclusive forum for the resolution of any complaint asserting a cause or causes of action arising under the Securities Act, including all causes of action asserted against any defendant to such complaint. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both U.S. state and federal courts have jurisdiction to entertain such claims. This choice of forum provision may limit a shareholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees and may increase the costs associated with such lawsuits, which may discourage such lawsuits against us and our directors, officers and employees. Alternatively, if a court were to find these provisions of our amended and restated articles of association inapplicable to, or unenforceable in respect of, one or more of the specified types of actions or proceedings, we may incur additional costs associated with resolving such matters in other jurisdictions, which could adversely affect our business and financial condition. Any person or entity purchasing or otherwise acquiring any interest in our share capital shall be deemed to have notice of and to have consented to the choice of forum provisions of our amended and restated articles of association described above. This provision would not apply to shall not apply to causes of action arising under the Exchange Act.

Risks Related to the Arrangement

Consummation of the Arrangement is subject to court approval. If the Arrangement is not approved, our business and operations could be materially harmed.

Pursuant to Section 350 of the Israeli Companies Law, even if the proposed arrangement whereby L.I.A Pure Capital Ltd. (“Pure Capital”) will acquire the entirety of issued and outstanding share capital (the “Arrangement”) is approved by our shareholders, it is still subject to the court’s approval. Neither us nor Pure Capital can guarantee whether the Tel Aviv District Court (Economic Division) (the “Court”) will approve the Arrangement, or its conditions will be satisfied. Moreover, even if our shareholders approve the Arrangement, the Court retains broad discretion to reject it if it believes the terms are unfair to minority shareholders or if statutory requirements are not satisfied. Objecting shareholders have the right to submit objections to the court, which could lead to delays or prevent the Arrangement from being consummated.

If the Arrangement is not consummated, we may be subject to the following material risks, among others:

If some or all of these risks were to occur, we may not be able to continue our present level of operations, we may need to scale back our business and may not be able to take advantage of future opportunities or effectively respond to competitive pressures, any of which could have a material adverse effect on our business and results of our operations.

Xylo’s directors and executive officers have personal interests in the Arrangement.

Our directors and executive officers have personal interests in the Arrangement that are different from, or in addition to, those of our shareholders generally. These interests include the following:

In the event that the Second Meeting is adjourned or postponed for any reason, it may be more difficult to secure shareholder approval for the Arrangement.

At the second special general meeting to be held on May 27, 2025 (the “Second Meeting”), which our shareholders (other than Pure Capital or its controlling shareholder and persons having an ongoing business relationship with Pure Capital or its controlling shareholder) will be asked to approve the Arrangement. Under the Israeli Companies Law as currently in effect, the Arrangement cannot be consummated unless a majority of our shareholders present (in person or by proxy) and voting (not including abstentions) who hold together at least 75% of the Ordinary Shares represented at the Second Meeting approves the Arrangement. Failure to obtain such 75% approval will prevent the consummation of the Arrangement. For more information on the Arrangement see section “4.B – Business Overview”.

General Risk Factors

We do not intend to pay any cash dividends on our Ordinary Shares in the foreseeable future and, therefore, any return on your investment in our securities must come from increases in the value and trading price of our securities.

We paid cash dividends in an amount of $1.6 million on December 28, 2022. We do not anticipate that we will pay any cash dividends on our securities in the foreseeable future, therefore, any return on your investment in our securities must come from increases in the value and trading price of our securities.

We intend to retain our earnings to finance the development and expenses of our business. Any future determination relating to our dividend policy will be at the discretion of our board of directors and will depend on a number of factors, including future earnings, our financial condition, operating results, contractual restrictions, capital requirements, business prospects, applicable Israeli law and other factors our board of directors may deem relevant.

Raising additional capital by issuing securities may cause dilution to existing shareholders.

We may seek additional capital through a combination of private and public equity offerings, debt financings and collaborations and strategic and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest will be diluted, and the terms of any such offerings may include liquidation or other preferences that may adversely affect the then existing shareholders rights. Debt financing, if available, would result in increased fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions such as incurring debt or making capital expenditures. If we raise additional funds through collaboration, strategic alliance or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams or product candidates, or grant licenses on terms that are not favorable to us.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, our share price and trading volume could decline.

The trading market for our securities will depend on the research and reports that securities or industry analysts publish about us or our business. We do not have any control over these analysts. There can be no assurance that analysts will cover us or provide favorable coverage. If one or more analysts downgrade our shares or change their opinion of our securities, the price of our securities would likely decline. In addition, if one or more analysts cease coverage of our Company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.

ITEM 4. INFORMATION ON THE COMPANY

A. History and Development of the Company

We were incorporated in the State of Israel on December 9, 1999, as a private company pursuant to the Israeli Companies Ordinance (New Version), 1983. In February 2006, we completed our initial public offering in Israel, and our Ordinary Shares traded on the TASE until January 25, 2021. In May 2015, we listed the ADSs on Nasdaq and since August 2015 the ADSs have been traded on Nasdaq under the symbol “MDGS”. Following a 20:1 reverse share split of our ordinary shares effected on July 7, 2022, together with a 1:15 ratio change of the ADSs on November 14, 2022 (the “Ratio Change”), each ADS represents fifteen (15) Ordinary Shares. On March 6, 2024, our shareholders approved an amendment to our Articles of Association for our board of directors to implement a name change of our company to Xylo Technologies Ltd., or any other name as will be approved by the Registrar of Companies, which our board of directors believes may better reflect future business expansion. The name change became effective on April 1, 2024, and symbol change became effective on April 18, 2024. On August 5, 2024, we executed a ratio change in our American Depositary Receipts (ADRs) resulting in a reverse split of our ADR program on the basis of one (1) new ADS for every 2.666666 old ADSs held. As a result, the number of Ordinary Shares represented by each ADS was changed from fifteen (15) Ordinary Shares to forty (40) Ordinary Shares.

On November 15, 2024, we entered into a Warrants Purchase Agreement with an institutional investor, whereby the investor purchased $1,000,000 worth of pre-funded warrants.

Principal Capital Expenditures

Our Group had capital expenditures of approximately $12,000, $51,000 and $74,000 in the years ended on December 31, 2024, 2023 and 2022, respectively. Our capital expenditures are primarily for network infrastructure, computer hardware, purchase of machinery and software and leasehold improvements of our facilities. We have financed our capital expenditures from our available cash. We expect to maintain our capital expenditures in 2025 with a consistent volume.

There are no significant capital expenditures or divestitures currently in progress by the Company.

B. Business Overview

Overview

The activities carried out by us and our subsidiaries are focused on internet and other online-related technologies, real estate and the electric vehicle (EV) sector.

Our internet-related activities include ad-tech operations through our stake in Gix Internet in which as of December 31, 2024, we held 45.74% of its outstanding share capital. Our internet related activities also include our investment in Eventer, an online - event management and ticketing platform in which we held, as of December 31, 2024, 58.44% of its outstanding share capital.

Our medical related activities include: innovative surgical devices with direct visualization capabilities for the treatment of Gastroesophageal Reflux Disease using Ultrasonic Surgical Endostapler, or MUSE.  

Our activity in the EV sector includes our ownership of Charging Robotics Inc. (“Charging Robotics”) and its 19.99% subsidiary Revoltz, developing both wireless vehicle battery charging technology and three modular EVs. On April 7, 2023, Charging Robotics Ltd. consummated a share exchange transaction, whereby it became a wholly owned subsidiary of Charging Robotics Inc. (previously known as “Fuel Doctor”). As of December 31, 2024 we held 63.75% of the outstanding share capital of Fuel Doctor, with an option to increase our holdings to 73.35% of the outstanding share capital based on predetermined milestones.

Our activity in the drone products and safety field is conducted through our stake in Parazero Technologies Ltd. (“Parazero”) in which we held, as of December 31, 2024, 5.7% of its outstanding share capital.

Our interests in real estate include our ownership of 60% of Zig Miami 54 LLC’s issued and outstanding share capital

On December 24, 2024, L.I.A Pure Capital Ltd. (“Pure Capital”), through its legal representatives, submitted a request to the district court of Tel Aviv to call a general meeting of our shareholders, pursuant to Section 350 of the Israeli Companies Law (the “Request”), to approve a proposal whereby Pure Capital would acquire the entirety of our issued and outstanding share capital (the “Arrangement”). On February 19, 2025, after negotiations between us and Pure Capital, Pure Capital proposed setting the purchase price pursuant to the Request at $5.25 per ADS, as opposed to the original purchase price of $3.70 per ADS, to which we agreed. On March 20, 2025, the court ordered us to call a shareholders meeting (or meetings), in order to discuss and approve the Arrangement, and on April 21, 2025, we published proxy materials in preparation for such shareholders meetings.

On February 13, 2025, we, together with Pure Capital’s agreement, requested an additional extension to further analyze the Request until March 6, 2025, which the court granted. On February 16, 2025, in order to facilitate further discussion regarding the Request, we, together with Pure Capital signed a mutual non-disclosure agreement.

On February 19, 2025, following deliberations between our and Pure Capital’s legal representatives, we noted that according to the Initial Economic Analysis conducted on our behalf, the ADS price was close to $6.5 per ADS. Pure Capital stated that given the above valuation and the trading price of the ADSs on Nasdaq was then $4.48 per ADS (with an average price-per-ADS over the past six months of $3.73 per ADS), it proposed setting the purchase price pursuant to the Request on $5.25 per ADS.

On February 27, 2025, our board of directors convened to discuss the initial Economic Analysis prepared by IFS Consulting and Investments (2009) Ltd. (“IFS”). Following the discussions, our board of directors requested that IFS conduct further analysis on the possible alternatives to Pure Capital’s proposition.

On March 3, 2025, our legal counsel informed Pure Capital’s legal counsel that (i) unvested restricted share units granted to our officers, directors and employees pursuant to the our share incentive plan would undergo acceleration assuming the Arrangement was finalized (pursuant to the grant letters signed by us and the grantees of such restricted share units); and (ii) we intended to acquire “run-off” insurance, as is customary in change-of-control transactions.

On March 3, 2025, our board of directors met to discuss IFS’ further analysis. Following a discussion of our alternatives, our board of directors resolved after thoroughly considering relevant factors, including several alternatives, that we should not object to the Arrangement, which is fair.

On March 4, 2025, Pure Capital submitted an amendment to the Request (the “Amended Request”). The Amended Request increased Pure Capital’s proposal for the acquisition of the remaining of our issued and outstanding share capital to an updated purchase price of $0.13125 per Ordinary Share of Xylo (or $5.25 per ADS) as opposed to the previous proposed purchase price of $0.0925 per Ordinary Share of Xylo (or $3.70 per ADS). The Amended Request further clarified, subject to shareholder approval of the Arrangement, that (i) Pure Capital commits to purchase RSUs granted to our employees, officers and directors that are subject to acceleration upon a change of control; and (ii) we will purchase customary run-off insurance as of the date the Arrangement becomes effective.

On March 12, 2025, we filed a response to the Request (the “Response”) with the court, stating that following our engagement with an independent valuation expert, and after due consideration of the Amended Request, our board of directors does not oppose the convention of a general meeting and intends to present its position that the proposed Arrangement terms are fair. Furthermore, due to the fact that certain confidential information regarding the Arrangement and the Amended Request (the “Classified Information”) was attached to the Response, we requested permission from the court to submit the Classified Information in a closed session and under a temporary confidentiality order, accessible only to the court, Pure Capital, and any other respondent as determined by the court (subject to confidentiality assurances). This measure was sought to prevent selective information disclosure until the filing date of the notice and proxy statement for the general meeting of our shareholders, at which point the information would be made public. On March 13, 2025, the court approved the Amended Request as submitted.

On March 20, 2025, the court ordered us to call a shareholders meeting (or meetings), in order to discuss and approve the Arrangement.

On March 27, 2025, we, in agreement with Pure Capital, submitted a request to the court to order the convening of two shareholders meetings, in accordance with Section 350 of the Israeli Companies Law, as follows: the first meeting shall include all of our shareholders and ADS holders; the second meeting shall be considered a “pure” meeting, including our shareholders and ADS holders, except for (i) Pure Capital; (ii) Pure Capital’s controlling shareholder; and (iii) holders of Ordinary Shares or ADSs who have an ongoing business relationship with Pure Capital or its controlling shareholder. The court has approved the joint request as submitted.

On April 21, 2025, we published proxy materials in preparation for the upcoming shareholders meetings. These materials included detailed information about the proposed Arrangement, the Amended Request, and the rationale behind our board of directors’ decision not to oppose the Arrangement. The proxy materials also provided instructions for shareholders and ADS holders on how to participate in the meetings, vote on the proposed Arrangement, and submit any questions or comments they may have.

Internet and other online related Activity Overview

Gix Internet - Ad-Tech and Online Advertising

Gix Internet is the parent of Viewbix Inc. a publicly traded company (OTC: VBIX) (“Viewbix”) which is the majority shareholder of Gix Media Ltd. following a corporate reorganization that was consummated on September 19, 2022 (the “Reorganization Transaction”). Gix Media Ltd., is the majority holder of Cortex Media Group Ltd., a digital advertising platform that develops and markets a variety of technological platforms that automate, optimize and monetize digital online campaigns.

We consolidated Gix Internet’s financial statements as of February 28, 2022.

As of December 31, 2024, we held 45.74% of Gix Internet’s outstanding share capital.

Eventer Technologies Ltd. - Online Event Management

Eventer is a technology company engaged in the development of unique tools for automatic creation, management, promotion, and billing of events and ticketing sales. Eventer seeks to tap the growing demand for enterprise and private online communication. As such, Eventer’s systems offer and enable advanced, user-friendly solutions for online events such as online concerts, enterprise events and online conferences, in addition to management and ticket sales for events carried out in offline venues. In addition, Eventer’s platform provides individuals with the ability to create and sell tickets to custom small-scale private or public events. Eventer’s revenues are derived from commissions from sales of tickets for online and offline events planned and managed through its platform.

On December 6, 2023, we signed a share purchase agreement with Keshet Holdings LP to purchase its entire stake in Eventer for consideration of USD 250K which was paid in our shares. The closing of the transaction occurred on August 28, 2024. Following this transaction, our holdings in Eventer increased to 58.44% of Eventer’s issued and outstanding common stock. As of December 31, 2024, we held 58.44% of Eventer’s outstanding share capital.

Medical Activity Overview 

Our MUSE‎™‎ System  

We have been engaged in the development, production and marketing of innovative surgical devices with direct visualization capabilities for the treatment of Gastroesophageal Reflux Disease, a common ailment, which is predominantly treated by medical therapy (e.g. proton pump inhibitors) or in chronic cases, conventional open or laparoscopic surgery. Our product, the MUSE™ system for transoral fundoplication is a single use innovative device for the treatment of GERD disorder. The MUSE™ system is an endoscopic, incisionless solution that is used to perform a procedure as an alternative to a surgical fundoplication.

On June 3, 2019, we entered into the Golden Grand Agreement for the know-how licensing and sale of good relating to the MUSE™ system in China, Hong Kong, Taiwan and Macao. Four out of five predetermined milestones in the Golden Grand Agreement were completed during 2020 and 2021, and consequently 80% of the agreed payments were already transferred to us. The parties are having difficulty completing the last milestone and are currently discussing how to resolve the issue.

Electric Vehicle Activity Overview

Charging Robotics Inc.

We invested in Charging Robotics Ltd., which was previously our wholly owned subsidiary. Charging Robotics is developing an autonomous wireless charging system for electric vehicles. On March 28, 2023, the Company entered into a securities exchange agreement (the “Exchange Agreement”) with Fuel Doctor Holdings, Inc. (“Fuel Doctor”). Pursuant to the Exchange Agreement, at the closing, which occurred on April 7, 2023, Fuel Doctor acquired 100% of the issued and outstanding share capital of Charging Robotics, making Charging Robotics a wholly-owned subsidiary of Fuel Doctor, in exchange for the issuance of shares of the Fuel Doctor’s common stock. As a result, Charging Robotics became a subsidiary of Fuel Doctor and as of December 31, 2024, we held 63.75% of Fuel Doctor’s outstanding share capital, with an option to increase our holdings to up to 73.35% of its outstanding share capital based on pre-set milestones. Fuel Doctor later changed its name to Charging Robotics, Inc.

Revoltz Ltd.

On February 19, 2021, Charging Robotics entered into a joint venture agreement with Amir Zaid, Weijian Zhou and Charging Robotics, for the purpose of developing and commercializing three modular electric vehicle (EV) micro mobility vehicles for urban individual use and “last mile” cargo delivery, through a new subsidiary, Revoltz Ltd. (“Revoltz”) Pursuant to the terms of such agreement, Charging Robotics was issued 19.99% of the issued and outstanding share capital of Revoltz.

Other Activities 

Parazero Ltd.

In 2022 we made multiple investments in Parazero, a company specializing in drone safety systems, through various transactions. As of December 31, 2024, we held 5.7% of Parazero’s issued and outstanding share capital. Parazero develops and provides drone safety solutions designed to protect people and payloads, providing a solution to reduce the risk of a drone’s malfunction in an urban environment.

Zig Miami 54 LLC

On September 13, 2023, we signed an operating agreement with Zig Investment Group LLC (“Zig Investment Group”), a Florida limited liability company, pursuant to which they formed a company, under the name Zig Miami 54 LLC (“Zig Miami 54”), a Florida limited liability company. The purpose of Zig Miami 54 is to acquire, improve, renovate, develop, manage, sell and otherwise deal with a commercial property located in Miami, Florida. The rights of Zig Miami 54 are exercised by Zig Investment Group, and the business and affairs of Zig Miami 54 are managed under the direction of Zig Investment Group (the “Manager”). As of December 31, 2024, we held 60% of Zig Miami 54’s issued and outstanding share capital.

Our Strategy

Our primary goal is to generate revenues through the activities of our consolidated subsidiaries, each in their respective market and field. In addition, we seek to generate revenues by pursuing potential opportunities to sell our MUSE^™ technology, or alternatively grant a license or licenses for the use of the MUSE^™ technology. Our strategy includes the following key elements:

Commercialization of the products and services provided by our consolidated subsidiaries as well as achieving organic growth and profitability. Our board of directors has determined to support the growth, development and expansion of our consolidated subsidiaries businesses. 

Sell or License MUSE‎^™ technology. Our board of directors has determined to examine potential opportunities to sell our MUSE^™ technology, or alternatively grant a license or licenses for the use of the MUSE^™ technology.

General Pursuit of Opportunities. Our board of directors and management are constantly seeking and pursuing opportunities through which to leverage our assets and capabilities.

A substantial material portion of our revenues in 2024 and 2023 derived from Gix Internet, Jeffs’ Brands and Eventer. In 2022 revenues derived from Jeffs’ Brands, Eventer and from the licensing and sale agreement. The following data reflects our total revenue arising from the following services:

The following data reflects our total revenue broken down by geographic region:

Seasonality of Business

During the last few years, we have not seen any seasonality in our sales. However, our subsidiaries experience certain effects of seasonality in their operations.

In connection with our subsidiary, Eventer, there is an increase in events scheduled during the holiday season in Israel, which typically occurs in September and October, and which corresponds to an increase in ticket sales.

In connection with our subsidiary, Gix Internet, the digital advertising industry is not affected by much seasonality. However, there is a seasonal trend such that the fourth quarter is characterized by higher activity compared to average, while the first quarter is characterized in lower activity than average. This seasonality results from, among other things, changes in large advertising budgets, usually towards the end of each quarter and effective towards the end of each year. In addition, the last quarter of the year includes many leading events and an increase in advertising budgets and the volume of traffic on the network.

Marketing and Distribution

Sale or License of MUSE^™ System

As part of our board of directors’ decision to examine potential opportunities to sell our MUSE™ technology, or alternatively grant a license or licenses for the use of the MUSE™ technology, our board of directors has reexamined the efforts and resources previously invested by us in our MUSE™ technology distribution agreements as well as the revenues obtained through such agreements in order to assess their financial viability. As a result of this analysis, our board of directors resolved to terminate our distribution agreements in order to redirect our resources to securing licensing agreements, which may in turn generate significant income in the short term, reduce operating expenses and lower our Company’s burn rate. On May 5, 2021, the Company engaged with a contractor into service agreement, which the contractor seek, develop, evaluate, filter and recommend suitable business opportunities for the Company in the fields of the Muse products and technology, and also Communicate and meet potential customers and introduce the Company and the Company’s products thereto, and, to the extent required by the Company from time to time, assistance and support with respect to negotiations with potential customers.

Intellectual Property  

Our commercial success depends, in part, on obtaining and maintaining patent and other intellectual property protection, in the United States and internationally, for the technologies used in our products. We cannot be sure that any of our patents will be commercially useful in protecting our technology. Our commercial success also depends in part on our non-infringement of the patents or proprietary rights of third parties. The patent positions of medical device companies and companies in the automotive space, can be highly uncertain and involve complex and evolving legal and factual questions. For additional information see “Item 3. Key information-D. Risk Factors-Risks Related to Our Intellectual Property.”

We and Charging Robotics (hereinafter in this paragraph: “We” or “Us”) own 13 U.S. patents and have two additional pending patent applications in the U.S. In addition, we own 5 patents that were granted in other countries, including European patents, which are not valid on their own unless validated in specific European countries as indeed were validated or requested the protection of the Unified Patent System and 2 pending patent applications in such other countries. We also own two pending Paris Convention Treaty (PCT) patent applications.

We have nine (9) registered trademarks, tradenames and service marks.

We cannot be sure that any patents will be granted with respect to any the pending patent applications or with respect to any patent applications filed by us in the future. There is also a significant risk that any issued patents will have substantially narrower claims than those that are currently sought.

Competition

Competition related to our subsidiary Eventer

Eventer competes with traditional ticketing offices and digital platforms offering event management and ticketing solutions. In Israel, major competitors include Eventbuzz, TickChak Ltd., Kupat, Leaan Tickets Ltd., CTS Eventim New Co, and Kupot Tel-Aviv Tickets and Shows Ltd. Additionally, Eventer faces competition from platforms like BUYME and Groupon for events and activities. Maintaining competitive advantages through innovation and strategic marketing is essential for sustaining growth and market share.

Competition related to our subsidiary Gix Internet

There are companies that develop various types of software and digital content that partially enable some of the operations performed by Gix Internet. As of the date of the report, Gix Internet is unable to assess its size and position compared to its other competitors and its size in the digital advertising market. The main competitors in the field are Perion, FireArc, Spigot, IAC AOL, System One, Tonic, Aporia, Kueez, Spike Media, Front Story and Predicto. Additionally, there are hundreds of smaller competitors.

Government Regulation

The healthcare industry, and, therefore, our business, is subject to extensive federal, state, local and foreign regulation. Some of the pertinent laws have not been definitively interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations. In addition, these laws and their interpretations are subject to change.

Both federal and state governmental agencies continue to subject the healthcare industry to intense regulatory scrutiny, including heightened civil and criminal enforcement efforts. As indicated by work plans and reports issued by these agencies, the federal government will continue to scrutinize, among other things, the billing practices of healthcare providers and the marketing of healthcare products.

We believe that we have structured our business operations and relationships with our customers to comply with all applicable legal requirements. However, it is possible that governmental entities or other third parties could interpret these laws differently and assert otherwise. In addition, because there is a risk that our products could be used off label, we believe we are subject to increased risk of prosecution under these laws and by these entities even if we believe we are acting appropriately. We discuss below the statutes and regulations that are most relevant to our business and most frequently cited in enforcement actions.

C. Organizational Structure

As of December 31, 2024, we had three significant subsidiaries, (i) Eventer Technologies, a company incorporated under the laws of the State of Israel in which held, as of December 31, 2024, 58.44% of its outstanding share capital, (ii) Charging Robotics Inc., a Delaware corporation, in which we held, as of December 31, 2024, 63.75% of its outstanding share capital, (iii) Gix Internet a company incorporated under the laws of the State of Israel in which we held, as of December 31, 2024, 45.74% of its outstanding share capital.

D. Property, Plant and Equipment

Our offices are located at 10 HaNechoshet Street, Tel Aviv, Israel, 6971072, where we occupy approximately 102 square meters. We believe our facilities sufficiently meet our current needs.

ITEM 4A. UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the related notes to those statements included elsewhere in this annual report on Form 20-F. In addition to historical consolidated financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. Our actual results and timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Item 3. Key Information-D. Risk Factors” and elsewhere in this annual report.

Certain information called for by this Item 5, including a discussion of the year ended December 31, 2023, compared to the year ended December 31, 2022, has been reported previously in our annual report on April 22, 2024, under Item 5 “Operating and Financial Review and Prospects”.

For the purpose of this Item 5., references to “Xylo Technologies”, the “Company”, “us”, “we” and “our” refer to Xylo Technologies and its consolidated subsidiaries.

Overview  

Our legal and commercial name is Xylo Technologies Ltd. We were incorporated in the State of Israel on December 9, 1999, as a private company pursuant to the Israeli Companies Ordinance (New Version), 1983. In February 2006, we completed our initial public offering in Israel, and until January 25, 2021, our Ordinary Shares were traded on the TASE, under the symbol “MDGS”. On January 25, 2021, we delisted our Ordinary Shares from trading on TASE. In May 2015, we listed our ADSs on Nasdaq, and from August 2015 until April 17, 2024, our ADSs were traded on the Nasdaq under the symbol “MDGS”. Following a 1:15 ratio change of the ADSs on November 14, 2022 (the “Ratio Change”), each ADS represents fifteen (15) Ordinary Shares. In connection with our name change our ADSs began trading on Nasdaq under the symbol “XYLO” as of April 18, 2024. On August 5, 2024, we executed a ratio change in our American Depositary Receipts (ADRs) resulting in a reverse split of our ADR program on the basis of one (1) new ADS for every 2.666666 old ADSs held. As a result, the number of Ordinary Shares represented by each ADS was changed from fifteen (15) Ordinary Shares to forty (40) Ordinary Shares.

On October 14, 2020, we signed a share purchase agreement and a revolving loan agreement with Eventer. The Eventer transaction closed on October 26, 2020. Pursuant to the share purchase agreement, we invested $750,000 and were issued 325,270 ordinary shares of Eventer, representing 58.7% of Eventer’s then issued and outstanding share capital. On April 8, 2021, Eventer consummated an additional share purchase agreement with certain investors in connection with the sale and issuance its ordinary shares for an aggregate amount of $2.25 million (the “Purchase Agreement”). According to the Purchase Agreement, if during the twelve months following the closing of the Purchase Agreement, or March 25, 2022, Eventer shall not consummate an IPO, then the price per share shall be adjusted by issuance of additional shares. By March 25, 2022, Eventer had not consummated an IPO, therefore, on May 25, 2022, Eventer issued additional shares to the Company and additional investors. As a result of such share issuance, our holding in Eventer decreased to 46.21% of Eventer’s outstanding share capital. On December 6, 2023, we signed a share purchase agreement with Keshet Holdings LP to purchase its entire stake in Eventer for consideration of USD 250K which will be paid as our ordinary shares. The closing of the transaction occurred on August 28, 2024. Following this transaction, our holdings in Eventer increased to 58.44% of Eventer’s issued and outstanding common stock. As of December 31, 2024, we held 58.44% of Eventer’s outstanding share capital.

As of December 31, 2021, we held 34.58% of Gix Internet’s outstanding share capital. On February 14, 2022, we purchased 500,000 additional shares, increasing our holdings to 35.78% of Gix Internet’s outstanding share capital. On February 28, 2022, we purchased additional shares following which our holdings in Gix Internet increased to 38.03% of its outstanding share capital. As a result of this increase, and the fulfillment of additional conditions we consolidated Gix Internet’s financial statements as of February 28, 2023. On June 19, 2022, we purchased an additional 3,171,160 shares of Gix Internet. On December 11, 2023, we signed an agreement for an additional investment of NIS 1.3 million (approximately USD 350 thousand). As of December 31, 2024, we held 45.74% of Gix Internet’s outstanding share capital.

A. Operating results:

The following table sets forth a summary of our operating results:

Year ended December 31, 2024, compared to year ended December 31, 2023

Revenues

Revenues for the year ended December 31, 2024, were $29,858 thousand representing a decrease of $61,866 thousand or 67% compared to total revenues of $91,724 thousand for the year ended December 31, 2023.

The decrease in revenues was primarily due to: (1) the decrease in Gix Internet’s revenues from internet services, mainly as a result of technological changes and changes in content policy in the advertising platforms.

(2) deconsolidation of Jeffs’ Brands as of January 28, 2024.

The tables below set forth our revenues, by region and by product for the periods presented:

U.S. dollars; in thousand

U.S. dollars; in thousand

Cost of revenues 

Cost of revenues for the year ended December 31, 2024, were $23,175 thousand representing a decrease of $56,708 thousand, or 71%, compared to cost of revenues and of $79,883 thousand for the year ended December 31, 2023. The decrease is primarily due to the decrease in cost of revenues of Gix Internet as a result of the decrease in revenues and the deconsolidation of Jeffs’ Brands as of January 28, 2024.

Gross Profit 

Gross profit for the year ended December 31, 2024, was $6,683 thousand, representing a decrease of $5,158 thousand compared to gross profit of $11,841 thousand for the year ended December 31, 2023. The decrease in gross profit was primarily due to decrease of sales related to Gix Internet and the deconsolidation of Jeffs’ Brands as of January 28, 2024.

Research and Development Expenses 

Research and development expenses for the year ended December 31, 2024, were $4,917 thousand, representing a decrease of $971 thousand, or 16.5%, compared to $5,888 thousand for the year ended December 31, 2023. The decrease was primarily due to the reduction of expenses primarily in manpower and technological services in Gix Internet as part of a reduction costs program in Gix following the revenues decrease.

Sales and Marketing Expenses 

Sales and marketing expenses for the year ended December 31, 2024, were $3,038 thousand, representing a decrease of 1,622 thousand, or 35%, compared to $4,660 thousand for the year ended December 31, 2023. The decrease was primarily due to the reduction of expenses in the Search and Content Platform, primarily in manpower and salaries in Gix as part of cost reduction program following revenues decrease. It was additionally affected by the deconsolidation of Jeffs’ Brands starting January 28, 2024.

General and Administrative Expenses 

General and Administrative expenses for the year ended December 31, 2024, were $7,222 thousand, representing a decrease of $4,886 thousand, or 40%, compared to $12,108 thousand, for the year ended December 31, 2023.

The majority of the decrease was due to: (1) The deconsolidation of Jeffs’ Brands starting January 28, 2024; (2) decrease in the company's professional services expenses mainly due to decrease in costs related to the sale of odysight.ai in 2023 and decrease in granted options benefit expenses.

Net change in fair value of financial assets at fair value through profit or loss 

During 2024 we recognized a gain of $3,623 thousand from net change in the fair value of financial assets derived mainly from income of $2,339 from Parazero, $806 thousand from Polyrizon and $781 thousand from Metagramm, offsets mainly by the expenses of $1,311 from the change in the fair value of the shares of Jeffs’ Brands.

During 2023 we recognized a loss of $3,830 thousand from net change in the fair value of financial assets derived mainly due to expenses of $1,806 from Parazero, $703 thousand from Clearmind Medicine Inc. and $793 thousand from Automax Ltd.

Equity losses  

The investments in each of Revoltz, SciSparc (as part of Jeffs’ Brands until January 28, 2024), Solterra Energy (formerly known as A.I. Conversation Systems) until November 28,2024 , Polyrizon until July 2,2024 and Zig Miami 54 are accounted for using the equity method. The share net loss accounted for using the equity method for the year ended December 31, 2024, amounted to $367 thousand representing a decrease of $3,740 thousand, or 91% compared to $4,107 thousand, for the year ended December 31, 2023.

The majority of the decrease was due to: (1) the decrease in equity losses in SciSparc due to the deconsolidation of Jeffs’ Brands starting January 28, 2024; (2) transition of method from equity to fair value in Solterra Energy and Polyrizon due to diluted cause by issue and mergers (3) an impairment loss of USD 1,176 thousand following the impairment of the entire amount of the investment in Laminera in 2023.

Net gain from derecognition of investments accounted for using the equity method 

During 2024 we recorded $140 thousand net gain from derecognition of investments accounted for using the equity method mainly due to a gain of $138 thousand from transition of Solterra Energy (formerly known as A.I. Conversation Systems) investment to a fair value method.

During 2023 we recorded $2,227 thousand net loss from derecognition of investments accounted for using the equity method upon loss of significant influence mainly due to a gain of $714 thousand from transition of Parazero investment to a fair value method and a loss of $2,941 thousand from Odysight.ai as a result of transition of the investment to a fair value method prior to its sale.

Impairment of goodwill and other intangible assets

During 2024 we recognized an impairment loss of goodwill and other intangible assets of $2,919 thousand due to an impairment loss for the online advertising & internet traffic routing reporting unit’s goodwill.

During 2023 we recognized an impairment loss of goodwill and other intangible assets of $1,812 thousand mainly due to an impairment loss of $508 thousand for the online advertising & internet traffic routing reporting unit’s goodwill and of $1,304 thousand related to Eventer’s software license.

Operating loss 

We incurred an operating loss of $8,017 thousand for the year ended December 31, 2024, representing a decrease of $15,304 thousand, or 66% compared to operating loss of $23,321 thousand for the year ended December 31, 2023. The decrease was primarily due to a gain from changes in fair value of financial assets at fair value through profit or loss and decrease in Operating loss due to the deconsolidation of Jeffs’ Brands starting January 28, 2024.

Change in Fair Value of Warrants Issued to Investors 

There is no gain or loss from the change in fair value of the company’s warrants issued to investors for the year ended December 31, 2024 due to the expiration of the warrants on July 19, 2023.

During the year ended December 31, 2023 the Company recognized gain from change in the fair value of warrants issued to third party investors of $396 thousand for the year ended December 31, 2023.

Loss in connection with issuance of warrant by subsidiaries

The Company incurred a loss in connection with the issuance of warrants by subsidiaries of USD 1,833 thousand for the year ended December 31, 2024. The loss is due to the cost of warrants granted in Viewbix Inc. as part of certain loan agreements to which it is party.

Loss (Gain) from changes in fair value of warrants issued to third party investors by subsidiaries 

Loss from change in the fair value of warrants issued to third party investors by a consolidated subsidiary for the year ended December 31, 2024, was USD 53 thousand compared to a gain of USD 2,322 thousand for the year ended December 31, 2023.

Warrants issued to investors are classified as either liabilities or as part of the shareholders’ equity based on the accounting guidance established in connection with the rights attached to the warrants. The warrants that were classified as liabilities due to a cashless exercise mechanism are subject to adjustment to fair value each statement of financial position cut-off date. This adjustment is presented separately within the consolidated statement of loss and other comprehensive loss.

Financial expenses net 

Finance expenses, net for the year ended December 31, 2024, were $1,051 thousand, representing a decrease of $481 thousand, compared to finance expenses of $1,532 thousand for the year ended December 31, 2023, primarily due to the deconsolidation of Jeffs’ Brands as of January 28, 2024.

Loss for the year

We incurred net loss of $12,005 thousand for the year ended December 31, 2024, representing a decrease of $9,727 thousand, or 45%, compared to loss of $21,732 thousand for the year ended December 31, 2023. This decrease was primarily due to: (i) a decrease in operating expenses of Gix Internet and Jeffs’ Brands due to the deconsolidation of Jeffs’ Brands as of January 28, 2024; (ii) a gain from changes in fair value of financial assets at fair value through profit or loss.

Year ended December 31, 2023, compared to year ended December 31, 2022

The discussion and analysis regarding the results of operations from the fiscal years ended December 31, 2023, and December 31, 2022, is contained in our annual report on Form 20-F, filed with the SEC, on April 22, 2024.

Effective Corporate Tax Rate

Our effective consolidated tax rate for the year ended December 31, 2024 was 2%, and for the year ended December 31, 2023 was almost zero percent (0%), primarily due to the fact that the Company, Gix Internet, Jeffs’ Brands and Eventer did not record a deferred tax asset in connection with the losses incurred in Israel, since it is not probable that we will be able to utilize such losses in the foreseeable future against taxable income.

Impact of Inflation, Devaluation and Fluctuation in Currencies on Results of Operations, Liabilities and Assets

We generate part of our revenues in different currencies than our functional currency (U.S. dollars), such as NIS and Euro. As a result, some of our financial assets are denominated in these currencies, and fluctuations in these currencies could adversely affect our financial results. A considerable amount of our expenses are generated in U.S. dollars, but a significant portion of our expenses such as salaries are generated in other currencies such as NIS. Accordingly, we incur and expect to continue incurring additional expenses in non-U.S. dollar currencies, such as described above. Due to the mentioned, our results could be adversely affected as a result of a strengthening or weakening of the U.S. Dollar compared to these other currencies.

The inflation in Israel during the last several years was relatively immaterial and, therefore, had immaterial effect on our results of operations.

Effective January 1, 2016, we changed our functional currency to the U.S. dollar from NIS. This change was based on management’s assessment that the U.S. dollar is the primary currency of the economic environment in which we operate. Accordingly, the functional and reporting currency of our consolidated financial statements is the U.S. dollar.

B. Liquidity and Capital Resources

Liquidity

During the year ended December 31, 2024, we incurred a total comprehensive loss of approximately $ 12.1 million and a negative cash flow used in operating activities of approximately $ 1.8 million. As of December 31, 2024, we incurred accumulated deficit of approximately $ 107.6 million.

We will need to seek additional sources of funds, including selling additional equity, debt or other securities or entering into a credit facility, take costs reduction steps or modify our current business plan to achieve profitability. If we raise additional funds through the issuance of debt securities, these securities may have rights senior to those of our Ordinary Shares and could contain covenants that could restrict our operations and ability to issue dividends. We may also require additional capital beyond our currently forecasted amounts. Any required additional capital, whether forecasted or not, may not be available on reasonable terms, or at all. If we are unable to obtain additional financing, we may be required to reduce the scope of, delay or eliminate some or all of our planned research, development and commercialization activities, which could materially harm our business and results of operations.

Because of the numerous risks and uncertainties associated with the development of our products and the current economic situation, we are unable to estimate the exact amounts of capital outlays and operating expenditures necessary to complete the development of our products and successfully deliver commercial products to the market. Our future capital requirements will depend on many factors, including but not limited to the following:

Cash Flows

Net cash used in operating activities for the year ended December 31, 2024, was $1,824 thousand, compared to $6,247 thousand for the year ended December 31, 2023. For the year ended December 31, 2024, the Company had net cash from investing activities of $2,384 thousand compared to net cash used in investing activities of $1,438 thousand for the year ended December 31, 2023. For the year ended December 31, 2024, the Company had net cash used in financing activities of $998 thousand compared to $3,149 thousand of net cash flow from financing activity for the year ended December 31, 2023.

The change in our liquidity for the year ended December 31, 2024, resulted from several factors, including but not limited to:

C. Research and Development, Patents and Licenses, etc.

Our research and development efforts are focused on continuous improvement of our products. We conduct all of our research activities in Israel.

As of December 31, 2024, our research and development team consisted of 6 employees and subcontractors for the development of our products in Gix Internet, and Eventer as needed. We have assembled an experienced team with recognized expertise in software, control algorithms and systems integration.

The table below set forth our research and development expenses for the periods presented:

From time to time, we file applications for patent registration in certain countries, some in which we are active and some which we consider as potential markets in order to protect our developed intellectual property.

D. Trend Information

Other than as disclosed elsewhere in this Annual Report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2024 to December 31, 2024 that are reasonably likely to have a material adverse effect on our revenue, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial condition.

E. Critical Accounting Estimates

Our significant accounting policies and their effect on our financial condition and results of operations are more fully described in our audited consolidated financial statements included elsewhere in this Annual Report. We have prepared our financial statements in conformity with International Financial Reporting Standards or IFRS, which requires management to make estimates and assumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. These estimates are prepared using our best judgment, after considering past and current events and various other assumptions. While management believes the factors evaluated provide a meaningful basis for establishing and applying sound accounting policies, management cannot guarantee that the estimates will always be consistent with actual results. In addition, certain information relied upon by us in preparing such estimates includes internally generated financial and operating information, external market information, when available, and when necessary, information obtained from consultations with third parties. Actual results may differ from these estimates. We believe that the accounting policies discussed below are critical to our financial results and to the understanding of our past and future performance, as these policies relate to the more significant areas involving management’s estimates and assumptions. We consider an accounting estimate to be critical if: (1) it requires us to make assumptions because it included matters that were highly uncertain at the time, we were making our estimate or the assumption is material due to the levels of subjectivity and judgment involved, and (2) changes in the estimate could have a material impact on our financial condition or results of operations.

Fair value measurements and valuation process of financial assets and liabilities measured at fair value through profit or loss (FVTPL)

Some of the Group’s financial assets and financial liabilities are measured at fair value for financial reporting purposes.

In estimating the fair value of such assets or liabilities, the Group uses market-observable data. Where Level 1 or 2 inputs are not available, the Group determines the fair value of the financial instrument using acceptable valuation techniques and, as applicable, engages third party qualified valuation specialists to perform the valuation.

Impairment of Intangible Assets

During 2024, the Company recognized an impairment loss of USD 2,919 thousand for the online advertising & internet traffic routing reporting unit’s goodwill, reducing the book value of goodwill to USD 4.8 million as of December 31, 2024. The Company’s quantitative goodwill impairment test involves the comparison of the fair value of each reporting unit to its carrying value. In estimating the fair value of the online advertising & internet traffic routing reporting unit (Gix Internet) the Company used the income approach method, which requires management to make significant estimates and assumptions related to future cash flows and discount rates.

Recent Accounting Pronouncements

Please see Note 2 to our audited consolidated financial statements included elsewhere in this annual report for information regarding recent accounting pronouncements.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Senior Management

The following table lists the names and ages of our directors and senior management as of April 29, 2024:

Liron Carmel has served as our Chief Executive Officer since April 2019. Mr. Carmel has vast experience in business and leadership across multiple industries, including bio pharma, internet technology, oil & gas exploration & production, real estate and financial services. In addition, he serves as chairman of the Israel Table Tennis Association. Mr. Carmel also currently serves as a member of the board of directors of several of our subsidiaries including Gix Internet (TASE: GIX), beginning April 2021, Polyrizon Ltd., beginning July 2020 until September 2024 and since January 2025, Jeffs’ Brands Ltd. (Nasdaq: JFBR) beginning September 2021, Viewbix Inc. (OTC: VBIX) beginning September 2022 and as the chairman of the board of directors of Eventer Technologies Ltd. beginning October 2020. Mr. Carmel holds a B.A in economics and management from the College of Management.

Eliyahu Yoresh has served as a member of our Board since September 2018 and as Chairman of the board since February 2020. Mr. Yoresh serves as Chief Financial Officer of Foresight Autonomous Holdings Ltd. (Nasdaq, TASE: FRSX). In addition, Mr. Yoresh serves as Chairman of Rail Vision (Nasdaq: RVSN) and Gix (TASE: GIX) and serves as a director of Viewbix Inc. (OTC: VBIX), Charging Robotics Inc (OTC:CHEV) and Elbit Imaging (TASE: EMITF). Mr. Yoresh served as the Chief Executive Officer of Tomcar Global Holdings Ltd., a global manufacturer of off-road vehicles, from 2005 to 2008. Mr. Yoresh is an Israeli Certified Public Accountant. Mr. Yoresh holds a B.A. in business administration from the College of Management, Israel and an M.A. in Law Study from Bar-Ilan University, Israel.

Ronen Rosenbloom has served as a member of our Board since September 2018. Mr. Rosenbloom is an independent lawyer and has been working for a self-owned law firm specializing in white collar offences since 2004. Mr. Rosenbloom served as chairman of the Israeli Money Laundering Prohibition committee and the Prohibition of Money Laundering Committee of the Tel Aviv District, both of the Israel Bar Association from November 2015 until December 2019. Mr. Rosenbloom holds an LL.B. from the Ono Academic College, an Israeli branch of University of Manchester.

Eli Cohen has served as a member of our Board since September 2018. Mr. Cohen is an independent lawyer working for a self-owned firm. He serves as chairman of Univo Pharmaceuticals Ltd., as director of Europe Hagag Ltd., and previously served as director of Hagag Group Ltd., Multimatrixs Ltd., Matrat Mizug Ltd. and User Trend-M Ltd. Mr. Cohen also serves as a director of several private companies. Mr. Cohen holds a B.A. in economics, an LL.B. and an LL.M. in Commercial Law from Tel-Aviv University, as well as an MBA from the Northwestern University and Tel-Aviv University joint program.

Kineret Tzedef has served as member of our Board since June 2019. Ms. Tzedef also serves as a director of sports division and served in other positions at Hapoel Organization (Israeli Sport Federation) since 2007. Ms. Tzedef serves as an external director at Upsellon Brands Holdings Ltd. (TASE: UPSL), and as an external director of Augwind Energy Tech Storage Ltd. (TASE: AUGN). Ms. Tzedef is admitted to the Israel Bar Association since 2014. Ms. Tzedef holds a LL.B. from the Academic Center for Law and Science, Israel and a B.Ed. in Law Study from the Academic College at Wingate, Israel.

Tali Dinar has served as our Chief Financial Officer since June 8, 2021. Mrs. Dinar served as Chief Financial Officer of Novomic Ltd., a private company between January 2019 and January 2023. Mrs. Dinar also currently serves as a member of the board of directors of Jeffs’ Brands, beginning September 30, 2021, Parazero. beginning February 13, 2022, a director in Charging Robotics Ltd. since November 2021, a director in Charing Robotics Inc. since April 4, 2023. She has also served as a member of the board of directors of Micronet Ltd. (TASE: MCRNT) between July 2016 and February 2023. In addition, she has also served as a director of Canzon Israel Ltd. (TASE: CNZN) since August 2020 until March 2022. Between 2019 and 2020, Mrs. Dinar served as the Chief Financial Officer of TechCare Corp. (currently Citrine Global Corp.) (OTCQB: CTGL). Between 2009 and 2019, Mrs. Dinar worked at the MICT group and served in various positions, including as Chief Financial Officer of MICT Inc. (Nasdaq: MICT) and as Chief Financial Officer of MICT Telematics Ltd. From 2002 until 2006, Mrs. Dinar served as the chief controller of I.T.L. Optronics Ltd. From 1997 until 2000, Mrs. Dinar worked in the audit department of Ernst & Young Global. Mrs. Dinar is a certified public accountant in Israel and holds a B.A. degree in Accounting and Business Management from The College of Management, Israel.

Family Relationships

There are no family relationships between any members of our executive management and our directors.

Arrangements for Election of Directions and Members of Management

There are no arrangements or understandings with major shareholders, customers, suppliers or others pursuant to which any of our executive management or our directors were appointed.

B. Compensation

Compensation of Directors and Executive Officers

In accordance with the provisions of the Companies Law, the compensation of our directors and officer holders must generally comply with the terms and conditions of our compensation policy, as approved by our compensation committee, board of directors and general meetings of our shareholders, subject to certain exceptions under the Companies Law.

The table below reflects the compensation granted to our six most highly compensated directors and officers during or with respect to the year ended December 31, 2024.

The aggregate compensation paid by us to our office holders, as defined in the Companies Law, for the year ended December 31, 2024, was approximately $1.01 million, which includes six persons. This amount includes, when applicable, set aside or accrued to provide pension, severance, retirement or similar benefits or expenses, car expenses and value of the Ordinary Shares underlying the options representing accounting expenses, but does not include business travel, relocation, professional and business association dues and expenses reimbursed to officers, and other benefits commonly reimbursed or paid by companies in Israel.

Compensation of Directors

Under the Companies Law and the rules and regulations promulgated thereunder, our directors are entitled to a fixed annual compensation, up to the limits set forth in the compensation policy. We currently pay each of Mr. Ronen Rosenbloom, Ms. Kineret Tzedef and Mr. Eli Cohen an annual fee of NIS 132,000.

Each of our non-executive directors were also granted options to purchase   100,000 Ordinary Shares under the Plan (as defined herein). Such options were granted on June 29, 2021. The options vest over a period of three (3) years commencing on April 1, 2021, with 1/12 of such options vesting at the end of each subsequent three-month period following the grant, (ii) the term of the options is of six (6) years from the grant date, unless they have been exercised or cancelled in accordance with the terms of and conditions of the applicable incentive plan of the Company, (iii) unless previously exercised or cancelled, the options may be exercised until 180 days from the termination of the tenure of a director, (iv) the exercise price per share of the options is equal to the average share price of the 30 days prior to the date of grant, $1.783 (v) the options grant is in accordance and pursuant to Section 102 of the Income Tax Ordinance [New Version] (“Tax Ordinance”), if applicable, and (vi) the options will be accelerated upon the closing of a material transaction, resulting in change of control of the Company.

On April 25, 2021, and on May 4, 2021, our compensation committee and board of directors approved new compensation terms for Mr. Eliyahu Yoresh in connection with his services as an active chairman of the board of directors. For his services, Mr. Yoresh is entitled to receive a monthly payment of NIS 45,000 plus VAT, which constitutes the sole and complete compensation. In addition, Mr. Yoresh is entitled to an annual, target-based bonus and an additional overachievement bonus of up to 6 monthly salaries, each. The weight afforded to each target and overachievement component, is to be decided by our board of directors and compensation committee in accordance with the following weights: (a) 35% Company performance measures of strategic goals and related objectives; (b) 25% Company performance measures of material transaction or material profitability/revenues; (c) 20% Company performance measures of revenues and/or loss reduction; and (d) 20% Company performance measures of achieving commercialization of Company’s technology. The aforementioned compensation terms are consistent with our current compensation policy.

Following the approval of the annual general meeting of our shareholders held on August 30, 2021, Mr. Yoresh was granted a one-time grant of options to purchase 300,000 Ordinary Shares in accordance with the terms of the Plan. The options vest over a period of three (3) years commencing on April 1,2021, with 1/12 of such options vesting at the end of each subsequent three-month period following the grant, (ii) the term of the options is of six (6) years from the grant date, unless they have been exercised or cancelled in accordance with the terms of and conditions of the applicable incentive plan of the Company, (iii) unless previously exercised or cancelled, the options may be exercised until 180 days from the termination of Mr. Yoresh’ tenure as a chairman, (iv) the exercise price per share of the options is equal to the average share price of the 30 days prior to the date of grant, $1.783 (v) the options grant will be in accordance and pursuant to Section 102 of the Tax Ordinance, if applicable, and (vi) the options will be accelerated upon the closing of a material transaction, resulting in change of control of the Company.

As a result of market conditions, in June 2023, Mr. Yoresh and Mr. Carmel elected to reduce their compensation by 20%, effective June 2023 through December 2023. Similarly, the Board voted to reduce the directors’ compensation by 20% for the second, third and fourth quarters of 2023. As of January 2024, Mr. Yoresh’s, Mr. Carmel’s and Board’s respective compensation were reinstated to their full amounts.

Equity Based Compensation of our Executive Officers and Directors 

As of April 17, 2025, options to purchase 1,037,500 of our Ordinary Shares were outstanding and held by current executive officers and directors consisting of 6 persons with an average exercise price of NIS 5.93 per ordinary share. As of December 31, 2024, 2,273,645 restricted share units, or RSUs, had been granted to our executive officers and directors See “Item 6. Directors, Senior Management and Employees-E. Share Ownership” in this annual report on Form 20-F.

Agreements with our Executive Officers

We have entered into written agreements with each of our executive officers. All of these agreements contain customary provisions regarding non-competition, confidentiality of information and assignment of inventions. However, the enforceability of the noncompetition provisions may be limited under applicable law. In addition, we have entered into agreements with each executive officer and director pursuant to which we have agreed to indemnify each of them to the fullest extent permitted by law to the extent that these liabilities are not covered by directors and officers insurance.

Our office holders are generally eligible for bonuses each year. The bonuses are established and granted in accordance with our compensation policy and are generally payable upon meeting objectives and targets that are approved by our compensation committee and board of directors (and if required by our shareholders).

Consulting Agreement with Mr. Carmel

On July 25, 2019, our shareholders approved that as of April 2, 2019, our Company would enter into a consulting agreement with Mr. Carmel, who serves as our Chief Executive Officer. The term is for an indefinite period, however the agreement may be terminated by either party by giving 60 days advance notice, or shorter periods in some cases, such as termination for “cause.” During the notice period, Mr. Carmel will be entitled to consulting fees only to the extent that he provides services to the Company during the notice period. The agreement also includes customary covenants regarding confidentiality, IP assignment, non-competition and non-solicitation.

Mr. Carmel’s monthly consulting fee is NIS 60,000 plus VAT, effective as of May 2021, as approved by our shareholders at our annual general meeting held on August 30, 2021. In addition, Mr. Carmel is entitled to an annual target based bonus and an additional overachievement bonus of up to 6 monthly salaries each, subject to a performance matrix to be approved by the Company’s compensation committee and board of directors on an annual basis, while up to 30% of such annual bonus may be discretionary and not subject to measurable performance indexes. The annual target bonus may be reduced by our board of directors according to our financial position and Mr. Carmel’s performance, and must be returned by Mr. Carmel if it is later shown to be granted in error which shall be restated in our financial statements.

In addition, Mr. Carmel was granted with options to purchase up to 62,500 Ordinary Shares of the Company (the “Options”), in accordance with the following terms: (i) the Options vest over a period of four (4) years commencing April 1, 2019, 25% of the Options vest on the first anniversary (i.e., April 1, 2020), and 75% of the Options vest on a quarterly basis over a period of three (3) years thereafter; (ii) the term of the Options is of six (6) years from the date of grant, unless they have been exercised or cancelled in accordance with the terms of and conditions of the applicable incentive plan of the Company, (iii) unless previously exercised or cancelled, the Options may be exercised until 180 days from the date of termination of the service, (iv) the exercise price per share of the Options shall be NIS 11.8, (v) the Options’ grant shall be in accordance and pursuant to Section 102 of the Income Tax Ordinance [New Version], and (vi) the Options shall be accelerated upon the closing of a material transaction, resulting in change of control of the Company.

At the annual general meeting of our shareholders held on August 30, 2021, Mr. Carmel was granted with additional grant of options to purchase 300,000 Ordinary Shares. The options vest over a period of three (3) years commencing on April 1, 2021, with 1/12 of such options vesting at the end of each subsequent three-month period following the grant, (ii) the term of the options is of six (6) years from the grant date, unless they have been exercised or cancelled in accordance with the terms of and conditions of the applicable incentive plan of the Company, (iii) unless previously exercised or cancelled, the options may be exercised until 180 days following the termination of the engagement, (iv) the exercise price per share of the options is equal to the average share price of the 30 days prior to the date of grant, $1.783 (v) the options grant will be in accordance and pursuant to Section 102 of the Tax Ordinance, if applicable, and (vi) the options will be accelerated upon the closing of a material transaction, resulting in change of control of the Company.

Following the SEC approval of Nasdaq’s proposed clawback listing standards, under Rule 10D-1 (the “Clawback Listing Rules”), which directed companies to adopt and comply with a written clawback policy, to disclose and file the policy as an exhibit to its annual report, we have adopted as of September 28, 2023, a clawback policy as contemplated pursuant to the Clawback Listing Rules, as filed as an exhibit to this Annual Report as Exhibit 97.

C. Board Practices

Introduction

Under the Companies Law and our amended and restated articles of association, the management of our business is vested in our board of directors. Our board of directors may exercise all powers and may take all actions that are not specifically granted to our shareholders or to management. Our executive officers are responsible for our day-to-day management and have individual responsibilities established by our board of directors.

Under our amended and restated articles of association, our board of directors must consist of at least three and not more than six directors, including two external directors appointed as required under the Companies Law. Our board of directors currently consists of four members, none of which are external directors, including our chairman of the board of directors, which is also appointed by the general meeting of our shareholders.

Our directors are divided into three classes with staggered three-year terms. At each annual general meeting of our shareholders, the election or re-election of directors following the expiration of the term of office of the directors of that class of directors is for a term of office that expires on the third annual general meeting following such election or re-election, such that at each annual general meeting the term of office only one class of directors will expire. Each director holds office until the annual general meeting of our shareholders for the year in which his or her term expires and until his or her successor is duly appointed, unless the tenure of such director expires earlier pursuant to the Companies Law upon the occurrence of certain events or unless removed from office by a vote of the holders of at least 65% of the total voting power of our shareholders at a general meeting of our shareholders in accordance with our amended and restated articles of association.

Our directors are divided among the three classes as follows:

In addition, our amended and restated articles of association allow our Board of Directors to appoint directors to fill vacancies on our Board of Directors or in addition to the acting directors (subject to the limitation on the number of directors and their qualifications), until the next general meeting in which directors may be appointed or such appointment terminated.

The board of directors (and, if so determined by the board of directors, the general meeting) may at any time and from time to time appoint any person as a director to fill a vacancy (whether such vacancy is due to a director no longer serving or due to the number of directors serving being less than the maximum number of six directors. In the event of one or more such vacancies in the board of directors, the continuing directors may continue to act in every matter, provided, however, that if the number of directors serving is less than three, than our board of directors may only act in an emergency or to fill the office of a director which has become vacant up to three directors, or for the purpose of convening a general meeting of the Company’s shareholders for the purpose of electing directors to fill any or all vacancies. The office of a director that was appointed by the board of directors to fill any vacancy shall only be for the remaining period of time during which the director whose service has ended was filled would have held office, or in case of a vacancy due to the number of directors serving being less than six, the board of directors shall determine at the time of appointment the class to which the additional director shall be assigned.

Pursuant to the Companies Law and our amended and restated articles of association, a resolution proposed at any meeting of our board of directors at which a quorum is present is adopted if approved by a vote of a majority of the directors present and eligible to vote. A quorum of the board of directors requires at least a majority of the directors then in office who are lawfully entitled to participate in the meeting.

According to the Companies Law, the board of directors of a public company must determine the minimum number of board members that should have financial and accounting expertise while considering, among other, the nature of the company, its size, the scope and complexity of its operations and the number of directors stated in the articles of association. Our board of directors resolved that the minimum number of board members that need to have financial and accounting expertise is one, and that Mr. Eliyahu Yoresh has accounting and financial expertise as required under the Companies Law.

External Directors

Under the Companies Law, companies incorporated under the laws of the State of Israel that are “public companies,” including companies with shares listed on the Nasdaq Capital Market, are required to appoint at least two external directors. External directors must meet certain independence criteria to ensure that they are unaffiliated with the company and its controlling shareholder, as well as certain other criteria. External directors are elected for three-year terms in accordance with specific rules set forth in the Companies Law and the regulations promulgated thereunder and may be removed from office only under limited circumstances. Under the Companies Law, each committee of a company’s board of directors that is authorized to exercise powers of the board of directors is required to include at least one external director, and all external directors must be members of the company’s audit committee and compensation committee.

Pursuant to regulations promulgated under the Companies Law, companies with shares traded on a U.S. stock exchange, including the Nasdaq Capital Market, may, subject to certain conditions, “opt out” from the Companies Law requirements to appoint external directors and related Companies Law rules concerning the composition of the audit committee and compensation committee of the board of directors. In accordance with these regulations, effective as of June 28, 2017, we have “opted out” from the Companies Law requirements to appoint external directors and related Companies Law rules concerning the composition of the audit committee and compensation committee of the board of directors.

Under these regulations, the exemptions from such Companies Law requirements will continue to be available to us so long as: (i) we do not have a “controlling shareholder” (as such term is defined under the Companies Law), (ii) our shares are traded on a U.S. stock exchange, including the Nasdaq Capital Market, and (iii) we comply with the director independence requirements, the audit committee and the compensation committee composition requirements, under U.S. laws (including applicable Nasdaq Rules) applicable to U.S. domestic issuers. We believe that Mr. Eli Cohen, Mr. Eliyahu Yoresh, Mr. Ronen Rosenbloom and Ms. Kineret Tzedef are “independent” for purposes of the Nasdaq Stock Market rules.

Alternate directors

Our amended and restated articles of association provide, as allowed by the Companies Law, that any director may, by written notice to us, appoint another person who is qualified to serve as a director to serve as an alternate director and to terminate such appointment. Under the Companies Law, a person who is not qualified to be appointed as a director, a person who is already serving as a director or a person who is already serving as an alternate director for another director, may not be appointed as an alternate director. Nevertheless, a director who is already serving as a director may be appointed as an alternate director for a member of a committee of the board of directors as long as he or she is not already serving as a member of such committee.

Board committees

The board of directors may, subject to the provisions of the Companies Law, delegate any or all of its powers to committees, each consisting of one or more directors (except the audit and compensation committees, as described below), and it may, from time to time, revoke such delegation or alter the composition of any such committees. Unless otherwise expressly provided by the board of directors, the committees will not be empowered to further delegate such powers. The composition and duties of our audit committee and compensation committee are described below.

Audit committee

Our audit committee is currently comprised of Mr. Eli Cohen, Mr. Eliyahu Yoresh, and Mr. Ronen Rosenbloom. Mr. Eliyahu Yoresh acts as the chairperson of our audit committee.

Companies Law Requirements

Under the Companies Law, our board of directors is required to appoint an audit committee, which is responsible, among others, for:

Nasdaq requirements

Under the Nasdaq corporate governance rules, we are required to maintain an audit committee consisting of at least three independent directors, all of whom are financially literate and one of whom has accounting or related financial management expertise. All members of our audit committee meet the requirements for financial literacy under the applicable rules and regulations of the SEC and the Nasdaq corporate governance rules. Our board of directors has determined that Mr. Eliyahu Yoresh is an audit committee financial expert as defined by the SEC rules and has the requisite financial experience as defined by the Nasdaq Marketplace Rules.

Each of the members of the audit committee is required to be “independent” as such term is defined in Rule 10A-3(b)(1) under the Exchange Act, which is different from the general test for independence of board and committee members. Our board of directors has determined that each member of our audit committee is independent as such term is defined in Rule 10A-3(b)(1) of the Exchange Act.

Audit committee role

Our board of directors has adopted an audit committee charter setting forth the responsibilities of the audit committee consistent with the rules of the SEC and the Nasdaq Rules, which include, among others:

The audit committee charter states that in fulfilling its obligations, the committee is entitled to demand from the Company any document, file, report or any other information that is required for the fulfillment of its roles and duties and to interview any of our employees or any employees of our subsidiaries in order to receive more details about his or her line of work or other issues that are connected to the roles and duties of the audit committee.

Compensation Committee

Our compensation committee is currently comprised of Mr. Ronen Rosenbloom, Mr. Eli Cohen and Ms. Kineret Tzedef. Mr. Eli Cohen acts as the chairperson of our compensation committee.

Companies Law requirements

Under the Companies Law, the board of directors of a public company must appoint a compensation committee which roles are, among others, as follows:

Nasdaq requirements

Our board of directors has adopted a compensation committee charter setting forth the responsibilities of the committee consistent with the Nasdaq Rules, which include among others:

The compensation committee is also authorized to retain and terminate compensation consultants, legal counsel or other advisors to the committee and to approve the engagement of any such consultant, counsel or advisor, to the extent it deems necessary or advisable.

Our board of directors has determined that each member of our compensation committee is independent under the Nasdaq Rules, including the additional independence requirements applicable to the members of a compensation committee.

Compensation policy

Under the Companies Law, companies incorporated under the laws of the State of Israel, whose shares are listed for trading on a stock exchange or have been offered to the public in or outside of Israel, such as us, are required to adopt a policy governing the compensation of “office holders” (as defined in the Companies Law). Following the recommendation of our compensation committee and approval by our board of directors, our shareholders approved a compensation policy for directors and officers on October 30, 2024, which was identical to the compensation policy approved by our shareholders on August 30, 2021. Our compensation policy must be approved at least once every three years, first, by our board of directors, upon recommendation of our compensation committee, and second, by a simple majority of the Ordinary Shares present, in person or by proxy, and voting at a shareholders meeting, provided that either:

Such majority determined in accordance with the majority requirement described above is hereinafter referred to as the Compensation Special Majority Requirement.

To the extent a compensation policy is not approved by shareholders at a duly convened shareholders meeting or by the Compensation Special Majority Requirement, the board of directors of a company may override the resolution of the shareholders following a re-discussion of the matter by the board of directors and the compensation committee and for specified reasons, and after determining that despite the rejection by the shareholders, the adoption of the compensation policy is in the best interest of the company. A compensation policy that is for a period of more than three years must be approved in accordance with the above procedure once every three years.

The compensation policy must serve as the basis for decisions concerning the financial terms of employment or engagement of office holders, including exculpation, insurance, indemnification or any monetary payment or obligation of payment in respect of employment or engagement. The compensation policy must relate to certain factors, including advancement of the company’s objectives, the company’s business plan and its long-term strategy, and creation of appropriate incentives for office holders. It must also consider, among other things, the company’s risk management, size and the nature of its operations; and with respect to variable compensation, the contribution of the office holder towards the achievement of the company’s long-term goals and the maximization of its profits, all with a long-term objective and according to the position of the office holder. The compensation policy must furthermore consider the following additional factors:

The compensation policy must also include the following principles:

Our compensation policy is designed to promote retention and motivation of directors and executive officers, incentivize superior individual excellence, align the interests of our directors and executive officers with our long-term performance and provide a risk management tool. To that end, a portion of our executive officer compensation package is targeted to reflect our short and long-term goals, as well as the executive officer’s individual performance. On the other hand, our compensation policy includes measures designed to reduce the executive officer’s incentives to take excessive risks that may harm us in the long-term, such as limits on the value of cash bonuses and equity-based compensation, limitations on the ratio between the variable and the total compensation of an executive officer and minimum vesting periods and performance-based vesting for equity-based compensation.

Our compensation policy also addresses our executive officers’ individual characteristics (such as their respective position, education, scope of responsibilities and contribution to the attainment of our goals) as the basis for compensation variation among our executive officers and considers the internal ratios between compensation of our executive officers and directors and other employees. Pursuant to our compensation policy, the compensation that may be granted to an executive officer may include: base salary, annual bonuses and other cash bonuses (such as a signing bonus and special bonuses with respect to any special achievements, such as outstanding personal achievement, outstanding personal effort or outstanding Company performance), equity-based compensation, benefits and retirement and termination of service arrangements. All cash bonuses are limited to a maximum amount linked to the executive officer’s base salary.

An annual cash bonus may be awarded to executive officers upon the attainment of pre-set periodic objectives and individual targets. The annual cash bonus that may be granted to our executive officers other than our Chief Executive Officer will be based on performance objectives and a discretionary evaluation of the executive officer’s overall performance by our Chief Executive Officer and subject to minimum thresholds. The annual cash bonus that may be granted to executive officers other than our Chief Executive Officer may alternatively be based entirely on a discretionary evaluation. Furthermore, our Chief Executive Officer will be entitled to approve performance objectives for executive officers who report to him.

The measurable performance objectives of our Chief Executive Officer will be determined annually by our compensation committee and board of directors. A non-material portion of the Chief Executive Officer’s annual cash bonus, as provided in our compensation policy, may be based on a discretionary evaluation of the Chief Executive Officer’s overall performance by the compensation committee and the board of directors.

The equity-based compensation under our compensation policy for our executive officers (including members of our board of directors) is designed in a manner consistent with the underlying objectives in determining the base salary and the annual cash bonus, with its main objectives being to enhance the alignment between the executive officers’ interests with our long-term interests and those of our shareholders and to strengthen the retention and the motivation of executive officers in the long term. Our compensation policy provides for executive officer compensation in the form of share options or other equity-based awards, such as restricted shares and restricted share units, in accordance with our equity incentive plan then in place. The equity-based compensation shall be granted from time to time and be individually determined and awarded according to the performance, educational background, prior business experience, qualifications, role and the personal responsibilities of the executive officer.

In addition, our compensation policy contains compensation recovery provisions which allow us under certain conditions to recover bonuses paid in excess, enable our Chief Executive Officer to approve an immaterial change in the terms of employment of an executive officer who reports directly him (provided that the changes of the terms of employment are in accordance with our compensation policy) and allow us to exculpate, indemnify and insure our executive officers and directors to the maximum extent permitted by Israeli law subject to certain limitations set forth therein.

Our compensation policy also provides for compensation to the members of our board of directors either (i) in accordance with the amounts provided in the Companies Regulations (Rules Regarding the Compensation and Expenses of an External Director) of 2000, as amended by the Companies Regulations (Relief for Public Companies Traded in Stock Exchange Outside of Israel) of 2000, as such regulations may be amended from time to time, or (ii) in accordance with the amounts determined in our compensation policy.

Investment Committee

Our investment committee is comprised of Mr. Eli Yoresh and Mr. Eli Cohen. The investment committee is authorized to approve certain investments in accordance with the Company’s investment policy approved by the board of directors. The investment committee monitors the management of the portfolio for compliance with the investment policies and guidelines and considers the merits of time sensitive investments that could be beneficial to the Company.

Internal auditor

Under the Companies Law, the board of directors of a public company must appoint an internal auditor based on the recommendation of the audit committee. Under the Companies Law, each of the following may not be appointed as internal auditor:

The role of the internal auditor is, among other things, to examine whether a company’s actions comply with applicable law and orderly business procedure. The audit committee is required to oversee the activities and to assess the performance of the internal auditor as well as to review the internal auditor’s work plan. Our internal auditor is Daniel Spira, Certified Public Accountant (Isr.).

Fiduciary duties and approval of specified related party transactions and compensation under Israeli law

Fiduciary duties of office holders

The Companies Law imposes fiduciary duties on all office holders of a company comprised of a duty of care and a duty of loyalty.

The duty of care requires an office holder to act in the same degree of proficiency with which a reasonable office holder in the same position would have acted under the same circumstances. The duty of care includes, among other things, a duty to use reasonable means, in light of the circumstances, to obtain:

The duty of loyalty requires an office holder to act in good faith and for the benefit of the company, and includes, among other things, the duty to:

Under the Companies Law, we may approve an act specified above, provided that the office holder acted in good faith, the act or its approval does not harm the company’s best interest, and the office holder discloses his or her personal interest a sufficient time before the approval of such act, including any relevant document.

Disclosure of personal interests of an office holder and approval of transactions

The Companies Law requires that an office holder promptly disclose to the company any personal interest that he or she may have and all related material information or documents relating to any existing or proposed transaction by the company. An interested office holder’s disclosure must be made promptly and, in any event, no later than the first meeting of the board of directors at which the transaction is considered. Under the Companies Law, once an office holder complies with the above disclosure requirement, the board of directors at which the transaction is considered. An office holder is not obliged to disclose such information if the personal interest of the office holder derives solely from the personal interest of his or her relative in a transaction that is not considered an extraordinary transaction.

Under the Companies Law, a company may approve a transaction between the company and the office holder or a third party in which the office holder has a personal interest only if the office holder has complied with the above disclosure requirement, provided, however, that a company may not approve a transaction or action that is not to the company’s benefit.

Under the Companies Law, unless the articles of association of a company provide otherwise, a transaction with an office holder or with a third party in which the office holder has a personal interest, which is not an extraordinary transaction, requires approval by the board of directors. Our amended and restated articles of association do not state otherwise. If the transaction considered with an office holder or third party in which the office holder has a personal interest is an extraordinary transaction, then the audit committee’s approval is required prior to approval by the board of directors. For the approval of compensation arrangements with directors and executive officers, see “Item 6. Directors, Senior Management and Employees -C. Board Practices-Compensation of directors and executive officers.”

Any person who has a personal interest in the approval of a transaction that is brought before a meeting of the board of directors or the audit committee may not be present at the meeting or vote on the matter. However, if the chairperson of the board of directors or the chairperson of the audit committee has determined that the presence of an office holder with a personal interest is required, such office holder may be present at the meeting for the purpose of presenting the matter. Notwithstanding the foregoing, a director who has a personal interest may be present at the meeting and vote on the matter if a majority of the directors or members of the audit committee have a personal interest in the approval of such transaction’ provided, however, that if a majority of the directors at a board of directors meeting have a personal interest in the approval of the transaction, such transaction also requires the approval of the shareholders of the company.

A “personal interest” is defined under the Companies Law as the personal interest of a person in an action or in a transaction of the company, including the personal interest of such person’s relative or the interest of any other corporate body in which such person and/or such person’s relative is a director or general manager, a 5% shareholder or holds 5% or more of the voting rights, or has the right to appoint at least one director or the general manager, but excluding a personal interest stemming solely from the fact of holding shares in the company. A personal interest also includes (1) a personal interest of a person who votes according to a proxy of another person, including in the event that the other person has no personal interest, and (2) a personal interest of a person who gave a proxy to another person to vote on his or her behalf regardless of whether the discretion of how to vote lies with the person voting or not.

An “extraordinary transaction” is defined under the Companies Law as any of the following:

An extraordinary transaction in which an office holder has a personal interest requires approval of the company’s audit committee followed by the approval of the board of directors.

Disclosure of personal interests of a controlling shareholder and approval of transactions

The Companies Law also requires that a controlling shareholder promptly disclose to the company any personal interest that he or she may have and all related material information or documents relating to any existing or proposed transaction by the company. A controlling shareholder’s disclosure must be made promptly and, in any event, no later than the first meeting of the board of directors at which the transaction is considered. The following require the approval of each of (i) the audit committee (or the compensation committee with respect to the terms of engagement of the controlling shareholder or relative thereof with the company related for the provision of service, including among others as an office holder or employee of the company), (ii) the board of directors and (iii) the shareholders (in that order): (a) extraordinary transactions with a controlling shareholder or in which a controlling shareholder has a personal interest (including a private placement in which a controlling shareholder has a personal interest), (b) the engagement with a controlling shareholder or his or her relative, directly or indirectly, for the provision of services to the company, (c) the terms of engagement and compensation of a controlling shareholder or his or her relative as an office holder, and (d) the employment of a controlling shareholder or his or her relative by the company, other than as an office holder (collectively referred as Transaction with a Controlling Shareholder). In addition, the shareholder approval must fulfill one of the following requirements:

In addition, any extraordinary transaction with a controlling shareholder or in which a controlling shareholder has a personal interest with a term of more than three years requires the abovementioned approval every three years, however, unless, with respect to certain transactions the audit committee determines that such longer term is reasonable under the circumstances.

Pursuant to regulations promulgated under the Companies Law, certain transactions with a controlling shareholder, a relative thereof, or with a director, that would otherwise require approval of a company’s shareholders may be exempt from shareholder approval upon certain determinations of the audit committee and board of directors.

The Companies Law requires that every shareholder that participates, in person, by proxy or by voting instrument, in a vote regarding a transaction with a controlling shareholder, must indicate in advance or in the ballot whether or not that shareholder has a personal interest in the vote in question. Failure to so indicate will result in the invalidation of that shareholder’s vote.

Approval of the compensation of directors and executive officers

The compensation of, or an undertaking to indemnify, insure or exculpate, an office holder who is not a director requires the approval of the company’s compensation committee, followed by the approval of the company’s board of directors, and, if such compensation arrangement or an undertaking to indemnify or insure is inconsistent with the company’s stated compensation policy, or if the said office holder is the Chief Executive Officer of the company (apart from a number of specific exceptions), then such arrangement is subject to the approval of our shareholders, subject to the Compensation Special Majority Requirement.

Directors. Under the Companies Law, the compensation of our directors requires the approval of our compensation committee, the subsequent approval of the board of directors and, unless exempted under the regulations promulgated under the Companies Law, the approval of the general meeting of our shareholders. If the compensation of our directors is inconsistent with our stated compensation policy, then, provided that those provisions that must be included in the compensation policy according to the Companies Law have been considered by the compensation committee and board of directors, shareholder approval will also be required to be approved by the Compensation Special Majority Requirement.

Executive officers other than the Chief Executive Officer. The Companies Law requires the approval of the compensation of a public company’s executive officers (other than the Chief Executive Officer) in the following order: (i) the compensation committee, (ii) the company’s board of directors, and (iii) if such compensation arrangement is inconsistent with the company’s stated compensation policy, the company’s shareholders by the Compensation Special Majority Requirement. However, if the shareholders of the company do not approve a compensation arrangement with an executive officer that is inconsistent with the company’s stated compensation policy, the compensation committee and board of directors may override the shareholders’ decision if each of the compensation committee and the board of directors provide detailed reasons for their decision.

Chief Executive Officer. Under the Companies Law, the compensation of a public company’s Chief Executive Officer is required to be approved by: (i) the company’s compensation committee; (ii) the company’s board of directors, and (iii) the company’s shareholders by the Compensation Special Majority Requirement. However, if the shareholders of the company do not approve the compensation arrangement with the Chief Executive Officer, the compensation committee and board of directors may override the shareholders’ decision if each of the compensation committee and the board of directors provide a detailed reasoning for their decision. The approval of each of the compensation committee and the board of directors must be in accordance with the company’s stated compensation policy; however, under special circumstances, the compensation committee and the board of directors may approve compensation terms of a Chief Executive Officer that are inconsistent with the company’s compensation policy provided that they have considered those provisions that must be included in the compensation policy according to the Companies Law and that shareholder approval was obtained by the Compensation Special Majority Requirement. In addition, the compensation committee may resolve that the shareholder approval is not required for the approval of the engagement terms of a candidate to serve as the Chief Executive Officer, if the compensation committee determines that the compensation arrangement is consistent with the company’s stated compensation policy, that the Chief Executive Officer did not have a prior business relationship with the company or a controlling shareholder of the company, and that subjecting the approval to a shareholder vote would impede the company’s ability to attain the candidate to serve as the company’s Chief Executive Officer.

Duties of shareholders

Under the Companies Law, a shareholder has a duty to refrain from abusing its power in the company and to act in good faith and in an acceptable manner in exercising its rights and performing its obligations to the company and other shareholders, including, among other things, when voting at meetings of shareholders on the following matters:

A shareholder also has a general duty to refrain from discriminating against other shareholders.

The remedies generally available upon a breach of contract will also apply to a breach of the shareholder duties mentioned above, and in the event of discrimination against other shareholders, additional remedies are available to the injured shareholder.

In addition, any controlling shareholder, any shareholder that knows that its vote can determine the outcome of a shareholder vote and any shareholder that, under a company’s articles of association, has the power to appoint or prevent the appointment of an office holder, or any other power with respect to a company, is under a duty to act with fairness towards the company. The Companies Law does not describe the substance of this duty except to state that the remedies generally available upon a breach of contract will also apply in the event of a breach of the duty to act with fairness, taking each shareholder’s position in the company into account.

Approval of private placements

Under the Companies Law and the regulations promulgated thereunder, a private placement of securities does not require approval at a general meeting of the shareholders of a company; provided however, that in special circumstances, such as a private placement completed in lieu of a special tender offer or a private placement which qualifies as a related party transaction (See “Item 6. Directors, Senior Management and Employees -C. Board Practices-Fiduciary duties and approval of specified related party transactions and compensation under Israeli law”), for which approval at a general meeting of the shareholders of a company is required.

Exemption, Insurance and Indemnification of Directors and Officers 

Under the Companies Law, a company may not exculpate an office holder from liability for a breach of a fiduciary duty. An Israeli company may exculpate an office holder in advance from liability to the company, in whole or in part, for damages caused to the company as a result of a breach of duty of care but only if a provision authorizing such exculpation is included in its articles of association. Our amended and restated articles of association include such a provision. The company may not exculpate in advance a director from liability arising out of a prohibited dividend or distribution to shareholders.

Under the Companies Law and the Securities Law, 5738-1968, or the Securities Law, a company may indemnify an office holder in respect of the following liabilities, payments and expenses incurred for acts performed by him or her as an office holder, either in advance of an event or following an event, provided its articles of association include a provision authorizing such indemnification:

An “Administrative Procedure” is defined as a procedure pursuant to chapters H3 (Monetary Sanction by the Israeli Securities Authority), H4 (Administrative Enforcement Procedures of the Administrative Enforcement Committee) or I1 (Arrangement to prevent Procedures or Interruption of procedures subject to conditions) to the Securities Law.

Under the Companies Law and the Securities Law, a company may insure an office holder against the following liabilities incurred for acts performed by him or her as an office holder if and to the extent provided in the company’s articles of association:

Under the Companies Law, a company may not indemnify, exculpate or insure an office holder against any of the following:

Under the Companies Law, exculpation, indemnification and insurance of office holders must be approved by the compensation committee and the board of directors and, with respect to directors or controlling shareholders, their relatives and third parties in which such controlling shareholders have a personal interest, also by the shareholders.

Our amended and restated articles of association permit us to exculpate, indemnify and insure our office holders to the fullest extent permitted or to be permitted by law. On February 18, 2021, our board of directors approved a new directors’ and officers’ liability insurance policy, following the recent amended of our compensation policy approved by our shareholders on February 12, 2021.

Employment and consulting agreements with executive officers

We have entered into written employment or service agreements with each of our executive officers. See “Item 7. Major Shareholders and Related Party Transactions - B. Related Party Transactions - Employment Agreements” for additional information.

Directors’ service contracts

There are no arrangements or understandings between us, on the one hand, and any of our directors, on the other hand, providing for benefits upon termination of their employment or service as directors of our Company.

D. Employees

Number of Employees

As of December 31, 2024, the Group employed 38 employees, which includes our Chief Executive Officer and other executive officers that are engaged by the Company as consultants.

As of December 31, 2023, the Group employed 84 employees, which included our Chief Executive Officer and other executive officers that are engaged by the Company as consultants.

As of December 31, 2022, we employed 77 employees in Israel including those employed by our subsidiaries Jeffs’ Brands, Charging Robotics and Eventer, which included our Chief Executive Officer and other executive officers that are engaged by the Company as consultants.

Distribution of Employees

The breakdown of our employees, by areas of engagement and geographic location, as of the end of each of the past three fiscal years is as follows: