2025 Final Results

T42 IOT Tracking Solutions PLC

13 April 2026

 

13 April 2026

t42 IoT Tracking Solutions plc

("t42" or the "Company")

Full year results

t42 IoT Tracking Solutions plc (AIM: TRAC), a global provider of real-time tracking and monitoring solutions for containers, is pleased to announce its audited results for the year ended 31 December 2025.

Financial Highlights

·    Revenue increased 47% to $6.10m (2024: $4.16m), with an increased contribution from the supply chain solutions.

·    Adjusted EBITDA improved to a gain of $1.23m (2024: Adjusted EBITDA loss of $0.21m).

·    Gross margin increased to 46%, mainly due to cost reduction impact in the hardware segment (2024: 38%).

·    Total operating expenses broadly unchanged at $2.45m (2024: $2.48m).

·    Cash and cash equivalents as at 31 December 2025 increased to $0.57m  (31 December 2024: $0.15m), as a result of positive operational cash flow.

·    Working capital ("WC") improved by $2.3m to a negative WC of $1.87m (2024: A negative WC of $4.18m).

Operational and Strategic Highlights

·    Continued solid performance across the four contracts secured in 2024

o  Strong outperformance on one contract with others in line with management expectations

·    Strong order growth underpinning increased revenue visibility for current year

o  Year-on-year increases of 150% and 100% in sales for Lokies and Tetis, respectively

·    Ongoing discussions with a number of existing and new customers globally

o  Including positive negotiations with a major customer regarding their 2026 order expectations, which may result in an expanded contract scope

·    Technological improvements provide a key operational advantage

o  Improved reliability, scalability, and interoperability across the Helios, Lokies, and Kylos product families

o  Positioned to support significantly larger fleets and device volumes

CEO, Avi Hartmann commented:

"We have established a clear path towards sustained profitability - with an enhanced product base and broader target customer base, the Company is extremely well placed in terms of commercialization and market opportunity.

"The strong growth in sales, margins and adjusted EBITDA during the Period combined with the technology development and growing routes to market underpin the Board's confidence in trading for the current period."

"We continue to see strong traction and have recently entered into a number of new distribution agreements for our software and hardware solutions with companies internationally. We have several agreements and trials in the pipeline and are confident that positive outcomes will result in a significantly enhanced sales order."

 Contacts:

t42 IoT Tracking Solutions PLC Michael Rosenberg, Chairman Avi Hartmann, CEO	07785 727595 [phone]
Strand Hanson Limited (Nominated Adviser, Financial Adviser and Broker) James Harris/ Richard Johnson/ Imogen Ellis	020 7409 3494
Walbrook PR Ltd (Media & Investor Relations) Nick Rome / Marcus Ulker	Tel: [phone] or [e-mail]

The Annual Report will be made available to shareholders shortly and be available from the Company's website at: www.t42.co.uk/. A notice of AGM will be dispatched to shareholders in due course.

CHAIRMAN'S STATEMENT

We are pleased to report T42's audited results for the year ended 31 December 2025.

Revenues increased to $6.10 million, up from $4.16 million in 2024. We expect continued fulfillment of the agreements announced during 2024 over the coming years.

The software segment recorded a strong gross margin of 88%, compared to 82% in 2024, and the hardware segment recorded gross margin of 25%, compared to a negative margin of 7% in 2024. The increases are primarily due to the following factors:

1.     Successful cost reduction measures in the production of hardware components.

2.     Improved supply chain management, reducing overhead costs.

3.     Adjustments in pricing strategy that align better with market demand.

4.     Savings on shipping costs are due to switching to a shipping-free sales model for our main customers

5.     Introduction of a new version of hardware products that perform better in the market.

We continue addressing these factors and expect margin improvement in the current year.

Several years ago, we pivoted the Company's strategy from vehicle tracking to container monitoring solutions. This led to a rebranding to t42 and a fundamental change in our core business. As part of this transition, key personnel were replaced, and an experienced, focused management team was brought in. The signs of success are evident in the 2025 results.

We have developed a new version of products in collaboration with leading manufacturers, identified new customers, and introduced innovative business models and solutions. Within a short period, we have demonstrated that we are on the right path, and this positive momentum is reflected in our results.

In 2025, we experienced significant growth in the container segment, including the signing of new multi-year agreements that exceeded the sales volumes of 2024. This momentum is driven by the high quality of our Lokies locks and increasing demand for our new Tetis models.

We have made substantial technological improvements, particularly in power consumption - a key operational advantage for our customers.

This trend continues: new customers are being secured, pilot projects are advancing, and market potential is turning into a pipeline of commercial opportunities. We are also investing in our complementary Tetis product with a focus on energy efficiency.

Much of the container segment growth stems from agreements signed in 2024 and 2025. We now expect actual orders under these agreements to exceed customers' initial forecasts. We are in advanced negotiations with one major customer regarding their 2026 order forecasts, which may result in an expanded contract scope. Though, as always, the timing of these orders remains uncertain.

There is no doubt that t42's solutions are shaping the future of container monitoring. The expected increase in 2026 orders marks a significant step toward fulfilling the Company's potential and its aspiration to lead the container tracking market and the smart technology which we can provide.

In the Helios segment, our platform was selected for national deployment in a South American country to improve safety and reduce road accidents in public and heavy transportation, including buses and trucks.

Positioned for Growth

Of the four major contracts secured in 2024, one is already performing ahead of management's initial expectations. Annual order growth for the Lokies product has reached nearly 100%, which is expected to positively impact 2026 financial results. Other contracts are progressing in line with planned schedules. As previously reported, these contracts represent total potential sales orders of up to 100,000 units, primarily from customers in Latin America. Subject to full implementation and delivery timelines, these contracts are projected to generate approximately $20 million in hardware and SaaS revenue over the next three years.

As of the date of this report, the Company is in the initial stages of several promising new deals in the Middle East, Europe, and the USA. These opportunities are strategically significant because they involve a new customer profile outside the traditional shipping container sector, expanding the application of our core technology. Furthermore, since the beginning of 2025, we have seen a nearly 100% increase in sales orders for Lokies and Tetis, which will contribute to this year's revenue.

Historically, the Company established its roots in fleet management. We have since evolved into a provider of sophisticated monitoring and security systems for containers and cargo across maritime, land, and air transport. Our solutions ensure reliability, security, and economic viability, significantly reducing implementation time and accelerating ROI for our customers. We are now leveraging our proven technology to enter new markets and are focused on establishing a direct presence in Europe, North America, and South America this year.

A key strategic objective for this year is our entry into the B2C market. This requires bespoke software development and a tailored marketing strategy. We are currently working to accelerate our timeline, now aiming to launch this initiative during the Summer.

Board and Senior Management Changes

2025 also marked a period of leadership transition. In April, our CFO, Igor Vatenmacher, stepped down to assume a CEO role at another firm, and we are pleased to retain his expertise on our Board of Directors in a non-executive role. His successor, Aviran Sabag, has brought renewed vigor to the finance role, focusing on streamlining operations and reducing supplier-related costs-initiatives that have already had a tangible positive impact on our cash flow. Additionally, Shachar Rosiansky has succeeded Maxim Perry as VP of Sales and is instrumental in driving the promising new business developments mentioned above. Meanwhile, Martin Blair has served the board of directors as a non‑executive director for a number of years and has agreed to step down as a director with effect from 30 June 2026. We shall greatly miss his wisdom and dedicated service over many years. Martin will also relinquish his role as chairman of the audit committee and will be succeeded by Igor at the end of June 2026.

R&D

Over the past twelve months, t42 continued to expand and strengthen its technology platform across firmware, hardware integration, and cloud infrastructure. Development efforts focused on improving reliability, scalability, and interoperability across the Helios, Lokies, and Kylos product families, while also expanding the platform's ability to integrate with external sensors and enterprise systems.

On the device side, we introduced multiple firmware enhancements for the Helios M Pro and Kylos M platforms, improving BLE connectivity stability, battery monitoring, and odometer-based mileage and speed calculations. We also expanded support for additional BLE sensors, including door sensors and beacon devices, enabling broader IoT monitoring use cases across logistics and fleet environments. Significant work was also carried out to improve firmware upgrade reliability, GNSS performance, cellular connectivity initialization, and device-level diagnostics, ensuring higher operational stability across large deployments.

For the Lokies platform, we continued refining locking state awareness, environmental monitoring, and communication protocols, including enhancements that allow identification of the user interacting with the device and improved temperature measurement reliability. These upgrades further strengthen Lokies' suitability for high-security logistics and asset protection applications.

At the cloud and platform level, the t42 system underwent substantial upgrades to improve monitoring, reporting, and system integration capabilities. New webhook integrations, expanded APIs, and enhanced event monitoring allow customers and partners to integrate t42 data more easily into their operational systems. We also introduced new reporting tools for driver behaviour, routing monitoring, SIM management, and fleet analytics, enabling customers to gain deeper operational insights from their deployments.

In parallel, we continued investing in the performance and scalability of the platform infrastructure. Improvements included enhanced routing services, better transmission monitoring, API throttling mechanisms, and additional backend services written in Rust to support future high-scale deployments. These developments position the t42 platform to support significantly larger fleets and device volumes while maintaining high reliability and performance.

Looking ahead, alongside ongoing platform improvements, we are currently developing a completely new version of the Lokies platform. This new generation of the platform is designed to support our strategic efforts to expand into the B2C market, providing a simplified user experience, improved onboarding, and enhanced device management capabilities tailored for individual users and small businesses.

FINANCIAL REVIEW

·      Group revenues of $6.10 million (2024: $4.16 million) - an increase of 47%.

·      Gross margin increased to 46% (2024: 38%). The software and hardware segments recorded strong margins of 88% and 25%, respectively (2024: 82% and -7%).

·      Total operating expenses decreased to $2.45 million (2024: $2.48 million).

·      Operating profit of $0.37 million, a substantial improvement on the prior year (2024: loss of $0.88 million).

·      Loss after tax decreased to $0.58 million (2024: $1.75 million).

·      A foreign exchange rate loss of $593k was recorded mainly due to the depreciation of the Israeli shekel against the US dollar (2024: $72k gain).

·      Trade receivables declined to $0.60 million (2024: $0.88 million).

·      Inventory declined to $0.86 million (2024: $1.12 million).

·      Trade payables decreased to $0.73 million (2024: $1.11 million).

·      Cash flow from operations was approximately $0.4 million, compared to cash flow of $0.6 million in 2024.

OUTLOOK

After several years of market entry challenges and technology validation in the container space, we made a strategic decision to rebrand the Company and focus on container tracking solutions. This move sends a clear message: t42 is here to lead.

In 2025, we experienced over 250% growth in container-related sales compared to 2024, and negotiations are already underway to expand existing agreements. It is now clear that we are not just participating in the market - we are becoming a key player.

But our ambition goes further - to lead the next wave of innovation in the industry. This requires breakthroughs, an advanced strategy, and collaborations with visionary industry leaders. We are already in advanced discussions with such partners and hope to share developments soon.

The journey has begun - long, challenging, and at times turbulent, but full of opportunities. The Board's expectations for t42 are high, and we look forward to updating on key milestones.

Michael Rosenberg OBE

Non-Executive Chairman

_______________

CORPORATE GOVERNANCE STATEMENT

General

The Board has adopted the QCA Corporate Governance Code ("the QCA Code"), further detail of which is set out on the Company's website. The following comments are intended to provide an update on the application of these guidelines where appropriate. The Company seeks to comply with the principles of the QCA Code that the Board considers appropriate, given the size and nature of the business. However, there may be certain cases where non-compliance is appropriate due to the nature of the business and its non-UK status, as explained further below.

Division of responsibilities     

As of today, the T42 IoT Tracking Solutions PLC Board consists of four directors, three of whom are non-executive, including the Chairman. Although the Company is a relatively small company with a small board, the roles of Chairman and CEO are separate, clearly established roles, with a clear division of responsibilities between them.

The Chairman

The Chairman is responsible for the leadership of the Board. The Chairman sets the agenda for Board meetings and encourages an open and constructive debate. Since the Company is based in Tel Aviv, some Board meetings take place by conference call, but normally at least one meeting a year takes place physically in Israel with all Board members attending. However, given the current troubles in Israel it was decided to hold all meetings in 2025 by conference call.  During 2025, a total of 6 Board meetings were held and all directors attended all meetings either in person or by conference call. There were 2 audit committee meetings held during the year under review, and all members of the committee attended. There was one remuneration committee meeting held during the year under review, which all members attended.

The non-executive directors

The Chairman is responsible for the leadership of the Board. The Chairman sets the agenda for Board meetings and encourages an open and constructive debate. Since the Company is based in Tel Aviv, some Board meetings take place by conference call, but normally at least one meeting a year takes place physically in Tel Aviv with all Board members attending.  However, given the current troubles in Israel it was decided to hold all meetings in 2025 by conference call.

Time Commitment

Each non-executive director is required to be able to devote sufficient time to his role as a director in the light of other commitments external to the Board. In practice, despite their limited contractual time obligations to the Board which in general are one or two days a month, the non-executive directors devote considerable time over and above their commitments to the Company in support of the other executive members of the Board. On average, they provide at least one day a week and sometimes more to assist management. The non-executive director is fully committed to the Company and spends as much time as is needed, both in normal working hours and very often much more.

The business model and strategy

The strategic objectives of the Company are becoming clear in the shipping container market.  The Company's target is to reach each and every container and convert it into a transmitting data point. The Company is targeting to use the opportunity of the present global environment of supply chain challenges and logistics costs in order to penetrate the mass market. The Company's legacy products and experience will support the business to challenge this market and provide a comprehensive solution.

To understand and meet shareholder needs and expectations

The Board keeps in regular contact with investors with a view to understanding their needs and expectations. During 2025, with the assistance of the Company's brokers, presentations were made to a number of investors. In addition, the Board welcomes contact from investors via the Company's brokers, and via the website. Shareholders are encouraged to attend the Company's Annual General Meetings where they can meet and directly communicate with the Board.

Taking into account wider stakeholder and social responsibilities and their implications for long-term success

The Company's tracking products are sold via distributors; therefore, the Company has little influence over individual product sales. Thus, although the Company continues to monitor performance of its distribution network, it is not generally in touch with end users and has limited influence over the processes followed by distributors. However, the Board constantly reviews the distribution network by measuring the performance of individual distributors. Where products are manufactured by external firms, the Company regularly inspects the production facilities and processes used.

The Board is committed to reviewing and assessing stakeholder expectations and guides the Company's senior management to act in accordance with feedback received.

Embed effective risk management

The Board is fully aware of, and monitors closely, the risks that may apply to the business. These include counterparty credit risk, foreign exchange risk and, from time to time, political risks in countries where the Company is actively marketing its products. It is also influenced by the covenants imposed by its bankers on credit risk for certain countries. Operational risks are identified and assessed by management and are reported to the Board when necessary. The Audit Committee also addresses these risks at its regular meetings. During 2025, management has actively been seeking to widen the manufacturing bases for the Company's products so as to lessen reliance on any single manufacturer, thus minimizing risk to the business. In order to monitor risk, regular visits are made to the manufacturing facility and the Board is informed of any issues that need addressing. The key risks facing the Company together with any mitigation taken are considered further on pages 11-13 of this document.

Ensure that the directors have the necessary up-to-date experience and skills

The Board currently comprises one executive and three non-executive directors with an appropriate balance of sector, financial and public market skills, and experience. The experience and knowledge of each of the directors gives them the ability to constructively challenge strategy and to scrutinise performance. In addition, the Non-Executive Chairman, Michael Rosenberg, brings further strategic, commercial, transaction and leadership experience which will be invaluable as the Board pursues the Company's growth strategy and continues to transform the Company.

Ethical matters

As a small company, the directors are constantly in touch with members of the staff. There are about 14 members based in the office in Israel and their needs and aspirations are regularly reviewed.

Main governance structures and processes

The Non-Executive Chairman, Michael Rosenberg, has responsibility for ensuring proper corporate governance and can also rely on the support of the non-board CFO, Mr Sabag, who is also very familiar with corporate governance requirements.

Further information on the Board and its Committees:

Michael Rosenberg OBE (Non-Executive Chairman)

Michael has many years of experience both as a corporate financier and as an entrepreneur, involved in a number of new businesses in the healthcare, media and financial sectors. He has considerable global experience, having been chairman of the UK DTI committee on trade with Hong Kong and as member of the China Britain Business Council. He was, for many years, also chairman of the British Export Healthcare Association, now known as ABHI, and led a number of UK trade missions overseas. He was a founder of the investment bank now known as Numis Securities where he served as chairman for a number of years until his retirement in 1999.

Over many years he has also served on the boards of other Israeli companies listed on AIM, including Pilat Media Global PLC, as well as several other non-listed companies. 

Avi Hartmann (Chief Executive Officer)

Avi has spent his life as an entrepreneur focused on the technology of tracking systems. He was a founder of Mobiltel Communications Services, which was purchased by Pelephone in Israel in 1999. Together with his son, Uri Hartmann, and his then partner, Doron Kedem, he founded t42 IoT Tracking Solutions PLC in 2004.

Martin Blair (Non-Executive Director)

Martin qualified as a chartered accountant with Ernst & Young in 1982 and between 1983 and 1986 also worked for PwC.  He then spent 15 years in a variety of senior financial roles, primarily for media and technology companies, both in UK and the US. Martin became the CFO for Pilat Media Global PLC, a company which previously traded on both AIM and the Tel Aviv Stock Exchange. Pilat Media Global developed, marketed and supported new generation business management software solutions for content and service providers in the media industry. Martin is also currently non-executive Chairman of the Board and Audit Chair at Cake Box Holdings PLC (AIM: CAKE).

Igor Vatenmacher (Non-Executive Director)

Igor is a certified public accountant in Israel and has a bachelor's degree in economics from Ben Gurion University of the Negev, and an Executive MBA degree with honours, specializing in financing, banking, capital markets and financial engineering, from the Hebrew University in Jerusalem. He began his career with Ernst and Young. Igor joined t42 IoT Tracking Solutions PLC in December 2017 and brings highly qualified accounting experience to the Company. Since his appointment, he has assisted with the development of more sophisticated internal systems and controls essential to the growth of the business. He joined the Board of the Company in January 2019 as CFO, transitioning to a non-executive role in April 2025.

Audit Committee

The Audit Committee consists of the non-executive directors, Martin Blair and Michael Rosenberg, and is chaired by Martin Blair. The Audit Committee, inter alia, determines and examines matters relating to the financial affairs of the Company, including the terms of engagement of the Company's auditors and, in consultation with the auditors, the scope of the annual audit. The Audit Committee met several times during 2025. In June 2025, the Audit Committee reviewed the financial statements for the year ended 31 December 2024, paying particular attention to the level of debtors. The Audit Committee met in August 2025 to consider the interim financial statements for the six months ended 30 June 2025. Again, the Committee focused on stock valuation and debtor levels. The Board considers that, given the size and nature of the business, it is not beneficial to include a full audit committee report in the annual report and accounts for 2025. This will be kept under annual review by the Board.

The Remuneration Committee reviews the performance of the directors and makes recommendations to the Board on matters relating to their remuneration and terms of employment. The Committee also makes recommendations to the Board on proposals for the granting of share options and other equity incentive plans pursuant to any share option scheme or equity incentive scheme in operation from time to time. The committee meets as and when necessary to assess the suitability of candidates proposed for appointment by the Board, but not less than once per annum. Members of the Remuneration Committee comprise Michael Rosenberg, who acts as chairman of the committee, with Martin Blair as a member.

The Board considers that, given the size and nature of the business, it is not beneficial to include a Remuneration Committee report in the annual report and accounts for 2025. This will be kept under annual review by the Board.

On behalf of the Board,

M. Rosenberg, Non-Executive Chairman

_______________

t42 IoT Tracking Solutions PLC

              Directors' Report

              for the Year Ended December 31, 2025

The directors present the annual report together with the financial statements and auditors' report for the year ended December 31, 2025.

The Company was incorporated in Jersey and two wholly-owned trading subsidiaries: Starcom Systems Limited and t42 Ltd, were incorporated in Jersey and in Israel, respectively.

Principal activities and review of business

t42 pioneering Advanced Real-Time Tracking and Management Solutions

t42 is a global leader in the field of advanced, automated real-time systems, specializing in the remote tracking and management of vehicles, containers, and assets. Our commitment to innovation is underpinned using cutting-edge Artificial Intelligence (AI) and Machine Learning (ML) technologies. We offer a unique and revolutionary real-time cargo tracking solution that caters to a diverse clientele.

At the forefront of our product line are the revolutionary Tetis, Lokies, and Kylos products. These products provide a comprehensive 360 degree view of containers and goods throughout the entire supply chain. Our commitment to excellence is evident in the strength, stability, and continuous performance of all our systems.

Accounts production

The financial statements for the year ended December 31, 2025, have been prepared in accordance with International Financial Reporting Standards as adopted by the EU ("IFRS").

Dividends

The directors do not propose a final dividend.

Directors

Michael Rosenberg             Appointed February 2013

Avi Hartmann                      Appointed February 2013

Igor Vatenmacher               Appointed January 2019

Martin Blair                          Appointed May 2019

Remuneration of Directors 

Remuneration of directors for the year ending 31 December 2025: (All amounts presented in thousands of USD)

Executive Director	Salary	Pension and Related Expenses		Fees	Car Maintenance	Total
A Hartmann	179		26	-	31	236
U Hartmann	179		26	-	22	227
Non-Executive Directors
M Rosenberg	-		-	53	-	53
M Blair	-		-	47	-	47
Total 2025	358		52	100	53	563

Directors' remuneration in share options: (In thousands)

Executive Director	Total vested at 01/01/25	Exercised	Vested/ (Expired) during the year		Total Vested at 31/12/25		Total Un-vested at 31/12/25		Grant Total
A Hartmann	1,165	-		-		1,165		-		1,165
I Vatenmacher	375	-		-		375		-		375
Non-Executive Directors
M Rosenberg	814	-		-		814		-		814
M Blair	364	-		-		364		-		364
	2,718					2,718				2,718

Charitable and Political Donations

The Group did not make any charitable or political contributions during the year.

Corporate governance

The Company adopts the Quoted Company Alliance's (QCA) Corporate Governance Code ("QCA Code") and the Board believes this is the appropriate code for the Company to adhere to.  The Board assesses its compliance with the QCA Code on an annual basis.

In common with other organizations of a similar size, the executive directors are heavily involved in the day to day running of the business and meet regularly on an informal basis as well as at Board Meetings.

The Board of directors meets regularly and is responsible for formulating strategy, monitoring financial performance and approving major items of capital expenditure.

Statement of Directors' Responsibilities

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable laws and regulations.

Company law requires the directors to prepare Group and parent Company financial statements for each financial year. Under that law, the directors are required to prepare the Group and parent Company financial statements in accordance with International Financial Reporting Standards ("IFRS") as adopted by the EU.

The financial statements are required by law to give a true and fair view of the state of affairs of the Group and parent Company and of the profit and loss of the Group for that period.

In preparing each of the Group and parent Company financial statements, the directors are required to:

i)              Select suitable accounting policies and then apply them consistently;

ii)             Make judgments and accounting estimates that are reasonable and prudent; and

iii)            State whether they have been prepared in accordance with IFRS as adopted by the EU, subject to any material departures disclosed and explained in the parent Company financial statements; and prepare the financial statements on the "going concern" basis unless it is inappropriate to presume that the Group and the parent Company will continue in business.

The directors are responsible for keeping proper accounting records which disclose with reasonable accuracy, at any time, the financial position of the Group and parent Company and enable them to ensure that the financial statements comply with the Companies Act 2006 and Article 4 of the IAS Regulations. They have a general responsibility for taking such steps as are reasonably open to safeguard the assets of the Group and parent Company and to prevent and detect fraud and other irregularities.

Under applicable law and regulations, the directors are also responsible for preparing a Directors' Report to comply with that law and those regulations.

In determining how amounts are presented within terms in the income statement and balance sheet, the directors have regarded the substance of the reported transaction or arrangement in accordance with generally accepted accounting principles or practice.

So far as each of the directors is aware at the time the report is approved:

There is no relevant audit information of which the Company's auditors are unaware; and

The directors have taken all steps that they ought to have taken to make themselves aware of any relevant audit information and to establish that the auditors are aware of that information.

Going concern

The directors have prepared and reviewed sales forecasts and budgets for the next twelve months and, having considered these cash flows and the availability of other financing sources if required, have concluded that the Group will remain a "going concern."  After this process and having made further relevant enquiries, the directors have a reasonable expectation that the Group and the Company have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the "going concern" basis in preparing the accounts.

Risks

Foreign exchange risks

Most of the Group's sales and income are in US Dollars and the US Dollar is the currency in which the Company reports. The expenses, however, are divided between the US Dollar, the British Pound, and the Israeli Shekel. The cost of goods (components) are paid in US Dollars and part of the operational costs, such as rent and other service providers, quote their fees in Israeli Shekel. Labor costs are paid in Israeli Shekels. The Company has, therefore, a partial currency risk in the event that the Israeli Shekel strengthens against the US Dollar, which could have an effect on the bottom line of the Group's financial results.

The Group consults with foreign currency experts from main Israeli banks regarding the main financial institutions' expectations for foreign currency changes. Management reviews them carefully and will consider with the board whether it should purchase financial instruments sold by local banks to protect itself from this foreign exchange risk.

Interest Rate Risks

The Company is exposed to interest risks as it uses credit lines and loans from its banks. Changes in the effective Prime interest rate published monthly by the Bank of Israel can influence the Company's financing costs.

Credit Risk

The Group is exposed to credit risks if its customers fail to pay for goods supplied by the Group. In order to minimize this risk, the Group has a policy of:

(a) Selling only to respectable integrators and distributors and not to the end customer.

(b) Orders from customers in certain regions are shipped only after an approved letter of credit is received by the Group's bank.

(c) New customers in common pays at least 30% before initial shipping.

Capital Risk management

The Group manages its cash carefully. In order to reduce its risk, the Group may take measures to reduce its fixed costs (labor) if performance is below the directors' expectations. The Group may conduct a placing for new shares of the Company in order to raise additional capital as required when monitoring its performance, and to continue its operations.

Supplier payment policy

It is the Group's policy to settle the terms of payment with suppliers when agreeing to the terms of the transaction, to ensure that suppliers are aware of these terms and to abide by them.

CREST

The Company's ordinary shares are eligible for settlement through CREST, the system for securities to be held and transferred in electronic form rather than on paper. Shareholders are not obliged to use CREST and can continue to hold and transfer shares on paper without loss of rights.

Electronic Communications

The Company may deliver shareholder information, including Annual and Interim Reports, Forms of Proxy and Notices of General Meetings, in an electronic format to shareholders.

If you would like to receive shareholder information in electronic format, please register your request on the Company's Registrar's electronic database at www.linkassetservices.com. You will initially need your unique investor code which you will find at the top of your share certificate. There is no charge for this service. If you wish to subsequently change your mind, you may do so by contacting the Company's Registrars by post or through their website.

If you elect to receive shareholder information electronically, please note that it is the shareholder's responsibility to notify the Company of any change in his name, address, email address or other contact details. Shareholders should also note that, with electronic communication, the Company's obligations will be satisfied when it transmits the notification of availability of information, or such other document as may be involved, to the electronic address it has on file. The Company cannot be held responsible for any failure in transmission beyond its control any more than it can be held responsible for postal failure.

In the event of the Company becoming aware that an electronic notification is not successfully transmitted, a further two attempts will be made. In the event that the transmission is still unsuccessful, a hard copy of the notification will be mailed to the shareholder. In the event that specific software is required to access information placed on the Company's website, it will be available via the website without charge.

Before choosing electronic communications, shareholders should ensure they have the appropriate equipment and computer capabilities sufficient for this purpose. The Company takes all reasonable precautions to ensure no viruses are present in any communication it sends out but cannot accept responsibility for loss or damage arising from the opening or use of any email or attachments from the Company and recommends that shareholders subject all messages to virus checking procedures prior to use. Any electronic communication received by the Company that is found to contain any virus will not be accepted.

Shareholders wishing to receive shareholder information in the conventional printed form will continue to do so and need to take no further action.

Should you have any further questions in this regard, please contact the Company's Registrars, Share Registrars Limited.

On behalf of the Board,

M. Rosenberg, Non-Executive Chairman

________________

 

INDEPENDENT AUDITORS' REPORT

To the Shareholders of t42 IoT Tracking Solutions PLC

Opinion

We have audited the consolidated financial statements of  t42 IoT Tracking Solutions PLC and its subsidiaries (hereinafter - "the Group") which comprise the consolidated statements of financial position as of December 31, 2025, and the consolidated statements of comprehensive income, changes in equity and cash flows for the year then ended, and notes to the consolidated financial statements, including material accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the group as at December 31, 2025, and its consolidated financial performance and its consolidated cash flows for the year then ended, in accordance with IFRS Accounting Standards.

Basis for Opinion

We conducted our audit in accordance with generally accepted auditing standards in Israel, including standards prescribed by the Auditor's Regulations (Auditor's Mode of Performance), 1973. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the company and its subsidiaries, in accordance with the applicable legal provisions in Israel regarding independence and conflict of interest of auditors. Additionally, we have fulfilled our other ethical responsibilities in accordance with the Auditors' Law, 1955 and the regulations thereunder. We believe that the audit evidence we have obtained is appropriate and sufficient to provide a basis for our opinion.

Emphasis of Matter - Financial Position of the Company

We draw attention to the statement in Note 1e to the financial statements regarding the financial position of the Company and the Company's sources of financing to meet its obligations. Our opinion does not include a change from the standard version regarding this matter.

Key Audit Matters

The key audit matters described below are those matters that were communicated, or were required to be communicated, to the board of directors of the Company, and that, in our professional judgment, were of most significance in the audit of the consolidated financial statements of the current period. These matters include, among others, any matter that (1) relates, or may relate, to significant accounts or disclosures in the consolidated financial statements; and (2) involved our professional judgment that was challenging, subjective or especially complex. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon. The communication of these matters below does not change our opinion on the consolidated financial statements as a whole, nor do we provide through such communication a separate opinion on these matters or on the accounts or disclosures to which they relate.

Why was this matter determined to be a Key Audit Matter in the audit

As stated in Note 4 to the consolidated financial statements, the Company's inventory balance, net of the provision for impairment as of December 31, 2025, amounts to approximately $856 thousand, which constitutes 22% of the total assets in the Company's consolidated financial Statements. Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and costs necessary to make the sale. The Company's management exercises judgment that involves estimates and assessments when reducing the value of inventory, based on market demand for its products that will affect inventory sales. In addition, the Company periodically reviews the condition and age of inventory and makes provisions for slow-moving inventory. Due to the complexity of the matter and its materiality in the financial statements, we identified this matter as a key audit matter.

The Response to the Key Matter in the Audit

The following are the main procedures we performed for this key matter as part of our audit:

• Assessing the adequacy of the Company's policy in making a provision for slow and/or dead inventory.

• Making inquiries of management.

• Attending inventory counts conducted by the Company and conducting sample inspections of inventory items.

• Obtaining references for the cost of material inventory items.

• Examining the selling prices of inventory items against the value of inventory as of December 31, 2025, in order to examine the recording of inventory at the lower of cost or net realizable value.

• Examining the completeness of the disclosure included in the Company's consolidated financial statements.

Responsibilities of Board of Directors and Management for the Consolidated Financial Statements

The board of directors and management are responsible for the preparation and fair presentation of the consolidated financial statements in accordance with IFRS Accounting Standards and for such internal control as the board of directors and management determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the board of directors and management are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the board of directors and management either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. 

Auditors' Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with generally accepted auditing standards in Israel will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with generally accepted auditing standards in Israel, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:

·    Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is appropriate and sufficient to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

·    Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control.

·    Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the board of directors and management.

·    Conclude on the appropriateness of the use by the board of directors and management of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.

·    Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the board of directors and management regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.

We also provide the board of directors and management with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, the safeguards applied to eliminate identified threats to our independence.

From the matters communicated or required to be communicated to the board of directors and management, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter.

The engagement partner on the audit resulting in this independent auditors' report is Assaf Shachar.

Shtainmetz Aminoach & Co.

Certified Public Accountants (Isr.)

Tel Aviv

April 13, 2026

T42 IOT TRACKING SOLUTIONS PLC

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

U.S. Dollars in thousands

		December 31,
	Note	2025			2024
ASSETS
NON-CURRENT ASSETS
Properties, plant and Equipment	6	254			341
Right-of-use assets	23	840			1,039
Intangible assets	7	591			759
Trade receivables	3	18			136
Bank deposit	5	10			9
Total Non-Current Assets		1,713			2,284
CURRENT ASSETS
Cash and cash equivalents		571			147
Trade receivables	3,24	585			740
Other accounts receivable		88			86
Inventory	4	856			1,117
Total Current Assets		2,100			2,090
TOTAL ASSETS		3,813			4,374
DEFICIT AND LIABILITIES
DEFICIT	14	(2,939)			(2,682)
NON-CURRENT LIABILITIES
Long-term bank loans, net of current maturities	10	-			13
Leasehold liabilities	23	715			770
Amortized cost of loans	11 A, B	2,059			-
Total Non-Current Liabilities		2,774			783
CURRENT LIABILITIES
Short-term bank credit	12	94			68
Current maturities of long-term bank loans	10	15			74
Trade payables		726			1,106
Other accounts payable	9	1,032			1,070
Current maturities of leasehold liabilities	23	187			202
Financial liabilities in fair value	11 A,B, C	249			238
Current maturities of amortized cost of loans	11A, B,D	666			2,745
Related parties	21	1,009			770
Total Current Liabilities		3,978			6,273
TOTAL DEFICIT AND LIABILITIES		3,813			4,374

                            The accompanying notes are an integral part of the consolidated financial statements.

April 13, 2026
Date of Approval of the Financial Statements		Aviran Sabag CFO		Avi Hartmann CEO

T42 IOT TRACKING SOLUTIONS PLC

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

U.S. Dollars in thousands (except shares data)

                                                                                +                                                                             

			Year ended December 31,
	Note		2025		2024
Revenues	24,25		6,100		4,158
Cost of revenues	15		(3,276)		(2,565)
Gross profit			2,824		1,593
Operating expenses:
Research and development			(349)		(159)
Sales and marketing	19		(389)		(366)
General and administrative expenses	16		(1,722)		(1,888)
Other expenses (income), net			8		(64)
Total operating expenses			(2,452)		(2,477)
Operating profit (loss)			372		(884)
Finance income	17		325		262
Finance expenses	18		(1,273)		(1,126)
Net finance income (expenses)			(948)		(864)
Total comprehensive loss for the year			(576)		(1,748)
Loss per share:
Basic and diluted loss per share	14, 20		(0.009)		(0.032)

The accompanying notes are an integral part of the consolidated financial statements.

                   T42 IOT TRACKING SOLUTIONS PLC

                   CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

                   U.S. Dollars in thousands

		Share   Capital			Premium on Shares			Capital Reserve				Reserve from Share-Based Payments				Accumulated Loss		Total deficit
Balance as of January 1, 2024		-		13,543			89				1,253				(15,824)				(939)
Share-based payment		-		-			-				5				-				5
Comprehensive loss for the year		-		-			-				-				(1,748)				(1,748)
Balance as of December 31, 2024		-		13,543			89				1,258				(17,572)				(2,682)
Issue of share capital, net of expenses		-		319			-				-				-				319
Comprehensive loss for the year		-		-			-				-				(576)				(576)
Balance as of December 31, 2025		-		13,862			89				1,258				(18,148)				(2,939)

The accompanying notes are an integral part of the consolidated financial statements.

T42 IOT TRACKING SOLUTIONS PLC

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. Dollars in thousands

		Year Ended December 31,
		2025		2024
CASH FLOWS FROM OPERATING ACTIVITIES:
Loss for the year		(576)		(1,748)
Adjustments for:
Depreciation and amortization		466		523
Financial expenses, Changes in fair value of financial liabilities and exchange rate differences, net		420		700
Share-based payment expenses		-		5
Gain from modification of debt terms		-		(190)
Intangible assets impairment		-		122
Changes in assets and liabilities:
Decrease in inventory		261		322
Decrease in trade receivables		273		17
Increase in other accounts receivable		(2)		(35)
Increase (Decrease) in trade payables		(380)		166
Increase (Decrease) in other accounts payable		(38)		720
Net cash provided by operating activities		424		602
CASH FLOWS FOR INVESTING ACTIVITIES:
Purchases of property, plant and equipment		(1)		(10)
Investment in intangible assets		-		(142)
Net cash used in investing activities		(1)		(152)
CASH FLOWS FOR FINANCING ACTIVITIES:
Increase (Decrease) in short-term bank credit, net		26		(77)
Proceeds from (payment to) related parties, net		51		19
Payment of leasehold liabilities		(210)		(191)
Repayment of loans		(185)		(240)
Consideration of the issue of shares, net		319		-
Net cash provided by (used in) financing activities		1		(489)
Increase (Decrease) in cash and cash equivalents		424		(39)
Cash and cash equivalents at the beginning of the year		147		186
Cash and cash equivalents at the end of the year		571		147
Appendix A - Additional Information
Interest paid during the year		358		338

The accompanying notes are an integral part of the consolidated financial statements.

T42 IOT TRACKING SOLUTIONS PLC

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

U.S. Dollars in thousands

NOTE 1 -	GENERAL
	a.	The Reporting Entity
		t42 IoT Tracking Solutions PLC ("the Company") was incorporated in Jersey on November 28, 2012. The Company and its subsidiaries ("the Group") is a global supplier in the field of advanced, automated real-time systems, specializing in the remote tracking and management of vehicles, containers, and assets.
		The Company fully owns t42 Ltd., an Israeli company, and Starcom Systems Limited, a company incorporated in Jersey. The Company's shares are admitted for trading on the AIM market of the London Stock Exchange ("AIM"). The address of the official Company office is in Israel at t42 IoT Tracking Solutions offices, which are located at 96 Dereh Ramatayim Street, Hod Hasharon, Israel. The address of the Company's registered office is at Starcom Systems Limited offices, which is: Forum 4, Grenville Street, St. Helier, Jersey, Channel Islands, JE4 8TQ.
	b.		Definitions in these financial statements:
1.				International Financial Reporting Standards ("IFRS") - Standards and interpretations adopted by the International Accounting Standards Board ("IASB") that include international financial reporting standards (IFRS) and international accounting standards (IAS), with the addition of interpretations to these Standards as determined by the International Financial Reporting Interpretations Committee (IFRIC) or interpretations determined by the Standards Interpretation Committee (SIC), respectively.
2.				The Company - t42 IoT Tracking Solutions PLC.
3.				The Subsidiaries - t42 Ltd. and Starcom Systems Limited.
4.				Starcom Jersey - Starcom Systems Limited.
5.				The Group - t42 IoT Tracking Solutions PLC. and the Subsidiaries.
6.				Related Party - As determined in International Accounting Standard No. 24.

NOTE 1 -	GENERAL (cont.)
	c.	Operating Turnover Period
		The ordinary operating period turnover for the Group is a year. As a result, the current assets and current liabilities include items that are expected and intended to be realized at the end of the ordinary operating turnover period for the Group.
	d.	Functional and Presentation Currency
		The consolidated financial statements are presented in U.S. dollars (hereinafter: "dollars"), which is the functional currency of the Group and is rounded to the nearest thousand, except when otherwise indicated.
		The dollar is the currency that represents the economic environment in which the Group operates.
		The Group's transactions and balances denominated in dollars are presented at their original amounts. Transactions in foreign currencies are translated into the respective functional currency of Group entities at the exchange rates on the transaction dates. Monetary assets and liabilities denominated in foreign currencies as of the reporting date are translated into the functional currency at the exchange rate as of that date. The foreign currency gain or loss on monetary items is the difference between amortized cost in the functional currency at the beginning of the year, adjusted for effective interest and payments during the year, and the amortized cost in foreign currency translated at the exchange rate at the end of the year. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Foreign currency differences arising in translation are recognized in profit or loss.
	e.	As of December 31, 2025, the Group has accumulated losses of $18.2 million from operations since inception and has a working capital deficit of $1.9 million, including loans totaling $2.8 million to be repaid or converted within the next 24 months. In addition, the year ended on December 31, 2025, resulted in net loss of $576k. Based on its forecasts regarding sales and current expenses' structure, the management believes that, due to the growth in the Group's sales and other efficient measures taken, the Company will have sufficient cash flows to continue its activities and meet its liabilities at least during the next 18 months.

NOTE 2A -	BASIS OF PREPARATION
	a.	Statement of compliance
		The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs). The consolidated financial statements were authorized for issue by the Company's Board of Directors on April 13, 2026.
	b.	Basis of Measurement
		The consolidated financial statements have been prepared on the historical cost basis, except for financial liabilities at fair value through profit or loss that are stated at fair value.

NOTE 2B -	USE OF ESTIMATES AND JUDGMENTS
	The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
	Upon formulation of accounting estimates used in preparation of the Group financial statements, management is required to make assumptions in regard to circumstances and events that are significantly uncertain. Management arrives at these decisions based on prior experiences, various facts, external items and reasonable assumptions in accordance with the circumstances related to each assumption.
	Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected. Information about assumptions made by the Group with respect to the future and other reasons for uncertainty with respect to estimates that have a significant risk of resulting in a material adjustment to carrying amounts of assets and liabilities in the next financial year are included in the following notes: Note 8 on Recognition of deferred tax assets in respect of tax losses. Note 11 on Fair value measurement of financial liabilities and derivatives. Determination of fair value Preparation of the financial statements requires the Group to determine the fair value of certain assets and liabilities. Further information about the assumptions that were used to determine fair value is included in the following note 11. When determining the fair value of an asset or liability, the Group uses observable market data as much as possible. There are three levels of fair value measurements in the fair value hierarchy that are based on the data used in the measurement, as follows: •           Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities. •           Level 2: inputs other than quoted prices included within Level 1 that are observable, either directly or indirectly •           Level 3: inputs that are not based on observable market data (unobservable inputs).
NOTE 2C -	SIGNIFICANT ACCOUNTING POLICIES
	a.     Basis of consolidation Subsidiaries are entities controlled by the Group. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control is lost. The accounting policies of subsidiaries are like the policies adopted by the Group. All intra-group transactions, balances, income, and expenses of the companies are eliminated on consolidation. b.     Foreign currency and linkage basis Assets and liabilities stated in foreign currency are translated to USD at exchange rates at the reporting date. The income and expenses of operations stated in the foreign currency are translated to USD at exchange rates at the dates of the transactions. Foreign currency differences are recognized in other comprehensive income. Exchange rates and changes in exchange rates during the reported periods are as follows:                    As of December 31,  2025 2024 Exchange Rate of NIS in U.S. $ 0.313 0.274 Exchange Rate of GBP in U.S. $ 1.345 1.254 For the Year Ended December 31, 2025             2024    Change in Exchange Rate of U.S. $ 14.23%            (0.72) % Change in Exchange Rate of GBP 7.26%             (1.57)% c.     Financial instruments (i) Financial assets The Group initially recognizes trade receivables and debt instruments issued on the date that they are created. All other financial assets are recognized initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument. A financial asset is initially measured at fair value plus transaction costs that are directly attributable to the acquisition or issuance of the financial asset. A trade receivable without a significant financing component is initially measured at the transaction price. Financial assets are derecognized when the contractual rights of the Group to the cash flows from the asset expire, or the Group transfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks and rewards of ownership of the financial asset were transferred. When the Group retains substantially all of the risks and rewards of ownership of the financial asset. Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Group currently has a legal right to offset the amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. The Group has balances of trade and other receivables and deposits that are held within a business model whose objective is collecting contractual cash flows. The contractual cash flows of these financial assets represent solely payments of principal and interest that reflect consideration for the time value of money and the credit risk. Accordingly, the group's financial assets are measured at amortized cost. These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.

NOTE 2C -	SIGNIFICANT ACCOUNTING POLICIES (cont.)
	c.	Financial instruments (cont.)
		(ii) Non-derivative financial liabilities
		Non-derivative financial liabilities include bank credit and borrowings from banks and others, finance lease liabilities, and trade and other payables.
		The Group initially recognizes debt securities issued on the date that they originated. All other financial liabilities are recognized initially on the trade date at which the Group becomes a party to the contractual provisions of the instrument.
		Financial liabilities (other than financial liabilities at fair value through profit or loss) are recognized initially at fair value less any directly attributable transaction costs. Subsequent to initial recognition these financial liabilities are measured at amortized cost using the effective interest method.
		Financial liabilities are derecognized when the obligation of the Group, as specified in the agreement, expires or when it is discharged or cancelled.
		An exchange of debt instruments having substantially different terms, is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. Furthermore, a substantial modification of the terms of an existing financial liability, or an exchange of debt instruments having substantially different terms between an existing borrower and lender, are accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability at fair value.  In such cases, the entire difference between the amortized cost of the original financial liability and the fair value of the new financial liability is recognized in profit or loss as financing income or expense. The terms are substantially different if the discounted present value of the cash flows according to the new terms, including any commissions paid, less any commissions received and discounted using the original effective interest rate, is different by at least ten percent from the present discounted value of the remaining cash flows of the original financial liability. In a non-substantial modification in terms of debt instruments, the new cash flows are discounted using the original effective interest rate, and the difference between the present value of the new financial liability and the present value of the original financial liability is recognized in profit or loss.
		(iii) Hybrid financial instruments
		Liabilities that are convertible into shares denominated in foreign currency or are linked foreign currency are a hybrid instrument (combined) that is presented fully as a financial liability. The instrument is split into two components for measurement purposes: A liability component without a conversion feature that is measured at amortized cost according to the effective interest method, and a conversion option that is an embedded derivative and is measured at fair value at each reporting date. Interest related to the financial liabilities is recognized in profit or loss.
		Any directly attributable transaction costs are allocated to the liabilities and equity components in proportion to their initial carrying amounts.
		(iv) Derivatives that do not serve hedging purposes
		The changes in fair value of these derivatives are recognized in profit or loss, as financing income or expense. Inter alia, the Group implements the said accounting treatment to changes in the fair value of the conversion component of convertible loans and warrants granted to lenders.

NOTE 2C -	SIGNIFICANT ACCOUNTING POLICIES (cont.)
	d.	Cash and cash equivalents
		Cash and cash equivalents comprise cash balances and call deposits with maturities of three months or less from the acquisition date, subject to an insignificant risk of changes in their fair value and used by the Group in the management of its short-term commitments.
	e.	Share capital
		Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognized as a deduction from equity, net of any tax effects.
		The consideration received from the issuance of a parcel of securities is attributed initially to financial liabilities that are measured each period at fair value through profit or loss, and then to financial liabilities that are measured only upon initial recognition at fair value. The remaining amount is the value of the equity component. Direct issuance costs are attributed to the specific securities in respect of which they were incurred, whereas joint issuance costs are attributed to the securities on a proportionate basis according to the allocation of the consideration from the issuance of the parcel
	f.	Property, plant and equipment
		Property, plant and equipment are measured at cost less accumulated depreciation.
		Depreciation is calculated using the straight-line method over the estimated useful lives of the assets, at the following annual rates:
			%
		Computers and software	33
		Office furniture and equipment	7 - 15
		Laboratory equipment	15
		Leasehold improvements are depreciated by the straight-line method over the term of the lease, ten-year period (including option terms) or the estimated useful lives of the improvements, unless it is reasonably certain that the Group will obtain ownership by the end of the lease term.
		At each balance sheet date, the Group examines the residual value, the useful life and the depreciation method it uses. If the Group identifies material changes in the expected residual value, the useful life or the future pattern of consumption of future economic benefits in the asset that may indicate that a change in depreciation is required, such changes are treated as changes in accounting estimates. In 2025, no material changes have taken place with any material effect on the financial statements of the Group.
	g.	Intangible assets: Research and development
		Expenditure on research activities, undertaken with the prospect of gaining new scientific or technical knowledge and understanding, is recognized in profit or loss as incurred.
		Development activities involve a plan or design for the production of new or substantially improved products and processes. Development expenditure is capitalized only if development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Group intends and has sufficient resources to complete development and to use or sell the asset.
		The expenditure capitalized includes the cost of material and direct labor that are directly attributable to preparing the asset for its intended use. Other development expenditure is recognized in profit or loss as incurred.

NOTE 2C -	SIGNIFICANT ACCOUNTING POLICIES (cont.)
	g.	Intangible assets: Research and development (cont.)
		Capitalized development expenditure is measured at cost less accumulated amortization and accumulated impairment losses. Amortization is calculated using the straight-line method over the estimated useful lives of the assets: between five to ten years.
		At each balance sheet date, the Group reviews whether any events have occurred or changes in circumstances have taken place, which might indicate that there has been an impairment of the intangible assets. When such indicators of impairment are present, the Group evaluates whether the carrying value of the intangible asset in the Group's accounts can be recovered from the cash flows anticipated from that asset, and, if necessary, records an impairment provision up to the amount needed to adjust the carrying amount to the recoverable amount.
	h.	Leases
		On the inception date of the lease, the Group determines whether the arrangement is a lease or contains a lease, while examining whether it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. In its assessment of whether an arrangement conveys the right to control the use of an identified asset, the Group assesses whether it has the following two rights throughout the lease term: (a)The right to obtain substantially all the economic benefits from use of the identified asset; and (b)The right to direct the identified asset's use.
		1.     Lease assets and lease liabilities
		Contracts that award the Group control over the use of a leased asset for a period of time in exchange for consideration, are accounted for as leases. Upon initial recognition, the Group recognizes a liability at the present value of the balance of future lease payments (these payments do not include certain variable lease payments) and concurrently recognizes a right-of-use asset at the same amount of the lease liability, adjusted for any prepaid or accrued lease payments, plus initial direct costs incurred in respect of the lease. Since the interest rate implicit in the Group's leases is not readily determinable, the incremental borrowing rate of the Lessee is used. Subsequent to initial recognition, the right-of-use asset is accounted for using the cost model and depreciated over the shorter of the lease term or useful life of the asset. The Group has elected to apply the practical expedient by which short-term leases of up to one year and/or leases in which the underlying asset has a low value, are accounted for such that lease payments are recognized in profit or loss on a straight-line basis, over the lease term, without recognizing an asset and/or liability in the statement of financial position.
		2.     Lease term
		The lease term is the non-cancellable period of the lease plus periods covered by an extension or termination option if it is reasonably certain that the lessee will or will not exercise the option, respectively
		3.     Variable lease payments
		Variable lease payments that depend on an index or a rate are initially measured using the index or rate existing at the commencement of the lease and are included in the measurement of the lease liability. When the cash flow of future lease payments changes as a result of a change in an index or a rate, the balance of the liability is adjusted against the right-of-use asset. Other variable lease payments that are not included in the measurement of the lease liability are recognized in profit or loss in the period in which the event or condition that triggers payment occurs.

NOTE 2C -	SIGNIFICANT ACCOUNTING POLICIES (cont.)
	h.	Leases (cont.)
		4.     Depreciation of right-of-use assets
		After lease commencement, a right-of-use asset is measured on a cost basis less accumulated depreciation and accumulated impairment losses and is adjusted for re-measurements of the lease liability. Depreciation is calculated on a straight-line basis over the useful life or contractual lease period, whichever earlier, as follows:
		Offices -                                10 years
		Vehicles -                              3 years
	i.	Inventories
		Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the moving average/first-in first-out (FIFO) principle, and includes expenditure incurred in acquiring the inventories and the costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operating capacity. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

 

NOTE 2C -	SIGNIFICANT ACCOUNTING POLICIES (cont.)
	j.	Impairment
		Financial assets
		The Group recognizes a provision for expected credit losses (provision for doubtful accounts) in respect of financial assets at amortized cost which are mainly trade receivables. The Group has elected to measure the provision for expected credit losses in respect of trade receivables at an amount equal to the full lifetime credit losses of the instrument. When determining whether the credit risk of a financial asset has increased significantly since initial recognition, and when estimating expected credit losses, the Group considers reasonable and supportable information that is relevant and available with no undue cost or effort. Such information includes quantitative and qualitative information, and an analysis, based on the Group's past experience and informed credit assessment, and it includes forward-looking info. The Group assumes that the credit risk of a financial asset has increased significantly since initial recognition when contractual payments are past due for more than 60 days. The Group considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the Group in full or when the payments of the financial assets are past due for more than 120 days. Credit losses are measured as the present value of the difference between the cash flows due to the Group in accordance with the contract and the cash flows that the Group expects to receive. At each reporting date, the Group assesses whether financial assets carried at amortized cost is credit-impaired. A financial asset is 'credit-impaired' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following events: Significant financial difficulty of the borrower, payments being past due, it is probable that the borrower will enter bankruptcy or other financial reorganization. Provisions for expected credit losses of financial assets measured at amortized cost are deducted from the gross carrying amount of the financial assets. The gross carrying amount of a financial asset is written off when the Group does not have reasonable expectations of recovering a financial asset at its entirety or a portion thereof. This is usually the case when the Group determines that the debtor does not have assets or sources of income that may generate sufficient cash flows for paying the amounts being written off. However, financial assets that are written off could still be subject to enforcement activities in order to comply with the Group's procedures for recovery of amounts due
		Non-financial assets
		The carrying amounts of the Group's non-financial assets, other than inventories are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset's recoverable amount is estimated. The recoverable amount of an asset is the greater of its value in use and its fair value less costs of disposal. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the assessments of market participants regarding the time value of money and the risks specific to the asset for which the estimated future cash flows from the asset were not adjusted. An impairment loss is recognized if the carrying amount of an asset exceeds its estimated recoverable amount. Impairment losses are recognized in profit or loss.
	k.	Revenues
		The Group recognizes revenue when the customer obtains control over the promised goods or services. The revenue is measured according to the amount of the consideration to which the Group expects to be entitled in exchange for the goods or services promised to the customer, other than amounts collected for third parties. When determining the transaction price the Group takes into account the effects of all relevant elements like: discounts, refunds, credits and an existence of a significant financing component. In order to measure the transaction price, the Group adjusts the amount of the promised consideration in respect of the effects of the time value of money if the timing of the payments agreed between the parties provides the customer a significant financing benefit.

 

NOTE 2C -

SIGNIFICANT ACCOUNTING POLICIES (cont.)

	k.		Revenues (cont.)
			When assessing whether a contract contains a significant financing component, the Group examines, inter alia, the expected length of time between the date the Group transfers the promised goods or services to the customer and the date the customer pays for these goods or services, as well as the difference, if any, between the amount of the consideration promised and the cash selling price of the promised goods or services. When the contract contains a significant financing component, the Group recognizes the amount of the consideration using the discount rate that would be reflected in a separate financing transaction between it and the customer on the contract's inception date. The financing component is recognized as interest income over the period, which are calculated according to the effective interest method. In cases where the difference between the time of receiving payment and the time of transferring the goods or services to the customer is one year or less, the Group applies the practical expedient included in the standard and does not separate a significant financing component. During the year of 2025 the group recognized such interest income in the amount of 49K$. In sales of  hardware products (devices) customers obtain control over the products when they are dispatched from the Group's warehouse and or when they are provided to the client's warehouse (depending on the specific agreement between client and the group), therefore the Group recognizes revenue at that time. For Saas services, which mainly include providing access to Group's platform that allows control and monitoring of the use of the Group's products - revenue is recognized over time in the reporting period in which the services are provided, since the customer simultaneously receives and consumes the benefits provided by the Group's performance when the Group provides such services. In certain contracts with customers the Group provides warranty services to the customers according to the contract or as customary in the industry. The warranty services are provided only in order to ensure the quality of the work and compliance with the specifications agreed between the parties, and do not constitute an additional service to the customer. Therefore, the Group does not identify the warranty as a distinct performance obligation but rather accounts for it in accordance with the guidance in IAS 37 and recognizes a provision for warranty at the estimated cost of such services.
		l.	Provisions
			Provisions are recognized when the Group has a current obligation (legal or derived) as a result of a past occurrence that can be reliably measured, that will in all probability result in the Group being required to provide additional benefits in order to settle this obligation. Provisions are determined by capitalization of projected cash flows at a rate prior to taxes that reflects the current market preparation for the money duration and the specific risks for the liability.

NOTE 2C -	SIGNIFICANT ACCOUNTING POLICIES (cont.)
	m.	Finance income and expenses
		Financing income comprises interest income on funds invested, gains on changes in the fair value of financial derivatives at fair value through profit or loss and foreign currency gains.
		Financing expenses comprise interest expense on borrowings, charges and changes in the fair value of financial derivatives at fair value through profit or loss. Borrowing costs, which are not capitalized to qualifying assets, are recognized in profit or loss using the effective interest method. Foreign currency gains and losses on financial assets and financial liabilities are reported on a net basis as either financing income or financing expenses depending on whether foreign currency movements are in a net gain or net loss position. Interest income or expense is recognized using the effective interest method. Generally, in calculating interest income and expense, the effective interest rate is applied to the gross carrying amount of the financial asset or to the amortized cost of the financial liability, as applicable.
n. Employee benefits 1. Short-term employee benefits - Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided or upon the actual absence of the employee when the benefit is not accumulated (such as maternity leave). A liability is recognized for the amount expected to be paid under short-term cash bonus if the Group has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee and the obligation can be estimated reliably. The employee benefits are classified, for measurement purposes, as short-term benefits or as other long-term benefits depending on when the Group expects the benefits to be wholly settled. 2. Benefits upon retirement - The Group has a post-employment benefit plans. The plans are financed by deposits with insurance companies, and they are classified as defined contribution plans. A defined contribution plan is a post-employment benefit plan under which an entity pays fixed contributions into a separate entity and has no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognized as an expense in profit or loss in the periods during which related services are rendered by employees. Contributions to a defined contribution plan that are due more than 12 months after the end of the period in which the employees render the service are discounted to their present value. 3. Shares based payments The grant date fair value of share-based payment awards granted to employees is recognized as a salary expense, with a corresponding increase in equity, over the period that the employees become unconditionally entitled to the awards. The amount recognized as an expense in respect of share-based payment awards that are conditional upon meeting service is adjusted to reflect the number of awards that are expected to vest. Share-based payment arrangements in which equity instruments are granted by the parent company to the employees of the Company are accounted for by the Company as equity-settled share-based payment transactions.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS U.S. Dollars in thousands
NOTE 2C -	SIGNIFICANT ACCOUNTING POLICIES (cont.)
	o.	Taxes
		Income tax comprises current and deferred tax. Current tax and deferred tax are recognized in profit or loss.
		Current taxes Current tax is the expected tax payable (or receivable) on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date. Current taxes also include taxes in respect of prior years and any tax arising from dividends. Deferred taxes Deferred tax is recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax is not recognized for temporary differences related to the initial recognition of assets and liabilities in a transaction that is not a business combination and that affects neither accounting nor taxable profit or loss. The measurement of deferred tax reflects the tax consequences that would follow the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when they reverse, based on the laws that have been enacted or substantively enacted by the reporting date. A deferred tax asset is recognized for unused tax losses and deductible temporary differences, to the extent that it is probable that future taxable profits will be available against which they can be utilized. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realized. Deferred tax assets that were not recognized are reevaluated at each reporting date and recognized if it has become probable that future taxable profits will be available against which they can be utilized. Offset of deferred tax assets and liabilities Deferred tax assets and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they relate to income taxes levied by the same tax authority on the same taxable entity, or on different tax entities, but they intend to settle current tax liabilities and assets on a net basis or their current tax assets and liabilities will be realized simultaneously.
	p.	Earnings per Share
		The Group presents basic and diluted earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders of the Company and the weighted average number of ordinary shares outstanding, after adjustment for the effects of all dilutive potential ordinary shares, which comprise convertible loans,  warrants and share options granted to employees.

NOTE 2D -		CHANGES IN ACCOUNTING POLICIES AND DISCLOSURES
There were no new standards or amendments that are relevant for the Group which are effective for annual periods beginning on or after 1 January 2024. New significant relevant standards not yet adopted: IFRS 18, Presentation and Disclosure in Financial Statements This standard replaces IAS 1, Presentation of Financial Statements. The purpose of the standard is to provide improved structure and content to the financial statements, particularly the income statement. The standard includes new disclosure and presentation requirements that were taken from IAS 1, Presentation of Financial Statements, with small changes. As part of the new disclosure requirements, companies will be required to present two subtotals in the income statement: operating profit and profit before financing and taxes. Furthermore, for most companies, the results in the income statements will be classified into three categories: operating profit, profit from investments and profit from financing. In addition to the changes in the structure of the income statements, the standard also includes a requirement to provide separate disclosure in the financial statements regarding the use of management-defined performance measures (non-GAAP measures). Furthermore, the standard adds specific guidance for aggregation and disaggregation of items in the financial statements and in the notes. The standard will encourage companies to avoid classifying items as 'other' (for example, other expenses), and using this classification will lead to additional disclosure requirements. The standard is effective from annual reporting periods beginning on or after 1 January 2027 with earlier application being permitted. The Group is examining the effects of the standard on its financial statements with no plans for early adoption.

NOTE 3 -	TRADE RECEIVABLES
			December 31
			2025		2024
	Open accounts		456		439
	Income to receive		147		460
			603		899
	Provision for doubtful accounts (credit loss)		-		(23)
			603		876
	Income to receive - long term		(18)		(136)
			585		740

The movement in the provision for doubtful accounts respect of trade receivables during the year was as follows:
		2025		2024
Balance as at January 1		23		21
Change from write-off of financial assets		(41)		(42)
Allowance for doubtful accounts		18		44
Balance as of December 31		-		23

Presented hereunder is information about ages of trade receivables accounts:

		December 31, 2025
Not past due		428
Past due 1-30 days		125
Past due 31-60 days		35
Past due 61-90 days		6
Past due more than 90 days (*)		9
Total		603

(*) The provision for doubtful accounts refers to debts overdue by more than 90 days.

NOTE 4 -	INVENTORY
			December 31
			2025		2024
	Raw materials		640		959
	Finished goods		216		158
			856		1,117

In 2025, the Group wrote down inventories to their net realizable value by the amount of $399k.

NOTE 5 -	BANK DEPOSIT
	Bank deposit sums of $10 and $9 as of December 31, 2025 and 2024, respectively, serves as a security deposit for repayment of a long-term bank loan (see note 10). The deposit bears negligible interest.

NOTE 6 -		PROPERTY, PLANT AND EQUIPMENT
			Computers and Software		Furniture and Equipment		Laboratory Equipment		Leasehold Improvements			Total
	Cost:
c	Balance as of January 1, 2025		244		159		310		347			1,060
	Additions during the year		-		1		-		-			1
	Balance as of December 31, 2025		244		160		310		347			1,061
	Accumulated Depreciation:
	Balance as of   January 1, 2025		235		131		255		98			719
	Depreciation during the year		7		4		43		34			88
	Balance as of December 31, 2025		242		135		298		132			807
	Net book value December 31, 2025		2		25		12		215			254
			Computers and Software		Furniture and Equipment		Laboratory Equipment		Leasehold Improvements			Total
	Cost:
c	Balance as of January 1, 2024		240		159		306		345			1,050
	Additions during the year		4		-		4		2			10
	Balance as of December 31, 2024		244		159		310		347			1,060
	Accumulated Depreciation:
	Balance as of   January 1, 2024		221		117		220		70			628
	Depreciation during the year		14		14		35		28			91
	Balance as of December 31, 2024		235		131		255		98			719
	Net book value December 31, 2024		9		28		55		249			341

NOTE 7 -		INTANGIBLE ASSETS
					Total
		Cost:
		Balance as of January 1, 2025			2,160
		Additions - capitalized development costs			-
		Balance as of December 31, 2025			2,160
		Accumulated Amortization and impairment loss:
		Balance as of January 1 ,2025			(1,401)
		Amortization during the year			(168)
		Impairment during the year			-
		Balance as of December 31, 2025			(1,569)
		Net book value as of December 31, 2025			591
					Total
		Cost:
		Balance as of January 1, 2024			2,018
		Additions - capitalized development costs			142
		Balance as of December 31, 2024			2,160
		Accumulated Amortization:
		Balance as of January 1, 2024			(1,066)
		Amortization during the year			(213)
		Impairment during the year			(122)
		Balance as of December 31, 2024			(1,401)
		Net book value as of December 31, 2024			759
	Amortization is calculated using the straight-line method over the estimated useful lives of the assets, 5-10 years.

NOTE 8 -

TAXES ON INCOME

a.

Israeli taxation

1.

The Israeli corporate tax rate for 2025 and 2024 is 23%.

2.

Tax Benefits from the Encouragement of Capital Investments Law, 1959 ("The Encouragement Law")

t42 Israel was determined in the past as a company which is entitled to a reduced tax rate. However, the Group does not expect to pay taxes in Israel by t42 Israel in the next coming years due to carryforward tax losses.

3.

t42 Israel has carryforward operating tax losses of approximately NIS 40 million as of December 31, 2025 (NIS 49 million as of December 31, 2024). Since there is a significant uncertainty regarding the existence of taxable revenues in the near future, deferred tax assets were not recognized. The company recognized deferred tax assets for carryforward tax losses up to the amount of deferred tax liabilities. t42 Israel has been assessed by the Income Tax Authorities up to and including the year 2019.

b.

Jersey taxation

Taxable income of the Company and Starcom Jersey is subject to tax at the rate of zero percent for the years 2025 and 2024.

c.

Reconciliation between the theoretical profit before taxes and the tax expense

The difference between the statutory tax rate (23%) and the effective tax rate (0%) is primarily due to non-recognition of deferred tax assets and liabilities on losses and other temporary differences.

NOTE 9 - OTHER ACCOUNTS PAYABLE            December 31 2025 2024 Employees benefit obligation 103 324 Advance payments from trade receivables 655 450 Deferred revenue 16 41 Vacation provision and other employees' accrual 68 100 Government institutions 72 44 Other 118 111 1,032 1,070

NOTE 10 -

LONG-TERM BANK LOAN, NET OF CURRENT MATURITIES

1.

Composition:

December 31

2025

2024

Long-term liability

15

87

Less: current maturities

(15)

(74)

-

13

 

3.	Additional information regarding long-term loans:
	Date Received			Original amount Received NIS (U. S. dollars) In thousands		Annual Interest Rate		Loan Terms and Maturity Dates		Interest Payment Terms
	Dec 9, 2020			1,000 ($310)		Prime + 1.5		48 equal monthly installments of principal and interest (14 months grace for principal)		Monthly basis
	The loan is a state-guaranteed loan, received by t42 Israel as assistance due to the spread of the Covid -19 virus. Per the loan's conditions, interest for the first year was paid by the State of Israel. As of December 31, 2025 the prime interest rate was 5.75%. The loan was fully paid in February 2026.
	See also Note 13 regarding charges.
NOTE 10 -		LONG-TERM BANK LOAN, NET OF CURRENT MATURITIES (cont.)

NOTE 11 -	CONVERTIBLE LOANS AND FINANCIAL LIABILITIES IN FAIR VALUE
NOTE 11 - NOTE 11 - NOTE 11 -	a.     During July 2023 the Company received a convertible loan, total amount of $1.3m provided by Ewave Mobile Ltd.  The loan bears interest of 10% per annum to be paid on a monthly basis. The Loan, together with accrued interest at the time of conversion, may be converted, at the discretion of the Lender, at any time prior to the Loan repayment date, into such number of shares as corresponds to 29.5% of the Company's issued ordinary share capital immediately following such conversion. The Loan may be converted in part, on a pro rata basis to the above terms. On 30 September 2024 an addendum with the lender was signed, to extend the original due date from 20 January 2025 to May 20, 2025. The Company examined the discounted present value of the future cash flows of the loan according to the new maturity date discounted at the original effective interest rate (before the change in terms) and found that it was different by more than 10% from the discounted present value of the remaining cash flows of the loan before the change in terms. Therefore, the Company treated the change in terms as a substantial modification in terms of debt and accordingly derecognized the original loan components on the date of the change and recognized the loan components under the new terms at their fair values ​​as of that date. The difference between the original loan components that were derecognized and the fair value of the components on the date of the change in terms amounted to approximately $ 191,000. It was recorded as finance income in the profit and loss statement for the year 2024. On July 28, 2025 the company signed a collaboration agreement with the lender, among alia, to extend the convertible loan period until December 10, 2027. There was no change in the other terms of the loan. On the day of recognition, the loan amount ($1.3M) was divided into components: a conversion component and anti-dilution component which are measured at fair value, and a residual component of liability of the loan in amortized cost. As of  December 31, 2025 the values of components are as follows: ·      Conversion component of the convertible loan and anti-dilution liability component at fair value - $43k. ·      Amortized cost of a convertible loan - $1,260K. An effective interest rate was calculated for the liability component of the loan, based on its amortization table. After deducting the conversion and anti-dilution component it is 12.42% per annum. CONVERTIBLE LOANS AND FINANCIAL LIABILITIES IN FAIR VALUE (cont.) b.     During December 2021, The Company received third parties loans in the total amount of $1,251 thousand (£925K) in the form of convertible loans enabling the lenders to convert the loans at an exercise price of £0.15 per share at any time, subject to compliance with the AIM Rules, Takeover Code and MAR regulations, up to December 31, 2023. The convertible loans bore interest at the rate of 8% per annum calculated by reference to the principal amount of the convertible loans. If not converted, the loans were supposed to be repayable on December 31, 2023. As of 31 December 2023, the loan was not repaid and in February 2024 the company successfully negotiated the extension of the maturity date of the loan (original principal of £925K and accrued interest of £71K) until 20 January 2025. The following terms have been agreed with the lenders as part of the extension: ·      The interest payable on the loan shall be 10% per annum to be paid in a monthly basis, commencing from 1 January 2024. ·      Conversion: the lenders will have the right to convert, at their discretion, the amount of the loan into the number of company shares ("Conversion Shares") corresponding to 28.82% of the company issued ordinary share capital immediately following the date of conversion, if the aggregate loan amount is converted, and into a pro-rata number of Conversion Shares in case of a partial conversion. The lenders shall not issue a conversion notice if this would result in a breach of Rule 9 of the UK Takeover Code. ·      Anti-dilution: the agreement includes anti-dilution provisions to protect the equity interest percentage of the lenders, so that in the event of the exercise or conversion of existing warrants, options, or other instruments convertible into the company's ordinary shares (subject to certain exceptions), the lenders will be issued for no additional consideration such number of shares such that, together with the shares already held, each lenders percentage shareholding shall remain the same. ·      Security: security provided by way of parent guarantee, fixed, and floating charges over the assets of t42. The floating charge ranks pari passu with the floating charge provided to Ewave under the Ewave loan and the fixed charge security over the intellectual property rights of t42 is second ranking, subordinated only to the fixed charge in favor of Ewave under the Ewave loan. ·      Conversion/Repayment Event: In the event of a certain major transaction or financing investment, the lender may elect for conversion or repayment of the loan. In conjunction with the agreement, the company also entered into an addendum with Ewave, pursuant to which Ewave consented to the loan extension and will also have the same conversion rights in the event of a major transaction. On 30 September 2024 an addendum with the lenders was signed, to extend the due date from 20 January 2025 to May 20, 2025, with no other changes in the loan's terms. The Company examined the discounted present value of the future cash flows of the loan based on the new maturity date discounted at the original effective interest rate (before the change in terms) and found that it does not differ by more than 10% from the discounted present value of the remaining cash flows of the loan before the change in terms. Accordingly, the original loan components were not derecognized, and no new liability components were recognized at fair value. A loss of $1,000 from the adjustment to the present value was recognized as finance expenses in the profit and loss statement for the year 2024. CONVERTIBLE LOANS AND FINANCIAL LIABILITIES IN FAIR VALUE (cont.) On the day of recognition, the loan amount (£996K) was divided into components: a conversion component and anti-dilution component which are measured at fair value, and a residual component of liability of the loan measured in amortized cost. In July, 2025 the company signed an additional addendum, with the lenders as follows: ·      As of June 30, 2025, the total amount of the principle together with the capitalized interest is $1,476,896 which will be repaid in 30 unequal monthly payments starting in July 2025 amounting $20,000-$75,000 per month. The total payments the company has committed to repay during the coming year and the year after is approximately $0.4$ million and $0.7 million, respectively. ·      The convertible loan period will be extended till December 10, 2027. ·      In the event that the Company fails to meet two consecutive repayments, then without derogating from any other remedy, lenders shall be entitled to 60% of the Helios Saas sales revenue until repayments are resumed. ·      To secure the lender's rights and in addition, the existing securities, the company shall grant the lenders a second-ranking fixed deposit over all its rights and assets - whether existing or future - in connection with its Helios division. The fixed charge will be subordinated only to a charge registered in favor of an Israeli bank, as described in notes 10 and 13(1),(2). Registration of the charge with the relevant government authorities is one of the prerequisites for the agreements to enter into force. ·      The company shall be entitled to enter into negotiations for the sale of the Helios division, provided that the proceeds from the sale are sufficient to repay all the outstanding principal and interest. ·      All other provisions of the convertible loan agreement and its addendum from February 2024 remain unchanged and in full force and effect. On the day of recognition, the loan amount (1,477K$) was divided into components: a conversion component and anti-dilution component which are measured at fair value, and a residual component of liability of the loan measured in amortized cost. As of  December 31, 2025, the values of components are as follows: ·      Conversion component of the convertible loan and anti-dilution liability component at fair value - $178k. ·      Amortized cost of a convertible loan - $1,085K. An effective interest rate was calculated for the liability component of the loan, based on its amortization table. After deducting the conversion and anti-dilution component it is 15.46% per annum. c.     During December 2022, the Israeli subsidiary entered into a loan agreement with CSS Alpha Global Pte Ltd, in which warrants for a total of 2,976,185 company's shares have been issued to CSS, exercisable at 7p per share over 5 years. During the year 2024 the loan and accrued interest were fully paid. As of December 31, 2025 the fair value of the warrants is $28k. d.     In December 2022, the Company issued a £265,000 convertible loan note to a supplier, to be applied in lieu of settlement of a supplier debt, assisting with the Company's cashflow management. The loan bears interest at 3% per annum, payable quarterly, and is repayable by 31 December 2024. The loan is convertible at 9p per share at the discretion of the holder (In the event that the company does not comply with the loan terms, the conversion price will be updated according to the mechanism stipulated in the loan agreement). In addition, the Company had the right to enforce conversion of £100,000 of the loan in the event share price exceeds 12p and full loan balance if the share price exceeds 15p. CONVERTIBLE LOANS AND FINANCIAL LIABILITIES IN FAIR VALUE (cont.) As of December 31, 2025 the loan was not paid and its balance (including accrued interest) is $380K. During the first quarter of 2025 a binding oral agreement was reached between the Company and the supplier's representative, according to which the supplier will waive all remedies to which it is entitled in the case of the Company's failure to repay the loan, as well as waiving the option to convert the loan into shares, so that starting January 1, 2025, the loan will become a debt bearing annual interest (3%) only and will be repaid in cash from time to time in an agreement to be reached by the parties. e.     As of December 31, 2025, the fair values of the Warrants and the Anti-dilution and conversion components of convertible loans were measured by an independent appraiser. The fair value of the Anti-dilution and conversion components of convertible loans a was estimated as follows: Initially the fair value of the debt component of the loans was estimated by discounting the future cash flows to be paid to lenders using a company‑risk‑adjusted discount rate (12.8%-16.2%). Then, the remaining loans amount not allocated to the debt component was allocated to the Anti-dilution and conversion components. The fair value of CSS warrants was valued under B&S model ,applying a 3.7% risk‑free rate and a volatility (standard deviation) of 112%.                                                                   The level of the fair value hierarchy is level three. The table hereunder presents a reconciliation from the opening balance to the closing balance of financial liabilities carried at fair value level 3 of the fair value hierarchy: Anti-dilution and Conversion components Warrants Total Balance as of January 1, 2025 204 34 238 Additions during the year 336 - 336 Finance expenses (income), net (319) (6) (325) Balance as of December 31, 2025 221 28 249

 

 

 

 

NOTE 12 -		SHORT-TERM BANK CREDIT
					December 31
					2025		2024
Bank overdraft (bears an average annual interest rate of 10%)					-		13
Short-term bank loan (bears an annual interest rate of P+ 3.35%)					94		55
					94		68

As of December 31, 2025 the Prime rate was 5.75%.

NOTE 13 -	CHARGES
		In respect of bank credit and loans set out in Notes 12 and 10 above and convertible loans set out in Note 11 above, charges were placed as follows:
	1.	A charge on the t42 Israel's IPs and Intangible assets,
	2.	A floating pledge on the assets of t42 Israel.
	3.	A guarantee of the company in accordance with certain t42 Israel's bank liabilities up to 10M $.
	4.	A pledge on a bank deposit of t42 Israel. See note 5.
	5.	A pledge on a certain bank account of t42 Israel up to 180K NIS (approx. 56k$)
	6.	A secondary fixed and floating pledge on t42 assets.
	7.	A secondary fixed deposit over all rights and assets - whether existing or future - in connection with Helios division.

NOTE 14 -	EQUITY
	a.	Common stock of no-par value, issued and outstanding:
			As of December 31,
			2025		2024
			65,626,357		55,126,357
	b.	Company share grants to its holder voting rights, rights to receive dividends and rights to net assets upon dissolution.							During December 2022, the Company raised £90 ($100) thousand before expensesthrough a placing of 1,000,000 Ordinary Shares.
	c.	In February 17, 2025 the Company completed a capital raising in a total (gross) amount of £262,500, in which the Company issued to investors 10,500,000 shares of the Company and 10,500,000 warrants. The warrants are convertible into shares of the Company in a ratio of 1:1 in exchange for £0.05 per warrant for a period of 3 years from the date of their issuance. The proceeds of the offering, net of issuance expenses, amounted to approximately £253,375.

NOTE 14 -	EQUITY (cont.)
	d.	Warrants and Share options The following table lists the number of share options and warrants and the exercise prices of such during the current and prior years:
	2025 2024 Number of options Weighted average exercise price Number of options Weighted average exercise price                       £                      £ Share options & warrants outstanding at the beginning of year (1) 7,584,014 0.156 10,876,650 0.166 Warrants issued during the year (2) 10,500,000 0.05 Options & Warrants exercised during the year - - (209,302) - Options & Warrants expired and confiscated during the year (113,208) 0.1 (3,083,334) 0.18 Share options & warrants outstanding at end of year 17,970,806 0.097 7,584,014 0.156 Share options & warrants exercisable at end of year (1)(3) 17,970,806 0.097  7,584,014 0.156
	(1)   The balances as of December 31, 2025 and 2024 include 4,494,621 and 4,607,829, respectively, options granted to directors and employees as a share based payment (ESOP). (2)   See note 14 C. (3)   In addition, the Group also has two convertible loans, which can be converted as of December 31, 2025, into a maximum total amount of 117 million shares. See notes 11a, b.
NOTE 15 -	COST OF REVENUES
				Year Ended December 31,
				2025		2024
	Purchases and manufacturing			2,789		1,687
	Communication Suppliers and Others			207		343
	Amortization			168		213
	Change in inventory			112		322
				3,276		2,565

NOTE 16 -	GENERAL AND ADMINISTRATIVE EXPENSES
	a.			Year Ended December 31,
				2025		2024
	Salaries and related expenses (2),(3)			798		907
	Professional services (1)			323		395
	Doubtful accounts and bad debts			18		23
	Amortization and Depreciation			298		310
	Office maintenance			225		198
	Car maintenance (2)			60		55
				1,722		1,888
	(1)   (1) Including share-based payment to directors and senior management in the amounts of $5k for the year ended December 31, 2024. See also Note 14d. (2)    (2) Including CEO's salaries and related expenses in the amount of $236K (2024: $216K). (3)    (3) an amount of $153 K is attributed to employees who support production and technical service.

b. Average Number of Staff Members by Category:
		Year Ended December 31,
		2025		2024
Sales and marketing		4		5
Research and development		4		3
General and administrative		7		11
		15		19

NOTE 17 -			FINANCE INCOME
									Year Ended December 31,
									2025				2024
			Exchange rate differences, net						-				72
			Gain from modification of debt terms (see note 11 A, B)						-				190
			Changes in fair value of financial liabilities (see note 11 e)						325				-
									325				262
NOTE 18 -         FINANCE EXPENSES
		Loans interest						(541)					(768)
		Bank charges						(58)					(37)
		Interest to suppliers and institutions						(37)					(71)
		Interest to a related party						(9)					(10)
		Changes in the fair value of financial liabilities (See note 11e)						-					(193)
		Exchange rate differences, net						(593)					-
		Others						(35)					(47)
								(1,273)					(1,126)
		Net finance expenses						(948)					(864)
NOTE 19 -	SALES AND MARKETING
									Year Ended December 31,
									2025			2024
			Salaries and related expenses						297			232
			Sales commissions						36			49
			Travel expenses						17			34
			Others						39			51
									389			366

 

NOTE 20 -	LOSS PER SHARE
	Weighted average number of shares used in computing basic and diluted loss per share:
		Year Ended December 31,
		2025		2024
		64,241,742		55,117,182

In calculating the loss per share for 2024 and 2023 warrants granted to employees, CSS option and convertible loans were not taken into account because their effect was anti-dilutive.

NOTE 21 -	RELATED PARTIES
	a.	Related parties that own shares of the company are:
		Mr. Avraham Hartmann who serves as a director and CEO (6.77%), Mr. Uri Hartmann, a son of Mr. Avi Hartmann, who serves as CTO (4.68%) and Mr. Igor Vatenmacher, who served as a CFO until  April 2025 and currently serves as an executive director (0.69%).
	b.	Current debit (credit) balances:				December 31,
						2025				2024
		Current account
		Avi Hartmann				(10)				36
		Uri Hartmann				(744)				(585)
		Total Credit Balance				(754)				(549)
		Loans to (from)
		Uri Hartmann				(255)				(221)
		Total Loans				(255)				(221)
						(1,009)				(770)
	c.	Shareholders' current credit balances are mainly related to deferred salaries. Loans from shareholders accrue 4% annual interest. See also note 26(1)a.
	d.	Transactions:			Year Ended December 31,
					2025			2024
		Total salaries and related expenses for Mr. Avi Hartmann and Mr. Uri Hartmann, including car maintenance (1)			463			426
		Salaries and related expenses for Mr. Igor Vatenmacher, including car maintenance (Executive director and ex CFO)			84			171
		Non-executive directors' fees (2 persons), (2)			100			108
		Total share-based payment (5 persons)			-			4
		Interest to related parties			9			10
		(1) Mr. Uri Hartmann's salaries and related expenses are included in R&D expenses (2025:                 227K$), Regarding Mr. Avi Hartmann - see note 16(a)(2). (2)   As of 31 December 2025, the company owes them 267K$, including a short-term loan received by one of the directors in the amount of 30K$.
	e.	Mr. Avi Hartmann and Mr. Uri Hartmann are each entitled to benefits, in addition to a monthly salary of 12K$, that include inter alia a vehicle, a cellular phone, a pension fund and a professional enrichment fund. In addition, each of them is entitled to reimbursement for expenses incurred in connection with their duties and 18 days of annual leave. Each of the Company and the aforementioned may notify the other party of the termination by giving 6 months' notice. The Company has a right to offset any debt of the aforementioned against any compensation due to them.

NOTE 21 -

RELATED PARTIES (cont.)

f.     As of  December 31, 2025 each of  Mr. Uri Hartmann and Mr. Avi Hartmann has approximately 1,165 thousand warrants convertible into the Company's shares in a ratio of 1:1 in consideration of 0.12-0.4  £ per warrant. Unexercised warrants will expire from July 2026 to May 2031. The three directors together have approximately 1,553 thousand warrants convertible into the Company's shares in a ratio of 1:1 in consideration of 0 - 0.4 £ per warrant. Unexercised warrants will expire from July 2026 to May 2029.

NOTE 22 -				FINANCIAL INSTRUMENTS AND MANAGEMENT OF FINANCIAL RISKS
	a.	Financial Risk Factors:
		The Group's operations expose it to a variety of financial risks , mainly Currency, Credit and Liquidity risks. The comprehensive Group plan for risk management focuses on the fact that it is not possible to predict financial market behavior and an effort to minimize possible negative effects on Company financial performance.
		1)	Exchange rate risk
			The Group is exposed to currency risk on sales, purchases, receivables and borrowings that are denominated in a currency other than the respective functional currency of Group, the US dollar (USD). While a major part of the Group's revenues, purchases, and manufacturing costs are denominated in dollar, operating expenses (primarily salaries and overhead) are paid in NIS and some of the headquarters' expenses are paid in GBP. Changes in the exchange rates of the NIS and the GBP against the dollar can cause losses for the Company.
		2)	Credit risk
			The Group's credit risk arises principally from the Group's receivables from customers. The carrying amounts of financial assets and contract assets represent the Group's maximum credit risk exposure. The Group's exposure to credit risk is influenced mainly by the individual characteristics of each customer. However, management also considers the demographics of the Group's customer base, including the default risk of the industry and region in which customers operate, as these factors may have an influence on credit risk. See also note 24. The Management has established a credit policy under which each new customer is analyzed individually for creditworthiness before the Group's standard payment and delivery terms and conditions are offered. Purchase limits are established for each customer, and usually an advanced payment of 25-50% is required before shipping. The Group holds cash and cash equivalents mainly with big banks in Israel and therefore believes its cash and cash equivalents have low credit risk.
		3)	Liquidity risks
			Cash flow forecasts are determined on both an individual company basis and a consolidated basis. The Company examines current forecasts of its liquidity requirements so as to make certain that there is sufficient cash for its operating needs, and it is careful at all times to have enough cash that the Company does not exceed its credit limits. These forecasts take into consideration matters such as the Company's plan to use a bank short term credit for financing its activity and the group's liabilities. The following are the contractual maturities of financial liabilities at undiscounted amounts and based on the future rates forecasted at the reporting date, including estimated interest payments.

NOTE 22 -

FINANCIAL INSTRUMENTS AND MANAGEMENT OF FINANCIAL RISKS (cont.) (

b. The Group's exposure to linkage and foreign currency risk was as follows:

	December 31, 2025
	NIS					U.S. Dollar		GBP		Euro		Total
	Unlinked		Variable Interest			Unlinked
Financial Assets:
Cash and cash equivalents	50		-			500		7	14			571
Short-term deposit	-		10			-		-	-			10
Trade receivables, net	61		-			539		-	3			603
Other accounts receivable	-		-			6		-	-			6
Financial Liabilities:
Short-term bank credit	-		(94)			-		-	-			(94)
Long-term bank Loan	-		(15)			-		-	-			(15)
Trade payables	(336)		-			(82)		(308)	-			(726)
Other accounts payable	(190)		-			-		-	-			(190)
Leasehold liabilities	(902)		-			-		-	-			(902)
Related parties	(1,212)		(255)			458		-	-			(1,009)
Amortized cost of other loans	-		-			(2,345)		)380)		-		(2,725)
Financial liabilities in fair value	-		-			(249)		-		-		(249)
	(2,529)		(354)			(1,173)		(681)		17		(4,720)

	December 31, 2024
	NIS					U.S. Dollar		GBP		Euro		Total
	Unlinked		Variable Interest			Unlinked
Financial Assets:
Cash and cash equivalents	35		-			108		-	4			147
Short-term deposit	-		9			-		-	-			9
Trade receivables, net	91		-			721		-	64			876
Other accounts receivable	(175)		-			205		-	-			30
Financial Liabilities:
Short-term bank credit	-		(68)			-		-	-			(68)
Long term bank Loan	-		(87)			-		-	-			(87)
Trade payables	(702)		-			(84)		(319)	(1)			(1,106)
Other accounts payable	(435)		-			-		-	-			(435)
Leasehold liabilities	(972)		-			-		-	-			(972)
Related parties	(983)		(245)			458		-	-			(770)
Amortized cost of other loans	-		-			(1,082)		(1,662)		-		(2,744)
Financial liabilities in fair value	-		-			(141)		(97)		-		(238)
	(3,141)		(391)			185		(2,078)		67		(5,358)

NOTE 22 -

FINANCIAL INSTRUMENTS AND MANAGEMENT OF FINANCIAL RISKS (cont.) (

 

c. Sensitivity:

Analysis of Sensitivity to Changes in the Exchange Rate of the U.S. Dollar Against the NIS:
												5% Increase in Exchange Rate						5% Decrease in Exchange Rate
For the Year Ended December 31
2025												(144)						144
2024												(176)						176
Analysis of Sensitivity to Changes in the Exchange Rate of the U.S. Dollar Against the Euro:
													5% Increase in Exchange Rate							5% Decrease in Exchange Rate
For the Year Ended December 31
2025													1							(1)
2024													3							(3)
Analysis of Sensitivity to Changes in the Exchange Rate of the U.S. Dollar Against the GBP:
												5% Increase in Exchange Rate							5% Decrease in Exchange Rate
For the Year Ended December 31
2025												(34)							34
2024												(104)							104

 

d. The following are the contractual maturities of financial liabilities at undiscounted amounts and based on the future rates forecasted at the reporting date, including estimated interest payments:

		As of 31 December 2025,
		Carrying amount		Up to six months			7-12 months		1-2 years		3-4 years		Total contractual cash flows
	Related parties	1,009		-			-		1,049		-		1,049
	Trade and other payables	916		916			-		-		-		916
	Short-term bank loan (1)	94		52			51		-				103
	Short-term bank credit (1)	15		15			-		-		-		15
	Other loans	2,725		274			305		2,685		-		3,264
		4,759		1,257			356		3,734		-		5,347

(1)   The interest payments on variable interest rate loans may be different from the amounts in the above table.

	e.	Fair value
		As of December 31, 2025, there was no significant difference between the carrying amounts and fair values of the Company's financial instruments that are presented in the financial statements not at fair value. See also note 11E regarding financial instruments measured in fair value.

NOTE 23 -	LEASES
	Group as a lessee
	The Group has lease contracts for offices and 7 vehicles used in its operations. The lease for the offices is for 5 years, with an option to extend for another 5 years, while vehicle leases are for 3 years.
	Below are the carrying amounts of right-of-use assets recognized and the movements during the period:

		Offices		Vehicles		Total
Balance at January 1, 2024		837		207		1,044
Additions		-		66		66
Effect of Index linkage		148		-		148
Depreciation expenses		(122)		(97)		(219)
Balance at December 31, 2024		863		176		1,039
Additions		-		27		27
Disposals		-		(37)		(37)
Effect of Index linkage		21		-		21
Depreciation expenses		(124)		(86)		(210)
Balance at December 31, 2025		760		80		840

	Below are the carrying amounts of lease liabilities and the activities during the period:

		2025		2024
As at January 1		(972)		(982)
Additions		(27)		(66)
Disposals-		43		-
Effect of Index linkage		(21)		(148)
Exchange rate differences		(135)		4
Payments		210		191
Others		-		29
Balance at December 31		(902)		(972)
Current liabilities		(187)		(202)
Non-Current liabilities		(715)		(770)

	Maturity analysis - Contractual discounted cash flows (*)
	One to Two years 322 Three to Five years Six to Ten years 440 140 Total discounted lease liabilities on December 31, 2025 902
	(*) including potential future payments related to the extension period.
	The following are the amounts recognized in profit or loss:

		2025		2024
Depreciation expenses of right-of-use assets		(210)		(219)
Interest expenses on lease liabilities		(47)		(54)
Total amount recognized in profit or loss		(257)		(273)

 

NOTE 23 -

Leases (cont.)

The Group had total cash outflows for leases of $251 in 2025 ($242 in 2024). The Group also had non-cash additions to right-of-use assets and lease liabilities of $27 in 2025 ($66 in 2024)

		a.	Major customers' data as a percentage of total consolidated revenues to unaffiliated customers:
NOTE 24 -	CUSTOMERS AND GEOGRAPHIC INFORMATION

		Year Ended December 31,
		2025		2024
Customer A		55%		34%
Customer B		9%		6%
Customer C		5%		6%

b.

Breakdown of consolidated revenues to unaffiliated customers according to geographic regions

		Year Ended December 31,
		2025		2024
Latin America		7%		13%
Europe		4%		8%
Africa		10%		20%
Asia		3%		3%
Middle East		58%		42%
North America		18%		14%
Total		100%		100%

NOTE 25 -

SEGMENTATION REPORTING

		The Group has two reportable segments: Hardware and SaaS, which form the Group's strategic business units.
		The strategic business units offer different products and services and the allocation of resources and evaluation of performance are managed separately because they require different resources. For each of the strategic business units, the Group's CEO reviews internal management reports on a quarterly basis. The accounting policies of revenue recognition for each segment are described in Note 2C(k). There is no inter-segment transaction.
		Performance is measured based on segment gross profit (loss) as included in reports that are regularly reviewed by the CEO. Segment gross profit is used to measure performance as management believes that such information is the most relevant in evaluating the results of certain segments relative to other entities that operate within these industries. Information regarding the results of each segment is included below:

			Hardware		SaaS
Year Ended 31.12.2025:
Segment revenues			4,060		2,040
Cost of revenues			(3,035)		(241)
Gross profit (loss)			1,025		1,799
Year Ended 31.12.2024:
Segment revenues			2,036		2,122
Cost of revenues			(2,182)		(383)
Gross profit			(146)		1,739

NOTE 26 -

SIGNIFICANT EVENTS AFTER THE REPORTED PERIOD 1)    The Annual General Meeting (AGM) held in December 2025 approved, inter alia, the following decisions: a.     To increase interest payable on the loan given to the Company by Uri Hartmann, which remains outstanding, from 4% to 8% per annum, effective January 1, 2026. The proposal is supported by the Remuneration Committee, which reviewed the market interest rates, the Company's size, its risk levels, and other existing financing costs recently granted to the company. b.     Grant of options to directors and employees as follows: Name Quantity Exercise price Vesting Period Avi Hartmann 250,000   2.5p 1 year, equally Avi Hartmann 250,000   3.0p 2 years, equally Avi Hartmann 250,000   4.0p 3 years, equally Uri Hartmann 200,000   2.5p 1 year, equally Michael Rosenberg 75,000   2.5p 1 year, equally Martin Blair 75,000   2.5p 1 year, equally Aviran Sabag 150,000   2.5p 2 years, equally c.     Converting partly balances of non-executive directors into shares. 1.     Michael Rosenberg - a balance of £80,078 to be converted into shares at a price of 2.0p per share. 2.     Martin Blair - a balance £70,509 to be converted into shares at the same price. 2)    On August 12, 2025, a monetary claim was filed in the Court against t42 Israel by a former employee, alleging bodily injury in October 2018. The case has been referred to the t42 Israel's employers' liability insurer, which has assumed conduct of the defense while reviewing coverage and liability. The former employee estimates the damages she suffered at 400 K Israeli shekels, in addition to general damages and demands, and seeks, among other things, adequate compensation for these damages. At this stage, the company's legal advisors consider the company's potential exposure as immaterial.

 

END