{"url_path":"/sec/bosc/10-k/2026/item-11","section_key":"item-11","section_title":"Item 11 Quantitative and Qualitative","topic":"sec","document":{"doc_type":"20-F","doc_date":"2026-03-31","source_url":"https://www.sec.gov/Archives/edgar/data/1005516/0001213900-26-037333-index.html","accession_number":"0001213900-26-037333","cik":"0001005516","ticker":"BOSC","issuer_name":"BOS BETTER ONLINE SOLUTIONS LTD","edgar_url":"https://www.sec.gov/Archives/edgar/data/1005516/0001213900-26-037333-index.html","primary_entity_key":"0001005516","primary_entity_name":"BOS BETTER ONLINE SOLUTIONS LTD"},"word_count":832,"has_tables":true,"body_markdown":"** **\n\n**Item 11:  Quantitative and Qualitative\nDisclosure about Market Risk** \n\n \n\nMarket risk represents the\nrisk of changes in the value of our financial instruments caused by fluctuations in interest rates, foreign exchange rates and equity\nprices. We do not engage in trading market-risk instruments or purchase hedging or “other than trading” instruments that are\nlikely to expose us to market risk, whether interest rate, commodity price or equity price risk. We have purchased forward contracts but\ndo not use derivative financial instruments for speculative trading purposes.\n\n \n\n**Foreign Currency Exchange Rate Risk**\n\n \n\nWe are exposed to currency\ntransaction risks because some of our expenses are incurred in a different currency from the currency in which our revenues are received.\nOur most significant currency exposures are to the NIS. In periods when the U.S. dollar is significantly devaluated against the NIS, our\nreported results of operations may be adversely affected. The Company enters into foreign currency contracts, with financial institutions\nto reduce the risk of exchange rate fluctuations. Such contracts are not designated as hedging instruments. From time to time, the Company\nrecognizes derivative instruments as either assets or liabilities on the balance sheet at fair value.\n\n \n\nASC 815, “Derivatives\nand Hedging”, requires the presentation of all derivatives as either assets or liabilities on the balance sheet and the measurement\nof those instruments at fair value. For derivative instruments that are designated and qualify as a cash flow hedge (i.e., hedging the\nexposure to variability in expected future cash flows that is attributable to a particular risk) the Company applied the following:\n\n \n\nRecognize all changes in fair\nvalue of the derivative instruments designated for hedging purposes that were determined as qualifying for hedging purposes (including\nthe ineffective components of the hedging relationship) as a component of OCI, net of tax; such amounts are reclassified into earnings\nin the same period or periods during which the hedged transaction affects earnings.\n\n \n\n55\n\n \n\n \n\nOther derivatives which do\nnot qualify for hedge accounting, or which have not been designated as hedging instruments, are recognized in the balance sheet at their\nfair value, with changes in the fair value carried to the statements of income as incurred in financing income (expenses), net.\n\n \n\nThe Company entered into\nforward contracts to hedge against the risk of changes in future cash flow from payments of payroll and related expenses denominated\nin New Israeli Shekels. These contracts are designated as cash flows hedges, as defined by ASC 815, and are considered highly\neffective as hedges of these expenses. As of December 31, 2025 and 2024, and during the periods then ended, the impact on the\nCompany’s financial statements of these forward contracts amounted to expenses of $457,000 and 457,000, respectively.\n\n \n\nIn addition, the Company previously\nentered into forward contracts in order to hedge the exposure to variability in expected future cash flows resulting from changes in related\nforeign currency exchange rates. These contracts did not meet the requirement for hedge accounting.\n\n \n\nAlthough from time to time\nwe enter into foreign currency contracts to reduce currency transaction risk, these transactions will not eliminate translation risk or\nall currency risk. For information concerning risk factors related to Foreign Currency Exchange see “Item 3D - Risk Factors.”\n\n \n\n**Credit Risk Management**\n\n \n\nThe Company sells its products\nand purchases products from vendors on credit terms.\n\n \n\nThe trade receivables of the\nCompany are derived from sales to customers located primarily in Israel, India and the Far East. The Company generally does not require\ncollateral; however certain of the Company’s customers outside of Israel are insured against customer nonpayment through the Israeli\nCredit Insurance Company Ltd. and, in certain circumstances, the Company may require letters of credit, advanced payments, or other collateral.\n\n \n\nProvisions are made for doubtful\ndebts on a specific basis and, in management’s opinion, appropriately reflect the loss inherent in collection of the debts. Management\nbases this provision on its assessment of the risk of the debt. \n\n \n\nThe table below presents the\naccount receivables balance by geographical market as of December 31, 2025, and December 31, 2024:\n\n \n\n  \n2025  \n2024 \n\nIsrael and others \n 14,866,000  \n$10,892,000 \n\nIndia \n 544,000  \n 351,000 \n\nAmericas \n 103,000  \n 115,000 \n\nFar East \n 9,000  \n - \n\nEurope \n 116,000  \n 429,000 \n\n  \n 15,638,000  \n$11,787,000 \n\n \n\n**Interest Rate Risk**\n\n \n\nThe Company’s exposure\nto market risk for changes in interest rates is due to loans that carry variable interest.\n\n \n\nA material change in the interest\nrate payable on our loans may have a material adverse effect on the Company’s financial results and cash flow. In the event that\ninterest rates associated with the Company’s variable rate borrowings were to increase 100 basis points, the after tax impact on\nfuture cash flows would be a decrease of $11 in year 2026.\n\n \n\n**Bank Risk**\n\n \n\nThe Company manages its loans in Bank Leumi and\nin Bank Beinleumi, which provides credit to the Company’s Israeli subsidiaries. In case of the termination or expiration of our\ncredit lines, deterioration in our relations with our bank or adverse changes in the financial position of the bank, our liquidity could\nbe materially adversely affected."}