{"url_path":"/sec/bosc/10-k/2026/item-6","section_key":"item-6","section_title":"Item 6 Directors, Senior Management","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":6855,"has_tables":true,"body_markdown":"**Item 6:  Directors, Senior Management\nand Employees**\n\n \n\n**6A.\nDirectors and Senior Management**\n\n \n\nSet forth below is information\nregarding our directors and senior management.\n\n \n\n**Name**\n \n**Age**\n \n**Position**\n\nMs. Osnat Gur(*) (1)\n \n55\n \nChairman of the Board of Directors (Class A)\n\nMr. Yaron Eldad (*)(2)\n \n59\n \nChairman of Audit and Compensation Committees (Class B)\n\nMr. Avi Dadon(*)(3)\n \n70\n \nDirector (Class C)\n\nMr. Eyal Cohen(3)\n \n57\n \nChief Executive Officer and Director (Class C)\n\nMr. Avidan Zelicovsky\n \n56\n \nPresident\n\nMr. Moshe Zeltzer\n \n45\n \nChief Financial Officer\n\n \n\n(*)\nMember of our audit committee and compensation committee.\n\n \n\n(1)\nElected for a 3-year term in 2024.\n\n \n\n(2)\n\n \n\n(3)\n\nElected for a 3-year term in 2023.\n\n \n\nElected for a 3-year term in 2025.\n\n** **\n\n**Ms. Osnat Gur** joined\nour Board of Directors in October 2021 and was appointed as Chairman in March 2025. Ms. Gur brings extensive experience in the management\nof companies. Currently, Ms. Gur serves as the CEO of Enzymofit Ltd., a Biotech startup, and as a director in Orda Print Ltd. a public\ncompany traded on the TASE, Maabrot Products Ltd, Granot Group - the largest Israeli cooperative, and at The Economic Company of Emek\nHefer Regional Council. Ms. Gur had previously served as the CEO of Oz Global B2B, a full-service global B2B marketing agency. She was\nthe CEO of Tadbik TAT, an RFID technology company from 2014 through 2019 and during 2013 to 2015, Ms. Gur served as the CEO of Anlit Ltd\na company that develops and produces high-quality children’s dietary supplements.\n\n** **\n\n**Mr. Yaron Eldad**joined\nour Board of Directors in January 2021 and was appointed Chairman of the Audit Committee and Compensation Committee. Since 2010, Mr. Eldad\nhas been serving as the CEO and CFO of Yamba Group Ltd, an international trading company specializing in consumer electronic products.\nFrom 2008 until 2010, Mr. Eldad has served as the CFO at Recoly NV, and from 1995 until 2008 as the CFO at e-SIM Ltd. Mr. Eldad holds\na Master’s Degree in Business Administration (strategic management) from the Hebrew University, an M.A in law from the Bar Ilan\nUniversity, and a B.A in Economics and Accounting from the Ben Gurion University. The Company’s Board has determined that Mr. Eldad\nis an independent director and a financial expert in accordance with the SEC and Nasdaq rules.\n\n** **\n\n**Mr. Avi Dadon** joined\nour Board of Directors in March 2025. Mr. Dadon was the Head of Procurement for the Israeli Ministry of Defense from 2017 to 2023, overseeing\nprocurement and production operations for the Israeli Defense Forces (IDF). Mr. Dadon is a retired Colonel with 28 years of military service.\nMr. Dadon holds an M.Sc. in Logistics Management from the Florida Institute of Technology and a B.A. in Interdisciplinary Studies in Social\nScience from the Bar-Ilan University. He is also a graduate of the Wexner Senior Leadership Program at Harvard University.\n\n \n\n**Mr. Eyal Cohen** was\nappointed as the Company’s Chief Financial Officer in January 2007. In August 15, 2017, Mr. Cohen was appointed as the Company’s\nCo-Chief Executive Officer, and since December 2019, he serves as the Company’s sole Chief Executive Officer. From 2004 through\n2006, Mr. Cohen served as the Company’s controller, and prior to that held the position of Chief Financial Officer at Cellact Ltd,\na technology company. From 1998 to 2001, Mr. Cohen was the controller of e-SIM Ltd., a technology company traded on Nasdaq in the past,\nand in the years 1995-1997 held an audit manager position in technology department of PricewaterhouseCoopers. Mr. Cohen holds a B.A. in\nAccounting and Business Administration from the College of Management in Tel-Aviv and is a certified public accountant in Israel and in\nthe United States, in the State of Maine.\n\n** **\n\n27\n\n \n\n** **\n\n**Mr. Avidan Zelicovsky** is\nthe President of the Company, leading the Company’s Supply Chain Solutions division. Mr. Zelicovsky has more than 20 years of experience\nin supply chain management, with a focus on electronic components for the aerospace, defense and high technology industry. He joined BOS\nas part of the Company’s acquisition of Odem in November 2004. Mr. Zelicovsky has been with Odem since 1996. He holds a BA in Business\nAdministration from the Tel Aviv College of Management and an LL.M. from the Bar-Ilan University.\n\n \n\n**Mr. Moshe Zeltzer** was\nnominated as the Company’s CFO on February 19, 2021. Prior to joining the Company, during the years 2018-2020, Mr. Zeltzer was a\ncontroller at Eltek Ltd. (Nasdaq: ELTK). Between the years 2012 and 2018, Moshe served as a controller at Metropolinet Ltd (Milgam Group),\nand between the years 2007-2012 he was an auditor with BDO Israel. Mr. Zeltzer holds a B.A. in Economics and Business Administration from\nthe Ariel University and an Accounting Certificate from the Bar-Ilan University and is a Certified Public Accountant.\n\n \n\n**6B.\nCompensation**\n\n \n\nThe\nfollowing table presents the total compensation paid to or accrued on behalf of all of our directors and officers as a group for the year\nended December 31, 2025. Directors who are also executive officers do not receive director fees.\n\n \n\n  \nSalaries, Directors’ fees, stock-based compensation, Commissions and Bonus\n(in thousands)  \nPension, Retirement and Similar benefits\n(in thousands) \n\nAll directors and officers as a group (then 6 persons). \n$1,011  \n$118 \n\n \n\n**Compensation Requirements\nunder Israeli Law**\n\n \n\n*Compensation Policy*\n\n \n\nIn\nDecember 2012, an amendment to the Israeli Companies Law, or Amendment 20, became effective, requiring public companies to appoint a compensation\ncommittee. See “Compensation Committee” below for information concerning our Compensation Committee.\n\n \n\nPursuant\nto Amendment 20, we were required to adopt a compensation policy regarding the terms of office and employment of office holders, including\ncompensation, severance and other benefits, exemptions from liability, insurance and indemnification. The Compensation Policy must be\nbased on the considerations, must include the provisions and needs to reference the matters which are detailed in the Israeli Companies\nLaw. An “office holder” is defined in the Israeli Companies Law as a general manager, chief executive officer, chief business\nmanager, deputy general manager, vice general manager, any other person assuming the responsibilities of any of the foregoing positions\nwithout regard to such person’s title, a director and a manager directly subordinate to the chief executive officer. \n\n \n\nAs required by the Israeli\nCompanies Law, our Compensation Policy for Executive Officers and Directors (the “Compensation Policy”) was approved by our\nBoard of Directors, after considering the recommendations of the Compensation Committee. According to the Israeli Companies Law, a compensation\npolicy must also be approved by a majority of a company’s shareholders, provided that (i) such majority includes at least a majority\nof the shareholders who are not controlling shareholders and who do not have a personal interest in the matter, who are present and voting,\nor (ii) the non-controlling shareholders and shareholders who do not have a personal interest in the matter who were present and voted\nagainst the policy hold two percent or less of the voting power of the company (the “Compensation Majority”). Our Compensation\nPolicy was approved by a Compensation Majority on December 16, 2020.\n\n \n\nThe Compensation Policy\nof the Company includes a clawback policy which complies with the Nasdaq listing rules and was adopted by the shareholders on December\n14, 2023.\n\n \n\n28\n\n \n\n \n\nThe\nCompensation Policy must be approved by the Board of Directors and the Company’s shareholders every three years. In the event that\nthe Compensation Policy is not approved by the Company’s shareholders, the Compensation Committee and the Board of Directors may\nstill approve the policy, if the Compensation Committee and the Board of Directors determine, based on specified reasons and following\nfurther discussion of the matter, that the Compensation Policy is in the best interests of the Company. \n\n \n\nChanges\nto existing terms of office and employment of office holders (other than directors), only requires the approval of the Compensation Committee,\nif the Compensation Committee determines that the revised terms are not substantially different from the existing terms. \n\n \n\nPursuant\nto Amendment 20, any arrangement between a company and an office holder (other than a director or the chief executive officer) as to his\nor her terms of office and employment must be in line with the company’s compensation policy and requires the approval of such company’s\ncompensation committee and board of directors. However, under certain circumstances and conditions, the compensation committee and the\nboard of directors may approve an arrangement that deviates from the company’s compensation policy, provided that such arrangement\nis approved by the Compensation Majority of the company’s shareholders. The board of directors and the compensation committee of\na company may, under special circumstances and for specified reasons, approve such an arrangement even if the shareholders did not approve\nit, following a re-discussion of the matter in which, among other things, any shareholders’ objections were examined.\n\n \n\n*Directors*\n\n \n\nPursuant\nto Amendment 20, any arrangement between a company and a director as to his or her terms of office and employment must be in compliance\nwith the Compensation Policy and requires the approval of the Compensation Committee, the board of directors and the shareholders by a\nsimple majority.\n\n \n\nUnder\nthe Israeli Companies Law and regulations promulgated pursuant thereto, the compensation payable to External Directors and independent\ndirectors is subject to certain further limitations.\n\n \n\nIn\naccordance with the approval of our shareholders in October 2019, directors who are not employees or service providers of the Company\nare entitled to receive annual compensation of NIS 29,270 (approximately $9,104), paid on a quarterly basis, and an additional NIS 2,175\n(approximately $676) for each board and board committee meeting attended (or 60% of the attendance\nfee for a board meeting held via teleconference or 50% of such fee for a meeting held without convening). Commencing 2025, the\nannual compensation of our directors was increased to NIS 40,000 (approximately $11,000).\n\n \n\nIn\nrecognition of the expanded role of the Chairman, the Company’s Audit Committee and Board approved an increase in the annual compensation\nof Ms. Osnat Gur, the Chairman of the Board to NIS 70,000 (approximately $ 22,563) from NIS 40,000 (approximately $12,900). The increase\ntook effect retroactively as of March 2025, when Ms. Gur was appointed Chairman, \n\n \n\nIn\naddition, in October 2019 our shareholders approved a grant to each of our directors of options to purchase 7,500 Ordinary Shares. The\noptions shall be granted to those directors elected or re-elected by the shareholders provided that three years have lapsed since the\nCompany’s previous grant of options to such director, and to future directors to be elected for the first time to the Board of Directors.\nThe grant date will be the date of approval of appointment or reappointment of the director at the shareholders meeting. In December 2024,\nour shareholders approved an increase to the grant to our directors and officers, such that the triennial grant shall be of options to\npurchase 15,000 Ordinary Shares (instead of 7,500).\n\n \n\nThe\noptions’ exercise price is calculated as the weighted average of the closing prices of the shares on the Nasdaq Capital Market during\nthe 20 trading days preceding the date of approval of the grant by the Board of Directors.\n\n \n\n \n●\nThe options will vest and become exercisable annually over a period of three years, in three equal parts, such that one third of the options shall vest on each of the first, second and third anniversary of the grant date, provided that the director is still serving on the Company’s Board of Directors at the applicable vesting date.\n\n \n\n29\n\n \n\n \n\n \n●\nThe options shall expire on the fifth anniversary of the Grant Date.\n\n \n\n \n●\nPayment of the exercise price must be made in full upon exercise of the options, by cash or check or cash equivalent, or by the assignment of the proceeds of a sale of some or all of the Ordinary Shares being acquired upon exercise of options, or by any combination of the foregoing.\n\n \n\n \n●\nThe options are exercisable only by the director, and may not be assigned or transferred except following approval of the Company’s audit committee or compensation committee, as applicable, by will or by the laws of descent and distribution. The options shall be exercisable during the term the director holds office (up to five years) or within 60 days following termination of this position, with certain exceptions in the case of the death or disability.\n\n \n\nThe Compensation of the directors is in compliance\nwith the Company’s Compensation policy.\n\n \n\nRegulation 5D of the Israeli\nCompanies Regulations (Reliefs for Public Companies whose Shares are Listed on a Stock Exchange Outside of Israel), 5760-2000 (the “**Relief\nRegulations**”), provides that Israeli companies with securities listed on certain foreign exchanges, including Nasdaq, such as\nthe Company, that satisfy certain conditions, namely, (i) meeting the applicable foreign country laws and regulations that apply to companies\norganized in that country relating to the appointment of independent directors and composition of audit and compensation committees; and\n(ii) have no controlling shareholder, are exempt from the requirement to appoint External Directors and certain other corporate governance\nrequirements that are otherwise dictated under the Israeli Companies Law. Accordingly, on October 16, 2017, we have chosen to opt out\nof the requirement to appoint External Directors under the Relief Regulations and related Israeli Companies Law rules concerning the composition\nof the audit committee and compensation committee of the board of directors.\n\n \n\nThe Company does not have\nany contracts with any of its non-employee or non-consultant directors that would provide for benefits upon termination of service.\n\n \n\n*Executive Officers*\n\n \n\nPursuant\nto Amendment 20, any arrangement between a company and its chief executive officer, or CEO, its Chief Financial Officer, or CFO, and its\nPresident, as to his or her terms of office and employment must be in line with the Compensation Policy and requires the approval of the\ncompensation committee, the Board of Directors and, with respect to the CEO, the Company’s shareholders by the Compensation Majority.\n\n \n\nUnder certain circumstances\nand conditions, the Compensation Committee and the Board of Directors may approve an arrangement that deviates from the Compensation Policy\nprovided it is approved by the shareholders by the Compensation Majority. In addition, under certain circumstances, a company may be exempt\nfrom receiving the shareholders’ approval with respect to the terms of office and employment of a candidate for chief executive\nofficer if such candidate meets certain independence criteria and the compensation committee has determined for specified reasons that\nshareholder approval would prevent the engagement, provided that the terms are in-line with the Compensation Policy.\n\n \n\nSet forth below is the compensation\nof our executives in respect of the year ended December 31, 2025 and to date:\n\n \n\n*CEO, Mr. Eyal Cohen:*\n\n* *\n\n*Monthly Salary*:\n\n \n\nA gross monthly base salary\nof NIS 65,000 (approximately $17,570) linked to an increase in the CPI, plus customary benefits, which include managers’ insurance,\neducation fund, car expenses and long-term disability insurance.  \n\n \n\n30\n\n \n\n \n\n*Bonus*:\n\n \n\nA bonus of US$ 94,000, which\nis equal to five months’ salaries. The bonus payment was paid by issuance of 19,075 Ordinary Shares. The number of shares was calculated\nbased on a price per share equal to the weighted average closing price of the Company’s Ordinary Shares on NASDAQ during the 20\ntrading days preceding the date of the approval of the bonus by the Board.\n\n \n\n*CFO, Mr. Moshe Zeltzer:*\n\n* *\n\n*Monthly Salary*:\n\n \n\nA gross monthly base salary\nof NIS 33,000 (approximately $10,686), plus customary benefits, which include managers’ insurance, education fund, car expenses\nand long-term disability insurance.\n\n \n\n*Bonus*:\n\n \n\nA bonus of NIS 30,000 (approximately\n$9,714), equal to one month salary.\n\n \n\n*President Mr. Avidan Zelicovsky*\n\n* *\n\n*Monthly Salary*:\n\n \n\nA gross monthly base salary\nof NIS 54,984 (approximately $14,864) linked to an increase in the CPI, plus customary benefits, which include managers’ insurance,\neducation fund, car expenses and long-term disability insurance.\n\n \n\nFor additional information\non the compensation of our directors and CEO see our proxy statement filed with the SEC under Form 6-K on September 3, 2025.\n\n \n\n**6C.\nBoard Practices**\n\n \n\n**Directors:**\n\n \n\nOur Board of Directors is\ncurrently comprised of 4 directors. The directors are elected by a simple majority at the annual shareholders’ meeting. Pursuant\nto the Company’s amended Articles of Association adopted by the shareholders on October 31, 2019, our Board of Directors is comprised\nof 3 classes, such that at each annual general meeting, approximately one-third of our directors are being nominated for election. At\nthe October 2019 shareholders meeting the directors were elected for staggered periods ranging from one to three years, as follows: Class\nA shall serve an initial term of one year; Class B shall serve an initial term of two years; and Class C shall serve an initial term of\nthree years.\n\n \n\nCommencing upon the December\n16, 2020, annual shareholders meeting, a director elected upon the lapse of his or her term is elected to serve a three-year term, and\nuntil his or her respective successor is elected and qualified, unless such director is elected as a replacement to a director who did\nnot complete his or her term. In such case the replacement director is elected for the remaining period applicable to the director he\nor she is replacing.\n\n \n\nOur Articles of Association\nprovide that the number of directors in the Company shall be determined from time to time by the annual general meeting of shareholders,\nprovided that it shall not be less than 4 nor more than 7. Our Articles of Association provide that the directors may appoint one more\nadditional director (whether to fill a vacancy or to expand the Board of Directors) so long as the number of directors so appointed does\nnot exceed the number of directors authorized by shareholders at the annual general meeting, and such appointees shall serve until the\nnext annual general meeting. In addition, our Articles of Association provide that directors shall be elected only at an annual shareholders\nmeeting.\n\n \n\n31\n\n \n\n \n\nNasdaq Marketplace Rules require\nthat the board of directors of a Nasdaq-listed company have a majority of independent directors, within the meaning of Nasdaq rules. Our\nBoard of Directors has determined that Messrs. Eldad, Gur and Dadon, who constitute a majority of the Board of Directors, are independent\ndirectors under the applicable Nasdaq Stock Market requirements. In accordance with Nasdaq Rules, our independent directors conduct executive\nsessions at least twice a year.\n\n \n\nOur Articles of Association\nprovide that a director may appoint, by written notice to the Company, any individual to serve as an alternate director, for up to a maximum\nperiod of one month, if the alternate director does not already serve as a member of the Board of Directors. An alternate director shall\nhave all of the rights and obligations of the director who appointed him or her and shall be subject to all of the provisions of the Articles\nof Association and the Israeli Companies Law. Unless the time period or scope of any such appointment is limited by the appointing director,\nsuch appointment is effective for all purposes for a period of one month, but in any event will expire upon the expiration of the appointing\ndirector’s term, removal of the alternate director at an annual general meeting, the bankruptcy of the alternate director, the conviction\nof the alternate director for an offense in accordance with the Israeli Companies Law, the legal incapacitation of the alternate director,\nthe removal of the alternate director by court order or the resignation of the alternate director. Currently, no alternate directors have\nbeen appointed. A director may appoint an alternate director to serve in his place as a member of a committee of the Board of Directors,\neven if the alternate director currently serves as a director, as long as he does not already serve as a member of that committee.\n\n \n\nOfficers serve at the discretion\nof the Board or until their successors are appointed.\n\n \n\nAccording to the provisions\nof our Articles of Association and the Israeli Companies Law, the Board of Directors convenes in accordance with the Company’s requirements,\nand at least once every three months. Usually, our Board of Directors convenes more often. Furthermore, our Articles of Association provide\nthat the Board of Directors may also pass resolutions without actually convening, provided that all the directors entitled to participate\nin the discussion and vote on a matter that is brought for resolution agree not to convene for discussion of the matter. Resolutions passed\nwithout convening a meeting, shall be passed by an ordinary majority (just as in the case of convened meetings) and shall have the same\neffect as resolutions passed at a duly convened meeting.\n\n \n\nIn accordance with the requirements\nof the Nasdaq Stock Market, nominees for directors are recommended for election by a majority of the independent directors.\n\n \n\n**External Directors:**\n\n \n\nUnder the Israeli Companies\nLaw, public companies are required to elect two External Directors who must meet specified standards of independence. External directors\nmay not have during the two years preceding their appointment, directly or indirectly through a relative, partner, employer or controlled\nentity, any affiliation with (i) the company, (ii) those of its shareholders who are controlling shareholders at the time of appointment\nand/or their relatives, or (iii) any entity controlled by the company or by its controlling shareholders. Under recent amendments to Relief\nRegulations, Israeli companies with securities listed on certain foreign exchanges, including Nasdaq, such as the Company, that satisfy\ncertain conditions, namely, (i) meeting the applicable foreign country laws and regulations that apply to companies organized in that\ncountry relating to the appointment of independent directors and composition of audit and compensation committees; and (ii) have no controlling\nshareholder, are exempt from the requirement to appoint External Directors and certain other corporate governance requirements that are\notherwise dictated under the Israeli Companies Law. Accordingly, on October 16, 2017, we have chosen to opt out of the requirement to\nappoint External Directors under the Relief Regulations and related Israeli Companies Law rules concerning the composition of the audit\ncommittee and compensation committee of the board of directors.\n\n \n\n32\n\n \n\n \n\n**Fiduciary Duties of\nOffice Holders**:\n\n \n\nThe\nIsraeli Companies Law codifies the fiduciary duties that “office holders,” including directors and executive officers, owe\nto a company. An office holder’s fiduciary duties consist of a duty of care and a duty of loyalty. The duty of care requires an\noffice holder to act at a level of care that a reasonable office holder in the same position would employ under the same circumstances.\nThis includes the duty to utilize reasonable means to obtain (i) information regarding the business feasibility of a given action brought\nfor his or her approval or performed by him or her by virtue of his or her position; and (ii) all other information of importance pertaining\nto the foregoing actions. The duty of loyalty requires that an office holder act in good faith and for the benefit of the company, including\n(i) avoiding any conflict of interest between the office holder’s position in the company and any other position he or she holds\nor his or her personal affairs; (ii) avoiding any competition with the company’s business, (iii) refraining from exploiting any\nbusiness opportunity of the company in order to receive personal gain for the office holder or others, and (iv) disclosing to the company\nany information or documents relating to the company’s affairs that the office holder has received by virtue of his or her position\nas an office holder.\n\n \n\n**Disclosure of Personal\nInterests of an Office Holder; Approval of Transactions with Office Holders:**\n\n \n\nThe\nIsraeli Companies Law requires that an office holder promptly, and no later than at the first board meeting at which such transaction\nis considered, disclose any personal interest that he or she may have and all related material information known to him or her and any\ndocuments in his or her possession, in connection with any existing or proposed transaction relating to the company. In addition, if the\ntransaction is an extraordinary transaction, namely, (i) a transaction other than in the ordinary course of business; (ii) a transaction\nthat is not on market terms; or (iii) a transaction likely to have a material impact on the company’s profitability, assets or liabilities,\nthe office holder must also disclose any personal interest held by the office holder’s spouse, siblings, parents, grandparents,\ndescendants, spouse’s descendants and the spouses of any of the foregoing (“relatives”), or by any corporation in which\nthe office holder or a relative is a 5% or greater shareholder, director or general manager or in which he or she has the right to appoint\nat least one director or the general manager.\n\n \n\n Under\nthe Israeli Companies Law, all arrangements as to compensation of office holders who are not directors require approval by the board of\ndirectors, and exculpation, insurance and indemnification of, or an undertaking to, indemnify an office holder who is not a director requires\nboth board of directors and compensation committee approval. The compensation of office holders who are directors must be approved by\nour Compensation Committee, Board of Directors and shareholders, in that order.\n\n \n\nSome\nother transactions, actions and arrangements involving an office holder (or a third party in which an office holder has an interest) must\nbe approved by the board of directors or as otherwise provided for in a company’s articles of association, however, a transaction\nthat is beneficial for the company’s may not be approved. In some cases, such a transaction must be approved by the audit committee\nand by the board of directors itself, and under certain circumstances shareholder approval may be required. Generally, in all matters\nin which a director has a personal interest he or she shall not be permitted to vote on the matter or be present in the meeting in which\nthe matter is considered, except in case of a transaction that is not extraordinary or for the purpose of presenting the proposed transaction,\nif the chairman of the audit committee or board of directors (as applicable) determines it necessary. Should a majority of the audit committee\nor of the board of directors have a personal interest in the matter, then: (a) all of the directors are permitted to vote on the matter\nand attend the meeting at which the matter is considered; and (b) the matter requires approval of the shareholders at a general meeting.\n\n \n\n**Audit Committee:**\n\n \n\nUnder\nthe Israeli Companies Law, the board of directors of any public company must appoint an audit committee. Our audit committee currently\nconsists of Yaron Eldad, Osnat Gur and Avi Dadon. The chairperson of the audit committee is Yaron Eldad.\n\n \n\nUnder\nthe Nasdaq Rules we are required to maintain an audit committee consisting of at least three independent directors, all of whom are financially\nliterate and one of whom has accounting or related financial management expertise.\n\n \n\nThe\nCompany has determined that all the members of its audit committee meet the applicable Nasdaq Capital Market and SEC independence standards.\n\n \n\nMr.\nYaron Eldad is an audit committee financial expert as defined by the SEC rules and has the requisite financial sophistication as defined\nby the Nasdaq Rules.\n\n \n\n33\n\n \n\n \n\nOur audit committee oversees\n(in addition to the Board of Directors) the accounting and financial reporting processes of the Company and audits of our financial statements,\nincluding the integrity of our financial statements, compliance with legal and regulatory requirements, our independent auditors’\nqualifications, independence, compensation and performance, and the performance of our internal audit function. Our audit committee is\nalso required to (i) find deficiencies in the business management of the Company and propose to our Board of Directors ways to correct\nsuch deficiencies; (ii) determine whether certain related party actions and transactions are “material” or “extraordinary”\nin connection with their approval procedures; (iii) approve related-party transactions as required by Israeli law; and (iv) establish\nwhistle blower procedures (including in respect of the protections afforded to whistle blowers). Additional duties of our audit committee\nare (i) to establish procedures to be followed in respect of non-extraordinary related party transactions with a controlling shareholder\nwhich may include, where applicable, the establishment of a competitive process for such transaction, under the supervision of the audit\ncommittee, or whomever it designates for this purpose, in accordance with criteria determined by the audit committee, (ii) to establish\nprocedures for approving certain related party transactions with a controlling shareholder, which having been determined by the audit\ncommittee not to be extraordinary transactions, were also determined by the audit committee not to be negligible transactions; and (iii)\nsuch other duties as may be directed by our Board of Directors. The audit committee may consult from time to time with our independent\nauditors and internal auditor with respect to matters involving financial reporting and internal accounting controls.\n\n \n\nThe Company has adopted an\naudit committee charter which sets forth the responsibilities of the committee. A copy of this charter is available upon written request\nto the Company at its address in Israel.\n\n \n\nUnder the Sarbanes-Oxley Act\nof 2002, the audit committee is responsible for the appointment, compensation, retention and oversight of the work of the Company’s\nexternal auditors. However, under Israeli law, the appointment of external auditors requires the approval of the shareholders of the Company.\nAccordingly, the appointment of the external auditors is approved and recommended to the shareholders by the audit committee and ratified\nby the shareholders. Furthermore, pursuant to the Company’s Articles of Association, the Board of Directors is the organ that has\nthe authority to determine the compensation of the external auditors; however, the Board of Directors delegated its authority to the audit\ncommittee, so that a second discussion by the Board of Directors shall not be necessary.\n\n \n\n**Compensation Committee**:\n\n \n\nOur\nBoard of Directors has established a compensation committee, which offers recommendations to the Board of Directors regarding equity compensations\nissues (with the Board of Directors also approving compensation of our executive officers). The compensation committee also makes recommendations\nto our Board of Directors in connection with the terms of employment of our chief executive officer and all other executive officers.\n\n \n\nUnder\nthe Israeli Companies Law, a company’s compensation committee is responsible for: (i) making recommendations to the board of directors\nwith respect to the approval of the compensation policy applicable to the company’s office holders and any extensions thereto; (ii)\nproviding the board of directors with recommendations with respect to any amendments or updates to the Compensation Policy and periodically\nreviewing the implementation thereof; (iii) reviewing and approving arrangements with respect to the terms of office and employment of\noffice holders; and (iv) determining whether or not to exempt a transaction with a candidate for chief executive officer from shareholder\napproval.\n\n \n\nUnder the Nasdaq Rules, we\nare required to maintain a compensation committee consisting of at least two independent directors. Our compensation committee currently\nconsists of Yaron Eldad, Avi Dadon and Osnat Gur. The chairperson of the compensation committee is Yaron Eldad.\n\n** **\n\n**Internal Auditor**\n\n \n\nUnder\nthe Israeli Companies Law, the board of directors of a public company must appoint an internal auditor based on the recommendation of\nthe audit committee. The role of the internal auditor is, among other things, to examine whether a company’s actions comply with\napplicable law and orderly business procedure. Under the Israeli Companies Law, the internal auditor may not be an interested party or\nan office holder or a relative of an interested party or of an office holder, nor may the internal auditor be the company’s independent\nauditor or its representative. An “interested party” is defined in the Israeli Companies Law as: (i) a holder of 5% or more\nof the issued share capital or voting power in a company, (ii) any person or entity who has the right to designate one or more directors\nor to designate the chief executive officer of the company, or (iii) any person who serves as a director or as a chief executive officer\nof the company.\n\n \n\nBDO Consulting Group, BDO Israel’s consulting\narm, serves as our internal auditor.\n\n \n\n34\n\n \n\n \n\n**Duties of Shareholders**\n\n \n\nUnder\nthe Israeli Companies Law, a shareholder has a duty to refrain from abusing its power in the company and to act in good faith and in an\nacceptable manner in exercising its rights and performing its obligations to the company and other shareholders, including, among other\nthings, voting at general meetings of shareholders on the following matters:\n\n \n\n \n●\nan amendment to the articles of association;\n\n \n\n \n●\nan increase in the company’s authorized share capital;\n\n \n\n \n●\na merger; and\n\n \n\n \n●\nthe approval of related party transactions and acts of office holders that require shareholder approval.\n\n \n\nA\nshareholder also has a general duty to refrain from discriminating against other shareholders.\n\n \n\nThe\nremedies generally available upon a breach of contract will also apply to a breach of the above-mentioned duties, and in the event of\ndiscrimination against other shareholders, additional remedies are available to the injured shareholder.\n\n \n\nIn\naddition, any controlling shareholder, any shareholder that knows that its vote can determine the outcome of a shareholder vote and any\nshareholder that, under a company’s articles of association, has the power to appoint or prevent the appointment of an office holder,\nor has another power with respect to a company, have a duty to act with fairness towards the company. The Israeli Companies Law does not\ndescribe the substance of this duty, except to state that the remedies generally available upon a breach of contract will also apply in\nthe event of a breach of the duty to act with fairness, taking the shareholder’s position in the company into account.\n\n \n\n**Israeli Securities Authority Administrative Enforcement:**\n\n \n\nUnder the Israeli Securities\nLaw, the Israeli Securities Authority, or the ISA, may take certain administrative enforcement actions against a company or a person,\nincluding a director, officer or shareholder of a company, if performing certain transgressions designated in the Securities Law.\n\n \n\nThe ISA is also authorized\nto impose fines on any person or company breaching certain provisions designated under the Israeli Companies Law.\n\n \n\n**6D.\nEmployees**\n\n \n\nAs of March 15, 2026: we have\n84 employees, all located in Israel. The breakdown of the employees to our various departments is presented below\n\n \n\nIn addition, the Company employs\ntemporary employees who provide inventory counting services, in a number which fluctuates according to the particular projects, and customarily\nincreases towards year end. We believe that our relations with our employees are satisfactory. We have not experienced a collective labor\ndispute or a strike.\n\n \n\n35\n\n \n\n \n\nIsraeli labor laws are applicable\nto all of our employees in Israel.\n\n \n\nWe and our employees are not\nparties to any collective bargaining agreements and our employees are not represented by any labor union. However, certain provisions\nof the collective bargaining agreements between the Histadrut (General Federation of Labor in Israel) and the Coordination Bureau of Economic\nOrganizations (including the Manufacturers’ Association of Israel) are applicable to all Israeli employees by order of the Israeli\nMinistry of Labor and Welfare. These provisions principally concern the length of the work day and the work week, minimum wages for workers,\ncontributions to pension funds, insurance for work-related accidents, procedures for dismissing employees, determination of severance\npay and other conditions of employment. These provisions are modified from time to time.\n\n \n\nIsraeli labor laws subject\nemployers to increased liability, including monetary sanctions and criminal liability, in cases of violations of certain labor laws and\ncertain violations by contractors providing maintenance, security and cleaning services.\n\n \n\nOur Israeli employees are\ncovered by pension insurance policies according to law requirements. Israeli employees and employers are required to pay predetermined\nsums to the Israeli National Insurance Institute which amounts also include, since January 1, 1995, payments for national health insurance.\n\n \n\n**6E.\nShare Ownership**\n\n \n\nThe beneficial ownership of\nour ordinary shares is determined in accordance with the rules of the SEC. Under these rules, a person is deemed to be a beneficial owner\nof a security if that person has or shares voting power, which includes the power to vote or to direct the voting of the security, or\ninvestment power, which includes the power to dispose of or to direct the disposition of the security. For purposes of the table below,\nwe deem ordinary shares issuable pursuant to options that are currently exercisable or exercisable within 60 days as of March 15, 2026,\nto be outstanding and to be beneficially owned by the person holding the options or warrants for the purposes of computing the percentage\nownership of that person, but we do not treat them as outstanding for the purpose of computing the percentage ownership of any other person.\nThe percentage of ordinary shares beneficially owned is based on 7,049,810 ordinary shares outstanding as of March 15, 2026.\n\n \n\nAs of March 23, 2026, shares\nand options held by our officers and directors, then consisting of 5 persons, are as follows:\n\n \n\n**Name**** **\n**Position**** **\n**Number of\nshares and\noptions\nBeneficially\nOwned**** **** **\n**Percentage\nof Shares\nand options\nBeneficially\nOwned**** **\n\nEyal Cohen \nChief Executive Officer \n 76,866  \n 1.09%\n\nAvidan Zelicovsky \nPresident \n 13,334  \n 0.19%\n\nYaron Eldad \nDirector \n 7,500  \n 0.11%\n\nMoshe Zeltzer \nChief Financial Officer \n 11,801  \n 0.17%\n\nOsnat Gur \nDirector \n 7,500  \n 0.11%\n\nAvi Dadon \nDirector \n 15,000  \n 0.21%\n\n \n\nS**hare Option Plans**\n\n \n\nThe purpose of our Share Option\nPlan is to enable us to attract and retain qualified persons as employees, officers, directors, consultants and advisors and to motivate\nsuch persons by providing them with an equity participation in the Company.\n\n \n\n36\n\n \n\n \n\nThe Share Option Plan is administered\nby the Board of Directors, which has broad discretion, subject to certain limitations, to determine the persons entitled to receive options.\n\n \n\nIn May 2003 the Company’s\nshareholders approved the adoption of our 2003 Israeli Share Option Plan or the Plan.\n\n \n\nIn December 2012, the Company’s\nshareholders approved a 10 year extension to the Plan, according to which the Board of Directors may grant options under the Plan through\nMay 31, 2023.\n\n \n\nIn December 2017, the shareholders\napproved an increase of the pool of shares reserved for issuances under the Plan, to 500,000 Ordinary Shares. On July 18, 2018, the Company’s\nshareholders approved (i) an increase of the pool of shares reserved for issuances under the Plan, by 200,000 to a total of 700,000 Ordinary\nShares, and (ii) an amendment of the Plan allowing for the grant of Ordinary Shares in addition to options. In December 2022, the shareholders\napproved an increase of the pool of shares reserved for issuances under the Plan, by 300,000 to a total of 1,000,000 Ordinary Shares.\n\n \n\nOn May 28, 2023, the Company’s\nBoard of Directors approved a 10 year extension to the Plan, according to which the Board of Directors may grant options under the Plan\nthrough May 31, 2033.\n\n \n\nUnder Israeli law, the extension\nof the Plan does not require shareholder approval. However, the Plan was submitted to the Shareholders approval as required under the\nUS Internal Revenue Code in order to allow grants of Incentive Stock Options, or ISOs, thereunder. In December 2023, the Company’s\nshareholders did not approve the extension. As a result the Plan is in effect however the Company may not grant ISOs thereunder.\n\n \n\nUnder the Plan, the terms\nand conditions of the options and the number of shares subject thereto shall be determined by the Board of Directors. The Board of Directors\nalso has discretion to determine the nature of the consideration to be paid upon the exercise of an option under the Plan. Such consideration\ngenerally may consist of cash, or, at the discretion of the Board of Directors, cash and a recourse promissory note.\n\n \n\nThe Ordinary Shares acquired\nupon exercise of an option are subject to certain restrictions on transfer, sale or hypothecation. Options are exercisable and restrictions\non disposition of shares lapse pursuant to the terms of the individual agreements under which such options were granted or shares issued.\n\n \n\nThe Company has elected to\ndesignate the Plan under the “capital gains” track of Section 102 of Israeli Income Tax Ordinance 5721-1961 (the “Tax\nOrdinance”), designed to afford qualified optionees certain tax benefits under the Tax Ordinance (a “Section 102 Plan”).\nPursuant to the election made by the Company, capital gains derived by optionees arising from the sale of shares pursuant to the exercise\nof options granted to them under the Plan, will be subject to a flat capital gains tax rate of 25% (instead of the gains being taxed as\nsalary income at the employee’s marginal tax rate). However, as a result of this election, the Company is not allowed to claim the\namounts credited to such employees as a benefit when the related capital gains tax is payable by them, as an expense for tax purposes.\nThe Company may change its election from time to time, as permitted by the Tax Ordinance. There are various conditions that must be met\nin order to qualify for these benefits, including the registration of the options in the name of a trustee (the “Trustee”)\nfor each of the employees who is granted options. Each option, and any Ordinary Shares acquired upon the exercise of the option, must\nbe held by the Trustee for a period commencing on the date of grant and ending no earlier than 24 months from the date of grant.\n\n \n\nAs of March 15, 2026, we had\n126,125 options outstanding under the Plan (of which 76,124 are exercisable) with the exercise prices as set forth below:\n\n \n\n**Exercise Price Per Share\n$ **\n \n**Number of\nOptions Outstanding**\n\n$\n2.245\n \n \n31,667\n\n$\n2.968\n \n \n30,834\n\n$\n3.251\n \n \n7,500\n\n$\n3.252\n \n \n31,124\n\n$\n3.876\n \n \n10,000\n\n$\n3.986\n \n \n15,000\n\n \n \n \nTotal\n126,125\n\n \n\n37"}